Who needs to take advice?

Posted on Dec 07, 2018

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The media regularly shares stories of sensible people being scammed by ‘get rich quick’ pension schemes which offer ‘too good to be true’ returns. Many of us, it seems would rather look after our money than turn to a financial adviser for help and recent research has confirmed this. In fact, according to a poll by The London Institute of Banking & Finance and Seven Investment Management (7IM), it would take a windfall of over half a million pounds before most would call in a financial adviser…

Of those shunning professional advice, nearly half (47 per cent) think they can look after their own money, 28% say they don’t have enough to justify an adviser and a similar amount (again 28%) think the costs are too high. One in five (19 per cent) say it doesn’t matter how much they inherit – they would never consider obtaining financial advice…

While we’ve been led to think that men aren’t great at asking for advice – or maybe that’s just the case when it comes to directions! – this research has shown that women are actually more reluctant than men to consult an IFA. The advice tipping point for most men is just under £499,171 but it is £544,249 for most women.

The figures also show that only half (53 per cent) of Britain’s over-50s feel well prepared for retirement and four out of ten (38 per cent) worry about it.

Responding to the research, Peter Hahn, Dean at The London Institute of Banking & Finance, says: “Statistically, a 50-year-old Briton is expected to live to age 81, so most will have to fund a minimum of 14 years in retirement. That means having a long-term investment strategy with less inflation-exposed cash, a balance many may not be confident about. So, while over-50s say they feel well prepared, these findings suggest a poor understanding of long-term risk and reward, risking poorer retirements.”

He adds: “And you don’t need a £500,000 ‘windfall’ to make advice worthwhile. Advice can be really helpful in all sorts of circumstances and with much smaller ‘pots’ of money and assets.”

At The Goodman Partnership, we would completely agree with Mr Hahn’s suggestion that getting financial advice is not dependant on receiving an inheritance or a windfall. Many of us already have several hundred thousand pounds set aside in a pension and it is key to manage that properly too. 

An IFA can also help clients minimise tax. Even if somebody thinks they can make some fairly clear financial decisions, they also need to sort out the tax aspects and that’s where talking to an expert is key.

Recent figures from the HMRC show that an increasing number of people when drawing pension benefits are now paying either a 25% tax charge on income or 55% on a lump sum. These are not small figures and highlight the need to talk to an experienced IFA, rather than taking the DIY approach. Nobody should pay unnecessary income tax on pension payments and, without good advice, there’s a risk you’ll end up with a tax charge you weren’t expecting.

To avoid this, it is prudent to seek independent financial advice, preferably from a Chartered Financial Planner such as The Goodman Partnership. This accreditation is further reassurance that our financial planners are highly qualified, experienced and knowledgeable. It also demonstrates that we’re committed to building our knowledge and skills, so that our clients get the most up-to-date advice available.

When it comes your pension investments, we can help lead you through the legislative frameworks to minimise the effects of paying unnecessary tax.

At The Goodman Partnership, we have built our reputation on advising people at or near retirement helping clients to weigh up their options and make the best decisions for their future. Click here to find out more or call us on: 01892 500600.






Goodman Chartered Financial Planners is a trading name of Fairstone Financial Management Ltd. Fairstone Financial Management Ltd., is authorised and regulated by the Financial Conduct Authority – FRN: 475973 Registered in England and Wales no: 05574120. Part of the Fairstone Group. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: www.financial-ombudsman.org.uk.