Andrew Chorley, Financial Planning Wales
Financial Planning Wales’ astute pension planning over 20 years led one couple to a £30,000-per-year retirement. “We continually asked them to focus on their long-term aim and that retirement planning is not just about pensions,” says managing director Andrew Chorley. “We employed several strategies that were not only effective, but extremely tax efficient. Drawing taxable income up to personal allowances from pensions has given them £20,000 tax free with the balance from ISA income or withdrawals of capital up to the annual exemption; they get the income they require, but as we don’t have to consider the deduction of 20% tax the required rate of return is lower.” A return of around 3.2% is needed to sustain current withdrawal rates – higher than the 5.31% annualised return achieved since 2008 thanks to a “boring but consistent investment strategy of capital preservation”. “This has put them in a comfortable position to enjoy the retirement lifestyle they wanted and allow some scope to increase withdrawals depending on inflation,” adds Andrew. “The investment returns and tax savings are easy to quantify in pounds and percentages, but putting a value on keeping clients on the right path over a prolonged period is not so easy.”
Stuart Evans, Common Sense Financial Planning
Helping clients to align their finances with their lives is the biggest benefit that Staffordshire-based Common Sense Financial Planning brings to its clients. Director and chartered financial planner Stuart Evans says: “The value of our advice does not sit in the numbers; our primary value to our clients is as a planner and coach. “The first thing we do with our clients is to understand everything that they wish to do, be or have, as without this understanding we simply cannot plan effectively.” He recently dealt with a client who had inherited around £300,000 and came to the firm to invest it. “After following the EVOKE client interview process, we worked out that she hated her job, wanted more time to herself and most of all wanted to be an art therapist. “In September, she started a full-time art therapist course, no longer works in the job she hated, has a defined career path following her course and is happier than she has ever been.” To achieve this, Stuart advised her to use £200,000 to repay her mortgage and fund living expenses for the next two-and-a-half years. The remaining £100,000 has been invested in the adviser’s model portfolio for long-term growth.
Scott Gallacher, Rowley Turton
One of Rowley Turton’s clients was sadly widowed at a relatively young age. Her husband had good life assurance benefits, and left his wife well provided for financially: having repaid the mortgage she was left with £1 million. Scott Gallacher, a director of the Leicester-based firm, says: “Inherently cautious by nature, the client’s first instinct was to seek the supposed safety of cash and spread this money over several bank and building society accounts and National Savings. “Whilst cash does give certainty, it is far from safe due to the risks of inflation eroding the real value of it. Even with relatively low inflation of 2% per annum, with today’s low interest rates she was effectively ‘setting fire to £1,000 a month’.” The adviser is now arranging a low risk investment portfolio designed to preserve the real value of her capital and give her a supplementary income to offset the loss of some of her late husband’s income. “Achieving a real return of 1.2% year could allow her to withdraw £1,000 per month and still maintain the value of the money. By comparison, relying on cash at current rates could have cost her £200,000 [over 10 years] due to inflation.”