When should I think about retirement

Discussion in 'Pensions' started by Marc, 1 Dec 2018.

  1. Marc

    Marc Frequent Poster

    Last edited: 1 Dec 2018
    I’ve been a financial adviser for 25 years and helped many hundreds if not thousands of people to make the transition from work to retirement.

    The one common theme that never ceases to amaze me is this: given that you have spent maybe 40 years working, why is the the most common question this: “ i recently retired, how does “x” work or what is the tax treatment of “y”.

    Imagine I’m taking a trip to Limerick by train.

    I set off from Dublin and I’m sat in my seat watching the world go by when all of a sudden a station appears in the window and a sign says Cork.

    You wouldn’t expect me to jump out of my seat and start asking questions of my fellow passengers.

    “Why are we in cork?”
    I wanted to go to limerick? How does a train work. I don’t have a ticket? Where’s my bag? Ooops, it’s at home I didn’t pack yet.

    Hey, fellow passengers. Can somebody go back to Dublin and pack for me?
    Oh and then drop me off in Limerick on your way back?

    This is how an extremely large proportion of recently retired people sound when they make the call to a financial adviser AFTER they have retired.

    It’s one of the biggest financial decisions we ever have to make and yet many of us are literally as unprepared as my hapless train passenger.

    Now just ask yourself this: how vulnerable do you think your future self will be to being exploited by a salesperson at the time you ask your questions?

    That’s right. The reason so many people come onto Askaboutmoney after a few years and post “I’ve got an ARF, whatever that is, and the salesman took a huge commission and didn’t tell me”

    So if you take one positive from this: Make an appointment with a FINANCIAL PLANNER not Financial Adviser at least 5 years before you plan to retire.

    If you own your own company at least 10 years before you plan to retire.

    It will give you a much better journey and a much higher chance of ending up at the right destination.

    Last edited: 1 Dec 2018
    Purple, Ravima, Armada and 2 others like this.
  2. Leper

    Leper Frequent Poster

    Last edited: 1 Dec 2018
    1. Excellent post by Marc. Ignore at your peril.
    2. Get your income tax affairs in order from about years before retirement (I mean 100% in order), even if you and your spouse works in the Public/Civil Service.
    3. Don't decide to become a landscape painter on your 65th birthday. If you would like that to be one of your hobbies do art classes years before and continue if liked.
    4. If you are not fit don't leave it until you've received your gold watch.
    5. You'll be seeing more of your spouse; know your space and limits (don't underestimate point 5).
    6. Learn to use the washing machine, dish-washer and how to prepare a decent meal.
    7. Read a newspaper (not online edition) during that time you'd have spent driving to/from work.
    8. You don't have to rush your breakfast anymore.
    9. Get used to everyday being like Sunday. Go to Mass if you feel like it.
    10. Trawl through RIP.ie and note those who didn't make it this far. Maybe going out to Mass is not a bad idea?
    11. Don't listen to anybody who tells you to "Give something back . . . " unless you feel inclined.
    12. Toddle down to that café you wouldn't have visited while in your pinstripe and have a decent cup of coffee. Do the simplex. Ask the waitress for a clue, even if she doesn't speak good English. Smile, ask her name, leave a small tip and say thanks. Suddenly, you're a long way before your 65th birthday although you're heading beyond 65.
    13. Don't think about your work colleagues; they are not thinking about you.
    14. The rat-race is behind you and remember you can't have a rat-race without rats.
    15. Now for some corny jokes (they're the best ones) listen to Marty-in-the-Morning on Lyric FM.
    16. It's cold outside; spending 6 to 8 weeks in southern Spain in February/March @ €600 per month is an option. Must check Aer Lingus and Vueling, couldn't be bothered with Ryanair . . . purveyors of the aforementioned rat-race.
    Last edited: 1 Dec 2018
    Green, jim, Buddyboy and 5 others like this.
  3. Bronte

    Bronte Frequent Poster

    Excellent post Marc (and Leper).

    I think the main problem is that pensions are seen as complex, which they are, and financial advisors are not trusted. Rightly so in my opinion.
    Marc likes this.
  4. Conan

    Conan Frequent Poster

    Yes Pensions can be complex, but is that just an excuse?
    I think the real problem for today’s “younger generation” is that:
    - “retirement is a long way off”
    - “retirement is for old people”
    - “I will start one next year”
    - “I prefer to spend my money on holidays etc”
    - “I don’t intend to retire”
    - “I don’t understand how they work”

    But equally those with Pension Funds approaching retirement can also struggle to figure out what to do. Admittedly the rules/options can be confusing.

    “Financial Advisors/Planners are not trusted” is yet another excuse. Like any professional, some are better than others (as with Doctors, Solicitors, Dentists, Accountants etc etc). If you are feeling unwell you can always consult Dr Google, but not to be recommended. Equally if you have a Pension Fund and are approaching retirement you can also consult Google. But professional advice probably pays for itself.
    Marc likes this.
  5. Cervelo

    Cervelo Frequent Poster

    Couple of questions if I may,

    What are the differences between a planner and a advisor, Is one only for pre retirement advice and the other post retirement advice or can both do both ??
    And how do you know if you've got a good one, is it simply just down to the returns you make or don't ??
    moneymakeover likes this.
  6. TrundleAlong

    TrundleAlong Registered User

    I would also suggest that people familiarise themselves about the ins and outs of the State Pension. The number of contributions required to qualify etc.
    Also to keep records of places worked, dates, p60's. p45's, even payslips. It is amazing how many questions I have had to answer on various forms.
    You will also need Birth Certs, Marriage certs etc
    Thankfully I kept most of this stuff.
  7. Conan

    Conan Frequent Poster

    Financial Planners or Advisors come in all shapes and sizes. Some can be larger firms such as Mercer, Aon, Invesco etc. Others can be small firms or even one-man-bands.
    Typically they can advice on both pre and post retirement issues.
    But which is best???
    Generally I would start with which ever firm is advising the particular scheme of which you are a member. But if you are unhappy with them then talk to another few advisors (but check whether they charge a fee for advice or operate on commission for execution). Ask in advance as to how they operate.
    Generally advisors will be recommending particular product providers (insurance companies, investment firms etc). So apart from product advice, they should also discuss investment options, risk and return, investment time horizon etc.
    Unfortunately there are few guarantees when it comes to advice. Do some research yourself and have prepared questions for the advisor.
    WhiteCoat likes this.
  8. WhiteCoat

    WhiteCoat Registered User

    Hi Conan,

    Is there a way of finding out which advisers genuinely charge a fee for the services. A lot of advisers that I've seen want to charge an asset under management fee which I don't consider a fee at all - I consider it a commission. Thanks in advance.
  9. Conan

    Conan Frequent Poster

    Ask in advance. Advisors are required to outline how they propose to charge, whether:
    - fee only
    - upfront commission only (execution commission) and how much
    - commission plus ongoing management % of funds ( for an ongoing advisory service)

    Don’t be afraid to ask exactly what they will charge and what you will get in return. Advisors are required under regulations to outline their charging basis.
    Remember that whether it’s commission, fees, % of funds etc, it’s ultimately you that’s paying for the advice and ongoing service.
  10. Buddyboy

    Buddyboy Frequent Poster

    On Lepers point number 6

    Not only learn to use the washing machine, dishwasher, oven, hob and iron, but have your spouse learn all the stuff you do, e.g. bills, visa cards, etc.
    You never know when you may fall off the perch, and that is not the time to leave the remaining spouse without a clue as to what to do, or where things are.

    Note: I deliberately left it non-sex specific, as in my case, and no doubt many others, we do the tasks that we are good at, regardless of gender.

    And I'm very good at ejecting errant spiders ;)
    Leper and DeeKie like this.
  11. SBarrett

    SBarrett Frequent Poster

    Anyone can call themselves either. It was supposed to be that a planner is a Certified Financial Planner (CFP) and adheres to a code of ethics (but all authorised advisors are supposed to adhere to the Central Banks Client Protection Code and "work in the best interest of the client"). But the CFP is a qualification, nothing more so don't think that just because someone is a CFP, they are honest.

    You need to talk to the advisor and get a feel for what they are about and how they will help you. Are they up front about their fees or do they fob you off? Ask them if they are prepared to be paid by fee instead of commission? Is the conversation being steered towards commission paying products or is it staying on what is important to you?

    If you start off the conversation asking what are your fees, you will end up with someone who tells you there are no fees (are they working for free?) but you will ultimately pay through large annual management fees to recoup the large commission payments. Meanwhile, the advisor/ planner who was upfront with you has priced themselves out of your thoughts.

  12. Gordon Gekko

    Gordon Gekko Frequent Poster

    Personally, I don’t place much faith in the CFP qualification. Having reviewed the syllabus and met plenty of CFPs, it is, in my view, the QFA on speed and just another calling card for product pushing bank salesmen.
  13. Conan

    Conan Frequent Poster

    I beg to disagree. Most of the CFP’s are not “bank salesmen”, but rather independent (not tied) advisors. I fully accept that any qualification does not guarantee infallibility, but if it’s a choice between a “professional “ and an “amateur “ I know where I would start to seek advice. Whether I take that advice subsequently, well that depends ......
  14. Gordon Gekko

    Gordon Gekko Frequent Poster

    You are entitled to your view obviously.

    Personally I’d prefer to sit in front of a team which contains an AITI tax advisor and a CFA.
    DeeKie likes this.
  15. Marc

    Marc Frequent Poster

    Personally I find that posting massively over simplified generalizations so much easier than carefully considered posts.
    Come on Gordon, not up to your usual standard!
  16. Gordon Gekko

    Gordon Gekko Frequent Poster

    Not at all Marc.

    My sense is that you are an excellent advisor.

    However, my sense is that it has absolutely nothing to do with the fact that you are a CFP.

    It is an affront to top class professional qualifications like chartered accountancy, chartered financial analyst, and chartered tax adviser to compare them with the CFP designation.

    The fact that it is evolving into the minimum standard for product floggers in the pillar banks tells you all you need to know. And the fact that most of them seem to carry cheap black folders with their name and “CFP” on it which is particularly low-end!
  17. Conan

    Conan Frequent Poster

    I am not particularly advocating on behalf of CFPs, but how many cases have we seen in recent years concerning Accountants and their poor “professional “ practices?
    In my experience I don’t think CFPs are merely “product floggers in the pillar banks”. Good financial advice often involves “products” but that does not automatically nullify the quality of the advice.
    I have come across Accountants, Tax advisors and even CFAs whose “retirement planning” advice (where the original post started) was far from expert. All “professionals” are selling something, whether that be products, advice, services, goods etc. But that’s fine. I don’t think CFPs are any better or any worse than most other professional people (other than perhaps surgeons).
    Leper likes this.
  18. SBarrett

    SBarrett Frequent Poster

    I certainly wouldn't see it as a confirmation that you are going to get a "trusted advisor". Like you said, there are plenty of people who just scrape by the 40% pass mark and are now CFPs. To the public, they are no different to the person who got 1st class honours. Add in the fact that there are lots of CFPs who do just peddle products and charge commission only for the job they do, you have justification in what you say.

    But it is a good qualification. I learnt a huge amount from the Grad Dip in Financial Planning. One of the criticisms of it, is the low passing grade. It's almost impossible to fail the thing. Make it real hard, like the tax and accounting qualifications, which will discourage the codgers from getting it. You hear talk of making personal finance a profession. We're years off it.


    Oi! I have one of those folders. Made from the finest leather :D

    so-crates and Gordon Gekko like this.
  19. Cervelo

    Cervelo Frequent Poster

    So it would seem from the conversation there is little or no difference between a planner and an adviser bar a basic qualification and both can and do each others role equally well
    The advice so-far would be for a person to sit down with a few advisors/planners big or small and get a feel for who they are, what they can do, how there going to get you there and maintain it after you've arrived
    but also equally important would be to for the person to research and gain some basic knowledge of the planning for and retirement process.

    The answers to my second question which is more of a personal one "how do you know if you've got a good one" are trust, fees and getting a feel for who they are and what they can do for you
    I believe the firm I'm with now is as good as it gets, they are in business more then 35 years, my investment is secure and I like and trust the advise they have given me so-far
    But and for me its getting to be a big but, so-far my investment has not delivered the yearly return of 4% that was indicated at the start, RTD after 3 & 3/4 years is around 3%

    So to ask a third question, at what stage do you start to question the advice given when it is not providing the projected returns ??
  20. North Star

    North Star Frequent Poster

    Personally I don't think a decision on who to work with re financial planning should be based on QFA or CFP qualification. I view both as minimum requirements ( allowing for the variations between both) so therefore its not that useful as a decision metric.
    I would also look at the advisers experience, be that dealing directly with clients or in previous roles in relevant fields such as tax, risk management investments etc. I would also ask for specific and measurable examples of where they have added value to clients previously.
    This may be counter intuitive, but I think its almost more important that that the adviser knows what he or she 'doesnt know' i.e. when external specialist advice may be required e.g specialist tax or trust advice. A little knowledge can be a dangerous thing.
    In that instance then ask what external specialist resources they have available to them to deal with complex specialist matters.

    As Cervelo mentions - speak to several firms and get a good feel for their capabilities and if you feel that you are the right fit for each other.