Financial Advice/planning costs

Hi All,

I have never used an FP but have often considered doing so. My concern has always been poor financial advice and the costs.

What is the typical payment model for a planner (investment strategy pension etc..). Is this a yearly cost or something different?

How does one go about picking a good one and how to measure whether they are doing their job right?

My own view is that Financial Planning should be charged for on its own, by way of invoice. It should not be contingent on setting up a product, or be calculated by way of a percentage of assets. Financial Planning revolves around reviewing your life goals, setting some targets and optimising your finances. Much of that work has nothing to do with financial products. Paying off debt, keeping cash on deposit, gifting funds to children, building up reserves funds in your company might all be in your best interest, so you have to make sure the advisor is free to make those recommendations. If they are only paid through some form of % of assets, these recommendations are less likely.

Most of the better advisors charge 1% of assets as a Financial Planning / Implemention fee and 0.50% ongoing annual management fee. Others will just take whatever commission is offered by the product provider. Protection products pay between 100% and 180% of the first year premium. This increases your premium by 20% on average for the life of the policy, so that's what you are paying as a fee.

Thecaddie said:

Hi All,

I have never used an FP but have often considered doing so. My concern has always been poor financial advice and the costs.

What is the typical payment model for a planner (investment strategy pension etc..). Is this a yearly cost or something different?

How does one go about picking a good one and how to measure whether they are doing their job right?

Click to expand...

Are you looking for a financial plan or advice on investment strategy?

I agree with Dave, a financial plan should be a stand alone cost. You pay for advice on whether you have enough money for the rest of your life and what structures you need to do the things you want to do. By paying for the plan, the Financial Planner doesn't have to sell you something to get paid. If something needs to be implemented afterwards, if you want them to implement it for you, you pay for that too.

The best way to measure whether a financial planner is a good one is to go and talk to them. Are they someone you want to work with and will they be able to do what you want them to?

Fees will vary depending on who you use. My fees are on my website.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Does financial planning not automatically include investment advice Steven?

David, protection products? Are these only available via a financial planner? First time I have come accross the terminology

@Thecaddie
Financial Planning almost always lead to investment advice, and ideally an advisor will set out a service level agreement and fee schedule covering both. I would argue that a sound long term financial plan should be put in place first, and the implementation of that plan MAY lead to investments, pensions etc.

'Protection products' is just a broad term covering life assurance, specified illness cover, income protection etc. If you go directly to an insurance company they will just quote you their highest monthly premium for the cover required. That is fine, and may be cheaper than paying an advisor to research and set up policies on your behalf. However, the companies in question will also price match other providers in most cases, and offer a quote without commission, but you will probably have to go through an advisor to get access to those 'wholesale' offers.