You’ve taken the plunge at last and are waiting for a meeting with your new independent financial adviser – but what should you discuss?
Although all IFA clients are different, have opposing life views and varied financial circumstances, some questions turn up again and again at financial meetings.
Here are some of the most common questions clients ask IFAs, and the sort of answers you should expect from a professional.
When can I retire and how much do I need in the bank?
It’s true to say many of us don’t bother that much with our finances until later in life – certainly not before our thirties.
One of the main drivers is when can someone stop working, either full time or going just part time.
When depends on how much you want to spend and how quickly you can muster the money to invest to support that goal.
A good place to start is with The Pension and Lifetime Saving Association (PLSA), which has a set of retirement lifestyle standards and how much you would need in the bank to fund them.
How do I pay less tax?
No one likes paying tax, but giving the government the right slice of your cash is unavoidable.
You can try to minimise the tax you pay providing you play by the rules set down by HM revenue & Customs. The trick is avoiding tax, which is legal, not evading tax by failing to tell the truth about your finances.
A good IFA will look at the benefit for you of trusts, estate planning to save inheritance tax and better ways of saving.
What will advice from an IFA cost?
Costs will vary from IFA to IFA, but in general look for a fixed fee rather than an open-ended hourly rate. A fixed fee allows you to budget, while an hourly rate can soon inflate into a huge unexpected sum.
Many IFAs will bill a percentage of an amount invested, so a lump sum of £350,000 could attract a £3,500 (1%) fee.
Most IFAs will offer a free introductory meeting and should explain their charging structure during the discussion.
Will my money grow?
A key question is will your money grow better as cash in a bank or from taking an IFA’s advice?
No one can guarantee your money will grow, but an IFA should find you a better return on your money than most high street banks offer.
But don’t forget to take fees and charges into account as well. You want net figures after costs are deducted.