Monthly Archives: August 2017
Your financial circumstances might sometimes mean that you require professional advice to make sure that you make the correct decisions and take the correct actions.
A professional adviser will help you to prioritise your financial goals and give you an understanding of the bigger picture, taking into account other important factors such as any potential tax implications and investment risk. There are thousands of different financial products and investments available and choosing the right one for you can be difficult and at times confusing.
Do you need financial advice?
You may find it helpful to speak to a financial adviser if you are not sure what you need to do or are feeling confused about the options available to you. Financial advisers can help you with a variety of things, such as:
- Providing an income after you stop work
- Saving and investing your money
- Buying and insuring your home
- Insuring yourself and your family against illness, disability or premature death
- Passing your assets on to the next generation tax efficiently
- Changing personal circumstances such as starting a family, redundancy, divorce or bereavement
Once your financial adviser has recommended a plan to help you achieve your financial goals it should generally be reviewed on a regular basis to ensure it remains appropriate to your circumstances and accommodates any changes to your priorities.
What does professional financial advice cost?
Financial advisers usually charge for their services in one of (or a combination of) the following methods:
- an hourly rate – typically averaging around £150 – £250, but can be higher for specialist advice;
- a percentage of the money invested – this can vary depending on the size of the initial investment and will typically be 0.5% to 3%. An annual charge for reviewing an investment portfolio is likely to be 0.50%-1%;
- a fixed project fee – typically £1,000 – £5,000 for a specific piece of research and advice work;
- some firms may also charge clients a monthly retainer fee of between £50-£100.
Fees vary depending on the experience and qualifications of the adviser and the geographical location of the business.
Advisers are no longer paid commission, except for certain non-investment product recommendations, and they have to explain to you how much the advice will cost you. You will need to agree this and how you will pay for it before any advice is provided.
What should I be looking for when dealing with an adviser?
It is important to understand whether your adviser is regulated to provide investment and financial advice in Jersey. A regulated advisory business needs to have in place professional indemnity insurance, which would provide their clients with an additional level of security.
A professional regulated adviser will be able to draw your attention to the potential pitfalls of what may seem a fool proof way to get a much better return on your assets. This is becoming more common place because traditional methods of generating returns on your capital such as bank deposits and low risk investments are currently providing little or low returns than in previous times.
The following list is a prompt for some of the questions you can ask your financial adviser.
- Are you regulated to provide financial advice?
- What is you experience?
- What types of clients do you work with?
- What are your qualifications?
- Do you offer an area of expertise?
- How much will the advice cost?
- What information will you need from me?
- What are the risks associated with the recommendation?
Financial planning involves revealing detailed personal financial information and can involve divulging information about your goals and ambitions, so you need to be comfortable in the company of an adviser. It is worth meeting a few to determine who you are most comfortable working with in an ongoing professional relationship.
There are two great truths when considering investments
- If it looks too good to be true it generally is
- Don’t put your investment eggs in one basket
Most people have two or three main protection needs that can be covered by Life Insurance (often known as Life Assurance):
- Paying off large debts such as your mortgage in the event of your death.
- Family protection, where you leave behind money for your family to live on after you’ve died.
- Funeral expenses
Different types of insurance policies are good for different protection needs:
The most basic type of life insurance is called term insurance, where you choose the amount you want to be insured for and the period for which you want cover. If you die within the chosen period, the policy pays out. If you don’t die during the term, the policy doesn’t pay out and the premiums you have paid are not returned to you.
There are three main types of term insurances to consider: level term, decreasing term and family income benefit. Sometimes a combination is the best answer.
- Level Term Life Insurance
A level term policy pays out a lump sum if you die within the specified term. The amount you’re covered for remains level throughout the term – hence the name. The monthly or annual premiums you pay usually stay the same, as well.
Level term policies can be a good option for family protection, where you want to leave a lump sum that your family can invest to live on after you’ve gone. It can also be a good option if you need a specified amount of cover for a certain length of time, e.g. to cover an interest-only mortgage.
You might also consider including an automatic annual increase of the sum assured to counteract the effects of inflation or increasing expenses. There are even budget versions where the monthly cost is lower during the first few years.
- Decreasing Term Life Insurance
With a decreasing term policy, the amount you’re covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgage.
Premiums are usually significantly cheaper than for level-term cover as the amount insured reduces as time goes on.
- Family Income Benefit Life Insurance
Family income benefit life insurance is a type of decreasing term policy. Instead of a lump sum, though, it pays out a regular income until the policy’s expiry date if you die.
The upside of family income benefit is that it is easier to work out how much you need. For example, if you take home £2,000 a month, you can arrange for the same amount to be paid out to your family if you die.
As the name suggests, whole-of-life policies are ongoing policies that pay out when you die, whenever that is. Because it’s guaranteed that you’ll die at some point (and therefore that the policy will have to pay out), these policies are more expensive than term assurance policies, which only pay out if you die within a certain timeframe. These are often used when cover is required for funeral expenses.
The good news is that Life Cover in general is now more affordable, and most importantly can provide you with peace of mind, knowing that your family will be financially protected in the event of your passing away.
For and on behalf of Cherry Godfrey Insurance Services (Jersey) Ltd
Regulated by The Jersey Financial Services Commission in the carrying on of investment and general insurance mediation business
A little-known flaw in the Consumer Credit Act may put Jersey shoppers at risk of losing their money if things go wrong.
Under Section 75 of the UK Consumer Credit Act, shoppers who make payments between £100 and £30,000 on a credit card can get their money back if the goods turn out to be faulty, not as described or don’t arrive. The UK law makes the retailer and credit card company jointly liable. Jersey consumers usually benefit from this protection due to terms and conditions reflecting the UK Consumer Credit Act.
However, a little-known loophole revealed by a MoneySavingExpert means that consumers will only be reimbursed if there is a direct link between the customer, their credit card provider and the supplier. If the payment is processed by a third-party company then the protection under Section 75 does not apply.
So, if you bought a concert ticket through an agent on a credit card, you may not be able to get your money back using Section 75 if it doesn’t arrive.
The same may apply if you booked a holiday through a travel agent. However, the travel industry may very well have their own financial protection schemes in place.
You may also not be covered for credit card transactions made through online payment platforms, such as PayPal, because it breaks the chain between customer and supplier. However, if the firm you’re buying from has a “Commercial Entity Agreement” you’ll be able to make a claim under Section 75 even if you use PayPal. PayPal has its own Buyer Protection scheme. This covers online purchases made on eBay and other websites if the item does not arrive or match the seller’s description. Property, vehicles, custom-made items and industrial machinery are among some items that are not guaranteed.
Amazon is another firm where Section 75 may not apply. Shoppers who buy items on a credit card from third-party suppliers on the online marketplace will not be covered. If you buy directly from Amazon then you could make a claim.
Confused, it is not surprising! Trading Standards offers the following advice:
- Know who you are buying from and who will take your payment
- Wherever possible put payments on your credit card
- If you are entitled to protection, you are still covered even if a small proportion, part payment or deposit was paid using your card
- When things go wrong, don’t delay. If you don’t have Section 75 protection you may alternative protection through platform buyer protection schemes, but these are often time limited.
Free confidential consumer advice is available from Trading Standards on 448162 or email firstname.lastname@example.org. You can also drop in, they are in the Central Market under the clock.
When we pay a deposit, we are committing to a binding contract with the outstanding payment to be paid at a later date. The natural position of the Law is that the deposit will not be refunded should you decide you do not want the goods or services. You should be aware that the trader may be in a position to pursue you for the outstanding money.
For example, when ordering a wedding dress or prom dress, we are usually required to pay something upfront. It is always recommended that you ask whether the amount it is refundable or not, and if it is, ask the person to indicate the term on the receipt or by email.
For further advice on this matter or any other consumer issues, please contact Trading Standards on 01534 44160.