Financial Adviser

[Wishimaywishimight]

I did a financial assessment online with a firm of financial advisers (the reason being we have recently paid off the mortgage so just wonder what to do with the extra money). They responded offering me a free half hour consultation which I am probably going to take up. I am just a bit wary that they will be pushing investment products on to me (which I am of course free to refuse) - presumably this is what they have to do in order to make money?

Not sure what they can offer to be honest, we are both really risk averse! Currently both have pensions. DH has been in the Civil Service almost his entire working life and has a good pension. I am paying the max allowed in my work pension and also pay Additional Voluntary Contributions - currently paying total 26% of my salary to a pension.

We have savings of about €50k in total, and can now put away around €1,500 per month with no mortgage. No children so no uni fees or anything of that nature.

Would you think it worth us getting financial advice in view of the above?

For reference we are in Ireland and there do not seem to be any savings products, even long term, with any decent interest rates.

I expect they will suggest ways for you to invest the monthly £1500 you now have available and charge a (monthly) fee accordingly.

But what are your objectives? Do you have a goal and a time frame in mind for this money? Have a think about that in advance of your meeting.

Paddy Delaney, an independent financial adviser in Ireland, has a podcast.
I would listen to episodes from that, so you learn more about financial advice in Ireland.

This episode is about seeking financial advice:
https://informeddecisions.libsyn.com/financial-advisor-in-ireland-prostitute-escort-or-spouse
On his website, he gives a clear structure for what fees to expect. Find his site using Google: Informed Decisions paddy delaney

Do talk to several advisers and see who you get on with. Some may not take you on as the amount of money you have is too small for them. The initial advice may cost you €5k, so it's quite a chunk of your savings. Discuss fees and what you get for the initial fee and how much ongoing fees are and what you get for that.

@Sunseed Honestly, no goals as such in mind. We are both mid-50s, DH can retire at 60 and get his pension, me not until 65. We enjoy holidays but have a separate savings post for those. No debts. We have spent a bit on the house in the past few years - new bathroom, new windows etc so no real plans there. We have private medical insurance and plan to spend a bit more on this from next renewal.

I suppose we want to ensure as comfortable a retirement as possible and ensure we can pay for a decent care home for one or both of us if we live to that stage!

@nannynick Thank you so you much for recommending that podcast, sounds really useful so will definitely have a listen to that.

I suppose we want to ensure as comfortable a retirement as possible and ensure we can pay for a decent care home for one or both of us

I think you are wanting financial planning. You want to get a good feel for what you will have in retirement, how investments grow between now and then plus when you retire. When listening to the podcast, keep an ear out for when he talks about advisers who do planning.

My knowledge of financial investments in Ireland is a little sketchy, but a few things to think about before your meeting: (I am not a financial adviser so do your own research always).

How old are you both, and what are your financial goals? What do you want/need additional savings or investments for? A safety net? Early retirement or additional income in retirement? Saving for something specific?
I would aim for 1-2 years household outgoings in an emergency cash savings account, plus a savings account for any additional major repairs or household upgrades in the near/medium future.

Beyond that, it's my understanding that short and medium tax efficient savings and investment options are very limited in Ireland, and only long term retirement investments attract tax advantages.

I suspect that if you have sufficient pension arrangements and cash savings then an adviser will explore your appetite for risk, and suggest investment options to you. In Ireland, these are probably going to be ETF's (Exchange Traded Funds). These are investment vehicles that are a mix of assets, such as stocks and bonds, designed to track the performance of a market segment or index. (I believe index funds such as Vanguard LifeStrategy are restricted in Ireland due to the regulatory requirements - you cannot invest in US funds). These investments are for the longer term as over time they are more likely to show a profit, but are more volatile in the shorter term. Be aware that investments are a risk and you could lose some of the capital investment. Fees also eat into any profits and the effects of these are often overlooked.

In your situation, I would listen to what the adviser has to say but make no decisions on the day. If you liked the idea of investing, you don't need to use an adviser to do this - you could use a commission-free platform such as e Toro, and research the funds yourself. (You could even use Vanguard ETF's to build a balanced portfolio based on their Lifestrategy funds).
I believe e Toro have a free to use demo account where you could practise your investments without real money.
But in the end, if you are very risk-averse, cash savings are the safest option for not losing any capital (the risk with savings is that inflation eats into the real value).

Finally, if you don't actually 'need' to make any additional savings or investments, and are just wondering what to do with the surplus income, why not look to reduce your working hours? Or use the additional income to make life easier on a day to day basis - employ a cleaner/gardener; take more holidays/buy a holiday cottage; spend more on your hobbies, support a charity of interest to you, etc? This is where financial goals are useful in deciding.

There is no such thing as free financial advice. If you aren't paying them, they are being paid a commission by whoever you invest in after they advise you. This means that they will only recommend products that pay them a commission, and potentially will push harder those that pay the highest commission. They ought to disclose their commission to you, but that's often in the fine print after you've made up your mind. So on anything that advise you to do, ask "what commission or other fee do you get paid if I invest in that?"

If it's free you might as well speak to them, but don't necessarily take their advice. Ie they may advise you to invest in a managed fund, and that may be sound advice, but doing then just put your money into the managed fund they recommend.

You could either get a few of these free consultations from differ t advisors and compare what they offer or else pay for a consultation with someone who is t working on commission.

And above all - if something they recommend sounds to good to be true, then avoid it like the plague.

OP - cross post with your update, so some of my questions you have clearly already explored! I would also add - never invest in something you don't understand, or in which the fees are unclear.

Hi OP, I'm also living in Ireland. My experience of financial advisors here is that they're basically just salesmen who only care about your commission. Please be very careful in investigating the fees in any products they offer to you and don't be pressured in to signing up to anything without taking the time to research and think things through.

Years ago I set up a pension through an "independent" financial advisor, I was a bit clueless about pensions back then and thought I was doing the right thing going through a professional. He signed me up to a Zurich product with extortionate fees.....I could have blindly picked any other pension product at random off the internet and not have been screwed over as badly as I was in the product he choose for me. I've spoken to several other financial advisors since then and found them all severely lacking.

Instead I've taken time to educate myself in all personal financial matters. It's really worthwhile to take the time to learn and manage things yourself. R/irishpersonalfinance on Reddit is an excellent resource to learn about the most tax efficient ways of investing in Ireland.

@nannynick You can see how I need to do much reading / educating in this area, thank you, it does sound like Financial Planning is what we are looking at.

@seekingasimplelife Thank you for such a detailed response, I truly appreciate you taking the time to respond. I am actually going to print out the responses and read each one properly. I have actually been thinking about cutting work down to 4 days, perhaps expanding the working day a little so that pension / annual leave are not greatly affected. I wfh almost full time (occasional trips to the office) so this would pose no great difficulty.

@SummerInSun Yes, of course, that is as I suspect and is absolutely understandable - they are a business and not a charity! I appreciate the advice re asking about their commission on any recommended product and will make a note to do that. As you say, there is no harm in accepting the offer of a free half hour while making it clear that I am not signing up for anything without further investigation (if at all).

@shivawn I have asked around friends if anyone has any recommendations and have actually heard a couple of stories similar to yours which makes me wary. Thank you for the reddit tip, I will take a look.

I think, risk averse as we are, that simply leaving money in savings may well be the way we go. I will do the free half hour, no harm and perhaps see if I can find a financial adviser not working on commission if such a thing is possible.

Many thanks all of you, I do appreciate your responses.

As you are very risk averse I would simply suggest buying premium bonds.

That’s the first time I’ve recommended them to anyone but they are simple to understand, ok value with zero risk and the potential for a dream win.

https://www.nsandi.com/

Thanks @DemonSpawn I'm in Ireland though, not UK.

I don’t know what the law says in Ireland but in the UK commission on FCA regulated investments was banned some years ago.

I do not believe this is the case in Ireland, unless there have been recent changes.

It is my understanding that financial advisors can charge fees or commission (or both). They can also receive some commission from the investment company they introduce their clients to… and whilst this might not entail additional monetary fees for the client, it might well influence the type of investments and providers that will be recommended- and not always to the client’s advantage.

Go into askaboutmoney.com, the money makeover thread, fill in their template and ask your question. It is Irish based. It will certainly give you and idea and then take it from there.

Nobody will sell you anything and they are very practical.

Could your aim be to retire at the same time? Could you live on one salary for now until your husband retires and then both of you retire?

Being so risk adverse, perhaps consider savings accounts where you can earn interest. Not a lot of options in Ireland but there is Raisin (around 3% I think) or Trade Republic (2%), both covered up to 100k by state deposit guarantee scheme as far as I know but double check on that.

@Focalpoint Many thanks for that, I will absolutely do that.

@shivawn I think this is going to be my most likely option.

@determinedtomakethiswork To be honest I am not sure I would want to retire at 60. I enjoy my job for the most part and think I would be happy to drop down to 4 days. DH would be happier to retire at 60 I think.

@SummerInSun I so agree. We had a so called Independent Financial adviser who, and I quote ' gets paid a salary and don't get commission' After recommending a couple of products we went with one - only to realise sometime down the line he didn't mention the consequences of having a chronic health condition (increased benefits). Subsequently when the investment came to an end we only received half what we were expecting. Fortunately we were able to prove mis-selling and and got back a sum which even then only took us up to what we had invested.
Never again. Don't trust any of them

Do you have anything like stocks and shares ISAs in Ireland? In the UK we can save up to £20k pa in cash and/or an investment product where the growth is tax free.

One of the most popular ways of investing at low cost, although there is some risk is an index tracker product, where you can choose different funds to spread the risk. Vanguard is a popular, reputable, low cost provider, and it looks like they operate in Ireland

https://www.ie.vanguard/home

That podcast looks useful, possibly an Irish version of meaningful money, which is a UK one by a financial adviser who seems to spend most of his time telling people they don't need a financial adviser and all you need is a S&S ISA with your money invested in a global multi asset tracker fund and a pension. You then save some of your money until you have enough to retire. At some point you find you can retire or work part time and start to enjoy your money more.

You can mitigate investment risk by gradually taking money out so if you find that the market is down, you can live on cash instead of investment income, leaving most of your money invested until you nearly need it, as investments should grow more than cash over time. Remember that, at your stage of life, it could well be that you won't need some of your money for another 10/20/30+ years so there's still plenty of time to ride out ups and downs in the market.

I think with no DCs and a decent amount of money behind you, the world is your Oyster and I'd be looking to enjoy your money while you're younger, as much as saving for your really old age. I'd probably look at planning to retire at the same time as your DH, it sounds like you can afford it.

Oh, just seen that you don't plan to retire at the same time as your DH.

Another one saying “salesmen”! There may be some useful ones out there - but I believe one must be highly vigilant and do one’s research, I would say not based on trust. I recently consulted an advisor - free half hour - at the end of which I realised they could not actually advise me. Also their fees were significant.

@Wishimaywishimight think about ISA’s, with interest rates at high rates you may end up paying tax on savings interest. Saving £20k a year into ISAs is a way of reducing taxable interest.