A survey from Legg Mason Asset Management that considered the views of 1,000 investors in the UK showed that on average anyone who received financial advice achieved an investment return of nearly 7.5% in 2018. This was much higher than the 5.9% return achieved by investors who chose their own investments.
The survey considered views and returns of 16,810 investors across the globe who each had at least €10,000 to invest in the following twelve months.
Why was the return for investors who received financial advice higher?
One of the reasons highlighted was that investors who took financial advice outperformed in 2018 due to their asset allocation during the period. The DIY investors on average had a much higher proportion of their savings (46.8%) in cash, compared to the group that took financial advice who had just under a third (29.7%). The advised portfolios that Legg Mason Asset Management reviewed across the globe typically had more balanced portfolios. Exposure to cash and equities were lower but these portfolios had greater holdings in fixed income and alternative investments. Investors using financial advisers also tended to use differentiated asset classes and had a more global approach to investing.
‘Employing an independent financial adviser, could help you avoid making common investment mistakes as we ensure that you invest in assets that are appropriate for your risk profile, to achieve your required investment return. The earlier you get financial advice and start saving the more chance you have of achieving your financial goals, but if you want to save for your retirement, university fees or for a holiday home financial planning is a priority. When our independent financial advisers offer financial advice, we always recommend our clients invest for the long-term. However, historical evidence shows that despite short-term fluctuations over the longer-term equity markets outperformed cash, so if you don’t need your money for many years equity investing could provide you with a higher return over a long-time period.’
‘If you want to achieve your lifetime financial goals working with an independent financial adviser can help. Our qualified team of independent financial advisers can set up a Lifetime Financial Plan and use cashflow planning to review your income, expenses, savings and assets. Your financial plan will show you how much money you must save to achieve your lifetime financial goals. Read our brochure on Lifetime financial Planning for more information. Our independent financial advisers can also offer pension advice and we add value in tax planning, estate planning, risk management, asset allocation and costs. Lifetime financial planning is important, because it gives you the confidence to make major life changes such as accepting redundancy or retiring early. We meet clients regularly to discuss their financial planning and review their needs and aspirations. We make sure their financial plan is working and they are in control of their financial decision making. At Lonsdale Services we believe it is important to educate our clients, so they understand why we make our financial planning recommendations and how these decisions could affect their future income. If you are new to investing we recommend reading our ‘Beginners Guide to Investing'. If you would like to speak to one of our independent financial advisers, we offer a free initial consultation. Please contact me on 01582 466900 or email firstname.lastname@example.org’
The Financial Conduct Authority does not regulate Cashflow Modelling, Tax and Estate Planning. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.