The Final 5%

A few client conversations have highlighted the importance to me this week of what I call ‘the final 5%’.

What I mean by this is that the majority of clients that we work with are very financially knowledgeable. They often have a good understanding of things like the Pensions Lifetime Allowance or Inheritance Tax Gifting Rules. They know 95%.

Where our professional expertise really adds value is in the ‘final 5%’. These are the quirks in the rules that are not often reported in the media or in ‘guides’ that you find online. These are the little pitfalls and stumbling blocks that people often get caught out by.

I have had 3 conversations with clients this week, where, were it not for that ‘final 5%’ that we bring to the table, the client might have made a serious mistake, in some cases causing significant additional tax liabilities or inviting an investigation from HMRC.

In all 3 cases, the clients existing understanding of the issue at hand was very good (certainly better than the vast majority of the population I would wager), but they were just missing that ‘final 5%’. The subtle little details that make all of the difference.

In one other case, that ‘final 5%’ turned what was already a very good idea, into a spectacular one, in this example, our expertise more than doubled the potential Inheritance Tax saving for a client, just by making a slight change to the planning that they were proposing.

We are here to serve our clients and to optimise your financial position. So, if you are thinking of implementing some new planning in the next few months, why not run it past us first. It’s all part of the service, and, you never know, that final 5% might actually create ideas that are 100% more effective!

If you have any questions, please get in touch.

Lies, Damn Lies and Speculation

As budget day approaches, the volume of rumour, speculation and mistruth is stepping up in traditional fashion.

Of course, there are the old favourites (you know, the things that the media report ‘might’ happen in the budget every single year, but never seem to actually occur) such as the removal of the 25% tax-free cash on pensions and restrictions to pension tax relief (for what it’s worth, I don’t believe we are likely to see either at this coming budget).

Then we have the two new rumours that seem to be doing the rounds, namely the alignment of Capital Gains Tax rates with Income Tax rates and some kind of root and branch reform of Inheritance Tax.

For what it’s worth, once again, I believe that both are unlikely to materialise in a few weeks’ time. The reason for this is that almost all suggestions in this respect would require pretty much a complete rewrite of that particular part of the tax system and a whole raft of changes to HMRC IT systems – projects that could take years to complete at the best of times.

That’s not to say that we won’t see some changes to the tax system (the freezing of the personal allowance and basic rate tax band are looking likely at this stage) however, the point is that no one (myself included) really knows other than the Chancellor himself, and even he would not have completely made his mind up at this stage because the budget document is often only finalised in the days leading up to the budget announcement itself.

What I am trying to get at is that it’s important not to delay planning because of what ‘might’ be coming in the budget. There will always be some big financial event on the horizon to wait for (after this budget, I suspect there will be another in the autumn and then in the spring again).

If you are planning on taking some action that might be impacted by a forthcoming budget, can it be a good idea to accelerate that action – yes absolutely. After all, if you are planning on doing something anyway, why not get it done and then you know where you stand.

However, I would strongly discourage people from delaying action based on what might be included in this budget or the next one or the one after that. I have seen too many examples of families learning this lesson the hard way.

It is frustrating enough looking back and thinking that you should have done something historically that you have never thought of before. But, when you look back on today a year from now, how would you feel if you knew that you should have taken action, but didn’t for whatever reason.

The old rules of financial planning say that we plan based on current and known future tax changes and then we adjust the plan to take any future unknown changes into account. That rule is just as valid in the run up to a budget as at any other time of the year in my view!

Light At The End Of The Tunnel?

Last week’s announcement from the Prime Minister that schools will remain closed and lockdown will effectively be extended until the 8th March will come as a surprise to no one.

Infection rates, while improving quite dramatically, are still high and the number of hospital admissions and sadly deaths are still shocking.

However, I do hope that we can begin to see some light at the end of the tunnel. The fact that the government plans to publish a plan in the week commencing 22nd February is good news as at least it does show that there is some level of thought going into how the country can tentatively begin to re-open.

What is safe to say is that the process will be gradual and I suspect quite painful, but at least we can hopefully get some idea of the timescales when this report is published in a few weeks’ time.

If we assume that this will be the ‘last lockdown’ (I know no one really knows, but the Government seems pretty intent on not releasing this lockdown until they have confidence we will not need to go into another one), now is the time to begin thinking about what elements you want to put back in ‘your box’ as life begins to return to normal.

Imagine your life is a box and in it were all of the things that featured in your life before lockdown – you remember – overseas travel, eating out with friends, theatre visits. As lockdown struck, many of those elements had to be taken out and laid on the dining room table and they were replaced with a new ‘lockdown life’. Perhaps this involved cooking at home more, watching more films, more exercise – you get the idea.

Everything I have mentioned above would generally be considered ‘good things’, enjoyable, pleasurable. Now of course, both our pre and post lockdown lives probably contained some not-so-good elements as well. Perhaps you were not as fit or healthy as you wanted to be or maybe you didn’t have time to pursue a passion or hobby.

As we come out of lockdown and life (fingers crossed) begins to return to some sort of normality, you get to decide what that normality should look like. You get to choose what elements go back in your box.

So imagine all of the components of your pre-lockdown life and also everything that has changed since March last year. All of these things are now laid out before you on the table. You can decide what you want to feature in your ‘new normal’. There are no rules or guidance to follow, only what you think is right.

The words ‘new normal’ have been overused to the point of exhaustion now, but, as the world has gone through crises in the past, things have always changed, usually for the better.

You see, crises make us see things differently. We learn things about ourselves and about each other that we didn’t know before. We become aware of possibilities that seemed like impossibilities only a few short months ago.

I wrote last time (Here We Go Again, Again (Again)) about making the most of the opportunity that lies in what could be the final weeks of lockdown. I would also suggest that, during that time, we all consider how we want life to look in the future. You have a blank canvas in front of you – what will you create?

A Message From Matt – 11th December 2020

So how is it that we have already arrived at the end of 2020?

I think this year has been the ‘fastest, slowest’ year I have ever experienced. In some senses 2020 really seems to have dragged on. It seems forever since I saw my family or friends properly and I am sure we are all looking forward to hopefully getting back to this kind of thing as we move into the Spring next year and beyond!

In other ways, 2020 has flown by.

I know we say it every year, but the last 12 months seem to have gone by in the blink of an eye. Perhaps it is the fact that much of this year has felt like a bit of a groundhog day? The big ticket events that punctuate our years and photo albums (birthday celebrations, weddings, overseas holidays) have largely been absent and so the months have seemed to blur into one a little bit.

I think it is fair to say that 2020 will not go down as one of most people’s favourite years, but, being the eternal optimist, I do like to look at the positive in all of this.

First of all, we have learned a lot, both individually and collectively. The ingenuity of the human race never ceases to amaze me and 2020 is testament to the power of our collective minds. Not only have we developed and rolled out the vaccine in record time, we have also celebrated several other scientific and technological achievements which have pushed us forward, despite the challenges of the pandemic.

Although crisis sometimes brings out the worst in us, it can also bring out the best of us. I am sure we have all seen acts of incredible kindness and selflessness in 2020 – let’s hope we can carry some of that sentiment forward with us.

Finally, on a more local level, I could not be more pleased with how we have adapted and thrived as a business and as a team during the past 12 months. Have there been challenges and failures and frustrations – of course there have, but I feel that we have far more to celebrate than commiserate as a team this year.

This will be my last blog post of 2020 as I am taking an extended Christmas break, having taken relatively little holiday all year to help guide the business through what has been the most tumultuous of years.

I would like to close by thanking each and every one of you, our clients, from the bottom of my heart. I am always grateful for every client that chooses to join us on this journey, but I cannot express how incredible it has been to have your support during this year above all others.

You are the reason that I get to do what I love each and every day and I am not sure that many people get to say that in this world.

Wishing you all a very merry festive season and a happy, healthy and prosperous 2021!

Yours sincerely,
Matt Smith, Director, Buckingham Gate Chartered Financial Planners

A Message From Matt – 29th June 2020

As it becomes clear that Coronavirus is not going away any time soon, we move from the initial panic phase of the crisis into the management and maintenance phase.

If we accept that the Coronavirus pandemic is going to be a marathon and not a sprint, you could use the analogy that we have started a little too fast, running the first 5 miles in record time, but that might come back to bite us later as we struggle to settle into a more consistent pace for the rest of what is still a very long race ahead.

It feels to me as if, in general (notable exceptions being New Zealand and Germany for example), governments were a little too late to lockdown and we have exited lockdown a little too early. Katherine and I were shouting at the news for Boris to lockdown around a week earlier than he actually did, and we also feel that the ‘unlocking’ is coming a bit too early as well.

Others will disagree and if anything is for certain at the moment, it is that Covid-19, just like Brexit before it, is proving to be a divisive issue with people’s opinions largely informed by how the crisis impacts them and their family.

Although this is a vast over-simplification, I would summarise the position as follows:

The more severe the economic pain people are going through, the less they seem concerned with the health implications of the crisis.

The more severe the health impact that people have suffered, the less they seem concerned with the economic implications of the crisis.

Of course, these issues are never binary and there will be a variety of different views on the matter. The other issue is that we will only know which view was ‘right’ (if there is such a thing in this kind of situation) with the benefit of hindsight. I certainly know that I don’t envy the impossible decisions the government is having to make at the moment.

What I would say that we could all do with is a little more understanding. No matter what angle you view the pandemic from, it has touched all of us in some way and caused some form of pain or suffering – sometimes severe, sometimes moderate.

Whatever your view though, I think it is important to remember that other people may have been impacted in different ways.

In my personal little family bubble, we have definitely been more focused on the health implications of the crisis, to the point where we have barely left the house in 3 months. Other members of my wider family are suffering financially and therefore can’t wait for the economy to re-open.

Regardless of your perspective, the one thing that binds us all together is that we are in this together. We have already seen the capacity for human kindness and generosity during this pandemic and hopefully this will continue as we enter what could well be an extended period of ‘tough times’ for certain people.

Above all – stay safe, stay sane and enjoy the sunshine!

 

 

Your Post-Lockdown Life

As we enter the month of June, we find ourselves in an interesting dichotomy.

The UK is beginning to relax lockdown measures as other countries are having to reimpose them, given that they are seeing a resurgence in the virus.

Japan and South Korea are this morning reporting an increase in case numbers and therefore are having to do a U-turn and reintroduce some measures which had previously been implemented.

This gives us some idea about the road ahead and shows that the path is probably not going to be a straight one, but rather a very bendy one with several U-turns along the way.

As we begin to open up though, I think we have also reached a point of maximum risk. Risk both to health, but also to our future’s. Not so much from a financial point of view, but more from a lifestyle perspective – how we choose to live our lives.

I have used this metaphor before, but I am going to go with it again.

At this moment – sitting here on 1st June 2020, picture your life as a mostly empty box. The elements of your life in the ‘old world’ have mostly been taken out of the box by force and are now sitting outside the box on the dining room table.

As the UK begins to ‘open up’. You, yes you, get to decide what to put back in. If the past few months have shown us anything, it is that the things currently outside the box are not necessities. You know the things – the frenetic activity, the perhaps slightly unhealthy lunches while in the city, the putting off things which we know are really important because we are ‘too busy’.

Now, please don’t get me wrong, in the ‘old world’ these things probably felt like necessities. They felt like we had to do them, but we have now been shown conclusively that this is not true.

So, this begs the question. What do you want to put back into your box?

Alongside all the elements of your old life now sitting on the table are the new things that have been added to your life since lockdown began. Some of these are good – perhaps weekly zoom calls with the family, more exercise, eating better quality food. Some not so good – too many biscuits in the home office, getting up late etc.

So, on the table, spread out for you to see are all of the elements of your old, pre-lockdown life and all the elements of your lockdown life. The question is which of these things do you want to keep in your life as lockdown eases?

I suspect for many of us, there will be elements of both that we would like to carry forward into the future.

I for one am desperate to get back to a restaurant for a meal out. This is something I enjoyed before but will truly savour in the future (although I certainly will not be rushing to do so when the doors open – wait and see is perhaps the best approach with something as unpredictable as the virus). I am also keen to get back to face-to-face meetings in the office, although I think we all acknowledge that may not be possible or practical for some time yet.

I am keen to maintain the now-every-day exercise routine I have implemented and continue to connect with friends and family more frequently as we move forward.

I suspect that I will also be spending more time on Zoom and other online conferencing tools as we move into the brave new world – I just hope it is not the whole time.

What we keep and what we leave behind can be conscious choices, but these choices can also so easily be made for us. Made for us by the world outside, by external forces, by our bosses, by our friends and family.

My hope is that we don’t sleepwalk into this new world which we are going to find ourselves. That we don’t just wake up one day and wonder what happened to all of the ‘good bits’ of lockdown.

There is a real risk of that happening over the next few weeks as the economy starts to re-open in many cases with little to no notice.

Dentists are a great example of a profession which might be catapulted from zero to 100 in very little time indeed. Having had little information on the re-opening of practices for months, there is now an expectation that they will be ready to open a week on Monday.

So, as our activity, both vocational and social, starts to ramp up over the coming weeks, I just hope that we can choose the best bits to carry forward into our ‘new lives’.

This is perhaps a once-in-a-lifetime opportunity for us to re-invest how we live and work. I just hope we make the most of that opportunity.

Top Rated Adviser’s 2020

This month two Buckingham Gate Chartered Financial Planners have made it into VouchedFor’s Top Rated Adviser Guide for 2020.

The guide is distributed nationally in The Times and digitally through the Telegraph’s website and so this is a great achievement that Buckingham Gate are tremendously proud of.

Congratulations Matthew Smith and Peter Ditchburn for receiving such well-deserved recognition for the fantastic advice you provide to your clients.

What makes their inclusion in the guide so much more special, is knowing that it was thanks to their lovely clients for leaving such powerful reviews on VouchedFor.

VouchedFor is a leading review site for Financial Advisers and helps those looking for advice, find the right adviser for them.

Our unique combination of expertise, makes us a one stop shop for your retirement, investment and estate planning needs.

Matthew and Peter would like to say a huge thank you to their clients for taking the time to leave a review, it really means a lot to them.

If you’re looking for financial advice, you would definitely be in good hands with these two!

The 4 Ps of Retirement Planning

I was having a conversation with my father over the weekend about his retirement and it occurred to me that there are 4 things that you must have to live a successful and happy retirement. All of them beginning with the letter P:

Purpose

People

Places

Projects

The first is arguably the most important and drives the other 3, so what better place to begin than:

Purpose

Those clients that go onto live happy retirements often enter retirement with a sense of purpose. They don’t feel that this is ‘it’, there is usually ‘something more’, ‘something next’ that is driving them forward.

There is no right or wrong answer here. Your purpose is just that – yours. It could be that you wish to write a book to change how people view the roman empire, perhaps you wish to play in a band and perform in front of 50,000 people. Maybe you want to visit each country on the planet, or it could be that you wish to provide the best support to your children and grandchildren.

It doesn’t matter what your purpose is, more that you have one.

Mitch Anthony, a US retirement expert says, “To have a wonderful retirement you only need two things: enough purpose to get up in the morning and enough money to sleep at night”.

I think this is quite true. Although it can be tricky, it is important that you figure out your purpose before you go into retirement to give yourself a sense of direction and meaning. Once this is clear, the other 3 p’s then fall into place.

People

The next thing most people will think about is people. Who do you want to spend more time with now that you have more of it?

It could be children and grandchildren. Perhaps you wish to spend more time with friends and family. It can also help to think about what you wish to do with those people. Is it simply spending more time with them that counts or is there something specific you need to work on or achieve together?

We have clients who have had slightly rocky relationships with their loved ones that have been repaired as they have gone into retirement. Perhaps it is simply the addition of more time that makes the difference.

Places

Where you do wish to go and see? What do you wish to do while you are there? For some people there will be grand plans to see the world (perhaps the whole of it), for others, their travel plans will be more modest.

However, it is important to decide in which places you wish to spend your retirement as this will very much drive the cost of your desired lifestyle.

Projects

Finally, it is useful to think about projects. Some projects could be short term and arise because you simply haven’t had the time to tackle them before. Clean the garage out, tidy that draw full of papers – that type of thing.

Other projects are far wider reaching and could transcend years or even decades. Learn to play the guitar, influence government policy, save the rain forest. All examples of projects that clients have wanted to undertake which could very well be works in progress forever!

Summing Up

From my own experience (and there is now a lot of research and science backing this up as well), the people who enjoy their retirement the most, are the ones that have really thought about the 4 P’s before they retire. In doing so, some people realise that they don’t really want to retire at all. Others will decide that their retirement might not really be ‘retirement’, more a new chapter in life.

If you would like any help on your own retirement journey, we would be delighted to assist. Please contact us now for your discovery meeting, provided at our own expense.