Tell me about your financial advice experiences

[BobVance]

I’m debating whether to get some financial advice and just wondering what people’s experiences are? Good value for money or a waste of time?

I think if you get a good one then in theory they’ll pay for themselves but I’m not sure.

For background, my husband and I have a mixture of debt (mortgage and student loan), investments and cash. We both earn good salaries and we have a good company pension scheme, but we are wondering whether we are potentially missing a trick and could maximise our assets/income with some decent advice.

There’s loads of really good general information available without seeing a financial adviser, but if you’re looking for specific products rather than more conceptual strategies then I think there is value in talking with an IFA. None of what they tell you will be rocket science but they take a lot of the grind out of performing your own assessments.

I’ve spoken with a few over the years and until I got to app I where there we significant funds to manage they were quite formulaic:

First: Generally speaking they’ll want you to have life, critical illness and/or sickness cover.

Second: 6mths in cash for emergencies.

Third: maxing out pension contributions

Fifth: investments, max out tax free options and then index linked funds. Thereafter property and businesses to ensure a good return.

Sixth: pay off mortgage.

5 & 6 can be a bit contentious. Lots of people like the satisfaction of paying a mortgage off but funds are earning far more than the interest on a mortgage is currently costing so for the moment investments over debt freedom seems to be the preferred advice.

Jeez don’t take my advice I can’t count!

Forth is probably don’t spend it all

Thanks @PegasusReturns - I didn’t notice you missed number 4!

I think a lot of the reason why I’m considering getting the advice will be to essentially force us into doing something rather than nothing. I think we have sound financial knowledge but don’t have the time to really research and act - as you say I like the idea of someone taking the grind out of things for me.

What you’ve outlined however is really helpful and a good start so I think we will do have a look at how we shape up and go from there. Thank you so much!

Think about what it is you actually want to do, what your objectives and goals are, work up a rough plan for your life. Then think about the numbers that will help you achieve those goals.

For example, your objective might be to retire at 60 and maintain a certain standard of living. How much will you need to meet the bills? Maybe you'll be buying a boat and need capital for that.

Look at what your existing assets are and what the shortfall might be. You can then start to see a direction of travel. An adviser can help you come up with a suitable financial plan to help you move towards those objectives and can make recommendations for you to make best use of your existing assets and future accumulation.

If you do seek advice you will have a much more productive conversation if you've done some of this thinking in preparation.

I’m a believer in paying for expertise, but I wasn’t impressed with my one experience. Chose someone local via trustpilot reviews (lots of, all very good).

I knew plenty about pensions, and had a good idea when I wanted to retire. Also had already answered the mortgage v pension question myself, maximised pension contributions to still get CB, and had a good idea of my attitude to risk. All easy enough to self learn.

IFA laughed and said he could train me to work for him. I laughed, he said - no, I’m serious. I’m not saying this to show off, I’m saying it because all my learning was supported by the internet, and especially MSE website.

The one thing I really wanted from him, was where to invest. I have no idea whether I’m too U.K. reliant, or emerging markets dominant.. I’d been picking funds simply by saying, right, I’ll go for one 3/5 and one 4/5 rush level rating on Aviva. It all felt very pin the tail on the donkey.

So, he set up a new pension with appropriate funds. And then took a few thousand pounds out of my pension for doing so.

They haven’t performed any differently over 5 years now, to the money I left in Aviva in a tracker (VLS60). I cancelled the agreement with the IFA after 14 months because (a) the funds were performing the same as my tracker and (b) I felt he should have proactively contacted me after a year.

If he wasn’t going to review my funds - why was he still getting a %? The initial % more than covered a very handsome hourly rate.

So I still want a good IFA, but I don’t know how to find them. I suspect a lot of 5 star reviews are from people who have used an IFA to get them to start saving, or people who haven’t done the basic research about pension tax benefits. I was very disappointed.

There are a lot of areas in life where you can do things for yourself with a bit of time spent researching etc. Whether it's servicing your car (changing the oil etc), wallpapering your living room, laying decking in your garden. Financial advice really is no different.

Like literally ANY service provider, a lot of what they do is pretty simple with the right "tools" whether that's a spanner or the ability/time to do a bit of research/googling.

If you're the kind of person who is able and willing to research and teach yourself, then do that and forget paying a professional to do it, at least at first. Do the basic stuff yourself. Discover what you can and can't do (or can and can't understand) and just go to a professional when you hit your limit of ability.

Hiring a professional really works best for people who have no interest in self-research, don't have time, or don't have the ability. For people who can tick those boxes, they're likely to be disappointed by the "added value" of whichever professional they use.

Search for Damien's Money MOT and do that first. That will cover much of what a financial advisor will ask you.

For people who can tick those boxes, they're likely to be disappointed by the "added value" of whichever professional they use possibly. However keeping up with this info is what’s hard. My clients are all investable assets over 500k as a min, and are knowledgeable and intelligent. I have bankers, VCT investors, city workers, accountants, and tax specialists amongst my clients ie industry professionals. I saved my tax specialist about 139k in tax by reversing a decision she made with her pension. Yes she knows about tax, but she’d missed pension protection legislation.

I do agree that technical advice is for people that have the assets to benefit. Most people will also benefit from a bit of housekeeping though. Like anything, things in our industry change and move on. It’s our job to be on top of the detail.

Goodness, Cocomarine very similar experience to my own. The first IFA I talked to was recommended by the estate agent I was buying through. They suggested a deal that I had already spotted so I felt that was good validation.

Then, they insisted that I needed to buy life insurance (for a repayment mortgage). I already had four times my salary lump sum benefit through work so was a tad surprised.

Phoning the mortgage provider direct, I established it would be no problem to use the employer benefit.

Happened to bump in them later and was asked why I had not been back. They just shrugged .....

Next IFA was the one my husband to be had used for a while and strongly recommended. Again, they suggested two potential policies, one of which I had already spotted so we seemed all good. I asked him for his 'agent number' so that he would get the referral fee, some £800 one off. When he discovered I was going for a repayment rather than endowment mortgage he lost interest, saying it wasn't worth the fuss of providing his agent number, being only interested in the annual payment of the endowment policy.

Now, I'm still looking for a good 'un. Always pick up recommendations from anyone who mentions one. At best, the Experience is as described in @Cocomarine above

Difficult, isn't it.

This is helpful to read PegasusReturns and I recognise much of what you have listed out

I have been pondering how we save etc recently - I have pension advice through work but to be honest I haven’t found it that helpful - when asking about things like negative tax allowances and the pension lifetime allowance all I get back is that they want to pass me to their finance advisors

Weirdlynormal is this where it makes sense to talk to someone? Or places where I can read up more - in the coming years I can foresee the pension contributions I can make getting much more limited due to tapering, yet the longer term projections warn about LTA

And frankly we could probably do with the money for other more here and now things so I don’t want to lock money away in my pension if there are longer term tax penalties

Good for you for thinking about this. There is indeed lots of information on mse. I would recommend a financial planner (different to an advisor) they will look at your current position, goals and suggest ways you to get you there

Thank you @Gassylady

Any suggestions on how to find an independent financial planner who doesn't just want to move things around for the sake of commission.

I think I would find it reassuring to be charged for advice up front rather than as a percentage of transactions. In much the same way I pay a dentist for a check up

Search for chartered financial planner as they have separate qualifications, ours offered an initial discussion for fre but came recommended by a colleague

I have one. If I were interested, had the time and motivation I could do it for myself, but I don’t so I pay an expert to do it for me. She’s saved me lots of tax and chivvies me into taking action when I’d otherwise put things off. She’s Jenny Whitehouse at Tilney if you’re looking for a recommendation - very normal and down to earth.

Great post @Kazzyhoward

Thank you @HermioneWeasley