It should come as no surprise that we believe financial advice adds real value to the lives of our clients. While the financial benefits of advice are often discussed, the value it can add in terms of wellbeing is sometimes overlooked but is just as valuable.

The improvements to wellbeing that financial advice can offer can be difficult to assess. After all, every client will have differing goals, priorities and challenges. New research from Royal London has measured how professional financial advice can support emotional wellbeing.

Financial advice helps people feel in control and confident

The research found that the vast majority of the 17 million people who seek financial advice in the UK benefit from a positive experience. Overall, it helps people to feel confident, in control of their finances and gain peace of mind. Clients rated three key areas that highlight the positive impact of a relationship with a financial adviser:

• Quality of advice and expertise (82%)
• Communication style (81%)
• Trustworthiness (81%)

One of the important ways the report found advice adds value is through understanding financial matters.

When searching for financial products or information, you’re often confronted with jargon and complex terms. Even when you have a good handle on your financial situation this can be daunting, making it difficult to know what’s right for you. Besides, products, legislation and regulation frequently change and keeping up to date can be challenging if it’s not part of your day-to-day role.

Those receiving advice feel up to three times more confident in their understanding of products and their finances than those who haven’t worked with an adviser. Some 23% of non-advised individuals said they would not know where to start when asked about life insurance, compared to just 7% of those taking financial advice.

The financial decisions you make have a long-lasting impact and it’s important to understand products and your options. We’re here to explain to clients how different products work, as well as outlining the pros and cons with their situation in mind. It means clients can have confidence in not only their plans but also their financial knowledge.  

The benefits of preparing for the unexpected

When people first approach a financial adviser it’s often to seek advice on something they know is going to happen or would like to happen. For example, planning for retirement or setting up an investment portfolio to create an income.

However, an important part of creating a financial plan is to look beyond this to plan for the long-term, including the unexpected. As a result, financial planning can improve financial resilience and ensure you’re better prepared for an unexpected shock, such as redundancy or illness.

It’s a step that boosts emotional wellbeing. Some 63% of clients said they felt secure and stable, as opposed to 48% who did not receive advice. The report highlighted how it can have an impact on emotions too. Four in ten (41%) of those that do not take financial advice said they feel anxious about their household finances, compared to three in ten (32%) who receive advice.

Protection products in particular improved financial and emotional wellbeing. These insurance products pay out under certain circumstances and should align with your priorities and concerns. For instance, life insurance can provide peace of mind that your family will be financially secure should you pass away, while income protection can provide an income if you’re unable to work due to illness. Clients who received advice on protection said it helped them feel more prepared and less worried about the future.

Unsurprisingly, the Covid-19 pandemic has reinforced how planning for the unexpected can be valuable. With millions of employees seeing their income fall and facing redundancy, 35% said they felt anxious about their financial situation. This has led to 65% saying they’ve come to appreciate the value of being more prepared for life-shocks that may be outside of their control.

On average, financial advice clients are £47,000 better off

While the emotional benefits of advice are important, the financial benefits are too. After all, financial freedom can help you to achieve goals and feel more confident about your future.

The report also covers previous research conducted by the International Longevity Centre UK.  It found that customers who took financial advice were on average £47,000 better off. Those who fostered a long-term relationship with their adviser were up to 50% better off than those who received one-off financial advice.

Tom Dunbar, Intermediary Distributions Director at Royal London, said: “We have long suspected that the benefits of advice go far beyond financial gains alone and our research confirms that individuals who have received advice are more likely to feel confident about the future, and less likely to feel anxious or worried.

“It’s easy to see why clients turned to financial advisers when the pandemic struck. But advice is most powerful – and most rewarding – when it goes beyond a one-off meeting. An ongoing relationship with an adviser amplifies the emotional, as well as the financial, benefits.”

Please contact us if you’d like to arrange a meeting to discuss how financial advice can help you and improve your wellbeing.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

We know that investments come with risk and the value of your investments can fall. With risk linked to potential rewards, it can be difficult to know how much risk is appropriate for you.

When we make financial decisions, lots of factors can influence what you decide. This may include emotional factors or bias, which can lead to you taking too much or too little risk for your circumstances. So, how do you balance risk and reward when investing?

How are risk and reward linked?

As a general rule, the more risk you take the higher the potential returns. However, this comes with a higher risk of investment values falling and potentially losing your money.

Investments are usually placed on a sliding scale of risk to show you where they fall. When you invest through a fund, for example, it will have a ‘risk rating’ to help you select investments that suit you. The table below shows how different investments may be categorised on a scale of one (lowest risk) to ten (highest risk).

While higher risk generally means higher potential returns, that doesn’t mean you should choose these investments. In many cases, a high-risk investment portfolio isn’t suitable for the average investor. Creating a risk profile can help you understand the level of risk that is appropriate for you.

What affects the level of risk you should take?

There’s no one size fits all solution to the level of risk you should take. It needs to consider you and your financial circumstances, including:

• Your investment goals. Your goal should be at the heart of your investment decisions. They can have a large impact on the level of risk you feel comfortable taking. If you’re investing for your child’s or grandchild’s future, you may want to take a more conservative approach. If, on the other hand, you’re investing to create extra income for a retirement that will already be comfortable, you may be willing to take more risk.
• The investment timeframe. As a general rule of thumb, the longer you plan to invest for, the greater amount of risk you can afford to take. So, if you’re starting your career and investing for retirement, you’re in a better position to take more risk. This is because over a longer timeframe there’s more opportunity to recover from dips in the market.
• The other assets you hold. You can’t consider investment risk without looking at your wider financial circumstances. If you’re taking a high level of risk with other assets, lower risk in your investment portfolio may make sense. In the same way that a portfolio needs to be balanced, so does the level of risk you’re taking across all your assets.
• Your capacity for loss. If the value of your investments were to fall, how would it impact your plans? If it could seriously affect your plans, a lower level of risk is likely to be advisable. If investments falling in value would leave you in a financially vulnerable position, you should look at alternatives first.
• Your overall attitude to risk. Finally, how you feel about investment risk is important. You need to feel comfortable with the investment decisions made. However, bias can have an impact and can lead to investors taking too much or too little risk. This is where a financial planner can help. We’re here to explain the options and why we recommend certain investments. With more information and someone to talk to, you can invest with confidence.

Remember the basics of investing

Whatever your risk profile, the basic lessons of investing still apply. Keep these three in mind when making investment decisions.

1. Invest for long-term goals: If you have a short-term goal in mind, investing probably isn’t appropriate for you. Ideally, you should invest with a minimum five-year timeframe. This provides an opportunity to smooth out the peaks and troughs to hopefully deliver returns over the long term.
2. Don’t focus on short-term fluctuations: It can be easy to focus on daily market movements, but it’s more important to look at the bigger picture. Focusing on the short-term movements can make it tempting to deviate from your plan by buying or selling. Instead, have faith in your long-term plan and remember, it’s time in the market not timing the market.
3. Diversify: All investment portfolios should invest in a range of assets and sectors. This helps to spread the risk of your investments. When one area of your portfolio is performing poorly, another can help balance this. Even when your risk profile is ‘high’ diversifying is important.

If you’d like to talk to us about your risk profile, investments, and long-term financial plans, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Taking ESG (environmental, social and governance) factors into consideration is a growing trend among investors. But what does it mean and why would you look at these areas when making investment decisions?

Our latest guide explains the basics of ESG investing. According to the Investment Association, 26% of all UK assets use ESG factors in some way, though the depth varies. As a result, it’s gradually being incorporated into more investment strategies. Our guide explains:

• What ESG factors cover
• How ESG factors may be used when making investment decisions
• Why investors may want to consider ESG influences
• What the challenges of ESG investing are

Click here to download your copy of the guide.

If you’d like to talk about your investments, long-term goals and ESG factors, please contact us on 01206 632006. We’re here to help you understand your investment options and how they can help you achieve your aspirations.

As countries around the world eased lockdown restrictions, there are positive signs that economies are recovering following the Covid-19 pandemic. However, with new measures in place potentially for months, the virus continues to have an impact and the future remains uncertain.

The Organisation for Economic Co-operations and Development (OECD) now expects the global economy to recover faster than it thought in June. The global economy is now expected to shrink by 4.5% in 2020, compared to the 6% decline expected just a few months ago.

Another positive sign is factory output rising, suggesting increased demand. According to JP Morgan, global factory growth hit a 21-month high.

UK

The big news in the UK this month, has been lockdown measures coming back in as Covid-19 cases began to rise again as schools and offices reopened. The government has imposed a 10 pm curfew for pubs, bars and restaurants, u-turned to ask workers to work from home if they can, and imposed stricter local lockdowns in hotspots. Undoubtedly, this will affect a range of businesses.

Chancellor Rishi Sunak also unveiled new measures to support businesses and jobs. This includes a new job support scheme, which will replace the furlough scheme in November, for workers that are only able to work part-time. For businesses, the ability to pay back Covid-19 business loans over a longer period will help spread costs and VAT bills can be spread out over 11 separate payments.

While the Chancellor’s measures have gone some way to supporting businesses, they have come at a cost. The UK borrowed £35 billion in August, an increase of £30.5 billion, compared to a year earlier. Since the new financial year in April, the government has borrowed £173.7 billion.

Covid-19 uncertainty means 156,000 people were made redundant between May and July, taking the unemployment rate to 4.1%. This represents the biggest jump in over a decade. Many of these jobs will have been in the retail, hospitality, accommodation and leisure sectors. Some of the well-known names affected are:

• Coffee chain Costa will cut 1,650 jobs
• Restaurant Pizza Express is set to cut 1,100 jobs
• After recording a £55 million pre-tax loss for the first half of this year, John Lewis has scrapped its staff bonus

Even with the manufacturing sector growth, jobs are being lost. The manufacturing PMI showed strong growth with a reading of 55.2 following a relaxation of lockdown measures. Output rose at the fastest pace in six years and new orders also accelerated. Despite this positive sign, staff are still being cut.

With more than five million people still on the furlough scheme, the figure could rise significantly.

The Bank of England will hold its rate at 0.1%, despite speculation interest rates could fall into negative territory. Bank of England rate setter Michael Saunders acknowledged more monetary stimulus would be needed to boost growth but the bank has since said negative rates are not close.

Covid-19 means Brexit has taken a somewhat back seat in the headlines. But with the end of the transition period drawing nearer and no deal in sight, it is causing some jitters among investors.

Europe

The European Central Bank President Christine Lagarde says the economic data has shown a strong rebound in the eurozone economy but added there was still significant uncertainty and it would depend on how the pandemic developed. The central bank held rates at 0.25%. Growth forecasts have been raised but the economy is still expected to shrink by 8% and to rebound by 5% in 2021.

Like the UK, France has also unveiled a new response to Covid-19 to help lift the economy out of recession. Dubbed Relaunch France, it includes subsidies, tax cuts for businesses and funding for environmental projects.

US

The US economy added 1.4 million jobs in August, in line with expectations, and now has an unemployment rate of 8.4%. This was better than expected but still considered to be at crisis level. With the presidential election now just weeks away, the job market is likely to be a key point of debate.

The Federal Reserve will also hold its rates, which are at a record low and near zero, potentially until 2024 in a bid to boost the economy.

Similar to the UK, factories in the US increased output with a PMI of 53.1. There was also growth in retail spending for the fourth month in a row as shoppers begin to spend again. However, the growth didn’t meet forecasts which hoped pent-up demand would lead to a surge

Asia

As the first country to be affected by Covid-19, the situation in China is being watched closely. China reported its strongest growth in almost a decade, with new export orders helping manufacturers boost production. Its manufacturing PMI has now been in growth territory for four consecutive months. Export from China increased by 9.5% compared to a year ago, indicating the global demand is now picking up.

Keep an eye on our blog for future market updates and financial news.

If you’d like to discuss your investments or wider financial plan in light of the current circumstances, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Getting on the property ladder has always been a struggle. But a combination of soaring rents, rapidly rising house prices and stagnant wages means many millennials are worrying they’ll never be able to purchase their own home.

For the millennial generation, the oldest of which are now approaching 40, never owning a home could become a reality. Research from OneFamily found seven in ten worry homeownership is something they will never be able to afford. Just 50% of those nearing 40 are paying off a mortgage, a percentage the previous generation achieved a whole decade earlier. As a result, it’s predicted 20% of millennials will be tenants at the age of 65, more than treble the current 6% of over 65s that pay rent today.

While, for some people, remaining a tenant suits their plans, such as offering flexibility to move for jobs, it can be far more costly. The research suggests the additional cost of renting would be around £300,000 throughout their lifetime. This is due to monthly rent typically being more than a mortgage repayment, especially in the current climate of low-interest rates, and continued payments after a mortgage term would have ended.

If renting throughout your life suits you, it’s important to consider the financial impact in your later years. Remaining a tenant could leave a hole in your retirement finances and mean less stability. Careful planning can help you ensure you have the financial means to continue paying rent once you’ve retired.

If you’d like to buy a home but are struggling to get on the property ladder, some things could help.

1. Use a Lifetime ISA to save

Saving a deposit for a home can seem like an enormous challenge, a Lifetime ISA (LISA) can boost the amount you save.

Each year, you can deposit up to £4,000 into a LISA. The government will then add a 25% bonus. So, put in the maximum annual contribution and you’ll have an extra £1,000 to use for your home. It can make homeownership that bit closer when you’re saving.

To open a LISA, you must be aged between 18 and 40. You can choose a Cash LISA, which will provide interest on your savings, or a Stocks and Shares LISA, where your savings will be invested with the aim of delivering returns. If you plan to buy a property within the next five years, a cash account usually makes sense as investments will be affected by short-term volatility.

One important thing to note with a LISA is that if you withdraw money before the age of 60 for a reason other than purchasing your first home, you’ll lose the bonus and a portion of your own contributions.

2. Take advantage of the Help to Buy Equity Loan scheme

The Help to Buy Equity Loan scheme can help first-time buyers in two ways.

First, when using the scheme, you only need to provide a deposit of 5%. Second, the loan will reduce the amount you need to borrow through a mortgage, which can help if you’re struggling to access enough to buy a property.

The government will lend you up to 20% (40% in London) of the property’s value, which combined with your deposit, means you’ll only need to borrow 75% of the value through a mortgage. It can help you step onto the property ladder sooner. 

There are some restrictions though. The property you buy must be a new build and have a purchase price of less than £600,000. In addition, you will need to pay the government loan back, so this needs to be factored into your long-term plans. For the first five years, the equity loan is interest-free but after this interest will be added.

3. Seek shared ownership properties

Shared ownership properties can cut the size of the deposit you need and the amount you need to borrow using a mortgage. You’ll purchase a portion of a property, paying rent on the rest. It’s a solution that can help you take that initial step on the property ladder. In most cases, you’ll be able to buy more equity until you eventually own 100% of your home, this is known as staircasing.

Shared ownership properties are usually owned by housing associations and there may be a criterion that you must meet. It’s also worth considering if there will be any restrictions and what happens when you want to sell before buying a shared ownership property.

4. Ask family if they would act as your guarantor

If you’re struggling to secure a mortgage, there are options available that may suit you. A guarantor mortgage allows a loved one takes on some of the risks of the mortgage. As a result, a bank may be more willing to lend or allow you to borrow more. Your guarantor will usually need to own their own home, as their savings or home will be used as security against the loan if you default on payments.

5. Speak to the Bank of Mum and Dad

It’s no secret that the Bank of Mum and Dad has become hugely important to first-time buyers. According to a Legal and General study, £6.3 billion was gifted or lent in 2019. On average, the Bank of Mum and Dad gave first-time buyers £24,100. If your family are in a position to do so, approaching them for help could mean you’re able to buy a home.

It’s important to talk about whether the money given by the Bank of Mum and Dad is a gift or loan. Would you be able to repay the money if it were needed for your parents’ retirement, for example? In other cases, a gift now may mean that you receive less from an inheritance later in life. If you approach your parents for financial help when buying a home, it’s important both of you understand what’s being agreed and it’s often vital financial and legal advice is taken.

If you’re struggling to get on the property ladder, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

When you’re coming to terms with the loss of a loved one, financial planning will be one of the last things on your mind. Yet, in the month’s afterwards, it can provide security and help you plan for the rest of your life.

Bereavement can mean you may no longer take financial advice. After all, you’ll have a lot of other areas to deal with and loss can make it seem like a task that is insignificant in comparison to everything else. Research finds that the reason almost half of widows (49%) leave a financial adviser is that they no longer want to receive advice. While it’s understandable, there are reasons to continue taking financial advice following the loss of a partner.

1. Your priorities and financial situation may have changed

For many, bereavement can mean your priorities and goals change.

Previous plans are likely to have been influenced by both parties. Once you’ve come to terms with the loss, you may find that goals previously set out may no longer match what you want. It can be a difficult process to go through. Letting go of aspirations and experiences you believed you’d tick off together can be incredibly emotional. But after a period of grieving, it’s important for you to think about what your priorities are now.

In some cases, plans previously set out will still be important to you. In others, you may want to make changes. Both outcomes are fine, but you should take time to assess where goals now lie.

In addition to changing priorities, you may find that your financial situation has changed. For example, if you relied on your loved one’s salary or pension to create an income. Financial planning can help you understand how your income may change now and what steps you can take to provide security and live the lifestyle you want. Understanding how assets have been affected and how to make the most of allowances can be complex. We’re here to explain what changes in your financial situation may mean now and in the future. 

2. Providing confidence in your financial security

Following a loss, it’s natural to worry about your future. For some people, this will include how secure they are financially and what it means for their life. This can be particularly true if your loved ones used to make the majority of financial decisions.

Long-term finances can be complicated, and you may not feel confident in making decisions. Financial planning can help you get to grips with what your options are and understand the pros and cons of each with your situation in mind. There’s no right or wrong answer but the decisions you make should relate to what your priorities and goals are.

Knowing a professional financial planner has worked with you to create a long-term financial plan can deliver confidence, enabling you to pursue goals.

3. Consider your legacy

The loss of a loved one often prompts us to think about our own mortality. With this mind, your attention may turn to your legacy and what you’ll leave behind for loved ones.

The first step to considering your legacy is to understand what assets you hold and how you’re likely to deplete or add to them over your lifetime. This can help you see how your estate and its value will change over time. From here, you’re in a position to think about how you’d like your estate to be distributed. There are many things to consider, from whether you’d like to leave a charitable legacy to whether there are certain items you’d like to leave to specific people. Financial planning can help you set out priorities when it comes to estate planning.

Once you have an estate plan, you should take steps to write your will, name a Power of Attorney and take steps to mitigate Inheritance Tax if necessary.

We understand how challenging it can be to think about the future and day-to-day finances when you’ve lost someone important to you. When you’re ready to, financial planning can help you understand your finances and goals over the coming years. If you’d like to discuss your situation with a financial planner, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate will writing or estate planning.