bitcoin, steam trains, tulips

Simon Goldthorpe: Cautionary lessons from bitcoin, steam trains, and tulips

This article first appeared in Professional Adviser

Why you should be careful where you invest.

As bitcoin booms, Simon Goldthorpe revisits some historical investment bubbles including the Victorian rush to locomotives and the first futures market in tulip bulbs...

If you've been paying any attention to the headlines at all these last few months, you'll be aware of the latest ‘boom' in bitcoin.

You might have first heard about the cryptoasset in December 2017, when its value surged to almost $20,000 per coin. And although its price fell sharply in the months that followed, it's recently grown to over double that amount.

They say that those who don't learn from history are doomed to repeat it. So I thought it might be time to look at some historical parallels and see what we can learn about the bitcoin bubble.

‘Tulip mania': the first financial bubble?

When bitcoin's explosive rise in value first came to my attention, what also sprang to mind was not something new and revolutionary, but the so-called ‘tulip mania' of the 17th century.

At the time, the Dutch Republic had some of the most sophisticated financial institutions in Europe (if not the world), including the first official stock exchange, capital market and central bank.

This advanced financial system encouraged investment and trade in ways that had never been seen before, and one of the innovations that resulted was the formal trading of futures.

Unfortunately for the Dutch, all new ideas have teething trouble, and when merchants began trading futures of tulip bulbs - a luxury commodity at the time - a bubble quickly began to form.

Supposedly, at the height of the frenzy, futures contracts for tulips were exchanged as many as ten times per day, driving their price up, often to several dozen times their intrinsic value.

Of course, the bubble couldn't last forever and when it popped, the price collapsed overnight. Merchants who had sold their houses for a slice of the action suddenly found themselves completely empty-handed, and theirs is a tale whose cautionary lessons should still be heeded by investors today.

There's certainly a parallel with the crypto crash of 2018 when the price of bitcoin plunged 80% between January and September. Once again, a bubble had burst and dealt a heavy blow to the casual investors who had bought in late - many of whom had only heard about bitcoin when it hit the national headlines.

The same thing happened recently with struggling US retailer GameStop, whose vastly inflated share price tumbled after a week of breathless, ill-informed investment. And as bitcoin climbs to brand new heights, one can't avoid a very worrying sense of déjà vu.

Tracing the market conditions of today in the railway boom of the 1840s

Tulip-mania is an excellent example of commodity speculation gone wrong, but there are many useful bad examples of business speculation, too.

According to a recent article in Forbes, Tesla trades at fifteen times its projected 2021 revenue and 175 times its projected earnings. While the firm may well play an important role in the future of clean energy, one has to question whether its stock may still be somewhat overinflated.

Here, too, we have a telling historical precedent ­- in this case, the railway-mania of the Victorian era, when the market conditions and makeup of investors were broadly similar to those of today.

The mid-19th century was a period of particularly low UK interest rates, which made gilts - the go-to investment for many affluent Victorians - much less attractive than they had been previously. Furthermore, the industrialisation of Britain had created a strong middle class, who had capital to invest and financial knowledge to make informed decisions.

When the Liverpool and Manchester Railway opened in 1830, it was an undeniable commercial success and prompted a flurry of similar applications for the building of additional lines. In 1843, there were 63 applications to Parliament; in 1844, there were 199; and by the end of 1845, there were another 562.

This new and exciting investment attracted many members of the middle class, whose confidence was buoyed by the continued success of the original line from Liverpool to Manchester.

However, when many smaller railways were found to be commercially unviable, consumer confidence evaporated and their stock prices fell accordingly. Once again, the bubble burst, leaving legions of investors empty-handed.

Tesla shares have risen by more than 700% in the past two years, but in the same period, they have also reduced their earnings forecasts for every year from 2020 to 2024.

This has led some analysts to question whether its stock is simply surging on ‘speculative fervour' - in which case, prospective investors should take care to consider the risks of buying in.

Studying bubbles

Studying previous bubbles is a useful way to avoid exposing yourself to excessive risk. It's easy to spot a financial bubble with hindsight, but less so when you're living through one.

For instance, Tesla's stock price surge in recent years may not be backed by a corresponding increase in earnings, but its potential as a manufacturer of green technologies could still mean that it isn't as inflated as it first appears.

Its price might see a drastic fall, or it might just prove itself a valuable long-term investment as the world transitions towards renewable energy. Only time will tell.

Nevertheless, if you want to ensure that you don't fall foul of financial bubbles, one of the best ways to prepare for the risk is by learning from past mistakes.

The specifics might be different, but the fundamentals are the same, and the tulip and railway manias are only two good cases; there are dozens of similar crashes to consider, many of which faced market conditions similar to our own.

Where there are investors, there will be bubbles: that much we know for sure. But by learning from history and avoiding past mistakes, you can ensure you're in the clear when the enthusiasm fades and they inevitably burst.



Cashflow planning key to advisers' 'biggest challenges'

Simon Goldthorpe encourages advisers to double down on cashflow modelling as the answer to a "surge" of clients facing financial hardship in the wake of the coronavirus crisis.

green savings bonds

NS&I Green Savings Bonds: what are they and will they offer a good return?

The Chancellor’s Spring Budget unveiled a new savings scheme from the Government’s National Savings & Investments (NS&I) arm, focusing on ‘green bonds’.

Green bonds are a new form of investment issued by governments and companies which aim to use the proceeds to improve the environment. This can manifest in a broad range of ways – from investing in clean energy facilities to helping carbon-intensive companies reduce the levels of pollution they create. As with government bonds, if you invest in these you agree to effectively lend the government money for a set period of time, in exchange for an interest payment. At the time of writing, detail is still fairly scant on what kinds of green bonds will be available, how much they would pay in interest, or how long you might have to stow your money away for. But there were hints in the detail of the Treasury’s announcements that suggest these bonds may be more competitive than current dismal rates.

Dire savings market

The savings market has been in decline, in terms of rates on offer, for years. But this dire situation has been accelerated by the coronavirus crisis, seeing many savings accounts now paying as little as 0.1% interest. NS&I’s products are no different. In the second half of 2020 the Government-backed savings provider slashed its own rates to all-time lows. This was ostensibly done to discourage households to hoard their cash and encourage spending to help the economy and is not a new concept during crises.

Sovereign green bonds

The new green bonds are being introduced here, and by other governments, to support what is being called the ‘green recovery’ and includes the recent announcement of green sovereign bonds, also confirmed in the Budget. These bonds will be sold to investors as ethical, environmentally focused investments. But the Government, not content with offering such assets to professional investors, also wants consumers to have an option to put their savings towards meaningful green initiatives. The consumer-focused NS&I bonds will be 100% government guaranteed, but there is little detail as to whether they will offer a meaningfully better rate than normal non-green NS&I accounts. The Treasury has said, however, that these deposits will sit outside the normal remit of NS&I deposits, which could imply a different set of goals in terms of how much it tries to attract.


Speculation is rife over what rates will be offered. That being said, it is highly unlikely the bonds will pay significantly more than the current NS&I savings products, especially when the Government is providing 100% guarantees and the rest of the savings market is so poor.

There is no concrete timeline for these accounts to launch either, with NS&I sticking to a “coming soon” position for now. In the meantime, if you’re keen to invest your savings with the planet’s greater good in mind, there are a range of alternative ways to do so.

Please get in touch with your financial adviser to discuss the options for ethical investing.







frozen tax allowances

Budget 2021: four frozen tax allowances that could catch savers unawares

This year’s Spring Budget is as noteworthy for what wasn’t announced, as for what was. Having been set to be a big one given the state of the public finances, Chancellor Rishi Sunak has effectively raised taxes via the backdoor thanks to a series of stealth tax allowance changes.

Much debate was made around the contents of the Budget and whether Sunak would raise taxes in order to pay the extraordinary debt accrued during the coronavirus crisis – some £400 billion in extra government borrowing. But in the event the Chancellor only opted for one upfront tax rise – to corporation tax. The levy on company profits will be raised from 19% to 25% from 2023. Businesses with profits of £50,000 or less will not be liable for any increases and above that a taper will be in effect – so only firms with profits of £250,000 or more will be hit with the full 25% rate.

The Treasury has, however, opted for a raft of tax hikes by the backdoor – by freezing a series of allowances, including income tax, inheritance tax, capital gains tax and the lifetime allowance. By freezing these allowances, the Government isn’t presenting an ‘in your face’ tax rise. Instead, it is reducing the benefit of tax-free allowances as your income and savings grow over time.

Here are the key numbers and implications for each:

Income tax allowance – This has increased to £12,570 for the tax-free allowance and higher rate payer threshold held at £50,000, but rates will then be kept at that level until 2026.

Inheritance tax allowance – frozen at £325,000. This allowance hasn’t changed for years, although extra nil rate bands relating to family homes have been introduced over time. But every year that the rate has been held at the same rate has seen more estates grow enough in value to be liable to then pay tax.

Capital gains tax (CGT) allowance – frozen at £12,300. Many expected much more sweeping changes to CGT after the Chancellor commissioned a review, but instead the allowance has just been held, a much less ambitious change.

Lifetime allowance (LTA) – frozen at £1,073,100. This is clearly relevant for those with larger wealth and dictates how much savers can put into pensions without incurring extra tax charges. Those who breach the LTA face a tax of 55% on any lump sum withdrawals above the threshold, or 25% if you take an income.

What you can do

There are various ways to mitigate the worst of these tax freezes. The effects won’t be immediately felt – this means it is possible to plan financially to minimise the extra tax burden. This can include apportioning more to other, unaffected, areas such as ISAs, spreading allowances between yourself and a spouse, making extra gifts out of your estate, or sacrificing income in to pensions to avoid higher tax bands.

If you are concerned by any of these tax changes don’t hesitate to get in touch with your financial adviser to discuss your options.


state pension

Hundreds of thousands of women entitled to £13,500 from unpaid State Pension

Around 200,000 women could be entitled to an average back payment of £13,500 thanks to an error made by the Department for Work and Pensions (DWP).

The Treasury has announced it is setting aside some £2.7 billion to pay back these women in Rishi Sunak’s latest Budget, with a further £90 million set aside every year to keep up with the adjusted higher payouts. The details were not announced by Sunak, but mentioned in the Office for Budget Responsibility’s (OBR) fiscal report accompanying the Budget. The DWP says that following an internal investigation of old State Pension data it found many women had been paid less than their State Pension entitlement over many years.

Who is eligible for back payments?

Women who are owed money from their State Pension entitlement fall into one of the following groups, as explained by DWP:

  • People who are married or in a civil partnership who reached State Pension age before 6 April 2016 and may be entitled to a Category BL uplift based on their partner’s National Insurance contributions.
  • Following a change in the law in 2008, when their spouse became entitled to a State Pension, some people should have had their basic State Pension automatically reviewed and uplifted. Underpayments occurred in cases when this did not happen.
  • People who have been widowed and whose State Pension was not uplifted to include amounts they are entitled to inherit from their late husband, wife or civil partner.
  • People who have not been paid the Category D State Pension uplift as they should have been from age 80.

The Government says no action needs to be taken by individuals who think they may be affected as the DWP will be in touch to arrange repayment.

If you think you have been affected however, there are a few things you can do to ensure you receive what you are entitled to. This includes making sure your information is up to date with the government Pensions Service so you don’t miss any letters.

But you can also proactively speak to the Pensions Service (using the same link above) if you think you or a loved one are entitled to the uplift.

Of course, if you are unsure or would like to discuss the issues raised in this article, or for any other pensions-related queries, please don’t hesitate to get in touch with your financial adviser for help.

bond and stock markets

Market turbulence: inflation ‘fears’ give investors the jitters

Bond and stock markets have had a troubled few weeks as investors watch for signs of an economic recovery which could finally end the near decade-and-a-half of record low interest rates.

The recovery in countries from the US to China, spurred by increasing vaccination programs, have sparked comments from central banks about ending the unprecedented support for markets. This in turn has caused bond values to fall, with a knock-on effect in the stock market as risk-averse investors cash out.

But why is this happening when global economic news is getting more positive?

Well, it is precisely because of positive economic news that investments are suffering. This comes down to how investors anticipate changes to both interest rates and other support from central banks around the world, including the US Federal Reserve and the Bank of England.

Economic recovery

As economies recover from the coronavirus pandemic and countries open up it is widely expected that cash - which has been pent up by a lack of anywhere to spend - will be unleashed. In the UK, for example, households saved £18.5 billion in January this year alone – an extraordinary amount of money. When this cash is let out of lockdown, it is likely that prices will rise faster than normal as the economy balances supply and demand of goods and services. This means, essentially, that inflation is going to increase, possibly by up to 2-3%.

This is where the ‘fear’ in markets stems from. If inflation rises significantly central banks may be forced to take action and they only have a few things they can do to quell inflation, the primary one being to raise interest rates. Raising rates can cool down an overheating economy as it encourages more people to save their money instead of spending it, thanks to increased savings rates from banks. Plus, if central banks raise rates this makes certain investments less attractive than simple savings accounts where money is guaranteed. That causes the value of bonds to fall, and the yields of bonds to rise. This reflects that the company – or government – issuing the bond has to offer a higher return to compete with savings accounts and incentivise an investor to lend them their money.

Why are bonds and stocks both falling in value now?

In recent times both bonds and stocks have risen in value. This is down to an excess of ‘liquidity’ in markets. Essentially, there is so much free cash looking for somewhere to invest, so both types of investment soak it up, causing more growth in values. The opposite is true when that liquidity dries up. When this happens, cash retreats away from those markets and both – as we are seeing now – experience falls. This sends bond yields higher as explained previously, while the prices of bonds and shares go lower. In normal circumstances it wouldn’t be a bad thing to see rising yields on bonds. Many investment institutions anticipate and plan for this eventuality in the wake of an economic crisis.

But right now, yields are shooting up too fast – reflecting a market that has become overly sensitive to the changing conditions. In essence ‘fear’ has overtaken the market in anticipation of central banks, most notably the US Federal Reserve, raising its interest rates to combat spiking inflation. Stocks are also falling as more conservative money moves out of company shares and into either relatively safer bonds, or even into cash as investors attempt to avoid losses.

What you should do about it

In short, nothing. Investing your personal savings and wealth is a long-term activity. It is not worth worrying about short-term issues in markets taking place over a matter of weeks when your horizon is ten years or more ahead. Selling out of investments when markets are falling is never advisable as this can crystalise losses, leaving a portfolio permanently worse off. If anything, it is a good time to put more money into a portfolio to take advantage of temporarily cheaper investments.

If you have any concerns about your portfolio or want to discuss any of the themes in this article, don’t hesitate to get in touch with your financial adviser for more information.


National Insurance contributions impact state pension - Britons may need to act urgently

Simon Goldthorpe is quoted in the Daily Express warning people that now is the time to take action to avoid missing out on annual allowances this tax year as 5 April falls on Easter Monday this year.

increasing client referrals

Increasing client referrals in 2021

This article first appeared in Professional Adviser.

How to improve?

Receiving referrals from clients or, rather, introductions is an important way to grow your business.  I take a look at how to improve your 'introduction rate'.

Back in the nineties, when advisers were subjected to an observed interview from a supervisor, one of the key competencies was asking for a client referral.

But the adviser didn't just have to ask for a referral. They also had to hand the client a business card and ask them to pass it onto any colleagues, friends or family who might benefit from advice. So they did.

In the real world, however, IFAs would never have done this. The rest of the time they felt too uncomfortable, nervous, or just plain daft trying to generate a lead from the client in front of them.

In many ways, little has changed when it comes to asking for referrals. Many advisers still find it confronting or presumptuous to ask for business, even from clients they know very well.

In actual fact, ‘referrals' is the wrong word to use here. A referral is where a client gives your name to someone else, which may well result in a new enquiry, but will never beat an ‘introduction'.

An introduction is a physical or email interaction and is much more likely to result in a prospect - not least because you have the chance to follow up.

So, for the purposes of this piece, let's talk ‘introductions'.

There are many reasons why an introduction is the best type of prospect. To name just a handful: the person has an immediate need; they are pre-sold on the benefits of working with you; they are the ‘lowest cost' among all other sources of new business; and, ultimately, they have the highest conversion rate of any type of new enquiry.

Importantly, introductions are the only type of new enquiry over which you have complete control. Your own actions will dictate whether clients become advocates and refer you to others. Every other type of marketing is affected by outside influences.

Which begs the question. How can you improve your rate of introductions?

Building introductions into your process

The first way to improve your introduction rate is to have better, dedicated and more intentional conversations with new and existing clients.

Perhaps clients don't know who best to introduce you to. Perhaps they don't know the value you could bring to people in different circumstances. Or maybe they simply don't know whether you would like them to make those introductions.

You can make those conversations easier to have if you think of the process, not as ‘referring', but as ‘a grown-up discussion about your business'. Follow these five steps:

  1. Add a ‘business update' to your client meeting agenda and ask their permission to spend a few minutes sharing your latest news;
  2. Deliver the update - e.g. on new team members, exam success, charity fundraising, etc.;
  3. Explain your plans for growth, reassuring clients that you'll maintain service standards;
  4. Check that they are happy to introduce you to others;
  5. Explain who you'd like the client to introduce you to.

Build these steps into your process and they will soon become second nature within your firm. Clients will start to understand exactly who you want them to introduce, why, and what you can do for them.

If you're nervous, start with your best clients. Familiarity should make it easier to broach the topic and they're also more likely to introduce you to the type of prospect you are looking for.

Other ways to improve your introduction rate

It's always worth considering why clients might not be recommending you already.

Yes, it might just be an issue of communication, but there could be other underlying reasons. You may need to take a harder look at your business.

Perhaps, in truth, your clients aren't satisfied with the service provided. If your standards have slipped, they might feel uncomfortable introducing you to others. A poor experience would not reflect well on the person who made the recommendation.

Equally, your online presence might be putting people off. If a client introduces you, the first thing their contact will probably do is try to find you online. If they can't find you or your presence is poor, they might have second thoughts about getting in touch. For example, is your website and Google My Business listing portraying your business in the right light?

Or maybe it's something so much simpler: maybe you forgot to thank your client when they last introduced you. I'm not suggesting that you send them champagne after every recommendation. But a simple ‘thank you' card or email can go a long way in showing your appreciation for the trust that they have placed in you.

Respect the power of ‘no'

Ultimately, however, some clients simply won't want to make introductions. Often because they've had a bad experience in the past or because they're unsure how their contacts will react to their name being shared.

However well you follow the steps above, ‘no' will sometimes be a reasonable answer, and it's never worth jeopardising an existing relationship by pressuring your client into something they're not comfortable with.

retail investors

Reddit, GameStop and the new retail investment army – why chasing ‘trends’ is best avoided

January saw one of the most widely covered stories for years in financial markets after a group of online retail investors clubbed together to, in their own words, “take on the hedge funds”.

The story goes like this: A retail investor and some like-minded fellow traders got chatting on popular internet chat forum Reddit, and noticed that a number of hedge funds were betting on the price of a retail business’ shares falling (a process known as “shorting”).

The retailer in question, GameStop, is a little-known business outside the US. The firm has been suffering the same as many retailers in the pandemic, with a huge reduction in customers in its stores.

The traders, fuelled as much by boredom as anything else, decided to start buying up as many shares as they could in GameStop, in one of the very few incidences ever of co-ordinated retail investor behaviour.

As the shares started to soar, more and more people flocked to join them but, crucially, the vast majority of them held on to their shares rather than sold them as the price started to rocket.

On the other side of the equation - the hedge funds that had bet on the company’s shares falling -started to lose millions of pounds as GameStop’s share price rose more than 800% in a week.

GameStop was not the only company under the microscope, with other businesses, and even commodities shorted by the assortment of hedge funds then targeted by this same army of retail investors, with similar outcomes.

Did the retail investors win?

The saga continues. Following the huge rise in share prices of these businesses, regulators stepped in to monitor the situation. The ability of retail investors to actually trade the shares via popular US platforms such as Robinhood was then curtailed as the firms halted trading of GameStop and its peers for a time.

The outcome of this was swift. From its peak price, GameStop shares crashed back down to earth, losing around 80% of their value.

However, whilst that sounds like the end of the story, a week or more on the situation is not yet resolved. Trading restrictions have been lifted on a number of platforms, and while share prices are back near where they began, there are some renewed signs of activity as traders locked out of the market are allowed back in.

Lessons learned

The big lesson here is about trends and hype. It can be tempting to jump on the bandwagon when it comes to investing, buying something because it is soaring in the hope of making a quick return.

However, the whole event flies in the face of long-term wealth building. The actual true valuations of these businesses have not been contemplated by the retail investor army buying up shares – everyone was simply jumping on the bandwagon to push the price higher.

There are examples of this time and again across markets, and more often than not the end result is the same.

The best way to approach investing is to have a clear plan, make sure your investments are aligned with your end goals, and to avoid making short-term decisions.

Your money is typically invested for the long term, and your investment approach should reflect this. Otherwise, you can end up like those unwitting buyers of GameStop shares just before they collapsed.

tax allowances

Early end to the tax year? Get your skates on to fulfil your allowances

The tax year ends on 5 April, but thanks to the Easter holiday, many won’t be around to process that last minute deposit this year. Therefore, now is the time to be planning this so you don’t miss the deadline.

The last day of the tax year is always 5 April, with the tax year 2021/22 starting on 6 April. But a quirk in the annual public holidays this year means that 5 April is the Easter Monday bank holiday.

On top of that, the Friday before, 2 April, is also a bank holiday. This means realistically if there is anything you need to get sorted; it should be arranged before the last working day – 1 April.

With that in mind, there are several allowances and limits you need to look at to be ready for the unusually early tax year end.

Pension - Make sure you’ve contributed as much as you can to a pension. The annual limit is £40,000 per person. If you’ve maxed yours and have spare cash, consider adding to a spouse’s annual allowance if they have spare.

 ISA - Make sure you’ve topped up your ISAs to their maximum potential of £20,000.

 JISA - If you have kids under 18, make sure they’ve had their full allowance contribution. The allowance was more than doubled last year from £4,368 to £9,000 – if you’ve missed that it would be easy to not realise you could add more.

CGT – Make sure if you have any investments or assets that are due for disposal that you do it ahead of the new tax year to maximise your £12,300 allowance. This is especially important in light of possible CGT changes from the government

State pension – Less well-known but still important is if you’ve missed any National Insurance contributions in the last five years and would like to make up the difference. You can do so by paying for extra State Pension entitlement. It’s important to note that this has a limit of six years for the end of the tax year for which the contributions are paid.

Marriage allowance – If your spouse earns under the annual allowance of £12,500 you can transfer up to £1,250 to them each year to spread the load. Marriage tax allowance can be claimed back up to five years assuming you qualified in each of those years.

IHT – Every year you have an allowance of £3,000 for cash gifts. If you miss a year you can carry it forward, but only for 12 months. You can also gift £5,000 to a child getting married, or £2,500 to a grandchild.

If you think you need to fulfil any of these allowances before 1 April, get in touch with your adviser right away to discuss your options.

stamp duty

Too late to beat the stamp duty deadline?

If you’re buying a home, time is ticking if you want to take advantage of the Government’s stamp duty holiday and save yourself up to £15,000. The tax break means that anyone buying a home worth up to £500,000 doesn’t have to pay property taxes. However, after 31 March, the threshold reverts back to £125,000, meaning you will have to pay potentially thousands more in taxes.

While anecdotal,  there are some indications that the property market is cooling as the deadline looms and people abandon hope of making it across the line. Halifax Bank for instance published its latest house price figures showing asking prices suffered their biggest fall in January since April 2020. There is also a question hanging over the market as to whether Rishi Sunak will extend the holiday. At the time of writing, a chorus of voices is assembling calling on the Chancellor to extend the holiday and avoid a cliff edge.

Ways to beat the deadline

Unfortunately, we won’t know until 3 March what the Chancellor decides (read our full piece on 'what’s in store for the Budget'). With that in mind, and less than two months to go until the deadline, have you missed the boat? And what can you do to ensure that your purchase completes on time? If you haven’t already started the purchase process, then in all honesty the likelihood that you’ll beat the deadline now is slim, unless you’re buying with cash and are not part of a chain. However, if you are part way through the process, here is what you can do to speed things up.

Find a solicitor with capacity - Many property lawyers, or conveyancers, are reporting that they are swamped at the moment because of the wave of buyers looking to beat the deadline. If you don’t have a conveyancer lined up, then call around until you find a reputable one that has the capacity to complete all of the necessary paperwork by the deadline.

Book your survey as soon as possible - A survey is a vital part of the homebuying process and can’t be skipped. Like conveyancers, surveyors are likely to be very busy right now. Take the initiative and line one up as soon as you possibly can.

Stay in regular contact with your estate agent - As time is not on your side, your estate agent will be one of your best friends over the next few weeks. If you’re relying on the stamp duty savings, and are in a chain, tell your estate agent to stress to the others in that chain that it’s vitally important to work as quickly as possible. That’s a little bit out of your control, but it may inspire a bit of urgency to others in the chain.

 Get expert mortgage advice - A good mortgage broker will not only find you a good interest rate, but they will also be able to tell you which lenders are suffering delays and which ones can give you an offer quickly. Ask you adviser what documents you need at the very beginning so you can save time further down the road.

Be organised and pushy - Your broker, solicitor, lender and surveyor all have a vital role to play in making sure you beat the deadline, but so do you. It’s your job to make sure that you act quickly and provide the necessary documents as quickly as possible when asked for them. And if things are delayed, don’t be afraid to apply pressure on whichever part is holding things up.

If you’re ultimately unsure at whether it is worth it to try and beat the rush or perhaps wait and see if the Chancellor gives you extra time, get in touch to discuss your options.

spring budget 2021

Spring Budget 2021: what to expect in Rishi Sunak’s financial address

Rishi Sunak delivers his second Budget on 3 March against the backdrop of record government spending and escalating national debt. There is much speculation that the Chancellor will use the Budget to balance the books and introduce tax hikes. Increases to income tax and VAT seem to be off the table, as it could hinder much-needed economic growth. However, there are a number of other lesser-known rates that he could target that would produce significant windfalls for HM Treasury – so called stealth taxes.

Capital Gains Tax

Capital Gains Tax (CGT) – the levy you have to pay when you make a profit on an asset sale –is one tax thought to be in Sunak’s sights. CGT is currently charged at 10% for basic rate taxpayers and 20% for higher rate payers. This rises to 18% or 28% respectively if you’re selling a second property. It is thought the Treasury is toying with the idea of reforming the tax, bringing it in line with income tax. That would mean raising the rates to 20% for basic rate taxpayers and 40% for higher rate taxpayers. According to a review by the Office for Tax Simplification this could net an extra £14 billion for the Treasury, and bring to an end what it calls various ‘distortions’ caused by differing rates between CGT and income tax.

Pensions tax relief

Pensions tax relief reform is something that has been discussed in political circles for some time. The relief is designed to incentivise people to save for their retirement by diverting some of the money you would have paid in tax into your pension instead. At present, higher rate taxpayers have a better deal, gaining 40% relief on their pension contributions, compared to 20% for basic rate taxpayers. It has been suggested the Treasury could introduce a flat 20% rate of relief, saving it more than £20bn a year.

Property wealth tax

HM Treasury is said to be looking at the idea of an annual property ‘levy’ or wealth tax. This would replace council tax and stamp duty completely and be revenue neutral – meaning that the treasury would not bring in extra cash from the changes. It would, however, hit hardest those people living in areas where house prices are higher, such as London and the South East. A 0.48% annual levy has been proposed. A homeowner in London with a property worth £516,000 – the average for the area – could expect to pay £2477 a year under the new system. Someone with a property worth £140,000 in North East of England would pay just £672.

One-off wealth tax

Another idea recently touted was that of a one-off wealth tax – amounting to 5% of an individual’s wealth, paid in 1% increments over five years. The plans, suggested by the Wealth Tax Commission, would see anyone with wealth over £500,000 impacted. This idea is however less likely to gain traction than others, considering the Conservative Party’s generally reticent attitude to creating new taxes, particularly on older, wealthier voters.

While these ideas have all been either leaked or touted in the press in one way or another, none are guaranteed as of yet. If you would like to discuss the potential implications of any of these changes with your adviser, don’t hesitate to get in touch.

Thinking of joining or moving network?

Why Beaufort Financial should be on your list….

✓ Cashflow help to ease transition
✓ No lock-in period, or cash penalty. We simply ask for 3 months’ notice
✓ Commitment to independence
✓ Genuine whole of market access
✓ Optional future buy-out plan for those looking to exit at any time
✓ Weekly fees payments
✓ Cloud-based back office, CRM and adviser tools
✓ Award-winning investment solutions

Built by IFAs for IFAs, Beaufort Financial is a nationwide partnership of advisers with a common goal of building successful businesses.

Joining, or moving to a new network might seem a daunting prospect, but we know what needs to be done to make the transition really easy. We have created an onboarding process which makes it really simple - by doing the hard work for you!

Here at Beaufort Financial we work collaboratively; we believe that advisers know best how to deal with clients, so your opinion helps shape our strategy. We would love to talk to you about how it can change your business for the better.

Get in touch with us today!


Andrew Bennett, Joint Executive Chairman          Dave Allen, Partner Services Manager             

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.