Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area

jos5000

I used the supposedly Free Unbiased.co.uk's 30min financial health/pension/mortgage/investment check for pension advice (advertised on MSE) and had a horrible experience with this and do not recommend it or at least be extremely wary of it.

The IFA who contacted me immediately tried to push an array of non-pension related products. Within less than 10 minutes he became confrontational and told me I sounded like someone who was happy to do their finances 'DIY' so I should not call an adviser expecting free advice, that i was basically taking advantage and that we should end the conversation. The call lasted 10 minutes. What's more the advice he promised to give if i chose to pay £5000 for his service was really basic stuff like getting insurance for my limited company. I have been freelance for 2 years now and cannot sign contracts without various insurances, this is such basic stuff.

I wrote an immediate latter of complaint to unbiased about this - total waste of time and was insulted.

dunstonh

I used the supposedly Free Unbiased.co.uk's 30min financial health/pension/mortgage/investment check for pension advice (advertised on MSE) and had a horrible experience with this and do not recommend it or at least be extremely wary of it.

Unbiased is no longer a directory of IFAs. It changed to a lead generation site and allowed FAs to be included. Not just IFAs. They also put their charges to adviser firms up. Since then, all the IFAs I know stopped using unbiased and only appear on the "free listings" now. The salesforces (regional and national) seem to have more prominent positions on it now.

The initial free consultation would not see you get any advice usually. It is there as a get together to discuss what you are looking for and to see if the adviser and yourself get on and if there is a reason to take it further.

A 10 minute phone call would barely have a chance to cover anything.

Dentonn

I'm a complete money noob. And have most of my savings in fixed rates or easy access (and those interest rates are not doing well against or even matching inflation). I saw a financial advisor recently and was given some ideas on how to move on and how things would work if I wanted to use the firm to manage investing and stuff.

I'm a uni student in my final year (so stressed) at the moment so I don't have the time to be learning about finance.

They charge a one off 595 fee then 2.4%. To minimise the % charge, I'd have to invest ~£24k. Which I can, it's just very intimidating? (And also pretty much the max I can invest right now since fixed rates haven't matured and so that money is 'inaccessible')

So I'm unsure about what to do. Just not invest at all and let my money mean less year on year? Or invest but not £24k and therefore pay a much higher % charge? Just invest £24k?

I've been told 2.4% is very very high and I should steer clear of them.

webmasterpolo

£576 for financial advice is very cheap. the percentage is less relevant as it's a small investment and most advisers wouldn't take you on as a client.  if you think of a solicitor they would charge you 576 for 2 hours work easy.  giving you  advice would take more than 2 hours of meeting time just discussing it, then hours of preparation behind the scenes.  sounds like they are working for very low rates per hour, if it takes them 5 hours to process the advice and 2 hours of meetings with you that's only £82ph. my mechanic charges more.  the charge is all relative.  if it was £10m 2.4% is expensive, but on £24k is a bargain. 

Dentonn

webmasterpolo said:

£576 for financial advice is very cheap. the percentage is less relevant as it's a small investment and most advisers wouldn't take you on as a client.  if you think of a solicitor they would charge you 576 for 2 hours work easy.  giving you  advice would take more than 2 hours of meeting time just discussing it, then hours of preparation behind the scenes.  sounds like they are working for very low rates per hour, if it takes them 5 hours to process the advice and 2 hours of meetings with you that's only £82ph. my mechanic charges more.  the charge is all relative.  if it was £10m 2.4% is expensive, but on £24k is a bargain. 

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though? Since I'd have to take away 2.4% from that. Would it be worth it then? It seems I would have to invest at a medium risk at least to make it worth it.

dunstonh

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though?
What is your definition of cautious?
4% annually (average) after charges is a fair assumption for the general meaning of cautious.

 Since I'd have to take away 2.4% from that. Would it be worth it then? 
If you are investing for the medium to long term and need advice then yes it is.   Advice is about getting it right and having someone do it for you.     A one off reduction is not going to change that.

webmasterpolo

Dentonn said:

webmasterpolo said:

£576 for financial advice is very cheap. the percentage is less relevant as it's a small investment and most advisers wouldn't take you on as a client.  if you think of a solicitor they would charge you 576 for 2 hours work easy.  giving you  advice would take more than 2 hours of meeting time just discussing it, then hours of preparation behind the scenes.  sounds like they are working for very low rates per hour, if it takes them 5 hours to process the advice and 2 hours of meetings with you that's only £82ph. my mechanic charges more.  the charge is all relative.  if it was £10m 2.4% is expensive, but on £24k is a bargain. 

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though? Since I'd have to take away 2.4% from that. Would it be worth it then? It seems I would have to invest at a medium risk at least to make it worth it.

Sounds like you're thinking it's 2.4% per year. It's not. It's 2.4% once.  So if you  invested for 5 years it's  an average of 0.48% a year.  If you invested over 10 years it's  0.24% a year. For 20 years it's 0.12%.

On this basis if you make 40% in 10 years you get 37.6% which is far more than in cash.  of course you're investing so returns can be more or less than that.

Dentonn

dunstonh said:

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though?
What is your definition of cautious?
4% annually (average) after charges is a fair assumption for the general meaning of cautious.

 Since I'd have to take away 2.4% from that. Would it be worth it then? 
If you are investing for the medium to long term and need advice then yes it is.   Advice is about getting it right and having someone do it for you.     A one off reduction is not going to change that.

Cautiously would be low risk. 

I'm not sure I fully understand how they charge. It's not per year then? Just per investment? As in, per each time I put in an amount of money? 

webmasterpolo said:

Dentonn said:

webmasterpolo said:

£576 for financial advice is very cheap. the percentage is less relevant as it's a small investment and most advisers wouldn't take you on as a client.  if you think of a solicitor they would charge you 576 for 2 hours work easy.  giving you  advice would take more than 2 hours of meeting time just discussing it, then hours of preparation behind the scenes.  sounds like they are working for very low rates per hour, if it takes them 5 hours to process the advice and 2 hours of meetings with you that's only £82ph. my mechanic charges more.  the charge is all relative.  if it was £10m 2.4% is expensive, but on £24k is a bargain. 

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though? Since I'd have to take away 2.4% from that. Would it be worth it then? It seems I would have to invest at a medium risk at least to make it worth it.

Sounds like you're thinking it's 2.4% per year. It's not. It's 2.4% once.  So if you  invested for 5 years it's  an average of 0.48% a year.  If you invested over 10 years it's  0.24% a year. For 20 years it's 0.12%.

On this basis if you make 40% in 10 years you get 37.6% which is far more than in cash.  of course you're investing so returns can be more or less than that.

I see, I think I really didn't understand their charges correctly. This is the paper I got with their fees on. I blacked out the irrelevant parts  


Sorry for the dumbass questions, I'm super super new to all this and I don't want to possibly unnecessarily spend money when I don't actually have that much /am afraid of making mistakes. 

bowlhead99

Dentonn said:

I'm not sure I fully understand how they charge. It's not per year then? Just per investment? As in, per each time I put in an amount of money? 

webmasterpolo said:

Sounds like you're thinking it's 2.4% per year. It's not. It's 2.4% once.  So if you  invested for 5 years it's  an average of 0.48% a year.  If you invested over 10 years it's  0.24% a year. For 20 years it's 0.12%.

On this basis if you make 40% in 10 years you get 37.6% which is far more than in cash.  of course you're investing so returns can be more or less than that.

I see, I think I really didn't understand their charges correctly. This is the paper I got with their fees on. I blacked out the irrelevant parts  

Sorry for the dumbass questions, I'm super super new to all this and I don't want to possibly unnecessarily spend money when I don't actually have that much /am afraid of making mistakes. 

The bit you didn't black out shows a fee being charged to implement a solution. For example, they will implement a solution to invest £75k, for a £1800 charge, and assuming you are going ahead with that, the minimum up front planning fee will be covered out of that money so you are paying £1800 total and not a separate planning fee on top. This doesn't mean you are paying 2.4% every year out of your income, because no further one-off planning or implementation is needed once the money is invested.

If next year you  suddenly find yourself with another £75000 to invest, they would perhaps charge £1800 to implement their recommendations on that too. However most advisors will charge an ongoing servicing fee which covers taking additional cash on an ongoing basis and deploying it into the same plan. If you had so much new money in the future that the optimum plan for you changed significantly and the original plan was no longer suitable, there might be an additional fee for that.

Thrugelmir

Dentonn said:

webmasterpolo said:

£576 for financial advice is very cheap. the percentage is less relevant as it's a small investment and most advisers wouldn't take you on as a client.  if you think of a solicitor they would charge you 576 for 2 hours work easy.  giving you  advice would take more than 2 hours of meeting time just discussing it, then hours of preparation behind the scenes.  sounds like they are working for very low rates per hour, if it takes them 5 hours to process the advice and 2 hours of meetings with you that's only £82ph. my mechanic charges more.  the charge is all relative.  if it was £10m 2.4% is expensive, but on £24k is a bargain. 

If I invest cautiously , and I've been told that the average return is 4%, then I wouldn't be making much over the average interest rate out there though? Since I'd have to take away 2.4% from that. Would it be worth it then? It seems I would have to invest at a medium risk at least to make it worth it.

Hence the current attraction of passive trackers for many. Returns will be average. However fees are low. Which results in a proposition that should beat bank deposit accounts over the longer term.