Westside Article – June 2021

The recent Budget was one of tax pain largely deferred. Mr. Sunak was never going to introduce significant tax increases as economic recovery is the priority.  The proposals of most interest were:

  • The addition of £70 to the personal allowance and £200 increase in the basic rate band, in line with indexation requirements.  However, after 2021/22, the personal allowance and higher rate threshold (outside Scotland) will be frozen for four tax years.
  • The inheritance tax nil rate band, the pensions lifetime allowance and the capital gains tax annual exemption will all be frozen at their current levels for the next five tax years.

These freezes, along with rising property prices across the UK, mean that investment values are growing, putting more people at risk of falling into the inheritance tax net.  The Government raises billions each year from people sleepwalking into higher and higher taxes.   It is time to act.  No matter how large or how modest, everyone has an estate and you will want to control how it is administered to the people or organisations you care most about.   There are lots of points to consider such as making a will, appointing a Lasting Power of Attorney or nominating a pension beneficiary.  It is important to plan ahead with confidence in order to minimise the tax burden for your family and loved ones in the future. 

The world has never seen as much coordinated stimulus as in the past nine months.  This sets the stage for a strong economic recovery across the world in 2021.  Markets have already put COVID-19 behind them and have been largely positive since January. Biden wasted no time in unveiling a $1.9 trillion stimulus package and the UK has announced more measures to protect badly affected businesses. Companies know that the end is in sight and they also know that consumers are itching to spend as soon as they can.  However, returns on bank and building society accounts are falling to a minimum and interest rates and inflation are picking up.  All of this suggests now is the time for a financial review so that you are ready for the recovery.

During the Covid-19 pandemic, financial scams have been a growing problem, particularly affecting the older generation with the average age of a victim being 75.  The need for trusted, independent advice has never been greater.  Hamnett Wealth’s Director, Jonathan Rowley, is a SOLLA accredited Independent Financial Adviser. SOLLA is a not-for-profit organisation founded to make sure older people and their families get the very best advice when it comes to financial planning for later life. SOLLA members keep up-to-date with the fast-moving world of financial fraud and can help to spot the signs of scams. They are dedicated to providing the right advice and with a full understanding of the issues affecting older people and their families. Hamnett Wealth Management has also committed to the Financial Vulnerability Taskforce Charter which aims to promote a greater understanding of vulnerability, encourage appropriate behaviours and establish good practice amongst personal finance professionals in respect of people who find themselves in vulnerable circumstances.

Hamnett Wealth Management offers a free consultation where you can gain an independent and professional second opinion on your financial arrangements. Do you know what your current advisor is charging you in fees?  Recent press reports have highlighted several cases of people moving their portfolios and pensions from a certain provider because they have been subjected to high fees, poor service and a lack of transparency.  Maybe you’ve lost touch with your financial advisor, are unsure of how your portfolio is performing or are looking to minimise the fees you are paying – our Advisors can review your finances and look at alternate ways for you to get a good return on your savings and pensions. We keep our costs to a minimum and because we are independent, we don’t need to worry about shareholders.  We can then pass these savings onto our clients, meaning that our fees are cheaper than the large corporate companies.

Our office is operating as normal but we can also offer appointments in the comfort of your own home, by telephone or by Facetime, Microsoft teams and Zoom. Please call us on 0114 235 3500 to arrange a free initial meeting. 

This article appears on page 27 of the June issue of Westside magazine. You can read the magazine online at Westside | RMC Media.

Dying Matters Awareness Week 10th – 16th May 2021

Dying Matters Awareness Week, running from 10 – 16 May, is a chance for individuals and organisations to open up the conversation around dying, death and bereavement. This year focuses on the importance of being in a good place to die.

Dying Matters want people of all ages to be in a good place when they die – physically, emotionally and with the right care in place. Getting there means having some important conversations and taking some careful decisions. You can join in the conversation on social media by sharing your story on social media using the hashtags #InAGoodPlace and #DMAW21. Alternatively, visit the campaign website, Dying Matters, for more information and resources.

During the awareness week, there will be daily themes, including financial, to explore what it means to be in a good place, and how you and your loved ones can plan for the end of life.

At Hamnett Wealth, we can help you answer this question on a practical level by assisting you with long-term care planning, wills and protecting your assets.

By taking appropriate action now, you and your family can face the future with peace of mind.  Long-term care planning gives you choice, flexibility and dignity when care is needed. It protects the assets of your family, ensures stability for the future and can protect against future potential fee increases.

To talk to us about long-term care planning, wills and protecting your assets, please call 0114 235 3500.

Stress Awareness Month April 2021 – Regain Connection, Certainty and Control

Stress Awareness Month has been held every April, since 1992, to increase public awareness about both the causes and cures of our modern stress epidemic. Despite this running for 29 years, we have got a long way to go. According to the Mental Health Foundation, 74% of UK adults have felt so stressed at some point over the last year they felt overwhelmed or unable to cope.

Millions of us around the UK are experiencing high levels of stress and it is damaging our health. Stress is one of the great public health challenges of our time, but it still isn’t being taken as seriously as physical health concerns. Stress is a significant factor in mental health problems including anxiety and depression. It is also linked to physical health problems like heart disease, problems with our immune system, insomnia and digestive problems. Individually we need to understand what is causing us personal stress and learn what steps we can take to reduce it for ourselves and those around us.

The theme for Stress Awareness Month 2021 is ‘Regaining Connectivity, Certainty and Control’.  The Stress Management Society recently collaborated with Huawei to conduct a study on stress, gathering data from 2000 British adults. The research identified that 65% of people in the UK have felt more stressed since the COVID-19 restrictions began in March 2020.  The three key causes for concern are feelings of disconnection, uncertainty and a worrying loss of control.

This year the Stress Management Society will be hosting a 30 Day Challenge to encourage you to pick one action each for your Physical, Mental and Emotional Well-being to carry out every day.  It takes 30 days to turn actions into habits, which is why this is a month-long programme.  The 30-day challenge will maximise your chances of turning useful knowledge and techniques into positive behavioural change.

Hamnett Wealth Management could help you reduce your financial worries by working with you to plan for your future financial situation. We are passionate about making sure your finances are in good shape. We provide a bespoke personal financial planning service. Our extensive portfolio of advice covers areas from pensions to inheritance matters and tax-efficient investments. We are Chartered Independent Financial Advisors (IFAs) and are not restricted in any way. We are dedicated to building long-lasting relationships to help you secure your future.

To find out more about stress awareness and take a look at the fantastic resources available to help, please visit:  https://www.stress.org.uk/stressawarenessmonth/

Hamnett Wealth Management Commits to the Financial Vulnerability Taskforce Charter

Hamnett Wealth Management has committed to the Financial Vulnerability Taskforce Charter.

A newly created independent and inclusive representative body covering the personal finance sector, the Financial Vulnerability Taskforce is supported by the Personal Finance Society.  Its ultimate purpose is to promote a greater understanding of vulnerability, encourage appropriate behaviours and establish good practice amongst personal finance professionals in respect of people who find themselves in vulnerable circumstances.

At the heart of the initiative is a Charter which underpins the work of the Taskforce and sets out how professionals who commit to it, such as Hamnett Wealth Management, are expected to work with customers in vulnerable circumstances.

Jonathan Rowley, Director of Hamnett Wealth Management, said:  “Signing up to the Financial Vulnerability Taskforce Chater means that people can be confident we will use our best endeavours to provide them with a service that recognises their unique circumstances and delivers the same outcomes that they would expect if they were not in vulnerable circumstances.”

Advisers, financial planners and firms who adopt the Charter agree to abide by nine commitments:

1. Making advice easier to understand

2. Placing your interests above all else

3. Understanding how your circumstances might make you vulnerable

4. Not making assumptions about you

5. Not labeling you

6. Dealing with you sensitively

7. Adapting processes and

8. Ensuring staff are knowledgeable and appropriately trained

9. Taking appropriate action if you are in harm’s way

Jonathan continues: “Vulnerability is something that can affect us all; through unexpected events such as illness, loss of employment, divorce or even the sudden acquisition of wealth through inheritance or a lottery win.  While some health issues can lead to permanent vulnerability, fortunately in most cases it is a temporary phenomenon. But when it happens, you need to be assured that the professionals who support you fully understand its consequences and how best to continue to provide the highest quality service in these changed circumstances.”

You can find out more about the Financial Vulnerability Taskforce at: www.fvtaskforce.co.uk

Retirement – How Covid made people put plans on hold

A recent article in the Guardian Money section looked at how the pandemic has made many people reaching the state pension age reassess their future. For many on the verge of retirement, Covid-19 has had a financial impact.

In 2021 about 680,000 Britons will reach state pension age, according to the Office for National Statistics, but the coronavirus means many are having to think again about when, or even if, they can stop work. Research by the Interactive Investor website indicates one in five people aged 60-65 believe they will need to delay retirement. Its Great British Retirement Survey of 12,000 adults also revealed about one in four feared they would never be able to retire. You can read the article in full at: ‘I can’t possibly afford it’: how Covid has dashed retirement dreams | Retirement planning | The Guardian

How to boost your pension

• Check for missing funds: The Department for Work and Pensions estimates that there could be 1.6m lost pension pots, containing a total of £19.4bn. The government offers a scheme to track down lost pensions at: gov.uk/find-pension-contact-details.

• Make use of pension freedoms: From the age of 55 you can do what you want with your retirement savings: you can draw an income, buy an annuity, take a cash lump sum or a combination of these options. Making the best use of a mixed approach to your retirement income could boost your income, and an adviser can help with this.

• Inform your pension provider: If you are considering delaying your retirement, tell your workplace pension provider in plenty of time. This will prevent your pension moving into lower-risk assets and missing out on further opportunities for growth.

There are plenty of free resources out there that can help you plan for retirement. For example, you can speak to the government-backed free guidance service Pension Wise about any concerns. You can find out what you are on track to receive from the state pension, and when it will be paid, by using the government’s online forecast tool at: gov.uk/check-state-pension.

Whatever stage of life you are at, Hammett Wealth Management offers unbiased expert pension and retirement planning advice. Our professional, qualified Independent Financial Advisers will look at whether your current pension arrangements are likely to help you achieve your retirement goals. If not, we will recommend actions to take and the likely effect of them in order to secure your financial future.

We ensure that you fully understand all of your numerous retirement options and that you don’t have to take the first offer from your existing pension provider. There is nearly always better value to be had from the open market when considering annuities and the new flexible pension option should also be fully considered. Our impartial advice takes into account all of this as well as the latest retirement and pension legislation, including the new limits on lifetime allowances. If necessary, we will also recommend any steps you can take to limit your tax liabilities.

We can also review all of your existing arrangements and look at the performance of the underlying funds, the charges being levied and assess the projected income at your chosen retirement date.

Please call us on 0114 235 3500 for a free initial meeting. Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.

Spring Budget 2021

It is less than a year since Rishi Sunak presented his first budget, after having been in the role of Chancellor for less than a month.  His despatch box premiere featured an allocation of £12bn towards mitigating the impact of Covid-19.  Ironically, on the same day as Mr. Sunak revealed that boost to spending, the World Health Organisation declared the outbreak a pandemic.  Total expenditure on dealing with the pandemic is now estimated to be around £300bn.

The March 2020 Budget was what should have emerged in the Autumn of the previous year, before being deferred because of the General Election.  The March 2021 Budget is the result of a similar delay.  Last September the Chancellor decided that the uncertainties created by the pandemic meant it wisest that he waited until Spring 2021 to present the Budget.  Since then, Mr Sunak has been kept busy announcing extensions to the various Covid-19 support schemes introduced in 2020.  Whether the Chancellor feels the economic outlook today is much clearer than six months ago is a moot point.

One financial aspect which has been painfully clear for some time is that the government’s finances have been fundamentally changed by the pandemic.  A year ago, the Office for Budget Responsibility (OBR) forecast that the government would borrow around £55bn in 2020/21.  Twelve months later its estimate has risen to £400bn.  The coming year, 2021/22, should see borrowing more than halve according to the OBR, but the deficit is still projected to be running at over £160bn – more than three times the figure of just two years ago.

Dealing with this level of borrowing is probably not what Mr. Sunak signed up for when he moved into 11 Downing Street.  He now has to deal with total government debt of about £2,100bn, equal to the UK economic output for the year.  The last time debt was as high was in the early 1960s, when the UK was still in the business of paying down the bills incurred in World War II.

Despite the lake of red ink, Mr. Sunak was never going to introduce significant tax increases in this Budget.  For a start, nearly all economists, regardless of political hue, were saying that economic recovery was the priority and sorting out the debt could wait.  Secondly, Mr. Sunak’s boss, Boris Johnson, cannot even bring himself to mention the A-word (austerity) which would ruin his ‘leveling up’ agenda.  As a result, the Budget was one of tax pain largely deferred.

The proposals of most interest were:

The addition of £70 to the personal allowance and £200 increase in the basic rate band, in line with indexation requirements.  However, after 2021/22, the personal allowance and higher rate threshold (outside Scotland) will be frozen for four tax years.

The inheritance tax nil rate band, the pensions lifetime allowance and the capital gains tax annual exemption will all be frozen at their current levels for the next five tax years.

For companies with profits of over £250,000, in April 2023 the rate of corporation tax will jump by 6% to 25%.  A new smaller companies’ rate of 19% for companies with profits of up to £50,000 will be introduced at the same time.

A new ‘super-deduction· 130% first-year allowance will be introduced for companies investing in plant and machinery between 1 April 2021 and 31 March 2023.

The temporary £500,000 0% band for stamp duty land tax will continue to apply for residential property purchases up to 30 June 2021. The band will then be halved for the following three months before reverting to its original £125,000 level from 1 October.

The coronavirus job retention scheme (CJRS – furlough scheme) and the self-employed income support scheme will be extended to September, albeit with reductions in the final three months of their life.

The business rates holiday for retail, hospitality, and leisure businesses will also be extended. Until June 2021 100% relief will apply and thereafter reduced (and capped) 66% relief will operate until the end of March 2022.

12 Quick Tax Tips

1.           Don’t waste your (or your partner’s) £12,570 personal allowance in 2021 /22.

2.           Don’t forget the personal savings allowance, reducing tax on interest earned.

3.           Don’t ignore the dividend allowance, eliminating tax on £2,000 of dividends.

4.           Don’t dismiss National Insurance contributions – they are really a tax at up to 25.8%.

5.           Think marginal tax rates – the system now creates 60% (and higher) marginal rates.

6.           ISAs should normally be your first port of call for investments and then deposits.

7.           Even if you are eligible for a LISA. you still might find a pension is a better choice.

8.           Tax on capital gains is usually lower and paid later than tax on investment income.

9.           Trusts can save inheritance tax but suffer the highest rates of CGT and income tax.

10.         File your tax return on time to avoid penalties and the taxman’s attention.

11.         If you are entitled to a company car, going hybrid or electric could slash your tax bill.

12.         Don’t assume HMRC won’t know automatic information exchange is now widespread.

If you need further information on how you will be affected personally, you are strongly recommended to consult your financial adviser. If you would like one of our Advisors to review your finances, are unsure of how your portfolio is performing, or want to look at alternate ways to get a good return on your savings and pensions, please call us on 0114 235 3500 for a free initial meeting.

Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.

Things to do during Lockdown

Whilst the current UK lockdown measures are still in place, you may find yourself with some available downtime and so it may be a worthwhile exercise to put your basic wealth planning in order with the help of the simple checklist below.

1. Write a will

Recent research by The Royal London Mutual Insurance Society indicates 54% of adults in the UK do not have a will and six out of ten parents do not have one, nor do they have guardians in place who would look after their children.

For those who already have a will, this might also be a good time to review and determine if it needs to be updated in the form of a new will to reflect changes in circumstances or via a codicil.

It is also worth noting that marriage revokes an existing will unless the will was written in full anticipation of the marriage, whereas a divorce doesn’t revoke an existing will. As a result, life events can often necessitate the need to review an existing will to ensure it continues to remain up to date and reflect your wishes.

2. Establish a Power of Attorney

A Power of Attorney is a legal document that allows someone to make decisions for you, or act on your behalf should you no longer be able to, or if you no longer want to. This could be in the short term, for example as a result of spending a period of time in hospital, or long term due to mental incapacity.

These decisions can relate to your general welfare, including decisions made on your daily routine, any medical care, or in choosing a care home – this is known as a Health & Welfare Lasting Power of Attorney.

Alternatively, you may require assistance in making decisions regarding your finances should you be physically or mentally incapacitated. This includes managing your savings and investments, structuring your income requirements, paying your bills or selling your property(s) – this is known as a Property & Financial Affairs Lasting Power of Attorney (LPA).

You are able to appoint one or more attorneys to help you make decisions on the above. An attorney must be over 18 and have the mental capacity to make their own decisions. Where the expectation is that the attorney could only be required for a short period of time then a simpler ordinary power of attorney could be considered rather than an LPA.

3. Collate lost pensions arrangements

Are you aware of all of your existing pension arrangements? Even from that short-term employment you took up 10 years ago? Any pension funds which you have accumulated in your working life could make a real difference to your overall pension savings when you reach retirement.

Research carried out by The Association of British Insurers in October 2018 estimates that there is nearly £20 billion held within 1.6 million pension pots with an average size of £13,000 which have been forgotten.

If you suspect that you have an old pension pot from a previous job, you are now able to track down the pension scheme’s contact details by using the Pension Tracing Service which is a free government service: https://www.gov.uk/find-pension-contact-details

4. Update pension beneficiary form (expression of wishes)

You have reviewed your will; now do you know who will inherit your pension benefits? Pensions normally do not form part of your estate for inheritance tax purposes and are therefore not covered by your will. In order to specify who you want to inherit your pension after your death, you need to have an Expression of Wish in place and if any of your pensions pre-date your current relationship then you may want to review this to ensure they are up to date.

The best chance of ensuring your beneficiaries are able to retain the tax-advantageous pension wrapper in the form of a beneficiaries’ pension is to list them specifically on your Expression of Wish form and check the death benefit options of your existing arrangement.

You should contact your pension providers to find out your current nomination and to obtain the relevant forms as soon as possible.

5. State Pension

In 2016 the UK Government introduced the new single-tier State Pension. Under the previous system, it was difficult to understand exactly what you may have been entitled to until you reached your state retirement age, however the new system is designed to make this far simpler.

The new State Pension is based on your National Insurance record, requiring an individual to have 35 qualifying years to be eligible to receive the full amount. A qualifying year can include years where you have been in full-time employment, or where an individual has received National Insurance credits given to those who have caring responsibilities (i.e. those receiving Child Benefit).

The majority of individuals are unaware of how much they may be eligible to receive as their State Pension, or at what age they will qualify for it. The link below provides further information on how much you could stand to receive and at what date it could become payable. The State Pension could form a valuable part of your retirement income, so understanding your entitlement is essential: https://www.gov.uk/check-state-pension

6. Review old insurance policies

Every month, do you see that direct debit leave your bank account and go off to an insurance provider for that protection policy you took out many years ago? Or do you have that prehistoric mortgage endowment policy which you keep receiving annual statements for? Do you know what you are actually covered for and whether this is sufficient for your needs?

Insurance may also need updating following changes in your personal and financial situation and/or following certain life events, including:

– A new job or changing to self-employment – You may have sold your business and be considering retirement – Marriage or divorce – Children or grandchildren – A change in either yours or your partner’s health – Paying off a debt or other liability – Moving house or buying/selling property – Making financial gifts from your estate.

Right now might be the time to review your protection policies to ensure you are adequately covered in the event that you may have a need to make a claim on your insurance policies. If you cannot locate your original policy documents, you should contact your insurance provider to find out what exactly you are covered for. As you review these policies, you should also check if your life assurance policies are held in trust. Ensuring these policies are written under trust will mean that when the funds are paid out they do not automatically form part of your estate or your beneficiary’s estate on your death.

7. Consider new insurance policies

If you do not have any insurance currently in place then this is something that you may wish to consider. Putting in place a basic level of protection is probably more affordable than you think and you could buy certain life insurance for just a few pounds a month.

There is currently what is referred to in the industry as a ‘protection gap’ in the UK. This means that a large proportion of the UK would be left financially vulnerable should they, or their spouse, pass away prematurely or suffer an illness or injury that would affect their ability to earn. Despite this apparent financial vulnerability and need for a safety net, a research study by the Financial Conduct Authority (FCA) highlighted that 65% of the UK adult population has no form of insurance. Among the 35% who do have some form of insurance more of them have critical illness insurance (10%) than income protection (4%) and it is estimated that from c.26.7 million households in the UK, just 300,000 have an income protection policy in place.

Given the recent COVID-19 pandemic and the increasing levels of staff being furloughed or made redundant, now could be the time to consider your ongoing protection needs for you and your family.

8. Consider making gifts

Right now might be a time that someone close to you needs some financial support and you may want to help. Making an outright gift from capital is usually classed as a Potentially Exempt Transfer for Inheritance Tax (IHT) purposes. This means that if you were to pass away within seven years of making the gift, it would form part of your estate for IHT purposes unless the gift qualifies for an exemption.

One such exemption is the IHT exempt annual allowance of £3,000 per tax year. Each individual is able to make an outright gift of £3,000 per annum which is immediately exempt from their estate for IHT purposes. In addition, once the current year’s allowance has been maximised, you are able to utilise the previous year’s unused allowance meaning the first gift could amount to £6,000, which is immediately exempt from IHT.

Each tax year you can also give away up to £1,000 per person in consideration of marriage or civil partnership (or up to £2,500 for a grandchild and up to £5,000 for your son or daughter).

Finally, where you have the disposable income to do so, gifts out of income could also be immediately exempt from IHT provided the gifts are from disposable income, the intention is to establish a regular pattern of gifting and they do not adversely impact your standard of living.

Concerns have been raised about the potential longevity of these valuable reliefs with several influential reviews calling for wholesale change to the IHT regime. With asset valuations potentially lower, if you feel that you are in a position to do so, now may be an opportune time to make those gifts.

9. Charitable donations

You only have to hear the story of Captain Tom Moore, a 99-year-old war veteran who raised an enormous amount for NHS Charities Together by setting out to walk 100 lengths of his garden before he reached 100, to realise how many people are making charitable donations during the lockdown. You may be making donations to a charity close to your heart at this time too.

If you are a UK taxpayer when you make these donations you are usually able to elect to apply Gift Aid to these contributions meaning the charity you are donating to receives an extra 25% at no cost to you.

In addition, if you pay tax above the basic rate, you can claim the difference between the rate you pay and the basic rate on your gross donation (i.e. the donation amount after gift aid is applied). You should therefore remember to make a note of the donations you make so that you can apply for the additional relief on completion of your self-assessment tax return.

10. Budgeting

With all this extra time on our hands, now could be a good time to go through the rather boring (and sometimes frightening) exercise of seeing what you normally spend. This may be especially important if you are currently facing a cut in pay or income as a result of the pandemic. While in lockdown you are likely to save costs on some expenses, such as parking, petrol, train fare, coffees, eating out and entertainment.

You may also have been able to put certain monthly subscriptions on hold such as gym memberships. As such, a good starting point would be to review your expenditure prior to lockdown to determine how much is available in disposable income to start a new savings arrangement, make gifts out of income to a loved one or to your chosen charity.

11. In Case of Emergency (ICE) document

Do your family members know where all your important documents are held, who your financial adviser, investment manager, accountant or solicitor is and do they have their contact details? Has one member of the family historically controlled all the family finances? Now would be a good time to put all the important information into one document, including the location of your will, and anything else you think would be relevant if something were to happen to you.

12. And finally, consider the Budget 2021

It is worth remembering that the Spring budget is planned for March 3rd this year. Chancellor Rishi Sunak cancelled the Autumn Statement so we may see some changes announced in this year’s budget that may well impact your future financial planning. Below is a brief checklist of just some of the things you could consider before the end of the tax year.

Pensions – Pay the maximum you can afford into your pension – Carry forward unused pension contributions – Pay into your spouse’s pension – Boost your state pension

Investments – Use your annual ISA allowance – Use your Capital Gains Tax Annual Exempt Amount – Pay into your child or grandchild’s JISA or pension plan – Consider tax incentivised schemes such as VCTs or EIS

Tax planning – Consider bringing forward any capital losses to offset gains – Don’t forget the marriage allowance – Gifting to reduce your estate for inheritance tax purposes.

Remember to always take professional financial advice. If you would like one of our Advisors to review your finances, are unsure of how your portfolio is performing, or want to look at alternate ways to get a good return on your savings and pensions, please call us on 0114 235 3500 for a free initial meeting.

Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.

Monthly Market Commentary


2021 kicked-off with yet another historic moment. Mobs of Trump supporters stormed the US Capitol after the then president demanded support for the claim that he, not Biden, was the real election victor. Despite this attempt to overthrow democracy, the US congress confirmed Biden as president of America. Putting Trump in the rear view mirror might now be made even easier since, following the Capitol Riots, Twitter has permanently suspended his account.

Headlines in the UK painted a largely negative picture as COVID cases escalated. Over 68,000 confirmed cases were recorded on the worst single day, and the UK death toll has now surpassed 100,000. These losses are tragic, but we think it’s important to keep in mind that the outlook is much brighter than the current picture. The approval of the Oxford AstraZeneca is a big step forward. It is cheaper and easier to store than the Pfizer vaccine. The UK vaccine rollout is racing ahead of the rest of Europe, and the ability of COVID to cause further recessions around the world is small and shrinking.

The ongoing vaccine programmes worldwide are an overwhelming reason to be positive. It is increasingly clear that COVID is no longer an unknown problem. The challenges are much clearer. They involve vaccine production, distribution and rollout, all of which are difficult, but solvable. To put the availability of the vaccine into perspective: the estimated supply of the Oxford vaccine in 2021 will be enough alone to vaccinate the entire World’s most vulnerable people.

Markets may already have put COVID-19 behind them. Financial headlines have been dominated by the David-and-Goliath battle between small investors and Wall Street, with GameStop somewhere in the middle. After being hit hard by the pandemic, many institutional investors started shorting the stock. In a bid to get back at the short sellers, small investors came together on Reddit and have inflated it’s price dramatically, costing hedge funds many billions. GameStop, Tesla and Bitcoin are reminders of the froth investors are currently navigating. We’ll continue to look at the long term, rather than becoming distracted by violent movements in localised areas.

Because under the froth, markets have been largely positive through January. Biden wasted no time in unveiling a $1.9 trillion stimulus package and the UK have announced yet more measures to protect badly affected businesses. Companies know that the end is in sight, and they also know that consumers are itching to spend as soon as they can. Despite the inevitable bumps, the world is poised for a year of strong growth.

As things begin to return to normal, the conditions for a strong period of global growth are firmly in place – so our portfolios have decent allocations to equities in order to benefit.  Once growth becomes really embedded, attention will turn to the low level of interest rates, and at some point, central banks will have to begin a hiking cycle. That day is a long way off, but we still think that government bonds are unattractive, and prefer to invest in alternative assets that can still offer defensive qualities.

We have a number of long-term core views that help to guide our investment decisions and allocations within portfolios:

The recovery is almost over – growth comes next… The world has never seen as much coordinated stimulus as in the past nine months. We believe this sets the stage for a strong economic recovery across the world in 2021. The return to growth will occur at slightly different paces in different places – much of Asia is already back on track, the US should have a vibrant start to the year, with Europe finishing strongly. As the recovery continues and turns into an expansion, we want to be exposed to it. Positive for credit and equity.

Our portfolios are positioned for the new economic cycle… We think that the new cycle will require new leaders. Large US and Chinese technology companies will still be crucial as part of the growth cycle, but other industries are now better positioned to benefit, with low cost of debt and a cash-rich consumer desperate for products and services. We think that smaller, more nimble businesses can ride the wave best. Positive for lagging equity.

The virus hasn’t derailed growth… Lockdowns are unlikely to be as severe and as widespread as previously. At the same time offers a concrete way to end this crisis. Looking at the long-term and looking globally, there is more economic good news than bad news – despite how it can feel in the UK at the moment. Positive for credit and equity.


Equity markets in January were mixed. Emerging markets continued to do fairly well, returning around 3% over the month. Developed market equities had more of a shaky start shrinking by almost 1% over the month. Astonishingly, the GameStop saga had a part to play in this as hedge funds were forced to sell long positions to cover their shorts. In the last working week of January, all of the Nasdaq, Dow Jones and S&P 500 fell by over 3%.

Luckily, this pain is likely to be short-lived. The other main cause of bad developing market performance was likely to have been the Johnson & Johnson vaccine data, which fell short of what markets were expecting. It is reasonable to expect February to be better.

The UK started the month positively but eventually felt the shockwaves from the US. The FTSE initially surged but came back down to just below where it started the year. Despite this, a bad week for the UK’s blue-chip stocks will not drastically change the behaviour of long-term investors.

European stocks fell sharply towards the end of the month. This was largely due to the GameStop battle and worries around the availability of COVID vaccines to Europe. Germany has warned of 10 weeks of vaccine shortages. With the UK vaccine rollout steaming ahead, the EU has demanded that AstraZeneca diverts some of its supplies from the UK to Europe.

Despite how it may feel, the global economy is recovering from COVID, and in the UK we have every reason to be positive. On Saturday, more than half a million UK citizens received a dose of the Vaccine. Outside of the UK, the world is getting better at distributing the vaccine.

Client portfolios are globally diversified and have been positioned to benefit from the economic recovery and stimulus injected into the economy since the middle of summer.

Fixed Interest

Bond yields spiked in January, but this doesn’t necessarily change our view towards them in the short term. Even following the spike, yields remain historically low. We instead focus on alternative investments to provide protection to client portfolios. We continue to hold a low allocation to government bonds in more cautious portfolios with zero exposure in medium to high-risk portfolios.

Corporate bonds continued to provide positive returns to portfolios over the month. We have a preference for bank bonds (AT1 Bonds), which outperformed the corporate bond market over the month. Bank bonds have a similar level of risk to the wider corporate bond market, however, they offer higher returns as many investors remain scarred from the financial crisis. 

We continue to have a preference for Asian High Yield bonds, as returns are higher and default rates have historically been lower than in the US. Additionally, many Asian countries are successfully re-opening their economies without large outbreaks of the virus.


Our allocation to alternatives remains in place to predominately diversify fixed interest exposure given the record-low yields currently available in the market. We tend to avoid traditional alternatives (gold, infrastructure and commodities) and instead opt for strategies that are independent of the global economy.

Looking to the start of 2020, government bonds with the highest yields fell the most throughout the year. This means they provided a greater level of protection to client portfolio when equity markets fell. However, now the majority of government bond yields are close to zero if not below zero. We therefore have a meaningful allocation to alternatives as a source of diversification and protection.

Our alternatives allocation generated returns of c.15% last year and remains well placed to provide protection, whatever the weather – which we’ve seen in January too.

If you would like one of our Advisors to review your finances, are unsure of how your portfolio is performing, or want to look at alternate ways to get a good return on your savings and pensions, please call us on 0114 235 3500 for a free initial meeting.

Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.

Westside Article – February 2021

At the start of 2021, we can all look back and be amazed at how the world has changed over the last year. Covid-19 has had, and is continuing to have, a massive impact and has caused the untimely death of many people, placed enormous stress on health care provision and changed the way we work, travel, socialise and play. ZOOM, Microsoft Teams and Facetime have become the new communication method and working from home has brought about new ways of doing business for many. The good news is that both the Pfizer and Oxford AstraZeneca vaccines are now being rolled out and the most vulnerable are being prioritised alongside our key workers and NHS. Whilst this latest lockdown is an unfortunate necessity, the vaccination programme offers a glimmer of light at the end of the tunnel and we look forward with optimism that we can return to some form of normality, in as safe a way as possible, later this year.

Politically, Brexit has continued to dominate and we managed to leave the transition period with a trade deal. This month will see a new US president with Joe Biden moving into the White House (assuming that Donald Trump will move out!)

Markets do what they do when uncertainty prevails and we saw the biggest falls of recent times in March as the full impact of the first lockdown was felt. Markets then climbed in the second half of 2020 and now look to have settled back into normal trading levels.

So what about the future? Well, markets will continue to do what they do – go up and down. Interest rates are at an all-time low. Savers are being punished if they hold too much in cash. The returns on bank accounts are derisory. If inflation is at 2.5% p.a. and your savings are getting less than 1% p.a. your money is eroding. 

We believe that in the short-term, cash is king. Make sure you have enough to cover the next few years. Any surplus wealth you have should be invested in areas that allow you to keep pace with inflation and offer some growth potential. People are now looking to transfer money into different areas so they can profit from the new economic climate we are living in. We know that there is a range of funds that can offer low risk to very high-risk funds and can assist you in finding the best place for your money. There will be bumps in the road but don’t panic, focus on what you can control and mitigate risks elsewhere.  

Businesses will continue to fail and new ones will take their place. This is usual. However, the pace of change has quickened over the last year. We strongly believe that good companies, with sound management, low indebtedness and strong markets will continue to flourish. Rest assured that we will continue to monitor the companies and funds that we manage on your behalf and are working hard to minimise costs whilst offering support wherever we can.

Now is a time for us all to reflect, focus on the future and make sure our families are all safe and well. If this last year has taught us anything, it’s that plans change. Maybe you’ve decided to bring your retirement plans forward or are looking to try and pay off the remainder of your mortgage. If you would like one of our Advisors to review your finances, are unsure of how your portfolio is performing, or want to look at alternate ways to get a good return on your savings and pensions, please call us on 0114 235 3500 for a free initial meeting. Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.

You can read this month’s Westside online at https://www.rmcmedia.co.uk/magazines/westside/