outsource your investment management

Is it time for you to outsource your investment management?

How much of your time do you spend on the things you excel at – advising clients, setting goals and objectives, cashflow management, and so on?

If it’s less than you’d like, you’re not alone. Back in 2016, the Federation of Small Businesses found that two-thirds of small business owners in the UK said their administrative burden was preventing them from focusing on the primary aims of their business. More than half (55%) said that admin was holding back growth of their companies.

The most telling statistic was that three-quarters of all small business owners said that they spent more time than they would like on issues ranging from tax, employment law issues and insurance to dealing with workplace pensions, accounting tasks or health and safety matters. For financial planners, these tasks may also include investment management.

There are many reasons why you might be reluctant to outsource the management of your clients’ money. You might feel more confident looking after this aspect of the business yourself, or you may have concerns that a discretionary fund manager (DFM) may ‘steal’ your clients from you.

However, the outsourced model has many benefits for advisers. As well as freeing up the time you might have spent making investment decisions to spend on the financial planning aspect of your role, you may also have more time to take on new clients and grow your business.

What clients expect from you as their financial adviser

What do your clients value most about your service? When I see the results of client surveys, and analyse feedback from clients, one thing is clear: very few clients identify ‘return on investment’ as the key reason they work with a financial adviser.

If you asked your clients “what’s the most important thing your financial adviser can do for you?” how many would answer “manage my investments?” The likelihood is that it wouldn’t be very many. Most of your clients understand that you specialise in life-centred financial planning and that the specific products and funds are only one tool to enable you to help them to reach their goals.

Clients routinely identify reassurance, peace of mind, clarity, and security as the key reasons they work with a planner. They treat you as a trusted professional, with responsibility for all aspects of their financial plan. You’re there to help them achieve their life’s ambitions.

What this means is that there is not necessarily a need for you to also act as an investment manager – even if you have significant expertise in this area.

Many advisers these days choose to position themselves at the heart of the client relationship and to accept the responsibility of identifying the suitable investment mandate. It’s then the role of the DFM to ensure that the portfolio performs according to that mandate.

Increasing numbers of advisers accept the argument that they simply don’t have the capacity to manage a client’s investments fully and carry out the financial planning function including tax and pensions, protection, cashflow modelling and estate planning. On top of this, you also have the emotional and coaching elements of your role, such as nurturing, reassuring, educating, and understanding clients’ aims, fears and aspirations.

When you outsource investment management, the DFM takes on the responsibility of managing the portfolio on a day-to-day basis, freeing you up to concentrate on the things you’re really good at – developing client relationships and providing comfort. It means you can spend more time with clients focusing on what is more important for them, not just the return on their investment.

Other benefits of outsourcing investment management can include a potential reduction in the regulatory burden and removing the pressure of monitoring a huge and ever-changing myriad of funds and other investments.

If you have the resources and skill to manage your clients’ money, then you may have concluded that you can deliver as good an outcome as anyone. In this case – keep going!

However, if you find you can’t spend the time you want with your clients, or you feel a DFM has more skill and expertise, it could be more attractive to outsource this aspect of your business.

What you should look for in an investment manager

If you have decided to outsource, there are several things you should look for when you’re comparing investment managers:

  • Clear and regular updates about clients’ investments and changes to portfolios
  • Access to the fund managers who are managing the investments on behalf of your clients
  • Product and educational resources for you to use with your clients to explain investments in a concise and engaging way
  • Transparency on costs and charges.

For many, managing a client’s investments is a core part of their offering. And that’s great! However, if you do want to grow your business and concentrate on the financial planning aspects of your role – where your core skills may lie - then it might be time to think differently.

Brexit and your finances

What does the Brexit deal mean for your finances?

After more than four years since the 2016 referendum, the UK and the European Union have agreed a Brexit trade deal. But while a compromise has been found, the divorce may still have far-reaching consequences for the money in your pocket. So now a deal is in place, it’s a good time to take stock of your finances and ensure they are in a solid position now the UK has left the bloc.

Time to look again at the FTSE 100?

The FTSE 100, the UK’s index of blue-chip companies, has lagged behind large international rivals since the referendum vote, particularly last year. The combination of Brexit uncertainty and coronavirus caused the UK’s leading index to plunge 14.3% in 2020 – its worst year since 2008. By comparison, China’s CSI 300 rocketed 27% last year, while the US’s S&P 500 and Japan’s Nikkei indices ended the year up roughly 16%. But what happens now the UK has a deal in place with the EU? Could we see a FTSE 100 resurgence? As ever, it depends on who you ask.

Some experts believe investor sentiment towards unloved UK firms could improve now a deal is in place, which could lead to higher share prices. However, others believe the FTSE’s lack of fast-growing technology companies will continue to hold it back, while COVID-19 may act as a drag in the short term. A resurgent pound on the back of the Brexit deal could also dent the profits of the many firms listed on the FTSE 100 that earn the bulk of their revenues in dollars or euros. As for smaller companies (i.e.: those listed on the FTSE 250 and AIM indices), a deal provides more certainty, which may help share prices.

Will I get more on my savings?

 Now England is back in a national lockdown, it’s likely the Bank of England will keep rates at 0.1% to support the economy. Unfortunately, if you have a savings account, it means you will probably continue to get a poor rate on your cash for some time yet. That said, most experts recommend keeping between three and six months’ worth of outgoings in an easy-access cash savings account to cover emergencies.

Is my pension still safe?

 There are roughly 1.3 million Brits living on the continent, many of them with private pensions with UK providers, according to the United Nations. While the Brexit trade deal does not cover pension products directly, the UK and EU are about to begin talks about how they will co-operate on financial services products in the future. The Brexit deal on goods gives hope that they will come to an agreement that doesn’t hurt those with financial assets such as pensions or property on either side of the English Channel.

But for now, the best advice is: sit tight and don’t panic. However, if you are after peace of mind, then it’s worth speaking to your financial adviser about any of the themes mentioned and options for your money as we move on from life in the EU.

investment markets

Multi-year lows, record highs, and a pandemic – 2020 by the numbers

2020 was a year like no other. A global pandemic the likes of which has not been witnessed in our lifetimes changed the way the world works, and had a huge impact on global markets.

A huge decline in the first few months for most equity markets, and a rush to buy protection in the form of bonds and gold, was followed by record stimulus across the world from central banks as governments shelled out to companies to furlough staff.

Equities rebounded, with major markets including the US jumping to record highs. Bonds, meanwhile, move into negative territory, with many bonds now charging investors interest to hold them (rather than paying them an income).

Let’s not forget alternatives either. Gold, regarded as the ultimate safe haven, soared to a record peak above $2,000, and remains near there today. Meanwhile crypto currencies like Bitcoin saw unprecedented buying, more than quadrupling from lows in some cases, particularly as institutional investors started entering the market.

The numbers themselves are stark, and here are some of the highlights.

Equity markets break new records

US equity markets endured a bleak start to 2020, only to surge back in the second half as its huge weighting to technology stocks won out in the switch to working from home. In total, the S&P 500 rose 18.4% last year, while the tech-heavy Nasdaq index gained more than 40%. China, where the coronavirus pandemic began, also saw impressive gains in 2020, with the MSCI China index up almost 25%.

There were losers though, even as US markets smashed through record highs. The UK, blighted by both the pandemic and Brexit, struggled to make headway, with the FTSE 100 index shedding 15%, despite rallying off lows as the country reopened after the first lockdown.

A quarter of the world’s investment grade bonds now have a negative yield

As equities rallied, demand for safe haven bonds remained very much a priority for many investors (bolstered by central bank buying). By mid-December some $18.4trn of bonds were trading with a negative yield according to Bloomberg, with only US government bonds managing to still trade with positive yields across all time-horizons.


Having already risen substantially in 2019, gold’s meteoric rise continued in 2020, spurred by central banks buying up bonds by issuing more debt, and thus weakening their own financial positions. The precious metal jumped by more than 20% over the course of the year to leave the gold price just shy of $1,900 (a level it is not trading above). In truth, it could have been even better for gold, with the price actually rising above the $2,000 mark at one stage last year, before retreating late on.

Even with a year like 2020 behind us there are still many permutations of the coronavirus crisis left, meaning there is no doubt the next 12 months in markets are set to be as eventful as the last. If you would like to discuss any of the themes and ideas in this article don’t hesitate to get in touch with your adviser.


social care costs

Could the government tax over 40s to fund social care? Here’s how to prepare for later life costs

Former Health Secretary, now Chair of the Health and Social care parliamentary committee, Jeremy Hunt, has called on the government to introduce a social care tax on the over 40s. But you shouldn’t wait for the government to act, instead planning for the future and maximising your retirement pot now.

Reform of how social care is paid for and managed has been fermenting in the agenda of the government for some time. From Theresa May’s ill-fated plans in 2017, to the social care green paper stuck unpublished while the government fights more immediate fires, there are still more questions than answers. In July last year The Guardian reported that Health Secretary Matt Hancock was in favour of a social care tax plan for the over 40s being looked at by government departments. But events have overtaken long-term issues and plans have been on backburners since.

Government ideas

One possibility is raising an age-specific levy or ‘hypothecated’ tax on anyone over the age of 40. This would take a specific amount in tax and the money would be ringfenced to cover the cost of social care, which is currently absorbed by general taxation, but is ballooning in size as our population ages. The government is said to be looking at the experiences of Japan and Germany in funding social care costs. In Germany for example, all workers over the age of 40 pay 1.5% of their annual salary into a ringfenced social care fund. Funds can then be accessed later in life to pay for services such as in-home care or even care home costs.

Another more controversial proposal though is compulsory social care insurance. This would compel those over the age of 40 to take out some form of protection product that would effectively insure themselves against any potential future cost of care. Such a proposal would be inherently more controversial because it would rely on insurance market dynamics and consumer choice to pick policies and decide how much to pay into an individual fund.

Personal choices

In the meantime, it makes sense to ensure you’re doing all you can to prepare financially for any outcome in later life. Research routinely finds that people underestimate, vastly, the cost of later-life care and the possibility that they might need it. A 2019 Which? survey found that people on average underestimated the cost of later life care by around £17,000.  Government plans are still at an embryonic stage, and while it will likely come back into focus once the worst of the pandemic is past, for now the most important act individuals can take is to maximise their long-term savings into pensions and ISA as much as possible and making money work harder to leave them with larger pots on retirement.

Pensions and ISAs in particular are an important insurance policy when in retirement as these are much more likely to be easy to liquidate when you need money later in life. If you have any questions around the cost of care in later life or how to prepare your portfolio and would like to discuss these themes further, get in touch with your adviser.

investment portfolio

Three top tips for getting your portfolio primed for 2021

It’s the time of year again when we’re thinking about New Year’s resolutions, whether it be getting more exercise, spending more time with our children or taking up a new hobby. But the start of the year is also a great opportunity to take a look at your portfolio, to ensure it is doing what it should be but also to ensure it is setup correctly to weather the current environment.

Below are three things you should be considering right now to ensure your portfolio is in tip-top shape for 2021.

Time to rebalance

While many sectors have struggled through coronavirus, Big Tech – or specifically US tech – has boomed, earning investors a small fortune in the process.  That’s not a bad thing, but it does mean that your portfolio now may be a little tech-heavy because of the profits you have made over the past year. Therefore, it’s worth taking a close look at your holdings and deciding whether it’s best to cash in some of your profits on your US tech stocks and using it to rebalance your portfolio a little. For example, you may decide you want to take some of that money and invest in emerging market equities, unloved UK stocks or classic defensive stocks that tend to perform well in volatile markets.

Reassess your goals

It’s always a good idea to reassess your investment goals from time to time, so why not at the start of a new year? The chances are your life has changed considerably since you first opened your stocks and shares ISA or your general investing account. You may have got married, had children, started a new career or bought a new house. If that’s the case, you may need to reassess your long-term savings goals and work out if your portfolio is geared up to achieve them.

Protect yourself against inflation

As well as being devastating for health and the economy, coronavirus – and multiple lockdowns that have accompanied it – has had a huge impact on our spending habits. Those of us lucky enough to keep our jobs and were able to work from home have found that we have saved a considerable sum over the past year. In fact, UK households have reportedly squirreled away more than £100bn since the start of the pandemic.

However, sooner or later things will get back to normal, and it is likely that households will open up the purse strings again. If that does happen, it means one thing: inflation. A tried and trusted way to combat inflation is to invest in gold, which is seen as a store of value and therefore a good hedge against rising prices. That said, it’s not wise to overexpose yourself to gold, a small allocation as part of a diversified portfolio will suffice.

Your financial adviser will be able to advise you on an appropriate investment in the precious yellow metal.


Five things your network should be giving you monthly

This article first appeared in Professional Adviser.

As well as core regulatory assistance, writes Simon Goldthorpe, advisers should expect a lot more from their parent networks. Here he sets out a list of things networks should be offering their firms on a monthly basis.

There are few things more annoying than getting terrible service for something you spend good money on. According to a 2019Which? Survey, the UK's main culprits are Ryanair, Scottish Power, BT and TalkTalk, with consumers describing them variously as arrogant, greedy and sneaky.

Having your expectations met and exceeded is key to great service and the lessons learnt in retail and hospitality are no less important in financial services. First Direct, Lakeland and Waitrose regularly perform well in surveys of this kind because they each combine great ‘product' with knowledgeable and trustworthy staff.

Likewise, great service and an urge to go the extra mile ought to exist at the very heart of an adviser network. So, in addition to its core regulatory function, here are five things you should expect to get from your network every month.

1. Management information

Evidence is critical if you want your business to grow and improve. Only by assessing key metrics can you see where you need to make changes, and so your network should equip you with meaningful, valuable data.

For a start, it should put a Key Performance Indicators (KPI) dashboard in place to help you track your data quickly and efficiently. KPI dashboards are increasingly popular and with good reason: they allow you to choose what you want to monitor on a scheduled basis in order to meet your AR strategic goals in the most efficient way.

As well as supplying this technology, your network should be putting that data into context to reveal exactly what it means - what it says about your firm's activity, and how well or poorly you are currently performing.

2. Supporting your growth

Part of the role of your network is to support the continued growth of your business. It should therefore present you with a range of potential marketing material that you might not otherwise be able to access.

This, of course, can take a number of forms - from traditional collateral, like brochures and guides, to national public relations and advice on activity you could (or should) be doing locally. At a minimum, you should be receiving regular blogs or articles and other communications that can be used as a marketing tool with prospects and existing connections.

Whichever options are right for you, your network should help you to improve the efficiency and performance of your business while you retain control and independence.

3. Compliance support

Compliance support is a key reason financial planning firms join a network. Doing so removes the regulatory burden of being directly authorised and allows you to concentrate on growing your business in the way you want to.

Meanwhile, your network should interpret FCA and regulatory updates and produce policy and guidance accordingly. It should then continually assess your business to ensure that it meets the required standards and suggest any changes to your process where necessary.

Likewise, the network should always be on-hand to compliance check ‘softer' aspects, such as marketing collateral.

4. A sense of community

A network is a partnership and so you should expect to feel like part of an adviser community.

At the very least, this means the freedom to contact your support team quickly and to easily access the resources you need to grow your business successfully. But a truly good network will also encourage its advisers to mix - to chat among themselves and build connections. It's a space in which to connect with and work alongside like-minded people and learn best practice from each other.

5. CPD

The CPD on offer from many providers is limited at best and unlikely to assist with your annual targets.

You should expect your network to be able to leverage its size and contacts to attract a higher quality of speaker. Doing so will help you to complete the required number of hours, and you'll also get more out of the useful and engaging CPD provided.

Indeed, any one of the above services can significantly boost your business's ability to grow and realise its potential. But the very best networks will combine all five in a collaborative style that allows your opinions to shape its future practice.

Importantly, resources should always be fronted by transparent service from a team that truly cares about your prospects and outcomes.

decumulation strategy

Now is the time to engage with 'at retirement' clients

This article first appeared in Professional Adviser.

Based on their own day-to-day interactions with clients, advisers often assume that it’s the younger generations who are ‘going it alone’ when it comes to financial planning, observes Simon Goldthorpe. Here, he writes at-retirement clients have never been in more need of attention…

Yet a number of recent studies – including a 2019 report from the Pensions Policy Institute (PPI) – have found that it is, in fact, the over-65s who are less likely than average to employ a financial adviser.

Furthermore, the PPI warned that advice currently places too much emphasis on the accumulation phase – on the point of transition into retirement – despite the ‘pension freedom’ reforms of 2015 making decisions much more complex throughout later life.

It has arguably never been more vital that your clients have a decumulation strategy. Here’s why – along with some tips for easily assessing the needs of your client.


We're living longer than before - and here are the facts to prove it

In 1980, life expectancy in the UK was just under 74 years. So, if you retired at 65, you'd have needed your pension to last you about nine years. But these days your pension might need to last you 20 or 30 years - or even longer if you plan to start drawing your income at the age of 55.

A client underestimating their life expectancy could easily end up drawing out their money much too quickly in retirement, which brings us to the question of sustainable withdrawal rates.

The ‘Sustainable Withdrawal Rate' of 4% has been a rule of thumb for more than 25 years. However, a recent report by pensions consultancy LCP revealed that sticking to the rule of 4% is now three times more likely to lead to a client running out of money than it was a decade ago. Based on current market conditions and increased longevity, a lower rate may now be appropriate.

Having a robust and tailored decumulation strategy is therefore vital, even more so in light of the FCA's finding that six-in-10 savers in drawdown with pension pots over £100,000 take out at least 4% a year.


People are making mistakes at retirement

We all know that pension freedoms presented clients with many more options for drawing retirement income. But with increased choice comes increased complexity, and mistakes made at retirement can have profound implications for one's standard of living throughout later life.

Whether it's taking too large a lump sum and paying a hefty tax bill or making unsustainable withdrawals as discussed, ‘at retirement' is a time when clients can, but really shouldn't, be making costly mistakes.

Clients accessing drawdown without advice tend to do so at a much higher rate and are therefore more likely to deplete their funds, which means it's essential for advisers to engage with their clients, not just during or before retirement, but on the cusp of retirement in particular.


Exploring the ‘buckets' needed for a complete decumulation strategy

As retirement as we know it continues to evolve, there is a growing trend among advisers to manage a client's investments in various ‘buckets'. For those unfamiliar, these can be categorised as shorter-term buckets, which clients can rely upon for regular cash withdrawals, and also longer-term buckets with a high proportion of riskier assets to deliver growth.

Needless to say, each must be constructed with due consideration of the individual client's personal circumstances - like their health, their accommodation, their fees, their fears and their aspirations.

To ensure maximum effectiveness, there are a handful of key questions to be tackling when considering this approach:

  • Firstly, how much does a client need to leave in the short-term bucket, considering that the returns here are likely to be low (and therefore a client is more likely to run out of money)?
  • How much should be invested in riskier longer-term buckets to generate ongoing returns?
  • Do you have a consistent approach with clients? What processes are in place to ensure client outcomes are consistent?

And, of course, there are also asset allocation considerations - pinpointing when changing circumstances mean it's time to move from equities to lower-risk assets, for example.

The above factors reinforce why it is so crucial for clients approaching retirement to take professional financial advice. While much of our focus as advisers and planners is on putting a plan in place to build wealth in the accumulation stage, more than ever we have a responsibility to engage with older clients on a decumulation strategy - whether or not they know so themselves.

stamp duty

Stamp Duty Boom: Where Next For The Property Market In 2021?

The property market has been on a roll in recent months, but whether or not this can continue into 2021 remains to be seen, with the Stamp Duty cut ending and unemployment rising.

At the time of writing the most recent house price index (HPI) from Nationwide Building Society suggested that house prices were growing 6.5% year-on-year in November. This was an acceleration from 5.8% in October. Indeed, November’s figure is the highest since January 2015.

There is no doubt that the buoyancy in the market is in part thanks to the Government’s Stamp Duty suspension. Without it, the ongoing coronavirus crisis would have severely dampened confidence in the market. Indeed, many purchases have been brought forward by this measure.

But for those considering whether to buy for the first time, sell a property or move home now, it draws an inevitable question over whether it is the right moment to strike, or if waiting till a slump occurs would be shrewd.

For first-time buyers, options are severely limited when it comes to taking the first step onto the ladder – even more so than usual. Thanks to the coronavirus crisis, the availability of typical first-time buyer mortgages has collapsed in the past six months.

The picture is not as bleak as it was, with 90% loan-to-value mortgages now trickling back onto the market according to financial data provider Moneyfacts. This should hopefully open options back up to those thinking about buying their first house, but this is by no means a “normal” market to buy in.

Luckily there is no need to “time” the market. Whether or not now is a ‘good’ time for someone to take their first steps onto the ladder is something of a moot point. Generally, you’d be looking at a 25-year mortgage – by which time the relative fluctuation in price at the time you bought will be a fairly distant memory.

For those already on the ladder but looking to move up, perhaps looking for more space or a new area to live in, then whether now is a good time becomes more of a judgement call. While the Stamp Duty cut will likely help lessen the costs of moving, it can take so long to complete on any move that the temporary tax cut no longer applies.

This is something of a self-fulfilling prophecy though, as once the full tax rates return, demand will likely be depressed and price rises will slow or even reverse. Plus, considering that next year the Office for Budget Responsibility (OBR) predicts that unemployment will hit a high of 7.5% in the second quarter, demand could be set to fall off a cliff, unless the Chancellor reignites the Stamp Duty cut in his March Budget.

Finally, for downsizers - those whose kids have perhaps left the family home and want something a bit smaller to manage – they face a similar issue to existing homeowners looking to move.

These are not normal times and anyone considering such a big financial decision needs to have this front and centre of their minds.

Circumstances vary greatly, so if you’re unsure about what to do, don’t hesitate to get in touch to discuss.

Retail Price Index

RPI On The Way Out: Here’s How It Will Affect Pensions

Chancellor Rishi Sunak announced in his Autumn Spending Review that the retail prices index (RPI) will be effectively abolished in 2030.

While this is later than was previously assumed, his predecessor having pushed for a faster change, the implications are still important to savers and investors.

RPI measures the rising price of goods and services but has been superseded by more accurate measures implemented by the Office for National Statistics (ONS), including Consumer Price Inflation (CPI) and CPIH - a new additional measure of consumer price inflation including a measure of owner occupiers' housing costs. From 2030, the UK Statistics Authority (UKSA) will change how RPI is measured – matching it to CPIH’s methodology.

This effective abolishment of RPI has several implications. RPI has, over much of the last decade, measured higher than CPI or CPIH. For instance, at the time of writing, the most recent data from the ONS for October 2020 has RPI at 1.3%, whereas CPIH, considered the most accurate index, was just 0.9%.

Rail fares, student loans, and utility bills such as broadband or mobile phones are all linked to RPI, with annual hikes priced off of RPI, so its replacement with CPIH will be good news for consumers’ wallets when the change happens.

But the news is bad for some pension holders. The Pensions Policy Institute estimates that some 64% of final salary schemes are uprated each year by RPI . While these pensions will continue to be uprated each year from 2030, it will be by the CPIH measurement.

In aggregate between 2009-2019 RPI increased by 30.2% while CPIH increased by 22.7% according to the ONS. On a pension portfolio worth £100,000 this is a £7,500 difference – no small change. Losing out on investment compounding would make these basic sums look even worse.

Whether or not you may be affected depends on the pension you hold. The change will mainly affect holders of defined benefit (DB) pensions, so-called ‘final salary schemes.’


What else will be affected?

Index-linked gilts will also be hit. Ironically enough the price of these bonds actually soared on the news from the Chancellor, as markets had originally factored in an earlier change to the measure.

But in the long term, these bonds will deliver less income for holders, so considerations should be made whether they’re worth keeping in an investment portfolio. The value of such bonds could also steadily fall as the deadline approaches and investors divest themselves from a less attractive asset.

Some annuity holders will also be affected as certain annuity products are also uprated by RPI currently. These products are, however, increasingly unusual thanks to the advent of pension freedoms. But any holder of such a product will be subject to lower pay out increases from 2030.

If you think any of these may affect you or your portfolio, don’t hesitate to get in touch and discuss your options.

capital gains tax

How To Protect Yourself From The Proposed Capital Gains Tax Hike

If you are an investor, own a second home or regularly sell high-value assets, you could soon have to pay a lot more tax.

Advisers to the Government have recommended hiking and reforming Capital Gains Tax (CGT) in a move that could raise billions to pay for the spiraling economic cost of coronavirus.

If the Government accepts those recommendations, it could see many investors pay considerably more tax when they sell certain assets.

But what is happening exactly and how can you minimise the impact on your finances?


What is CGT?

Capital Gains Tax, or CGT as it is often known, is a tax you pay on the profits you make when you sell investments, a second home or personal possessions such as art or jewellery.

It’s worth noting that you don’t have to pay CGT on gifts to a partner or a charity, Premium Bonds, UK gilts, lottery or betting winnings, and any investments in an Individual Savings Account (ISA), Personal Equity Plan (PEP) or a personal pension.


How much do you have to pay at the moment?

 This depends on how much you earn and how much profit you make from the sale of your assets.

At present, everyone has a CGT-free allowance of £12,300 a year, meaning you will not have to pay anything if your annual profits from the sale of your assets is less than this.

However, after that you will pay 18% on residential property and 10% on the profit of other assets if you earn less than £50,000.

If you earn more than £50,000, you will pay 28% tax on residential property and 20% on other assets.


What changes have been proposed and how will I be affected?

 The Office for Tax Simplification (OTS) has advised to reform three key elements of the tax.

Firstly, it has suggested lowering the threshold at which CGT kicks in from its current level of £12,300 to £5,000 or even as low £1,000.

Secondly, the OTS has suggested aligning CGT with income tax. For example, that means higher rate taxpayers will have to pay a potential rate of 40% or even 45%, rather than between 20% and 28% at present.

Finally, it has also recommended that the Government scrap the CGT “uplift”, which usually means CGT is waved when a beneficiary inherits an asset that has gone up in value since it was first purchased.


Ok, if the Government presses ahead with the recommendations, what can I do to minimise my tax bill?

Before we go on, it’s worth making the point that tax is a highly complex area and so it’s always best to seek professional advice before acting.

However, here is an idea of the types of things you can do to ensure you keep hold of as much of your profits as you can.

  • Spread your gains over several tax years
  • Offset your losses against your gains
  • Max out your ISA
  • Take advantage of Bed and ISA
  • Contribute to a pension


When do I have to act?

That’s the thing, at the moment, we don’t know for sure whether or not the Government will make any changes to CGT or, if it does, what those changes will be exactly.

However, it’s good practice to ensure that your investments are always as tax efficient as they can be, so it’s worth exploring your options sooner rather than later.

As we said before, tax is incredibly complicated. So, please get in touch.

equity markets

Equity Markets Riding High On Vaccine News – But What Does It Mean For Your Investments?

Equity markets have climbed to record highs in the last few weeks, with investors scrabbling to reposition portfolios after news of a vaccine for COVID.

Since the first vaccine announcement from Pfizer revealing its vaccine was 90% effective, markets have been on something of a tear. At the time of writing, the FTSE 100 index of stocks is up nearly 18% in the past six weeks.

While a final few hurdles remain around the vaccine, provided these are met, it appears the next step is managing the rollout of the vaccine globally.

The news has sent sold-off sectors soaring, as investors return to things like airlines, retailers and manufacturers, and also sparked a move out of the lockdown winners which included food delivery companies and online shopping platforms.

So, what does this mean for you and your portfolio? As we emerge from a world where everyone has been locked inside, there are a number of changes we are seeing being played out in markets which you need to factor into your investments.


  1. New leadership emerges in equity markets, but is it here to stay?

One of the most obvious characteristics of this most recent surge in markets is the recovery of so-called value stocks.

These are names which are considered to offer value to investors because they have already fallen in price for various reasons, but longer term present an opportunity to investors. In this pandemic, the value stocks are in the sectors people are avoiding, be it airlines, retailers or travel and leisure names.

The resurgence for value stocks in the past six weeks has been rapid, erasing much of the lag they had behind other stocks. Whether it is here to stay or not depends on factors including the development of a vaccine for coronavirus.

Rather than take binary bets, one approach is to have a spread of investments across both growth and value names, and across different markets around the globe.


  1. Beware more volatility

We have seen some dramatic swings in markets already this year which will have had an impact on the value of your investments, but the overall trend across core markets like the US has been an upward one.

The outlook remains clouded by uncertainty however, and while various measures of market volatility have dropped back in recent weeks - particularly since the vaccine announcement and the resolution of the US election - we are not out of the woods yet.

As such, it is important for investors to be prepared for more short-term swings in markets, and to revisit their objectives over the long term and keep these front of mind.


  1. Have some safety nets

 It can be tempting during volatile periods to think that things will never go back to the way they were, prompting investors to move into one sector or another, and avoid others. The reality – as we have seen in the last few weeks – is that markets exaggerate trends (good and bad ones) and investors must be cognisant of this.

One way to lessen the impact of these swings is to hold a range of investments which complement each other by acting differently to each other in different circumstances.

Holding, for example, some equities, some bonds, some commodities like gold and some other assets like property can provide that mix of return profiles and help smooth the path forward for your portfolio.


Revealed The Wellbeing And Emotional Impact Of Financial Advice

It should come as no surprise that we believe financial advice adds real value to the lives of our clients. While the financial benefits of advice are often discussed, the value it can add in terms of wellbeing is sometimes overlooked but is just as valuable.

The improvements to wellbeing that financial advice can offer can be difficult to assess. After all, every client will have differing goals, priorities and challenges. New research from Royal London has measured how professional financial advice can support emotional wellbeing.

Financial advice helps people feel in control and confident

The research found that the vast majority of the 17 million people who seek financial advice in the UK benefit from a positive experience. Overall, it helps people to feel confident, in control of their finances and gain peace of mind. Clients rated three key areas that highlight the positive impact of a relationship with a financial adviser:

  • Quality of advice and expertise (82%)
  • Communication style (81%)
  • Trustworthiness (81%)

One of the important ways the report found advice is adding value  through understanding financial matters.

When searching for financial products or information, you’re often confronted with jargon and complex terms. Even when you have a good handle on your financial situation this can be daunting, making it difficult to know what’s right for you. Besides, products, legislation and regulation frequently change and keeping up to date can be challenging if it’s not part of your day-to-day role.

Those receiving advice feel up to three times more confident in their understanding of products and their finances than those who haven’t worked with an adviser. Some 23% of non-advised individuals said they would not know where to start when asked about life insurance, compared to just 7% of those taking financial advice.

The financial decisions you make have a long-lasting impact and it’s important to understand products and your options. We’re here to explain to clients how different products work, as well as outlining the pros and cons with their situation in mind. It means clients can have confidence in not only their plans but also their financial knowledge.

The benefits of preparing for the unexpected

When people first approach a financial adviser it’s often to seek advice on something they know is going to happen or would like to happen. For example, planning for retirement or setting up an investment portfolio to create an income.

However, an important part of creating a financial plan is to look beyond this to plan for the long-term, including the unexpected. As a result, financial planning can improve financial resilience and ensure you’re better prepared for an unexpected shock, such as redundancy or illness.

It’s a step that boosts emotional wellbeing. Some 63% of clients said they felt secure and stable, as opposed to 48% who did not receive advice. The report highlighted how it can have an impact on emotions too. Four in ten (41%) of those that do not take financial advice said they feel anxious about their household finances, compared to three in ten (32%) who receive advice.

Protection products in particular improved financial and emotional wellbeing. These insurance products pay out under certain circumstances and should align with your priorities and concerns. For instance, life insurance can provide peace of mind that your family will be financially secure should you pass away, while income protection can provide an income if you’re unable to work due to illness. Clients who received advice on protection said it helped them feel more prepared and less worried about the future.

Unsurprisingly, the COVID-19 pandemic has reinforced how planning for the unexpected can be valuable. With millions of employees seeing their income fall and facing redundancy, 35% said they felt anxious about their financial situation. This has led to 65% saying they’ve come to appreciate the value of being more prepared for life-shocks that may be outside of their control.

On average, financial advice clients are £47,000 better off

While the emotional benefits of advice are important, the financial benefits are too. After all, financial freedom can help you to achieve goals and feel more confident about your future.

The report also covers previous research conducted by the International Longevity Centre UK.  It found that customers who took financial advice were on average £47,000 better off. Those who fostered a long-term relationship with their adviser were up to 50% better off than those who received one-off financial advice.

Tom Dunbar, Intermediary Distributions Director at Royal London, said: “We have long suspected that the benefits of advice go far beyond financial gains alone and our research confirms that individuals who have received advice are more likely to feel confident about the future, and less likely to feel anxious or worried.

“It’s easy to see why clients turned to financial advisers when the pandemic struck. But advice is most powerful – and most rewarding – when it goes beyond a one-off meeting. An ongoing relationship with an adviser amplifies the emotional, as well as the financial, benefits.”

Please contact us if you’d like to arrange a meeting to discuss how financial advice can help you and improve your wellbeing.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.


family financial planning

The Benefit Of Family Financial Planning

Money can be a taboo subject, even among families. However, talking openly about money, financial goals and aspirations can help different generations make better decisions. If you make talking about money part of your normal family routine, it can have far-reaching benefits.

When you created your financial plan, you may have involved a partner but most people don’t include their wider family. Yet, for many reasons, making financial planning as a family can make sense.

  1. Your goals may include your family and legacy

For many people, goals involve family in some way.

You may want to help pay for your grandchildren’s school fees now, or ensure you leave an inheritance that financially secures their future. With this in mind, involving loved ones in the financial planning process can make sense. Openly discussing what you intend to leave as a legacy, for instance, can help all of the family to plan more effectively.

Firstly, take some time to think about your personal goals. This can help you create a list of priorities when talking about a financial plan. You may intend to offer monetary support, but securing your own future is just as important.

  1. Find out what their goals are

Do you know what your family hopes to achieve or what their concerns are?

You may have an idea about the aspirations and worries of loved ones, but sometimes you need a frank discussion to really understand each other. You may find there are more effective ways you can lend support if that’s your goal.

Many younger generations, for instance, are struggling to purchase a property or manage day-to-day finances due to stagnating wage growth. If you had planned to leave an inheritance, passing on wealth now may be more effective. A house deposit or a lump sum to pay off a mortgage could help reduce the outgoings of children or grandchildren. It’s a step that can improve their financial security and wellbeing both now and in the long term.

It’s also an opportunity to discuss your concerns with them. For example, are you worried about the cost and support you’d receive if you needed care? Having a chat with family can help you create a solution and put your mind at ease. It may be something they’ve already thought about. By involving loved ones in a financial planning discussion about care. you can create a plan that suits all of you.

  1. Reduce costs

Working together can help reduce costs and get the most out of your money.

Understanding the potential impact of Inheritance Tax (IHT) is just one way you can make your money go further. If your estate could be liable for IHT, there are things you can do now to reduce or eliminate the cost, but this requires a proactive approach. Strategies to mitigate IHT include giving away some of your wealth during your lifetime and setting up a trust for family. If you’re worried about this, please contact us.

There are ways you could save money now by pooling resources too. Take investing for example, if several family members are paying for investment fees and advice, bringing this together can save  money and lead to better returns.

Personal goals and challenges must be considered in these scenarios, as well as understanding who has ownership of assets. Please contact us if this is something you’d like to discuss.

Making family financial planning suit you

If you want to involve family in your financial plan, there are numerous ways you can do so. You should think about what you want to achieve and how involved you’d like your family to be.

On one hand, making time to have a simple conversation about money and long-term goals may be enough. This can help you see how goals may align and where you may want to offer support. On the other hand, you can work together with a financial planner as a family if you’d like to create a more comprehensive plan that includes several adults and generations.

Striking the right balance is important when involving family members in your financial plans. If you’d like to discuss how family financial planning can help your wider family goals, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate tax or estate planning.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.


Balancing Investment Risk And Reward: What Should You Consider?

We know that investments come with risk and the value of your investments can fall. With risk linked to potential rewards, it can be difficult to know how much risk is appropriate for you.

When we make financial decisions, lots of factors can influence what you decide. This may include emotional factors or bias, which can lead to you taking too much or too little risk for your circumstances So, how do you balance risk and reward when investing?

How are risk and reward linked?

As a general rule, the more risk you take the higher the potential returns. However, this comes with a higher risk of investment values falling and potentially losing your money.

Investments are usually placed on a sliding scale of risk to show you where they fall. When you invest through a fund, for example, it will have a ‘risk rating’ to help you select investments that suit you. The table below shows how different investments may be categorised on a scale of one (lowest risk) to ten (highest risk).

While higher risk generally means higher potential returns, that doesn’t mean you should choose these investments. In many cases, a high-risk investment portfolio isn’t suitable for the average investor. Creating a risk profile can help you understand the level of risk that is appropriate for you.

What affects the level of risk you should take?

There’s no one size fits all solution to the level of risk you should take. It needs to consider you and your financial circumstances, including:

  • Your investment goals. Your goal should be at the heart of your investment decisions. They can have a large impact on the level of risk you feel comfortable taking. If you’re investing for your child’s or grandchild’s future, you may want to take a more conservative approach. If, on the other hand, you’re investing to create extra income for a retirement that will already be comfortable, you may be willing to take more risk.
  • The investment time frame. As a general rule of thumb, the longer you plan to invest, the greater amount of risk you can afford to take. So, if you’re starting your career and investing for retirement, you’re in a better position to take more risk. This is because over a longer time frame there’s more opportunity to recover from dips in the market.
  • The other assets you hold. You can’t consider investment risk without looking at your wider financial circumstances. If you’re taking a high level of risk with other assets, lower risk in your investment portfolio may make sense. In the same way that a portfolio needs to be balanced, so does the level of risk you’re taking across all your assets.
  • Your capacity for loss. If the value of your investments were to fall, how would it impact your plans? If it could seriously affect your plans, a lower level of risk is likely to be advisable. If investments falling in value would leave you in a financially vulnerable position, you should look at alternatives first.
  • Your overall attitude to risk. Finally, how you feel about investment risk is important. You need to feel comfortable with the investment decisions made. However, bias can have an impact and can lead to investors taking too much or too little risk. This is where we can help. We’re here to explain the options and why we recommend certain investments. With more information and someone to talk to, you can invest with confidence.

Remember the basics of investing

Whatever your risk profile, the basic lessons of investing still apply. Keep these three in mind when making investment decisions.

  1. Invest for long-term goals: If you have a short-term goal in mind, investing probably isn’t appropriate for you. Ideally, you should invest with a minimum five-year time frame. This provides an opportunity to smooth out the peaks and troughs to hopefully deliver returns over the long term.
  2. Don’t focus on short-term fluctuations: It can be easy to focus on daily market movements, but it’s more important to look at the bigger picture. Focusing on the short-term movements can make it tempting to deviate from your plan by buying or selling. Instead, have faith in your long-term plan and remember, it’s time in the market not timing the market.
  3. Diversify: All investment portfolios should invest in a range of assets and sectors. This helps to spread the risk of your investments. When one area of your portfolio is performing poorly, another can help balance this. Even when your risk profile is ‘high’ diversifying is important.

If you’d like to talk to us about your risk profile, investments, and long-term financial plans, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.


reducing tax liability

Underestimating The Amount You Need In Retirement: How A Mid-Life Check Can Help

Do you know how much you need to save into your pension for the retirement you want?

Millions of pension savers are underestimating how much they’ll need once they give up work. It’s a miscalculation that could lead to a retirement that doesn’t meet expectations. Even if retirement seems a long way off, a pension health check can make sure you’re on track. It’s far easier to bridge a pension gap if you recognise the shortfall early.

Two-thirds nearing retirement not saving enough

Analysis found that two-thirds of those aged 50 to 65 are under-saving for retirement.

If you reach retirement age and find there’s a shortfall in your pension, your options are limited. You may have to carry on working for longer or settle for a lifestyle that doesn’t match your aspirations.

In contrast, finding a pension gap when you’re middle-aged gives you an opportunity to plug the gap. Increasing regular contributions or adding a lump sum can get you back on track. It means you know what income you can expect in retirement and look forward to a secure lifestyle.

Mid-life pension health check

Despite the importance of understanding what kind of retirement your savings will afford, it’s a task many are putting off.

An Aviva survey found 53% of people in their mid-life have never calculated when they can afford to retire and 61% have never requested a State Pension forecast. A mid-life pension check can give you confidence in your future and mean you’re able to look forward to retirement.

So, what should you be checking?

  1. Your State Pension forecast

The State Pension alone isn’t enough to fund retirement for most people. However, it can provide a reliable income that you’re able to build on. In 2020/21, the full State Pension pays £9,110.40 annually.

There are two things to check when reviewing your State Pension forecast.

The first is when you’ll reach State Pension age. This is currently 66 but is rising, by the mid-2030s, it will be 68 according to the government’s current timetable. You can access your personal pension before this point, but you’ll need to take into account the State Pension won’t be available.

The second area to review is how much you’ll receive. The State Pension increases each tax year by a minimum of 2.5% under the triple lock. However, to receive the full amount, you must have 35 qualifying years on your National Insurance record. If you have fewer than this, you’ll receive a portion of the State Pension. It’s worth reviewing whether you’re on track to meet this requirement as you may be able to buy years to fill gaps.

You can check your State Pension forecast here.

  1. The type of pension you have

Over your working life, you’re likely to accumulate a few pensions. Take some time to find the details of each and understand the kind of pensions you hold. There are broadly two types.

  1. Defined Benefit pension: This type of pension will pay you a guaranteed income from a set retirement date until you die. You don’t have to worry about investment performance, your pension income is secure. How the income you’ll receive is calculated will be pre-defined. It’s usually tied to how long you pay into the scheme and your final salary.
  2. Defined Contribution pension: You’ll make regular contributions from your pay which is then invested with this type of pension. In most cases, your employer will also contribute, and you’ll receive tax relief. When you reach pensionable age, the value of the pension will depend on your contributions and investment performance. You must then decide how and when to use your pension to create an income.

If you’ve ‘lost’ a pension, you can use the government’s tracking service here.


  1. Pension values and forecasts

When reviewing your pensions, take a look at how much they are worth now and their forecasted value at retirement age.

Make sure the retirement age is correct and keep in mind that this is a forecast only. Investment performance or leaving a pension scheme will have an impact on the value when you retire. But it can be  useful for giving you a general idea if you’re on the right track.

What does the pension value mean for retirement lifestyle?

The value of your pension can be useful, but it doesn’t help you answer the question of whether you’re saving enough. To do this, you need to consider a range of factors, including life expectancy, retirement age and the lifestyle you want. You may also plan to use other assets to supplement your pension income. This is something we can help you with.

It’s never too soon to start thinking about retirement. Please contact us to discuss your pension savings and how they can help you live the retirement you’re looking forward to.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

Top 100 Financial Advisers

FT Adviser Top 100 financial advisers 2020

We are delighted to be included as one of FT Adviser's Top 100 Financial Advisers for 2020.

lockdown habits

Six 'lockdown habits' advisers should keep

This article first appeared in Professional Adviser

Whether it's because we had to or wanted to, lockdown gave us all the opportunity to do things differently. But which of these new habits are likely to remain part of everyday life? I share my thoughts...

I recently saw a post on social media, asking about new habits people had taken up since lockdown started.

Answers were intriguing and varied. Gardening. Spending more time with the family. Cooking. Playing the piano. Watching endless hours of Disney+.

Whether it's because we had to or wanted to, lockdown gave us all the opportunity to do things differently. In recent weeks, deserted offices and increased demand for homes on the coast have shown that some changes are likely to remain.

One thing all financial advisers will be able to say with certainty is that they adopted new methods and processes in the last six months. But which are those that should be kept and incorporated into our permanent ways of working?

Here are six.

  1. Virtual networking

While it's not been possible to meet peers and professional contacts face to face, online networking events have thrived.

From webinars to virtual conferences, lockdown has given advisers plenty of opportunities to find new professional connections and maintain their relationship with current ones. Considering you don't even have to leave your office (or home) to join them, this could be a more time and cost-efficient means of networking going forward.

  1. More regular communication with clients

We've always kept in touch with clients through annual face-to-face reviews and ad hoc meetings, but the adoption of video conferencing as an integral part of the client relationship has revolutionised this interaction, certainly in terms of ‘frequency of contact'.

While video calls may be no substitute for face-to-face advice, they're an undeniably good way of staying in touch. Aside from removing travelling time, they importantly maintain social distancing for high-risk or more vulnerable clients.

And it's not just video that has improved communication. Advisers have been upping the ante on activity such as newsletters and blogs, as well as online events and webinars. Clients have largely welcomed these initiatives, so they look set to be embedded as a part of ongoing relationships.

  1. Focusing on staff wellbeing/company culture

With offices sitting empty, many firms have focused on the wellbeing of their staff and have taken strong steps to ensure their team ethic remains strong.

From regular online catchups to social events such as virtual quizzes, it's likely that these team-building efforts will continue even after lockdown is over. Many firms will be in the office less often, so continuing to bring the team together virtually will remain important.

  1. Working on the business, not in it

Fewer face-to-face meetings have freed up time for business planning and strategy. Many advisers have found themselves being able to work on implementing new back-office systems, finally getting around to updating their tired website, or creating a new marketing, lead generation and/or client retention strategy to drive their business post-lockdown.

Ensuring your business is always moving forward is a great habit to maintain in the future.

  1. Building on personal knowledge

With clients to see and reports to write, it can be hard to find the time for personal development. Lockdown has given advisers the time to do valuable and worthwhile CPD, from exam study to attending product provider webinars.

As an example, when the current crisis is over, clients will need help to recover and build for the future. Decumulation is, therefore, one area it may make sense to build up skills and knowledge, both because there is likely to be more scrutiny from the FCA in the future, but ultimately to get the best outcomes for clients.

  1. Reviewing clients' protection

Many advisers spent months of lockdown reassuring clients about their portfolio in the light of global stock market volatility. However, it has also been a great opportunity to talk to people about the life, illness, and income protection they have in place.

Protection is still the cornerstone of all the best financial plans. While it has been particularly appropriate to discuss this during a pandemic, this is something advisers should consider continuing to build into their discussions.

Those firms who successfully build these factors into their long-term ways of working are far more likely to thrive as we enter the ‘new normal'.