Who should advise me on investment advice in the UK?
You need a UK based adviser who is regulated through the Financial Conduct Authority (FCA). Ask if they offer restricted advice via a limited selection of providers or offer truly independent advice from the whole of market. Independent advice will offer the widest possible choice.
There are then many other factors that differentiate between each adviser from the types of funds being used, their investment approach, performance, expertise, proactive or reactive approach. Here at sold my business, we are both regulated through the FCA and provide independent advice.
How do I reduce risk and volatility when investing?
Through a combination of both diversification, this being the investment in different asset types, such as shares, bonds, property, and cash, but also and perhaps more importantly, by using an adviser that has a proactive investment approach, with the knowledge to identify risks when they are increasing. They will then adapt to those conditions, realigning to capitalise upon those conditions.
What level of initial or ongoing charges are reasonable for financial advice?
There is no reason why you should pay large initial upfront charges for investment advice. It’s reasonable to pay for the time involved in advising you on an hourly basis, especially if a holistic approach is undertaken. You shouldn’t be paying a percentage initial charge when investing large sums of money. For example, anyone investing in excess of £1M and charged 1% would pay £10,000. This is completely disproportionate for the service being offered and more about looking after the adviser than the investor. By avoiding discretionary investment advice, you can avoid VAT on charges.
Ongoing fees to an adviser should be a lower percentage the more you are investing, and over £1M you should be paying less than 1% for advice. The more you are investing, the lower the percentage cost should be. Remember investment advice from an IFA can avoid VAT on your charges.
How do I pass more of my wealth onto my children and grandchildren?
If you have recently sold your business, it will probably have qualified for Business Property Relief, making the shares free from Inheritance Tax. There are ways of investing some of your sale proceeds to maintain these immediate IHT savings, even years after the sale. This avoids the use of trusts and maintains the capital in your name, under your control, but 100% outside your estate and free from Inheritance Tax.
What other legal documents will assist my family now?
It’s important that you have a valid Will as well as a Lasting Power of Attorney. These can be established for both health and finances enabling your loved ones to manage your health and finances if you are unable to do so.
What type of investments are suitable for me?
This will depend primarily on the degree of risk you are willing to accept, as well as your capacity for loss, being the degree of risk, you can afford to take, to achieve your main objectives.
What investments or products should I avoid investing in?
There are many investments advertised in the media and press, which offer returns in excess of what would be considered attractive. To avoid these, only use a FCA regulated UK based adviser. You can check any potential scam investments here at the FCA website.
What percentage returns are considered realistic on investments?
This is difficult to outline, but don’t rely on what’s occurred in the past. Future investment returns will be linked to economic conditions and current stock market valuations. Looking forward, if you invest when shares are expensive and have risen to high levels, then returns will probably be lower over the next 5-10 years, than in the previous 10-year period. Ideally, you want to invest when share price valuations are considered cheap, offering the best possible growth opportunity.
How do I reduce my personal taxation?
You can invest in a variety of tax planning investments namely ISA’s, Investment Bonds, EIS’s or VCT’s, which offer taxation benefits. However, the suitability of these will depend upon you own attitude to risk, as higher risk investments have a higher degree of potential losses and may not be suitable. Ideally an independent financial adviser will be able to recommend which routes offer you the best possible outcomes.
How do I generate an income that is sustainable?
Firstly, you will need to consider the level of income you need as a percentage of the available capital you have, and whether that percentage is a realistic investment return for the degree of investment risk you are willing to accept. If it’s not, then you either need to accept a higher degree of risk for the improved potential return or reduce your income requirements to accommodate a more modest investment return.
Ideally, you want to generate an income from your investments while growing the underlying capital.
Where should I place my cash on deposit to maximise returns?
There are platforms that provide a simple way in which you can manage your cash on deposit, without the need to open numerous individual bank accounts. This simplifies the process while providing an opportunity to enhance returns. It also increases potential investor protection.
Do I qualify for the £1M in FSCS protection under the Temporary High Balances rule?
When you receive large cash payments into your bank account from the sale of a business there is no increased FSCS protection. Whilst there is protection offered for temporary high balances, such as the sale of a property, there are specific circumstances when this protection applies which can be found here. However, this does not apply when selling a business.