Check for Chartered!
Efficient Portfolio is a Chartered Firm, a status which we have proudly held since 2010.
- Only the top 14% of firms in the UK hold this accolade
- We were the first firm in Rutland to achieve this gold standard
- To achieve this status, over 50% of our advisers have to hold the APFS designation- at EP, all of our employed Financial Planners hold this as a minimum
- We have to adhere to strict guidelines over ethics, practices and client servicing, as stipulated by the PFS, CII and FCA, which are tested annually.
Chartered Firm status demonstrates that our team hold a high level of qualifications and undertake continuous development to make sure we remain as knowledgeable as possible. In this we are far ahead of many financial companies in England. It is not easy to maintain Chartered Firm status, as the Regulator is very strict about a firm's eligibility. It therefore not a surprise to learn that many companies claim they are a Chartered Firm when they indeed are not.
A recent investigation by Professional Adviser involving a search of online professional directories, revealed that a number of Financial Planning firms have registered as Chartered Firms when they are not recognised by the Chartered Insurance Institute.
It is possible that some firms are simply confused over the difference between a Chartered individual and a Chartered Firm, as the rules are complicated. However, people cannot always be given the benefit of the doubt: a similar 2017 investigation discovered that half of the firms reviewed did not have even one adviser with the relevant Chartered status.
Whilst online directories are a great place to start your search for a professional, we strongly advise you to verify their qualifications, professional memberships and standings with the appropriate governing body before you commit to working with anyone. It is always best to go directly to the regulating body to check credentials. For Financial Advisors this is the Chartered Insurance Institute, where you will find Efficient Portfolio listed in their Financial Services Register https://register.fca.org.uk/
Probate during a pandemic
The pandemic has had a tremendous impact, not only on the way we live but also on how we work. The probate process is no exception and it is important to be aware of the changes and how to mitigate the new burdens that may arise when carrying out the probate process.
Speak to your executors
As the saying goes, "preparation is key"; this applies equally to choosing your executors. You have decided that you trust your executors on your death, so now is the time to speak to them. Give them key information relating to your estate, such as where they will find your important documents. Ideally, these should include a list of any assets, debts and gifts that you have made, enabling your executors to be transparent and clear with HMRC when the time comes.
Even "simple" estates are complicated
Generally, the bigger the estate the longer it takes to administer and yet probate is not a one-size-fits-all. Even estates below the Inheritance Tax threshold are not always straightforward. Executors carry the burden of administering the estate correctly and honestly. This means that detail is key and being aware of the up-to-date Inheritance Tax rules and when a Grant of Probate may be necessary is vital. This also applies to those who have perhaps not executed a Will and where the intestacy rules apply.
Previously, it would have taken between four and eight weeks from submission to obtain a Grant of Probate. Obtaining accurate figures and statements was usually also possible in a predictable timeframe. However, the pandemic has impacted turnaround times and the ease with which requested documents can be obtained, so be prepared to chase institutions and for unprecedented delays.
Lifetime planning is equally as important as estate planning. Lasting Powers of Attorney provide you with peace of mind should the need for them arise. However, they are valid only during your lifetime and will not provide your attorneys with the authority to administer your affairs after you die. At that time, your Will replaces the Lasting Powers of Attorney, so it is essential to ensure your Will is kept up-to-date and continues to represent your wishes.
The seven-year rule
During a time when technology is playing a vital role it is easy to forget about keeping records. Bank statements, along with a list of gifts dating back seven years prior to date of death, are likely to be required and so it is more important than ever to keep a record. Gifts given out of surplus income are a valuable exemption, but evidence is crucial.
HMRC have announced that specific delays caused by the pandemic may be considered a "reasonable excuse" if your return is submitted late as a result. However, it is important to note that the deadlines themselves have not changed. The deadline for paying Inheritance Tax and submitting returns remain the same. Therefore, it is essential to submit your returns as normal and hope that it will not be necessary to rely on the excuse and avoid paying interest.
Executors have a range of responsibilities to ensure that they are protecting the deceased's estate. This varies from arranging insurance for an empty building to physically removing valuables from the property. It also includes being aware of available protections, such as the Financial Services Compensation Scheme: instead of the usual limit of £85K, cash from a deceased's estate is potentially covered up to £1m, for up to six months. As this may or may not be sufficient, awareness of assets is key.
Regardless of its size, administering the estate is likely to take at least six to twelve months and delays could make this timeframe even longer.
Protecting your estate in a post Covid-19 world
It is said there are two possible results of 3-month lockdown during the Covid-19 pandemic; one that the UK divorce rate might increase and, second, that there could be a baby boom!
If divorce affected you, you may need to ask yourself if you are leaving your estate to those you want it to go to. Or is there a possibility that it could go to a son- or daughter-in-law from hell and so pass outside your family bloodline? This is where establishing a Trust during your lifetime to capture your estate on your death is so valuable, ensuring that your wealth is protected for the people whom you want to benefit.
If there was a baby boom and your family was to grow, what provisions would you want to make for your children's future? We have established many Trusts for clients to make provisions for their children's or grandchildren's future - for school or university fees or to enable them to get onto the housing ladder. By using various gifting allowances and deposits into the trust, and managing and protecting these funds, you can provide for your chosen beneficiaries in the future and, at the same time, potentially reduce the IHT on your estate.
So, whether you wish to make gifts during your lifetime or pass your estate to your chosen beneficiaries on death, one way to protect the estate that you have spent your life building up is to create a Trust which, when structured correctly, can also help to save you tax.
With uneven data and a potential second Covid-19 wave, is the stock market running out of steam?
Optimism about a "V"-shape recovery seems to be waning amongst many investors as the true state of the economy starts to sink in.
A number of States in the U.S are seeing spikes in Coronavirus cases, as are other countries around the world. Here in the UK there has been some positive news this week with numbers of cases falling - for now, that is.
We are all eager to put the pandemic behind us and start reopening the economy; however, in reality I don't think we are yet ready. Market analysts have suggested that investors should expect more volatility and turbulence, as the road to recovery could be bumpy.
So far, the markets have been priced for continued stimulus and improvement. However, this has not factored in the likely possibility of a second wave of Covid-19 infections. This would further impact the employment figures, leaving a very uneven job market.
Many of the major Indices have recovered by more than 40% since their March lows. The S&P 500 and the FTSE 100 have been trading sideways over the last week and are at a similar level to early June. Many were optimistic about a recovery, thinking that the economy had already bottomed due to minimal reaction from bad news and data. Although the economic calendar is currently rather quiet, the markets could be vulnerable to any negative data and economic news in the coming weeks.
In this situation, many people are not able to save or are saving less than usual. This could have a devastating impact in years to come, especially if you are planning to retire within the next 10 years. Those who have lost jobs or had a reduced income and are unable to build up their savings are being pushed into borrowing. Those on lower incomes could be vulnerable to high- cost credit.
This highlights how vital wealth is to our standard of living. Savings and assets provide an important buffer when income drops. There has never been a more critical time to re-plan and re-think our strategies.
Although the stock market had appeared to suggest a "V"-shape recovery the more likely scenario, as David Batchelor suggested in April, is rolling "Ws". The government may be able to lift stocks from the slump through unprecedented stimulus, but there is very little they can do to prevent the volatility.
Don't forget - CGT rules have changed
The April Efficient Wealth Update explained the Capital Gains Tax changes for property sales, but we feel it worth mentioning again so you don't fall foul of the new rules.
Before April this year, if a property was sold, the sale of which generated a capital gains tax bill - for example, a second home or buy-to-let property, CGT was accounted for in your next tax return. However, from April you now have 30 days from the completion date of sale of the property to pay the Capital Gains Tax.
Any good solicitor handling the sale should advise you of this, of course, but be sure not to get caught with a hefty fine by missing this new 30-day tax payment deadline.
Notes on Brexit
It has been a while since we talked about Brexit because, like the rest of us, the negotiation teams have been in lockdown. But as the restrictions ease and the deadline for the Transition Period looms, talks are once again underway. The UK government has already given the EU formal notice that it will not apply for an extension to the Transition Period, despite the setbacks to negotiations caused by the Coronavirus pandemic, and the parties are already at loggerheads over the Emergency Coronavirus fund. As if we don't have enough to disagree on!
Both sides committed to inject "new momentum" into the stalled negotiations on our future relationship, agreeing to hold talks every week through July and August. Whilst Mr Johnson thinks there's "no reason why you shouldn't get [it] done in July", there are still some key and sensitive topics to be covered. It is difficult to understand the need for such haste, given that the scope of these arrangements potentially impact the daily lives of everyone in the UK, affecting complex issues such as the funding and running of the NHS to more straightforward things such as the labels on our food.
The Fisheries Bill appears to be the next main bone of contention, as both sides have already clearly drawn lines in the sand and those lines are very far apart. The target for this agreement is 1st July but given the passion, and in some cases campaign promises, of both parties on this matter it remains to be seen if this can be accomplished.
The Trade Bill and the Agriculture Bill are already on their passage through Parliament; still to come are Immigration (another sensitive subject), the Environment Bill, Animal Welfare and - one very close to our hearts - the Financial Services Bill.
Charlie’s Mini Blog
Over the last few weeks my eldest daughter, Ffion, has come to the end of lower school at Oakham, and my youngest daughter, Bronwyn, has finished her final primary school years at Brooke Priory. These times should be great celebrations for them, but because of the current environment, that cannot really happen. I feel especially sorry for the children that should have been celebrating finishing their A-Levels and graduating from school, having leavers balls and heading out to Ibiza with their mates for their first parent/teacher free holidays.
Amongst all these losses, however, is something else we can focus on; how the world has adapted in adversity. We sat with Ffion at the kitchen table watching a live broadcast of the lower school speech day, where no one was more surprised than her when she won a prize. Both have received excellent live schooling through Microsoft Teams and Bronwyn has made it back for 2 weeks of school, albeit in a small class bubble and the strangest of school environments. They have learned so much from this time; skills and attitudes that will no doubt help them for the rest of their lives.
As a business we thought we were already pretty good at this technology stuff, but switching seminars to webinars, doing book launches online and taking all client and team meetings to Zoom and Microsoft Teams has certainly kept us on our toes. That said, in many ways it has actually improved our efficiency. I suspect that, although we still really value our client face to face interactions and can’t wait for the day that can be resumed, going forward we will all be more inclined to eliminate travel time, the hassle of parking and tolerating public transport in the interest of new found efficiencies. Instead of losing half a day because of a 1-hour meeting, these efficiencies can help us achieve more in less time. So, we too are learning how we can continue to be more efficient and deliver more. After all, the clue is in our name!
A few years ago, I recommended the book ‘Creativity Inc’ by Ed Catmull, one of the founders of Pixar, and it is still one of the best business books I have read. So when ‘To Pixar and Beyond’ was released by Lawrence Levy, the FD of Pixar from the early days through to taking the company public, it was always going to end up on my reading list; and it didn’t disappoint.
The story of the struggle to take the unknown Pixar with a very bleak outlook to the success we know today. If you enjoy business bio’s, this is definitely one to add to the list. Full of wisdom on bringing business and creativity together and recounting the touching story of Levy's enduring friendship with Jobs, ‘To Pixar and Beyond’ is a fascinating insider's account of one of Hollywood's greatest success stories. You can purchase a copy here