Non-motoring > Financial Adviser Miscellaneous
Thread Author: Bobby Replies: 43

 Financial Adviser - Bobby
I think the time has come to see a financial adviser, primarily about my various pension employment pension funds I have and to decide whats best to do with them.

I have never had a financial adviser but when I used to work with Norwich Union Life Ins we dealt with a lot of intermediaries who were

a. a tied agent eg an adviser or a bank who would only sell one company's products
b. an IFA who would either be an individual, a compnay or even a bank arm who would sell any company's policies.

Back in those days , in most cases, their advice was free and they earned commission to pay their way.

Can anyone explain to me how things work now as I believe most are fee based? How do I find a good one to use? Is it just word of mouth like any other trade?
 Financial Adviser - Terry
I'm a chartered accountant, not a financial advisor. But I am aware many have been caught with poor advice or scams - a few suggestions:

- be clear what you want or need - income, or low risk. They are often mutually exclusive
- bear in mind you may need to live with decisions made now for 20-30 years
- if it sounds too good to be true, it probably is
- unless you are a very high earner of have masses of capital - KISS - keep it simple stupid
- be very wary of cashing in any final salary or similar schemes
- use any capital to pay off any expensive loans - eg: credit cards, overdrafts
- make sure you understand what happens if/when you die - widows pension, inheritance etc

You may feel you need advice - but make sure you fully understand the advice you are getting!
 Financial Adviser - Bromptonaut
If the issue is wholly about Pensions does Pension Wise extend to Scotland?
 Financial Adviser - bathtub tom
If you've a large portfolio, I'm told an accountant is worth their weight.
 Financial Adviser - No FM2R
The more risk averse you are, and I am very risk averse, then the more you are in the world of good accountants and tax advice. They don't like risk, neither do I.

The more risk you are looking to take, with the potentially higher rewards, then the more you want advisors who are comfortable with risk.

Pension advice would seem to be right up at the low risk end.
 Financial Adviser - smokie
I was obliged to engage an IFA to release my main pensions into a SIPP. Actually the former employer paid for the IFA, who would have been pretty expensive as moving pensions out of final salary schemes requires specialist sign off which doesn't come cheap.

He did a long fact-find which delved into all aspects of my finances and my attitude to risk etc. The outcome was that I am prepared to take risks, which I knew before we started, but I needed it to come out that way to release the final salary pension so my answers were skewed n(by me) in that direction.

They also came up with suitable place to invest my fund-to-be, and I initially though I might need a fair bit of hand-holing but the place which did this ISTR came out at over 5% per year - which in 20 years would swallow the lot! But it really was gold plated - monthly meetings to review progress etc, probably over lunch with agreeable wine at my cost etc.

So along came an altogether cheaper option which is the one I took. I can manage my own swaps between funds so once the money had landed in the account I dispensed with the IFA.

I made a poor decision in the early days, switching to a low risk fund because my pot had dipped dramatically, only to find I'd done it at the bottom of the dip and IO left myself an unnecessary and panicked 5% down in about 3 months.

But fate works in funny ways and my pension has grown by over £900 a day since 1 March, by lucky timing of switches between funds. Had it been in the fund the adviser recommended, it would only be about 95% of it's initial value. Had I put it in the more cautious fund it would be about 3% up. As it is it is about 10% up, and that's having lost a few % early days!!

I would and could not have got to this position without an IFA, and it is a very useful exercise to go through everything with them. Whether you need ongoing support from them is another matter. I don't claim to know what I'm doing really, but I am watching how it's going much of the time even though the time to switch funds means an immediate reaction takes two of three days to reach the funds.

I do have an ex-IFA mate who retired about the same time as me who had a quite reasonably sized chunk in the Woodford funds, and I think he's lost a bob or two as a result.

Wrt finding one, I eventually got one from
 Financial Adviser - Duncan
>> I do have an ex-IFA mate who retired about the same time as me who
>> had a quite reasonably sized chunk in the Woodford funds, and I think he's lost
>> a bob or two as a result.

Well, until comparatively recently, he was THE man to follow, but not no more. Sad, and of course, quite a few people have lost significant sums of money.
 Financial Adviser - smokie
Very true, and at least one of the stocks he was in has since turned in a very decent share price rise as a result of Covid (this article suggests 420% but I think he was in much earlier, at more like 5p a share, and it's now worth £2). I expect there are more like that.

He was caught out not so much by losses as illiquidity, in shares exactly like the above because he was unable to trade them when there was a bit of a run on his fund.

I suppose my point, if there was one, was even IFAs can get fund management wrong, though back to the OP question, a financial review would be really useful as it is largely fact based and may well bring you unexpected benefits and info.
 Financial Adviser - legacylad
And don’t forget to spend your money before you curl up your toes.
 Financial Adviser - Duncan
>> Very true, and at least one of the stocks he was in has since turned
>> in a very decent share price rise as a result of Covid (this article
>> suggests 420% but I think he was in much earlier, at more like 5p a
>> share, and it's now worth £2). I expect there are more like that.

Article in today's Telegraph money section, about a woman running an advisory business.

She uses eToro. No, I don't know what it is.
 Financial Adviser - Terry
Smokie raises a good point about management of any pension pot. To actively manage it you need to be active very regularly, and understand what you are doing.

You need to understand the relationship between risk and reward and be clear about your own risk appetite. Typically as people near retirement their appetite for risk declines - when you are 30 you have a few decades to make up any losses, when you are 70 you are stuffed!

If highly regarded investment professionals and financial journalists are unable to consistently get it right, my chances of outpacing the market are fairly limited. People, like politicians, tend to crow about their successes but bury the failures.

I get little joy scrutinising the financial press - I have better things to do with my time. But "horses for courses" - self management can be good but understand whether it is right for you.
 Financial Adviser - Ambo
As well as, cited above, there is

I have used 4 financial advisers in the past, admittedly before present regulations applied, but didn't think much of any of them. "Chartered (or "Certified") Financial Managers" seem to be the cream of the current pack.

Probably all financial advisers offer a free initial consultation. Subsequently, I decided that fixed rate advice was better than fee-based.
 Financial Adviser - Manatee
Bobby, commission based advice was never free, and in many cases very costly.

If they are final salary schemes do nothing without proper knowledge or good advice. and a lot of thought.

Never ever respond to any sort of cold call or mailing. The same applies to "schemes" you might stumble across on the internet. Brazilian hardwood plantations, storage units with guaranteed returns and ones we haven't even imagined - you'd never see your money again.

Sorry that's all negative stuff that you probably know but it can't be repeated too often.

There's lots of stuff on the net about finding financial advice, just take note of the source.

If you have occupational pensions you might find that one or more of those will have a scheme for offering you free (paid for by them) or subsidised advice. The scheme I am a trustee of does that - we have to be very careful about transfers, which is why we insist people have had advice and because our job is looking after members' interests (and the company has agreed to pay for it) we will contribute to one round of independent advice through a group arrangement (they can't keep repeating it). That advice necessarily looks at the whole picture for the member, not just the pension from the scheme.

 Financial Adviser - smokie
"If they are final salary schemes do nothing without proper knowledge "

You aren't allowed to do cash final salary pensions into SIPP type pension pots without the recommendation of an IFA who has the relevant qualification in pensions (which is not a lot of them, though they will all have a company they can refer your stuff to. Also at the time I was doing it, even if you had the required approvals there were some companies that would not take it.

This approval doesn't come cheap, I was told not less than £6k and that was 5 years ago. The issue is that they could potentially be sued for bad advice so have liability insurances to keep up long after you've left them.

But I'm not sure that was even in Bobby's mind.

Anyway - for me, my final salary scheme company eventually offered me about 20 x my projected annual pension for me to go away, plus the IFA costs to achieve it. I'm thinking I've done the right thing because the pension wasn't as good as some out there - not inflation proofed, fund was significantly underfunded, and I had a quite reasonable amount of savings so really didn't want an income which would be taxable from day 1. |I also left the 25% tax free in the pot rather than having a lump sum top splurge.

Lastly I knew a couple who worked for BA for their whole lives and left with a really decent pension. Both had died within maybe 4 years of retiring and so all that money just went - nothing for the (grown) family. So the pot is a also pretty good piece of wealth management which generally has significant benefits for IHT, especially if you croak before 75.
 Financial Adviser - Lygonos

I dabble in the markets using AJ Bell's platform ( ) with SIPP/ISA and dealing accounts.

My NHS pension stays put of course.

 Financial Adviser - smokie
Yeah if I had an NHS pension I'd have stayed put!!

I've also got a "gambling fund" ISA (with Willis Owen) which isn't doing too badly, actually seeded a few years ago by looking at what someone who used to be here was invested in. More recently I've been doing my own thing and the fund is well over double it's initial value. Which is nice cos its tax free!
Last edited by: smokie on Mon 3 Aug 20 at 00:39
 Financial Adviser - zippy
>> My NHS pension stays put of course.

A guy I know had a decent final salary scheme pension with a major UK bank. Earning about £50k p/a he had been there since 16 and is now 58.

He recently cashed it in for £1m and transferred it to an American bank to handle his pension.

Not sure I would be that brave.
 Financial Adviser - bathtub tom
I know of a state school whose teachers were convinced to invest their pensions in a private fund due to 'projected' earnings. Because one or two were convinced, the rest followed.
They lost an awful lot of money!
 Financial Adviser - Ambo
Re advisers, I see that there are also Chartered Wealth Managers and Chartered Investment Managers. It is not clear how they differ from other financial advisers.
 Financial Adviser - smokie
I hadn't heard of them either but would hope that they are subject to the same levels of training and oversight that a regular IFA is - my ex-IFA buddy had to do some (apparently) pretty tough exams to add the various specialisms to his status, and his work was rigorously checked for accuracy and suitability by an external agency before being presented back to the customer. He wasn't qualified to do pension swaps though - IHT was his main area.
 Financial Adviser - Bobby
Thanks for all the suggestions and info.

I have a long way to retirement but have 5 works pensions so just need to see whats best. My most recent empployer, who I left last summer, just had the pension statement in and the fund seems to have lost £10k in a year which is about 10% so this has prompted me to look into more carefully!

Back in my Norwich Union Days you could select a "With Profits Fund" which was guaranteed to never lose you any value - obviously might also not have grown any value either!!!
 Financial Adviser - Manatee
It doesn't matter if they are small individually, DB pensions have no costs for your pot and if they are decent schemes they will have some reasonable inflation protection and widow's (and dependants?) pension.

If you commute 25% to take as tax free lump sum, remember you can usually do that without commuting the widow's pension - so she'd still get half of what you would have got, if you know what I mean.

The core of my pension income is couple of DB ones that would be just about enough to get by on and with reasonable inflation protection on those I sleep a bit easier.

Not advice of course.
 Financial Adviser - smokie
Again not advice but the 10% drop could have come after a year of 20% rise, or in a year when others dropped by a large %age. COVID has hit a lot of investments quite hard, If your statement had come out in March you'd have been be smiling. Over time the market usually sorts itself out, though personally this time I think it could take a while. But you may find you can't do a lot better, without higher risk.
 Financial Adviser - Crankcase
While we're on this pension stuff:

A family member has a pension pot with the Prudential. When it was started, she said she wanted to retire at 55.

She has reached 55 but isnt retiring. For reasons I'm not going into, she isn't able to talk to the company right now. If she just ignores the letter asking what she wants to do that she had from them, what happens to the pot, in general terms?

 Financial Adviser - Falkirk Bairn
Why does she not write a letter to the Pru?

She might not retire at 55 but she could
1) Take a Pension now and continue working
2) Stop paying in & agree to leave the pension pot and allow it to hopefully grow.
3) Continue paying in and hopefully grow the pension pot over time.

Taking a pension at 55 results in a smaller pension that starting at 60/65/70.

It is not the best plan to ignore the letter. Depending on the terms of the scheme there will be steps that your friend does/does not want to happen - best to speak to them.
 Financial Adviser - Crankcase
Thank you. By "talk" I suppose I meant "contact in any way".

Have spoken at length, but alas that's where we are right now. I was wondering if the default position would be the pot just sits there until one day she claims it, if she ever does.
 Financial Adviser - Falkirk Bairn
What happens varies from company to company so send a letter, make a phone call etc etc

If you do nothing it might lie in an "dormant account" awaiting instructions.

After all it's not £3.24 in a Post Office savings account that matters very little is £££s that your friend will rely on when he/she eventually retires - doing something is imperative..

 Financial Adviser - Manatee
>> Thank you. By "talk" I suppose I meant "contact in any way".
>> Have spoken at length, but alas that's where we are right now. I was wondering
>> if the default position would be the pot just sits there until one day she
>> claims it, if she ever does.

It's unlikely that anything irreversible will be triggered if it's a personal pension pot, although the answer is to look at the correspondence which should give a clue.

The reason for the letter is possibly for no other reason than that 55 is the minimum age for getting money out of a pension pot in normal circs.

This is what Pru say as a general guide - I wouldn't take it as gospel because they will have done various products over the years, probably including group pensions with slightly different rules and investment strategies.
 Financial Adviser - Manatee

If she has previously indicated that she wanted to retire at 55, there might be some 'lifestyling' going on with the investments. Near retirement the usual thing used to be to move over a period of years into gradually safer (and lower return) investments, to avoid being caught by a big dip just before buying an annuity. Sometimes this was done automatically, and if that was the case it would have started possibly 5-10 years ago and the whole lot could be sitting in some very low return (but safe) funds now.

We actually stopped doing this with our DC section because people now are much more likely to use some form of drawdown, which often means they remain long term investors for a large part of the pot.

But if she has been 'lifestyled' because of her planned retirement date then she might actually have dodged the recent drops.
 Financial Adviser - smokie
And of course your friend is continuing work and can afford it, it is very tax efficient to put money into a pension.
 Financial Adviser - Aretas
Before I retired, 20 years ago, I was visited by a representative of the company pension scheme to see what I wanted to do. I asked her if I should take a lump sum and a smaller pension. She said she wasn't authorised to advise, but did so in a roundabout way. She said that her father had retired a few years ago and didn't regret taking his full pension and no cash. I made the same decision and certainly don't regret it. Guaranteed cash in the bank every month and not having investment decisions works for me.
 Financial Adviser - Crankcase
Thanks for the replies on this one. Useful indeed - I have no idea about all this pot stuff so couldn't really advise her much when asked, other than the obvious "well talk to them, ducky". Which led nowhere.

I can't live other's lives for them, but I can distill the above into wise nuggets, offer them up and then I've done the best I can I guess.

Much appreciated all.
 Financial Adviser - Bromptonaut
>>For reasons I'm not going into, she isn't
>> able to talk to the company right now.

No criticism of Crankcase is intended or implied but the bit above would be a serious red light in my area of advice (benefits).
 Financial Adviser - Crankcase

>> No criticism of Crankcase is intended or implied but the bit above would be a
>> serious red light in my area of advice (benefits).

She's just scared herself witless over the whole thing and is putting her head in the sand bigtime.
 Financial Adviser - MD
If you've money to invest - Property Property Property
 Financial Adviser - Ambo
Right. It looks as if the private property market is growing but add some commercial property as well for stability. Word is that there will be increased demand for warehousing as more and more suppliers go online and need the storage space.
 Financial Adviser - smokie
Would that not be the same storage space already owned by the wholesalers/retailers, but sold off at rock bottom prices because their outlets have gone?

And what about all those empty office blocks?

And what about the thousands who have/will have lost their jobs due to the pandemic, and those remaining in jobs but with lower salaries therefore less disposable?

Gloomy? Me? :-)
 Financial Adviser - Bobby
Yeah, I would have thought commercial property was worth steering away from for the reasons stated!
 Financial Adviser - MD
That's the view I would take especially with small stuff, although I 'may' be about to pounce on something if the timing is right. Of course the biggest unknown is which way this Covid carp is going to jump.
 Financial Adviser - No FM2R
If you're going to invest in property then consider where you think your revenue stream / profit is coming from.

If you are investing to simply sell at a profit in a rising market then you're a braver man than I.

If you are investing to change/improve and then sell at a profit, then I hope you're a builder. (Yes, I know MD is one) because you'll need the expertise. Of course I know it seems like the bigger the change/improvement the higher the cost but the greater the opportunity for profit, but a good builder will spot stuff that looks like hell but that can actually be cleaned up pretty easily and cheaply before being flipped.

If you're investing for rental income then that seems the 'safest' option to me. And if you don't mind the work, buy at the cheap tatty end. Combining a cheap acquisition, some cosmetic work and then renting out can lead to attractive returns.

The last market to die is going to be the single younger person living in a cheap rental. Also, many cheaper properties is safer than fewer more expensive properties. It can be a lot more tax efficient as well. As I said, providing that you don't mind the work.

As for commercial properties, I wouldn't touch it with someone else's barge pole. Far, far too difficult, too changeable and too uncertain at this time. And I'd say that there is a glut. IMO only attractive from a risk/reward perspective if you're playing with money you can afford to lose or that belongs to someone else.

 Financial Adviser - smokie
I thought they'd wiped out much of the tax efficiency of buy-to-let but it's not my specialist subject (- nothing is!!).
 Financial Adviser - Falkirk Bairn
My experience, admittedly 25 years ago, was that they were "not the sharpest tools in the box" - I had come into some money & was "re-organising matters".

I spoke to 3 - 2 independent and a tied adviser "Equitable Life" a close call not going with him.
I ended up "doing my own thing" in the end.

A person I know from when he was a boy now is a director of an small IFA - I do not know how good / bad his company might be BUT I know his dad bailed him out on at least 2/3 occasions in his 20s & 30s. My feeling is that if he could not manage his own affairs how could he be trusted to advise / manage other peoples.

When his dad died it turns out that dad had taken Equity Release from his home - looks like bailing out his only child, had come at a great cost, to him & his wife.
 Financial Adviser - smokie
I think IFAs are a different breed now FB - to be an IFA you do need to have passed some quite stringent exams, and in my mate's experience all of your day-to-day work is "marked" by someone independent ( - in his case it was a company in India) to make sure your advice is sound and fits the facts.

In my mate's case this eventually resulted in him retiring probably earlier than planned due to the stress it induced, though it may course be that as a senior and respected IFA of many years standing he may have found it irritating, to say the least, to have nit-picky questions raised on everything he did - I think I would. Still, there is stronger regulation in the industry now and, as a result, less sharks I believe.

(Though I do not use one now the pension is somewhere where I can manage it myself, but I do keep it in managed funds which provide a level of spread and de-risking without me having to get too involved)
 Financial Adviser - Terry
Many IFAs will develop longer term client relationships - it is not necessarily a once/twice in a lifetime meeting.

They may prfer this as if they can give some sound pre-retirement advice to someone age (say) 50-55, they get more fee earning opportunities as the client actaully retires, is an active pensioner, perhaps needs care, concerns about inheritance etc. It could be 20-30 years of advice.

This long term relationship means that many can wind gently down to retirement over a decade - not seeking new business but relying upon relationships already formed which gradually fall away.
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