Why Free Financial Advice Can Cost You: The Value of Professional Guidance

These days, many people are focusing more on their finances, and with good reason. Rising costs, increased job insecurity and the prospect of funding decades of retirement living are just some of the factors that might keep you up at night. How can you make ends meet while also saving for the future?

If ever there was a time for financial advice, this is it. However, the challenge is knowing where to turn for such advice. Who’s credible? Who can you trust?

Let’s face it, free advice isn’t hard to find. Thanks to the internet, you have immediate access to a world of information on a litany of financial topics. There’s also the media, both traditional and social, inundating you with articles, blog posts and videos. Add to that your friends, family and maybe even your hairdresser, and it’s clear that anybody and everybody can have an opinion on what you should do with your money. Free financial advice is everywhere. But what about its quality?

As the saying goes, you get what you pay for. There’s a lot of questionable “free” advice floating through cyberspace. Some of it is well intentioned but misguided or non-specific, and others just downright inaccurate. Without proper understanding you really have no idea what is accurate and what is not.

You might also encounter breezy narratives and vague rules of thumb, like “own gold” or “buy and hold.” On their surface, simple stories offer certainty in an uncertain world. Despite their innate appeal, these simplified perspectives can prove dangerous to your financial health. Whether inaccurate, oversimplified or too generic to apply to individual circumstances, this type of “advice” positions money management as being easy. Of course, if it were easy to succeed financially, everyone would be wealthy, right?

In reality, financial decision-making is complex. What you do (or don’t do) as it relates to your finances can hugely impact your present and future well being. If you have a family or own a business, the complexity increases. Good wealth planning isn’t about churning out sound bites or video clips. It involves looking closely at your whole financial picture and how all the pieces connect, then developing coordinated, personalized strategies that fulfill your unique needs. It’s also about having a trusted coach by your side to help you get through the inevitable bad days when you’re liable to succumb to emotion and make poor decisions about your money.

That’s why so many people choose to work with a Financial Advisor. Advisors have the education, ongoing training, regulation and real-world experience to address your current financial goals and prepare you for the unexpected, while also building your wealth for the future. Although the advice isn’t free, you will get your money’s worth. Research suggests that financial advisors can contribute immensely to the client’s bottom line. A report by the research Centre CIRANO found the average household that worked with a financial advisor for 15 years or more had asset values 131% higher than an average “comparable” household without a financial advisor.

A report prepared by the Investment Funds Institute of Canada (IFIC) suggest that “a financial advisor can boost a saver’s retirement savings by as much as 60% and retirement consumption by as much as 25%”. This is just one of the many quantifiable benefits a financial advisor can provide to help clients navigate their finances to meet current and ongoing financial needs.

There is so much value in credible advice, far beyond and questionably even more important than market returns themselves.