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Why it’s important to separate a want from a need when it comes to financial advice

Have you ever wondered why some shops are laid out in the way they are?

For example, think of your local garden centre. All the things you “want” will be near the entrance – barbeques, and garden chairs, together with cute stuff like ornamental garden gnomes. That’s the stuff to catch your eye and open your wallet.

The things you actually “need” will be at the back. Lawnmowers and hedge trimmers – boring, utilitarian items that aren’t particularly exciting or eye-catching, but you can’t get by without them.

When it comes to financial planning, human nature suggests you’ll focus on your “wants”. But sometimes the less exciting things are necessary, so read on to find out how working with a financial planner can help you to retain a focus on these vital “needs”.

Financial planner as personal trainer

As a financial planner, I see my role as a lot more than giving you advice on your financial future.

In many ways the role of a financial professional is one of a behavioural coach, and the associated value that adds.

You could think of working with a financial planner like working with a personal trainer – though without the Lycra, treadmills, and puddle of sweat!

A personal trainer will work with you to put a training plan together to help you achieve a level of fitness you’re seeking. They will hold you to account and ensure you’re taking the necessary steps to help you meet your target.

In the same way, a financial planner will help you take the necessary financial steps to give you the best possible chance of achieving your goals and living the comfortable lifestyle you’ve worked hard for.

They will encourage you to cut out bad financial habits (perhaps all the things you “want”!) and develop positive behaviours to hit your targets (your needs).

Keeping you balanced

One key behavioural bad habit you should try to avoid is the perfectly understandable one of panicking in the light of bad investment news.

The natural temptation in the wake of a sudden market upheaval is to want to sell your assets before the fall gets any worse (there’s that “want” word again). It’s an action followed by many amateur investors, much to their financial detriment.

The correct reaction – what you “need” to do – is to hold firm and do nothing, or even to buy when others are selling. Any good investment plan will consider market crashes and accept they can happen.

Managing behaviour and preventing mistakes adds value many times over for the fees you pay for advice.

Quantifying the value of financial advice

Leading provider, Royal London, have done a lot of good work recently highlighting the value of working with a financial adviser rather than taking the DIY approach.

In 2019, they commissioned the International Longevity Centre (ILC) to carry out some research looking at the value of financial advice. The research revealed that people who took advice at the turn of the century were, on average, £47,000 better off 15 years later than those who didn’t.

Part of this was down to advisers helping clients choose the right products and investments to meet their needs, but much of this impact came from the adviser instilling good financial behaviours in their clients when it came to managing their money.

Good behaviours lead to strong feelings of financial and emotional wellbeing. In a separate survey, Royal London found that 62% of clients with an ongoing relationship with a financial adviser felt that advice helps them feel in control of their finances.

58% also said that access to financial expertise made them feel confident in their plans, and the same number confirmed that contact with a financial adviser gave them peace of mind.

The value of investment advice

Along similar lines to the Royal London research highlighted above, top investment company, Vanguard, developed a concept called “Adviser Alpha” that illustrated that investment advice can increase the value of your portfolio by 3% each year.

Alongside obvious factors like the construction of appropriate portfolios, and focus on the long-term, one of the key benefits they highlighted was making investment decisions in areas such as estate and retirement planning to meet your needs. There’s that word again!

Managing behaviours, and closing the behaviour gap

It’s the work financial planners do, identifying “needs” above “wants”, that really does help justify the fees charged.

Even the most detailed, researched, and robust financial plan won’t achieve the results it’s intended to if the client it’s designed for doesn’t follow it.

So, getting someone to adapt their financial behaviour helps close the gap between how they currently manage their financial situation and how they should. This is known as the “behaviour gap”.

Closing the gap, and thus increasing the chances of success for their plan, is one of the most valuable and, for me, rewarding services I provide.

The most valuable thing an adviser does is help you behave the way you are supposed to when it comes to your finances.

A final word about the power of “needs”

To my mind the BBC programme Dragon’s Den has gone off the boil recently, but in the early days it was a fascinating study of financial aspiration and money-making.

One pattern I noticed, which is very relevant to what you’ve read in this article, is that the ideas that really piqued the Dragons’ interest were those that addressed people’s needs, rather than their wants.

All the business experts, regardless of how they made their money, were aware that fulfilling needs is a key driver when it comes to financial success.

Get in touch

I can’t help you with your garden centre shopping, but when it comes to putting a financial plan together to help fulfil your financial needs, I can help you face your future with confidence.

To find out more, please give me a call on 07769 156 250.

Please note

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.


Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate school fees planning, taxation & Trust advice and Will writing.

The value of your investment 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.

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