I need a second opinion / Can I afford to Retire?

I’m just not convinced this is the best solution

Issues & Concerns

Gerald was a very successful executive who juggled a hectic business schedule and family life. During his career he had various company and private pensions that had already been consolidated into one large SIPP (Self Invested Personal Pension). He also had a complicated investment portfolio.

He didn’t understand the charges being levied by his existing adviser, didn’t feel they were completely honest and open and didn’t fully understand where his money was being invested. He couldn’t put his finger on the problem but he felt “uneasy”.

Gerald was approaching 60 and starting to think far more seriously about retirement. His wife Leanne was particularly keen that he slow down. Gerald realised that he did not have the time or expertise to look into this. Gerald and Leanne requested that we give them a second opinion.

Solutions

We discussed and clarified that Gerald really wanted ‘financial freedom’, ie he wanted to know whether he was working out of choice rather than necessity. We built a financial plan so that Gerald and Leanne would both understand when retirement was available to them maintaining the lifestyle they had become used to. The plan included the purchase of a holiday home and bequests to their children to reduce their estate for Inheritance tax planning.

We ran a complete audit on their existing arrangements using a powerful software tool. We were able to ‘X-Ray’ the pensions and investments to get a full understanding about the funds being used, charges and investment risks.

They were surprised to learn that despite their money being spread across 30 different funds, the underlying investments were concentrated largely into risky stocks and shares. Some of these funds were ‘unregulated’ (high risk and without investor protection). They were taking far more investment risk than they had been led to believe, understood or needed to take. So close to retirement, they should have been in ‘wealth preservation’ mode, not risking the kitchen sink.

They were very surprised to learn the full costs that were being levied by the funds they held, in the platform the money was invested in, via their advisers. They did not feel they were getting any real service.

In many ways this confirmed Gerald’s suspicions and concerns that his existing arrangements were not suitable for their requirements. After our initial work had been carried out, Gerald and Leanne were welcome to make the changes themselves, work with another adviser or ask us to carry out the work and look after them going forward. They requested that we implement the changes and look after them.

Results

  • Gerald is still working, but now it’s out of choice and as a business consultant from home. Both he and Leanne realised that with his “type A“ personality he would get bored very quickly. Any time he wants to stop then he can easily do so.
  • He has taken part of his pension tax free lump sum to buy a holiday home.
  • We have a strategy in place with sufficient low risk investments to meet his need for capital whenever it occurs.

The strategy allows us to ‘turn on’ his retirement income and vary it at a moments notice.

They gifted some money to their children immediately and vested a further amount via a trust. This can be used for children or grandchildren in future.

Leanne is happy is that Gerald spends more time at home, enjoys his work and seems stress free!