Client trends May 2019: Focus on due diligence, pension perils and property planning

Any number of factors can motivate people to seek wealth management advice. Some want investment management alone while others seek broader financial planning advice. This May, our users are thinking about unscrupulous advisers, pension perils and alternative ways to deploy property wealth.

Investors seek safety amid wealth scam warnings

We’ve been fielding a lot of questions about how to avoid disreputable firms in recent weeks following the UK regulator’s warning it has seen increasing evidence of wealth firms’ discretionary portfolios being used for pension scams alongside unsuitably high-risk investments being made for clients.

Of course, such cases remain unusual in a tightly regulated market like the UK, but they are a timely reminder to only deal with the most reputable wealth management organisations.

We represent firms that are both large and small, old and new, independent and bank-owned, so making the grade isn’t necessarily a question of brand profile. Rather, it’s about track record

Users are invariably very reassured to hear about the we vet the wealth managers on our panel. We represent firms that are both large and small, old and new, independent and bank-owned, so making the grade isn’t necessarily a question of brand profile. Rather, it’s about track record. In addition to requiring the firms we work with to be fully regulated, we also ensure that they have been managing a serious amount of client assets for a number of years.

We’ve narrowed down the market to an optimum range of wealth managers to suit any profile of client, and you can be sure you can work with all of them with confidence.

Perils of poor pension advice get more prominence

Outright scams aside, the risk of taking poor advice on pensions transfers seems to have really struck a chord, prompting pension-related enquiries to stay at an already high rate.

As this recent feature explained, expensive mistakes are being made by final salary scheme members who do not get good advice. Around 100,000 a year are trading in their guaranteed incomes for cash lump sums, but it’s thought that around half could have made the wrong choice.

Getting pension advice you can rely upon from a real expert could be one of the best financial decisions you ever make. Make sure you speak to a reputable, well-qualified adviser

The average final salary transfer exceeds £250,000, but affluent individuals are at risk of several pension pitfalls if they do not take comprehensive advice on both financial planning and investment management.

Tax traps await the unwary in both the accumulation and decumulation phase. Many of our users are close to exceeding lifetime or annual pension contribution allowances or want to know what their tax-efficient options are at the other end.

You have to achieve right balance of contributions and withdrawals, and maintain an underlying investment portfolio that is appropriate, during each stage of your financial journey – no easy task. Getting pension advice you can rely upon from a real expert could be one of the best financial decisions you ever make. Make sure you speak to a reputable, well-qualified adviser.

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Top Tip

Those facing big financial decisions very often benefit from a cashflow modelling exercise being carried out which will give a realistic forecast of your income in the years ahead – invaluable when weighing up significant moves.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Putting property wealth to work?

Still on the subject of pensions, but with a property spin, we heard about this piece a number of times in calls over recent weeks. In it, The Telegraph’s Harry Brennan explores whether those with high-value homes should consider downsizing ahead of time in order to supercharge their pension saving portfolios.

Research suggests that many even quite diligent savers are going to fall seriously short of their ambitions. While the average hoped-for income of a little under £40,000 a year, the typical saver has a £186,600 pot compared to the £571,000 that would be needed to generate that annually.

As the article argues, people are seeing the need to get more creative about retirement planning. For some, moving to a smaller (and more manageable) property and investing the difference could be the most tax-efficient way to boost their pension pot to the required level. Four-bedroomed houses are worth almost £500,000 on average today so £300,000 tax-free or more could very realistically be released by the modestly wealthy. Many of today’s property millionaires could release very much more.

For some, moving to a smaller (and more manageable) property and investing the difference could be the most tax-efficient way to boost their pension pot to the required level

The British have always fetishized property, but the housing freeze we discussed last month is making many people wake up to how illiquid the housing market is when events like Brexit strike. Diversifying wealth away from property is likely to be a wise move for many people due to the tendency to focus too much on it.

Downsizing is a significant financial decision, however, and you should never make any big ones without taking proper advice. Tax complications always loom large for affluent individuals, particularly around pension contribution and withdrawal allowances.

Furthermore, a well-funded pension pot doesn’t necessarily mean a well-managed one. Everyone needs to ensure that their pension pot is yielding sufficient returns at a manageable level of risk, but naturally this is even more paramount for those who have ploughed their property wealth into it too.

Do you share these concerns?

findaWEALTHMANAGER’s users are negotiating a broad range of financial challenges, but are generally united by their need to make their investments work as hard as they can, keep tax to a minimum and boost their family’s wealth in the long term.

Whether you are entirely new to wealth management, feel like you could be getting a better deal or just want to know what you could be doing to reach your goals more quickly, why not see which advisers would suit your needs?

 

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We make the best advisors easy for you to access

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