The “free” financial review

There’s something wrong with my car. There is an engine warning sign came on first. Then the Add AdBlue sign came on. Despite putting about 15 litres of the stuff in, it won’t go off. I brought the car to my mechanic. He couldn’t fix it and said he doesn’t have the equipment required to see exactly what the issue is and what needs to be fixed. He said I have to bring it to Audi where they could run a full diagnostic test on it.

Luckily the Audi centre is 200 yards from my office, so it wasn’t out of the way. It took 2 weeks to get an appointment though but that day has finally come so I dopped it over.  A fella came out to explain the process and that there would be a full service and tyre check on the car. I explained I just want the AdBlue issue fixed but was told that they have to do it. Here is what they came back with:

  1. AdBlue waring issue
  2. Front brake discs to be replaced
  3. Rear brake discs to be replaced
  4. New front suspension
  5. Wheel alignment after suspension repairs

I had my brake pads replaced a year ago, my car was serviced three months ago and I don’t do much mileage. But they managed to find an additional €1,800 worth of work on top of the work that I dropped it in for (which cost €1,500 anyway!)?

Free financial review

It reminds me of the free financial review that I still see being offered by some advisors and banks. I used to do them myself. There is one thing you can be guaranteed from a free financial review. There will always be a problem. Your pension is invested in the wrong fund that can only be fixed by moving to a new provider (and the commission that goes with it). The life cover you have isn’t sufficient and you need more. You don’t have critical illness cover, your income protection isn’t the absolute maximum and you need to max it out.

But what do you expect? The advisor isn’t getting paid anything to do the review for you. It’s free! He needs to sell you something to get paid.

Paid financial review

The other option is that you pay someone to review your finances for you. If they don’t have to sell you anything to get paid, you will get an honest opinion on the state of your finances.

Instead of being told you need to move your pension to a new provider, you may have a conversation about investment strategy and risk versus return. You may decide to stay in your existing fund (most funds do just fine over the long term) or a simple fund switch to a more equity based fund may do they trick. Your risk benefits may be adequate, so that in the unlikely event that you need to claim, your families future will be protected but they won’t be getting wealthy off your demise. But if you want to pay more for more cover, this is the cost so judge for yourself.

As an advisor, I love telling people “just keep doing what you’re doing and you’ll be fine.” You will never get that with a free financial review.

Steven Barrett

25 September 2023