Winston Churchill was once accused by an opponent of having drunk enough liquor in his life to half-fill a room. Without a trace of embarrassment the great man simply looked up at the ceiling and said, wistfully: “Ah, so much to do and so little time”.
I am sure the sentiment of “so much to do and so little time” will strike a chord with many advisers, especially given all the huffing and puffing going on with the financial advice market review (FAMR), coupled with media speculation about what will happen to pensions in the Budget. I am, therefore, delighted to hear that most financial advisers are concentrating their efforts on building strong, profitable businesses by doing a good job for their clients.
So much to do and so little timeThis is critically important, because the Government has already made so many radical changes to the taxation of investments and savings that it is well-nigh impossible for clients to keep track of them and the host of financial planning opportunities they represent. It is, therefore, up to financial advisers to bring these opportunities to clients’ attention and, where appropriate, help them take advantage of the Government’s changes.
This brings us to the essence of a personal financial planner’s role – that of helping clients save for the future and protect their families as they accumulate or, of course, ultimately decumulate capital, all in the most tax-efficient way possible.
Many of the recent tax changes will apply from as early as 6 April this year, and my guess is that virtually every client could benefit from your help and advice. This gives you a golden opportunity to meet up with your client base to explain these important changes and how they will impact their finances.
For example, in the next tax year, bank deposits will stop deducting tax and will pay interest to customers gross. From April, basic rate taxpayers will be able to earn £1,000 of interest tax-free, and even those paying a higher-rate tax can earn £500 tax-free. At today’s miserable interest rates, this enables interest on or around £70,000 of capital to be sheltered, while a number of detailed changes to the way funds can be moved around in Isas will also undoubtedly create opportunities. Additional-rate taxpayers lose out, however, as they will not qualify.
On the dividend front, I have written previously, that for a Conservative Government to essentially bring back the hated Investment Income Surcharge is very disappointing for clients who receive substantial dividends. Those who receive more modest dividends, however, can receive up to £5,000 of dividend income completely tax free from 6 April. Again a great tax planning tool.
Little wonder, then, that for financial planners it is a case of focusing on doing business by helping clients as there is, indeed, “so much to do and so little time”.
Ken Davy is chairman of SimplyBiz
