Case Studies

Investments

Case Study Number One – Mr & Mrs W

Mr & Mrs W required a full financial review. Married with two children and relying on Mr W’s sole income for the last 7 years, clients had about £5,000 in general savings. They also had a £180,000 mortgage on a Pure Interest Only Basis. Mr W had recently received a promotion at work and wanted to use the additional £800 per month of take-home pay to address their financial needs. These were established to be:-

  • To provide financial security in the event of death, serious illness or long term disability
  • To ensure the mortgage is paid off by the time they retire,in 22 years time
  • To provide funds for when their two children go to University

After establishing what benefits Mr W had through his employer and agreeing their attitude to risk and investment term, we established :-

A Joint Life Level Term Assurance Policy for £180,000 over a 22 year term – to ensure their mortgage would be repaid in full in the event of either party’s death during the 22 year mortgage term

As client’s had a ‘Medium to High’ attitude to risk we established a regular savings Stocks & Shares ISA in Mr W’s sole name that projected to repay their mortgage over a 22 year term

An Income Protection for Mr W that will pay 60% of his salary in the event of him being off work for 26 weeks. His Employer will pay him for the first 26 weeks. The policy will pay out the required level of income until such time as he returns to work or until his selected retirement age.

A joint Life Family Income Benefit Policy that will provide £15,000 per annum in the event of either party’s death during the next 15 years. This will provide some financial security for the surviving spouse and children in the event of either spouse dying before their youngest child is 21 year old.

We also set up a stand alone Whole of Life Critical Illness policy on a joint life basis that was written on an ‘Ultimate Cover basis. This was designed to pay out a lump sum to either party in the event of the first valid claim on diagnoses of a critical illness. We included ‘child cover’ so that a specified amount could also be claimed in the event of either child being diagnosed with a critical illness.

Finally, to address the University funding requirements we utilised part of the £3,600 annual tax-free Junior ISA allowance for their youngest child and incremented the Child Trust Fund allowance for their other child. This allowed them to save a regular amount to build up a flexible tax-free sum.

The case study illustrated above is based on one of our clients and its aim is to give you an idea of the type of work and planning we undertake for our clients.

Changes in legislation and tax can impact on the advice that we give to our clients. This case study is not guaranteed to work in all circumstances and is intended to be a guide.

Please remember that the value of investments can fall as well as rise.

Case Study Number Two

Mr & Mrs C had just retired and having recently ‘downsized’ they had a £120,000 lump sum that they wished to invest for income and capital growth. In addition, Mr C had a £245,000 pension lump sum that he wanted to use to provide an income for himself and his wife. Clients also had an existing savings and investment portfolio worth some £100,000. They wanted its performance reviewed and also to ensure it was tax-efficient and that the charges were competitive.

After assessing clients ‘attitude to risk’, investment objectives and any short-term capital objectives, we agreed the following recommendations:-

We utilised client’s ISA allowances and re-registered their existing Investment Portfolio to our Choice Investment Portfolio Solutions (Choice IPS) WRAP Platform. The funds were re-structured into our ‘Wealth of Choice Two (Low/Medium Risk) Model Portfolio’. This portfolio had the same risk profile as their existing portfolio but had produced 18% more capital growth over the past 3 years. Furthermore the annual management charges were 0.80% per annum less. Even after we added in our 0.75% annual advice charge, clients would have still been better off and will now benefit from our quarterly review of the portfolio funds and regular ‘free fund switch’ advice.

We invested £100,000 of the £120,000 house sale proceeds and kept £20,000 in short-term savings accounts ‘in case of need’. This was held in Mrs C’s sole name to utilise her remaining personal allowance. The £100,000 was invested on the Choice IPS WRAP Platform, partly in the Wealth of Choice Two (Income) and partly in Wealth of Choice Three (Growth).

We moved Mr C’s pension fund in to ‘drawdown’ to provide the additional income he required.

The case study illustrated above is based on one of our clients and its aim is to give you an idea of the type of work and planning we undertake for our clients.

Changes in legislation and tax can impact on the advice that we give to our clients. This case study is not guaranteed to work in all circumstances and is intended to be a guide.

Please remember that the value of investments can fall as well as rise.

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