Question
I will shortly retire with £108,000 lump sum from a final salary pension. Also 2 final salary pensions as well.
For financial advise on this money do I need the qualifications of a 'Chartered' advisor or just an advisor with e.g Diploma.
Would a Chartered adviser cost me more because of the extra qualification?Answer
The main criteria for a financial adviser to attain chartered status is to hold an Advanced Diploma in Financial Planning and have at least five years of industry experience. Does this guarantee good, honest advice? No. But attaining an advanced diploma requires some legwork suggesting the adviser probably takes their career seriously. Although, if they made a fortune from taking clients for a ride already then passing the extra exams would have been a strong motivation to keep the gravy train flowing.
Unless your needs are particularly complex (e.g. complicated inheritance tax planning) then I can't see that a chartered adviser would be in a position to give technically better advice than an adviser with just the diploma qualification (the minimum qualification required to practice). In practice the bigger issue is that far too many IFAs lack either the skill or inclination to give solid investment advice, instead opting to use funds of funds - which is something of a kop out and usually more expensive for customers.
As for cost, most IFAs (regardless of qualification) will still try and get away with 3% upfront and 0.5% a year, either as sales commission or 'fees'. In fact there seems a trend for some advisers to try and charge 1% a year, which seems excessive - but they seem to get away with it...
Those working on an hourly rate seem to charge around £150 - £250 an hour, which sounds a lot, but what's important is how much they'll bill you in total for the advice and ongoing service. You don't want to find yourself in a position where you're effectively signing a blank cheque.
I would speak to several potential advisers and get a clear idea of the service they'll provide and costs you'll incur. Try to gauge how professional they are and whether they'll provide bespoke investment advice or simply lump your money into a funds of funds. And, if they try to sell you their own company's investment funds then walk (it's usually a bad idea and the adviser might be financially incentivised to sell his company's product over others). You can find more info on choosing and adviser on our financial advice page.
Good luck.
I will shortly retire with £108,000 lump sum from a final salary pension. Also 2 final salary pensions as well.
For financial advise on this money do I need the qualifications of a 'Chartered' advisor or just an advisor with e.g Diploma.
Would a Chartered adviser cost me more because of the extra qualification?Answer
The main criteria for a financial adviser to attain chartered status is to hold an Advanced Diploma in Financial Planning and have at least five years of industry experience. Does this guarantee good, honest advice? No. But attaining an advanced diploma requires some legwork suggesting the adviser probably takes their career seriously. Although, if they made a fortune from taking clients for a ride already then passing the extra exams would have been a strong motivation to keep the gravy train flowing.
Unless your needs are particularly complex (e.g. complicated inheritance tax planning) then I can't see that a chartered adviser would be in a position to give technically better advice than an adviser with just the diploma qualification (the minimum qualification required to practice). In practice the bigger issue is that far too many IFAs lack either the skill or inclination to give solid investment advice, instead opting to use funds of funds - which is something of a kop out and usually more expensive for customers.
As for cost, most IFAs (regardless of qualification) will still try and get away with 3% upfront and 0.5% a year, either as sales commission or 'fees'. In fact there seems a trend for some advisers to try and charge 1% a year, which seems excessive - but they seem to get away with it...
Those working on an hourly rate seem to charge around £150 - £250 an hour, which sounds a lot, but what's important is how much they'll bill you in total for the advice and ongoing service. You don't want to find yourself in a position where you're effectively signing a blank cheque.
I would speak to several potential advisers and get a clear idea of the service they'll provide and costs you'll incur. Try to gauge how professional they are and whether they'll provide bespoke investment advice or simply lump your money into a funds of funds. And, if they try to sell you their own company's investment funds then walk (it's usually a bad idea and the adviser might be financially incentivised to sell his company's product over others). You can find more info on choosing and adviser on our financial advice page.
Good luck.
Read this Q and A at http://www.candidmoney.com/questions/question707.aspx
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