Do I need an IFA?

[springletter]

I've just inherited a large amount of money from my dear lovely dad who died last year. He was well paid and pretty thrifty, I'm an only child, so I'm in the very fortunate position of being much better off than I was. It's over a million pounds.

Some of what I've inherited are investments are with Hargreaves Lansdown, some with St James Place, and some is now in cash after his house has been sold.

Already I've had his former IFA contact me and offer me a "free" consultation. Meanwhile the existing SJP person and the HL person want me to give them all my financial details as of course they want me to leave the investments with them. My brief research suggests that their fees are high and they might not be the best place for the money, but I don't want to go out of the frying pan in to the fire with another IFA who just wants to get their hands on the commission for whatever they suggest!

DH thinks that I should do my research and then manage it myself. Is this at all realistic?

I have no pension, though DH has a good one and we were planning for us both to use his. So that could be a start, and I would be happy to get an IFA just for that. We have a mortgage, but a low interest rate and DH reckons that we should keep it and invest what we'd use to pay it off. We also have three children that we'll be gifting some of the money to in due course.

Any advice for me? I know I'm extremely fortunate, and don't want to mess up.

Make sure they are actually an INDEPENDENT fa and not tied to a bank or building society etc.
My husband is one of you want to drop me a pm

There are some obvious things you can do immediately.
Eg put £20 k in an isa now and another £20 k in April. Up to 50kin premium bonds as readily accessible cash.
Do you contribute towards a pension?
Do you have a mortgage or rent?

Sorry I didn't se the last paragraph yes you have mortgage at a low rate.
You need to set up your own pension before April then contribute the max for this year and the max for next year.

It's a lot of money so getting advice is a good idea. However you can learn to do a lot it yourself, so you may want to find an advisor who helps with the planning but let's you do the implementation. There are firms who provide fixed fee planning, then you can implement or they implement and charge a fee based on the amount of the assets.

Some places to learn:
meaningfulmoney.tv
https//moneytothemasses.com

Speaking as an IFA administrator, with that amount of money an IFA is a good idea. Use vouched for to check reviews. Go for someone truly independent, not linked to St James' Place, Hargreaves Lansdown or any similar company. Most companies offer a free initial meeting, ask their fees there and then (no commission nowadays).

I'd expect their maximum fees to be 2% initial and 1% per year ongoing (hopefully less!) which sounds like a lot but their job is to make sure it grows by much more than that each year. Plus they'll help with tax planning and work with your accountant/solicitor as necessary.

Just don't leave it in one big cash account.

Feel free to pm me.

Nannynick's advice is good. You need to make sure they're independent and you don't want to pay for stuff you can do yourself.

1% is a lot of money - £10k per year of your investable £1m. Plus transaction fees, fund fees etc. The way it's described "just 1%" is misleading.

A good planner should be able to help you work out what you want the money to do and when, and some rules of thumb around spread between asset classes based on your risk appetite and end goals. However, you could probably manage to do the same by investing in some which? Money guides and doing it yourself.

See an adviser. It is a huge sum of money and getting it set up right is worth paying a fee for. They’ll explain the tax situation and so on, which could save you a huge amount in the long run. There is also some peace of mind knowing you’re not doing something stupid.

It may not be worth paying them ongoing however. Most IFAs want you to pay them 1% a year. Better in my view to give them a one off fixed fee to sort everything out in one go without the annual check up after. You can always go back and see them if your financial circumstances change.

@nannynick links are v good and will help you get a good overview.

I suggest you speak to 3 advisers and ask them how many clients they mange with over £1m. Are they a planner or simply IFA? Do not whatever you do go to SJP dog funds and very high charges, and Bid offer spreads that should be illegal.

I think you’ll find a good Chartered Financial Planner brings more to the table than simple investment. Be wary of any that tell you how by managing your money they will achieve higher returns. Think about some inter generational planning now too.

Sorry about your dad.

@nannynick

It's a lot of money so getting advice is a good idea. However you can learn to do a lot it yourself, so you may want to find an advisor who helps with the planning but let's you do the implementation. There are firms who provide fixed fee planning, then you can implement or they implement and charge a fee based on the amount of the assets.

Some places to learn:
meaningfulmoney.tv
https//moneytothemasses.com

Highly recommend the chap behind this as an IFA !

You need independent advice but explore different charging options as opposed to straight % charge. You can lay for one off advice and reviews.

Take account though that many advisors get discounted rates from some companies so you need to look at he combined charges of the IFA and company

Don't touch SJP. Their advance charges are huge and often have exit penalties. They were subject to a Sunday Times investigation a few Yeats ago which made awful reading. My friend is with them but gradually extricating himself as the exit charges reduce

Whilst very sad to loose your dad, financially It’s a very fortunate position to be in. With that comes responsibility too, to do the right thing with the money he’s left you. Rightly so you want to help your 3 children. I’d suggest you think about what amount you want to gift them and look at your outstanding mortgage balance. Even with a mortgage on a low rate the low risk sensible strategy is to repay this. A couple of things, advisers no longer work on a commission basis, it is an agreed fee between you and the adviser. With such large sums of money I wouldn’t recommend managing yourself. There will be areas of planning you haven’t even considered, with such a large inheritance you’ve immediately got an inheritance tax issue for example. It’s like anything in life you can do it yourself, or pay a professional, the end results can be very different. Cheaper is not always best, likewise more expensive is not always best either. As an IFA I’d suggest meeting with a few and seeing who is the best fit for you, Ideally from a recommendation.