September 2010 - Page 3 of 3 - Financial Planning in Wimbledon

Tax Mess

It appears that a P800 is not just a mobile phone, but also an HMRC form. Today a significant number of people have received a P800 from HMRC which outlines their taxation for the last two tax years (2008/09 and 2009/10). This is due to an error in calculating the tax due via the PAYE system (for employed people). Many have underpaid, some have overpaid their tax.

As you know, tax is not optional, although in certain circumstances one might conclude that it is (if you were to believe everything that the financial services industry says). So it is important that you deal with the matter quickly if you are the recipient of such a form.

If you have paid too much tax, HMRC will automatically send you a repayment, usually within a week or so.

If you have paid too little tax and the amount owed to HMRC is under £2,000, this will automatically be reflected in your new tax code for 2011-12. This spreads the collection of the underpayment throughout the year. If the result is that this causes financial hardship, you are able to ask HMRC to collect the balance over a longer period of time.

If the amount owed more than £2,000, expect a letter asking for full payment. It is possible to agree to spread the payments, but it is likely that HMRC will want this cleared up before 5th April 2011. If you need assistance because of the amount HMRC have a hotline, which doubtless is fairly busy – 0845 3000 627.

For further information have a look at the HMRC site.

A new computer is to blame for the error (naturally!). In this increasingly cost saving society, there are new calls for an overhaul to the PAYE system. I would imagine that the postal cost alone must be fairly enormous – particularly as tax coding notices often change several times in the space of 12 months…. I sense change and the inevitability of further new computer system errors.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Tax MessDominic2023-12-01T15:32:10+00:00

Back to School and the Importance of Failure

I imagine that most of us would like to remove pain from life, pain is a natural part of life and reminds us of our humanity and invariably strengthens our character. Unfortunately our society is very much set up to despise “failure” and to view it as a “least favourable outcome” or something to be avoided at all costs.

Our culture has become ever more “protective” and I would argue that this short-changes us all of the valuable life lessons that can be learned. Financial advice is subjective, rarely is there only “one way” to do anything – of course sensible controls should be in place and advisers should act with integrity, but reality says – we are all human and in every sphere of life there are “broken” people getting it wrong – some deliberately, others unintentionally.

Obviously like all decent IFAs my job is to provide clients with the best advice I can. Sometimes I get it wrong. The key question is what has been learned? and not to give up at the first sign of difficulty.

As many children return to school today, I wonder how much freedom we grant them to fail – as opposed to being continously caught up in the cycle of academic “success”. I hope that my daughters know that they are free to fail – that its not just ok to fail but also quite important…that failure can be good. After all, the road to success is one of failure. Just a thought… here are 3 great “failures” or more accurately – people that had “failed” but chose not to give up:

1. Donald Trump was once $1billion (billion!)in debt in the 1990s.
“I refused to give up. Defeat is not in my vocabulary”.

2. Winston Churchill lost every election for public office until he became Prime Minister.
“Never give in, never give in, never, never, never, never – in nothing, great or small, large or petty – never give in except to convictions of honour and good sense”

3. Michael Jordan was once dropped from his high school basketball team
“I’ve failed over and over again in life. That is why I succeed”.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Back to School and the Importance of FailureDominic2023-12-01T15:32:10+00:00

Industry News

You may have gathered that the FSA are implementing something called RDR (Retail Distribution Review). The long and short of it is that to be called “independent” advisers must have a clear fee charging structure. In addition firms have been told to have higher reserves on deposit and have more exams. This all gets implemented from 1st January 2013.

Long story short, there are around 20,000 financial advisers in the UK and this is expected to reduce by 15% according to the FSA. A new survey places estimates at similar levels but with a further 17% unsure if they will continue to operate. The main sticking point is the general problem for clients to pay direct fees. Something that our clients have always done, but most firms have “fudged” this issue using commission to offset a fee.

Working through the maths, with a population of 60m the average adviser: client ratio is 1:3,529 as a conservative estimate. The obvious and unavoidable conclusion is that most people will be left to the mercy of online comparison sites or the Banks, who make up the lionshare of complaints.

Applying some fairly simple economics to the price of financial advice – supply v demand. There will be a much reduced supply, so in general expect prices to rise for most IFAs.

We have now had 11 years of experience advising in this way and will not find the new regime problematic. Our model has proven to be successful and sustainable.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Industry NewsDominic2023-12-01T15:32:11+00:00

Our Approach To Investing

Here is one of the guys that I rate tremendously. He is a really good and very entertaining speaker – one of those senior American guys that just seems to be full wisdom.

He has written many books and articles on investing and finance. He taught advanced investment courses at Harvard and Yale and has advised of some very large institutions

Charlie Ellis who wrote “Winning the Loser’s Game” provides a shortish video that may be of interest. Here he talks about the role of financial advisers or financial planners… people like me.

https://www.vanguard.co.uk/public/portal/uk/uk-en/home/Library/Interviews__video_Ellis.jsp

Sorry, but I don’t seem able to imbed the video into my blog. Its definitely worth a look.

Thanks Vanguard for granting me permission to link this to my blog.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Our Approach To InvestingDominic2023-12-01T15:32:12+00:00

Investing: Great visual web tool

Here’s a great visual tool – demonstrating what I have been banging on about for many years now. Have a play – the key thing is the mix of equities & bonds (diversifying a portfolio). The Vanguard guys are pretty plain speaking, which I like a lot. They have a very good and clear way of presenting information that helps investors get to understand the bigger picture.

Thanks Vanguard.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Investing: Great visual web toolDominic2023-12-01T15:32:12+00:00

Annuity Rates

Annuity rates have continued to fall much in-line with Gilt yields. In the early 1990s annuity rates were above 12% for makes aged 65 – meaning that a £100,000 pension fund would secure a lifetime income of £12,000 a year. Now annuity rates are closer to 6% – effectively halving the income that a £100,000 would produce.

The main problem with annuities is that once you have decided to have one, you are stuck with it for life. This is a big decision to make just at the point you are considering all your possibilities upon retirement.

There are few rights and wrongs with annuities as only in the fullness of time will the decision be proven “right” or “wrong” – essentially it is is gamble on how long you will live.

The only really “wrong” decision is to accept the annuity that is quoted by your pension company. This is often very poor when compared to getting the best deal on the market – which is where an IFA helps. However importantly, another aspect to consider is the income planning – and tax liability that might be generated. This is where a good financial planner can add significant value (such as ourselves).

The more “bells and whistles” that are added to the annuity the worse the initial deal looks. However, for most people it makes sense to maximise any guarantees and have the annuity pay to a suriving spouse if appropriate. It may be worthwhile to have an annuity that increases in line with inflation each year – though it may take many years to reach the same monthly income as a level annuity, taking even longer to match the accumulated total income paid.

So it is vital to get good advice that reflects your requirements and retains flexibility wherever possible. There’s a document within our resources section of the website that covers the main options.

If you know anyone approaching retirement or about to agree an annuity please ask them to get in touch, we might make their retirement income considerably better.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Annuity RatesDominic2023-12-01T15:32:13+00:00

State Pension Forecast Forms

These have been mailed to our clients today.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

State Pension Forecast FormsDominic2023-12-01T15:32:13+00:00

State Pension Forecast

We will be sending clients a BR19 form to complete in order to obtain an up to date State Pension forecast. As you may be aware, the State Pension has become something of a political punchbag over the years with the retirement age increasing for many people.

The State pension is a valuable source of income and I estimate worth nearly £130,000 if it were a pension fund in 2010. Most of us would probably welcome an injection of this sort of sum into our pension pots, so it is important that you know what to expect and be prepared for what may one day become means-tested….though not exactly a vote winning option.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

State Pension ForecastDominic2023-12-01T15:32:14+00:00

The “Big” Saving News

Research from NS&I (the post office to you and I) has suggested that people are saving more now than before the recession. They have found that the average Briton is now saving 6.9% of monthly income.

NS&I calculate that savings have risen to £85.21 a month as opposed to £81.94 a month (an increase of £3.27 a month).. which I calculate to be a 4% increase. They go on to say that this is despite a decline in monthly net income which has now fallen to £1,235 from £1,310.

I’m not entirely clear where NS&I obtain their data or indeed how they are calculating an average income, whether this includes children and those that are unemployed or retired etc. However the figures are calculated, the sums are merely a testament to two truths that UK plc needs to face:

1. “We” are not saving enough
2. Income levels are seriously out of line with property prices which can surely only lead to reducing property prices.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

The “Big” Saving NewsDominic2023-12-01T15:32:15+00:00