IFA vs DIY

Veloflyer

I'd be interested to learn what are folks' views on DIY pension management vs. handing over to an IFA or similar? My immediate concerns would be handing over my life savings to a relative unknown and them scarpering off with the money, their ability to manage the risk, pick funds/bonds etc, fees, etc.

On the other hand, it would mean I don't have to do it - especially pertinent in later years perhaps? I assume they would also have a better appreciation of minimising tax, maximising growth, minimising risk……I guess that would justify the fees?

Thoughts welcome

Bostonerimus1

It's very much up to the individual and the complexity of the situation. If you go with a registered IFA fraud is very unlikely.

artyboy

…paging @Ibrahim5 for a balanced view 🤣

In all seriousness, DIY is not as scary as some people assume. Bear in mind that an IFA can be very helpful in structuring your thoughts in terms of appetite to risk, long term objectives, how you can get from where you are now to where you want to be, understanding potential pitfalls, proposing a suitable investment mix etc.

But… the investment risk is always with you, whether you IFA or DIY. It comes down to how much time and effort you want to put into understanding how to do it yourself, versus accepting the cost of having someone to help you in doing that.

And please… whatever you do, no FAs, only ever IFAs. Too many tales of woe on here from people that have been suckered by SJP and the like.

squirrelpie

It's a very personal decision, so whatever people say won't matter much. What does matter is your own feelings. Do you feel capable of managing your own money? (if not, you may have other problems too). You don't say how old you are, or anything about your circumstances, so it's very difficult to offer any suggestions at all. Note that you can always change your mind later, whichever way you choose now.

poseidon1

OP from a previous thread have you not already been managing your own Sipps on a DIY basis, and by your own testament ' done pretty well?

During this process have you not already developed a sense of your own appetite for risk, and how that might be changing as you go into retirement?

An IFA maybe able to add value to your financial planning outlook by looking at ancillary matters such as IHT planning ( if relevant to your circumstances), or perhaps as a back up resource for your spouse if she does not share your own investment and fiscal abilities, in the event you predecease her.

You are best placed to judge to what extent an IFA can be of value in the above scenarios, given your concerns about their potential honesty or skills that may or may not exceed your own.

dunstonh

I'd be interested to learn what are folks' views on DIY pension management vs. handing over to an IFA or similar?

I doubt it has changed from every other time this comes up on the site.

My immediate concerns would be handing over my life savings to a relative unknown and them scarpering off with the money, their ability to manage the risk, pick funds/bonds etc, fees, etc.

How would they scarper off with your money? you don't hand your money to an IFA.

IFAs don't micro-manage the investments. The IFA is responsible for the suitability of the investments fitting the objectives and criteria, but the management itself is within the funds.

At the end of the day, its no different to any other job. If you know what you are doing and can do a good job of it then DIY can save you money. If you make a right pigs ear of it then it can cost you money.

I have clients that could easily DIY but choose not to as they find it boring (and good investing is usually boring) and they dont want the work that goes with it. I have others that don't have a clue and need the knowledge. Some people have lots of tax wrappers and annual allowances to use across those. Others have very little.

Albermarle

https://forums.moneysavingexpert.com/discussion/6657950/ifa-vs-diy

This used to be a regular question on the forum, usually setting off long threads with people taking antagonistic views about financial advisors. Luckily that seems to have largely calmed down nowadays, although there remains one survivor !

My own view is that the balance can change as you get older/personal situation changes.

Accumulating funds over the long term whilst working with pensions, savings, ISAs etc is not that difficult, as long as you have some basic knowledge. OK you might end up with a bit more or a bit less, but it is not rocket science.

It gets more complicated as you think about decumulation, especially if you have built up a decent level of funds.

Annuities or not ? Get all the TFLS out asap? Avoid paying 40% tax? Drawdown strategy ? Cash buffers ? Inheritance tax/beneficiary pensions thoughts? Max lump sum allowance? Small pots rule etc etc.

Also it seems to get more complicated if you ever get into the £2M plus category, own a business etc

Plus you might fell less capable/inclined to think about it all as you get older still, and may also be worried about leaving it all to a Spouse who has never took much interest.

Veloflyer

Thank you all. To elaborate, at present I am leaning towards setting up an ILG for half my pot, leaving the rest in equities for the present. So far, the process of DIY has not been too taxing and I think I can set up the ILG easily enough - sell enough equity funds/ETFs to buy the IL gilts from Bell? Also, it is not me that has done "pretty well" more the equities. There was a little thought as regards fund/ETF choice, and of course, reading around on this forum and elsewhere - all very useful.

For sure my concerns are for the missus should I depart this mortal coil - I am 61 by the by - and my possible deteriorating mental state later on. IHT is also a consideration thanks to our dear chancellor.

Perhaps one idea may be have an hour or so with an IFA to discuss a suitable way forward rather than completely hand over the management of my pension to them.

gm0

>Perhaps one idea may be have an hour or so with an IFA to discuss a suitable way forward rather than >completely hand over the management of my pension to them.

This is likely a no go. But never say never. A meet and greet to check compatibility and generic chat - yes.

The I only want this - structured chat or review and confidence for tiny fee. Not happening.

They largely have to do all the FCA regulated pension advice - first - before layering on anything additive. And don't want to give away the actual advice without either the one off transaction, or the implement+ongoing fee. But the main issue is compliance as condition of insurance. Flexibility is lacking.

Workarounds - using a spouse pensions etc. can be used to have advice on a smaller amount of family assets. Obviously non-ideal from the IFA perspective.

Veloflyer

I had thought of a brief paid session with an IFA initially to sense check my current portfolio and plan of action until SP, and possibly what I can do now to mitigate IHT for me and the missus.

After the SP kicks in, I may consider handing it over - quite when depends on whether I can still do the crossword…..

Ibrahim5

Oh dear. You obviously don't understand. It's all about ongoing fees. Are you going to agree to pay enormous ongoing fees for managing your investments? Have you got enough invested? Unless the IFA thinks you will be useful to him he is unlikely to even answer your enquiry. What you want is no importance.