Afternoon included a meeting with a pension consultant where I explained my strategy for auto enrolment. We are setting up a new venture called Aisa Corporate Benefits, with the objective of helping companies establish workplace pension schemes ready for the staging dates. As a director of this company, I will be spending the majority of my time in this area. I think there will be an extremely large demand from employers who require professional, independent specialists to help them set up the most suitable pension plans for their companies.
Tuesday
I spent the morning at an international adviser seminar in Bristol – a four-hour event covering various topics, from offshore bonds to emerging market funds. It was interesting, with a lively ‘debate’ on the effect of adviser charging on 5 per cent withdrawals and an explanation on why Indonesia may be the next ‘emerging economy’ among other things. It was good to catch up with some old faces and receive a free lunch. Ended up having to pay £8.50 for parking – there is no such thing as free parking.
My first meeting is with a client who wants to pay £100 a month into a pension. After running through a basic factfind, it transpires that she only has £600 a month disposable income, before living expenses such as food, with no savings, and she plans on getting married next year. I tell her to save what she can into an Isa and wait for her employer to start a pension in 2015, when we will assess the situation again. Then I find out an adviser she had met that morning told her he would set up the pension but would have to take a £500 fee. The RDR is not perfect for every consumer; I believe in saving and not discouraging pension planning, but it has to be workable.
Wednesday
I met with a new client who has a considerable inheritance tax liability, I informed her that her home (which is held in an interest in possession trust) would be considered as part of her estate and therefore her tax bill could cost her family more than £200,000. I ran through a potential solution for her investment portfolio, using a discretionary trust and making gifts out of income. We agree another meeting so I can run through options with her two sons.
The second meeting was with a potential client who has a pension with a well-known ‘closed’ company and is being told he now has to wait another five years (to age 65) to receive his pension, otherwise there will be a 20 per cent MVR (more than £29,000) if he wanted to take his tax-free cash now. Not good.
Thursday
I have a meeting with a local company regarding its pension scheme I set up last year. I added five new members and held meetings with each one to run through various areas, including attitudes to risk. I was shocked at the low level of knowledge that these 20 year olds have regarding pensions and investing. We definitely need finance to be added to the school syllabus, including lessons on mortgages, compound interest and exactly how banks work. Luckily I do not have to let the state of our education system grind my gears for too long, as I spend the evening mountain biking round Ashton Court.
Friday: Today includes a meeting with a pension consultant to put together reports that will help companies set up workplace pensions.
These reports will provide employers with a breakdown of their workforce into eligible, non-eligible and entitled employees. The rest of the day is spent making calls to clients who have inheritance tax liabilities. While this remains an important part of financial planning, it takes time for clients to decide whether they want to mitigate their liabilities. The fact that in most instances they need to survive seven years before the strategy will reach its objectives should mean people act quickly, but it does not. It is often added to the never-ending to-do list, along with updating their will and defrosting the freezer.
Geordie Bulmer is an IFA of Bristol-based Aisa Professional
