Financial Advice – how do you pick an adviser?

by Mark Alexander

10:04 AM, 8th October 2013
About 5 years ago

Financial Advice – how do you pick an adviser?

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Financial Advice – how do you pick an adviser?

All landlords require financial advice from time to time, I’ve listed some of the many reasons below. My question to readers of Property118 is how do you select an adviser? Do you want to be able to meet them or do your prefer to communicate by phone or internet? Do you prefer to work with people who are landlords themselves? Is age, sex, cultural background a deciding factor?

These are the some of the areas I’ve sought financial advice in the past:-

  • Mortgage advice
  • Estate planning and IHT
  • Capital Gain Tax
  • Income tax
  • Other tax planning and deferral/avoidance schemes
  • Life Insurance
  • Landlords building and contents
My little black book contains hundreds of names of different professionals and contractors but in this article I’m focussing only on financial advice.
Financial AdviceI’m not at all bothered about meeting the person who arranges my landlords insurance or my mortgages but I do want advice from a real person. Yes I could just rely on price comparison sites but I’ve learned that price isn’t everything and I’d rather pay a bit more for somebody else to read all the terms and conditions and to help me pick the right provider and product for my needs.When it comes to advice of tax issues, particularly income tax, IHT, capital gains etc. I think it’s very important to have a close relationship. Can that be done without face to face? I’m not sure – I still prefer to see my advisors and chat things through properly to make sure we’ve thought through everything before decisions have been made.
I’ve always tried to make sure anybody I take financial advice from has at least one thing in common – they must have a property portfolio of their own.My view is that a person without a property portfolio simply can’t have the same mindset as me. Their advice might well be spot on but I feel I could never trust it completely unless they thought about property in the same way as I do.
I created a quirky little calculator to work out how much life insurance landlords would need to buy in order to enable their loved ones to refinance at 60% LTV after paying costs of repaying existing mortgages and fees to set up a new one. Life insurance can be expensive so I wanted to work out the minimum I should buy. This is not a replacement for financial advice but do feel free to give my calculator a whirl.

So, back to my question, how you you decide who to work with when you want financial advice?

This article was first published on 7th July 2012 and has been re-published on 8th October 2013.


Comments

17:03 PM, 18th July 2012
About 6 years ago

Hi Mark, Having Property in both UK and Namibia, I find it difficult to find someone that can understand both the markets, But I agree it has to be someone that is the same mindset and Its always better for me to meet face to face. When you start looking on the internet its overwhelming the companies that can offer advice, so its finding what works for you.

Don Holmes

10:39 AM, 19th July 2012
About 6 years ago

Hi Mark "face 2 face" for me and yes I think if they have there own property they have the same issues and will have researched long and hard to find best salutation to mutual difficulties, I have this need now as I recently posted but not made the final edit??.

Mark Alexander

10:49 AM, 19th July 2012
About 6 years ago

Hi Don

if you would like to drop me an email outlining your needs I'll be happy to introduce you to the most appropriate contacts I've got - mark@property118.com

10:56 AM, 19th July 2012
About 6 years ago

All this face to face stuff is all very well but the logistics can conspire against such a situation occurring.
Whilst not a perfect solution could not skype be considered as a next best thing to being there.
It would be interesting to know if any FA has ever attempted to conduct business over shype which has resulted in business being acquired.
The USA President conducts teleconferencing which is all skype really is so why not for F2F advising!!?

Mary Latham

13:03 PM, 19th July 2012
About 6 years ago

In the early very 80's when I already owned rented property I decided to
become a full time landlord and to buy more properties to let. The words
"buy to let" had not been heard of and I needed to consider several
issues.

1. How would I "hold" my properties?

2. How would I finance my future investments?

3. What would my long term aims be?

I didn't know another landlord - this
was pre1988 Housing Act and in particular Section 21 and it was very difficult
to remove a bad tenant so buying property to let was not popular among
"working class" people. I had a gut feeling that I should limit my
liability and protect my home and other personal belongings should things go
wrong. I spoke to my Accountant and my Solicitor and they both told me not to
use a limited company. I listened to everything they told me about limited
companies including the burden of accounts etc. I gave it a lot of thought and
it occurred to me that at some point I might want to pass on my properties to
my children. My Accountant told me that passing on property to my children
would carry a tax burden but that passing on shares up to a given amount each
year would not. Against the advice I was
given I decided to buy a limited company “off the shelf” to hold my future
purchases.

Financing my future purchases was the
next consideration – I had already been to an auction and I had agreed to buy
two properties within 30 days! I had no money but, with the confidence of youth,
I thought that was easily solved I would ask my bank! Haha looking back I was so naive and I fully
expected my Bank Manager to loan me the money based on the fact that I had
banked with them since the day I started work and I had never been in the
red. My Bank Manager soon made me
realise that there was a little more to it than that! Cutting VERY long story
short eventually my bank, Lloyds, did loan me the money in time to complete on
my purchases – I managed to convince them not to take a charge on my family
home and they took a charge on each of the properties I bought plus one of the
ones I already owned. They loaned me

£60k and I bought and renovated 5 properties! They gave me a one year capital holiday
( no interest only loans in those days) and spread my repayments over 10 years
at a fixed rate, I was very nervous agreeing to a fixed rate but my Bank
Manager explained that interests rates may rise considerably and that would put
me under pressure – remember this was just before the days when interest rates
hit 16% - which proved to be a Godsend.

My short term aim was to build a
small portfolio of properties that would give me a good living and allow me to
be a stay at home mum. My longer goal was to increase my holding to build a nest
egg for my family.

Did I do the right thing?

When I sold several properties in
2003 I had a huge capital gain, I had bought many of them for as little as £10k
and I sold them for an average of £120k but, because they were held in a limited
company, I only paid 19% capital gains tax as opposed to 40%

Over the years I have gifted my
children shares in the limited company so that, when I shuffle off this moral
coil, I will not need to scowl down at the Tax Man for robbing my children of my
life’s work

Over the years I have come to know
many landlords and I always listen to their financial planning and I have
picked up some good ideas that have meant that I have adjusted my business plan.
If I want advice these days I speak to landlords who have succeeded in the
business, if they recommend a service to me I give it serious consideration but
I would not take advice from an “expert” in any other field because the
business of a landlord differs from all other businesses and I need to know
what works for us.

I often sit here shaking my head when
I read the “next good idea” to make a fortune from property investment. There
is only one way that I am certain of and that’s hard work with a sense of humour
and making sure of the cash flow. I haven’t been wrong for the last 40 years let’s
hope it continues.

17:35 PM, 19th July 2012
About 6 years ago

You Mary are what is known as a shrewd old mover!, which I had been as much as you; but hey! we all have to learn somehow!!
Seems to me you haven't made many mistakes and were in the right place at the right time and alright then you have also put a lot of hard work into it!

Mary Latham

17:46 PM, 19th July 2012
About 6 years ago

Hey Paul less of the shrewd hahaha When I have finished the book you will see that I have made more mistakes in my time than any 10 other landlords combined. I always learn the hard way but I least I don't forget - a bonus at my age hahahaha

18:09 PM, 19th July 2012
About 6 years ago

OOH!! Mary that is strong competition I reckon in my short time in this game I have made far more mistakes than you have ever done.
Plus a load of othe mistakes made in certain life choices though not personal or emotional ones.
I don't really want to be in competition but I am convinced I am the biggest mug that has ever been.
Perhaps if we ever met I could tell you about my idiotic and foolish trusting decisions I have made, ultiamtely stitching myself up up big-time with the ramifications probably going to continue to affect my personal circumstances til the day I die.
Plus the effects such decisions have had on close family.
Essentially all caused by me being a big old stupid softie, you know the type, the one about a fool and his money are easily parted and belive me I have been parted bigger than you can EVER imagine.
I'm not crowing about it but I believe I can out mistake you any day of the week!!
Which is why I follow what you say with utmost attention.
That way I shouldn't c--k up again, well hope so anyway!!!

Mary Latham

18:34 PM, 19th July 2012
About 6 years ago

Paul write your book and we can compare. I actually don't mind most of the mistakes that I have made because I have never knowingly hurt another person nor caused discomfort to any of the many tenants who have paid for my financial freedom. The person who has never made mistakes has lead a very boring life and neither you nor I would want to be boring would we hahahahahaha

7:42 AM, 20th July 2012
About 6 years ago

I appreciate what you are saying but; I have to say based on my experiences I honestly wouldn't have minded being the most BORING man in the world.
Like you I have never caused detriment to anyone apart from myself and look where that got me.
I risk being made homeless, how's that for being boring!, all caused by a wrongun tenant.
Perhaps you can appreciate why I would love to be the most boring man in the world!!!

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