choosing an IFA - how do I know they are any good?

richards123

We are now in need of one these and I have considered it in the past. I have had contact probably with around 5 of these people during the last 20 years none of whom have inspired me with confidence. No one I know is able to make any solid recommendations so it seems to me its pot luck as to who to chose.

How do I know the person I have contacted is any good?

Would my accountant who I get on with ok be a better bet?

We are looking for someone for some overall advice re. things like 1) the right ways to do BTL from tax point of view 2) the right way to handle savings given that Universal Credit (child tax credit element affects us) is withdrawn if your savings are over £16K - this kicks in later part of 2013 apparently. 3) the right way to prepare for retirement at 65 (12 yrs time and we have no pension)

We do have a pot of cash approx £110k and an interest only mortgage expiring 2022 of £92k with no repayment vehicle.

How do I find these people that I can rely on to do a good job?

dunstonh

How do I know the person I have contacted is any good?

You should be able to tell. Even if you are not strong on the subject, you should be able to gauge the quality of research or at least understand the reasoning. If you dont think its up to scratch then you have youar answer.

I have had contact probably with around 5 of these people during the last 20 years none of whom have inspired me with confidence.

What sort of contact? Were they IFAs or FAs or muti-tied?

Would my accountant who I get on with ok be a better bet?

Accountants do a different job to IFAs.

We are looking for someone for some overall advice re. things like 1) the right ways to do BTL from tax point of view 2) the right way to handle savings given that Universal Credit (child tax credit element affects us) is withdrawn if your savings are over £16K - this kicks in later part of 2013 apparently. 3) the right way to prepare for retirement at 65 (12 yrs time and we have no pension)

1 - Accountant
2 - IFA or Accountant
3 - IFA

How do I find these people that I can rely on to do a good job?

Statistically, you are unlikely to find a bad one. Less than 1% of complaints at the FOS are about IFAs. IFAs dominate the retail advice distribution (handing around 75% of retail pension class transactions for example). Millions of transactions a year but under 3000 FOS complaints. You cannot compare an IFA today with any class of adviser from 20 years ago. Or even 10 years ago given the change. There will always be some bad apples as there is in any job but you should be able to spot them as long as you focus on the advice and research/reasoning and not personality (sign here type with no explanation avoid)

MrsCautious

I hope you don't mind me saying but if I was in your position, with questions about benefits and money needed to stay safe to pay your mortgage, I would be heading for the Citizens' Advice Bureau and/or the Money Advice Service to try and get a proportion of sound objective advice for free.


The reason I say that is you have £110k but £92k to pay in 10 years time, Personally I'd be finding the lowest risk, highest paying interest savings accounts so there is no risk for your money in the mean time so the money for the mortgage can be added to with maximum interest, You don't say what your interest rate is on your interest only mortgage or savings.

I'm not sure an IFA is needed to advise you on this, or would consider it worth their while -- you don't want to pay someone to do that bit imho! Sorry if you already have this bit sorted!

you could separate out the £92k and put the remainder in something with a potential higher yield?
As I understand it, an IFA could help find you a decent pension, I would ask your accountant for a recommendation to help you make the most of your £18k and pension, they must know people they trust?

I would happily recommend my IFA if that would be helpful (south midlands) and I am sorry if what I say above is irrelevant or off the mark. Like you, I look set to lose child tax credits under rules to do with savings come 2014, I have so far taken the option of taking it on the chin -- not sure what else I can do.

Re finding an IFA, I have found that those in business networking groups where you have to have enough trust and faith from fellow members to stand in front of them every week and attempt to sell their services are trustworthy, though I am sure others may have a different opinion!
I would research those groups and see who's there, look on Best of websites, contact your local chamber of commerce, professional associations, that sort of thing, ask for testimonials and case studies (no names mentioned..) of how they have helped others?
Good luck, hope something I say here may be ok food for thought for you.

richards123

dunstonh, thanks for reply - I cannot remember who was who in regard to the IFAs as they were spread over a long period of time. The most recent contact was getting reffered business from a firm of IFAs as I understand it. Interesting to read of the stats relating to lack of complaints - I'm surprised by that!

Mrs Cautious, you sound like your user name lol . I dont think I'm anywhere needing the CAB yet!!!! Very happy to pay for good advice, forgot to say the £92K mortgage is on a prop worth £260K so not so near the breadline that I need the CAB? I cannot believe that a IFA would see me as not worth bothering with, maybe I am wrong. Re. the mortgage, our original intention was to trade down in 10 yrs time to a smaller place so that takes care of that one. Biggest problem I see is the £16K savings cap which if we exceed it will cost us £3K a year which is alot of money - not sure if I can be as philosophical as you about that!

dunstonh

Interesting to read of the stats relating to lack of complaints - I'm surprised by that!

They have been dropping year on year for many years now. Things have moved on a lot. Research from one of the consumer groups a few years back found that over half the people that see tied FAs actually believe they are seeing an IFA. Most of the issues over the years have come from FAs and tied agents. However, excluding the banks, even they have improved. Financial Ombudsman Service (FOS) chief executive Natalie Ceeney just last month praised IFAs for their complaints handling and verified the 1% figure again as well as the fact that the FOS overrules less IFA complaint rejections and that IFAs have better complaint handling than banks and big firms.

DiggerUK

richards123 wrote: »

...... I have had contact probably with around 5 of these people during the last 20 years, none of whom have inspired me with confidence.......

How do I know the person I have contacted is any good.....

So, having not been over inspired in the past, you are going back to the same people again.......!

You won't know if they are any good until you look at your finances in the years to come. Maybe it's time to take control of your own fortunes, and discover it really isn't that difficult, and a whole lot cheaper.
..._

dunstonh

o, having not been over inspired in the past, you are going back to the same people again.......!

the OP hasnt said he is going back to the same people. I would think that would be unlikely given his views about those ones.

MrsCautious

richards123 wrote: »

dunstonh, thanks for reply - I cannot remember who was who in regard to the IFAs as they were spread over a long period of time. The most recent contact was getting reffered business from a firm of IFAs as I understand it. Interesting to read of the stats relating to lack of complaints - I'm surprised by that!

Mrs Cautious, you sound like your user name lol . I dont think I'm anywhere needing the CAB yet!!!! Very happy to pay for good advice, forgot to say the £92K mortgage is on a prop worth £260K so not so near the breadline that I need the CAB? I cannot believe that a IFA would see me as not worth bothering with, maybe I am wrong. Re. the mortgage, our original intention was to trade down in 10 yrs time to a smaller place so that takes care of that one. Biggest problem I see is the £16K savings cap which if we exceed it will cost us £3K a year which is alot of money - not sure if I can be as philosophical as you about that!

You are so not wrong, glad I made you smile. . I didn't think you needed to be on the breadline to use a free service but it could pay to get some advice on how to proceed for nothing? Good luck with everything and sorry for being slow...but if you have £16k+ plus in savings and new rules come in to say you will lose payments because of that, how can you do anything other than accept it as payments are to designed to help the most vulnerable?

richards123

MrsCautious wrote: »

You are so not wrong, glad I made you smile. . I didn't think you needed to be on the breadline to use a free service but it could pay to get some advice on how to proceed for nothing? Good luck with everything and sorry for being slow...but if you have £16k+ plus in savings and new rules come in to say you will lose payments because of that, how can you do anything other than accept it as payments are to designed to help the most vulnerable?

ok:) but in my experience, advice that costs nothing is usually worth less than if you pay for it. I am considering BTL and spoke with Shelter about the subject of perceived contrived tenancies and they were completely useless.

Going back to the subject re. IFAs being any good or not I am more in a position now that I need one and I know for a fact that if I find one it will benefit me. That said, my instinct tells me my accountant might be a better bet.

Re. the £16K savings rule, it seems simple to me that I keep my saving beneath £16K. Given that I am going down the BTL route, I would think that takes care of that one but some quality overall advice on the whole thing would be good. I cannot believe for a minute that there is not a mechanism to keep your savings beneath £16K Oh hang on, we need an IFA or an accountant which comes at a cost!! only jesting but you see what I mean;):)

MrsCautious

richards123 wrote: »

ok:) but in my experience, advice that costs nothing is usually worth less than if you pay for it. I am considering BTL and spoke with Shelter about the subject of perceived contrived tenancies and they were completely useless.

Going back to the subject re. IFAs being any good or not I am more in a position now that I need one and I know for a fact that if I find one it will benefit me. That said, my instinct tells me my accountant might be a better bet.

Re. the £16K savings rule, it seems simple to me that I keep my saving beneath £16K. Given that I am going down the BTL route, I would think that takes care of that one but some quality overall advice on the whole thing would be good. I cannot believe for a minute that there is not a mechanism to keep your savings beneath £16K Oh hang on, we need an IFA or an accountant which comes at a cost!! only jesting but you see what I mean;):)

Sorry to be honest with you I think I misunderstood your first post and was being thick (well even more than usual) . I can't get past what if you get your savings down below the threshold and have a BTL doesn't that bring with it increased income that lowers TC?

richards123

yes but my wife only works part time and doesnt get anywhere near her tax allowance and I'm self employed....

so savings over £16K = no UC. (£3K pa) Income from rental that tips over tax allowances = taxed at going rate. I think we would be better off paying tax on some of the rental than seeing goodbye to all the UC which is worth approx £3K a year. I think:)

so to summarise...

one rental property that after expenses gives us say £3K pa. My wife earns £3K a year. She has £6Kpa allowance left and the prop rental profit takes only half of that. If we ended up renting out and paying tax on £3k rental profit that would only be roughly £750pa. Losing the £3K pa through having over £16k in savings is far more expensive...