Confused by financial advisers


At 77 and lazy I need someone to look over my finances move them around as necessary and keep them moving as appropriate.

Man in debt, counting his pennies

Confused? Finding trustworthy financial advice can be difficult

I am happy to pay for the service so long as the adviser works for his keep, is trustworthy and knows his business.

I can live well off my pension and have £100,000-plus to control/invest. Do such advisers exist and, if so, how can I know that I have avoided the run-of-the-mill or the ones who have already got too much work to be interested? F.K., Solihull, West Midlands

Danny Cox, head of financial planning strategy at independent financial adviser Hargreaves Lansdown, replies: In simple terms there are three ways to deal with your finances: do everything yourself; do part yourself and part with an adviser; delegate everything to an adviser.

The latter is of more interest to increasing numbers of people. Finance, tax and investing are complicated and take time and effort to keep up to date. Some people enjoy managing their own investments, others are happy to delegate to a professional, in the same way that some enjoy and do their own DIY and others pay a professional and spend the time saved on the golf course.

A discretionary managed service is where you entrust all the decision making on your investments or pension funds to professionals. They manage your money within the parameters that you set them, meaning that you choose the amount of risk, how much income you need etc, then the investment manager gets on with it.

If they need to buy and sell, they will do so without telling you first, so it is important to understand the investment philosophy of the manager and how wide a remit they have.

For example, some services allow the manager to move your money to cash when they feel that the stockmarket is in bad shape. Others will try and maintain the same level of exposure to markets, whatever the conditions. Moving investments in and out of markets sounds good in theory, however, the problem is that if the manager gets it wrong, your investments suffer.

Reader services
- Help with wealth planning, for investors with more than £100,000
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Most Banks and larger IFA firms offer discretionary managed services. The difference between the best and worse of these, in my view, is how good the associated financial planning service is. In many cases the discretionary manager does a good job with your investments, but then doesn't understand other issues which impact on you, such as tax or gifting.

£100,000 is a substantial amount of money and there are lots of firms who will provide a good level of service for you. It is at the low end for a private banking service and would probably not be cost effective. I would ask the prospective firms what type of client you would be for them, big or small and agree with them how often they will send you valuations, provide reviews and what the ongoing service is. Importantly, how much will they charge and by what means. If it seems too good to be true, it probably is.

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