What do we need? Pension advisor? Financial advisor? Are they the same or different?!

Emanef

Hi money gurus!

We need to get advice on a few things and aren't sure where to start or who to be asking!

My wife (aged 49) has a pretty decent company pension from the company whe was with for 12 years until a few years ago, I believe that it's now on hold (as she left) and we need advice on what to do with it. I think it's investment based. We need to look at what options are available for her pension and what's best to do.

I (aged 51) don't have a pension other than state pension a rubbish old Co-op contracted out of SERPS pension from the 90s that's not worth much.

We've recently started a consultancy business and have been advised by our accountant to consider getting a pension as it'll be a tax efficiant way of putting money aside for retirement and think it's worth looking at. She's suggested talking to a pension adviser on that.

We also have a 6 year old and need to do our wills and work out what to do with our daughter and estate if anything happened to us, so I'm thinking it's worth getting financial advice on what to do about our savings, property and possibly setting up a trust for if we did both die?

What sort of person should we be looking to for advice? A pensions advisors different to financial advisors? Or should most cover all areas of pensions and finance? What sort of person should we be looking for? And how much should we be looking to pay for such services/advice?

Neither of us have ever dealt with this type of stuff so don't have a clue, and it's such a minefield!

dunstonh

What sort of person should we be looking to for advice? A pensions advisors different to financial advisors?

There is no such role (in regulatory terms) as a pension adviser. Some occupational pension scheme administrators may have staff they refer to as pension advisers in title but are not actually advisers in the regulatory sense.

Advisers are either IFAs or FAs.

What sort of person should we be looking for? And how much should we be looking to pay for such services/advice?

FAs should be avoided. Most FAs are linked to a single provider (i.e. a sales rep) or a limited panel and/or have restrictions on areas of advice they can give. Ironically, they also tend to be more expensive despite their limitations. IFAs are whole of market and the I is for independent (they dont work for an insurer/provider). IFAs are not allowed to restrict. IFAs are the type of adviser you are looking for.

Cost will vary (often by a very large amount). Some will be good value. Others will be damned expensive. However, the cost should be relative to the work that needs to be carried out and the contributions you are paying. Limited company directors often make no regular or small regular contributions but make one or two single payments each year. It often depends on their ability to budget and put aside. However, one near the tax year end or after they are sure that money wont be needed is quite common. So, the service should reflect what you are looking for. Not the other way around.

Albermarle

An INdependent Financial Advisor can cover anything connected to pensions ( it is their bread and butter), investments, family finances etc

We also have a 6 year old and need to do our wills and work out what to do with our daughter and estate if anything happened to us, so I'm thinking it's worth getting financial advice on what to do about our savings, property and possibly setting up a trust for if we did both die?

You need a solicitor for this. Although an IFA can give you advice on it.

Normally an IFA will base their charges on your investment/pension funds. Maybe around 2% initially and 0.75% pa after that + the usual investment charges. As you apparently do not have a lot they may charge you differently.

and have been advised by our accountant to consider getting a pension as it'll be a tax efficiant way of putting money aside for retirement and think it's worth looking at.

Pensions are tax efficient and usually the best way to save for retirement, but I have to say at 51 you are very late to the party. The issue is that to generate a good retirement income you need a pretty big pension pot, especially if you want to retire early.

Brie

Agree about you needing an IFA. And just so you know most IFAs will be happy to spend an hour or so chatting through what you have and need and what they might do for you. It's a bit of a get to know you session. you'll get the most out of it if you have all your paperwork with you and know a bit about what you are talking about.

So break things down into individual areas.

Past Pensions (get together any benefit statements, find out if they are defined benefit or defined contribution schemes)

Current Pensions (what will your business support, how much are you reinvesting in the business and what is your tax situation)

Future Pensions (what about state pension? do you need to buy years?)

Will (get together a list of your assets and think about what you want to do with all your stuff and who will do this when you're gone. Also think about how your family might change in coming years, aging, more kids, parents?, siblings??)

work your way through the various sections of MSE that deals with some of these things, read stuff on the various forums to get a feel for where there might be problems. Look at the various bits of info on the gov.uk sites.

xylophone

A solicitor regarding your wills/guardianship of your daughter in the event that you should both die/be incapacitated before she reaches her majority.

Regarding financial advice, you could try here

https://adviserbook.co.uk/

Tick confirmed independent and such other specialisms required when the menu comes up.

LHW99

https://forums.moneysavingexpert.com/discussion/comment/80027027#Comment_80027027

And have some idea of what you actually spend on the basics (food utilities etc) now, to give some idea of what income you may be looking at when you retire. Things like mortgage (if you have one) and payments into pension will stop (or perhaps just reduce if you continue to add to your pension until 75), but child costs may still be relevant at SPA if they are at University (even with grants, even if your income is too low for an official "parental contribution", its very likely you would have to help out to some extent)

Emanef

Thank you for the really helpful replies everyone!

Apologies for the slow reply, there's a lot to digest!

On the wills, I think we want a fairly straightforward set up so that if either of us die everything goes to the other, but if we both die it all goes to our daughter/trust for our daughter. The more complicated decisions of that is who would look after if she's still young and how it would be funded from our estate. 

I think I do recall someone mentioning it was for both of us to put 50% to each other and 50% to our daughter in case one die and the other suddenly needed care. I'll look in to that anyway!

So we need an IFA, thank you, I'll ask around to see if anyone can recommend someone locally. 

When you say they usually charge around 2% initially and 0.75% pa after that; what is that percentage from? The total value of the pension fund? Do they also usually take things like home equity and amount of savings and shares into consideration as well? We own our home outright and have a good amount of savings and shares.

I know I don't have one, but my wife's is a decent amount in hers. 2% of that is quite a lot, and even .75% is. 

On me being late to the party, yes, I know, I contracted for a long time so didn't have an option of a company pension and just never got round to it. I guess it's weighing up whether it's worth buying back years, or just making sure I keep putting money into ISAs as I have been. 

I'm pretty sure I'm ok on state pension though, I did buy back a few years I was short a few years ago, and my wife is definately fine on that. How do you going about finding out? Can you find that out through your Gov Gateway account or do you need to write to them? 

Thanks again for all the reply, all very helpful, and gives me plenty to be busy with!

Dazed_and_C0nfused

I'm pretty sure I'm ok on state pension though, I did buy back a few years I was short a few years ago, and my wife is definately fine on that. How do you going about finding out? Can you find that out through your Gov Gateway account or do you need to write to them? 

Yes, you can get a forecast immediately.

It's important to read the whole thing carefully, not just headline figure as that can be very misleading.

dunstonh

When you say they usually charge around 2% initially and 0.75% pa after that; what is that percentage from? The total value of the pension fund? Do they also usually take things like home equity and amount of savings and shares into consideration as well? We own our home outright and have a good amount of savings and shares.

initial charges vary significantly.   I saw someone with £500k previously and our charge was £2500 but SJP (an FA) that they were also consulting had a £25,000 fee.    I came across a company who recently folded who was trying it on with a 7% fee.

Many adviser firms have a cap and collar to their fee or a tapering of their charge to stop it becoming obscene.  Greedy ones do not and that will tell you a lot about them when you decide whether to use them or not.

Fees are taken against the invested value.  Not your assets.

Large values tend to result in lower percentages.  e.g. for ongoing 1% may be used for lower values but tapering to around 0.5% for higher ones.

MallyGirl

Emanef said:

On the wills, I think we want a fairly straightforward set up so that if either of us die everything goes to the other, but if we both die it all goes to our daughter/trust for our daughter. The more complicated decisions of that is who would look after if she's still young and how it would be funded from our estate. 

This is an important point. We thought long and hard over this as we didn't want either my brother (not a fan of his parenting style or life choices) or OH's sister (long term disabled) to look after her. Both sets of grandparents were already in their 60s when she was born and lived far away from us and each other. In the end we asked local friends so that she could stay at the same school etc - still not without challenges. My mum was not impressed. Thankfully it was never needed and she is 21 now so we need to get the will updated.

Albermarle

On the wills, I think we want a fairly straightforward set up so that if either of us die everything goes to the other, but if we both die it all goes to our daughter/trust for our daughter.

We have done something similar.

I later found out that although parents often worry about the ' what if we both both die at the same time in a car crash' scenario, it is thankfully  a very rare occurrence. So I would not fret too much about the exact terms/who the trustees might be.  Also I would avoid setting up any kind of trust in advance, as there will be annual fees. You can write the will so a trust is started when necessary, and then presumably take it out of the will once she is 18. This is only my experience, I am not a legal expert.

When you say they usually charge around 2% initially and 0.75% pa after that; what is that percentage from? The total value of the pension fund? Do they also usually take things like home equity and amount of savings and shares into consideration as well? We own our home outright and have a good amount of savings and shares.

Home equity, savings, and final salary pensions are not taken into account for charging, but they will look at  your overall financial position, which will include these of course. Normally all other investments would be included, but you can negotiate. However if you try and exclude too much, they may just lose interest. Also it is usually best if the family finances are dealt with as a whole by the IFA and not just including one partner.