Lowes Magazine Issue 119

Issue 119

“When obstacles arise, you change your direction to reach your goal; you do not change your decision to get there.” Zig Ziglar

INSIDE TRACK

Financial security is priceless THREE IN FIVE ADULTS ADMIT TO FEELING MORE ANXIOUS ABOUT THEIR FINANCES NOW compared to before the pandemic, according to new research from Abrdn.

At the same time, almost half of adults worry about their current financial situation, while a third don’t like to think about their long-term financial future. Worries about money are understandable in the best of times, and certainly following the uncertainty of the Covid-19 pandemic. We find that at times of high stress in the markets, such as when the dotcom bubble burst and during the financial crisis, and as a result of the pandemic, it can be difficult to know what is the best course of action, which can lead to inaction, or potentially worse, a

knee jerk reaction to market changes. This is where Independent Financial Advice can help by providing a plan of action around investments and savings – as well as advice on tax issues – to provide peace of mind when others are stressing.

If you know someone who would benefit from advice on any of their investments, pensions and savings, please put them in touch with us for a free initial consultation.

Social media influenced investing

REPORTS IN THE MEDIA AROUND SO-CALLED ‘vigilante investors’, who look to push up the price of a stock in an attempt to hurt short-sellers (traders who are speculating on the decline of that company’s share price), show how hype and hyperbole can catch hold and result in stock frenzies. The danger is that those investing get caught up and don’t realise the potential downsides to their investments, particularly if they are inexperienced investors. The stocks can be high risk and volatile, more gambling than investing and could result in a large financial hit. In our view, this kind of social media- influenced speculative day trading should be avoided unless you have money you are prepared to lose. It is a pertinent reminder also of how the world has changed and how there are now far more streams of information in the market, some of which can be dangerous financially.

Checking State Benefits entitlement ARE YOU OVER THE STATE PENSION AGE AND need someone to help look after you at home due to a long-term illness or disability? If you are, you may be able to claim State Benefits for attendance allowance – currently at £60 or £89.60 per week, depending on your circumstances. Many people who could claim one or more State Benefits are not doing so because they are property owners and so they believe they are not entitled. If you know someone who you think may be entitled to claim but isn’t, it could be worth them checking their entitlement. The Money Advice Service is a good first port of call, or www.gov.uk.

2 LOWES Issue 115 · Published July 2020 The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results.

Covershot: Valley of Fire State Park, Nevada, USA Shutterstock

INSIDE TRACK

Advice in divorce IN RECENT YEARS DIVORCING COUPLES have been encouraged to move away from an adversarial approach to divorce proceedings, to avoid unnecessary confrontation. This is especially so since the introduction of the ‘no fault divorce’ legislation in 2020. Instead, both parties are steered towards formal negotiation to reach agreement before any formal court proceedings. With property, pensions and other assets forming the financial aspects of divorce discussions, this can be a complicated area and having an Independent Financial Adviser to provide guidance on these aspects can help achieve a better financial outcome for both parties. Our experienced Lowes Consultants can help in divorce situations. If you would like to talk with one of them please call 0191 281 8811. Your call will be treated with care and confidentiality.

Lowes competition update FOR THIS YEAR’S LOWES COMPETITION WE asked you to predict, to two decimal places, the value of the FSTE 100 at close of the last trading day of 2021. The FTSE started the year at 6460.52. The index has been rising since the beginning of the year and at 30 June 2021, it was 7037.47. If it continues on this trajectory where might it end the year?

FTSE 100 1 Jan - 30 June 2021

7,200 6,800 6,400 6,000

31/01/21 28/02/21 31/03/21 30/04/21 31/05/21 30/06/21

Make your money work. Best bank & building society rates Type Amount Provider

Account

Gross Rate

Contact

Unrestricted instant access accounts Online £1+

Atom Bank

Instant Saver

0.36% 0.50% 1

www.atombank.co.uk

Online

£5,000 +

Charter Savings Bank

Easy Access – Issue 21

www.chartersavingsbank.co.uk

Accounts with first year bonus / restrictions Online £1 - £250,000

www.marcus.co.uk

Marcus by Goldman Sachs

Online Savings Account

0.50% 2 0.50% 2

Online

£1 - £100,000

Saga

Easy Access Savings Account

www.sagasavings.co.uk

Fixed rate bonds Online £1,000 - £1,000,000 Online £1,000 - £100,000 Online £1,000 - £100,000

1.10%

www.gatehousebank.com

Gatehouse Bank

1 Year Fixed Term Green Saver 3 2 Year Fixed Term Savings Account 3 Year Fixed Term Savings Account

JN Bank JN Bank

1.21% www.portal.jnbank.co.uk 1.31% www.portal.jnbank.co.uk

1 Rate drops to 0.10% if balance falls below £5,000. 2 Includes bonus of 0.10%. Rate drops to 0.40% after 12 months. 3 Gatehouse Bank will plant a tree in a UK woodland on your behalf for opening and funding your account. You may also wish to consider Premium bonds offered by National Savings and Investments (NS&I), maximum £50,000. Whilst no guaranteed interest is earned, they do offer the opportunity for tax free winnings. Measures of inflation - The average change in prices of goods and services over a 12 month period to June 2021 Retail Prices Index (RPI) 3.9% Consumer Prices Index (CPI) 2.5% Sources: Providers’ websites, Office for National Statistics, www.thisismoney.co.uk, www.moneysupermarket.com, www.moneyfacts.co.uk 13/07/2021. All accounts subject to terms and conditions.

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 9 8 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 9 1 2 3 4 5 6 7 8 9 3 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 4 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 2 3 1 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 7 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 3 1 2 3 4 5 6 7 8 9 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 5 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 4 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 9 8 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 1 2 3 4 5 6 7 8 9 1 2 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 3 4 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 9 7 1 2 3 4 5 6 7 8 9 5 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 2 1 2 3 4 5 6 7 8 9 Grid n°9165 medium A number may not appear twice in the same row or in the same column or in any of the nine 3x3 subregions.

Sudoku We hope you enjoy this mind teaser – our latest Sudoku puzzle. To complete the puzzle fill the grid so that each row, column and 3x3 block contains the numbers 1 to 9. The solution to the puzzle can be found on page 14.

Follow us for company updates

@LowesFinancial

Lowes Financial Management

Source: www.printmysudoku.com

If you would like to receive further information on any of the subjects featured in this issue please call: 0191 281 8811 , fax: 0191 281 8365 , e-mail: client@Lowes.co.uk , or write to us at: Freepost LOWES FINANCIAL MANAGEMENT . Lowes ® Financial Management Limited. Registered in England No: 1115681. Authorised and Regulated by the Financial Conduct Authority. 3 Lowes.co.uk We have all the free sudokus you need! 400 new sudokus every week. Make your own free printable sudoku at www.PrintMySudoku.com

COMMENT

Above and beyond

AS I WRITE THIS, ENGLAND IS ABOUT TO LIFT ALL BAR A few restrictions which were imposed to combat the Covid-19 Coronavirus pandemic. There is no doubt that this has been an unprecedented time for people around the world and our thoughts are with anyone who has lost a family member, friend or colleague as a result of the virus. Let us hope that with the sterling work done by the pharmaceutical companies to develop effective vaccines in record time, we can put this terrible period behind us and in future this virus can be handled much like the flu, with an annual jab for the vulnerable amongst us. Time will tell. This has also been an unprecedented time for businesses. We have all had to adapt to a new way of working where personal contact was no longer possible and staff worked from home. Throughout this 16-month period we have done our best to have a business-as-usual approach, knowing our clients would need reassurance over and above the norm. Our Consultants often found themselves spending time talking to clients not just about their finances but also providing a friendly ear in what has been a very difficult time for us all. Whilst we always strive to do the best we can for our clients, because of the unprecedented times we have all been through, when we sent our biennial client survey this year, we had no specific expectations of the results we might get back. In fact, your response has blown us away. You have rated us higher in pretty much every category than in our last survey in 2019. You scored us higher across a range of key areas: Client service, Level and quality of contact, Depth of knowledge, Professionalism, Integrity, Approachability and Helpfulness – in all of which 96% to close to 99% of you rated us as ‘very good’ or ‘good’. However, three metrics that really stand out for us are that over 97% of clients rated us in the same way for our Investment Advice and for delivering service in accordance with our philosophy of caring for personal finances personally, and over 97% of you said also you would recommend Lowes to family, friends and colleagues. While every one of those metrics

is important to us, the ultimate accolade is that of personal recommendation. It validates for us that, while there is always room for improvement and we are constantly reviewing and assessing what we do and how we do it, overall we are doing a good job. This year we celebrate 50 years serving our clients so it is an extra fillip for us to receive this affirmation. At the core, I believe are the principles upon which Lowes has been built – a friendly family feel to the company, helping clients not just to invest their money but to grow and maintain their wealth, and an investment philosophy that looks long term. This helps clients to ride the inevitable ups and downs of the stock markets knowing they have the experience and expertise of all at Lowes to guide and support them through market upheavals - and pandemics. Thank you to everyone who completed our survey – over a third of advised clients responded – we appreciate your time and your kind comments. Looking forward, I hope by the time of our next magazine in October, we will have been able to put as much of this period behind us as possible. There will be new financial challenges ahead and you can rest assured Lowes will be here to help and support you as they arise.

Ian H Lowes, Managing Director

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PLANNING

Decision-making when vulnerable

ONE OF THE MOST VULNERABLE TIMES FOR PEOPLE TO make decisions on their savings and investments can be after the loss of their life partner. While there are some decisions that need to be made and actions taken as soon as possible, for example around probate and being able to continue to pay bills, where wealth has been passed between partners, it can be prudent to delay making any decisions on where the money is best placed and definitely take Independent Financial Advice before making any commitments. Where a sizeable sum has come from life insurance, or there are investments and savings to be taken into account, this can change a person’s individual financial circumstances quite considerably. Sometimes people want to give money away to help out family, for example, but we always caution against making any decisions without taking a holistic view of their new circumstances. What can seem a large amount of money can quickly be diminished and once money is given away it is gone. The best advice is to take the time to plan ahead for life’s eventualities, supported by sound professional advice, which can both help relieve stress at key emotional points in our lives, as well as ensure the right decisions are made in respect of financial futures.

Is your Will up-to-date? Having an up-to-date Will in place can ensure your assets are distributed as you would wish – the alternative is dying intestate, which then involves the authorities in distributing your wealth. Having a Will also makes things very much easier for those left behind who have to manage your estate. Lowes does not have a Will writing service but we can can put you in touch with a professional firm that can help. If you want help in putting in place the right plan for your circumstances, or you know someone who would benefit from advice, we can arrange for a free consultation with one of our Consultants. Call 0191 281 8811 to find out more.

Call 0191 281 8811 if you would like further information in this respect.

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PLANNING

Helping with first home deposits

THE PROPERTY MARKET HAS BECOME A much tougher market to enter in 2021. There has been a substantial rises in house prices, even during the pandemic, driven by the stamp duty holiday and the desire of urban property owners to move out of the cities and gain easier access to outdoor space. This has resulted in a sellers’ market, with house prices at their highest level in nearly seven years. Even with the stamp duty holiday having ended in June, house prices remain very high creating continued difficulties for first time buyers to get on the property ladder. It is not surprising therefore, to read reports that older homeowners have been gifting an average of £42,000 to help younger relatives get a foot on the housing ladder. Some provide this funding through

savings, others through releasing equity from their home via an equity release mortgage. These gifts can be driven by emotion and the desire to help younger generations to achieve their home ownership ambitions, but they can also lead to decisions that are later regretted. Key points to consider are that once given away, the money is outside your control; whether you can meet your own living expenses now and particularly, in the future; the potential need to fund long-term care; inheritance tax issues; family inheritance issues. The pandemic has proven we live in an unpredictable world, and we strongly advise seeking Independent Financial Advice on the options available to you before passing on wealth, especially when this involves a financial transaction on your own home.

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PENSIONS

The power of knowledge

A PRIMARY BENEFIT OF A PENSION IS THE TAX relief received when contributing to it – set at the highest marginal rate of tax of the individual – with the maximum tax relievable contribution being the lower of 100% of relevant earnings during the tax year, or £40,000 (2021/2022 tax year). So, currently, if an ordinary rate taxpayer pays £80 into their pension they will receive £20 tax relief, a 25% uplift. Yet, when research company Opinium carried out a survey among 2,000 UK adults on behalf of mutual assurer Royal London, they found that 27% of people admitted they had never heard of the benefits of tax relief in respect of pension saving. Of those that had heard of it, just 15% of those surveyed said they fully understood how tax relief on pension contributions works, while a further 31% said they had some understanding. The remaining 27% said they had heard of pensions tax relief but did not know how it worked. If we take this as a representative sample of the UK population, it is clear that the messages around pensions benefits – not just the tax relief but creating a long-term savings habit for which our future selves will thank us – need to be spread far and wide. There are other good reasons to save through a pension too. When the Pensions Freedoms were introduced in 2015, they changed the available death benefits, allowing pensions to be passed on to named beneficiaries outside of the estate for inheritance tax purposes, and for income to be drawn by the beneficiaries free of income tax or at their marginal rate, depending on set criteria. Once people have a better understanding of how pensions tax relief works, and all the other benefits, our experience is that they will view pensions more positively and contribute more towards their pensions over time. Likewise, we urge anyone whose employer has a workplace pension to which the employer makes a contribution to take advantage of it.

There are many personal pensions to choose from and many investments within those pensions – a pension is a tax wrapper, what you invest in within it typically is determined by the range of investments offered by the pension provider. Alternatively, Self Invested Personal Pensions (SIPPs) are pension wrappers where, as the name suggests, the individual can select the investment they want to put in the pension wrapper. Typically SIPPs are advised on by Independent Financial Advisers who have the knowledge and access to the universe of investment products.

Reviewing our pensions Lowes Consultant Jennifer Morris says: Once set up, pensions can often

be overlooked. Payments go in and an annual statement is received. But pensions should be constantly monitored and the annual statement should be used as a prompt to do so. Ideally, a pension where contributions rise, at least with inflation, should be used but this does not mean contributions should not be increased further wherever possible. In particular, parents should consider paying more into their pension pots when their children have left home. At this point in their lives many people are earning more, they may have paid off or be close to paying off their mortgage, have less overheads and so should be better off financially. The rewards of paying more into a pension at this point can be reaped in a better standard of living in retirement or potentially, retiring earlier than expected, while also not substantially affecting their current standard of living.

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CONTINUING THE CELEBRATION OF OUR 50TH anniversary, journalist Rob Kingsbury interviewed one of Lowes’ longest standing Consultants, Rob Newton, alongside one of the ‘newer generation’ Gershom Chan, about how the role has changed over the years and what it means to be a Lowes Consultant in 2021. Both Rob Newton and Gershom Chan say they joined Lowes for two main reasons, the firm’s reputation in the market and its independence, which meant they weren’t tied to a limited set of investments or financial products but could find the right solution for each client and so do their best for every client they served. When they joined they both had several years’ experience as financial advisers under their belts. “I didn’t want to work for a large company that restricts what you can do and tries to fit the client to the product they want to sell at that time,” Rob says. “Whole of market advice gives the client more choice which can be selected by a trained professional fitting in with the client’s circumstances, as opposed to a narrow range of set products chosen by a restricted adviser.” What it means to be a Lowes Consultant LOWES 50TH ANNIVERSARY Gershom agrees: “I’d worked in the banking environment where we were restricted in what we could offer. When I give advice I want to be able to provide the best solution I can for the client. I would say that at Lowes we are the best at what we do. This is a role that requires we have an expert knowledge across a wide range of topics from economics through stock markets, to how to help someone open an ISA for their grandchildren. But it’s far from just being about investments, products and tax wrappers. Lowes gives its clients so much more than that; it really is a holistic service where we care about our clients not just their finances.” Rob says it’s the great satisfaction of dealing with people, listening to what they want to do and helping them to achieve it, which has kept him as a Consultant at Lowes for so long. “It’s dealing with clients every day, some of whom I have dealt with for nearly 20 years. I see a lot of clients as being friends as well as clients.” Whole of market advice gives the client more choice, which can be selected by a trained professional fitting in with the client’s circumstances. Rob Newton

Providing a service focussed on people not products has really been demonstrated during the pandemic, Gershom says. “It has been a tough period for everyone. As Consultants, we are used to dealing with people face-to-face and having that personal contact on a daily basis, so we’ve had to adapt to working from a distance. That’s had an effect on us and our clients. But what’s been great is how clients have adapted to it, talking over the telephone or on a video call. In fact the take-up of Zoom calls has been tremendous – we’ve had 80-year-olds proving technology isn’t just for the younger generations.” “What we’ve found during the pandemic is that clients haven’t so much wanted to talk about their finances – as Consultants we emphasise having a long-term outlook and not reacting to stock market fluctuations; when properly managed to a large extent the money takes care of itself – but rather clients have been more concerned around the uncertainty, the health aspects and the effect on their families. The pandemic has been

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Lowes.co.uk

LOWES 50TH ANNIVERSARY

unprecedented and people just didn’t know what to expect. At times we’ve been less Consultants and more Counsellors, but that’s what Lowes is about, going the extra mile.” Having long-term relationships with clients has also helped, Rob says. “As we couldn’t see clients face- to-face, it did make it more difficult for some clients. Fortunately, I have dealt with a lot of my clients for many years, and they know me well enough for me to advise them over the telephone. It really was a case of finding the best way to be a source of help to them.

He has now been a financial adviser for some 30 years, during which time he has seen a considerable amount of change in the profession. “Perhaps the biggest has been in terms of regulation,” he says. “The changes in compliance and the time it takes to do a case and the amount of content that goes into it is tenfold what it was, in order to meet all the rules and regulations. There is certainly a lot more paperwork involved. “Lowes itself has changed too. There are now many more people here than when I first joined and our move from Holmwood House to Fernwood House in 2016, has given us a lot more space and nicer rooms in which Consultants can meet with clients. And, of course, there are a lot more grey hairs around the corridors!” But what hasn’t changed over the years, he says, is the Lowes ethos. It’s about doing the best for each client, because every client is different. The way I approach it is to try to give advice based on what I would do myself. It’s advice given on a very personal basis.” Gershom joined Lowes in November 2018, becoming the Consultant for a proportion of Rod Molyneux’s clients when Rod retired and taking on other Lowes clients since then. He had 10 years’ experience prior to joining the firm, gained in banking, primarily in investment analysis and then as an adviser. It is the client contact and being able to help people get what they want out of life that attracted him to the role of Consultant, he says. “We’re highly qualified and we have the knowledge and the expertise as professionals to help people while also getting to talk to them as individuals as well. I find that very rewarding.” Both Rob and Gershom work alongside their wives as a team. “I see us as families working for other families,” Gershom says. “We’re dealing with real life issues. We’re talking to people about what they want, where they want to get to and how their finances can help them get there. But just as families have issues other than finances, so do our clients. “I’d like to think our clients see us as more than just a financial adviser; it’s a privilege to be in this role.”

I would say that at Lowes we are the best at what we do. Gershom Chan

“But what I will say about the pandemic is that working from home was a disaster as I like to separate work/ home life. The kids were draining all the Wi-Fi when being homeschooled, so I was glad when things went back to being a little more like normal.” Given the pandemic is not over by any stretch of the imagination, what advice would Rob and Gershom give to clients at this point in time. Rob says: “In uncertain times, I’d say review your investments/plans regularly to make sure they are still on track. We’re here to help you with that. And make use of new investment opportunities, particularly those with defensive features and/or market protection.” Gershom adds: “We’re here to make sure people are okay for the long term. I’d say, with a clear plan and a good Independent Financial Adviser behind you, you can make your way through any crisis.” How Rob and Gershom joined Lowes Rob was one of the first Consultants employed by Ian Lowes after he became Managing Director, joining the company in 2003. He had started working in financial services at age 17 and had worked for just two other financial services companies before joining Lowes.

Tell a friend

Do you know someone who would benefit from our investment management or other financial planning services? We would of course welcome any such referrals and to mark our 50 years in business, we have pledged to donate up to £50,000 to charity. Therefore, if your referral becomes a client of Lowes we will donate £50 to a chosen charity on their behalf, £50 on your behalf and a further £50 donation on behalf of Lowes – a total of £150 per referral! Please feel free to contact us on Contact@Lowes.co.uk, or reach out to our marketing team on 0191 281 8811 and advise them of any new client referrals.

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SAVING

Impact of inflation

INFLATION IS ONCE AGAIN ON THE RISE. THE UK inflation rate more than doubled in April with figures from the Office for National Statistics showing inflation jumped to 2.1% in May from 1.5% in April and then in June rose again to 2.5% and the Bank of England is not ruling out a rise to 3%. The concern for savers is that it continues on this trajectory as the UK emerges from lockdown and the economy opens up again. Rising prices for clothing, recreational goods and meals and drinks out were behind the increases, and as the UK eased lockdown restrictions and consumer spending increased, also the price of oil, as demand and travel have begun to pick up. The Bank of England has said that consumer price increases are a natural bounce back from the impact of the pandemic and that it will tolerate inflation rising modestly without effecting interest rate rises. In an inflationary environment the purchasing power of our money reduces which means our savings and investments have to work harder for what we have to spend to stay on a par with before (see table). Tax madness HM REVENUE & CUSTOMS FIGURES SHOW THAT pension savers overtaxed on pension withdrawals have had to reclaim £716 million since 2015. Figures show that the number of claims is a fraction of the number of withdrawals made (in 2020 a reported 38,000 official reclaim forms were processed by HMRC, while over 600,000 people flexibly accessed their retirement pot for the first time). This suggests many people are unaware they have been overtaxed or do not know the process to reclaim, which includes completing one of the three separate forms. Over-taxation occurs when a pension investor accesses their retirement pot flexibly for the first time in a tax year, prompting HMRC to apply an emergency ‘Month 1’ tax code to the withdrawal. The individual has the option to

Interest rates have been very low for so long now that an inflation bounce could have a serious effect on people’s finances. Therefore, it makes sense to factor the potential for higher rates of inflation into financial plans. This potential for higher inflation means keeping anything other than the necessary amount in cash, i.e. sufficient funds to cover a few month expenses, will only see its value diminish further. Investment portfolios with a long term bias that will ride out any fluctuations in inflation rates are now more important than ever.

Impact of inflation on our savings

Easy access cash saving - 0.5% interest rate

What £100 today is worth with Annual Inflation rate of 1% 2% 3% 4% 5% 98 93 88 84 80 95 86 78 71 65 93 80 69 60 52 91 74 61 50 42

Year 5 Year 10 Year 15 Year 20

Source: Aegon

either fill out a reclaim form or rely on HMRC to adjust their tax position. This situation has occurred since the pension freedoms were introduced – the tax system has failed to adapt to the new flexibility of the pension regime and to date HMRC are not considering a reform.

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How we have helped clients Lowes Consultant Craig Moffat talks about one of the ways in which Lowes has been able to help clients over our 50 year history. PLANNING

Independent Financial Advice is only for the very wealthy Many Lowes clients are ordinary people working and saving hard for their future, who want help building their wealth over time, or who are approaching retirement and want help with managing their wealth going forward. In particular they want to ensure they don’t run out of money, as well as undertaking tax and inheritance planning, which are complex areas and affecting more and more people. We don’t talk about money We are often reticent to talk about our financial affairs – even with our partners and loved ones – and yet money is one of the most important areas of our lives. Too often over the years we have been asked to help someone who has been bereaved of their spouse/partner and is without a full picture of their finances and whether they have sufficient to pay their bills going forward. Sitting down as a couple and having the benefit of an Independent Financial Adviser address all your financial and wealth issues, can not only make sure your money is working in the best way for you but will do away with this kind of uncertainty. I’ll do it tomorrow Independent studies, as well as our own experience, categorically show that the sooner you take action to seek Independent Financial Advice, the quicker and larger your wealth can grow. One study by Royal London and the International Longevity Centre found that those taking financial advice benefited from a wealth uplift of close to £50,000 over non-advised savers over a decade. If that’s not a reason to take Independent Financial Advice we don’t know what is. For the past year we have not been able to run our seminar programme as we would have wanted but hopefully, with the easing of restrictions imposed due to the pandemic, we can once again start to present to potential clients. Lowes seminars facts and figures (since 2005) Number of seminars - 135 Number of attendees - 8,391 From these seminars we have welcomed 1020 households as clients Over 99% of seminar attendees felt that their time was well spent

IT MAY SEEM OBVIOUS TO SAY, BUT ONE OF THE main ways we have helped clients is to introduce them to Independent Financial Advice. We have been running our introductory seminars since 1984. Over the years we have presented to thousands of people who wanted to know more about how they could better take control of their finances, investments and savings and make them work towards their goals in life, whether that is creating wealth for retirement, school fees, or other ambitions. Feedback from attendees nearly always describes it as time well spent. Many of our clients have joined via the seminars, and some have said it was the best thing they have ever done for their financial wealth. Even those who have managed their own investments for a while, because as portfolios grow larger, as they should over time, they can become less easy to manage successfully. One of the most surprising aspects when we present is learning why people have not considered taking professional financial advice earlier. There are some that stand out. Financial advice is too expensive Like all professional services, Independent Financial Advice has a price to it but many people are surprised to find that it is not as ‘expensive’ as they may have been led to believe. When put into perspective in terms of the service being delivered – financial peace of mind being top of the list, alongside ongoing wealth management, pensions, tax and estate planning advice, and others – most of our clients see it as value for money. I have always self-invested and can look after my own money Research from mutual assurer Royal London and the International Longevity Centre UK has proved that individuals who take professional financial advice not only feel more informed, they are also financially better off by more than £47,000 over a ten-year period than their non-advised peers.

If you know of anyone you feel would benefit from Independent Financial Advice and attending one of our future seminars, please have them call 0191 281 8811 for further details. As for many others, it could be the one best decisions they make for their financial wealth.

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SURVEY

Client Survey 2021- the results

AS PART OF OUR CONSTANT ASSESSMENT OF OUR service and where we might improve it for our clients, every two years we undertake an in- depth client survey, asking you to let us know your views. We have recently completed out 2021 survey with over a third of advised clients responding to provide their views and feedback. Thank you to everyone who responded to our questionnaire; your time and comments are very much appreciated. In this year’s survey – coming as it does in our 50th year and after 18 months of unprecedented interruption and uncertainty in all our lives – we have seen our standing with clients rise even further. In almost all the key areas

you have rated our service higher than in our 2019 survey. Two highlights for us are our investment advice which 97.15% rated highly, and also the clients who would recommend our service to their family friends and colleagues, which has gone up from 95.78% to 97.06%. Independent Financial Advice is by its nature a personal service so we are very pleased to have scored so highly with so many of our clients. We won’t be resting on our laurels but will continue our efforts to improve our performance, always looking to do the best for our clients.

Clients who rate Lowes as ‘very good’ or ‘good’ in this year’s survey

Level and quality of contact 96.34%

Staff helpfulness 98.48%

Depth of knowledge 97.90%

Integrity 97.54%

Client service 96.49%

Investment Advice 97.15%

Professionalism 97.83%

Client survey comments:

Over 97% Clients who would recommend Lowes to family, friends and colleagues and agree with the Lowes philosophy of “where personal finances are cared for personally”

I feel confident that every aspect I have to discuss with my finances will be dealt with professionally - very reassuring. So much appreciated during these worrying times. Ms. B. Williams

I would recommend Lowes services to all my friends. They are professional, helpful and reliable. I have been very happy with the service I have received. Ms. D. Heaney

You have looked after our modest investments with care and expertise for as long as you’ve been in business. We are very happy for this to continue. Thank you! Mr. & Mrs. I. Willson

Average star rating 4.66

Thank you to all who participated!

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SPOTLIGHT Lowes ‘Preferred’ plan maturities WHILST WE WERE DISAPPOINTED WHEN produced a 1.42% return, the minimum total return delivered by these Investec investments was 14% (after

INVESTEC Structured Products pulled out of the retail market, many of its plans continue to mature providing investors with strong returns in flat and falling markets. Over the past few years, Lowes had teamed with Investec to produce a rolling range of successful joint products, namely the 8:8 Plans. The table below shows the performance of the Lowes ‘Preferred’ structured products most commonly held by our clients, which matured in the second quarter of 2021. During this time, eight of the plans ‘preferred’ by Lowes which matured were Investec products. Six of these were the 8:8 Plans (Issues 2, 3, 5, 6, 9 and 10) specifically designed to provide investors with positive returns in unpredictable markets. Compared to the underlying index, the FTSE 100, which at best

two years) and the maximum 31% (after 4 years). As can be seen the returns across all products produced well in excess of their underlying indices. The exception was the Société Généralé plan which simply returned investors’ capital, a function of it being a slightly riskier, dual index product. Lowes has now worked in collaboration with Mariana, our partner on the 10:10 Plans, to offer a new range of 8:8 Plans, both to our clients and the wider retail investment market. If you know anyone you think could benefit from knowing about Lowes ‘Preferred’ plans, please show them this magazine, refer them to Lowes.co.uk or put them in touch with us.

Maturity Date

Term (Years)

Underlying Change

Plan Gain

Provider

Underlying

Société Générale Investec Investec Investec

FTSE 100 Index and EURO STOXX 50 Index

12/04/21

6

-2.83%*

0%

19/04/21 22/04/21 29/04/21 10/05/21 19/05/21 24/05/21 03/06/21 07/06/21 07/06/21 07/06/21 17/06/21 28/06/21

FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index FTSE 100 Index

3

-4.34% -1.48% -6.44% -4.16% -6.97% 1.42% 0.03% -5.93% -5.93% -3.47% -2.77% -6.17%

24% 20% 15% 23% 28% 18% 20% 26% 31% 16% 14% 23%

2.5

2

Walker Crips

3.5

Mariana

4

Walker Crips

2.5 2.5

Investec Investec Investec

4 4 2 2 3

Walker Crips

Investec Investec

* worst performing index - FTSE 100 Index

1 2 3 5 6 7 9 8 4 7 6 4 8 1 9 5 3 2 9 5 8 3 2 4 1 6 7 2 3 1 9 8 6 7 4 5 4 7 5 1 3 2 8 9 6 6 8 9 7 4 5 2 1 3 5 4 6 2 9 8 3 7 1 8 1 2 6 7 3 4 5 9 3 9 7 4 5 1 6 2 8 Grid n°9165 medium

Sudoku solution We hope you enjoyed the Sudoku puzzle we published on page 3 of this issue of the Lowes magazine. Here is the solution to the grid.

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SPOTLIGHT

Spotlight on Lowes staff

JACKIE SCOTT HEADS UP THE LOWES Technical department.

“Our job is to work with the Consultants to find the right solution for each of our clients and put their recommendations into writing,” she says. “We’ll discuss things with the Consultant and do any necessary research and then we will write the letters and documents that are given to the client. We try to do it in a way that makes everything we write easy to understand for the client, without the industry jargon, in language we would understand if we weren’t doing the job every day.” If there is a bane in Jackie’s life it is the number of standard paragraphs that have to go into the documents to ensure all the necessary regulation is covered off. “Sometimes this makes the documents so thick and I feel for the clients having to read them. But we make sure they have all the information they need to understand the advice we are giving in as readily accessible and as easy-to-read a format as we can.” Jackie is another longstanding member of the Lowes team. She joined the company in 1995, as her first full-time job, working first in the Administration department before transferring into the Technical department in 1999. She left for a period of 15 months but when she heard the Head of Technical job was open, she came back eagerly. “That period away showed me what a great place to work Lowes is. People say it’s like a family and that’s true. It was more so back then when the company was smaller, when everyone knew each other. But even now, with nearly 100 people, everyone is so friendly and there is a great feeling of camaraderie, and we have a really good social side. It’s why so many Lowes people stay Lowes people for years.” The Technical department consists of eight people, including Jackie, and alongside working with the Consultants on their reports, the team regularly reviews the products in the market. “We don’t look at pensions or structured products, which have their own specialist departments, but there are still a lot of products out there and we analyse them, looking at what they offer, their charges and terms, finding the ones that would suit and be best for Lowes clients.” Asked if she had a magic wand and could change any part of her job to make her life easier what would it be, she says: “I’ve really wracked my brain on this. I’ve been doing the job for a number of years now

and I have a great team around me and the support from other departments and people in Lowes, so everything runs relatively smoothly. “If there is anything, I would like a piece of software that could automatically pull in all the information I need, from all the different providers I have to go to, using all the different passwords, into one place. That would save a lot of time. That would make my life easier. But I’m not holding my breath on getting it.” But when asked what she enjoys most about the job, Jackie comes back quickly on that question: “It’s when we have a complex case and we’re discussing it with the Consultant and we come up with an answer, which may be something that no-one has thought of before, and that gives us the solution for the client. That is a really satisfying feeling and what I like most about the job.”

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DOUG’S DIGEST

INFLATION, OR HOW MUCH THE PRICE OF A BASKET of goods and services rises each year, is one of the main reasons people need to invest. We have discussed inflation here before, and how the figure declared by the Office of National Statistics is likely to be very different to the figure experienced by each of us in real life, but it has been the rate at which inflation is increasing that has made it the hot topic in many recent economic reports. At the time of writing the Consumer Prices Index (CPI), the government’s chosen measure for inflation, sits at 2.5%, up from 2.1% the previous month and just 1.5% in April. Before last month it was almost two years since it has been above the 2% target set by the government, and it is a sharp increase since August last year when inflation was only 0.2%. More importantly, it is expected to increase further from here. A little inflation is a good thing for investors. Rising prices tends to mean there is more demand than supply, so if businesses can increase production to meet that extra demand then at the same time they are going to increase their profits, which in turn benefits investors in that company. Inflation can also be beneficial for borrowers – including governments who have had to borrow heavily over the last year to pay for furlough schemes and increased benefits at a time when their tax income was falling. If the repayments are fixed, while inflation is causing our incomes to rise, then the percentage amount of income used to maintain that debt reduces over time. Those who have had a mortgage to buy their home will have seen this, where the monthly repayments were a large proportion of their income to start with, but were more easily managed after 25 years. The worry at present is how quickly inflation is rising, and more importantly how quickly it will continue to rise in the coming months. Whilst a little inflation is a good thing for the economy, too much can be damaging. If prices rise too quickly then people have to spend more on essentials and have less to spend elsewhere, leading to falls in demand. Also, people demand higher wages to cover their increasing costs, which in turn causes costs to rise, leading to a spiralling problem if allowed to go too far. So is inflation becoming a problem? Well, the buzz-word at the moment is “transitory”. Is the rise in inflation transitory and will it fall back some time soon, or can we expect higher levels of inflation to be with us for an extended period? Inflation rising

The important thing to remember is that the rate of inflation measures the increase in prices since the same time last year, and last year we were in

unprecedented times. Whilst we all had to continue buying essentials such as food a lot of other purchases, such as fuel for transport,

fell dramatically as we all stayed at home. It is this lower base for the cost of the basket of goods last year which will cause the higher inflation figures we will be seeing in the coming months. It is interesting to note that whilst inflation in June stood at 2.5% for one year, it was only 3.15% for two years, giving an annualised rate of 1.56%. That is still below the government’s target of 2%. As we move forward through the next twelve to eighteen months, prices will once again be compared to more normal levels and a truer picture of inflation will emerge, with rates expected to reach their highest levels later this year before falling away. It will only become a problem if we see price inflation leading to a sustained increase in wage inflation also. We are starting to see signs of that, but whether this is a short term or long-term trend remains to be seen. The events of the past year have seen people re-assessing careers and working lives, with some deciding to take early retirement for example. This has led to a tightening of the work-force, putting people in more demand and able to ask for higher wages as a consequence. As government support schemes come to an end, businesses will have to assess whether they can afford to bring all their staff back onto the payroll and this is sadly expected to lead to some job losses. How much of an effect this will have is unclear, but in the UK we have a second potential factor as a result of Brexit and the pandemic. Last year’s lock-downs saw migrant workers leaving rather than staying in the UK with no work. It is not yet clear if they will return as restrictions are lifted, or decide that the changes introduced following Brexit now make the UK a less attractive destination. Migrant workers form a large part of the workforce in the UK, especially in certain industries such as agriculture, which could have a big effect on costs. So, as we all breathe a sigh of relief as restrictions on how we live and work come to an end, inflation is just one topic that shows the full effects of the past year will not be known for some time, and something we will certainly be keeping an eye on.

UK CPI Inflation vs Target Level

113

112

UK CPI Basket Value Increasing at 2% Target

111

110

109

108

Source: Office for National Statistics.

107

Jul 19

Jul 20

Jun 19 Jun 21 Despite recent sharp rises, the price of the basket of goods used for CPI is still below where it would have been if it had increased by the UK target of 2% p.a. Aug 19 Sept 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21

Lowes Financial Management is authorised and regulated by the Financial Conduct Authority. Visit: www.Lowes.co.uk | Call: 0191 281 8811 | Email: enquiry@Lowes.co.uk

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