Discover the alchemy of financial expertise –
a wealth of knowledge that rewards you.

One of the most common things that financial advisers are asked by potential clients is: can we pick the next big stock or fund? Or they may enquire how they should invest a specific lump sum to achieve the best returns.

However, a good financial adviser will always respond to such questions with the words: “It depends.” Although getting the investment ‘right’ is important, it is only a small part of the adviser’s role and the value that they bring.

And getting the investment ‘right’ really does depend on what each client’s circumstances are and what they’re hoping to achieve in life.

Therefore, if you come to us for advice the very first thing that we will do is sit down with you and help you to clearly define your goals. We will then establish how realistic these might be in terms of your present circumstances and how your future is likely to pan out.

Then – and only then – will we start to think about how your money can be invested in a way that matches your goals. For example, this might entail taking on more risk with the aim of achieving a better long-term return – or the exact opposite, as you might currently be exposed to too much risk to suit your circumstances. What’s more, we’ll help you avoid making any bad decisions that could turn out to be expensive, such as investment scams or impulsive reactions to short-term fluctuations in the stock markets.

If necessary, we’ll then consider the best ways for you to make the most of the tax allowances and reliefs available to you; for example, by using the best tax wrapper – such as a pension or ISA – to suit your circumstances.

What’s more, by meeting on a regular basis, we’ll be able to review your plans and any changes in your circumstances. That way, we can make sure everything is on track to meet your goals while making adjustments to your portfolio if necessary.

Perhaps even more valuable, is the kind of peace of mind you just can’t put a price on that comes from knowing you’re on the right path.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Over the past decade or so, responsibility for planning your financial future has shifted significantly towards the individual.

Over the past decade or so, responsibility for planning your financial future has shifted significantly towards the individual.

Those saving for retirement today can no longer rely on generous state support and defined benefit pensions schemes that were commonplace not so long ago.

It is vital, therefore, that you think much harder about how your finances are going to help you over the long term.

This might not only be to plan for retirement but also to move you towards achieving your goals in life – whether that’s retiring early, fulfilling a lifelong dream, supporting children and grandchildren (both now and after your death), or anything else that matters to you.

To support this, expert and regular financial advice is crucial.

In one sense, the value of advice comes down to one simple equation: getting the most from your investments + tax management. If both are done well, you should get a return that is considerably higher than any fees or charges you incur.

Independent research has shown that this can amount to people being an average of £47,000 better off when they retire.¹

And that’s not to mention the invaluable peace of mind that comes from knowing you have a realistic plan and are on track to achieve it.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

¹ The ILC has calculated that if a person received professional financial advice between 2001 and 2006 it resulted, on average, in them being £47,706 better off in terms of pensions and financial assets once fees and charges had been taken into account in 2014/15. (What it’s worth – revisiting the value of financial advice, ILC, November 2019).

If you fear being tricked out of your money by schemes that appear – and often are – too good to be true, a regulated financial adviser is the perfect person to ensure you don’t fall for a scam.

The value here, of course, is that the adviser could potentially save you losing your money.

All financial advice in the UK is regulated by the Financial Conduct Authority, whose job it is to keep people safe from unscrupulous firms. It supervises nearly 6,500 companies in the consumer investments market, including St. James’s Place.

Greater confidence comes from a better understanding of how to organise your finances.

Some typical comments from people who have not received financial advice are: ²

“I don’t feel prepared. I’m not really sure how much money I would need to support myself over the longer term…”

“[Financial advice] would have an impact on my comfort levels… because I would hate the thought of having £200,000 just doing nothing. I’d think, ‘What a waste’.”

Above all, advisers can explain the need to take on a certain level of investment risk (and the potential rewards this can bring over time) versus the risk of inflation being higher than the interest rates available on your cash holdings. In most cases, money that is invested in a diversified portfolio on the stock market over the long term (at least five to ten years) will grow in value in real terms, while money left as cash will lose to purchasing power.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and can fall as well as rise. You may get back less than the amount invested.

An investment in equities will not provide the security of capital associated with a deposit account with a bank or building society.

² Peace of mind: Understanding the non-financial benefits of financial advice, ILC, Nov 2020

How inflation erodes the value of cash

If you had saved £10,000 in the average 90-day savings account for the last 10 years it would be worth: £10,931

However because of the impact of inflation from 2013 to September 2023, that would only be able to buy goods and services today that in 2013 would have cost: £8,207

The benefits of investing

Some people are put off investing because they don’t know how to pick the best investment from the wide range available. But you don’t have to select the ‘best’ fund to make investing a good idea. Even if the fund or funds you choose are not the top performers – as long as your investments are diversified – history suggests that investing, despite the associated costs, could be a better long-term option than cash. There can be no guarantees with investing but this point is endorsed by the Financial Conduct Authority who said in 2020;

“As savings held in cash will tend to lose value because inflation reduces their buying power over time, investing can help to protect the value of your money as the cost of living rises.”

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and can fall as well as rise. You may get back less than the amount invested.

An investment in equities will not provide the security of capital associated with a deposit account with a bank or building society.

One of the most important things a financial adviser can do for you is to help you understand the importance of long-term investing. That is, deciding on an investment plan and sticking with it over an extended period of time, preferably at least 5 or 10 years.

Your adviser will explain that it’s important to select the right portfolio to match your personal goals, then ignore any short-term fluctuations in the stock markets. If the stock market starts to go down, or uncertainty increases, it’s often tempting to make an emotional decision and sell your investments. They will be able to reassure you that this is just part of the long-term journey, which can make the decision to stick with your plan a lot easier.

It’s also important to review your plans and your investments performance from time to time – at least once a year – with a financial adviser. That way, you’ll be able to reap the benefits of taking a long-term view and align your portfolio to your goals, while not making costly knee-jerk reactions to market events.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and can fall as well as rise. You may get back less than the amount invested.

The value of advice: + 2% per year

According to independent analysis by Numis Securities, the value of advice amounts to an additional 2% per year. This is based on comparing annual returns for St. James’s Place clients against those who managed their own investments.

The research, which covered all clients’ SJP pension investments, found that between June 2010 and June 2020 the average growth achieved was 7.7%pa. This means £100,000 invested at the start of the period would be worth £210,000 by the end. By comparison, the same exercise for pension clients of a large firm where investors usually make their own investment decisions achieved an average of 5.5% pa over the same period. So on average £100,000 invested by a non-advised client grew to £171,000 over the ten years.

This analysis didn’t include any tax benefits from advice and so Numis’s researchers concluded that the main difference between the two was the “greater long-term discipline and lower emotion an adviser provides”.

Past performance is not indicative of future performance.

Numis Securities Research, Sept 2020

Financial advice can add value to people’s lives in many ways, with financial and non-financial benefits. The financial advantages are the most obvious. Whether it’s building up a savings buffer, managing your day-to-day finances better, buying a house or building a retirement fund, you need a plan of how to get there.

The non-financial benefits are equally valuable, yet often underestimated.

Financial decisions driven by emotions such as anxiety and fear rarely deliver good outcomes. An adviser can take the emotion out of decisions and distinguish noise from useful information so you make considered choices.

Advisers aren’t just there to help with investments – they can also add a lot of monetary value to your portfolio through tax planning.

One of the most useful ways of doing this is by ensuring your investments are in the most appropriate ‘tax wrapper’ (e.g. a pension or an ISA). This will make the most of all the tax allowances and exemptions available to you.

And even if your financial affairs are relatively straightforward, advisers can often add value in unexpected ways when it comes to tax.

Here’s an example:

Emily is 55 and has just inherited £20,000 that she doesn’t need in the short term. She therefore decides to invest it in a Stocks & Shares ISA and hopefully watch the money grow over the next 10 years or so, by which time she aims to retire. This seems like a sensible thing to do, as any profits an ISA makes are currently free of Income Tax and Capital Gains Tax.

However, Emily decides to double check with a financial adviser – and she’s surprised to find out that it might not be the best option for her. The adviser points out that she currently pays higher-rate income tax but is likely to be a basic-rate taxpayer when she retires and wants to access the money.

Therefore, it makes sense for her to pay the lump sum into her pension instead of an ISA. That way, she can claim tax relief at the higher rate of 40%, so her contribution would increase from £20,000 to £33,000 (once tax reliefs are factored in).

This would be achieved through 20% automatic tax relief on her investment. Emily could then claim the additional 20% tax relief through her annual self-assessment form and invest the proceeds.

When she withdraws the money after retirement – by which time, hopefully, it will have grown into an even larger sum – she will have to pay tax on most of it (25% will be tax free), but only at the basic rate of income tax, which is 20% (assuming her taxable income falls below the higher-rate income tax threshold by then).

It’s therefore highly probable that the tax saving alone will far outperform what would have happened if she had invested in the ISA as she originally planned – even when taking into account the cost of advice.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

How tax advice can more than pay for itself

Some other ways a financial adviser can help you grow the value of your investments is through the use of mainstream tax allowances and exemptions such as:

• Making the most of your annual pension allowance – which can be impacted by your income levels and previous pension contributions or benefits that you have taken
• Advising on making the most of your and your family’s annual tax-efficient ISA allowances
• Ensuring as much of your money as possible can be passed on to your loved ones when you die, by reducing the amount of Inheritance Tax payable on your estate

Financial advisers are experts in tax relating to pensions and investments and will help to ensure you’re not paying too much or too little in those areas.

What’s more, if your tax affairs go beyond this and are more complex, they can put you in touch with people who specialise in navigating the bewildering array of tax rules and regulations.

Pension rules have changed so much in the past few years, and there are layers and layers of complexity that only a specialist adviser can expect to understand. What’s more, there has been a big push towards pensions being more flexible – which can be a good thing, but can also make you vulnerable to making mistakes. Taking advice can give you the reassurance to know that your pension is being carefully looked at by someone who knows what they’re doing. In short, advisers are there to guide you and help you to reach your goals and your aspirations.

One of the biggest benefits of financial advice is clarifying what’s important to you now and what your long-term goals are. A professional adviser will be able to help you do this.

What’s more, in an ageing society, where many of us are likely to live well past 80, it’s essential that you plan for your financial security in retirement to ensure you don’t run out of money.

Over longer periods of time – 5 to 10 years, say, or preferably even more – investing in stocks and shares is one of the best ways to see your money grow. This will help you secure your retirement and reach any other goals you may have.

A financial adviser can help you to find the optimum ways of investing your money that match up to what you’re aiming to achieve.

So what’s holding you back?

It’s clear that financial advice has many tangible and non-tangible benefits. However, according to the Financial Conduct Authority there are far too many people holding all their savings in cash, where it is likely to decline in value due to interest rates being lower than inflation.

This finding is perhaps not surprising, as only 8% of adults in the UK have received financial advice. According to an ILC estimate, however, people who have received financial advice are, on average, 8% more likely to put some money aside on a regular basis and 10% more likely to invest in stocks and shares than those who have not.

And the benefit is clear and measurable.

The International Longevity Centre (ILC) has calculated that a person who uses a financial adviser is on average £47,000 better off when they retire.⁴

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and can fall as well as rise. You may get back less than the amount invested.

An investment in equities will not provide the security of capital associated with a deposit account with a bank or building society.

⁴ The ILC has calculated that if a person received professional financial advice between 2001 and 2006 it resulted, on average, in them being £47,706 better off in terms of pensions and financial assets once fees and charges had been taken into account in 2014/15. (What it’s worth – revisiting the value of financial advice, ILC, November 2019).

As well as the kind of value you can measure in pounds and pence, there are also many non-tangible benefits to receiving financial advice, particularly when it comes to peace of mind.

Research⁶ has shown that the key non-financial benefits are as follows:

Confidence

Knowing that you have a clear, detailed plan of how you will achieve your long-term goals – particularly for your retirement – gives financial confidence.

Financial literacy and capability

This comes through interaction with a financial adviser. They can help you get a better grasp of the world of finance (which can often be complicated), as well as understand the balance between risks and rewards when saving and investing for the future.

Control

Feeling you are more in control of your money, other than just letting things happen, can give a strong sense of relief. This is particularly the case when you know your finances are being reviewed regularly by an expert, who can work with you to make the best decisions to match your goals.

Reassurance

Knowing that you’re ‘doing the right thing’ by consulting an expert helps avoid concerns about whether you’re making the best decisions for you and your circumstances. You’ll know whether you’re on track to meet your goals and whether you’re missing out on any opportunities.

Fewer worries

The research shows that people who take financial advice worry less about their money. This peace of mind and feeling of security comes partly from acting on the advice you’re given and partly from knowing you’ve acted to safeguard your future.

The overwhelming majority of those who take financial advice have a good experience.

9 in 10 people are satisfied with the advice they received and the vast majority decide to go with their adviser’s recommendations.⁷

And here’s the final word from the ILC, which is an independent organisation that does not give financial advice:

“Since advice has clear benefits for customers, it is a shame more people do not use it.”

^{6, 7} Peace of mind: Understanding the non-financial benefits of financial advice, ILC, November 2020

Many of the strongest benefits of financial advice can only be realised if you have an ongoing, trusted relationship with your adviser.

For example, if you just have a one- off recommendation – perhaps about an investment – you may end up making unwise decisions through periods of stock-market volatility, or you won’t be able to adjust your plan to suit your changing circumstances.

A good adviser will not only provide you with a full financial advice service, but will also identify areas where other professional support could be valuable and introduce trusted experts to help.

For example, this could be in areas such as writing and updating a Will, other legal services, specialist insurance needs or tax services.

The fact that an adviser can give you confidence – such as the confidence to invest at the right level of risk for you, instead of keeping all your money in cash – is one of the most valuable aspects there is.

However, before they start talking to you about investments, returns and tax, they will take time to understand you as an individual, as well as your family, to find out what your goals and objectives are.

Knowing that your finances are on track to help you achieve them, and that you have access to someone you trust who knows you and your family, is really important.

That’s the kind of thing that helps you sleep at night.

Wills are not regulated by the Financial Conduct Authority and the writing of Wills is a separate and distinct service to those offered by SJP.