My mother has £200,000 cash to invest for retirement, please help!

kidmugsy

King_Weasel wrote: »

Is this such "wonderful value"? You lose a year's pension payments so it takes a decade or so just to get back to where you would have been had you not deferred. I'm not saying "don't do it", but trying to warn that the 10% extra isn't comparable with, say, a 10% annual growth in an investment.

1) Yes, it's wonderful value - just compare it with any commercial index-linked annuity.

2) It may take far less than a decade to "get back" depending on future inflation rates.

3) Where can you lay your hands on an investment that guarantees 10% annual return?

CompBunny

Hi again

My Mum has spoken with the original IFA again. Here is a breakdown of what his fees would be in my mums words...still sounds higher than what was suggested here? What do you think?
"
Initial start-up costs on £200,000 is 1.5% +£3000
Then yearly - on 1st £100,000 will be 2% = £2000
- on 2nd £100,000 will be 1% = £1000

The cost of my yearly meeting with him, annual report, newsletter, access when needed = 0.5% of amount invested - £1000 on £200,000 I’m not sure when I have to pay that, possibly after a year, i will have to look at the info he has left me."

She hasn't signed a contract with him yet.
She also asked him about the possibility of paying more into her workplace pension (which is through Aviva):
"Pension considerations – if i pay into my work pension eg a lumpsum of £11,280 a year the state will add £25% on. However, I will have to live to 85 to get back what I put in, and I will not have that capital sum to use as i please except 25% as a lump sum - not taxed -on retirement."
She said on the phone that he had though paying extra into her pension was overall not a good idea for her.

I also asked her on the phone about sorting her stocks and shares ISA before the end of the year and she said that the IFA wanted to sort that for her if she signs before the end of the financial year. I asked if it wasn't something we could do ourselves but apparently he had said that he can "wrap" it better.

Any feedback would be greatly appreciated. Mum seems to like this man but I don't want her to just sign up with him because a family friend used him once for a £40k investment!

xylophone

See http://www.standardlife.co.uk/1/site/uk/financial-education/retirement-planning/retirement-income

Is your mother currently in receipt of her CS pension or is it deferred until scheme retirement age? (60?)

If she will not draw it until SRA, approximately what can she expect?

Presumably she will be eligible to draw her state pension no later than 2021 - has she requested a state pension forecast?

When does she expect to retire from her current employment?

What sort of pension does she expect from this employment?

Has she asked Aviva for an estimate of what she might expect if she made increased pension contributions? http://www.aviva.co.uk/pensions-and-retirement/retirement-centre/?source=8391/1&entry=129358&gclid=CPuivKSx6LUCFfLLtAoduzUAqQ

How much money does she need to keep as an emergency/spending pot? Is she using her cash ISAs for this?

Have you compared the current IFA's proposals with those of others?
https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser

Has she considered transferring all existing S&S ISAs to a discount broker like HL for example and then considering whether other funds might suit her better?

She could also hold her non-isa investments in their Vantage service and gradually transfer over each year?

This would have the advantage of being easy to manage on-line if she wanted to go the DIY route.

You mention that your father is self investing - what is his strategy?

And if this is going to take another month or two to consider, she could at least park this year's isa allowance with the likes of HL so as to avoid losing it?

http://www.hl.co.uk/ perhaps play around with this?

http://www.hl.co.uk/funds/master-portfolios

Do come back and tell us what was eventually decided!

CompBunny

Wow, Thanks for your reply! I will send this post to her and ask for her answers. I really hope that she will compare with other IFAs, I know she wants to minimise stress but hopefully with support she can handle another opinion/quote....

Thanks very much for recommending H&L, I think it sounds like a great idea to "park".

My father is doing a variety of things, I don't speak to him now but he sent my mum a long email of suggestions - however, one of these suggestions was premium bonds....enough said :cool:

nicknameless

dunstonh wrote: »

Statistically, the odds of finding a bad one are low. IFAs handle the majority of regulated advice transactions but account for just 1% of complaints at the FOS. Most of which are rejected. Indeed, just in November the FOS commended IFAs for their record keeping and justifications which made it easier to show the advice was good in most of the cases they looked at. She could be unlucky and find one in that 1% but realistically her only issue is going to be finding one that isnt greedy.

So greedy doesn't equate with bad ever? The 'bad' IFA generating 2% less return, but charging 1% fee, is the same as the good IFA generating 2% more but charging 3% isn't she?

atush

The fees suggested to your mother sound very high to me. There should be set fees, not percentages at level of investments. See another IFA I think.

nicknameless

CompBunny wrote: »

Hi again

My Mum has spoken with the original IFA again. Here is a breakdown of what his fees would be in my mums words...still sounds higher than what was suggested here? What do you think?
"
Initial start-up costs on £200,000 is 1.5% +£3000
Then yearly - on 1st £100,000 will be 2% = £2000
- on 2nd £100,000 will be 1% = £1000

The cost of my yearly meeting with him, annual report, newsletter, access when needed = 0.5% of amount invested - £1000 on £200,000 I’m not sure when I have to pay that, possibly after a year, i will have to look at the info he has left me."

She hasn't signed a contract with him yet.
She also asked him about the possibility of paying more into her workplace pension (which is through Aviva):
"Pension considerations – if i pay into my work pension eg a lumpsum of £11,280 a year the state will add £25% on. However, I will have to live to 85 to get back what I put in, and I will not have that capital sum to use as i please except 25% as a lump sum - not taxed -on retirement."
She said on the phone that he had though paying extra into her pension was overall not a good idea for her.

I also asked her on the phone about sorting her stocks and shares ISA before the end of the year and she said that the IFA wanted to sort that for her if she signs before the end of the financial year. I asked if it wasn't something we could do ourselves but apparently he had said that he can "wrap" it better.

Any feedback would be greatly appreciated. Mum seems to like this man but I don't want her to just sign up with him because a family friend used him once for a £40k investment!

seriously she would have to pay 0.5% to get to meet with him each year on top of those fees?

dunstonh are any of those 1% of upheld claims ever about sheer and utter greed?

CB - yes the ISA deadline may be looming, but that is definitely not a reason to rush into a decision which will have so much long term importance for your mother.

I would most definitely shop around and talk to 2-3 more IFAs with your mum.

nicknameless

p.s. Dustonh - who is an IFA also (who obviously knows his onions) would most likely say something different about the pension in that the comment made by your mother's potential IFA is exactly the reason to invest some in a pension (so that it acts as long term indefinite income which can't be used up prematurely).

CompBunny

Dustonh appears to be from Norfolk...shame, my Mum is in suffolk and judging by his posts on MSE he indeed does look like he know his onions! :P

jem16

CompBunny wrote: »

Hi again

My Mum has spoken with the original IFA again. Here is a breakdown of what his fees would be in my mums words...still sounds higher than what was suggested here? What do you think?
"
Initial start-up costs on £200,000 is 1.5% +£3000

I would think 1% on £200k should be the top end of fees. £3k is too much.

Then yearly - on 1st £100,000 will be 2% = £2000
- on 2nd £100,000 will be 1% = £1000

What exactly is this for? Do you mean any future topups will be at those charges or is this an annual charge for the £200k?

The cost of my yearly meeting with him, annual report, newsletter, access when needed = 0.5% of amount invested - £1000 on £200,000 I’m not sure when I have to pay that, possibly after a year, i will have to look at the info he has left me."

0.5% for ongoing servicing is the norm on £200k. It should include an annual review plus Bed&ISA, annual rebalancing plus any contact should be inlcuded in that charge and not extra.

She also asked him about the possibility of paying more into her workplace pension (which is through Aviva):
"Pension considerations – if i pay into my work pension eg a lumpsum of £11,280 a year the state will add £25% on. However, I will have to live to 85 to get back what I put in, and I will not have that capital sum to use as i please except 25% as a lump sum - not taxed -on retirement."
She said on the phone that he had though paying extra into her pension was overall not a good idea for her.

I can't see from your previous posts if she already pays into this Aviva work pension? Does the employer also contribute or not?

If your Mum already pays into her employer's pension and pays enough to receive the full employer contribution, then I agree that as a basic rate taxpayer I wouldn't see the point of paying more.

I also asked her on the phone about sorting her stocks and shares ISA before the end of the year and she said that the IFA wanted to sort that for her if she signs before the end of the financial year. I asked if it wasn't something we could do ourselves but apparently he had said that he can "wrap" it better.

You could DIY but if the IFA is dealing with the whole portfolio it makes sense to let him sort it out, just as I would expect him to Bed&ISA each tax year.