Does the cost add up?
PAYING FOR FINANCIAL ADVICE
MOST of us could do with independent financial advice at some point in our lives, but in practice only a tiny number of us are willing to pay for it.
That is understandable, given advice costs anything between £50 and £250 an hour, and many do not know whether this is money well spent.
Almost half of people do not know how much money is needed to make paying for financial advice worthwhile. However when pressed, the average answer given was £117,000, according to research for Hargreaves Lansdown.
Personal finance analyst Sarah Coles said people tend to seek advice when things get too complicated or there are large sums at stake.
Many seek out an adviser as they approach retirement, to help them decide how much income to take from their pension. “It also makes sense when you inherit money, as you may not be familiar with the options that you face,” said Coles.
Milestones such as marriage, children and divorce are common triggers. Coles added: “Some want a mid-life check-up to make sure they’re on track.”
Before you weigh up whether advice is worth the money, you must understand how your adviser charges. “Some charge a percentage of your total assets, others charge per hour, while some will agree
a fixed fee in advance,” said Coles.there is no set charging scale but as a rough rule of thumb, you can expect to pay between £500 and £2,500 for advice on investing assets up to £100,000. “If you have more money or complex needs, such as tax and inheritance planning, you could pay £5,000 or more,” she said.
Every financial adviser must offer a free initial consultation, with no obligation, during which they should set out their charging structure.you will only get specific recommendations and a financial strategy once you agree to use (and pay for) their services. Coles said: “A good adviser will also be up-front if they think it’s not worth you paying for advice.”
If you think it is too expensive, you are free to walk away.
Andrew Morris, senior equity release adviser at Age Partnership, said you should look for a fully independent financial adviser who can recommend products
from across the entire market, rather than just one provider, or a limited range of providers.
Make sure they specialise in the area of advice you require. “Later-life issues, such as whether to take out an equity release scheme, require specialist knowledge,” Morris said.
If you are aged 50 or over, you can get free, impartial guidance from the government-funded Pensionwise service at Pensionwise.gov.uk or by calling 0800 138 3944. Or you could use the free live chat service at Pensionsadvisoryservice. org.uk.
The government-funded Money Advice Service provides useful and impartial advice at Moneyadviceservice.org.uk.you can talk to its advisers on 0800 138 7777, although wait times can be lengthy.
For debt issues you can get free advice from Citizens Advice, Stepchange or National Debtline.