Case study: Core

Financial planning advice on how best to position your investments to generate an income in retirement.

Setting the scene Initial considerations How we can help Outcome Our service

Meet Miss Teng who has recently received an inheritance of £500,000 from her late father’s estate. Miss Teng is currently working and expects to retire in five years. Miss Teng accumulated some investments and has a small mortgage.

Miss Teng approached Crowe FPUK as she would like financial planning advice for the following:

if it’s best to clear the existing mortgage
how to invest any remaining inheritance, taking into account if the mortgage has or hasn’t been re-paid
consider a suitable income strategy to aim for in retirement.

In terms of assets, Miss Teng holds:

£150,000 in a personal pension, in addition to a defined benefit pension
her main residence is worth £650,000 with a remaining repayment mortgage of £75,000.

Miss Teng does not have much experience with investing and her knowledge of investments is limited. She described herself as 'not a confident' investor.

Initial considerations

Miss Teng is looking to invest her inheritance as an addition to her retirement savings. She would like to see what level of retirement she can feasibly sustain over the longer term and what level of lifestyle this facilitates.

Miss Teng is looking to clear her mortgage before retirement to stop paying interest and to reduce her monthly outgoings at this time.

The inheritance can be invested over the medium to long-term, and Miss Teng is looking for some level of capital growth to mitigate the level of withdrawals that will eventually be taken. There needs to be an in-depth conversation here around risk and investment options as Miss Teng has not had much experience in the past. We need to ensure that Miss Teng is comfortable with any investments recommended and that she fully understands the risks involved before proceeding.

Miss Teng is looking to retire in around five years’ time and would like to target a similar level of income that she currently receives through her work. She would like to draw the income in the most tax efficient way possible. Miss Teng has three adult children, and she would like them to benefit from her remaining estate as best as possible.

Ultimately, Miss Teng has sought professional advice as she wants reassurance, professional support and expertise to help her achieve the above.

This will provide Miss Teng with the peace of mind throughout retirement that her current standard of living can be maintained.

How did we assist Miss Teng?

We listened

Arguably the most important part of the financial journey, we spent time to understand what was important to Miss Teng.

Through this stage, we asked Miss Teng to define what ‘good’ looks like to her, what she is passionate about and where she wants to go and why. This helps us shape the financial plan and ensures the planning process is collaborative and outcome focused.

We assessed

A full review was completed of the existing pension for suitability, charges, asset allocation and performance. This included contacting the provider, collating the information and analysing the data.

We looked at the strengths and weaknesses, opportunities, and risks within the current structure.

Arguably the most important part of the financial journey, we spent time to understand what was important to Miss Teng.

We looked at the strengths and weaknesses, opportunities, and risks within the current structure.

We informed

A full income strategy and cash flow analysis were completed, showing that the target expenditure is potentially achievable.

Following our initial analysis, we ran through the options available to Miss Teng and how to optimise the plan to best align with her ‘ideal’ financial journey.

We implemented change

Our recommendations were provided and implemented. As we are completely independent, the open market was researched to find the best solutions available for Miss Teng.

These solutions will be managed in line with her attitude to risk and long-term objectives.

A full income strategy and cash flow analysis were completed, showing that the target expenditure is potentially achievable.

Following our initial analysis, we ran through the options available to Miss Teng and how to optimise the plan to best align with her ‘ideal’ financial journey.

Our recommendations were provided and implemented. As we are completely independent, the open market was researched to find the best solutions available for Miss Teng.

These solutions will be managed in line with her attitude to risk and long-term objectives.

Outcome

Miss Teng sought professional advice as she was unsure about the options available to her. We optimised her plan by:

cashflow forecasting, we demonstrated the fiscal implications of paying off her mortgage sooner or later
recommending a new financial structure to invest the remaining inheritance, tax efficiently
ensuring Miss Teng has a cohesive investment strategy aligned to her on-going objectives and attitude to risk
immediate tax efficiency to utilise allowances available and to manage her ongoing tax liabilities when seeking an income of £36,000 net per year
long-term tax efficiency by exploring inheritance tax planning, given the inheritance received and the existing property value
initiating an ongoing advice service to ensure, through improved monitoring and professional advice, the plan remains on track.

Further benefits to the planning process

Peace of mind

Agreed level of income is sustainable over the longer term and quality of life can be maintained providing emotional security far into retirement.

Clarity

Detailed explanations to give a clear understanding of what her plan looks like and providing the options available to Miss Teng.

Informed and empowered

For Miss Teng to be involved in the discussions around risk and investing.

Legacy and family

Ensuring that the estate is protected for the next generation through initial and ongoing planning.

Peace of mind

Agreed level of income is sustainable over the longer term and quality of life can be maintained providing emotional security far into retirement.

Clarity

Detailed explanations to give a clear understanding of what her plan looks like and providing the options available to Miss Teng.

Informed and empowered

For Miss Teng to be involved in the discussions around risk and investing.

Legacy and family

Ensuring that the estate is protected for the next generation through initial and ongoing planning.

Through engaging with Crowe FPUK, Miss Teng was able to retain control of her narrative, ensure the plan is working hard for her and is aligned to her wants and needs. This enabled her to get excited about the next phase of life and embrace retirement in full.

The client names used in this case study are fictitious, but the actual advice case is a true example of the way in which Crowe Financial Planning UK Limited can help clients.

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The Financial Conduct Authority does not regulate Trusts, Tax or Estate Planning.

Core service

What was the cost to deliver this advice with an ongoing service?

Our initial advice fee for the recommendation and implementation was £6,000.
Our ongoing advisor charge will be 0.50% per year, based on the value of the assets under our management.

The portfolio research and analysis took three to four weeks, with the recommendations and report production taking a further one to two weeks to put together and write.

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