danielashby

The World In A Week - Back To School

While the country waved the next generation off to start a new school year, the same old issues still loitered in the global playground.

The tedious game of moans between the US and China continues unabated. The trade stalemate was highlighted with mirrored tariffs, showing a much harder stance from China. This was highlighted with their refusal to acknowledge that talks were progressing, despite Trump's tweet of having deep and meaningful telephone conversations.

When the deal is not going your way, the art is to find someone else to attack. So, Trump continued his open criticism of the Federal Reserve on Twitter, with their tremendous lack of vision and asked: who is our bigger enemy? Jay Powell or President Xi?

It is this political pressure that casts many doubts over the world's most important central bank, which finds itself in detention for not having reduced interest rates quickly enough. The Federal Reserve meet next week, which will be monitored closely for their rhetoric as well as their actions.

However, the biggest playground skirmish was around Brexit. Reacting to the controversial plan to suspend Parliament, the rebel alliance forced through a bill requiring an extension of Article 50 until 31^st January 2020 if a deal to exit the EU is not in place by 19^th October 2019, ruling out the possibility of a 'no deal' Brexit.

As a result of voting against the government, 21 Conservative MPs have effectively made themselves 'independent' in the House of Commons. Such a weak government would normally result in an election, however there is no demand for an election before the bill to rule out a 'no deal' is enshrined in law.

All we know for sure, is that the process has much longer to run and a general election looks all but certain in the near term. All of which is having an adverse effect on the UK economy, which continues to weaken with uncertainty continuing to linger on the horizon.

So, we have all been given a new timetable to learn.

by danielashby

The World In A Week - Prorogue

You may think that the title of this week's 'World in a Week' relates to the protagonist of a play, disappointingly this is not the case. Prorogue is the technical terminology for the discontinuation of a parliamentary session without formerly dissolving parliament. This is what Boris did next, when he announced that parliament would be suspended from mid-September to mid-October, in order to push through Brexit. In a move which received approval from the Queen, Remainers will now have significantly less time to prevent a disorderly Brexit. While it has been cited that Boris will have much greater leverage and credibility in the EU renegotiation of a Brexit deal, he is also at risk of facing a vote of no-confidence, which could trigger a possible election. The Pound came under pressure against the US Dollar on Boris' announcement, be sure to stay tuned for the next act...

Staying in Europe, equity markets rose steadily last week. The reasons for this were two-fold; firstly, the US/China trade discussions showed signs of improvement, which was positive for Germany whose economic data demonstrated that they had managed to stave off a recession, for now at least. Secondly, Italian markets received a significant fillip when populist party 5-Star Movement and the centre-left democratic party agreed to formalise their plans to build a coalition government. The Italian stock exchange, the FTSE MIB, rose nearly 4% on the back of this news. This positive news was marred by the fact that the coalition will face immediate and tough challenges such as the country's mounting debt, a stagnating economy, and the expectation that they are likely to breach their target budget deficit in 2020. Italy have already come under scrutiny by the EU in May of this year. It is broadly expected that the coalition will go ahead but with political views that are poles apart, it is questionable whether the coalition will be sustainable over the longer-term.

by danielashby

The World In A Week - The G7, and other Sticky Wickets

Market volatility continued for the week ending 23^rd August 2019, with global equities down -1.6% in GBP terms as measured by MSCI ACWI - this was primarily driven by ongoing concerns regarding the US economy as well as a weakening Dollar. Global bonds fell -0.1% over the week, while Sterling bonds fell -0.3%. Sterling rose against all major currencies, having weakened significantly for the year to date.

While England simultaneously basked in a sweltering bank holiday weekend and victory over Australia in the cricket & Ireland in the rugby; the leaders of the major western democracies gathered in Biarritz for the annual G7 summit. In spite of some rather superficial gestures regarding advancing the Iranian nuclear talks and the establishment of a fund to combat Amazonian forest fires, the summit was broadly as dysfunctional as it has been over the Trump era. President Macron attempted a charm offensive with Mr Trump, hoping to appear statesmanlike. Prime Minister Johnson spent the weekend portraying the UK as open, outward looking and ready for new international trade deals in a post-Brexit world.

We can expect market volatility to continue into this week as the London markets re-open (with the air-conditioning up full blast no doubt). Worries over the US-China trade war persist, Italian political drama drags on and the depth of the economic slowdown in Germany is a serious cause for concern. The upside for equity markets is now potentially more limited than that of England's prospects in The Ashes.

by danielashby

Diary of an adviser: Tony Gardiner

Monday

Monday starts at 8am, checking my emails and seeing what action is needed. After, I check my diary to make sure that everything is in place for the week ahead.

The morning is spent looking at client portfolios that are due reviews over the next two weeks and putting into place any action plans with the admin team. Due to the current market volatility, there are a couple of fund switches to complete. I have one client with which I am in discussion regarding going into drawdown on his pension fund, and we have decided to go a little more defensive on a percentage of his fund.

This evening sees me head off for an evening meeting with a couple to complete a Life Plan cashflow model as part of their pension options discussion we are having.

Tuesday

It's an early start as I head to London for meetings with a one of my introducers, a solicitor practice in Mayfair. I give a presentation to the family team about our Life Plan cashflow service, and then we hold some joint meetings with several clients throughout the day where we use the service to demonstrate how this can be the backbone of their financial planning going forward.

Tonight, I do some facetime calls with some friends back in the UAE, where I lived for many years. It's a bit later for them though, so it's short hello's, quick catch-ups and then a bit of TV before bed.

Wednesday

The day starts in the office, where I meet with the admin team and run through yesterday's meeting and pass over the change of agency forms which I was given. The admin team then action these and we await the return of the document before we plan any recommendations and follow up meetings.

I've got a Lunch time meeting with an introducer, then I head back to the office to work on a client's investment options.

Tonight, I'm out for a light jog. I'm still trying to rehab after snapping my Achilles during a football game I took part in with Beaufort Financial within my first few weeks!

Thursday

Today's diary schedule tells me I have back-to-back client meetings so I'm looking forward to catching up with them and giving them updates on their portfolios. More importantly I'm looking forward to finding out how they are, and to see if there have been any changes in their circumstances since we last saw each other.

The day ends well when a person I have known for several years calls me and asks for a meeting to discuss an inheritance he is due to receive. He wants some regulated advice to more sufficiently understand his new position.

Friday

The week ends well with an email from an introduced prospect that I meet two weeks ago, letting me know that they would like to start to work with me and begin a financial planning journey with Beaufort Financial (Reading). I'm really pleased to be able to help another family plan their financial future.

We then have a lunch time meeting in the office with the head of the Berkshire Community Foundation, who are a charitable grant-maker supporting hundreds of charities and voluntary organisations across Berkshire. Beaufort Financial (Reading) staff offer volunteering days to help charities we are passionate about so I was keen to meet him and find out how I could get more involved. It's been a great week, and now I have some time to relax over the weekend.

by danielashby

The World In A Week - Rebel Without A Cause

The US and China are both playing hardball, with neither wishing to lose face, but so far, there is no winning, only losing. On a topic that we have written extensively about in the past, trade wars continue to fluctuate between resolution and escalation. Following Trump's announcement of further tariffs on Chinese goods last week, which initially, were planned to be implemented on 1^st September 2019, China allowed its currency to devalue, falling through 7 Yen to 1 US Dollar. The tit for tat continued, with the US proclaiming China a currency manipulator. Trump later announced that he would defer some of his new tariffs, those specifically linked to consumer goods. China agreed to further talks within the next two weeks, in a move likely focussed at calming some of their tensions, as protests in Hong Kong escalated.

While stock markets responded positively to the softening stance of China, the same cannot be said of bond markets. Last week, we witnessed an event that has not been seen in over a decade; the event in question is the inversion of the US Treasury market's yield curve. It has been over 10-years since the yield curve inverted; this means that the yield on 10-year notes fell below that of 2-year notes. The last time we witnessed this move was in 2007 and the Great Recession duly followed in December 2008. Despite the inversion being rather brief, historically, this has been a reliable precursor of a recession. But, bond markets, like equity markets, can get it wrong. However, we must be cognisant that the chances of recession have now greatly increased.

by danielashby

Saving for Retirement - the challenges ahead

Gone are the days of gold-plated defined benefit and final salary pension schemes for all but a few private sector employees. Many public sector employees have seen their pension entitlements trimmed as cash strapped local authorities and public agencies seek to re-negotiate pay packages and benefits. Every day it seems we hear of massive pension black holes in public companies. Successive Governments from the late 1980s have tinkered with the pension legislation. We have witnessed the decline of final salary schemes, dreadfully poor return on annuities as interest rates remain stubbornly low, annual and lifetime tax-free allowances cut back, the rise (and perhaps) fall of self invested and administered pension schemes and more recently pension freedoms, which on the one hand have sparked a greater interest in the tangible benefit of a pension, but on the other have led to scams and frauds.

According to a recently published annual report by leading pension provider Scottish Widows, one in five people believe that they will never be able to retire. The report does, however, reveal that saving for retirement has jumped this year and that some 59% of workers over the age of 30 are saving adequately - which means saving at least 12% of their annual income. This is a record figure since Scottish Widows' first edition of the report was published in 2005. Some 12% are saving something, whilst 44% of the 'adequate' savers are still in defined benefit schemes. Roll back the years and that figure would have been double.

The impact of compulsory workplace pensions (auto-enrolment), introduced some seven years ago, is now being felt. It is "the engine of progress", according to the report and "is perhaps the single most transformative retirement policy that has been implemented in the UK". After a previous decline in pension scheme participation there has been a sharp turnaround, as nearly a third of the working population have been automatically enrolled, according to The Pensions Regulator and the Office of National Statistics.

The report's Adequate Savings Index finds that the proportion of those not in a defined benefit scheme, but saving, has risen substantially since 2007/08. The ASI shows that its mainly younger people saving more - up 18% for those aged 22-29, but also those aged 60-69 who are saving 7.5% more now than eleven years ago.

The challenges ahead

Whilst this rise in saving is undoubtedly good news, there are more underlying concerns about how we will afford retirement. Earnings in real terms are still below those earned before the credit crunch. Although we are told that inflation is low, nudging two percent, try telling that to would be house buyers, commuters, pub goers, council tax and utility bill payers and motorists. Their costs have gone up many times more than 1.9% per annum over the last decade.

The Resolution Foundation tells us that the average UK salary is £26,000, and although unemployment sits at 3.8%, the lowest for half a century, does this really help us understand how to plan better for saving towards retirement? Disposable income is the lowest it has been for a long time. There is still a long-term savings gap, particularly for those saving for a deposit to buy a house and for the huge number of self-employed as well as those on zero hours contracts who haven't, and can't, make any pension provision. Of the low paid, 24% cannot afford to save at all. Of the self-employed, at least 15% of the UK's workforce, 37% have no pension, and 41% expect no income in retirement, and 19% never expect to retire!

The housing crisis, affordability of housing and the need for a substantial deposit, coupled with low wages has caused a perfect storm that no other previous generation experienced when contemplating home ownership. Retirement savings could be used to help buy a property the Scottish Widows report concludes. Otherwise, it is the Bank of Mum and Dad, that prospective home-buyers will need to turn to.

Other storm clouds are the increase in state retirement age and the spiralling cost of care for the elderly. Some £14.7bn is the amount patients with dementia have spent on their own care in the past two years. Patients would need 125 years of saving to pay for dementia care if saved at the same rate as a typical pension; according to the Daily Mail. The latter is particularly scathing of successive Governments' inability to solve the social care crisis. Dementia sufferers have been betrayed, cries the Mail. Since Tony Blair appointed Frank Field as pensions minister in 1997 and asked him to think the unthinkable and reform pension legislation - which he did; and was fired, we have had Royal Commissions, the Sir Andrew Dilnot's review of 2011, Mrs May's proposed dementia tax, the six times delayed social care green paper on the proposed state-backed insurance scheme and others, all changing the face of saving for care.

What we do know is that a long-term savings policy needs to be agreed that includes everyone. The population face a long retirement and pricey care home costs as we live into our nineties and beyond.

by danielashby

The Beaufort Financial Arkriders complete the Twin Towns Tour

Three of the firm's Financial Advisers have yet again raised thousands for the Basingstoke Ark Cancer Centre Charity.

Mark Dolby, Andy Coles and Ashley Hull of Reading-based IFA firm Beaufort Financial have raised another £3,415 for the charity, which is aiming to raise £5m to build a specialist cancer treatment hospital in Basingstoke, Hampshire. The money will be added to £20 million pledged by the NHS.

For the fourth year, Beaufort Financial advisers joined the Arkriders' summer fundraising endurance bike ride. The John O'Groats to Lands End challenge was the first in 2016, followed by Basingstoke to Paris (262 miles) in 2017, and Basingstoke to Bournemouth and back on the hottest weekend of the year in 2018.

This year saw a team of 30 riders set off from the Ark Conference Centre in Basingstoke and cycle to Cologne, via Basingstoke's twin towns of Braine - L'Alleud in Belgium and Euskirchen over the German border, before reaching the destination some five days, 500 miles and five countries later.

Overall the group have raised £48,300 so far on this trip, totalling approximately £270,000 over the last four years.

Commenting on the challenge, Andy Coles said: "We joked on our first ride to Land's End that the Ark Centre's first patient could be one of us. Unfortunately, one of our own riders, Richard, was diagnosed with cancer earlier in the year. Which is an all too familiar story and one that has brought the cause sharply into focus. Richard's recent news is encouraging, but he has a long journey ahead. We were pleased to be able to take on this challenge to raise money once again for such a worthwhile cause".

Mark Jones of the Ark Cancer Centre Charity added "The Ark Riders have been at the heart of the community campaign to raise the money for the new NHS cancer treatment centre in Basingstoke and now the 2019 peloton have piled on the miles, and the pounds, in this latest formidable feat. So far we have raised over £2.3 million.

On the 28th September, the Arkriders will host the "Eine Grosse Nacht" celebration to mark the epic feat at the Basingstoke Irish Club. Tickets are selling fast, so please visit https://www.arkriders.co.uk/product/twin-towns-tour-party/ to get yours.

You can still donate via the link: https://www.justgiving.com/fundraising/beaufort-financial2

Alternatively, you can send a cheque payable to 'Ark Cancer Centre Charity' and send it to: Dinwoodie Drive, Basingstoke, Hampshire, RG24 9NN.

If you are able to Gift Aid please download a form to send with your cheque.

by danielashby

Could your property boost your retirement fund?

Property is increasingly being seen as an asset that's vital for funding retirement. It's no surprise, after all, our homes are often one of the largest assets we have, but what are your options and the drawbacks of doing this?

The value of property has grown enormously over the last few decades. If you're approaching retirement now, you've likely benefited from this at some point. According to figures from Nationwide, the average home cost £59,534 at the beginning of 1989. Over a 30-year period, it increased to £212,694. As a result, property has become an integral asset to consider when planning for retirement or thinking about how you'll pass your estate on to loved ones.

Property and retirement: A growing trend

Some retirees are already exploring how they can use property wealth to enhance their lifestyle and supplement other financial provisions. Research suggests it's a trend that's set to continue. According to analysis by Canada Life younger generations are three times more likely to plan to use property wealth to fund retirement:

• Almost one in ten (9%) people aged between 16 and 54 expect the wealth stored in their homes to be their main source of income in retirement
• This compared to just 3% of those aged over 55

Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said: It is good the younger generation recognises that they can unlock wealth from their property in retirement. This openness is likely driven by the reality that many under 50s will receive less generous pensions under the Defined Contribution scheme, compared to the majority of the older generation on the Defined Benefit plan.

Notably, the research also illustrates the evolving profile of retirement income, and lends further weight to the argument that Equity Release is moving into mainstream financial planning.

The findings suggest the majority of over 55s are confident in their financial security. Half believe their State or Workplace Pension will provide sufficient income, whilst one in five are relying on savings. However, with 21% underestimating how long they'll live for, more could be reliant on property wealth than expected in the future.

What are your options?

With a significant portion of your wealth likely locked in property, it's natural to wonder what you can do to access it should you need to.

One of the most obvious answers here is to downsize. Selling your home to purchase a cheaper property to spend retirement in can free up some of the investment you've made in property. This used to be the traditional route retirees went down. But what if you can't or simply don't want to move? Or what if downsizing wouldn't release as much capital as you need?

Equity Release is an option that more retirees are choosing. There are several different types of Equity Release products, but they typically allow you to take either a lump sum or several smaller sums though a loan secured against your property which you pay interest on. This money is then repaid when you die or move into long-term care, as a result, you don't usually make payments to reduce the loan during your lifetime, though some products allow you to pay off the interest.

Equity Release can seem like a fantastic way to fund retirement, but there are some crucial things to consider; it isn't the right option for everyone.

1. As you don't usually pay the interest, the amount owed can rise rapidly
2. Accessing the equity may mean you're liable for more tax and affect means-tested benefits
3. You may not be able to move in the future or face a high cost for doing so
4. Equity Release will reduce the inheritance you leave behind for loved ones
5. You will not be able to take out other loans that use property as security

Before you look at Equity Release products it's important that you explore the alternatives to ensure it's the right route for you. There may be different options that are better suited to your circumstances and goals.

Building a retirement income that suits you

Whilst property wealth is set to play a growing role in funding retirement, it's important that other sources aren't neglected. Retirement income is typically made up of multiple sources and may include:

• State Pension
• Workplace and/or Personal Pensions
• Investments
• Savings
• Property

Choosing property over contributing to a pension can be tempting if retirement still seems far away, especially when you factor in property growth over the last 30 years. However, once you consider tax relief, employer contributions and investment returns, as well as tax efficiency, pensions should still play an important role in holistic retirement planning.

If you're starting to think about retirement, whether the milestone is close or you want to understand how your current contributions will add up, we're here to help. We'll work with you to help you understand the different income streams that could provide a comfortable, fulfilling retirement that matches your aspirations.

by danielashby

Using your savings to achieve aspirations

What's on your bucket list? Whether incredibly exciting experiences, exotic travel destinations or something entirely different features on your list, it's likely finances will play some role in how achievable they are. Could your savings be used to tick a few of your aspirations off?

You may have been saving with specific goals in mind or simply putting money to one side for the future. However, dipping into savings can be something people find difficult. To have built up a healthy savings fund you've likely established good money habits and accessing savings can go against this. However, it may mean you miss out on opportunities to achieve aspirations, even if you're in a financial position that allows for it.

As a result, it's important to understand your savings and how dipping into them will affect your plans, giving you the confidence to make decisions.

If you have big plans ahead, from helping younger generations get on to the property ladder to a once in a lifetime trip, there are a few things to consider. Your savings are likely to be spread across multiple products, how do you know where you should take the money from and when should you do it? Among the areas to consider are:

• Accessibility: When looking at various savings, the first step should be to see how accessible they are. Are any of them fixed term accounts? Or are some of them invested? If you're planning ahead for a few years' time, accessibility is less likely to be an issue, but if you want the money soon, it may limit your options. Be sure to check that you won't lose any of your savings, interest or returns by taking money out. Some accounts may lower interest rates, for example, if you make a withdrawal before a set date.
• Tax efficiency: Would accessing your savings affect your tax position? There are some instances where taking a lump sum from savings may mean an unexpected tax bill. Let's say you decide to use some of your pension after the age of 55 savings to kick-start retirement; the first 25% can usually be withdrawn tax-free, but, take out more than this and it may be considered income for tax purposes. If you sell stocks and shares, you may be liable for Capital Gains Tax too. Looking at the tax efficiency of different options allows you to maximise your savings.
• Allowances: As you've been saving for the future, you may have made use of allowances. Your ISA (Individual Savings Account) allowance means you can save £20,000 each tax-year tax-efficiently. If you take money out of an ISA, you can't return the money without using the current year's allowance, which may limit you. In some cases, allowances will have little impact on your decisions, but in others they are important. This will depend on your personal circumstances and plans.
• Potential for future growth: Which of your saving pots has the biggest potential for growth in the future? Accessing savings that are invested over a cash account with a low-interest rate may not be in your best interests financially when you look at the long term, for example.

The impact on your long-term financial security

Of course, it's important to consider what impact using savings now will have on your long-term financial security. If you're worried about how taking money out of savings could affect future plans, this is an area financial planning can help with.

Often people find they're in a better financial position to start accessing their savings than they first think, but it's normal to have some concerns. Cashflow modelling can help you visualise the short, medium and long-term impact of using your savings. It can also model how taking savings out of different saving products will have an effect, allowing you to choose the right option for you.

It's also an opportunity to weigh up how your financial security will be affected. Would using a portion of savings mean your emergency fund is depleted, for example? Understanding the long-term implications gives you the tools needed to decide how much and when you should make a withdrawal from your savings. Taking the time to consider the long-term impact of your decision means you can proceed with confidence and really enjoy spending the money on turning aspirations into a reality.

If you're thinking of accessing some of your hard-earned savings to work through your bucket list and have concerns, please contact us. Our goal is to work with you to help you get the most out of your money by creating a financial plan that reflects aspirations and boosts confidence.

by danielashby