Lowes Magazine Issue 116

PLANNING

How we help clients

OFTEN WE CAN BE RETICENT TO talk about our personal finances and yet there are times when it is very important that we do so. Lowes Consultant Robert Newton considers examples of how we help clients to discuss and make decisions about their financial wealth

Also important for couples is tax planning. When investing and saving, it can make sense to use available allowances and exemptions to the maximum limit, including, for example, ISAs, capital gains tax, and pensions payments. Talking through a joint strategy can often make better use of the available reliefs and allowances and help build wealth and a more secure financial future. Insurance protection should also be a discussion had by couples, again to better ensure financial security, especially where a couple may have children. It is also important that couples know where their respective Wills are and any insurance policies. Will writing is an essential part of estate planning. Where someone hasn’t left a will, the process of probate can take even longer. There are many reasons couples don’t discuss their finances beyond the superficial and unless something disturbs the status quo that can go on for years. In our experience, couples who jointly discuss their finances are more often in a better position to make effective decisions about their wealth, to grow and maintain it and can better prepare to pass it on to future generations. Talking between generations Another area where talking about wealth and finances can help considerably, is between the generations. While recent retirees have often benefitted from final salary pensions, few if any of the generations that will retire in the next 5-10 years and beyond will have the same level of benefit. It’s an entirely different pension landscape that they will be inhabiting. In future, individuals will need to save more and for longer for their retirement. A similar situation is being experienced in respect of the housing market, where it is now increasingly difficult for younger generations to get a foot on the property ladder. The ‘bank of mum and dad’ is now a common phrase used to describe how loans or gifts are being made to younger generations to help them buy a property. It has never been more important to talk to sons and daughters and grandchildren about their finances and saving and investing for the future, whether that is for 10 year goals or property purchase or retirement in 40 years’ time. Understanding the power of compound interest and cumulative return can help put saving and investing into a new perspective. But choosing the right pensions and investment vehicles is important as is tax efficient saving/investing. Talking about money can help prepare upcoming generations for their financial futures, hopefully avoiding unnecessary debt and equipping them to make sensible decisions around money in, money out and cultivating a savings and investment mindset. Talking about estate planning There are numerous aspects to estate planning which will require discussion amongst couples, family and, we suggest, with an Independent Financial Adviser. While most people will want to pass on some of their wealth to their beneficiaries, many also feel the need to retain control

Fundamentally, human beings are social animals, which means we like to talk to one another and share stories. And in the age of social media it is far easier to do that and with more people than ever before. And yet, when it comes to one of the most important topics of all, money, in particular our personal finances, often we can feel inhibited, not even discussing it with our nearest and dearest. Yet, we make better decisions and often reach better outcomes when we do talk about the things affecting us and so better understand them. Saving, investing, pensions and tax are important elements of our lives but often are complex to deal with. More often than not they will need to be discussed between couples and amongst families, and also with professional advisers. To my mind, if more of us were able to talk about money not only would many of us be wealthier than we are in financial terms but we could also be richer in terms of our outlook on life and our relationships. Talking between couples As Consultants where we most commonly see the impact of not talking about money is between couples, especially, where one person tends to deal with all the finances. While we might want to keep some finances personal to us as individuals, where a set of finances affect a couple jointly there are benefits to talking about them. It makes sense, for example, for couples to both know their monthly outgoings, how and when they are paid and from where. On numerous occasions over the years Lowes Consultants have been asked to help a recently bereaved widow/widower deal with their finances because their partner had always dealt with the household accounts. This can be anything from helping to sort out paying utility companies to dealing with current, savings and investment accounts. In many of these situations, if the couple had regularly discussed their finances, and had both their names on the utility bills, mortgage documents and had joint accounts, it would have saved huge inconvenience, upset and sadness at a time when the person left behind was already emotionally vulnerable. Where a bank or savings account is in a single name, it is frozen until probate and the executors of the person’s estate can access it. That can take too long, especially where household bills are lining up to be paid. What we recommend for this kind of situation is setting up a joint account for household payments and either keeping enough cash in it to meet the household bills for at least three months or more, or setting up a separate joint savings account to do the same. This ensures the person left behind can meet the household expenses while all the paperwork is gone through.

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