Wealth Planning explained Making your finances work for you

A comprehensive guide to our broad range of services

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Killik & Co is a financial services firm with a stock broking heritage offering financial and securities advice and execution as well as investment management across the whole market. We are an independently owned business and we are not tied to any particular product providers. Under the Retail Distribution Review (RDR) our regulator has chosen to define life policies, pensions, unit trusts, open ended investment companies (OEICs), investment trusts, and Exchange Traded Funds (ETFs) as Retail Investment Products (RIPs). For an adviser to be able to refer to themselves as “independent” they have to be able to advise on “all” RIPs. Our Brokers offer specialist investment advice which includes advice on unit trusts, OEICs, investment trusts and ETFs. However, under this definition, as they do not offer advice on life policies and pensions theirs is deemed to be ‘restricted advice.’ Our Wealth Planning division (Killik Chartered Financial Planners) offers holistic financial planning advice that can include all RIPs, so their advice is deemed ‘independent advice.’ Through a combination of our Brokers and Wealth Planners, we draw upon our skills and experience in investment advice and management, as well as financial planning, to deliver a truly integrated wealth management service bespoke to your requirements. www.killik.com

Introduction Killik Wealth Planning Services are provided by Killik Chartered Financial Planners which is the specialist financial planning arm of Killik & Co. We provide transparent, impartial holistic financial planning to those who are serious about growing, protecting and preserving their wealth. As a leading wealth manager, we believe in providing comprehensive independent wealth planning services. Our wealth planners are holistic in their approach and cover all aspects of your financial matters from pensions and annuities to inheritance tax planning and trusts to ensure that you have the correct financial architecture in place to meet your financial planning objectives. In this booklet we explain the wealth planning services we provide to our clients, the benefits of engaging a wealth planner and whether it could be the right service for you. To find out more, please speak to your Broker or call Killik Chartered Financial Planners on 020 7337 0544.

What does chartered mean for you? Killik Chartered Financial Planners have been awarded the prestigious title of Chartered Financial Planners by the Chartered Insurance Institute (CII). This title is the industry’s gold standard for financial planning practices. It confirms that we have satisfied rigorous qualification criteria by retaining highly-qualified staff who subscribe to the membership conditions of the CII. It also involves a commitment to continuing professional development and adherence to an industry standard Code of Ethics. Our status as an accredited firm of Chartered Financial Planners means you can be confident that you are dealing with one of the UK’s leading firms which is wholly committed to providing you with the best possible advice, service and support. All our wealth planners are Chartered Financial Planners.

Killik Wealth Planning We work with you through the various stages of your life, whether that is growing, protecting, preserving or ultimately distributing your wealth, to ensure that your financial goals and objectives are achieved as efficiently as possible. We believe in transparency and therefore all our services are provided on a clear and fair fee basis. We will not undertake any work without previously agreeing the work to be undertaken and the corresponding fee. For more information on how we charge, please see the ‘Our fees’ section on the next page. We recommend that clients opt for our comprehensive wealth planning service as this approach ensures that every aspect of your personal finances is aligned to achieving your overall financial and lifestyle ambition. However, we acknowledge that this level of service is not always desired and therefore provide targeted or ad-hoc financial advice through our focused wealth planning service.

A comprehensive guide to our broad range of services

Through our offshore branch in Dubai, we provide specialist financial planning for those who may not be UK resident or UK domiciled.

Our approach We tailor our service to the individual requirements of each client, making our approach very personal. We offer whole of market advice rather than a “one size fits all” solution. We have no outside influences and our experienced and highly qualified financial planners, who are either Chartered Financial Planners in their own right or working toward this, offer truly independent financial advice. Whatever stage of their financial planning career, all of our wealth planners undertake a regular programme of Continuing Professional Development (CPD) to maintain and improve their knowledge and skills to ensure that our clients receive the most suitable and up to date planning strategies and guidance.

Comprehensive Wealth Planning Our comprehensive wealth planning process is split in to five distinct stages.

Stage 1 - Initial meeting and getting to know you During the initial meeting we will talk about your goals and objectives and confirm whether we are able to help you achieve these. It is important that we fully understand your current financial position, relationships and your attitude to investment risk. We will also consider your tax position and take details of any existing investments and policies which you may have. Before undertaking any financial planning on your behalf we will confirm how our fees and charges work and agree this with you prior to proceeding by issuing a bespoke Terms of Engagement document.

Stage 2 – Wealth Plan Your wealth planner will gather full details of your existing investments and policies to review their performance and cost effectiveness. We will then confirm our understanding of your goals and objectives and prepare an outline plan of actions to be taken in order to achieve these. Our financial advice will include suitable asset allocation as well as a choice of suitable tax wrappers where appropriate. Crucial to the success of any wealth planning strategy is ensuring that both parties have a clear picture of your current situation. This is delivered through the production of a personalised Wealth Plan report, which confirms your financial situation including a detailed analysis of your income and expenditure and cash flow modelling to determine any gaps both between your stated goals and reality, plus a thorough analysis of your existing financial arrangements, and your short, medium and long term financial planning objectives. The Wealth Plan report identifies the steps that need to be taken to enable you to achieve your financial and life style vision.

A comprehensive guide to our broad range of services

Stage 3 - Solutions Once we have agreed what action needs to be taken, we will research and recommend the specific financial solutions and investments required to fulfill the objectives in your Wealth Plan. We will provide you with a detailed Solutions Report outlining the recommended financial solutions (tax wrappers, protection arrangements) and reasons why they are suitable for your requirements.

Stage 4 – Implementation Having met with you to discuss the Solutions Report and agree the recommendations within it, the final stage of the process is to implement these, thereby establishing your wealth planning and investment strategy.

Stage 5 – Ongoing governance Your wealth planner will aim to meet with you at least annually (or more frequently if you desire) to review your Wealth Plan and your circumstances. If necessary, your wealth planner will make recommendations for any changes which may need to be made. We agree the on-going governance service to be provided and corresponding fee through a bespoke client agreement.

Focused Wealth Planning Our focused wealth planning service is for clients who do not want or necessarily need a comprehensive wealth planning strategy but instead require targeted or ad-hoc planning advice. Our approach can cover all areas of financial advice from specific retirement planning, pension reviews, or protection reviews. This service is provided by our experts and, as with our comprehensive service, is totally impartial and provided on our transparent fee basis. Following the initial meeting, we will tailor our focused wealth planning service and fees to meet your requirements.

Our fees We are a fee based independent wealth planning firm. We agree fees on a case by case basis, depending on the nature and complexity of work to be conducted, and this is always done before any charges occur. We operate on a fixed fee basis. We believe fixed fees provide our clients with the peace of mind that comes from having a known, fixed price for a particular service or piece of work agreed at outset. Following the initial meeting, we will issue a bespoke Terms of Engagement document confirming the work to be carried out and corresponding fee. Please note we will not carry out any work without your prior agreement to our fees.

Case studies Case Study 1 – Comprehensive Financial Planning – At Retirement Mr and Mrs Smith ran a successful interior design firm and decided that at age 70 it was time to stop working, wind down their business and retire. They have four

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grown up children, some of whom live overseas and they particularly wanted to travel more whilst they were fit and able to do so. Like many clients, they had accumulated various pensions, investments and had more than one property. Some investments were held with Killik & Co and some had been acquired through their bank and previous advisers. The problem for them was that with all the various plans and policies (and their different charging structures and tax rules) they were unclear as to what their personal wealth meant in relation to their desired retirement goals. What they actually wanted to know was whether they would have enough money to ensure their desired standard of living was achieved and maintained throughout retirement. Whilst they had an idea of how much money they needed to live reasonably comfortably, they preferably wanted to spend more money in retirement than this and they also wanted to pass assets to their children as tax efficiently as possible. They were unsure how to effectively plan for these two different goals, and were particularly concerned that if they gifted capital they might run out of money. As they had built up a good relationship with their Killik & Co Broker over the years they wondered whether it would be more suitable to try and simplify their financial affairs and utilise our investment expertise further. The Solution Mr & Mrs Smith were introduced to a Wealth Planner via their Broker. After explaining in detail how Wealth Planning operates and charges for its services, the Wealth Planner undertook a comprehensive fact-find with the clients to gain a detailed understanding of all their financial objectives, their assets, various income sources, helping them to identify their expenditure requirements both current and throughout retirement. Once engaged by the client, the Wealth Planner analysed the Smiths’ entire financial circumstances and produced a bespoke Wealth Plan capable of meeting their financial objectives. In essence, the Wealth Planner was able to create a bespoke financial ‘road map’ which demonstrated how they could achieve their desired lifestyle. The plan detailed how to structure their current investments in the most tax efficient way and also how to plan effectively to pass on assets, without compromising their standard of living. It also detailed which pensions and investments to keep and which to consolidate in order to simplify their arrangements. Critically, it showed them when and how to take their pension monies. After going through this exercise, the clients stated that they felt more financially in control than they had ever been before, even knowing the exact level of annual investment returns required on their pensions, investments and savings for the rest of their retirement to achieve all their goals. This gave them and their Broker a clear mandate for choosing and reviewing investments most suitable for their requirements.

Case Study 2 – Comprehensive Financial Planning – Wealth Accumulation Andrew, 38 and Kate, 34, are married with two children, Max who is 3 and Lucy who is 1. Andrew is self-employed running an IT consultancy firm and has

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total remuneration of c. £280,000 a year, comprised of a salary and discretionary bonus based on the annual profits of his company. Kate works part-time in a gallery and earns £31,000 a year. They live in a property worth c. £800,000 with an outstanding mortgage of £350,000. Andrew and Kate had disposable income and were looking to start preserving their wealth by building capital through the most tax efficient means. One of their main priorities was to fund Max and Lucy’s future education fees. Andrew has an occupational pension scheme through this company but wanted advice on how to maximise his retirement savings. Kate also had an occupational money purchase scheme through her employer. Andrew had recently set up a Stocks & Shares ISA but Kate did not have one. They have no other savings or investment vehicles except an emergency lump sum of £40,000 in a joint bank account. Andrew and Kate wanted to start tax efficient saving with a view to funding school fees for Max and Lucy when they both turned 5. In addition, Andrew wanted to ensure he was making maximum use of his pension as a tax efficient means of investing money for their retirement. Kate was also seeking advice on how to ensure they hold their assets as tax efficiently as possible. The Solution Having identified Andrew and Kate’s goals and priorities in terms of their desired lifestyle, required income, anticipated expenditure and savings goals, the Wealth Planner provided a strategy to i) maximise their use of tax efficient wrappers and ii) ensure Andrew and Kate could accumulate enough savings to start funding school fees in 2 to 4 years’ time. As Andrew and Kate had excess disposable income every month, it was recommended that they each fully fund a Stocks and Shares ISA on an annual basis, making the most of the tax free growth they would receive. The planner conducted a ‘carry forward’ calculation on Andrew’s utilisation of his pension annual allowance and worked out he could contribute and receive tax relief on a further £110,000 of contribution in that tax year. The Wealth Planner also recommended that any further disposable income they had (having funded their ISAs and pensions) went towards an investment portfolio, with the aim of seeing a return on their money, greater than that offered through their bank’s interest rates. As Kate was a 20% tax rate payer, it was recommended that this investment account was set up in her name. It transpired that Andrew and Kate were underprotected in respect of their existing life and critical illness protection and the level of outstanding mortgage they had. The Wealth Planner recommended that Andrew increased his level of protection, in order to safeguard against the family losing their main stream of income in the event of Andrew being unable to work.

Case Study 3 – Comprehensive Financial Planning – Inheritance Tax Mitigation Jack, age 69, and Sue, age 67 are both in good health. They have three children, and two grandchildren. Jack is a company director, earning c. £70,000 per annum and Sue is a housewife. Their principal private residence in Surrey is worth c. £1m and there is no mortgage outstanding.

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They have £400,000 of cash on deposit and an investment portfolio worth £200,000. Sue has a wine collection worth c. £50,000. Jack is a member of a fully funded final salary pension scheme, and he also has several other pension arrangements, which provide a gross annual income of £55,000 per annum, which is more than sufficient to meet their expenditure needs in retirement. Jack and Sue decided that they should review their estate planning strategy, with a view to minimising the overall level of Inheritance Tax (IHT) liability on their combined estate. They were aware that they had an IHT liability but wanted clarification as to what the likely liability might be and what estate planning strategies they could put in place to reduce their IHT liability but still live the lifestyle they desired in retirement. They identified that they would like to retain immediate access to £50,000 of capital, both now and in future, though it is possible that a further capital sum might be required due to unforeseen circumstances. The Solution Having identified the potential IHT liability on their estate, the Wealth Planner put together a well-defined estate planning strategy to (i) mitigate the potential IHT liability and (ii) fund any liability which does occur. It was identified that Jack and Sue have sufficient income in retirement from Jack’s pension schemes, and therefore, lifetime gifting was recommended as a significant part of this strategy, both from their existing assets and their future income. In the detailed stategic report the various IHT exemptions and annual allowances that were available to both of them were outlined, and it was identified that they could save up to £50,000 in IHT just by making full use of some of their annual IHT exemptions, through making contributions into Junior ISAs or pensions for their grandchildren. In addition, it was recommended that some of the capital held on deposit could be used immediately to make a gift into an appropriately structured discretionary trust structure, with the aim of potentially removing funds from their estate. An offshore bond was recommended to provide them with tax-deferred income in retirement. Due to the illiquid nature of one of their major assets, their Surrey home, we also recommended the use of a joint life, second death whole of life policy, written in trust, to cover some or all of the IHT liability on their estate. We were also able to make suggestions on how their cash assets are held to ensure that upon the death of one of them, the survivor has access to sufficient funds until such time as the estate has been distributed.

Stephen approached Killik Chartered Financial Planners to find out whether it would be financially beneficial for him to consolidate his pensions into one SIPP, as he found it difficult to monitor each policy’s investment performance on a regular basis. He was also concerned that he wasn’t fully aware of the charges and felt like there was a lack of transparency from some of the providers on this. Stephen engaged Killik Wealth Planning to review each policy and provide advice on whether transferring them to a SIPP would be preferable to his existing arrangements with three different insurance providers. The Solution Having identified Stephen’s concerns and queries, the Wealth Planner put together a comprehensive report which reviewed each pension in turn, analysing the charging structure the underlying investments and their performance over time comparable to their benchmarks, the tax free cash entitlement and any guaranteed annuity rates attached to the plans. Having looked at each pension in detail, the Wealth Planner highlighted poor investment performance in two out of the three policies. He also brought to light a punitive charging structure on one of the policies. Further to this, the Wealth Planner explained to Stephen that by having three separate policies, he was paying three separate annual management charges so in effect tripling the charges he could be paying. Additionally, the Wealth Planner discovered that one of the pension plans was offering Stephen a guaranteed annuity rate that was significantly more favourable to the rates he may be offered on the open market. This preferable rate was guaranteed up to the point that Stephen decided to draw on his benefits. It was therefore agreed that Stephen would consolidate two of the plans into a SIPP. Stephen wanted to have access to better performing funds and was also interested in holding direct equities, in line with his existing investment mandate at Killik & Co. However, he did express an interest in purchasing an annuity at some point in the future so it was agreed that because of the guaranteed rate on the third policy, it would remain with its existing provider as it made little financial sense to transfer this policy into a SIPP.

Conclusion Killik Wealth Planning services can assist you with ensuring that your finances are structured in the most effective and tax efficient way to achieve your goals – whether that might be wealth accumulation, preservation or transferring your wealth to the next generation.

Case Study 4 – Focused Wealth Planning – Pension Review Stephen is 39, single and a Partner in a London law firm. He has accumulated three separate personal pension arrangements with different providers. Stephen has had an investment account at Killik & Co for five years and has recently discussed the SIPP offering through his dedicated Broker. Stephen takes an active interest in his account and enjoys following the stock market, regularly discussing his investment ideas for his portfolio with his Broker.

A comprehensive guide to our broad range of services

For more information, an initial discussion or to arrange a meeting with a Wealth Planner please speak to your Broker or contact Killik Chartered Financial Planners directly on 020 7337 0478.

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A comprehensive guide to our broad range of services

Killik Explains Educational Video Series It has always been our philosophy that when it comes to investment, knowledge is everything. We have therefore committed to enhancing our clients’ understanding with a series of educational videos called Killik Explains which covers a broad range of investment topics.

www.killikexplains.com from Tim Bennett

We highly recommend that all Killik & Co clients view arguably the two most important videos - Lifetime Savings: The Risks and Why Investors Must Diversify.

It is important that you understand that there remains risk with all investment and you may not get back the original capital invested. The value of your investments may fall as well as rise, and the past performance of investments is not a guide to future performance. The tax treatment of investments may change with future legislation.

Call a Wealth Planner today: 020 7337 0478 [email protected]

www.killik.com Killik & Co is a trading name of Killik&Co LLP, a limited liability partnership authorised and regulated by the Financial Conduct Authority and a member of the London Stock Exchange. Registered in England and Wales No OC325132. Registered office: 46 Grosvenor Street, London W1K 3HN. A list of partners is available on request. Killik Offshore is the registered Branch of Killik & Co LLP in the Dubai International Financial Centre (“DIFC”) a trading name of Killik & Co LLP and is an Authorised DIFC Branch regulated by the Dubai Financial Services Authority (“DFSA”). Telephone calls may be recorded for your own protection and quality control. You should be aware that the value of investments and the income from them may vary and you may realise less than the sum invested. Past performance of investments is not a guide to future performance. The tax treatment of investments may change with future legislation. The charges and commissions contained in this brochure are current at the time of publication but are subject to change. Please ask for a current copy of the Terms and Conditions. This financial promotion has been approved by Killik & Co. WealthPlanningEx 11.15