Most clients only have three levers they can pull to improve their financial lives; costs, tax and risk.
Getting the balance of these three right, can make a huge difference to your financial outcomes. Allowing you to retire earlier, give more to family, give more to charity, buy that boat or holiday home, whatever it is that motivates you.
If you can pull back on the first two levers of tax and cost, the compound impact of the money that doesn’t leave your portfolio accrues rapidly over the years.
Even small reductions in the ongoing tax paid from your portfolio can make a huge difference to outcomes. This might be reductions in capital gains or income tax. It might be for you, a saving of 40% inheritance tax. The tax numbers can be large as successive UK governments battle with the deficit. Bluntly every pound given to the government is a pound that can’t remain in your portfolio and grow towards your goals.
The impact of costs is even easier to illustrate, as we have done on this website with our cost comparison calculator. Using this calculator, you quickly see how a percentage charge reduces your long-term growth compared to the equivalent flat fee. Again money given to the financial services industry is money that ultimately you and your family don’t get to spend.
This leaves the lever of risk.
If you have a long enough investment time horizon to ride out the ups and downs, the evidence from a hundred plus years of investing shows that the more you allocate to shares, the more growth you will achieve. If you have an adviser who has managed to reduce the first two levers and built this into a future financial forecast for you, then you can understand the trade-off of moving the final third lever.
It might be that having dealt with the first two, you decide that you don’t need to take much risk to achieve your goals. You might decide that two fewer years of working for a hated boss is worth taking additional investment risk now,
The most important thing is to understand and have modelled these trade-offs for you. All of the flat fee advisers featured on this website can help you with levers 1, 2 and then help you to understand number 3. Get in touch with us today to be put in contact with the one that you feel suits your budget and location.