Client trends September 2019:
Ruined retirements, soaring education costs and the search for safe havens top HNWIs’ concerns

It’s “back to school” season and the pressure of meeting education fees and being the “Bank of Mum and Dad” is front of mind for HNWIs. Meanwhile, investors are wondering if gold is starting to shine as a safe haven asset.

Parents worry helping children could ruin their own retirement

Many of our recent conversations with those approaching or in retirement have centred on new statistics showing that many parents are really sacrificing their financial wellbeing in order to help their children.

Doing so is the most natural of impulses, but new research has highlighted just how much of an impact acting as the “Bank of Mum and Dad” is having on the financial wellbeing of parents (and grandparents). According to a Legal & General survey, a quarter of those who have helped are no longer confident they have enough money to last them through retirement, while 15% have accepted that their expected standard of living will now have to be lower.

With one in five properties now bought with family help, huge numbers are raiding their pensions and savings or trying to release equity from their own property nest eggs to help. And, while this is certainly laudable, we are very pleased to see our users wanting to take advice beforehand.

With one in five properties now bought with family help, huge numbers are raiding their pensions and savings or trying to release equity from their own property nest eggs to help. And, while this is certainly laudable, we are very pleased to see our users wanting to take advice beforehand

Getting an impartial professional view of how much you can realistically assist is absolutely vital – particularly given that so many people are seriously underestimating how long they are likely to live and just how much expenses like care fees could amount to.

Equally important is exploring the best possible way of giving to maximise tax-efficiency and ensure that family money is protected against divorce.

These considerations are a regular part of the retirement conversations our users have with wealth management advisers, alongside making sure that their pension pot investments are working as hard as they possibly can.

Later-life concerns always make up a significant part of our enquiries and we are glad to see users increasingly thinking about the real realities of their retirement.

Lessons wanted in how to meet soaring education costs

Still on the theme of helping family financially, this month we’ve seen a bigger than ever influx of enquiries about saving and investing for education costs.

Last year, average private school fees hit £17,277, marking an incredible 49% rise over a decade. Then, parents have to contend with covering university studies, with the average cost of a three-year degree now standing at £64,000 and predicted to rise to a over £100,000 by the time a child born today goes into tertiary education. With those costs in view, it’s no wonder that those with a child in or approaching education are worried (and perhaps terrified if they have more than one!).

These kinds of numbers are challenging even for the quite wealthy and when the bills start to hit doormats, we always see a spike of interest in this area. The threat of a recession being just around the corner seems to have focused minds even more in 2019.

With those costs in view, it’s no wonder that those with a child in or approaching education are worried (and perhaps terrified if they have more than one!)

The good news is that wealth managers are adept at helping parents plan and invest for education costs, and can often reveal strategies that the layperson may never have considered. As we describe in this feature on meeting school fees, locking-in fees by pre-paying is one option for the cash-rich, while maximising your use of Capital Gains Tax allowance could save a significant amount of money when annual payments are concerned.

As we have been telling concerned parents, there is a huge amount that can be done to make paying school and university fees less painful. And, while it’s certainly preferable to starting planning while your children are young, there are still many options open later on too.

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Top Tip

Many of our enquiries this month have centred on managing wealth effectively on a familial basis. This is something that the super wealthy have done for generations, but can feel like a bit of a leap for those new to professional wealth management. The benefits can be huge, however, ranging from enhanced tax-efficiency and returns to greater family harmony. Whatever your objectives and situation, rest assured that wealth managers have seen it all before and have many strategies to help standing ready. Don’t hesitate to get in touch with our expert team to discuss your options.
Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Investors ponder piling into gold

Ongoing trade tensions and fears that a deep recession is coming have got our users thinking about whether gold is worth adding to their portfolios – and how to do so.

The precious metal is, of course, a time-honoured store of value in troubled times and some predict that its price could soon rocket to a new all-time high of $1,950 as investors increasingly seek safe haven assets.

Holding a sizeable amount of physical gold isn’t really feasible for anyone but the ultra-high net worth, so the way that many high net worth investors gain exposure to the gold spot price without buying actual gold bars is through gold-backed Exchange-Traded Funds or funds that invest in elements of the gold supply chain, like mining companies.

Diversifying your investments so that your wealth is spread around several types of asset is a fundamental part of managing risk while maximising returns, and we would certainly urge investors to consider the role alternatives can play in this

Such vehicles tend to benefit from nervous markets and unsurprisingly we are now seeing quite dramatic inflows into gold. In levels not seen since 2013, investors put some $2.6 billion into gold-backed ETFs in July and in seeing these headlines many of our users are wondering if they too should turn “goldbug”.

Diversifying your investments so that your wealth is spread around several types of asset is a fundamental part of managing risk while maximising returns, and we would certainly urge investors to consider the role alternatives can play in this. However, it is important to make sure that gold is added to your portfolio in line with a sensible asset allocation strategy.

Our users are rightly wary about piling into what can be a very volatile type of investment, but the surge in gold investment is prompting interesting discussions between our users and the wealth management advisers we connect them with.

If you want to explore what effective asset allocation could do for the health of your portfolio – and whether there is a place for gold within it – letting a professional assess your holdings against your situation is likely to be a very valuable move. What’s more, by using our matching service, these initial conversations can be set up quickly, conveniently and free of charge.

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