Lowes Magazine Issue 120

Issue 120

“Man cannot discover new oceans unless he has the courage to lose sight of the shore.” Andre Gide

INSIDE TRACK Lowes wins Best Investment Advice Firm Award for third time WE ARE DELIGHTED TO ANNOUNCE THAT LOWES HAS been named Investment Advice Firm of the Year at the 2021 Money Marketing Awards for the third time in four years. We are exceptionally proud of winning this prestigious award for the third year in such a short space of time. It reflects the high level of commitment and expertise Lowes employs in our market analysis and identifying the best investments for our clients’ portfolios. The award is won through a difficult process that includes detailed submissions and an intense interview process in front of a panel of industry experts. The latest trophy will be displayed in Reception at Fernwood House, alongside the many others we have won for our Investment and Pensions Advice. We believe our award success stems from our ethos of providing the best possible Independent Financial Advice for our clients, as well as the dedication and professionalism of everyone at Lowes working on behalf of our clients.

Change in financial circumstances THE COVID-19 PANDEMIC has caused a significant rise in the UK’s financial vulnerability, according to new research from Royal London.

If your circumstances have changed for whatever reason and you need further advice or to speak to someone in confidence, then do contact your Consultant or call our office on 0191 281 8811, and we will arrange for someone to contact you. The mutual insurer found that around 30% of people now feel more financially vulnerable than they did in March 2020, at the start of the pandemic in the UK. This could be down to reduced income by being furloughed, job loss, helping out family and so on. With the support of Lowes Consultants, our clients should be able to feel confident in their financial situation.

Having enough money in retirement

TWO IN FIVE PEOPLE RETIRING THIS YEAR ARE worried they won’t have enough money to last through retirement, according to research by abrdn. Being aware of how much you will need to meet your retirement goals, how much you can afford to spend and how this could change as the years go on, as well as considering how to piece together different types of income options, is no small task. This is where Independent Financial Advice can help.

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: Sinuous sea fans (Eunicella tricoronata) growing on a rock Photo: Shutterstock

INSIDE TRACK

DEMAND FOR COMPLEX TAX AND ESTATE PLANNING advice is expected to increase over the next five years. In part this is because the market is witnessing an exponential growth in the group of retirees whose family situation is more complicated in respect of their financial needs and planning. This can be due to, for example, extended families, children from previous marriages and a higher incidence of divorce than in the past in older age groups. This group of retirees currently is deemed to account for a third of the people seeking advice but it is expected to be the largest group by 2035. Typically, issues that arise concern tax, trusts, wills, gifting and family communication. If this is an issue for you or someone you know, Lowes Consultants are experienced in dealing with the complex family financial and inheritance issues and can help.

Planning is growing more complex

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

Gross Rate

Contact

Unrestricted instant access accounts Online 1 £1 +

Tandem

Instant Access Savings Account

0.55% www.tandem.co.uk 0.50% www.fordmoney.co.uk

Online

£1+

Ford Money

Flexible Saver

Accounts with first year bonus / restrictions Online £1+ Fixed rate bonds Online £1,000 - £1,000,000 Gatehouse Bank Online £1,000 - £1,000,000 Gatehouse Bank Cynergy Bank

Online Easy Access Account (Issue 42)

0.66% 2

www.cynergybank.co.uk

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

1.51% 3 1.75% 3 1.81%

www.gatehousebank.com www.gatehousebank.com

Online

£1,000 - £100,000

JN Bank

www.jnbank.co.uk

1 Once open, the account can be managed through the Tandem app and via email. 2 Rate includes a bonus of 0.36% for the first year. 3 This is the Expected Profit Rate (EPR). 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 August 2021 Retail Prices Index (RPI) 4.8% Consumer Prices Index (CPI) 3.2% Sources: Providers’ websites, Office for National Statistics, www.thisismoney.co.uk, www.moneysupermarket.com, www.moneyfacts.co.uk 14/10/2021. All accounts subject to terms and conditiwwons.

Grid n°439388506 hard

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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 13.

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

2

6 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

1 2 3 4 5 6 7 8 9

9

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

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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 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 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

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Follow us for company updates

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

8

2 3

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

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

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

@LowesFinancial

@LowesFinancial

Lowes Financial Management

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6

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

Source: www.printmysudoku.com

A number may not appear twice in the same row or in the same column or in any of the nine 3x3 subregions.

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 ave all the free su okus you need! 400 new sudokus every week. Make your own free printable sudoku at www.PrintMySudoku.com

COMMENT

Pricing pressure YOU WILL BE AWARE THAT ENERGY PRICES are soaring – if you haven’t yet felt it, you will. If you do the weekly shopping, you’ll have felt the impact of price increases there and have no doubt seen signs of some shortages beyond

There are understandably, those that feel strongly that civilization’s efforts should be focused on trying to repair our own planet, rather than trying to find the next place to live. On that front, I am hoping also that governments of the world will do our planet proud as they meet in Glasgow for the 26th United Nations Climate Change Conference between 31 October and 12 November. The evidence is overwhelming that we need to change how we utilise the Earth’s resources if we are to tackle climate change and sustain an ever-growing human population. This subject has become a major focus of investment houses with 129 ‘responsible investment funds’ having been launched in the past four years. With a plethora of terms banded about – ethical, sustainable, responsible, ESG – which can mean different things to different people, unfortunately, there have been found to be incidents of ‘greenwashing’ where marketing material over eggs the responsible investment credentials of a fund. If you wish to consider a more ethical bias for your investment portfolio, be sure to talk to us – we have two discretionary managed, ethical portfolios which undergo regular screening by our investment committee to ensure they are the ‘right shade of green’.

those at the forecourts. These are all going to have an impact on you. We went to press with this issue before the release of the latest inflation figures but even without them, look at the figures for the twelve months to the end of August in the middle of the previous page. Inflation is a threat to your wealth and hedging out its impact is one of the primary reasons why people need to invest. Whilst it constantly nibbles away, often going unnoticed, it is currently taking big bites out of peoples’ savings. Even if it does only peak short term, what it takes won’t ever be given back. A year of 4% inflation and 1% interest sees 3% of deposit capital gone, for no benefit. That is why we must invest. When it comes to investment advice, I’m very proud to say that we are really good at it. You don’t have to take my word for it, it has been the view of successive panels of judges in the annual Money Marketing Awards who have identified Lowes as the Best Investment Advice Firm in the UK for the third time in four years. And then there’s the 97% of respondents to our last client satisfaction survey who rated our investment advice to be ‘good’ or ‘very good’. While focused on investment, there is no doubt that our success is thanks to the various constituent parts of the Lowes team working together and acting in the best interests of our clients. It also is testament to the benefits of Independent Financial Advice, a philosophy that allows us to use investments from across the market in our client portfolios. I hope all of this provides an extra layer of confidence that your personal finances are in the very best of hands. In other news, William Shatner has finally boldly gone where few men, and none as old as him, have gone before, but many will follow. The space race is definitely on! The world’s billionaires – Branson, Bezos and Musk – are turning science fiction into science fact. It won’t be long before space related investment opportunities are innumerable, and I can see potential for such to turn into another historic bubble akin to the Railway Mania of the 1840’s.

Ian H Lowes, Managing Director

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Lowes.co.uk

TAX

Government policy and tax changes The Government introduced new legislation to ensure state pensions were uprated by 2.5% in recognition of their manifesto promise and commitment to pensioners. The Government said the triple lock would be re-instated in 2022. Increase in dividend tax

THE GOVERNMENT RECENTLY INTRODUCED THREE significant changes to national insurance contributions, State Pension calculation and dividend tax. One of the benefits of Independent Financial Advice is to create financial plans to help weather any adverse market events, changes to government policy or tax hikes and we would expect Lowes clients to be sufficiently protected in terms of their finances not to be overly affected by the changes. However, given the breadth of change, they are likely to affect all our clients in some way and are worth summarising here. National Insurance hike For working adults National Insurance (NI) contributions have been increased by 1.25%. This applies to employer contributions also. Billed by the Government as a new ‘Health and Social Care Levy’, the hike is intended to raise £12 billion a year over the next three years in an attempt to put money into the NHS post the pandemic and to pay for social care reforms. The tax increase will come into force in April 2022 and will be paid by all working adults. An important change to note from current NI arrangements, is that this will include those above state pension age who are exempt currently from National Insurance contributions. Reported figures show that those earning a base rate of £24,100 will pay an extra £180 over the course of a year, while those earning £67,100 will pay an additional £715 more a year. It is estimated that the highest earning 14% of people are expected to foot half the bill. Triple lock suspension The triple lock basis for the annual increase in State Pension payments has been suspended for a year. Under the triple lock the annual payment increase was set as the higher of earnings, price inflation or 2.5%. The earnings figure has been dropped for a year, moving instead to a double lock, based on price inflation or 2.5%. At time of writing, inflation is above 2.5%. If this remains the case, the state pension increase for 2022 will based on the inflation figure. Sticking rigidly to the State Pension triple lock formula would have granted state pensioners an unrealistic increase of around 8.8% at a time when earnings are still recovering from the pandemic. The triple lock had been tweaked in 2020 to ensure that pensioners received a fair deal, at a time when inflation was 0.5% and earnings were falling due to the furlough scheme.

The Government’s announced increase in the dividend tax rate by 1.25% will affect investors, and the shareholding company. Initial figures suggest the increase could raise as much as £600m a year. The planned increase will come into force in April 2022, for the 2022/23 tax year – see box for new tax rates. In an aim to start to equalize the tax positions of company directors and the employed, in 2018, the Government reduced the dividend allowance (the amount of dividends able to be received tax free) from £5,000 to £2,000, which increased the tax for those directors who were able to pay themselves low salaries (within the tax-free personal allowance) and higher dividends and therefore pay lower amounts of income tax overall. Looked at in more detail, the increases only really become costly for company shareholders and those with significant portfolios outside of ISAs and Pensions, where tax is not paid on dividends, and those receiving dividends over £2,000 allowance. The government suggests that of those people who receive income via dividends outside of ISA’s, 60% of them will not see a rise in taxation in April next year. With this hike, anyone needing an income from their investments should look to maximises their tax efficiency. This means, where possible, making use of all of the available allowances, including the £2,000 Dividend Allowance, the £12,570 Personal Allowance, £12,300 capital gains allowance, £20,000 ISA allowance, £40,000 Pension Annual Allowance and potentially the VCT Allowance. For those where dividends form a major part of their income, ultimately this hike will see them pay more tax.

New dividend tax rates from April 2021

Tax rate

Old rate

New rate

Basic Rate Higher Rate

7.5%

8.75% 33.75% 39.35%

32.5% 38.1%

Additional Rate

If this is an issue that effects you, please call us on 0191 281 8811.

5 Lowes.co.uk

LONG TERM CARE

Help with Long Term Care costs

REVENUE RECEIVED BY THE GOVERNMENT FROM THE recently announced increase in National Insurance contributions under the new ‘Health and Social Care Levy’ is to be split two ways: a proportion will go to the NHS and the remainder (estimated at £5.2 billion) will be used to help fund social care. This move ends the more-than-a-decade long wait for the Government to clarify the costs that individuals will need to meet for their social care in their lifetime. But, a solid financial planning strategy will still be needed. Further details are awaited on the new arrangements but for those in England it includes a cap of £86,000 on contributions towards ‘personal’ care. However, room and board, if in residential care, will still need to be met by the individual. In addition, from October 2023, the new threshold for the amount of assets a person has before they have to fully fund their own care will be set at £100,000. It is currently £23,250. Those with assets of less than £20,000 will not have to pay anything for their care, while those with assets of between £20,000 and £100,000 will be means tested. The cap will limit people’s exposure to the horrendous costs that can be involved in long term care. It may also encourage more insurers to enter the market. But individuals are likely to pay out more than the headline £86,000, due to the accommodation and food costs that are not covered. This means there is much more to anticipating and planning for the potential need for social/long term care. This could include the best approach to planning for ‘normal’ retirement, while factoring in scenarios where care costs might need to be paid. In this respect we would look at utilising pensions, investments, housing wealth and other assets. The financial plan should also be reviewed periodically throughout retirement. Individuals will also have different levels of financial need. It is reasonable to assume that those who have the means to do so may wish to have some control over their choice of care – including type, location and quality. It makes sense to set some money aside for additional costs.

Lasting Power of Attorney Lowes Consultant Chris Milsom says: Those planning for possible future care should consider putting in place a Lasting Power of Attorney so if they are unable to make sound financial decisions, a trusted individual or individuals can do so on their behalf. The process does not need to be particularly time-consuming nor complicated, and taken early can save a lot of heartache. Lowes Consultants have years of experience of dealing with social care planning, setting up trusts and facilitating Lasting Powers of Attorney. If you would like to talk with a Consultant or know someone else who might benefit from doing so please call 0191 281 8811, for an appointment. Balanced against the need to provide for future care costs is the question of what happens if it is not needed? This is where a careful assessment of the value of an individual’s estate – both today and its predicted value in the coming decades – is necessary. Where the total estate exceeds the IHT threshold and money is not needed for care, a significant proportion could be lost to IHT rather than being passed on to family members. In this situation a trust can be used to keep money outside the estate for IHT purposes after seven years, or by regular payments which will fall outside the estate immediately, but also enable the individual to draw payments from the trust if needed to fund care. If not needed, the assets can be passed to beneficiaries. When a person starts to need care, it can be an incredibly difficult time for them and their family. Having open conversations about the issue earlier rather than later, and before a crisis hits, while it cannot solve all issues can at least save families from some of the financial pressures at an otherwise very stressful time.

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Lowes.co.uk

50TH YEAR CELEBRATION

Lowes: A ‘family’ firm providing personal service

WE ARE EXCEPTIONALLY PROUD AT LOWES TO HAVE reached our 50-year anniversary – a rare achievement for an Independent Financial Advice firm. In our view there are two fundamentals to our success and longevity: providing the best advice and care when looking after our clients’ financial interests by adhering to our philosophy of being a firm where ‘personal finances are cared for personally’; and being a company that people want to work for, where they feel part of a team that is making a difference to people’s lives. These were the goals of our founder Ken Lowes when establishing the company in 1971 and they have been our ethos for the past 50 years. When Ken set up Lowes Financial Management he was looking to support his family but also to find a way to give investors and savers access to better advice. The advice models of the day did not sit well with him and he felt there could be a far better model than the ones clients were being offered by the market at the time. This is why he established Lowes as an Independent Financial Advice firm, as it meant he could offer investments and products drawn from across the whole market, rather than being restricted to a limited number of funds, pensions and savings products. This has benefitted tens of thousands of Lowes clients over the years and it is a principle we still hold to today as we believe it delivers the best results for our clients. Alongside this, Ken knew that to build the company he needed a great team around him, people who thought the same way that he did and wanted to do their best for the firm’s clients. Over the years we have applied the same approach as we have recruited and grown as a company. 50 years on from those early days when the company comprised of just Ken and his PA, Lowes now consists of around 100 people – our Consultants, technicians, support staff, pensions, investment, administration, operations, marketing, accounting, IT and structured products teams, not to forget our receptionists and our board members. Whether their roles are client facing or behind the scenes, they are part of the bigger picture and the overall service we provide for our clients. It is their enthusiasm and dedication to delivering the very best service for our clients that has helped make Lowes the company it is today.

If you know anyone who you think could benefit from our investment management or other financial planning services, please put them in touch. They can call 0191 281 8811 and we will arrange a no obligation consultation at our cost. We pride ourselves on our client service, depth of knowledge, professionalism, integrity and approachability. In our latest biennial client survey, in which we ask our clients to rate us over a range of key areas, over 97% of clients said they would recommend us to family, friends and colleagues. For us that is the greatest recognition of our performance and our success as a company. Family feel We have been lucky also to create a family feel to the company even as we have expanded over the years. Some of our staff have been with us for 25 years and more, which we think says a lot in this day and age. Some of our clients have been with us for the same length of time – and longer! Our Consultants say they have known some clients so long – and their children and their grandchildren – that they seem more like friends than clients. And over the years clients have shared their stories with us – from bearing the Olympic torch when Great Britain hosted the 2012 Olympics, training dogs for people with disabilities, publishing a first novel, to sailing across the Atlantic ocean. As Lowes has grown over the years, increasing the number of our clients we serve, so the investment and savings market has become more complex and sophisticated and the amount of regulation has increased. This has seen us bring in the necessary personnel to ensure we provide the level of professional service on which Lowes has built its reputation. We have also been building a name in the structured product market and Lowes is now recognised as a leading authority on this market, with our opinion and data being sought by national and industry publications. It is a specialism that has benefitted Lowes clients too, with many taking advantage of our insight to invest in the ‘Preferred’ Plans as well as the 10:10 and 8:8 plans which Lowes had a hand in designing, and which have helped develop the structured product market. We have also picked up our fair share of awards for investment, pension and client service in our 50 years as an IFA firm. Ultimately, of course, it is our work with clients, helping to grow and maintain their wealth for their personal goals, family and retirement that is at the core of what we do. There have been numerous instances over the years where we have helped people through both happy and difficult times.

7 Lowes.co.uk

50TH YEAR CELEBRATION

Lowes’ charity challenges

NEW Team

OVER THE YEARS LOWES AND ITS STAFF HAVE BEEN involved in many charitable events and challenges. 1987 saw our first garden party and raffle, raising £6,000 from clients and £10,000 donation from Lowes to provide a Minibus for St Oswald’s Hospice. Lowes staff have taken part in some hair-raising events for charity. In 2006, ten members of the Lowes team crossed the river Tyne on a zipwire, from the top of the famous Tyne Bridge to near the Millennium Bridge, raising money for the Anthony Nolan Trust, which supports leukaemia patients. The Lowes team consisted of ten members of staff- with Managing Director, Ian Lowes, heading the charge. In 2014, a small team from Lowes - including Jackie Scott and Ian Lowes - bungee jumped from a 330ft crane above the river Tyne, raising money for Tiny Lives, Rape Crisis, and the Bobby Robson Foundation. In early 2021, members of staff from Lowes Financial Management decided to collectively trek the virtual distance across the Atlantic Ocean - starting at Fernwood House, Newcastle and covering the same distance as it would take to end up at The Empire State Building in the centre of New York City. This was planned to be a total of 3,332 miles. However, by the challenge’s end, Team Lowes had clocked up a total distance of 3,880 miles! As a result Lowes Financial Management raised £19,400 for Mind. In September 2021, thirteen members of staff from Lowes took on the Hadrian’s Wall Charity Challenge Walk in aid of Heel & Toe Charity – including Belinda McFarling (Compliance Assistant) and Michael Stowe (Consultant) pictured above – raising over £8,000! Also, to mark our 50 th anniversary, we are running a referral scheme, with a pledge to donate up to £50,000 to charity. See the box below for more details. 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.

Longstanding Lowes people WE ARE DELIGHTED THAT SO MANY OF THE LOWES team have stayed with Lowes for so many years. Their time with us, we hope, says much about Lowes as a company. Here are some of our current people and when they joined the company. Investments – Doug Millward, Investments Manager (joined 1996) Pensions – Barry O’Sullivan, Pensions Technician (joined 2007) Consultant Support – Linda Payne, PA to Chris Milsom (joined 2006) Administration – Christine Craig, Administration Team Leader (joined 2007) Compliance – Belinda McFarling, Compliance Assistant (joined 2001) Accounting – Kate Wigham, Accounts Supervisor (joined 2004) IT – Eddie Hindmarsh, Data Management & IT Support (joined 1989) Consultant – Rob Newton (joined in 2003) Marketing – Adele Baillie, Marketing Manager (joined 2006) Technical – Jack Scott, Technical Manager (joined 1996) WE ARE NEVER ONES TO SIT ON OUR LAURELS, believing we can always improve upon the service we provide to our clients. To this end we have recently established a dedicated Client Servicing Department. This team consists of a group of highly qualified, knowledgeable, and experienced individuals who are dedicated to help provide Lowes personal service and is tasked with providing client support and monitoring portfolios, as necessary. Our Client Servicing team consists of Nina Hughes, Rob Earl, Kristofer Armstrong, Alex Molyneux, Keiran Menhams, Anne-Louise Hudson, and Lisa Porrelli. This new team is being set up in addition to Lowes award- winning investment, technical, administration and support teams, who continue to work hard behind the scenes to monitor and manage your investments.

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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Lowes.co.uk

PLANNING

How we have helped clients

Lowes Consultant Michael Stowe looks at the decisions we need to make at retirement, in particular how we fund our future income

APPROACHING THE END OF OUR WORKING LIVES, we need to make decisions about how we are going to withdraw funds from our pension(s), savings and investments to fund our retirement income. For many people, the best way to have an adequate income in retirement is to save gradually over the whole of their working life. How much people can save and for how long will depend on their financial circumstances and where Lowes Consultants are involved, we can help our clients to choose the best savings and investment vehicles and tax wrappers for them at the time. This could be pensions, ISAs, LISAs, investment bonds, and so forth. When it comes to taking our money in retirement, you might think that the decision making becomes easier. However, since the Pensions Freedoms were introduced in 2015, the decision- making process in fact has become far more complex. Advising clients on how to draw money in the right way from the right source at the right time, is where Lowes Consultants can ensure mistakes aren’t made and, for example, unnecessary tax bills are not incurred. But financial awareness is just part of the overall picture. Emotional preparedness is a vital factor to think about and can play a huge part in the financial considerations. Planning your retirement, knowing when that might be, and also knowing what you want it to look like, will considerably influence the financial profile of your retirement. The big lifestyle changes that retirement transition brings can be unsettling, and particularly so if you don’t have a plan in place. A well-developed retirement strategy will help give you the confidence that everything is arranged to help deliver the retirement that you want. Which assets to use first for income? Pensions may seem like the obvious place to start when withdrawing money for retirement income but since the pensions freedoms, a pension could be the last element of your savings that you want to touch. The changes to death benefits mean personal pensions can be passed on to your beneficiaries free of inheritance tax and income tax if you passed away before the age of 75. Post 75 beneficiaries can draw money from the bequeathed pension but will pay tax at their marginal rate of income tax.

Money invested in an ISA, on the other hand, is subject to inheritance tax. If your estate is likely to be over the £325,000 nil rate band, or £500,000 including the residential nil rate band where relevant, then using your ISA investments for tax free income may make sense. Any cash savings currently will be losing value thanks to inflation, so after maintaining some emergency money, using cash first again may be a sensible option. The order in which assets are used for retirement income will depend on the individual’s circumstances.

Pensions withdrawals How you draw money out of your pension is another area that matters, says Lowes Consultant Daniel Waugh. A full state pension is worth £9,339 a year. Thereafter, individuals usually have a personal pension, a final salary pension or a combination of both.

If drawing from a workplace pension proves to be a viable option, then there are various methods of drawing money from those savings. For example, if you have a defined contribution scheme, you can select a product that pays a fixed amount every month (an annuity), take a more flexible option where you can vary what you draw but the amount is not guaranteed (known as drawdown) or take cash as a lump sum. You can also choose a mixture of these approaches, again depending on needs and circumstances. Savers who have a final salary (defined benefit) pension, can choose to take their whole pension as a regular income (sometimes with a cash lump sum), often upgraded in-line with inflation, or after taking financial advice – for pots over £30k – they can choose to transfer their pension to an alternative arrangement. Final salary pensions can have different sets of rules around death benefits, so if you wish to pass on your pension to a beneficiary you may need to transfer the money into an appropriate pension vehicle.

9 Lowes.co.uk

TAX

Tax planning needed as IHT numbers rise

LATEST FIGURES SHOW THAT GOVERNMENT revenues from Inheritance Tax (IHT) have risen again – by £500 million year on year, bringing in 2.1billion for the Treasury from April to June 2021. The rise is in part because 2020 figures were affected by the pandemic which reduced HMRC’s ability to contact estates for tax payments, but also because the freeze on the nil rate band and the residence nil rate band at the last Budget is dragging more and more people into paying IHT. The need for IHT planning is greater than ever. There are various options for IHT mitigation, ranging from the simple to the complex, which can be considered by families to help reduce their potential IHT liabilities. Your first port of call for advice should be a Lowes Consultant. But also important, is for families to plan ahead outside of financial considerations. Talking about inheritance can be one of the hardest topics to broach and many parents put off discussing the issue with their children.

Yet, family conversations around managing wealth in old age and passing it on to the next generation have never been so fundamental, particularly in a time when demographics show people are living longer but not necessarily in good health. In this respect, later life planning, including the potential for long term care, is now a pre-requisite of any structured financial planning, despite government recent proposals to cap the amount an individual will be expected to pay for care. This planning may never be needed but if it is, it is far better to have had the conversation and put a plan in place, so families can overcome the feelings of worry and know what is going to happen.

If you would like help with tax or later life planning, or know someone else who would benefit, Lowes can help.

10 Lowes.co.uk

TAX

Impersonation scams more than double

NEW FIGURES FROM UK FINANCE SHOW THE SERIOUS threat financial scams have become over the past year. Impersonation scams have more than doubled in the first half of 2021. This is a threat which is not going away anytime soon and can wreck lives. Hence, we feel it is an issue worth raising with clients again. In six months, 33,115 impersonation scam cases were reported, with criminals stealing £129.4 million through this type of fraud. In the same period last year there were 14,947 impersonation scam cases which led to £57.9 million being stolen. In an impersonation scam, a criminal pretends to be from a trusted organisation such as a bank, the police, a government department or a service provider. The criminal then tricks their victim into transferring money using a range of cover stories. These include claiming they need to protect an account from fraud, that a fine or tax needs to be paid or an erroneous refund must be returned. Criminals can get away with these scams by preying on people’s reluctance to say ‘no’ to a request for personal information from a stranger via email or text or phone calls because they don’t want to appear rude. Instead, research has found that people use phrases like ‘I’m not sure’, ‘I don’t think so’, ‘Let me think about it’, and ‘I can’t at the moment’. When criminals hear these phrases they use this reluctance as a way to win people over.

Should you be approached in this way, the advice from the Stop Fraud campaign, is as follows:

Stop: Taking a moment to stop and think before parting with your money or information could help keep you safe. Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you. Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud.

Investment scams Latest figures from the UK regulator, the Financial Conduct Authority (FCA), show that £570 million has been lost to investment scams in 2020-2021. Investment scams take many forms, such as cold calling, false websites and advertising on social media, most often tempting investors in with promises of high levels of return. They can be highly convincing. Our advice is to invest nothing before talking with Lowes.

11 Lowes.co.uk

INVESTMENT

Much Ado About… Quite a lot actually, says Senior Investment Analyst, Paul Milburn.

“To be, or not to be, that is the question.” (Hamlet) One threat to this would be if energy prices stayed higher for longer, although as we put pen to paper hopefully Russia is coming

AS WE HEAD TOWARDS THE END OF 2021 THERE remains a number of questions to be answered when it comes to the outlook for markets and the global economy. The latest growth projections from the Organisation for Economic Co-operation and Development (OECD) released in September suggest that the UK economy will grow 6.7% this year, fuelled by loose monetary policy such as very low interest rates, and fiscal policy, with governments appearing willing to spend to lend support. Whilst this figure is strong it should be placed in the context of the 9.8% contraction which we saw last year. Indeed, economic growth achieved to the end of June this year meant that the UK economy was still 4.4% smaller than at the end of 2019. The forecast growth of 5.2% for next year however, one of the strongest in developed countries, will go some way to putting the economy back onto the right path. For the US meanwhile the OECD forecast growth of 6% this year, with a more reserved yet positive figure of 3.9% in 2022. This follows a much shallower contraction of 3.4% in 2020. “We have seen better days.” (Timon of Athens)

to the rescue with regard to gas supply. Another threat would be if wage growth were to continue to rise for a prolonged period of time. Here in the UK the number of job vacancies has hit a new record of 1.1m, and with fewer unemployed people for each vacancy than before the pandemic, employers are having to offer higher wages to attract suitable candidates. “Uneasy lies the head that wears the crown.” (Henry IV) A more sustained period of higher inflation could be difficult to tackle for central banks if we see a continued slowdown in the economy. Whilst an interest rate rise or reduction in liquidity through the tapering of quantitative easing would help bring

inflation back in line, it could at the same time slow the economy further. This could potentially induce a phase known as stagflation, something which all central bank governors will be keen to avoid. “There is nothing either good or bad but thinking makes it so.” (Hamlet) And finally we have China. Trade wars having been put aside, for now, the authorities appear focussed internally and the transition to a more stable, domestically

As we moved through the third quarter however, we started to see economic momentum turn downwards. Whilst the high speed of recovery was unlikely to be maintained, the pace at which leading economic indicators are turning down has taken some by surprise. For example, in the US the Federal Reserve of Atlanta run a model called GDPNow. The is purely a quantitative

model which looks at different economic data sets to provide an indication for the current quarters’ growth, in this case the third quarter. On 30th of July the initial forecast was 6.1% on an annualised basis. By 2nd of September the forecast had slipped to 3.7% and as of 8th of October the figure stood at 1.3%. Whilst economic growth momentum shows signs of slowing, inflation and inflationary pressures continue to surprise to the upside. UK inflation is currently running at 3.2%, above the Bank of England’s set target of 2%. In his letter to the Chancellor, the Governor acknowledged that one of the key drivers of higher inflation were base effects, given how low the price of some goods and services reached last year. It was also recognised that the pandemic had caused demand and supply issues on a global basis. The logistics of shipping is perhaps a little more intricate than some recognise. We are now seeing many examples of bottlenecks at ports and a shortage of certain goods. This imbalance ultimately leads to a price rise for items in short supply. “Wisely and slow, they stumble that run fast.” (Romeo & Juliet) The argument as to whether these inflationary pressures are transitory or not rumbles on, with economists, investment houses and central banks divided. With regard to the latter, we have seen interest rate increases in countries such as New Zealand, Poland and Norway. In the UK meanwhile interest rates remain on hold, although the Bank of England are perhaps more hawkish than others. They acknowledge that inflation is likely to be in excess of 4% this year, however they expect it will return to target over their two year forecast horizon.

orientated economy and a ‘common prosperity’. Issues with property developers continue, although much of this is due the ‘three red lines’ legislation which was introduced in 2020. This included the limiting of leverage such companies were allowed to take. Whilst the Chinese government appear unwilling to save individual companies, they do want to protect those that may be disadvantaged, such as residents who may lose deposits already placed. There have also been crackdowns on financial software companies, internet/consumer technology, online gaming and after school tutoring. Whilst this has created short term repercussions around the Asian region, the action taken perhaps leads to their desired goals being met in the long term. A little heavy handed, maybe, but is that sometimes what is needed? “What light through yonder window breaks?” (Romeo & Juliet) Whilst there are clearly issues to contend with, it is important to take a step back and look beyond the noise. Economies are slowing, but from a rate of recovery which was always going to be unusually high after such a sharp contraction in 2020 for many nations. Forecast growth rates for next year still remain above longer-term trend rates. Whilst inflation has clearly been on the rise, these higher levels could yet prove transitory. Furthermore, part of the reason for the rise in prices is due to the increase in demand as we return to, hopefully, a more normal way of life. Perhaps we need to get back to an understanding where good news actually is good news, and not be so dependent on central bank emergency action(s) to get by.

12 Lowes.co.uk

Lowes Recommended Structured Product Maturities

THIS YEAR CONTINUES TO BE ANOTHER WHERE structured investments prove their worth, with many defensive and step-down, autocall plans maturing with substantial returns, despite the stock market being down over the investment term. Whilst the lower market position does, of course, mean that the maturity of the non-defensive equivalents is deferred for another year, the potential returns that will be paid increase for each year they are in force. Most of the plans we have recommended have extended, maximum possible durations allowing what we expect to be ample time to see them mature with market-beating returns.

The table below shows the maturity performance of the structured investments most commonly held by our clients, which matured in the third quarter of 2021. All of these were autocall / kick-out contracts utilising the FTSE 100 Index as the underlying. Six of the ten plans shown were co-created by Lowes and/or exclusively available to our clients. We have access to an exclusive range of similar investments, utilising counterparties such as Morgan Stanley, Citigroup, Société Générale, Credit Agricole and Goldman Sachs. If you would like to talk to us about adding more structure to your portfolio or know someone else who could benefit from our unique, tried and tested investment advice, please do not hesitate to get in touch.

Provider

Maturity Date

Term (Years)

FTSE 100 Change

Plan Gain

Investec

19/07/21

4

-5.24%

29%

Investec

29/07/21

2

-7.91%

14%

Walker Crips

02/08/21

2

-4.39%

17%

Walker Crips

04/08/21

4

-5.16%

26%

Investec

16/08/21

3

-5.33%

23%

Mariana

18/08/21

4

2.11%

30%

Investec

23/08/21

4

2.70%

26%

Investec

23/08/21

4

2.70%

30%

Walker Crips

06/09/21

2

-1.31%

16%

Walker Crips

22/09/21

4

-3.12%

26%

2 3 5 8 9 1 7 4 6 7 1 9 5 4 6 3 8 2 8 6 4 2 3 7 5 9 1 6 9 8 4 2 5 1 7 3 3 7 2 1 8 9 6 5 4 5 4 1 6 7 3 8 2 9 9 5 7 3 1 4 2 6 8 1 2 6 9 5 8 4 3 7 4 8 3 7 6 2 9 1 5 Grid n°439388506 hard

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.

13 Lowes.co.uk

SPOTLIGHT

CHRIS BROWN PROVIDES TECHNICAL SUPPORT to Lowes Consultant Gershom Chan but financial advice was not on his radar when studying history at university, he says. “It was only when I was talking to the father of a friend who was a financial adviser and who emphasised how rewarding it was to help people achieve their financial goals that I found out about it as a career. That was not how I had envisaged financial services and it piqued my interest,” he says. After graduating, he hand-wrote a letter to Lowes Managing Director Ian Lowes, enclosing his CV and asking about work at the company. “Ian interviewed me intensely for about half an hour but then I was offered a General Assistant job with Lowes.” It was a job tackling anything that needed doing in the building but it gave him a foot in the door and soon after he moved into the Structured Product department. He started studying for exams and after gaining his Diploma in Financial Planning moved into the Technical department in 2016. There he was gathering information, checking facts, and ensuring everything was technically correct and compliant. “I’m a bit of a pedant when it comes to making sure everything is right,” he admits. In 2020 he moved into his current role as dedicated Technical Assistant to Consultant Gershom Chan. On a day-to-day basis Chris works closely with Gershom, undertaking technical analysis, and attending client meetings. From the meeting Chris gathers all relevant information. “I will take it away and find out what other information we might need and then I will help Gershom look at the client’s financial needs and goals and how we can best help achieve them through our recommendations.” Attending client meetings Chris says is the part of the role he most enjoys. “I was really nervous when I went into my first few meetings but then you realise you are meeting everyday people who have everyday concerns and you can help them resolve those concerns through the work that you do. I get to hear first hand what their concerns are and what they are trying to achieve and after doing all the fact finding and analysis there is a really rewarding feeling that you have helped someone. In some ways it becomes quite personal.” Spotlight on Lowes people

If there is a part of the job that rankles, he says, it is having protracted phone calls with product providers trying to get information from them and filling out forms. “But that is definitely outweighed by the more enjoyable sides of the role.” Chris says he is lucky enough to have an office of his own next to Gershom’s. “It may seem like a perk but it’s necessary to have some peace and quiet when I’m tackling technical issues. Our work can be quite complicated at times and it helps when I want to get my head around things.” In time, he says, he might consider becoming a Consultant himself. “It would be a natural progression from what I do now and something I would enjoy doing.” Outside of work Chris is a film buff; his favourite film is Eternal Sunshine of the Spotless Mind , starring Jim Carrey. He is also a musician and has played in a band since his teenage years. His current band is called The Old Pink House. They play Indie-Rock.

14 Lowes.co.uk