Financial advice is for rich people.

Tirian

A provocative statement? Perhaps. I just called up to find out about getting some pension advice from an IFA, there's only one listed on unbiased.co.uk within reachable distance of me that has someone with pension qualifications. I called them up, and am going in for an initial consultation in a couple of weeks. This will be free, but after that either I have to take commission based service .. which makes me a little wary ... or go for fee based service.

How much is fee based service? £250 an hour apparently. :eek:

Is this mind-boggling sum supposedly in the realms of what is considered reasonable for a bit of advice on how to save for my retirement? And how many hours is it likely to take? Or do I just wait until they come back to me and tell me that they've spent 4 hours planning my investment strategy and bill me for a grand???

I get increasingly nervous the more I delve into trying to sort all this out - the world appears to be fuller at every step with people eager to charge me massive amounts of money for signing a bits of paper that absolve them of responsibility if I then lose masses more money as a consequence. We'll see .. not been to the first appointment yet, so perhaps I'll be pleasantly surprised. However anyone who talks of £250 /hr fees immediately makes me very nervous. I do wonder sometimes if half the people I talk to in financial services have any concept at all of what it's like to live on less than the £40k plus a year they all seem to get.

*sigh*

rant over.

headcase

I'm an ifa with many years experience and deal with pensions etc as well as a user of this website for many months. I'm not looking for business but I charge £75 per hour

Mrs_pbradley936

Be upfront and say that you want to limit your consultation to an hour, you might also say that other IFAs are less expensive but that they are closer etc. I think the reason it is important to have advice from an IFA is because it is tailored to your personal circumstances. Whether you are married, have kids, your age, etc all have a bearing on the sort of advice they will give you. The generic advice we all pass around on here will not necessarily be specific to a given individual. As an example I am in my 50s so I am not really interested in investments which will be good in thirty years time – I do not expect to be here. If I am I shall be my children’s problem to sort out with Nursing Home Fees.

cheerfulcat

Hi, Tirian,

No, [paid for] financial advice is for lazy people. There is plenty of information out there - more than enough to equip anyone with the wherewithal to handle their own investments. Have a look at the Motley Fool for starters.

dunstonh

£250 an hour is high but it depends on location. A London adviser or remote adviser could easily justify more. Plus prestige can come into play as well.

I charge £150 an hour if its done by the hour but most dont go on fee basis because I work on discounted commission of 1% of the amount invested and that us usually lower than the per hour rate built up.

I am very surprised you only had one IFA nearby. If you used the filter option on the unbiased website, that would explain the response. The filters are highly flawed. For example, over the years there have been around 3-4 versions of qualifications to be an adviser. If you specify one qualification, you will not get those with the other qualifications listed even though they would be at least as qualified, possibly higher.

Its the same if you filter on a pension qualification for example. Different pension qualifications now exist and it wont display those with the alternative options to which you selected.

Re-do the unbiased check again but dont filter out anything and see how many you get now.

Tirian

I did use the filter, so I will go back and try without.

Prestige and location are all very well, but it doesn't really make much difference to the point that £250 per hour is simply not an option for anyone but the wealthy. I live in London. I live there because I couldn't get a job elsewhere. Thus I'm paying London rent and expenses, plus student loans, and I don't earn buckets of money to throw around on extras. And I'm not one of these people who goes around ploughing all their cash into designer clothes and ipods. I am careful with my money, have no non-student loan debts, have saved some money. But part of being careful with my money means you can be damn sure I'm not just going to hand over £250 to anyone for anything unless they give me some good reason why it's worth my while to do so.

I know I might sound like a stuck record here, but if the government and industry want young people to take pension and retirement planning seriously, they need to wake up to the fact that young people don't earn buckets of money to throw around on fees like this.

And I know that commission based service is there, but it's kind of understandable that we should be wary of that given the debacles of the past, eg. endowment mortgages etc.

Maybe I'll just work through my retirement instead

cheerfulcat

I know I might sound like a stuck record here, but if the government and industry want young people to take pension and retirement planning seriously, they need to wake up to the fact that young people don't earn buckets of money to throw around on fees like this.

You have been given the means with which to educate yourself, for free.

dunstonh

Prestige and location are all very well, but it doesn't really make much difference to the point that £250 per hour is simply not an option for anyone but the wealthy

It makes a big difference. You can rent office space round our area for £250pm. The same office space would be closer to £1000pm in London. You can hire assitants in this area for 10k a year. That would be £20k in London. The whole cost of living is reflected in London pricing in a wide range of services. Prestige though is aimed at the wealthy.

And I know that commission based service is there, but it's kind of understandable that we should be wary of that given the debacles of the past, eg. endowment mortgages etc.

There is a world of difference in the quality, monitoring, qualifications and experience of the individuals giving advice today. Most advisers I know have clean records with no complaints. It should also be noted that around 12 companies (all tied) reflect the majority of ombudsman complaints. IFAs represent the lowest level of complaints yet account for most of the business. And over 80% of advisers out here today have never had a complaint.

Perhaps something to consider is that a regular contribution stakeholder pension of around £50pm would earn the adviser £100 on commission terms. A regular contribution ISA would be £1.50pm. Fees probably arent the best option for you.

Tirian

cheerfulcat wrote:

You have been given the means with which to educate yourself, for free.

If, like myself, a person has no experience of stocks, shares, investments, etc. then it is a considerably more daunting affair than you would appear to assume. I'm no klutz - I work with companies in the financial services sector every day, I studied maths at uni (and have a PGCE in secondary maths), but investments, pensions, the products, regulations, risks etc. is a mammoth area. If you want to pretend otherwise, I think it is you who is being a little naive.

My comments referred to the many people in my age bracket who won't even have the numeracy / mathematical headstart that I do when approaching these matters. Who struggle to comprehend why saving into a 5% ISA doesn't make sense before they've paid of their £1000 credit card with a 19% APR - yes, I know a lot of people, graduates, who explaining that to is a challenge. Telling them to go and figure out retirement investment planning off their own bat is ludicrous.

So, thanks for the platitudes - but for a realistic solution, just telling everyone to go and figure it out for themselves is nonsense.

Dunstonh - I will certainly make sure I discuss the implications of commission based service when I have my appointment. £75 / hr fees might be do-able for me. £150 / hr even, at a stretch, if I knew it was going to get me value for money and wasn't going to end up being too big an initial outlay. £250 /hr just isn't feasible for me. We'll see ...

cheerfulcat

Tirian wrote:

If, like myself, a person has no experience of stocks, shares, investments, etc. then it is a considerably more daunting affair than you would appear to assume. I'm no klutz - I work with companies in the financial services sector every day, I studied maths at uni (and have a PGCE in secondary maths), but investments, pensions, the products, regulations, risks etc. is a mammoth area. If you want to pretend otherwise, I think it is you who is being a little naive.

My comments referred to the many people in my age bracket who won't even have the numeracy / mathematical headstart that I do when approaching these matters. Who struggle to comprehend why saving into a 5% ISA doesn't make sense before they've paid of their £1000 credit card with a 19% APR - yes, I know a lot of people, graduates, who explaining that to is a challenge. Telling them to go and figure out retirement investment planning off their own bat is ludicrous.

So, thanks for the platitudes - but for a realistic solution, just telling everyone to go and figure it out for themselves is nonsense.

There's absolutely no need to be rude. I didn't say go and figure it out yourself, I said that all the information you need is freely available and gave you a link which, had you gone and done a little reading, would have equipped you - or anyone else - with enough knowledge to begin investing for retirement. And I'm sorry, if a graduate finds it difficult to grasp that paying interest at 19% costs more than an ISA at 5% returns then he probably shouldn't be allowed to deal with money at all.

BTW, there are thousands of small investors out there, doing pretty well without paid for advice and most of them self-taught...

Tirian

cheerfulcat wrote:

There's absolutely no need to be rude.

cheerfulcat wrote:

if a graduate finds it difficult to grasp that paying interest at 19% costs more than an ISA at 5% returns then he probably shouldn't be allowed to deal with money at all.

*ahem* .. pot? Kettle?

However much it might offend your heightened sensibilities, all I am doing is pointing out the genuine situation of a large proportion of the population. Just because you (presumably) and I understand maths, doesn't mean everyone does. You can complete most degrees today without knowing how to even do a ten times table. That's just the way it is. Dismissing that with a throwaway comment like "they shouldn't be allowed to deal with money" doesn't make that problem disappear, I'm afraid.

I did have a quick look at the link you gave. It gave things average returns for investments in equities, bonds and cash over 50 years and showed equities came out top. This is no great surprise to me, however I also happen to know that average returns don't mean a thing - some will make huge profits, others will make losses. To judge which is which will still take a lot of working out, and some luck - especially if, as with myself, you don't have a huge mass of capital to play with and spread around. The man with a few beans is always going to be at a much greater risk. Anyway, you obviously have your view, which appears to be that anyone who doesn't do it themselves is either lazy, stupid or both. I disagree. I've given my reasons, you've given yours - unless you have something new to add, how about we leave it there?