You’re only as strong as your weakest link!

Unless you’ve spent the weekend on the moon or simply ‘switched off from the world’, you will be aware of the unprecedented cyber-attack ‘WannaCry’, which began as a ransomware attack on Friday morning, infecting over 230,000 computers in 150 countries and causing grave disruption to many organisations including the NHS.  Whilst the stories that hit the headlines related to large organisations, there will no doubt be many small businesses and individual users who have also been victims.

 It seems that everywhere you look we are being warned about the risks of cyber-crime; yet despite this, it is still the fastest growing area of crime, as criminals continue to take advantage of advancing technology and the vulnerability of systems and individuals.

According to statistics recently published by the Office of National Statistics, cyber-crime was one of the most common offences committed in 2016, with an estimated 2 million cyber-crime incidents compared to 686,000 domestic burglary offences!

It’s not surprising that individuals unwittingly fall foul of these increasingly sophisticated attacks, particularly when these often come from what appear to be genuine and respectable authorities.   A warning email I received on Friday morning from HMRC illustrated this perfectly.  It read “Customers are strongly advised to lookout for a new phishing scam. If you get an email with the subject, “Your 2016 Tax Report”, with an attachment, do not open!”

Now I know that HMRC would never email important documents to me and if I was in any doubt, I would telephone HMRC to check (after looking up the number from a genuine source and before opening any attachments), but, how many individuals would have been panicked by seeing ‘HMRC’ and immediately opened the attachment, resulting in who knows what malicious activity, financial loss, data loss, identity fraud or even psychological issues resulting from the stress of the attack.

The National Cyber Security Centre makes the following suggestions for keeping safe: –

  • Use proper anti-virus software and always download the latest software and app updates; they contain vital security upgrades which help protect your devices from viruses and hackers. The most common reason respondents across the UK gave for not downloading software updates was that it takes too long. In reality, it only takes a few minutes compared to the time it can take to recover from a cyber hack.
  • Use three random words to create a strong password. Weak passwords can allow hackers to use victims’ email to gain access to many of their personal accounts, leaving them vulnerable to identity theft and fraud.
  • Back up the data that is important to you – you can’t be held to ransom for data that you hold elsewhere.

 Of course, these activities alone can’t keep you completely safe. In September 2016, the ringleader of a gang responsible for the biggest cyber-fraud the Metropolitan police had seen was jailed for 11 years.  Their crime; defrauding innocent bank customers over the phone by pretending to be from the fraud department of the bank and persuading them to provide their internet banking details on the basis that their accounts had been hacked.   Within a matter of seconds and whilst the call was still taking place, the callers associate would gain access to the victims account and empty them!

Now you might think that you wouldn’t have fallen prey to this crime, but the criminals were so convincing that amongst the victims was a firm of solicitors who were fleeced out of £2,260,625! In fact, between January 2013 and October 2015, the gang took approx. £113 million from victims!

 Through its Cyber Aware campaign, the government are urging everybody to treat cyber-crime as seriously as home security.   For more information on keeping yourself safe, please visit

Carpenter Rees takes cyber-crime and the security of client data very seriously.  In October 2016 we successfully completed the Cyber Essentials badge demonstrating that we have the correct security controls in place which meet government endorsed standards.


The kids are alright?

Further to my blog at the end of March “You can’t Take it with you”, I wanted to share with you some experiences and observations around gifting to children.

In many cases people delay making decisions about gifting to their children and other family members which is often due to fears such as: –

  • They may squander the gift – This may indeed be the case, but if they are set to inherit the money eventually, gifting it to them whilst you are still around allows you to guide them.  However, if this is a concern then the money can be gifted into a Trust. This would entail additional cost, added complexity and possibly a feeling of distrust and therefore if you are considering this option, you should be open with the family; at least about why. Another option is to gift an asset such as a property or a house deposit, which is difficult to squander and from our experience, property ownership makes children more responsible.   Another somewhat extreme but effective measure is to make it known that if the gift is used unwisely, they may be disinherited.
  • Too much too young– I love getting song titles from the Specials into my blogs! Some people are concerned that giving money too soon could remove that individuals work ethic and desire to create their own wealth. This can be tricky and the choice will be determined by the child’s personality and the values they have had instilled upon them. Again, a trust may be a possible solution.


  • Future Outlaws – As we all know; divorce courts start from a 50/50 split of assets. If you are concerned

The Solution to Uncertainty (Part 2)

Carrying on from last week’s blog, I did promise to let you have our solution to dealing with uncertainty. We believe the very best tool for dealing with this issue is diversification. We allocate part of your investment to conservative fixed income investments to provide stability when equity prices fall and to rebalance into when equity prices rise. In addition, we also diversify the equity portion of your portfolio across international markets and types of companies.

In some instances, the entire stock market can move in unison. However, that is not always the case and different asset classes often behave differently at different times, but all have strong long-term performance characteristics.

As a recent example of diversification in action, consider the following difference in returns that even a single quarter can make;

4th Quarter 2016                              UK                          Overseas

Large Company Stocks                   3.89%                    7.08%

Value Stocks                                    4.19%                    11.17%

Small Company Stocks                   1.48%                    8.01%


1st Quarter 2017

Large Company Stocks                   4.02%                    5.1%

Value Stocks                                    1.0%                      3.0%

Small Company Stocks                   5.1%                      4.0%


During the 4th Quarter of 2016 overseas stocks significantly outperformed UK Stocks and this was mainly because of strength of both US Companies and the Dollar. The very next quarter the returns are generally aligned with each other.

You might think that if we were clever, we would be able to predict which is likely to outperform from quarter to quarter, but nobody can do that despite what they may think.

Over the long-term the expected returns of UK and Overseas stocks are similar, but as demonstrated here there is a diversification benefit to holding both. The benefit of a diversified portfolio is a smoother ride and a reduction in the uncertainty that can and will happen.

In short, we will never own enough of one thing to make an absolute killing, but in so doing we won’t own enough of one thing to get killed! If you have a reliable financial plan in place, you don’t have to make a killing to accomplish your goals. We believe the market return, which is there for the taking, is often sufficient to achieve a positive outcome to a solid financial plan.




The Illusions of Certainty and the Value of a Financial Coach

I would like to start by saying that we do not take any credit for the governments U-turn over the increased probate fees which took place within 2 weeks of our last blog! (see it pays to live).

Since then, we have had Theresa May (or Mummy to her cabinet colleagues) call a snap election, the results of the first round of Presidential Elections in France and the unpredictable first 100 days of the Trump Administration. All of these events could give rise to an increase in investor uncertainty.  On the contrary, this might imply that there is such a thing as investor certainty.  We can assure you this is not the case!

It pays to live …

… or more accurately, it now costs more to die if you live in England and Wales as Probate fees are set to rise in May 2017.

The Ministry of Justice (MoJ) has announced that it plans to go ahead with a revision of probate fees despite a consultation in which only 63 out of 829 respondents agreed with changing from a flat probate fee to a proportionate fee based on the value of the estate. In addition only 13 out of 831 respondents agreed with the revised proportionate scales.

Should I stay for good in this final salary pension scheme?

The overwhelming majority of people who have been fortunate enough to be a member of a defined benefit (also known as ‘final salary’) occupational pension scheme should stay in it. There is certainly much to be said for a guaranteed, inflation-linked income for life

However, for some individuals leaving the scheme might be the right option. One example of this is wealthier clients, who may be more concerned about passing on an inheritance and the amount of income tax they pay on an income they may not need, rather than the prospect of running out of money.  For such people the high level of transfer values currently available will be good news and Carpenter Rees have been advising several clients on this matter.

There are many factors that are driving up transfer values but the first, falling interest rates from UK government bonds – gilts – is having the greatest impact.

Falling gilt yields – The economic uncertainty produced by the vote to leave the EU has seen investors moving into safe havens; gilts have been a major beneficiary of this trend. The increased demand has pushed prices high and as a result reduced gilt yields to historic lows. With the lower expected future returns from gilts, pension schemes have had to assume higher current values to provide the guaranteed future benefits – which in turn have resulted in higher pension transfer values.

Lower expected investment returns – We currently live in an economy with low inflation and low interest rates meaning we should expect lower investment returns. In addition, defined benefit final salary based pension schemes are paying out more of their funds in retirement benefits to pensioners as many schemes are closed to new younger members. As a result, Trustees, are expected to take less investment risk by reducing the proportion of their funds in equities and switching to gilts and fixed interest stocks to match the liabilities of the pensions they are paying out.

Improved life expectancy – Life expectancy at older ages in England has risen to its highest ever level. This is a generally welcome development, but it can be a headache for pension schemes that must now expect to pay pensions for longer and this is again reflected in higher transfer values.

It does not however follow that higher transfer values mean that more people should transfer. Many will be comfortable with the guarantees in place and the fact they do not have to take on the investment risk.  But for those with enough wealth to be confident about their own future financial security and would like to be in control of the level of income and therefore the tax they pay, a transfer of benefits from a final salary would be worth considering.

The decision to transfer will be based around numerous factors including the level of risk a client would wish to take, the income levels required and whether they would view their pension fund as a valuable asset to pass on to future generations outside of the estate. I know that I have mentioned our financial modelling software many times, however, this tool is invaluable in helping our clients understand whether a transfer would be of benefit to them; this is crucial as once the transfer is complete, the decision is irreversible.

If you would like to talk to us about your defined benefit pension plan, or in deed any other pension plan, please do get in touch.   We look forward to hearing from you hear.


You can’t take it with you.

‘You can’t take it with you’ and ‘What’s the point of being the richest person in the graveyard’ are phrases I often use when looking over a financial model with clients.

What does dying with money left really mean?

  • You were a very successful saver?
  • You struck on an amazingly successful investment strategy?
  • You had an idea or business that made you lots of money?

Or perhaps it means that:

  • You died sooner than expected?
  • You were worried about running out of money so were cautious in your spending?
  • You never got to do all the things you wanted?
  • You wanted to leave money to your children?
  • You developed habits or attitudes from life that said you should not spend capital or thrift is good?
  • You never got ‘permission’?

Let’s be clear, any money you do not spend or give away which is left in your estate on death over the inheritance tax (IHT) threshold (currently £325,000) will be subject to tax at 40%.  If nothing else, this 40% loss to your wealth should make you stop and think about your money options.

Striking a balance between today and tomorrow

A great Financial Planner who has you and your family’s best interests at heart, will help you to identify how much money you need to ensure you never run out. I like to call this your ‘enough’.  With ‘enough’ ring fenced, your Financial Planner will then help you develop a strategy to:

  • Be kinder to yourself; maybe spend more doing the things you weren’t sure you could afford to do.
  • Free up your most precious resource – your time. Spending money to engage help (e.g. a cleaner or gardener or maybe even a PA) can make life easier for you.
  • Culture memories by spending money taking friends and family on fabulous holidays or experiences.
  • Give money to your family or friends when they need it, rather than when you die. With the added benefit that you get to see them enjoy your gift.

Use your money for ‘good’ to help causes which are close to your heart and can make a difference. Such giving may also provide income and capital gains tax benefits, along with a real feel good factor.

So, what are you waiting for?

We are all creatures of habit. It takes time to develop the confidence to change lifetime habits and feel comfortable to spend or give more.  But gifting does good and it feels good.  The ultimate win win.

In summary, if you are in the fortunate position of having ‘enough’ take action by spending or giving more now or perhaps build spending and giving into your annual expenditure.  After all, inaction may just lead to the resulting loss of 40% of your family wealth when you go….

If you’re not sure where you are in your accumulation of ‘enough’ or want to kick start your gifting plan, please get in touch.  We look forward to hearing from you.

Remember you can’t take it with you.


Simple steps to becoming a wine tasting expert

In preparation for those long summer evenings, whereby we might get the chance to dine alfresco, I thought I would leave financial planning to one side today and talk instead about one of my other passions … wine!

For anyone who wishes to be able to evaluate and taste wine like an expert, there are a few simple tips you can follow.

 The right environment

 First of all, make sure you are in the right wine tasting environment. For example, a noisy or crowded room can affect your concentration, while any distracting smells can impede on achieving a clear sense of a wine’s aroma. You will also need the right glass – not a glass that is too small, the wrong shape or smells of detergent or dust. And there are other factors to take into consideration: what is the temperature of the wine? How old is the wine? Are there any residual flavours left from what you’ve been eating or drinking previously?

 The sight test

 Ensure that the glass is approximately one third full. Look straight down into the glass, hold the glass to the light and give it a tilt so the wine rolls toward its edges. This will allow you to see the wine’s complete colour range – and not just the dark centre – giving you a clue to the density and saturation of the wine. A murky wine may have chemical or fermentation problems, or it may just be a wine that was unfiltered or has some sediment due to be shaken up before being poured. A wine that shows some sparkle is always a good sign.

 Tilting the glass so the wine thins out toward the rim will provide clues as to the wine’s age and weight. If the colour is pale and watery near its edge, this suggests that the wine is rather thin. If the colour looks tawny or brown (for a white wine) or orange or rusty brick (for a red wine), it is either an older wine or has been oxidised and may be past its prime.

 Sniffing for aromas

 When it comes to sniffing the wine, give the glass a swirl but don’t bury your nose inside it. Instead, you want to be hovering over the top of the glass – think helicopter pilot surveying rush hour traffic. Take a series of quick, short sniffs, then step away and let the information filter through to your brain.

 You want to be looking for aromas that indicate that the wine is spoiled. A wine that is corked will smell like a musty old attic and taste like a wet newspaper – this is a terminal, unfixable flaw.

A wine that has been bottled with a strong dose of SO2 will smell like burnt matches; this will blow off if you give it a bit of vigorous swirling. 

And finally…

 It’s now time to start tasting the wine. Take a sip of wine into your mouth (not a large swallow), and try sucking on it as if pulling it through a straw. Again, you’ll encounter a wide range of flavours, and you should find that most will follow right along where the aromas left off.

 Learning how to taste wine is a straightforward adventure that will deepen your appreciation for both wines and winemakers. Starting with your basic senses and expanding from there, you will learn how to taste wines like the pros in no time. Keep in mind that you can smell thousands of unique scents, but your taste perception is limited to salty, sweet, sour and bitter. It is the combination of smell and taste that allows you to discern flavour.

Now that you understand the basic steps with our wine tasting tips, it’s time to experiment on your own. Enjoy!



Spring Budget 2017

The Chancellor of the Exchequer, Philip Hammond, delivered his Spring Budget to Parliament on 8 March 2017. In our guide, we consider the key measures and outcomes and look at the impact on you, your family and your business.

This Budget was the last one to take place in the spring. The Chancellor said last year that he wanted to simplify the whole business of setting taxes and government spending, which had become too complicated.

So, Spring Budgets will again become autumn ones (the first will be later this year), while the other big set piece event, the Autumn Statement, will become a spring one (the first will be in 2018).

As the UK begins the formal process of exiting the European Union, this Spring Budget was relatively low-key, with many changes having already been announced.

Opening his statement, Mr Hammond said the UK economy ‘continued to confound the commentators with robust growth’, and promised his Budget would provide a ‘strong and stable platform’ for the Brexit negotiations to come.

The Chancellor increased National Insurance for self-employed people. He also made provision for £2 billion for social care services in England, as well as offering additional help for firms impacted by business rate rises.

Mr Hammond announced a reduction in the total amount of dividends company directors and shareholders can receive from businesses without having to pay taxes, from £5,000 to £2,000. He said the move was meant to ‘address the unfairness’ around the dividend tax advantage, which he claimed was ‘an extremely generous tax break for investors with substantial share portfolios’.

As predicted, there were improved economic forecasts via the Office for Budget Responsibility (OBR). On the economy, Mr Hammond said growth was expected to be higher – and borrowing lower – than forecast in November.

Want to discuss the impact of Spring Budget 2017 on your personal or business situation?

The Chancellor resisted making far-reaching tax changes in this last Spring Budget, but some of the announcements could have an impact on your personal or business situation. If you would like to discuss your situation, or if you have any further questions, please contact us.

Click here to view our Guide to the Spring Budget 2017.


The Tailor Made Pension Scheme for the Family Business….

Family businesses in the UK employ over 9.5 million people and two thirds of this country’s businesses are family owned. We have a great deal of experience in dealing with family businesses, a lot of which comes as a result of the fact that we administer the ultimate family business pension vehicle, the Small Self- Administered Pension Scheme (SSAS).  

These schemes are the made to measure family business pension plan – the family are trustees, members and also have the facility to use the scheme’s funds to invest into the family business by way of a loan to the company (now referred to as pension led funding, but we still call it loan back) or by using the funds to purchase commercial property for the business.

The key here is that the family has control over the investment strategy, the membership (family members only) and the level of contributions (within limits set out by our good friends at HMRC).

In addition to this, the fund can assist with the family’s succession plans in that Mum and Dad can draw their benefits from the pension fund making them less reliant on drawing funds from the business. This enables more to be paid to younger family members working in the business, when they probably need it most.

In our dealing with the family pension schemes, we have grown into the role of family business advisors and developed the soft skills necessary to help families with their future planning. It is not always about the money, but often about how and who is best to take the business forwards and where to have the assets i.e. in the company or the pension fund to help with the future generational planning.

I am probably teaching to the converted in many cases, but please feel free to pass the word on to other family businesses that could benefit from a bespoke made to measure pension scheme or simply have a scheme but are not receiving any proactive advice on what they can do.