Taking the plunge(early retirement) & finding IFA advice confusing!
sqwiffy
Posts: 39 Forumite
I posted almost a couple of years ago about wishes for the future and got some helpful advice on here about using an unexpected windfall.
My OH and I have done some sums and agreed that if I retire early at 60 (with some conditions like having his dinner on the table etc:rotfl:) we can pay our bills on his salary. He is willing to continue working until 66 if he has too (he's 59) but would love to retire beforehand if possible. On this basis, I have handed in my notice with a retirement date of 1st February 2018. Only 73 days to go....
We have spoken to 2 IFA's for the initial free session with the intention of choosing one to help us generally but also to decide on whether I should take the standard pension and lump sum or a maximum lump sum and reduced pension. However they gave us opposing views based on our goals so we are reluctant to pay either one money for further advice at this stage.
One was charging £500 for the next bit of work which would look at all out income/outgoings etc and give us a plan accordingly. He was proposing a fair amount of our money going into mixed investments which we would pay a % on, and the further £500 annually or every other year. On brief discussion, he thought there was potential for TOH to retire early too but dates not discussed. He thought we should take the bigger lump sum to invest.
The other spoke in more details of figures. He charged an hourly rate and thought it would take around 20 hours of work so almost £4000 to do a plan, and he was talking about us using our savings to live on until our state pensions kick in at 66. On looking at what we thought we'd need/want annually then, he thought our combined pensions would be at least that and a little more so we could afford to spend some each year until then, and for TOH to also retire early if he wants. He thought we should take the higher pension to have a better guaranteed income into old age.
I appreciate both IFA's did not have all our detailed figures but I feel very confused now as to which one we should use. They are not cheap enough to pay for both and I seems as though we need to be sure which way we want to go before getting the advice! I've got to let the pension people know what I want to go for.
Any thoughts folks? Do you need figures and or additional information to answer my questions?
My OH and I have done some sums and agreed that if I retire early at 60 (with some conditions like having his dinner on the table etc:rotfl:) we can pay our bills on his salary. He is willing to continue working until 66 if he has too (he's 59) but would love to retire beforehand if possible. On this basis, I have handed in my notice with a retirement date of 1st February 2018. Only 73 days to go....
We have spoken to 2 IFA's for the initial free session with the intention of choosing one to help us generally but also to decide on whether I should take the standard pension and lump sum or a maximum lump sum and reduced pension. However they gave us opposing views based on our goals so we are reluctant to pay either one money for further advice at this stage.
One was charging £500 for the next bit of work which would look at all out income/outgoings etc and give us a plan accordingly. He was proposing a fair amount of our money going into mixed investments which we would pay a % on, and the further £500 annually or every other year. On brief discussion, he thought there was potential for TOH to retire early too but dates not discussed. He thought we should take the bigger lump sum to invest.
The other spoke in more details of figures. He charged an hourly rate and thought it would take around 20 hours of work so almost £4000 to do a plan, and he was talking about us using our savings to live on until our state pensions kick in at 66. On looking at what we thought we'd need/want annually then, he thought our combined pensions would be at least that and a little more so we could afford to spend some each year until then, and for TOH to also retire early if he wants. He thought we should take the higher pension to have a better guaranteed income into old age.
I appreciate both IFA's did not have all our detailed figures but I feel very confused now as to which one we should use. They are not cheap enough to pay for both and I seems as though we need to be sure which way we want to go before getting the advice! I've got to let the pension people know what I want to go for.
Any thoughts folks? Do you need figures and or additional information to answer my questions?
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Comments
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Yes we need figures. Pensions (options, amounts and when they start), SP forecasts, other investments, savings, home equity and your income requirements, so do a detailed budget. £4k seems like a lot for this planning to me, but I know nothing of the amounts charges in the UK. If you have some basic abilities with spreadsheets you can do a lot of planning for yourself. The tricky bits are coming up with reasonable estimates for inflation. investment return and being honest about how long you might live......it's best to be optimistic on that one and maybe a bit pessimistic with the other numbers.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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I'm going to go out on a limb and say that £4,000 is a ludicrous sum of money to spend on cashflow planning alone, unless you are so stonkingly rich that it's small change. This is why hourly fees are best left to solicitors.
Which would give you greater value - take two nice holidays abroad, or spend £4,000 to be told that you could have afforded a couple of nice holidays this year if you hadn't just spent £4,000 on cashflow planning.
If the second IFA also decides that it would be sensible to invest some of your money for the long term - and it would be odd if he didn't, given that you will be living on your savings for 6-7 years - that will mean further fees on top of the £4,000, whether that's more hourly fees or a percentage of the investments.
What % is the first IFA proposing to charge? How much is "a fair amount of our money"?0 -
It really isn't that difficult to work out cashflow yourself, with a spreadsheet or even paper and pen.0
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AnotherJoe wrote: »It really isn't that difficult to work out cashflow yourself, with a spreadsheet or even paper and pen.
Agreed, if you are numerate, Excel literate and have a basic understanding of personal finances/inflation/investment returns/tax etc a simple financial plan is easy to do. If you are planning on relying on drawdown I believe it is essential to acquire these skills.
On the other hand a charge of £500 for someone to provide the reassurance of an independent review of your situation may well be worthwhile. The cost does not seem unreasonable.0 -
Some advice firms are based on providing cashflow planning and have absolute faith in it. Some consumers do too. So, the business model of that firm may well be that. Typically the firms that are focused on that model only want clients that buy into that. Those clients also typically tend to be high net worth.
Personally, I am not a fan but they do fit a certain type of person and a certain type of business. Problem is that those businesses that offer that model tend to lack flexibility and you have to fit them rather than them fitting you. When I say a fan, I am on about the real in depth ones. With drawdown, a simpler cashflow calculation works for most.
There are over 20,000 advisers out there. All operating in different ways targetting different types of clients. Find an IFA that fits what you want to achieve. Not the other way around.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Malthusian wrote: »I'm going to go out on a limb and say that £4,000 is a ludicrous sum of money to spend on cashflow planning alone, unless you are so stonkingly rich that it's small change. This is why hourly fees are best left to solicitors.
Which would give you greater value - take two nice holidays abroad, or spend £4,000 to be told that you could have afforded a couple of nice holidays this year if you hadn't just spent £4,000 on cashflow planning.
If the second IFA also decides that it would be sensible to invest some of your money for the long term - and it would be odd if he didn't, given that you will be living on your savings for 6-7 years - that will mean further fees on top of the £4,000, whether that's more hourly fees or a percentage of the investments.
What % is the first IFA proposing to charge? How much is "a fair amount of our money"?
Generally agree but there's no way I'd be letting solicitors loose on an open ended hourly rates base, fixed budgets with reviews for additional work is the only way to go I'd suggest.0 -
I agree that £4000 is a huge amount to pay for an IFA and we did the initial free consultation with one prior to my OH and then got him to look into options as to what to do with his pension. That cost us £750 and I can honestly say it was a waste of money and he did nothing we could not have found out ourselves. In fact he gave us wrong information which I spotted and after that I had no confidence in him at all so just researched it myself.
You do not need an IFA to work out cash flow. An excel spreadsheet or pen and paper if you are not IT literate is fine. Take the savings or investments you have and any quotes for pensions and state pensions. Write down the income amounts for each year. Difficult to work out without figures but I would say the first thing you should work out is your required amount per annum. See how it matches up with the pensions and assume maybe 3% yield on investments per annum. From that you can see whether your OH can go earlier than spa.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
enthusiasticsaver wrote: »
You do not need an IFA to work out cash flow. An excel spreadsheet or pen and paper if you are not IT literate is fine. Take the savings or investments you have and any quotes for pensions and state pensions. Write down the income amounts for each year. Difficult to work out without figures but I would say the first thing you should work out is your required amount per annum. See how it matches up with the pensions and assume maybe 3% yield on investments per annum. From that you can see whether your OH can go earlier than spa.
There are also some websites that will walk you through the cash flow calculations. You input you income sources, start times and investment information and they provide a projection of your income/withdrawal rates etc“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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