Financial Planning Alace 2015 ours What this session will cover - - PowerPoint PPT Presentation

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Financial Planning Alace 2015 ours What this session will cover - - PowerPoint PPT Presentation

May 03, 2023 40 likes •364 views

ours ours Financial Planning Alace 2015 ours What this session will cover ours Wont do: Will do: Provide financial or Making good pension choices tax advice Key financial planning Look at individual needs, principles

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Financial Planning Alace

2015

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What this session will cover

  • Making good pension choices
  • Key financial planning

principles

  • Overview of the world of

investments

  • Tax hints and tax efficiency
  • Accessing advice/do it yourself

and pros and cons of each

  • Provide financial or

tax advice

  • Look at individual needs,
  • bjectives and planning
  • Promote any particular financial

products Will do: Won’t do:

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Introducing Close Brothers

Selected to deliver financial education Delivered financial education seminars

  • 40+ years
  • For > 200 UK’s best known employers
  • Speak to > 6,000 delegates each year
  • Specialist speakers

Part of Close Brothers Group plc

  • Founded in 1878
  • FTSE 250 company
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LIFE PLAN

The need to plan

university fees start children on property ladder estate settlement mortgage repaid child’s wedding grandchildren retire from work enjoy hobbies downsize main home start wealth transfer planning nursing home

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What do we need to plan & why?

Own, family & dependants, future generations Level of security, risk & protection Key goals & timelines Assets & liabilities Income & expenditure

Lifestyle

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Life expectancy

Average life expectancy

29.5

years

26.4

years

25

years

22.1

years

20

years

18.1

years

16.7

years

14.4

years

Source: Office for National statistics, based on data for the years 2009-2011 (March 2013)

Age today 55 Age today 60 Age today 65 Age today 70

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At pension age

  • Lump sum or higher pension?
  • Consider other pension benefits

e.g. dependent pension, life cover etc.

  • Budget 2014 changes –

consider transfer but take advice

DB schemes

Making good pension decisions – at pension age

  • NB Budget 2014 changes
  • Annuity or drawdown/UFPLS or

combination?

  • Choosing an annuity

DC schemes

AT PENSION AGE

  • Timing when to take your pension
  • One decision – 30+ years impact – important to get it right
  • Recommend seeking professional advice
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Universal principles

Access Income Growth Security Tax efficiency

From one investment? From one asset? One plan over time? Same plan for everyone?

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Access ‒ choices

Traditional Alternative

  • Bank/ building society
  • Instant access
  • Postal/ internet
  • Mortgage offset
  • Premium Bonds
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Income & growth choices

Funds Stocks/ Shares Gilts Deposits Bonds Property Alternatives

KEY: Invest in line with your own risk attitude & construct a balanced plan

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Security & risk

Aspects to consider:

  • Risk inherent in an asset
  • Your attitude to risk / capacity

to withstand financial loss

  • Risk of not acting

RISK

“If it looks too good to be true, it probably is”

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Inflation

£86,260 £74,410 £64,190 £55,370 £78,350 £61,390 £48,100 £37,690

£- £10,000 £20,000 £30,000 £40,000 £50,000 £60,000 £70,000 £80,000 £90,000 £100,000

5 10 15 20

3% annual inflation 5% annual inflation

Years

What £100,000 today could be worth in future years at different rates of inflation

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The importance of diversification

Performance of individual asset classes (% in sterling terms)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Japan Eq. 42.14 UK Small Cap Eq. 24.18 Asia Eq. 38.17 Global Gov. Bond 49.16 Asia Eq. 58.19 Gold 34.15 UK Gilts 10.99 UK Small Cap Eq. 28.15 UK Small Cap Eq. 33.1 US Eq. 20.87 Commodities 33.44 Europe Ex UK Eq. 17.14 Gold 29.27 Gold 43.88 UK Small Cap Eq. 54.69 Asia Eq. 24.87 Gold 10.64 Asia Eq. 17.78 US Eq. 29.79 UK Corp. Bond 12.2 Gold 31.44 Asia Eq. 15.8 Europe Ex UK Eq. 15.48 Global EM Bond 14.05 UK Large Cap Eq. 27.87 Commodities 21.64 UK Corp. Bond 6.91 Europe Ex UK Eq. 17.68 Europe Ex UK Eq. 24.78 World Ex UK Eq. 11.34 Asia Eq. 30.64 UK Large Cap Eq. 14.82 Commodities 15.23 UK Gilts 7.38 Global EM Bond 22.4 UK Small Cap Eq. 19.85 Global Gov. Bond 6.74 UK Corp. Bond 13.05 Japan Eq. 23.77 Asia Eq. 10.48 UK Small Cap Eq. 22.69 Gold 8.16 Global Gov. Bond 9.29 Cash(UK) 5.49 Europe Ex UK Eq. 21.16 US Eq. 19.17 Global EM Bond 6.33 Global EM Bond 12.81 World Ex UK Eq. 20.37 UK Gilts 9.98 World Ex UK Eq. 22.25 Cash(UK) 4.85 World Ex UK Eq. 9.01 Japan Eq. 2.55 World Ex UK Eq. 17.67 Japan Eq. 19.1 US Eq. 2.65 US Eq. 10.76 UK Large Cap Eq. 19.05 Global EM Bond 9.65 Global EM Bond 21.83 World Ex UK Eq. 4.08 UK Large Cap Eq. 7.75 UK Corp. Bond

  • 4.06

US Eq. 14.13 Global EM Bond 14.9 Cash(UK) 0.65 UK Large Cap Eq. 10.41 Asia Eq. 1.62 Global Gov. Bond 5.27 UK Large Cap Eq. 21.24 US Eq. 1.68 Cash(UK) 6.02 Commodities

  • 12.95

Gold 12.25 World Ex UK Eq. 14.87 UK Large Cap Eq.

  • 1.82

World Ex UK Eq. 9.71 UK Corp. Bond 0.87 Gold 4.49 Europe Ex UK Eq. 20.89 UK Corp. Bond 0.74 Global EM Bond 4.46 US Eq.

  • 14.3

Commodities 11.43 UK Large Cap Eq. 13.01 World Ex UK Eq.

  • 7.68

Japan Eq. 3.74 Cash(UK) 0.49 Japan Eq. 2.96 US Eq. 16.94 Global EM Bond

  • 2.38

US Eq. 4.2 World Ex UK Eq.

  • 17.89

UK Corp. Bond 10.78 Global Gov. Bond 9.67 Commodities

  • 7.78

Gold 2.3 Global EM Bond

  • 4.57

UK Small Cap Eq. 1.08 UK Corp. Bond 9 UK Gilts

  • 4.3

UK Corp. Bond 1.81 Europe Ex UK Eq.

  • 24.9

Cash(UK) 0.89 UK Corp. Bond 8.38 UK Small Cap Eq.

  • 12.31

Cash(UK) 0.63 Global Gov. Bond

  • 6.13

UK Large Cap Eq. 1.04 Cash(UK) 4.84 Global Gov. Bond

  • 6.65

UK Gilts

  • 0.05

UK Large Cap Eq.

  • 27.99

UK Gilts

  • 5.41

Europe Ex UK Eq. 5.92 Japan Eq.

  • 12.55

UK Gilts

  • 0.9

Commodities

  • 6.89

Cash(UK) 0.49 Global Gov. Bond 4.63 Japan Eq.

  • 10.29

Japan Eq.

  • 7.78

Asia Eq.

  • 33.97

Japan Eq.

  • 5.59

UK Gilts 2.79 Asia Eq.

  • 14.69

Global Gov. Bond

  • 2.63

UK Gilts

  • 7.3

Europe Ex UK Eq. 0.01 UK Gilts 2.42 Commodities

  • 18.68

UK Small Cap Eq.

  • 8.34

UK Small Cap Eq.

  • 42.62

Global Gov. Bond

  • 6.78

Cash(UK) 0.56 Europe Ex UK Eq.

  • 14.82

Commodities

  • 7.73

Gold

  • 29.44

Commodities

  • 12.73

Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable indicator of future results.

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The importance of diversification

Performance of individual asset classes (% in sterling terms)

Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable indicator of future results.

UK small cap 22.69 UK small cap 24.18 UK small cap

  • 8.34

UK small cap

  • 42.62

UK small cap 54.69 UK small cap 19.85 UK small cap

  • 12.31

UK small cap 28.15 UK small cap 33.1 UK small cap 1.08

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The importance of diversification

Gold 27.74 Gold 10.45 31.4 Gold 10.64 Gold 12.25 Gold 43.88 Gold 2.3 Gold 8.16 Gold 29.27 Gold 34.15 Gold

  • 29.44

Gold 31.44 Gold 4.49

Source: Bloomberg, Close Brothers Asset Management as at 31 December 2014. The value of investments and the income from them may fall as well as rise and is not guaranteed. The performance information set out herein refers to the past. Past performance is not a reliable indicator of future results.

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Example asset allocation

Example Portfolio Fund

Asset allocation is based on current market conditions and assumptions made by the investment manager. It is subject to change at any time without notice. This information is for illustrative purposes only and should not be construed as investment recommendations. Source: BNY Mellon 31/01/2015

n

Alternatives 1 0.09%

n

Cash 2.24%

n

UK Equities 5.1 8%

n

Fixed Interest 40.1 7%

n

Rest of the World Equities 42.33%

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Past performance is not a reliable indicator of future returns

Fund Ranking 31/12/2004 – 31/12/2008

Scot Widow Latin American B in GB

1

CF Ruffer European C Acc in GB

2

Schroder ISF Latin American A Dis NAV GBP TR in GB

3

JPM Latin America Equity A Dis NAV USD TR in GB

4

Threadneedle Latin American Ret GBP in GB

5

Baring Latin America A Inc NAV USD TR in GB

6

Invesco Perpetual Latin America Acc in GB

7

Neptune Japan Opportunities A Acc GBP in GB

8

Neptune European Opportunities A Acc GBP in GB

9

JPM Turkey Equity A Dis TR in GB

10

Source: FE, Close Brothers Asset Management as at 25 February 2015. Universe of 1202 registered funds. * N/A are funds closed in the subsequent five-year period .Past performance is not a guide to future returns All returns in sterling terms; non sterling-denominated funds will also have been impacted by currency movements.

Ranking 01/01/2009 – 31/12/2014

1062 919 1080 752 1033 1060 855 973 1034 1068

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covered next Universal principles

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Tax efficiency

Tactics

Tax Allowances

USE THEM

Tax Reliefs

USE THEM

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The main taxes

INCOME TAX CAPITAL GAINS TAX INHERITANCE TAX

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Earned & unearned income Independent tax (2015/16)

Personal Allowance £10,600*

*No Personal Allowance if income exceeds £121,200

Tax bands 20% on the first £31,785……. (£42,385) 40% over £31,786 to £150,000 45% over £150,000

INCOME TAX

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  • A tax on realised investment profit eg sale of shares, unit trusts
  • Independent tax
  • Personal allowance £11,100 (in 2015/16)
  • Transfer of assets between spouses and

civil partners does not create a tax charge

  • Two rates:
  • 18% on gains above allowance for basic rate

Income Tax payers

  • 28% for everybody else

Capital Gains Tax CAPITAL GAINS TAX

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Estate preservation

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  • A tax on the transfer of capital or wealth
  • The first £325,000 (the nil rate band) of an estate is free from tax
  • Balance is taxed at a flat rate of 40%
  • r 36% where 10% or more of ‘net estate’ is left to charity
  • Transfers between spouses and civil partners are exempt band from

AND unused nil rate first death can be used by survivor

Inheritance Tax

INHERITANCE TAX

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  • Spouse or civil partner exemption
  • Potentially exempt transfers – PETs
  • Lifetime gifts
  • Charitable gifts
  • Annual exemptions and small gifts
  • Gifts out of income

Estate planning

INHERITANCE TAX

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Gifts into trusts Wills Skiing Estate planning

INHERITANCE TAX

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The common tax reliefs

NATIONAL SAVINGS PENSIONS INDIVIDUAL SAVINGS ACCOUNTS

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  • Not an investment itself
  • But a way of sheltering investments from tax

NB: On death – transfer of ISA allowances

£15,240 Cash Stocks & shares £15,240 £15,240

Maximum limit Overall limit

No restriction of movement between these asset classes

New Individual Savings Account - NISAs

Tax year 2015/16

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Your plan

Do it yourself Get professional advice

Choices

A bit

  • f both

“Don’t confuse information with advice” “Everything has a price

  • there is no such thing

as a free investment”

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Access to specialist advice

Pensions Mortgages Full financial planning Protection Long term care Investments Capital lump sums Annuities Retirement Inheritances Tax planning

Please be aware, the value of investments can fall as well as rise and that past performance is not a reliable indicator of future results and you could get back less than invested.

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Get professional advice Do it yourself

Good advice – what does it look like?

Model based around

  • Access to experienced professionals
  • Services tailored to meet your needs
  • Transparent, fee based costs
  • No cost to you unless you choose to instruct us
  • Long term client relationships

Deliver solutions Service excellence Personal client plan Build value Financial planning strategies Personal adviser

Please be aware, the value of investments can fall as well as rise and that past performance is not a reliable indicator of future results and you could get back less than invested.

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Thank you

CBAM 3052 PR 03/15 v14

Issued by Close Asset Management Limited (Company No.1644127) which is registered in England and Wales, is authorised and regulated by the Financial Conduct Authority and is a subsidiary of Close Brothers Group plc. Close Asset Management Limited uses the trading name Close Brothers Asset Management. Registered office at 10 Crown Place, London EC2A 4FT