IFA's - how does it work for me

icw

I'm 47 now and never paid into a pension.
I want to start now and am thinking of putting in about £400 per month. (maybe up to £500)
I need to work out how I can get the most value from my investments. I have a fairly high tolerance of risk and so might be interested in some kind of investment funds.
So far I looked at Standard Life and it seems they have two types of pension that might be suitable AMP and SIPP - but how do I know which would be best for me?
I think I have come to the conclusion that I need the advice of an IFA. However I am scared on making some long term commitment in that area.
I think I just need an hour or so of advice now in order to get me started don't I?
How does it work with IFA's ?
can you just pay them by the hour or do people benefit fro longer term relationships - and what sort of rates can I expect to be handing over?

dunstonh

I need to work out how I can get the most value from my investments. I have a fairly high tolerance of risk and so might be interested in some kind of investment funds.

You say you have a high tolerance if risk. So, a loss of say 40% in 12 months is the sort of level you are looking at with high risk. Is that right?

However, do you have the capacity to afford taking such high risk?

So far I looked at Standard Life and it seems they have two types of pension that might be suitable AMP and SIPP - but how do I know which would be best for me?

A SIPP is for experienced investors wanting access to investment options not available on stakeholder or personal pensions. I am not a fan of Std Life but that is rarely an issue as they are not exactly competitive in pricing.

I think I just need an hour or so of advice now in order to get me started don't I?

You wont get advice in an hour. For an IFA to give advice they will need to factfind you (obtain information about you and your finances), risk profile you and then go away and do a shortfall analysis, risk analysis and then research and prepare a report on which pension provider to use, how to invest and how it fits with your shortfalls and risk profile.

can you just pay them by the hour or do people benefit fro longer term relationships - and what sort of rates can I expect to be handing over?

You can pay by the hour but you are probably looking at about 6 hours work there. Most people prefer fixed fee as it gives certainty. The fee can be collected via the pension allowing you to get tax relief on the fee.

Some people will prefer ad hoc transactions. Others prefer ongoing relationships over the long term. It is up to you which you want. However, do be aware that an inexperienced investor wanting a one off transaction advice is likely to get an investment solution that fits that particular type of individual. It will suit that need but it may not be the sort of thing an IFA would use for themselves as that usually requires ongoing reviews, monitoring and servicing. However, given the fact you are likely to be at least 3-5 years away from needing a review (due to small fund size), it may be better to be transactional to begin with and then move to servicing when you need it.

atush

Find an IFA thru unbiased.co.uk in your area (if you don't have a personal recommendation).

They now mostly charge a fee based on their time rather than a commission, which can be paid thru a pension if you want (to take advantage of tax relief). You often get a short introductory meeting for free, to asses what you want, if they can help, and what it will cost.

What about your work? Don't they offer a pension? If they don't now, they will very soon have to- ask them. Generally, a work pension is better as the employer contributes alongside you (this extra is known here as 'free money'.

There are personal pensions like you looked at, and there are SIPPs (self invested personal pensions). Note the self part. These are more suited to those who want to invest for themselves and not use the advice of an IFA. If you are not this type of person, you might be better with a personal Pension and just choose the funds yourself, use a lifestyling option, or get the advice of an IFA who will judge from what you tell them your attitude to risk.

Look at Hargreves Landsdown, Cavendish online, monevator. Read up on investing if you want to go down the Sipp route.

icw

I am self employed so no work pension unfortunately.
However I have just made an apt for Monday with a reputable IFA from my town.
Thanks for your help

dunstonh

there are SIPPs (self invested personal pensions). Note the self part. These are more suited to those who want to invest for themselves and not use the advice of an IFA.

I would disagree. IFAs frequently use SIPPs. It isnt about whether you use an IFA or DIY. its about whether you want the investments that a SIPP can offer or not.