IFA for pension advice

chrispies2020

Hello. I am 60 yerars old and have started considering how I can arrange my pension savings in better order and make the most of my savings

Recently I contacted an IFA and have recieved details of the services he provides and the related charges. I have always managed my money for myself and I am now puzzled as to how the IFA can improve my situation.

The documents he has supplied mention 'cash flow plans' and ongoing management of my finances - but the *substance* of what he intends to do eludes me. The simple truth is that I do not have faith in his services because I simply do no underdstand what his proposals involve. The only concrete suggestion he has made so far is paying my entire current income into my pension and living off my savings - for tax reasons .I simply cannot afford to do this. 

So my question is, are any of you in the same position and what in particular has your IFA done to improve your situation? Has it benefitted you?

Regards
Chris

jimjames

If you are puzzled how the IFA can improve your situation then they probably can't. If you've always managed your money and are comfortable to continue to do so then why not carry on if that works for you.

ColdIron

It's like plumbing, if you can do it yourself you can save money. But if you can't and think plumbers are expensive consider the cost of getting it wrong

Keep_pedalling

Have you actually had any face to face meetings with the advisor? Are you certain that he/she is actually an IFA rather than a FA (salesman)?

The idea of pumping your salary into a pension could be a good one if you are sitting on a pile of cash that you could use to cover your living expenses. 

Albermarle

 The simple truth is that I do not have faith in his services because I simply do no underdstand what his proposals involve.

If you can not understand the proposals, then this may indicate that your knowledge level is less than you might think.

You maybe have been managing your money, but how well?

Of course I do not know you so I am only speculating.

It might be a good idea to spend some time reading through this forum and the Pensions forum

Pensions, annuities & retirement planning — MoneySavingExpert Forum

Then you can get a feel for some of the points often discussed about planning retirement income, investments, asset allocation, drawdown strategies, how much cash to hold etc etc . Although you will see different opinions on many topics.

xylophone

Are you sure that you are dealing with an Independent Financial Adviser?

At all events, if he cannot explain his proposals clearly in a way that you can understand it would be better not to go ahead?

Have you determined what income you are likely to need?

First of all, have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

Next, are you currently employed and a member of a workplace pension scheme? If so, is it a DB or a DC scheme?

What other pensions do you have?

Are they DB or DC?

How much do you have in savings?

Given the adviser's suggestion, presumably  enough to cover your expenditure for a few years?

The point about pension contributions is that they can be very tax efficient.

https://www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension

If you wish to look round for another adviser you could try

https://adviserbook.co.uk/

Tick "confirmed independent" and other requirements when the menu comes up.

chrispies2020

Thanks for your comments.

As for how well I have been managing my finances - a great question! I do not know! I can only look at my present circumstances and judge by this.

Unlike many people the cost fo living crisis has not adversely affected us. Honestly, I barely noticed it. We are mortage free, currently with a dual income. I was able to afford to reduce my working week to 4 days without struggling with money. Whether I could have done even better, I have no idea. The the pensions I do have were hit quite hard after last years financial turmoil. I am holding on and hoping the situation improves. I aim for at least 4 more years paid emplyoment and yes I do have savings we could live on. We live quite simply with some treats like the cinema and streaming TV. But thats all and I'm fine with that. No fancy cars, foreign hoildays or eating out. Again, I am fine with this - a nice walk in The Peak District beats all these alternatives :-)

I will get a full state pension (I have checked) and have a small index linked pension from my ex employer, which largely covers gas and electricity. BUT, I constantly worry about the future, espcecially due to the poor performance of my private pensions and the propects for my grown up kids, who I suppose I will have to to help in future.

I feel the advice i am getting and the general situation regarding pensions and choice of IFA is entirely opaque. I know the options quite well, but not **which** to choose. Hence my question.

How much has your IFA helped you? Could you really not have managed things for yourself equally well?? So far, we have done well enough for me to be satisfied, but the future is always an unknown country! Thanks for the link to the other IFA's BTW. I will follow that for further advice.

Linton

An IFA may not be appropriate if your pension savings are relatively small and/or wont be required for you to maintain your desired standard of living in retirement.

If this does not apply, the sort of questions you need to consider in order to set up your finances for retirement.....
 
How much income will you need in retirement over time?
Do you have sufficient money in pension savings to generate that income until you die?
Do you have any dependents/spouse? How will they manage financially after you die?
How do you invest your pension savings in a way that will enable you to take sufficient inflation adjusted income  from your pension for the rest of your life, however long that may be?
What will you do if the market crashes whilst you are drawing down your pension?
Have you considered buying an annuity? If so, what features do you need?
Is tax, both on-going and on your death, an issue for you? If so how are you proposing to minimise it?

If you are confident you can answer questions like this you could reasonably choose not to use an IFA, though using one should you want to buy an annuity may be worthwhile especially if there are special circumstances such as ill health.

gm0

What Linton said.

If you are considering continuing to manage your own affairs and *need* to support your retirement with a private pension (DC pot) alongside state and other guaranteed income. You either need to work through the following to do list and DIY.  Or you need to find and hire an independent advisor that deals with your net worth level.  They will help you on a simlar (albeit regulated) journey to set this up for what should be about 1% pot up front.  And then charge 0.5% of pot every year forever to keep running it for you.  People consider that either excellent or appalling value for money depending upon their attitude to learning to do it themselves.

Advice is sold as essentially a regulated form of "trust me I'll sort you out with something suitable because I do hundreds and know the rules and you don't".  It is unkind but not entirely without foundation to observe that more effort goes on regulatory box ticking than on actual work you can easily see the value of up front.  The adviser fact find which is the key step to gather info about you - forces you to confront many of the questions in the list below.

DIY planning agenda:

- Retirement plan duration and basic parameters

- Future income both needs and wants  (Teasing apart "essential" from "desirable")

- Capital - Initial DC pot(s) and other capital  events - inheritance, gifting, downsizing home

- Risk taking required to match required and desired income to capital (To inform risk capacity/attitude in investing)

- Sources of guaranteed income and its impact on risk taking (State and other DB pensions)

- Handling sequence of return  (Dealing with this key risk to drawdown)

- Writing an investment statement and portfolio selection and design (Conclusions on all the above shaping a plan)

- Platform and specific fund selection  (Tools to implement said plan)

- Scheme transfers and implementation (Setup)

- Rebalancing, monitoring and ongoing work (Run)

chrispies2020

 Linton Thanks

The answer to your questions is - I don't know.

As I say, the future is unknown to me. I have no fixed financial targets. If I die, my wife inherits everything. She would be fine bearing in mind we own our property outright and my life is insured. The finances of my 3 kids are a matter of concern, but I cannot predict their future in this regard.

What would I do if the markets crash?? No idea. What would any of us do in this situation? Would an IFA know what to do? What did anyone do last year after Liz Truss ripped things apart? I know of no one who was able to avoid the repercussions of what she did. The IFA I spoke to told me there is no 'safe place' for money ATM.

I did consider annuities. The only consideration is that the policy would not die with me. I wish to do all I can for my family as well as myself.

My pension income will always be taxed. That is the only 'issue' for me.

As for the state of my health in future, that is further speculation I cannot answer.

As I say, the whole area of my personal finances is entirely opaque to me. It is exaclty the same for the majority of people I speak to. Even those with IFA's working for them are unable to tell me if their association with advisors has been of benefit or not

chrispies2020

I thInk its safe to say, I am none the wiser.  There is an element of 'shaming' associated with financial planning which I feel is troubling. If it goes wrong its *your* fault - whetever choice you make. Shame on me! The word 'need' is associated with this.

I have no answers to any of the points raised. However the charges are interesting. The  charges I have been quoted are higher than mentioned here. Initial fee up to 100k is 3% and the ongoing charge is 0.7%. Is this excessive?