Financial Advisor advice

Albermarle

RogerPensionGuy said:

A slight view/question comes to my head on this thread.

Using an IFA/FA to manage a portfolio, is it possible an IFA/FA will be unlikely to suggest annuities as after the one off commission or fee they don't get an ongoing % fee for that product? 

I suppose human nature will always play a part in any situation, even if it is subconscious.

However IFA's and FA's are tightly regulated and they have to offer appropriate advice for your situation, and be able to prove that by keeping a lot of records. They can not just do what they feel like, there are clear set procedures.

Of course like any profession, I guess not all follow the rules to the letter, especially in the more grey areas.

Albermarle

Marlax said:

I think I'm looking for advice/opinion on how to structure my retirement plan, given what I have, to make sure I'm not unnecessarily paying more tax than I should or to optimise how I use it. All the things they keep saying in the clickbait social media ads about 'dont make these 5 mistakes' or 'you could retire 5 years earlier if you structure your finances like this'. I keep getting emails from MoneyCoachJoe who says he's helped 100s of people 'just like me' to 'cut 10-20 years off their retirement age' and he doesn't want me to miss out (such a caring guy! 😄). Like you I'm cynical about these things especially when they do such obvious hard sell (50% off but only for the next 4hrs!) - but then again, am I missing something optimisation areas?

There is no black and white answer.

If you DIY, you will always be worried that you have missed something.
If you have an IFA, you will always be wondering if you are gaining enough to offset their fees.

As already said, the large majority of the public are clueless about personal finance in general, never mind pension rules etc. and are not interest in the subject at all. Or just may be incapable due to poor numeracy skills for example. In this case if they had a reasonable level of assets, then most likely some professional help would be beneficial, even if it only reduces stress/sleepless nights.
On the other hand, if you take an interest/have some basic knowledge and are prepared to spend some time on it, then DIY can work fine. ( reading this forum can help of course)

gm0

Albermarle said:

Marlax said:

I think I'm looking for advice/opinion on how to structure my retirement plan, given what I have, to make sure I'm not unnecessarily paying more tax than I should or to optimise how I use it. All the things they keep saying in the clickbait social media ads about 'dont make these 5 mistakes' or 'you could retire 5 years earlier if you structure your finances like this'. I keep getting emails from MoneyCoachJoe who says he's helped 100s of people 'just like me' to 'cut 10-20 years off their retirement age' and he doesn't want me to miss out (such a caring guy! 😄). Like you I'm cynical about these things especially when they do such obvious hard sell (50% off but only for the next 4hrs!) - but then again, am I missing something optimisation areas?

There is no black and white answer.

If you DIY, you will always be worried that you have missed something.
If you have an IFA, you will always be wondering if you are gaining enough to offset their fees.

As already said, the large majority of the public are clueless about personal finance in general, never mind pension rules etc. and are not interest in the subject at all. Or just may be incapable due to poor numeracy skills for example. In this case if they had a reasonable level of assets, then most likely some professional help would be beneficial, even if it only reduces stress/sleepless nights.
On the other hand, if you take an interest/have some basic knowledge and are prepared to spend some time on it, then DIY can work fine. ( reading this forum can help of course)

This.  And it's VERY personal - once you understand the way this market works. What it does and does not do. And what it charges.  Insured professionals need to be paid.  Wealth managers need to look prosperous. Expensive watches need to be funded somewhere.  But the old saying never goes away about the city.  "Where are the customers Porsches/Yachts - delete to taste).

I cannot get past the cumulative fee calculation of ongoing management. 

On a large DC pot.  40 years. So take half the value (which the line must travel through. Deaccumulation to zero.  For capital + returns making up income.  So half value x 0.5% advice drag x 40 years = 10% plus initial charge. Let's call that 2%. So 12% of initial pot.  

For ZERO guarantee of any particular absolute or relative to market performance.  That could be a luxury car, or several very nice holidays in early retirement - for some.  With unremarkable pensions viewed as income (at 3% of pot).  It needs to be understood before committing. This is not a small number.  Now it wil provide some handholding and general tax advice to avoid you or spouse having to bother with learning that.  And it will provide a "sound" portfolio - which is also readily available retail.  Bad DIY is caused by people applying a little knowledge as a dangerous thing and thinking they can beat the professionals with their high speed trading, better data, and other resources.  Occasionally a well timed contrarian can and does.  But most of us cannot and don't.  A more realistic comparison is retail consumer SIPP DIY (which provides sound options at market price - without the 0.5% load).  And adviser recommended platform which invests in broadly the same thing - but with it.  And then market sequence - is what it is - in either case.

The adviser is likely to think drawdown is suitable (their ongoing fees depend upon it remaining assets under management).  A way will be found for that recommendation to suit you.  It's not difficult to make it sound less self serving.  A sniff of an inheritance objective or need to vary income will do.   Just like recommendations to switch platforms - after a period of turbulence providing a stimulus - from the one originally used - before the IFA sold out to an FA network. To the house solution which is reassuringly more expensive - but "might" perform better.  A way will be found to make an FCA "suitable" recommendation. 

Cynical perhaps.  Wrong - not so much

Bostonerimus1

Marlax said:

I think I'm looking for advice/opinion on how to structure my retirement plan, given what I have, to make sure I'm not unnecessarily paying more tax than I should or to optimise how I use it. All the things they keep saying in the clickbait social media ads about 'dont make these 5 mistakes' or 'you could retire 5 years earlier if you structure your finances like this'. I keep getting emails from MoneyCoachJoe who says he's helped 100s of people 'just like me' to 'cut 10-20 years off their retirement age' and he doesn't want me to miss out (such a caring guy! 😄). Like you I'm cynical about these things especially when they do such obvious hard sell (50% off but only for the next 4hrs!) - but then again, am I missing something optimisation areas?

NEVER!!!! answer any unsolicited emails, social media ads, calls or letters! Unscrupulous people prey of Fear of Missing Out which is a very powerful incentive, but almost always has no substance. Search locally for an IFA and ask around for recommendations from family and friends. If you understand income tax rates and your personal allowance it's not difficult to take from savings, ISAs and pensions to keep your taxable income below the Higher Rate level (£50271) where you pay 40%.

dunstonh

RogerPensionGuy said:

A slight view/question comes to my head on this thread.

Using an IFA/FA to manage a portfolio, is it possible an IFA/FA will be unlikely to suggest annuities as after the one off commission or fee they don't get an ongoing % fee for that product? 

Possible with an FA, as not all of them do annuities.   Some are wealth management firms that only do investments.

Unlikely with an IFA.    Most IFAs are working above capacity, and IFAs via annuities are being arranged at the highest volume in over 17 years.     IFAs do transactional and ongoing work, and it doesn't matter to most firms.

Most IFA firms find their assets under management increase annually and their income isn't reliant on keeping people on ongoing services.  A mixture of transactional and ongoing is fine.    The key though is the type of firm.  A consolidator firm or one looking to sell to a consolidator needs AUM.   A general practitioner IFA (that is most of your small localised IFA firms) does all sorts.

Broadly speaking, the more confident the investor and the lower the draw rate, the less likely an IFA is to point towards annuity (i.e. strong capacity for loss).  However, between 2008 and 2022, annuity rates were poor and not really viable.   From mid-2023 onwards, and especially in 2025, annuities have become viable, and you are seeing a lot of IFAs move those types of people onto annuities.     Also, an increase in those who would have been comfortable using a drawdown in their 60s but are now in their 70s who think an annuity with a decent guarantee period is worth it.

artyboy

Marlax said:

I think I'm looking for advice/opinion on how to structure my retirement plan, given what I have, to make sure I'm not unnecessarily paying more tax than I should or to optimise how I use it. All the things they keep saying in the clickbait social media ads about 'dont make these 5 mistakes' or 'you could retire 5 years earlier if you structure your finances like this'. I keep getting emails from MoneyCoachJoe who says he's helped 100s of people 'just like me' to 'cut 10-20 years off their retirement age' and he doesn't want me to miss out (such a caring guy! 😄). Like you I'm cynical about these things especially when they do such obvious hard sell (50% off but only for the next 4hrs!) - but then again, am I missing something optimisation areas?

This is me 100%

Both Mrs Arty and I are perfectly happy with DIY for ongoing investments - we have a reasonable understanding of our risk appetite, and no concerns with DIYing our investments in terms of fund and platform choices.

However as we are approaching retirement, and with a recognition that as things stand, we have a sizeable estate (that has in fact doubled as a result of the pensions IHT changes), what we are looking for is targeted advice on best drawdown, usage, and pass-on strategy.

Everyone is entitled to their own views on the fairness of IHT, but when our own estate's bill has notionally gone up by 7 figures at a stroke, I have no moral qualms about exploring all legal options to optimise our position and that of our children/future grandchildren.

So what we need is an IFA that is able to take a holistic view of our position, and what we are currently planning, and either validate our approach, or give us some expert advice on alternative strategies, e.g.

- use of annuities with long guarantees
- trusts (*shudder* yes, I know, but they can have a use...)
- alternative tax efficient investments within risk tolerance (not sure how diversified you can get with VCTs, as an example)
- investment bonds
- anything else we've not considered.

What we DON'T want is someone that will just manage everything for us for both an upfront and ongoing fee... 

So, got an intro call with a Costco promoted Wealth Management firm - yes I know, I know... but they are - apparently - IFAs, and I feel I need to start somewhere. I'll get a feel pretty quickly if they have anything to offer...

Marlax

artyboy said:

Marlax said:

I think I'm looking for advice/opinion on how to structure my retirement plan, given what I have, to make sure I'm not unnecessarily paying more tax than I should or to optimise how I use it. All the things they keep saying in the clickbait social media ads about 'dont make these 5 mistakes' or 'you could retire 5 years earlier if you structure your finances like this'. I keep getting emails from MoneyCoachJoe who says he's helped 100s of people 'just like me' to 'cut 10-20 years off their retirement age' and he doesn't want me to miss out (such a caring guy! 😄). Like you I'm cynical about these things especially when they do such obvious hard sell (50% off but only for the next 4hrs!) - but then again, am I missing something optimisation areas?

This is me 100%

Both Mrs Arty and I are perfectly happy with DIY for ongoing investments - we have a reasonable understanding of our risk appetite, and no concerns with DIYing our investments in terms of fund and platform choices.

However as we are approaching retirement, and with a recognition that as things stand, we have a sizeable estate (that has in fact doubled as a result of the pensions IHT changes), what we are looking for is targeted advice on best drawdown, usage, and pass-on strategy.

Everyone is entitled to their own views on the fairness of IHT, but when our own estate's bill has notionally gone up by 7 figures at a stroke, I have no moral qualms about exploring all legal options to optimise our position and that of our children/future grandchildren.

So what we need is an IFA that is able to take a holistic view of our position, and what we are currently planning, and either validate our approach, or give us some expert advice on alternative strategies, e.g.

- use of annuities with long guarantees
- trusts (*shudder* yes, I know, but they can have a use...)
- alternative tax efficient investments within risk tolerance (not sure how diversified you can get with VCTs, as an example)
- investment bonds
- anything else we've not considered.

What we DON'T want is someone that will just manage everything for us for both an upfront and ongoing fee... 

So, got an intro call with a Costco promoted Wealth Management firm - yes I know, I know... but they are - apparently - IFAs, and I feel I need to start somewhere. I'll get a feel pretty quickly if they have anything to offer...

Sounds like we're in a similar situation. Costco's an interesting choice, please let me know if they're any good and I'll give them a go too, if they are? Good luck

logies

Yes, this is how I feel artyboy. I have a basic knowledge of pensions but I would benefit from some precise and targeted advice regarding IHT planning. There are so many “experts”’out there, it’s difficult to know who ti trust.

Linton

RogerPensionGuy said:

A slight view/question comes to my head on this thread.

Using an IFA/FA to manage a portfolio, is it possible an IFA/FA will be unlikely to suggest annuities as after the one off commission or fee they don't get an ongoing % fee for that product? 

IFAs don’t get any benefits from selling you a particular product. Their income comes from the charge for the advice.  If their advice can be shown to be inappropriate you can claim compensation for any losses incurred.

If after receiving advice you decide not to take an annuity you can ask the IFA to manage the portfolio for you for a fee. The choice is yours.

RogerPensionGuy

Linton said:

RogerPensionGuy said:

A slight view/question comes to my head on this thread.

Using an IFA/FA to manage a portfolio, is it possible an IFA/FA will be unlikely to suggest annuities as after the one off commission or fee they don't get an ongoing % fee for that product? 

IFAs don’t get any benefits from selling you a particular product. Their income comes from the charge for the advice.  If their advice can be shown to be inappropriate you can claim compensation for any losses incurred.

If after receiving advice you decide not to take an annuity you can ask the IFA to manage the portfolio for you for a fee. The choice is yours.

My thinking/feeling is like an IFA is looking after my £1M SIPP and paying say 0.6% charges PA on the balance and this situation could run over many years and decades. 

However I say to advisor I wish to use say 800K or the lot to buy an annuity or two and just make life very simple. 

It maybe possible my IFA would rather I don't buy them annuities from a business point of view, I understand an IFA must act in accordance with all the rules, but it could be tuff to switch off a nice income stream.