During the course of a working lifetime, the average person will have slightly more than £1Million pass through their hands(1). The very successful could have considerably more, but without some financial planning the likelihood of getting to retirement with little or nothing is still quite considerable. Pension provision over and above the Basic State Pension in the UK has only recently become more than a minority sport, with auto-enrolled pensions pushing participation to over 50% of the working population.
For the employed and the entrepreneur, knowledge of how the investment and tax system works for and against you is very valuable. Tax and saving incentives like pension contributions and ISAs can make a big difference to the wealth you can accumulate over a working lifetime and how comfortable your retirement will be.
For a pension, the final outcome will be a product of the amount you paid in, the tax relief you received, the investment return, less the running costs of the product and the advice costs. The easiest factors to influence are the product and advice costs, so they are probably the ones to concentrate on initially.
There is a bit of confusion about the cost of financial advice; there has always been a cost, even before the RDR, (Retail Distribution Review), made it explicit, but inertia within the adviser community seems to have left costs paid by clients at around the same level. Now, given the unpredictability of the markets, the obvious way to obtain a better outcome is to put pressure on the initial and recurring costs.
The development of investment platforms, (Internet based services used by intermediaries and sometimes clients to view and administer investments), and firm, downward pressure on the cost on unitised investments has provided an opportunity to significantly reduce the costs of providing and advising on pension investment. Turkeys do not vote for Christmas, so it is not surprising that the advice community has not hurried to reduce the lifetime cost to clients.
Any potential client will accumulate wealth in some form, from pension funds to family savings, a family house to art or jewellery, but investments held on a platform in a systematic manner, will allow the best to be made of investment decisions, tax reliefs, market information and succession planning.
For reliable, cost-effective financial planning and investment advice, please contact Jeremy Edwards at the Martin-Redman Partners offices.
(1)(Wikipedia 14/11/2014, 2011 average individual earnings for full time workers, £26,000, or £1,040,000 over 40 years).
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The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.