I'm getting to that age where I really need to think about what to do with my money when I retire. The pension pot isn't huge, but should be enough to keep me housed, warm and fed.... I think. And I've a few years of earning left (min 5, Max 10) that I can keep putting in money.
I am, I'll admit, a bit clueless when it comes to finances, and the options available to me to seem confusing and vague.
I clearly need some sound financial advice.
So, how do I make sure the IFA I go to is the right person for me? What are the things to lookout for, both good and bad?
Is there an equivalent place to STW for money that I can go to without fear of mockery and derision?
I'm not looking for any financial advice directly, just how to select the right person to talk to. Any knowledge shared gladly received.
I don't have an answer to your question but I like Meaningful Money and James Shack on Youtube for general financial advise. Both have lots of video's regarding pension/retirement advise.
I'm not really a fan of financial advisors, I've seen relatives receive poor advice and their fees will eat into your investments.
As above there is a wealth of information out there (I like James Shack too), you should educate yourself on it whether you decide to use an IFA or not. If you do decide to use an IFA then being armed with knowledge will help you decide if they are right for you.
At very least understanding where your current pension is invested, what fees it has, and whether that is appropriate for retiring in 5-10 years should be a priority.
Duplicate post, this site!
I've just turned 60 & have dropped to a 4 day week for a couple of years before retiring.
I wanted to consolidate 3 old pension pots into a sipp to prepare for retirement keeping my drawdown options flexible to provide an income to get me to state pension age of 67
Pensionwise was useful & free
Martin Lewis website was full of useful info
Unbiased were not very unbiased (only suggested one IFA) who I went see for a free consultation but they didn't fill me with confidence & wanted >£3k in fees to consolidate my pensions - I decided to do it myself & opened an Interactive investor sipp, all was straightforward & I've no regrets.
Drop me a message if you want a referral link to ii.
OP, please make sure you FULLY understand the real cost of an IFA in £ terms rather than merely in % terms.
For the huge majority of people, the information is in the public domain and is relatively simple to get access to.
What's important is to understand your objectives and future needs, understand wrappers and understand what risk level you're happy with.
If you haven't done it, you need to create a spreadsheet encompassing this to give yourself clarity.
All of the above shouldn't need the huge cost of an IFA.
Yes, you can DIY but not everyone is happy to. You can service your own car too, there's loads of videos on line for that. And, unpopular as it sounds as a regular reader of the 'How much do I need to retire?' thread I'm not convinced that a self selecting group of recently retired MTBers are quite as sorted as they think, yes their pensions are serving them admirably now but in 20 or 25 years time, I worry some will be running out and wish they'd been more careful or taken advice.
There's also whenever a thread like this is posted a bit of a rush from those that self-manage, telling how easy it is and only a fool would PAY someone to do it for them, so much so that as someone who isn't confident to make the right choices, lacks the time to research it all properly, doesn't know the implications of future potential IHT changes, etc., etc., agonises over whether to post at all because I'll just be called a fool again. I don't know how many others feel the same and so whether you get a real balanced answer. Vis a vis, asking for help to choose an IFA and up to me starting this post the first 4 answers are telling you not to.
So. To answer the question asked; I asked around a few places, including in my cycling club which had a few high net worth individuals (Surrey cyclists, who knew!) and from that spoke to a shortlist of recommendations. In the end I chose a firm with a premises and a history, and the adviser there being not too old (so will be retiring themselves and passing the account on to someone I didn't connect to) and dare i say it, not too young. So, talk to a few and see which one listens to you and understands your assumptions, plans, aspirations, etc. I 'knew' fairly quickly which of the two on the very shortlist I was considering and then looked at fee structures. I also knew which it wasn't going to be.
Yes, I paid a sum for the survey and recommendations and they are taking a % on the investments, which is costing me money vs DIY. but I consider it worth paying. As is clear OMMV.
And don't be afraid to argue and challenge. They are making a cut on your money so make them work for it, and they may recommend additional investments too but if you can't afford them don't take them (not mis-selling, rather 'this is your projections, but if you put some more in this is the difference it makes' - and I am savvy enough to be able to check the maths on that)
So, how do I make sure the IFA I go to is the right person for me? What are the things to lookout for, both good and bad?
I'm not looking for any financial advice directly, just how to select the right person to talk to. Any knowledge shared gladly received
As is so aften the case, many of the replies above haven't actually answered the question that ( I think ) the OP actually asked. < Exc JohnVwhose past I didn't see before posting here>And the reason for that is covered in those very same answers.
Unless you know / can learn a reasonable amount about it yourself then it's very difficult to know if an FA is providing value. Like so many things in life, you need a recommendation from someone you trust with good financial knowledge. Ask them for a recommendation or a contact who had a recommendation.
The problem you'll have is that many people will make a recommendation based on lack of knowledge. They don't know enough to know they're being ripped off. They might happily say X is excellent and made me y amount of money, but if they don't understand finance then it's worthless.
My mum for example is paying an FA about 2% PA to manage a small portfolio which includes some ridiculous bond and an ISA. She is well happy with it but the fact is that the FA made far more over the last 6 years than she did.
Apart from recommendations, the other ( not very good) option is to force yourself to learn a bit about a particular area and then discuss that with them without letting them know you know... Are they bullshitting you? Does what they day tie in with what you know? Are they evading questions? If the answers are positive then perhaps you can trust them with your finances.
I'm not really a fan of financial advisors, I've seen relatives receive poor advice and their fees will eat into your investments.
Mainly agree
As above there is a wealth of information out there (I like James Shack too), you should educate yourself on it whether you decide to use an IFA or not. If you do decide to use an IFA then being armed with knowledge will help you decide if they are right for you.
At very least understanding where your current pension is invested, what fees it has, and whether that is appropriate for retiring in 5-10 years should be a priority.
Totally agree
decided to do it myself & opened an Interactive investor sipp, all was straightforward& I've no regrets.
Totally agree
OP, please make sure you FULLY understand the real cost of an IFA in £ terms rather than merely in % terms.
Totally agree
and understand what risk level you're happy with
This is one I would be careful with. <IMHO>Bear in mind that when people talk about lower risk investments what they mean is the risk of it tanking is low. What they probably won't tell you is that the risk of it making a very mediocre return is actually very high and that if your goal is to get a decent return over a long period then " low risk " investments are actually very high risk </ IMHO>
Keen to get others views on this last point.
Theotherjohnv makes a good point here:
bit of a rush from those that self-manage, telling how easy it is and only a fool would PAY someone to do it for them,
I just want to qualify/ correct it. I self manage my finances and will continue to do so. There is no way I would hand it all over to an FA to manage, BUT I sure as hell will engage one at the time to tell me what they know, pick holes in my plan and offer advice on the other bits I need. The thing is that I will independently check and challenge everything he says.
I will use their knowledge to add to mine. I will use my knowledge to assess theirs and then happily take on the good bits of what they say. I will happily pay them for that knowledge.
But I won't blindly pay and trust them
The OP however probably doesn't want to go through that shit, so he has a challenge. Which I think is best done by finding an ( informed and c*****) acquaintance who has and aski him
I’ve got one, and I’m paying for their service. As mentioned above, you can do it yourself, like most things in life, or pay someone to do it, who does it for a living. I was in a particularly chaotic part of my life though, coming up to 55 and losing both parents, and Mrs Rocks remaining parent in the space of 18months. So we had inheritance to manage, and where best to put that. We met two recommended Advisors and one I gelled with, so went with him. Consolidated some old workplace pensions and got excellent advice on tax minimisation. So that paid for itself in a time of confusion. I’m currently on a three-day contract with my employer, and will probably leave at the end of this year and start to draw from the pension. I think, at that point, the value of the IFA may be questionable, so that might be the time for me to leave them.
Is it good value, it doesn’t feel it tbh, but had I not gone to one, I would have been in a much worse financial position now. So I suppose it is good value. They didn’t do anything magic, but good advice and clarity was worth it when I couldn’t think straight for myself.
On that last point above, one of my previous workplace pensions that was looked had had started “lifestyling”, effectively moved into safe assets, but wasn’t going to grow much better than a cash ISA. As above, it’s very safe to put cash under the mattress, but it won’t be worth anything in ten years.
TL:DR. Ask around and get recommendations. A decent IFA should really offer a free overview meeting. See who you gel with and gets what you are looking for.
Vis a vis, asking for help to choose an IFA and up to me starting this post the first 4 answers are telling you not to.
I didn't tell them not to. I said I didn't like the ones I had seen and that you need to educate yourself anyway, whichever route you choose.
About 30 years ago I used an IFA to set up a mortgage and was talked into an endowment and a whole life insurance policy.
In retrospect the advisor selected products that gave him the highest commission rather than those that fitted my needs. Endowments were just starting to be seriously questioned at the time. I was mid-20s with no dependents so the whole life cover was over the top.
I was royally ripped off and it was made worse by the fact that the advisor was the brother of a close friend so I thought I could trust him. He even got me to install a network linking their offices PC's together and allowing them to share a printer. I had to get the train from Reading to London to do that and spent a whole Saturday doing it. In return I got bought a curry - no refund of the train ticket or any other compensation.
After a few years I cashed in the endowment and moved to an offset mortgage which worked brilliantly for me. I researched that myself in a few hours and it saved me thousands in interest payments.
The whole life thing ran for maybe ten years until I reviewed my direct debits and questioned what I was getting. It was very expensive and I got better cover for less than half the price after a bit of internet research.
I am sure that there may be honest IFA's out there who genuinely try to do the best for clients but for the average person I think spending time researching the options yourself is a far better choice.