Mark Howell, 43, and his girlfriend, Sally Lowthel, 36, are in what seems like an enviable financial situation, from the outside at least. But as so often in life, the reality is more complex — significantly so in their case.

The couple, who live in Nottingham, have joint income of £250,000 a year, which more than covers their outgoings. Their savings and investments come to more than £80,000 and they have nearly £200,000 set aside in pension funds for their retirement. So far, so good.

However, Mark, a finance director, needs help with a complicated trust set up to pay for the private education of his two children from a previous marriage. The trust has about £150,000 in it and pays the first £10,000 of school fees for Rebekah, 15, and Jonathan, 14, every year. A further £17,000 a year is needed to cover the fees in full.

He says: “I need advice about the investments that I hold within the trust. An Abbey Life Investment Bond, worth £120,000, matured recently, but what would be the best way to use this money and how should I invest it?”

Most of the assets that Mark and Sally hold outside the trust are in savings accounts of one sort or another. They have approximately £10,000 in internet accounts and £15,000 in cash Isas. Mark also has about £40,000 sitting in a business account and a further £14,000 in shares.

They appear to be pretty well set up for retirement, given that they still have many years in which to save. But again, there are complications. Mark is particularly keen to sort out his pension arrangements, which he feels could be made neater. He has a group personal pension from his former employer PricewaterhouseCoopers, the accountancy group, which is worth about £120,000 and is invested in the Schroder Managed fund.

On top of this he has a Standard Life personal pension. The latter is worth about £70,000 and was set up when he contracted out of the state earnings-related pension scheme (Serps) in the 1980s.

Mark recently sought guidance from an independent financial adviser because he is worried that his Standard Life pension could be invested more wisely. The fund is invested in two of Standard Life’s with-profits funds, which have not performed well over recent years. The adviser recommended that he convert this into a self-invested personal pension (Sipp) with Scottish Widows, using Quilter as a manager. The plan is to invest in a fund of funds, giving him diversification across a range of assets.

Mark asks: “Does that sound like good advice? While I am at it, would it be worthwhile consolidating both of my pensions into one fund?”

The couple also need help with their domestic situation. Sally, who is an operations director, accepted a job in London recently and they are thinking of buying or renting a property in the capital.

That would allow Sally to live in London during the week and return to Nottingham at weekends. However, they are unsure how easy it will be to obtain a mortgage if they decide to buy rather than rent.

Sally already owns a house in Chester, with mortgage repayments of £300 a month. However, the couple are unsure what they should do with the property.

Mark says: “We are thinking of renting out the house in Chester. What will we need to do to make that a reality, especially if we also want to buy a property in London?”

Alternatively, they could sell the Chester property. The money received could then be used to provide a deposit for a London purchase.

“It’s a dilemma,” says Mark. “We really have no idea what would make more sense.”

What the experts say

Trust planning: Darius McDermott, Chelsea Financial Services

“If Mark is to invest wisely, he must choose a suitable investment plan that will ensure the appropriate amount of growth tailored to his investment horizon and risk profile.

“Investor types are best determined by their stages in life. Mark is looking to provide for tuition fees with a horizon of approximately four to seven years. As he appears relatively risk-averse, but wants to grow the capital, the focus should be on establishing a well-diversified equity portfolio. In a low-inflation, low-interest rate environment, shares are far more attractive than other asset classes, such as cash and bonds.

“He should look to diversified funds, which invest in a range of equities. Average returns from these types of investments tend to range from 6 per cent to 10 per cent a year over a medium-term period.

“The core of the holdings should be focused on UK equity funds with strong track records and highly rated managers, such as M&G Recovery and Invesco Perpetual Income. For a medium-risk investor, this should make up 40 per cent of the portfolio.

“The remaining amount should be allocated to emerging market funds, such as First State Asia or Hexam Global Emerging Markets (10 per cent). The US, meanwhile, should account for 20 per cent. In the US we would go for Investec American. Europe should also make up 10 per cent (Neptune European Opportunities). A fund such as Rathbones Global Opportunities (10 per cent) will provide more global exposure.

“Finally a 5 per cent portion should be allocated to commodities (JPM Natural Resources), while property should take a further 5 per cent (Schroder Global Property Securities).”

Action plan

Invest school-fees trust in equities for medium-term growth.

Ensure that Mark’s portfolio is well diversified.

Pensions: Aleks Termanis, AWD Chase de Vere

“Before looking to change his pension, which could incur fees and costs, it would be sensible for Mark to consider if his current pension meets his needs. Group personal pensions usually have a keen charging structure and therefore, if it is possible and suitable, an internal fund switch should be considered.

“If Mark is interested in funds of funds, Standard Life provides access to schemes such as Jupiter’s Merlin fund range, which is run by John Chatfeild-Roberts. However, Mark would need to check if his current pension structure gives him access to the whole Standard Life fund range.

“The decision whether to use a Sipp will depend on Mark’s appetite for risk and also how much he will make use of the greater investment flexibility that a Sipp allows. As Sipps tend to have higher charges, it may not be cost-effective to follow this route if Mark has a low appetite for risk. But if Mark wants to be more adventurous and active in his pension investments, then a Sipp could make sense because he would be able to access funds and managers that are not in the mainstream pension arena.

“Depending on attitude to risk and choice of structure, Mark could consolidate his pensions, but this must be weighed up against the cost of doing this and the flexibility he needs.”

Action plan

Consider an internal fund switch.

Weigh up the cost of consolidating pensions.

Mortgages & property: Andrew Montlake, Coreco

“A simple calculation needs to be done as to whether renting out Sally’s Chester property and raising funds will give the couple enough money for a deposit, as opposed to simply selling. Lenders generally will not lend more than 75 per cent of the value of a property if it is rented out. It should be possible to borrow between three and four times joint income subject to their credit score. Taking a buy-to-let product on the existing property should be straightforward enough, as long as the rental income is sufficient to cover about 125 per cent of the interest payments on the new loan.

“Although the actual rates of interest are not bad, at between 4.5 per cent and 6 per cent, the fees can be anything between 1 per cent and 3.5 per cent of the loan amount.

“Check the redemption penalties on the existing mortgage and speak to your existing lender. You may be able to port [transfer] your existing mortgage to a new property in London and top it up, which will avoid any penalties.

“Bear in mind, though, that porting your mortgage will be treated as a whole new application. The lender will probably want to credit check you again, check your income and carry out a valuation on the new property.

“If this is not an option, it may give you consent to let the property without changing the interest rate.”

Action plan

Calculate whether renting will provide enough money for a deposit.

Check redemption penalties and other fees.

Ask if you can port your mortgage.

Mark’s response

Although the experts answered some of our queries, we feel that there is a lot more that we have to learn before we are in a position to review our financial arrangements.

The investment advice was quite useful as it pointed to specific markets and funds that we should consider. However, I am not sure how Mr McDermott came to the conclusion that I am relatively risk-averse.

The recommendations about the sale and rental of Sally’s Chester property were also helpful. It has given us some indication of the mortgage and rental options that are available and what terms we might have to accept.

However, we will need to do more homework, exploring the options in more detail, before we decide the best way forward.

I was much less happy about the advice given on pensions and did not find the advice useful at all. Frankly, I think that I could have written it myself. Consequently, I do not feel that I am any closer to knowing what I should do with my pension fund.

Would you like a financial makeover?

Write to Money, The Times, Times House, 1 Pennington Street, London E98 1TB, marking your envelope Money MoT, or e-mail moneymot@thetimes.co.uk. Please include current finances, short and long-term goals and a daytime telephone number. You must be prepared to disclose your income and be photographed.