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Do I need an Independent Financial Adviser?

Some of life’s biggest decisions are also one-off decisions – which means that you have to make these major choices based on little or no experience. That’s why it’s almost always a good idea to seek independent financial advice at these critical points, to ensure you get it right first time.

Independent financial adviser working

You can benefit from independent financial advice at any time of life, but there are certain times when it can be invaluable or even essential. Let’s take a look at the key advice moments – the very best times for seeing an independent financial adviser (IFA).

Buying a home

Your home will almost certainly be your biggest ever purchase, and the greatest financial burden on you for most of your working life. Securing the right mortgage is vital, but it’s really just the first step. You’ll also have to service that mortgage – pay it off month by month – and many homeowners find they have little room to manoeuvre. A financial adviser can create an overall financial plan for you, to ensure that you really can afford that property, and advise you on how you would manage if your circumstances were to change.

Saving up your pension

You should really be saving into a pension from the day you start your career, so you’ll probably have one on the go by the time you buy your first home (see above). But you need to take care that buying a home, or saving for one, doesn’t detract from your pension savings. It seems natural to prioritise short-term goals over long-term ones, but remember that the most effective pension saving takes place when you are young.

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If you have a workplace pension, the scheme administrator will usually invest your contributions in a ‘default fund’ unless you specify otherwise. In most cases this fund won’t be ideal for your needs at this stage of your career, as you can afford to take more risks when retirement is a long way off. An IFA can look at your pension scheme and ensure it is invested in the most suitable funds – this can translate into a difference of many thousands of pounds in the long term.

If you have a private pension, such as a SIPP, then seeking advice is even more important to ensure that your investment choices are appropriate to your needs.

Having a family

According to the Centre for Economic and Business Research, the average cost of raising one child in the UK to the age of 18 is around £227,000 – only slightly less than the average UK house price. In other words, having a child is like taking out an extra mortgage, so requires similarly rigorous financial planning. An IFA can help you re-think not just your weekly and monthly spending, but also long-term plans such as investing for school and higher education. The good thing about childhood is it comes with some very predictable milestones, which is a great help when building an investment strategy.

Accessing your pension

If you seek financial advice only once in your life, it should be when you access your pension savings. You can do this at any age from 55 onwards, so you may still be working and perhaps even still paying off a mortgage. It can be tempting to use some of your savings for home improvements, or perhaps to help your children onto the property ladder. However, you should remember that your pension is intended to support you throughout your retirement.

Options for accessing your pension include lump sums (either tax-free or taxable), a flexible (but finite) income, or a guaranteed (but limited) income for life. Weighing up the pros and cons of these and how they relate to your needs can be very complex. Even more stressful can be the process of turning your decision into action and choosing the correct products. A financial adviser can relieve you of the whole burden, helping you to assess your options and choose the best products, while avoiding costly mistakes.

Retirement

There are many other choices to make in retirement, besides how to access your pension. Will you continue to live in the same home? Can you unlock any of its value to provide extra income? Will you eventually need long-term care? Should you downsize? An IFA can help you weigh up all these options – for example, equity release can provide you with income and/or a lump sum in exchange for some of the value of your home. An adviser will be able to recommend the best solution for your needs.

 


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13 Comments

  1. I left my career of 25 years to care for a parent. I moved in with them and rented my home out. I also got redundancy and purchased a buy to let property as a pension. My parent recently went into a home then passed away. I have sold their home which I was also on the deeds of under a trust. I have a part share in a property in Europe. I now want to by my own home to live in as I have been renting recently and don’t want to return to my original property I rented out. I need some advice about CTG on selling these properties and stamp duty for on buying a new one.

    Comment by F — July 8, 2020 @ 1:38 pm

  2. I should like some advice on property tax.
    I left my career of 25 years to care for a parent. I moved in with them and rented my home out. I also got redundancy and purchased a buy to let property as a pension. My parent recently went into a home then passed away. I have sold their home which I was also on the deeds of under a trust. I have a part share in a property in Europe. I now want to by my own home to live in as I have been renting recently and don’t want to return to my original property I rented out. I need some advice about CTG on selling these properties and stamp duty for on buying a new one.

    Comment by F — July 8, 2020 @ 1:36 pm

  3. I have a main property to sell and wanted to understand if I have to pay CGT on it. What are your charges to asses the calculations?

    Also I wanted to understand if I’m leaving the country and I can withdraw my pension pot before reaching 55 yrs

    Comment by Muralidhar — June 20, 2020 @ 11:48 am

  4. I would like some clarity on the Capital Gain Tax for military personnel. I joined the RAF in 2005 and my predicted Exit date is 2029. We purchased a 2-bed property in 2011 for £145,000 through the Armed Forces Help to Buy Scheme with the intention of it being our main residence. Unfortunately, due to postings away from the property location we never had the opportunity to live in the premises. The property has been let out until Mar 2020 due to not living in close proximity to the house. We have recently completed a full redemption on the property for £195,00 with the intention to sell for £192,000 because it’s too small for my wife and 3 children. Can you please confirm if we are liable to pay the 18% CGT even though it was never our intention to let the property but required as we could not afford to pay the rent on the military quarters and a house we could not live in?
    Any information or help on above matter will be greatly appreciated.

    Comment by William — June 17, 2020 @ 4:21 pm

  5. Mr Drake – thanks for your message. It sounds like you need to speak to a financial advisor to be sure about whether CGT is payable or not – see link in guide above or click here. Best of luck!

    Comment by HomeOwners Alliance — March 2, 2020 @ 1:18 pm

  6. My wife and I brought a maisonette 1n 1998 for £54,000 to house my elderly relatives. They have lived there rent free but paid all their bills. In 2016 they had to be moved to an assisted living sheltered housing due to poor health. I’m thinking of selling and know that I will have to pay CGT, but I read somewhere that I may be entitled to a reduced CGT tax. Is this information correct.

    Comment by Mr D Drake — February 28, 2020 @ 11:58 am

  7. Please can you help me understand the rate exempt from inheritance tax. I have been asked to act as executor and want to get things right for those involved. There are 2 sons of the deceased. The father died 2 years ago and left everything to his wife. The wife died recently and left all to the sons. I think the 325,000 unused element is passed to wife and so had thought £650,000 would be exempt. I was told by friend I need to also consider the main residence nil rate band. I read your article and wanted to check whether that means the total is increased to £950,000. If it does, do I need to submit the iht205 and 217 only or do I have to apply for the nil rate band separately. I think if house valued n estate it may be 700-800k. Any help much appreciated or advice on where to look next very helpful

    Comment by Jon — February 1, 2020 @ 11:29 am

  8. Hello Farhana, you can find an independent financial adviser at this link.

    Comment by HomeOwners Alliance — January 6, 2020 @ 2:26 pm

  9. I need advice on capital gains tax and pensions please

    Comment by Farhana Khalil — January 5, 2020 @ 3:11 pm

  10. Dear Debbie – it sounds like you may have to pay stamp duty land tax on your purchase of your brother’s share of the property. Your conveyancing lawyer will be able to advise you on the amount payable. You can get conveyancing quotes via our site here. Very best of luck!

    Comment by HomeOwners Alliance — November 21, 2019 @ 11:49 am

  11. My brother and i have inherited a house from our parents. I will be ‘buying out’ my brother and wonder if I have to pay any kind of tax in doing so. Your help would be greatly appreciated. The property has been valued at £550,000.00. Manu thanks for your help in advance.

    Comment by Debbie — November 19, 2019 @ 8:06 pm

  12. Hello Jane, if you click on the banner you’ll land on this page and you can fill in your requirements and someone will be in touch.

    Comment by Sara Hind — June 11, 2019 @ 1:16 pm

  13. good afternoon
    i am in the process of looking at my prospects of owning a holiday let.
    i have been in the industry for years, and have run several holiday caravans – but i have never looked at funding for a ‘house’ that can be rented for holidays.
    i would very much appreciate speaking to a specialist in this field to give me a few pointers and to put me in touch with the right people and to ask the relevant questions etc. i know how to make the money in the returns but i dont know how to get there…
    i look forward to hearing from you soon
    kind regards
    jane

    Comment by jane pile — June 10, 2019 @ 1:28 pm