My mum is 60 years old and has approximately £900k to invest, from which she will need to draw down c.£40k a year for life. This will be her sole income, she has no private pension. Some capital erosion in the odd year would be fine, but the investments needs to last the rest of her life. She is not very financially literate and would not be able to proactively manage the money herself. What would you recommend for someone in her position? Would you favour an Independent Financial Adviser or a Robo Adviser? Thank you!
There’s nearly a million quid at stake here. That’s a big old chunk!
And managing this pot of money in drawdown – so that there’s enough left but not too much left – is not easy. The consequences of getting it wrong are significant.
For your mum, I also suspect she would value peace of mind and not having to worry/being able to outsource the responsibility.
I would 100% recommend getting a financial adviser.
They will be able to walk your mum through some cashflow modelling scenarios, and also manage the right investment mix and approach.
Trust will be key, so it’s your Mum who will need to pick the adviser she feels most comfortable with.
It may be she’d prefer another woman. She may prefer someone within 10 miles. She may want to look at a few sites and pick the language and presentation she thinks are more her style.
Try the VouchedFor site for recommendations or get your Mum to ask some trusted friends if they use anyone.
And don’t be afraid to have a very direct conversation about fees and charges. These should be clearly disclosed in a very upfront way - these days they are not hidden commissions, but upfront charges which are easy to identify and should be discussed without any embarrassment!
You should expect to pay about £150 - £200 an hour or about 1.5% - 2% a year all-in.
Cashflow modelling can sometimes be done as a one-off and you should expect to pay about £1,000 to £2,000 for a financial plan to include this.
I think that would be a great start, and although it sounds like a big lump sum, when considered in light of the tax mistakes it might save, the investing in dodgy schemes it will avoid, the running out of money it can help mitigate etc. etc. – I think it’s worth it.