Retirement is a word that means different things to different people, but one thing it is not and never should be is something to dread.
It is such a joy to see, at reviews with clients, what they have been up to, how much fun can be had and real ambitions achieved. Life is short so go for it – and more and more you do!
To a Financial Planner if we have in place a plan for our clients financial arrangements that works and suits the needs of clients then we can spend the rest of the time looking at how to enjoy it. How can a ‘Retirement Plan’ work though – we think it should cover these points:
- Flexible – to meet capital and income needs
- Tax – Take advantage of tax breaks and general Tax savings
- Perform – Give the appropriate return on your money
- Transparent – so a client can see what is happening
- Costs – ensure that costs are competitive and consistently reviewed
- Security – that there is protection for your money
- straightforward – an easy to understand plan
We all deserve a retirement of fulfilled dreams and care for our families and each other – as professional advisers we always want our clients to feel we are with them all the way and we have the retirement plan for you.
The regulator (FCA) in the ‘Chartered Insurance Institute’s’ Journal recently discussed how they were going to rebuild consumer trust. To us we want the regulator to ensure big mistakes are not made again that affect us all, like a run on a bank- remember ‘Northern Rock’ and the massive effect around the world of the ‘Lehman Brothers’ collapse. The regulator highlighted their view that a culture of ethical behaviour was what they wanted to see in all financial firms, big or small.
But what do they mean by culture and as a small firm do we fit in? – It is about embedding a real belief throughout the firm so that we enhance trust by putting the interests of our clients first. It seems pretty logical that as a firm we would want that anyway as we value our clients so much and consequently we are 100% agree with the sentiments the FCA have. How do we provide this culture for clients:
- Always being honest, even if we make a rare mistake
- Having good systems in place
- Being ahead of the game
- Ensuring our standards and knowledge are up to scratch
- Working with other professional’s as part of a team
- Thinking about our client all the time
At Alexander Grace, all the above sentiments are critical to the way we do business for clients and people can have confidence that they will be well looked after because after all we want to keep our clients for life.
One of the most difficult things for some clients to get to grips with, is having money when they least need it!
It something to strive for by working hard and making the most of opportunities through life and then suddenly there is actually the time to spend some of the wealth built up. How do you change the habits of a lifetime, from saving and budgeting, to enjoying what has been accumulated.
We don’t believe the tax man should get the biggest share, so plan as best you can to ensure this doesn’t happen. There are many ways and clever schemes we can come up with, but when a client says:
“we raised a glass to our financial planner who told us to go Business class to New Zealand to see our family. It was the best thing we could have done and made a fantastic difference knowing it was OK to spend our money in this way”
This gives us the best buzz of all………………
Until the last couple of years, we had a very unusual period in the UK where CASH (money on deposit, savings accounts with Banks and Building societies) earned more in interest that inflation, and this went on for some 10 years. This means that CASH effectively gave you a ‘real’ return on your money. Well it did until 2008 when we thought the banks were bust and we’d lose our savings – Real under the bed stash the cash time!
There is something wrong with a real return above inflation on your cash savings for a protracted period. Even though its great in theory because there is less risk; to me it just doesn’t sit well? This is because if ‘cash is king’ then people follow; but far more importantly companies and banks and the whole financial system does too. Its a worldwide thing – so the best example is that ‘Apple Inc’ have $50,000,000,000 or more in their bank account. Clearly they get away with massive margins on the iphone and ipad but more importantly haven’t put the profits back into research and development and creating the new lines that they could have. A conscious decision on their part to keep the value in cash and wait and see because they are worried about losing value and they feel the return is OK.
BUT – Everything has changed – Cash is now Trash. The days of real return are over and other than for emergency or covering a few years cash flow, it has never been more important to invest in other types of asset. Assets that do give a ‘real’ return in the longer term are Shares and Property in the main, and that’s because they give an income and capital growth. Of course there can be a risk to fluctuation in value, down as well as up, but its better than a sure fire guarantee that your cash will be worth less in future than it is now.
There will be more to come from me on this as there are some really good ways around this problem.
In England when a couple get divorced their assets are divided, usually equally.
In the old days no one really thought about the pension benefits or accumulated pension fund, which is after all just another place to build up savings to use at retirement. All assets are now added up and divided in line with the divorce agreement. When pensions are involved there are 3 ways they can be divided, as usually one partner has a much bigger pension than another.
- Offsetting – This is where the value of the pension is offset against other assets, like property or savings
- Attachment – The spouse is entitled to receive a percentage of the pension when it becomes due
- Sharing – The pension benefits or pension fund are split and shared to each partner who then owns their own share outright.
Options 1 and 3 are used the most as ‘Attachment’ has many drawbacks, the main one being that the partner has to wait until the member retires before getting anything. We find Solicitors tend to like offsetting, but we see that it is becoming more and more the done thing to Share as pensions funds are often now worth more than the house!
All circumstances are slightly different and we unsurprisingly recommend that advice is really important, so as to get the real value from the assets and the fair share.
A firm like ours will provide detailed valuation of existing pensions and help to mediate where necessary, and make any arrangements that are required, We are used to dealing with other professionals to ensure that everything is done properly and in the best interests of our client.