At what point is an IFA needed

MarcoM

Hi,

Is there a sum below which seeing an IFA is pointless?

many thanks

Lokolo

Well if you have £100, yes, I would say pretty pointless.

To see an IFA it's not all about how much money you have. It depends on your circumstances. For example, no knowledge, or a complicated situation.

People should also have a cash savings account before they start investing.

Rob_192

If by the nature of your question, you're implying that small investments aren't worth using a FA for, whereas once you have a fair sum of money it is worth using a FA, I would actually turn that on it's head. When people start out, they invariably haven't got a clue what they're doing or even where to look for/ask for advice (I know I didn't ). This is exactly when you should use a FA, even if the sums involved are fairly small. As your investment grows, you should be reasearching and learning how things work until you're confident enough to take things back under your own control.

Any fees you pay to the FA on those early contributions, should be viewed as a small cost for the education. If you don't reach that point and/or aren't going to put the time and effort into doing your own reasearch, then stick with the fA, but if like me, it all begins to make sense then take control and transfer everything away from the FA and go it alone.

R

dunstonh

The issue with small sums is whether it is cost effective. Getting it wrong under DIY can be far more costly than an IFA. However, it is harder to get it wrong with small amounts. With larger amounts, the importance of structured portfolios and other tax wrappers and future planning becomes more important. That doesnt mean you cant DIY with large amounts. You tend to find using an IFA becomes more cost effective with larger amounts than smaller.

IFAs are primarily financial planners. Matching solutions for your needs. £200pm in a personal pension via an IFA can be cheaper than a nil commission stakeholder bought direct. It can also be viable for the IFA to give advice in that scenario too. So, its not always the big ticket stuff that is needed.

Newer advisers rarely turn down anything as they don't have the workload and are looking to build up a client bank. Experienced advisers will start to pick and choose their business more as they will likely be busier and wont be interested in dealing with lower value clients. So, you cannot really put a value on it. It really comes down to the type of adviser you contact and your personal knowledge and what you are looking to do.