Financial Planning and Financial Advisors
"I always pass on good advice. It is the only thing to do with it. It is never any use to oneself." Oscar Wilde
The FSA’s child guide to your finances is as good a place as any to start. For instance, it covers in non-jargon terms how to go about preparing a budget and it offers an online financial healthcheck, as well as giving an introduction to a range of financial matters. http://www.moneymadeclear.fsa.gov.uk/
It is very important that you have a financial advisor whom you can trust and whose judgement and knowledge you respect and trust. This may be a family member or friend, particularly if they have experience in financial matters, but in many cases your professional financial advisor is likely to be a member of a firm, be it a firm of accountants, solicitors or IFAs (Independent Financial Advisors) or a bank. The FSA website also gives access to its register, where you can check that your financial advisor’s firm is properly registered with FSA.
Financial planning for retirement: http://www.direct.gov.uk/en/Over50s/RetirementAndPensions/PlanningForRetirement/index.htm
Choosing and Using a Financial advisor:http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10034209
Financial planning for retirement : http://www.financial-planning.uk.com//plan-retirement/index.htm
The website for the Institute of Financial Planners http://www.financialplanning.org.uk/default.aspx?OpenNavigationTo=/AboutIFP/Background.aspx
Julian Nokes, a former independent financial advisor, writes:
Although independent financial advice is often necessary in negotiating the minefield that is the personal investment market, many of the ‘products’ offered by advisers (nay recommended!) carry substantial commissions. This applies particularly in the case of insured products sold by ‘life’ companies and to a lesser extent, by unit trust fund managers.
Of course, everybody deserves to make a living from honest work but some make better livings than others! The larger financial advisors (Stockbrokers, accounting firms etc.) may already receive a payment from fund managers, for instance when they purchase unit trusts on your behalf and it should be possible to arrange that you get some benefit from this. Do they want your business or not?! The market is highly competitive and just like pretty girls, if the first few advisors you speak to are unwilling to play ball, sooner or later you will find one who is. You should certainly run from the room if you hear the words: “it’s not our policy”!
Rule 1. Always ask the adviser how much he/she will earn if you invest as suggested
If you are happy with such an arrangement, accept. If not then follow -
Rule 2. Always suggest a reduction in the commission or front-end fee.
Rule 3. If that doesn’t suit, suggest you pay a fee for the advisor’s services in which case you should insist that all such charges are rebated for your benefit back into the investment contract thus enhancing its value.
A note on annuities:
These contracts typically carry a front end charge of one percent of the capital value which the annuity company pays to the advisor. Some compulsory purchase annuities (those utilising funds from pensions) may have a capital value of the order of one million pounds or more. In which case, ask yourself: does my advisor really merit a fee of £10,000 for arranging this? These commissions are negotiable and can be reduced for your benefit by asking for a reduction and for your annuity to be enhanced by the amount of commission foregone by the advisor.
Rule 4. Remember, it is a competitive market and if your adviser won’t co-operate then find one who will.
Good luck to all our readers!