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Should we have an IFA?

2

Comments

  • Tom32y
    Tom32y Posts: 16 Forumite
    Hi,
    There has been some good advice on here regarding looking for an IFA, it’s also a good thing that you are looking towards the future and not just the present and are willing to do something about it.

    I wouldn’t worry about whether you will have enough money for an IFA to see you or not, at the end of the day they are there to give you advice on your situation regardless of how much money you earn or have in the bank. The company I work for buy in client leads, the minimum amount is 10k in a pension and I have been out to see clients who earn barely anything, so again I wouldn’t worry about whether you earn enough.

    Again as mentioned before I would also be wary of using Bank advisers as they will be biased towards their own products, if not tied exclusively to them. It can be hard to find a decent adviser especially if you haven’t used one before, I have come across a few that are just interested in taking commission, but then I have also come across IFA’s that really do go the extra mile to look after their clients. I have heard of a few good IFA’s based in Halstead that a few of my colleagues know. If you manage to find a few from that Unbiased website, like Dunstonh has said the initial meeting should be free and you should get a feel for how well you get on with them.
    .
  • Rollinghome
    Rollinghome Posts: 2,741 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 1 October 2010 at 2:37PM
    pinkteapot wrote: »
    In your opinion, and I know you may well not be able to answer with such sketchy information about our finances, is it worth us seeing an IFA? Worth it in the sense of long-term gains from using recommended products instead of having all our savings in cash at HSBC (!) versus cost now?

    I think the best answer to that is that it depends on how much less knowledgeable you are than the adviser you use and how much time and effort you are willing or able to put into learning.

    I'm in a position, with savings and investments well into seven figures, where most people would be using professional advice. The reason I currently don't is because the expertise of those I've used, including IFAs, has been pretty dismal. Even when they've offered to work on a fee basis the IFAs have generally known little about any investment that doesn't pay commission. That's not to say that good IFAs don't exist, only that I've been less than impressed with those I've seen to date.

    Even if advice from an IFA is appropriate I've always held that it's important to know at least enough to judge the quality of advice given. Remember that the vast majority of IFAs, including those on this board, will have a sales background: in most cases from selling financial products for banks and insurance companies. I wish it were different, but the fact is that ultimately no one will have a greater concern for your best interests than yourself.

    For those reasons I'd suggest the best and most cost-effective way to start is with a few good books. Some suggestions:
    (Edit: The price of all those books has risen in the past few months but still good value.)
  • Reaper
    Reaper Posts: 7,356 Forumite
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    Rollinghome wrote: »
    I'm in a position, with savings and investments well into seven figures
    Wow. I could get to 7 figures too but only by putting a decimal point in the middle of the number!

    Rollinghome is right - the very best option is to learn and do it yourself. I don't use an IFA myself either as I feel I have a grasp of the essentials and I'm too tight to pay for one!

    However too many people leave their money wasting away in poor paying taxable savings accounts because it all looks terrifyingly complicated and they never get round to tackling it. For those people even a less-than-perfect IFA can make them a lot better off and is worth the money in my opinion.

    However if you feel up for it then I would certainly encourage learning the ropes and you can always ask questions here.
  • Tom32y
    Tom32y Posts: 16 Forumite
    You are correct Rollinghome, if you have had bad experiences with IFA's then you probably would rather do you own research rather than pay out lots of money for nothing. I think things will change though as the more 'Old School' Advisers retire.

    I think many things can be researched from the internet or books, but it does depend how long you have to read up on all of the subjects. Something such as investment fund research can be alot harder without the specialised software, but again can be done if enough research is put in.

    It sounds like you are doing the right thing by putting money away each month, as this is the time that you will be able to afford to do this. The only problem you will have at the moment is the aweful interest rates that are being offered by banks, and if interest is relatively high then it can mean that your savings will be decreasing in value over the years. So getting an Adviser that knows his stuff on Investment funds may really help you in your situation for your savings.
    .
  • Rollinghome
    Rollinghome Posts: 2,741 Forumite
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    Tom32y wrote: »
    I think things will change though as the more 'Old School' Advisers retire.
    I'm sure you're right Tom. I've got great hopes for post 2013 when the FSA's RDR will force an end to the current commission system and proper advisers replace the salesmen. I suspect for a while though there will still be a lot of old time advisers out there with little understanding of any investments that traditionally don't pay commission.

    I saw an IFA a short while ago, the director of a medium-sized firm, and it was clear that some of my fairly commonplace investments, such as splits etc., were a complete mystery to him. As far as investments went he understood unit trusts and bonds and not much more.

    With the ending of commission would be good to see the ending of any confusion on whether IFAs are there to sell or to advise.
  • pinkteapot
    pinkteapot Posts: 8,044 Forumite
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    edited 1 October 2010 at 4:52PM
    ThriftyFelicity wrote: »
    You should consider doing a budget, to find out what you're spending your money on each month, and what a realistic spend would be when your income drops to £35k.

    I'm guessing your household take-home pay is around £8500-£9300 (including your bonus); if you're saving £3k, then an average monthly spend is £5500 to £6300. That's a fair bit since your mortgage isn't that big.

    The £3k per month was from income excluding bonus, which is about £7.1k monthly.

    Mortgage and household bills = £1k
    Food = £300
    Commuting = £800
    Savings = £3k

    Leftover = £2k. Which is ludicrous I know but we bought our house in August and are doing work on it. Will be able to save more once we're done. :D
    ThriftyFelicity wrote: »
    You have probably gotten used to expensive holidays, the latest gadgets, lots of meals out, etc... how much of a change in lifestyle will be acceptable in future?

    Holidays - no, as I'm scared of flying. :o Hubby is a gadget fan yes, but is much better with money than me. His parents are very, very thrifty and don't splurge and he has inherited that attitude to an extent.

    There are things we've got used to certainly. We can decide to go for a meal and a West End show on Friday night on the spur of the moment. Five years ago that would have been inconceivable to me. But at the same time we're conscious of it - we regularly say "God it's weird we just spent that without thinking/worrying about it." But I can feel my attitude to money changing and I know I'm going to feel it when the budget goes back to what it was a few years ago.

    As I said, five years ago I was on a fraction of what I am now an in debt, and had to live to a very tight budget to get debt-free. So I'm using to thinking about budget, what we're spending etc, even though we're in an amazing position now where we don't have to worry about it.
    ThriftyFelicity wrote: »
    How much extra will you be spending because of the child/children?

    That's the big unknown. :( A local salary for hubby would cover the mortgage, bills, food, and work travel costs (car running). So the baby fund we're saving up needs to cover all other spends and luxuries. I had originally thought £30k - £500 per month for five years. We're over that now and adding to it all the time. I don't think it's possible to budget in great detail for kids. You read those stories about the cost of kids and realise if people tried to budget for it they'd never have them. :rotfl:
    ThriftyFelicity wrote: »
    Will you need a bigger house and all of the extra expenses that go with it (mortgage, council tax, utilities, etc)?

    We wouldn't need one; we bought a four bed 1990s detached place with a smallish but young child friendly garden. In theory we could live there for thirty years, unless we have more kids than planned. :)

    This is another area though where I have guilt about wanting to give up work, and this particular career. We spent less than half of what we could have if we'd got our max mortgage on our current salaries. We could have a ludicrously beautiful house, or could in the future (if we forego that private school!). I feel like I'm costing us these things. :( But I want to be with the kids. I might of course change my mind about that once we have them. :rotfl: And I shouldn't be greedy; we are enormously fortunate and most of our friends are maxed out on borrowing to afford their 2 or 3 bed places due to house prices in the area.

    I won't reply in detail on the rest - you're right about trying to work out what monthly income we want in the future; it's what we tried to do when buying the house. We didn't buy based on what we could borrow, but on how much we wanted to be spending on the mortgage in the future when circumstances are different. Again, we were hugely, hugely lucky to be able to afford what could easily be a very long term house if we want it to be.

    Perhaps I'm being unrealistic about what monthly income I'll be happy dropping back down to. But at least with the pot now bigger than planned there's more there to fall back on during the frugal years.

    Lots and lots of food for thought on this thread, thank you all.

    Confession time; my job is in the investment industry. I should be able to figure it all out for myself. But, in my defence, I'm not in a personal finance related role. :o Biggest issue is pensions; I seem to have some mental block that, as I said, has stopped me working out if I should consolidate my three or not! And I just don't understand the way pension products work, in terms of structuring, SIPPS versus other types, etc etc. I need to do some reading instead of making half hearted dips in to it. And in terms of Funds, there are just so many products, structures, platforms etc that I feel daunted trying to work out the most cost-effective way to invest.

    Not ruling out an IFA though - I'm not convinced I'll ever be clued up enough or brave enough to organise investments for us. I also feel like we have a great opportunity to make future life easier because of the money we're generating now, if we make the right decisions for it.
  • DiggerUK
    DiggerUK Posts: 4,992 Forumite
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    pinkteapot, IFA's are not market analysts or financial gurus, they are purveyors of financial products, that's all. I won't add any more to the criticisms of IFA's, much as I would like to.

    Your troubled conscience about raising children is normal. But as a father and grandfather (with the Tshirts) I will now advise you to forget about them. You will do best by making it up as you go along.
    As I am sure you will have flown, you will remember having been told that when the masks fall down, you are to put yours on first, then look after children.

    So my advice is to look after the home first, then everything else will fall in to place. In other words, get rid of the mortgage, then you will have a safe base from which you can survive anything coming over the horizon. Including you both being "unwaged" as the euphemism goes.
    Best of fortune.
  • ThriftyFelicity
    ThriftyFelicity Posts: 771 Forumite
    Tenth Anniversary Combo Breaker
    pinkteapot wrote: »
    The £3k per month was from income excluding bonus, which is about £7.1k monthly.

    Oh yeah, you DID say that at the start. My brain must be scrambled today. :)
    pinkteapot wrote: »
    Holidays - no, as I'm scared of flying. :o Hubby is a gadget fan yes, but is much better with money than me. His parents are very, very thrifty and don't splurge and he has inherited that attitude to an extent.

    It's great that he has that background and knows all about a thrifty lifestyle! And don't worry, ALL men gadget fans rolleyes.gif

    It sounds like you've already thought a lot of things through and made decisions based on the future and not on the "now". You and hubby are very sensible :T

    And if I were you, I'd try to stop stressing about giving up a well-paid job for your future kids... a happy childhood is not dependent on having lots of money... in fact, a thrifty upbringing will set them up well for the future, whether they end up being big earners or not (as it did for your hubby).

    Good luck for the future... you're definitely on the right track :)
    R.I.P. Bart. The best cat there ever was. :sad:
  • Cautious_Investor_3
    Cautious_Investor_3 Posts: 579 Forumite
    DiggerUK wrote: »
    pinkteapot, IFA's are not market analysts or financial gurus, they are purveyors of financial products, that's all. I won't add any more to the criticisms of IFA's, much as I would like to.

    Out of interest Digger what do you do for a living?
  • henpecked1
    henpecked1 Posts: 404 Forumite
    cant see what an IFA could do to be honest. I would have to charge a fee and no asset types baulk at them. Build up a worthwhile lump of 100k plus and I think IFAs will be able to help. fIRST OF ALL, PAY OFF THE MORTGAGE!
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