North East Life - May 2008
Contributor : Jonathan Fry

Mmm...interesting. Save for the overworked alliteration to attract your "interest", the inquiry is all-too-typical of those received every day by financial services providers across the country.

And, sadly, it also typifies the unmerited faith too many of us place in the institutions we have been brought up to trust, namely banks, building societies and investment and insurance providers.

As we now know to our cost, even the most solid and outwardly dependable institutions can fail - Equitable Life and Northern Rock to name but two.

Whether you are looking for a loan to buy your house - the biggest financial commitment most of us make during our lives - to fund school or university fees, to pay for a holiday or buy a car, or just to clear the debts on several credit cards, it is vitally important to find the product that matches your means now and will continue to do so throughout its term.

It is equally if not more important to gather the right information when investing in longer-term savings plans or pensions, or in planning for future expenditure, such as education fees and residential or nursing care. If you are fortunate enough to have assets that generate an income, or may do so in future, or if you are likely to inherit a significant sum through the death of a loved one, you need to take advice on how to limit your tax responsibility and ensure that your cash continues to work for you in an environment that will not, at the whim of the global banking or investment market, or through an unforeseen institutional failure, see your savings wiped out.

Sound financial management does not rely on clairvoyance. For all some warning signs were apparent, even the most astute of advisers could not have predicted with accuracy the dramatic demise of Northern Rock. Equally, nobody can say with any certainty that other similarly-celebrated and high profile failures will not occur in future.

However, the first rule of wealth preservation - my business - is to limit the exposure to losses, whether they be through a reduction in interest rates, a downturn in the value of shares or the collapse of a major financial institution. And this is best achieved by spreading the risk across a portfolio of products.

The potential investor who chooses to go directly to the counter or the switchboard of a single commercial organisation, such as a bank or insurer, with the question: "I'm interested in giving you my savings, can you help?" will receive only one, very positive response. The visit or the call will probably end with the investor having opened an account or several accounts with the one provider - all the eggs in a variety or wrappings, but in one basket.

Whether or not the products were the best available to suit that particular investor will almost certainly not have been discussed. Which personal adviser working for one financial institution is ever going to say that the client before them will get a better deal by going next door? None, I'll wager.

Not surprisingly, my very strong advice is to seek the assistance of an independent financial adviser before handing any of your hard-earned or easily-come-by cash over to an investment custodian.

Discuss your individual circumstances, your immediate and long-term financial obligations, your ambitions and objectives for yourself and your family and the levels of growth and risk you are willing to accept.

Only then will you be in the position place your money in products carefully selected to suit you alone from the many thousands that are available from a myriad of providers, all of whom want to say, "Yes, we're interested."

© North East Life 2008