Advising Vulnerable Clients

It is fair to say that the COVID-19 pandemic has had an impact on all our lives one way or another. Fear, worry and stress are normal responses to perceived or real threats to our lives and livelihoods. This can put extra pressure on people which could lead to them becoming vulnerable.

People living in later life are more likely to be exposed to vulnerability both from a health and wellbeing and financial perspective. Their vulnerability can be short lived, long term or be permanent. It can often be triggered by emotional or financial shock. According to the insurance company JUST:

  • 1 in 6 people over 80 years old are affected by Dementia
  • 1 in 7 adults have literacy skills that are expected of a child age 11 or below
  • Just under 50% of UK adults have a numeracy attainment age of 11 or below
  • Almost 50% of adults do not have enough savings to cover an unexpected bill of £300

When meeting with new and existing clients, I have a duty of care to ensure I can identify “vulnerability indicators” and tailor my advice to their personal circumstances. Whilst not an exhaustive list, it is important for me to consider the following vulnerabilities:

  • Low literacy, numeracy and financial capability skills
  • Communication difficulties
  • Severe or long-term illness
  • Physical disability
  • Mental health problems
  • Dementia or loss of capacity
  • Low income and/or debt
  • Change in circumstances such as bereavement
  • Caring responsibilities (including operating as power of attorney)
  • Dealing with a sudden life event such as death of a spouse

If a vulnerability is identified, I handhold the client on the advice journey, taking extra measures to ensure the pace is appropriate for their particular circumstances.  Additional measures might include:

  • Providing additional opportunities for them to ask questions about the information we have provided.
  • Continuously seeking confirmation that they have understood the information that has been provided.
  • Asking if there is anybody who is able to assist them, such as a family member or trusted friend, to be present during our conversations.
  • Conducting the meeting at a place and time of day which best fits in with their circumstances and allows them to feel most comfortable.

Are you in this situation or do you know someone who is?  We are here to help

Ben Harrison is a Financial Planning Consultant at MHA Moore and Smalley, he is an Independent Chartered Financial Planner, accredited through the Society of Later Life Advisors (SOLLA) together with holding specialist qualifications in advising vulnerable clients.

For an initial, no obligation meeting to discuss any financial planning matter please contact Ben via e-mail atben.harrison@mooreandsmalley.co.uk or call the office on 01772 821 021.

MHA Moore and Smalley and is registered to carry on audit work in the UK by The Institute of Chartered Accountants in England and Wales and is authorised and regulated by the Financial Conduct Authority and details of our registration can be viewed at https://register.fca.org.uk/ under reference number 448716.

How hard are your cash deposits working for you?

As many of you reading this will be aware, National Savings and Investments (NS&I) recently slashed the interest rates it pays on many of its savings accounts this month. Most notably its popular easy access account from 1.16% to just 0.01% AER and its Direct ISA has dropped from 0.9% to 0.1% AER.

Of course, the NS&I are not alone in reducing rates, if you search any comparison site, cash ISA instant access rates are around 0.6% AER, whilst easy access savings accounts are down at 0.5% AER.

In addition, let us not forget, most of the mainstream banks now offer just 0.01% on their instant access accounts so, it really is becoming increasingly difficult for savers to earn a good return on their cash.

Many of us know we should be looking at our cash deposits and switching them to a more competitive deal, yet in reality many of us ‘never get round to it’ due to the perceived ‘hassle’ or, for the few that may consider this, end up not proceeding because they think that the rates elsewhere are no better.

Well there is some good news. Whether you are a business, individual, or charity with cash on deposit, MHA Moore and Smalley can review you circumstances and assist you in securing market leading rates, whilst also reducing your risk through diversification, thus maximising any protections available to you.

For those individuals who have a longer-term outlook for their cash savings, now may be an opportune time to consider a stocks and shares ISA. Whilst there are other risks to consider, there’s also a real chance for inflation-beating returns over the medium to long term.

Some things to consider:

  • £270 billion held in cash ISA’s – earning little or no interest
  • Typical cash ISA rates less than 0.6%
  • Typical easy access savings rates less than 0.5%
  • Typical easy access deposit rates 0.01%

Get in touch and let us help you make your money work harder.

For more information on our cash management services, please contact a member of our Financial Planning team. Our initial meeting is always free and no obligation.

This article should not be construed as advice or a personalised recommendation. The most suitable solution for you will depend on your own personal circumstances.

If you would like to get in touch with our financial planning team, please email info@mooreandsmalley.co.uk or phone 01772 821 021.

If you would like to discuss any further information regarding the content in this blog, please make sure to get in touch with Nathan Douse on nathan.douse@mooreandsmalley.co.uk or 01772 821 021

The LLP trades as MHA Moore and Smalley and is registered to carry on audit work in the UK by The Institute of Chartered Accountants in England and Wales and is authorised and regulated by the Financial Conduct Authority and details of our registration can be viewed at https://register.fca.org.uk/ under reference number 448716.

Pension contributions, cash deposits and other financial planning matters to be considered before your financial year end

2020 has been one of the most tumultuous times for businesses, staff, and humanity alike, and many if not all, businesses have had to adapt and change in this new world.

That’s why now more than ever, it is crucial to take stock on what has worked well this year, and review what needs improving, as the countdown to your company year-end approaches.

Now is the perfect time to review your checklist of performance indicators to ensure that your business is performing in line with expectations, so you can effectively plan for the year ahead. Also included should be a review of your financial planning objectives.

To ensure that your business is not missing out on any opportunities and is equipped for any unknown challenges ahead, a consideration should be given to the following:

  • Pre-year end pension contributions for corporation tax relief
  • Reviewing cash deposits, and their underlying rates of interest
  • Utilising accumulated pension plans for business purposes
  • Reviewing Shareholder agreements/succession plans, and associated insurance plans
  • Updating keyperson/business continuity plans
  • Reviewing pension plans as part of your retirement or exit strategy

Most pressing within this list is often pension contributions, as you will have a deadline of your company year-end to pay these to ensure they qualify for corporation tax relief in the intended year.

It makes sense to give priority and to know early on how much you can afford to contribute, and how much you are allowed to contribute for each employee.

Pension contributions are not an end in themselves however, as a pension plan they can be used to great effect for individuals and businesses alike. As well as providing a tried-and-tested retirement planning vehicle, the varied range of investments available mean pensions can be used for the benefits of your company, in a tax-efficient manner.

Businesses should also think about “activating” dormant cash deposits. With interest rates at historical lows and below the major measures of inflation, having a cash management strategy in place to find the higher rates available can mean deposits retaining their real value. To read more about this please see our blog called “How hard are your cash deposits working for you?”

Ignoring these areas can mean missing out on opportunities that could assist your business plans or avoid disruption in the event of a death or illness in the future.

For further information on financial planning for your business, please contact Ian Aldred in the Financial Planning Team on 01772 821021 or email ian.aldred@mooreandsmalley.co.uk.

The LLP trades as MHA Moore and Smalley and is registered to carry on audit work in the UK by The Institute of Chartered Accountants in England and Wales and is authorised and regulated by the Financial Conduct Authority and details of our registration can be viewed at https://register.fca.org.uk/ under reference number 448716.

Lee Salter

Professional: Lee is a Chartered Financial Planner and a member of the Chartered Institute of Securities and Investments. With a natural passion for investments Lee is the chairman of the in house investment committee.

He is a general practitioner but specialises in advising high net worth individuals and corporate entities. Working across the North West, Lee provides holistic financial planning advice to clients of the firm.

Personal: Lee is happily married and enjoys spending time with his family. He is a keen squash player, Tarantino fan and enjoys spending time in his garage woodwork shop.

Income Protection – and why you need it!

Income protection is an insurance policy that pays out a percentage of your salary should you be unable to work due to accident or sickness. It is, in my opinion, the most important insurance policy you can have if you are of working age, and I will explain why.

Let’s start by asking you a question; what is your plan ‘b’ should you be unable to work due to accident or sickness?

For those of you who are employed, perhaps your employer offers an enhanced sick pay package, something like 4 weeks full pay or maybe longer however, in reality a mere 10% of UK employers offer some form of sick pay package. Statutory sick pay is a mere £95.85 a week and payable for up to 28 weeks yet the average family weekly spend is estimated to be £585.60.

Savings could well be an option for some, but nearly half of UK households have either no savings or less than £1,500. Furthermore, 44% of people would struggle with a loss of income within 6 months.

How long would your savings last? One month? Two months? What then?

Many of us insure our homes and contents, our pets, the boiler, or the car to name a few. Some of these insurances are required by law, some we can chose the level at which we insure, for example, car insurance can be on a comprehensive cover basis or third-party fire and theft. We chose to insure these things or events to give us peace of mind. Peace of mind should the worst happen. Peace of mind that if the dog or cat become seriously ill or have an accident that we do not have to ‘find’ the money to cover the vet’s bill.

In the UK, there are an estimated 250,000 jobs lost per year and around 2 million people are not working at any one time due to sickness or long-term disability.

The average UK salary is £30,000 which equates to well over £1 million pounds throughout your working lifetime, yet worryingly, when we consider all what I have just written, only one in ten protect their income.

I will finish this blog with the same question I started with; What is your plan ‘b’ should you be unable to work due to accident or sickness?

Whether or not these types of policies would be suitable for you, depends on your individual financial circumstances. The information given in this article should not be construed as financial advice.

Contact us

For an initial, free, no obligation chat around your protection needs please get in touch with Nathan Douse ,Financial Planning Consultant or call 01772 821021. Alternatively you cancontact us here.

Spreading risk has always made sense

Almost exactly 50 years ago, a company few people had previously heard of was hitting the headlines as the price of its shares went stratospheric. A few months later it came back to earth with a crash. Fortunes were made and lost after mining company Poseidon announced the discovery of new nickel ore reserves in Western Australia just as world nickel prices hit a new high.

Poseidon misadventure

Poseidon shares had been trading at A$0.80 in the second half of 1969 when they took off. The price climbed relentlessly for weeks as investors claimed their piece of the action. One day in February 1970, the shares touched A$280.00. Then the profit-taking began and the share price crashed. Nickel prices later dropped back and the Poseidon nickel ore was low quality; receivership ensued in 1974.

Fast-forward 20 years and a new ‘rising star’ of the stock market burned out. A minor fashion house called Polly Peck had been acquired by new owners in 1980 and used as a vehicle for ventures in Northern Cyprus. A series of deals in the 1980s brought such growth that the company’s shares entered the FTSE 100. In September 1990, Polly Peck shares were suspended amid fraud allegations. However, even in these two countries, the data confirmed a broader overall trend towards decelerating growth rates.

FOMO frenzy – 300 years ago!

The loss suffered by many investors in Poseidon or Polly Peck was a painful lesson about impossible returns and concentration of risk. There had been plenty of previous warnings, right back to the South Sea Bubble in 1720, about blindly following the herd in a Fear of Missing Out aka FOMO frenzy. Speculative investment has always had particular risk attached and that is all the greater if it is not diversified.

The value of diversifying your portfolio with collective investments

As a general principle, any investment in shares needs to be spread around, so that if one share price slumps badly it only affects a proportion of your overall portfolio. For many investors, a sound way to achieve a spread of risk is through collective investment schemes with risk profiles aligned to suit their needs.

Need more information?

This article should not be construed as advice or a personalised recommendation. The most suitable solution for you will depend on your own personal circumstances.

We can advise on the investment strategies and products most appropriate for your objectives and needs. Please get in touch with a member of our financial planning and wealth management team.

Business Succession: On Death

What do you have in place should the worst happen?

Many of you reading this article will have considered at some point establishing a personal will and your likely motives for putting this in place will be one or more of the following; you want to limit the amount of tax you pay; if you have children you want to appoint a guardian and ensure they are provided for financially; you want to head off any potential family disputes; and critically you want to have control over how your estate will be distributed after your death.

Individuals generally want to have peace of mind that on their death their wishes are carried out as they would want them to be and it is the same from a business point of view.

Individuals who have business interests via Limited Companies, Partnerships, or LLPs should ensure there is clear instruction as to who and how their business interests are left to…

Worryingly, over fifty percent of UK businesses have not left instructions in a will or any special arrangements regarding shares on their death.

Let us consider an example; a limited company, with 2 shareholders, each owning an equal share of the business. The shareholders are both married, and both have dependents. If we asked either of these shareholders what they wanted to happen to their share of the business on death, they’d likely say they would want their respective families to inherit the cash value of their share of the business and rightly so. However, with no formal agreements in place the reality is often quite different.

The shares would generally pass to the spouse under the terms of the will (and if there was no will in place, the rules of intestacy would apply). The spouse may wish to ‘sell’ these back to the business, but there is nothing binding to make this happen. The business may not be able to buy the shares from the spouse (even if they wanted to) as they may not have any readily available cash.

Perhaps borrowing is an option. This will take time.

Would it even be possible against the likely backdrop of a potentially traumatic period for the company?

They could sell the shares on the open market but, would they get a fair value?

How long would this take?

The business would almost certainly not welcome this course of action.

What else?

The spouse may decide to keep the shares and become actively involved in the business. This could be an unwelcome event for the remaining business owner.

Having a business will in place can provide businesses with a solution. It will allow the funds to be in place to facilitate the purchase of shares and it will ensure that the business can continue, and the family are compensated as per the client’s wishes. Peace of mind for all involved and minimal disruption to the business.

Have a think about you own business, whether that be a Partnership, an LLP, or a Limited Company.

Have you considered what you would like to happen should the worst happen?

What have you got in place to ensure your wishes are carried out?

Importantly, if you believe you have something in place, when was it last reviewed?

Does it still meet your needs?

For an initial free no obligation conversation about your own individual circumstances, please contact our Financial Planning Consultant Nathan Douse who specialises in this area on 01772 821021 or email nathan.douse@mooreandsmalley.co.uk and update your business accounts and finances anytime, anywhere via the internet. It enables you to keep your business finances organised.

Building financial resilience

One notable theme evident throughout the coronavirus lockdown has been ‘back to basics’ with people displaying an increased appetite for the simpler things in life. While not everyone has fully embraced Tom and Barbara’s ‘Good Life’ philosophy, home baking, gardening and knitting have all enjoyed a notable renaissance.

Lockdown lessons

Back to basics has also become a key personal finance theme. The economic impact of the pandemic has clearly resulted in many people’s finances becoming severely stretched. As a result, a significant proportion of consumers have sought to change their financial habits by reducing expenses and becoming more mindful spenders.

Dealing with debt

While good budgeting skills have become a necessity, it’s also important not to ignore debt. Many have benefited from mortgage and other debt payment breaks, but these will not last forever. Going forward it’s vital to keep up with repayments or, if you are struggling, consult a debt adviser. When it comes to lingering debt, the worst thing anyone can do is nothing.

Financial fragility

Sadly, for some people, the pandemic has highlighted the fragile nature of their financial safety net. The last few decades have seen the burden of responsibility increasingly shift from state to individual, which has increased the importance of protection products in order to maintain both your and your family’s financial security in uncertain times.

Rainy day funds

The pandemic has also highlighted the need for emergency savings. If you don’t have any, regular savings schemes can be a particularly good way to accumulate rainy day funds. If you do have savings, make sure you shop around for the best available rates rather than leaving funds stagnating in poorly paying accounts.

Long-term goals

Although it’s extremely easy to focus solely on short term financial needs, it’s also important not to lose sight of other financial goals. While finding money to fund longer-term plans such as retirement savings can be difficult, the cost of delay can ultimately prove even more expensive.

Help at hand

The last few months have shown we never really know what’s around the corner and also demonstrated the importance of being financially prepared for what may lie ahead. If you need assistance strengthening your financial resilience, please get in touch with a member of our financial planning and wealth management team.

Business Loan Protection – What are the risks?

There is no doubt that we are living in unprecedented times. Over six months ago the country was put into lockdown and to this day the thought of returning to what once seemed like ‘a normal life’ still seems some way off. We now find ourselves dealing with local lockdowns, track and trace, wearing of masks in public places and other measures introduced by the government in an attempt to deal with and contain this virus.

From a business point of view many sectors find themselves having to navigate through unchartered territory and immersed in long term uncertainty.

The government announced various measures to support businesses facing difficulties, two of which are the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). The schemes aim to support long-term viable businesses who may need to respond to cashflow pressures by seeking additional finance.

There is no doubt that these schemes will have provided a crucial financial safety net for many firms, but they do also raise questions about how business owners should protect their debt.  

This pandemic will have forced many business owners to think even more carefully about how to protect their biggest assets, which is themselves and their key people. But for many business owners they do not realise that their debt does not die with them and that any loans will have to be repaid if they do pass-away. Furthermore, how would this debt be serviced in the event of long-term sickness or incapacity?

Remember, the borrower always remains 100% liable for the debt. You’ll be responsible for repayment of 100% of the CBILS facility, not just the 20% outside the coverage of the government’s guarantee and while no personal guarantees are required with the BBLS, the responsibility for paying back the loan rests with the business. Where defaults occur, lenders will follow their standard commercial recovery procedures, including the realisation of security (where appropriate), before making a claim against the government’s guarantee for any shortfall.

Furthermore, these coronavirus-related loans could well compound the existing issue of corporate debt, some of which may well be subject to personal guarantees, namely, your biggest asset, your home. Now is an ideal time to sit down with your financial planner and look at ways to insure and protect your business and family should the worst happen.

At MHA Moore and Smalley, we specialise in formulating and implementing comprehensive protection solutions that will help mitigate the risks a business is faced with. Whilst cost is often an objection, in reality, a robust solution can be put in place for a fraction of most business’ turnover or profit. What business owners should be asking themselves is what is the cost of not having something in place – not just on their business but also their families.

For an initial, no obligation meeting to undertake a review of your business protection arrangements please contact Nathan Douse, Financial Planning Consultant at MHA Moore and Smalley.

E-mail: nathan.douse@mooreandsmalley.co.uk or call the office on 01772 821 021.

Keep your retirement plans on track

The COVID-19 pandemic is having a widespread impact on all aspects of our finances, including retirement planning. However, while recent stock market volatility undoubtedly poses a challenge, particularly for those close to retirement, it is important not to allow the outbreak to derail your plans.

A resilient retirement plan

One thing the pandemic has vividly highlighted is the importance of developing a resilient retirement plan. Although market turbulence will impact all pension holders, those with a clearly defined, carefully considered plan will inevitably be in much better shape to weather market volatility. For instance, as they approach retirement, an increasing proportion of their pension fund will be ‘lifestyled’, meaning it shifts to ‘safer’ havens such as cash, gilts or bonds, thereby limiting their overall level of investment risk.

Stay the course

At times like these, it is also vitally important to remember pension savings are designed for the long term. This means that, particularly in the case of younger investors, there should be plenty of time for markets to recover and pension pots to achieve growth aspirations before retirement income is required. In addition, making decisions based on short-term economic upheaval can be extremely risky, with the potential to lock in losses following declines in investment values. Historically the best strategy is therefore generally to be patient, resist the urge to sell and stick to a long-term investing philosophy. For those closer to retirement, now is a good time to take stock of your full complement of retirement resources before making any decisions. This will involve reviewing your pensions, and any other savings and investments.

We can review your level of income and whether this has been adversely impacted by, for example, reduced savings rates or cut dividends.

Making your pension last

Another factor that could impact pension holders’ response to the pandemic relates to staggered retirement. As a result of increased longevity, a greater proportion of the population now withdraw more gradually from work, as retirees find an optimum worklife balance that accommodates their specific needs. This trend clearly provides for greater flexibility with part-time work enabling many pensioners to preserve retirement funds into later life – an increasingly popular choice for many.

Advice increasingly essential

Perhaps unsurprisingly given the heightened economic uncertainty, the past few months have seen a sharp rise in demand for professional financial advice. It has never been more important for people to obtain sound advice in order to ensure their retirement plans remain firmly on track.

We’re here to help

So, if you are concerned about the impact of coronavirus on your plans, talk to us. We will help you see the bigger picture, weigh up all your options and make a balanced assessment of risks tailored specifically to your individual needs.

If you would like further information on any of the topics covered in this article please contact Dave Gleeson, MHA Moore and Smalley Senior Financial Planning Consultant – Head of Technical. E-mail: dave.gleeson@mooreandsmalley.co.uk or call the office on 01772 821 021.

Click on the link below for more helpful information regarding retirement.

MHA Moore and Smalley are authorised and regulated by the Financial Conduct Authority.