IFA - views on benefits of using IFA versus DIY route

Daffodil1234

I'm interested in people's views on what they see as the benefits of using an IFA, versus the DIY route.

I understand that using an IFA can be really helpful for people, especially when people don't feel confident about money.

However I can see that a lot of people posting on this forum are already very knowledgeable and confident and in many cases would seem to be going down the DIY route.  By DIY, I mean someone doing their own research / keeping check on their own investments, pension and savings, managing their own spreadsheet of expected spend and income during retirement, planning some "what if" scenarios and so on.

As Mr and Mrs Daffodil, we plan for 1 spouse to retire in 2 years and likely the other spouse to retire in approx 3 or 4 years.  We've used a lot of online guides including the PensionBee site, Guiide calculators, plus lots of helpful comment on threads in MSE and we think this will be doable for us - on a frugal basis.  We're wondering whether it is worth the cost of IFA fees to get their advice (or their validation on the choices we have already made), especially as the IFA will not have any more information than we do on the items which could unexpectedly derail retirement (e.g. an illness diagnosis;  death of one spouse; an unexpected family problem).

Have any of you found that using an IFA was helpful by giving you new knowledge / insights - even when you were already quite knowledgeable and insightful before you went to see them ?

Peterrr

It sounds as though an appointment with a retirement planner would be more appropriate for you than an IFA

Daffodil1234

Thanks Peterrr.   Could I ask what you see as the difference between IFAs and Retirement Planners (as when I search on retirement planners , what seems to come up is people who are IFAs.

I've already used the free one hour the government provides via PensionWise, which is fine but naturally fairly high level.

Albermarle

Thanks Peterrr.   Could I ask what you see as the difference between IFAs and Retirement Planners (as when I search on retirement planners , what seems to come up is people who are IFAs.

Although an IFA can fulfil different roles, they would be the normal pensions/retirement planner for most people.
The IFA vs DIY discussions has been played out on this forum many times, although less frequently recently for some reason.
If there is a consensus, it is that if you have some reasonable understanding of investing, pensions ( tax issues for example ) and are prepared to spend time reading and monitoring, then you do not need an IFA. Unless you have more complicated family, personal finance, inheritance  issues etc , such as trusts, family business, divorce, blended families, offshore investments, or if you are maybe in the multi million pounds league.

I understand that using an IFA can be really helpful for people, especially when people don't feel confident about money

Yes that is a different situation

Daffodil1234

Thanks Albemarle,  useful comments.

I did a quick search on this forum re using the IFA option versus DIY but didn't spot any threads. If anyone remembers any threads / names / titles to look for, I'll happily search again

dunstonh

Thanks Peterrr.   Could I ask what you see as the difference between IFAs and Retirement Planners (as when I search on retirement planners , what seems to come up is people who are IFAs.

IFA cannot have any restrictions on the products and services offered.    Any hint of a restriction and they cannot use the IFA title.   So, you often find restricted FAs will use other tiles to try and hide the fact they are restricted.

Technically, there is no such thing as a retirement planner.  Its just an IFA or FA (agent/sales rep) giving retirement planning advice.   The choice should be to either use an IFA or DIY.   Not to use an FA or other titled individual.

I understand that using an IFA can be really helpful for people, especially when people don't feel confident about money.

or don't want to be bothered with the work.   I have very many clients who could DIY if they wanted but don't want to.   I have a number that used to DIY but got bored.   So, its not always about the handholding.   Some just like the fact that there is someone doing all the tax allowance work, cash float/bucketing etc as it means they don't have to.     

If you compare an IFA charge to a robo provider, the ongoing charge is often not a lot different.   (obviously some will be more as some are greedy).  Robos are good for small amounts but if you have a large amount, an IFA could be cheaper.

if you have already worked out which drawdown method is best for you and how you are going to structure your portfolio and cash management over the timescale and are confident about it, then an IFA won't have much to offer unless you are using expensive options.  (assuming what you intend to do is the best thing).

Albermarle

Daffodil1234 said:

Thanks Albemarle,  useful comments.

I did a quick search on this forum re using the IFA option versus DIY but didn't spot any threads. If anyone remembers any threads / names / titles to look for, I'll happily search again

The search facility is not very good. In any case for a time many of these threads deteriorated, as some posters had an anti IFA agenda, although most of them seem to have disappeared.
Hopefully a few more of the regular posters will post their views on this thread for you to read.

gm0

The adviser helping many people each year in a certain wealth range is obliged to be familiar with current legislation etc. to guide all these people through the thicket of rules to a sensible outcome.  When the customer agrees the recommendation.  It is implemented for  a fee.  And reviewed and looked after - for ongoing fee if desired.  It is insured, to a level, as being a suitable to the wealth and risk attitude and capacity on investment but with zero guarantees as to outcomes for risks taken.

The alternative as you say is becoming familiar enough to avoid most obvious mistakes and using the direct to consumer products available to roll your own.  And then look after it.  This trades an investment of quite a lot of time for an investment of money in having an adviser do it.  An effort to avoid "bad DIY" outcomes. 

When I was on my planning journey to DIY - I had made some decisions about risk attitude, use of drawdown, had done the pensionwise call (to check I understood pension freedoms and wasn't missing something big). Also chatted to PAS to clear up some specific inconsistencies from the PensionWise call where their scripts were lacking around LTA. 
Then went on a web research journey on portfolios and shopping for consumer direct products and platforms to implement my ideas. 

I was not confident to press the button but not ready to give up, and go with an adviser implemented approach either.

Two of my remaining agenda items were:. 1) Am I missing a better fit product in the adviser introduced space. 2) What portolio would they recommend for my situation - and how does that compare with my homebrew efforts - mix of asset classes, % etc.

I went and found cutdown advice from a pension benchmark and transfer business.  I was explicit with them that I had prepared  a partly completed DIY plan.  Yet was interested in the adviser introduced products and platforms in the market as a potential alternative.  A genuine interest if their offer proved superior at a sensible cost.  They could in possession of those facts - based on their pre-sales and fee on acceptance of proposal for transfer model take me on as a potential client or could decline to do so.

Making a pension transfer recommendation even DC to DC is still a form of regulated advice. So I received a proposal from them for a "suitable" portfolio for me at a particular adviser introduced platform. To compare to my existing ideas.
And in IFA discussion could assess whether any new issues arose from the fact find.  So there was some value to me for time invested - confidence building and the data point on an adviser introduced product.  Clearly they didn't make any money but it was their choice to invest pre-sales effort.  So I don't view it as exploitative in context of up front disclosure.  I did not take their proposal forward. It wasn't that it was bad.  Just not sufficiently better to motivate me to switch my approach. 

So each different advice business - FA and IFA types are focused on different customer groups and have more wide ranging or more focused offers.  And different pre-sales and contractual models. Care is needed on who you get entangled with and all the small print bears careful study in any case before committing.

To your exact question.  I did not learn anything major in terms of new facts from the experience. 
But the advice process was somewhat helpful and confidence building around the two agenda points I mentioned.

Daffodil1234

Thanks  gm0 , dunstonh and Albermarle

Really useful input from all of you.

Daffodil1234

(not quite sure how I managed to create the avatar / pic above when copying in your names !)

NlghtOwl

I am confident to manage my investments (index trackers) and i do my own planning (I love a spreadsheet) 😀 However I still retain an IFA and use them to check my strategy is right every few years as the cost of not getting one of the key planning decisions wrong is worth a few ££’s. They just don’t have any of my investments under management which are held on a diy platform.