WHAT IS THE BEST HOME FOR YOUR CLIENT S PENSION?

ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013 WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION? ADVISER KNOWHOW THE WEEKLY TV PROGRAMME FOR ADVISERS B...
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ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

ADVISER KNOWHOW THE WEEKLY TV PROGRAMME FOR ADVISERS BY ADVISERS

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION? There are many things to consider when it comes to choosing the best home for a client’s pension arrangements: what flexibility do they need? How much are they prepared to pay? Ought they consolidate other pension pots? What are their retirement planning needs? How does pension saving fit into their overall financial plan?

KEY POINTS 1 Sipps are popular but some are now more expensive 2 Advisers prefer platforms to insured pensions 3 Client’s circumstances matter

ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

KEY POINTS KEY POINTS FOR THIS WEEK’S ADVISER KNOWHOW FEATURING AN INTERVIEW WITH FRANCIS KLONOWSKI OF KLONOWSKI & CO

1

SIPPS ARE POPULAR BUT SOME ARE NOW MORE EXPENSIVE ¬¬ Sipps are essential for clients in drawdown who might need a cash option. ¬¬ Sipps are good for consolidating pots and at retirement. ¬¬ The Sipp market is narrowing with some providers becoming too expensive. ¬¬ Sipps can invest in property funds which are a reasonably safe asset

2

ADVISERS PREFER PLATFORMS TO INSURED PENSIONS ¬¬ Insured pensions have a wide fund range but are controlled by life companies ¬¬ Platform pensions can be included in portfolio management.

3

CLIENT’S CIRCUMSTANCES MATTER ¬¬ Be cautious setting up a Qrops if clients have moved overseas - they might come back! ¬¬ Consolidation of old pots helps clients understand their financial situation. ¬¬ Pension planning can be very individualised because the pension system is so complex.

ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

PROGRAMME TRANSCRIPT “We feel that a Sipp option is essential if we’re going to be advising people on drawdown, if only just to give them a cash option.” Leigh Tarleton, LS Wealth Management

Hello and welcome to Adviser Know How, this week we’re discussing what the best home is for a clients personal pension. With the many, varied choices in the private pensions market and the differing needs of clients, figuring out where to put retirement savings for the best returns can be a complex business. I am joined by Francis Klonowski of Leeds-based, Klonowski & Co to discuss this. So, Francis, what do you think is the best home for a client’s personal pension? Francis Klonowski, Klonowski & Co I think it’s hard to give a definitive answer to that that suits everybody because there are different circumstances in which different types of pension would be appropriate which actually tells you more about the complexity of the system that’s built up, more than anything else. Brian Cantwell, New Model Adviser Okay fantastic, well we had a chat with advisers earlier on in the week. So, let’s see what they’ve been saying.

involved in the Sippmarket. We do a lot of income drawdown business and we feel that a Sipp option is essential if we’re going to be advising people on drawdown, if only just to give them a cash option. Are you using commercial property investments? Is it safe? What clients are they suitable for? Alistair Mann Yes I do, I’ve got some companies using their own commercial property as an investment within their SASS, some using it within a shared Sipp. Is it safe? I’ve got some property funds, I’m going back into commercial property funds, is it safe? It’s a reasonably safe asset class. Leigh Tarleton Not at the moment we got involved in because we don’t want to have to do the due diligence on it, not an area of expertise for us. Are you putting clients on platforms? Has that influenced pension investment decisions?

Alistair Mann, Clocktower I use Sipps for individuals, I’ve got a few companies using SSAS for their directors and key staff.

Alistair Mann I wouldn’t say it’s affected my investment decisions in that the larger companies that are using their own commercial property aren’t on a platform. The ones that are on a platform tend to be in property funds.

Leigh Tarleton, LS Wealth Management Tend not to use SSAS, but we do get

Leigh Tarleton Yes, we’ve always used platforms

Do you use SIPPs or SSAS for clients?

since we started the business, we have historically used Skandia, we’re seeing quite a lot of business now going to a more open architecture approach of Seven Investment Management and an integral part of our business. Are you using insured personal pensions and for which clients? Alistair Mann Very rarely, predominantly because of cost, but also because of service and accessibility to fund range. A lot of the insurance companies have a very wide fund range, but they control the fund range and I can’t typically do portfolio management on them. Leigh Tarleton, LS Wealth Management Not really. To be honest with you, I think over the years we have got involved as most IFAs have done, but in recent years, this kind of demographic that we’re looking at lends itself more to platform proposition and our own in-house portfolios. Francis do you draw a distinction between Sipps and SSAS for private clients? Francis Klonowski Most of the SSAS that I’ve dealt with are ones that I have kind of inherited so, the ones that were already in place and there were good reasons for keeping them there. I haven’t had the opportunity recently of setting

ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

“One client in particular had been paying in for about 20 years. He said, “I feel like I own it now and I know where it’s going.” Francis Klonowski, Klonowski & Co

new ones. Sipps I’ve used quite extensively, both for the accumulation phase and the consolidations, but particularly for the at retirement market. Fantastic. I mean, are the changes in the Sipp market having any affect on the choices you’re making for your clients? Francis Klonowski I think it’s narrowing down to some of the providers. One or two of them have got very expensive, one or two of them have got too big and some of the more specialised ones, are the ones that are easier to deal with and keeping their costs down as well. I mean, are you putting clients on platforms, how much is that putting into the retirement space? Francis Klonowski Platforms, I was using quite a long time ago actually as a method of getting some kind of quasi Sipp before the word platform was ever invented. So, the likes of Alliance Trust, I found many years ago, they had this wonderful pension which wasn’t called a platform and it wasn’t called a Sipp, but it gave you the opportunity of holding a number of investment trusts and individual shares if the clients had any, that they wanted to put into it, and that flexibility to change the investments and very low costs as well. So, I was using that quite a long time ago.

I mean, what about Qrops, do you look at that as part of the course if you’ve got clients who’ve gone abroad?

for about 20 years. He said, “I feel like I own it now and I know where it’s going.”

Francis Klonowski Yes, I do have clients who have moved overseas. I would be very wary of setting one up just because somebody has moved overseas. The reason for that is that some of my clients who retired to go and live overseas have actually come back and one even, as we speak, one is just hoping to sell their house abroad and come back. So, they would be the fourth out of 12 people who have gone abroad, the fourth one to come back. So, if you set one up just because they’ve moved out of the UK and they come back within the five years, they could end up with some huge tax implications. So I would say wait until they are very well settled overseas before you start moving into anything like that.

Fantastic, well that’s great for me, that’s wrapped it up very nicely, thank you for coming in today Francis, it’s been a pleasure.

Do you think small pots have a part to play? Do you deal with many clients who come to you with a lot of small pots? Francis Klonowski Yes, yes very often, and because I am fee based the size of the pension fund doesn’t really matter, it’s the financial planning and how do we draw it all together. I think the comment that people make very often is, “for the first time, I actually know what I’ve got and I know where it’s going.” One client in particular said, “I feel like I own it at last.” He’d been paying in

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ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

ADVISER KNOWHOW A PROGRAMME FOR ADVISERS BY ADVISERS

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ADVISER KNOWHOW EPISODE 49 12 NOVEMBER 2013

WHAT IS THE BEST HOME FOR YOUR CLIENT’S PENSION?

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