Independent Financial Advice - Recommendations

Pointers

Hi All,

Please can anyone recommend a financial advisors to advise me on my tax and pension arrangements, how best to go about engaging with one and anything that I should prepare in advance of meeting an advisor.

My background is as follows:
37 years old
Single with no dependents
I've had a well paid job for the last 5 years but have been too busy with work to really consider how I was using the money and so have saved up a lot of money from my salary that is now in ISAs or bank accounts where I only receive c1% interest. This is risk free but doesn't seem like the most efficient way to use the funds.
Under my pension scheme I pay in the maximum 9% that I can and my employer contributes 6%. Other than I don't have any other investments but I haven't always put in the maximum amount and so haven't made the most of these tax free contributions to my pension.
As I haven't really planned ahead I've simply been paying tax at 40%/45% for the last 5 years which has resulted in my paying a substantial amount of tax. My understanding is that i can use some of my tax allowances from previous years even now, which I would like to do.
I am renting but would have a sufficient deposit and salary so that I could buy and still have funds left over. I'm currently waiting to see how Brexit progresses before buying anywhere.

In previous years my salary has averaged over £120k per annum and in one of the years my salary was £170. In 2019/20 my salary will likely be over £200k with bonuses.

However, these salaries have been good as they are bonus linked (I worked in sales) and are unlikely to continue and so i want to make the best use of the money I've earned and will earn in the next 1-2 years. I don't need it now as I can live on a relatively small amount. I want to invest the money for the future when I may require it.

I appreciate I've been very lucky regarding this but it is very short term and wish to plan ahead.

I'm not interested in approaches but want some advice from those who have experience of this as to where I should start.

Many thanks in advance.

dunstonh

Most IFA firms are small localised firms of 1-4 advisers. So, its more a case of looking in your area. Its a bit like asking the internet for a recommendation for a butcher. Its doesnt really mean much unless they are near you.

You dont appear to need anything specialist. So, no reason any IFA firm should not be suitable.

tacpot12

You need to find a local financial advisor. Financial advice is a personal service, so you need to find an advisor that you trust.

Start with https://www.unbiased.co.uk/ then review websites of the potential candidates, then call them up and see how they handle your initial contact.

Expect to have to meet with them for about an hour initially to discuss what you want and what fees they will charge for this. Then expect another hour to go through in detail. Making a list of any information that might be useful would be good preparation: eg. all your assets, pensions, employment and existing insurance details, have a read around the concept of risk appetite for retail investors, and have a think about what your aims are.

xylophone

You could try

https://adviserbook.co.uk/

When the menu comes up, tick "confirmed independent" and such other specialisms as you require.

Pointers

Thanks for the feedback.

I have gone onto the Unbiased website and have received a number of contacts. Each of them offers a free initial discussion with the potential to then follow this up later. As the initial consultations are free I was thinking of meeting with 3-4 and then making a decision as to whether I wish to proceed with receiving professional advice and if so which of the advisers I should continue with.

Is this a practical approach?
Other than whether i get along with the person is there anything else that i should consider regarding choosing an advisor?

Thanks

lisyloo

Fees is an obvious thing to consider, but that doesn’t mean cheapest is best, sometimes it’s the opposite.

[Deleted User]

How the fee is structured is important. Transparent charges of x pounds per hour of service is what I would be looking for.

Anyone who will try to charge you an ongoing fee... Avoid.

Whatever they help you set up should be simple enough so you can easily run it yourself in the future.

lisyloo

I don’t agree with that but it might depend on what you want.
My advisor charges an on going fee, but does provide ongoing service I.e. continual review of the portfolio.

Are you looking to self manage your portfolio?
Or have it managed for you?

If you have the skills to self manage then what do you need an FA for, you can set up a SIPP yourself can’t you?

menziesthefish

As the initial consultations are free I was thinking of meeting with 3-4 and then making a decision as to whether I wish to proceed with receiving professional advice and if so which of the advisers I should continue with.

Is this a practical approach?

Sounds spot on.

Other than whether i get along with the person is there anything else that i should consider regarding choosing an advisor?

As lisyloo alludes to, your main consideration is whether or not you actually want (or need) ongoing advice. If you only want one-off/transactional help, your needs are going to be very different than if you wish to engage in an on-going relationship. If it's the latter, then it's vital you get along with the person providing the advice, you are happy with their approach, they explain their services clearly and have the patience to make sure YOU are comfortable with what is being offered and that you see value in it.

Admittedly these are not always easy to assess in an introductory meeting, but you'll soon spot the people looking to 'flog' their service rather than those willing to explain what they offer and let you make the decision.

Transparent charges of x pounds per hour of service is what I would be looking for....Anyone who will try to charge you an ongoing fee... Avoid.

Transparency of costs is of course vital but thankfully also a regulatory requirement in the UK so you will always know the pounds & pence (and % if applicable) cost of the service being provided to you. Any good advisory service will offer a range of charging options and be willing to apply the one that best suits your circumstances & needs.

[Deleted User]

I am not seeing annual % charges as being particularly transparent. What IFA is selling = his labour. Fee for service, making clear the hours spent and pounds per hour charged is transparent.

bowlhead99

The cost per hour that he would need to charge for "his labour" includes recovering the costs of employing his staff, running his premises, training, research, regulatory compliance, marketing, PI insurance, making a profit margin for the business etc etc, and would need to be charged at a rate high enough during the charged hours sufficient to cover the non chargeable hours. All of that stuff is going to be somewhat opaque to you as a consumer, rather than transparent.

I suppose you can say that none of it matters to you as the consumer as long as you know the final price per hour, to compare with other firms.

However, you do not actually see him do the work, because you're not at his premises when he does it all. It's not a transparent process because when he does a 7 minute phonecall with you he might do 13 or 33 minutes of preparation and 10 or 35 minutes of post-conversation documentation. So is that 0 5 or 1.25 hours on the clock?

One firm might end up charging you 16 hours while another charges you 12.5 hours, so a 10% lower charge out rate for the first IFA actually produces a higher charge. The amount of time spent by one IFA might be a bit higher because he has an archaic scanner/ photocopier while a rival has a whizzy document management system. One firm might require the adviser to spend some time on slow research as part of the portfolio review while another outsources it to get the data more easily to his fingertips.

So really to get a 'transparent' view of prospective fees you don't just want to know the price per hour, you need to know the expected number of hours, to translate it into a cost to you; if you reliably know price times quantity you get cost.

If that's coming out at £1200, is it really better for that to be presented as 5 hours at £240 rather than 1% of your £120k portfolio or 0.5% times your £240k portfolio? At the end of the day it's the same number. But with an hourly rate you might be reluctant to go back to the advisor with some questions because an hour of helping you (on phone or email with some follow up documentation) increases your cost by 20%.

Or what if the advisor estimated 'about 5 - 6 hours' for some work and then he ended up billing you 6.5 because it 'took a little longer than expected' because of some unforeseen issue which came up which you don't quite know whether he should have foreseen it or how long such a thing really takes to resolve. You end up being disappointed that it cost 30% more than you were hoping (the 5 hours) while the advisor doesn't think his bill should be problematic because it was only 8% more than the 6 hours he'd advised you it could quite easily be. If you had wanted a fixed fee, he says, you should have asked for one.

But you hadn't wanted want to fix a fee because you think a per hour charge is better for you - as when giving you a fixed fee price he would have had to err on the side of caution when quoting and have the agreed fee be larger than his real estimate because he doesn't want to get screwed over when you turn out to be more time consuming than he had hoped and there's no easy mechanism to get paid for the overruns.

There is no perfect mechanism for charging for professional services. Anecdotally though, while time-costs might be offered as a price structure, consumers don't like it because they know the amount they'll get charged is a lot more than the 7 minute phone call without knowing what is reasonable to occur in the background outside the call. And they think that charging for every hour gives the advisor no incentive whatsoever to work quickly, effectively, productively. They don't like the *lack* of transparency inherent in being billed 13 hours for a service when they are not sitting over your shoulder to know whether it was perhaps really 12 or 16 or whether you could have done it in less if you were more focused.

So people tend to go more for fixed fees. Whether you have that quoted in pounds or quoted in percent of a portfolio size, fixing gives certainty so is inherently "transparent".

You mention that you don't think an annual % charge is particularly transparent. But maybe what you are missing is that calling it x% of portfolio size is just a way of presenting it in a way that aligns with the other metrics on your portfolio (growth rates, management fee rates etc all being in percentages). The adviser could certainly quote you your fee in pounds instead of percent if you wanted it that way. Then the next year if your portfolio was a different size you would have a different fee, which may or may not be the same percentage of your assets, depending on what the adviser wanted to charge for looking after that amount of assets. Many people would prefer the certainty of knowing it was always going to be 0.x% of the assets until their assets reached a certain size and then the percentage would drop.

If your portfolio is a bit bigger (within reason) and you asked to be quoted as percent or portfolio size, the fee would rise, but fair enough the adviser has more risk. If the portfolio doubles the risk doubles (adviser insurance costs rise) and maybe the complexity of the portfolio increases so the work increases but doesn't double; you can probably renegotiate a lower percentage. Although maybe you won't get the price as low as you hoped when you try to renegotiate because the adviser had already quoted on the assumption that your portfolio was going to grow and his year one price was an investment in the relationship.