Bymapfinancesadmin

Interest Rates and Changes

Earlier this month, the Bank of England raised interest rates from 0.5% to 0.75%. This is not a big increase admittedly but bearing in mind the 0.5% was in existence in March 2009, and hasn’t changed at all since then, I suppose this is a big change, in a kind of a way. There are two sides to look at this from however.

From a savers point of view, the additional 0.25% won’t make any kind of serious difference unless you have millions of pounds stashed away, and even then, if you had this all in interest-bearing stock, you would be losing out anyway. When you take into account the fact that the current inflation rate is 2.5%, savers will still be losing out if they have money in a bank or building society getting only 0.75%. In real terms though, savers will still be worse off as they are not getting more than the inflation rate, but the rate increase has very slightly helped them, and we use that word loosely.

Borrowers on the other hand though will find that very shortly, lenders will increase their borrowing rates, because they in turn will have to pay more for the money that they borrow. This increase  of course will be passed on. Mortgages will be dearer, and we have started to see some lenders withdrawing previous deals and re-arranging them and offering ‘new’ ones. Needless to say, they are a bit more expensive.

The reason that the Bank of England has raised interest rates is to take some heat out of the economy. We saw the effect of this, as inflation (which had been pretty steady) at 2.4% p/annum has just increased to 2.5% p/annum. Interest rates are used to albeit slowly reduce the amount of money available in the market today, and it is hoped that this reduces inflation going forward.

If you would like to discuss any investments with Money Advice & Planning Ltd, please contact us today on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Tax Planning and The Markets

When we invest client money at MAP, we always take the markets and the current situation into account…you have to!

First of all, when we put money away for a client, we always use accumulating funds, as opposed to income funds, where possible. But why?

If you invest in a company or fund on an income basis, you are looking to receive dividends from them. Everyone gets £5,000 a year with no tax but after that, it is taxable and can amount to a fair bit. If on the other hand you invest in accumulating funds, you are working on increasing the value and getting growth. Growth isn’t taxable to income tax, but any gains are subject to Capital Gains Tax which is a bit more lenient than income tax. Every year a person can make gains of £11,700 and pay no tax at all. If you had made this in income funds, you would get the first £5,000 free and the balance would be taxable.

What we do for the bulk of our clients is invest in accumulation units to maximise growth. Then, if someone needs money and withdraws it, the withdrawal is subject to Capital Gains Tax which is slightly more generous to the individual. From experience, we probably only deal with about two or three capital gains tax assessments a year. That will give you some indication of the scope of this, and shows you can legally avoid paying tax here.

When saving or investing, always bear in mind that if you have income, it will be subject to income tax, whereas if you have capital gains, it is not always liable to Capital Gains Tax.

As well as this basic measure, there are plans which specifically cater for tax:

  • Pensions: these are long-term savings contracts which gives full tax-relief when paying into. Always remember however that you will inevitable pay tax when you take the money back out. You can take out 25% of a pension as a tax-free lump sum, but you pay tax on the rest.
  • ISAs: There are small income tax savings in ISAs but there is no Capital Gains Tax on selling ISAs. So if for example, you used it to pay off a mortgage such that when you cash it all in there are big gains, there will never be any capital gains tax. For those under the age of 18, don’t forget adults can pay into a Junior ISA (JISA) for them.
  • Trusts: We use trusts for Inheritance Tax (IHT) planning, as they can save significant amounts of IHT. Quite a complicated area which we won’t go in to detail here – we don’t want to bore you!

It goes without saying that if you can reduce the effects of taxation by as much as you legally can, you will keep more of your money. Therefore, you should always plan your money and spending out.

If you would like to discuss any investments or tax planning with Money Advice & Planning Ltd, please contact us today on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Brexit – How to approach it?

Quite a few of our clients are asking us what is going to happen with Brexit. The simple answer is, we haven’t a clue, but then again no-one does.

What we would add though is that where clients have money invested on a platform, the challenges presented by Brexit are no different than any other market changes, albeit this is on a larger scale.

What we all need to do is sit back and see where we want to invest our money – whether Europe, UK, Asia, America, Japan, Global, etc. Our view is that we believe trading arrangements will be made, and yes, they are taking their time getting there. However, European countries need the UK market just as much as the UK needs European markets. Just think how many German cars are sold in the UK!

We are not for one minute going to fall off a cliff edge at any time. That’s why we believe they will come to some agreement eventually, but this is all about politics, and the EU getting as much money from the UK as they can before the break.

If someone is very nervous about Brexit, the obvious thing is to reduce your levels of risk. If you have category four funds, you may wish to switch these for category three funds. Similarly with category three funds; switch for category two funds. We wouldn’t suggest any drastic changes though because you don’t know how all the companies you are invested in actually trade. A lot of blue chip companies for example get the bulk of their income from overseas, and you just do not get companies which only trade in the UK. So unless you know all the underlying agreements and areas of business, you could very well be jumping from the frying pan in to the fire.

In situations where we are dealing with the unknown – as is the case here – the best way to proceed is to do nothing or only small changes. Once you know what you are facing, then you can easily change things to adapt; that is the approach we would recommend.

This after all is why we use investment platforms – so your investment portfolio can be easily adapted to meet changing circumstances. You could do something now and repent at leisure, so we would advocate that you only do something when you are in full possession of the facts.

If you would like to discuss any investments with Money Advice & Planning Ltd, please contact us today on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Why involve an IFA when dealing with probate or confirmation?

The majority of people use a solicitor to deal with probate or confirmation on a will, but fail to combine the assistance they are receiving from their solicitor with the advice they should be taking from an IFA to help save them money and reduce the potential tax bill on an estate.

For solicitors that work alongside a trusted IFA, this can be a real value-added service they can offer clients, and is also a real opportunity for both solicitor and IFA to secure new clients from the next generation of the family they have both helped.

There are many ways an IFA can help in probate cases, such as:

  • Posthumous applications to HMRC, to avoid tax charges on large pensions;
  • Highlighting any government benefits that the surviving spouse might be eligible for; or
  • Arranging for an additional ISA allowance where savings are involved.

Once probate has been carried out, the IFA will then be able to advise the family on the best way to maximise investment returns on any money inherited, and hopefully secure future business for both solicitor and IFA from the next generation of the family.

With more and more businesses looking at how they can keep in contact with the intergenerational transfer of wealth and future business when probate is carried out, this is a model of working together which can produce growth, profitability and sustainability for both IFA and solicitor.

If you would like to discuss how Money Advice & Planning Ltd can add value to your clients and enable you to offer an additional service to them then please contact us today on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Are your clients getting the right financial advice?

Speak to a financial adviser who can help you

Reading the national and financial press recently, it is very apparent that a lot of people don’t know where to turn for financial advice. With most Financial Services providers having withdrawn from having a local presence, and the ongoing onslaught of bank closures in the average UK high street, it is becoming even more confusing for people to know where to go or who to call for good financial advice.

Establishing a relationship with an Independent Financial Adviser (IFA) you can trust to handle all of your financial needs is critical to achieving your financial goals. Not all Financial Advisers are the same, so you must beware!

The two main types of financial adviser are those who are independent and those who are not. All advisers must tell you what services they offer from the outset. To be called an Independent Financial Adviser, they must be able to offer a broad range of retail investment products, and give consumers unbiased advice based on a comprehensive analysis of the market.

Restricted or tied advisers on the other hand can only recommend certain types of investment products or products from a limited number of providers (possibly only one if tied). It is important to establish at the outset what type of advice an adviser can offer, to ensure you get the best investment(s) to suit your needs and requirements.

All advisers must be properly qualified to give financial advice and hold the Diploma in Financial Planning, or an equivalent qualification. Advisers must also prove that their knowledge is up-to -date through continual professional development (CPD).

Some types of advice require an adviser to have specialist qualifications – pension transfers and equity release for example. Any companies offering these services should have advisers within their ranks who are suitably qualified to provide advice in these areas.

Advisers must also be transparent in the fees they charge for both initial and ongoing advice and services.

With Money Advice & Planning Ltd you can rest assured in the services we offer:

  • Non-restricted advice and planning – no matter what financial advice and products you need, we can help.
  • Face-to-face advice from UK-wide trusted advisers – irrespective of where you are in the UK, one of our advisers will be happy to meet you and discuss matters face-to-face.
  • Fees structured to suit requirements – financial advice should never take on a ‘one size fits all’ approach and our fees will be structured and mutually agreed to suit your needs.
  • Tailored service packages – we don’t believe in one-off financial advice and have several service packages available, so your financial affairs are reviewed throughout your journey with MAP.
  • Whole of market non-discretionary investments – our bespoke investment strategy will cater for your needs and requirements, and give you an investment right for you.
  • Quarterly investment reviews – our proactive analysis of fund performance ensures you are always invested in the best areas to suit your attitudes to risk.
  • Recommended funds – we invest using recommended fund lists, which have been tried and tested to deliver successful returns for our clients.
  • Transparency and peace of mind – clients have 24/7 access to their investments through the MAP portal, so they always know how their investment is performing.

Why not get in touch today to see how we can add value to your business and your clients.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Tax planning is not just about tax reliefs

Dealing with taxWhen I plan out a person’s retirement strategy, some people have commented that it’s not just about pensions, and to me that is correct. Retirement planning should be about pensions and ISAs; both are important.

Putting money into a pension is logical, as you get tax relief on this, and at 40% this is quite an advantage. Please bear in mind though that when you take the money out at some time in the future, it is then taxable. ISAs on the other hand, don’t attract tax relief, but there is no tax when you take the money back out in the future. All well and good you might say, but so what!

What I try and do is to obtain a good mix between the two. Always try and ensure you have a sufficiently good pension fund where you can take out £11,800 a year (the basic tax allowances), so this means £11,800 a year with no tax. As I invariably always use SIPPs for pensions, I like to recommend where possible, that a person takes out their 25% tax-free cash, and either puts this into ISAs or general investments, to build up the non-taxable side of things.

If, for example, someone is looking for £25,000 a year in retirement income, I would look to take withdrawals of £13,200 a year from an ISA or general investment – and so, when added to the £11,800, that person has £25,000 a year income in retirement. Now what could be financially better than that?

This is what planning is all about, to make the best of things for clients.

The Financial Conduct Authority does not regulate tax advice.

For any enquiries or just an initial chat, contact Andrew Singleton on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Working the Stockmarkets

The Stock MarketsI suppose the headline of this article could be a bit misleading because I believe that no-one can actually work the markets; it’s usually the other way about – the markets work you!

This is a basic principle of how we invest any client’s money – we always take a good spread of funds, and by that I don’t mean picking different equity funds. It’s far wider than that.

Low-risk funds “tend” to be more interest-based, whilst middle-risk funds are more about equities. High-risk funds are about specialities in a variety of flavours. What we as advisers need to do is always give clients a good spread of risk, and that’s why part of our fact-finding is to find out exactly what a person is comfortable with in terms of risk. We invariably use 10 funds for a portfolio and when we find out what someone wants with regards to risk, we can then allocate the funds.

If for example, someone says that they are middle-of-the-road and balanced, we would interpret this as 3 low-risk funds, 4 middle-risk funds and 3 high-risk funds. Looking into this further, we would choose 3 low-risk funds, some of which are interest-based, and so less volatile. Middle-risk funds would usually be equities – whether UK or Europe, and in some cases, Global. High-risk funds would be American, Japanese or some speciality like an Alpha fund (i.e. start-ups). So, by picking 10 funds across the categories, the client not only gets a good spread of types, but they will also get a good spread of regions and risk categories. In other words, you are covering all bases. You know the saying about putting all your eggs in the one basket.

In addition to this, you also need to watch trends to see what areas are doing well and similarly, which are not. At the moment, America is doing well but I think that it is slowly coming to the end of the bull run it has been on. Japan is doing well and seems to be holding up. Europe is also doing well, as is Asia and some Emerging Markets, but not all.

We pick a basket of funds for a client based on consistency on how well they are performing. This gives us an insight (and that’s all it does) on how it might do in the future, but you do need to watch the trends. Finally, you need to keep watching this to ensure a fund is doing what you picked it for in the first place.

For any enquiries or just an initial chat, contact Andrew Singleton on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Offering solutions, not products

What do you think of when you hear the term ‘Financial Adviser’? Does it conjure up the image of someone trying to sell you as many financial services products as possible – life insurance, pensions and savings plans, to name the most common – or do you see someone who can help you achieve your goals in life?

Here at Money Advice & Planning Ltd, we believe our business is about offering solutions to help people to achieve their goals and aspirations in life.

We have heard it said many times that “a goal without a plan is just a wish” and we believe that to be very true. How many people set out on life’s journey wishing to own their dream house, pay for their kids’ education, enjoy their ideal holidays or retire and spend their time playing golf or lying by the pool at their holiday home? Sadly, for many people, the goals and aspirations that they have turn into nothing more than a pipe dream which they will never achieve.

There can be many reasons why this can happen but for many it is down to nothing more than a lack of planning. For others, they see financial products as nothing more than an expense rather than a tool that can help them achieve their goals.

The role of a Financial Adviser is not about selling financial products; it is about offering solutions to help clients achieve their goals and being there over the long-term to make sure that happens. The financial products are the tools the adviser has in their bag to get the job done.

Money Advice & Planning Ltd does what it says on the tin – it provides the advice and planning needed throughout a clients’ journey, to help them achieve their goals, and after all, your goals are our goals!

If you would like to find out about how Money Advice & Planning can help you achieve your goals, please visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call Andrew Singleton on 0345 241 1808.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Are you getting value for money with financial products?

There is a well-known saying that you get what you pay for and you pay for what you get, and this is what we work to at MAP. The number of times we have seen people deciding things solely on a cost basis, without looking at all aspects, never ceases to amaze us.

Our middle of the road charge is 3.5% initial and 1.4% per annum ongoing. For that, whilst there are never any guarantees, we aim to produce returns of about 8% net per annum. The problem with that for a number of people though is that they cannot see what they might get back, but they can focus on what they will pay, and in a few cases, they decide to watch costs and not do anything.

We had a potential client recently with £1.3m to invest and he decided to go elsewhere because of ongoing costs. His ongoing charge was 1.6% and if we had made him 8% net of all charges, he would have still have been better off. By going with someone else however, he may only be charged say 0.75% a year but only make 5% net. In monetary terms this is a difference of 3%, which on £1.3m is £39,000…a lot of money!

We can sympathise with people making these decisions as growth is only a maybe and not a definite, but all we would say to people thinking about investing is to please look at all aspects of the service offered, as it is way more than just charges.

What we do at MAP is constantly watch all the funds we use for investing in, and we only make changes as and when we feel we need to (after getting permission of course). Over a few years now, we have achieved 8-9% per annum for clients with a balanced portfolio using our investment process. Nothing is guaranteed apart from change, which is why we watch the funds that we use every calendar quarter.

The one thing that should give clients a degree of comfort about our charging structure is that MAP will only benefit pro-rata with clients, because we charge a percentage and not a fixed fee. If you don’t make much in any one year, neither do we, as our percentage will be down, so it is in our interests to try and make clients as much as we can, and we can benefit as well.

You get what you pay for and you pay for what you get!

If you would like to find out about how Money Advice & Planning invests client money, please visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call Andrew Singleton on 0345 241 1808.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Bymapfinancesadmin

Robo Advice v. Bespoke Services?

Technology is changing the world on every level, at a pace we could hardly have imagined possible even 10 years ago. On a personal level and, especially in the world of business, technology is shaping how we live and work, both now, and in the future.

Every industry is being shaped by technology and financial services is certainly no exception. You just have to look at how banking has changed in the last 10 years and how we now interact with banks. Straight forward transactions can be carried out much faster online but what do you do when you need some advice and help, especially face-to-face advice?

The IFA world has also gone through many changes in recent years and technology has played a major part in those changes. From back office systems to help you manage your business more effectively to investment platforms that allow you to access and invest client money all in one place, technology has transformed how we operate. MAP has embraced this technology to assist us in maximising returns on our clients’ investments.

The latest technology to enter our sector which you will no doubt hear more and more about is “Robo Advice”. Robo Advice is basically an online investment platform which uses algorithms to assess a clients’ attitude to risk via an online questionnaire before offering what is usually a limited choice of risk-rated portfolios to invest in. There is very little (if any) human intervention and wider issues such as estate or retirement planning are not addressed at all.

At Money Advice & Planning Ltd we believe it is our job to truly understand our clients, their goals and aspirations, and their attitude to risk. We do this through meeting with them face-to-face and building a long-term plan to help them achieve their goals. This is the human aspect of financial advice which a computer algorithm could never deliver.

We provide our clients with a bespoke proactive investment strategy and service – initial and ongoing – to maximise returns on their investments, based on three key steps:

  • Select – We choose the best product and range of funds from the whole of the market based on our clients’ attitude to risk;
  • Review – We regularly review the funds we are happy to recommend to clients based on the funds’ performance; and
  • Switch – We recommend fund switches where necessary and, with your permission, we make those switches.

To provide complete transparency, we provide our clients with 24/7 access to the MAP portal where they can track and monitor the performance of their investments.

We do believe technology has its place, but we don’t believe in one-off, remote financial advice and investment services.

If you would like to find out about how Money Advice & Planning invests client money, please visit us at www.mapfinances.co.uk and use the contact form. Alternatively, call Andrew Singleton on 0345 241 1808.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.