When is the right time for business owners to retire?


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

A good proportion of the clients we look after at Phillip Bates & Co Financial Services are business owners.

This presents added complexities when trying to work out when the best time is to retire or, at the very least, step back from the day-to-day frontline.

Business owners are naturally extremely protective of the business they have built up, often over many decades.

Taking the decision to let go of the reins can often be daunting.

There are, of course, examples when a business owner has meticulously planned his departure with the final years running the company centring on his or her exit strategy. Sometimes, ill health can accelerate the need to put in place an exit plan.

At Phillip Bates & Co, we are all about long-term planning to give business owners the best possible opportunity to be in control of their destiny rather than finding themselves dictated to by events outside of their control.

Often, business owners I talk to think that their only option is to sell their company outright.

But the reality is very different. In recent months, working closely with our sister business, Phillip Bates & Co Chartered Accountants, we have helped business owners take a different route to creating more time for themselves and their loved ones.

In one case, we assisted the owner in exiting his business via an employee share ownership buyout. It is an altruistic way to pass a business on to the very people who have helped you to grow it over the years. In this instance, it cost the ‘buying’ employees nothing, with the retiring owner being paid an agreed sum based on future profits.

In other cases, the business owner often sees his exit as all or nothing when, in fact, one client of ours recently successfully reorganised his company so that other members of his management team took on more responsibility, allowing him to reduce his working week to just a couple of days.

There are a number of other ways in which business owners can move towards retirement. Some will pass the business on to their children or other family members. Some may consider a merger with another, complementary business. And, of course, many are sold as a going concern.

Whatever the route you choose to go down, a lot of emotion will be wrapped up in the decision-making process. To most people, their business is more valuable to themselves than it is to anyone else as it contains emotional value.

Planning is key. Addressing the question of “how much is enough?” should ideally begin a number of years before the decision is taken to start to exit a business.

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.

If you are a business owner considering options for retirement either now or in the future, please do consider making contact to arrange a free initial consultation.

We are one of the few firms to have Chartered Financial Planner status

Cheshire-based Chartered Financial Planners Phillip Bates & Co Financial Services now has three Chartered Financial Planners in its team.

The company is one of only a handful of firms in the region to have Chartered Financial Planner status.

Helen Brown, Senior Financial Planner and Margo Dorozik, Client Service Manager, join Managing Director Alan Mellor in becoming Chartered after passing their exams with flying colours.

Alan Mellor said: “As a firm we are immensely proud of our Chartered status and it is something that Margo and Helen have worked extremely hard for. They thoroughly deserve all that they have achieved.

“Helen and Margo’s qualifying is further recognition of our commitment to delivering high quality financial planning services to our clients.”

The company also welcomes two new starters – Nicky Wilson has joined the firm as Client Service Manager and Joanne McGarry as Administrator.

Alan added: “We are delighted to welcome Nicky and Joanne to the team.

“Nicky has lots of experience in the IFA market and wider experience in planning for small businesses. In her role, Nicky will be managing the client investment experience and providing clients with effective information in a timely and understandable format.

“Joanne has a decade of experience at IFAs on the Wirral and will be a key cog in the administration of our clients’ affairs, ensuring that we carry out their financial plans effectively.”

Phillips Bates & Co Financial Services works with clients across Cheshire, Wirral, Merseyside and elsewhere from its offices in Neston.

Anne Merriman Foundation for Hospice Africa celebrating 25th anniversary

Congratulations to our client Anne Merriman whose incredible foundation has helped over 30,000 people in Africa.

Hospice Africa Uganda – Uganda’s very first hospice – was set up in Liverpool by Dr Anne Merriman with the help of her friend in 1992, and is this year celebrating its 25th anniversary. Anne, then aged 58, founded the charity with the vision of “palliative care for all in need in Africa”.

The way in which Anne felt she would reach this vision was through creating a model from which African palliative care could be adapted to different countries, cultures and economies. Uganda was chosen and Hospice Africa Uganda (HAU) began with minimum funding in 1993.

The hospice has since supported 32,000 patients and families, and at this present moment supports more than 1,500 patients. It has also trained more than 10,000 people from all over Africa. In 1993, HAU was only the fourth country of the 54 African countries to have palliative care.

Anne had witnessed terrible suffering in Nigeria, where she had spent 10 years as a young doctor. While working as Medical Director of Nairobi Hospice, she was able to bring relief from severe pain with her formula for affordable oral morphine (which could be given at home), bringing patients and families to peace. Holistic care could then be given to them to address their social, cultural, economic and spiritual needs.

Anne was aware that the suffering was being experienced throughout the poorer countries of Africa and in most countries 90% of cancer patients were now dying at home and in pain, as a result of late diagnosis, most without pain control or treatment.

Cancer is one of the major killers in Uganda, with an estimated prevalence of 0.3% of the 39M population. 117,999 are suffering as we write. Yet palliative care is available in 90% of the Districts due to the efforts of HAU and its partners.

The average life expectancy in Uganda is just 54 years, but was only 38 when Dr Anne entered Uganda in 1993. AIDS was prevalent and millions of young parents were dying leaving young children without care and sometimes also with HIV.

Anne, now a 2014 Nobel Peace Prize nominee for her work in Africa, recognised this need and, together with her team in Liverpool and Uganda, was determined to do something about it.

Uganda was only the fourth country to receive palliative care at that time but now 37 countries are having some form of care, but only 22 have the affordable medication to control the severe pain of cancer. Uganda was found to have an integrated palliative care service close to the developed world in 2014 and in 2015 was recognised as the second best place to die in Africa.

Since leaving Singapore in 1990, Merriman has remained a client of Phillip Bates & Co Financial Services.

“The support I have received from Bates & Co has been invaluable,” she said.

“I have had and continue to have ambitious plans for Hospice Africa, and a key factor in me being able to achieve these goals has been the support I’ve received from Alan Mellor and his first-class team.”

The work of Anne and her team relies on donors to continue its vital work. Patients are asked to pay £2 per week but less than 30% can afford this. It costs £1million every year to care for patients and to train all involved in Uganda and from all over Africa up to a Bachelor’s degree for future leaders in PC. These degrees are through HAU’s Institute of Hospice and Palliative care in Africa, which grew from the education programme commenced in 1993. The degrees are distance learning except for an initial 4 weeks in Uganda.

“It has given me peace of mind, knowing that Bates can manage my finances in a way that allows me to focus on my work in Uganda,” Merriman said.

“Having them look after my finances in the excellent way they do gives me the confidence to continue in Uganda as long as the suffering need me. Thus I can continue to work as a volunteer in Uganda, 23 years on.”

To find out more about Hospice Uganda, visit: www.annemerrimanfoundation.com

Please donate through the website of Hospice Africa UK: hospice-africa.merseyside.org

A photograph of a close up of a woman with a phone to her ear for our scam calls article

What to do if you receive a scam call about your finances

One of the downsides to ever-advancing technology is the ease with which people can fall prey to so-called scammers.

Scam calls can strike at any time and in any industry but can be particularly dangerous when dealing with financial matters.

By engaging in conversation with a scammer for even just a few minutes you could be on your way to losing thousands of pounds.

Alan Mellor, Managing Director at Phillip Bates & Co Financial Services said: “If you are unfortunate enough to be on the receiving end of a call from someone who is looking to discuss your personal financial matters, we’d first and foremost advise you not to engage in any further conversation with them. Put a stop to it there and then.

“By speaking further with them, you are inviting them to find out more and more about you and thus increasing your vulnerability.

“Financial advisers are, by law, unable to cold call you regarding financial matters by phone, so this should be a warning sign straight away.”

Here at Phillip Bates & Co Financial Services, we have a long-standing policy of always contacting our markets if we receive an email or letter asking us to make bank transfers.

If you are concerned, please contact Alan Mellor on 0151 353 1066.

A photograph of a man writing on a piece of paper for our chartered status article

Congratulations Helen & Margo!

Helen Brown, Senior Financial Adviser at Phillip Bates & Co Financial Services and Margo Dorozik, Client Service Manager have both passed important exams in recent months, taking them one step closer to Chartered status.

The two, who took the exam just before Christmas, are now gearing up for their final exam, which they will take shortly.

Phillip Bates & Co Financial Services is one of only a small number of Chartered Partnerships in the region.

The firm is proud of its status, which reflects its belief of meeting the standards and quality of what they do.

An image of coins stacked on a desk in our tax changes news piece

Dividend tax changes afoot

The end of the financial tax year is fast approaching and there are tax changes afoot.

From April, business owners who pay themselves in the form of dividends, rather than a salary, will see their tax-free allowance cut from £5,000 to £2,000.

The tax changes will also affect investors who have portfolios of shares held outside Isas or pensions.

Alan Mellor, Managing Director of Phillip Bates & Co Financial Services, commented: “This impending change will impact shareholders and business owners who are ultimately going to be paying more tax.

“Whilst there is not a lot we can do to combat the [tax] changes, we invite clients to contact us and see what their options are.”

Alan Mellor can be contacted on 0151 353 1066.

A photograph of a woman with a child on her back outdoors on a pension transfers article

Seek specialist advice before transferring your pension

Pension transfers have been in the news a lot lately, since the transfer values have increased.

But Alan Mellor, Managing Director at Phillip Bates & Co Financial Services, has issued a warning to seek specialist advice before transferring your pension.

“It is important to fully understand and appreciate the value of a guaranteed lump sum for the future,” Alan said.
“We are not encouraging people to transfer their pension.”

Pension transfers came into the spotlight last year, when their value increased as a result of the Brexit vote.

Pressures on some pension schemes had led to some making hugely inflated offers to people to swap future income for a cash lump sum.

At Phillip Bates & Co FS, we saw cases where the transfer valuations had gone up by tens of thousands of pounds in just a handful of weeks, which for some individuals meant cash sums equivalent to more than 30 times the projected annual income on retirement being offered to final salary (or Defined Benefit) pension schemes.

The sharp rise in transfer valuations may look appealing, but anyone considering leaving their final salary scheme should do so only after careful consideration with their financial advisor.

If you’d like to discuss your position, please contact Alan Mellor on 0151 353 1066.

An image of a coin with Bitcoin branding.

Beware of Bitcoin

Bitcoin – a digital currency created in 2009, which uses decentralised technology rather than one central bank – is gaining more and more interest lately.

Since it thrust itself into the mainstream some five years ago, Bitcoin has been a constant source of interest and confusion, but the currency has certainly garnered more attention recently.

Since Christmas, Bitcoin has endured a drop of more than 50 per cent in little over a month, and its sudden crash from $20,000 to under $8,000 has led to concern.

Alan Mellor, Managing Director of Phillip Bates & Co Financial Services has issued a warning about the currency.

He said: “We’re advising our clients to be very wary of Bitcoin.

“The currency’s sudden crash is concerning; when looking at the bigger picture, we as a nation don’t truly understand a lot about this fairly-new phenomenon.

“It can leave those who invest in it potentially very vulnerable – without the need for physical cash, Bitcoin is essentially a chunk of code sitting on a person’s computer, which can also be used in ransoms.

“Far from an investment, Bitcoin is really a gamble.”

Need some advice? Contact Alan Mellor on 0151 353 1066.

We welcome withdrawal of stamp duty for first-time buyers in ‘positive’ budget

We welcomed the announcement by Chancellor Philip Hammond in yesterday’s budget that stamp duty is to be abolished for first-time buyers purchasing properties worth up to £300,000.

Phillip Bates & Co Chartered Financial Planners predicted a reduction in stamp duty for first-time buyers was likely, but that it would perhaps be a temporary one. So far, no date has been announced for when this change will run until.

Alan Mellor, Managing Director of Phillip Bates & Co Chartered Financial Planners, said: “We feel that yesterday’s budget was a positive one as it gives something for everyone.

“There is great news for those looking to get on the housing ladder – no stamp duty for properties worth up to £300,000 is significant. It is worth noting however that this change applies exclusively to first-time buyers – to be eligible, you must have never had a stake in any property before.

“There has been talk that the announcement could hike up house prices and it may well do in the short-term, but this of course is all speculation and its impact remains to be seen.

“We suspect that the announcements relating to housing will be felt most in the South-east of the country and it is notable that plans have been announced to build five new garden towns here too. The towns will be built largely between Oxford and Cambridge – cities known for their focus on technology. Indeed, boosting advances in technology appears to be an underlying theme in this budget and is surely one that is only to be encouraged if we are to make our own way post-Brexit.”

Back in October, Alan also predicted that pension tax relief may come under the spotlight with discussions having stepped up a gear this year in the lead-up to the budget.

He added: “Although there was no announcement with regards to pension tax relief in the budget, we do feel that this an issue that’s bubbling away under the surface and that we may well see an announcement soon.”