Millions of Brits haven’t named a Power of Attorney. It may seem like something you can put off for a while, but it’s something we should all have in place.

A Power of Attorney is a legal document which gives someone you trust the ability to make decisions on your behalf if you’re unable to do so. Thinking about lacking the mental or physical capacity to be independent and make decisions isn’t something anyone wants to do. However, it can happen and having a Power of Attorney in place can provide you with some security if it does happen.

Being unable to make your own decisions is often something we associate with old age and dementia in particular. As a result, naming a Power of Attorney can seem like something that’s fine to put off for a few years or even longer. Yet, accidents and illnesses can strike at any age. It’s important to note that a Power of Attorney can make decisions on your behalf on a temporary basis as well as a permanent one. If you were to recover and in a position to take control of decisions again, you can do so.

You may think that you wouldn’t need someone to act on your behalf, that everything would stay on the course you’ve set out. But even being unable to make decisions for a few months can have a lasting impact. There are two types of Power of Attorney to consider when looking at what would happen if there was no one making decisions on your behalf.

Health and welfare: This relates to areas such as medical care, moving into a care home and life-sustaining treatment. You may have clear ideas about what you’d like to happen should you become ill. A Power of Attorney allows you to discuss these with a loved one who will then be able to make these decisions.

Property and financial affairs: This type of Power of Attorney allows a trusted person to manage your bank, pay bills and collect your pension. It can help ensure your finances remain secure and commitments are met. Even a few months could have an impact if someone isn’t able to access your accounts to settle bills, for example.

It’s also important to note that no one has the automatic right to make decisions on your behalf, this includes spouses and civil partners.

What happens if there’s no Power of Attorney?

If you don’t have a valid Power of Attorney in place, an application would need to be made through the Court of Protection. The Court of Protection can decide if you’re able to make your own decisions, make an order if you lack the mental capacity to make decisions, or appoint a deputy to make decisions on your behalf. The process can be costly and lengthy, delaying decisions that may be important. It’s a process that can be stressful for both you and your loved ones.

4 reasons to have a Power of Attorney

1. A Power of Attorney should be part of your financial plan when considering ‘what-if’ scenarios and putting in place measures to ensure your security and plans stay on track as much as possible.
2. It can provide financial security if something were to happen by enabling someone to take control of your finances, including ensuring payments are met and you’re able to access income.
3. It’s also an opportunity to make sure your care and health wishes are met by discussing them with your trusted Power of Attorney.
4. The legal document also supports loved ones, without one in place it can be difficult and time consuming to go through the Court of Protection to act on your behalf.

Supporting other estate plans

Naming a Power of Attorney should be done alongside a wider estate plan too. This may include writing or reviewing your will and considering a potential Inheritance Tax bill when you pass away. Putting these pieces in place together can ensure a cohesive plan that is aligned with your wishes. If you’d like to discuss legacy planning and safeguarding your future, please get in touch.

Please note: The Financial Advice Authority does not regulate Power of Attorney, will writing or estate planning.

As businesses have been hit by the coronavirus pandemic, some have decided to cut dividends and regulators are adding pressure for others to follow suit. This may leave a hole in your income if you rely on dividends.

According to reports from The Times, investors have suffered a dividend cut of at least £600 million as some of the UK’s biggest businesses aim to conserve cash during the coronavirus pandemic. A wide range of business sectors has been impacted by the virus and resulting lockdown, leading to profits tumbling. As a result, firms have taken steps to hold cash as a buffer and, in some cases, regulators have stepped in. The UK banking regulator, for example, wants banks to suspend dividends temporarily. Some businesses are also using the government’s scheme to furlough staff, therefore taking money off the taxpayer, leading to questions around whether these firms should continue to make payouts to shareholders.

Why does this affect investors?

If you’re investing in growth stocks with a long-term plan, the recent market volatility isn’t likely to have a significant impact on your goals overall. However, it’s a different story if you rely on dividends to top-up your income.

A dividend is the distribution of a portion of the company’s earnings paid to shareholders. Dividends are managed by the company’s board of directors and must be approved by shareholders through their voting rights. Dividends are typically paid in cash, but can also be issued as shares, and may be issued at regular intervals.

As a result, dividend-paying companies may be used as part of an income investment portfolio. These typically involve investing in well-established companies that no longer need to reinvest the majority of profits back into the business to reach goals. As a result, high growth businesses typically don’t pay out dividends.

For the most part, once a company has established dividends, investors expect this to continue, but that doesn’t mean they will. As even established firms face uncertainty in light of the pandemic and more are choosing to either freeze or suspend dividends in the short term.

Whilst historically dividends have tended to be less volatile than the stock market itself, this doesn’t mean they are a ‘safe’ investment. Investing for income, including dividend-paying companies, still comes with risks that need to be considered.

So, if dividends make up a portion of your income, what can you do?

1. Reduce outgoings

If your income has been affected, the first thing to do is understand what it means for your finances in the short term. If there is a shortfall in covering essential outgoings, there are currently government-backed schemes in place to support households, including mortgage holidays. Where possible, it may be necessary to reduce outgoings temporarily to match the reduction in income.

2. Use your emergency fund

Everyone should have a cash emergency fund they can fall back on should their income drop. Ideally, this should be easily accessible and have enough to pay for three to six months of outgoings. Often clients can feel reluctant to access this money they’ve put away for a rainy day, but it’s times like these that you’ve been saving for.

3. Create an income from other assets

If your income from dividend-paying stocks has fallen, you could build an income stream from other assets that you hold. What’s possible and whether or not it’s the right decision for you will depend on a variety of factors. If this is something you’d like to discuss, please get in touch with us.

4. Keep your investment plans in mind

If dividends have been reduced or halted altogether, you may be tempted to dump the stocks and look at alternatives. However, keep the bigger picture in mind.

Given the current situation, it’s likely many dividend-paying companies are in a similar position for the time being. A reduction in dividends can be a prudent move and ensure sustainability, therefore protecting your dividend income over the long term. If you’re worried about how secure a firm is, research why the changes to dividends have been made. A statement is often made available on the firm’s website. This may be able to provide you with some reassurance that the changes are temporary.

5. Speak to us

We’re here to help ease concerns you have about your financial situation and what it means for your plans. This includes a reduction in dividend income. Whether you want to understand what it means in the short term or are considering making investment changes due to this, please get in touch with us.

Please note: 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.

It probably comes as no surprise that much of the market update for March will be linked to the coronavirus pandemic. What started as a virus in Wuhan, China, has quickly become a global issue that’s affecting millions of people worldwide and implications for stock markets.

As governments around the world impose measures to try and halt the spread of the virus, economies have ground to a halt. Previously the International Monetary Fund (IMF) predicted the global economy would rise by 3.3% this year. However, it’s since warned that the forecast has been torn up as Covid-19 impacts both supply and demand. It’s now expected global growth will dip below last year’s (2.9%), but it difficult to predict by how much given the current uncertainty.

Few industries have been left untouched by the pandemic, leading to fears that a global recession is just around the corner. With travel nationally and internationally facing restrictions, the airline and travel industry have been one of the most severely affected. IATA, which represents the airline industry, said the pandemic is set to cost the industry at least $63 billion. In recent weeks, airlines have been forced to ground flights and, in some cases, entire fleets.

UK

Usually, the Budget taking place would be headline news. But the 2020 Budget, taking place on 12^th March, has been overshadowed by the impact of the coronavirus and lockdown. However, the Budget was used to announce some of the early measures taken to stimulate the economy during uncertainty, including offering ‘business interruption’ loans and cash grants to small firms.

Just before the Budget, the Bank of England also announced a cut to its base interest rate, quickly followed by another cut just a week later. The base rate is now just 0.1%, a historic low.

The current circumstances have been likened to a ‘wartime situation’ with a stimulus package worth £20 billion to support businesses through the worst of the crisis. However, the FTSE continued to experience volatility. In fact, the FTSE 100 ended quarter one 24.8% down, the worst quarter since 1987.

However, even before the coronavirus was taking hold, figures suggest that the UK economy was flatlining. The Office for National Statistics (ONS) figures show that GDP was flat in January and weaker than expected. On top of this in the three months to January, the service sector was flat, and production contracted by 1%. Whilst construction grew by 1.4%, this only represents a small part of the economy.

The Purchasing Managers’ Index (PMI) demonstrates the impact the pandemic is already having, with figures below 50 showing contraction:

• Overall, the PMI shows an extremely sharp fall in activity, falling from 53 to 37.1. It marks the worst reading since the survey began in 1990
• The service sectors slumped to 35.7 from 53.2 in February
• Manufacturing registered a small fall from 51.7 to 48, however, the PMI calculation assumes long delays for supplies are a sign of a strong economy, so the situation is likely to be worse than the figures indicate

So, where does this leave the UK? Predictions suggest that a recession is becoming more likely. Capital Economics predicted UK GDP could fall by 15% in the next quarter. This compares to the 6% decrease seen during the 2008 financial crisis.

A YouGov poll suggests that Brits aren’t optimistic about economic prospects either. More than half (52%) expect a recession within the next year. Some 19% expect a depression, typically associated with slumped output, extremely high unemployment and widespread company closures.

Europe

Europe is in a similar position to the UK; governments are taking measures to support individuals and businesses throughout the pandemic, stock markets are experiencing volatility and there are fears that the crisis will trigger a recession.

In response to the economic shocks, the European Union suspended debt borrowing limits. Christine Lagarde, President of the European Central Bank (ECB), also pledged there were ‘no limits’ on the actions the ECB would take with quantitative easing used in a bid to sustain the eurozone economy.

The PMI for the eurozone reached a record low of 31.4, with services and manufacturing falling to 28.4 and 39.5 respectively.

US

In response to Covid-19, the Business Roundtable, which speaks for dozens of America’s biggest companies, including JP Morgan Chase, Apple and General Motors, called for bold action to limit the economic fallout.

The White House has proposed a roughly $850 billion emergency economy rescue package to support businesses and taxpayers. The Federal Reserve also made an emergency rate cut, with a target range of 0% to 0.25%. The combination did help to ease markets, but investors still experienced significant volatility.

The latest figures for job growth in the US painted a positive picture for January and February. But this was before the impact of coronavirus was felt, with unemployment figures rising throughout March. In New York alone, there was a 1,000% increase in unemployment claims. Capital Economics predicts the country is heading for a 10% unemployment rate, more than double the rate seen at the end of 2019.

Risk of a recession is also being felt in the US. Bloomberg’s News’ Recession Tracker calculates the probability of a recession is over 50%.

This all had an impact on the markets. Wall Street suffered its worst day since 1987 on the 16^th March. US 10-year treasury bonds, the benchmark for global demand of bond, plumbed to new depths, far beyond those of the financial crisis, indicating global investors are looking for ‘safety’.

Asia

As the original epicentre for the outbreak, it’s not surprising that China has reported a huge tumble in factory sales for the first two months of the year. The country saw factory sales fall by 38.3% year-on-year. Highlighting the impact of the pandemic on both supply and demand, new car sales in China also fell by 80% in February year-on-year.

Whilst the current stock market volatility and economic uncertainty may be a cause of concern among investors, it’s important to keep a long-term view and your goals in mind. If you’d like to discuss your portfolio, please get in touch.

Please note: 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.  

One of the more unwanted consequences of the recent coronavirus pandemic has been a reported rise in the number of scams. Fraudsters are taking advantage of the panic currently surrounding the virus, with Action Fraud reporting that there were 105 reports of fraud relating to Covid-19 since the beginning of February, with total losses reaching £970,000.

The organisation reported a spike in fraud reports after March 13^th, with the majority of reports relating to online shopping, ticket fraud, charity fraud and lender loan fraud, as well as coronavirus-themed phishing emails.

The National Fraud Intelligence Bureau, which coordinates the police response to fraud, has also reported a spike in scams. The Bureau says that, since the beginning of February, it had received reports of 104 cases where fraudsters had taken advantage of the outbreak, with losses totalling almost £1 million.

The common coronavirus scams

Action Fraud say that roughly half of their coronavirus scams related to fake face masks, while Tony Neate of anti-fraud group Get Safe Online said he had even seen cases of fake coronavirus cures and treatments.

In one incident reported to police, a member of the public spent £15,000 on face masks which never arrived. The City of London Police have reminded the public to research online sellers if they do not already know and trust them, perhaps by asking a friend or family member for advice. Most shoppers who use a credit card should be protected by the existing laws.

Another example of fraud has seen scammers offering cheap flights to capitalise on the confusion around current international travel arrangements.

While many scams relate to products, there has also been a rise in email scams concerning investment schemes, pensions and trading advice. These include:

• Investment schemes encouraging people to take advantage of the downturn in stock markets caused by the coronavirus pandemic
• Emails purporting to be from HM Revenue and Customs offering a tax refund
• Emails from the government, saying that a tax refund has been made available in partnership with the NHS to help deal with the outbreak.

According to Action Fraud, one known tactic is that emails claim to come from official organisations such as the World Health Organisation (WHO) and offer fake health advice or claim to be able to provide a list of infected people in your area. If you click on a link you are taken to a malicious website or asked to make a payment in Bitcoin.

Detective Superintendent Estelle Mathieson, of Greater Manchester Police, says: “There is currently a lot of publicity surrounding coronavirus and it has come to our attention that fraudsters are using what is a time of uncertainty for many and exploiting innocent people out of their hard-earned money.

“It is likely that nationally, scams of this type will rise as the virus situation continues.”

How to avoid pension scams

In recent weeks, consumers have been warned that scammers could turn their sights to consumer’s pensions, particularly as clients approaching retirement have been seeking professional advice following the short-term pension losses caused by stock market falls.

Between 24 February and 23 March 2020, the FTSE 100 index fell by around 30%. Even though clients are typically invested in a balanced portfolio, many have seen the value of their pension pot fall significantly over the past couple of months.

Analyst Tom Selby said: “While the country hunkers down in the hope of slowing the spread of the coronavirus, the economic fallout will inevitably lead to an increase in the number of vulnerable or potentially vulnerable people in the UK.

“In such an environment, unscrupulous scammers will already be plotting ways to take advantage during what for many will be a time of serious financial strain.”

Email scams often claim that they can allow savers early access to their retirement savings – and this may be particularly enticing if household incomes fall due to uncertainty and unemployment caused by the coronavirus pandemic.

Any consumer taking advantage of such an offer could see them hit with a 55% unauthorised payment charge from HM Revenue and Customs, as well as fees charged by the scammers.

Mr Selby added: “Scammers’ tactics are evolving all the time and increasingly we see complex schemes promoted online through social media.  This virtual wild west is a natural home for fraudsters, with governments around the world struggling to create meaningful protections for consumers.”

Common signs of pensions scams include:

• Claims that a provider can generate higher returns on pension savings, often using the term ‘guarantee’
• Phrases including ‘free pension review, ‘savings advance’ and ‘loophole’
• Time-limited offers
• Unusual and high-risk investments which are often overseas and therefore unregulated with no protection.

4 steps to keeping yourself safe from pension and investment scams

1. Ignore any unsolicited offers, either by email or ‘cold calling’
2. Check the Financial Services Register to establish anyone you are thinking of dealing with is FCA registered and that they can provide the services they say.
3. Take your time to consider an offer. Don’t be rushed into making a decision.
4. Seek impartial and professional advice. A financial adviser will help you make the best decision for your own personal circumstances. If you do decide to speak to an adviser, make sure they are regulated by the FCA and never take investment advice from the company that contacted you, as this may be part of the scam.

If you are considering a pension or investment offer you have seen, speak to us first. Get in touch to find out more.

We’re now well into spring but rather than enjoying the Great British countryside, you likely find yourself cooped up indoors.

With much of the country in lockdown, you might find yourself turning to the comfort of a good book. If so, why not stay engaged with the great outdoors by choosing some so-called ‘New Nature Writing.’

It’s a genre that has seen a real resurgence of late. From Paula Hawkins to Robert MacFarlane, British authors are putting themselves at the centre of a narrative that celebrates our ‘everyday connections with the natural world’.

Here’s your guide to five of the best.

1. Waterlog, by Roger Deakin

It’s only right to start our list with the book often credited as kick-starting the genre over 20 years ago.

Roger Deakin’s 1999 bestseller Waterlog: A Swimmer’s Journey through Britain, traces his escapades all around the British Isles.

‘From the sea, from rock pools, from rivers and streams, tarns, lakes, lochs, ponds, lidos, swimming pools and spas, from fens, dykes, moats, aqueducts, waterfalls, flooded quarries, even canals’ he ruminates on what it means to be an island race, and the effect that this has on our relationship to water.

The book begins (and ends) in the moat that surrounds his Suffolk home, getting a ‘frog’s eye view of the rain on its surface’ before open-air swimming the width and breadth of Britain.

Deakin died in 2006 and, although one of three books by the author, this was the only one to be published in his lifetime. 

2. The Old Ways, by Robert MacFarlane

Robert MacFarlane became a friend of Roger Deakin in later life and refers to their friendship often in his books.

In The Old Ways: A Journey on Foot, MacFarlane sets out to discover the drove-roads, holloways, and tracks that mark the passage of our ancient ancestors, asking what it means to make tracks and uncovering the history of these ancient byways.

He begins in England, leaving his home and following the fresh tracks of wildlife in the snow. From there, he follows ancient sea roads in the Hebrides, journeys briefly to the West Bank in the occupied Palestinian territory, before returning to England and walking in 5,000-year-old footprints.

A top ten bestseller on release, the author describes the book as the third in a loose trilogy – after Mountains of the Mind and The Wild Places – about ‘landscape and the human heart’.

As with all of MacFarlane’s books, it’s also about language. He’s trailing not just the people that made the tracks and ‘old ways’ that he follows, but the nature writers that preceded him too.

3. H is for Hawk, by Helen MacDonald

Winner of the Samuel Johnson prize for non-fiction in 2014, H is for Hawk tells of MacDonald’s attempts to follow a childhood dream and train a goshawk, following the death of her father.

Whilst the author struggles with grief, and the challenge of training £800 goshawk Mabel, she also parallels her tale with that of T H White, author of the 1951 The Goshawk, a similar tale of falconry and the battle of wills between hawk and trainer.

Interweaving the narratives of the author’s battle with depression, the training of Mabel, and the life and experiences of T H White, makes for a thrilling and intricate story.

Intensely honest, the nature in the book is the goshawk, itself a metaphor for grief, but the result is uplifting and inspiring. 

4. Love of Country: A Hebridean Journey, by Madeleine Bunting

Situated on the northwest coast of Scotland and comprising hundreds of islands, the Hebrides form the setting for Madeleine Bunting’s book that charts their history, cultures, and traditions.

From ancient shipping routes to modern concepts of Britishness, Bunting spent six years writing the book, travelling to the islands – and back again – from her home in east London.

Overcoming a feeling of being an outsider, whilst avoiding the inclination to over-romanticise, she plots her journey. On a north-west heading, she visits seven of the Hebridean islands as she moves forward in time, from the seventeenth century to the present day.

She takes literary detours along the way, via ‘WH Auden, Stephen Spender, Cecil Day-Lewis and George Orwell [who] all headed north’ and in whose footsteps Bunting is well aware that she is travelling.

The book is part memoir, part travelogue, part history of the islands and a worthy addition to the ‘New Nature Writing’ cannon.

5. The Butterfly Isles, by Patrick Barkham

Originally published in 2010, The Butterfly Isles: A Summer in Search of our Emperors and Admirals follows Barkham over one action-packed summer as he sets out to spot every one of the UK’s 59 native species of butterflies. 

The author’s love of the creatures was formed when he spotted a Brown Argus – ‘not exactly rare but hard to find in East Anglia’ – when he was eight years old. Thirty years later, his interest showing no sign of waning, he set himself the challenge and this fascinating book is the result. 

Despite his lifelong love, the book is written for laymen rather than lepidopterists, and for lovers of the British landscape.

From London parks to Scottish bogs, the 59 varieties needed to complete the set don’t make the author’s life easy.

But his love of the creatures is clear, as is his love for the British landscape, in all its forms.

Over the last few months, speculation that the Bank of England would increase its base interest rate has been mounting. However, the impact of Covid-19 has changed that, leading to the central bank making two cuts to the interest rate in quick succession.

Coinciding with the 2020 Budget, the base rate was cut from 0.75%, where it’s been since August 2018, to 0.25% on Wednesday 11^th March. Just a week later, the rate was cut again on Thursday 19^th March to just 0.1%. The latest cut represents a historic low, and it could have an impact on your finances.

The Bank of England base rate is the official borrowing rate of the central bank, affecting what it charges other banks and lenders when they borrow money. This then has a knock-on effect on personal finances.

Why has the Bank of England cut interest rates?

The rate cuts have been in direct response to the coronavirus pandemic.

As the virus has spread globally, it’s had a significant impact on economies. In the UK, non-key workers have been urged to work from home, pubs and other leisure facilities have been temporarily ordered to close, and many other businesses have taken the decisions to either reduce operations or suspend them. These are steps that are hoped to stem the spread and relieve pressure on the healthcare system but come at an economic cost.

The latest interest rate cut has increased its quantitative easing stimulus package and pumped more money into the UK economy. The aim of this is to calm the financial markets, which have experienced volatility over the last few weeks, and stabilise the economy.

In a statement, the Bank of England said: “Over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt markets have deteriorated as investors sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves. As a consequence, the UK and global financial conditions have tightened.”

The Monetary Policy Committee, which is responsible for setting the base rate, voted unanimously to increase the Bank of England’s holding of UK government bonds and sterling non-financial-grade corporate bonds by £200 billion, bringing the total to £645 billion.

But what does this mean for your finances? The impact will depend on whether you’re looking at borrowing or saving.

Borrowers

For some borrowers, the lower interest rate is good news. This is due to the cut lowering the cost of borrowing.

The area where you’re likely to see the most immediate impact is your mortgage if you have a tracker or variable rate one. A tracker mortgage, for example, tracks the Bank of England base rate, so your mortgage repayments should drop before your next payment. A variable mortgage tracks your lender’s interest rate, this will follow the trend of the Bank of England, and most borrowers will benefit from the full 0.65% drop, but it does vary. It’s worth checking with your lender about how your mortgage repayments will change if they haven’t already contacted you.

Unfortunately, those with a fixed-rate mortgage won’t benefit from the rate cut.

Savers

The years since the financial crisis have been difficult for savers. Low-interest rates over the last decade have meant savings aren’t working as hard as they may have done before 2008.

Interest rates on savings accounts are now likely to fall even further. When you factor in the pace of inflation, this means that many savings are likely to be losing value in real terms. This has a particular effect if you’re saving for medium and long-term goals. Inflation rising by a couple of percentage points each year can have a large impact when you assess the impact over ten or 20 years, for instance.

If you have a fixed-rate account, your interest rate and savings will be protected for the time being. However, if you have savings in other types of accounts, it’s likely the amount they earn will fall eventually. Banks must give existing customers at least two months’ notice of a cut, for current accounts and instant-access savings accounts.

For long-term saving goals, investing can help savings match the pace of inflation, maintaining your spending power. However, it’s important to note that investment values can fall and experience volatility, with the pandemic having an impact on markets too. As a result, it’s important to assess your financial goals and risk profile before making any investment decisions.

If you’re unsure what the base rate change means for you, please contact us. We’re here to help you adjust financial plans and goals as circumstances change, whether they’re within your control or not.

Please note: 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.