Cashflow Forecast cost?

[dr_gn]

All, we've been in touch with a Financial Advisor regarding investments and pensions over the next 10-15 years to retirement. We've not been "under" an FA before, so this process is pretty new to us.

We had a free consultation where he got to understand a bit about us and our finances. He suggested a next step would be a Cashflow Forcast / what-if analysis, which seems the obvious next step before deciding what - if anything - we do next. That may be consolidating pensions, making voluntary contributions, changing investments and savings accounts etc. All the usual stuff I guess.

Question is - what would you expect to pay for a service like this? We've been quoted a flat fee, after which we decide to contine with their services in some form or other, or do it ourselves.

It's a well established, reputable company who my family have used in the very distant past (40+ years ago) when doing accounts for a small business. They have now diversified into financial advice. They were my first port of call, purely due to them being known to me.

Thanks!

[Derek Chevalier]

dr_gn said:

All, we've been in touch with a Financial Advisor regarding investments and pensions over the next 10-15 years to retirement. We've not been "under" an FA before, so this process is pretty new to us.

We had a free consultation where he got to understand a bit about us and our finances. He suggested a next step would be a Cashflow Forcast / what-if analysis, which seems the obvious next step before deciding what - if anything - we do next. That may be consolidating pensions, making voluntary contributions, changing investments and savings accounts etc. All the usual stuff I guess.

Question is - what would you expect to pay for a service like this? We've been quoted a flat fee, after which we decide to contine with their services in some form or other, or do it ourselves.

It's a well established, reputable company who my family have used in the very distant past (40+ years ago) when doing accounts for a small business. They have now diversified into financial advice. They were my first port of call, purely due to them being known to me.

Thanks!

Ballpark figure £3-£k plus VAT, but I'd question the value of one-off planning/advice.

[dingg]

When I was about to transfer my old works dc pension into my own sipp, the IFA the company used to oversee the group wanted a percentage of the sum that amounted to 8k

I told him in no uncertain terms that wasn't going to happen.

Sorted it out myself for free and the assets its now invested in have outgrown the mediocre performance that the previous funds did, I even kept in touch with old colleagues and they are still under performing now and were much worse off during cv19 conditions.

Consider taking over your own decisions, its not that difficult

[dr_gn]

Thanks both.

[dr_gn]

Derek Chevalier said:

dr_gn said:

All, we've been in touch with a Financial Advisor regarding investments and pensions over the next 10-15 years to retirement. We've not been "under" an FA before, so this process is pretty new to us.

We had a free consultation where he got to understand a bit about us and our finances. He suggested a next step would be a Cashflow Forcast / what-if analysis, which seems the obvious next step before deciding what - if anything - we do next. That may be consolidating pensions, making voluntary contributions, changing investments and savings accounts etc. All the usual stuff I guess.

Question is - what would you expect to pay for a service like this? We've been quoted a flat fee, after which we decide to contine with their services in some form or other, or do it ourselves.

It's a well established, reputable company who my family have used in the very distant past (40+ years ago) when doing accounts for a small business. They have now diversified into financial advice. They were my first port of call, purely due to them being known to me.

Thanks!

Ballpark figure £3-£k plus VAT, but I'd question the value of one-off planning/advice.

I think the idea is that it's not necessarily one-off.

There are a range of options after the Cashflow Forecast, including walking away with the information and doing what we want with it - there has been no pressure to do anything at all so far. The other options - the one recommended - was a one-off fee for dealing with any initial recommended investments, then a [0.5% of invested sum] fee per year for as long as we wanted advice. This could be terminated whenever we wanted.

The financial forecast is something we thought would be useful as a one-off source of information, and for a professional to input into rather than us trying to do it ourselves. Having not done much of this kind of thing before, it seemed worthwhile to get professional opinion - could easily be wrong about that I guess.

A couple of other people I've spoken to about their experiences of IFAs said that the fees easily paid for themselves, even short-term.

Thanks.

[outnumbered]

dr_gn said:

Derek Chevalier said:

dr_gn said:

All, we've been in touch with a Financial Advisor regarding investments and pensions over the next 10-15 years to retirement. We've not been "under" an FA before, so this process is pretty new to us.

We had a free consultation where he got to understand a bit about us and our finances. He suggested a next step would be a Cashflow Forcast / what-if analysis, which seems the obvious next step before deciding what - if anything - we do next. That may be consolidating pensions, making voluntary contributions, changing investments and savings accounts etc. All the usual stuff I guess.

Question is - what would you expect to pay for a service like this? We've been quoted a flat fee, after which we decide to contine with their services in some form or other, or do it ourselves.

It's a well established, reputable company who my family have used in the very distant past (40+ years ago) when doing accounts for a small business. They have now diversified into financial advice. They were my first port of call, purely due to them being known to me.

Thanks!

Ballpark figure £3-£k plus VAT, but I'd question the value of one-off planning/advice.

I think the idea is that it's not necessarily one-off.

There are a range of options after the Cashflow Forecast, including walking away with the information and doing what we want with it - there has been no pressure to do anything at all so far. The other options - the one recommended - was a one-off fee for dealing with any initial recommended investments, then a [0.5% of invested sum] fee per year for as long as we wanted advice. This could be terminated whenever we wanted.

The financial forecast is something we thought would be useful as a one-off source of information, and for a professional to input into rather than us trying to do it ourselves. Having not done much of this kind of thing before, it seemed worthwhile to get professional opinion - could easily be wrong about that I guess.

A couple of other people I've spoken to about their experiences of IFAs said that the fees easily paid for themselves, even short-term.

Thanks.

I've said this on other threads but will repeat it here. I retired aged 56, pretty much as a result of using a trusted IFA for the 15 years prior. We have paid a reasonable amount (probably on average 0.3% in IFA fees) but in my view it's been a life changing decision, since I've no doubt I'd still be working 5 years later if I hadn't got the right advice, then actually understood what I wanted to achieve and implemented the plans for how to get there.

We started off as fee based but few firms seem to offer that now.

I'd certainly recommend doing the initial analysis and then deciding where to go from there. In our case, the IFA only directly manages ISAs, I manage my own (larger) pension funds myself, essentially mirroring the strategy from the other funds. So that avoids a big chunk of potential fees.

[mikeiow]

outnumbered said:

I've said this on other threads but will repeat it here. I retired aged 56, pretty much as a result of using a trusted IFA for the 15 years prior. We have paid a reasonable amount (probably on average 0.3% in IFA fees) but in my view it's been a life changing decision, since I've no doubt I'd still be working 5 years later if I hadn't got the right advice, then actually understood what I wanted to achieve and implemented the plans for how to get there.

We started off as fee based but few firms seem to offer that now.

I'd certainly recommend doing the initial analysis and then deciding where to go from there. In our case, the IFA only directly manages ISAs, I manage my own (larger) pension funds myself, essentially mirroring the strategy from the other funds. So that avoids a big chunk of potential fees.

Averaging 0.3% for financial advice is a rather impressively low number: well done!
How did you find one charging so little, especially 15 years ago when the industry was….less open than today?

Most will be in the 0.5-1% area or higher.
I guess if the pot being managed is over £300-500k, this charges would be dropped down.

Another option for the OP is to create themselves a nicely anonymous user on MSE and pop some more details over on their pension forum here . Some very helpful folk (including a couple of FAs) often pop sage advice along.

I would say the majority DIY there, although some will use an IFA. All will agree that it should be an IFA, not just a FA…..

[outnumbered]

mikeiow said:

Averaging 0.3% for financial advice is a rather impressively low number: well done!
How did you find one charging so little, especially 15 years ago when the industry was….less open than today?

Most will be in the 0.5-1% area or higher.
I guess if the pot being managed is over £300-500k, this charges would be dropped down.

It started off as fee based, so that helps, then it was 0.5% for quite a few years and 1% latterly. I'm also taking into account the fact that I'm managing my own pension, but using their plan, so effectively I'm not paying any fees to them on 60-70% of our investments, but they're still including all the pensions in the planning they do for us. The original guy I used was actually someone I knew from personal life, but he ended up selling his IFA business to a larger firm when he retired, and we've stuck with them.

I feel there's quite a strong anti-IFA sentiment on this forum, at least partly fuelled by the previous sponsor. There's no doubt that financial advice is "expensive", but I'm just trying to show by example that it can actually be very worthwhile. For example, lots of people post on here asking about which funds they should invest in, which is putting the cart a long way before the horse. The first thing that a good IFA would sort out with you is what are you actually trying to achieve ? And it all flows from there.

[markiii]

the problem with IFAs as per any trade/professional; is finding a good one.

If you know enough to choose a good one you probably know enough not to need one

[Derek Chevalier]

markiii said:

If you know enough to choose a good one you probably know enough not to need one

I don't really understand the link.

[markiii]

to determine if your getting good advise you need to know enough to evaluate it.

If you know enough to evaluate it was probably superfluous to begin with

[mikeiow]

markiii said:

to determine if your getting good advise you need to know enough to evaluate it.

If you know enough to evaluate it was probably superfluous to begin with

Have to say, unless your life is complex, I tend to agree with you on this.

But maybe in 15 years when I am a penniless tramp with poor health & no pals, I will have to eat my words

[Derek Chevalier]

markiii said:

to determine if your getting good advise you need to know enough to evaluate it.

If you know enough to evaluate it was probably superfluous to begin with

Many highly qualified, experienced financial planners have their own financial planner. Reasons include:

1. An independent sounding board
2. Someone to challenge their ideas
3. Someone to hold them to account
4. Someone to look after the other half in case they get run over.
5. Cobbler's children - someone to ensure the plan is on track and implement the recommendations.

[Derek Chevalier]

Derek Chevalier said:

Many highly qualified, experienced financial planners have their own financial planner. Reasons include:

1. An independent sounding board
2. Someone to challenge their ideas
3. Someone to hold them to account
4. Someone to look after the other half in case they get run over.
5. Cobbler's children - someone to ensure the plan is on track and implement the recommendations.

Just to add: Tim Hale's excellent book has a section on finding the right adviser and whether you actually might need one. (section 12)

https://www.amazon.co.uk/Smarter-Investing-Simpler...

[dr_gn]

Thanks all - I appreciate the comments and advice.

One thing I'm struggling with is - irrespective of whether we decide to deal with investments ourselves, or whether we go with the IFA:

Isn't the financial forecast modelling a good fist step to confirm where we are now, and looking at various "what-ifs"? Yes, I guess we could do a similar thing ourselves using a spreadsheet, but I'm assuming there might be a few subtleties we might miss - maybe misinterpreting tax requirements or something), making the results invalid.

Also, I assume the with the financial modelling we'd be paying for the analysis and advice from the results, not just getting a load of figures on a graph? We're not obliged to go any further after that step.

[mikeiow]

I feel like the only person who can answers is the IFA you are dealing with.

Why not ask for a sanitised example to see what they could deliver?

Post up here for comments!

[bitchstewie]

dr_gn said:

Thanks all - I appreciate the comments and advice.

One thing I'm struggling with is - irrespective of whether we decide to deal with investments ourselves, or whether we go with the IFA:

Isn't the financial forecast modelling a good fist step to confirm where we are now, and looking at various "what-ifs"? Yes, I guess we could do a similar thing ourselves using a spreadsheet, but I'm assuming there might be a few subtleties we might miss - maybe misinterpreting tax requirements or something), making the results invalid.

Also, I assume the with the financial modelling we'd be paying for the analysis and advice from the results, not just getting a load of figures on a graph? We're not obliged to go any further after that step.

I'd speak to them and ask them but I'd be surprised if they're going to do a full financial plan and hand it over to you if you decide not to continue

There are online tools like Timeline and Guiide that you can use that will give a rough idea whether you're on track.

I'd also say some of this depends how savvy you are and how complicated your finances are and what you're already doing.

So for example respectfully I'd say if you have a high savings rate and are already doing sensible things like using ISA and pensions contributions and other wrappers the amount of "obvious" stuff an IFA could suggest is probably smaller than it is for someone starting from absolutely zero knowledge.

I'd take not of Derek's suggestions too - a lot of useful info there

[dr_gn]

All, quick update: I'm waiting for the book Derek suggested at the moment.

In the meantime we decided to do the financial forecast. I forgot to say - the cost for this is a one-off fee of £1750. After that we will decide whether to do the investmets ourselves, or let the IFA assist.

Thanks again for the advice and comments.