Individual circumstances

One of our key roles in assisting clients is helping them plan what risk they can afford to take and what risk they need to take.  Whilst the vast majority of individuals would always like more money, most people achieve a lifestyle they are very comfortable with at some point.  When this is achieved, the risk of trying to achieve higher investment returns can be counterproductive as the damage of a poor return far exceeds the benefit from being a little wealthier.

Another aspect where financial planners play an important role is in the construction of portfolios in terms of which asset classes are held where.  For example it makes more sense to hold fixed income investments in a pension or ISA than ‘directly’ in one’s own name as 20% income tax on the interest is reclaimed.  Many people tend to hold their equity style investments in these wrappers to take advantage of the capital gains tax allowance, but never actually use their annual CGT limit.  With the current CGT allowance at £10,100, a married couple can realise £20,200 of investment gains every year without paying any tax.  Very few people ever do this.  It is only a financial planner who has a view on all of a client’s assets who is in a position to give this type of advice.