Did you feel the #MoneyFlex burn?
Updated 03 December 2020
Last week put a new spin on financial advice. In MoneyFlexÂ Week we had advisers taking the role of personal trainers, helping people target financial problem areas. We look back on five days of pumped-up money tips and â¦ selfies?
Isnât it so much easier to walk past a gym than to walk in? Itâs as if stepping through the door commits you to a yearâs membership and the next London Marathon. Thatâs why free drop-in sessions are so popular, as they give you a no-pressure taste of whatâs on offer. In fact, we like them so much, we did some of our own.
MoneyFlex Week invited people to ask financial questions online, anonymously if they wished, and try out the benefits of professional expertise free of charge. More than 100 people posted questions, which our panel of independent advisers responded to in surprising detail and depth. Many questions were from people contacting a financial adviser for the first time in their lives.
âThe most sense Iâve heard all day!â
What users soon discovered was how much better this was than just looking up information online. Quite often an adviserâs response would raise issues not considered in the original question, and so flag possibilities or risks that the person hadnât considered before. This process of constructive feedback proved very enlightening, with one user commenting, âThe most sense Iâve heard all day!â
An unexpected by-product of MoneyFlex Week was the adviser selfie, as our panel members tweeted pictures of themselves taking part in the Q&A. By putting friendly faces to the expert advice, this also highlighted one of the least-considered yet most important benefits of seeing an adviser: namely, being able to talk to someone who understands your concerns. The reassuring human contact that advisers can provide sets them apart from all other ways of managing your money â and the adviser selfie summed that up in one snap.
No such thing as a silly question
The hottest topic was pensions and retirement, but we fielded questions on everything from childrenâs savings to mortgages, investments, wills and payment protection insurance. So, did we get a result?
Weâve distilled just a few of the broader tips and insights that emerged from our five Q&A days.
- Pension check: Before you transfer out of an employer pension scheme, check the transfer charges and compare the costs with the new scheme, to make sure you really will be better off, and ensure you wonât lose other valuable benefits like employer contributions. Also, think very carefully before transferring out of a final salary scheme, as the certainty they provide is a major benefit in itself.
- Financial health check: Itâs good to assess your whole financial situation every year, including your mortgage.Â For instance, check that your mortgage interest rate is still competitive and that you can still keep up repayments, and see if any better rates are available. Remember that new deals are appearing all the time, and your provider will want to retain your custom.
- Investment check: If you have investments, review them regularly to ensure they continue to meet your needs. For instance, if your main requirement is for additional income, then having growth-focused funds will not be appropriate even if the rate of return is higher. A regular rebalancing of your portfolio should ensure it continues to match your lifestyle requirements.
- Mortgage check: Donât be lured too easily by the prospect of buy-to-let as a source of income, unless youâve thoroughly researched it and worked out all the potential risks as well as the likely rate of return. There are major tax implications with this kind of investment, and the bulk of your money is tied up in the property itself. People get emotionally attached to the idea of owning property, but when you look at the figures, often it doesn’t add up.
- Mortgages: Beware mortgage deals that seem very good on the surface â always look for the catch. Some of the lowest rates on the market can carry big fees which can eat into any savings you are making, or you may find that you are locked into the mortgage for years while the rate rises. Speak to a mortgage broker who can search the whole of the market to find what is truly the best deal for you â their fee will be more than worth it in the long run.
- Wills: If you have children from a previous marriage, remember that remarriage cancels the terms of a previous will â but divorce does not. Therefore itâs really important to make a new will as soon as possible after the breakup of any marriage, and to seek legal advice from a solicitor about this. You might also want to seek legal advice on the merits of a pre-nuptial agreement, as a way of protecting wealth in the event of a future divorce and preserving inheritance for your children.
- Savings: Junior ISAs are a good way of saving for children, but if you want to retain control of the money while ring-fencing it for your childrenâs education (for instance) then a Family Trust or Education Trust is a possible solution. You can deposit money into a long-term investment that is earmarked for children or grandchildren, and during your lifetime you control the investment and you decide when the money is paid out and what it is used for.
- Insurance: If you think youâve been mis-sold payment protection insurance, you can complain to the Financial Ombudsman Service within six years of being sold the insurance, or three years after you first became aware that you may have grounds for complaint, whichever is longest. For example, if you were sold PPI in 2005, you may still be able to take your complaint to the Financial Ombudsman Service if you only became aware of the possible mis-selling in 2011 or so.
- Pensions: Some pension holders who want to go into drawdown have found that their provider will not yet offer this option to them. Although pension providers are not required to offer drawdown options, they must not unfairly prevent you from transferring to a different provider which does offer this facility. If you’re unhappy with their service then put your complaint to them in writing, and if youâre still not satisfied then refer your complaint to the Financial Ombudsman Service.
- Retirement planning: When managing the investments in your pension fund, you should have a clear idea of your likely retirement age so you can start to adjust your risk exposure as you approach this age. Generally speaking, you should start to move your funds from aggressive growth to lower-risk options between 7-10 years before your retirement date, and risk reduction should be done gradually.
We could go on and on â but thatâs enough exercise for one day. If youâd like to discover all the financial fitness tips from last week, theyâre up on our MoneyFlex homepage for you to explore at your leisure. We think youâll agree that itâs much easier to get motivated with a personal financial fitness trainer!