CASE STUDIES

Case Study 1: Approaching Retirement

Henry & Ann contacted Ten Wealth Management Limited after the death of Henry's mother. They had been pleased with how Ten Wealth Management had looked after Henry's parent's investments during their lifetime and now wanted to review their own financial planning.

Henry & Ann own and manage a family retail business and have been saving for their retirement for over 30 years, during which time they have established five different pension contracts with three different providers.

They have also accumulated a number of different personal investments, including a significant investment portfolio managed by a Stockbroker.

Our initial discussions were focused on understanding and helping to define their financial objectives, as well as obtaining details regarding their various pension and investment contracts.

We were soon able to establish that by transferring their existing investments and pensions to an independent investment platform they could reduce their overall costs, increase their investment options and become financially more organised.

They also needed to adopt a more suitable and bespoke investment strategy, as each plan was being managed independently of their other assets, leading to a number of duplicate investments.

The transfer process was carefully managed, as some investments could be transferred 'in-specie' allowing the underlying funds to remain invested; other contracts needed to be surrendered and transferred as cash.

We also established that the five different pension contracts all had slightly different contract terms, especially in relation to the amount of tax-free cash that they could provide at retirement. Therefore additional investigations were required to ensure that a transfer would not remove any favourable terms and this resulted in one plan being left in-situ, but continued to be monitored by Ten Wealth Management.

The whole process took around six months to complete, but has resulted in all their investments and savings (except for two contracts) being held on an independent investment platform and invested according to their investment risk profile. The platform provides access to online valuations whenever required, the ability to invest in any listed investment and their annual ongoing costs have been reduced.

Following the initial organisation of their pensions and investments we have begun to widen the areas for discussion to include

• How to organise their estate efficiently to reduce any potential Inheritance Tax liability
• Whether to transfer their existing business premises into their pension fund
• Increasing their company pension contributions to allow them to become financially independent of their business

Henry & Ann now benefit from six monthly review meetings, with telephone and email communications whenever required between meeting dates.

All figures accurate as at October 2015. Client names have changed for privacy reasons.

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Case Study 2: Wealth Management & Estate Planning

We were asked to speak to Mr & Mrs Bell by their accountant in 2012, as their previous adviser had retired and they were unimpressed by his replacement.

Mr & Mrs Bell had recently invested around £250,000 into an investment portfolio via their local bank; but had yet to receive any ongoing advice from them.

Mr Bell had previously sold his engineering business and had now retired; he had a Personal Pension valued at around £1 million but had yet to commence withdrawing any income.

We commenced by establishing their need for additional income and their desire to provide financial security for their family. We also spent some time discussing investment risk and understanding both the level of risk they were comfortable with and the level of risk they needed to take.

It was soon obvious that Mr Bell's pension fund was invested in relatively high-risk funds, so a fund switch to reduce the possibility of short-term capital losses was swiftly implemented. Further investigations established that the plan's charges were relatively high and therefore a pension transfer was recommended to provide three advantages:

• Immediate access to both income and capital
• Lower ongoing costs
• Access to a wider range of investment options

A staggered approach to withdrawing pension benefits was recommended, with £180,000 of the pension fund initially moved into Income Drawdown. This released a tax-free lump sum of £45,000; which was subsequently gifted into a Family Trust for the future benefit of their children and grandchildren.

The Family Trust was established on a Discretionary Trust basis, with Mr & Mrs Bell as the sole trustees, providing them with control over the Trust's investments during their lifetime.

We also established a 'By-Pass Trust' so that any death benefits from Mr Bell's pension fund would be paid into this Trust and be used to support Mrs Bell without forming part of her taxable estate.

Since our initial financial planning advice, we have continued to meet with Mr & Mrs Bell every six months and gradually moved further pension funds into Income Drawdown; allowing Mr & Mrs Bell to benefit from additional income and make further gifts into Trust for their family.

Due to the successful investment management of Mr Bell's pension fund, we were asked in 2014 to take over the management of the investment portfolio that they had established with their local bank. This was achieved whilst retaining the tax efficiency of their NISA investments and using their Capital Gains Tax allowances to release profits from their non-NISA investments.

Following the 2015 Summer Budget changes to pension legislation, it was agreed to release the remaining tax-free lump sum from Mr Bell's pension fund and this was used to provide direct gifts of cash to their children and grandchildren; for which they were all very grateful.

Since being appointed by Mr & Mrs Bell, we have delivered an investment return of 7.09% per annum (net of all charges) in respect of Mr Bell's pension fund (June 2012 to May 2018).

We have organised their pensions and investments so that their total portfolio costs are all less than 1.40% per annum; this figure includes all ongoing service and advice fees, investment management charges and custody fees.

All figures accurate as at October 2015. Client names have changed for privacy reasons.

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