Ian Sackfield, chief executive of private bank Brown Shipley, has an interesting take on pension freedoms. The most attractive part of the changes, introduced last year for Brown Shipley’s clients is the ability to pass on a pension down the generations, free of inheritance tax (IHT).
Mr Sackfield said: “Traditionally, our clients will have pension funds of £1m, and they will have other assets, and generally speaking we will say don’t touch your pension. They’re almost better off spending capital elsewhere, because it attracts IHT as part of their estate. But if you’ve got a £1m pension fund, you can hand it down the generations.”
Understandably, most of Brown Shipley’s 5,000 clients come with substantial assets, far more than the average financial adviser client. To qualify for the Brown Shipley service, they must have at least £500,000 in investable assets. For the average Brown Shipley client, not touching one’s pension fund in retirement is perfectly achievable.
Brown Shipley has been expanding its business over the last couple of years, developing its financial planning business, so that it offers a more rounded service to its clients. In October, it bought financial advice business The Roberts Partnership after buying Hampton Dean in 2015; an adviser business it offered discretionary fund management work for. But Mr Sackfield said the bank had to evolve so that its business model meant it could offer a more complete service.
He said: “What we’re now increasingly seeing is the investment offering is becoming more commoditised. People are using ETFs [exchange-traded funds] and discretionary funds, and all those things people can buy off the internet. They can choose funds themselves and use them at low cost.
“Where we add value is the ability of a client to manage all their affairs. We can give wealth planning advice, satisfy lending needs and administer their pensions, and to do all of that out of one office is a differentiator. That’s why we were attracted to Roberts Partnership – bringing wealth planning experts and being able to offer to their clients a more robust offering, and allow such a thing as lending.”
The bank has a £175m loan book, and clients will often use the bank’s loan facility to buy a holiday home, help with the purchase of a child’s property or even borrow to invest in the stock market.
But Mr Sackfield said: “It’s a conservative loan book, I don’t lose a lot of sleep over it. We only secure these loans against property or investment portfolios. We only offer these loans to clients where we manage their assets and we give them financial advice.”
In addition, any mortgage it offers will be a five to 10-year loan – 25 year mortgages are not on the table.
Brown Shipley has had financial planning as part of its business for a long time. In 2001, it bought a pension advisory business from L&G, called Fairmount, which means the business advises on 1,000 long-term self-invested personal pensions (Sipp) and small self-administered schemes (Ssas), as well as administer some of these products.