We live in an age with unprecedented access to information. Pretty much anything you need to know is just one click away. But an abundance of information does not necessarily translate into more expertise. This is particularly true when it comes to investing. Running your own portfolio is easier than ever before, but running it well is still a challenge. The right advice is key.
The rise of the DIY investor has been accompanied by the rise of the financial influencer. Amateur financial advisors that promise large profits on a variety of speculative investments usually inhabit social media channels and point the inexperienced investor towards the riskier end of the spectrum. DIY investors are at risk of falling victim to information overload when trying to research investing and misinformation is a real danger. Using a qualified and regulated financial adviser is now more important than ever for those looking to protect and build their wealth through investing.
The value of planning
Wealth managers can create comprehensive financial plans for clients, mapping out individual circumstances and monitoring them as they evolve. A thorough financial plan will take account of a client’s lifestyle along with factors such as care costs, pensions and rainy day funds. It will take account of your incomings and outgoings and assess the affordability of your future plans. This requires a considerable amount of work and is not easily replicated with an amateur approach. DIY investors can frequently underestimate the time required to prepare and manage a plan of this detail. Professional investment managers are not managing their own money so will be less likely to make emotionally driven decisions, especially in times of increased market volatility. You can be sure of a dispassionate view with a professional adviser at your side.
Professional wealth managers will ensure portfolios are central to a client’s financial plans and contain an appropriate level of risk. A wealth manager will command a strong knowledge of the investing landscape and understand important trends such as Environmental, Social and Governance (ESG) concerns. Professional investment managers are able to skilfully negotiate the requirements of ESG and match a client’s wishes with their investment strategy. Some modern investors would like their portfolio to be sustainable and work for a cause as well as make a profit and this is achievable with expert financial advice.
The big picture
The value of investment products can be driven by global factors such as natural disasters, civil unrest, geopolitics or black swan events like pandemics. Professional wealth managers are well-positioned to analyse these issues and manage a portfolio accordingly. This has the potential to add significant value compared with portfolios managed by amateur investors with a narrower focus. Understanding the big picture is key to a portfolio navigating the inevitable volatility inherent in the market.
Wealth managers are regulated and authorised to give financial advice and they are at the service of the client. A DIY investor will have to balance their personal financial plan and portfolio while keeping abreast of market movements, industry news and concerns in their personal life. Hiring a qualified and experienced wealth manager can take away this burden. Investors that take unregulated financial advice may also not be able to access the protections afforded to them by the Financial Ombudsman Service or Financial Services Compensation Scheme.
At London & Capital, we believe that professional financial advice is the best way for anyone to manage their wealth. Ensuring that your assets are in the hands of an expert means they have more chance of flourishing and you can be free to concentrate on dedicating your time to what’s important to you.