Financial advice might seem very pricey upfront, but like an expensive education, it can provide terrific value in the longer term. You could pay many thousands of pounds over the years for help constructing a balanced investment portfolio, for example, but are likely to more than recover those costs in higher eventual returns.
The chancellor’s budget this month carried very significant implications for many aspects of people’s finances, from pensions to inheritance tax planning and buy-to-let investments, so now’s a good time to review the range of professional help you can access.
One of the biggest advantages of taking regulated advice is that you can get redress if it turns out that advice wasn’t suitable. All good advisers will be happy to have an initial conversation free of charge to discuss your position, how they can help, and their fees, so there is nothing to lose in seeing what help is available.
It is always worth comparing several companies in any category before committing. Here’s the lowdown on five key professionals to consider.
Independent financial adviser
IFAs can help with broad financial planning and specific questions, such as how to invest an inheritance, pay school fees or plan for retirement. They cover all the major categories including budgeting, savings, investments, pensions and tax, and should take a holistic approach.
Nevertheless, some specialise in one area such as pensions or ethical finance. They can recommend products from across the market without bias and can execute transactions on your behalf. Advisers who are tied to product providers aren’t IFAs but “restricted advisers”.
Fees vary widely. You might pay £500 for a general financial review; £150 to £200 an hour for ad hoc advice or a monthly fee for an ongoing service including an initial review, annual or biannual meetings and contact any time by phone and email. Most firms argue that regular advice is cost-effective for anyone who owns property and has significant pension and investment assets or surplus income to invest.
Jason Witcombe, of Evolve Financial Planners, says: “Most people first seek financial advice after a big life change, such as getting married, having children or being promoted.”
▶ Who for: Anybody with property and investment/pension assets
▶ Find one at: unbiased.co.uk; financial-planning.org
An independent mortgage broker can help to identify the best mortgages for your needs and may be able to access deals that you could not otherwise find or apply for. Good brokers know the different lenders and their criteria intimately and can exert sway to help your application. “Whole of market” brokers can access the widest range of deals; however some mortgages are only available to people who apply to the lender direct, with no intermediary. Brokers can provide quotes for suitable deals before you pay any money, so it makes sense to try at least two brokers and approach some lenders, including your bank, direct before making any commitment. Different brokers have different fee structures. Some are “free” to you, but take commission from lenders; others charge a flat fee of about £500 per mortgage or a percentage of the loan value. Fee-charging brokers may receive commission too.
Aaron Strutt, of Trinity Financial, the mortgage broker, says: “It’s a huge and confusing market and it’s increasinlgy difficult for people without expert knowledge to know if it’s even worth applying for a particular deal.
“In some cases it will take two weeks simply to get an appointment with a bank’s mortgage adviser, when you could find and arrange a suitable mortgage within the same timeframe with a broker.”
▶ Who for: Anyone looking to
get a mortgage or remortgage
▶ Find one at: unbiased.co.uk
Accountants are useful for anyone who has to file a tax return and doesn’t find the task straightforward. That includes many business owners and individuals with taxable income from things like investment dividends and buy-to-lets. They can also help people to secure finance; for example, helping an entrepreneur to draw up a business plan to attract investment, or a self-employed person prove their income in order to get a mortgage.
It is crucial to choose accountants that are members of the big industry bodies, notably the Institute of Chartered Accountants in England and Wales (ICAEW) and Association of Chartered Certified Accountants (ACCA). Accountants will charge about £200 to £300 to complete a simple tax return for a small investor. You can claim the cost of some accountants’ fees as a tax deduction and the amount determined by using a free tax calculator.
Anita Brook, of Accounts Assist, the accountants, says: “People are sometimes put off by the upfront cost but we can often save clients thousands of pounds. For example, we’ve had clients who didn’t realise that rental income from their lodger was tax-free under the Rent a Room scheme; and a business owner had spent thousands of pounds on deductible expenses, totally unaware of the tax break.”
▶ Who for: Anyone who finds
completing their tax return tricky
▶ Find one at: icaew.com;
A traditional advisory stockbroker can provide advice on individual shares and broader asset allocation within your portfolio and execute trades for you — IFAs can advise on funds, but not individual shares. Alternatively, you can buy shares without taking advice using an execution-only service, or can pay higher fees to have a stockbroker manage your portfolio on a discretionary basis. DIY investors use cheap execution-only platform websites to buy shares and funds.
Again, costs vary widely. Killik & Co has an “advised dealing” service, where a dedicated broker will give guidance on individual shares bearing in mind your aims and risk appetite, with commission of 1.65 per cent on the first £15,000 when you buy and sell, plus “custody” fees of £20 a year per security. Its “advised portfolio” service adds asset allocation advice for a fee of 0.5 per cent of your portfolio balance, from £50 up to a maximum of £250.
Rachel Winter, of Killik & Co, says: “There is a very common misconception that advisory stockbrokers are only for rich people, but we have many younger clients who aren’t earning especially high salaries. For us, it’s about forming lifelong relationships. As an example of how we work, a number of clients have recently been calling to speak about the situation in Greece. We will happily talk about things like that at no additional charge.”
▶ Who for: Higher-risk investors
who buy stocks and shares
▶ Visit: londonstockexchange.com/find-a-broker
It is generally sensible to use a solicitor to draw up your will. If you don’t make one, your assets will be dished out following intestacy laws. Solicitors should automatically provide advice on inheritance tax (IHT) planning as part of the will-writing service. Many families will remain exposed to hefty IHT bills despite changes in the last budget.
The Law Society can direct you to solicitors who specialise in wills and estate planning. Solicitors may charge about £400 to £600 to draft a simple will and £1,000 to £1,500 for a more complex will which includes setting up trusts for IHT purposes. You should have your will reviewed every three to five years and at any big life change. During Will Aid’s “make a will month” in November, solicitors will make basic wills in return for a £95 gift of to charity.
Nicola Plant, of Thomson Snell & Passmore, the solicitors, says: “Often, new clients say that their affairs are very simple, but it turns out they have a previous marriage with children who need providing for, young children from their new relationship and foreign property assets, say. As well as inheritance and tax planning, we can talk about things like appointing guardians for minor children and drafting lasting powers of attorney, where relevant.”
▶ Who for: Anybody with assets to bequeath
▶ Find one at: lawsociety.org.uk