How to make those crucial money decisions

Whether you’re looking for a savings account for your holiday fund, a mortgage for your dream home, or a pension for your retirement, picking the right product can make you significantly richer. And while it might be reasonably easy to choose a savings account, for example, knowing where to invest your money could be slightly trickier.

So here’s our guide on how to work out when you can make those crucial financial decisions yourself, and when you should seek the advice of the professionals.


The difficulty ratings
1. Simple and straightforward: no advice needed
2. Fairly simple: advice only needed if you have unusual circumstances
3. Slightly on the complex side: advice recommended depending on your own level of knowledge and confidence
4. Fairly complex: advice recommended
5. Extremely complex: advice essential


A savings account is at the heart of most financial planning and finding the most suitable one for you is pretty straightforward. The things you need to consider when choosing an account are the interest rate, withdrawal penalties, bonuses and whether you have to pay a minimum contribution. If you haven’t used your annual £3,600 (2008/9) cash ISA allowance, this would also provide you with an excellent savings vehicle as it shields your savings from the taxman.

The key is to shop around and read the small print before you sign up to anything – to prevent any surprises further down the line.

However, there are going to be some occasions when you will need more formal advice, says Danny Cox, pensions development manager at Hargreaves Lansdown. “For example, if you have a lot of money – say £500,000 or more – to put away, the way you structure your savings can bring you tax advantages,” he adds.


After you’ve picked an account, it’s worth revisiting your choice every six months or so to ensure it is still competitive. More often than not it doesn’t pay to remain loyal to one account as rates can slip and you may be able to squeeze out a few extra pounds by shifting your money to another one.

You should also consider how secure your savings are. The government has promised to protect savings of up to £50,000 per person per bank, but if you have more than this you need to think about spreading your savings over a number of institutions to make sure you won’t lose out should your bank go bust.

Another issue to bear in mind is that the clause "per bank" refers to the way your bank or building society is licensed or authorised by the Financial Services Authority. Many banks in the UK share the same banking license, which means your money could be at risk.

Moneywise has created a free tool that allows you to search for your bank or building society and see how it is authorised. You can then search for other banks that share the same license.

Difficulty rating: 1

Unless you have lots of money to stick on deposit, you should find it easy enough to pick your own savings account simply by shopping around. You can use the Moneywise Compare and Buy service to scour the market ( or go to savingsroundup for our daily round-up of the best deals available.


There can be a huge variation between the best and worst performing funds or shares and, unfortunately, it’s not an easy job picking the winners. For example, according to figures from Lipper, investing £50 a month into a UK equity income fund could have netted you anything from £9,770.26 in Invesco Perpetual’s High Income fund to £5,394.63 in New Star’s UK Strategic Income fund over 10 years. That’s a difference of £4,375.63.

Choosing an investment is often so complex that it might be best to seek the advice of an investment expert before you make any decisions.

Caroline Hawkesley, director of IFA firm Evolve Financial Planning, says: “There are a couple of things you need to consider before making an investment, including what type of investment vehicle is suitable for you and what is best to put into it. Individuals may not be aware of what is the most suitable approach for them.”

You need to think about how long you intend to invest for and what your goals are. For example, do you want an income from your investment or are you saving for future expenses like your child’s university fees or to help fund your retirement? You also need to be honest with yourself about how confident you are in making your own investment decisions.

“We can help clients decide what would be best for them by looking at their current situation, goals and attitude to risk,” says Caroline Hawkesley.

Of course, if you feel confident making your own financial decisions, online fund supermarkets such as Interactive Investor, Hargreaves Lansdown and Fidelity’s Funds Network are a good place to start. Not only do they offer substantial discounts on fund charges, they also have a wealth of tools to help you find the most appropriate funds for your portfolio.

“Fund supermarkets have lots of information to help your investment decisions. This includes performance data and alerts about changes to funds – for example, if a manager leaves,” explains Danny Cox.

Difficulty rating: 3-4

It has never been cheaper or easier to research, buy and manage your investments yourself online. Many investors find this both enjoyable and rewarding. However, if you’re confused about the options or don’t have the time or inclination to do the research yourself, it’s worth seeking the advice of an IFA who specialises in investments. Charges may be higher, but if it means you end up with a better performing portfolio, it’s a price well worth paying.


Sorting your own mortgage is relatively straightforward – you simply have to decide the type of deal you want, shop around for the best buys, and then contact the lender.

Although current market conditions mean that the number of mortgages available has dropped, there are still plenty of deals around. And while it may be slightly trickier, most homeowners with a reasonable amount of equity in their homes shouldn’t struggle to find a good deal.

If you want to remortgage, contact your existing lender first to find out what it can offer you and then shop around to see if you can better it. Gordon Swan, marketing manager at online mortgage service provider Mform, says: “Most people can find the best mortgage for themselves using a specialist search engine. But remember to choose one that offers the whole of market and not a restricted panel of lenders.”

The key to choosing the right mortgage is to understand what you need from it. For example, if you want to be certain that your repayments won’t rise, you need to hunt down the best-fixed rates. But if you’re happy to pay a rate that rises and falls in line with the Bank of England base rate, a tracker or discount mortgage will suit you better. And watch out for arrangement fees – if you only have a small mortgage, it may be worth paying a slightly higher rate in return for a lower fee.

Of course, there are always exceptions. If you’re a first-time buyer and only have a very small deposit, are an existing borrowing with a 100%-plus loan, or have credit problems, professional advice could prove invaluable.

Difficulty rating: 2-3

You should be able to find the best deal for you by simply shopping around using a good mortgage comparison website. Log on to /tags/mortgages for the latest information about mortgages. If you need advice, contact an independent mortgage broker or a mortgage IFA – just make sure they are independent and can offer you access to all the market, rather than just a limited panel of lenders.


Sourcing an insurance policy for your car, home or holiday is usually relatively straightforward. The internet has made it easy to compare insurance quotes, and comparison sites such as,, should help you find the best deal for you.

It’s worth noting, though, that each website will not include every insurer, while some insurers, like Norwich Union and Direct Line, don’t work with any comparison sites. This means you may well need to check a few websites to make sure you get a comprehensive view of the deals on offer.

Comparison sites rank products on price, but you shouldn’t judge products on cost alone. You need to read all the small print on the policy documents as well to ensure you know exactly what each plan does and does not cover you for.

Eric Galbraith, chief executive of the British Insurance Brokers’ Association, warns that you need to be careful. “If you go on price alone you could find yourself with a big hole in your cover,” he says.

It’s also sensible to seek professional advice if your requirements are more unusual. This could be the case if you have a thatched property, drive a classic car, or have a medical condition such as a heart complaint that would make obtaining travel insurance difficult.

Difficulty rating: 1-2

If your situation is straightforward, you should be able to find the best deal for you simply by using a quotation comparison service.  If you need advice, it’s worth getting in touch with the British Insurance Brokers Association (0870 950 1790) to find a specialist broker in your area.


Although they are a form of insurance, products such as life insurance, critical illness and income protection insurance are more complex than a simple insurance policy. Products vary and you need to be sure you have the right type and level of cover because you can’t chop and change as easily as you can with a one-year insurance contract. If you go for the wrong product or fail to supply the correct details you might end up being unable to claim, or might not get as much as you hoped.

“It’s more complicated,” says Danny Cox. “You can do the research yourself, but you might miss product subtleties such as family income benefit, joint life cover and trusts.”

If you go it alone, it’s sensible to read as much as possible about the cover. Financial websites such as and the Financial Services Authority’s Money Made Clear ( can help demystify the products.

It’s also worth speaking to an adviser if you have any current or past health problems that might affect your application. An adviser’s understanding of the market means they will know which insurers are more likely to accept your business without slapping on a hefty loading.

Matt Morris, spokesperson for protection adviser LifeSearch, says: “As the needs of consumers and the range of products vary greatly, it’s crucial to take independent advice, unless you’re experienced and knowledgeable in this area, and know exactly what you need.

“A good adviser will know which insurer can offer you the best value policy based on your individual circumstances, as well as help you decide how much cover to take out and for how long.”

Difficulty rating: 4

Protection products are usually complex. The application process is less than straightforward and the consequences of getting it wrong can be severe, so it’s almost always worth seeking advice. An IFA who specialises in protection should be your best option. They will ensure that your application is filled out correctly, and that you have the right combination of products and the right sum assured. They’ll also ensure that the policies are written in trust, if necessary.


Since the introduction of new pension rules in April 2006, it has become easier to save for your retirement.

Having said that, pensions are still complex. If you opt for your company’s pension scheme, your employer will usually pay for you to see an IFA who will help you pick the funds you’d like to invest in. But be aware that simply choosing the default option is unlikely to be the best deal for you. Tom McPhail, head of pensions and research at Hargreaves Lansdown, says: “The default option can be characterised as the least worst option for the most number of people, but it probably won’t be the perfect solution for you.”

Also, don’t forget to monitor your pension’s performance once a year, and bear in mind you’ll need to switch into lower-risk funds as you approach retirement.

If you opt for a personal pension or a self-invested personal pension it’s probably worth forking out to see a specialist – unless you’re an expert when it comes to funds.

Professional help can be particularly crucial if you go for a SIPP, because it lets you pick and choose where you invest. While portfolio tools and online research can make this easier, it could still be quite baffling for a novice investor.

Advice is also essential if you want to consolidate or transfer your existing pension arrangements.

However, McPhail says: “The more comfortable you feel about doing it yourself the better. The areas where you might need a hand, though, could be the investment decisions and tax planning.”

Difficulty rating: 2-3

If you’re joining your company’s pension scheme your employer will usually offer you a consultation with a financial adviser to help you make your choices. This should make it fairly straightforward. However, if you’re planning to start a personal pension or a SIPP, or you want to consolidate a number of pensions, it’s worth seeking the advice of an IFA specialising in pension planning.

Estate planning and inheritance tax

Whether you need expert advice or not will largely depend on the size of your problem. Inheritance tax (IHT) becomes payable if the value of your estate, including your home, exceeds £312,000 (2008/09). “Simple steps like making use of the IHT exemptions can be done without advice. The Revenue’s website lists all the rules,” says Cox. “For more complex arrangements, such as trusts, it’s definitely worth seeing a professional.”

However, avoiding IHT is only part of your estate planning. You should draw up a will to ensure your assets are passed on in the way that you would wish. You can write a will yourself with templated documents from a stationers, but people frequently fail to get these witnessed correctly, which renders them invalid.

So it’s always worth speaking to a solicitor to ensure the will is legally binding and you’ve got every angle covered. This is particularly important if your family situation is not straightforward. Second marriages, for example, can be a minefield, especially if you want to protect some assets for children from previous relationships.

Difficulty rating: 5

Depending on your own personal situation, estate planning could be one of the most complex financial tasks you would ever make so it is often necessary to seek professional advice from an IFA, trust specialist or solicitor. Contact the Society of Trust and Estate Practitioners (020 7340 050)