Should you have a financial adviser for your pension?
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While having a financial adviser isn’t necessary when setting up a pension or planning your retirement, speaking with one can help. An adviser can look at the best pension plan for you, look at tax planning solutions and recommend investment profiles that suit your situation.
In this post we will look at how having an adviser can help and why you may need an adviser for certain elements of your pension. We will also look at how you can look for an adviser using a service like Unbiased.
How an adviser can help
Setting up and managing your pension
If you have a workplace pension you generally don’t need an adviser to help you. A lot of the work is done by your employer including set up and investments. So, unless you are considering moving to a personal pension, you should be fine to manage this on your own.
When considering a personal or private pension, you may want to consult a financial adviser before choosing the right one and setting it up. They can help with managing risks, understanding your options at retirement and help you make tax-efficient decisions.
One of the most daunting aspects of doing it yourself can be selecting the right investments. Since value of your pension at retirement relies heavily on how well your investments perform, making the right decision at the right time can be crucial. An adviser can help keep on track with your investment goals.
Transferring your pension
If you are transferring a defined contribution pension, you will normally not need a financial adviser to do so. This will be the case for the majority of pension transfers. An adviser may, however, be able to help with your transfer as part of setting up your retirement plan.
If you have a defined benefit pension valued at more than £30,000 you must take financial advice from a suitably qualified person before you can transfer it. There are substantial benefits that come with a DB pension and these can be lost if you transfer.
Because of the complexity and risk involved in transferring a defined benefit pension, this kind of advice can be expensive. The adviser must be able to comprehensively review the decision and confirm if they believe that this is the right thing to do, or not. If it will not give you the best outcome, they must tell you. You can go with their decision or not and ultimately the risk is yours to own.
Taking money out
You do not need an adviser to take money out of your pension in most cases, unless there are safeguarded benefit attached to it. An adviser may be able to help you understand your options at retirement and pick the best one for you. For example, if you want to purchase an annuity (income for life), you may need help finding the right one or understanding the annuity rates and how they affect the income you will get.
An adviser will also be able to help you understand any risks of taking your benefits early as well as managing your tax effectively. In some schemes it is possible to take all of your pension out at once when you turn 55. This may be right for you but, chances are you will pay a lot of tax up front and risk your retirement in the long term.
How much does it cost?
Costs can vary and will depend on how your adviser charges. An adviser will charge either a flat fee or an hourly rate. They may take a percentage of the pension pot being transferred as an initial fee and charge ongoing fees for pension management.
How to find a Financial Adviser
A quick Google search will bring up a huge number of professional advisers near you. But, how do you decide who to choose without going through the whole list and reading all their websites?
Unbiased is a free service that will match you to one of more than 27,000 advisers. All you do is answer a few questions and your adviser will contact you for an initial consultation. You can also search by specialism. Enter your postcode and pension value you will see a list of suitable advisers near you who can help. Checkout the link below to find your perfect match.
Help us find your perfect match
Unbiased also has a wealth of information on all financial matters, not just pensions. You’ll find caculators, tips and guides on everything from mortgages to budgeting and life insurance.
Things to consider
To summarise, here are some things to consider:
- With so much choice available, a financial adviser can make your decision easier. Especially if you are planning your retirement.
- Unless you are comfortable managing your own investments, consider consulting an adviser to make sure you get the best outcome.
- How much can you afford when it comes to fees?
- What is your life situation right now? If you are considering making big changes, you might want some help with planning before you make the leap.
- Consider using Unbiased to find the right adviser for you.
