Will A Financial Advisor/Plan be value for money?

fcmisc

A financial planner has offered to write a financial plan for myself for £2,999. I am finding it hard to assess whether or not he is likely to help me, and was hoping people here could advise?

A bit about me (which the financial planner also knows)...

I have around £45,678 in unconsolidated (is this the correct term?) capital gains in unit trusts. I am planning on using my annual CGT allowance to control this, by selling a little every year. I currently do contribute a lot to to my non-tax-wrapped accounts, and know that my potential CGT liability could easily grow in the future. My spouse is currently maxed out too, so I cannot share the burden with her. The FP claims he can help reduce my future CGT liability. I'm not an expert on tax, but don't really see how he can take it further than what I'm already doing.

I am maxing out my pension contributions every year at the £40,000 threshold, which means I'm likely to breach the lifetime limit. The advisor believes he can help me manage this, but I'm not sure what this will mean, and am not keen on paying £2,999 to find out whether or not his answer isn't something that I'd be happy with.

I have 3 children. I currently have enough income to max out their ISAs and SIPPs.
I also max out my own ISA.

I am uninterested in reducing inheritance tax and don't want to explore that route (someone has to pay for this Covid crisis).

The advisor claims that he can write a plan that will help me save hundreds of thousands of pounds in tax. But I'm unsure of how I can verify the claim without paying up front.

Dazed_and_C0nfused

Are you paying hundreds of thousands in tax?

Is this a FA or an IFA.

To be honest if they approached you I would steer clear.

You sound reasonably clued up already.

fcmisc

No. I don't pay hundreds of thousands in tax. Atleast not on an annual basis. Perhaps I will between now and my retirement age.

Jeremy535897

If you don't pay lots of income tax and capital gains tax, then if the financial planner is to save you "hundreds of thousands of pounds" of tax, it must be inheritance tax, which you don't care about.

Albermarle

If you go to the 'Savings & Investments ' and 'Pensions' forums there are many threads about the value of financial advisors ( opinion is split) and Pension Lifetime allowance strategies and related inheritance tax issues .

Pennywise

I don't suppose it's an IFA working under St James' Place is it?  There's a lot of varied experience/opinions about them and their quality can be variable.

fcmisc

No, it wasn't St James' Place.

Are there any good threads on how to manage the CGT allowance? All the articles I see on the internet are very standard and non-creative.

The best thing I can think of is to start using up SEIS.

For example, suppose I have £10k of gains above the allowance.
If I crystalize the gain I will have £2k of CGT tax to pay.
If I spend £4k of that on an SEIS fund, I will also claw back £2k of income tax, and get £1k of CGT relief.

So I'll end up with:

£6k cash
£4k of SEIS investments
£2k tax relief from the SEIS
£2k cgt tax bill
£400 cgt tax relief

implying a net value of £10,600 (I don't know how much SEIS fees will eat into this), from an initial value of £10k, though £4k of that will be in risky investments.

Is the above a good deal?

Jeremy535897

What you are asking for is regulated investment advice. All I will say is that all the SEIS investment of £4,000 will do from a capital gains tax viewpoint is reduce the tax on your other gains by £4,000 x 50% x 20% (assuming you pay higher rate tax) = £400, so 10% of the investment you would make.

Daniel54

In answer to your first question,£3k seems at the top end of the scale and well worth shopping around alternative IFAs. Admittedly 7 years go,but I paid £1800 for a complete financial health check ,including IHT advice and the cost of SIPP transfers.

I would be wary of someone who sells him or her self on how much they can save you

But if done professionally it can be a very useful exercise ,even if it only reinforces your own understandings.But I certainly picked up IHT alternatives that I would not have been aware of without the advice, even though I have not actioned on them.

The reason there aren't many threads on CGT on investments is that it is pretty easy to manage.Which you seem to recognise.As the annual CGT allowance is use it or lose it, then it just needs  patience over  a relativelyy  small amount of time to take your gains free of tax.If you need the money sooner ,then taking 80% of the surplus gains might not be the end of the world in your situation .

If you want to invest in high risk  tax efficient investments such as EIS/SEIS,then I would suggest doing so independent of your GGT gains, which are easily dealt with as above.