Why it’s beneficial for “health” charities to work with an IFA

By | Financial Planning

When you as an individual apply for life insurance directly to a life office, the outcome of the process is very uncertain for a number of reasons, e.g.  Refusal of life offices to accept certain medical conditions, limits of cover for certain conditions, ambiguous or difficult questions which, if misunderstood and answered incorrectly, can lead to an immediate rejection.

If you live with a specific medical condition, particularly less common and obscure ones, you may have found it difficult, if not impossible to get life insurance through the traditional channels.  The brands we see heavily advertised on TV often produce a “computer says no” scenario for many whose profile doesn’t fit the standard “norm”.

Typically, a junior underwriter will take your application through an automated screening process that produces yet another automated letter of rejection, if, for example, a particular element of your past medical history is flagged up.  Unfortunately in these cases, insurers cannot usually look at an individual and their medical history as a whole, which is where independent financial advisers can make a difference.

Many of you with these conditions, whether recently diagnosed, or from birth, will reach out to specialist charities for support, knowledge and help.  It was with this in mind that a partnership between key charities and an IFA seemed like the perfect option to London based NLP Financial Management, especially as they also identified an opportunity to help raise additional funds to boost charities’ fundraising activities where grants and external funding has more often than not been reduced.

You could be forgiven for thinking that being initially rejected by the “well known brands” means you’ll be rejected by all insurance providers but this is absolutely not true.  An experienced IFA, like NLPFM, has already built up senior level relationships with a wide range of different insurers, understanding that risk is not a constant throughout the industry.  By grasping the needs of those struggling to find comprehensive life cover, they can target those insurers they know will be able to amend terms and conditions where other insurers cannot.

The benefit to you, as an individual, is that you stand a far better chance of obtaining insurance cover without the pain of research and rebuffs, at a price that provides value for you.  For the charities themselves, the benefits include an additional income stream, as NLPFM give 20% of the initial fees back to the charities for each case that is completed.  It’s also important to note that when we talk about fees for life assurance, these are included in your premium and not charged separately – it’s all negotiated through NLPFM – so you are not penalised in any way by going through an IFA.

NLPFM also offer additional support to the charities they work with by providing content for their blogs and social channels, event and personal fund raising efforts, as well as offering “clinics” on either social media or via the traditional telephone.  Here charity members can call a dedicated number to discuss their own individual queries and financial circumstances – all for free.  Although specific advice can only be given on a one-to-one basis, it offers an opportunity to consider financial decisions that you may have been putting off, only due to not knowing where to turn.

If you work for a charity, or would like to recommend a charity you belong to, please get in touch with Tom Burrill on [email protected] or call 020 7472 5549.

 

Setting up Pension Schemes for your employees

By | Financial Planning

Automatic Enrolment legislation was introduced in October 2012 and under the reforms, employers are required to automatically enrol certain members of their workforce into an Automatic Enrolment Workplace Pension Scheme and contribute towards it.

Since its introduction, mainly large and medium-sized companies have had to comply to date. However, since June 2015, companies with less than 50 employees are now having to comply.  You may even need to set up a pension scheme if you employ a nanny!

The Pensions Regulator estimates approximately 512,000 employers will need to comply with the legislation in 2016 with a further 660,000 in 2017.

The date for compliance is known as your Staging Date. The latest employer awareness research which is published every six months by the Regulator, noted that only 38% of small or micro employers have an accurate knowledge of their Staging Date suggesting many employers are not yet prepared.

If you are responsible for workers in a company or other employer, we recommend that you speak to an adviser to understand the legislation and ensure you comply with the legislation, as the fines for non-compliance can be significant. Taking into account the number of employers who are staging in the next two years, we suggest this is done sooner rather than later, to ensure successful and seamless implementation.

In order to support you in this area, our Consultants can provide you with relevant information and assist you with the implementation of an appropriate Scheme, suitably tailored for your business.  We have already assisted well over 50 companies in setting up their own pension schemes that meet the legislation and will be delighted to help you.

If you would like further details please contact one of our consultants here.

 

Structured Products – Is now a good time to invest?

By | Financial Planning

A structured product is a fixed-term investment, the return on which typically depends on an Index level, e.g. the FTSE-100 Index.  The main attractions of investing in structured products are that the potential returns can be quantifiable albeit they are not guaranteed, and they provide useful diversification from other more traditional investments such as equities.  Although capital invested can be tied up for a number of years, most plans offer the potential for early maturity, often on an investment anniversary, subject to the performance of the referenced index.  However, these can be sophisticated investments, in which complex financial instruments are used to provide the returns.

 

We undertake extensive research into available structured products and maintain a panel of approved plans.  We prefer offers that are linked to a single index, such as the FTSE-100, rather than being linked to multiple indices or individual stocks, which may offer higher returns but carry greater risk.  We favour defensive plans which can pay out even if the FTSE-100 Index falls by some margin during the term.  Some plans offer a “step-down”, where on each anniversary the required level of the index is lower than the year before, meaning that the plan can mature early even if the index has fallen.

 

However, with these investments there is usually a risk that capital may be lost if the underlying index falls significantly, typically by over 40% at maturity.  Another potential risk is counterparty failure, where the party issuing the underpinning financial instrument becomes insolvent; in these circumstances investors may lose their full investment. Understanding the financial strength of counterparties is therefore essential and we will only recommend products where we are comfortable with the counterparties.

 

In times when the FTSE-100 Index has fallen, investing in structured products arguably becomes more attractive, as the likelihood of loss of capital perhaps reduces.  In addition, the returns offered from these products are usually higher during periods of increased market volatility, which is why now may be a good time to invest.  Returns from growth plans are usually subject to Capital Gains Tax, so investors can use their annual CGT allowance of £11,100.

 

In conclusion, with a wide range of products available, we believe it is essential to obtain financial advice when investing in structured products.  Investing in a portfolio of carefully selected products, perhaps at different times to provide diversification between counterparties and maturity dates, can be an appropriate strategy to adopt alongside a broader investment portfolio.  Returns can be attractive, but you need to understand the risks involved, and due to their complex nature, structured products are not suitable for all investors.

 

Risk Warnings

  • You are not guaranteed to receive back the full amount invested.
  • The value of your investment can fall as well as rise and is not guaranteed.
  • Levels and bases of, and relief from, taxation are subject to change.
  • The investments are intended to be held for the full term of 5 years unless specific features mean that they will pay out early.
  • Past performance is no guarantee of future performance.

 

Retirement Planning – At Your Service

By | Financial Planning

Many of us look forward to retirement where we can spend our days doing whatever we wish, take up new pastimes and travel the world. As life expectancy is increasing, our retirement can now represent more than a third of our lifetime, so it is becoming more important to ensure we have a robust financial plan to meet our income and capital needs when we retire.

We can help you plan the financial aspects of your retirement, whether you are many years from or approaching retirement with our ‘Retirement Service.’ We focus on six separate areas summarised as follows:

Establish what you Need – Help you understand what your expenditure may be in retirement and factor in the impact of other variables such as inflation.  A retirement budget planner is used to aid this process.

Establish what you Have – Estimate what potential income you may have at retirement taking into account your savings, investments, state and private pensions.

Bridge the Gap – Our cash-flow planner will illustrate any shortfall / surplus between what income you may need and your current savings. It can also illustrate whether you may run out of capital in later life, the impact of higher than anticipated levels of expenditure, inflation and investment growth levels so you can consider a range of variables. We can then advise on what changes you can make to both your savings and investment strategy to achieve your required goals.

Discuss your Pension Income Options – Once you reach retirement, you may either opt to secure pension income through purchasing an annuity and / or select a more flexible pension income option such as drawdown. We will advise on a range of strategies according to your circumstances, incorporating your objectives and risk profile as well as considering inflation, tax, investment approach, access to capital and death benefits.

Consider Non-Pension Savings – Advise on how other investments held such as ISAs and share portfolios can be used to supplement your income needs in retirement.

Inheritance Tax and Estate Planning – Advise you on how to structure your affairs to potentially mitigate inheritance tax through considering a variety of solutions which will prioritise your own financial needs whilst seeking to protect assets for the next generation.

Our service does not stop there.  It is important to provide an ongoing service “In Retirement” in order to ensure that your goals are being met and any income is sustainable.  We will regularly appraise your investments, your pension income options, legislation and changes to your lifestyle.

If you would like to discuss this further with one of our consultants please get in touch here.

 

Middlesex County Cricket Club

By | Financial Planning

We are delighted to announce that we have arranged a Programme Player Kit Sponsorship with Middlesex County Cricket Club to sponsor the shirts of James Harris across all 3 competitions in the current season.  This is the second year that we have arranged such a sponsorship with Middlesex CCC.

James was the leading First Class wicket taker for Middlesex last year and recorded best ever figures of 9-34 against Durham in the Championship.

We are delighted to be associated with our local County cricket club and wish Middlesex CCC every success in the season.

James Harris from Middlesex CCC commented….

 “I am delighted that NLP Financial Management have chosen to become my Programme Player Kit Sponsor for this season and I would like to thank them for their support this year.”