It is no secret that the gap between those with access to affordable financial advice and those without has only gotten worse in recent years, or that self-employed workers are at risk because the majority are not saving adequately for retirement.
According to research from Fidelity, almost two in three self-employed people admitted they had no pension savings, compared to only 32 per cent of employed people.
And only 20 per cent had invested in stocks and shares, with Isas being the most popular investment vehicle used by 39 per cent of self-employed people.
But with more solutions becoming available, such as a robo-advice service designed specifically for the self-employed and freelancers expected to launch soon, there is hope of bridging the advice gap by increasing access for those that are self-employed.
But aside from saving into a pension, what else can self-employed people do to boost their savings for the future?
The reality is that investment options for the self-employed are the same as if they were employed, according to Adrian Lowcock, head of personal investing at Willis Owen.
However, the client’s circumstances are materially different, which can have a big impact on the type of investment products they might use.
The first crucial point self-employed clients need to consider is cash flow because their work might not be as regular and knowing when they will get paid for work is less certain, suggests Mr Lowcock.
He says: “They’ll [also] need to plan to pay any tax bills which might be due, review their national insurance contributions and make sure they have built up the qualifying years."
Building a portfolio
Once cash flow, tax and national insurance contributions have been accounted for, it is time to consider investing.
“In terms of investment, a diversified lower-risk, multi-asset portfolio will protect from market volatility and serve to allow cash to be available to top-up living expense budgets if a leaner month arrives,” says Tom Sparke, investment director at GDIM, a discretionary fund management firm in Cambridge.
He adds: “An actively-managed portfolio can help to mitigate large swings in values and ensure that withdrawal is appropriate as and when the time comes, but that will also help to grow in value."
Since cash flow is potentially an issue, an Isa would be a preferential place to start with, points out Mr Lowcock.
He explains: “This is because they offer significant flexibility and accessibility.
“So if things do get tough and the self-employed need to tap into savings, at least they have access to the money if they need it.”
He adds: “Of course, to avoid this it would make sense for most self-employed [clients] to have a decent amount of cash savings – I would suggest around six months of normal income.
“This would help smooth out their cash flow and maintain a more regular income.”