The Financial Compass

And here's the final part of 🚩 red flags 🚩 when dealing with a financial planner / adviser!

🚩 𝗧𝗵𝗲𝘆 𝗽𝗿𝗼𝗳𝗲𝘀𝘀 𝘁𝗼 𝗵𝗮𝘃𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 ‘𝗲𝘅𝗽𝗲𝗿𝘁𝗶𝘀𝗲’ – most advisers are not actively involved in the management of your money. Rather, they might build a portfolio of funds for you. The managers of those funds are the ones actually making day-to-day decisions about how your money is moved around.

🚩 𝗧𝗵𝗲𝘆 𝗺𝗲𝗻𝘁𝗶𝗼𝗻 𝘁𝗵𝗲 𝗽𝗵𝗿𝗮𝘀𝗲 "𝗴𝘂𝗮𝗿𝗮𝗻𝘁𝗲𝗲𝗱 𝗿𝗲𝘁𝘂𝗿𝗻 𝗼𝗿 𝗻𝗼 𝗯𝗿𝗮𝗶𝗻𝗲𝗿" - get out now - nobody can guarantee the performance of investments!

🚩 𝗔𝗻𝘆 𝗮𝗱𝘃𝗶𝘀𝗲𝗿 𝘁𝗵𝗮𝘁 𝗴𝗲𝘁𝘀 𝗰𝗮𝗴𝗲𝘆 𝗼𝗿 𝗱𝗲𝗳𝗲𝗻𝘀𝗶𝘃𝗲 - be very wary of.

I have many testimonials and recommendations which I'm very proud of - you can find me on Vouched For - search for me in the Ealing area.

💥 Always trust your gut.
💥 It's about you, not them.
💥 Like and trust.

These are the three key things about employing or meeting a financial planner for the first time.

If your gut is telling you, that you don't feel you can build a relationship with the planner or adviser - listen to it and don't engage that person.

Does he/she talk more about themselves rather than about you? If so, that person is probably not right for you!

Remember that you are entrusting them with the knowledge of your finances and bank balances - so if the like and trust is not there - don't employ them!

Your relationship with your adviser will encompass all these things, so you really should like and trust your financial adviser/planner from the first meeting.

Tomorrow I'll be revealing other warning signs that the adviser/planner may not be right for you!

I was at a client's home recently and I spotted something that I hadn't seen for a long time.

The good old piggy bank!

The piggy bank has long been a symbol of saving and for many children it is the first foray into managing their finances.

In the good old days, children would put their pocket money in a piggy bank sitting on their bedroom shelf to save for their hobby or latest craze.

I remember my old bank giving me first piggy bank to encourage me to save. I wonder what happened to it!

Fast forward to 2022, like most things these days, pocket money is moving online with a range of apps and contactless cards that let parents send and manage their child’s spending through their smartphone.

This means the good old piggy banks are now sitting on the shelf gathering dust.

I feel quite sad about that, yes there are many advantages of a cashless society but I do think the kids these days are missing out on the thrill of filling their piggy banks!

I was disturbed to learn that some of the teenagers these days don't know what a penny or a tuppence looks like!

What are your thoughts about living in a cashless society and how kids are missing out?

When I'm networking, I'm often asked what the difference is between a 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗽𝗹𝗮𝗻𝗻𝗲𝗿 and a 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗮𝗱𝘃𝗶𝘀𝗲𝗿.

A financial planner is a professional who helps individuals and families create a strategy to meet long-term financial goals. That's me in a nutshell.

A financial adviser is a broader term for those who help manage your money, including investments and other accounts. Most advisers provide advice with a narrow focus, for example, the need for a pension or life insurance. The financial adviser has to be strictly regulated and insured as they are providing personalised investment advice.

A 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗹𝗮𝗻𝗻𝗲𝗿 will

✔️ Focus on your goals, both short and long term.
✔️ Involve wider family members.
✔️ Prioritise understanding your objectives, what you are looking to achieve and where you want to get to.
✔️ Implement a financial roadmap for your family, detailing how you can achieve your goals. This will be carried out through cashflow planning.
✔️ Establish a long-term relationship, reviewing the strategic plan at least once a year.
✔️ Adopt a holistic approach.
✔️ Work with other professionals (e.g. tax advisers and solicitors) to ensure a collaborative approach is adopted by all parties.
✔️ Make use of financial products and investments where appropriate in the financial plan.

In summary, a 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗔𝗱𝘃𝗶𝘀𝗲𝗿 tends to focus on a single problem, rather than the bigger picture.

In contrast, a 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗹𝗮𝗻𝗻𝗲𝗿 will provide holistic, bespoke advice, helping you work out what you want from life and implementing a financial plan to ensure you get there.

My role as a financial planner puts you in control of your finances, providing you with clarity and confidence.

Yesterday, I had a conversation with a client who asked me to explain what 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗚𝗮𝗶𝗻𝘀 𝗧𝗮𝘅 (CGT) is and how it works.

CGT is a tax charge applied to the gain from the sale of something you own. It’s calculated from the gain made, the increase in value of the sale price compared to the purchase price, for an asset held for more than one year.

Typically, it's applicable to:

🔵 Shares
🔵 Investment funds
🔵 Second properties
🔵 Inherited properties
🔵 The sale of a business
🔵 Valuables including art, jewellery, and antiques
🔵 Assets transferred at below their market value

If you’re selling certain assets of high value, you’ll probably have to pay capital gains tax on your profits. Here’s how it works.

🔷 Capital Gains Tax is a tax on the profits earned from selling an asset or a property belonging to you (excluding your main residence).

🔷 You only pay CGT on your overall gains above your tax-free allowance – known as the ‘annual exempt amount’.

There are a lot more complexities involved in Capital Gains Tax that would only confuse the readers here!

Because it’s so complex, a financial planner or accountant is best placed to help you get this all done easily.

They will also be aware of any tax reliefs you may be entitled to claim during the calculations, or whether there are other ways to reduce or eliminate your CGT (like gifting to your spouse or civil partner).

𝗛𝗼𝘄 𝗹𝗼𝗻𝗴 𝗱𝗼𝗲𝘀 𝗮 𝗿𝗲𝗰𝗲𝘀𝘀𝗶𝗼𝗻 𝘂𝘀𝘂𝗮𝗹𝗹𝘆 𝗹𝗮𝘀𝘁?

The good news is that recessions don’t last forever, and the government often does what it can to get away from negative growth.

Recent global recessions have tended to last 10 months on average. This time, the Bank of England has predicted that the slump will last around 18-24 months.

For an economy to come out of recession, it gradually readjusts and recovers some of the gains lost.

Though headlines predicting financial doom and gloom are certainly anxiety-inducing, the important thing to remember, is to focus on what you can control.

My simple advice is to be sensible with your spending!

As always, I am available for an informal chat and point you in the right direction.

𝗜’𝗺 𝘄𝗼𝗿𝗿𝗶𝗲𝗱 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗶𝗺𝗽𝗮𝗰𝘁 𝗼𝗳 𝗮 𝗿𝗲𝗰𝗲𝘀𝘀𝗶𝗼𝗻. 𝗪𝗵𝗮𝘁 𝗰𝗮𝗻 𝗜 𝗱𝗼?

Firstly, in these economic times it is important not to panic and to focus on what you can control.

That might involve taking a proper look at what is coming in, going out, and setting a clear budget.

If possible, you might want to start building up an emergency fund, to cover any unexpected scenarios.

The ideal goal would be to have enough savings to cover three to six months of living expenses.

While this might seem daunting, especially considering the current cost of living crisis, there are some small changes most people can make to increase their savings.

The best way is to cut back on any non-essential expenditures if possible. Ensuring you have a strict household budget is also a good habit to adopt to both keep on top of daily spending and to reveal any saving opportunities.

As always, I am available for an informal chat and point you in the right direction.

We love our subscriptions!

We’re continually working to speed up efficiency in all areas of our lives, both personal and commercial.

We’ve learnt how to simplify our lives.

We navigate our existence by making split second decisions on our phones from any location.

This generation of increased productivity and technical engagement has led to the rise of subscriptions.

Affordability and efficiency have married to produce a culture that is able to function via transparent pricing and guaranteed services.

The average UK household spends over £50.00 per month on subscription services; however, I know of many friends that spend more than quadruple of that.

Sky, Netflix, Prime, Disney+, Apple+ are just a few of the entertainment subscriptions.

There are also newspaper and magazine subscriptions; flowers and stationery; wines and gins; toys and books; and it goes on!

With the cost of living increasing, now may be a good time to evaluate your spending and see if there are any areas where you can cut back costs.

There are a variety of apps now available that connect to your bank accounts and highlight any unwanted or wasteful subscriptions.

Check if your bank has an in-app subscription management tool that allows you to easily view and cancel the subscriptions in just a few clicks.

What subscription do you have? Are they good value for money for the frequency that you use them?

At the weekend, Jeremy Hunt confirmed that on Thursday in his Autumn Statement, there will be tax rises across all levels of earnings.

He also confirmed that there will be public spending cuts - meaning services will suffer.

Of course, with continued rising energy costs and inflation for some time yet.

And the effect of increased interest rate rises meaning dwindling funds or finding extra income.

This will result in -

👉 Cashflow issues.
👉 Less luxuries.
👉 Harder for any new borrowings.
👉 Strain on relationships and unemployment.

However, this doesn’t mean that there are no opportunities for growth – this is achievable with a positive mindset as well as proper…

👉 Budgeting
👉 Look at what expenses / subscriptions are not being used
👉 Clear down expensive borrowing (could you
👉 Stronger due diligence of new projects/investments…don’t jump in especially when the price is too good to be true!

What tips do you have?

As ever, I am always available to chat about your concerns.

Managing your finances is pretty simple.

There are three steps to financial freedom.

Budget - Understand where your money is going

Protect - Expect the unexpected.

Invest - Be proactive with your retirement.

Speak with your financial planner (or me) to get you started.