Right, I suppose I’d better properly reply now, I’m at work so won’t be distracted by dirty nappies, sick and random jobs until this evening!!!
As some of you will know I’m an Independent Financial Adviser (IFA) and I am ‘truly’ independent i.e. can search the entire market for the best product/provider for my client’s needs. Financial Advisers (note the lack of ‘Independent’ in the title) at Banks or Building Societies tend to be working from a panel; say 3 or 4 providers only and are restricted to their products so you can end up with a best-fit as opposed to perfect-fit.
This is a generalisation as some IFA’s work from a panel (I could do but choose not to) and I understand some banks will have proper IFA’s in-house. It can be difficult to definitively find out which is which but you’ll find more IFA’s are exactly that and more bank/BS FA’s are working from a panel. Be aware though that the bank will LIE!!!
As for charges, you have an option for either paying on a time/cost fee basis, on a commission basis or a combination of both. You’ll usually get an initial consultation for free, which costs should be discussed during, and take it from there. If you pay on a time/cost fee basis (like an Accountant would charge) then you pay for all the time, etc, out of net salary don’t forget (so increase by 40% in some cases), but the contract charges should be reduced to compensate. On a commission basis the product provider pays the adviser a commission (varies dependent upon type contract, premium, term, etc), so you pay nothing upfront, however the charges are likely to be a bit higher – money doesn’t arrive by magic I’m afraid. A combination would be something like the adviser says I need to earn £500 for this case, the provider will pay be £350 commission, you pay £150 as a fee. From my experience, most people prefer the commission route (though this is being outlawed from 2013) therefore accepting slightly higher charges over the duration of the contract but means they don’t have to part with their hard earned cash. All three options should be discussed and considered. Monthly ‘retainers’ are starting to become more commonplace.
I wouldn’t trust anyone at the bank as far I as could throw them I’m afraid, for anything, I‘ve spent too long trying to unravel the mess they’re created for clients who eventually come to me with a rather sheepish expression of ‘mmm, OK, you were right after all’. I can virtually 100% of the time offer more cost effective contracts to the bank and, absolutely definitely, offer a hugely massively better level of service.
As for you specifically Tom, if you went to ask for investment advice, well that is what you should receive. Yes, OK, as part of our job we recognise other needs & priorities which should be flagged up but not pushed down your throat rather come back and revisit at a later time.
To answer your questions regarding the contracts offered…
Income Protection – a good contract that replaces your salary if you’re unable to work due to accident or illness. Check your sick-pay at work as this policy should kick-in once that runs out (can reduce cost). Not many people have this if I’m honest but great peace of mind. This protects things like mortgage payments & general living costs. This is vital for the self-employed.
Critical Illness – lump sum payment upon diagnosis of a list of CI’s. You don’t need to die so benefit from the payout (bearing in mind a lot more CI’s are survivable) so can clear mortgage/debt and so end monthly interest payments. More expensive than straight life cover which simply reflects the much greater chance of being diagnosed with something as opposed to dying. Our policy incudes death & CI so covering both bases (and cheaper perversely than CI on its own).
As BGM said, these ‘protection’ contracts are much cheaper to take out when you’re young and healthy and offer good protection if the worst were to happen. But, as you say Tom, they’re only good if you need to make a claim – like all insurance (house, car, phone pet).
As for ISA’s, are you looking at regular contributions or a lump sum (up to £10,680 for this tax-year). We offer pretty much what you’re looking for with regards to a ‘portfolio’ of investments to choose from. We can satisfy a risk rating from between 2/3 up to 7/8 out of 10 using the portfolios. We can go higher but wouldn’t use a portfolio for that. Lower then get a Cash ISA at the bank. You’re best planning to invest for 5-10 years to allow for the charges & any immediate volatility to iron out to long-term growth.
In summary Tom, sounds like you weren’t talking to the most ethical of advisers (rather typical of the bank) who was pushing what he’s rather sell as opposed to what you wanted (not saying the products weren’t appropriate but his technique hardly confidence building).
As for my sales pitch Tom (and anyone else still awake!!) is, if you want good quality advice, high levels of service and most importantly on-going service/advice then avoid the banks, or any tied-adviser, and seek a good quality IFA. Don't forget Mr Bank IFA will be here today, gone tomorrow, so won't really give a shit about you. I'm 35 and run my own business, I'll be here giving advice for another 30 years, which give me massive accountability; no vanishing into fresh air for me I'm afriad. I’m happy to speak to anyone on here, if I can help, I’ll certainly look after you, if I can’t compete for any reason then I’ll tell you so upfront. Locality really doesn’t trouble me as I have clients nationwide. Even if you already have bits and bobs I can still look into 'rejigging' to save cost or improve benefits on pension, protection, healthcare, mortgages, etc. Companies too (group pension, life cover, healthcare, etc).
Hope that helps.
Roger
Wow, this turned into a massive free advert - thanks Tom
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