[JD6]

Originally Posted by JR1664

I'd recommend an IFA if you have a substantial sum to Invest (say £200K plus) but for general advice and ideas about the savings, Investments etc look at the above link.

£200k seems a very modest investment to consider paying for advice if the holder is at least a little financially-aware. The fees are likely to substantially outweigh any benefit in my view, unless there is some unusual aspect.

[JR1664]

Originally Posted by JD6

£200k seems a very modest investment to consider paying for advice if the holder is at least a little financially-aware. The fees are likely to substantially outweigh any benefit in my view, unless there is some unusual aspect.

It was a ball park figure based on years of reading the site I linked above. I was quoted 1%- 1.5% negotiable on a similar amount but DIY'd it.

I can imagine many people don't have the time or confidence to Invest.

Realistically what would someone do with that amount who was completely clueless apart from maxing out premium bonds and chucking the rest in a BS

When you add on maximising pension opportunities etc the advice could easily pay for itself for those who aren't financially savvy or don't have the time.

What figure would you suggest ? (You're probably a lot more clued up than me)

[Scoobyd]

Again, it's not just about having £200k and simply picking some funds to invest in is it. Why does there have to be an unusual aspect to benefit from receiving advice?

As @JR1664 says, what tax wrapper does it get invested in? Most people should know about their £20k ISA allowance but how many know how to maximise their pension contributions and how to utilise things like carry forward to take advantage of unused contributions from previous tax years. The tax relief alone gained on planning like this can pay for any advice fee in itself several times over. Then how many know about GIA's, Bed & ISA's, managing their CGT allowance etc.

And as also said even if you did have the knowledge and confidence who has the time, or will, to truly keep on top of it all.

[JD6]

Originally Posted by JR1664

It was a ball park figure based on years of reading the site I linked above. I was quoted 1%- 1.5% negotiable on a similar amount but DIY'd it.

I can imagine many people don't have the time or confidence to Invest.

Realistically what would someone do with that amount who was completely clueless apart from maxing out premium bonds and chucking the rest in a BS

When you add on maximising pension opportunities etc the advice could easily pay for itself for those who aren't financially savvy or don't have the time.

What figure would you suggest ? (You're probably a lot more clued up than me)

If someone is as you say, ‘completely clueless’ then an IFA may be the right choice, even for someone with 200k. But I suppose I would expect the majority of people with that sort of sum not to be completely clueless, or at least to make an effort to learn the basics of finance.

The exception may be someone who is recently widowed and their partner looked after the finances, or someone with no experience of money who inherits a significant sum. There I can see the point of an IFA at least at the start.

For someone with a limited grasp of finance, I would expect them to be able to self-invest up to at least 500k, probably a fair bit more.

I am quite experienced in finance (as a former investment banker) although I have no professional experience of personal finance, so there are bound to be gaps in my knowledge.

The IFAs I have met were not impressive at all - there are very low barriers to entry in that profession, although regulation has improved the murkier side of that business. There are probably good ones as well, but I don’t see them as necessary for the majority.

[JD6]

Originally Posted by Scoobyd

Again, it's not just about having £200k and simply picking some funds to invest in is it. Why does there have to be an unusual aspect to benefit from receiving advice?

As @JR1664 says, what tax wrapper does it get invested in? Most people should know about their £20k ISA allowance but how many know how to maximise their pension contributions and how to utilise things like carry forward to take advantage of unused contributions from previous tax years. The tax relief alone gained on planning like this can pay for any advice fee in itself several times over. Then how many know about GIA's, Bed & ISA's, managing their CGT allowance etc.

And as also said even if you did have the knowledge and confidence who has the time, or will, to truly keep on top of it all.

There has to be an unusual aspect in my view, as otherwise it’s relatively straightforward to do it yourself. Routinely paying unnecessary fees is a pretty easy way of damaging wealth.

Most aspects of personal finance are pretty simple, and a forum, such as the one JR1664 linked to are a good starting point for those who wish to learn. It’s clearly in an IFA’s interest to make it sound more complicated than it actually is, but I would suggest that people educate themselves a little first before they decide whether or not to use one.

[Scoobyd]

Originally Posted by JD6

For someone with a limited grasp of finance, I would expect them to be able to self-invest up to at least 500k, probably a fair bit more.

I think until you're able to acknowledge the difference between 'investing' and 'financial planning' we're always going to disagree. Investing is the relatively easy part.

Self-investing is fine. But where are they going to invest that £500k? In what tax wrappers?

Also, you don't need to have high wealth to benefit from good financial advice.

Today I've helped a client that came to me with 'just' £150k to invest. I've been able to reduce the ongoing charges she's been paying on her personal pension by 0.8% a year and shown her how she can obtain £10,400 of tax relief in this tax year alone by utilising her carry forward allowance. Something she'd have missed out on if she hadn't taken financial advice.

She's not in an 'unusual' situation. In fact I'd say she's the rule rather than the exception.

[kzg1969]

Originally Posted by Scoobyd

a client that came to me with 'just' £150k to invest.

when you say just £150k are you talking a new lump sum or an assessment of their existing savings/isa/shares?

I've been thinking about a FA for a while now, but wasnt really sure i had enough money to warrant it.

[gr4z]

Sorry to jump into the OP thread but I have some similar questions.

I am about to move back into permanent employment from being a contractor for 10 years (thanks HMRC and IR35!) but now have some cash sitting in my company account and a fairly good sum in my company pension. My new employer offers a very good pension so will be taking them up on that. But I have a question with what to do with my current pension (with Hargreaves Lansdown)...do I move that sum into the company one and take use of their very low charges at around 0.3% or my IFA has recommended that they take over the pension or just leave it where it is?

Anyone offer any advice?

Also have some cash in the company that I will be partly using to up my last 3 years of contributions into the pension, then close the company and take Entrepeneurel Relief at 10% to get the money out. Then what? IFA once again wants to recommend some ISAs etc for the remaining cash. Any thoughts on that?

Thanks all

[Scoobyd]

Originally Posted by kzg1969

when you say just £150k are you talking a new lump sum or an assessment of their existing savings/isa/shares?

I've been thinking about a FA for a while now, but wasnt really sure i had enough money to warrant it.

Was a combination of both existing and a new lump sum.

This is the problem now though. The sheer amount of regulation, compliance, research, client reporting etc that has to be done now is so detailed and time consuming that a lot of IFA firms are no longer offering assistance to people with less than a certain amount of money to invest as the costs involved just wouldn't be profitable for the business. Not to mention the levies we pay into the FSCS so the good guys end up paying for the bad guys and the ever rising costs of PI insurance etc.

[Scoobyd]

Originally Posted by gr4z

Sorry to jump into the OP thread but I have some similar questions.

I am about to move back into permanent employment from being a contractor for 10 years (thanks HMRC and IR35!) but now have some cash sitting in my company account and a fairly good sum in my company pension. My new employer offers a very good pension so will be taking them up on that. But I have a question with what to do with my current pension (with Hargreaves Lansdown)...do I move that sum into the company one and take use of their very low charges at around 0.3% or my IFA has recommended that they take over the pension or just leave it where it is?

Anyone offer any advice?

Also have some cash in the company that I will be partly using to up my last 3 years of contributions into the pension, then close the company and take Entrepeneurel Relief at 10% to get the money out. Then what? IFA once again wants to recommend some ISAs etc for the remaining cash. Any thoughts on that?

Thanks all

Obviously hard to say for certain without knowing greater detail but based on what you've said I'm not sure I agree with your IFA there. If your company one has charges of 0.3% then it's very hard to beat. I assume that charge is for the administration and funds combined? So an all in charge? As long as the available fund choices within it are good and there's something that matches your risk level then it's hard to find an argument against workplace pensions if you're still in the accumulation phase of your retirement planning.

The lower you can keep your costs the better. Consolidating your existing pensions into the company one could potentially be your best outcome. Hargreaves Lansdown isn't cheap. If your IFA has recommended they take over the pension I'd be asking what's the benefit to you of that. Will the charges be equal to or lower than your current 0.3%? Unlikely. Especially when adding together the platform, funds and adviser fees. I also imagine there'd be an initial fee for them transferring the pension away too.

Good idea to max your pension contributions using carry forward and benefit from the tax relief. ISA's are always the next go to place due to their tax efficiency so nothing wrong with that idea either.

[gr4z]

Originally Posted by Scoobyd

Obviously hard to say for certain without knowing greater detail but based on what you've said I'm not sure I agree with your IFA there. If your company one has charges of 0.3% then it's very hard to beat. I assume that charge is for the administration and funds combined? So an all in charge? As long as the available fund choices within it are good and there's something that matches your risk level then it's hard to find an argument against workplace pensions if you're still in the accumulation phase of your retirement planning.

The lower you can keep your costs the better. Consolidating your existing pensions into the company one could potentially be your best outcome. Hargreaves Lansdown isn't cheap. If your IFA has recommended they take over the pension I'd be asking what's the benefit to you of that. Will the charges be equal to or lower than your current 0.3%? Unlikely. Especially when adding together the platform, funds and adviser fees. I also imagine there'd be an initial fee for them transferring the pension away too.

Good idea to max your pension contributions using carry forward and benefit from the tax relief. ISA's are always the next go to place due to their tax efficiency so nothing wrong with that idea either.

Thanks for this, very useful and I am kind of thinking the same.

Just re-read the pension charges part for my employer. They use Aviva and charges are via 4 funds and charged at 0.24, 0.47, 0.41 and 0.21%. So average 0.33%. Funds used vary depending on many years to retirement.
IFA wants a 1% charge to 'actively' manage the funds on my existing H&L pension. Not sure what H&L charge, will have to look but I bet its more.

Will probably get the IFA to work out what to do with the cash extracted from the business. ISAs seem best bet.

[JustChris]

Answer: Stay away from car forums.

[Scoobyd]

Originally Posted by gr4z

Thanks for this, very useful and I am kind of thinking the same.

Just re-read the pension charges part for my employer. They use Aviva and charges are via 4 funds and charged at 0.24, 0.47, 0.41 and 0.21%. So average 0.33%. Funds used vary depending on many years to retirement.
IFA wants a 1% charge to 'actively' manage the funds on my existing H&L pension. Not sure what H&L charge, will have to look but I bet its more.

Will probably get the IFA to work out what to do with the cash extracted from the business. ISAs seem best bet.

No problem.

How did you come to be in the particular funds you currently are with the company pension? Might be worth asking them for the full list of available funds for you within the plan.

A 1% charge to actively manage the funds within your existing Hargreaves pension? Or is that for them to transfer the money out of Hargreaves to a new provider? The latter I'd assume. Though I'd imagine that 1% will be just the ongoing adviser charge. You'd likely also have the fund charge and platform charge on top of that. So hard to see what justification there would be for not moving it into your far lower cost company scheme assuming it does accept transfers in. Most tend to.

How many years to go before you'd be hoping to retire do you think?

[gr4z]

Originally Posted by Scoobyd

No problem.

How did you come to be in the particular funds you currently are with the company pension? Might be worth asking them for the full list of available funds for you within the plan.

A 1% charge to actively manage the funds within your existing Hargreaves pension? Or is that for them to transfer the money out of Hargreaves to a new provider? The latter I'd assume. Though I'd imagine that 1% will be just the ongoing adviser charge. You'd likely also have the fund charge and platform charge on top of that. So hard to see what justification there would be for not moving it into your far lower cost company scheme assuming it does accept transfers in. Most tend to.

How many years to go before you'd be hoping to retire do you think?

My Dad (sadly no longer with us) chose the funds for my personal company's pension. He was very astute with money and the funds have done well with a 73% increase over 10 years.

The new Aviva company pension defaults to the standard 4 funds, although they do offer to let you manage it yourself. I am totally clueless when it comes to this stuff so would prefer to let them get on with it. I don't know how much their funds have increased on the last 10 years must admit. But with a personal contribution of 7% and the company chucking in 16% I can't really refuse that! They will also accept transfers, takes a few months I believe.

Another 10 years until semi-retirement. 12 for retirement is the plan if I can. Trying not to go the full way until 65 if possible.

[MashinBenzin]

Originally Posted by gr4z

My Dad (sadly no longer with us) chose the funds for my personal company's pension. He was very astute with money and the funds have done well with a 73% increase over 10 years.

The new Aviva company pension defaults to the standard 4 funds, although they do offer to let you manage it yourself. I am totally clueless when it comes to this stuff so would prefer to let them get on with it. I don't know how much their funds have increased on the last 10 years must admit. But with a personal contribution of 7% and the company chucking in 16% I can't really refuse that! They will also accept transfers, takes a few months I believe.

Another 10 years until semi-retirement. 12 for retirement is the plan if I can. Trying not to go the full way until 65 if possible.

I would say that when I started an Aviva pension about 7 or 8 years ago, I took a few of their standard funds - risk based such as adventurous, moderately adventurous etc.

A couple of months in I started self managing and selected other funds; but left the first few quid in those funds. This meant I monitored their performance before eventually dropping them.

They were pretty awful. Eg adventurous S6 returned 21% in the five years to feb2019. Balanced 13.5%. Moderately adventurous 19.4%. Moderately cautious 7.5%.

Compared with my own self selected funds which averaged between 26% and 70% over the same 5 years. One glaring exception was a Natural Resourced fund which produced 5% over 5 years to that point but largely countered by the fact that it was a monthly drip feed and produced 102% over the last 3 years. i.e. I had some 'buying cheap' in there.

Anyway, I digress, the main point was that the very worst performing parts of my pension were the ones that were theoretically balanced to a risk profile and handled for me. Glad I just had peanuts in them, I kept them to the point of disposal simply as a bellweather and to keep my own investment choices honest.

[KRS_SN]

Read through 4 pages couldn't make head or tail of what's being said apart from the conclusion that being on a bmw forum and buying bmws frequently isn't compatible with financial astuteness for myself

[kzg1969]

Originally Posted by KRS_SN

Read through 4 pages couldn't make head or tail of what's being said apart from the conclusion that being on a bmw forum and buying bmws frequently isn't compatible with financial astuteness for myself

CORRECT!

But you should at least be happy...........until you see the trade-in value.