By Granville Turner, Director of Turner Little

Making money is one thing, but protecting it is another – this is particularly true if you want to pass your assets onto your children. Any reputable bank, solicitor or lawyer will tell you that individuals who have amassed some form of wealth need to protect their assets, especially those with a high net worth. In the event of your death, there are many loopholes that could stop your children from benefiting from your assets, often causing further distress for your loved ones. It is therefore important to shield your assets from any possible risk by having a secure, legally binding plan in place.

As divorce rates in the UK rise, marrying more than once has become much more common. Research shows that one-third of all marriages in England and Wales are between couples where at least one of the spouses has been married in the past. This set-up often brings children from previous relationships, resulting in a UK-wide rise in blended- and step- families. As such, many people find themselves trying to manage the financial needs of their current spouse while ensuring that children from a previous relationship inherit their fair share of your estate. That’s why making a Will is an essential part of protecting your assets for those you leave behind.

Making a will

Granville Turner

Making a Will is a necessity that many people ignore. Without a current and valid Will, the law decides who gets what and how much. The majority of your assets will likely be given to your spouse, who can then leave it to whoever he or she chooses. Even if you are separated, but not yet divorced, your children from your previous relationship may be disinherited if your new spouse decides to keep your inheritance for themselves. As such, it is crucial that you update your Will after any life-changing event to ensure the right people benefit from your estate.

For individuals who have remarried, the best thing to do is to write up a will that includes a trust. Not only will this protect your children’s assets, but it will also allow you to look after any future spouses in the event of your death. Your future spouse can access your assets during their lifetime, but once they die, your children will inherit the remainder of your estate.

A trust is particularly important if you don’t have a prenuptial agreement as it will ensure that specific assets are preserved for designated children. However, in the event of a second marriage breakdown, a prenuptial agreement will ensure that the assets owned solely by you (or any assets acquired before the marriage) go only to your own children if you so wish. So, having both a Prenuptial Agreement and a Will in place should account for every eventuality. It’s about exploring the options available to you as to how you can leave your assets.

Thankfully, Turner Little’s Will writing specialists work closely with you to explore every avenue, giving you complete peace of mind. We protect your children’s assets at all costs to ensure fairness and financial security for the whole family. We advise on succession planning, skipping a generation, protecting the vulnerable, preparing for care fees, as well as tax reduction. So if you’re looking for a legally binding document that ensures your wishes are carried out in the most tax-efficient way, get in touch with us today.

BSI, in its role as the UK National Standards Body, has today published the first specification for responsible and sustainable investment management. It addresses the policies and processes needed to create and embed a responsible approach to investment management.

It is the second publication from the Sustainable Finance Standardization Programme delivered in collaboration with the Department for Business, Energy and Industrial Strategy (BEIS) and the UK financial services industry in support of the UK Green Finance Strategy. Its launch coincides with the UK preparing to assume the G7 presidency and host next year’s UN Climate Change Conference (COP26), placing a spotlight on the need for business to unlock sustainable finance in order to build resilience, particularly for those operating in the world’s most climate vulnerable countries.

The new standard, PAS 7341:2020, Responsible and sustainable investment management – Specification, sets out the requirements to establish, implement and manage the process of integrating responsible and sustainable considerations into investment management.

It is structured across five key principles of sustainable investment:

1. Governance and culture
2. Strategy alignment
3. Investment processes
4. Investor rights and responsibilities
5. Transparency

It underlines the importance of effective disclosure to appropriate stakeholders, and builds on existing industry guidance, principles and regulatory developments.

Scott Steedman, Director of Standards at BSI, said: “The financial system is playing a crucial role in helping to rebuild a more sustainable future through responsible economic growth. This is the first consensus for delivering responsible investment management at corporate level. The new standard, called PAS 7341, creates a way for financial management organizations to transition from ‘responsible’ to ‘sustainable’ investment management. In our role as the UK National Standards Body we are proud to support the government’s Green Finance Strategy with this globally relevant, pioneering and practical standard.”

Kwasi Kwarteng, Minister of State for Business, Energy and Clean Growth, said: “Transforming our financial system for a greener future is crucial as we build back better from Covid-19 and to meet our legally binding target for net zero carbon emissions by 2050. Building on our pioneering Green Finance Strategy, this new standard will help the UK investment sector become even more sustainable as we strive to lead the world in tackling climate change.”

This free to download standard has been produced by a steering group¹ of technical experts made-up of organizations from the UK finance eco-system.

By Qiaojia Li, co-founder and CEO at the award winning wealthtech company, Rosecut

For many people, the process of investing can seem opaque and impenetrable, and filled with jargon.

They can see the potential benefits, but they can also see the Financial Conduct Authority (FCA) risk warnings.

Despite – or perhaps because of – this, the long-term trend suggests that more individuals are open to investing. One set of statistics suggests the percentage of individuals investing in stocks and shares in the UK grew nearly three per cent between 2010 and 2018.

Here are four steps for sensible investing:

1. Figure out why you invest, ahead of everything else

The key here is knowing what the overall goal is.

It is a constant source of amazement that when it comes to investing, few people stop to consider why they are actually doing it. Whether they have £100 or £100,000, many do not think about how their approach should be dictated by their overall goals.

For instance, someone looking to buy a house in the next 12 to 24 months should not be looking to dive into the world of bonds and equities, because they have a short-term target which requires reasonably fast access to cash. Tying their resources up in different funds and stocks will not only limit how quickly they can get their hands on their money when it comes to putting down a deposit, but they will not see the return that they would expect due to the short term price fluctuation of these assets. They would be better using a Cash ISA and enjoying the tax-free allowance.

On the other hand, if they have spare cash lying around that they won’t need for the next 3-5 years or longer, or they want to get a headstart on earning their retirement or long-term financial freedom, investing into financial markets is the way to generate compound return. That will give them a chance to beat inflation and, in all likelihood, it will give them a higher return than real estate would.

It is like any big project – determining the overall goal informs the strategy, which dictates the tactics. In the world of investment, this means management. Yet even deciding what goals they are working towards can be challenging for some people – they might have overinflated ideas or be too conservative.

This is where independent, objective, and knowledgeable financial planning comes in. By giving an individual’s finances a thorough check-up – much like visiting a GP – a qualified and experienced financial planner can consider circumstances, wishes and constraints. Only when this has been completed can they assess how feasible a client’s goals are, and the client can start considering how they should invest.

It needs to be a bespoke diagnostic and prescription process, in much the same way that a trip to the doctor requires the practitioner to have an understanding of any contributing factors and your medical history.

2. Seek professional help

If you were going to buy a property, you would look for a capable and qualified property lawyer instead of reading legal textbooks and undertaking training. The same logic applies to other professional advice, such as accounting, medical treatment and tax. Strangely, though, when it comes to investing, many people attempt to teach themselves.

While this approach is to be applauded, and there is certainly a huge amount of information readily available within a couple of clicks, the intricacies and vagaries of asset classes and funds, opposing investment styles, individual savings accounts and a hundred and one other terms can be overwhelming.

Forging ahead without professional guidance is a bit like having a pain in your hand and deciding to do a bit of exploratory surgery based on watching medical documentaries – there is only a slim possibility everything will turn out fine. This is why 99% of people have lost money by DIY-ing their own investments. It is a risky learning curve that, frankly, is better outsourced.  Learning how to find a good investment provider can be a more efficient and less risky use of your time.

3. Do not trade

Qiaojia Li

In the report quoted above, there is an alarming line: “Investors are now holding onto their shares for 0.8 years on average before selling them. In 1980, the average was 9.7 years, representing a decline of 91.75%.”

The proliferation of trading apps brings convenience and lowers barriers, helping people to access financial products, but the user friendliness of the technology often encourages over engagement at a real financial cost.

On an individual basis, each time you buy and sell any financial product (not just shares, but funds too)  you lose a tiny slice of your capital, even if you can trade for free – this is due to “spread” which, put simply,  is the price difference between purchase price and sale price. As you trade, this quickly adds up and eats into your principal, which you need to earn back before seeing any profit. This is a direct cost, in addition to the time you invest, checking the share price several times a day, the sleep you lose during volatile days, and the potential for developing an addiction, which is a common result of trading. Take a look at your work pension investment report if you have any – there is a reason why professional investors don’t buy and sell frequently.

On a collective basis, crowd trading behaviour drives more “boom and bust” cycles of financial markets, which has happened many times before and will continue to happen in the future. It is a more pronounced characteristic of less developed financial markets where there are fewer professional/institutional investors to stabilise  the market for everyone’s benefit.

4. Diversify globally, meaningfully

Sensible investing requires a skillset that is the opposite of most professional careers or entrepreneurship. In the latter, one strives to become an expert in a chosen arena in order to command the highest possible pay or profit margin. A wise investor, meanwhile, needs to be a generalist rather than a specialist, and investing is about hedging all possible risks before seeking a return. One of the biggest principles to reduce risk is to diversify on various levels:

• Your holding currency – for example, GBP has lost more than 15% in value against USD compared to the pre-Brexit high of five years ago, so it is a bad idea to hold all your assets in GBP only
• Your country/geography exposure – for example, you can buy GBP priced US assets, or USD priced US assets, such as S&P 500 tracker, to have a slice of US economy growth. We strongly encourage people to consider a globally diversified portfolio, for the reason that different economies go through business cycles and are at different stages at any given point of time. With a globally diversified portfolio, you can always benefit from the growth of some country, somewhere, at any given point of time
• Asset classes – If all your money is in London real estate, for example, you are likely to have felt some value depreciation since 2014. You take a risk if you tie your financial future to a single city’s economic cycle and potential rise and fall.
• Industry allocation – as a former banker I never bought banking stocks or bonds, simply because my job and salary were already tied to the UK banking sector, and owning a piece of banks is like doubling down in a casino – not wise for risk mitigation. This is an often overlooked risk – people like to invest into companies and sectors they know well, typically from professional exposure and “inside knowledge” but this leads to blind spots and concentration risk.

Investing should be part of one’s long term financial strategy hence there is no one size fits all recommendation that I could give here. A simple step by step guide is:

1. Save a good portion of your monthly income, that allows you to enjoy your current life but also prepare for the future

2. Shortlist 3 financial planners (include Rosecut as one option) and pick one that you feel you can trust and who is cost effective to lay out your big picture and future plan

3. Invest regularly into a globally diversified, professionally managed portfolio that fits with your future goal and then make minimal changes. Ideally you should only even consider changing on an annual basis

4. Learn from this loop, iterate and optimise, ask many questions along the way!

Rosecut is a financial planning partner and investment manager, giving access to the knowledge you need to plan for the future you want. Start your free financial health check today at https://app.rosecut.com/ or download the app.