We all know people who aren’t sure whether they need a financial planner, don’t need a financial planner, or don’t know what a financial planner is. Two years ago, I was discussing some ‘rules of thumb’ with a friend whose son had recently left university and, for the first time, had become financially independent. My friend passed the tips on to her son and recently told me that they’ve helped him to feel financially on track.
Passing on some common sense when it comes to personal finance can be seriously powerful and occasionally life changing. With that in mind, if you know anyone who needs help with their finances, here are a few basic tips you can pass on to them to offer a little help:
These four habits require effort, practice and they are only the beginning of a true financial plan (let us not forget inflation!) but they can really build a solid foundation for a financially secure future and we all want that for the people we care about.
Finally (and this will probably be the most uncomfortable part of the conversation), tell them to plan for the worst, insure any loans that they take out (mortgages for example), find a couple of people they trust and set up Lasting Powers of Attorney and remind them that it’s only polite to your family and friends to speak to a solicitor and leave a Will.
I hope this does help someone in your life as much as it has helped those in mine, but at the very least, I hope it answers the question of whether your friends and family need a financial planner or not, or even just gives them an idea of what a financial planner is!
A Sporting Bunch
There have been a lot of sporting achievements and upcoming physical challenges within the team recently and we thought that it would be nice to share these in Navigator.
After last years successful Brecon Beacon Challenge (in which the team raised over £1,000 for the Alzheimer’s Society), next month half of us will be climbing up Scafell Pike to raise money for Children’s Hospice South West.
Our very own Steve Brady has been selected to represent England in the over 50’s Hockey team (and went on to win every game in their first tournament) and we have recently sponsored the exciting young Bath Rugby player Josh Bayliss.
On the 7th of July a team of 9 will be heading to the lakes in the very early hours of Saturday morning to climb and conquer Scafell Pike. After a long day of walking we will then nip up the Old Man of Coniston and back on the Sunday morning, before the long drive home. We are taking on this challenge to raise funds for the Children’s Hospice South West, an amazing local charity which we have had a close connection with over many years.
Many of us have visited the hospice at Charlton Farm in Wraxall and have seen first-hand the incredible work that they do. If you would like to sponsor us we would be very grateful for any donations, big or small – just click the link below to donate via our just giving page;
We will be sure to let you know how we get on and thank you in advance for your support.
Further information about Children’s Hospice South West and their work can be found at the bottom of this article.
Steve’s Playing for England!
We’d like to congratulate Steve Brady, a director of the firm, on being selected to represent the England over 50’s Hockey team. This is a fantastic achievement for Steve who has now had the opportunity to represent England on the world stage. Steve has now played his first International Hockey tournament, representing England at the Home Nations competition in London. England managed to win every game without conceding a single goal.
I asked Steve if there was anything he’d like mentioned in this article and his response was ‘feel free to use words like heroic’.
A glass to Steve… Heroic!
Sponsoring a Future Rugby Legend
We’re delighted to announce that we are sponsoring the exciting young Bath rugby player – Josh Bayliss.
A local lad, Josh is a former pupil at Millfield School in Glastonbury. He was a member of the England under 20’s squad that went on to achieve a Six Nations Grand Slam and a place in the 2017 World Rugby under 20’s Championship. He made his first team debut for Bath in 2016 and has been hailed one of the most exciting back row players in the country.
A little more about Children’s Hospice South West
Children’s Hospice South West provide care for children with life-threatening conditions by providing hospice care and profession family support services. They are dedicated to making the most of short and previous lives through the provision of the best possible hospice care for children and your people with life-limiting conditions. The care offered is not just about medical and nursing support for sick children but is also about enriching the lives of the children and their whole family. They provide specialist palliative care, respite for the whole family, a sibling service for brothers and sisters, emergency support, end of life care and a bereavement service for as a long as it is needed.
We’ve always been proud of the individuals at Brunel and Pilgrim and their academic achievements (whether that is achieving Chartered Status, Financial Planning and Paraplanning Diplomas or learning Spanish) but we’re now proud to announce that as a collective, we’re TWO of the few firms in the country to achieve Chartered Status. That’s both Brunel and Pilgrim.
In this section we look a little further at what this means, discuss our recent Cyberplus Accreditation (and how this safeguards you) and our Managing Director Damien talks about his new role on the Personal Finance Society’s Financial Planning Expert Practitioner Panel, as a leading expert to help improve the Financial Planning Industry.
Chartered status is an exclusive title only awarded to firms which meet rigorous criteria relating to professionalism and capability. The award is granted by the Chartered Insurance Institute the professional body for insurance and financial planning. To achieve this status we were required to demonstrate a commitment to developing knowledge, enhancing capability and maintaining ethical standards. This provides all our clients with the reassurance that we are operate in an ethical manner, put our clients interest first and provide high quality advice based solely on our clients’ researched needs.
To date, fewer than 700 firms have achieved Chartered status which indicates that this is a highly coveted award reserved for the leading firms within the financial advice market.
We will be working hard to maintain these standards and providing a commitment to customer service and professionalism.
As a firm we have also recently achieved Cyber Essentials accreditation. Cyber Essentials aims to help organisations implement good levels of protection against cyber-attacks. In addition we have undertaken further assessment with IASME to demonstrate that we have taken into account the requirements of the General Data protection regulation (GDPR).
The IASME Governance standard, based on international best practice, is risk-based and includes aspects such as physical security, staff awareness, and data backup. The IASME standard was recently recognised as the best cyber security standard for small companies by the UK Government.
IASME is one of just five companies appointed as Accreditation Bodies for assessing and certifying against the Government’s Cyber Essentials Scheme. The Scheme focuses on the five most important technical security controls. These controls were identified by the government as those that, if they had been in place, would have stopped the majority of the successful cyber attacks over the last few years.
We take our client’s cyber security seriously and would urge you to look for this accreditation with other organisations you may deal with online!
Damien’s New Role on the Financial Planning Expert Practitioner Panel
As an organisation we are always looking for new challenges, especially in areas where we can make a difference. One of my new responsibilities, and something I’m hugely excited about, will be to sit on the Personal Finance Society’s (PFS) Financial Planning Expert Practitioner Panel. I was delighted and honoured to be chosen as one of the inaugural members of this new panel of financial planners.
The timing couldn’t be better. There is a real buzz about the financial planning profession, and a quiet revolution of planning excellence is gathering pace.
The Vital Role of the Personal Finance Society
I’ll come on to the panel shortly but first a quick look at the PFS and why they’re so vital. They are the professional body for financial advisors in the UK and they exist to promote high standards across the financial advice community. In climates like this, where the public can be suspicious of financial institutions, we need bodies like the PFS to help strengthen confidence in our profession.
The PFS is well qualified to do it. They have a long and commendable history of championing professionalism, promoting technical knowledge and establishing high levels of client service and ethical practice.
The PFS has recently announced its new President will be Sharon Sutton. Sharon is Managing Director of Thornton Associates Ltd, Chartered Financial Planners, based on the Isle of Man, where she was the island’s first Chartered Financial Planner. Sharon’s biography on the PFS website says she “believes in educating people to take control of their lives through financial planning so they can seek to achieve their dreams and don’t run out of money”. I know Sharon personally, and I also know that we’re going to get on very well as that fits exactly with the philosophy of Brunel and Pilgrim.
My Role on the Financial Planning Expert Practitioner Panel
One of the ways the PFS will achieve this is through the new Financial Planning Expert Practitioner Panel. The panel has been established to guide the PFS as it broadens its Continuing Professional Development (CPD) programme to incorporate inspirational financial planning good practice. The first meeting took place earlier this month. As well as myself, the panel comprises another 11 members from the financial planning industry. Without wanting to sound immodest, Sharon Sutton commented that it brings together “a distinguished and passionate group of individuals who are willing to share what they have learned for the benefit of the wider profession.”
The PFS has established the panel to provide financial planning insight and guidance to the wider profession as part of a continued focus on consumer outcomes and business sustainability. This is great news for clients as it seeks to ensure they receive the best service from advisers who are themselves benefitting from guidance on best practice across the industry. We on the panel will meet regularly to develop guidelines and amass insight on good practice to distribute and make available for PFS members. We’ll also be seeking to arrange a series of specialist events and we’re working on a good practice guide resource for advisers.
A Foundation of Trust and Confidence
Helping people to take control of their finances, gain financial freedom and make their dreams a reality are the principles that Brunel and Pilgrim are built on. But before we can help people achieve this, we need to build a foundation of trust and confidence in the professionalism and ethical standards of financial planning. It’s a responsibility that falls to us all, as financial advisers, and extends right across our profession. As a member of the new Financial Planning Expert Practitioner Panel I’m hugely looking forward to taking on this responsibility in the new term ahead.
If you know someone that would like some guidance on their financial planning, please do drop me a line or call me on 0117 214 0870.
How much money do you need for the rest of your life? It’s a big question. More than that – it’s a big question that leads to hundreds, maybe thousands of other big questions.
So let me start again…
What do you want to do with the rest of your life?
You can’t answer the first question without the second, and you can’t achieve the second question without the first. Then there’s the third question – What will the rest of your life throw at you?
If you can answer these three questions accurately, you’ve got your number.
Your number is the amount you need to live the way you want to live for the rest of your life, confident that you will never run out of money. Complete financial independence, or, if you prefer, freedom.
Most people don’t take the time to find out their Number and those who do find that it’s ever changing. You can work out your Number at, say, 30 and then find that it’s a completely different Number when you’ve reached 40. Your lifestyle will have changed, your aspirations may have changed, and then there’s the costs of living and potentially long term healthcare provisions to compete with! It’s not easy finding your Number but it’s certainly necessary.
Finding your Number
Remember those three tricky questions? Well let’s take a closer look at them.
What do you want to do with the rest of your life?
We’ve heard the same answer to this question over and over again: ‘After I’ve retired I want to maintain my current lifestyle without ever running out of money’. But after delving deeper we’ve found that this is never the case. Some people want to support a charity or pass money onto their children, some people want to pursue a passion with their new found time, and some folk just want to live a simpler and calmer life – these are the people who find that their number is smaller than they thought. The point is that the very nature of your lifestyle will change in retirement so to just ‘maintain your current lifestyle’ is never enough. Which brings us to our next question:
What will the rest of your life throw at you?
This question addresses those uncertainties that will change your future and that are beyond your control. Maybe one of your children will unexpectedly boomerang back into your home, or maybe, hopefully, you’ll win big on the horses. One unfortunate scenario that keeps popping up these days is the increasing need for long term care, the cost of which is often grossly underestimated (fingers crossed for those horses eh?) To be truly comfortable with your number you need to prepare for all of these uncertainties.
Finally, how much money do you need for the rest of your life?
Of course there isn’t a definite answer to this, but if you know what you want to do with the rest of your life it’s possible to make a rough estimation as to how much that might cost. Then, using the various possible answers for what the rest of your life might throw at you, it’s possible to create different scenarios to see how you would fair financially under each circumstance. Finally, you factor in your life expectancy, and let’s be generous here – no-one wants to fear living too long!
When you think you might have an idea of what your number is, you plan for it, and then you update it, and then you plan for it again. You keep on top of your number, and eventually, when you’ve got it, you use it.
Using your number
Finding your number involves a lot of hard to answer questions, but once you’ve found it you’ll have a great deal of answers too. You may already have savings, but now you’ll know what you’re saving for and this will help you to save effectively. You might want an early retirement but may not be sure how early your savings will manage, but if you know your number, you’ve got your date.
But it goes further than that – just thinking seriously about your number now might change how you retire later, maybe you’ve been spending too much and need to cut back slightly now to live the rest of your life exactly how you want to live it. Or maybe, just maybe, you’ve already reached your number…
How much money do you need for the rest of your life? It is a big question that can lead to hundreds, maybe thousands of other big questions, but knowing your number may well change your life.
By Tim Ewins, Paraplanner, Brunel Capital Partners
We know that everyone is different. We all want different things in our lifetime, we all have different desires and objectives and similarly, although we may not like to talk about it, we all have different wants for when we die as well.
But it is because of our differences that is important to talk about what we want to happen when we die. There can be a lot to sort out for whoever you leave behind. We have developed ‘In Case of Emergency’ (I.C.E) packs to help make talking about what you want easier, and to make the process for your loved ones as pain free as possible.
In these packs you can keep an up to date and simple record of anything anyone would need to know about your financial affairs after you pass away. This includes things like:
There are also booklets included from Age UK, providing you with details of what the key duties on death are and what to expect if you are asked to be an executor.
Of course, we will be on hand to help your loved ones in any way possible in such an event, but these packs will help those that you love to understand what you want when you die and will help the process to run as efficiently as possible to give them the time they need to focus on what really matters.
By Naomi Davidson, Client Services Administrator
You can ring us anytime and we will always be happy to chat. It took us by surprise then, when we recently received a phone call from one of our long-standing clients who, after being put through to their Planner, requested to be put back on hold.
Should we have been offended? What had we done wrong? No one likes to be put on hold, right?
As many of you will know, we joined forces with our sister company, Pilgrim Financial Planning in Wells 18 months ago, and we’ve discovered some incredible talent in and outside of the financial planning world. It is the talent of Hannah in particular (Pilgrim directors, Arnold and Julie Wills’ daughter) that has started the odd requests to be put on hold.
Since starting her singer career as a child at home around the piano with her father, Hannah has performed at the Royal Albert Hall, the Royal Opera House, the Royal Festival Hall and Barcelona Cathedral along with numerous venues across China and Hong Kong.
So, as always, we’d be delighted if you’d like to ring us for a chat, but, strange as it may sound, if you ring and simply ask to be put on hold, that’s fine too!
By Tim Ewins, Paraplanner, Brunel Capital Partners
Who would you trust to make your decisions for you?
It is a sad fact of life that many of us will reach a point when we can no longer make decisions for ourselves – it is not a comforting thought.
One thing that can give us some comfort and peace of mind is that, whilst we still have capacity, we all have the power to choose who we would like to make those decisions for us. All we have to do is be proactive and make sure we nominate them whilst we can.
It is a common misconception that the solution is simple – that husbands, wives or next of kin can automatically make those decisions for us. Anyone who has been confronted by the reality will know that this is far from the truth.
Last year my Grandad passed away leaving behind my Grandma who was starting to show signs of advancing dementia. Fortunately, they had acted many years ago to appoint their son (my Dad) as their attorney. When the time came for Grandma to move into a care home he was able to sell her home, speak to her banks, her pension providers (including the Department for Work and Pensions), her utility providers and her care providers to ensure that her move was seamless and that she was able to get the most suitable care in line with her own wishes. Importantly, by preparing well in advance, they had also made time to discuss those wishes should the time come as it now has.
If my Dad had not been appointed as attorney, despite knowing her wishes, he would have been unable to speak to any of these people or arrange his own Mother’s financial or care arrangements. This would have contributed significant levels of stress and time as well as cost to an already difficult situation.
If we don’t appoint our own attorneys and then lose capacity, the only recourse would be to apply to the Court of Protection to become our deputy.
The Court may choose whomever they think is appropriate for this role and in many cases family members are overlooked as they are considered to lack experience due to the additional requirements over and above those of an attorney. The process can take up to six months and cost several thousand pounds. Crucially you no longer get to decide who makes your decisions for you.
I was also speaking to a married couple recently who believed (as I did at the time) that an attorney wasn’t necessary for them as they held everything jointly. In reality, should one holder of a joint account become mentally incapable, many banks reserve the right to cancel the authority for ‘either to sign’ to withdraw funds and will freeze the account until presented with a valid Lasting Powers of Attorney (LPA) or proof of deputyship.
With the availability of LPAs there is now no need for any of us (or our families) to find themselves in a difficult situation. LPAs are just as important as a Will in safeguarding you, your family and loved ones against financial and emotional strife further down the road.
LPAs are not just for the elderly. Incapacity can happen at any time.
If you are yet to appoint your attorneys please give us a call. We have recently launched a cost-effective service to help you arrange your own LPAs and we would be delighted to help you.
When people ask me what I do, I assume they’re not asking about what I do in my own time, what I do with my kids or what I think my role in life is. They are asking what I do as a job. “I’m a Paraplanner” I tell them. “Oh right” is the standard response. Cue the blank face, followed by a second question “and what does that mean then?”.
To anyone outside the financial profession it’s not a term people are generally familiar with, unlike Financial Adviser or Financial Planner which are roles people tend to recognise.
The role of the Paraplanner is a relatively new one, and even within the industry it is not always clearly defined.
In some Financial Planning practices, a Paraplanner has limited input into the advice process and is simply tasked with the role of gathering information and formalising the Financial Planner’s recommendations into a report, essentially, providing a report writing service.
In other practices, the Paraplanner has a much more active role in the advice process.
This is the case at Brunel Capital Partners. The Paraplanner here works as part of a team alongside the Financial Planner to provide clients with a professional and ongoing Financial Planning experience. We play an active role in the advice process.
The Financial Planner gathers the initial client information, gets to know the client and gains a real understanding of their objectives and what they are trying to achieve. The Paraplanner then collates the client’s personal details, gathers policy information and builds up a picture of the client’s current financial position. We then use this as the starting point for identifying any shortfall between the client’s current position and where they want to be, in line with their personal objectives.
We analyse every detail of the client’s personal situation; their age, their health, their objectives, their existing plans, their attitude to risk, their existing plan charges, the underlying investments; essentially the overall suitability of these plans and how likely it is that the current provisions are going to meet their future needs.
Then we build on the initial picture with the Financial Planner. Together we analyse whether the client’s existing plans and provisions are appropriate and sufficient on all fronts. We look at what would need to be done to address any shortfall and whether the objectives set are achievable. This is a collaborative process between Financial Planner and Paraplanner.
We draw on the intricate knowledge and understanding that the Financial Planner has of the client, their needs and their objectives and apply this to the analysis the Paraplanner has done, to determine the best course of action for the client going forward.
A Paraplanner is often qualified to give investment advice in their own right, and typically has a wealth of financial exams to prove it. Honestly we are a little (ahem) geeky, we like numbers, we like technical detail and we make sure we keep abreast of changes in the market, changes in legislation and compliance requirements. This gives the Financial Planner and Paraplanner combination a dynamic edge, two sets of knowledge, two sets of eyes, and two sets of ideas.
This gives the client the best possible solution, advice and hopefully outcome.
Once recommendations have been made and put in place we work with the Financial Planner to review this advice regularly, ensuring it remains appropriate, and that it’s on target to achieve the client’s goals.
So, when people ask me “what do you do?”, I must admit I do sigh a little inside. Not because I don’t love what I do (which I do), but because there isn’t a quick answer. Explaining the role takes a while, and I fear that Mr Well-Meaning Polite Person isn’t actually looking for chapter and verse on the ins and outs of my role.
Apparently pension legislation, Inheritance Tax and cash flow forecasting aren’t everyone’s cup of tea. Luckily, it’s ours, and that’s what we’re here for.
Whilst Brunel Wealth Management manages its own portfolios, Quartet provides the research and fund selection resource to Brunel. Colin sits on the Brunel Wealth Management Investment Committee that oversees all investment decisions made as we construct our and our clients’ investment portfolios. Other members of the Brunel Wealth Management Investment Committee include Steve Brady, Brunel Director; Dan Hiles, Brunel Chartered Financial Planner; and Andrew Weston, Brunel Compliance & Technical Manager.
Here Colin talks about the Brunel Investment Strategy. Described as ‘systematic, globally diversified & low cost’, it is also an investment style that can be described as ‘passive’ rather than ‘active’. But passive doesn’t mean in-active.
It’s an investment strategy that:
A passive investment strategy:
Brunel takes the approach that the starting position in its core satellite portfolios is a passive position and that only if there is a compelling argument for an active fund over a passive one will it be included.
Over a recent 10-year period, active mutual fund managers’ returns trailed passive funds consistently
This is according to Kent Smetters, a Professor of Business Economics at Wharton Business School, Pennsylvania. Managers of stock funds for large- and mid-sized companies produced lower returns than their index competitors 97% of the time, while managers of small-cap stocks trailed 77% of the time.
Those very few investment managers that outperformed the passive index were still likely to underperform in the future. In fact, outperformers had only a 20% chance of repeating the following year, and … just a 10% chance of outperforming three years in a row.
It’s just too hard for an asset manager to pick a portfolio that outperforms the market by enough to make up for the 1, 2 or 3% fee that must be charged to support the stock and bond picking operation.
Many index-style mutual funds and exchange-traded funds charge less than 0.2%, some less than 0.1%, giving them a huge cost advantage.
Most investors are not good at predicting short-term swings in the market. More often than not, investors find themselves buying high and selling low.
When the market starts selling off sharply, investors will panic, sell their own shares, and sit on the sidelines.
Unfortunately, some of the biggest one-day upswings in the market occur during these volatile periods. For instance, if an investor stayed fully invested in the S&P 500 from 1993 to 2013, they would’ve had a 9.2% annualised return.
However, if trading resulted in them missing just the ten best days during that same period, then those annualized returns would collapse to 5.4%!
Portfolio diversification plays a key role in passive investing and is a widely embraced investment strategy that helps mitigate the unpredictability of markets for investors. It has the key benefits of reducing portfolio loss and volatility and is especially important during times of increased uncertainty.
Modern Portfolio Theory, provides the academic bedrock for diversifying portfolios. Simply stated, by combining assets that are not perfectly correlated, that is, do not move in perfect lock-step together, the risks embedded in a portfolio are lowered and higher risk-adjusted returns can be achieved. The lower the correlation between assets, the greater the reduction in risk that can be derived.
Colin has over 18 years’ investment management experience and founded Quartet in 2009. Before this Colin was a board director at the UK arm of a Swiss Private Bank where he oversaw the portfolio management function. He holds the Investment Management Certificate and the Chartered Institute of Securities and Investment Diploma. Colin is a Chartered Wealth Manager and a Chartered Fellow of the Institute of Securities and Investment. Quartet is a discretionary investment management firm managing bespoke portfolios for individuals and providing research and fund selection resources to firms who manage their own portfolios such as Brunel Wealth Management.
Below are performance charts for a selection of Brunel Wealth Management portfolios: Cautious, Balanced and Adventurous which are compared against the FTSE All Share.
The FTSE All Share is not a true benchmark because it is made up of 100% equities. Our clients’ portfolios only contain a percentage of equities. We use the FTSE All Share to give general market context and because it is the one most often reported in UK market news bulletins.
The 6 months show the impact on markets of Brexit
12 months include Brexit and the fallout from the markets going wobbly over China last year
Since the inception of our clients’ portfolios on 1st January 2012, the markets and our clients’ portfolios have experienced significant market meltdowns such as the Euro Crisis, Greece (twice), the fall out in the China market and most recently Brexit.
Brunel Wealth Management portfolios from 1st January 2012
The past performance is evidence that our philosophy is working.
Our approach is to hold a low cost, diversified portfolio. Our underlying philosophy is not to second guess the markets but to take advantage of what the whole market has to offer. It means not trying to control the markets using complex products such as hedge funds and structured products and sticking to a rebalancing programme when our portfolios become too weighted towards certain asset classes. We let portfolios breathe allowing the underlying holdings to do their job.
This four year scatter graph shows that our clients’ portfolios display lower levels of volatility but delivered higher returns than the FTSE All Share