A day in the life of a financial adviser by Cole Mills
It is a fine Tuesday morning in Lincolnshire. Following a final swig of coffee I leave the house and head to the office. A 20-minute drive through the heart of the Wolds, passing Cadwell Park on the A153, a road notorious for its snowdrop flowers and featured on one of Jeremy Clarkson’s programs.
On that bombshell… today entails three client meetings, some fund analysis and no doubt copious amounts of phone calls both inward and outbound.
F H Manning originally advised the first client I am seeing in 1989. One of my first projects when I joined the team in 2018 was to reinitiate contact with those that hadn’t had any dealings with us for some time – did you know that receiving financial advice can leave clients around £50,000 richer over 10 years? (International Longevity Centre)
My sporadic correspondence must have worked as we finally sit down to discuss his circumstances and objectives. Apart from the pension information I hold on file from all of those years ago, the client has no other paperwork or policy numbers to work with in respect of other entitlements accrued throughout his 40-year career.
Year by year we talk through the roles he’s had with different employers. Not only does this give me a basis to work from in tracing his pensions and establishing which roles are likely to produce something in the form of a retirement provision, I can see all of the memories, good and bad, flooding back to him.
In cross-referencing his previous employments with the pension tracing service I can send Letters of Authority off to the appropriate providers to establish any entitlements he does have .
IF ONLY IT WERE THAT SIMPLE – there’s some major work to do here!
The next meeting in the diary is the mother-in-law of a recently onboarded new client. At present, her income just about meets her expenditure – however, with the persistent increase in the cost of living this may not be the case for very long.
Alongside her daughter, we discuss her current investments; 3 whole of life investment bonds that have remained untouched for several years – one of which she’s still paying a monthly premium towards.
These investments were taken out a while ago. This is important for a couple of reasons:
- The client may not be aware of the characteristics of the investments and why they were originally recommended. For example, an investment bond has a 5% annual withdrawal allowance, meaning the client can access 5% of their initial investment per annum with no immediate tax liability.
- The period since commencement could have an impact on how withdrawals and/ or gains are taxed.
The 5% withdrawal allowance mentioned above, if not used one year can be carried forward indefinitely. Equally, 20% tax is already paid within the fund, meaning that upon surrender if the gain does not take the client into a higher-rate tax bracket there will be no further tax to pay.
Given the clients age this case is a balancing act between ensuring she utilises her investments to maintain a comfortable standard of living and retaining investment status of the bonds because of their 101% insurance value characteristic – investment bonds can’t be considered by local authorities in conducting means-tested benefit calculations.
Overall, I’m sure I can provide her with the reassurance she needs to be happy.
Before my first meeting of the afternoon, the time is upon us to start our next quarterly review process.
Unlike most firms in the area we still formulate our investment propositions in-house, meaning it is my job to ensure the funds we recommend are doing what they set out to do. Although the process as a whole involves an internal scoring system grading each fund individually (there are over 100!) on various factors such as performance, volatility and manager tenure to name a few, this lunch time will be spent analysing each propositions’ portfolio performance over a 3, 6 and 12-month period. This will provide me with a broader perspective before I begin to funnel down.
Pay day has just been so I treat myself to Myers’ Bakery lunch – Home of the Famous Lincolnshire Plum Loaf. I opt for a beef pasty, which in my opinion is levels above. Subsequently, a quick spruce up before my final meeting of the day.
I meet with two local entrepreneurs, very successful entrepreneurs may I add, whom have just sold the business they built from the ground up. Although its an opportunity for me to demonstrate the products and services we can offer as a whole of market, independent financial advisor firm, it is also an opportunity for them to reaffirm their objectives in the next chapter of their lives.
Some may choose to slow things down a bit but given they’re still young numerous business ideas and ventures were discussed. It is my job to show where we can add value in their journey. For example, utilising a Self-Invested Personal Pension to purchase a commercial property. Benefits of utilising a SIPP include the ability to loan up to 50% of the pension’s value to purchase a commercial property. Business rents generated from the property can be paid into the pension, which not only contributes to increasing the overall pension value, but it is also classed as a business expense. Any rent received is free of income tax, and any gain achieved on the property’s future sale is not liable to Capital Gains Tax (CGT) as the SIPP is its own legal entity.
Overall a very enjoyable meeting with inspiring people, discussing a different topic from the normal day to day activities.
After each meeting I write minutes for the file. Although an FCA requirement, it enables me to capture important discussion points and reiterate the client’s objectives and goals. It also helps me to reflect on the meetings themselves and identify if I’ve missed an opportunity.
It’s been a great Tuesday establishing new relationships with potential clients; however I have several recommendations that need formulating and plan information that needs chasing up… bring on Wednesday.
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