Bring your cash ISAs to life

Bring your cash ISAs to life

Millions of pounds still sit inside cash ISAs earning poor rates of return and this situation is unlikely to change in the foreseeable future. The question is, was it a mistake by investing in the first place? The answer in many cases is no. The reason is having the option to organise an ISA transfer, which is effectively moving the tax-free ISA value across to a product that might be more appropriate and with the potential for better returns. This can involve increasing the investment risk, however is does not necessarily mean moving from low to high risk. The most popular choice is for retirees to move cash ISAs across to an income portfolio and although this does mean introducing higher volatility, the income stream from a well-managed portfolio can be extremely consistent, currently delivering tax free monthly income between 3% and 4%. Alternatively, for those not requiring income, an option to invest into a risk graded model portfolio often provides an attractive solution using the following fund profiles:
  • Cautious
  • Moderately Cautious
  • Balanced
  • Moderately Adventurous
  • Adventurous
What makes this opportunity even more viable follows the introduction of the new Personal Savings Allowance (PSA). This is the amount of interest which can be earned tax free and for a basic rate payer this amounts to £1,000 per annum. A deposit account can be seen as an extension to the cash ISA allowance, leaving your proper ISA open to find a better home.

By Philip Harper  |  April 2021

Investing for children

Investing for children

A case of tax efficiency versus control

We have a silly phrase we use with clients which is: ‘don’t let the tax wag the dog’. The words don’t make a lot of sense but somehow the meaning is generally understood, and we use it frequently when talking about investing for children.

The temptation for many is to look no further than Junior ISAs (JISA), a tax-exempt allowance of £9,000 per tax year which individuals can use to save for children. A variety of investment companies offer JISAs and access to some excellent funds is available. So, what’s not to like about JISAs? The answer is control. Firstly, access to any of the funds inside a JISA is not permitted until the child reaches age 18, so no dipping in to help fund the school ski trip. Secondly at age 16 the child takes ownership of the investment and age 18 they have full control – not you.

And these are the reasons we often encourage clients to look at alternative options. Our most popular solution is to set up an investment which is ‘designated’ for the child, but crucially the ownership remains with the investor and full access to funds is available at anytime without penalty. This account can be established in such a way that it does not disturb the investors own ISA allowances and although there may be some small tax considerations, we firmly believe when investing for children, control overpowers tax efficiency on most occasions.

By Philip Harper  |  February 2021

Saying a little prayer

Saying a little prayer

This may be of little help if your loved one dies without a will…

Aretha Franklin, Jimi Hendrix, Bob Marley, Amy Winehouse and Prince are some celebrities who have died intestate. It is a common misconception that if you die without a Will, your closest relatives will decide how assets are split. This is not the case. There are rigid rules and in some cases the government can collect the lot.

About 30 million adults in the UK do not have a Will and, more worryingly, this includes 54 per cent of people with children, and 64 per cent of unmarried couples, according to Will Aid, a charity that encourages people to make a Will. Yet failing to make provision for your loved ones when you die can lead to confusion and heartache. Your wealth could go to people you did not intend it to go to, depriving those you cared for most. We answer your questions on what happens if you die intestate.

What happens if we have children?
The surviving spouse would inherit the first £270,000 of the estate, all personal items and half of whatever remains. The other half is inherited by the children and is divided equally between them, although they cannot gain access to the estate until they are 18. This applies to all children of the parent who has died, even if they come from different relationships. A quirk of this is that the share of any estate that does go to children may be subject to inheritance tax.

We are an unmarried couple living together, with children. What happens when one of us dies?
The key thing is that the surviving partner does not inherit anything, because the term “common-law partner” has no legal standing. Therefore, it is so important for couples in this position to make wills. Under the intestacy rules, the deceased person’s estate would be shared equally between the children.

What if we don’t have children?
The estate will pass to the deceased person’s parents, if one or both are alive. Failing that, it would be divided equally between any surviving brothers and sisters, or failing that, to any half-brothers and half-sisters.

Next in line come any grandparents. Followed by aunts and uncles, then half-aunts and half-uncles. If there are no surviving relatives in these categories, the estate passes to the Crown.

If there are no surviving blood relatives, what happens then?
The estate passes to the Crown under a process known as bona vacantia. The Crown can grant shares in the estate to those who can prove that they have an entitlement, although it is under no obligation to do so.

When a parent dies intestate, does care of any dependent children pass automatically to the surviving spouse?
It doesn’t, and more than half of those with dependent children do not realise this. This is another example of how importance of making a Will goes well beyond simply disposing of an individual’s wealth.

What happens if both partners die at the same time?
The same rule applies: custody of the children will not go automatically to the relatives or individuals whom they intended it to go to if they have not made their wishes clear in a Will.

By Kelly Wilkes |  November 2020

Buckinghamshire Building Society

Buckinghamshire Building Society

Being independent allows Financial Management to continue to form new professional partnerships to ensure we meet all our client’s financial needs and allowing us to provide bespoke, often preferential, terms for our clients. We are delighted to announce we have recently formed a business partnership with the Buckinghamshire Building Society (BBS). Buckinghamshire Building Society are based in Chalfont St Giles, one the longest standing building societies left in the UK, with an ethos similar to us; it is recognised as a respected and trusted building society renowned for exceptional service and community support.

We work hard with our partners and within our own office to streamline administration procedures, so it is easy for our clients to manage their finances, while still meeting the regulations and exceptional customer service. The Society are working with us to reduce the paperwork for account opening and lending procedures for our clients. Our relationship with them enables us to work very closely with them to tailor solutions to individual requirements.

Here are a few of the areas where the BBS can potentially help you:

Savings: A range of different accounts designed to help with long term savings and easy access. There are specific accounts for companies, charities, clubs & societies, children, young adult (16-18) plus their cash ISA and Junior Cash ISA.

Loans: Winner of the Mortgage Product Innovation Award and Best Local Building Society in 2019, they offer a wide selection tailored to deal with a variety of circumstances, alongside prime mortgages, and re-mortgages. A few examples are listed below:

  • Family Assist mortgage allows the applicant to borrow up to 100% of the purchase price by taking a collateral charge on the parent’s or grandparent’s property we can use equity in their property to help their children get on the property ladder with smaller deposits.
  • Buy to Let and Ex Pat Buy to Lets
  • Self-Build and Custom build
  • Lending into retirement
  • Non-standard credit and impaired credit

We will of course keep you up to date with the terms available, however if you have any immediate enquiries please call us to discuss further.

If you would like to discuss mortgages, please call Paul Wakefield. He can look at your own situation and find the best solution for you. 

fmmortgage t/a Mortgage Management Professionals Ltd is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority (FCA).

By Philip Harper  |  October 2020

Savers should plot their escape from zombie funds?

Savers should plot their escape from zombie funds?

Over many years there has been a huge reduction in the number of product providers within the financial services industry, one of the major drivers for this has been the offloading existing policies by large insurance companies who have decided that these clients no longer suit their business strategy. These polices are purchased by specialist providers known as ‘consolidators’ who in turn wish to squeeze the maximum profit from these policies for as long as possible. Tagged as ‘zombie funds’ they are left on the shelf until policyholders either transfer away, retire or die.

The Financial Times ran the headline “More than €1tn of investor money is stuck in ‘zombie’ funds” in February 2020. Many household names including Standard Life, AXA, Scottish Amicable, NPI, Sun Alliance, Legal & General, Old Mutual, Royal Life and Friends Provident have gone down this particular road.

Why should this matter?
Our experience of dealing with consolidators is we see an immediate deterioration of service levels. There is no incentive for the consolidator to develop existing products to reflect legislative and market changes. Investment performance can often be affected by fund manager departures. The assessment by, a specialist website, found billions of pounds languishing in poor performing “with-profits” funds. If you are affected by any of these changes, we have a variety of options which can help them find a solution.

By Philip Harper  |  September 2020

How fm can help make your life better

How fm can help make your life better

We believe the best way we can help the happiness and financial health of our clients is by helping them to create a plan focused on their life goals.

A recent survey by psychologist Robert Epstein found that 25% of our happiness hinges on how well we’re able to manage stress. The next logical question is, of course, how best can we reduce our stress?

The stress management technique that worked best, according to the survey? Planning.

In other words, “fighting stress before it even starts, planning things rather than letting them happen,” says Epstein. “That means planning your day, your year and your life so that stress is minimized.”

“Money doesn’t take care of itself, and that fact can create a lot of anxiety,” says the Chair of the Institute of Financial Advisers. “If you don’t plan where you’re going with your money, you may not end up where you want to be. A financial plan can get you on a path toward your goals, which can give you greater peace of mind—and likely, a better night’s sleep.”

Since I started the firm in 1991, my best experiences are when I see plans materialise into reality. It’s also important to be able to reassure a client faced with an unexpected event that their plan is flexible enough to deal with these new circumstances.

We are experienced in helping you think through your issues, opportunities and future goals to create a personalised financial plan and investment portfolio. Working with us gives you the confidence that comes with a better understanding of your financial position. We’ll help you understand your options and build a plan to meet your personal ambitions and aspirations. Your personalised plan will need to respond to changes in your circumstances and financial markets, we help with this too. This is why we do what we do; we believe a plan has the greatest benefit to our clients and is the best way, we can make their life better.

Some people feel comfortable developing their own financial plan, which is fine, but you may prefer to work with a financial planner. Just like an architect helps design a house and a travel agent helps map out a trip, a financial planner can help guide your financial life. There is no ‘one size fits all’ solution for financial planning, our service is personal to you.

By Philip Harper  |  September 2020

The form has been submitted

Thank you for this confirmation to invest additional funds to your General Investment Account. We will confirm the bank account to transfer the funds and a reference number. Once the top up has been applied to your tax-free investment account, the Client Support Team will confirm this and provide you with an updated valuation.

The form has been submitted

Thank you for this confirmation to invest additional funds to your ISA. We will confirm the bank account to transfer the funds and a reference number. Once the top up has been applied to your tax-free investment account, the Client Support Team will confirm this and provide you with an updated valuation.