Financial planning is vital at each stage of life to ensure that you are prepared in advance for what’s coming next and also in the likelihood that you have a work or family financial emergency that arises at any time. Which is why it is so worrying that a survey by the Financial Services Compensation Scheme (FSCS) has revealed that almost two thirds (64%) of UK adults with savings, investments or a mortgage have not taken regulated financial advice in the last five years.
The survey of 2,000 people between the ages of 18 and 75 found that cost was the main driver with more than half (55%) saying that financial advice is just for the wealthy. One in five of those who obtained free guidance, rather than regulated advice said they did this as they believed the service was too expensive. However, the findings also revealed that despite the growing gap in advice (which could leave vulnerable customers open to scams and making poor financial decisions), 62% of the UK adults who had actually paid for regulated financial advice said they were happy and would use the same service again.
When it comes to what advice people are taking from a financial services provider, more than a third (38%) were taking advice on their mortgage and nearly half (48%) believed mortgage advisers to be very or fairly trustworthy.
Financial planning is an ongoing process as you move through the 5 stages of the Financial Planning Life Cycle – Teenage Years (13–17), Young Adulthood (18–25), Starting a Family (26–45), Planning to Retire (46–64) and Successful Retirement (65+). As a teenager, you may be trying to save for your education or travelling the world, whereas a couple with a new family may have to cut back and be careful with their spending compared to a retired couple.
When it comes to investing in your financial future, a recent study by Shepherd’s Friendly has also revealed that almost half of all UK adults (47%) have never invested money before and have no plans to do so. 2,000 people in the UK were asked about their investing habits in 2023, and it found that adults aged 16-24 were the most likely to try their hand at investing with 67% saying they have either invested their money before or are currently investing.
Those surveyed aged 55 and over were the least likely, with 39% saying they have not invested money before. When it came to women, the numbers were higher, with 54% saying they had never invested compared to 40% of men. When it comes to reasons why someone might not choose to invest, one in six said they were scared of investing and 9% said the long-term commitment of investing was a turn off.
If you are looking to start investing, its essential that you don’t just jump straight in and always seek professional financial advice, so, here are some top tips to help you: –
Consider a stocks and shares ISA: This allows you to invest in shares, funds, bonds, and other assets without paying capital gains tax.
Start small: You don’t need a lot of money in the first place in order to start investing, as you can invest as little or as much as you like.
Choose a strategy: Consider how much money you would like to set aside for investing, as well as what your long-term goals are. With any investments there is always a risk that you can get back less than what you put in. Therefore, remember this when choosing your strategy and what investments you choose to make.
Keep regular track of your investments: You could set up a Google alert for mentions of companies in which you’ve invested in. Keeping track of your investments value is essential so you can decide when is a good time to sell your stocks.
Financial planning is ideally best left to the professionals, as poor financial advice or DIY financial planning results in millions of pounds each year disappearing from people’s pockets. Also by going via a regulated financial provider, you know you have FSCS protection on financial products and services. Always be fully aware and confident about the decisions you make with your money and the risks that come with taking guidance from unauthorised sources.
