Case study: Foundation

Meet Mr Johnson who is in his thirties and is in the accumulation stage of financial planning. Mr Johnson is single with no children, is working and has some existing investments and liabilities. He has a stable career, with a salary of £50,000 gross per year. This more than covers his expenditure and he has been accumulating cash in the bank.

He approached Crowe Financial Planning as he would like financial planning advice for the following:

• how best to clear his debts
• how to structure his existing investments for long-term growth
• where to contribute his excess income, after expenditure is accounted for 
• how to protect against a loss of earnings.

Mr Johnson has several tax efficient investments which are all managed on differing risk levels and a cash balance of £20,000. He would consider himself a relatively confident investor and would like to focus on higher risk investing during the accumulation stage of his life. 

Initial considerations

Mr Johnson’s main priority is to clear his various debts. High levels of interest are applied to his liabilities, and he is paying £300 per month on the repayments. Mr Johnson has excess cash from his salary each month and has accumulated a reasonable amount of cash savings.

Mr Johnson has started to invest in a variety of investment vehicles with the long-term goal of supplementing his income in retirement. We need to be mindful that any investment into pensions, although tax efficient, will not be accessible until the minimum retirement age. There needs to be some consideration given to savings and investments which can be accessed for emergencies and any large expenditure plans.

While Mr Johnson has some cash savings, he does not have any financial protection to cover lost income in the event that he cannot work. A loss of earnings over the long-term could take a toll on his savings, undermine his financial position and this is an area we considered.

There needs to be an in-depth conversation around risk and Environmental, Social and Governance (ESG) factors. Mr Johnson has stated that ESG investing is a 'top priority' and where possible, he would like to invest in funds involving sustainable infrastructure, such as renewable energy, public transport and best practice construction projects utilising technologies like Cross-Laminated Timber retrofit.

Ultimately, Mr Johnson has sought professional advice as he wants reassurance, professional support and expertise to help him achieve the above.

This will provide the assurance to Mr Johnson, that whatever happens in the future, he will have the right financial foundations in place to be able to accommodate uncertainty.

How did we assist Mr Johnson?

Outcome

• simplifying his investments through appropriate consolidation
• this increased the transparency of costs and performance
• ensuring Mr Johnson has a cohesive investment strategy aligned to his on-going objectives and attitude to risk
• immediate tax efficiency to utilise the allowances available and an ongoing plan to review these each tax year
• arranging for appropriate financial protection policies to cover lost earnings in the event of accident, disability or sickness
• initiated an ongoing advice service to ensure, through improved monitoring and professional advice, the plan remains on track.

Through engaging with Crowe Financial Planning, Mr Johnson was able to retain control of his narrative, ensure the plan is working hard for him and is aligned to his wants and needs. This enabled him to get excited about the next phase of life and continue his journey of saving for retirement.