Change is in the air as wealth managers begin to rationalise their client books once again. Savings efficiency and the role of passion assets have been regular features in our conversations with users too.
Some clients are being ousted as a result of new compliance rules
Although we are naturally always overjoyed to have new users, it is also a shame to see them being forced to come to us because their old adviser has unceremoniously dumped them. That, sadly, has become a noticeable trend in recent times.
The reason seems to be new the Consumer Duty rules, which the industry has complained are increasing complexity and costs, and leaving firms with no choice but to rationalise their client bases. It might be that some clients are seen as not profitable enough anymore, or that their needs and outcomes are too difficult to document to the satisfaction of the new rules. The sector is said to be really struggling to meet the new requirements, particularly at the IFA level, and many predict a wave of consolidation will result. We hope client detriment can be avoided.
Rest assured, there will be numerous wealth managers vying for your business, even if you have quite a modest level of assets, and you can have them make an approach very easily through us
Regulatory changes always shake up industries, and sometimes in ways which are surely unintended the supervisory authorities and certainly unwanted by the users of it. The good news is that you can find a new provider fast by using our free online matching service. Rest assured, there will be numerous wealth managers vying for your business, even if you have quite a modest level of assets, and you can have them make an approach very easily through us.
Savings tax bills are becoming an issue
During years of rock-bottom interest rates, paying taxes on savings was hardly a concern. But now savers with high cash balances are bracing themselves for shock tax bills after a period of higher rates – and potentially for more levies to come. We have been having many conversations about sheltering savings from tax and also what other options there are for nest eggs.
Currently, basic rate taxpayers can earn up to £1,000 a year in interest on their savings before tax is due, while higher rate taxpayers can earn £500. This means those earning 5% (which has been eminently achievable in the past year) only need to have £20,000 or £1,000 respectively in their savings accounts before breaching the personal savings allowance threshold. We regularly encounter users with many multiples of those amounts due to a host of factors including inheritance, property sales or simply a build up on excess funds which they haven’t decided how best to deploy yet.
ISAs are a go-to option for shielding interest and investment gains from tax, and managing these tax-efficient accounts is foundational work for wealth managers (as is the administration side of things)
ISAs are a go-to option for shielding interest and investment gains from tax, and managing these tax-efficient accounts is foundational work for wealth managers (as is the administration side of things). Managing an investment portfolio within an ISA tax wrapper really is a no-brainer and you should ensure every family member, including children, are maximising their ISA allowances each and every year.
But once those limits are breached, you will need to think about other tax-efficient ways to deploy your savings. There are many to explore, including qualifying Enterprise Investment Scheme assets (which offer a host of tax savings) and topping up pensions. Why not let us set up some no-obligation conversations with leading advisers so you can weigh up your options, particularly as the Autumn statement could well reveal plans for more tax pain?
Top Tip
We’ve been in the wealth manager matching business since 2012 and so have seen several waves of industry consolidation over this time; a lot of this has been due to compliance complexities and increasing overheads. Client movement is the inevitable result, as is some clients being abandoned or somewhat sidelined as costs bite.
While it can be hard to ‘not make the cut’ any longer, you should look at this as an opportunity to find a better match for you. You are likely to find that many wealth managers are a good factual fit, which means you only need decide which one feels right for you. Our process is rapid and will cost you nothing more than taking a few minutes to complete our matching questionnaire. What have you got to lose?
Lee Goggin
Co-Founder
Summer signals more time for fun investments
Users of our service certainly have many serious concerns on their minds at present, but it is nice that we have recently had a good deal of side conversations with investors who are using the summer period to indulge in their passions – perhaps prompted by our ongoing series on collectibles which has covered cars, watches, handbags, diamonds, whisky, art and more.
The need for real diversification means that mainstream alternative investments such as commodities and hedge funds are a core part of many people’s wealth strategies; there can also be a strong case for more exotic and esoteric ones such as collectibles too. Not only are passion assets a source of great joy, they can actually deliver really strong returns if the right choices are made.
Not only are passion assets a source of great joy, they can actually deliver really strong returns if the right choices are made
Because of their enduring popularity, many wealth managers have advisers, teams or even whole departments dedicated to passion assets, with art divisions being quite commonplace at the upper end of the industry for instance. However, the main thing your wealth manager will be focusing on is how much of your portfolio can sensibly be dedicated to non-traditional assets, and any tax and estate planning implications which will result. Those pragmatic points taken care of, you can indulge your passion confidently.
Take care of both the serious and fun sides of your wealth
It can be easy to forget that money is meant to be enjoyed, as well as to be built and preserved. Therefore, we always like to emphasise the key role wealth managers play in helping their clients to gain peace of mind, maximise their financial health and ultimately use their assets in the most strategic manner to make the absolute best of life.
Optimum wealth management results come from a truly holistic approach which looks at your (and your family’s) financial profile and objectives in the round, and these are just the kind of relationships we are expert in setting up. We know all the firms on our panel intimately, and often their leading advisers too. This means our matching capabilities are unsurpassed. Why not let us set up some no-obligations with leading professionals, fast and free?
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
