Bill Jamieson: Financial advice is not just for the 'well off'

How well off do you have to be to need a wealth manager? The better question is this: how well off do you have to be not to need one? Everyone needs a 'wealth manager' '“ though in popular perception it seems to be a preserve of the very well off. Don't wealth managers come with a boardroom job, a £150,000-plus income, a bulging portfolio of shares and a second home?

But in truth wealth management is an essential for millions of people who do not consider themselves “well off” at all.

Wealth management is about the preservation and enhancement of our savings.

One of the key functions of the wealth manger is financial advice – and that advice cannot come soon enough, whether we are a paper millionaire or starting out with a pension plan, bank deposit account and one or two unit or investment trust holdings.

We need the wealth manager most, not when we are already wealthy, but in helping to protect and build what wealth we have.

As we age and acquire savings for retirement or specific ambitions such as house purchase, that help of necessity comes to span a wide variety of areas where specialist knowledge and expert advice is vital.

Would we consider any financial decision without checking out the tax implications? What are the most tax efficient ways of investing and how best can we make use of the tax breaks and reliefs available?

There is pension saving and inheritance tax planning: what realistic assumptions can we make about investment returns?

Should we be investing or income or for capital gain, and if so, in what proportion?

How can we arrive at a plan for our savings and investments that is tailored as far as possible to our individual needs and circumstances?

If we are self-employed or running a small business, how are my financial affairs best arranged to secure better long-term returns, tax efficiency and at the same time provide a cushion for emergencies or when the business suffers a downturn?

Wealth management incorporates financial planning, investment portfolio management, retail banking, estate planning, legal resources and tax professionals.

Wealth managers devise strategies for the transfer of assets at the end of a client’s life and employ portfolio management techniques that minimise taxes and maximise after-tax returns.

Small-business owners and families who require a financial advisory specialist also employ wealth managers to co-ordinate their financial activities and to advise on the ramifications of business asset acquisitions and disposals.

Our circumstances constantly change – a change of job, assignments overseas, illness, divorce or relocation. We cannot foresee the future. But there is a powerful human drive to prepare as best we can for the uncertainties ahead.

A recent financial planning week organised by the Chartered Institute for Securities and Investment (CISI) highlighted the importance of seeking a qualified financial planner or accredited financial planning firm.

A key theme was that financial guidance is not just for the wealthy but for every consumer.

CISI’s deputy head of planning, Jacqueline Lockie said: “Families, retirees, millennials, students, divorcees, newlyweds: we all need help with managing money at every stage of our lives. Trust and professionalism go hand in hand with financial guidance.”

Among leading firms in this area with offices in Scotland are UBS, Cazenove Capital, Investec, Brewin Dolphin, Baillie Gifford, AGL and Cornelian.

There are big advantages to combining the expertise of investment adviser and financial planner. And amid all this, advice on tax reduction is a key part of what wealth managers undertake – all too often an area we file under “too difficult” and push it out of mind.

Another way of looking at wealth 
management is to view it as an essential part of everyday maintenance.

As a top wealth manager at Investec Wealth put it, “would you buy your dream car and not service it? Would you go to the doctor about a chronic condition, be prescribed some pills, but never go back to discuss progress and make changes?”

Legislation and the investment outlook constantly change but even these can trail the frequency, speed or significance of how life changes.

Our Market Watch table gives snapshots of some of the key economic statitics that we look to to inform investment decisions, but they only tell part of the story.

Saving on taxes, keeping investments appropriate and ensuring our financial arrangements are up with latest legislation is why wealth managers are needed – no matter your level of income or the size of your pension pot.

This article appears in the SUMMER 2017 edition of Vision Scotland. An online version is available here. Further information about Vision Scotland here.