Is it financial advice or parental advice which is needed?

Reports Steven Pyne, 28th July 2009

For most people the guidance they need is very simple. It is more in the sphere of a parental head than financial advice. Yesterday I had a call from a 28 year old self employed saver. He earned about £30k a year and had managed to save about £25k in his working life, but was concerned he was not doing the right thing. In our conversation it transpired that he was renting but that in the next 5 years would probably try and buy a property. He wanted to talk about pensions, ISAs and savings rates.

What to advise? Well what would you do? The average price of a property in Greater London is £348,585 and the need for a good deposit is getting larger. A 25% deposit ensures that you are getting the most competitive interest rates. For my caller buying an average property would mean he would need to save £87k to have a 25% deposit, ignoring other costs. Stamp duty at his level is 3%, which adds £10k to the bill and with legal fees he might need another £12k to buy an average property. So the target could be £100k.

My caller so far has saved £25k. He might need £100k to get on the property ladder. There really is very little scope for complicated advice or investment products and this is the position most people under 35 find themselves in. My caller was basically doing the right thing. He does not have a lot of scope for investment products and there is not a lot of advice needed and certainly no need to get involved in fee paying advice to clarify this. He needs to make sure he is using his ISAs and keep an eye on the money section of the Saturday newspaper to keep his interest rate competitive. This is the position a lot of under 35s find themselves in, where the need is more for a parental steer rather than financial advice.

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