Why Chartered status matters

Chartered Financial Planner status is widely accepted as the ‘gold standard’ qualification for professional financial planners and financial advisers in the UK.

The Chartered Financial Planner qualification is overseen by the Chartered Insurance Institute (CII). The CII says on its website that gaining Chartered status “is challenging and takes commitment” and “places you among the top professionals in your field”.

It is recognised and respected by consumers as a mark of trust.

We have three chartered financial planners at Phillip Bates & Co Financial Services – Alan Mellor, Helen Brown and Margo Dorozik.

Alan has held the status for a number of years, while Helen and Margo both qualified last year.

Alan says: “To have three chartered financial planners in the team is recognition of our commitment to delivering high quality financial planning services to our clients.”

We are also proud to be part of a Chartered Partnership with our sister business, Phillip Bates & Co, holding chartered accountant status.

GPs hit by tax changes

One of the biggest talking points with higher earning clients working in the NHS has been the Government’s tax charges on pensions.

The NHS Pension Scheme has undergone quite drastic changes in recent times.

The annual cap on how much pension pots can increase by, tax-free, has been set at £40,000 since 2016.

GPs and consultants are therefore hit with tax if they attempt to grow their pension savings by more than this in one year.

Alongside this, the Government brought in new rules regarding the amount of tax-free pension benefits that can be built up over a lifetime – cutting the limit from £1.25million to £1million.

Then there were changes to the amount of tax relief on pension benefits that the highest earners could gain. It means the tax-free limit was cut to as low as £10,000 for those earning the most.

The upshot of the changes was a growing number of the highest earning medics saw no reason to carry on working until retirement age, while others opted to reduce their clinical hours to avoid the pension charges.

It seems that the Government has listened and is proposing new reforms aimed at trying to stem the tide of retiring GPs.

The thrust of the reforms focus on allowing NHS employees the chance to build their pension pots more gradually, thereby avoiding charges.

Currently, there is no flexibility with the highest earners required to pay 14.5 per cent of salary.

The immediate reaction from GPs has been somewhat underwhelming with one GP saying: “You will take a bit more home at the end of each month by avoiding tax bills – but your pension is halved. That doesn’t seem very generous or like a way of encouraging me to work harder.”

Refer a friend

We pride ourselves on providing our clients with an outstanding service.

It’s important to us because we value our client relationships and want you to be delighted with the advice we provide.

One of the benefits of providing a great service is that many of our clients are pleased to refer us to friends, family and other contacts.

If you know someone who would benefit from an initial free consultation with one of our three chartered financial planners, please do get in touch.

At the end of every quarter, we will look back at the referrals we have received and award a bottle of bubbly to the best one!

Brexit uncertainty no closer to being resolved

Since our last newsletter in March, various Brexit deadlines have come and gone as, indeed, has a Tory leader.

So, we now find ourselves with the double whammy of continued uncertainty regarding our future relationship with the European Union – and no idea who the next Tory leader (and Prime Minister) will be.

Boris Johnson is considered by many to be the front runner but, as history shows, the favourite for the Conservative Party crown has a habit of tripping up at the final hurdle.

Our clients tend to reflect the country at large – many voted in favour of leaving the EU while just as many were adamant that our future economic prosperity was best served by staying within the EU family of nations.

A few were even content for us to leave the EU without a deal – something that has become a major talking point during the recent Tory leadership hustings.

Despite these uncertain times, the UK economy and financial markets have held up resiliently. And even when the pound goes down, there is usually a positive for overseas holdings.

I held a review with one client last week, who had come to the end of his first year with us. He had enjoyed an 8 per cent return.

People are often surprised when I tell them that major news events such as Brexit and the wider political uncertainty have had little or no impact on their portfolios.

My answer is always the same. Our job as your financial advisor is to ensure that your portfolio is suitably diverse and part of a clearly defined strategy. Inevitably, there will be economic jolts along the way but a properly robust and varied plan, should ensure strong performance over the longer term.

Charity Spotlight: Wirral Society of the Blind and Partially Sighted

We are always delighted to promote charitable causes that matter to our clients.

In this newsletter, we turn our spotlight on to the Wirral Society of the Blind and Partially Sighted.

The charity was founded in 1989 by a group of visually impaired people and, since then, has gone from strength to strength, despite having to raise 100% of its funding.

Adele Law, who sits on the charity’s board, says: “We help blind and partially sighted people on the Wirral with the practical, emotional and social support they need to live independently with sight loss. We work with people of all ages and their families, providing Low Vision Aids, IT training, an advocacy service as well as clubs, classes and social activities.

“Although our resource centre is in Birkenhead, several of our members live in the Neston area, as we are the only organisation providing these services on the Wirral

“This year, with the end of a substantial grant, we have already had to make staff cuts and curtail some planned activities.

“We are always looking to increase our links with the business community and would love to talk to businesses who may be able to support us in some way. Whilst cash is always welcome – businesses help us by staff fundraising or donating much needed services.”

For more information please visit http://www.wirralsociety.org.uk/or email fundraising coordinator Lynne Sedgwick at lynne@wirralsociety.org.uk

Helen named in top financial adviser guide

Helen Brown, a chartered financial planner at Phillip Bates & Co, has once again made it into VouchedFor’s 2019 Guide to the UK’s Top Rated Financial Advisers.

The guide “aims to demystify the advice landscape and highlight those financial advisers who are consistently doing an excellent job for their clients.”

Selection is based on the number of client reviews amassed during the course of a year.

Helen’s achievement caps a successful 12 months as, together with colleague Margo Dorozik, she achieved chartered status. This means that, along with MD Alan Mellor, the firm now has three chartered financial planners, something that is extremely rare in the region.

The effect of a Trump tweet

President Donald Trump does a lot of things differently to previous incumbents of the Oval Office.

One of the more significant is his addiction to Twitter and his habit of using the social media platform to fire staff and, more worryingly, announce changes in policy.

More recently, this has included giving his 59.1 million followers updates on how trade talks have been going with China.

One minute the talks are going great, the next they are going nowhere and there are renewed threats of stringent tariffs.

Every time President Trump tweets the markets naturally react as they are barometers of sentiment, looking for signs of future value.

A Trump tweet in the middle of the night can trigger short-term consternation and cause financial advisers to grow a few more grey hairs.

Thankfully, any temporary blip caused by the President’s running commentary on issues such as trade talks balances itself out in due course.

But I think most advisers will hope that the next President of the United States is a little less active on social media.

Offshore Tax Crackdown

One notable announcement coinciding with the Chancellor’s Spring Statement was a further crackdown on offshore tax evaders and their advisers as part of an initiative called No Safe Havens 2019.

A Treasury document outlined HM Revenue & Customs (HMRC) strategy for reducing the amount of overseas tax evasion. This includes hefty punishments for those found to be transgressing.

The document states: “We will relentlessly pursue enablers using the new penalty regime for anyone who designs, sells or otherwise enables the use of a tax avoidance arrangement which HMRC later defeats.

“Similarly, we will impose new civil penalties on those who deliberately enable another person’s offshore evasion or non-compliance.”

It went on to reveal that HMRC has collected data on 3 million UK residents’ offshore financial interests during the last year and is beginning to detect cases of possible non-compliance.

The crackdown on offshore tax evasion should not be confused with offshore bonds which are completely above board and meet all regulatory requirements.

Chancellor’s hands tied by Brexit

Usually, the Chancellor’s Spring Statement is an important event in the Government’s calendar.

But this year, it passed by almost unnoticed, drowned out by the Brexit pantomime being played out in Parliament.

While Philip Hammond talked about a potential ‘deal dividend’ of around £27billion, it means nothing until a deal is concluded.

Hammond talked about “an economy that has defied expectations and will provide the solid foundation that Britain needs to seize the opportunities that the future offers.”

The positive messages from the Chancellor were dampened slightly by the Office for Budget Responsibility (OBR) which slashed its forecast of UK growth by a third, from 1.6% at the time of last November’s Budget to 1.2% now.

On a rolling 12-month basis it marks the lowest figure since the UK exited the 2009 recession.

Robert Chote, Head of the OBR, commented: “In recent weeks survey indicators of current activity have weakened materially, in part reflecting heightened uncertainty related to Brexit.”

Clients often ask me about the impact of Brexit on their financial planning and my response is always that a good, long-term, well diversified plan anticipates bumps in the road such as recessions, economic dips and even extraordinary events like Brexit.

Having said that, I don’t think there is anyone who doesn’t want to see an end to the uncertainty caused by Brexit. Without such certainty, it is impossible to understand the Government’s intended future direction of travel.

How much money is enough to retire?

How much is enough to retire?

By Alan Mellor, Chartered Financial Planner and Managing Director of Phillip Bates & Co Financial Services

I often take on a number of new clients at the start of a new year.

The holiday season will have provided an opportunity to discuss both immediate and longer-term plans. This is particularly the case for those in their early to mid-50s who are starting to think about retirement.

When can I retire? How much do I need?

Of all the questions I am asked, these are two of the more popular ones. However, the answers depend on the individual and require careful consideration before any significant life decisions are made.

I know from experience over the last 25 years that people often leave it later than they should to plan for their retirement.

Traditionally, the advice has always been that you should try and save the equivalent of half your age. For example, if you are 50 then you should aim to put away around 25% of your salary.

This is extremely rudimentary and not something we work to at Phillip Bates. Instead, we work with clients to put in place a very personalised and long-term financial plan.

We will carry out cash flow modelling that takes into account someone’s larger and smaller outgoings. How much of the mortgage remains to be paid off? Are you paying private school fees? How much do you spend – and expect to continue spending – on foreign holidays?

Our job as chartered financial planners is to provide clients with the right advice. This isn’t necessarily always what they want to hear, but the recommendations that will give them the best chance of long-term financial security.

I recently met with someone in their early 50s who said he would love to retire by the age of 57. We looked at the numbers together and agreed that this would simply not be possible. By working up a financial plan together, taking into account current and projected future spending, we were able to see how retirement in his early 60s would be achievable by taking important steps such as increasing monthly pension contributions.

I have also recently met up with a long-term client, now in his mid-70s, who retired over 10 years ago following the sale of a company in which he was a director and shareholder.

He did quite well from the sale but not as well as he and his fellow directors had anticipated.

Part of the plan we put in place was based on his desire to be able to continue enjoying a holiday home abroad until his mid-70s after which he would look to sell in order to help fund the next stage of his retirement plan.

But, following a recent review, we agreed that there was actually no pressing need to sell the home because his overall financial plan had performed well and was extremely robust.

There are lots of different factors to take into account when putting together a long-term financial plan.

Some clients choose to leave their full-time employment and take on a part-time job to help cover the gap between 60 and 66. Others take advantage of today’s more flexible pensions which give scope to take more for a few years and less later. Some people will spend extremely carefully during their working years in order to speed up the point at which they can take early retirement.

Often people simply do not realise quite how much they are spending now, let alone what they will ideally need when they do finally reach retirement.

Planning is key and the sooner that process begins the better your prospects of being able to enjoy the retirement you envisage.

Typically, we start working with clients in their late 40s, early 50s, but there is no hard and fast rule. We have some clients – often sons and daughters of older clients – who come to us in the 30s, while others will come to us much later following advice from family and friends that they should start planning for the future.

We are proud to be one of only a handful of Chartered Partnerships in the North West – combining the knowledge and expertise of our chartered accountants and chartered financial planners.

In the Financial Services team alone, we now have three dedicated chartered financial planners – myself, Helen Brown and Margo Dorozik.

Please contact us if you would like to arrange a free initial consultation.