Should I get a Financial Planner to help me with my retirement strategy?

10 March 2021

Got a question?We'll put your question to our panel of helpful advisers

Question by Gary

Hi,

I got the opportunity to retire 2 years ago when I was 55.

I decided to transfer out of my company DB scheme and received a transfer value of £2.2m. I met with a number of FA's (SJP, Hargreaves, True Potential, Tilneys, Brewin, Investec plus some independents) and decided to invest all my pension pot and enter a drawdown scheme with Prudential, in what is now called their Risk Managed 2 Pension Fund (with smoothing).

I opted for Prudential due to EGR, charges and reputation. I prefer to invest in a managed fund.

It’s fair to say that 2 years ago I was making some pretty significant decisions, the only one that can now be altered is the choice of investment (I'm quite happy with the other two, not sure about the third).

I am unsure as to whether I am over exposed having all my money in one fund with one provider? I doubt whether Prudential's risk managed 2 will differ dramatically from their risk managed 1 & 3 funds. I'm not sure if it’s possible or advantageous to transfer some money to another provider, and if this would make things difficult when calculating LTA usage calculations? It’s difficult to determine my fund’s performance relative to similar funds, primarily due to the lack of transparency with charges (Fund performance has been 3.09% gross, 1.97% net over the two year period).

Prudential use ABI Mixed Investment 20-60% shares as a comparison, average growth has been 1.3% over the period, I looked at Trustnet Fe Fundinfo Pension Mixed Investment 20-60% shares sector, average growth has been 4.2% over the period (again not sure if these figures are gross or net).

I have other investments, however prudential do not provide an overall financial planning service. Basically they inform me if any changes I am going to make to my drawdown amounts will bankrupt me (I'm currently drawing down £40k PA). When I met with FA’s prior to retirement they had quite different views on how I should manage my finances.

I do not know if I am as tax efficient as I could be and wondered if a session with financial planner could be the answer? Not the most transparent areas of financial planning, however one of the most significant.

Kind regards,

Gary


Answered by Carly Dunningham

Hi Gary,

Yes, I would suggest that a session with a Financial Planner would be worthwhile for you. Most Financial Planners will offer an initial chat free of charge so you can get a feel for what they can do and discuss, at top level, your current concerns. A big advantage of going to a Financial Planner is that they will look at things holistically for you, taking into account all your assets, not just your pension drawdown arrangement. It might also be a good opportunity for you to reassess your objectives and goals with the help of a Financial Planner to review the decisions you made 2 years ago and how the different aspects of your financial arrangements fit together.

With regards to the performance of your current Prudential fund and having your whole pot with one provider, this is something a planner can also review with you. As a general rule, you want your pension investments to be diverse, match your attitude to risk and charges to be reasonable. The one single fund solution can sometimes still meet these criteria, but a planner can go into more detail in analysing the fund you’re in and recommending if you should split the pot across other funds or providers, keep it where it is or switch completely out of the current fund. The difference in the growth on Trustnet could be just down go ongoing charges on the Prudential pension, or it may be underperforming the benchmark – again a planner has more tools to assess this for you and give you a clearer insight.

And finally, a planner can help determine if you’re drawing the right amount of income from your pension to meet your needs and if there are more tax efficient ways available, taking into account your other assets. I hope this helps to answer your question and I would suggest you have an initial chat with a couple of Financial Planners to see who you feel most comfortable with then proceed from there.

Kind regards,

Carly

Answered by

Carly Dunningham

Chartered Financial Planner & Director

Originally from Derbyshire, I came to Liverpool in 1998 where I graduated from Liverpool John Moores University alongside my now husband and we have never left the city. I got straight into Financial Planning after leaving university and I love working closely with clients to really understand their life goals and what’s important to them. When I’m not creating financial plans for clients, I’ll be spending time with my 6-year old daughter, walking the dog or doing yoga!