Retirement. Divorce. Receiving an inheritance. These are all moments you might expect someone to get financial advice.
But when I caught up with Sabrina Tambini, one of our financial advisers here at Fidelity, it became clear that the reasons people seek advice are often much broader than you might expect.
Sometimes something has changed. Markets have fallen, tax rules are changing or retirement suddenly feels closer.
Sometimes nothing dramatic has happened at all. They simply want to know whether what they’re doing is still right.
And while everybody’s circumstances are different, Sabrina said some questions get asked more often than others. Here are eight of them.
- Refer a friend and you’ll both receive a £100 Amazon.co.uk gift card when they invest £5,000 or more in a qualifying account. T&Cs and exclusions apply. Find out more
1. “The market has fallen. Should I do something?”
It’s perhaps no surprise that market volatility gets people thinking about their investments.
When markets fall, Sabrina said customers will often start questioning decisions they were perfectly comfortable with a few months earlier.
Should I sell? Should I move into cash? Is now the time to buy? Have I taken too much risk?
Others suddenly realise they haven’t properly reviewed their investments for several years.
The difficulty is that periods of uncertainty are also precisely when emotion can start influencing financial decisions.
A financial adviser can’t tell you what markets are going to do next. But they can help you look beyond what has happened this week or this month and return to the reasons you invested in the first place.
Has your objective changed? Has your time horizon changed? Has your ability or willingness to take risk changed?
If the answer is no, a dramatic market movement doesn’t necessarily mean your long-term plan needs to change too.
2. “My investments have gone up. Does that mean I’m doing well?”
This was one of the more interesting questions Sabrina raised.
It’s natural to judge an investment by its return. If your portfolio has made 5% or 6%, for example, you may feel perfectly happy with it.
But return only tells you part of the story.
The other question is: how much risk did you take to get there?
Two portfolios could have produced a similar return while taking very different routes. One might be spread across a range of investments, while another might be heavily concentrated in a particular market, sector or type of company.
That matters because taking substantially more risk hasn’t necessarily benefited you if you could have achieved a similar outcome with less.
This is where the idea of a risk-adjusted return comes in. Rather than asking whether your investments have simply gone up, it considers the return alongside the level of risk taken to achieve it.
And it leads neatly to another question Sabrina hears regularly.
3. “I own lots of funds. Surely I’m diversified?”
Not necessarily.
It’s quite possible to own five, 10 or even more funds and discover that many of them invest in similar things.
You could, for example, have several funds with significant exposure to the same large technology companies or the same region. On paper there are plenty of different names in your portfolio. Look underneath and there may be far more overlap than you realised.
Sabrina said this can happen particularly easily when people have built up their portfolio gradually. They read an article. They hear about an interesting fund. A particular investment theme – like gold – catches their eye. Another fund performs well so they add that too.
There’s nothing wrong with doing your own investment research. But collecting investment ideas and managing a portfolio are two different things.
A portfolio also needs a purpose. How do the pieces fit together? How much risk are you taking overall? When might you rebalance? And, perhaps most importantly, what is all this money ultimately for?
4. “When can I actually afford to retire?”
What struck me about this was that the question isn’t specific, such as ‘Can I retire at 67?’
Sabrina said conversations around retirement are changing.
Increasingly, people in their 40s and 50s want to know what choices their money could give them much sooner.
Could I finish work at 60? What about 55? Could I move to a four-day week? Change career? Take a lower-paid job I enjoy more? Spend more time travelling while I’m fit and healthy enough to do it?
It turns retirement planning into something much broader than choosing a date when work stops.
And this is where financial planning can become particularly powerful because it can start putting numbers around different versions of your future.
How much income would you need? What assets do you already have? How much might you need to save between now and then? What could changing your retirement date by a few years mean?
You might discover your goal is more achievable than you thought. Equally, you might find there are compromises to make.
Either way, knowing gives you something to plan around.
5. “How much can I afford to take from my pension?”
Building your pension is one thing. Working out how to turn it into an income is another.
Sabrina said the move from accumulation (building up your wealth) to decumulation (starting to spend it) is one of the big triggers for advice.
Suddenly there is a different set of decisions to make.
How much should you withdraw? Which assets should you use first? How long does the money need to last? How will withdrawals affect the tax you pay?
One seemingly simple point Sabrina highlighted is the difference between your gross and net retirement income.
You might decide, for example, that you want a certain amount to live on each year. But that doesn’t necessarily mean withdrawing that exact amount. Depending on where the money comes from and your tax position, the amount you need to draw could be higher.
There’s also a balance to strike between enjoying the money you’ve worked hard to build and making sure your plans remain sustainable. Your pension pot may need to support you for decades. But equally, you’re likely to be more physically active when you’re younger, so you may choose to allocate a larger income in your 60s than when you’re in your 80s.
That’s a much more personal calculation than simply choosing a withdrawal percentage no matter your age.
6. “Am I making the most of my pension allowances?”
Sometimes advice identifies things people simply didn’t know were available to them.
One example Sabrina sees quite often is pension carry forward.
Broadly speaking, carry forward can allow eligible people to make use of unused pension annual allowance – currently £60,000 – from the previous three tax years. There are rules attached, including around eligibility and how much you can contribute, so whether it is useful will depend on your circumstances.
But Sabrina has seen cases where pension and tax planning have made a substantial difference to somebody’s longer-term plans.
And carry forward is just one example.
Pensions, ISAs, tax allowances and the way different assets work together can all create planning opportunities.
The important point isn’t to use every allowance or tax rule simply because it exists. It’s to understand which ones are relevant to what you’re trying to achieve.
7. “The rules are changing. Should I act now?”
Budgets, tax announcements and speculation about possible changes have a habit of making people nervous.
A story about pensions, tax-free cash, ISAs or inheritance tax can quickly create a feeling that you need to “do something” before it is too late.
Sabrina said she often sees people tempted to make decisions in response to a rule change – or even speculation about one – before asking a more fundamental question, ‘What is this money actually for?’
Rules and tax matter. But they are part of your financial plan, rather than the purpose of the plan itself.
Before making a big decision, it can be useful to bring the conversation back to your own objectives. What are you trying to achieve? When will you need the money? What would the proposed change actually mean for you?
Reacting quickly isn’t necessarily the same as planning well.
8. “Is financial advice really worth paying for?”
This might be the question that sits behind all the others.
Advice has a visible cost. And Sabrina said people will understandably look at the pound amount and ask themselves whether it’s worth it.
But comparing the cost with the value of advice isn’t always straightforward.
There are the things that are easier to quantify – such as making effective use of allowances, structuring retirement withdrawals or identifying whether a portfolio is taking more risk than necessary.
Then there are benefits that are much harder to put a number on. Financial advisers often challenge an assumption you’ve made or spot something you’ve overlooked. They can help you hit pause before you make a rushed decision when markets are falling. They might suggest bringing together pensions and investments that you’ve accumulated over decades, making it easier to manage. Or their counsel might simply give you greater confidence that there’s a plan behind what you’re doing.
The value won’t look identical for everyone.
And good advice isn’t about making your finances unnecessarily complicated. Often, Sabrina said, its job is the opposite: to take a complicated collection of pensions, investments, tax rules, aspirations and worries and turn them into a clearer plan.
What did I take away from my chat with Sabrina?
What struck me from my conversation with Sabrina was how rarely financial advice starts and ends with choosing investments.
People arrive with questions about markets, pensions, retirement, tax and risk.
But underneath many of them is a bigger question. What do I actually want this money to make possible?
Perhaps you want to retire earlier. Perhaps you want the confidence to spend more. Perhaps you’re trying to make sense of investments you’ve accumulated over many years. Or perhaps you simply want someone to tell you whether the plan you already have is on track.
That’s where advice can add value – not simply by looking at the individual pieces, but by connecting them to the life you’re trying to build.
Want to know more about financial advice?
Our personal financial advice service is designed for people who are looking for long-term financial advice and have a minimum of £100,000 to invest, which can include your pension. It starts with a free, no-obligation, initial discussion – which is an informal chat to see whether advice could be right for you. If you do decide to continue, an adviser will take time to understand your circumstances, goals and attitude to risk before making a personal recommendation.
About Sabrina Tambini