Is it worth hiring a Financial Advisor?

dllive

Hi,

My situation: 50 years old. Earn income from a property rental, self-employed income and employed income. I have no mortgage. Last year Ive started paying into my SIPP and company pension. All my investments are passive index trackers (S&P500, world trackers etc) and held within ISAs.

I have a basic accountant who submits my self assessment once a year.

Im thinking about whether its worth hiring a financial advisor, but Im not sure what benefits they would bring. As you can see, Ive got things fairly nicely setup (ie: not taking massive risks on crypto, not day trading, dont have over-complicated tax affairs etc). But Im fully aware of the limits to my financial knowledge.

- Do you think having an FA would be beneficial?

- How much do FAs usually charge? (I know, how longs a piece of string!?)

- Do they offer a no-obligation initial consultation?

- Is it better to use a high street FA, or a one-man-band?

- Is there anything I should consider asking when I speak to an FA?

Thanks

eskbanker

Rule number one on here will normally be to go to an IFA rather than just an FA, the Independent status being considered advantageous rather than those who can only recommend products from a restricted pool.

They will all offer an initial free meeting, but only to discuss process, costs, etc, rather than to give any advice.

The key thing missing from your overview is some sense of scale, in terms of how much each component of your portfolio is worth, which may influence whether advisors would be interested as well as affecting the charges....

dunstonh

- Do you think having an FA would be beneficial?

Never an FA.  It should be a choice between IFA and DIY.   

- How much do FAs usually charge? (I know, how longs a piece of string!?)

Depends on what you are employing for and how much is involved.   You get greedy firms and good value firms.    Generally, the more you have, the better value they are relative to the amount involved.

- Do they offer a no-obligation initial consultation?

Yes but its not to give advice.  Its a getting to know you session and seeing if both sides agree to that there is something beneficial in the service.

- Is it better to use a high street FA, or a one-man-band?

Again, this comes to IFA vs FA.   Most IFAs are small local firms of 1-5 advisers.   FAs tend to be larger regional or national firms working on a salesforce style basis.    Smaller tends to be better.

- Is there anything I should consider asking when I speak to an FA?

Think about why you need one first.   IFAs are planners and facilitators for people who don't know what they need to do or prefer to pay someone to do it as they don't want to.     Is that you?   if not, then stick with DIY.   If it is then use an IFA and not an FA.

dllive

Great, thanks! Very useful. I will certainly contact an IFA and have an initial chat.

Even if I have to pay an IFA for a one-off session (or 2) just to oversee my process/thinking and confirm Im not doing anything outrageously wrong! 

JohnWinder

Just speculating out loud here, and I'm sure folk need no invitation to correct my thinking, but it seems to me there are three relevant matters here:

Firstly, what are the issues? Secondly, what are the ins/outs of the issues? Thirdly, what's my view about how to proceed, having cogitated over #2?

The issues include: how much to save to fund retirement spending; what to invest in; dealing with tax laws, etc.

The ins/outs include: the sources of retirement spending and ways to estimate; characteristics of investment asset classes; how different savings vehicles are taxed, etc.

Regarding #3, will one blindly take an advisor's advice, or how far along the spectrum are you in needing to take personal control of the necessary decisions?

So, if you can find sources to alert you to the issues, and find background material to inform you of the ins/outs, do you need an advisor, because it won't be the cheaper route on the face of it?

masonic

I would suggest, having seen your posts here, that you are engaged and eager to learn, so that would point more towards the DIY route while in the accumulation / growth phase, where decisions are largely based on knowing your risk appetite, which investments are a good match with that, and prioritising the right tax wrappers. All of which can be picked up through general research/discussion. However, as you move towards the decumulation phase and need to use your assets in retirement, there are many more factors to consider to make the most of the assets you have built up. This is where it could be valuable to jointly construct a financial plan with an adviser that takes into account all of your personal circumstances and needs, alongside using your assets optimally to give you a suitable income lasting an appropriate length of time.

dllive

masonic said:

I would suggest, having seen your posts here, that you are engaged and eager to learn, so that would point more towards the DIY route while in the accumulation / growth phase, where decisions are largely based on knowing your risk appetite and prioritising the right tax wrappers. However, as you move towards the decumulation phase and need to use your assets in retirement, there are many more factors to consider to make the most of the assets you have built up. This is where it could be valuable to jointly construct a financial plan with an adviser that takes into account all of your personal circumstances and needs, alongside using your assets optimally to give you a suitable income lasting an appropriate length of time.

Thanks @masonic . And also apologies for making you read/reply to my persistent questions on here. Its thanks to people like you - and all the other really helpful and knowledgeable people here on the MSE forums -  people like me have the power to take control of our own finances. I wouldnt be half as knowledgeable without the likes of you taking the time to explain things. So thankyou.

Yes, I think the decumulation phase is a whole other ball game, and certainly will speak to an IFA at that point.

Funny thing is, I get the feeling the hardest bit about the decumulation  phase is going to be to learn to spend and enjoy the money Ive spent a lifetime accumulating!

loobs40

I thought our circumstances were fairly easy to manage but a friend recommended an IFA as my retirement was looming and it was the best thing I have done.  There was so much pension stuff I just did not truly understand and the IFA  has paid for himself several times over in terms of pension and investment advice

Archerychick

dllive said:

Great, thanks! Very useful. I will certainly contact an IFA and have an initial chat.

Even if I have to pay an IFA for a one-off session (or 2) just to oversee my process/thinking and confirm Im not doing anything outrageously wrong! 

We have recently looked for an IFA for a ‘check in’ on set up, not looking for any fund management. It took a little while to find an IFA who charge on a one off basis, we had a number of no, sorry we don’t do that responses. I couldn’t see an easy way to work that out without making contact - so just be aware, it is possible but you have to find one!