As a company committed to your financial well-being and planning, we are excited to present the latest edition of our client newsletter, designed to empower you on your financial journey. Our mission is clear: to provide you with essential insights and motivation that will turn your financial aspirations into reality.

In this edition, you will find invaluable articles crafted to enhance your financial knowledge and strategy. Dive into the October Budget, uncover critical takeaways, and confidently prepare for 2025. Explore the concept of intergenerational wealth, master the skills to identify financial scams, and grasp the essential role of protection when taking out a mortgage.

Each topic has been thoughtfully selected to equip you with the knowledge necessary for immediate and long-term financial success. This newsletter goes beyond theory; it’s brimming with practical guidance.  Our straightforward guidance ensures you feel not only informed but truly capable as you navigate your financial landscape.

Email: planningteam@hexagonwm.com

Telephone: 01270 250900

In the intricate tapestry of life, planning for the inevitable is often a topic we prefer to avoid. Yet, in the United Kingdom, creating a will stands as one of the most vital responsibilities an individual can undertake. This legal document, often overlooked, plays a pivotal role in ensuring your wishes are respected, assets are distributed as intended, and your loved ones are cared for after you’re gone.

 

Preserving Your Legacy

A will is your voice after you’re gone. It encapsulates your desires regarding the distribution of your assets, properties, and belongings. By clearly outlining your intentions, you safeguard your legacy, ensuring that your hard-earned assets benefit those you cherish the most.

 

Protecting Your Loved Ones

In the absence of a will, intestacy rules come into play. These laws dictate how your estate will be divided among your family members. Creating a will allows you to specify provisions for your spouse, children, and other dependents, providing them with financial security during a challenging time.

 

Minimising Family Disputes

A well-drafted will can prevent potential disputes among family members. Clearly defined instructions leave little room for interpretation or contention, fostering harmony and understanding among heirs. This ensures that your loved ones can focus on grieving and supporting one another, rather than engaging in legal battles.

 

Appointing Guardianship

For parents, a will is indispensable as it allows you to nominate guardians for your minor children. This decision, made by you, ensures that your children are placed under the care of individuals you trust and who share your values, beliefs, and parenting style.

 

Tax Planning

Wills can be used as strategic tools for tax planning. With proper guidance, you can structure your estate in a way that minimises the tax burden on your beneficiaries, allowing them to inherit a more substantial portion of your assets.

 

Peace of Mind

Knowing that you have taken the necessary steps to plan for the future provides peace of mind. It offers reassurance that your loved ones will be taken care of and that your assets will be distributed according to your wishes, relieving you of the worry that your family might face financial hardships in your absence.

 

Encouraging Charitable Giving

A will provides you with the opportunity to support charitable causes that are close to your heart. By including charitable bequests, you can leave a lasting impact on organisations and initiatives that are meaningful to you, contributing to a better society even after you’re gone.

In conclusion, creating a will in the UK is not merely a legal formality; it is a profound expression of love and responsibility toward your family and the causes you hold dear. By taking this important step, you can leave behind a legacy of care, compassion, and support, ensuring that your influence continues long after you have departed.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE WILL WRITING.

Whether we are talking about Pensions, ISAs, Bonds, Unit Trusts, OEICs etc… these will all likely have an underlying portfolio of investments.

You may or may not know what you are paying for your investments. New regulatory disclosure rules introduced in January 2018 meant that all charges must be disclosed and broken down for investors so you may be able to understand how much you are paying for what service.

Typically, an investment holding on a platform will have the following 3 charges: –

• Platform charge
• Portfolio/Fund charge
• Ongoing Adviser charge

 

What’s the challenge?

In the majority of instances when we are reviewing a new client’s existing investments, we discover their underlying investments are invested in ‘the usual suspects’, which generally have an ongoing Portfolio/Fund charge of more than 0.80% per annum. Whilst this might not seem like a lot, when added to the other two charges above this can take the total overall investment charges above 2% per annum.

That’s 2% the investment has to make up before trying to compete on performance against banks and building society interest rates. That’s also 2% before the effects of inflation have been considered.

In our experience, we often find these portfolios of usual suspects are not only costing the investor more than necessary, they purport to be actively managed and attempt to outperform the market average but often they don’t achieve it.

 

How can this be addressed?

We know from our experience it is possible to obtain better performance via a more passive approach, which also typically has a lower charging structure (saving around 0.50% pa on average). Using this method we have saved some of our clients thousands of pounds.

At Hexagon Wealth Management, we can review your existing portfolio to check whether you are currently invested in any of these funds and help you to reduce your ongoing charges where possible as well as seek superior alternatives.

Investing isn’t just about charges and performance. We help our clients to understand where they are going in life, put plans in place and help them to use their finances for this. See our other post on What to expect from a Financial Planner for more information on the financial planning journey.

For a free initial health check on your existing portfolio please contact us on 01270 250900 or planningteam@hexagonwm.com for an initial chat.

 

The value of investments and income from them may go down. You may not get back the original amount invested.

What are you most interested in?

• Profit Protection
• Key Person Protection
• Debt Repayment Insurance
• Life Insurance
• Critical Illness Insurance

 

Contracting and running a business can bring a level of uncertainty both in terms of where the next work is coming from as well as financially rewarding. Trying to manage this can be tricky and likely causing you a certain level of stress.

 

You might be asking yourself certain questions such as: –

• Am I building up enough of a reserve for those leaner times?
• How do I save for my long-term future without compromising on my short-term needs?
• What do I do if I can’t work for a period of time due to illness?
• How do I extract more profit from my business?

 

We appreciate that everyone is different, which is why we take the time to listen to your needs and personal concerns and ultimately help you to be more intentional with your finances. Whether you need to start your wealth building journey, protect your family in case the worst should happen or need some advice on your retirement planning we are there for you.

 

So what are the top things we consider when engaging in the financial planning process?

1. Emergency Fund. This is extremely important. Even if that fund just covers the simplest of contingencies you should try to make sure you have built up a sufficient pot to fall back on in times of short-term unforeseen expenditure needs.

2. With the best will in the world plans can be disturbed by external forces. It’s no good having a plan to build your wealth and be in a position to access this when you reach your ideal time for financial independence for the worst to then happen, or you have an unfortunate health issue, which impedes your ability to fulfil your goals. You need to make sure you are adequately protected, otherwise the whole plan could crumble.

3. Pay yourself first. Whilst budgeting can be important for those that need to concentrate on repaying bad debts such as credit card balances or personal loans because it adds a structure and accountability to where your money goes it can be tricky (and lets be honest – boring) to stick to. Instead, we encourage you to be intentional with your financial planning and apportion your finances towards your dreams first and live on what’s left. We can map out your plans with you so you can understand and see for yourself how these wealth building methods translate in real terms for your future.

4. Consider what’s important to you in life. What does money mean to you? If you only had 12 months to live, what would you do with your life?

5. Start now. The compound effect of growth over a long period of time can be staggering and make such a difference to you and your family’s life. The sooner you start your journey the sooner you will reach financial independence.

Number 4 can be a difficult question and the answer may develop over time. The important point is to start thinking about it now and put a plan in place for you and your family. If the plan changes then that’s great. At least you are being intentional with your money and your life.

Take Action

Speak to our financial planning department today to start your journey to financial independence on 01270 250900 or email us.

We have a number of clients with either current or (more commonly) frozen Final Salary Pension Schemes as well as personal pensions or new employer workplace pension plans. When going through working life ‘collecting’ pensions it can be tricky and more so confusing to understand where you are up to with your retirement provision.

There are so many different historic types of pension scheme with a variety of different ways in which the benefits can be paid that it is no wonder people seek our advice to assist them to make the right decision for them and their needs.

We can help you to map out your desired life and what this might cost. Add to the mix your existing provision such as existing pensions, savings, investments etc and the help you to understand whether you have a shortfall or enough provision or could indeed choose to retire earlier than you had originally planned.

Can I take an income from my pension and continue to pay back into it or another pension plan?

You may have read some rules around what level of contribution you can make to a pension if you are already in receipt of pension income.

The answer to this lies within what type of pension your income is being taken from and whether the withdrawals from the pension are indeed classed as ‘income’ or tax-free cash:

Final Salary Pension Income can be paid without impacting on the level of contribution you can make towards a personal pension plan or money purchase workplace pension scheme.

Most Personal Pensions and Workplace Money Purchase Schemes allow up to 25% of the value to be taken as a Pension Commencement Lump Sum (or Tax Free Cash as it is more commonly known). Taking this and this alone will not impact on your normal pension contribution allowance – unless you try to recycle this tax free cash back into a pension to receive tax relief of course. This would then fall foul of Tax Free Cash Recycling Rules, which are a bit of a mine field in themselves.

Buying an annuity with the remaining 75% of a Money Purchase Pension Scheme will not reduce the amount you can pay into another pension scheme.

However, Income taken from the remaining 75% of a Money Purchase (Personal Pension, Workplace Personal Pension etc) pension scheme via Flexi Access drawdown will indeed trigger something called the Money Purchase Annual Allowance (MPAA). This means that you would then have a reduced annual pension contribution allowance, which can be quite limiting.

Why is this important?

Sometimes we have queries where clients are trying to raise capital for their businesses and seek to access some of their pension funds in the hope to replace them later down the line when the business can afford to do so. However, there are some pitfalls as mentioned above which may go overlooked.

If you would like to discuss your own retirement planning needs please do get in touch with our Financial Planning team on 01270 250900 or email awm@alextragroup.co.uk and they will be happy to take a look at how the rules may affect your personally.

With bank account and savings interest rates being stagnant at their historically low levels for the last 10 years its easy to understand why so many people are now turning to investments to try and at least keep up with inflation.

We are finding that many of our clients are holding significant sums of cash in their business bank accounts which is being eroded over time by the ever increasing cost of living.

How can we help?

We can show you a number of different ways in which you can make your money work harder for you. We will plan with you to help you get the most out of the fruits of your labour.

Extracting profits with Pensions

One keen way to help you do this is by looking at your scope for pension contributions – still one of the most tax efficient methods of saving for your future because:

• Your business can save thousands in Corporation Tax
• You personally get to take more out of your business
• The money then grows in a tax-free growth environment
• You can take pension benefits from age 55 onwards and 25% of these can be tax free

And you thought pensions were boring, didn’t you?!

Business Investments

It’s not just individuals that can invest in the markets for the hope of better returns than current account interest. Your business can do this too.

As long as you have a medium to long term view on the investment time horizon – 5 years plus – then it could be prudent to look at investing in the markets.

What about risk?

We will work with you to agree an appropriate level of risk to take, given your individual circumstances – it doesn’t have to be high risk to keep up with inflation if this is what you are looking for.

Take Action today

Using our joined up thinking, we work with your accountants to help you to understand the tax implications for you and your business with either of the above options.

Get in touch on 01270 250900 or email planningteam@hexagonwm.com to find out more.

Most people have a need for protection. In an ideal world, fully comprehensive financial protection would include life insurance with critical illness cover as well as income protection insurance. This is because they each protect against a different major life event.

We understand that insurance isn’t something that you’ll want to spend time thinking about. After all, life is for enjoying, not worrying about what’s around the corner. But as financial planners, we’re here to help make sure that you can enjoy life even more, knowing that you have the right protection in place. We can offer advice on the following areas of protection:

Critical illness cover – designed to pay out a cash sum if you were diagnosed with a critical illness, such as cancer.

Life cover – designed to pay out your chosen cash sum if you die during the policy.

Income protection – designed to provide you with a monthly income to help you pay the bills and everyday living expenses, should you not be able to work due to illness or disability.

We can carry out a review of your insurance needs to make sure that you have the right cover for you and your family, taking into account your circumstances, needs and objectives. And, if you already have cover in place, we can check to make sure you’re not paying more than you need to.

Take Action – 

We can review your insurance to make sure you have the appropriate level of cover at the right price. To arrange a review, please give Steven Pepper a call on 01270 250900 or email planningteam@hexagonwm.com

If your policy has no investment element then it will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained then cover will lapse.

A Critical Illness Policy may not cover all the definitions of a Critical Illness. For definitions please refer to your key features and policy document.

The Challenge

The ING International Survey Savings 2019 released on 20^th February 2019 suggested that about half retirees across Europe don’t enjoy the same standard of living they had when they were working. 58% of UK residents surveyed said they worry about whether they will have enough money in retirement and 54% of UK residents surveyed feel they will have to continue to work in retirement. See the full report here

• How do you feel about your own retirement plans?
• Do you have enough provision?
• When will you retire?