Paying For Financial Advice

[bednobs]

If i do get made redundant at the end of this month, i will have a redundancy payout. Is it worth paying for financial advice regarding this sum, beyond "pay off debts and keep some for a rainy day"? How much do IFA's charge, and is it a percentage, fixed fee or they get paid for recommending certain accounts etc? do they just recommend investments, or can they (for example) work out if paying into my offset mortgage is more financially advantageous

[Buenchico]

>>>is it a percentage, fixed fee or they get paid for recommending certain accounts etc?

IFAs can no longer work on a commission basis. They have to directly charge fees to their clients.
http://www.vouchedfor.co.uk/blogs/about-financial-advice/ifa-fees-how-much-do-ifas-charge/

How much? How long is a piece of string?
http://www.which.co.uk/news/2012/01/which-finds-huge-variations-in-ifa-fees-276693/

Chris

[Hymie]

If you don’t have any other source of income (another job, pension etc) – you can claim job seekers allowance for 6 months (about £70 per week) based on your NI contributions, after which it becomes means tested. Therefore I would advise that first you ensure you have enough money to last until you secure an alternate income source – worry about investing some of the money once you are sure that you will have no need of the money.

[factor-fiction]

Having been in your position I wouldn't do it, unless your settlement after tax is significant (approaching £100,000). Yes, pay off any debts and depending on your age stick a lump sum in your pension (since your pension will not get any more contributions. You could also consider paying something off your mortgage.
But the biggest unknown is whether you'll get another job. If you are out of work for 6-12 months a lot of the money will go. And when you do get a job the pay may be less than you have been used to. I'd just put the money in tranches -some that you can access at short notice and some within 12-24 months.
Once you get another job you can decide then about more complex investments

[woofgang]

I agree with the others on being a bit wait and see regarding investments. When DH and I retired he did quite a bit of research into what to do with the lump sum, including one (paid) meeting with an IFA. We gave it a LOT of thought. First thing is to make sure you have enough to live on. Second thing is to get as debt free as you can. I agree, if you can and can afford it, put some in your pension. The mortgage issue is a bit more complicated. If you pay it off, you have got an asset and a roof over your head but it might eat too far into your capital and if your mortgage is an offset one, and interest rates are so low it might be better to hang on to the capital. In any case, dont do anything in a hurry.
A good book about investing in funds
Amazon.co.uk User Recommendation

[bednobs]

factor, of course you have it right there - a redundancy amount is no good if you just erode it by living expenses