retirement and investment advisers

fitzharrys

Hi.

I am in my early fifties and hoping to retire in about five years, depending how things go. I have well funded occupational pensions (both DB and DC), and a similar value of independent assets. I need to start planning for retirement. It's a very complex topic and I want to get some professional advice.

There are plenty of pension and investment advisors out there, who will do an assessment, come up with a cash flows and so forth. Very often they manage investments including asset allocation, choice of strategies, funds and so forth, based on my needs and risk profile. Their advice will typically include paying for their ongoing investment management services.

So, I am trying to choose a advisor from the many available. There are plenty of resources on the internet about how to select an IFA, so there is no need to duplicate that in responses to this question.

However, one piece seems to be missing. How can I judge the ability of an advisor to manage and grow my funds? I guess I need to see something like the last 5 years growth for a medium risk client, so I can compare it with a benchmark, assess the volatility and so forth.

Would it a financial advisor be willing to give me this info? Is it reasonable for me to ask for it? How else might I judge their investment management capability?

HappyHarry

fitzharrys wrote: »

Hi.

I am in my early fifties and hoping to retire in about five years, depending how things go. I have well funded occupational pensions (both DB and DC), and a similar value of independent assets. I need to start planning for retirement. It's a very complex topic and I want to get some professional advice.

There are plenty of pension and investment advisors out there, who will do an assessment, come up with a cash flows and so forth. Very often they manage investments including asset allocation, choice of strategies, funds and so forth, based on my needs and risk profile. Their advice will typically include paying for their ongoing investment management services.

So, I am trying to choose a advisor from the many available. There are plenty of resources on the internet about how to select an IFA, so there is no need to duplicate that in responses to this question.

However, one piece seems to be missing. How can I judge the ability of an advisor to manage and grow my funds? I guess I need to see something like the last 5 years growth for a medium risk client, so I can compare it with a benchmark, assess the volatility and so forth.

Would it a financial advisor be willing to give me this info? Is it reasonable for me to ask for it? How else might I judge their investment management capability?

Yes they probably will, but they will be unlikely to disclose the funds or DFM they use at an initial meeting.

Yes, it is certainly reasonable to ask for it. You can ask anything you like.

If you are choosing an adviser on the basis of their investment management performance over the past five years, then I'm going to stick my neck out and say that you are going the wrong way about finding an adviser. A good adviser is someone who does far more than pick investments for you. Indeed, you can do that yourself by reading up on a few topics.

Most articles on choosing an adviser will recommend that you narrow the field down by some online research, and then meet two or three advisers face to face, to see who best suits you. The good ones will come up with some ideas that you haven't even considered, the bad ones will just say yes to anything you suggest, in order to get your business.

A good adviser will build a personal relationship with you over many years, and will be proactive with ideas that will work for you.

A good adviser will steer you into retirement with a solid plan, and out the other side without you suffering financial stress along the way.

A good adviser is not necessarily someone who says they made their clients 1% more return over a five year period than another adviser.

Good luck in your searching.

fitzharrys

Thanks. Yes I realize that fund management is only one aspect, but it is an important one.

Linton

That isnt how things work. An IFA will assess your requirements and risk acceptance and come up with an appropriate portfolio, possibly using a 3rd party service. Different IFAs, or their 3rd party suppliers, could come up with different portfolios which perform differently over a given period of time. Which one will do best is completely unpredictable as it depends on the details of how the world economy happens to behave. An IFA could do a bad job and come up with a portfolio that has for example a risky high allocation of oil shares. Even if the oil industry happened to perform particularly well it would still be a badly designed portfolio.

The important characteristics of a good IFA are really his/her ability to work with you to formulate and document your requirements so that they can be translated into an appropriate set of investment, and then to be able to explain to you what is being proposed and why. Given a suitable set of investments ongoing management should be very straightforward, just ensuring that the portfolio continues to satisfy your requirements unless of course they change. Predicting the future and modifying the portfolio to maximise return is not something the IFA or anyone else can do.

I used an IFA perhaps 30 years ago when I started earning far more than I could spend and didnt know what to do with the spare cash. He changed my life just by asking the question "When do you want to retire?". The thought had never occurred to me.

fitzharrys

An IFA could do a bad job and come up with a portfolio that has for example a risky high allocation of oil shares. Even if the oil industry happened to perform particularly well it would still be a badly designed portfolio.

Then my question is how to select an IFA who will do a good job in this respect and come up with a well designed portfolio.

bigfreddiel

There are many IFAs on this board who will be along to a swear your question, but remember all they offer is advice and some expertise in form filling and understanding the rules and regulations.

They will offer no guarantees, or performance history because they know no more than you or I on how any particular investment strategy will work.

For this advice be prepared to pay anything up to 2% of the amount of capital they will be advising on and an ongoing charge each to cast an eye over the portfoliowhetndr they make any changes or not.

Good luck fj

DancingBadger

"Past performance is no guarantee, etc, etc".

No reputable IFA will promise what he/she can't quantify.

Choosing an IFA is a very personal thing. It's a fact that folk do business with people they like. Find someone you feel understands your objectives and approach to risk.

We spent three or four months "interviewing" potential IFAs before settling on a Chartered IFA who is part of a medium-sized firm which deals with all aspects of financial planning.

With a large fund you need fee-based initial advice.

Snakey

I'm going to piggyback on this thread as I have a related question that might also interest the OP.

I have already selected a financial adviser, and having handed over some initial information I have a meeting with them at the end of the month at which they are going to take me through a cashflow projection and then... I'm not really sure what happens next. I assume this will be the point where they tell me all the things they can do for me and advise me on some options to consider, and then I sign up to let them manage my pension/ISA funds and any other things I think sound good, but I don't really know what to expect.

I do a lot better when I don't have to think on my feet, so I'd really appreciate any thoughts or advice on what I need to be considering in advance of this meeting, so that I have an idea of what questions to ask (or even at what point to put my foot down if they start running faster than I'm ready for).

I do not want to be an annoying client who asks for advice and then argues with it, or asks one million questions and then says no to everything right at the last second. I'm seeing these people because I have decided that they can make a better job of getting me to an early retirement than I can - or at least, that their extra experience and resources can get me there with more money than I'd otherwise have, even after their fees - and that means I should be letting them do their job.

But a bit of me is worried that they're going to start asking for x% of my pension pot up front and that it's going to be thousands and thousands each and every year and I'm not going to be able to help an instinctive feeling that I must be being ripped off and that I must say no and get out of there at once!

dunstonh

But a bit of me is worried that they're going to start asking for x% of my pension pot up front and that it's going to be thousands and thousands each and every year and I'm not going to be able to help an instinctive feeling that I must be being ripped off and that I must say no and get out of there at once!

They are not likely to give you any advice until the fee is confirmed and accepted by you.

As you don't want to pay for the advice, it is probably best you contact the adviser now and tell them that you wish to withdraw.

Snakey

Oh come on dunston, even if you take the one sentence you quoted in isolation and out of context it doesn't say that I'm not prepared to pay anything at all. I find it hard to believe that you thought it did.

Is it unusual in your experience for somebody to be worried about going to see a financial adviser for the first time and to not be sure what to expect? I know that on here there are plenty of people who've had experience of IFAs or are IFAs themselves, but in my real life I don't move in the sort of circles where people have financial advisers - it's certainly not something that anybody in my family has ever done.