View more on these topics

Value of ongoing advice

It’s in both your interests to bully clients, in the nicest possible way, into having regular financial reviews

How much does it cost to put a child through private schooling for a typical London day school?

I reran the figures recently, and found that my estimates were out of date. The sum is in the region of 200,000. This does not include university education. It is not cheap, which is why many places are supported through financial help.

The costs of fees and living in London were brought home to me by a couple that I saw recently. Stephen and Marjorie are what might be termed an average middle-class couple. Stephen is a partner in a firm of architects and Marjorie works part-time as an administrator for an engineering company. Stephen is a higher-rate taxpayer, earning a good basic income, with reasonable profit-share. Marjorie is a basic-rate taxpayer.

They came to me because they had let their financial planning slip. They felt they were not making the most of their opportunities and had not done as much as they should have to plan for retirement. They felt constrained in terms of availability of cash immediately for future security but wanted to get things in order so they knew what they should be doing.

I recall one of my colleagues saying to me that the three major financial commitments that one has in life are buying a house, saving adequately for retirement and providing for a child’s education.

He said it was possible to do two but to do all three was difficult. I was reminded of this as I looked at this couple. They had three children and they had put them through private education. The youngest is still in the last years and the two older ones have virtually completed.

They had made a decision four years ago to gear up on property and had taken out a mortgage which they were paying. The fact that the mortgage was interest-only put strains on future resources as there was no repayment vehicle.

My initial reaction was “Oh heavens, what on Earth am I going to do?” However, when I started to look at their situation, I could see that they were being realistic in terms of retirement timescales. They are in their early to mid-50s and were not planning to retire earlier than 65. This gave me time to work with.

We could use the benefits that they had already built up in pensions towards the overall planning. From the information they had given me, the state pensions and the final-salary pensions, albeit small in isolation, contributed to half the income that they wanted at retirement. At least we had a foundation.

The pension planning they had outside these final-salary schemes was woefully inadequate. Stephen had about 50,000 in his pension, and Marjorie had no personal pensions. In terms of other assets such as investment portfolios, the amounts were small.

How was I going to wave a magic wand? Particularly as Stephen’s profit-share this year was fully earmarked to finalise the purchase of a partnership share in his firm. This meant we had to look at profits from 2007 and the problem with profits is they are unpredictable.

Given that their basic salaries are still tied up in servicing their mortgage and finalising the education of their three children, the only resources spare had to come from Stephen’s profits.

When I looked at this in depth, I realised that Stephen needs to maintain the same profit-share level. Half needs to be earmarked for retirement planning and the other half to repay the mortgage.

With this in place, plus the return of his partnership capital, I could see that the whole thing was going to fall in place.

What on initial viewing looked to be a hopeless case, turned into a workable solution, albeit one that carries a higher degree of risk than most cases.

The most important message that I had to get across to Stephen and Marjorie was that they need to take their finances seriously and that regular reviews were imperative. Slippage of even one year would put their retirement plans awry.

This is the value of ongoing advice. Much better this discipline and to achieve the retirement they want, than to keep drifting as they were.

Amanda Davidson is a director of Baigrie Davies


BM aims for one-hour remortgage completion

BM Solutions has pledged to provide instant completions on remortgages next year, as the technology battle in the specialist market hots-up. The HBOS lender says it will offer a completion on a further advance within an hour, where it already holds the customers’ details. Edeus and GMAC launched point-of-sale decisions this month, with BM likely […]

Broker bidding system launched for mortgage leads

Mortgage brokers will now be able to bid for leads under a scheme developed by can submit a bid and the higher the offer the more chance they have of receiving the number of leads they want in their chosen area as quickly as possible as the system gives priority to the highest bidder. […]

Widows highlights plight of graduate FTBs

Over half of graduates are unable to get on the property ladder, according to research out today.It found that 53 per cent of graduates are unable to buy their first home, that 62 per cent of graduate first time buyers bought with a partner – 68 per cent of whom would not have the ability […]

Brogue trading

The Positive Solutions directors have a bit of a North-South divide going on, it seems. Executive chairman David Harrison recently had a pop at fellow director Mike Edwards for “being southern and a bit posh”. He explained how on a visit to Newcastle, Edwards was staying at “one of the nicer hotels in the area” […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm