Financial Planning: should I engage a financial planner?

allegro120

Sourpuss84 said:

Hi, 

I need some advice. I am about to come into an inheritance of around £350k. Should I engage a financial planner? I met with someone last night and was very impressed. Managing money like this is not something I have experience of. 

Fees: initial 3% capped at £10k with room to negotiate, followed by 1% p/a

I feel this would take a lot of worry away from me about managing the money well longer term and the personalised approach seemed very encouraging. 

Is this a way to grow my inheritance? 
What experience is out there? 

Thanks!

I would put this money in savings accounts spreading across 5 institution in order to be protected by FSCS, don't need much money management skills to do a simple thing like this. Certainly wouldn't pay somebody to do it for me.  It's a bit like paying somebody to put screen washer in your car because opening the bonnet feels like an enormous task that needs to be handled by a professional.

dunstonh

allegro120 said:

Sourpuss84 said:

Hi, 

I need some advice. I am about to come into an inheritance of around £350k. Should I engage a financial planner? I met with someone last night and was very impressed. Managing money like this is not something I have experience of. 

Fees: initial 3% capped at £10k with room to negotiate, followed by 1% p/a

I feel this would take a lot of worry away from me about managing the money well longer term and the personalised approach seemed very encouraging. 

Is this a way to grow my inheritance? 
What experience is out there? 

Thanks!

I would put this money in savings accounts spreading across 5 institution in order to be protected by FSCS, don't need much money management skills to do a simple thing like this. Certainly wouldn't pay somebody to do it for me.  It's a bit like paying somebody to put screen washer in your car because opening the bonnet feels like an enormous task that needs to be handled by a professional.

Its cheap but its probably not a good idea to do that.

eskbanker

allegro120 said:

Sourpuss84 said:

Hi, 

I need some advice. I am about to come into an inheritance of around £350k. Should I engage a financial planner? I met with someone last night and was very impressed. Managing money like this is not something I have experience of. 

Fees: initial 3% capped at £10k with room to negotiate, followed by 1% p/a

I feel this would take a lot of worry away from me about managing the money well longer term and the personalised approach seemed very encouraging. 

Is this a way to grow my inheritance? 
What experience is out there? 

Thanks!

I would put this money in savings accounts spreading across 5 institution in order to be protected by FSCS, don't need much money management skills to do a simple thing like this. Certainly wouldn't pay somebody to do it for me.  It's a bit like paying somebody to put screen washer in your car because opening the bonnet feels like an enormous task that needs to be handled by a professional.

Even if keeping £350K in cash deposit form is sensible for your financial circumstances, this would be pretty unusual and so what makes you believe that it would be appropriate for OP (or that your screenwash analogy is even close to fitting the situation)?

GazzaBloom

In my opinion, paying off all debt, including your mortgage would a great use of at least some of the money. Then decide when you want to use the rest and what purpose the money will have. The time between now and when you want to use it will help with decisions on whether to save or invest it, and what to invest it in, and what type of account to hold it in. Once those decisions are made there really is very little else to do on an ongoing basis.

All of these questions can be answered by yourself with a little online research. Personally, I would not want to pay up to £10K and an ongoing 1% in fees.

Bigwheels1111

I had a nice lump sum after selling my house.
I moved in with my best friend to care for them full time.
I put the cash in 5 and 7 year fixed rate savings, all with annual payouts.
As I’m a low earner £4001 this year, carers allowance.
I can get £14,569 of interest tax free.
Provides me with a nice little income.

I put some in an ISA with 90 day interest penalty.
Then an emergency fund in easy access account.
I run 3k a month through regular savers at 5.5% to 8%.
13 of them.
Never put more than 80k in each savings account / per institution.
85k is protected by FSCS, but not the interest over 85k.
80k at 5% gives 4k interest so all the money would be protected.
Stocks and shares are to long term for me, plus I know nothing about them.

I would not like to cough up 10k that’s for sure.

dunstonh

Bigwheels1111 said:

I had a nice lump sum after selling my house.
I moved in with my best friend to care for them full time.
I put the cash in 5 and 7 year fixed rate savings, all with annual payouts.
As I’m a low earner £4001 this year, carers allowance.
I can get £14,569 of interest tax free.
Provides me with a nice little income.

I put some in an ISA with 90 day interest penalty.
Then an emergency fund in easy access account.
I run 3k a month through regular savers at 5.5% to 8%.
13 of them.
Never put more than 80k in each savings account / per institution.
85k is protected by FSCS, but not the interest over 85k.
80k at 5% gives 4k interest so all the money would be protected.
Stocks and shares are to long term for me, plus I know nothing about them.

I would not like to cough up 10k that’s for sure.

You do not have to cough up 10k.  However, even if you did, its likely that what was recommended would soon surpass what you would do.

Plus, using cash savings to provide an income to live on is high risk unless you are near your life expectancy.   £350k with interest drawn will be worth around £234k in 10 years.   The spending power of that £14,569 interest will be around £9700.   Sooner or later, you will be eating the capital, which will then reduce the interest which will speed up the eating of the capital and you end up in a spiral of eroding value where running out is the ultimate destination.

If its income for life, then why not use the pension wrapper?  That would give you more than cash savings.  You may be limited on the pension wrapper but its one part of a wider solution.
If its funding the gap until state pension then you have multiple objectives.  i.e. funding that gap and then what you want after that.    So, you may have multiple solutions and use different investment options to suit the different timescales.

You say S&S are too long term for you but as you say £14569 is tax free, that suggests you are not of state pension age.   So, you may be underestimating your life expectancy, unless you have health issues.

jimjames

dunstonh said:

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

It's a poor quality product by current standards but in the 1990s I'd suggest it was actually not bad at all and certainly cheaper than the comparables you'd get at the time pre RDR where initial fees and high charges were common.

Bigwheels1111

dunstonh said:

Bigwheels1111 said:

I had a nice lump sum after selling my house.
I moved in with my best friend to care for them full time.
I put the cash in 5 and 7 year fixed rate savings, all with annual payouts.
As I’m a low earner £4001 this year, carers allowance.
I can get £14,569 of interest tax free.
Provides me with a nice little income.

I put some in an ISA with 90 day interest penalty.
Then an emergency fund in easy access account.
I run 3k a month through regular savers at 5.5% to 8%.
13 of them.
Never put more than 80k in each savings account / per institution.
85k is protected by FSCS, but not the interest over 85k.
80k at 5% gives 4k interest so all the money would be protected.
Stocks and shares are to long term for me, plus I know nothing about them.

I would not like to cough up 10k that’s for sure.

You do not have to cough up 10k.  However, even if you did, its likely that what was recommended would soon surpass what you would do.

Plus, using cash savings to provide an income to live on is high risk unless you are near your life expectancy.   £350k with interest drawn will be worth around £234k in 10 years.   The spending power of that £14,569 interest will be around £9700.   Sooner or later, you will be eating the capital, which will then reduce the interest which will speed up the eating of the capital and you end up in a spiral of eroding value where running out is the ultimate destination.

If its income for life, then why not use the pension wrapper?  That would give you more than cash savings.  You may be limited on the pension wrapper but its one part of a wider solution.
If its funding the gap until state pension then you have multiple objectives.  i.e. funding that gap and then what you want after that.    So, you may have multiple solutions and use different investment options to suit the different timescales.

You say S&S are too long term for you but as you say £14569 is tax free, that suggests you are not of state pension age.   So, you may be underestimating your life expectancy, unless you have health issues.

Might need the cash to buy a house in 3.5 years time or motorhome, I dont spend any of the interest anyway.

I don't need it, I only spend 1k of carers allowance a year at most.

No bills or debt.

Food, housing, mobile, Car insurance, Diesel, servicing & repairs etc are all covered by my friend who I care for.

I'm on call 24/7 365 days a year though.

I will have an extra 70-80k from interest and carers in 3.5 years.

Then i will need to make my mind up.

dunstonh

Bigwheels1111 said:

dunstonh said:

Bigwheels1111 said:

I had a nice lump sum after selling my house.
I moved in with my best friend to care for them full time.
I put the cash in 5 and 7 year fixed rate savings, all with annual payouts.
As I’m a low earner £4001 this year, carers allowance.
I can get £14,569 of interest tax free.
Provides me with a nice little income.

I put some in an ISA with 90 day interest penalty.
Then an emergency fund in easy access account.
I run 3k a month through regular savers at 5.5% to 8%.
13 of them.
Never put more than 80k in each savings account / per institution.
85k is protected by FSCS, but not the interest over 85k.
80k at 5% gives 4k interest so all the money would be protected.
Stocks and shares are to long term for me, plus I know nothing about them.

I would not like to cough up 10k that’s for sure.

You do not have to cough up 10k.  However, even if you did, its likely that what was recommended would soon surpass what you would do.

Plus, using cash savings to provide an income to live on is high risk unless you are near your life expectancy.   £350k with interest drawn will be worth around £234k in 10 years.   The spending power of that £14,569 interest will be around £9700.   Sooner or later, you will be eating the capital, which will then reduce the interest which will speed up the eating of the capital and you end up in a spiral of eroding value where running out is the ultimate destination.

If its income for life, then why not use the pension wrapper?  That would give you more than cash savings.  You may be limited on the pension wrapper but its one part of a wider solution.
If its funding the gap until state pension then you have multiple objectives.  i.e. funding that gap and then what you want after that.    So, you may have multiple solutions and use different investment options to suit the different timescales.

You say S&S are too long term for you but as you say £14569 is tax free, that suggests you are not of state pension age.   So, you may be underestimating your life expectancy, unless you have health issues.

Might need the cash to buy a house in 3.5 years time or motorhome, I dont spend any of the interest anyway.

I don't need it, I only spend 1k of carers allowance a year at most.

No bills or debt.

Food, housing, mobile, Car insurance, Diesel, servicing & repairs etc are all covered by my friend who I care for.

I'm on call 24/7 365 days a year though.

I will have an extra 70-80k from interest and carers in 3.5 years.

Then i will need to make my mind up.

See.  You are linking your money to your objectives.       The OP needs to consider their objectives and then solutions can be considered that meet their objectives.

ShinyStarlight1

Sourpuss84 said:

…This money is emotionally very important to me following the unexpected death of both of my parents. 

I am very sorry for your loss.

I had a similar experience with both of my parents so I understand how the money you have been left has great emotional significance.

Like you, I was not at all accustomed to having such a large amount of money.

In the beginning, I made mistakes because of my inexperience. But as I read more, and asked more questions, a little path appeared in the confusion.

Do keep asking for thoughts on here. There are some very knowledgeable people on here, and most are kind and generous with their insights.