In the past years the interest given on savings accounts was poor or absent. Customary saving strategies did not make sense so many in the position to accumulate wealth sought different possibilities to grow capital. Some of it intended for medium term, some for longer term. The availability of investment opportunities to everyone with a smartphone has exploded, and the number of commercial efforts to steer you towards solutions even more.
Not that long ago investing was (a) something few had access to, (b) considered complex enough compelling the investor to obtain advice before making the decision where to invest in and with how much, (c) restricted in the sense that non-professional investors could make individual trades in shares or bonds, (d) not including crypto or finfluencers.
In a couple of decades technology has brought a huge increase in available products with a high degree of standardization (e.g. Exchange-traded Funds, ETFs) and has enabled private individuals to directly access exchanges to perform trades through brokers with just a smartphone. The downside: peer experience has taken the role of expert advice and execution-only responsibility has replaced duty of care.
For many, advisers are famous in their own bubble, or hardly known outside the professional environment of specialized advice firms, private bankers and whatnot. For many other subjects than money, peer reviews have become the norm becoming comfortable making a choice for a product or a service. Strong reasons for peer review acceptance are that “they cannot all be wrong” and it is in most cases without immediate cost. And for not overly complex situations that is fine; if a band aid does not do what it is made for you simply try another until you are satisfied.
The value of financial advice
When you are investing €1,000 each month to build your personal pension pot or any other costly dream, obligation or excuse this is a serious strain on most people’s net earnings and it is intended to really “fix something”. So if this effort does not yield the intended goal it will take an even bigger effort to (a) repair and (b) make sure the goal is achieved on time and (c) this time it had better work!
Professional advice does not come free (exceptions exist) for a number of reasons. To be able to opine we have to continuously update our knowledge, educate ourselves in many relevant fields, deliver on promises, be there for customers if plans do not succeed this month, help solve practical issues and more importantly, help control damage if it occurs or manage success above and beyond expectations. Protecting the license to operate not only takes effort, it requires an investment in money as well. Both need compensation and that is what clients pay.
Advisers are reviewed and benchmarked by client organizations, regulators and by financial institutions our clients work with. Fame comes on foot and goes by horse is a saying, and very much true for the financial advice profession.
A word to the wise
Everybody is entitled to an opinion, and as far as we are concerned, so are finfluencers. We do object to some of these persons with many digital followers if they make recommendations
- Without suitability analysis for your situation
- For providers they are somehow rewarded by (and the advice is not independent or presented to customers as independent),
- Of which evidence is just their experience and you only have their word for it.
Maybe you could check statements before making next steps. Many financial mistakes are the result of a small risk with a large impact. Will your peer actually help solve an undesired situation. Does the peer have the experience and the capacity to do so? In our opinion, professional financial advisers will get you further.