Finance

Meet the Financial Adviser: Andy King

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Andy is here to help you with a holistic financial planning service, including tax planning, tax and inheritance tax mitigation, savings and investments, insurance and protection, pensions and retirement and estate planning. He uses sophisticated cashflow modelling software to help you develop lifetime financial plans and to bring your financial future to life.

If you’d like to know more about Andy and how he can help you achieve your financial goals, take a look at his profile: https://www.ellisbates.com/meet-your-advisers/andy-king

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Free guide: Successful Wealth Management

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Key traits for successful wealth-building

Developing an investment strategy tailored to your goals

 

Committing to a financial plan is crucial for building wealth and achieving long-term financial goals. When you have a plan, you are more likely to stay focused on your objectives and take the necessary steps to reach them.

If you’d like to find out more about how to build your wealth, download our free guide here.

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Passing on wealth through your pension

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New research reveals that almost a fifth of those aged over 55 (18%) do not plan to access their tax-free pension cash, to enable them to pass on more wealth to loved ones without incurring Inheritance Tax charges. Men are more likely to do this than women, and 38% of workers also plan to leave their tax-free pension cash where it is, three in ten over-55s say they were unaware of this.

If you’d like to discuss how to transfer wealth through your pension, please get in touch:

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Meet the Financial Adviser: Matthew Stirling

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Working with individuals, couples and businesses alike, Matthew is here to help you achieve your financial goals and be your go-to financial expert whatever your age and circumstances.

Using tools such as cashflow modelling, Matthew will work with you to look at your personal and family circumstances, to fully understand what you would like to achieve financially and then create a financial plan for the short, medium and long term to get you where you want to be.

If you’d like to know more about Matthew and how he can help you achieve your financial goals, take a look at his Profile Here

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Will you make the right decisions around your pension pot?

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Will you make the right decisions around your pension pot?

The announcement of the removal of the Lifetime Allowance (LTA) from the 2024/25 tax year in the Spring Budget 2023 has made defined contribution pensions even more appealing for wealth transfer. This benefits individuals over 55 who intend to leave their tax-free lump sum intact with their pension to maximise their benefits.

There may be further changes to pension allowance rules. However, removing the LTA charge allows for an unlimited sum tax-free for individuals who pass away before age 75. After the age of 75, the sum will be subject to taxation at the beneficiary’s marginal rate. It is important to note that although the charge has been removed, an LTA check still takes place to work out available tax free cash and the taxation of certain lump sum payments.

Without incurring Inheritance (IHT) Tax

New research* reveals that almost a fifth of those aged over 55 (18%) do not plan to access their tax-free pension cash, to enable them to pass on more wealth to loved ones without incurring Inheritance Tax charges. Men are more likely to do this than women, and 38% of workers also plan to leave their tax-free pension cash where it is, three in ten over-55s say they were unaware of this.

Pensions usually don’t count towards a person’s estate for IHT purposes, and can be passed on completely tax-free if someone dies before the age of 75. With no LTA charge and an increased annual pension allowance, pensions have become attractive for those looking to mitigate IHT.

Pension as a tax-free lump sum

The research also found that almost half of all consumers (46%) believe that the amount that can be taken out of a pension as a tax-free lump sum should increase in line with inflation. It is worth noting that since the LTA has been abolished, an LTA check still takes place to work out available tax free cash and the taxation of certain lump sum payments. This means that individuals are currently limited to withdrawing a maximum of 25% of the previous LTA as a tax-free lump sum from their pension, unless any protection is in place.

Tips to ensure your beneficiaries benefit from your pension:

  • Check if your pension offers death benefits: Not all pensions provide the same level of flexibility when it comes to death benefits.
  • Check with your provider to see if your pension plan allows you to nominate beneficiaries who will inherit your pension savings, as beneficiary drawdown may not be an option.
  • Specify your beneficiaries: While making a Will can be beneficial in many ways, it usually doesn’t control who inherits your pension savings. Your pension provider or trustees have the final say in where your pension savings go.
  • Name your beneficiaries directly with your pension provider or employer to ensure your wishes are considered.
  • Regularly review your beneficiaries: Life circumstances change, and reviewing and updating your beneficiaries as needed is essential. Major life events like the birth of children, marriages or divorces can impact who you want to receive your pension savings. Ultimately the trustees of a scheme have discretion. So although there are no guarantees, by keeping your beneficiaries up to date, you can ensure that your desired
  • Beneficiaries are considered first when it comes to your pension savings should you pass away.
  • Consider the tax implications: Pensions can be a tax-efficient way to pass on your wealth since they are not typically subject to
  • Inheritance Tax. With the removal of the lifetime allowance charge, pensions offer an even more attractive option for passing on your wealth to your loved ones. However, it’s essential to consider any potential tax liabilities your beneficiaries may face when receiving your pension funds.

Remember, seeking professional advice tailored to your specific circumstances regarding financial planning and pension matters is essential.

Do you want to discuss creating a retirement plan to give you the confidence to enjoy later life?

Retirement should be the golden age of your life. It’s when you finally relax, enjoy new hobbies, travel or spend time with loved ones. But retirement can only be fully enjoyed if you have financial freedom. To discuss your options or to find out more, please get in touch with us using the form below:

 

*Opinium conducted research for Standard Life among 2000 UK adults, aged 18+ between 12-16th May 2023, results weighted to nationally representative.

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Planning For a Secure Future

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The journey to financial freedom begins with a roadmap.

To start you can outline your current financial situation and this will pave the way towards your desired destination – your financial goals. It’s time to ask yourself, what are these goals? Saving for retirement, building an investment portfolio or establishing an emergency fund? The more precise your goals, the more tailored your roadmap can be.

Charting your course: the power of goal-based planning

Once you’ve defined your objectives, the magic begins. Goal-based financial planning allows you to invest systematically and in a disciplined way. It keeps you focused on your destination, unswayed by the market’s short-term turbulence.

While everyone’s goals vary depending on their life stage, they can generally be bucketed into three categories: essential needs, lifestyle wants and legacy aspirations.

ACHIEVING FINANCIAL SUCCESS: A COMPREHENSIVE APPROACH

Navigating the terrain of financial success in these areas can be challenging. It demands a holistic understanding of everything from complex retirement plans and investment products to risk management strategies and tax laws.

Your financial roadmap should be your beacon of clarity. It should encapsulate every facet of your vision – your hopes, fears and goals, vividly depicting your financial future.

What are some of the questions to ask yourself?

  • Can I sleep soundly knowing my future is financially secure?
  • Do I have a clear direction for my journey
  • Will my current lifestyle be sustainable in retirement?
  • Am I financially equipped to live the life I want now and in the future
  • Have I planned adequately to ensure I don’t run out of money?
  • Do I fully understand my financial position?
  • What is my financial ‘magic number’ to secure my current and future lifestyle?

The cost of your future lifestyle: Understanding your number

Start by identifying your financial goals and the time frame to achieve them. Determine their current cost, factor in a reasonable inflation rate, and voila – you’ll know what they’ll likely cost when you aim to achieve them. This exercise helps you uncover ‘your number’ – the money you need to secure your future lifestyle without fear of running out of funds.

Your financial roadmap is your guide to making informed financial decisions, striking a balance between current responsibilities and future aspirations. It’s designed to help you sustainably achieve your lifestyle goals and objectives over time.

We have produced a comprehensive guide to help you build a more secure financial future. To download your free guide, fill in the form below:

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Effective Wealth Creation Strategies

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There’s no one-size fits-all answer to how to build a plan for financial freedom.

Building wealth is a cherished ambition for many, yet it can often feel daunting.

Success in this endeavour requires time, commitment and self-discipline, so be wary of promises of instant wealth and opportunities that seem too good to be true, as they can lead you astray.

The silver lining here is that tried and true principles and strategies can aid anyone in accumulating and maintaining wealth over the long haul. Furthermore, the sooner you begin applying these principles, the higher your chances of success.

We have produced a comprehensive downloadable guide delving into the fundamental principles for wealth creation. These include goal setting and plan development, investing in education and skills, debt management, savings and investments, asset protection and shielding your investments from tax implications.

Fill out the form below to receive your free guide.

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Watch now: When can I retire?

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On 7th December we held our ‘Ask the Financial Adviser: When can I retire?’ webinar.

If you missed the webinar and would like to watch the recording, please fill out the form below to receive your link.

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Watch now: Building, Protecting & Passing on Your Wealth

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On 22nd November we held our ‘Building, Protecting & Passing on Your Wealth’ webinar.

If you missed the webinar and would like to watch the recording, please fill out the form below to receive your link.

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COP28 and SRI Portfolios

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On 30 November, world leaders will convene for the 28th Conference of the Parties (COP28) in the UAE, part of the United Nations’ annual climate change conferences. These meetings serve as a platform for global leaders to deliberate and commit to actions addressing greenhouse gas emissions, climate change adaptation and building resilience.

This year has been marked by devastating climate change impacts, from unprecedented heatwaves in continental Europe to wildfires in Canada, catastrophic floods in Libya and cyclones in Pakistan. Climate scientists warn that unless immediate and drastic action is taken to reduce greenhouse gas emissions, then we can expect even more frequent and severe weather events.

COP28 holds special significance in international climate efforts, as it marks the conclusion of the first global stocktake (GST). This assessment measures nations’ progress in meeting their commitments under the Paris Agreement and outlines the steps needed for future progress. Research indicates that more ambitious targets are essential for the world to stay on track with climate goals, thus making COP28 a pivotal moment for governments to create a roadmap for accelerated climate action.

Nevertheless, there have been setbacks as some countries have chosen to scale back their climate initiatives in recent months. These changes, which includes revisions to net-zero policies and postponements in the ban on combustion-engine cars, have been driven in part by concerns about rising household bills during a cost-of-living crisis. These actions have been met with scepticism among climate scientists and advisory bodies, such as the Climate Change Committee in the UK.

Socially Responsible Investing (SRI)

For some time in our client webinars, we have emphasised how governments must take the lead through policy changes and increased legislation in order to keep us on the path to a sustainable future. Given this perspective, a legitimate challenge to the viability of socially responsible investing (SRI) is: has SRI reached its limits? At Ellis Bates, we believe that this would only be the case if global environmental and social challenges were already solved, which is far from the truth. Sustainable companies, and therefore SRI portfolios, still have substantial room for growth and positive impact.

While SRI markets are facing challenges, broader market conditions (namely high inflation and rising rates) continue to impact share prices. This is because SRI portfolios often focus on companies in expanding industries with strong earnings potential, yet these prospects may be eroded by inflation. In discussions with fund managers, we are encouraged that, from a financial perspective, the companies in which our funds invest exhibit no fundamental issues. From a sustainability standpoint, those same companies are taking proactive steps towards sustainability, irrespective of government initiatives. This puts them in a strong position to confront both present and future environmental challenges.

While we appreciate that market downturns can be unsettling for investors, the recent market pullbacks have resulted in the investable universes for many of our SRI funds broadening and presented potentially attractive entry points. Over the years, several fund managers have expressed their frustration to us that certain names looked compelling in terms of their high quality, but they were commanding excessively high premiums to the market. Recent falls in share prices have, in some cases, reduced those premiums and created a more compelling investment case from current valuations.

We are continually challenging our conviction in our funds, regularly reviewing and re-evaluating our confidence in our investment decisions, following which we are pleased with how they are navigating an extremely difficult period. Our funds are led by experienced management teams committed to their investment principles, which puts them in a position to provide excellent financial and non-financial results over the long term.

In summary, as we approach COP28, it is clear our world faces significant environmental and economic challenges. Despite setbacks in climate initiatives and market uncertainties, we remain committed to the untapped potential of SRI as a means of sustainable change. Our fund managers’ dedication and the resilience of the sustainable companies in which they invest reinforces our confidence in delivering positive financial and non-financial results over the long term. Thus, we remain optimistic about turning these challenges into opportunities for positive change on the path to a sustainable and resilient future.

 If you’d like to find out more about Sustainable Investing at Ellis Bates click here

 

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