The Voyant Report: I think I need some practical IFA advice!

You said:

“I think I would be interested in some financial planning. But I need practical IFA advice like when will I be able to retire, what size pot do I need etc. Since I last spoke to you (a year ago) I secured a perm role and have a good pension plan with them and salary, but I'm 60 next birthday.”

Let’s take a closer look at this.

“When will I be able to retire, what size pot do I need etc”, that’s financial planning. To be more specific, that’s a lifetime cashflow forecast.

Saying you need financial planning but then wanting to speak to a financial adviser, is like saying I need an architect drawing for my self-build, I think I’ll talk to a builder.

Builders don’t get paid for drawing; they get paid for building.

Financial adviser is another name for a financial intermediary, or a regulated investment product distributor.

I am sure there are some builders who would do a blueprint for you for a fixed fee, but their commercial model is predicated on building stuff.

Similarly, I am sure there are some financial advisers out their who would do a financial plan for a fixed fee, but their core proposition centres around gathering assets under management to tap into for fees.

Here’s how advisers charge.

The Financial Conduct Authority (FCA) says advisers charge an average of 2.4% of the amount invested for initial advice and 0.8% a year for ongoing advice. If you found one who would do a financial plan for you, the average cost in 2023 was £196 per hour, according to VouchedFor. See Which Money.

For every £100k invested with them, that’s a fee of £2,400 plus £800 per annum.

You currently run your money on direct-to-consumer platforms (D2C) investing for market returns in trackers. Talking to you last year, I thought you knew what you were doing when it comes to investing.

What is “practical IFA advice”. It is advice from an Independent Financial Adviser registered and regulated with the Financial Conduct Authority (FCA) for the purposes of giving you regulated investment advice. You didn’t appear last year to want or need regulated investment advice. You were doing a good job yourself.

Financial planning is not regulated investment advice, as it is not a FCA regulated activity, see the FCA perimeter guidance PERG 8.26.2. But it becomes regulated if given in the course of or in preparation for a regulated activity, PERG 8.26.5. In other words, if given as part of IFA advice.

This means, that in most cases, if you ask an IFA to do the cash flow planning process for which they take a fee, they are going to have to put that through internal compliance services. Which suddenly makes the number of hours chargeable much more, as they must follow the internal sales process, factfinding, creating suitability reports, file checking, reporting, etc. This could easily double the chargeable hours. This could result in you paying a lot more for your report.

Since no specific product recommendations are required, this additional work is unnecessary, what value does that additional cost carry? You request generic financial planning advice, “when will I be able to retire, what size pot do I need”. We can answer that question.

On the basis of the planning, my guess is that you will make the required additional contributions, if any, to your existing D2C SIPPs, ISAs and GIAs.

Here’s the thing. I can offer you, through Financial Life Coach, a comprehensive financial planning service, with the industry leading cash flow planning report, Voyant.

Your investment, £1,495 initial charge, and £79 per month ongoing.