Banking sector jitters spark conversations about deposit protection limits
We frequently encounter individuals who are very overweight cash, and especially now due to escalating geopolitical tensions and nerves about the markets leaving many thinking it is best to stay on the sidelines. The recent collapse of several US banks and the forced takeover of Credit Suisse by rival UBS has got our users thinking about deposit safety in a big way.
While paltry interest rates from mainstream lenders have been a complaint for many months, real worries about deposit protection have recently come to the fore too. The result has been a dramatic uptick in people wanting to know more about how to diversify their savings accounts among two or more institutions.
All savers should hopefully know that under the Financial Services Compensation Scheme their deposits are only protected up to a maximum of £85,000 per person, per institution, or up to £170,000 for joint accounts. For those with larger amounts of cash, spreading money around a selection of institutions might therefore be a very wise move
All savers should hopefully know that under the Financial Services Compensation Scheme their deposits are only protected up to a maximum of £85,000 per person, per institution, or up to £170,000 for joint accounts. For those with larger amounts of cash, spreading money around a selection of institutions might therefore be a very wise move.
We would like to think that the chances of another global financial crisis are very small, but maximising your coverage under the FSCS is good practice in any case. Not all wealth managers take deposits, but we can help you to locate reputable and strong institutions which do fast and free. Often, wealth managers which are private banks or which are attached to a banking group will be able to offer far superior interest rates to High Street banks too.
Users are proving grateful for estate planning prompts…
We certainly never pry in our conversations with users, preferring to let them lead the way on their financial hopes (and fears). However, we do make a practice of asking if certain wealth foundations have been laid, and whether someone has a proper will in place is among the top questions on that list. What we have been finding recently is that people are particularly grateful that we have brought estate planning up.
High Net Worth Individuals (HNWIs) frequently tell us they feel sheepish that they have not made a will or tackled these conversations with the family at all. But we are able to reassure them that this is far from an unusual state of affairs and wealth managers are well used to managing such issues from scratch. Knowing this helps people get proactive we find.
High Net Worth Individuals (HNWIs) frequently tell us they feel sheepish that they have not made a will or tackled these conversations with the family at all. But we are able to reassure them that this is far from an unusual state of affairs and wealth managers are well used to managing such issues from scratch
To that end, we have been able to share with our users new research1 from Brown Shipley, a Quintet Private Bank, to great effect.
Explaining some of the findings, Rebecca Williams, Head of Wealth Planning, says: “Our research found that more than half of wealthy Britons (54%) prefer not to share their inheritance plans with loved ones as it can be an uncomfortable process that presents challenges across family dynamics. We also found that a large number (42%) have made no will and 1 in 10 said they have no plans to do so.”
1 Opinium Research surveyed a representative sample of 4,000 UK adults between 6 November 2022 and 10 January 2023. 692 of those surveyed have estimated financial assets in excess of £150,000 and/or a main home valued at £1m or more; of those, 390 identified themselves as ‘entrepreneurs’ and/or ‘business owners’
Top Tip
Lee Goggin
Co-Founder
...and business owners contemplating large IHT bills are particularly so
According to Brown Shipley’s research, a fifth of six-figure earners’ wealth comes from running a business, and many of our recent conversations with users have centred on the nexus between entrepreneurship, estate planning and and Inheritance Tax concerns. The rising IHT take has been well documented in the press, and business-owners often voice to us fears that their families could be hit extra hard.
On this point, Williams adds: “Many HNWIs have not made formal inheritance plans for many reasons – partly due to the complexity of dividing their assets fairly. Business owners may face additional complications when considering wealth transfer, particularly since businesses will often be an individual’s most valuable asset.
“If the family business is passed to one child, the owner may want to consider leaving personal assets to other children. If the business is sold the value of the individual’s estate, and likely IHT liability, will materially increase.”
Many HNWIs have not made formal inheritance plans for many reasons – partly due to the complexity of dividing their assets fairly. Business owners may face additional complications when considering wealth transfer, particularly since businesses will often be an individual’s most valuable asset
As she notes, “HNWIs should take a holistic approach to wealth management together with cash flow plans to manage their wealth most effectively and which firmly consider events such as deaths, economic volatility or black swan events such as the Covid-19 Pandemic.”
It has been really gratifying to contextualise the concerns our users have over their estate plans (or lack thereof), and to help them make the first steps to really putting their houses in order. Promoting holistic wealth management at the family level has always been a core principle of ours.
Whatever your concern, wealth managers stand ready to help
This piece highlights just a few of the diverse set of wealth management concerns we help our users to deal with every day. Not only do enquiries span investments, tax mitigation and estate planning, they invariably represent a set of interlocking wealth management issues it can be hard for people to unpick alone. You might be surprised how quickly real progress can be made with the right professional team though.
Whatever you worry or dream about wealth-wise, getting the expert advice you need is just one step away: complete our short wealth manager matching questionnaire or speak to our expert and unbiased team and well-established and respected firms can come to you.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
