Seeing a IFA

kittb

Hi

I hope I'm in the right forum I'd just like a bit of advice on seeing a Independent Financial Advisor please .....

Its been on our list of things to do for a LONG time, having finally made an appointement I'm balking at the fees he has sent us. I appreciate that we need to pay for an experts time and advice but ouch!

We have no savings, and would like assistance reviewing our mortgage, ISA (linked to interest only part of the mortgage), life assurance, accident, sickness & unemployment cover, pension arrangements etc. But its hard to imagine that he will be able to "save" us £21+VAT a month which is his fee. Though having writen it down that is obviously a lot of work to review.

Is this the right course of action to pay someone to manage this side of things? We've just hit the ... not a penny to spare stage and it feels hard to be cutting back on groceries etc then spending out on something else.

Thanks for any advice you can offer.
Kittb

dunstonh

but its hard to imagine that he will be able to "save" us £21+VAT a month which is his fee.

That fee is very low. What are you actually getting for it?

Though having writen it down that is obviously a lot of work to review.

it is and I wonder how it can be profitable to the adviser.

Is this the right course of action to pay someone to manage this side of things?

Its very normal with investments. You either DIY or use an IFA or do nothing (FAs dont typically provide servicing nor do transactional IFAs). However, its less common with mortgage and insurance. However, its possible it could still be worth it if the insurance business is being put through on nil commission basis as you are fee based.

We've just hit the ... not a penny to spare stage and it feels hard to be cutting back on groceries etc then spending out on something else.

Maybe a debt counsellor would be a better option?

kittb

Thank you for your answers. I don't know what a debt counsellor does - we're not currently in debt (beyond mortgage debt) but I do want to avoid ending up in further debt particularly as we have a young family.

The fees that we were quoted are for a basic retainer including a 2 year review in addition to an initial charge of around £250. I believe that any commision is then offset against the monthly fees.

We used to have access to an IFA through work, I believe they paid his fees in addition to him taking the commision on what he sold us. As this is no longer available we just assumed we should follow a similar path on our own so had no idea what to expect with regards to fees etc.

Thanks

Totton

Hi,
I'm not sure that you need an IFA at this moment in time, those things you have listed are likely to be all something that you could sort out yourself. What you are paying the IFA for is both expertise and time, if you have the time for researching those items then I'd imagine you should do that unless you can see a tangible benefit of spending £500 this year and £250 next. Go back to an IFA when there is going to be a benefit in doing so.

Best Wishes,
Mickey

jimjames

If he is charging £21 per month plus £250 what exactly is being recommended for you to do? If you are finding it hard to get the £21 per month, how will you be able to afford any additional saving/investment that is being suggested? If that is indeed a problem then paying out for the advice would not be a good move.

Although you may not be in debt having a look at the debt boards and the mantra of living below your means may enable you to find additional money each month that you could invest into your ISA or pension and that wasn't money you actually needed to spend.

dunstonh

I don't know what a debt counsellor does - we're not currently in debt (beyond mortgage debt) but I do want to avoid ending up in further debt particularly as we have a young family.

You are on a tight budget when mortgage costs are at an all time low and only likely to go up rather than down.

The fees that we were quoted are for a basic retainer including a 2 year review in addition to an initial charge of around £250. I believe that any commision is then offset against the monthly fees.

which is very good then and a good way of doing it as it removes any perception for provider bias and would actually provide lower premiums.

jamesd

Is your mortgage fixed rate or variable rate? How long left on the deal? As dunstonh hinted, you're at significant risk of inability to repay the mortgage if it's variable rate and rates go up. To me that suggests that pension investing is unwise and that any investing should initially be within a S&S ISA so the money is available if your mortgage costs increase. You could switch it to a pension later once a few years of pay rises have increased your safety margin.

kittb

Thank you everyone, its really helpful to have some input on this. I will definitely check out the debt boards as we need to try to future proof against the mortgage rates inevitably climbing again. We're on a variable discount rate which we do keep on top of and move when the rate runs out, we've not long gone onto a new product though.

The thought with the pension contributions is that dh is only just into the high rate tax band and it means that we loose all child benefit/ tax credits .... would paying more into a pension fund mean that he would drop below this and be eligible again? Or are there other tactics to achieve this or is it just hard luck, someone is always going to be on the borderline?

Thanks again