Financial Advice – how do you pick an adviser?

This is something which has now come into focus for me as I am about to make a new will and about to discuss this whole subject with my children, but it's proving difficult to fine someone to ask about the right insurance policy, as you say. I've also told they are expensive (whatever that means!), and I know about putting them into trust.

I now own five flats in central London, two shared half with my daughter, none with my son. They all have interest-only mortgages on them and the first three were re-mortgaged to fund the deposits on 4 and 5. They wish to continue this as a family business after I die. I had assumed (not a good thing to do!) that the children could just take on the mortgages on my death, but apparently that is not possible, viz your comments about having to take out new mortgages, together with the possibility of my children having to buy the properties at the then market price on my death.

Reply to the comment left by "Christine Johnson" at "08/10/2013 - 08:51":

Hello Christine

You have raised some extremely important points, and you have taken the right steps to start planning for the future and/or unforeseen events.

There are indeed several aspects to implementing the 'right' plans to ensure that what and who you leave behind are properly 'looked after', and these should all be properly considered before any actions are taken.

Writing a Will, planning the 'correct' life insurance strategy, succession planning for your property business, mortgage continuation etc etc., are just SOME of the issues that - in my opinion - EVERY landlord should be properly considering and taking care of.

So, when should you do this? The answer is always NOW.

None of us know when the inevitable will happen, so take a 'snapshot of today' and ask yourself; "...if today's situation is what I am leaving behind, what are the consequences to my loved ones?"

Finding the right Adviser is essential. In my opinion, you would need your whole estate planning matters to be considered as a 'whole picture' and not piecemeal by several 'advisers' including a solicitor, a mortgage broker, a life insurance planner, a trusts and wills consultants etc.

The solution? I would strongly recommend using a single Firm who has the whole 'team' in-house so that the full picture can be considered in it's entirety, that the individual specialists can liaise directly and efficiently with each other and that you - most importantly - have the right plans in place, all structured in the knowledge of each other - to give you absolute peace of mind so that your family is properly cared for.

Mortgages are NOT transferrable (read the article and research here > http://www.property118.com/life-insurance-landlords-ifa/30889/ ), Wills and trusts are essential (see the article here > http://www.property118.com/wills-and-estate-planning-for-landlords/ ) and talking to a Firm who can provide the right specialist (and importantly, independent, whole of market, experienced and expert advice) is also paramount too. This article is not an advertorial, just a reply to your point however my Firm's contact details are in my profile link above 🙂

Final note, you allude to insurance possibly being 'expensive' but as you say "whatever that means". In fact, if the cost of insurance was compared / balanced to the severe detrimental cost that a family 'inherits' if the debts remain after death and need to be paid through who knows what, then the actual cost of 'proper' life cover planning is essentially negated. A whole of market life insurance and trusts planner will present the most viable and best value options.

Hope this helps.

Howard

Between Mark and Mark I think they have the "advice" sector all sown up!!! Mary I really admire you. I too started many years ago when my kids were young and my husband felt that the agents managing our portfolio of ground rents were not doing such a great job. I worked with a Amstrad word processor on my lap in the kitchen and gradually one building's lessees liked what we did and recommended another building and so on.

When I got to 40 I started a buy to portfolio as my personal pension and to provide an inheritance for my children. I remembered some words of wisdom from an old family friend who had been in the residential market. He said that if you had 31 residential units you would have a rent cheque for each day of the year and a few spares to cover voids. I aimed to do that and because of my circumstances with children I always bought everything in two inter generational names. This can deal with some taxation issues and also with loans continuing after the borrower goes to a better place!!! I still do that although now it can be for grandchildren as well. Everything Mark and Mary say is so true but everyone must take their personal circumstances very much into account and especially when choosing financial advisors. I did speak to Howard Reuben whom Mark recommended last year and he seemed brilliant and I will meet with him when I organise some refunding in the next few months. As Mark says very important whoever you use is in the property market as well as so you speak the same language.

Id phone them up with a complicated deal, see if they say "ohh no cant do that" or if they say "hmm, let me see".

If its the latter, their on the right track as a pro-active broker, if its the former then no chance.

Many brokers out their today, go with only Abbey, TMW and BM. Anything other than that, they get scared.

Adam, that's a good tip: stretch the IFA with a more complicated project and see how they respond. I wouldn't expect them to wave a magic wand and come up with an instant answer, but I would look to see a positive and creative attitude. Too often in the past I've felt the IFA was only interested in commission and once you've invested the cash, that's the last you hear from them, even though they may be receiving trail commission for years to come! Maybe things will be better nowadays if you pay them cash in hand for advice; if he or she was good enough I'd even consider putting them on an advisory retainer, provided I felt I was getting something for it like a regular newsletter, or a reduced subscription rate to Trustnet, or reduced membership fee from the National Landlord's Association.

The other thing I find about IFAs is they're often not very good at dealing with the parallel universe that is self-employment and company directorships. Trying to get a mortgage is a nightmare if you have the cheek to have a non-regular income or prefer to be paid as a director with a minimal salary topped up by rental "investment" income and regular company dividends. This often isn't the IFA's fault - it's the utterly inflexible attitudes of mortgage providers who seem to lack the faintest idea of how small businesses work in conjunction with owners' personal financial affairs - but many of them fall at this first hurdle if you venture to ask for financial advice regarding debts, assets, future growth and minimising tax on your property-related business. Their comfort zone is well-off long-term employed people looking to invest spare cash in bonds, ISAs and the life: easy-peasy work, I would have thought, and far removed from the lives of most people today, especially landlords and small business owners.