Is it worth paying for an Independent Financial Advisor?

[Fishoutofcoffee]

DH and I are mid 50s, would like to retire in next few years. We're not really knowledgable about investments/pensions and really don't know what to do for the best. I've been talking to a few IFAs who could manage our pension pot etc and hopefully get the most for our retirement. The average upfront charge is about £6k. Can I ask if anyone has used an IFA and if the returns they've achieved have made the fees worth it?

We went with an IFA whose fees were not ridiculous around 2% and we are with Royal London.

We are lucky that we have a final salary income, plus state for DH (child bride here, so longer to wait 😂) I have two tiny final salary pensions, that pay for the cleaner and the gardener, so we don’t need to see a return anytime soon on our other pension pot, we are leaving it intact for as long as possible to allow the 25% tax free lump to grow.

We went into retirement, debt free and mortgage free, which physiologically was a huge boost, so before you engage with an IFA I would concentrate on that, if you need to do.

Failing that, ask around, we ended up going with word of mouth from some friends of ours who entered the process slightly earlier than us but more or less at the same stage in life.

We had until today full holdings in PB’s in both names (we have retained 50% of FH, we will split this out over two saving accounts twelve months at 5.2% and twenty four months at 6%, we also have an account with FDirect who pay 7% over twelve months maximum 3,600 pay in and a further 150 month into NatWest who pay 6.1%

Disclaimer I am not financially qualified, just stuff I/we have picked up along the way.

My IFA charges a percentage of my pot and costs about £1,800 a year. They seem to hive the responsibility of investment off to other companies (standard life, begin dolphin etc) who then charge too. My total costs are about £6k a year.

I don't use them for tax advice as I'm a tax advisor myself. I would use them to negotiate drawdown, but I won't be there for another 10 years.

I really don't know whether their returns are THAT much better. Just going on the one ISA I invested with them to protect my 20k against inflation, that's now worth 17.5k makes me wonder!

I've thought about leaving and looking after them myself as my current monthly investment is equal to the total annual fees.

There are various options to optimise pension pots and tax, it's really really worth making an appointment with Pensionwise www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

It's a free government backed service and they are very knowledgeable. It opened my eyes to a few options and I thought I was pretty well informed beforehand

IFAs can be worth it but usually only if you have a large pot or complex needs, personally I'd be wary and compare fees

Thanks for the replies, I've made an appointment with Pensionwise so will see what they say!

Agree that pensionwise is a good option.

I’d avoid IFAs as they charge high fees and are generally only worthwhile for very large investments. There is a lot of good free advice out there on pensions, and by the time you hit mid 50s you will want a fairly low risk investment strategy that should be represented by some of the standard pension company portfolios.

IMHO 2% or a £6k charge is ridiculous. That’s robbery.

Most (three quarters of) active fund managers do not even beat a simple low cost index tracker.

Your best bet is to do it yourself and follow the advice of Warren Buffett:

“buy a low cost index tracker such as the S&P500”

A good read is Money : Master the Game by Tony Robbins

@LucifersPain I appreciate this thread is a little old but I had a chat with an IFA yesterday and starting to also think I should just continue to manage my SIPP myself as I approach pension age.

I have index trackers anyway. The only thing I gleaned is may want to start moving some into cash or bonds as you get nearer to retiring.

I found Motley Fool book helpful years ago and it's been fairly sound advice over the years of using low cost SIPPs and trackers.

Absolutely not

Read Meaningful Money Handbook first and check out their YouTube

The founder is a certified financial planner and states that most people are wasting their money with professionals fees when they could manage themselves with some moderate reading

The compounding impact of 6000 a year in fees is outrageous .

I suggest you do some reading and consider managing yourself because the impact of those fees is very significant

Yes I realise that.

The going rate seems to be anything between 0.5 and 2 per cent of the total amount they look after