How do you find a good financial advisor?

[Jon277]

I'm in my fifties and need some financial planning advice -

1. How do I find a good financial advisor ? Is there some sort of equivalent site to Trust a Trader? Is there some sort of official certification scheme?

2. How much should I expect to pay? I'm guessing it is some sort of daily fee?

Thanks
John

[JohnB]

We don't much like financial advisors here, because of their fees, and once you've done enough research to know their advice is sensible, you don't really need them. But if you do want one, go for a fixed fee one, and avoid annual charges like the plague.

[xxd09]

No magic method unfortunately
IFAs are the only financial advisors that are bound by fiduciary rules like doctors or lawyers-so they are the ones to use
There is sadly no way round you being financially informed as a double check-IFAs need to earn money so their advice won’t be wrong but probably will more be expensive than do it yourself ie they don’t promote cheap index funds
I learnt as much as I could and then ran scenarios past an IFA. -first consultation usually free(a process than can be repeated)
If you are on a successful track they won’t contradict your choice but will offer other(more expensive) choices
xxd09

[DrFfybes]

Firstly, I should say I am not anti-IFA, I have used one myself, but they do cost.

All FAs are regulated, however some are tied to certain companies or providers, and will only recommend products from those providers, even though they know full well there are better and cheaper ones esewhere. They should tell you this up front, and these are usually the ones you'll get if your bank/insurance co etc gives you a free "Financial Health Check" or similar.

unbiased.co.uk is one of many sites that list in INDEPENDENT FAs. However Moneyhelper is a good place to start...
https://www.moneyhelper.org.uk/en/getti ... al-adviser

Before you meet one you need to get an idea of what you want, how much you want/need to live on, what assets you have, whether you want to leave money to children, downsize, travel the world, work part time for a few years, etc etc. Find out what (if any) DB schemes you have, what penalties/restrictions there are on taking it early. Also the Pension Advisory Service will do one free 'meeting' before you retire to go through options . Perhaps look into this first.

2. How much should I expect to pay? I'm guessing it is some sort of daily fee?

This varies massively. Some of the 'big names' can charge like a wounded rhino, a lot of people pay 3% every year for ongoing management. On a £400k pot that could be £150k before you retire, money better in your pocket.

Most companies have an Intital Consultation, fee is usually £1200-1500, and this will be the information gathering, phone call, their assessment, and then they'll come back with a list of recommendations. After that the fee depends on the service - anything you nvest through them will incur a fee of usually 3% of the amount invested, although generally the initial fee is deducted from the percentage.

Then there are ongoing fees, these are the real killer on return. Usuallty 1% but sometimes a lot more, and for this they call/write to you each year and usually say "all fine, nothing to see here, move along" and trouser 1% of your portfolio. Occasionally they suggest a change in your investments, and charge you 3% for that.

The other thing to note is that historically pretty much every fund recommended by every FA has underperformed a simple tracker fund over the longer term. I don't actually know of anyone ever having been recommended a tracker, but I could be wrong.

Having said all that, we paid an IFA a couple of years ago to review where we were, and he came up with several considerations and options that we hadn't really considered about structuring our investments and out withdrawal plan. I consider myself reasonably competent to manage finances, and pretty sharp, but what he said was (in hindsight) blatantly obvious but we had got ourselves focussed towards one route and completely missed the other, (and really embarassingly it had already been mentioned on these boards, I'd just missed it at the time).

You've picked a good time to think about it, but don't rush. Look around, ask more questions here.

Paul

[Dod101]

I'm in my fifties and need some financial planning advice -

1. How do I find a good financial advisor ? Is there some sort of equivalent site to Trust a Trader? Is there some sort of official certification scheme?

2. How much should I expect to pay? I'm guessing it is some sort of daily fee?

Thanks
John

Answers

1. With difficulty

2. Lots £££

Dod

[scrumpyjack]

We don't much like financial advisors here, because of their fees, and once you've done enough research to know their advice is sensible, you don't really need them. But if you do want one, go for a fixed fee one, and avoid annual charges like the plague.

Absolutely agree with that, but it is probably hard to find one who will work on a one off fixed fee basis or hourly rate or to know who is a good one and who isn't.

The business model of the big firms, like St James Place (don't go there!!), is based on continuing percentage charges structured in such a way that you don't realise how huge the charges are. Also the 'advice' will be very much standardised by the book, with the main skill of the advisers being smooth talking salesmen.

It may be worth talking to an IFA on financial planning issues - tax planning, pensions, IHT etc etc, but as for investment advice they are not experts. You will almost certainly do much better investing in trackers or investment trusts yourself rather than letting them advise on specific investments (which won't beat the indices) and with their annual percentage being skimmed off as well.

[dealtn]

I'm in my fifties and need some financial planning advice -

1. How do I find a good financial advisor ? Is there some sort of equivalent site to Trust a Trader? Is there some sort of official certification scheme?

2. How much should I expect to pay? I'm guessing it is some sort of daily fee?

Thanks
John

Define "good".

It will vary on what kind of "financial planning advice" you want.

Unfortunately your question (s) is a bit like what is a good supermarket/restaurant/radio station. For every Aldi, or MacDonalds and Radio 1 there will be Waitrose or Radio 3s.

[bluedonkey]

As mentioned above, please please don't go to St James Place.

[DrFfybes]

It may be worth talking to an IFA on financial planning issues - tax planning, pensions, IHT etc etc, but as for investment advice they are not experts. You will almost certainly do much better investing in trackers or investment trusts yourself rather than letting them advise on specific investments (which won't beat the indices) and with their annual percentage being skimmed off as well.

Basically that is what we did, although I didn't phrase it as well.

He looked at our strategy, suggested a different approach. I took the advice, invested enough funds with them to cover his fee (mainly to see how Dimensional funds performed compared to the Vanguard equivalents) and then replicated it elsewhere with trackers. The Dimensional and platform fees were actually pretty low, once you've stumped up the initial 3% advisor fee.

Paul

[JohnW]

https://www.evidenceinvestor.com/find-an-adviser/
Ignore the .com. They’re in England.

[AshleyW]

Financial advisors tend to be looked down upon in forums such as this because for the vast majority of people the investment solution is simple and why pay someone 1%+ annually which the advisor devises complex solutions to justify their high annual charges.

The real value of a good advisor is in tax and estate planning and in helping to devise an overall financial strategy. This is not very profitable for the advisor! But potentially very valuable for the client. Sometimes a little knowledge is dangerous. Many years ago I sold a property that had been rented for a few years (prior to the internet) and dutifully calculated and paid my cgt. It was only many years later when far more information was available on the internet that I realised I had overpaid by a few thousand pounds. A £300 accountant consultation would have saved me a bucketful of money.

[bluedonkey]

The positive side of financial advisors is the financial planning side. Such as I want to retire in X years time, help me plan towards that goal. This is very niche though and few genuinely offer this plus few clients can afford that type of service.

[vand]

With these two truisms:

Nobody cares about your money more than you do
Nobody knows you better than you know yourself

The nature of personal finance is that if you do the work yourself, with a few sensible checks and balances in place, you can be a much better financial advisor to yourself than anyone you hire externally.

FA can be useful if you have complex tax situations, but for most people they are just an expensive comfort blanket.

[OhNoNotimAgain]

Find one that charges by the hour and not a percentage of your assets.