Pointless to seek a Financial Adviser? DH adamant we can ‘self serve’

[SunshineGem]

We’re both in our late 30’s, have a few different pension pots, as well as a keenness to start investing to potentially retire early.

I’ve suggested we seek an Financial
Adviser for some guidance but DH is adamant this is an unnecessary expense and with ChatGPT and the amount of information online e.g MSE website etc we can save the money and research ourselves. He also works in banking (not doing anything to do with this though).

Has anyone here has success stories with a FA in terms of the above, or would you save your money?

YABU - don’t seek an FA and self serve instead
YANBU - best to seek an FA

How much money are we talking?

There is a wealth of information online re: FIRE and broader investment.

I think unless you’ve got >£20k a year each to invest (minimum), you don’t need advice - and anything a FA will tell you is what you can read online.

How much are you talking about? Less than about £150k and a financial adviser won’t be worth it in the slightest (and probably wouldn’t take you on). And it really can be totally straightforward, MSE will help.

If you’re talking millions the answer is different!

Only based on my experience - I agree with your dh. I did speak to an FA when I had some (any) spare money for the first time, as I was completely terrified of screwing it up and being penniless again. But I'd say if you're reasonably intelligent and have only some money, rather than lots of it, what he told me was exactly what I'd have done myself- ie distinguish between money I need to be able to access and money to lock away, use my ISA allowance to the max, and in general that stocks and shares are better for long term savings. Your situation sounds a bit different but not that complicated.

Not near those figures (first two replies) it’s more the retirement planning element, my parents said they (FA) can be really helpful for that.

If small sums, I don’t think a FA will add much value.

Reddit is very useful for this kind of financial planning - they have an investment flowchart which basically gives the information you are looking for.

The biggest q for you is probably around retirement time and therefore the benefit of saving in a pension (tax free upfront but age limit) vs an ISA (only tax free on way out, but accessible whenever).

He needs to step away from ChatGPT but MSE is a great starting point, also the financial flow chart and the Meaningful Money podcast, which is basically an IFA giving the knowledge you need so 95% of people don't need an IFA because all they're going to do is say put money in a pension or an ISA and for most people it doesn't really matter which. IFAs don't really add significant value until you're looking at six figure sums.

ukpersonal.finance/flowchart/

And look up the Which ! Information about how much you need in retirement. It links to a National wotsit that gives how much you need for a modest, comfortable or luxurious retirement.
then you know how much you need, so can work backwards.

assumes no rent, and mortgage free, so that becomes a priority when working.

Years ago IFAs were more useful for retirement planning, but the rules and the market changed (call RDR if you want to look it up), and ‘normal’ (sorry!) people can’t really access advice in the same way any more.

Another recommendation for the Meaningful Money podcast and also Rebel Finance.

I would also see if you can get a free initial consult with a FA (I got one through my Union). They might just throw up something you hadn’t considered (critical health cover). But if you don’t have much to invest then probably not worth it too much. But don’t cash in pensions unless you have advice.

DH works in financial services and had access to a pensions advisor via one of their HR benefits nice to haves. It was quite useful actually, but only to back up what we had been doing via the advice already out there.

Tbh if self researching I guess I shouldn't rely on any single source of info, but I'm sure you wouldn't anyway. Tbf I HAVE sometimes relied on a single source and it has been fine, eg having decided that I need a six-months-outgoings accessible cash fund but would like it to earn some interest, I looked at what Martin Lewis recommended for that situation and went with one of his top three accounts. Lazy but it's worked out absolutely fine.

I would in particular want backup if trying AI because I see it as a manipulable source - GIGO type scenario.

An IFA and paying off the mortgage is my advice.

It’s incredibly easy to find out information these days but it really depends on how good you are as an individual or couple at making decisions with that information. We have never paid an IFA and we have retired early. However there is the accident of birth year and what all of us live through depending on what money markets do at a macro level regardless of individual decisions.

What sort of pensions come with your jobs?

On a simple level if you can make AVC then great plus save your ISA allowances and do what Rachel Reeves wants us all to do go stocks and shares ISA.

We don’t do risky stuff anymore. You need time to recoup so now we are older we just don’t do that.

If you stay together that’s one of the best ways to build wealth, I have three friends divorcing in their fifties and it’s mighty messed up their retirement plans. So always communicate with each other.

Why focus on paying off the mortgage?

The type of person who thinks an IFA is needed (in most cases it's not) is probably also the sort of person who recommends paying off the mortgage based on absolutely no information whatsoever.

Do they even have a mortgage? If they do, what's the interest rate? Chances are they can get more interest by saving separately so overpaying the mortgage is a waste of money. Plus they might decide to just let it run it's course and concentrate on investing, which is likely to be much more lucrative over time.

But MN is weirdly obsessed with IFAs and overpaying mortgages.

@MidnightPatrol Why?
The mortgage was the biggest bill and took a chunk of my salary. The IFA advised me about paying it off without penalty and put to good use any money I had left over. I now have balanced savings which have proved “Trump-proof” and am retired.

Interesting - this is not the advice I have received. The mortgage is pretty cheap debt really.

You will make better returns investing your money - and that lump sum is going to make far greater gains invested and having your mortgage paid off doesn’t impact on the capital gain of your home.

Maybe a ‘I want to retire soon, how can I reduce my costs’ strategy, but for a younger person with a 30 year horizon it’s pretty inefficient and I’d be surprised for an IFA to give that advice.

Ditto on ‘Trump proof savings’. As someone who is old enough to be retired, you need a v different investment strategy to a younger couple. My investments have taken a hit sure but… it’s irrelevant in the short term as I don’t plan on touching the money for 20+ years.

Reddit uk finance independence is amazing. At your stage I would also self serve to be honest.

They charge an absolute fortune for advice you can find for yourself. My neighbour is one, he spends his days lounging around working from home, buying expensive properties (think 1m+) to invest in, all on the back of charging extortionate fees and taking high commissions from ordinary everyday people such as yourself. He also walks about with a smugness that is so hard to convey and tolerate, and barely says hello to anyone, because he thinks he is so superior to everyone else. Perhaps they are not all like that, but your husband is not being unreasonable in the slightest!

I found it incredibly difficult to find an IFA willing to talk to me when I was your age. They work on commission, on the basis that it's reasonable for them to pocket 0.5% of your overall wealth if they can structure it to grow 5% faster than it would do otherwise. Unless your existing pension pots are massive but stagnating with plenty of potential for them to be reinvested more profitably, no IFA will want to take you on. From their point of view you'd be asking them to do far too much work for far too little reward. Once you have grown your (non-home) assets to at least £400k through DIY efforts, then they will be pleased to swoop in and advise you how to get that to grow to £500k +

After a conversation with friends recently who are approaching retirement, they were very glad to talk to an IFA. Not high earners at all, but have always worked, they had had several jobs and so several pension pots. The IFA is working out what to use, what to save, where to keep investing etc etc. I think it’s a myth that you need lots of money to use IFAs. My friends are very pleased.

I voted YANBU but agree that an IFA (not FA) won't take you on with small amounts of money because it will cost you too much. I've used an IFA for 25 years and he has made me a lot of money over that time.

You can get free independent pension advice from the government service. As others have said, MSE is a great place for lots of financial advice. Just don't be tempted to get some "free financial advice" provided by a bank or insurer, as these are NOT independent and will push you towards products that they earn money from.

IFAs don't all charge commission - some work on a flat fee/annual fee basis.

I think you have had some good advice from MNrs. Your DH is right.

FAs are expensive so def depends on how much you have to invest.

The one piece of advice I'd offer is to equalise your pensions whilst you're young, it'll serve you both well in the end. £100pcm in your pension will provide >10x more money than paying £100 off your mortgage will save, so box clever.

@MidnightPatrol Perhaps my salient words are “am retired”. At 28 my husband and I earned the same. One salary was swallowed by the mortgage (not a pretty cheap debt), the other paid bills and living expenses. We had a 30 year horizon.
The OP mentioned “a keenness to start investing to potentially retire early”.
With the same aim we invested according to the advice given by an IFA then moved to paying off the mortgage after 20 years.
I totally agree with you about financial efficiency. For that I would always consult an IFA but that’s just me.