IFA Query

MrSaver96

I’m currently 23 with a very small pension (circa £3K). The contributions going in monthly have increased significantly over the last few months and will continue to do so over the next few years until I qualify in my role.

My question is this: at what stage is it reasonable to engage an IFA? I want to make the most out of my pot so I was going to engage an IFA to review the funds I’m invested in and advise which are best for my circumstances (basically high risk given the length of time I have until retirement!). The problem is I think I’m too ‘small fish’ to go to an IFA and should first build a worthy pot (at least one with £10k+). Views? I appreciate I’ll need to pay for such advice and happy to do so given I feel I would (although not guaranteed) hopefully see better returns on the pot.

Thanks

eskbanker

I'd agree that it'll prove difficult to get value for money from engaging an IFA, even at £10K+.

Why not post more detail on here of exactly what you've invested in, where (platform) and why?

You can usually rely on a number of posters offering a critique, hopefully in a constructive way, all without charge....

MrSaver96

Thanks eskbanker. I thought as much. Current investment is as follows:

Scottish Widows 50/50 split between SW Pens Portfolio One and Two. The reason for this being One is considered ‘risky’, Two ‘moderately risky’... I’m thinking of changing future payments to be allocated 100% to Pens Portfolio One given I can afford a bit of volatility, but then I’m querying do I sell what I have in Pens Portfolio Two (circa £1,996.61) aswell and invest that into Two?

[Deleted User]

Invest into a book and be your own IFA. Something like this: DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning.

Linton

At the moment most of the increase in your pension pot will come from your contributions. What you invest in will not matter much as long as it is something reasonably sensible. Either your current split or going fully into Pension One would be fine for the time being. Don’t worry about it. Higher risk probably gives slightly better returns in the long term but the difference won’t be life changing. If you kept both you would gain experience by monitorIng how they each behave, which could be.

Once your pot reaches 5-10 times your annual contribution the investment returns will become important and you should focus more on your specific choice of funds. By then your understanding of investments will be much greater.

JoeCrystal

MrSaver96 wrote: »

I’m currently 23 with a very small pension (circa £3K). The contributions going in monthly have increased significantly over the last few months and will continue to do so over the next few years until I qualify in my role.

My question is this: at what stage is it reasonable to engage an IFA? I want to make the most out of my pot so I was going to engage an IFA to review the funds I’m invested in and advise which are best for my circumstances (basically high risk given the length of time I have until retirement!). The problem is I think I’m too ‘small fish’ to go to an IFA and should first build a worthy pot (at least one with £10k+). Views? I appreciate I’ll need to pay for such advice and happy to do so given I feel I would (although not guaranteed) hopefully see better returns on the pot.

Thanks

Good for you to start your pension scheme so early in your life! I used an IFA to set up my pension scheme when I was 24 since my employer don't think any points are doing the pension scheme (apart from having to provide the stakeholder pension scheme). Since I don't know anything about pension schemes apart from casually lurking in this pension forum at the time, it was super useful.

I would say learn much as possible, and if by the time you reach more than £100k or £120k, you are still unsure, then it might be worth considering seeing an IFA.

Prism

MrSaver96 wrote: »

Thanks eskbanker. I thought as much. Current investment is as follows:

Scottish Widows 50/50 split between SW Pens Portfolio One and Two. The reason for this being One is considered ‘risky’, Two ‘moderately risky’... I’m thinking of changing future payments to be allocated 100% to Pens Portfolio One given I can afford a bit of volatility, but then I’m querying do I sell what I have in Pens Portfolio Two (circa £1,996.61) aswell and invest that into Two?

Those two are absolutely fine. In fact the SW portfolio range are the only funds worth using in that pension and are very similar to Vanguard LifeStrategy. Keep investing and over the years this should grow to a point that you could revisit

Albermarle

Presumably this is a pension with your current employer ?
If so are you making sure you are getting max contributions from them . Some will increase their % if you do, although many will have a strict limit of course .
Also in future salary negotiations , it is worth asking for more pension contribution, as well as salary . You never know !
As said already at this stage the level of money going in is more important than the exact fund split , which looks OK to me anyway.

fred246

When I was young I used to think that financial advisers gave financial advice. In reality they will only be interested in anything that gives THEM a load of money. Even they realise that they can't charge you £2K for looking at a pension worth £3K and they won't get out of bed for the amount you would want to pay. So they are only interested when they can take a chunk of your pension every year. Investing involves choice and there is no right and wrong. Use the next few years to educate yourself and it will pay handsomely in the long run. There is no need to pay an IFA.

MrSaver96

Thanks everyone - all very very useful!

I think I’ll invest in a book and try and educate myself on the simple points of investing/pensions etc.

My employer contributes and matches to 7%. The nature of my job (law) means when I qualify in a few years I will get a big jump in pay so my contributions will increase significantly then. Nevertheless, I max out employer contributions and it’s through salary sacrifice so get the benefit from that too!

Albermarle

a big jump in pay so my contributions will increase significantly then

If/when you become a higher rate taxpayer , the benefits of paying into a pension increase even further.