Financial advisor experience

[Alex321]

What was probably meant was "Adviser servicing fees" as a percentage of the pot.
Effectively the same thing, and they certainly do exist.

It isn't the same thing, because commission is paid by the pot provider to the advisor, and gives them an incentive to suggest the providers which give the best commission. Which is why it was banned.

 

[Pblakeney]

It isn't the same thing, because commission is paid by the pot provider to the advisor, and gives them an incentive to suggest the providers which give the best commission. Which is why it was banned.

Commission was probably just a poor choice of word. It is a charge coming out of the pot from start to death. 1% (or whatever)/annum for say 40-50 years adds up to a considerable amount which could have remained in your pot. Especially so if compounded.
Of course I am guessing at the OP's intent but I'd advise a single upfront fee over an on-going fee.

 

[Alex321]

Commission was probably just a poor choice of word. It is a charge coming out of the pot from start to death. 1% (or whatever)/annum for say 40-50 years adds up to a considerable amount which could have remained in your pot. Especially so if compounded.
Of course I am guessing at the OP's intent but I'd advise a single upfront fee over an on-going fee.

Yes, the final effect on your pot is the same, but because it is independent of which providers/funds are chosen, the incentive then is for the advisor to get you the best possible return, rather than the providers which give HIM the best return.

 

[gbb]

One of the major hurdles to retiring early, or even at SP age, is that many people just do not understand their likely future income levels nor do they have a handle on their current expenditure levels. Neither of which enables someone to project forward to obtain confidence in their financial future or to have a stable platform on which to base their future financial decisions.

Ime, many people over-estimate their future income requirements and become slightly paranoid about the, almost inevitable, likely drop in retirement income.

As already suggested, either build a MS Workbook, or similar, that in effect acts as a cashflow mechanic. If you can't do that yourself your accountant or IFA should be able to set you up with one. Get a one-off construct that you can enter data into yourself, you don't want to be paying ongoing fees for simple data entry from an expensive professional.

The hardest thing about taking retirement, early or otherwise, is the psychology surrounding income drop. Whole careers are built around increasing and maximising income and to initiate a drop voluntarily is counter-intuitive.

It took us several years, in the very early 2000's, to have the confidence in our projections to dump £'s substantial of net income pa and switch off our corporate careers. We were still 'scared' to some extent, tbh, but it was one of the best decisions we ever made.

So, start projecting and calculating as early as you can, or seek advice now if you can't DIY.

FYI, our cashlow forecast runs 20 years into the future although this time period becomes increasingly irrelevant as we age and our life expectancy may well be less than that. Damn!

Life... not too long, after becoming very comfortable financially, the Grim Reaper starts peeping over the horizon in your direction. Unless you are sufficiently gifted or lucky to have a sizeable stash at a young age, of course. Cest la vie!

As we all know, individual circumstances dictate what may feel comfortable.
Recently retired to look after my wife...and my state pension with additional SERPS ...WAS going to be sufficient, no mortgage or rent to pay, a modest lifestyle...I can survive reasonably happily on not that much, but then that's buffered by more than adequate savings.
Now of course we are legal guardians for two grandkids, that's changed the long term outlook altogether. Again, the savings should easily see us through that but will severely dent them.
I also noted, regarding your comment re spending over remaining lifetime, I saw that once.mum reached her late 70s, she virtually stopped spending anyway barring the usual stuff of course. Holidays, any big spends as good as stopped...so she began not dipping into savings but rather building savings as a consequence as she got older. The desire to 'keep doing stuff' ebbs with age .

It's all.very dynamic and changes on a sixpence....

 

[Pblakeney]

I saw that once.mum reached her late 70s, she virtually stopped spending anyway barring the usual stuff of course. Holidays, any big spends as good as stopped...so she began not dipping into savings but rather building savings as a consequence as she got older. The desire to 'keep doing stuff' ebbs with age .

I wholeheartedly agree.
It hit my Dad at 85 so it is age flexible but very definitely "a thing".

 

[ren531]

I wholeheartedly agree.
It hit my Dad at 85 so it is age flexible but very definitely "a thing".

I would also agree with the lowering of spending requirements later on in retirement, both mine and my wife's mum's have got into spending far less than earlier retirement and actually savings increasing now .

 

[Dorset Boy]

Commission was probably just a poor choice of word. It is a charge coming out of the pot from start to death. 1% (or whatever)/annum for say 40-50 years adds up to a considerable amount which could have remained in your pot. Especially so if compounded.
Of course I am guessing at the OP's intent but I'd advise a single upfront fee over an on-going fee.

Except it isn't an either or.
The initial upfront fee will be for the initial advice, setting up the plan, cashflow etc.
The adviser then has an FCA requirement to review suitability on an ongoing basis, and plans need to be reviewed regularly, as do cashflows, because forecasts will always be wrong. The ongoing fee covers the regular reviews, tweaks that are needed etc.
People are retired a long time. A 65 year old male has a 1 in 4 chance of living to 100.
With flexible plans, you aren't setting up a retirement plan at day 1 and forgetting about it, unless you have gone done the annuity route.

 

[Pblakeney]

Except it isn't an either or.
The initial upfront fee will be for the initial advice, setting up the plan, cashflow etc.
The adviser then has an FCA requirement to review suitability on an ongoing basis, and plans need to be reviewed regularly, as do cashflows, because forecasts will always be wrong. The ongoing fee covers the regular reviews, tweaks that are needed etc.
People are retired a long time. A 65 year old male has a 1 in 4 chance of living to 100.
With flexible plans, you aren't setting up a retirement plan at day 1 and forgetting about it, unless you have gone done the annuity route.

I guess I must be lucky then. Got put into a managed fund with no on-going advisor fees. If the fund performs poorly then I’ll take my business elsewhere so it’s in their interest to perform.

 

[SpokeyDokey]

As we all know, individual circumstances dictate what may feel comfortable.
Recently retired to look after my wife...and my state pension with additional SERPS ...WAS going to be sufficient, no mortgage or rent to pay, a modest lifestyle...I can survive reasonably happily on not that much, but then that's buffered by more than adequate savings.
Now of course we are legal guardians for two grandkids, that's changed the long term outlook altogether. Again, the savings should easily see us through that but will severely dent them.
I also noted, regarding your comment re spending over remaining lifetime, I saw that once.mum reached her late 70s, she virtually stopped spending anyway barring the usual stuff of course. Holidays, any big spends as good as stopped...so she began not dipping into savings but rather building savings as a consequence as she got older. The desire to 'keep doing stuff' ebbs with age .

It's all.very dynamic and changes on a sixpence....

I don't know whether it is a natural curtailing of ambition as a by-product of ageing or a case of 'been there, done that, etc,' but not only have we powered down our workload but also our domestic/social life, too.

We retired young and thought that retirement would be filled with holidays, short breaks, meals out blah, blah, blah.

And whilst we do do 'stuff' we do far less than we thought we would.

It's not through lack of money, or needing to save more than we have for whatever life throws at us, and we certainly are not in 'save it for the kids' mode.

But... we focus on the simple stuff that we can do together and are the happiest that we have ever been.

Things that were important when we were younger; ever bigger houses, fancier cars, long-haul holidays, silly priced watches, etc, no longer seem important at all.

It's all rather blissful in fact.

 

[mikeIow]

Shirley anyone can give anyone advice? Down to the individual whether they take it or not, and context is important in deciding.

Ah…no.
Anyone can pass an opinion & give their views/suggestions/guidance, which to you & me might feel like “advice”, but in the world of Financial Regulations, “advice” is a very regulated thing 😉

I always feel that good guidance can be received from many quarters, when it comes to money.

 

[Gunk]

Things that were important when we were younger; ever bigger houses, fancier cars, long-haul holidays, silly priced watches, etc, no longer seem important at all.

very true

 

[yello]

In the world of Financial Regulations, “advice” is a very regulated thing

So opinion is advice (in finance) if it's from a regulated person. Got it. Sounds like a cyclic definition to me

Nah, I get what is intended and the protection it is supposed to offer. I was being flippant in part. My point is more about the real world, everyday experience where people offer their advice all the time, sometimes unsolicited. Down to the individual whether they take it or not.

Though consider (as posed in a question from someone) a person who happens to work in finance (be it advisor, accountant or otherwise) They cannot offer 'advice' to a family member who asks for it but can give a benefit of experience 'opinion'? Semantics aside, there's a crossover grey area there. Outside of the office, or in an unofficial capacity, can they not effectively be the same thing?

Consider a different trade. I worked in IT. People find that out and ask me all manner of IT related questions - most of which I havent a clue about! I get why I'm asked though and so I do offer my comments where I can. Sometimes caveated.

And there loads of threads on here with people looking for advice. It's knowledgeably offered and thankfully received, indeed one of the underlying benefits of the forum. I guess there's 'advice' and there's 'financial advice' - they have slighty different meanings.

 

[rogerzilla]

I worked in financial services for my entire career, including giving financual advice for a few years, and I wouldn't trust a financial adviser as far as I could throw them. The advice used to be crap but free when they were tied to one company. Now it's crap and expensive. They recommend stuff that is far too complex but keeps the punter coming back for more advice.

 

[mikeIow]

So opinion is advice (in finance) if it's from a regulated person. Got it. Sounds like a cyclic definition to me

Nah, I get what is intended and the protection it is supposed to offer. I was being flippant in part. My point is more about the real world, everyday experience where people offer their advice all the time, sometimes unsolicited. Down to the individual whether they take it or not.

Though consider (as posed in a question from someone) a person who happens to work in finance (be it advisor, accountant or otherwise) They cannot offer 'advice' to a family member who asks for it but can give a benefit of experience 'opinion'? Semantics aside, there's a crossover grey area there. Outside of the office, or in an unofficial capacity, can they not effectively be the same thing?

Consider a different trade. I worked in IT. People find that out and ask me all manner of IT related questions - most of which I havent a clue about! I get why I'm asked though and so I do offer my comments where I can. Sometimes caveated.

And there loads of threads on here with people looking for advice. It's knowledgeably offered and thankfully received, indeed one of the underlying benefits of the forum. I guess there's 'advice' and there's 'financial advice' - they have slighty different meanings.

Ah, I also worked in IT….people rarely ask my opinion, but if they do, there are no *regulations* that might cause someone to be able to sue me….whereas in finance, if it was given by a regulated advisor, then they can be calling on their PI insurance if they bugger things up with ‘bad advice’.

I kind of agree, it is a bit of nonsense 🤷‍♂️

 

[CXRAndy]

Best to use a Fee based IFA where you pay a slug of money for their time.

Commission based introduces a potential conflict of interest.

The proper IFA are only fee based. Commission from the investment brokers or policies is no longer allowed, because of hidden costs the investor didn't always get to see.

Everyone in the chain was getting a piece of investment in commission