Administrator to partner - Professional Paraplanner
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The magazine for
paraplanners
and financial
technicians
March 2020
Administrator
to partner
Luan Mahoney, partner with
Chadney Bulgin, talks about
how she progressed her career
from mortgage administrator
to head of operations and
a partner with the firm
PAGE
8
Trusts
Why advice teams need
to keep on top of new
registration rules
Portfolio evaluation
Calculating money and
time weighted returns
Tax Special
End of year tax planning
PLUS
SPECIAL REPORT
FROM OUR
TEAM LEADER
SEMINAR
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For a fund that aims to achieve a high level of monthly income through a diversified portfolio,
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ADVANCES IN
the benefits of being able to show clients
all of their pensions, long-term savings and
investments in one place, and build financial
TECHNOLOGY plans off the back of that data, will be huge.
The convergence of health and wealth-
related technologies is another opportunity
on the horizon. For example, as technology
It’s been a busy month. launch of the 2020 Professional Paraplanner gets better at analysing our DNA and our
No doubt it has for you too Awards (see below for more on all of these). chances of getting diseases, and thereby,
as the end of the tax year I also attended three very interesting more accurately predicting our longevity, so
approaches. This issue technology conferences: Financial this information can be used to inform and
we have a Tax Planning Technology & Research Centre’s (FT&RC) improve the accuracy of financial planning.
Special for you, talking to Empowering Advice Through Technology 2020; Dynamic Planner introduced the latest
paraplanners about how they tackle end- Dynamic Planner’s annual conference; development in its Elements line up – a
of-year tax planning and any tips and tricks and the Getting Pensions Dashboards Done web-based cashflow planning tool, which
they have for getting through to 5 April, event hosted by Origo and identity platform will draw on the client’s risk-based profile.
alongside articles on which clients most specialist ForgeRock. Each pointed to This will be ready later this year – read more
need attention and how you can help them developments that we can expect to affect about it on our website.
through use of tax efficient products such as financial planning and sooner than we Our industry, we were told at the FT&RC
Business Property Relief. may think. A key theme across all three event, “is on the cusp of significant change”
Here at Professional Paraplanner, as well conferences was developments in Open being rapidly driven by technological
as putting together this issue and the daily Finance, i.e. how financial services will advances. As primary users of financial
website, we launched our Team Leader adapt technologies developed for open planning technology, there is no doubt
Seminars series, running the first event in banking to obtain and offer a far more paraplanners are going to be at the heart of
London – we’ve picked out some highlights holistic view of an individual’s finances and these developments.
on pages 16-17. We are also preparing for financial planning. Having systems that Rob Kingsbury,
this year’s Technical Insight Seminars, our talk to one another is essential for this to Editor, Professional Paraplanner
Investment Committee events, and the work in financial services companies but robkingsbury@researchinfinance.co.uk
PROFESSIONAL PARAPLANNER EVENTS SERIES 2020
Register for these events via • 9 September: Nottingham,
the Events page on the Nottingham Belfry Team Leader Seminars
Professional Paraplanner website. • 23 September: Glasgow, Hilton Glasgow
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Technical Insight Seminars • 8 October: Leeds, Oulton Hall
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Register for one of our 16 events around the • 4 November: Reading, Crown Plaza
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• 29 April: Exeter, Woodbury Park • 25 November: Newcastle, Crowne Plaza are once again supporting the Professional
• 13 May: Birmingham, Crowne Plaza • 2 December: Colchester, Colchester FC Paraplanner Awards, which will be launched
• 20 May: Norwich, Park Farm Hotel on 9 March via our website. There will be six
• 10 June: London, ETC Venues, The Investment Committee paraplanner and administrator specific awards
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• 9 July: Southampton, Hilton Ageas Bowl You can also sign up for events in Manchester The ceremony will take place on 10 June at the
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March 2020 | www. professionalparaplanner.co.uk 3
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Contents @profparaplanner
The magazine for
paraplanners
and financial
Professional Paraplanner is published by
technicians
March 2020
Administrator
to partner
Luan Mahoney, partner with
Chadney Bulgin, talks about
how she progressed her career
from mortgage administrator
to head of operations and
In this
a partner with the firm
PAGE
8
Trusts
Why advice teams need
to keep on top of new
registration rules
Portfolio evaluation
Calculating money and
time weighted returns
Tax Special
issue...
End of year tax planning
PLUS
SPECIAL REPORT
FROM OUR
TEAM LEADER
SEMINAR Address
001_PP_Cover_0320.indd 1 21/02/2020 14:13
80 Coleman Street, London EC2R 5BJ
T: +44 (0)20 7104 2235 E: info@researchinfinance.co.uk
6 Viewpoint Finding and W: professionalparaplanner.co.uk
keeping good people Investment Committee
8 Profile Luan Mahoney, 22 Investment When is Editorial Management
partner with Chadney average better than average? Editor Founding Director
Bulgin, on how she Simon Evan-Cook uses Rob Kingsbury Toby Finden-Crofts
progressed her career from the body size of 1940s US E: robkingsbury@ T: +44 (0) 20 7104 2236
mortgage administrator to Airforce pilots to explain. researchinfinance.co.uk E: tobyfindencrofts@
head of operations and a 24 Markets Are US equities Designer researchinfinance.co.uk
partner with the firm still worth the risk? Darius Pascal Don Design Founding Director
10 Pensions Denton’s McDermott looks at E: pascal.don@mac.com Richard Ley
Stephen McPhillips, the pressures on the US Editorial inquiries : T: +44 (0) 20 7104 2239
looks at unauthorised economy and markets editorial@researchinfinance.co.uk E: richardley@
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weighted and time- Year End Paraplanners Research Director Subscriptions
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Events
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15 Trusts Trust registration running up to the end of the
deadlines are changing and tax year?
paraplanners need to know © 2020 Research in Finance Ltd
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express permission of Research in Finance, which reserves all rights. Re-use of any
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FIND AND KEEP
achieve the business growth we’d set out
in our business plan. This meant practicing
what we preach and carrying out a training
GOOD PEOPLE
needs analysis on ourselves:
• Deciding on the skills we needed in the
business to achieve success
• Evaluating the skillsets we already
Natalie Bell, co-founder & director of The Art of had internally
• Highlighting any skills gaps (and setting
Finance and director of Culture & Engagement about filling them!)
across The Verve Group, describes how the The technical skills were the easiest
to identify – the businesses needed
management team established a development paraplanners and compliance officers and
framework for their underlying businesses we knew that we wanted to support them
to gain their Level 4. This was straight
forward enough, we identified the route
the practical skills needed for the role – both we wanted for them (the CII Diploma in
attract and keep staff. Ultimately, those who Regulated Financial Planning) and we
receive the appropriate training become invested in their qualification-related
more valuable to the business, contribute to progress. Even the practical skills needed
the business growth and on a personal level, for the roles were straight forward as the
feel valued in return. model we’d created was predominately
All of that said, training and development on-the job training, and also scheduled a
isn’t as easy as just asking an employee what number of internal workshops to deliver on
S
they want help with and then delivering the varying complexities expected of them
taff training and development – on it. It takes time and resource – both in as they progressed through their career path
well known, much needed and identifying the need in the first instance, (visualised and shared with them from the
pretty much always the greatest delivering on it and then the ongoing support outset). The greatest challenge came, and
challenge for any business (that, to make sure that the new knowledge is still does, with supporting the softer skills –
and recruitment!). So, when transferred back to the business. And often, team leading, effective communication and
you’re lucky enough to find your ideal such time and resource isn’t always available confidence building being some of the most
candidate, how do you go about keeping and to manage internally. Is it a genuine need? common. As the teams within the group
upskilling them? With so many different Or is it a limiting belief they have about have grown, it’s meant we have different
training needs and urgency levels it can themselves? What’s the cost to the business? challenges now to what we had three years
often be a game of Tetris when it comes to Is there a benefit back to the business? How ago so, regularly reviewing training needs
marrying up an individual’s development do you measure that return on investment? analysis is an absolute must!
points with that of the organisational goals. These are all very sound questions to ponder. This experience is in every essence, the
My role across The Verve Group means Last year, Cathi Harrison, founder of uniqueness of The Art of Finance and for the
all things considered ‘fluffy’, ‘people’ Para-Sols and Apricity Compliance and firms who have enrolled their staff to date, it’s
and ‘happiness’ all land at my door – staff CEO of The Verve Group, and I created where they see great value. We’ve designed
engagement, coaching and learning & The Art of Finance, having experienced our courses to provide the technical support
development to name but a few. Thankfully, our own internal training challenges whilst they need to get through the exams and give
it’s all the stuff I love and genuinely relish in scaling Para-Sols and Apricity Compliance. them the practical skills they need for the role
the opportunity to bring out the best version With a really successful graduate (direct business benefit). Together with the
of oneself. It’s no secret that businesses programme (The Grad Scheme) across the emotional, more coaching style approach,
which are willing to invest in their employees companies, it was crucial that we developed empowers and enables the candidates to
– such as offering help with qualifications or a learning and development framework to thrive (direct personal benefit).
I always say that it should never be a choice
of professional or personal development, it’s
Businesses which are willing to invest in their when the two can be blended that the real
employees both attract and keep staff magic happens for all involved!
The Verve Group is comprised of Para-Sols,
Apricity Compliance, The Art of Finance and
The Grad Scheme
6 www.professionalparaplanner.co.uk | March 2020
TECHNICAL INSIGHT
SEMINARS 2020 –
REGISTER TODAY
Register to join your fellow paraplanners at one of 16 events this year
TECHNICAL INSIGHT SEMINARS 23 September: Glasgow, Hilton Glasgow Presenters at this year’s Seminars will include
SPRING/SUMMER/AUTUMN 2020: 24 September: Edinburgh, Waldorf Astoria speakers from: FundsNetwork, Parmenion,
Dates and venues 8 October: Leeds, Oulton Hall i4C cashflow, ATEB Consulting, Transact,
29 April: Exeter, Woodbury Park 21 October: Manchester, Midland Hotel Dentons Pensions Management, Para-Sols, Lime
13 May: Birmingham, Crowne Plaza 4 November: Reading, Crown Plaza Outsourced Paraplanning, Octopus Investments,
20 May: Norwich, Park Farm Hotel 18 November: Bristol, Aztec Hotel Apricity, Cashcalc, NS&I, London Institute of
10 June: London, ETC Venues, Liverpool Street 25 November: Newcastle, Crowne Plaza Banking and Finance (LIBF) and more.
17 June: Cardiff, The Vale Resort 2 December: Colchester, Colchester FC Register your interest today at:
9 July: Southampton, Hilton Ageas Bowl Our events are a mixture of keynote and www.surveygizmo.com/s3/5397435/2020-
22 July: Chester, Double Tree Hilton workshop sessions, covering a range of topics Professional-Paraplanner-Technical-Insight-
9 September: Nottingham, Nottingham Belfry specifically for paraplanners. Seminars
Paraplanner profile
ADMINISTRATOR
TO PARTNER
Luan Mahoney, partner with Chadney Bulgin,
tells Rob Kingsbury how she progressed her
career from mortgage administrator to head of
Operations and a partner with the firm and why
she likes to stay hands-on in her day-to-day role
L
uan Mahoney’s financial services office to the north of the UK and she was
career stretches back over 25 years made redundant.
but it took off when she joined Her next role was with a mortgage The shift from mortgages to financial
Hampshire-based Chadney Bulgin adviser and then she moved to a wealth planning required a lot of re-training
in 2002. Her career progression management IFA. “But most of my roles of staff, Luan says, “including myself”,
is very much linked to the success and were with mortgage advisers and when as well as recruiting. “It was a period of
growth of that business over the past I joined Chadney Bulgin in 2002, it huge change.”
18 years, from a firm just undertaking predominantly did mortgages. I joined As the business has expanded, there has
mortgage work to one now split 65% as a mortgage administrator. We were been development and specialisation of
wealth management and 35% mortgages. processing 350 mortgages a month and those teams. Chadney Bulgin now has a
“My career has developed as the business we had one wealth planning consultant.” mortgage administration team, a wealth
has,” Luan explains, “from mortgage An inflow of new management into administration team, a service team, and
administrator to supervisor to manager the business on the retirement of senior paraplanning teams both on the wealth and
of a mortgage team, and then manager partner Tom Chadney, saw the business the mortgage sides of the business.
of a wealth and mortgage team, to head begin to change, taking on more wealth When mortgages came back after the
of operations. I became a partner in the management work as well as acquiring financial crisis subsided, for a while the
business in 2008.” smaller businesses on the wealth side. financial advisers straddled both areas,
Luan started her working career in This change of strategy was well taking on mortgage advice as well as wealth
retail but quickly found there wasn’t much timed and, in 2007, it was accelerated planning, but over time they became
money in it, so she went to night school, as the financial crisis began to take specialists in their areas, as have the
learned to type “because that was my hold and mortgage business dropped support teams, Luan explains. “That makes
perception of what I needed to do to work off significantly. sense, particularly in support, because the
in an office” and landed her first office The changes brought opportunities pace and demands on administration are
job. This happened to be in financial both for the business and for the staff. very different between the two arms. It
services, working for Abbey National (now Within two years of joining the firm Luan enables us to concentrate on the areas and
Santander) in a mortgage centre processing had been promoted to supervisor and what they need. We find it takes different
mortgage applications. She stayed there for then to manager of the joint mortgage skills and personality to be a mortgage
seven years until the company moved the and wealth administration team. administrator to someone on the wealth
side. As an example, on the mortgage side
it is faster paced, there is more contact and
chasing of providers for quick answers,
“We have a really good training which means there is a lot of telephone
work and a high level of tenacity is needed
infrastructure. One of our senior to chase and challenge the lenders.
“On the wealth side you need more
partners is responsible for training across technical and analytical skills sets. We find
people tend to settle and fit into one team
the business. Managers will identify or the other, although we do get people
moving between teams in order to develop
training needs and do on the job training” and progress their career prospects.”
8 www.professionalparaplanner.co.uk | March 2020
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A growing business naturally develops
a need for more and more infrastructure.
A typical day
Luan was promoted to head of Operations
in 2017, overseeing the firm’s offices
in Fleet, Hampshire and Chichester,
Sussex. Her responsibilities now include “As head of Operations, I’m the hub for that side of the business. IT takes up a big part of my
the management of all sales support day. It will depend on project work as well. For example, we are moving our back-office system
staff, operations, business strategies between providers at the moment. For a company of our size with over 80 members of staff, we
and maintaining service to all clients have a huge amount of data to migrate across, all of which requires data mapping, alongside the
throughout their ongoing relationship training of staff on the new system.
with Chadney Bulgin. “Finding the right system also came within my remit, researching the market and conducting
due diligence. The biggest challenge for us is that we have the two arms, wealth and mortgage,
Paraplanning team and while I went to the market and found some amazing systems that did wealth well or
Originally the firm had no paraplanning mortgages well, there was no system that did both to the level that we wanted. So, we targeted
operation. Luan has overseen the growth of a company that handles the wealth side of the business very well and is willing to work with us
the paraplanning team, bringing in Martin to build a better system for our mortgage side, so we can benefit from greater efficiencies for
Green as the first paraplanner, who is now our mortgage advisers and support teams.
paraplanner manager.* “As a partner I am involved in business strategy, looking at where we go in the future. I sit
The firm encourages staff to develop on our investment committee, I have regular meetings with my department managers, in
and learn and to progress their careers administration, paraplanning and HR, across Fleet and Chichester. They report to me on what’s
within the business. “We have people happening in their departments, what issues they have, and we work on solutions together.
move from administration into “I’m still very much involved in what’s happening in all the teams and I wouldn’t have it any
paraplanning and from paraplanning into other way because that’s where I came from and I’ve a stake in it. I’ve built up the teams and
advice,’ Luan says. “We have a really good having that experience of the business at so many different levels, I tend to have come across
training infrastructure. One of our senior most things and they can bounce ideas and solutions off me for a second opinion.”
partners is responsible for training across
the business. Managers will identify *Martin Green talks about being a paraplanning manager in this video:
training needs and do on the job training https://professionalparaplanner.co.uk/interview-being-a-paraplanning-manager/
but if we feel there is a need for deeper Martin also explains what being part of the investment Committee entails here:
learning, we will have classroom sessions. https://professionalparaplanner.co.uk/paraplanner-as-investment-committee-member/
“It helps us manage risks in the business [In the September 2018 issue we wrote about the structure of the Chadney Bulgin
when people are learning and developing paraplanning team – Ed]
and know to ask the right questions of the
right people to get the answers they need.
Having the ability to spot something that The size we are now is a nice size. It to have opportunities to progress their
doesn’t sound correct is a useful attribute.” means the senior managing partners careers just as I’ve had.”
Also, the firm is a registered know everyone’s name and what they
examination centre with the CII and has do, and if anyone has an opinion or an Three key elements for a good
just launched its own Training Academy idea it is listened to and valued. We administration department
on the wealth side. “We have a number never want to lose that. It’s important;
of wealth advisers who are going to be it’s what has kept people working here Luan believes the top three elements needed to
retiring over the next five to ten years and for a long time – and it’s what has kept run a good administration department are:
we are looking to bring people through the people as clients for a long time.” 1. Variety of interesting work. Having a variety
academy to replace them. This is a very Looking back over her 18 years with of interesting work keeps people engaged,
exciting development for us as a business.” the firm Luan says she recognises the wanting to learn and improve. It also feeds
benefits of working for a firm of the size and the next key element, which is…
Firm culture ambition of Chadney Bulgin. “The firm has 2. Morale. You have to have good morale and
Despite the growth of the business over vastly changed over the past 18 years and camaraderie. It has to be a good place to
the years, what’s important to Chadney as the business has developed so my career come to work.
Bulgin, Luan stresses, is that the firm has developed and changed with it. It’s 3. Strong leadership. Staff need someone
retains its culture, which she feels is been an exciting career path. to guide them or to go to with problems,
important to both the people in the “But for me the most exciting part whether those are work related or
business and its clients. “We don’t want has been to see other people’s careers personal. They have to feel confidence
to be big corporate; we still want to have develop within the firm as well, for me to in the leadership team and that they are
that family feeling within the business. hand over responsibilities and for people supported by them.
March 2020 | www. professionalparaplanner.co.uk 9
Pensions
UNAUTHORISED
PAYMENTS
Stephen McPhillips, technical sales director,
Dentons Pension Management Limited looks
at unauthorised payments from registered
pensions schemes that are SIPPs or SSAS
to the scheme. This article focusses on
“unauthorised payments” to members
and employers as they might relate to self
invested personal pensions (SIPPs) and / or
small self administered schemes (SSAS).
Unauthorised member payments
When an unauthorised payment is made
R
to a scheme member, a tax charge of
egistered pension schemes 40% of the amount of the unauthorised
enjoy many tax advantages. payment is levied. This is payable by the • A loan directly or indirectly to a member
These can range from tax scheme member. If the unauthorised or anyone connected with the member,
relievable employer and member payment exceeds 25% of the including a company controlled directly
member contributions through member’s fund value, there is a further or indirectly by a member.
to income tax-free returns, capital gains surcharge tax amounting to 15% of the • Payment of benefits to anyone other
tax-free growth and beyond that to tax- unauthorised payment. This is also payable than the member whilst the member
free lump sums upon taking retirement by the member. In addition, the scheme is still alive.
benefits and inheritance tax-free death administrator will usually be subject to • Benefit payments to a member before the
benefit payments. a tax charge of 15% of the unauthorised age of 55 (unless they satisfy the ill health
Substantial tax advantages such as these payment. However, this could increase to requirements or have a protected lower
are extremely valuable. They do however, 40% if the member fails to pay all of the tax pension age).
come with conditions. Breaching any of the charges that have arisen. • Va shifting, i.e. where a pension scheme
conditions relating to payments to members It therefore follows that tax charges of enters into a transaction that increases
and/or employers can be a very costly 70% (or more) of the unauthorised payment the value of an asset or decreases the
exercise for the scheme member and/or amount could arise where such a member amount of a liability of a member, or a
employer. There can also be implications payment occurs. Examples of unauthorised person connected with a member (and
for the scheme administrator attached member payments include: in the case of a SSAS, a sponsoring
employer), on anything other than what
would normally be expected on arm’s
Breaching any of the conditions relating to length terms.
payments to members and/or employers can be This is not an exhaustive list and care
a very costly exercise for the scheme member should be taken to ensure that unauthorised
member payments do not take place.
and/or employer. There can also be implications
for the scheme administrator Unauthorised employer payments
When an unauthorised payment is made
to an employer, a tax charge of 40% of
the amount of the unauthorised payment
is levied. This is payable by the employer.
10 www.professionalparaplanner.co.uk | March 2020Follow us on Twitter
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If the unauthorised employer payment occurrence of any such tax charges. In turn, to ensure that the five strict HMRC
exceeds 25% of the member’s fund value, this will often mean that providers will: requirements are met in full without
there is a further surcharge tax amounting • Undertake robust due diligence on any additional complications (such as
to 15% of the unauthorised payment. This is any proposed investment which could the SSAS trustees taking possession of
also payable by the sponsoring employer. give rise to unauthorised payments. any property which could be deemed
In addition, the scheme administrator For example, a peer to peer lending as “taxable property” in the event of
will usually be subject to a tax charge of platform might not be acceptable to a default by the borrower – items such as
15% of the unauthorised payment. provider if the end borrower cannot plant and machinery 0r stock).
However, this could increase to 40% if the always be identified. • Not permit the shifting of any value
sponsoring employer fails to pay all of the • Operate a strict company policy on from one member to another within
tax charges that have arisen. SSAS loans to employers in order its arrangements.
It therefore follows that tax charges of
70% (or more) of the unauthorised payment Summary table
amount could arise where such an employer
payment occurs. Tax situation Tax charge
Unauthorised member payment 40% of the amount of the unauthorised payment
Example of unauthorised Payable by the member
employer payments
A loan from a SSAS to a sponsoring Unauthorised employer payment 40% of the amount of the unauthorised payment
employer that does not satisfy each and (SSAS) Payable by the relevant sponsoring employer
every one of the strict requirements for Unauthorised payment is more Member/sponsoring employer will be liable to a surcharge of 15%
such a loan to be an authorised payment. than 25% of the value of the
Such requirements include the fact that relevant member(s) pension funds
the loan must be secured by a First Legal
Charge over a suitable asset or assets. Tax charge on the pension Usually 15% of the amount of the unauthorised payment.
scheme (via the Administrator) However, if the member or sponsoring employer fails to pay the
Potential impacts on SIPP and SSAS full amount of their tax charges, it could be as much as 40%.
Most responsible providers of SIPP Total tax charges for an unauthorised payment could be as high as 70% of the amount of the
and SSAS arrangements will take all unauthorised payment.
necessary and reasonable steps to avoid the
March 2020 | www. professionalparaplanner.co.uk 11Follow us on Twitter
TDQ @profparaplanner
PORTFOLIO EVALUATION
Catriona Standingford, MD of Brand Financial Training,
considers money-weighted rate of return and time-weighted rate
of return in evaluating performance of an investment portfolio
and are seen in a number of CII exams
A
nyone sitting one of the CII investment exams will then calculated for each period between these contributions or
need to be familiar with measuring returns. withdrawals and then the periods are all multiplied together. Let’s
In this article we look at the money-weighted rate of look at an example of this:
return (MWR) and the time-weighted rate of return
(TWR) both of which are examined in R02 as well 1 January 1 April 30 June
as in J10, J12 and AF4; in particular in AF4 students may need to Value = £1,000 Value = £1,200 Value = £2,400
actually do the calculations whereas in R02 it will be more about Further investment
understanding the theory. =£1,000
The time-weighted return shows the performance regardless
of the timing of new monies. The money-weighted return takes What is the TWR?
account of timing of additions and withdrawals. Let’s look at a Period 1 = This is the first three months when the fund went from
typical exam question: £1,000 to £1,200.
Period 2 = This is the next three months when £1,200 plus the
Calculate the money-weighted rate of return for the following investment: additional investment of £1,000 grew to £2,400.
Value at Money Income Value at 31
The return for each period is calculated by dividing the end value
1 January invested 31 received 30 December
by the value at the beginning.
March June
Period 1 = £1,200/£1,000 = 1.2
£100,000 £20,000 £2,000 £119,000 Period 2 = £2,400/£2,200 = 1.0909
The MWR formula is: D + V1 - V0 - C So now we know that in the first 3 months a gain of 20% was made
n )┤
V0 + (C × 12 and in the second 3 months a gain of 9.09% was made. To find the
Where: TWR we need to multiply the two periods together:
• D = income received during the year i.e. £2,000 (1.2) x (1.0909) - 1 x 100 = 30.91%
• V1 = the value at the end of the period i.e. £119,000
• V0 = the value at the start of the period i.e. £100,000 In conclusion, both the MWR and the TWR are useful when
• C = the new money introduced during the year i.e. £20,000 evaluating performance of an investment portfolio over a given
• n = the number of months remaining in the year i.e. 31 March time period. However, TWR focuses just on performance and is
until the 31 December therefore more suitable when comparing different portfolio returns.
If we input the figures into the formula: About Brand Financial Training
£2,000 + £119,000 - £100,000 - £20,000 /£100,000 + Brand Financial Training provides a variety of immediately accessible
(£20,000 x 9/12) free and paid learning resources to help candidates pass their CII
Therefore: exams. Their resource range ensures there is something that suits every
£1,000 / £115,000 x 100 = MWR of 0.87 or 0.87% style of learning including mock papers, calculation workbooks, videos,
audio masterclasses, study notes and more. Visit Brand Financial
The MWR is influenced by the timing of cash flows which are Training at www.brandft.co.uk
of course outside the fund manager’s control. The TWR aims
to eliminate this problem by measuring compound growth
irrespective of money flows.
To calculate TWR we need to know when and how much
new money is invested, when and how much of a withdrawal is
made and what the portfolio value was at the time. Returns are
12 www.professionalparaplanner.co.uk | March 2020Follow us on Twitter
Protection @profparaplanner
BUSINESS
Where a director has made a personal
loan to the business, which is required to be
repaid on death, this is better covered under
OWNER CLIENTS
a key person policy.
3. Shareholder protection
Most adviser firms will have business owners as Should a fellow director or partner die,
clients. Ensuring they have the right insurance provision should be in place to assure the
financial interests of surviving shareholders
protection in place can be a valuable part of in the business. The purpose here is to
their financial planning, says Chris Dunne, enable the remaining owners to be able to
buy the business share from the deceased
proposition manager, Scottish Widows shareholder’s estate at fair value.
Again, having the appropriate level of
business. There are four types of cover cover in place here can both ensure the
your clients should consider, depending continuation of the business, and that
on their circumstances: fair value of the deceased’s holding in the
business is transferred into their estate.
1. Key person
4. Relevant life cover
Key person cover protects a business
against the loss of one of its key employees These are individual life cover policies
B
through death or serious illness. enabling businesses to offer tax-efficient
usiness owners can all too When talking to clients, ask how death-in-service benefits to their
easily be focussed on the day- the business would be affected by the employees, outside of a registered group
to-day challenges of running long-term absence or death of a team life scheme. They are also used for high-
the business and overlook a member – an owner, director, salesperson earning employees who have substantial
vital element of running and or employee with specialist skills or pension funds, and want their death-
maintaining a successful business. It is knowledge. Ask them to make a list of in-service benefits to sit outside of their
essential that consideration is given to those members. They may be surprised at lifetime allowance. Other tax advantages of
all the potential risks to the business, the length of the list. Relevant Life Cover include:
not least of which is the potential impact This type of insurance covers the key • Payments made do not form part of the
should, for any reason, the business lose person but the business is the policy owner employee’s annual pension allowance.
them as Leader, or indeed another key and pays the premiums. The cover can also • Premiums aren’t normally subject to
member of staff. be written in trust if needed. income tax.
Fundamental questions to ask business • Premiums can be treated as an allowable
owners and leaders are: ‘What would 2. Loan protection expense for the employer in calculating
happen if one day you were in the their tax liability.
unfortunate position where a key person Another risk area to a business is where • Writing the policy in trust will mean that
in the business had suddenly died or a loan needs to be repaid in the event in most cases the benefits are paid free of
become critically ill? How would the of the death or serious illness of a loan inheritance tax, because the benefits are
business cope? What steps have you guarantor. This can represent a serious paid through that trust.
taken to address this potential situation personal risk where third party security
in your business planning? has been taken against the loan, such as Helpful Calculators
You may be surprised by the answers. a second legal charge on the director’s
While businesses will insure equipment family home. In this situation, insuring So that businesses may assess the cover they
and premises they often overlook insuring for the full value of the loan in the need, we have developed three calculators to
their key people. Even when some thought event of death or serious illness can be help determine the sum assured:
has been given to the issue, often not vitally important to the wellbeing of the • Key Person Calculator: to help work out the
enough has been done to prepare for it. surviving family. value of the key person.
This is not just about ensuring the Query with your clients what • Business Valuation Calculator: to help work
business is still able to operate and trade. arrangements they have in place. This could out the value of a business.
It also concerns the wellbeing of staff and save not just a business, but safeguard a • Relevant Life Policy Calculator: to show the
their families, and shareholders in the family home further down the line. potential tax savings of this cover.
March 2020 | www.professionalparaplanner.co.uk 13Follow us on Twitter Survey @profparaplanner PARA-METERS Our monthly paraplanner survey tracking trends and topical issues THE TOP 10 IA SECTORS MOST RESEARCHED BY PARAPLANNERS OVER THE PAST MONTH 1 3 5 7 9 MIXED INVESTMENT 40-85% SHARES UK ALL COMPANIES MIXED INVESTMENT 0-35% SHARES UK EQUITY INCOME PROPERTY 2 4 6 8 10 MIXED INVESTMENT 20-60% SHARES GLOBAL PERSONAL PENSIONS VOLATILITY MANAGED FLEXIBLE INVESTMENT DO YOU BELIEVE PENSIONS TAX RELIEF NEEDS REFORMING? SHOULD A FLAT RATE PENSIONS TAX RELIEF BE: YES 55% 20% 25% NO 33% 25% 31% NOT SURE 12% 30% 43% SHOULD A FLAT RATE PENSIONS TAX RELIEF BE INTRODUCED? DO YOU THINK IT MIGHT CHANGE RETIREMENT SAVING BEHAVIOURS? YES 41% YES 69% NO 47% NO 15% NOT SURE 12% NOT SURE 16% Rumours around changes to pensions tax relief the savings gap, there would be less incentive for VCTs and EISs, or turning more to property as a are rife in the industry, above and beyond a higher earners to pay into pensions which while long-term investment. One paraplanner said: “It change in Chancellor of the Exchequer. For our saving the Treasury money now could reduce the would change behaviours for the worse. It would latest Para-meters survey we asked for your income tax take for governments further down not make people on lower wages save more and opinions on pensions tax relief and in particular the line, higher rate earners would be forced to it would discourage people on higher earnings to the introduction of a flat rate of pensions tax seek alternatives, and there would be issues for DB make pension contributions.” relief, which it is suggested is most likely to arise schemes and employer contributions. in the Budget on 11 March. Would it change your recommendations? As can be seen from the data above, the ma- Changing behaviours Asked whether a flat rate would change the rec- jority of paraplanners responding to our survey By far the largest majority of people – 69% – ommendations made to clients, paraplanners said thought pensions tax relief needed reforming but thought that a flat rate of pensions tax relief this would depend on the level of flat rate relief opinions were split over whether a flat rate of tax would change people’s retirement saving behav- and would be case specific. Most said pensions relief should be introduced. iours. Higher rate tax payers were seen as most would remain a primary savings vehicle, “pensions Asked what benefits or issues they saw with likely to change their behaviours, as a reduction in will still be one of the best tax efficient invest- a flat rate tax, respondents tended to couch the tax relief would be seen as a disincentivise to save ments and we would maximise investments into benefits in general terms such as greater consist- into a pension as a main long-term saving vehicle. them”, although some said they would change ency, simplicity, fairer, more straightforward, While pensions would still be seen as useful tax the type of contributions – “I’d be unlikely to more transparency in the tax system. Also, that it tools, as one respondent said: “People need to be recommend lump sum contributions much; I’d be might encourage basic rate taxpayers to contrib- incentivised to save into pensions and if their tax more likely to look at employer contributions”. ute more (if the flat rate was above the current relief going in was seen to have been reduced it However, paraplanners said that in some cases, 20% basic rate tax level). Other benefits cited could put them off contributing in this way when ISAs would be considered more appropriate – “it were simpler calculation and administration of what we actually need is more savings into pen- will be difficult to recommend a pension over taxes, saving the Treasury money, and making tax sions not less.” an ISA for a higher rate taxpayer who would get relief easier for the general public to understand. What would likely be seen, it was suggested, basic rate relief now but might still expect to Those who saw disadvantages said they thought is people putting less into pensions and more pay higher rate tax in retirement – and/or tax a flat rate system would not encourage low earners money into other tax wrappers, such as ISAs, wrappers such as onshore and offshore bonds and to pay into pensions thereby not helping bridge or looking to tax efficient investments such as general investment accounts. SURVEY PRIZE DRAW Congratulations to Sukhi Dhamrait, Aurea Financial Planning, who is the winner of this month’s survey prize draw of £50 worth of Amazon vouchers. Don’t miss out on your chance to win a similar prize by completing the monthly survey. Keep an eye out for our email. And if you have any questions that you’d like us to pose to your fellow paraplanners, just fill in the section at the end of the survey form. 14 www.professionalparaplanner.co.uk | March 2020
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Trusts @profparaplanner
REGISTRATION
on TRS under the current process in place
for 4MLD and tax registration purposes.
The penalties for failing to meet these
RULES
deadlines are also still to be confirmed, but if
deemed to be deliberate, could be ‘financial’.
Whilst the latest proposed deadlines
now give trustees more time to register
Trust registration deadlines are changing than suggested before, advice teams need
and paraplanners need to know about to consider whether they have processes
in place to cope with the changes. It seems
them, says John Humphreys, inheritance fairly clear that trusts set up by families for
tax specialist at WAY Investment Services estate planning and to pass assets inter-
generationally will need to register. There is
O
little point in delaying this for new trusts. It
n 10 January 2020, the Fifth may also take some time to track down some
EU Money Laundering older trusts, and time has a habit of flying.
Directive (5MLD) came Perhaps this consultation could serve as a
into force in the UK, with an trigger for advice firms to discuss and review
objective to ensure that the with clients any trusts they may hold and
UK’s anti-money laundering and counter possibly even have forgotten about.
terrorist financing regime is ‘up-to-date, From the point of view of Trustees, their
effective and proportionate.’ already-extensive list of responsibilities is
As part of this, the rules and deadlines getting longer. As well as reading the latest
for registering trusts online with the Trust still have to register, trusts that consist solely consultation document, they need to ensure
Registration Service (TRS) are set to change. of pure protection policy with payment not compliance with the Trustee Act 2000,
Previously, Trusts only had to register with made until death or terminal illness won’t which is very prescriptive and includes
the TRS if a reportable tax event occurred. have to – as it would be disproportionate dealing with all payments to settlors and
Under the new regime far more trusts will to the risk of them being used for money beneficiaries, trust expenses, accounts
have to register, even if there is no tax to pay. laundering or terrorist financing. The same and tax returns, meeting tax reporting
The challenge for advice teams is that the applies to charitable trusts, and registered requirements (including exit and periodic
precise details of which trusts will need to pension schemes held in trust will also be charges) and be diligent. Included in this
register and definitive deadlines have not exempt unless they aren’t registered with list of responsibilities, Trustees are also
yet been confirmed. Although 5MLD is now HMRC. The consultation document has also expected to conduct regular investment
law, the implementation of the new rules suggested a completely new set of deadlines reviews, with a suitably qualified and
for trusts has been delayed, and instead a to those stated before: certificated investment adviser.
new technical consultation* was opened by • Trusts in existence on 10 March 2020 must Professional Trustees are well equipped
HMRC on 24 January. Interested parties had register by 10 March 2022. for this, but it will be more of a challenge
until 21 February to provide comment. • Trusts set up after 10 March 2020 must for some lay trustees. Existing Trustees will
Initially, it seemed that a vast number of register within the later of 30 days or need to be sure they are prepared and willing
trusts would be affected by the new rules, 10 March 2022. to take on the new responsibility and fulfil all
with the Association of Taxation Technicians • Trusts set up on or after 10 March 2022 of their fiduciary responsibilities; this may
(ATT) estimating that the number of trusts will have to register within 30 days. be a trigger for them to consider employing
on the TRS system could increase up to • Once registered, trustees will have 30 the services of professional trustees instead.
ten-fold from 200,000 to two million. The days to update any changes. In the meantime, families setting up new
latest consultation document suggests that • Until 10 March 2022, all trusts that incur a trusts need to think very carefully about
although trusts without a tax liability will tax liability for the first time should register their choice of Trustees. Likewise, families
considering appointing friends or family
The challenge for advice teams is that the precise members as Trustees should question
whether it is fair to put them in that position.
details of which trusts will need to register and Advice teams need to keep on top of
definitive deadlines have not yet been confirmed this. Trustees need to keep abreast of
developments and listen out for new
announcements. Professional Trustee
services will be doing so already, for lay
trustees it may be a little harder.
March 2020 | www.professionalparaplanner.co.uk 15Special Report
TEAM LEADER
One of the biggest issues raised by
individuals when moving from paraplanner
to manager was that they were promoted
SEMINAR
into leading a team but with no structure or
support in place to help them do so, in some
cases including a defined job description,
meaning they had to learn as went along.
Professional Paraplanner’s first Team Leader “I was thrown in the deep end. It was very
tough and a huge challenge,” one delegate
Seminar took place on 6 February 2020. Here said, while another described being given the
we pick out some of the highlights of the day and job “and a list of things that needed fixing”.
What is important in this situation,
from the peer-to-peer discussions delegates advised, is not to rush in and
try to address everything from the word
go. Taking a step back and some time to
The Seminar was held under Chatham House around you and, above all and at all times, review the strengths and weaknesses of the
rules allowing reporting of what was said but communicating with those around you. team and planning how you want the team
T
not who said it. Head of HR at Fidelity International to look are good first steps. If necessary,
he Professional Paraplanner Nella Mereu talked though key areas write your own job description, covering
Team Leader Seminar was a for team leaders, such as mental health areas such as management tasks, technical
mix of presentations, practical awareness, “team leaders are often work and training/development. The act
and interactive sessions and best positioned to know colleagues and of getting things down on paper can help
peer-to-peer discussions. Often when something is not right” and the clarify the tasks to be done and which ones
paraplanners become team leaders as part wellbeing not just of your staff but of need to be tackled first.
of the expansion of a firm’s paraplanner yourself as an individual. On a personal level, another clear issue
capability but they receive no formal Interactive sessions were delivered by for those transitioning into a management
management training. The Professional leadership and management development role was their passion for paraplanning
Paraplanner Team Leader Seminars aim specialist Mark Nobbs, who took itself and a “concern” that their new job
to help paraplanners with the transition, delegates through some practical tasks to was taking them away from what they like
their management style and techniques, as demonstrate how teams work together and to do best. “I’m not comfortable with that,”
well as providing the opportunity to discuss how management styles come through one delegate admitted. “It can be difficult,”
issues with their fellow team leaders in a when people have problems to solve. another delegate advised, “but at some
supportive environment. point, you’ve got to step out of your comfort
The Seminar was hosted by Fidelity Peer-to-peer discussions zone. You have to let it go.”
FundsNetwork and delegates heard In the peer-to-peer discussions delegates One way suggested to do that was to
from Jackie Boylan, Head of UK Advisor had the opportunity to talk to several focus on training others as a means of
Platform FundsNetwork on her experiences topics identified as specific to their roles as passing on your knowledge and experience.
as a manager and her insights into what she paraplanner team leaders, including what’s Linked with this issue were two other
termed her ‘non negotiables of leadership’. required of a paraplanner team leader in related ones, not wanting to give up
These included treating people how today’s advice firm; when to stop being a control and “being too nice”. They are
you’d expect to be treated, listening to hands-on paraplanner; becoming a boss; related in that they both resulted in team
others, recognising leadership qualities getting the most productivity from your leaders retaining too much day-to-day
you appreciate in others, being honest team; and happiness in the role. Here we paraplanning work and not passing on tasks
in self-appraisal, having the best people pick up on some of the points raised. they should no longer be doing if they are to
properly manage their team.
Disadvantages were identified as:
There is always someone better than you. • Unnecessary/increased workload for the
Good managers recruit at the next level up team leader.
• Avoidable/increased stress for the
from the role being advertised. That way they team leader.
raise the bar through their recruitment strategy • Time not spent in their role as managers.
• Restrictions on their own development.
• Limiting staff development.
• Lack of staff job satisfaction potentially.
leading to them leaving the firm.
16 www.professionalparaplanner.co.uk | March 2020You can also read
