Why should I use a financial adviser?
Using a regulated, independent financial adviser is generally the safest way to:
- Get to grips with your pension options
- Discover if there is a better pension out there for you
- Combine, switch or transfer your existing pensions
- Pensions can be complicated
- Pensions are abstract and are often not related to the here and now
For many people, these barriers make pension talk a manana moment. Even though the reality is that putting your pension off until tomorrow could end up losing you thousands.
A report by independent think Tank ILC2 showed that people who use a financial adviser have, on average, over £27,000 more in pension savings that those who don’t.
What am I paying for when I get financial advice?
Firstly, like most services you are paying for time and expertise. An adviser will also take on the responsibility of helping you make an informed decision. This can feel like a weight lifted and as long as you use a regulated financial adviser, you are protected against their advice not being right for you.
When it comes to investing and managing your pension, there are do-it-yourself options out there. And this can be the right choice for people who have a high level of financial competence, a lot of spare time to commit to dealing with their pension, and the capacity to take a hit, possibly a big one, if something goes wrong with their investments.
If this doesn’t sound like you, then seeking independent, regulated financial advice for your pension is the best way forward.
Can I get free financial advice?
It’s fairly common for financial advisers to offer the first consultation for free. It’s a chance for you both to get to know each other and decide if you are suited. The downside is, if you decide to proceed you are committed to paying, even if the advice is to do nothing. While in itself this advice is valuable, it can feel like a bit of a let-down. There is another way.
Companies such as Portafina will do the initial investigation into your pension for free. And in many cases we can continue to provide full advice with no obligation should you need it.
This means you get expert advice on what you should do with your pension. At the same time the adviser will clearly state how much it would cost to act on the advice, if that’s what you decided to do. In which case, any fee would usually come out of your pension so there is no extra money to find. Or, you could walk away fully informed with nothing to pay.
If you have a defined benefit scheme then in some cases you may not qualify for full advice with no obligation. The adviser should let you know any potential charges to progress your review after the initial investigation. So, you would still have the choice to walk away with nothing to pay. You just wouldn’t have received full advice before reaching that point.
What affects the price of financial advice?
Many variables affect the price of financial advice including:
Your questions answered
The type of pension you have
How much your pension is worth
When you pay for regulated financial advice you are also investing in a level of protection for your pension savings. And the bigger the size of your pot, the more the potential liability is for the adviser.
How the service is delivered
Are financial advisers on commission?
Since 2013 financial advisers have not been able to be paid a commission if they are giving advice on pensions, investments or retirement income products, such as annuities.
It’s great that this is now laid out in law because we believe that being paid commission to give advice undermines the whole process and is morally wrong.
At Portafina, we never claimed commission for our pension advice, even when we were allowed to. It’s the only way to consistently deliver truly independent advice.