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Should You Seek Financial Advice?
Having lived in Germany for seven years, I'd like to make a small comparison before getting to the point.
While Germans are all individuals like the rest of us, their culture has developed a few very different ways of looking at things.
As far as I'm concerned, if I want to call myself Toasted T Cake then that's my right, and I'll pay less than £40 to do so by deed poll.
In Germany, the state and its citizens find that strange and perhaps a bit messy. They can't have everyone going round changing their names. What if they call themselves “Toasted T Cake” or something? And how will they keep track and know what to call their own children if they keep changing their names?
It's much tidier if the state owns your name.
Professions are believed without question
I think it's definitely an unfair stereotype to say that their heads are “organised” differently to ours, or even that the Germans are different to us, but certainly some of the other structures that have arisen over time in Germany are more traditional or rigid.
Only chemists can dispense paracetamol still (for ten times the price of our supermarkets). And, if you've just got a degree, well done, you've just pigeon-holed yourself. Good luck to you if you want to move into a job in a different field in Germany.
And now let's take their view of financial advice – which finally brings me to my rambling point.
It could just be a reflection of the Germans I hang around with rather than a structure that's arisen by chance. But, in my experience, more Germans are inclined to believe that financial advisers are all capable professionals whose fees and commission charges are surely worth paying – whatever they are.
In the UK, scepticism of financial advice and its dispensers is pretty much the norm.
The reality is that there are capable and inept financial advisers as with any other profession or trade. I've met both types.
And there are those who overcharge or oversell, and there are those who treat you fairly.
I think it's also fair to say that financial advisers have high costs imposed on them by the regulator, insurance, admin support and more. Their customers naturally have to pay for this. This means that the price of advice is often prohibitive, particularly if you don't have a fair-sized pot or high income.
So you need to ensure that not just the advice is right, but the overall price is too.
In addition, financial advice is not black and white. Each adviser has his or her own opinion, so it makes sense to get several.
Arm yourself with a lot of questions
So I would say that the UK consumer appears to have the more healthy starting attitude.
If you approach financial advice/advisers with some scepticism – but not a closed mind – then the adviser will have to work harder to convince you and you're less likely to sign up to the wrong products, to high costs – or to the wrong adviser.
I once gave a list of five penetrating questions to a German to ask her financial adviser. I got the questions from a UK financial adviser's own website.
So if you're thinking of getting financial advice, you should google “questions ask financial adviser uk” and take a look at some of the results. Add to your search terms anything relevant to you, be it “pension” or “P2P lending”.
Note that most financial advisers will not be ready to advise on peer-to-peer lending yet, as I explained in Financial Advisers Steadily Switching On To P2P Lending, so you'll have to contact quite a few to get a good hit. Please let us know the details of any advisers you find who are willing to advise on P2P by emailing firstname.lastname@example.org.
UK culture isn't all that bad
When my German asked her financial adviser the five penetrating questions, he was furious and offended that she didn't trust him. He didn't answer the questions and she felt bad, so she signed up to the investment anyway.
The deal she signed was, as you might expect, very expensive for her.
I think it's best to maintain your British or Irish scepticism.
By the way, someone really did change their name to Toasted T Cake. Others have chosen Jellyfish McSaveloy, Nineteen Sixty-Eight, Hong Kong Phooey, Daddy Fantastic, One-One-Eight Taxi, Ting A Ling, Huggy Bear, Donald Duck, Jojo Magicspacemonkey and James Bond.