Client Trends February 2019:
Fees and tax top of the agenda

We speak to scores of affluent investors each month, hearing all about their concerns – and financial goals – while guiding them through the process of finding the right wealth manager for their needs. Here is an overview of what’s on our users’ minds this month.

Fee impact hits home

New regulations mean existing clients are increasingly aware of the totality of fees and charges they pay their wealth manager. They will have a much better idea of how much of a drag on performance excessive fees can be too.

New regulations mean many investors will have also recently received a letter notifying them that their portfolio had dropped 10% in value.

It is unsurprising then, that an even greater proportion of our users are people looking for a more competitive deal. As we always advise, performance netof all fees and charges should be your focus. Our guide, What to expect from wealth management fees will help empower you in your discussions.

DIY investors getting “vertigo”

Brexit, the possibility of a General Election and other threats are making investors managing significant portfolios by themselves experience what we call “investment vertigo”. Even more than usual, we are encountering individuals who no longer have the time or inclination to manage their own portfolio properly (and many more for whom a once enjoyable activity had turned into a real source of worry).

Even more than usual, we are encountering individuals who no longer have the time or inclination to manage their own portfolio properly

Although DIY investing may seem like the best-value option, lower fees must be weighed against the cost of your own time and the enhanced performance and risk management available through a professional. Institutions are also able to access cheaper share classes than individuals, highlighting the need for a balanced view.

Financial planning comes to the fore

Many users are feeling hesitant about investing new money and so are seeking either defensive portfolio strategies or the safe haven of higher-rate deposits at private banks. Drip-feeding money into the markets is good policy in any case, but some are keeping cash at the ready specifically to take advantage of dips later in the year.

Many users are feeling hesitant about investing new money and so are seeking either defensive portfolio strategies or the safe haven of higher-rate deposits at private banks

Financial planning has really come to the fore this month. When investment returns become harder to attain, it pays to turn your attention to where you can trim your tax bill or tighten up your wealth plan. Read Five Pillars of Good Financial Planning to start your “route map”. 

Pension transfers a top topic

While pension transfer related queries are far off their peak mid of last year, we still speak to users about Defined Benefits pension transfers regularly. I have also been asked to comment on this subject by journalists at big papers this month.

There are lots of complexities to take into account with pension transfers, not least the potential to lose certain guaranteed benefits. Consolidating and optimising your pension savings is likely to result in far superior returns, however, so it’s always worthwhile speaking to a professional.

Increased interest in offshoring

It might be the icy weather or the threat of a Left-wing government that’s in evidence, but we’ve seen a marked increase in enquiries the competitiveness of low-tax jurisdictions like Portugal, Singapore and Malta.

Booking money or investing offshore can be beneficial, but relinquishing the protection of the Financial Services Compensation Scheme is not to be taken lightly. Nor are the tax complexities that will invariably result.

Taking proper advice is even more essential in cross-border business. Many of the wealth managers on our panel are part of global groups able to offer services in any number of wealth management centres; all are experienced in making investments abroad and bringing money back to the UK in a tax-efficient manner.

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