CHECK OUT THE FINANCIAL PLANNING FOR RETIREMENT AND USEFUL

FINANCIAL PLANNING FOR RETIREMENT

A Financial Advisor could save you
$1,300 a year
Finding a good financial advisor can help you avoid these costs and focus on goals. Financial advisors aren’t just for rich people—working with an advisor is a great choice for anyone who wants to get their personal finances on track and set long-term objectives.


Consider this example: A recent Vanguard study found that, on average, a hypothetical $100K investment would grow to over $190k under the care of an advisor over 25 years, whereas the expected value from self-management would be $110k. The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”.

Why Work With A Financial Advisor?

It’s more important than ever to have a solid financial plan in place. In fact, among those who work with a financial advisor, 84% said that doing so gave them a greater sense of comfort about their finances during the COVID-19 pandemic, according to a survey conducted in 2020 by Age Wave and Edward Jones**.

A financial advisor provides advice and guidance to clients regarding investments, insurance and other financial planning matters. They also help clients set financial goals and make plans to achieve those goals. And perhaps most importantly, a financial advisor can help you prevent making emotionally charged decisions to buy or sell investments. Do you need help managing your money? If you’re like many Americans, you might need a hand. According to the National Financial Education Council*, a lack of personal finance knowledge costs the average American $1,300 a year.

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In addition to providing advice on investments, financial advisors help clients plan for retirement, manage their taxes and navigate life changes such as marriage or the birth of a child. The best financial planner is the one who can help you chart a course for all your financial needs. This can cover investment advice for retirement plans, debt repayment, insurance product suggestions to protect yourself and your family, and estate planning.

Keep in mind that financial advisors provide more than just investment advice. People with complex financial needs may need extra assistance. They could be looking to establish college funds or trusts for their children, navigate aggressive debt payment situations or solve tricky tax problems. Not all types of financial advisors offer the same menu of services, so decide which services you need and let this guide your search.

Find The Right Financial Advisor For You
Ultimately, determining whether a financial advisor is worth your money depends on your unique personal and financial circumstances and finding an advisor who aligns with your goals, listens to your needs, and acts in your best interests. If an advisor does these things and more, they will most likely be a good financial investment.

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Our full service offering provides you with access to a range of expertise that allows you to preserve, grow and transfer your wealth for the benefit of you and your family

 

How we help

Whatever your circumstances and needs, you should have the benefit and comfort of a detailed and bespoke plan to help you reach your financial goals.

We pride ourselves on providing you with a personal wealth plan, with regular reviews, so your financial goals are front and centre of any decision. We can work with your existing tax and legal advisers, as well as facilitate specialist expert advice as needed, so there is a comprehensive and robust strategy that delivers the best possible outcome for you and your family.

In addition to our support for UK clients, we work with clients across the world. Our international presence, knowledge of local regulations and extensive experience allows us to support clients with complex multi-jurisdictional challenges. Whether we are supporting you from the UK office, the international finance centres of the Isle of Man and Jersey, or out of the United Arab Emirates, your dedicated private banker works with an experienced wealth planner – alongside the specialist skills of our lending, investment and wealth structuring teams – to create a personalised roadmap to help you reach your financial goals.

Retirement planning service

As people approach retirement and become increasingly reliant on their investments, pensions and savings to fund their lifestyle, how can you make sure you will achieve financial success given the many additional risks facing retirees. The answer lies in a wealth plan, that is unique to you, and an investment service which will help navigate the challenges ahead to achieve your financial goals over the rest of your life.

Access our wealth planning brochure

Whatever the source of your wealth, there is an opportunity to maximise its potential through our wealth planning service. Find out about our approach by reading our brochure, which can be read here or downloaded for future reference.

Wealth structuring

As part of your wealth plan, we will help you structure your wealth in the most efficient manner to achieve your financial goals. With your wealth plan in place, it’s important that we use the right investment and wealth structures that are appropriate for your needs and suitable for your circumstances. We will take into account considerations such as:

The tax-efficient accumulation of wealth
Planning for a successful retirement
The transfer of wealth to the next generation
Leaving a lasting legacy through charitable giving.

Case study: set for retirement

The couple wanted to achieve a joint annual net income of £75,000 throughout their retirement, and tax efficiently pass on their estate to their children.

Bill is 66 and Hilary is 64. They were both born in the UK and have always lived in London, enjoying married life in Islington. Of their two adult children, one is married with a child. They presented us with full details of their financial assets which included: defined contribution pension funds of £800,000 and £500,000 respectively; a joint investment portfolio of £2 million; and ISAs to the value of £200,000 and £150,000 respectively. Bill also holds some venture capital trusts (VCTs), worth £400,000, and receives an income of £50,000 from a couple of non-executive director positions. Hilary is fully retired, and volunteers for a number of charities. Their home is valued at £1.75 million, and there is an investment property worth £500,000.
They came to Nedbank Private Wealth to seek advice to help them achieve the following goals: to generate a joint annual net income of £75,000 throughout their retirement; and to minimise their estate’s exposure to inheritance tax on their death.
The planning process
The team suggested a review of their last wills and testaments, given these had been drawn up a number of years before and prior to the birth of their grandchild. They also had lasting powers of attorney registered. Lifetime gifts using the annual £3,000 exemption were set up, and a provision was made to fund their grandchild’s private education using the ‘normal expenditure out of income’ exemption.
A life insurance policy was taken out to cover any inheritance tax due, given this is required to be paid before probate is granted and ahead of the distribution of the estate by its executors.
We provided pensions’ advice to consolidate their various schemes in self-invested personal pensions (SIPPs), as well as transfer over the ISAs, to Nedbank Private Wealth’s investment management service.
The results

As part of the planning process, Bill realised that he could afford to retire from his non-executive directorships and be able to enjoy retirement, and write satire. We were able to help them to structure their retirement income in an efficient manner, by ensuring they were using all available allowances, and also advise on the order in which income should be taken from their various investments and pensions. The general rule being to draw income first from those investments which are the least tax-efficient. They left their individual SIPPs to accumulate tax-efficiently, given that these are not considered part of their estate for inheritance tax purposes, and so can pass down the generations.

Case study: sustaining income after a divorce


Case study: as a client was going through a divorce, we helped her visualise her future finances to provide reassurance she could maintain her current standard of living and help her children financially when they are older.

Jane is 50, has two children, aged 17 and 18, and is in the middle of a divorce. She wanted to understand what the initial proposal for the separation of marital assets would mean for her: whether she could maintain her current standard of living, and also help her children financially when they are older.
Jane is also keen to continue to receive an income in line with her current annual expenditure of £60,000. Her income is primarily from buy-to-let properties, and it is important to factor in both the tax liability on this income and the impact of inflation throughout her retirement.
Given that Jane is not familiar with managing her finances, and is also on long-term sick leave from her civil service job, her lawyer introduced her to Nedbank Private Wealth. She believed in selecting a wealth manager that could manage all of Jane’s finances going forward on her behalf. As a bank, we can help with borrowing, as well as investments and wealth planning. We used cashflow modelling to help visualise Jane’s financial future and, importantly, to determine whether her wealth objectives could be met.
The planning process
The first step was to develop a full understanding of Jane’s financial position based on the proposed divorce settlement, and to understand her short, medium and long-term goals and objectives. In addition, Nedbank Private Wealth was introduced to the husband, Ben, to similarly help him plan his own finances after the divorce was finalised.
We developed a complete picture of their finances by assessing their current and projected wealth, along with their income and expenditure. We worked closely with their tax adviser to ensure they fully understood the impact of capital gains tax (CGT) on the transfer of marital assets after the divorce was final. The most significant tax consideration, in the context of separation or divorce, is likely to be a potential CGT liability when assets are sold or transferred from one spouse to the other as part of a financial settlement.
For many couples, the marital home is likely to be the most valuable asset to be considered in a divorce. Pensions are also a financial asset in scope, but are often the least understood and one of most complex assets to manage to facilitate a fair financial split. And given there is no legal obligation for these to be included in divorce discussions, there is little, if any, agreement on how the pensions should be valued or used to offset other assets. However, other assets and investments, including second homes, may also be significant in deciding any financial settlement.
Timing is key here.
However, if such a transfer takes place in a tax year after the couple has formally separated, assets will be treated as passing at market value and, accordingly, any gain in value since acquisition will be taxable on the transferring spouse, subject to any available relief.
The results
The use of cashflow planning helped us to develop a comprehensive financial plan that would enable Jane to understand what the proposed divorce settlement would mean for her and her children. In addition, it provided the reassurance that she would be able to manage her expenditure and allow her to make informed decisions with regard to both investments and estate planning. Finally, the plan was able to show Jane that she could afford to assist her children in buying their first homes, which was very important to her.

The ‘clean break’ divorce settlement involved Ben transferring his personal pension in full to Jane. This would help fund her expenditure in retirement, along with a final salary pension from her employment with the civil service. Jane will also request a forecast in respect of her state pension entitlement. Her personal cashflow plan also helped to identify the most tax-efficient strategy for the drawdown of her assets to meet her expenditure needs
We were also able to show her a number of different scenarios with regard to the buy-to-let property portfolio, should she wish to consider selling some of the properties in the future.
Last, but not least, Jane was reassured that the split of the assets would enable her to maintain her current lifestyle and not have to worry about going back to work (given her ill health), as the cashflow chart was not showing any red (indicating a shortfall between income needs and that which the financial assets could yield).
With the plan in place, we schedule a date for 12 months’ time given it is important that it is reviewed each year to take into account any lifestyle changes, and to ensure Jane remains on track to achieve her objectives.
In 2021, we held a series of three webinars focusing on divorce. These were: Managing your finances around a divorce; Divorce: beyond the financial and legal ramifications; and Divorce, pre-nups and pandemics – recent changes and those coming soon.
You can catch up on all of these demand on this website via the provided links. Please note that following the recording of these webinars the introduction of the 2020 Divorce Bill was postponed to April 2022.

Case study: leveraging the family relationships

Family support was needed to help a young couple buy and build a new home, without money being gifted, while working with the whole family’s finances.

Ben and his wife, Catherine, are in their early 30s and have a toddler. While he is the owner of a successful business, it has only been operating for two years. They were looking to buy a property that would be knocked-down to be rebuilt as a family home that met their medium-term requirements.
However, even though they would also be reinvesting the proceeds from their current home, the amount they were looking to borrow was higher than we were able to lend under the Mortgage Conduct of Business rules for regulated mortgages.
The lending process
Ben’s parents were long-term clients of the bank, and keen to help their son, but he did not want them to gift the money to him. Instead, we worked with the family to transfer funds from their bank account with Nedbank Private Wealth into a side account, and used the cash to guarantee the loan amount, as well as provide ongoing funds to service the debt.
In addition, because it is the parents’ funds guaranteeing the loan, we ensured that they took independent legal advice before completing the paperwork so they understood any potential repercussions for the arrangement for their finances.
The results
With the loan guarantee secured by the cash deposit, rather than against the property, the bank was able to reduce the cost of borrowing to the children, which made the loan possible and gives additional comfort to all parties that the loan servicing is affordable.
Ben and Catherine are now moving ahead with their plans to rebuild, an approach they also believe will stand them in good stead given they want to repeat the experience in the future, when they will look to sell, buy another property which will be rebuilt to provide their forever home.
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Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios, and loans can be denominated in Sterling, Euros or US Dollars.

Case study: long-term support via borrowing


As a client renewed her interest-only mortgage, a conversation with her private banker led to a solution that helped her broader finances too.

Jane has been a client since 2010 and three years ago started her own business, which also uses the bank for its office accounts. Jane wanted to renew her interest-only mortgage for her £2.6 million house, which is currently rented out to a tenant, with a 15-year-term in her sole name.
She also flagged that, in a year’s time, she was looking to move back into the house with her partner Brian, and become the owner-occupier again. They would then seek to sell Brian’s house and use the proceeds to pay down some of the mortgage.
The lending process
Given she was looking to move back into the property in a year’s time, we agreed with Jane that it would be best to apply for a capital repayment mortgage instead, to start to pay down the principal given her earnings would easily cover the costs.
We also recommended that the 15-year-term be extended to 20 years, and that the mortgage be in joint names, given Brian would be living in the house and contributing to the mortgage.
The results
With the changes to the loan reducing the level of risk to the bank, this allowed us to reduce the fixed rate of repayments by 0.5% for the entire term of the loan. The lower repayments would afford Jane a much better financial outcome, and she would not be left with a large liability so near her expected date of retirement.
In addition, the revised approach meant that Jane would save on future arrangement and valuation fees as she would only be renewing her mortgage once, rather than a second time in the near future.

Our flexible lending facilities can be arranged in Sterling, Euro or US Dollars, although any property used as security must be UK, Isle of Man or Channel Island-based. We also lend against investment portfolios.

Case study: two weeks to snap up prime land


Our client wanted to snap up a plot of land in a prime location through a private land sale, with the seller giving us just two weeks to complete.

James and Angela have been clients since 2005, with our support for James also encompassing his business finances. Over the years, our relationship has widened to include their four children, parents and other members of the extended family.
The strength and depth of the relationship mean we know James’s financial profile extremely well, and we have also provided the couple with a mortgage on their main residence in Jersey.
The lending process
While they enjoy life in their current home, they have always dreamed of owning a beach-front property in a prime location on the island. Having tried to buy land in this sought-after area before, and been outbid, James was excited by an opportunity to buy a track of land for £2.5 million in a private sale. However, in order to proceed, the purchase had to be completed within 18 days or the land would be advertised for sale on the open market.
James needed to borrow £1.5 million, which is above our usual loan-to-value limit of 50% for a land sale. Following a call from our private banker, the lending team contacted James’s solicitors and also arranged for a valuation of the land. While we typically wait for the valuation to be completed, we started the internal approval process as soon as we instructed the valuation, given the tight timeframe.
The results
Because the amount was above our loan-to-value limit, we agreed with James that the additional sum would be set against his main residence. This required a further discussion when the valuation for the land came in 25% below the asking price, and we needed to revalue the main residence, as the last valuation was completed in 2015.
We also advised James that cash reserves in his business could quickly pay down some of the amount being borrowed, despite knowing that this process would take two months to achieve given the company was near its financial year-end.
The loan was drawn down in time for the purchase and the land acquired, despite a delay in completion due to the approval needed from the Royal Court for the transaction to go ahead. James appreciated our approach to the facility and the flexibility we provided given the tight timeline. James and Angela are now looking to draw up architect plans to make the most of the sea view for life as empty nesters in the future.

Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios, and loans can be denominated in Sterling, Euros or US Dollars.

Case study: start planning early


A couple in their mid-30s were keen to make sure they were on track for retirement, and plan for unexpected shocks, and see what ‘good’ looked like.

Clara and George are both 36, with one child, and wanted to make sure they were on track for retirement and that their finances could survive an unexpected shock, such as Clara being made redundant. Clara earns around £195,000 a year as head of sales for a technology company, and George around £70,000 as a freelance contractor who is able to work from home. They have pension savings of £250,000 between them, individually have ISAs that total £100,000 and there is a joint general investment portfolio of £350,000. Their home is worth around £2 million and they have a mortgage of £800,000. They typically spend around £100,000 a year.
With their family history suggesting a long life expectancy, they were keen to understand what hurdles they might have to overcome in the future, as well as appreciate what else they could do towards planning for long-term health care. We used cashflow modelling to help determine what ‘good’ could look like.
The planning process
Firstly, we developed a complete picture of their finances by assessing their current and forecasted investments and other wealth, along with their income and expenditure. We reviewed their current arrangements – including their pensions and ISAs – to assess whether they were appropriate for their needs and we also highlighted any shortcomings that needed to be addressed.
We helped them plan for a number of different scenarios to highlight the various options for this couple. Although we hadn’t predicted the COVID-19 pandemic per se, we ensured their cashflow plan included different options for a variety of eventualities. The planning process mapped out several ‘what if?’ scenarios, e.g. ‘what if markets fall by 20%?’, ‘what if Clara is made redundant?’, ‘what if George stops paying into his workplace share scheme?’, ‘what if we don’t continue to see incremental increases in our earnings?’ or ‘what if one of us becomes ill?’ First, we presented a picture of their cashflow before we drew up the wealth plan.

The results


The cashflow modelling exercise helped us to come up with a new financial plan that would address some of the issues that had been highlighted.

 

The wealth plan developed showed the couple that any of their surplus income, that Clara and George were set to earn in the years before they retired, could be used to increase their pension contributions, on which they could claim additional tax relief. The potential gains from each of them investing in ISAs, up to their maximum individual allowances each year, were also highlighted. In addition, through the use of our financial profiler, and in conjunction with discussions with one of our investment specialists, the couple also increased the level of investment risk being taken given that their attitude to risk permitted the opportunity for higher returns.
We were also able to show them a number of different scenarios based on the ‘what ifs’ we had initially set out, and the couple is now considering some insurance to help protect against the loss of anticipated future income.
On retirement, the couple would be able to draw income down from the account that has is the least tax-efficient first i.e. their general savings, and then their ISAs, before starting to draw down on their pension, which would now last throughout retirement.

 

 

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