What's involved in a review of your finances? | SavvyWoman

Getting a professional review of your finances by an IFA. How much is it likely to cost?

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If you want to get a review – or MOT – of your finances, what does it involve? And how much should you expect to pay?

What is a financial review?

A financial review is designed to look at the money and investments you have and work out whether they’re the right ones for you and whether they’re on course to deliver the returns you expect. It’s up to you and your financial adviser how wide-ranging the review is, but a review could mean:

  • Checking your savings accounts are earning the best rate of interest. This is something that is pretty straightforward and easy for anyone to do on their own. But the fact is that many of us don’t check our accounts regularly. Having someone else look at your savings accounts and prompt you to switch can be useful.

SAVVY TIP: If you want to check your savings accounts yourself you can look at SavvyWoman’s best buy tables, provided by Savings Champion.

  • Reviewing your retirement plans. Most women have a mixture of pension and retirement savings including the state pension, one or more employer-based pension schemes and/or a personal pension or an investment plan such as a stocks and shares ISA.
  • Assessing your investments. If you have investments (such as a pooled fund that invests in stocks and shares through an ISA, for example), you’ll be sent statements at least once a year telling you how much these investments are worth. You can normally check your investments online whenever you want, as well. However, the statements may be written in unintelligible jargon and don’t always include information about the fund(s) you’ve invested in.

SAVVY TIP: Don’t assume that the more the adviser recommends the better the job they’re doing. If an adviser recommends that you sell lots of your investments and buy other ones, ask them to explain very clearly – in writing – why they’re recommending this. You normally have to pay upfront fees when you switch investments which will eat into the return.

  • Working out whether you’re on track to meet your financial aspirations. For most people, money is pretty boring and it’s what you can do with your money that’s interesting. If an independent financial adviser knows what you want to achieve with your money, they can help you get there.

What will the adviser do?

Independent financial advisers work in different ways but the review may mean the adviser:

  • Asks you to fill in a questionnaire before your financial review. This is useful to help you focus on what you want to achieve in the short, medium and long term.
  • Contacts companies you have policies with and ask for additional information. The most recent information you have may be out of date or may not give the full picture.

SAVVY TIP: Philippa Gee of Philippa Gee Wealth Management says this can often reveal information that wasn’t immediately obvious. “I’d want to find out about the current charges and how they’ve changed and how the investment has performed. Sometimes, information on charges is quite hard to get.”

  • Assesses your current cashflow. It may be that by cutting back or making some savings you’re able to put more money into your investments or paying your mortgage off early (or whatever your financial priorities are), which could mean you reach your goal or reach it quicker.
  • Prepare a report of recommendations. Your report/plan of action should be written in a way that makes sense to you (there’s no point in having it if you don’t understand what it means).

SAVVY TIP: It also means that you can make the changes that have been recommended without further involvement of the IFA (and therefore costs), if that’s what you want.

What should it cost?

Independent financial adviser’s fee vary. You can pay an IFA in different ways, including an hourly rate, for a set piece of work or by a monthly or ongoing fee.

SAVVY TIP: From 2013, IFAs can’t be paid a commission if they give you advice about pensions, investments or
retirement income products such as annuities. They can still be paid commission if you want advice on mortgages, equity release, general insurance (i.e home or travel insurance) or protection insurance.

  • Many IFAs charge between £75 and £350 an hour, depending on their level of expertise and whether or not they’re based in an expensive city. However, they may quote a fixed fee for a review.
  • A financial review could cost £400 – £1,500 or more. If your affairs are very complicated the review could cost more than £1,500. It’s important to get an estimate of the costs before you go ahead.

SAVVY TIP: Don’t assume that the cheapest is the best. If the IFA quotes £200 for the review it’s likely that s/he isn’t checking the information and figures direct with the investment company.

How often should I have a review?

This will depend on how complicated your finances are, how much money you have to spare and how much change there’s been in your life or the wider economy.

SAVVY TIP: If you can’t afford a review every year or two it’s a good idea to have one if you change jobs (where your work-related benefits may change), get married, move house (unless your mortgage stays the same). If your finances are straightforward you could have one every three to five years.

Related articles:

How to find an independent financial adviser you can trust

How will the government’s Pension Wise guidance service work?

A guide to stocks and shares ISAs

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