Case study: Premium

Meet Mr and Mrs Davis who have accumulated significant savings across a variety of accounts. Mr Davis has recently retired, although he may pick up some light work over the next couple of years. Mrs Davis will continue to work for the foreseeable future.

They approached Crowe FPUK as they would like financial planning advice for the following:

• how best to position their investments to generate an income in retirement
• their concerns about Inheritance Tax and how this might affect their two children
• the existing financial protection policies held by Mr Davis.

In terms of assets held they hold:

• £2.6 million across 18 different investments including various investment accounts, tax-efficient investments, rental properties and individually held shares. Many of the existing portfolios are holding nearly 100% in equities. 

Mr Davis has previously made the bulk of the investment choices and is comfortable investing in high-risk assets but Mrs Davis is not a comfortable investor. 

Initial considerations

Both are seeking security in retirement, they want to see what level of retirement they can feasibly sustain over the longer term and what level of lifestyle this facilitates.

They are looking to achieve tax efficiency both immediately in terms of the income taken, this could encompass utilising unused allowanced available to them and over the longer term optimising their inheritance tax efficiency. Leaving a legacy is important to them and ensuring their estate is protected where possible is clearly a priority.

As Mr Davis is seeking an income immediately, they are looking for some level of capital growth to mitigate the level of withdrawals taken and to help preserve the estate for their children. There needs to be an in-depth conversation here around risk and investment options as they both have differing attitudes and levels of comfort. We need to take steps to empower Mrs Davis to ensure she participates in the conversation as well as Mr Davis.

Ultimately, they have sought professional advice as they want reassurance, professional support and expertise to help them achieve the above. 

This will provide the assurance that we will help them whatever happens in the future.

How did we assist Mr and Mrs Davis?

Outcome

Mr and Mrs Davis sought professional advice as they were unsure about the options available to them, structurally, we optimised their plan by:

• simplifying their plan through appropriate consolidation
• this increased the transparency of costs and performance
• ensured they have a unified, cohesive investment strategy aligned to their on-going objectives and attitude to risk
• immediate tax efficiency to utilise allowances available and to manage their current capital gains and income tax liabilities when seeking an income of £60,000 net per year
• long-term tax efficiency by exploring inheritance tax planning
• initiated an ongoing advice service to ensure through improved monitoring and professional advice their plan remains on track.

Through engaging with Crowe FPUK, Mr and Mrs Davis were able to retain control of their narrative, ensure their plan is working hard for them and aligned to their wants and needs. This enabled them both to get excited about their next phase of life and embrace retirement in full.