5 useful ways a financial planner can help you manage your investments

Whether you’ve been investing for a long time or you’re just thinking about getting started, keeping up to date with the markets can be time-consuming and complicated.

So, DIY investing could potentially lead to misunderstandings and costly mistakes.

In contrast, working with a financial planner could offer financial and wellbeing benefits. According to research published in FTAdviser, people who seek help from a financial professional generally have a better quality of life and more financial confidence.

Read on to find out five ways a financial planner can help you manage your investments and achieve your long-term financial goals.

1. Boost your financial literacy and confidence

Learning how to build a strong investment portfolio can be challenging.

There’s a wealth of information to keep track of and interpret, and changes can occur rapidly. When you first start investing, this may feel overwhelming and confusing.

In fact, understanding how the markets react to economic, political, and social developments can take years of practice and experience.

So, it’s not surprising that, according to Lloyds Bank, around 38% of people choose not to invest because they don’t understand the complicated investment jargon.

To overcome this barrier, consider seeking help from a financial planner. You could benefit from their experience and knowledge while building your own financial literacy and confidence.

You’ll have someone to ask questions and to help you create a personalised investment plan based on achievable long-term goals.

A financial planner can also ensure that you understand investment opportunities before you commit to them, which could reduce the risk of making costly mistakes.

Finally, working with a financial professional could provide invaluable support during periods of market volatility.

It may be difficult to hold your nerve if your investments fall in value, especially if you’re a novice. The right support could help you to remain calm, avoid letting emotions rule your decisions, and focus on your long-term goals.

2. Gain access to valuable investment opportunities

A financial planner may be able to share investment opportunities that you couldn’t otherwise access.

Not all investments are available on self-directed trading platforms. So, by going it alone, you could be missing out on an opportunity that is a great fit for your investment goals.

By building a relationship with you over time and drawing on years of experience, your financial planner can tailor their suggestions to your specific interests. For example, if you’re retiring and looking for investments that can provide a regular income, your planner could suggest appropriate investments in line with your tolerance for risk.

3. Help you balance risk effectively

Effectively balancing risk is an important foundation of investing.

Unfortunately, determining what level of risk is right for you and aligning this with your financial goals can be challenging for new investors – especially as your attitude to risk might change over time.

The level of return you achieve on your investment is often linked to the amount of risk you adopt. So, taking on excessive risk could harm your portfolio, while being too risk-averse could result in less growth, which could harm your financial plan.

As an investment professional, a planner can continually review your portfolio and support you in adjusting your strategy if your attitude to risk changes over time. This could help you to meet your future financial goals.

4. Showing you how to invest tax-efficiently

Dividends might form an important part of your investment income. These are payments made to shareholders, usually quarterly, by dividend-paying companies.

You might have to pay tax on some of the dividends you receive. However, you don’t pay tax on:

• Dividends that fall within your Personal Allowance, which is £12,570 in 2023/24
• Dividends from shares that are held in an ISA
• Dividends that fall within your Dividend Allowance, which is £1,000 in 2023/24 (falling to £500 in 2024/25).

In addition, if you sell or “dispose of” certain investments, you may have to pay Capital Gains Tax (CGT) if you make a profit. The amount of CGT you’ll pay will depend on the size of your gain and your Income Tax band.

Misunderstanding your tax obligations could mean you end up paying more tax than you need to.

Meanwhile, a financial planner could show you how to invest tax-efficiently – for example, by suggesting that you invest through a Stocks and Shares ISA. This type of tax-efficient account allows you to invest without facing Income Tax, CGT, or Dividend Tax on any returns generated.

5. Teaching you the importance of diversification

It’s important to remember that market volatility is inevitable. As an investor, you’re likely to see short-term fluctuations as the markets react to geopolitical changes.

By spreading your money between different types of asset classes, industries, sectors, regions, and countries – “diversifying” – you could help to protect your portfolio during periods of volatility. As investments in these different categories will perform differently at various times, some funds in your portfolio may fall in value while others gain.

So, diversification is a crucial part of adopting a long-term attitude to investing. Over time, it helps to balance risk so that your entire portfolio ideally doesn’t lose value all at once.

When selecting investments, you may be tempted to follow the herd or stick to one sector you’re familiar with. A professional can help make sure that your portfolio is diversified and that you’re carefully balancing risk.

Get in touch

If you have further questions about how to manage your investments effectively, we can help.

Please get in touch either by email at helpme@aspirellp.co.uk or by calling 0117 9303510.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate tax planning.