Is a Financial Advisor worth it?

[underthebluemoon]

I came into some money and made an appointment with a FA. He sent me some documents to look at including pricing. From what I understand a review and setting up a policy costs £1000. That seems a lot if I have £10 000 to start with.

Is it worth it or am I better overpaying my mortgage and finding my own saving policy/ online stocks and shares to invest in?

I personally wouldn't spend that amount on advice. Get your mortgage overpaid as this will save you far more in the long run than you will get in interest. Be wary of getting involved with stocks/shares unless you know what you are doing.

yes that what I was thinking. Think I will cancel the appointment.

Thanks for replying.

Ask your friends for a recommendation for a financial advisor.

They will all have diffferent charging structures.

My h is an IFA and will do the first appt - spending 2-3 hours of his time, plus travel, for nothing. But FAs have to make money somewhere!!

For example, take an ISA. It takes dh about 3 hours to complete the paperwork for an ISA, so he's spent the time with you, deciding what ISA you want, doing your ££ history and confirming that an ISA is the best product for you, he has to travel to you and home from you, then he has to do then paperwork, send confirmation to you, to the company you're atking out the ISA with - blah blah. It takes a lot loinger than you might think.

That's why financial advice can be expensive - you're paying for the expertise of the financial advisor, who may have hundreds of products to choose from, and has to spend time deciding which is best for you.

Having said that, spending £1k on advice is a lot out of 10k. I'd advise you to shop around - or ask the advisor if he does a free advice session.

Thanks reallochness, for the info.
This guy did come on a rec and the first meeting is free. I think I'll phone tomorrow with my concerns and take it from there.

Do you have any savings currently?

I'd say you don't really need a financial adviser until you have about £50k+ to save/invest. Under that you could just overpay/pay off your mortgage, make sure you have some cash savings, buy simple low fee index tracker fund and/or buy some premium bonds. Apart from the index tracker, it's all risk free and unless your mortgage interest rate is ultra low, a good return. Even if you don't get it all exactly right, you haven't paid 10% of your money to an so are unlikely to be worse off.

www.moneysavingexpert.com/banking-v1

Have a look here. You could do worse than making your main current account as a Santander 123 account and keeping the balance at just under £20k to get 1.5% on this money. The cashback on bills should be more than the £5 pm fee. We get between £4 and $4.50 cashback every month and our bills are much lower than average (band A council tax, mobile phone costs less than £20 pm). Anyone with more average bills will get a bit more.

My DH and I have built up a portfolio of over 800K in ISAs, individual shares (mainly DH) and SIPPs over the last 20 years. We have never used an IFA. We have just built up our experience as we have gone along, some funds have fallen but most have risen, we have learnt to drip feed monthly and to spread the risk in a variety of funds/shares.

I got burnt by an IFA recommended by a friend when I moved jobs in my late 20s. He recommended a personal pension, rather than the company DB scheme, as I didn't see myself staying there long term. I stayed 3 years in the end.

Seeing the final salary payments I will get from previous jobs of 1.5 and 5 yrs respectively (far higher than amounts I paid into them!) I should have joined the DB scheme, even if only for a short time. I have never trusted an IFA since, I trusted his advice but it was totally wrong.

And that personal pot has grown almost 4-fold since I moved it into my SIPP, with funds chosen by myself, about 5 years ago, compared to the 15 or so years that it was invested through the adviser's company.

This may help? Also money saving expert, money matters websites too

www.moneyadviceservice.org.uk/en/articles/free-financial-advice-your-options

underthebluemoon wrote: "the first meeting is free"

Oh no! There are no such thing as free lunches. Cancel immediately. If you don't pay, you'll end up paying anyway.

How did you find him? Did you yourself look him up after doing proper research, or did he call you up trying to sell you something?

I work for a Financial Adviser and our first meeting is always free. Yes, sometimes that does mean that the meeting is all for nothing but that's just a part of it and something we have to suck up. However we would never charge a rate of 10% of your pot! I would suggest you don't need a Financial Adviser for that sum of money and instead would find a high interest ISA or overpay your mortgage.

If you don't already have 3 months living expenses in savings, you should keep this as cash savings before investing any of the rest of the £10k elsewhere.

Good point, NearlyFree17!

You could try one of the online DIY investor sites like Nutmeg or Wealthify. You choose your own risk level on a scale from 1-10 and can either invest any lump sum (no minimum) or monthly payment. You can see projections as to what your money would be worth if returns are good, average or below average, and have a play around with different risk levels on their website before opening an account.

At a young age i inherited a large sum of money and was pressured to see an IFA....he set up a mortgage for me...including things like house insurance....when i eventually sat down and looked through the paperwork he had made a lot of money out of me....after the first year i cancelled the insurance policys and took out my own thus saving a fortune....
He was still trying to to get me to see him after id moved over 200 miles away....i think he saw me as a cash cow....totally my fault i was very naive and had just lost both my parents !!!