Our children’s need for planning may be even greater than our own

Research from the Institute of Fiscal Studies (IFS) surrounding wealth in the UK has been making headlines in recent months. The study has found that people born during the 1980s are now half as wealthy as those born in the 1970s were at the same stage in their lives. This makes children born during the Thatcher era the first generation since the Second World War to earn a smaller income when they reach their thirties than people born ten years before them.

The current average household wealth of people in their thirties is £27,000, a figure dwarfed by that of those in the same age bracket ten years ago, which was £53,000, on average. The IFS suggests that, amongst a number of reasons, the key factors behind this turn of events include continuously low rates of interest and the 2008 global financial crisis, both of which have made it much more difficult for those born in the ‘80s to build up their level of wealth. This in turn, has left the generation with insufficient pension funds and lower levels of home ownership than those enjoyed by generations before them.

The study comes as yet further confirmation of the widening divide between the older and younger generations in the UK. Earlier this year, the IFS also found that whilst those under 30 have seen an average income decrease of 7% since the financial crisis, those over 60 have seen a rise of 11%. This divergence of fortunes in financial matters has in part been made possible by the pensions ‘triple lock’, which has seen the basic state pension rise in line with the highest of either consumer price inflation, average earnings or an increase of 2.5%.

With Brexit making the financial outlook in the UK more and more uncertain for the foreseeable future, the best way to protect yourself and your family from whatever the future may bring is to plan together, rather than allowing one person within your family to become ‘the one who handles the money’. As recent figures suggest that more and more people in the younger generations are saving nothing at all for their future, this is a great way to get your whole family into a positive financial mindset. That way you can protect the wealth passed down through your family into the future and engender a tradition of sensible planning and saving for generations to come.



Why you should review your wealth regularly.

We all know that life holds no certainties and therefore when it comes to your financial portfolio, a little change here and there can only be a wise idea. Preparing for changes in your life will help ensure that your wealth is optimised for all the uncertainties in your personal life and the environment around you.

When you first established your portfolio, you no doubt did this with clear plans based upon your personal situation and your adviser’s understanding of the economic climate and the financial services industry. Although your funds will often be managed in some manner of speaking, your objectives could change, and so could your appetite for risk.

Just like housekeeping, a spring clean every now and then keeps the cobwebs away and such should be the same approach with your investments, pensions, protection and mortgages. Giving your finances a health check will help to safeguard your wealth against negative market changes or realise opportunities from positive changes. No doubt, it is also important to take account of any major changes in your life.

Here are 4 personal reasons to review your portfolio:

1. Change in your personal status. 

Have you recently got married or entered into a civil partnership? You may also be in the beginnings of divorce or separation proceedings. Major changes in your personal circumstance may require you to split your pension, give up the equity in your marital home and so forth. Seeking appropriate legal advice is the best starting point for reviewing your portfolio in these circumstances, but once you’ve received that court order or that alternative dispute resolution agreement, seek immediate financial advice.

2. Children.

Worth every penny but not cheap (yes they really are worth it!), raising children can have a BIG impact on your wealth… as well as your sanity and your pre-children coolness. As these little one’s evolve into adults you may need to consider costs such as university, having paid for private tuition, ipads, iphones, PlayStation etc.  You then have the luxury of helping them purchase their own home and then pay a whack towards their wedding. You can then finally go on your cruise…actually nope, you’ll have to stay at home and help with the pregnancy and then you’re grandchild duty and then maybe you can go on your cruise. But seriously they’re worth it…I think.

Planning now for any future changes will ensure your finances have a better chance of serving those selfless ambitions.

3. Redundancy or retirement.

Stopping needing to work is something many of us dream about but few are fortunate enough to realise early. Whilst the retirement age goes up, you may decide to take what is deemed as early retirement. Redundancy may also affect you, leaving you with a new lump sum but a lack of regular income. Drawing upon your portfolio for temporary or permanent support may be necessary. Does your current arrangement allow for this? Or could your portfolio be better balanced in order for you to cope long-term?

4. Inheritance

An unexpected windfall in any form should be invested wisely and with this, a review of your current portfolio and diversifying this may be a good idea.  If you have an inheritance, planning how to invest this can be a good starting point for a whole portfolio review.  If you have been thinking of new investments, this could be the ideal time. Likewise, planning your own Will and the implications of inheritance tax on your family can be a good idea to ensure that your portfolio works effectively for you and for them.

Overall, when it comes to reviewing your portfolio, taking account of predicted or announced major changes in taxation, national economic policy, geopolitical events will stand you in good stead to manage volatility better.

Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.

5 Questions for the Potential Investor

Thinking about investing your personal finances is not a decision to be taken lightly. With so much to consider, just the thought of entrusting your hard-earned money can make your head swim! That being said, there’s no need to feel over-whelmed by making the decision to invest – with our help, you can keep your head above water and discover the right financial move for you.

Whilst taking the step of investing is actually very simple, the wisest investors and quite often those who reap the most lucrative rewards, are those who take the time to look before they leap. Whether you have the urge to jump in feet first or are hanging on to those purse strings for dear life – a few choice questions and a little reasoning will work wonders for your money’s potential as well as your peace of mind.

To help you, we have prepared 5 questions to ask yourself before you invest so that you can be a savvy investor:

1. Why should you invest?

Well put simply – if you want your money to grow and to benefit you as time goes by, investing is the best way to do that. Money that sits idle in a bank account serves little benefit beyond being some nice numbers on your bank statement each month. Investing puts your money to good use as well as increasing its value by being part of a wider project. Invested money is active money and is far more likely to benefit you in the long term than simple saving for a rainy day.

2. When should you invest?

The specific details of what you choose to invest in are up to you but the state of the market is something you should look at and consider. That being said, trying to predict a market or pick your ideal moment will probably just leave you in the starting blocks whilst the race goes on ahead of you. The thing to remember is that all markets experience short-term movement or fluctuations but it is the longer term picture that you should consider. There may never feel like the completely perfect time to invest but with a bit of research you can pick a very good time to put your money in.

3. How should you invest?

Investment markets will have down periods which is something that needs to be taken as the rough with the smooth. To minimise the risk of being adversely affected by these downturns, it may be wise to consider splitting your finances and diversifying your portfolio.  But beware: spread yourself too thinly and you may regret it due to a lack of financial reward and the pressure of keeping on top of too many assets. Choosing a few, specifically selected projects will instead enable you to keep an eye on your money, minimise risk and reap the benefits.

4. Where to invest?

A market that has a healthy long-term future is the best option. One which cannot be predicted to be a flash in the pan but instead is a more like a constant simmer. Giving your money some time to grow IS necessary and the safest, most stable option. So whilst you may be tempted to put your finances into the next big thing, a market which can demonstrate maturity and longevity is the wisest choice.

5. What to invest in?

This really is the million-pound question – and the answer lies entirely with you. After all your considerations, you need to be happy with what you are investing in and stay happy.  Consider regular reviewing your portfolio to check on the health of your investments and the decisions you made. In time, your preferences may change as your life moves forward. For instance – investing abroad may seem like a good idea when you are younger but as you approach retirement, UK investment may seem the more sensible option. Think about the needs of your family, your plans for the future and the benefits that your investments give you (if any) which are not financial.

Considering the questions above will give you a good starting point from which to make your investment choice. And as you take the step forward, you can go in to your investment being satisfied with the decision you have made. Winging it may seem like a good idea with some things in life – but choosing where to entrust your money is not one!


Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.

Expecting the Unexpected: Protect Your Income

Looking to the future is something most of us only do in the short-term.  We think ‘it will never happen to me’, or ‘we’ve got better things to spend our income on’ and unfortunately planning for the worst is simply not a priority.

The sad truth though is that none of us are immune to illness or injury, which could keep us away from work and considerably impact our lifestyles.

Future-proofing – just in case.

At the very least look at your expenditure habits, be honest with yourself with regards to how long it would take you to return to work, even factor in the possibility of losing your job due to sickness and then looking for new work once you are better. That should give you an idea of how many months worth of income you will need to replace.

That figure should be your initial savings target, before you even think about investing a single penny into stocks and shares. There’s no point investing in stocks and shares which are long term investment vehicles if you have to disinvest at the wrong time, it could cost you and your family a lot of money.

Serious illness or injury that stops you from working is a real concern and affects hundreds of people each year.  Consider the following facts:

  • Nearly 1 million people a year are off work long term sick
  • Most common long-term work absence is stress, mental health and musculoskeletal injuries
  • Musculoskeletal injuries are more common for manual workers and stress is more common for non-manual workers.

You can read more here: http://www.legalandgeneral.com/library/protection/sales-aid/W13952.pdf 

What would you do?

If you were one of those 1 million, or maybe your willing to take that chance? Maybe your thinking population in the UK is around 64 million so it appears as if it’s a 1 in 64 chance. A chance that you are willing to take. BUT, the working population is 31 million, so, now that’s a 1 in 34 chance and we haven’t got to considering your current health, dietary habits, exercise habits and current mental health. If we were to factor those in, the statistics could look a lot scarier.

Income Protection

An income protection policy usually protects your income upto 50% of your gross salary. It’s at 50% primarily to encourage you to return to work and if it is used in conjunction with your savings it can be a useful way to help you manage your finances when things are not going so well allowing you to focus on your recovery. What’s more, is that it is permanent, this means once you have been underwritten you can make as many claims as you need to if you return to work and then become unwell again. The benefits are also tax free.



Source: http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/2015-04-17


Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.

Got Post-Brexit Financial Panic?

4 tips to manage your finances in the wake of the EU referendum

If the recent results from the EU referendum have left you surprised, then it will only have been a matter of time until your mind turned to the financial implications. Leaving the EU is a political change that this country hasn’t experienced, meaning the impact upon our finances and economic future is unknown. It can be easy to think that there may be challenging times ahead as we move into a new era.

1. Panic stations.

With all this uncertainty, it’s easy to panic and start thinking about how secure your hard-earned cash may now be.  You may be worrying about secure your capital is or what your next move should be. Should you sell your house now? What will happen to the job market? Should you make changes or is it better to sit tight and wait for the banking world to respond?

Whilst concern is easily understood and in fact sensible, in actual fact overly worrying is what will contribute to any fluctuations in financial markets in the short term, rather than the EU exit itself. Rash decisions and panic buying or selling are more likely to bring about changes in the current financial market and this is what you need to consider.  

In order to put your mind at ease, we have 3 simple tips to help you think clearly and calmly and avoid that post-Brexit panic.

2. Don’t fall for the fall-out.

The best advice at this current moment is to simply take some time to think clearly about where your money is invested and why.

Assets you may have purchased or investments you may have made in the past were a good idea at the time but is this still the case? Do they still make sense to you? Do some research, think about your future and age and be prepared to be flexible in your approach.  Use this change in our political landscape as a chance to conduct a review of your finances in order to prepare for the future.

There should be no need to panic or make rash decisions though. According to financial experts, any major changes in markets due to Brexit will not surface for the next two years at least and the banking sector is actually in a more stable position than it has been since approximately 2007. Any changes to the house or job market are unknown at this stage and so far, are not indicating any major crash.

3. Don’t put all your eggs in one basket.

All this being said, a review of where you have placed your funds is never a bad idea and the best move you can make at this point is to diversify your portfolio. This particularly the case if up until now, you have kept your finances in a singular point. Spreading capital across investments will minimise the risk of being severely affected by any future dip in the markets.

Varying the types of assets you have and the location of your investments is also the best chance of safeguarding your finance. If you are far off from retirement, your pension is unlikely to be majorly affected.  If you are approaching retirement or already retired, you may want to consider removing a sum or keeping invested. Whatever you decide, now is the time to seek pension advice and to review your situation.

4. Relax – but keep your adviser on his…or her toes

If you haven’t spoken to your financial adviser in some time, it may be worthwhile picking up the phone and requesting a commentary from the investment committee or fund manager of your investments and pensions to see how they had been preparing for Brexit and post-Brexit. You do this basically to keep your adviser on their toes,  not that they are not, but it’s good to make sure.

On the other hand it may be the right time to review your situation and whether market changes or even potential changes are likely to affect when you will retire and how you will access your pension. For instance, if you had been planning on purchasing a lifetime income, that is an annuity, with your pension fund, you may want to reconsider this due to the weakening of the pound.


Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.

The future of wealth advice

The financial services industry is in an interesting place in 2015. It has been nearly 3 years since RDR and for the large part the industry has spent their resources focused on transitioning into a new and more rigorous regulatory landscape. The pressures from regulatory change have now subsided and organisations have adapted and the demand for advice in light of pension reforms and the threat of inheritance tax has increased. The demand is also unlikely to recede as people live longer and the need for more complex advice on how to grow and extract wealth becomes relevant to more people.

Today, a digital marketplace

In today’s marketplace close to 60% of investors look for advice online despite 25% conceding that there is not enough quality information available to base their decisions on. Although what is positive is that once engaged with an adviser almost 90% are extremely or mostly very happy with the quality of the service provided by their adviser. The challenge therefore is clear, in a time poor society, with ever increasing pressures, the traditional mode of face to face contact with wealth advisers is seriously threatened for the mass consumer and more needs to be done to harmonise technology with a client-centric experience whilst also improving on business efficiency.

Any thoughts that the future of wealth advice would be the preserve of the wealthier older generation who would prefer direct face to face interaction is likely to be short-sighted as the penetration of social media engagement crosses all age demographics. Consider the fact that Facebook’s membership growth is the fastest among those aged 55+, and if you are wondering how Facebook relates to the dignified professional realm of wealth advice, it’s because of leveraged multiplier marketing; that is creating awareness and recommendations from peers in a digital space. This stems from the synergy created between the digital space and mobile technology, forcing advertising to be become more personalised and bringing the producer or service provider closer to the customer in terms of engagement be it via Twitter or Facebook as customers engage with their devices at all times of the day.

What’s more, the figure from Facebook tells us something else, it is that confidence is growing among older clients in using the internet to converse and relate to others. So, just imagine that same demographic, taking a further step into the use of quality internet banking services, and now being exposed to quality investment management and advisory services…all online.

Resting on one’s laurels would be ill advised for the traditional advisory firm regardless of how successful they may be right now or have been in the past especially with the rise of relatively low-cost web-based advisory solutions offered by the likes of Wealth Horizon and True Potential which offer self-directed investment propositions tailored to one’s risk profile but also allow personalised financial advice over the telephone or face to face.

Another popular investment platform with a strong brand that has plastered the London Underground with their advertisements for the last few years has been Nutmeg. Since their inception, they have attracted users due to their very low cost and transparent fee structure coupled with a straightforward and simple user interface but has not offered any advice services for their client base. What’s interesting is that they plan to do so now and are currently on a recruitment drive to incorporate financial advisers into their proposition.

Although the latter organisations are new into the marketplace and despite the fact that their customer base and market share is relatively small they all have phenomenal potential as they have been able to build a compliant client centric infrastructure without the burden of dealing with legacy clients and systems which is an unfortunate challenge to the traditional wealth advisory organisations. Therefore, the medium to long-term threat to the traditional model is most certainly the latter emerging tech-savvy service solutions.

Don’t take your business model for granted

Consider the fact that only 10 years ago Facebook raised $12.7 million for capital investment, or the fact that Blockbuster was valued at $8 billion, YouTube was just founded, and as for Uber, it was still 3 years away. Today. however, Facebook is valued at $230 billion, Blockbuster is defunct, YouTube is valued at $70 billion and Uber is valued at $50 billion. Facebook and YouTube innovated and recognised a market opportunity that has since changed our behaviour and our relationship with our mobile devices and much more, Blockbuster couldn’t innovate fast enough and today Uber is the single biggest threat to the black taxi trade as we currently know it. So, what does this mean? Basically, innovate, otherwise, risk becoming another Blockbuster.

What does the future hold? There will always be a strong demand for advisers, as an adviser’s role is not merely to instruct clients where and how to invest but also provide bespoke advice around tax planning, wealth extraction, inheritance tax and even death planning which can never be automated as every client situation is different.

However, the delivery of this advice for the large part is likely to be over the phone and internet for most clients. Although demand will be strong for advisers, ironically, the industry on the whole is not doing enough to attract quality candidates despite the fact that roles exist aplenty for experienced advisers. You only need to ask a Financial Adviser who has their profile on LinkedIn for the number of requests they get to consider new opportunities.

Although, something can be said for the likes of Towry, which has been in the industry for over 50 years and have come through a number of downward markets to continue to be in a strong solvent position managing billions of client funds. They’ve invested considerably into their operations to train quality future advisers to service their client base as their existing experienced advisers retire and move on. They have also recognised the mass market opportunity utilising web-based and telephony services and have made some interesting developments to adapt their proposition towards the millennial client.

Traditional firms are however, more expensive, and the millennial client is tech savvy and engaged and an opportunity exists to tap into this demographic sooner rather than later. It’s interesting that the banks have managed to do something right – that is maintaining customer loyalty. We are more likely to change our partner than we are to change our banks; in actual fact, our relationship with our banks tend to last over 16 years which is longer than the average length of a romantic relationship which is at 14 years.

If only wealth advice firms thought about ways to garner that loyalty early on, possibly at the same time individuals leave school or go to university by offering a web-based service such as a budget planner or a platform to view all their bank and credit accounts whilst showing the monthly expenditure patterns. This way wealth management firms will be on a journey with their clients as they move through different income zones whence they will require different types and level of advice.

Certainly, traditional firms will need to adapt or lose their existing clientele to newer more tech savvy propositions with a desktop and mobile interface but this will essentially mean finding lower cost propositions for their clients as they compete over cost whilst also finding the resources and capital to invest into the new service offering, all the while being compounded by the fact that firms may have debt accrued due to RDR. As the impetus for web based solutions get more traction we may see more acquisitions take place by the larger traditional firms of their smaller but growing competition.

On the whole, it’s an exciting time for the industry and for consumers alike and we’re looking forward to participating in it.