Case Studies

pension consolidation

The Scenario

Jeremy had several workplace and personal pensions. When setting up a limited company, he wanted to look at his existing pensions to see if he could consolidate them. He also wanted to discuss his retirement goals while getting some advice on how best to make contributions going forwards. He had fifteen years until his normal retirement age.

Actions Taken

Having obtained Letters of Authority, all existing pension providers were contacted to analyse whether it would be suitable to consolidate. Aside from the cost analysis and investment selection, it is important to check that no benefits are lost such as guaranteed annuity rates and death benefits. We advised that four out of the five schemes were suitable for consolidation to be managed on our wealth platform using our investment portfolios. Part of our recommendation was that he leave the with profits pension in place as the transfer value was significantly less than the actual value due to early surrender penalties and a market value reduction.

We then established how much Income Jeremy needed in retirement by conducting a detailed income and expenditure analysis. We agreed on a monthly pension contribution to be paid through his limited company as the most tax efficient method for a Director who is a higher rate taxpayer.

Client Benefits

Jeremy is now able to view all his pensions in one place and has removed the administrative frustration from having many pensions. He is also able to relax knowing that his pension is now actively managed and not just sitting in a default balanced fund. Added reassurance is provided through our regular client review meetings in which we discuss performance and income projections. Jeremy is further assured knowing we are on hand to advise his wife should the need arise.

financial protection

The Scenario

Michael is married to Sarah and they recently had a baby boy. Whilst implementing a pension recommendation for Michael it was revealed during the fact find that as he was self-employed, he had no sick pay. Furthermore, they had a mortgage but no financial protection in place and with the arrival of their son this was something to consider.

Actions Taken

As Michael is self-employed without any sick pay, it was identified that his budget would best be spent on protecting his income. Sarah, who is a practicing Doctor, also had limited sick pay through her GP Practice. We analysed their income & expenditure and arrived at a suitable amount of cover to meet with their budget and lifestyle. Utilising the inflation linked option was important for them to ensure that if a claim was made, the purchasing power of that income would not be eroded over time.

With regards to life insurance, it was recommended that instead of joint life cover, which only pays out once, they could benefit from having their own plans for only a small extra monthly cost. This means that if Michael was to die first, Sarah would receive a lump sum but there would still be cover left in place for Henry. Both life policies were written in trust to ensure that with a successful claim, monies will be paid out prior to the grant of probate with almost immediate access.

Client Benefits

Having completed the fact find and discussed their situation, the clients were able to better visualise their exposure to loss of income. By using an adviser carrying out whole of market research, they were able to determine the best course of action and have these recommendations implemented successfully. Michael & Sarah can relax knowing they have utilised their budget in the best way possible, helping them to secure not only their financial future but that of Henry as well.

investment review

The Scenario

William is a professional introducer and during a meeting he mentioned that his existing financial adviser investment review was shocking and his investments were down 30% in one year. Upon further investigation this was due in part to speculative investments in high risk areas such as Gold, Mining, China and Latin America.

Actions Taken

During the investment review a discussion around risk was conducted to ensure his risk profile was correctly aligned. He had been classed as high risk but he was not aware of the changes that were being made to his portfolio. It turned out the investment team had changed but nobody had informed William of this.

William provided us with the fund list and we assessed the performance and fund selection against various benchmarks and finally against our own range of wealth management portfolios. On that basis we met with William to run through the advice process and explain more about the wealth management proposition. We also completed the Lifestyle Planning Report to re-organise pension, investment and savings contributions for school fees planning and to provide income into retirement.

Client Benefits

William was particularly impressed that we check his portfolio every week and email with details of any recommendations which he must approve before any changes are made. Fund switches tend to be made every few months unless markets make a dramatic shift. He has access to his own website which can be viewed online or via a mobile app. William finds this reassuring as he could log in and check the performance and the fund selection at any time with ease. The Lifestyle Reporting Tool helped him and his wife to forecast the future and commit to making suitable contributions. They are now on track to send their children to private school and aim for an early retirement at the age of sixty.

tax efficient investments

The Scenario

Lewis and Mary were referred by an existing client as they had been talking about school fees over dinner with friends. There was a lot to consider with monies coming in from the sale of a second property and a gift from his parents for the children.

Actions Taken

By using our Lifestyle Reporting Tool we were able to establish how much of a shortfall there would be in each year that school fees were to be paid. This was calculated after collating information from assets & liabilities through to income & expenditure. We advised using their Stocks & Shares ISA Allowances to invest for growth and as Mary wanted less risk, various deposit based solutions.

With capital gains expected from the second home it was important to make full use of their annual allowances and so it was recommended the property be moved into joint names prior to sale. As Lewis would have to pay higher rate tax on his share of the capital gains it was further recommended that he split the monies across various schemes that act as tax reducers such as Enterprise Investment Schemes.

We also advised that the grandparents paid the gift monies directly to the children to circumnavigate the issue of savings gifted from parents being liable to the parents’ marginal rate of income if the interest is over £100 per year (2013/2014).

Client Benefits

We were able to offer the client clear tax savings by utilising allowances and investing into tax-efficient vehicles. A five year plan was constructed having established the shortfall and we are working our way towards achieving that goal. We were able to spread the monies across different solutions depending on tolerance towards risk thus meeting all objectives.