News

With the US Presidential election drawing ever closer and nearly half of the rest of the world’s population preparing to vote in various elections, the prospect of significant domestic and international transformations becomes increasingly likely.

As a result, clients may start to look at some of the more esoteric assets as a means of diversifying their portfolios and hedging against potential volatility and inflation.

Gold

Amidst this backdrop of geopolitical uncertainty and volatility, it may be worth considering adding gold to your portfolios to balance risk mitigation with returns.

For many investors, gold is often synonymous with a safe haven, evoking a sense of security and stability in times of market uncertainty. While it does indeed provide an element of protection, it is also an effective diversifier of equities and other assets with similar equity-like returns and correlations.

Research undertaken by the World Gold Council indicates that gold tends to become more negatively correlated with equities in extreme selloffs in addition to excelling when equities perform.

According to market strategist Joseph Cavatoni (Americas at the World Gold Council), “since 1971, gold has outpaced the US and world consumer price indices (CPIs) and protects investors against high inflation. In years when inflation was between 2%-5%, gold’s price increased 8% per year on average. This number increases significantly as inflation rises above 5%.

Over the long term, gold has not just preserved capital but also helped it to grow.”

Such is its dependability; gold is now being used to collateralise the latest cryptocurrency stablecoin launched this month (June 2024) by Tether, the largest company in the cryptocurrency industry.

Cryptocurrency

Following the launch of Bitcoin over a decade ago in 2009, there are reportedly around 22,932 cryptocurrencies available today, with CoinMarketCap estimating the total market capitalisation at $1.1 trillion.

Varying from stablecoins to non-fungible tokens (NFTs), the underlying theme is the use of blockchain. Non-fungible tokens grant ownership of digital assets, including artwork, music, videos, and other online collectibles. Stablecoins, meanwhile, have a value linked to another asset’s price. For example, a stablecoin linked to the US dollar should, if functioning correctly, always be valued at $1.

Note that there is also a crucial distinction between coins and tokens. Coins, such as Bitcoin, are digital currencies operating on their own blockchain networks. In contrast, tokens are digital assets created on an existing blockchain. Tokens typically represent a tangible asset, provide access to a service, or grant the holder a specific utility and are essentially digital units that embody value or utility, distinguishing them from coins.

As mentioned, Tether, arguably the largest cryptocurrency issuer, has recently launched Tether Gold (XAUt), a token that provides ownership on a 1:1 basis of one fine troy ounce of gold in the form of physical gold bars that meet the Good Delivery standard of the London Bullion Market Association (LBMA).

Essentially, Tether Gold aims to track the value of the US dollar, using physical gold as collateral and can be traded on crypto exchanges. The idea is that if inflation continues to rise, meaning that the US dollar is worth less, the value of this alternative currency is preserved.

While there are myriad risks with cryptocurrencies in general, although the Tether Gold website claims the XAUt tokens are easily redeemable for physical gold, the bars can only be delivered to addresses in Switzerland, which may be worth bearing in mind if you ever intend to redeem your tokens.

Collateralised Loan Obligations (CLOs)

For the uninitiated, a Collateralised Loan Obligation (CLO) is a marketable security into which a bundle of loans is pooled. They are often backed by corporate loans with low credit ratings or loans taken out by private equity firms to conduct leveraged buyouts.

By investing in a CLO, investors receive regular debt payments from the underlying loans, subject to default risk. In return, they can enjoy a more diversified portfolio and potentially higher returns, making it an attractive option for those willing to take on credit risk.

After a significant decline in favourability following the global financial crisis of 2008, the last time these instruments saw such a rise in popularity was during the COVID-19 pandemic as the central banks cut borrowing rates.

However, with many borrowers showing strong performance and, with it, the ability to better service their debt, investors’ interest has been reignited.

According to data from the Bank of America, more than €22.7 billion CLOs have been issued between January and May this year (excluding any refinancing deals), in response to demand from investors in search of higher yields.

At We Complement, we believe in simplifying the complex world of investments, platforms, portfolios, capital accumulation, and decumulation. Our Investment Research & Due Diligence service is designed to provide clear, evidence-based insights to help you make informed decisions. Whether you need a new bespoke pack, including a Centralised Investment Proposition, Centralised Retirement Proposition, Platform Due Diligence, and Bespoke Portfolio or DFM Due Diligence, or wish to assess and update your current ones, our consulting team is here to support you.

Contact us today to discover how we can enhance your investment strategy and ensure your portfolios are optimally positioned for success.

Welcome to our monthly newsletter, Regulation Round-Up. In this edition, Hannah Keane covers the key stories from HMRC and the FCA, as well as other important developments in financial services regulations.

While April was bustling with activity due to the tax year-end and the accompanying changes, the past month has been relatively quiet on the regulatory front. However, there are still some noteworthy updates that you should be aware of.

Financial Promotions on Social Media – ‘Finfluencers’ Charged for Promoting Unauthorised Trading Scheme

In last month’s Regulation Round Up, I mentioned the FCA’s finalised guidance on financial promotions on social media (FG24/1). A key part of this finalised guidance is that influencers need to make sure that they have approval from an FCA-authorised person before they promote a financial product, or they could be criminally charged.

Since then, various social media influencers, including Lauren Goodger of TOWIE fame, have been charged in relation to promoting unauthorised investments via their Instagram accounts. The influencers have been charged with unauthorised communications of financial promotions, and will appear before Westminster Magistrates’ Court in June.

It will be interesting to see how this plays out, and whether this discourages other influencers from promoting financial products without proper approval.

Consultation – Raising Standards in the Tax Advice Market

HMRC are consulting on raising standards in the tax advice market through a strengthened regulatory framework. This could be achieved by:

• Introducing compulsory membership of a recognised professional body
• Joint HMRC and industry enforcement
• Regulation by a separate statutory government body

The Society of Pension Professionals (SPP) has responded to this consultation and raised some concerns. While the SPP welcome proposals to enforce minimum standards for tax practitioners, they are concerned that any regulation could have “unintended consequences for pension professionals” and could impact pension professionals like advisers when dealing with areas like lump sum allowances and death benefits.

The SPP recommends that HMRC consider giving an exemption to pensions professionals for any work relating to a registered pension scheme.

Consumer Duty Deadline for Closed Products

While Consumer Duty has been in force for most providers since last July, closed products and services will be subject to the Duty from 31st July 2024.

In a Dear CEO letter, the FCA has encouraged firms to look at five particular areas to help prepare for the implementation of Consumer Duty:

• Gaps in firms’ customer data
• Fair value
• Treatment of consumers with characteristics of vulnerability

• Gone-away or disengaged customers
• Vested contractual rights

The FCA said that “these issues are not unique to closed products and services” but “are likely to be more widespread or acute.”

We deal with a lot of old products here at We Complement (and I’m sure many paraplanners, administrators and financial planners can say the same). It’s not unusual for the providers to fall short of our expectations, and gathering the information you need to help your client can be longwinded and painful. If it’s that tricky for us, it must be even more difficult for clients to understand some of these old legacy products. It will be interesting to see whether Consumer Duty makes any difference to this.

💼 Need expert paraplanning support?

Our team at We Complement offers top-notch services to help you navigate these regulatory changes with ease. Contact us today to learn how we can support your financial planning needs!

AI Integration in Financial Advising

Nearly three-quarters (72%) of advisers believe that integrating artificial intelligence (AI) into their processes will be crucial for their business, but the majority feel unprepared, according to Intelliflo. More than nine in 10 (95%) advisers cited a lack of required skill sets within their business as a major obstacle. Despite these challenges, 46% of firms are either already using AI or have plans to incorporate it into their operations in the near future, based on findings from Intelliflo’s Advice Efficiency Survey 2024.

Digitalisation Needs

A significant 57% of firms expressed a desire for more digitalisation, particularly around note-taking and extracting key information from meetings, to alleviate some of the administrative burdens on staff.

Read the full survey here: Intelliflo’s 2024 Advice Efficiency Survey.

Innovations from Intelliflo Innovate 2024

intelliflo has rolled out several exciting announcements at their Innovate 2024 event:

💡 Wealthlink:

Going live in early August 2024, Wealthlink will allow advisory firms to enter client details just once and seamlessly access all Intelliflo services. This innovation will streamline the client journey from discovery and cashflow modelling to investment and client portal use. Wealthlink will simplify paraplanners’ tasks by significantly reducing admin time and eliminating re-keying errors, allowing them to focus more on value-added activities.

💡 Partnership with Aveni : Integrating AI specifically designed for financial advice experts.

💡 Partnership with Money Alive: Intelliflo will leverage Money Alive’s technology to offer integrated financial services educational content tailored to your clients. This partnership will create personalised video learning modules that address each client’s unique financial goals, preferences, and life stages. The videos simplify complex financial concepts into easily digestible narratives, making it easier for clients to understand.

Saturn’s Public Launch

Saturn AI’s smart tech allows Financial Planners to focus on the conversation with clients, knowing that key updates, conversation topics, and actions will all be documented automatically. And that’s just the beginning; the team’s roadmap looks incredible! Saturn’s mission is not just about reducing inefficiency around data but transforming the client experience and driving down costs.

After eight months of serving 40+ firms of all sizes and understanding their pain points, Saturn launched publicly last month. Today, 0.57% of regulated UK financial advice conversations are powered by Saturn, and this is just the start. The We Complement team has been using Saturn and has been blown away by how much it can improve efficiencies. We cannot wait to see them take over. Stay tuned for more developments.

Discover more about Saturn here: Saturn.

We Complement’s Support Services

At We Complement, we offer tailored support to ensure your technology integration is seamless and effective. Give us a call to learn how we can help you leverage technology to enhance your financial advisory services.

Platform 3.0

At their recent Adviser 3.0 event, Timeline announced that they would soon be launching a new platform – this is currently named Platform 3.0.

The aim of this platform is to bring together all aspect so the adviser and client experience, such as fact find, risk profile questionnaire, cash flow, investment analysis, Letters of Authority and a client portal.

Timeline called this new platform an ‘integrated ecosystem built for modern financial advisers’.

The platform fee quoted by Timeline is a base fee of 0.15%, which is definitely competitive when compared to other platform fees on the market.

We will continue to look out for further updates from Timeline regarding this new platform, as it all sounds very promising for advisers and clients alike.

Defaqto MPS Comparator

Defaqto have announced the launch of MPS Comparator, which is the only tool which allows comparisons across MPS portfolios with similar characteristics.

In light of the Consumer Duty, MPS recommendations continue to increase. It is estimated that they increased by 14% in 2024, totalling £85.8 billion.

However, it can be a total minefield trying to work out which providers and portfolios are the most suited for your clients.

The use of MPS providers should be monitored regularly as part of firms Centralised Investment Proposition (CIP) as there could be changes which mean the current provider no longer matches your requirements, or there could be a new provider which offers a solution which is even more suitable.

We feel that this new MPS Comparator tool could be very effective when completing research into MPS providers.

However, if you don’t have the time to complete this research and then update your CIP, get in touch with us at We Complement and we will be able to assist with this.

Standard Life Smoothed Return Pension Fund

Standard Life and Fidelity have recently announced that they have partnered to launch a new Smoothed fund called the Standard Life Smoothed Return Pension Fund.

This fund will be available exclusively on the Fidelity Adviser Solutions platform, and it will be trialled with a number of advisers before being fully launched later in the year.

Smoothed funds are very popular with advisers as the provide a degree of re-assurance to a client that they wont be subject to the high volatility of other investments.

A number of Smoothed Funds are available on the market, most notably the PruFund range, with others available from providers such as LV and Aviva.

It will be interesting to see whether there is much demand for this fund, or whether advisers will continue to recommend the Smoothed funds already in the market.

However, we feel that the launch of a new Smoothed fund can only be a good thing, as it provides an additional option for both advisers and clients.

Interest Rates and how they can affect portfolios

As everyone is no doubt aware, inflation has been extremely high for what has felt like a very long time. In response to this, the Bank of England Base Interest Rate has recently risen to 5.25%.

In their most recent investment update, iBoss have stated that this has led them to revise the structure of Bond holding within a large number of their portfolios, such as increasing the duration of Bonds, increasing the exposure to a variety of different bonds and increasing the allocation to active managers over passive.

They state that many of their clients have looked to fill gaps in their portfolio with more complex strategies, such as Structured Products and Absolute Return funds. However the increase in Interest Rates will likely lead to an increase in Bond investments, and their subsequent long term performance.

They have likened Bonds to Margherita Pizza and Vanilla Ice Cream. They are not the most exciting choice for an investment, but they are classics for a reason.

This information was taken from the following page: Vanilla Ice Cream & Margherita Pizza

Active vs Passive

The debate regarding Active and Passive investments will likely continue for the rest of time. Both sides have vocal supporters who can provide data to back up their side of the argument.

According to AJ Bell 91% of UK pension funds have underperformed against a FTSE All Share Tracker over 10 years. Almost three quarters of these funds underperformed by 10% or more, and over a third underperformed by 20% or more.

While there could be many reasons for the underperformance of many of these funds, these will likely not mean much to the actual investor. If a client is paying the higher charges for an Active fund, they would probably expect to see good long-term returns.

We will not get into this debate, as we like to remain impartial and open to ideas of the firms that we work with.

However, we do think that advisers should consider the merits of both Active and Passive investments and see how they could work for their clients. There is no ‘one size fits all’ when it comes to portfolios, and an Active strategy might be right for one client, where a Passive strategy might be right for another.

Information was taken from the following page: Pension funds underperforming index trackers

Navigating the complexities of MPS providers and ensuring your Centralised Investment Proposition (CIP) or Centralised Retirement Proposition (CRP) is up-to-date can be challenging. At We Complement, we specialise in providing comprehensive support to financial advisers. Our expert services can help you research, select, and manage the most suitable investment solutions for your clients, ensuring you meet regulatory requirements and deliver optimal outcomes.

Contact us today to learn more about how we can enhance your CIP and CRP strategies, and ensure you’re always offering the best possible advice and solutions to your clients.

When was the last time you stepped back and took a good, hard look at your shop windows?

Bear with me here. My marketing career began as a 17-year-old shop assistant arranging stylish new shoes at Dorothy Perkins—affectionately known as Dotty P’s. The first task each day was to inspect the window display. Did it look inviting? Did it reflect current trends? Was it clean? Was the messaging accurate and consistent?

Fast forward 20 years, and I still apply these principles when evaluating our website and all of We Complement’s digital marketing content. By reassessing your digital marketing, you ensure that clients and prospective clients leave your “shop” with a positive, lasting impression.

At 17, I had mastered the art of selling shoes. My boss wisely told me, “If you can sell shoes, you can sell anything,” and she was right. With more vacant units on the high street, I transitioned from shop work to my current role at We Complement.

The lessons from my Dotty P days are just as relevant in financial services as they were in retail. Here are my tips to attract a steady stream of clients to your “shop”:

1. Embrace Social Media

Did you know the average person spends two hours and 24 minutes on social media daily? Find out where your ideal client spends their time and join them there. For professionals, LinkedIn might be ideal. For a younger demographic, Instagram or TikTok could be more effective.

Similarly, in retail, stores offering complementary items tend to be located close together. People like having everything they need within easy reach!

2. Plan Your Strategy

Jumping into marketing activities without a plan is like writing a story without knowing the ending. How can you identify what works and what doesn’t? At a minimum, document:

• Your main goal
• Areas where you might need help
• The amount of time you can dedicate
• The methods you plan to use

What’s the point of having stock in the window if you don’t have enough to sell?

3. Know Your Competitors

Understanding your market position and differentiating yourself from competitors will help tailor your marketing. If you serve high-net-worth clients, focus on issues relevant to them. If your clients have modest incomes, their concerns will differ.

For instance, if you specialise in funding long-term care, your content should resonate more with the recipients’ middle-aged children than with the care recipients themselves.

If it’s wedding or prom season, I’m showcasing occasion wear in my shop window, not jeans and boots.

4. Improve Your Website

A clunky website that isn’t optimised for mobile users and fails to answer client questions will hinder your efforts. Even minor issues like spelling mistakes or broken links can drive potential clients away.

Think of it as scrubbing sticky fingerprints off windows—it’s about making a good first impression.

5. Build a Strong Social Media Presence

Regardless of the platform, post consistently to keep your brand visible. Prioritise quality over quantity by sharing valuable content that informs, entertains, or persuades. Repurpose relevant content and share interesting posts. Mix up your content with carousels, static images, and videos.

Change your windows weekly to keep them eye-catching and fresh.

6. Show Your Existing Clients Some Love

Send regular newsletters to keep clients informed of industry news. Check in with friendly emails each quarter. Remember birthdays, and send Christmas cards. Diarise major milestones and acknowledge them—sending a graduation card to a client’s child, for example, can make you the most thoughtful adviser they know.

Avoid making every email sales-focused. A subtle check-in can remind clients it’s time for another appointment without appearing pushy. Always thank customers, even if they haven’t purchased—they’ll remember it when they return.

These insights should encourage you to view your digital marketing from your client’s perspective. What lessons from your past are still relevant today?

Ready to Transform Your Digital Marketing?

If you’re looking to elevate your digital marketing game, We Complement is here to help. Our expert team can assist with everything from social media strategies to website optimisation, ensuring your digital presence is as compelling and effective as possible. Contact us today to learn more about our tailored marketing support services and start attracting more clients to your business.

In the 2023/24 tax year, Inheritance Tax (IHT) has raised a total of £7.5 billion of revenue for the government, which represents an increase of £4 million on the previous year. Furthermore, new data published by HMRC on the 22nd May 2024, shows that in the first month of the new financial year alone, an additional £700,000 million in revenue has been raised via IHT. This figure is 7.2% higher than this time last year.

This significant increase is, in part, due to rising house prices, but also the freezing of the Nil Rate & Residence Nil Rate Bands (NRB & RNRB) at the current levels, until April 2028. Furthermore, additional revenue could be raised by the government through closing inheritance tax loopholes, according to the Institute for Fiscal Studies.

In this vein, Business Relief (BR) & Alternative Investment Market (AIM) investments have been gaining popularity, offering the potential for reducing inheritance tax liabilities after holding the investments for a minimum of two years.

Despite it having been a challenging few years comprising of rising interest rates, forced selling and poor liquidity, which ultimately resulted in a 45% fall in AIM 100 (from its peak in August 2021), AIM portfolios have generally shown strong performance over the past 12 months. At present, the investable AIM market is made up of around 120 companies.

Following recent updates from Octopus & Time Investments, delivered towards the end of April 2024, we have taken a look at the performance of some of their main AIM & Business Relief qualifying investment offerings.

Octopus Future Generations Venture Capital Trust (VCT)

The Octopus Future Generations VCT is a relatively young VCT with the first investment having been made in June 2022. It invests in businesses that aim to build a sustainable planet (making up around 13% of the portfolio), empower people (around 27% of the portfolio) or revitalise healthcare (around 60% of the portfolio).

In their update, Octopus commented that the populus consensus, together with recent regulation, has driven and caused higher demand for sustainable, socially responsible investments, and, since its inception, the Octopus Future Generations VCT has made investments into over 25 companies, with over £45 million having been raised within the VCT.

No follow on investments have been made as yet, however, and Octopus have advised that no dividends are expected from the sale of any companies until around July 2025 at the earliest.

As the investments are more concentrated during the early investing stages, younger VCTs typically carry a higher level of risk than more mature portfolios which tend to be better diversified. This therefore means there is the risk that some of the investments may go on to fail.

Having said that, Octopus have a large and highly experienced team investing in the Future Generations VCT, which has resulted in a consistent pipeline of opportunities & investors seeking them out rather than the team having to search for potential investments.

Octopus Titan VCT

Turning to the Octopus Titan VCT, over the 12 months between the 31st of December 2022 & the 31st of December 2023, the Net Asset Value (NAV) per share decreased by 14.5p per share, from 76.9p per share to 62.4p per share.

It should be noted, however, that this represents the NAV per share once the dividends have distributed. Prior to this, shares were valued at 67.4p per share.

That is not to say, however, that the Titan VCT is performing poorly.

If we look at the discrete performance over the past 9-year period between the 31st of December 2014 and the 31st of December 2023, despite the recent tumult in the markets, the Titan VCT has generated total returns of 28%.

Some of the most notable and recent successful exits from the Titan VCT include graze (exited to Unilever), Tails.com (exited to Nestle), SwiftKey (exited to Microsoft), & Ultrasoc (exited to Siemens), amongst many others.

TIME:AIM Portfolio

According to the Q1 2024 Performance Update of the 25th of April 2024, the TIME:AIM portfolio has materially outperformed the relevant benchmark (NUMIS Alternative Markets Index) over the previous 1, 3 & 5 year periods.

Since inception, the portfolio has generated total returns of around 22.5% (inclusive of dealing and management charges).

Furthermore, following a strong fourth quartile in 2023, some of this performance has been shared in Q1 2024.

Although fundamentally, TIME Investments operate on a buy and hold philosophy, there have been some recent portfolio movements which include companies having moved into the main market (Breedon), others having been bought out (EmisGroup, smsplc & Impellam Group) and a couple being sold as they were not performing as expected (Johnson & iOmart).

With these exits, however, came further acquisitions between Q1 2023 and the present, including companies such as Alpha, Tatton Asset Management, Cerillion, bioventix and Tracsis.

Outlook

In terms of looking ahead, the Office for Budget Responsibility have forecast a rise of around 6.3% in the number of deaths resulting in an IHT liability, over the following four year period.

It is expected that there will be a huge transfer of wealth from the ‘Baby Boomer’ generation over the following couple of decades and with there being numerous elections on the horizon, there is concern over how this might further impact the IHT landscape.

For more personalised advice and to explore how you can benefit from these specialised investments, contact us at We Complement today! Our team of experts is ready to help you navigate the complexities of IHT and make the most of your financial planning. Let us assist you in optimising your investments and securing a prosperous future.

📞Get in to get in touch.

Crafting Consumer-Focused Suitability Letters

Welcome to this week’s newsletter, where we delve into the art of crafting consumer-focused suitability letters. At We Complement, we’re dedicated to simplifying complex financial information to support positive outcomes for both advisers and clients. Let’s explore what consumer-focused letters entail and the benefits they offer.

Understanding Consumer-Focused Letters

Consumer-focused letters prioritise client comprehension and outcomes over mere compliance. These letters serve as a bridge, translating intricate financial advice into clear, digestible insights for clients. They encapsulate advice summaries, client objectives, associated risks and benefits, and the rationale behind recommendations. Moreover, they address client queries comprehensively, guiding them on the recommended financial path. Ultimately, these letters aim to prioritise client education and align outcomes with their financial aspirations.

The Benefits of Consumer-Focused Letters

There are several benefits, with the main one being increased customer understanding. By using clear and concise language and linking recommendations back to the client’s objectives, customers will be able to easily understand why the recommended product or service is suitable for them. This will not only increase their confidence in your advice but also lead to better outcomes for the customer.

Another benefit is the reassurance that they will meet regulatory requirements. The Financial Conduct Authority (FCA) place a strong emphasis on ensuring that customers are treated fairly and receive advice that is suitable for their needs. By writing letters that are customer-focused and demonstrate a thorough understanding of the customer’s needs, firms can reduce the risk of regulatory action being taken against them.

Finally, by simplifying suitability letters and making them more engaging, firms can enhance their reputation and build trust with customers. A well-written letter that demonstrates a deep understanding of the customer’s needs and objectives can help to differentiate a firm from its competitors and foster long-term relationships with customers.

When crafting a suitability letter with a consumer duty focus, it’s important to ensure that it contains all the necessary elements to provide a clear and thorough understanding of the recommendation being made. Here’s what should be included:

Essential Elements of Consumer-Focused Letters

Crafting consumer-focused letters requires attention to detail and inclusion of vital components:

1. Client Goals and Priorities: Clearly articulate the client’s objectives.
2. Current Situation Overview: Summarise the client’s existing investments.
3. Rationale for Recommendations: Explain how recommendations align with client needs and objectives, including associated risks.
4. Balanced View: Present advantages and disadvantages of the recommended product.
5. Focused Advice Implications: Detail the implications of the advice provided.
6. Comparison (if applicable): Provide a clear comparison between old and new plans if replacements are involved.
7. Costs and Charges: Clearly explain financial implications, including costs, charges, and penalties.
8. Tax Implications: Address tax implications for the client.
9. Further Details: Include a section for specific client information.

At We Complement, we integrate these elements into our templates to ensure clarity and compliance. Whether you need a tailored suitability report template or updates to existing ones, our team is here to assist.

Contact us online or call 01472 728 030 to discover how we can create engaging, compliant templates that represent your firm effectively.

Ever noticed how even the simplest tasks in our daily lives are comprised of a series of steps? From brewing that essential morning coffee to navigating through rush hour traffic, processes surround us. Yet, it’s in our professional environments where process mapping truly shines.

Your clients expectations are constantly evolving, so staying ahead requires more than just delivering exceptional products or services. It demands a keen focus on the inner workings of your business, ensuring that every cog in the machine is well-oiled and functioning optimally.

Process mapping is akin to creating a visual storyboard of workflows and tasks. While it may seem mundane to dissect personal routines, in a collaborative setting, process maps become invaluable tools, bringing clarity and efficiency to everyone involved.

Delving deep into a process reveals its intricacies, allowing businesses to pinpoint inefficiencies and bottlenecks ripe for improvement. Not only does this foster clarity in roles and responsibilities, but it also streamlines operations, potentially saving both time and resources.

Tidying up

This is where the concept of “housekeeping” comes into play. Just like maintaining a clean and organised home, businesses need to regularly tend to their internal affairs to operate smoothly and efficiently. However, amidst the hustle and bustle of daily operations, these “housekeeping” tasks often get pushed to the back burner, overshadowed by more pressing priorities.

Neglecting these tasks can have far-reaching consequences. From unchecked expenses draining resources to outdated processes hindering productivity, the repercussions of overlooking business housekeeping can be significant. That’s why it’s crucial to carve out dedicated time and resources to address these matters proactively.

By leveraging technology, such as CRM systems, businesses can streamline their housekeeping efforts, automating reminders and tracking progress with ease. Whether it’s conducting regular audits of expenses, updating internal documentation, or reviewing IT systems, having a robust system in place ensures that nothing slips through the cracks.

Consider setting aside dedicated time, like a half-day session, to align your team on essential housekeeping tasks. Define the checks, frequency, and responsibilities clearly, then integrate them into your CRM system. This not only automates reminders but also ensures continuity, even in the absence of specific team members. Involving your team in the housekeeping process fosters a sense of ownership and accountability, driving engagement and efficiency across the organisation. By collectively identifying pain points and implementing solutions, you not only improve day-to-day operations but also cultivate a culture of continuous improvement.

At We Complement, we understand the importance of meticulous housekeeping in driving organisational success. Let’s collaborate to integrate these practices seamlessly into your workflow. Give us a call, and let’s chart your course towards efficiency and success together.

So, don’t let your business drown in a sea of clutter and inefficiency. Take the time to roll up your sleeves, get down and dirty, and clean up those everyday tasks. Your bottom line—and your sanity—will thank you for it.

Welcome to this week’s newsletter! At We Complement, we’re dedicated to offering comprehensive support to financial advisory firms like yours. Our approach transcends mere reporting; we strive to seamlessly integrate into your operations, ensuring perfect alignment with your goals and values. This week, we’re excited to share insights on 5 things we need to know when you begin a partnership with We Complement.

1. We need to know your Centralised Investment Proposition and Centralised Advice Framework

As part of our thorough onboarding process, we prioritise understanding your business holistically. By delving into your central processes, such as the Centralised Investment Proposition (CIP) and Centralised Advice Framework (CAF), we seek to enhance efficiency and consistency in your service delivery. These frameworks not only satisfy regulatory requirements but also instill confidence in your clients, fostering long-term trust and loyalty.

2. Risk profiling tools

Moreover, our expertise extends to risk profiling procedures, where we guide you in selecting the most suitable tools and documenting crucial client discussions. This meticulous approach ensures that your advisory decisions are well-informed and compliant with industry standards.

3. Annual Review process & Templates

In our recent poll conducted this week, we discovered that a significant 60% of advisers believe their Annual Review process could benefit from enhancements. As part of our onboarding procedure, we’ll request to review your templates to better understand your current approach. At We Complement, we understand the pivotal role of customisation in the annual review process. That’s why our in-house templates are designed to go beyond the ordinary, providing comprehensive explanations that not only resonate with clients but also fulfill stringent compliance requirements.

4. Are your client files in a good place?

Additionally, our collaboration extends to your internal compliance and file-checking procedures. By aligning with your established protocols, we guarantee that our work meets your compliance expectations, minimising risks and enhancing operational efficiency.

5. Where do we fit in amongst your in-house team?

Integrating closely with your administrative team streamlines processes, allowing you to focus on delivering exceptional financial planning services. This collaborative approach improves client satisfaction and cultivates a culture of excellence within your firm.

At We Complement, our commitment to your success extends beyond the initial onboarding process. We view our partnership as a continuous journey, where we remain dedicated to supporting your firm at every stage of growth and evolution. Whether you’re navigating regulatory changes, expanding your client base, or exploring new avenues for innovation, we’re here to provide strategic guidance and practical solutions. Our team of experienced professionals stays abreast of industry trends and best practices, ensuring that our support remains relevant and valuable in an ever-changing landscape. By choosing to collaborate with We Complement you gain a trusted ally who is invested in your long-term success.

If you would like to discuss this and other ways your business could benefit from working with us, please contact us online or call 01472 728 030.

I’ve completed dozens of bond surrender cases this year, and encountered several recurring themes and common pitfalls when dealing with bond surrender calculations. These calculations can be fiddly, especially if you haven’t dealt with one for a while. Dealing with changing regulation on certain aspects (I’m looking at you, top slicing relief) can make it easy to overlook or forget certain aspects. I hope this blog is a helpful memory jog on the more finicky aspects of bond surrenders.

Unintended Consequences

• Student loan repayments: Remember that bond gains are taxable income, so even if there’s no tax due on the gain, a bond surrender could lead to the recipient having to repay more of their student loan. Depending on their circumstances, this might be taken from their salary via PAYE.
• Tapered personal allowances: Similar to the above point, there might be no tax to pay on a gain, but the gain might increase the client’s annual income to a level that they lose an element of their personal allowance.
• Care costs: As long as the investment isn’t treated as a deliberate deprivation of assets, bonds are often ignored by a Local Authority when a client is being means-tested for care funding. This is something to be aware of if an older client who has held a bond for a long time is considering surrendering it and holding it as cash, for example.

Bonds in Trusts

Normally, a bond gain falls on the policyholder and becomes part of their income for tax purposes. This is similar for absolute trusts, where the gain falls on the beneficiary.

For bonds held in other types of trust, the rules are a little different:

• If the settlor is a UK resident and alive in the tax year of the gain, the gain falls on them. The settlor can reclaim any tax they pay from the trustees.
• If this isn’t true of the settlor, the gain falls on any UK resident trustees. Note that the old £1,000 standard rate band has been removed, so all gains that fall on the trustees are taxed at the trustee rate of 45%. If the trust only receives income below the allowable tax-free amount (usually £500), then the trust doesn’t have to pay income tax. If the trust receives more income than the tax-free amount, tax is due on the whole amount of income.
• If there are no UK resident trustees, the gain falls on the UK beneficiaries.

The Timing of Bond Gains

This is a small but easily overlooked point: the two types of bond gains are taxed at different times.

Surrendering whole segments will result in taxpayers having to pay any tax on the gain in the tax year the surrender was made.

On the other hand, if you make a withdrawal across all segments, the tax on the gain will be payable in the tax year that the policy year ends in. For example, take a withdrawal made via this method on 1st April 2024, where the policy year ends on 1st September 2025. The withdrawal takes places in the 2023/24 tax year, but the gain will be taxed in the tax year that 1st September 2025 falls into, i.e. the 2024/25 tax year.

Order of Tax

Onshore and offshore bond gains are savings income, and they can both potentially make use of the Personal Savings Allowance and Starting Rate for Savings. However, they’re not treated identically for tax purposes.

Onshore bonds are treated as the top part of income, and are taxed last, after non-savings income, other savings income and dividends. Offshore bonds slot in with other savings income, so are taxed before dividends and after non-savings income.

Top Slicing

Interaction with Personal Allowance, Personal Savings Allowance and Starting Rate for Savings

There have been some recent changes to these rules which can catch you out if you don’t deal with bond surrenders regularly.

In mid-2023, HMRC updated their guidance on how the above three allowances interact with top slicing relief. Prior to this updated guidance, when calculating the tax due on the average gain for top slicing purposes (step 4 of the calculation), you used the client’s income plus the full gain to determine whether the PSA and SRFS were available. On the other hand, eligibility for the Personal Allowance was based on the sliced gain, so you could potentially reinstate the Personal Allowance.

After the updated guidance, for step 4 of the calculation, the amount of PSA, SRFS and PA the client is eligible for is based on the sliced gain, not the full gain.

It’s important to note that this is only applicable to step 4 of the calculation, and not the calculation as a whole. Nevertheless, this could still result in some clients paying less tax.

Eligibility

Only individuals can claim top slicing relief. As bonds in absolute trusts are typically taxed, as though the beneficiary owns the bond, beneficiaries of absolute trusts can also claim top slicing relief.

For other types of trusts, if the trust assigns segments to a beneficiary, that beneficiary can claim top slicing relief going back to when the bond was established. Trustees cannot claim top slicing relief. Settlors can claim top slicing relief.

Top Slicing Years

Working out how many full years to use in a top slicing calculation can be tricky, as it depends on whether the bond is onshore or offshore, the type of surrender, and when the bond was established.

If you’re surrendering the whole bond, or whole segments, you can use the number of full years since the bond was established.

If the gain has been caused by an excess event (taking a withdrawal above the 5% allowance from across all segments) and the bond is onshore, you use the number of full years since the last excess event. In this situation, but with an offshore bond, it gets a bit more complicated. Luckily, there are some handy flowcharts available online. I have used the one below from Canada Life as an example.

This is just a quick roundup of some of the things to look out for when doing a bond surrender calculation. Are there any other tricky areas that might catch you out when doing a bond surrender?