Should I engage a Financial Advisor?

MEM62

Redlander said:

I received a legacy of about £400,000 which I invested on advice from my own bank, Santander. 

So, your fist port of call when needing advice is a restricted advisor that can only recommend their own in-house products.  

Redlander said:

I have spoken with an advisor who is a member of my church, whose integrity I trust. 

And your second point of call is member of your church.  He may be OK or his advice may be no better than you have had from your bank.    

If you want to take advice, you need to find an IFA - Independant Financial Advisor.  Someone who has access to the whole of market and who is paid, by you to act in your best interest.    

dunstonh

Would try to find at least 2 independent advisers, better 3, and try to get at least an initial for free session to get to know that side of business, fee structure and the approach of those advisors, what sort of questions they ask, are they open, do they take time to explain you products, etc. Even if you have to pay a small initial consultation fee, this could work very well in your favour.

All advisers offer a free initial meeting.   They are not allowed to charge until you know what the charges are and you have agreed to them.

Check reviews of those advisors.

The majority of IFA firms are small local firms with 1-5 advisers.  They rarely have reviews due to their small size.    Indeed, for many IFA firms, they have very little internet coverage.   Most don't advertise either.

El_Torro

I agree with others that say that an IFA (either the one you already know, or someone else) could add some value here. 

One thing to note, which you may already know: You say that the IFA fee is 0.5%. This isn't bad, though bear in mind that you will also be paying a platform fee and a fund fee. Depending on where the money goes this could easily be an additional 0.5%, or more. 

As mentioned already I'm not sure I'd want to pay 0.5% ongoing charge plus a set up fee of 3%. 

Considering where your investments are now, Santander, I think you can probably find a better fit elsewhere. When you engaged Santander they would only have looked at putting your money in their platform in one of the funds that they offer. Going to an IFA means a lot more choice. 

gm0

Performance doesn't really enter into it.

Whether you DIY or buy advice.  It's still always your risk and your investment.  Nobody guarantees better performance.  That's not what advice does for the 1-2% upfront and 0.5% per year

What it does do:

- Recommend something broadly suitable to your goals and risk appetite based on the questions/answer sessions.  Heavily regulated.  Once you commit.  They do a fact find - collect an audit trail of q&a.  Produce regulated outputs.  Recommend portfolio to take your funds under management.  You say yes  or no.

- Avoid a badly designed portfolio (silly fund picking individually or in aggregate) by a novice

Both of these two can be fixed to a workable level for DIY by reading up a bit on pensions and investment.  Your interest time and attention is required to learn the language and mechanics.

- Monitoring fund managers/funds for life expiry (shrinking/closing or increasing risk (changing). 

This is harder to DIY.  Advisers subscribe to data and analysis services which are not as workable for a single consumer

- Monitoring tax changes

- Periodic portfolio review

- Admin around income/rebalancing and use of annual tax allowances

Can DIY all these but again requires your time and attention. 

- Hand holding when turbulence occurs - emotional support to stick to your plans

I have chosen to DIY. And accept the gaps around monitoring.  I approach investment from the perspective that I will use only larger mainstream fund management providers.  And will use several.  And put part of my investment with each.   Risk impact mitigation, 

I have tried advice previously. 

Other considerations:

For a  widow/er of an investor who is not also savvy or interested then advice could be very important at that point if no other family can support. 

The difficulty with adviser recommended "mainstream" - moderate middle of the road portfolios is that these are also widely available at the basic fund management cost.  Which will win - like for like on similar global markets portfolio contents - by the 0.5%  cumulative and the missing 1/2/3% and its cumulative growth.  

That's just a premium you are paying for the other services. £2000 pa on 400k. 

Which is great value if you don't want to learn and do those  things yourself. 
And alternatively terrible value if you are prepared to spend some time on it to keep the £2000.  You may do worse, the same or better with the investments.  No guarantees there.

Clearly an adviser could lead you to a better than median market return (or worse than median market return) investment.  But this is not a promise or part of the contract as to its performance. 

bostonerimus

I believe that with a little study and some common sense most people can come up with a simple way to invest and manage their own money successfully. So I don't think IFAs are necessary, but an advisor who is also a friend is even worse. DO NOT have a friend or acquaintance from church give you financial advice. It's an emotional and professional minefield.

With 400k you should pay off all high interest debt and put a year's spending away in a saving account getting good interest. Then look at ISAs and personal pensions, or contributing more to your existing pension, to get some tax advantages and general investment accounts. If your investment time scale is over a decade look at some equity fund investments, an equity heavy multi-asset fund would probably work just fine. 

Scotbot

dunstonh said:

The majority of IFA firms are small local firms with 1-5 advisers.  They rarely have reviews due to their small size.    Indeed, for many IFA firms, they have very little internet coverage.   Most don't advertise either.

So how does one find them?

dunstonh

One thing to note, which you may already know: You say that the IFA fee is 0.5%. This isn't bad, though bear in mind that you will also be paying a platform fee and a fund fee. Depending on where the money goes this could easily be an additional 0.5%, or more. 

IFA platforms on 400k would be in the 0.25% ballpark for the decent ones but a little less for the el cheapo ones.

So how does one find them?

Word of mouth.  Friends & Family and local knowledge.

zagfles

As I always mention here it's worth doing a quick check on the FO site for decisions against any IFA you're considering, someone I know was recommended an advisor and it turned out they had a string of judgements against them for stuff like dodgy Cape Verde investments!

https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions

VNX

Sorry to drag up an old thread I’m in the OP boat wondering if it’s right to pay for advice on my pensions and savings etc

ive just had a online chat with someone from M&G and I’m struggling to find truly independent advisors. 

I just worry if I go ahead I’ll be paying fees for something I could do myself, sorry to sound wet behind d the ears it’s first time I’ve looked into paying for financial advise 

Albermarle

I just worry if I go ahead I’ll be paying fees for something I could do myself

That is highly likely, the question is would the end result be the same?

It could be better as you will not be paying the extra fees, or maybe it would not.....

It is a dilemma that really only you can decide which way to jump.