Money advice demystified: what do financial advisers and wealth managers do?

Many of us will be familiar with so-called financial phobia. The world of finance can often seem intimidating, deterring people from planning their finances and ensuring they are on track to meet their short- and long-term life goals. But there is another, more specific phenomenon that can prevent people from seeking professional help: “financial adviser anxiety”. The condition was first labelled as such in a report produced by Australia’s National Seniors Productive Ageing Centre and published with the Australian government’s department of health and ageing.

Financial adviser anxiety can stem from a fear of being judged about your lack of financial knowledge or the current state of your finances. It can encompass feelings of shame or guilt, and also a discomfort at the prospect of sharing personal information. The industry itself arguably hasn’t always helped itself – all too often presenting an image of sombre advisers dressed in suits and talking in jargon.

However, in practice, financial advisers and wealth managers can be much more human and approachable than people might think. “This may be a financial business, but first and foremost it is a people business,” says John Moseley, a financial planner at the investment firm Charles Stanley. “The human side of my role is hugely important, because I’m helping people to plan their finances for life – or if they don’t have a plan, helping them to construct one.”

Given how emotive money can be for people, perhaps it’s inevitable that financial advisers need to possess emotional intelligence. Even more so, given that money issues often come to the fore during difficult times. “[People] put a great deal of trust in us, and when things happen unexpectedly and they have to make changes to their plans – for example, their partner needs to go into care – they know they can rely on us to help them,” says Moseley. “Some of my clients have been with me for over 20 years.”

Translating financial jargon into something that clients with limited financial knowledge can understand can be challenging. “In terms of financial regulations, everything is written in a very jargonistic way,” says Moseley. “My role is to understand the jargon and interpret it in a way that is completely understandable and relatable to the individual.”

Wealth management is another area of finance that can leave people feeling daunted. Again, the most effective way of dispelling the mystique and seeming opaqueness is creating a human relationship founded on trust.

Emma Foden-Pattinson, an investment manager at Charles Stanley, highlights the importance of getting to know clients. “The first thing we do with a new client is to ask a lot of questions to get that in-depth understanding of what they want their money to do, as well as what risks they’re willing to take.”

Woman in professional suit with briefcase standing on large gold coin

Given that risk is such a central factor in so many financial decisions, trust is all the more important. Foden-Pattinson says this helps with managing people’s expectations. “When we experience periods of volatility, having an in-depth understanding of a client’s risk tolerance can help to manage their expectations around potential returns. For instance, a younger client who’s still in the wealth accumulation stage might be more comfortable taking a greater level of risk, because they may have a longer timeframe before needing to draw on the funds, and therefore longer to allow the market to recover.

“Delegating the responsibility to someone you genuinely trust gives you a huge amount of comfort knowing that there is someone there whose day job is to look at your portfolio and ensure it is positioned in line with your best interests and ensure that you have a robust financial plan in place without having to worry about it.”

A big part of a financial adviser’s role is to ask questions about subjects that clients might not have considered, challenge clients’ assumptions, and bring alternative insights to the table. Their breadth and depth of financial knowledge means they can highlight things that their clients may not have thought about, or have preconceived ideas about, and can identify risks and opportunities they might not have been aware of. One way of doing this is by exploring “what if?” scenarios.

“A client might decide they want to retire at 60, so we will run through various scenarios of what could happen if they retired at 60,” says Moseley. “What will their spending look like? What one-off costs are they going to have? If they have a partner, what happens if they are no longer around when they reach 60? Some clients have mortgages and think they will sell their business to pay it off. What if you can’t sell the business? Recently a few of my clients have considered drawing money out of their pension pots to help their children pay their mortgages because they can’t afford the higher interest rates. Will they still have enough to live on?”

And while it’s obviously better to start financial planning early in life, it’s never too late. “We have clients who are in their 80s who are considering the life of their investment portfolio beyond their [own] lifespan,” says Foden-Pattinson. “They want to be sure that it works as hard as it can, so that when it gets passed on it’s set up in a way that makes it easily divisible for their children and grandchildren – for example, putting it in a discretionary trust that’s managed to make sure it’s divided fairly.”

One of the emerging changes in the financial advice sector is its increasing diversity, with growing numbers of women, younger people, people from minority backgrounds, and career changers from other industry sectors choosing to make a career in financial planning. As John Moseley says: “Our clients are all very different, so diversity in the industry is a good thing. Some advisers specialise in areas such as tax, investments and pensions, and to have all that specialist knowledge within one company, working as a team, gives clients confidence. As the profession becomes more reflective of society, increasingly it will become second nature for people to talk to a financial adviser.”

If you want to find out how Charles Stanley could help you, request a call back from an adviser.

The value of investments can fall as well as rise. Investors may get back less than invested. Charles Stanley & Co Limited is authorised and regulated by the Financial Conduct Authority.

The Guardian