Client trends December 2020:
Varied concerns as the curtain draws on the strangest of years

The events of 2020 have affected people’s finances in so many ways, really putting wealth management plans – and providers – to the test. We continue to have incredibly varied conversations with users of our service spanning tax, asset allocation and more.

Business owners ponder selling-up soon

Ominous signals of a Capital Gains Tax overhaul that will hammer the better off have got business owners wondering whether they should bring forth planned sales.

Entrepreneurs and owners of family-run businesses have noted rumours that CGT could even be aligned with income tax rates, and so are naturally keen to explore their options before what could be a seismic change is announced in the next Budget and their carefully laid financial plans are laid to waste.

CGT has been a prominent feature in a great deal of our conversations with users, with many people looking to offload assets – very often properties – to avoid paying more tax than they had factored in

In fact, CGT has been a prominent feature in a great deal of our conversations with users, with many people looking to offload assets – very often properties – to avoid paying more tax than they had factored in.

Rightly, investors are frustrated that rises to CGT don’t reflect the additional risks they have taken on (and should be rewarded for). There may be little they can do to alter the Government’s course, however there is certainly lots they can do to limit the damage by speaking to a tax specialist well ahead of any changes kicking in. Forewarned is forearmed.

Investors wonder if green agenda will put them in the red

From an environmental perspective, the Government’s post-COVID green agenda is naturally a great thing. However, the sweeping changes to industry and consumer trends it augurs have got many investors worrying about negative financial implications if they do not reposition their portfolios. Dependency on fossil fuels runs deep in many manufacture and supply chains, and both individuals and companies could struggle with the ban on the sale of new petrol and diesel cars from 2030, for instance.  

Of course, many are also seeing opportunities to align their personal values even more closely with their holdings by investing in clean technologies and the like. Yet they are also aware that there will be winners and losers even in sectors being backed for success. The relative nascence of these sectors and the individual companies within them can make them particularly hard to read.

Sustainable investing is a booming area, but specialist expertise is required to really make it work holistically. Doing so is however increasingly business as usual for wealth managers.

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Top Tip

The holidays are certainly a time to relax, but for many people they are also a chance to review important areas of life admin neglected at busier times. Don’t let misperceptions about the level of hassle involved deter you from acting in your own self-interest when it comes to managing your wealth. We can generate a shortlist of best-matched wealth managers in a matter of minutes and arrange discussions for whatever time suits you, so you could start the new year with some very profitable changes already set up!

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Frustrations with mainstream banks bubble up

The past months have been dominated by talk of negative interest rates – and even of depositors potentially being charged by banks. Yet recent research has highlighted that the problem with mainstream banks runs deeper still, and really chimes with the conversations we are having with our users today. Survey datai shows that Britons are often very disappointed with the flexibility of banking products on offer, with 58% wanting more power to negotiate and a third frustrated by the range of off-the-shelf products. This is often a complaint we hear from affluent individuals who are not having much luck in getting their circumstances and needs understood.
The good news is that private banks are adept at both understanding things like uneven earning patterns or complex assets, and offering private client mortgages, wider credit and other solutions you simply cannot find on the High Street
The good news is that private banks are adept at both understanding things like uneven earning patterns or complex assets, and offering private client mortgages, wider credit and other solutions you simply cannot find on the High Street. You are likely to find that private banks are offering very much more attractive interest rates for your cash holdings too. Many of the wealth managers on our panel are or are affiliated with private banks, so please do get in touch to hear more about what might suit you best.

Retirement continues to wring nerves

The media continues to be awash with first-person accounts from people who have had their retirement dreams dashed by COVID – with them sometimes having lost hundreds of thousands from their pension pots due to the market falls. Thankfully, the stories we hear from users aren’t generally of that magnitude, but we are hearing a lot about vital streams of income vanishing due to widespread dividends cuts. The pension pain caused by the pandemic is difficult to overstate and affects savers of all ages (strategy being dependent on time-horizon to a huge degree). The companies that many of us might have built a portfolio around are now being sorely tested, and indeed business models generally are. Positioning portfolios correctly for the right mixture of risk and reward, and then income and capital growth has become very much harder – particularly with interest rates and many bond yields so unattractive.
For the right mixture of risk and reward, and then income and capital growth has become very much harder – particularly with interest rates and many bond yields so unattractive.
The complexity of pension planning is attested to by new researchii proving that people who are advised end up on average nearly £50,000 better off in retirement than those who go it alone. For someone with a substantial pot, achieving even a fairly small increase in performance could make the world of difference to your plans.

Are you ready to get proactive too?

There is no denying that the wealth landscape is difficult to fathom at present. The investment environment is incredibly hard to navigate and a raft of changes affecting both portfolios and financial planning are expected in 2021.

What investors can’t afford is to allow themselves to become paralysed, since the action they take now could dictate long-term outcomes to a very great extent. Calling in the professionals will invariably generate far superior results, not to mention giving you invaluable peace of mind and time-savings.

If you are clear about the areas where you need expert guidance, then use our smart tool to find your best-matched advisers in minutes. Alternatively, for an informal discussion, get in touch with our expert team. ,

i Yobota
ii International Longevity Centre UK

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