Financially mating the google grazer with the bone idle apathetic songbird.
Going alone in the world of financial planning is no bad thing, let's face it - there is a wealth of information, knowledge and general consensus online regarding what you should or should not do and It's a fair bit cheaper doing it yourself as well! So why wouldn't you? Well there is the old adage that a "little bit of information is dangerous", no more so than within the realms of financial planning. The times that I have sat back and inner sighed at the decisions new clients had previously made. Decisions like taking an annuity from their pension provider without looking around, like telling me that gold is the best thing since sliced bread and one of the funniest for any adviser is to be sat with a client who says that they are adverse to risk but would happily plug a large percentage of their salaries into their employers share save scheme! (Any employee of a bank would be feeling this) Why do we do this? why do we feel that jumping in with both feet is somehow putting our best foot forward? Yet not realise we are sinking whilst standing still? In my experience recently, it's down to the apathetic songbird and the google grazer! The apathetic songbird It's easier to sit back on our laurels and hope for the best, to put our faith within financial institutions in that somehow they know best and not review the status quo. Yet we blame others for our own inaction. I'm flabbergasted when new clients have known they should have taken a course of action but were too lazy to make a decision, because it's easier not too. This mainly down to fear of making the wrong decision. Ironically it's always someone else's fault that they didn't review their finances. The google grazer It's great to scour the internet for general facts and others experiences, any information on any given financial situation is available online. We spot some other persons situation within forums and force empathy upon ourselves in that "what's right for them, must be what's right for me, I can identify with that, I'll buy into that - that's the decision for me"! We put blind faith into our decision process without even meeting the person or understanding that persons real circumstances - blind empathy! No two people are the same when it comes to financial planning, we are all unique! So following the herd, because others do is plain barmy. In short we can all but fail in our financial decisions, blind ignorance can usually sail us through yet not to a chosen destination without solid planning! But for those that understand that insight is the understanding of not what can be done, but what you should do given your current circumstance. For the ones that appreciate the difference between internet knowledge and the power of insight, I salute you.
0 Comments
It will never happen to me - will it?
Looking at the evidence, you could be forgiven for assuming that business owners never fall seriously ill or die. Most companies make sure they have public liability insurance and cover for contents, fire and theft. And one would expect anyone running a small to medium sized company to recognise that the serious illness or death of a key person would have a potentially devastating effect on the business, not least to its value and profitability. Yet when it comes to key people, many adopt a high risk strategy by doing absolutely nothing about cover at all. Without question, the consequences of such inaction are potentially dire. What would happen, for example, if the business owner or major shareholder became seriously ill or died? Let’s take the case of two shareholders, A and B. They spend all their time in the business and then suddenly, A dies. Who would acquire the shares previously owned by A? Has A made a Will? Would the shares go to A’s spouse, children – or someone else? Shareholder B could now be in a very difficult position. Will B be able to carry on running the company as he or she wants? Who will exercise the voting rights of the shares previously held by A? Even if the person inheriting the shares wants to sell them, could B afford to buy? It could be more bad news for A’s family as well. What if B cannot afford to buy the shares – or doesn’t want to? Where does that leave A’s family? They could be ‘locked in’ to a company with no real prospect of any income or other financial support at a time when they need it most. Given that serious illness, such as cancer or a heart attack, affects one in four women and one in five men before retirement age*, potential scenarios like these are not uncommon. Yet the problems facing A and B could all have been perfectly ironed out if the right safeguards had already been put in place. Share purchase and partnership protection ensures business succession as well as the safeguarding of commercial interests and family legacy. This protection provides funds to allow remaining business owners to buy the shares of the business from the outgoing or deceased owner. By putting this simple arrangement in place, capital is available to help purchase this person’s interest. So in the cases of shareholders A and B, with these measures in place, solutions would have been found for both parties by utilising life cover, a business trust**, a legal document called a cross option agreement, and structuring Wills** correctly. On A’s death, the shares could pass into a Will Trust, set up for the benefit of the spouse and other family members. At the same time, the monies payable on A’s death from the life policy could pass into a Business Trust for the benefit of B and family. The cross option agreement then allows the shares to pass into the Business Trust and the money moves across into the Will Trust which can then be used to benefit A’s family. For A, the Will Trust structure will provide Inheritance Tax savings to be made on the spouse’s death later on, and long term planning opportunities for A’s children. It also provides a useful ‘asset protection mechanism’ for the family in the future. Meanwhile, as almost every privately owned business ends up being sold or transferred one day, B can take advantage of some useful long term tax planning opportunities for the future by holding shares previously owned by A in a Life Policy Trust. Having all the correct protection in place and ensuring this is regularly reviewed and updated to reflect business changes is a particularly onerous and daunting task for time-hungry entrepreneurs. It is one which is best left to a wealth management specialist to help protect the business from a wide range of risks and ensure business owners meet their aims while concentrating on managing their company. At the same time, a wealth expert can help owners with all those other neglected financial affairs such as formulating a carefully planned exit strategy,*** retirement planning, investment planning, mortgages, healthcare and other insurance. Your home may be repossessed if you do not keep up repayments on your mortgage. Charlotte Poole-Graham represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group's wealth management products and services, more details of which are set out on the Group's website www.sjp.co.uk/products. *This Is Money (20/9/11) ** Wills and Trusts are not regulated by the Financial Conduct Authority. Wills and the writing of Wills involves the referral to a service which is separate and distinct to those offered by St. James's Place. *** Exit strategies may include the referral to a service which is separate and distinct to those offered by St. James's Place. As a business owner you have access to a world of tax planning opportunities
As a business owner you have more flexibility on how you decide to manage your finances. This means you can take advantage of a number of tax saving opportunities. Exactly what opportunities are available to you depends on your individual situation. It is imperative that you take good quality financial advice to ensure that your affairs are organised correctly. Examples of some opportunities that may be available to you are: Let HMRC help pay for your life insurance Are you a company director? Do you have life insurance in place to protect your family? If so, you could be paying an unnecessary tax penalty. If you pay for this cover from your own bank account you will be paying from post-tax income, and if you are paying from the business account you will most likely be taxed on the payment as if it were income. Recent changes in legislation have allowed smaller companies to benefit from arrangements known as ‘relevant life plans’. These can be written on an individual basis so are available to all companies no matter how small. Relevant life plans are particularly suitable for businesses that do not have enough eligible employees to warrant a group life scheme and for high earning employees and directors who have substantial pension funds and do not want their death-in-service benefits to form part of their Lifetime Allowance. They can also be used by existing members of group life schemes who want to top-up their benefits but are limited to the amount that can be provided by their current scheme. The tax benefits are:
If you own or are considering purchasing a commercial property to run your business from you may be able to hold this in a SIPP (self invested personal pension) benefitting from all the tax advantages of a pension. The rules qualifying commercial property and how it is managed are very specific. If your commercial property meets the necessary criteria, the tax benefits are:
The levels and basis of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. Charlotte Poole-Graham represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group's wealth management products and services, more details of which are set out on the Group's website www.sjp.co.uk/products. The Reason for Father Christmas’ Success Father Christmas’ working year maybe very short but he has a huge amount of work to do in a very short space of time and a deadline that just can’t be missed. So how does he do it? Father Christmas knows what he’s good at and what he needs to focus on. Everything else has been delegated to a largely unseen but dedicated team of skilled and organised elves that work throughout the year toward their Christmas goal. We’ve all seen Father Christmas in Grottos asking children what they would like for Christmas but do we always pay attention to the elf by his side making a note of all the relevant details - name, address, gift etc. It is the same elves that are responsible for adding details from the letters sent to Father Christmas to the database making sure that no one is forgotten. Senior elves check that all the presents are age appropriate and parentally approved. They also supervise that the elves making and obtaining the presents do so within the allocated time frame. Presents are beautifully wrapped and clearly labelled with each child’s name and address (and often chimney accessibility). Postal elves sort the presents geographically into the relevant sacks and load them onto the sleigh which passed its MOT and is flight worthy thanks to the mechanical elves. For the months leading up to Christmas the stable elves have fed Rudolph, Dancer, Prancer, Dasher, Blitzen, Vixen, Cupid, Comet and, Donner a special diet making them lean, keen and fast and Rudolph’s completed a refresher orienteering course so that they don’t get lost. They shouldn’t as the Sat Nav elves have programmed the sleigh with the quickest, most straightforward route taking into consideration adverse weather conditions and atmospheric delays (as advised by the weather and travel elves). The wardrobe elves have polished Father Christmas’s boots and his outfit has been repaired, cleaned and ironed so that he looks his best; just in case someone catches a glimpse of him (and to make sure that there are no bits to snag on a chimney). The list of jobs carried out by the elves is endless (only a few of them are listed here) but it’s because of the elves proactive and effective work that nothing is left to chance. When Father Christmas steps into the sleigh on Christmas Eve he is confident in the knowledge that all he has to do is make sure that every child receives their presents before the sun comes up on Christmas Day. And that is why he hasn’t missed a deadline! Bankers should look after your money – let the experts look after the other services
I am often bombarded with sales calls, emails, letters, flyers and now tweets, asking me to buy this product or subscribe to that service – none of which I have requested. I hold the view that if I am looking for a particular service, then I will look for a solution – preferably in my local area to begin with, and if not, and then ask for recommendations from others. I believe that business and life in general just flows that little bit better this way. A trend which has developed over recent years is that more and more consumers are convinced that their bank is their only choice, or their preferred supermarket can look after everything “from cradle to grave” they’d have you believe. Perhaps I am in the minority, or maybe it’s because I work for a local, family owned and managed business, that I genuinely believe that buying from someone you can have more than just one conversation with is important and should be valued. One case in point is a firm of solicitors locally, for whom I have recently reviewed their insurances covering each of their offices. For years, they have entrusted this to their bank, and for years it now becomes apparent, they have been paying far too much, without any advice or support, let alone a single visit over the years. My approach was to visit them, discuss their requirements, and identify potential gaps in their cover, before conducting a thorough exercise with carefully selected insurers. The result is that I have saved them almost £2,000 immediately, and offered them much wider cover, in this case specifically designed for the legal profession. This is just one example where the power of using local really does reap rewards. I am sure that many professionals and tradesmen in the county will give testimony to why they prefer to operate locally. Cutting out the middle man, or simply letting the bank handle everything doesn’t always pay. If you, your family, business contacts or clients are still going down the supermarket aisle or are part of the banking queue, could I ask you to do them, and me a favour – have a word? Andrew Long Cert CII Cass Stephens |
Categories
All
CAP BUSINESS CLUBS BLOG
Archives
December 2018
Visit us on Facebook - We always appreciate any "Likes"
Contact us
T: 01594 723120 M: 07811 981929 Email: Here Office 3 The Main Place Old Station Way Coleford, Glos GL16 8RH |