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I've been researching financial advisors and have been looking at Money Saving expert. I'm working out how to choose one and who I can trust. In the words of my wife, "How can we trust a recommendation, when you need to ask someone who has retired, but their advisor will now be in their 90's..."? How do you choose and trust and advisor?
I was thinking of paying for advise from an independent advisor and also an advisor who gets a commission. My thoughts are the advisor who gets a commission will in some way be financially motivated to choose a product that performs well, and the independent will balance out with impartiality.
From yesterday's FT:
How to find a financial adviser
Search carefully and ask tough questions before you entrust professionals with your cash
https://www.ft.com/content/8c74bbb1-ef5e-47db-8506-6cab4a88466c
I've spoken with 2 recently free of charge, neither pushed me towards their services either. The first gave a few great ideas, the second confirmed them being great.
Difference with pensions is they may want to charge to cover their arse in case something changes in the future and there is an opportunity of recourse.
also an advisor who gets a commission
I don't think commission is legal any more.
I don’t think commission is legal any more
irrespective, it is an option with some advisors and some products.
IFAs will provide you with fair choices based on the information you have provided and what other insight they have. The final choice is yours. And that really has to be based upon what you know, what you have learned from your IFA, and hopefully your rational assessment of the factors that are important to you.
An IFA will only be looking at a narrow range of investments. There are 100's if not 1000's of potential investments and the IFA won't research them all.
Your details will be put into an algorithm which will then offer up some options.
When I told an IFA I had decided to self invest he asked me my choices. Fundsmith was one." Never heard of it " he said. !!!!
If you've a bit of time it's not rocket science doing some research yourself.
I don't like private pensions ,ISA's for me.
I don’t think commission is legal any more.
There's no such thing as commission any more. However, there will be a fee for advice and, with many providers/product, that fee is, entirely coincidentally, exactly the same as the old commission rate...
But IFAs are providing a service, and that service needs to be paid for somehow. You can either pay them for their time up-front, or pay them an ongoing fee that is usually linked to the value of your investment.
I don’t like private pensions ,ISA’s for me.
I won't be coming to you for retirement advice then.
I don’t like private pensions ,ISA’s for me.
Think of it as an ISA into which you can put twice as much per year, get the tax back on what you put in and then get 25% tax free at 55. The other 75% will be taxed when you retire which will be a lower net rate than when you're earning.
I've got a mix of ISA and pension. Currently about 50/50 but by retirement the pension fund will be about 75% and ISA 25%. ISA is the lump sum fund.
How does that sound to the other STWers?
When I told an IFA I had decided to self invest he asked me my choices. Fundsmith was one.” Never heard of it ” he said. !!!!
I'm not totally surprised by that..
The main thing you want from an IFA is guidance on how you structure your finances eg pension vs SIPPS, inheritance tax, saving for a deposit for your children on their first home etc.
You're not after the best choice of funds eg Fundsmith vs Scottish Mortgage Trust, should I go long on Amazon or short on Facebook etc?
Once you've figured out how much to save and where (eg Pension vs SIPP), they're more likely to suggest a managed portfolio with a large provider eg Aviva etc etc.
In fact, I'd be more worried if they did try and push specific funds / investments as, to me, this would be massive red flag. You only have to read the Sunday paper money sections - they're full of IFAs who pushed a 'great investment opportunity' which then went bust leaving the client with no pension at all.
I have one pension managed by an IFA who specialises in Wealth Management - they run a specific fund (via a big provider) and manage the investment choice for you. There are no 'big' names in there, it's all a mix of bonds / trackers in different markets - all ultra low cost and very diversified, quite possibly the most boring mix you could imagine.
I’ve got a mix of ISA and pension. Currently about 50/50 but by retirement the pension fund will be about 75% and ISA 25%. ISA is the lump sum fund.
How does that sound to the other STWers?
That doesn't sound like a bad plan as such. Personally I'd be putting most of my money into a pension to make the most of the tax break whilst it is still there but then I'm a higher tax rate payer AND I can afford to lock that money away for a decade or so. Your situation may be different.
Personally I’d be putting most of my money into a pension to make the most of the tax break whilst it is still there but then I’m a higher tax rate payer AND I can afford to lock that money away for a decade or so. Your situation may be different.
One thing my IFA did advise me on was that I was too pension heavy, which is a risk as you don't know what changes will be made to the rules and you can't take money out till you're 55. Whereas with ISAs you can access it immediately if they annouce a rule change etc.
Unbiased will point you at a local IFA.
Good luck, it's a shark pool.
My SIPP is with Intelligent Money so I do not use an IFA. I have a private client manager as part of my (very low) fee.
Slight tangent question - After a few job moves I now have a few different private pension pots, which I generally don't actively manage - with time ticking on I'm thinkingif transfering them all in one pot and taking an active interest in the funds via an online portal is the way to go?
Or would I get absolutely bent over for fees (or worse open myself up to fraud) and best off keeping the diversification?
Very easy to transfer pension pots, I moved a few old ones into one single SIPP just so its easier to keep track of / manage. The transfer is normally free.
With a transfer you phone up the new provider and tell them you want to transfer in another pension. They send you a form where you fill in the details of the old one. They then arrange the transfer direct with the old provider. All very painless.
If they're all defined contribution pots, you may as well move them into one place (like Hargreaves Lansdown, or Vanguard).
If you're happy to arrange it all yourself there should be no fees to move the money.
(and this is where Footflaps and I start discussing/arguing the pros and cons of active vs passive funds 😉 )
That doesn’t sound like a bad plan as such. Personally I’d be putting most of my money into a pension to make the most of the tax break whilst it is still there but then I’m a higher tax rate payer AND I can afford to lock that money away for a decade or so. Your situation may be different.
I know its currently quite ISA heavy, but I'm no longer contributing to it. I was slightly constrained by having a fairly poor pension scheme in a previous job, plus I was not higher rate at that stage, so anything I would have spent into pension went into the ISA instead. I guess I could "overpay" into the pension for a year and draw out from the ISA if I wanted to rebalance things.