Should I get one-off financial advice to help me pick best funds for my £100k work pension?

I’m in my mid-30s and have recently booked over £100,000 into my workplace pension.

However, I am in my company’s standard fund and don’t know if I should diversify. I looked at what the pension company has to offer, and there are plenty of choices with different ongoing benefits, but I’m not confident enough to pull the trigger for fear of making a costly mistake.

I would like to pay for one-off financial advice to build a more advanced portfolio, but am not sure where to find it and how much to pay?

Is it possible to sit down with a financial advisor for a few hours without entering into a long-term relationship?

Investment choice: Can I ask a financial advisor to help me choose the best funds available in my occupational pension scheme?

Tanya Jefferies from This is Money replies: Many people enjoy having a long-term relationship with an advisor, even though it comes at a cost.

That doesn’t make sense for a one-off task like this. However, once you’re up and running, it may be worth seeking out a financial expert who can take a full look at your assets (and those of your immediate family if relevant) and your future goals.

We asked two experienced and independently thinking advisors for their views on your situation about what you should do with your occupational pension.

Henry Tapper is a financial advisor and founder of the professional network Pension Playpen and AgeWage, which analyzes the value for money of pensions. He answers:

Congratulations on saving so much early in your career. Money makes money and you rightly wonder if your pot is working as hard as you are.

A standard fund is better than it sounds. Your pension company is assessed on this, so it receives attention.

The fund has a 0.75 percent cap on its fees and is designed to meet the needs of the average saver at every stage of his or her savings career.

Henry Tapper: Money makes money and you're right to wonder if your pension is working as hard as you are

Henry Tapper: Money makes money and you’re right to wonder if your pension is working as hard as you are

The option of choosing other funds is tempting, but you are right to be cautious. Are your best ideas better than the experts and what makes your circumstances special?

As for diversification, your standard should do that for you.

The Government is urging workplace pension companies to invest smarter so you get value.

Even if you have to pay more for the investments they choose for you.

Upcoming changes will likely lead to better results in the long run. So I would like to stick with the standard – unless you strongly believe that your money matters.

As for advice, I’m making myself unpopular with advisors by suggesting you don’t need investment advice.

You have more than 30 years to reach retirement age and paying for alternative portfolio advice will set the bar high for those chosen to manage your money.

You should carefully consider whether they can do a significantly better job than your standard manager, who has resources and economies of scale.

I would expect to pay $200 per hour for high quality financial advice and I would expect my advisor to advertise an hourly rate and quote fixed fees.

However, sitting down with a financial advisor to work out a financial plan is likely a good investment of time and money. You could think of this as giving yourself a midlife MOT.

Good advisors should be able to offer you a fixed price for a one-off project, where you are not tied to ongoing advice. Don’t skimp on this.

You will have to pay a four-figure fee for this work and pay VAT on top of that.

The fees of a good financial advisor will usually compare favorably with those of lawyers and tax advisors.

Professional advice, regulated by the FCA and backed by professional indemnity insurance, is worth seeking out.

This may give you a long-term relationship with a consultant, but you should make it clear that this is project work and not an annual contract.

I would expect to pay $200 per hour for high quality financial advice and I would expect my advisor to advertise an hourly rate and quote fixed fees.

As a general tip, be careful about letting advisors deduct their fees from your investments.

The fee may not sound like much, but even 0.5 percent to 1 percent of your assets can be as expensive as a fixed fee.

Your advisor may explain that it is more efficient for them to collect their fees this way (it is true that this can help you avoid VAT), but it may be better to pay VAT rather than be tied into a long-term contract.

Some consultancies have a lock-in period, which is fine if you’re using an advisor for life, but it’s not value for money if you only want advice occasionally.

Justin Modray, director of Candid Financial Advice, replies: The first question is whether you need advice.

If you stick to sensible, ‘managed’ funds offered by pension providers you are unlikely to make a costly mistake, provided they broadly match the level of risk you are happy to take.

In simple terms, this means combining exposure to equity markets, which generally offer higher long-term returns with higher volatility, with more prudent investments in corporate bonds.

There are other investment types you can add, but these are the most common.

Justin Modray: Don't be afraid to choose your own funds, because with some legwork and common sense you'll probably be fine

Justin Modray: Don’t be afraid to choose your own funds, because with some legwork and common sense you’ll probably be fine

At your age, you can probably afford the risk of having high exposure to the stock market as there is plenty of time to ride out the bumps in the road until retirement.

By comparison, someone nearing retirement who plans to purchase lifetime income through an annuity would probably want to be much more careful.

The stock market covers a very wide range of investments, ranging from ‘safer’ large blue chip companies to highly speculative start-up companies. And of course you can invest in many different regions and sectors.

It is made somewhat easier by the fact that most pension funds offer funds run by asset managers, whose job is to decide which companies to buy.

Funds come in two flavors; those that simply follow a stock index and those that are led by active managers who effectively place bets to try to beat the index.

However, active managers often struggle to beat the index, so choosing between the two can be a task in itself, with no guarantee of success.

If you decide to choose funds yourself, opting for index tracking is probably a sensible route as it reduces the chance of making mistakes.

Consider combining several to ensure you have good global diversification, or use a fund containing a large number of index trackers. Index trackers also tend to be cheaper than actively managed funds.

The argument for using a professional to select funds is that they can help match the risk you are comfortable taking and try to identify the active managers who could beat the index.

The former is potentially valuable, but the latter is haphazard, because no one has a crystal ball and professionals don’t always get it right.

If you want advice, it can be difficult to find an advisor who will provide it cost-effectively on a one-off basis.

Advice is tightly regulated, so the advisor will have to spend time gathering and documenting information, even if what you’re asking for is relatively simple.

And to put it bluntly, it will likely be less profitable for them than taking on a client they will care for in the long run, so finding someone willing to take on the job can be tough .

Some employers offer their employees access to pension guidance or advice, so it’s worth asking them if this is an option.

Otherwise, don’t be afraid to choose your own funds; With some advance work and common sense you will probably be fine.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow a commercial relationship to compromise our editorial independence.