Financial Adviser/Financial Consultant
The general title given that can be all encompassing. Typically, advisers that are tied to advising on the products from one Company, or a number of companies only, will use this title. The banks often use it for their tied sales force.

Independant Financial Adviser
A title that can only be used by those advisers who can offer products from across the whole market, hence the term independent. Traditionally, this has been the name used by the majority of advisers who are ‘independent’. Still commonly used and one that provides the consumer with the knowledge that the adviser is able to select from a wide range of products to meet the client’s requirements.

Financial Planner
A relatively new title used by those who arguably take a more strategic approach to financial planning, often incorporating tools such as ‘cash flow modelling’. The financial planning approach will often map future events and goals and build a plan to achieve build, maintain and protect financial wellbeing. Often, the products, such as a pension or investment policy, will be secondary to the plan itself.

Lifestyle Financial Planner
As above but with a bias to exploring the deeper meaning around the client’s relationship with money. The concept of lifestyle financial planning arrived on our shores from the US. The adviser will tend to spend longer probing and questioning the client’s beliefs, values and motivations before building a financial plan. The advocates of this approach believe that this results in designing a financial plan that is far more fulfilling for the individual.

Wealth Manager/Wealth Consultant
Where this title is used, the adviser or firm will tend to focus more on the management of money and investment process. More sophisticated investment processes and techniques may be employed to try and achieve greater returns for the client.

With the exception of choosing an adviser who is ‘independent’, there is arguably no right or wrong approach to financial planning. As with all industries, the delivery of financial advice as a ‘product’ or ‘service’ evolves. New approaches and techniques regularly come to market, some better than others, some simple, some more sophisticated.

All types of adviser referred to above may employ the same strategies and approach in delivering advice; the title alone is not a reliable indicator of the quality of advice. We firmly believe that financial advice succeeds where there is a high degree of trust between the adviser and client, where there are common beliefs and values, underpinned by an advisory proposition entirely centered on the client’s needs and wants.

When choosing a financial adviser, to some extent the title may be irrelevant. It’s important that in the first meeting you feel you can get along well with them, your ‘gut feel’ is good and that they ‘talk your language’, in the broadest sense. Always ask to speak with existing clients – do your homework, check out their website and speak with those who may know them. In the same way you don’t buy the first car you see, arrange to meet with a couple of advisers first to see which one will work best for you – the first meeting is often without obligation and you’ll get a fuller understanding of whether they are right for you.

Choosing a financial adviser is possibly one of the most important decisions of your life. The right adviser will make a significant difference to you wealth, health and happiness. Make sure it’s the right one.

The answer for the great majority of people is ‘somewhere in the middle.’ But just whereabouts in the middle depends on your attitude to risk – a combination of factors including your age, employment status, income, family circumstances and bluntly, your basic human nature. Some people are inherently cautious; some are more adventurous.

So why not just go ahead and invest the windfall yourself? Why bother with independent financial advice?

There are probably five good reasons why it makes sense to consult an IFA – and to work with him or her over the long term.

1. Firstly, your IFA is an expert. This means that he not only knows all the various investment products that are available to you, he knows the markets as well. He’ll have an appreciation for which stock markets are doing well, which are doing badly and he’ll be kept regularly up to date on this by all the investment companies that he deals with.

2. He’s experienced. World stock markets are just emerging from a very difficult couple of years – for most IFAs, this will be the second, third or fourth “very difficult” period that they’ve seen. Always remember that ‘markets can fall as well as rise’ means exactly what it says – no investment graph has ever risen in a continuous straight line – so it helps to be working with someone who has long term experience.

3. An IFA understands how to diversify an investment portfolio to minimise risk – or as your grandmother might have said, he’ll make sure you don’t have ‘all your eggs in one basket.’ Many of our clients have seen significant gains over the past few years by investing in the emerging economies of Latin America, Eastern Europe and the Far East. But for all but the most adventurous, investments in countries like these need to be balanced by other, more cautious investments. By combining investments in this way, your IFA will be able to make sure that your portfolio exactly matches your attitude to risk – and gives you the best possible chance of capital growth.

4. None of us like paying tax, and an IFA will make sure that your investment portfolio is arranged as tax efficiently as possible. Whether your portfolio is designed to give you income or capital growth, he’ll make use of all your tax allowances and do his best to ensure that you pay as little tax as possible – whether it is on income that you are receiving, or on an eventual capital gain.

5. Finally, your IFA will keep in touch with you. Every investment portfolio needs reviewing on a regular basis, both to check the performance of the portfolio and to make sure that it is still meeting the original aims of the investor. An IFA will make sure that you receive regular updates and valuations, and will always be available to answer your questions. Investing money is a medium to long term consideration: your IFA will work with you consistently to make sure that your investment runs as smoothly as possible and that you receive the best possible returns.

We are always here to answer your questions about investments – whether it is an existing investment portfolio or whether it’s something you’re planning for the future. Contact an Ashley Law adviser on 01293 817240.

It is true that there are few of us who could survive without bringing in an income. The privileged few such as those with inherited wealth who choose not to work, must wonder what it’s like to hold down a job or run a business of their own. Contrary to popular belief, it may not be as attractive as it sounds. For so many, work gives the individual a purpose, a reason for getting up in the morning. It enables them to validate who they are. They identify themselves through their work.

Extensive research into human motivation has produced a number of theories. One such area of study promulgates the belief that we have a number of deep psychological needs that we seek to satisfy on a regular basis. The pursuit of achieving satisfaction of these needs underpins our thinking, our language, our behaviours, our actions and our choices. Work can be the primary vehicle for the satisfaction of these needs.

One identified need is that of ‘significance’. This can manifest itself as the desire for recognition, status and position, the need to be different from others in some way, to be individual, to be unique. It drives us to be the best, to achieve high levels of success, to win.

Many of us have a driving need to make a ‘contribution’. This need motivates us to want to make a difference, to give something back, to ‘do our bit’. It can be, for some, the need to leave a legacy of value.

We have discovered that the significance need and the contribution need are often inextricably linked. When an individual satisfies their need to give of themselves in some specific way and they get recognition for that contribution, it can ‘tick their significance box’ at the same time.

For many of us, these needs tend to remain throughout our lives. But what happens when we retire? Without work, our ability to satisfy our needs may cease. We can feel frustrated and disappointed, and often experience a deep sense of loss. Life’s meaning can reduce and fulfilment, disappear.

Identifying, understanding and evaluating our needs, especially those we have satisfied through our work, will help us create the most meaningful and fulfilling life after work.

An article by our guest blogger – Simon Drury B.A., B.Sc.

Founder of Art of Reinvention and creator of ‘Personal Significance in Retirement’  http://www.artofreinvention.co.uk/

“With year-on-year inflation running at 5.4%, this actually means the over-55s are even worse off,” said Aviva Director, Clive Bolton. He also warned that although autumn and winter have been relatively mild so far, another cold snap – after 20% rises in heating bills – would hit the worst-off hard. Many pensioners are taking on part-time work in order to meet rising electricity and petrol bills. The number of 65-74 year olds who earn an income from wages, as well as a pension, rose from 18% to 22% over the year.

Others are digging deep into their savings to meet day-to-day costs. Aviva found that the typical person over 55 now has £11,153 in savings and investments, 27% lower than December 2010, when the average was £15,262. One in seven people over 55 have no savings at all, while even those who are saving are putting less aside every month. The typical monthly amount saved fell from £31.17 to £26.90.

Many are still paying off a mortgage well into retirement. Aviva found that one in 10 over-75s have a mortgage, typically around £60,000, “which is worrying as they are less likely to be working and more likely to have a fixed income”. One of the more remarkable findings of the report is that, on average, 65-74 year-olds have higher incomes than 55-64 year olds. Aviva said its quarterly tracking of income levels has found a consistent “retirement bounce” at age 65, when payouts from state and company pensions lift incomes.

The report also highlights deep income inequalities among older people. One in five 55-64 year-olds enjoy incomes over £2,500 a month, or five times the earnings of the bottom tenth. Many are also sitting on properties worth many times their pension. The average person aged over 75 owns a home worth £268,833 – significantly more than the value of the average home in the UK, said by the Halifax to be £161,731.

If you want to find out more or need advice about pensions and savings, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

The survey found that almost a quarter (23%) of pension schemes are now shut to both new staff, and to future contributions from people who were already in the pension scheme. This is up by a third from 17% in 2010, and from just 3% in 2008.

The survey shows that more change is inevitable. Among those pension schemes which are closed to new staff but still open to existing staff, 30% expect to close the pension altogether in the next five years. They plan to then move staff into a ‘defined contribution’ pension, where the employer is exposed to much less risk. Meanwhile, one in ten (11%) say they will keep the existing defined benefit pension scheme structure, but will make it less generous. This could include changing accrual rates or moving from a final salary to a career average structure.

The findings reflect an escalation in the decline of final salary (or ‘defined benefit’) pensions, as schemes that have already closed to new joiners shift their focus to existing members. Final salary pensions have been increasingly strained by rising longevity, poor investment results and red tape. Employers have been closing these pensions to try to manage risk and mounting costs. Only 19% of private sector schemes are now open to new joiners, compared with 88% ten years ago.

Joanne Segars, NAPF Chief Executive, said: “The private sector is seeing a seismic shift in its pensions, and more change is certain. Demographic and financial pressures mean businesses are struggling to afford these pensions and final salary deals are coming off the table and are either being watered-down or replaced altogether.

“Many firms are trying to get a grip on the risks and rising costs by freezing the fund to both new and existing staff. While it is difficult to be exact, we estimate up to a quarter of a million have been moved out of their final salary pension over the past three years. People will often find that the replacement pension on offer is a good one. It’s encouraging to see that, despite the harsh economic climate, payments into defined contribution pensions by staff and their employers have remained stable.’’

If you want to find out more or need advice about pensions and savings, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

Proposals published in December 2011 require each FSA-authorised bank or building society based in the UK to state that: ‘Your deposits are protected up to £85,000 by the Financial Services Compensation Scheme, the UK deposit protection scheme. Any deposits you hold above this amount are not covered.’

Banks with branches in the UK, but headquartered and authorised in the European Economic Area (EEA), will have to state that deposits held with them ‘are not protected by the UK Financial Services Compensation Scheme.’ They will also have to state which other national scheme is providing the protection so that customers again know which compensation scheme they are relying on, which country it is based in and how it would work – for example how long it would take them to get their money back.

The proposed changes are designed to reinforce existing deposit protection measures and to ensure that every customer can clearly see how much of their money is protected, how much is not and whether they are covered by the UK compensation scheme. Recent research conducted by the FSCS to measure consumer awareness of the scheme, found customer knowledge continues to be extremely poor, and has in fact dipped since the crisis.

These proposals are the latest step in improving the deposit protection arrangements for consumers. A year ago all national compensation schemes across the entire European Economic Area were harmonised to offer cover at €100,000, or the local currency equivalent, and ensure eligible consumers are paid within 20 working days. At the start of 2011, the UK introduced faster payout rules, with a target of a seven day payout for the majority of claimants and the remainder within 20 working days.

If you want to find out more or need advice, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

Only 38% of working-age people, 11.6 million out of 30.4 million people are saving into a private pension. In reporting the analysis, the DWP highlighted that this shows exactly why automatic enrolment into pension schemes being introduced from October 2012, is so critical.

The figures show a steady decline in pension saving between 1999/2000 and 2009/10, with the decrease being most dramatic among men and the under 40s. While the overall number of people saving into a private pension fell from 46% in 1999/00 to 38% in 2009/10, pension saving among men fell from 52% to 39%. And among people aged between 20 and 39 years old pension provision fell from 43% to 31%.

The analysis also reveals a map of pension provision across the UK in 2009/10, with higher pension provision in the South East (43%), Scotland (42%), the South West (41%) and the East (41%), and lowest pension participation in Northern Ireland (33%), London (34%) and the West Midlands (34%).

Minister for Pensions, Steve Webb, said: “These are alarming figures and they underscore exactly why our pension reforms will be so vital. With fewer people saving into a pension, lower annuity rates and an average of 23 years in retirement, many people could face a poorer future in their later lives.

“We simply must put a stop to this trend and get people saving. Automatic enrolment, beginning for the largest employers later this year, will get millions of people saving, many for the first time.”

Automatic enrolment in a nutshell

• Beginning in autumn 2012, many more people will have access to a pension at work, to help them save for their later years.
• Employers will have to enrol all eligible employees into a pension and make minimum contributions into the scheme.
• If you are eligible, your employer will enrol you automatically into a pension.
• You will be able to opt out if you want to but will therefore miss out on an employer contribution of around £600 a year once minimum contributions are established – 3% of average earnings of £26,200 for full-time workers (ONS 2011 Annual Survey of Hours and Earnings).

If you want to find out more or need advice about pensions and savings, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

Making financial decisions is really important and ensuring that you receive the correct advice and act in the most tax efficient manner is paramount in achieving this.  With an unsteady economic outlook and increased taxes for many if us, it is important to take advantage of any tax breaks that are available. The annual ISA allowance is just such an opportunity and is currently £10,680 per individual for the tax year 2011/12.  This is due to increase to £11,280 in the tax year 2012/13.

With the changes in the economy we have seen savers suffer and interest rates have remained at their lowest in over 300 years for a sustained period of time and economists indicate this could continue for some time.  This does mean that potentially Cash which has often been perceived as the safest of asset classes is no longer the sole area to invest and other forms of investment may now need to be considered.  Low interest rates mean Cash ISA returns have suffered to such as extent that:

The average rate of interest on Cash ISA is currently 1.17% (including introductory bonus accounts).
This is less than half than the average rate when the Bank of England base rate was cut to its current level of 0.5%.
The average rate on Cash ISAs is the lowest it has been since they were introduced in 1999.
 Source: Bank of England, October 2011

You many need to ask yourself, how much does my Cash ISA now pay and can I continue to solely pursue investing in Cash?  We can offer you a free no obligation review on your portfolio to assess the options available to you and to ensure that you are taking the right level of risk to achieve your financial objectives.

Managing your money

With well over 50,000 funds and over 5,000 fund house to choose from, there is plenty of choice but the key is being able to choose the right funds and to be able to manage this on an active basis.

If you are considering investing in an ISA in this tax year to make the most of the tax efficient opportunities this offers, now could be the right time. Alternatively, if you are considering how transferring your existing ISA portfolio might make it work harder for you we can help so please do not hesitate to contact Derek Evans at Ashley Law Crawley on 01293 817243.

The value of the investment can go down as well as up and you may not get back as much as you put in.

1. Sort out the mortgage

The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you’re paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an IFA or independent mortgage broker can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.

2. Sort out our life cover

This is an absolute priority, especially if you have children. Many people don’t know the answer to questions like ‘how much life cover do I need?’ ‘How much do I have?’ ‘Does it include critical illness cover?’ No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.

3. Start saving for the children

However much you’ve just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it’s university tuition fees, a first car, your daughter’s wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference – and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.

4. Start saving for ourselves

What’s true for the children is equally true for yourself; if there’s a specific savings target you have in mind, or whether you simply need to save for the proverbial ‘rainy day,’ the earlier you start to save the easier it is to achieve your goal.

5. Sort out my pensions from previous employment

Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don’t have an accurate idea of how much is in their pension ‘pot.’ Good pension planning is impossible without knowing the position you’re starting from, so it’s a sensible idea to talk to an IFA and find out the position with any old pension policies. For example, can they can be brought together and simplified?

6. It’s time I understood the company pension scheme

Just as importantly, far too many people don’t understand their existing company pension scheme. Is it final salary? Money purchase? Eightieths? Sixtieths? Can I make additional contributions? Buy extra years? Again, half an hour with a knowledgeable independent financial adviser will be time well spent. He’ll be able to summarise the main benefits of the scheme for you, tell you the sort of pension you’re likely to receive and advise you of the best course of action if you want to improve your pension benefits.

7. Investigate Inheritance Tax and Long Term Care

If it’s the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their – or your – estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, an IFA will be able to tell you what’s possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.

8. Look at Private Medical insurance

With tales of woe from the NHS continuing – and more economies seemingly still to be made – many people are starting to look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you.

9. We need to sort out the partnership insurance

Many businesses are run as a partnership (whether it’s a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business – and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. Your IFA will be able to explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!

10. We need to make a will

Last – but by no means least – make sure that you have an up to date will. The consequences of dying ‘intestate’ (that is, without a will) can be severe, and with a simple will being relatively inexpensive it’s sensible to make sure that this area of your financial planning is kept up to date.

So there’s plenty to think about… If you would like to discuss any of the above points – or any other aspect of your financial planning – then as always, please don’t hesitate to contact us at Ashley Law Crawley on 01293 817240.