Does the phrase “you get what you pay for” apply to investment services? Absolutely. But what’s more important is paying for what you need.
At one end of the spectrum you can take responsibility yourself and make all the decisions, and at the other end someone can do it all for you. And there are services in between too.
Deciding on a financial route to take isn’t always easy. You need to assess both what’s available and what meets your wants and needs; there’s no point in paying for something you don’t need and there’s no point in taking a cheaper option that’s going to cost you more later on.
When it comes to investing, there are broadly three levels of service you might choose.
Three levels of service
Execution only: a service by which you undertake all the investment research and decisions yourself. This is generally the lowest cost option but involves the most work. It’s primarily provided online – but also by telephone – and very quick to set up.
Good for: people with an interest in investing, and who have the time and expertise to make their own investment decisions.
Online advice e.g. Wealth Horizon: a service whereby you receive regulated financial advice in relation to your intended investment – with your circumstances and risk attitude being assessed – in order to ensure your money is managed in the right way for you. Such a service also manages your investments for you and makes the ongoing investment decisions. Again, such services are predominately online, but with the option of telephone support from an adviser. This is a low cost form of financial advice, based around your investment, which is quick and simple to arrange.
Good for: anyone who wants the security of receiving financial advice, but doesn’t necessarily want or need their whole financial situation assessed. Also suitable for people who want to invest money but don’t have the inclination or time to manage it themselves.
Face to face advice: a service that involves meeting an adviser in person. Regulated financial advice is provided and advice can be given across a number of different areas beyond purely investing. A more expensive choice, that takes more time to set up. An online account may be offered, but a mainly telephone/postal/in person service will be provided. It’s the most comprehensive option.
Good for: someone that wants or requires their whole financial situation to be assessed. They don’t want to make investment decisions themselves, and also prefer a face-to-face service over a primarily online one. A client will likely need to have sufficient funds to make this a viable option.
Right for you
If you’re already investing, it’s worth considering if your current investment service matches your needs. And if you’re planning to invest some money, make sure you do so in a way that suits you. The investment industry is full of advertising and marketing – and while this can help you discover products or services you didn’t know about – it’s important not to be pushed into something you don’t understand or feel comfortable with.
Focusing on your own requirements is important. Opening a low cost ‘do it yourself’ account might seems like a smart choice initially – but if you then don’t know what to do and end up leaving your money as cash, or investing it unwisely, it may well end up becoming the most expensive option for you! Conversely, if you purely want help investing a sum of money and are comfortable using a computer, going through the traditional approach of meeting with an adviser may cost you a lot more than it needs to.
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Any news and/or views expressed within this article are intended as general information only and should not be viewed as a form of personal recommendation. This article is not directed to, or intended for distribution or use in, any jurisdiction where such distribution would be prohibited. To the extent permitted by law, Wealth Horizon accepts no duty of care or liability for loss occasioned to any person acting or refraining from acting as a result of any material contained within this article. Where past performance is shown, this should not be taken as a guide to future returns. Investment in the stock market is not a suitable place for short term money. The value of investments and associated income may go down as well as up and you may not get back the full amount invested.
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