Archive for January, 2016

Should You Change Financial Adviser in 2016?

Thursday, January 28th, 2016

Should You Change Your Financial Adviser in 2016-Is it time for you to change your financial adviser?

In the most simple terms if you didn’t receive the return on your investment that you expected last year, then yes, it may well be time to change adviser.

In more complex terms there are a number of areas to consider more closely when judging whether or not its time to change adviser.

This post will run you through some key areas you should assess so as to make an informed decision about whether to switch to a new service.

Was Your Invest Performance Lucky?

Over the last six years or so, most investors have been receiving a good overall return and this period of time has been what is known as a bull market. In laymen’s terms, this means your adviser may have simply got lucky; earning you money without skill or insight.

This all changed in 2015 however, when the stock market had its first negative return in six years. This means it’s wouldn’t have been unusual to have received a lower return last year, but was yours lower than it could have been? Given the performance of the market last year, after typical expenses it may have been normal to receive a negative 2 or 3% return, but anything from 5-10% and its time to start looking at what went wrong.

Performance

What kind of strategy did your adviser apply and did it work? For example, he or she may have gone for a low cost ‘match the market’ strategy, if so did this work? Alternatively they may have gone for a higher cost, ‘beat the market’ strategy, if so did this more costly approach see a good return for you?

Reports and Feedback

A good adviser will keep you constantly updated- and not just when times are good. If you don’t feel your financial adviser has built a sufficient relationship with you, or fails to provide thorough data and reports, even during slump times, then it’s almost definitely time to change adviser. If you didn’t feel you were given enough facts to make an informed decision, this could also be an alarm bell to change services.

Risk

Does your adviser work from your own feelings on risk? A good adviser will take your lead when it comes to risk and won’t coerce you into either taking a gamble you wouldn’t take or playing it safe when you’d rather gamble. If you feel you were talked into a risk strategy that wasn’t to your choosing, this is another alarm bell.

Expenses

Quite simply, how much did your adviser charge? Was this expense greater than your overall return for 2015? If so then it’s almost certainly time to change adviser.

Is Your Financial Adviser Working in Your Interests?

Whilst these factors all look at the finer number crunching of investment, the most important thing is your instinct. How do you feel about your financial adviser? Does he or she understand where you are in your life and what you are looking for investment-wise? Do they have experience across the investment market including pensions, equity release and retirement as well as general investment? Do you feel he or she has invested in you as a person and will be there to inform you and answer questions in every sort of market, good or bad?

Another key area is to look at how many products you have been offered. Do you feel the products you’ve been offered in terms of pensions for example, has been limited? A good adviser will offer all products and not just the ones they make the best commission on.

What Should You Do If You Are Concerned About Your Finances?

If you feel your financial adviser hasn’t performed to the best of their ability, then it’s time to change. 2016 will be an interesting year for investment, especially for those looking to make the most of their retirement and ensure they have something to pass on, so make sure your adviser is up to the challenge.

If you are unsure about your current financial adviser, or haven’t previously had financial advice, then please contact Maxim Wealth Management today on 0141 764 0040 (Glasgow) or 0203 841 9941 (London). Our team will be happy to help you make sense of your finances.

Have You Discussed Your Family’s Finances?

Tuesday, January 19th, 2016

Have You Discussed Your Family's Finances-

Whilst it is easy to be naïve about the eventuality of old age, retirement is an inevitability for everyone.

If you wish to avoid paying high levels of tax and ensure your finances are correctly distributed among the members of your family retirement planning is a crucial step that should not be overlooked.

Even for those who understand the importance of pension planning, research has suggested that as many as 20% of couples over the age of 40 have never discussed their pensions with 49% have no idea about the level of retirement income they can expect once they stop working.

Why is it Important to Discuss Family Finances?

These figures are worrying, especially since families have become increasingly interdependent. Furthermore with the recent shake up to personal and state pensions (new pension freedoms were announced in 2014 and a new flat rate state pension will come into force this April) there is even more reason to discuss your plans for later life to ensure your partner and family receive the correct inheritance once you pass.

Despite these changes to pensions however, research also suggests that there is a reluctance for couples to visit a financial adviser to discuss retirement planning, with nearly two thirds having never met with one as a couple.

What Has Changed in Retirement Planning?

Traditionally retirement planning has focused on the needs of an individual, or a couple. However as families become increasingly interdependent, the situation has become more complicated as people need to factor in siblings, adult children or even parents into their financial plans.

Why Should You Discuss Your Will with Your Family?

One of the key areas that can cause confusion, or even disagreements following the death of a loved one is the Will. By speaking to a financial adviser to draw up a Will, and then discussing your intentions beforehand you will decrease the chance of upsetting arguments when it comes to distributing your estate after you are gone.

For those who have not set up a Will then it is time to stop putting it off. As many as 84% of 18-34 year olds and more surprisingly as many as 35% of over 55s are thought to not have a Will in the UK.

If you pass away without a Will you are considered to have died Intestate and specific rules apply. These rules changed on 1st October 2014 with the main beneficiary of these changes being your surviving spouse/civil partner.

Consider the Tax Implications of Inheritance

If you are planning to leave an inheritance to members of your family it is important to consider the most tax efficient way to do this to ensure that your loved ones do not lose much of your gift.

It can also be a good idea to consider the requirements of your children or younger generations. Attitudes to inheritance have changed in recent years with some younger relatives preferring their older family members fully enjoying retirement rather than struggling in order to leave something behind.

For those already at retirement, you may have already had the all-important family discussion and come to the conclusion that your family will not require as much in inheritance as you originally thought. This information could change your attitude to retirement, perhaps making you consider equity release or other retirement options.

Discuss Your Finances with Family and Advisers

It is understandable that you find the discussion of finances after your death a difficult subject to approach with your spouse, partner or family. However understanding the intentions of those around you is incredibly important.

Coupled with this you should seek professional financial advice from someone who can help you plan both your retirement and passing to ensure your money and assets are properly taken care of.

If you are wishing to speak to someone about pensions, retirement or financial planning please do not hesitate to contact Maxim Wealth Management today on 0141 764 0040 (Glasgow) or 0203 841 9941 (London). Alternatively you can fill in our Contact Form and one of our team will get back to you.

ISAs for Retirement Planning? – Understanding ISAs and Traditional Pension Funds

Friday, January 15th, 2016

ISA PensionsWhen you are planning your retirement you will need to decide which type of saving vehicle will best match your needs.

Whilst your ‘sunset’ years can be a great period retiring can also expensive, and when your regular paycheck stops coming you need to depend on your nest egg to match your lifestyle and expenses.

To make sure that you can not only live well after you stop working full time, but also pay for other expenses; healthcare for example, you would want to invest wisely in a retirement account.

Is an ISA Right for You?

If you choose to invest in cash ISA (individual savings account), not only will your savings work for your retirement years but you will also save on tax.

Because this type of account offers interest without taxes, it could be an ideal tax planning method. This type of investment is more stable so is better suited to those who are risk averse. The downside is that there is the chance that the interest rates will not grow a whole lot, unless you are open to taking more risks.

For people looking for a relatively safe place to invest for their golden years, this might be an option worth considering. Stocks and Shares ISA, while entailing a little more risk, also offer more returns, and the flexibility to invest as you like. It would also lead to greater degree of tax savings. There is also no time limit as to when your account is open for you to withdraw funds. Should you ever find yourself in a financial pinch you can think of using this account to rescue. However, with good financial planning, your savings should remain safe, and there should be no need to prematurely access it.

Pensions Are Still Worth Considering

Pensions have been the preferred way to save for the nest egg for decades. Pensions offer tax rebates, in that the amount you invest attracts relief on taxes, so you get to save more. The more you invest in a pension the more you stand to get as tax relief. Also, for employers that are contributing to an employee’s account, there is tax relief, and for the employee, more funds into the account. However, the planned changes to the tax rates on pension funds, would mean less savings.

Another reason to trust pension accounts is that contributions can be backdated. The contribution limits remain high, although the proposed changes to the law need to be studied in detail. You would also not be able to access the funds until a minimum age, so you would be prepared to do without the cash you saved in your hands, for at least a few years. In such a situation, you might want to consider an ISA. While the money you pay into the pension account may not attract tax, the money you withdraw will carry tax. How much you pay as tax is something your financial adviser will be able to tell you.

The Importance of Financial Advice

The New Pension Freedoms brought in by the current government have shaken up the way people plan for and enjoy their retirement. When it comes to making these important financial decisions, it is important that you seek the advice of a capable financial adviser.

The decisions you take today in regard to your savings and funds for post retirement will have far reaching consequences, for decades to come. That is why with the assistance of a financial adviser, who offers advice customised to your situation, you will be in a situation where you can face the future with confidence.

In addition to understanding the pros and cons of ISA and pension funds, you will also receive advice regarding other types of funds such as savings account, and premium bonds. You might also want to learn more about SIPP or Self Invested Personal Pension.

If you would like to speak to someone about your pension please do not hesitate to contact Maxim Wealth Management on 0141 764 0040 (Glasgow) 0203 841 9941 (London). Alternatively fill out our Contact Form with your question and we’ll get back to you.

5 Tips to Help You Save for Retirement

Wednesday, January 6th, 2016

5 Tips for Saving for RetirementAdjusting to retirement is a big change. Not having a job to go to every day after doing so for many years requires a complete lifestyle change, which you may or may not be prepared for, both mentally and emotionally.

The financial implications can be also seem daunting however with good planning, your sunset years can be comfortable and enjoyable.

By following the right preparation and advice you can make saving for your retirement easier. Here’s five areas you should consider to help you make the right plans in regard to saving for life after your working years.

1) Understand the new pension rules

If you have invested in a pension scheme, you have the freedom to decide how to take your pension. However, there are tax implications which many people do not understand. Typically, up to 25% of personal pension can be taken out without paying any taxes for those aged 55 years and above. The rest of it is taxable. Because pension income is put together with other income in the tax year the income is received and the total is taxed accordingly. This means that taking out a large sum could come with an equally large tax bill.

If your income is above a given bracket this could also cause personal allowance to be lost. To counter this you may benefit from spreading withdrawals over more than one tax year to benefit from tax allowances.

2) Pass on your tax benefits efficiently

The law enables you to pass on your pension upon your passing. This used to be subject to taxes of up to 55% if you had started withdrawing and the balance had been paid out as a lump sum. The rules changed and made it possible to pass on more of your pension upon your passing and in some cases, tax free.

For those who pass away before the age of 75, no income tax is paid when beneficiaries make withdrawals. After this age, withdrawals are taxed as income. Typically, pensions are exempt from inheritance tax. However, the rules vary depending on personal circumstances.

3) Two is better than one when it comes to tax allowances

Spouses as well as registered civil partners can transfer assets to each other without paying taxes. If one of you pays more taxes, it makes financial sense to spread or even them as a couple by transferring investments to save taxes on the one who pays less taxes. Also, a new Marriage Allowance has been introduced where it is possible to transfer 10% of personal allowance between partners to bring down the joint tax bill.

4) Taking all the shelter you can will also make a difference

There are a number of tax shelters available. The best known is the Individual Savings Account (ISA) that does not attract Capital Gains Tax or any other tax on income. Income from ISAs does not need to be declared making them ideal for generating additional, tax-free income for retirement. It is important to understand that an ISA is not in itself an investment but a way to shelter your savings and investments from tax.

You can withdraw from you ISA when you need to and they have no upper age limit. Individuals can put a maximum of £15,240 in an ISA for the current tax year (2015/16) and allowances can now be divided between different ISAs such as Stock and Shares ISAs and Cash ISAs as per an investor’s choosing.

5) Maximize on tax allowances

There are other changes that have been made that will be implemented this year where there will be added tax-free allowances for cash interest and income from shares or dividends. Some retirees may be paying thousands of pounds in taxes that they perhaps shouldn’t be. The changes have been confusing for some and unfortunately this has led to some not being able to take advantage of all the tax-free allowances they can get.

Speak to a Financial Adviser About Your Retirement Today

Sitting down with a professional financial adviser could have a major impact on your tax bill and improve the quality of your life in retirement. A pension adviser will be able to look at every aspect of your pension and help you understand how to make the most of these changes.

Maxim Wealth Management offers independent financial advice on pensions, retirement, equity release and other aspects of personal finance management. Contact us today to discuss your pension and let us help create the best possible retirement plan.

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