This is a question that most users of EvolveMyRetirement® will have considered. A financial adviser can hold your hand through important and often life-changing decisions. Most people lack the expertise, or perhaps the time, to do everything themselves. But hiring a financial adviser comes with a cost, either in fees or in commissions. With many retirement calculators available online, is doing it yourself a realistic option?

Option 1: Let a financial adviser do everything

Some people may wish to offload decision making onto someone else. A financial adviser would ask you detailed questions about your circumstances. In principle you could then let them make planning and investment decisions for you. You’d be trusting the adviser’s integrity, expertise and judgement to an enormous extent. At a minimum you’d expect them to make better choices than you’d have made alone. But to be worth the money, they’d need the ability to find solutions that actually met your objectives. Of course, there’s no guarantee that such solutions exist. If they don’t, the financial adviser would need the integrity to be honest with you, with the risk that you’ll take your business elsewhere. It’s not their job to tell you what you want to hear, but what you need to hear.

The problem with this option is that you won’t know if the adviser’s doing a poor job; at least not unless you run out of money. By standing back from the decision-making process, it would all come down to how well you chose your adviser.

Option 2: Do it all yourself

There’s no shortage of online retirement planning calculators. Using them you can play around with different settings. A calculator will typically tell you how long it will be before you run out of money. Different calculators will give you different results, which can make it hard to select the best one. Most ignore uncertainty, with only a few using Monte Carlo simulation. Even if you trust the results of a calculator, you still need to decide on specific investments, which the calculator won’t help you with.

We should add here that EvolveMyRetirement® is in a class of its own in terms of its features and usefulness. It uses Monte Carlo simulations; and uniquely, it will actually optimise your plan. But even it won’t suggest specific investments. So if you’re a do-it-yourself person, you’d still need to translate the results into ongoing investment decisions. The outputs from EvolveMyRetirement should help constrain your choices; but you’d still need to become an expert in investing.

Option 3: Best of both worlds

Despite aiming to make EvolveMyRetirement® the best that it can possibly be, it has never been our aim to replace a financial adviser. Our aim is to give users insight into the kind of choices they’ll need to make, and the impact of these choices. We actually encourage our users to consult a financial adviser before putting any plan into practice. We also encourage users to share their plans with their advisers. By the time you start talking detailed choices and investments with your adviser, it’s important that you’re not blinded by science. EvolveMyRetirement provides the type of sophistication normally only available with tools designed for professionals. It has sometimes been called a dumbed down professional tool. We agree, in the sense that it tries to talk the language of clients rather than of professionals.

Undoubtedly the best approach to retirement planning is to do your homework before walking into a financial adviser’s office. You need to be able to understand if the adviser is talking sense. You need to be able to challenge your adviser’s assumptions, and end up being confident in their recommendations. So the answer to the question “Do you need a financial adviser” is “Yes, but do your homework first, using a really good tool to educate yourself”.

Do You Need A Financial Adviser?

One thought on “Do You Need A Financial Adviser?

  • 27th November 2021 at 9:13 pm

    I’m finding this quite a difficult issue at the moment. I have a very old “apparently” DB scheme. However when you look at it you see it’s really a DC in DB clothes (they only declare the final Pension value once the “with profits fund” has run it course). I suspect it had to fit some rules at the time. Anyhow the “Pension” is exactly the one you could buy with the “fund” on the open market, so it’s a “fair price”.

    Given that, it makes sense to “take the the pot” then buy any annuity at the “right time”, not when it happens to mature (while rates are poor) but to do this (DB->DC) you must use/consult an IFA (unless the pot is <30K) so I needed to talk to an IFA.

    If seems in order to "sign off" on such a transaction they need specific HMRC "approval" . This approval is being withdrawn from IFAs who have not used it. Many rarely use it it because it's usually a bad idea. The only way it seems I can get an IFA who *might* sign off, is to take them on in a client role, not single advice … This ends up with fees of over £1000 per month. Or to put it another way, if you follow the "4% rule" , it's "3% for you, 1% for the IFA" , quite a big chunk of your total (taxable) income.

    I think at the core of this is liability. The IFA is liable forever, for the advice they give and they in turn pay insurance to match that risk. So "one off advice" carries similar risk to years of "client advice" but the latter obviously pays them higher fees.


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