Choosing a reputable, local pension adviser who’s right for you can be a tricky process. After all, that’s why PensionAdvice.org exists – to help remove the complexity from that decision.
An important consideration is to ask yourself what kind of advice you need. For instance, are you looking for advice on your final salary pension? Do you have a particular set of investments you need help with? Are you looking for long-term care planning, or help with a pension pot? Are you looking for pension advice in the event of divorce?
Another crucial thing to think about are your goals. What specifically are you looking to achieve with your pension or retirement income? Are you looking to retire comfortably? Travel the world for a few years? Getting these clear in your mind will be key in matching you with the right local pension adviser.
One way to find a financial adviser is to ask trusted family and friends. This can be helpful. However, the difficulty here is it’s not always straightforward to see if an adviser has done a good job. The fruits of their advice may not emerge until years later.
It’s also difficult to distinguish “niceness” from “competence.” Just because a friend or family member likes their adviser because they are “nice,” doesn’t mean they are a good local pension adviser.
Key Traits Of A Good Local Pension Adviser
One key thing you should look out for is the phrase “FCA regulated”. You should only work with a local pension adviser if they are regulated by the financial services authority. This means there are clear rules they must follow, to ensure you get the best and most impartial advice possible.
At PensionAdvice.org, we only ever refer people to a FCA regulated adviser.
Another important distinction to make is between “restricted” and “independent” financial advisers.
Many financial advisers offer advice on a whole range of financial matters – offering, essentially, holistic for all (or most) of your financial needs. Restricted financial advisers might be restricted in the types of retail investment products they can offer. Or, they are limited to a select number of providers.
Independent financial advisers, however, are allowed to recommend you to a range of retail investment products, from across a wide range of providers.
At PensionAdvice.org, we only put you in touch with an independent, local pension adviser. This ensures you get the widest choice possible when choosing product providers for the financial product being recommended.
Another important note. Since 2013, any adviser who deals in pensions, investments, retirement income products (e.g. annuities) and financial planning in general must charge a fee for their advice. They must also hold higher qualifications than they did previously.
Beforehand, many advisers were getting paid via commission on the products they sold. This meant that people weren’t always being referred to the best financial product for them. They were being pushed towards it because it rewarded the financial adviser with a higher fee.
How Much Do Financial Advisers Charge?
A financial adviser’s fees can vary depending on what you are being charged for, and the payment method involved. Some advisers might be willing to negotiate on the payment option you prefer:
- Hourly rate. This can range anywhere from £75 an hour to £350 an hour. The UK average is about £150 an hour.
- Set fee. This is often the route taken for a set piece of work, and can range from hundreds to thousands of pounds.
- Monthly fee. A flat fee could be used here, or you might pay a percentage of the money you have chosen to invest.
- Retainer / ongoing fee. This only applies in the case of an adviser providing you with an ongoing service. The exception is where you are using a regular payment to pay off an initial charge over time.
It’s important that any local pension adviser provides you with a copy of their pricing structure to you, prior to providing their services to you. They will even need to give you a cost for the service you require, even if it’s just an estimate.
Several factors can impact how much a financial adviser charges you, including:
- Geography. If your financial adviser is based in a more expensive part of the UK, their fees are likely to be higher to cover their overheads.
- Service delivery method. Some IFAs can provide their service over the phone or online. This can lower the price compared to a face to face meeting, which often takes up more time and resources. Be careful, however, that if you use this route that the advice you get comes with a specific recommendation (for your protection).
- Who does the legwork. Some firms get a qualified, experienced financial adviser to do all the work. Others will delegate specific tasks to support staff (e.g. a financial paraplanner), which can affect the cost.
- The adviser’s qualifications. If the pension adviser in question is highly experienced and qualified, they are likely to be more expensive. You might feel this extra cost is justified, depending on the type of advice you’re looking for.
- Your situation’s complexity. If your particular case involves a lot of sorting through, then this will take more time. More time, unfortunately, equals more money. Minimise your costs here by putting your paperwork into good order, and by being very clear about what kind of advice you need.
Summary: Key Questions To Ask A Local Pension Adviser
So, to recap. Here are some of the important questions to put to a local pension adviser before deciding whether or not to receive their services:
- What is your pricing structure?
- How much am I likely to pay for this particular service?
- Are you an independent or restricted financial adviser?
- What services do you offer?
- If you are not an independent financial adviser, are you able to consider products from across the market?
- What qualifications do you hold which are above the minimum you need to hold?
- What kind of clients do you currently have who are in a similar position to myself?
- Will my situation require ongoing advice? If so, what are the costs involved?