Inheritance- what to do with it?

[Lostintheforesttoday]

Hi all. Posting here for traffic. I’ve just inherited some money from my parents - around £190,000 after taxes/ expenses. Please don’t tell me I’m lucky as I’m still really traumatised and devastated by my Mums fairly recent death (suicide) and I’d swap any amount of money to have her back, in a heartbeat.

But I can’t, so here I am, someone who has never had a pot to piss in before with that money and no fucking clue what to do with it. I have a house already that I don’t want to move from or change. I have some student debt I want to pay off, ( my own and my two eldest children’s) - around £20,000 total, plus I want to put some away so my youngest 2 DC (11 and 12) can go to Uni if they want.

Other than that I have no clue what to do with it. I’m currently Re-training for an NHS career but on a year off due to health issues. When there I lived on an NHS bursary and wages from my part time jobs. During the year off Uni I was living on my wages topped up by tax credits (that have now stopped).

I’m 41 but have no pension so am aware I need to do something about that. I know I should get some financial advice but find it very difficult to trust people tbh. I also have quite a history of MH problems (BPD and PTSD) and can be quite impulsive and not always very rational, and I’m scared I’m somehow going to blow it all on sod all or lose it all by making bad decisions. That really scares me as my Parents worked hard for that money and I’d feel like I was letting them down.

Does anyone have any words of wisdom or advice to offer. I feel completely out of my depth, and also that I don’t deserve it as I haven’t worked for it. I’m also worried that my ex husband will make a claim for some of it - we’ve been separated since 2008 due to his violence but are still not officially divorced as I could never afford it. I know my Mum hated him for what he did to us, and that she wanted to change her will in case something happened to me and he got my share (though she never got around to it).

Apologies for any spelling/ grammar errors - I’m on a very small and very crap phone!

And since your rather defensive over this I guess you are one of these

Flirtygirl

As we don't know where the OP lives and that she has some debts and possibly a mortgage to pay off, its certainly not anywhere nr 190k.

Basing advice on supposition is poor advice indeed.

The very first thing she needs to do is make a new Will and then grieve.

I agree with the first poster. Go with Hargreaves Lansdown. You can go in their recommended funds and do not need an IFA. They are a well run company with good people.

Avoid, avoid, avoid a company that starts "St. J.........."

@blueshoes yes, it enables one to help ask the right questions.

I wasn't in a dissimilar situation too op, grieving and vulnerable. My solicitor knew this and thought she could get one over me and do quick slap dash job.

People with legal knowledge on here helped me through understanding what she should be doing,how she should have been helping me, and I was able too then get another.

Telling a financial advisor your vulnerable and have mh issue's isn't such a wise idea at all.

Jasjas
I said not for the op benefit but in response to those on the thread pooing the idea that property can be found in that budget.

I agree the op needs to sort her divorce, do a will and get ifa.

RayneDance financial institutions and advisers are legally bound to meet a different standard of care if you tell them you’re a vulnerable customer. You have far greater protection as a customer if you’re honest about it. IFAs are not Dickensian swindlers you know, preying on the vulnerable. Yes they are businesses and make money from clients, but the vast majority of firms are absolutely reputable. Many are national networks and you will be treated fairly - they have an absolute duty to treat all customers fairly. Even going to your bank and speaking to their advisers is better than making a decision blind.
Suewiang not an IFA, not have I ever been, but due to my profession I do have a lot of experience of the regulatory/legal side of things, particularly from a client/customer perspective. I cannot give advice here, and I’m certainly not qualified to give financial advice, but the OP has already said that she has a history of behaving irrationally. She needs fair, professional, independent advice.

TheDog: Even going to your bank and speaking to their advisers is better than making a decision blind.

No one is suggesting that the OP make a decision blind or make a decision solely based on (conflicting) advice from mn. Quite the opposite, we are asking her to arm herself with knowledge and differing views so as to ask the right questions to be able to get the best service from her IFA.

Your faith in IFAs is touching. I would hope an IFA would be slow to take advantage of a vulnerable client but being fair does not necessarily mean the advice is helpful.

Mental health issues does not mean OP's powers of understanding are diminished.

Saggital St J... are not IFAs though, although a lot of their clients seem to think they are.
I still think seeing a reputable, well-qualified IFA has to be the best route, and yes I work for one. Identifying well-performing products is only one part of the equation.
Identifying and balancing needs, goals, threats and attitude to risk are key. Many people do not fully consider the potential need for/ impact of long term care costs for example. Or they may be thinking about investing in a vehicle they’ve identified that ties up the majority of their funds for 5 years to get the best return for low risk, but the fact find reveals 2 children aged 13 and 15 and yes, the client does anticipate they will go to university, yes they’ve always intended giving some financial support, no they are unsure of how much tuition fees and living costs will be, they hadn’t really thought of all that being as close as 5 years, no they might not comfortably be able to manage that from income alone given Julie’s hope to reduce her hours in a year or two due to complications arising from Type 1 diabetes .... The thorough fact find an advisor conducts with each client, combined with a thorough knowledge of the field, often leads to them adding far more value (I’m not just talking about increase in assets here) than the client anticipated when they approached the firm. They may have come for pensions advice or investment advice, but end up with a much clearer, Informed plan for the future, and, we trust, the financial means to fund it.

Oops! Just realised I’m being a giant bore here, bit of a hobby horse, I’ll bugger off.
Good luck OP, try not to be too anxious, you are approaching this seriously and there is every good reason you will make the most of this in a good way.

My property investments have done a fair bit better than my stocks and shares investments. Although the bull market for the last two years has improved matters somewhat. it's difficult to go wrong with property in the UK. There's a lot of reasons for that (planning restrictions etc). Obviously you have to take care to ensure that you buy a property that won't depreciate and in very poor areas there is a risk of property depreciating. You would have to buy badly to do badly whereas if you buy averagely or well you could be ahead of the stock market.

It;s true to say that property is more illiquid than stocks and shares. And I am glad that a poster raised the issue of liquidity. It depends where you are with yourself really. I quite like having some properties that I will not sell because it's too difficult to sell immediately (that's not a recommendation to buy a hard-to-sell property btw). Something that can't readily be dipped into. That's not a bad thing.

There are restrictions on interest relief for landlords now which has affected at least one of my properties. But from the sounds of things this is not something that could affect the OP. The first reason why it is unlikely to affect the OP is that her funds are sufficient to buy outright a property in a reasonable area without risk of depreciation. The second reason is that the OP sounds as though she is a basic rate taxpayer rather than a higher rate taxpayer.

Anyway back to the definition of churn where I did express myself badly as a poster has pointed out. Churn is when accounts or funds turnover as investors leave. A lot of funds and deposit accounts too rely on investors' inertia - that is to say they either don't move or don't move quickly enough. Financial institutions rely upon a certain level of inertia (and this level of inertia can be very high). I've just been reading BestInvest's "Spot the Dog" report. This covers bad funds and investors havent left because of inertia. There's a surprising number of household names that have "dog" funds

I take the point that some IFAs might be able to open customer's eyes into the what-ifs. That's a helpful function. But investment gurus they are ABSOLUTELY not, for the most part they are not very well educated and don't understand their subject.

Someone mentioned SIPPs downthread, I do have a SIPP but it's something to be very careful about. You should probably be more careful about a SIPP than anything else. The first thing is that you take all the investment risk yourself. Some of the investing platforms have basic funds that they will get you to invest in. But you still take the investment risk and some of the suggested funds would make you raise your eyebrows when you start researching them. Also the SIPP providers charge a rake - HL is one of the most expensive - the cheapest ones (like interactive investor) are virtually unusable for the man on the Clapham Omnibus.

Something to note about pensions - investing in pensions is (rather like property or in fact rather worse than property) is that they are entirely illiquid until you get to 55. So say you are broke and under 55 - there's no way you could ever access that money. But the good thing about investing in pensions is that there is a tax deduction for money on the way in. It's a balance and the OP may already have a pension.

Sorry about the essay. I do think a lot about investments. I hope it's helpful.

Oh and your definition of churn is completely wrong - so, not such an experienced investor!

Agree and perhaps pearl has been a victim of a churn or two hence her aversion to IFAs which is understandable.

Oh and ring the provider pearl and ask for the trail to be switched off if possible. The investment must still be under your previous adviser and if they're not looking after it, they shouldn't be paid.

Oh dear, still wrong on churn, thesearepearls.

Churning is where investments are needlessly changed in order to achieve better remuneration for whoever advises the change. So, almost the opposite of what you suggest.

In the bad, old days when advisers were two-a-penny and there were cowboys galore, this happened.

We value our long-term clients and would not do anything to joepardise our reputation or to stop them recommending family and friends to us (that's exclusively how we now get new clients!)

In any case, under the much stricter regulatory regime we operate in, it would be impossible. All such changes have to be checked by our legal team. And quite right too.

*. I would hope an IFA would be slow to take advantage of a vulnerable client but being fair does not necessarily mean the advice is helpful.

Mental health issues does not mean OP's powers of understanding are diminished.*

Exactly. A properly qualified, experienced financial adviser would have to carefully document any proceedings with a vulnerable client. My compliance network are very, very strict on this and rightly so.

Student debt is not worth paying off. My student debt costs me £20 a month, my savings earn £50 a month. Paying off student debt puts me down £30 a month. Student debt also get written off after 25 years or so depending on when you took it out so paying it off is pissing money up the wall.

IFA, now. Save for your old age. A comfortable retirement is the best present your mum could have given you.

I would put the money into 4 different accounts with separate institutions. Tie up the money for at least a year, possibly 2 years.

Then wait during this time you can contemplate what you want to do and also seek advise without pressure(as the money is tied up)

Remember there is no rush

At present that money in its entirety could earn you interest at 2% would be earning £300+ in interest per month before tax

Don’t rush or do anything on impulse

Don’t go paying of your children’s debts yet either

blueshoes nowhere did I say that the OP’s powers of understanding are diminished, but by her own admission she has made irrational decisions in the past. That’s why she absolutely should disclose that she is a vulnerable customer and in need of additional support.

TheDog I am glad we agree that the OP's powers of reasoning are intact. Therefore, more knowledge and points of views are better than just one from the benevolently and paternalistically qualified and professional IFA.

Isn't that what mn is about? People answer an OP as best they can from their persona experience and the OP goes off armed with views (that don't all agree) and seeks help from a qualified professional. This is uncontroversial. It is not irresponsible for others to advise OP in this way. OP is protected from an outlier view nut because others pile in.

I should add that OP would also be better protected from a dodgy IFA (as well regulated as some posters say they are) who would take advantage of her vulnerability.

It is funny as I work in regulatory compliance in the legal sector. Not all solicitors, heavily regulated as they are for the longest time, are good eggs. The majority, I hope, are, but it is no guarantee, for sure.

There's a post from presumably an IFA to try to correct the definition of churning. I think you are thinking about churning as the offence from a broker's perspective. Churn from a financial institution's perspective is just that - the extent to which people move funds/investments. Those institutions rely upon lack of proper churn to a degree.

I'd really like the OP to come back and tell us her thoughts. I hope you're keeping well OP.

And ROFL at the concept of a benevolently and paternalistically qualified and professional IFA.

It's not a profession, the entry standards are nil and the qualifications are worth well I won't say nothing but you get my drift. I've no idea whether or not IFAs are paternalistic or not, I suspect that is irrelevant. The chap who came to fit my floorboards said that he was in a profession. In fairness he probably knows more about floorboards than IFAs do about investing.

Here's a question for the IFAs on the thread

Does an IFA have to have GCSE level maths as an entry requirement? I'm not talking A level maths. I'm just talking absolute basics. I'm not asking the IFAs to do time-value-of-money questions (which are relevant). I'm just examining the entry standards to this rather questionable "profession".

GCSE maths - required or not? As far as I can tell from a quick google it doesn't seem to be an absolute requirement. In fact it's rather harder to get into a university than to get into being an IFA. Even modern universities require a couple of A levels.

I'm not asking the IFAs on the thread whether or not they have GCSE maths btw. I'm assuming that something the vast majority of 16 year olds have is something that most IFAs have. I'm just asking if this is an entry requirement. As far as I can tell it is not. Please enlighten me if you have different information.

If this is a genuine question thesearepearls then the simple answer is No. But the exams require a higher level of mathematical ability than GCSE.
I am a graduate with a post-grad qualification and the exams I had to sit for IFA authorisation were MORE demanding than any of my previous exams.
In any case, that is missing the point. You appear to think that being mathematically able is the key factor in being an effective IFA. It is just one factor - there are a myriad other abilities. And almost the most important of these is emotional intelligence (e.g. Dealing appropriately with vulnerable clients) .
Yes, there are no doubt still bad apples, but they are few and far between these days and no more common than naff solicitors, doctors and accountants.
I have lost count of the scenarios I have come across where people have been seriously disadvantaged because they failed to take professional advice. A real shame.

Amen Adner. The IFA qualifications are tough. Since regulatory change around -0 years ago, they have toughened up significantly. They don’t just test mathematical ability or factual knowledge, they are very challenging. pearls should make sure of their ‘facts’ before casting out wildly inaccurate and misleading information.

Since we have now established that IFAs do not even have to have GCSE level maths, may I say that my case is proven?

Bunch of numpties they are. I've consulted 5. All five sounded like they had difficulties in tying their shoe-laces.

I will say there is a real difference between these "professional" IFAs and proper wealth managers. A proper wealth manager from a decent firm WILL know their stuff. The problem is that they will only consult with people who have substantial portfolios.

What I am trying to do here, is to protect the OP from snake-oil salesmen. They lurk around with advertisements for free consultations and before you know it you've bought a shed-load of insurance you don't need. Plus daft advice about investing when they know nothing about it.

Oh give it a break - you've proved nothing thesearepearls

I've worked alongside IFAs who were not necessarily star pupils at maths and I've worked alongside chartered advisers who most definitely WERE star pupils and are v strong on the technical side.
As for what they achieve for their clients, you would be hard-pressed to choose between them.
In one team, the very best IFA by some distance left school at 14. But he had a frightening intelligence and 30 years of hard-won experience. If I needed an adviser myself, I'd choose him in a heartbeat.

You may pride yourself on your maths, but your reading and comprehension could do with improvement.

So, just give it a rest.