Our lives seem to get busier and more complicated as time goes on, with more bills, accounts and policies needing to be set up than ever before. Many of these are also now online, with the reduction of monthly statements being sent via the post to save on paper. Utility bills are not always with the same providers, we may have multiple digital subscriptions and it is getting easier to switch bank accounts with newer, less traditional financial institutions promising us better rates and deals.
Therefore, it’s becoming easy to lose track of what accounts we hold, where we hold them, and what exactly they are for, unless we do a personal audit on a regular basis. Plus, whilst not particularly a cheery thought, all these accounts and subscriptions need to be cancelled in the event of death.
To help provide some clarity and structure at NLP Financial Management we’ve put together an “easy to use” document called a Financial Passport. The aim is to enable our clients to store all their important information in one place, capturing essential details they, or their loved ones, may need now or in the future. It will prove to be an indispensable reference resource for managing their wealth, as well as containing personal details, which can be amended and reprinted / saved as any changes to policies and accounts are made.
During initial discussions, our clients have expressed how useful this will be to them, so we are hoping that this will provide an additional benefit of working with us as we assist our clients throughout their financial journey.
Please click the link below for our latest monthly figures for the five model portfolios. The figures show the performance of our model portfolios versus various indices over the month of December.
Professional Adviser (an information service for UK-based regulated financial advisers) have just announced their shortlist for their 2020 financial adviser and provider awards and we’re delighted that one of our team, Janine Willis, has been shortlisted for the Paraplanner of the year award, especially as she is one of just five Paraplanners in the whole of the UK to be shortlisted.
Janine has supported Graham Mendoza-Wolfson, one of our senior consultants, for many years and apart from achieving the Chartered qualification in financial planning, her technical expertise, high servicing standards and professionalism has been recognized through this award.
Alongside NLP Financial Management’s shortlist, for the 7th year running, for the Adviser Firm of the Year in London award, we’re incredibly proud of Janine’s achievement, which reinforces the outstanding advice process and customer care our team of people strive to deliver.
With these awards now in their 15th consecutive year, more than 200 advisers, firms and providers were taken into consideration in 2019. We will discover in February at a Black Tie ceremony, whether Janine will be awarded the winner, however this clearly demonstrates our company ethos is being widely adopted by our team, and helping us sustain our determination to remain a leading firm of advisers.
Please click the link below for our latest monthly figures for the five model portfolios. The figures show the performance of our model portfolios versus various indices over the month of November.
Structured Products are one of the more complex and less well-known types of investments but at NLP Financial Management we believe they can play a useful role within a broad investment strategy for our clients. This article outlines how they work and some of the different products available.
In simple terms, a Structured Product is a pre-packaged finance product offering a given return, or coupon, over a specific period of time linked to the performance of a financial instrument, for example the FTSE 100 Index. The main attractions of investing in structured products are that the potential annual returns can be quantifiable at the outset, albeit they are not guaranteed, and they provide useful diversification from other more traditional investments such as equities and fixed interest. Although capital invested can be tied up for up to eight years, most plans offer the potential for early maturity on any investment anniversary, usually from the second year but sometimes after one year, subject to the performance of the underlying index.
There is a wide range of structured products available at any point in time, covering the full width of the risk spectrum, from lower risk products to high risk. We carry out extensive research into the various structured products available to retail investors, and maintain a panel of approved products which can be offered to clients.
There are two types of product available; Structured Deposits and Structured Investments, and each product will target capital growth or income. Structured Deposits are plans with a given rate of interest, which is payable subject to the performance of, for example, the FTSE 100 Index over the period of the plan, with each plan having specific conditions. If the underlying index underperforms, investors may not receive any interest at all, but the capital invested is secure, while the products have the same protection of £85,000 under the Financial Services Compensation Scheme (FSCS), as with any other savings account.
Returns from Structured Investments usually depend on how a stock market index performs, and we only recommend plans linked to the FTSE 100 Index, rather than more than one index or individual stocks, which may offer higher returns but are higher risk. We often favour more defensive plans, which can pay out even if the FTSE 100 Index falls, even by as much as 35% during the full term of the plan. Some plans offer a “step-down”, whereby on each anniversary the measurement level of the FTSE 100 Index falls, so the plan can mature early even if the market has fallen since the start of the plan. However, there is a risk that capital may be lost if the underlying index falls significantly, typically by more than 35% on maturity.
Another risk is that the provider purchases underlying financial instruments from one or more banks, known as counterparties, and if these institutions fail or become insolvent during the term of the investment, investors may lose their full investment as they are not covered under the FSCS. Understanding the financial strength of counterparties is essential and a key part of our research process, and we will only invest in products where we are completely comfortable with the counterparty, or in some cases multiple counterparties, involved in that product.
In times when the FTSE 100 Index has fallen, investing in structured products arguably becomes more attractive, as the likelihood of loss of capital reduces, simply on historical levels of the Index. Furthermore, the returns offered from structured products are often higher during periods of stock market volatility. From a tax perspective, returns from growth plans are usually subject to Capital Gains Tax, providing the opportunity for investors to utilise their annual CGT exemption of £12,000.
In conclusion, due to the wide range of products available, their complexity and associated risks, 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 a range of maturity dates and returns, can be an appropriate strategy to adopt alongside a broader investment portfolio. Returns can be attractive relative to other investments, but it is essential to fully understand the risks involved, and due to their complex nature structured products are not suitable for all investors.
Elliot Gothold is a Consultant with NLP Financial Management Limited and can be contacted on 020 7472 5555 or at [email protected]
It’s become relatively standard practice over recent years, for medium to large companies to offer their employees access to a range of staff benefits that are over and above the traditional areas of private healthcare and life insurance. Some even provide free food, holidays and unlimited flexi-time!*
A benefit that is growing in both popularity and need, is that of financial education, with the opportunity for employees to meet professional financial planners who can demystify what can be perceived as a complicated subject. With 94% of UK workers experiencing money worries, 77% of these say their work is impacted and productivity is impaired, with protection, budgeting/planning and tax being among the highest concerns.**
There are various ways in which financial education can be implemented within businesses, from workshops and presentations on a range of financial topics, to one-to-one meetings; or as in the case recently, attending a benefits fair at Goldman Sachs, with whom NLP Financial Management has had a long-term business relationship.
Whilst events such as these usually cover a wide selection of wellbeing providers, employees can informally meet finance professionals and ask questions in a relaxed environment, with the option of continuing the discussions afterwards, should they wish to do so.
Crucially, these events help employees to start having conversations about aspects of their current or future finances that they may have pushed to one side. It’s a common misconception that individuals need a large capital sum of money before speaking to a Financial planner, when in fact, a beneficial relationship can be started early on, that can help people effectively formulate their financial futures and put themselves in a far better position later on in life.
If you’d like to discuss the option of NLP Financial Management attending your workplace please contact us at [email protected]
Pictured – Ed Beaber (Business Development Consultant), Adam Katten (Managing Director) and Elliot Gothold (Chartered Financial Planner).