The holiday season is a great time to tackle longstanding financial to-dos and we’re hearing from lots of people looking to proactively address a range of wealth concerns this Christmas.
The pandemic has shifted the traditional view of how we work and live. For some, it has shifted their focus to broader goals such as health, happiness and fulfilment, rather than just the narrower pursuit of financial gain. Wealth managers can help clients refocus, as John Williams, Head of Wealth Planning at Nedbank Private Wealth, explains.
Mr and Mrs J are a couple in their mid-50s, who both worked long hours in the City of London, but weren’t enjoying life as much as they might. We had been discussing reviewing their finances for some time, but they had been too busy to date to focus on this.
The lockdown period gave them time and opportunity to thoroughly review their financial position, and also encouraged them to reflect on what is really important to them – e.g. did they want to continue working in London? Or could they spend more time with family, and try some of the things they always wanted to do, such as learn Spanish? While Mrs J had always wanted to become an author.
The lockdown period gave them time and opportunity to thoroughly review their financial position, and also encouraged them to reflect on what is really important to them
They revisited their goals and objectives, which now include moving out of London within the next three to four years, buying their long-term dream farm in Wales, and helping their children (22 and 25) to each buy their first home.
Many of us will leave lockdown with a burgeoning to-do list, but at least we will have starting seriously thinking about our goals. If these strange times have got you thinking about a change in direction, taking professional advice as early as possible maximises results. Why not let us arrange a no-obligation discussion so you can see what’s possible?
Via a video call, we gathered information on all their investments, pensions and insurances, and helped them to define their objectives. We produced a full financial plan, including a personalised cash flow model. This showed them that they would be able to buy their farm, help their children and have a sustainable retirement income beyond the farm. They were energised by the clarity of their future direction and reassured that their finances would soon allow them to realise their dreams.
The priorities were to update their wills, establish lasting powers of attorney, and consolidate their pensions and ISAs. Working closely with one of our investment specialists, we re-profiled their attitude to risk and recommended a new investment strategy across their personal and pension investments.
They were energised by the clarity of their future direction and reassured that their finances would soon allow them to realise their dreams
We also reviewed their exposure to Inheritance Tax (IHT), in the context of their plans, to gift significant sums to their children. We suggested the use of a life insurance policy (with the appropriate advice) to plan for the inheritance tax liability and for them to borrow against their investments to buy a small flat in Seville. Also, as they wanted to build in flexibility to their plan, should Abergavenny prove too rural for them, they initially structured the cash transfer to their children as loans.
Mr and Mrs J have sat down with their children, who were in lockdown with them, and talked through the next five years. In conjunction with a conversation with John, the children understand the opportunities and pitfalls of the wealth transfer and why the approach has been taken. The children are also reassured that they would not have to fund the inheritance bill.
Key for clients is that they understand that the plan has been prompted by a change in their life circumstances, which could be reviewed as life reverts to normal, and that allowing for flexibility and changes in focus is important.
Case studies can be an invaluable way to quickly see how a wealth manager has helped people similar to you. While details will of course remain anonymous, a prospective adviser should have abundant illustrations similar to this they can share.
If you have a specific pension planning question or feel the time is right for a thoroughgoing financial review, arrange to meet your best-matched advisers quickly and easily through our 3-minute search tool. Alternatively, please get in touch with our expert team to discuss your requirements further.