I’m a superwoman, obviously, as a mum, but I didn’t know I had to be a financial adviser to my children as well as a caterer/driver/nurse/entertainer/homework guru and all the rest of it.
Apparently the greatest proportion of the 18 to 35 age group ask their mums for tips on money (22%) rather than taking the more logical step of going to the bank (8%), professional financial advisers (7%) or reading about it in the media (2%). Dads are actually behind mums on only 18%, the survey (for the F&C investment trust) found.
I find that quite worrying. While I feel I have a reasonable grasp of mainstream money, I certainly don’t have any (recent) qualifications in pension planning or the latest mortgage deals. Should I do a crash course in investment? Because I would want a bona fide expert to sort that stuff out for me.
Sadly such experts seem to be few and far between. Even though financial advisers have been regulated into the ground, a few rogues remain. I’m thinking of a story I wrote for the Telegraph last week, see here. My case study, Simon Williams, had savings of £420,000 he wanted to invest to generate an income for his retirement. He paid about £4,000 for financial advice only to be told to bung the entire pot into just two funds – which happened to be run by the same company and shared many underlying investments.
In an ideal world, the adviser should have created a tailored portfolio containing many more funds with the money being spread between them. That’s just for starters - there were other glaring omissions. Doing a proper job would have required work more deserving of four grand in fees. Instead, the adviser said the money should go in the funds he picked because they were run by computers and therefore cheap. What he didn’t mention was that the deal also required very little effort on his behalf.
Technically this is not illegal because the adviser could claim that it was his considered opinion and therefore the best advice. But anyone with an ounce of commonsense (ie your mum) could see that it was putting too many eggs in too few baskets. Mr Williams himself thought it a little odd which is why he approached me to investigate.
It makes me really mad that people’s life savings should be vulnerable in this way. Pensions and investments are complicated and we need advisers, not cowboys, to help us. There are some decent firms out there; it’s just a matter of finding them. We’ve put together a guide to help you here. You should probably apply a final test to whatever the adviser says though: run it past your mum.