Seeing a financial advisor about pensions - can you get one for free?

saving123

We need to see a financial advisor about my husbands pension - basically about how much to pay in and what is the best company to do it with (he's self employed so has no employer contributing). Someone mentioned to me that you can get a financial advisor for free as they are paid comission from the companies. How do i go about finding one of these ones? thanks

atush

It isn't free.

Any commission wil comeout of your payments into the pension plus any trail commission annually. If ths is cheaper than paying a fee we don't know as youhaven't told us enough.

There are certain DIY platforms you can use that could be cheaper. but these come with the cost of the time needed to learn abt investing/risk if you are making the decisions yourself. As that is what the professional does for you, and so is earning their fees.

It would help if you were using other things like Cash and S&S Isas now?

DavidLaGuardia

Many advisers will agree to a free initial meeting, however they charge. So why not contact two or three local advisers to have a meeting with them and be honest that you are shopping around.

You are usually better off paying the adviser via the pension as you effectively get tax relief on the cost but the way they are then paid comes out as a cost somehow. I would immeidately eliminate any adviser who claims "its free becuse we are paid by commission" because its baloney.

Finally, charges do matter but the lowest cost option doen't always mean the best deal.

CannySaver_2

Hi

Very little worth having is free!

A few points here:

1. You need to decide whether you are a DIY investor or in fact need advice. There is no right or wrong answer here, you are what you are, if it is the first time you have made an investment of this nature then perhaps some advice might come in handy, alternatively you could spend some time using reputable sources such as the MSE board to help you make your own DIY decisions

2. If you decide to take advice then use an IFA; never see a tied financial adviser. You can find an IFA by using www.unbiased.co.uk or perhaps ask friends / family for a recommendation

3. IFAs can be paid in a number of ways. Firstly they can take commission, when you take a product our from them. This means you will not explicitly pay for the meetings i.e. you won't need to take your cheque book out, but be under no illusion the commission comes from the charges levied on the pension. My issue with the commission route is that it is only paid if you take out a product, which in the past has lead to some rather iffy advice. There are of course some very ethical IFAs operating down this route. The second alternative is to pay the IFA an hourly rate (£100 - £150) for their advice. This does mean you are more likely to recieve impartial advice as the IFA is getting paid irrespetive of whether you take out a product or not. However the downside is that it means many people may be put off taking advice.

As I say very little worth having is free, you will always pay, just make sure it is to someone who is offering value for money.

The Canny Saver

saving123

Thanks for the advice so far, basically he currently has a pension with halifax that we pay about £135 into a month. His salary is about £25k so we are obviously not paying enough and need to up it but I have heard that its not a good idea to have a pension with a bank and better to move to something like standard life/scottish widows etc. I have a few questions -

- should we stop the halifax one completely and start a new one (in that case how much would we get from that one when he retires - will they be able to tell us?)
- if we start again how much roughly should we be thinking about paying in?
- or should we keep the halifax one running alongside starting a new one?
- or she would we just increase what we are paying into the halifax one?
- also i have a local government pension (final salary) - so thinking we might be able to have not quite as good a pension for my husband as mine will compensate a bit?

thanks again

dunstonh

Commission is usually more expensive than fee basis. Plus it will be banned shortly.

basically he currently has a pension with halifax that we pay about £135 into a month.

That was commission basis and its a low quality pension with poor quality investment funds.

- should we stop the halifax one completely and start a new one (in that case how much would we get from that one when he retires - will they be able to tell us?)

Almost certainly, modern options via the whole of market will be better.

- if we start again how much roughly should we be thinking about paying in?

Depends on how much income you need in retirement and when and what level of investment risk you wish to take.

- or should we keep the halifax one running alongside starting a new one?

unlikely to be the best option but without a pension analysis taking place, we cant say for sure.

- or she would we just increase what we are paying into the halifax one?

If we say that doing nothing is the worst option, then this would probably be not far behind that. If you know a product is low quality then increasing what you pay to it is only better than doing nothing.

- also i have a local government pension (final salary) - so thinking we might be able to have not quite as good a pension for my husband as mine will compensate a bit?

Retirement planning should be done jointly. In retirement, if you die first, he only gets 50% of your pension. It certainly helps but you should not make retirement planning lop sided.

saving123

Thanks for the reply. So it looks like i need to stop paying anymore into halifax and go elsewhere. Am I better to pay a financial advisor to look into this for me or do it myself. If i do it myself where do I start? Also what will happen to the halifax pension. I assume he will get some sort of pension from this but just not very much? Will they be able to tell me how much? thanks again

atush

The suggestions you seek are above. You either find and pay an IFA via unbiased (and then decide if going commission or fee paid route), or you spend some time learning here and on other websites and reading books and the financial news in broadsheets and decide to be a DIY investor. Only you know which you are comfortable with doing.

as a general rule, when you first start a pension you should be putting in half your age as a percentage. So if you started first time at age 28, you should put in 14%. but this can include tax relief and any employers contributuons, plus you have a fund to transfer into yoru new pension. Second, another 'rul' is you should have a min of 35K in your pension by the time you are in your early 30's.

saving123

thanks, think i would rather try and do it myself if possible to save paying fees but dont want to do anything stupid. My husband will be 35 this year so as a rough guide it looks like we should be paying 17.5% of about £25000 so £4375 or £364 a year. With tax relief if we pay in £300 a month that would look about right? That will be the absolute max we could afford to put in at the moment anyway (with the potential to increase it when the kids are at school and our childcare costs come down). If I look around at different companies - standard life, scottish widows etc and then start paying that amount in every month does that seem reasonable? thanks again

dunstonh

If I look around at different companies - standard life, scottish widows etc and then start paying that amount in every month does that seem reasonable?

If your intention is to use either of those providers then use an IFA. you will be better off.

saving123

i would have thought i would have been worse off as i would have to pay them a fee? Can they get better rates or something? thanks again for your advice, i appreciate you taking the time to post