From achieving early retirement to realising life-long dreams, these three financial advisers have shown their worth to these clients in their 50s and 60s.
CAPITAL ASSET MANAGEMENT
A couple of years ago, a retired and proudly Welsh client in her mid-60s shared with Alan Smith her dream to visit a little-known part of Patagonia in Argentina. This is a place where a group of Welsh people emigrated to in the 1800s and their descendants still speak the language and uphold Welsh traditions and culture. However, she felt it was too far to travel and too expensive.
Alan, chief executive of London-based Capital Asset Management, used the Truth cash flow tool that his firm has enhanced and branded as FutureMap to prove that she had more than enough money for the rest of her life.
‘We were able to demonstrate that she could easily afford the trip – and what’s more as it’s a long flight, she should travel in style and comfort in business class and stay in five-star hotels,’ says Alan.
She went straight from Capital’s office to the travel agent and six months later sent a postcard from Patagonia.
‘Saving tax and making healthy returns on investments is always helpful, but helping clients tick off their bucket list is where the true value of a great financial planner lies,’ adds Alan. ‘We take great pleasure in giving clients permission to spend their own money!’
A 52-year-old client of Reading-based Beaufort Financial had worked for many years in the IT industry, but was unexpectedly made redundant in March. This came as even more of a surprise given that he had planned to retire sometime after his 55th birthday.
Chartered financial planner Andy Coles suggested a plan that would work both now and in retirement. The redundancy payment of £47,000 was added to his pension before the end of the tax year, netting him £11,750 in upfront basic-rate tax relief and the ability to reclaim another £11,750 in higher-rate tax relief from HMRC.
“That advice was critical to the success of his new financial plan, which allows him time find a job, work part time or not at all,” says Andy. “We have shown he can take £2,500 a month in income from his cash holdings and ISA investments until he is able to take his pension in three years’ time.
“He can retire when he wants and on his own terms. He has spare cash to indulge in his passion for skiing and will have enough income in retirement to spend more time in his holiday cottage in Ireland.”
Simon Bullock, a partner of Mulberry Bow in central London, first met a business owner and his wife a few years ago. They were in their early 60s with two children in their early 20s. Their net worth was just under £20 million, half of which was in their business which they planned to exit within five years.
Simon’s focus was initially on three things. “First, like so many clients we meet, they needed a plan, particularly with a possible business sale on the horizon. Second, they had £2 million of excess cash. Third, they were not being tax-efficient.”
The cash, which had been earning 0.5% per annum, was invested in a moderate risk portfolio targeting 4.5% per annum over five to ten years, a potential uplift of £84,000 per year.
They started using their children’s ISA and capital gains tax allowances, eliminating an unnecessary tax drag of 2.5% per annum – and potentially saving £700,000 over the 25 years of their estate plan.
Finally, the chartered financial planner looked at tax reliefs available from pension contributions and a small allocation to EIS and VCT. The clients should claim £190,000 in tax reliefs over the next five years without taking any investment risks they are uncomfortable with.