Overview
Hilary and her husband had agreed to an amical separation. They were both Shareholders of a successful business, however, Hilary’s role was less integral, and her shares would be bought from her as part of their Divorce agreement. As part of the deal, she would also need to transfer her share of the company pension fund into a pension scheme of her own (please also see “First Time Investor” Case Study.)
Their main concern
Hilary had never really been involved up to that point in any financial decision-making and found it stressful to have to have to juggle raising two children with taking charge of her own finances.
She would be unable to earn much at all for a number of years whilst she supported her children through school and onto University, which she had agreed to fully fund. Although she received a large sum for her shares in the business and her pension fund was healthy (a combined value of around £1.5million), she was worried about running out of money too soon, particularly as she was too young to be able to access her pension fund (she was only 46 when she came to us for advice).
To add to this, Hilary was very nervous about investing into anything other than deposit accounts due to the risks she perceived this would involve.
Our main advice
- Set up a suitable pension scheme in her own name.
- Arrange a suitable, relatively low risk, investment strategy for Hilary’s pension fund with the objective of achieving capital growth in excess of inflation over the next 10-15 years.
- Given her fears around investing, we started very slowly, investing just 25% of her available personal capital, retaining the rest into a combination of fixed term deposit accounts until she became more comfortable with the concept of investing (seven years on Hilary now has around 60% of her available capital invested and is much more comfortable with the idea of investing!).
- To give her investments and pension fund the potential to grow fast enough, to at least offset most of what she would need to spend each year to support herself and her children, to try and ensure her money would also provide for her later life.
What we did
- We researched and recommended a suitable pension scheme into which Hilary’s share of the company pension fund could be transferred into her own name. The funds were invested in line with our recommended strategy.
- We arranged the new personal investments via an Investment Platform, to simplify the administration and reduce costs for the initial investments and any changes we would recommend in the future.
- We recommended a diverse portfolio for her pension and investments, to spread the risks.
- We produce twice-yearly reports and hold twice-yearly review meetings with Hilary to look at the performance of the pension and investments and recommend any changes we feel would benefit her portfolios.
- At least annually, we revisit and update the cashflow modelling forecasts, which provide her with the reassurance that she won’t run out of money too soon.
- We help Hilary to source suitable deposit accounts for her ready cash and provide her accountant with all the information needed to complete her annual self-assessment.
What were the benefits
- Hilary has the peace of mind of knowing that her finances are benefiting from a structured approach to the investment of her pension funds and personal investments, which are invested in line with her own objectives and timescales and within defined risk parameters.
- Our ongoing advice and reviews mean that any changes to her circumstances, objectives, attitude to investment risk or the economic outlook are considered and changes to the funds are made when appropriate.
- We have ensured that Hilary has always had enough accessible cash to be able to fund her predicted expenditure.
