Redundancy/Pensions/Tax

I also recommend an accountant: the last IFA I could trust advised me to use an accountant as he could see the 20o7/8 Crash coming, so moved into using his Cider Apple business full time. He was also a Williams, which helped, especially after we found a shared ancestor! The “cousin” (or summink!) now has a 100+ Apple and Pear orchard in beautiful Lincolnshire countryside and looks much healthier. His ciders sell all over the world, but his joke is that his Accountant is rubbish. (his wife does the accounts)

I went through the same 3 years ago. When it comes to the tax bit of final salary pensions, my experience is an accountant says talk to an FA and vice versa. Neither was prepared to commit to an absolute answer but reading the blurb from HMRC I worked out I would be under the limits.

I knew I needed financial advice, but who to trust? In the end I decided to trust the Union (Unite) and I got a free consultation with my local Lighthouse Financial Solutions adviser. They do a lot with the Unions and it’s what attracted my adviser to become part of them when leaving the banking world to go out on his own.

They have been absolutely brilliant and my 25% lump sums and the left overs from the redundancy have been properly invested in funds you just cannot get access to yourself. I have full real time online access to all the investments, they’re all brought into one place by an app run by Aviva. They also got me a much better deal on the pension I had to sort out myself.

You will need to undergo an assessment to determine your attitude to risk before any investments are made. Everything is fully explained and you do not make out any cheques to your adviser. In the last 3 years I have averaged 8% after all commissions have been paid and it’s now all in ISAs – split between myself and my wife to get the maximum tax advantage – and in 3 different schemes (my wife has a more cautious attitude to risk than me – mines not high though – and hers is doing better)! This year is not going to be brilliant, but it’s all about 5 year + performance. My wife’s fund has achieved 16.7% over the rolling last 5 years.

There is no way I could have done this myself and hearing others experience I feel I am getting a much better deal than them. I am as informed as I want to be – there is no point watching them go up and down – and the Aviva app gives you a full break down of each fund and it’s performance over time. Whilst I have an annual review I can contact my adviser at any time. I can also withdraw 100% of the investments any time I like too, there is no lock in.

So my advice is if you have a Union, ask them for a referral. If not give Lighthouse a ring.

Who do you trust as a financial advisor ? One school of thought is to get an independent FA because they can advise you on products from any company. On the other hand they are just as likely to sell you something that earns them the most commission. The Pru used to offer some good free advice on such things and you dont have to take it.

The one comment I’d make is that you also need to have your own view of the economic future of this country and its place in the world (i.e impact on inflation, and Shares).

Use that to second guess what any FA’s say. By mainly ignoring the FA’s advice I avoided both losing half my money in the Equitable Life crash, and also to the Dot.com crash.  This view is also valuable when it comes to making a decision on whether or not to pay off your mortgage.(First thing I did, and one of my better investments, but it is an interest rate/personal circumstances dependent decision)

Take your own view of the Stock/Share market. Now could be a very risky time to invest. Warren Buckett is still  betting that the stock market is soon due for a crash, but to be fair he has been saying that for two years. He is also betting that Brexit will be a disaster for UK stocks. i.e DO NOT LOOK AT PAST PERFORMANCE AS A FUTURE PERFORMANCE INDICATOR.

From the foregoing you can tell that my personal experience of FA competence is at best mixed and contrary to that of Dave. If you are not careful the FA’s ongoing fees can skim off all the upsides on your investments and just leave you with the risk. If you must use an FA look VERY carefully at the benefit of a one time fixed payment for services versus him skimming long term off your investments.

FAs are like all professionals: a mixed bunch, some outstanding and some you should avoid like the plague. Good luck with your choice!

<p style=”text-align: left;”>Your relationship with your FA will probably not be anything like you think it will be. You won’t be bombarded with unit trusts etc. The funds I invest in do all that, as I mentioned the fund will be invested in scores of things, it’s the fund management that do all the technical stuff.</p>
I think you should at least talk to one, there is no commitment. They cannot sign you up to anything there and then, legally there’s heaps of stuff to go through first.

I am trying to stay with the spirit of my earlier thoughts on the subject. You can see how everyone has put forward their own personal situation specific views on the way forward. I had little or no need of the lump sum for a range of reasons. One being that my years of saving had already accumulated a pot that I have had to look after in various ways. Unfortunately my current situation would leave no time for active managing anything requiring detailed and careful preparation so professional assistance is/was the answer. I have two such ‘lumps’, the pension and ‘the other’.

The early pension option was on the table and was the right one the one for me and on that basis I opted to ‘stuff the fund’ with cash before I left. At the time in spite of my age I had two smallish children and believed that cash flow was valuable to me/us with a window’s pension also playing a hand in my thinking. One I had not taken into account at the time was the effect of annual pension reviews, those have seen my pension go up quite regularly with a compounding benefit and have protected the cash flow.

As I said this is a personal position for me, everyone will have their own position and it is vital to include the personal factors affecting your case and disregard those factors applying to others should they not overlap.

A good adviser should, (must?) help you to sort through the collection of aspects and come down to the vital and important, note they may not be the same. However, they should only ever be a facilitator not a Sargent Major.

For me it all boiled down to trust: an early experience with a “man from the Pru” soured my attitudes. My family had used the Man calling every month to collect payments and for 3 generations this worked harmoniously. I carried on and went so far as to add another service, transferring some pension allowance to Pru. Unfortunately a change in personnel resulted in a fraudulent collector taking 9 months of payments for himself. Pru did not tell me about missed payments for that whole period and it took a solicitor to get them to admit their mistake, catch the offender and prosecute him, after which I was given a ‘free’ 3 months of payments, to add to my own payments back! I changed to DD payments, then transferred to another Provider. This one was then swallowed up by Pru, moving me back to them but with a slightly larger monthly pension payment and a larger lump sum. I took part of the lump sum at early ill- health retirement from the County Council and this, together with the County Council’s (possibly over-generous) lump sum, bought me the equipment to set up as a self-employed designer and printer, my last career. I now have 2 quite small pensions to add to my HMF pension: one is L&G, which I take monthly, the other still Pru, but I take that annually in the first Monday of December, in order to help with Christmas. We are helped very much by the HMF pension, without which we would be forced to cut costs.

My last career in printing I enjoyed immensely, almost as much as I had during my years of working as a workshop foreman, dealing with Classic Cars, which included the import/export aspect. I thought that would have been a nightmare, btw, but really enjoyed speaking with people in the trades of shipping and supply, all over the world. I found the Japanese to be most welcoming, efficient and courteous. Some Americans were absolutely obnoxious, some eager to make a profit and convinced that we in the UK knew nothing. They became surprised when they discovered that we mostly have a higher IQ than they believed to be the case! Most were OK and I learned to ask amongst the good ones about a new contact. I learned so much during that time – and here I go, digressing as usual. It’s all the paths that my work and life experiences take me down, sorry guys! I am such a Networking Tart!???