Different kinds of financial advice to suit different needs

4 min read 27 Apr 23

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You may not have noticed, but the world of financial advice has changed dramatically over the past few years. Technological advances have brought new ways of offering and accessing advice. And many of us are more comfortable with digital communications after Covid-19 when face-to-face interaction was off-limits due to social distancing and travel restrictions.

Having access to more types of advice offers greater numbers of people new ways to get the help needed to plan their financial lives – and at a wider range of costs. So whether you’re wondering how to invest, how to prepare for retirement, or how to buy that house, you have more options than ever before for getting the help you need.

Here is more information to help familiarise you with the main types of advice available.

Robo advice is typically a low-cost digital service that uses technology to automate investing. It’s called "robo" because there’s usually no human interaction and it’s accessed through an app or online.

In most cases, these apps will begin by asking you a few basic questions about your goals. These are generally questions about how much are you looking to invest, how long for and what level of risk you’re willing and able to take.

The computer software will then use an algorithm to suggest an investment strategy that matches your answers to the questions. Robo advice is often used for more simple financial decisions, as it doesn’t take your personal circumstances into consideration or look at the bigger picture. If you’re looking for guidance on more complicated aspects of your finances like retirement planning, estate planning or have complicated tax arrangements, it might not be right for you.

Hybrid advice usually combines automated digital tools with oversight by a financial adviser. Hence the term ‘hybrid’ as it’s mixing two different types of activity – human and digital. As there is an added 'human' element this service is typically more expensive than Robo advice. With this type of advice, it’s likely that you’d be asked to begin by filling in a questionnaire online detailing your needs, how much risk you’re willing to take and your personal goals. This information will then be reviewed by a financial adviser who’ll make recommendations based on your answers. 

Essentially you still have a financial adviser to support you and make recommendations, but a lot of the more admin-based activity is done online, which can save both you and the adviser time.

Hybrid advice is often used for investors with more complicated needs like planning for their retirement, receiving advice on their pensions, or creating investment portfolios.

Traditional financial advice usually takes the form of a financial adviser talking you through your needs and supporting you at every stage of the advice process. So for example, they’ll carry out a fact find alongside you, whether that’s over the phone, by video call or face-to-face. They’ll discuss your attitude to risk and get to know your personal circumstances. 

Financial advisers look at your financial situation as a whole, rather than one or two parts of it. They’ll then work with you to create a tailored plan, make sure everything is set up and usually be on hand to discuss your plans, if and when they change in the future. Because of the tailored nature of traditional financial advice and an often ongoing relationship, this service usually costs more than robo or hybrid advice.

With the right type of advice, you can better plan for your financial future. But before you decide on which way or ways to access financial advice, here are a few key questions to think about:

  • What are your financial needs? For example, are you looking to set up an ISA to save some money or are you retiring shortly and looking for the best way to access your pension? Whether your needs are relatively simple or complicated could help you decide the best type of advice for you.
  • Is cost a big factor in your decision making? Robo advice is often the cheapest option because you won’t be provided with tailored recommendations based on your circumstances and on the flip side traditional advice is likely to be more costly due to the human interaction and the fact your financial adviser will recommend specific plans to achieve your goals. The cost of hybrid advice is usually somewhere in between.
  • Do you feel confident and comfortable looking at financial products and services? If you feel comfortable with financial markets and investing it may be that a digital solution would suit you, however, if you’re unsure where to start traditional advice might be more suited to your needs.
  • Are you looking for ongoing help? If you’re looking for regular financial advice it may be worth considering a more traditional route or potentially a hybrid advice as these often cater for annual financial reviews to see if you’re still on track for your goals and discuss whether your needs have changed.
  • Do you have any recommendations from friends or family?  Getting recommendations from people you trust and talking to them about their financial planning and if they’ve used any of these types of advice might help you with your decisions. While your needs are unlikely to be exactly the same as someone else’s getting recommendations is often a good place to start.

These are just some key areas to think about, and this is not advice to a particular course of action.

If you don’t already have an adviser but would like to explore traditional advice, you can find a financial adviser that's right for you here. If you’d like to see what robo and hybrid services are available there are a range of comparison sites available that will show you different providers and what products and services they offer.

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