BpH

Never stop dreaming

Simon — Mon, 12 Mar 2012 12:25:13 +0000

BpH Partner, Simon Brown, qualified as the UK’s first Certified Wealth Mentor two years ago. In achieving this qualification, Simon realised one of his dreams: “to help people of all ages to realise their potential through combining personal and financial understanding”. Simon now enjoys working as a Wealth Mentor to a number of clients, children of clients and professionals.

Here we look at what the term “wealth mentor” means and why everyone regardless of status or age should have one.

It’s easy to stop dreaming

We all get caught up in the hustle and bustle of everyday life. Whether we’re at work or not working, today’s world is full of stuff: stuff to do, to watch, to read, to order, to organise. It’s easy to lose sight of what the true meaning of life means to you. One where you have true clarity of purpose and are happy that you are spending enough time doing what you enjoy.

It’s easy to dream when we are first starting out in life. We start to have money of our own and the possibilities of what to spend our new found ‘wealth’ on might seem endless. The dreams may involve visiting places we’ve never been, helicopter rides, first cars, first homes. As we move on through life achieving some of our dreams, put our partners and our children first, it can be easy to stop dreaming.

Dreams drive us

This is the core message of a good little read called “The Dream Manager” by Matthew Kelly.

The book is about connecting what you do today with dreams you may have for the future. It demonstrates how dreaming and turning dreams into action can fill us with energy and excitement, particularly if we act to help others fulfill their dreams too.

The managers of a fictional janitorial services company are grappling with high staff turnover and low morale and they start a major exercise to find out what drives their employees. They discover is that it’s not a bigger pay cheque but the ability to realise some pretty crucial personal dreams such as buying a house, taking a first holiday, learning English.

They also learned that people at every level need to be offered specific kinds of help and encouragement otherwise dreams remain just dreams and dissatisfaction can set in.

The solution was a dream manager or “wealth mentor”

A full time recruit who would help manage and realise dreams, no matter how small.

This dream manager or wealth mentor is a clever combination of a life coach and a financial planner.

An expert in helping individuals to articulate or reconnect with their dreams, prioritise their dreams and then have the ability to match these life goals with a financial plan that will help achieve them.

A wealth mentor will focus on your strengths. They will help you identity what your strengths are and any blind spots that may be getting in the way. Wealth mentors are skilled at:

Guiding you towards clarity, helping you choose between the many options in life
Exploring how you can both make time to do the things you enjoy doing whilst analysing your capacity to build wealth
Evaluating the impact this will have on you, your family and your other key relationships
Providing you with a road map for the next stage of your life journey.

A wealth mentor can help you build a bridge between now and a more fulfilling future.

Beware structured products and hedge funds

Simon — Mon, 12 Mar 2012 12:12:49 +0000

“Smart products, dumb choices”

There are lots of adverts trying to tempt investors towards ‘principal protected, stock market participation’ or structured products and hedge funds. These investment vehicles may look appealing and relatively simple but both can expose you to risk. Our latest white paper looks at these two sophisticated and complex investment products in more detail.

A cautionary tale of the costly seduction of investors

Structured products appear simple at first glance, but are far more complex when one looks under the bonnet.

Hedge funds have a certain mystique, allure and seeming sophistication that has acted as a siren to many yet in general fail to deliver their promise of skill-based returns.

Tread with care

Both expose investors to unknown, unconsidered or opaque risks with considerable performance and risk management challenges.

Both sit uneasily in well structured, evidence-based traditional portfolios. The fact that they are widely used, dose not make them good portfolio building blocks. Nor does it absolve advisers or their clients from deep due diligence, in the unlikely circumstances that they are deemed to assist in meeting long-term investors’ needs.

The conclusion? Structured products and hedge funds are smart products but dumb choices.

Please call or email us if you would like a copy of this white paper in full. 01582 461122 or ku.oc.htlaewhpbnull@ecnalab

Tax planning – some opportunities

Simon — Mon, 12 Mar 2012 12:12:25 +0000

Tax planning has an important role to play in helping you achieve your financial goals. By lessening or shifting the amount of tax you have to pay, you can save more or more accurately plan your cash flow.

Our tax expert, Simone Freedman looks at some opportunities for the higher and additional rate taxpayer:

Choice of investment structures
Pension provision
Use of capital gains
Income tax mitigation.

Investment structures

There are a number of different types of investment, some of which are higher risk than others, as well as being designed to be held for different periods of time.

Let’s look at the benefits of each

ISAs are both UK tax and Capital Gains Tax free. There is also no personal UK tax on dividends, and income from fixed interest securities is tax free if held within a stocks and shares ISA. In 2011 – 2012 you can invest up to £10,680 in an ISA. Up to £5,340 may be in cash. For 2012 – 2013, this rises to £11,280 and £5,640 in cash.

VCT shares. You can subscribe up to £200,000 each tax year and get income tax relief of 30%. Dividends are normally free of income tax but tax credits cannot be reclaimed. They are, however, seen as a high risk investment in small company portfolios.

EISs offer similar tax advantages to VCTs. In this tax year ending April 2012, there is 30% tax relief on investments up to £500,000. This will be doubled in 2012-2013. Gains are Capital Gains Tax free after three years and you can defer this gain by reinvesting. The SEIS (Seed Enterprise Investment Scheme) arrives 2012-2013. This offers 50% income tax relief and up to 28% Capital Gains Tax relief but the investment limit will be £100,000.

Life assurance. Maximum Investment Plans (MIPs) and Investment Bonds are worth considering. The first is a regular investment plan subject to a special life company tax rate of no more than 20% on income and inflation-adjusted Capital Gains. Any personal tax liability stops after 10 years. Investment bonds are lump-sum investments. Up to 5% pa od the original amount invested can be withdrawn tax free for 20 years, and larger amounts are possible, depending upon your tax situation.

Collective investment funds (OEIcs and Unit Trusts) are Capital Gains Tax free and are tax free until surrendered.

Pensions

Pensions have always played an important role when looking for higher rate tax relief. There are two main life stages to consider: pre-retirement and at retirement.

While working towards retirement, your pension contributions will help reduce your taxable income. The annual allowance for contributions is £50,000 each year. If your contributions have been less than this for the last three years, this is the last year you may be able to use any unused relief for these last three years.

Also, if you are an employee, you may be able to work with your employer to offset National Insurance Contributions resulting in higher pensions contributions.

You may also be able to take advantage of a Lifetime Allowance. This is £1.8 million for 2011-2012 but will reduce to £1.5 from 2012 – 2013.

At retirement you need to decide whether you want to realise a lump sum or receive your benefits as taxable income. What to do for the best will depend on your situation. Your need for capital, your health and what you want to do about your estate planning. It’s a complex area which we’d be happy to explore with you.

Capital gains

The top rate of CGT (Capital Gains Tax) is 28%. Although taxable as income, the rate is still less than income tax. The annual exemption for both this year and next is £10,600 worth nearly £3,000 if you are liable to 28% CGT. You have to use it in the current tax year as it can’t be carried forward or back. If you have a partner you can double it and both realise £21,200 of gains before needing to pay CGT. The gains can be transferred between the two of you without creating any tax liability.

Income tax

There a number of opportunities for helping to reduce the amount of income tax you have to pay: use of partner’s allowances; income timing; type of income; and, use of children’s allowances.

Partners. If you are on high rate tax and your partner on low rate, it may be worth turning a joint deposit account to a sole account so that the lower rate of tax can be applied. You also need to make sure you both take advantage of your personal allowances. £7,475 this year and £8,105 for 2012-2013.

Income timing. Particularly when closing accounts. By doing it in March in time for the interest income to crystallise before the end of the tax year, it can be applied to this tax year rather than the next one.

Type of income. If you are employed, it’s worth looking at how you receive income. The dividends from shares are taxed at a maximum rate of 42.5% and there are no National Insurance Contributions.

Children. We all have a tax free allowance from birth. Tax does not apply to Child Trust Funds and Junior ISAs. If you give your capital to fund a plan for a child, any income woudl be taxed as if it were your if the income exceeds £100 pa, but non-parental gifts from grandparents and other relations are not subject to tax.

The whole area of taxation is quite complex and we work hard to keep up to date with all the opportunities and changes. If you would like to talk to us please give us a call on 01582 461122 or send an email to ku.oc.htlaewhpbnull@ecnalab

‘Give yourself a D-minus for behaviour’

Simon — Mon, 19 Sep 2011 14:37:19 +0000

“There is one principle a man must follow if he wishes to succeed, and that is to understand human nature”

Henry Ford, founder Ford Motor Co

This educational article explores a whole range of behavioural traits and biases that can trip investors up and promotes the value of an unemotional, disciplined and systematic approach to investing.

Key messages:

Human nature is a big impediment to successful investing as well as success in other areas of our lives
Deep-seated evolutionary traits and behaviours leave us prone to making emotionally driven decisions, often using short-cut approximations for reality
Our emotional selves tend to overpower logical selves
Recognising a number of critical blind-spots and blinkers provides a mirror to reflect on our behavioural weaknesses as investors
The consequence of our bad behaviour can be considerable and there is plenty of historical evidence to demonstrate it
Do not despair, a discipline and systematic investment process can help to trump evolution and to take much of the emotion out of investing, thereby improving the chances of a successful investment experience.

Produced in conjunction with Albion Strategic Consulting, September 2011.

“Structured”, “secure”, “protected”, now “absolute” and “all-weather”. Descriptions of investment products designed to catch your attention

Simon — Tue, 07 Jun 2011 13:39:07 +0000

Beware the way financial industry marketing works. New products, new names, same old risk and hidden agendas, names invented to resonate with investor’s emotions and more proof that you should not over react to the latest financial industry PR exercise.

This is exactly what Simon Brown’s co-authored book, “The 7 Secrets of Money” is about – the secrets kept from us by the financial establishment and the secrets needed to achieve long term investing success.

For too long the financial establishment has put its own interests above yours, resulting in a consistent failure to meet the returns you need and expect. Members of this establishment will try to persuade you to purchase the products that make them the most money and serve you poorly.

The smart way to look after your money? Focus your energies on the things you can control such as saving, spending, costs, taxes and sound financial planning.

Partner, Adam Bell, undertook a cycling challenge – Durness to Dover, 800 miles in 8 days

Simon — Tue, 07 Jun 2011 13:37:42 +0000

On 18 June 2011, BpH Wealth Partner, Adam Bell and his good friend, Mike Smith, started on a great cycling challenge. This was to mark Mike’s 40th birthday (Adam already being a few years past that), and to raise money for the East of England Air Ambulance charity.

The departure point was Durness, the most north westerly populated point on the UK mainland. The arrival point was Dover, 821 miles and 8 days later. The total amount of climbing is 35,000 feet, taller than Mount Everest.

Check it out and please sponsor Adam and Mike if you feel able.

Improving your financial health

Simon — Mon, 28 Feb 2011 11:47:58 +0000

Just as bad habits can endanger your physical health, bad habits can affect your long term wealth as well.

It’s not easy to change behaviour

Our commitment to change is under constant test as examples of doing precisely the opposite are thrown in front of us to make us question whether we have made the right choice.

Relatives who smoke or drink heavily can live into their 90s. Those that live apparently fitter, healthier lives don’t. Shares soar while other more prudent investments seem to lose money.

Hold your nerve, stick to a proven set of prescriptions

Here are some guiding principles to help preserve your financial health and wealth:

Stop reading the financial pages. Sensational headlines sell papers and magazines
Don’t search for that super star fund. Invest in the whole market
Pay no attention to forecasts. They aren’t possible
Keep a long term perspective, it’s time in the market, not market timing that counts
Invest new capital and work to your plan
Re-balance. Buy more of what hasn’t done well recently and not what’s hot. The latter may cause you to unbalance
Manage your emotions. This takes us back to number 1. Swap the financial news for something more interesting.

If you do find stock picking good entertainment, don’t do it with your investment capital.

Stay on track. It will pay in the long term.

Exam success – BpH staff pass with flying colours

Simon — Mon, 28 Feb 2011 08:52:04 +0000

We’ve been busy studying for industry qualifications over the last few weeks, months and years. Here is how we have done:

For Partner, Michael Freedman

A Fellowship. Michael is now Chartered Financial Planner, FPFS, which stands for Fellow of the Personal Finance Society.

This is the highest level of qualification in financial planning obtainable from the Chartered Insurance Institute.

For Partner, Simon Brown

Certified Financial Planner (CFP), which is an internationally recognised qualification through the Institute of Financial Planning. Simon has also qualified as a Certified Wealth Mentor, the first in the UK.

For Partner, Adam Bell

R06 Financial Planning Practice. This is a holistic type exam requiring advisers to demonstrate their overall capabilities by testing them on a wide range of financial issues.

For Client Service Assistant, Elspeth Bedford

Certificate in Financial Planning – Investment and Risk Module

For Client Service Assistant, Debbie Lake