What is financial independence? It’s creating the financial infrastructure that will support the lifestyle you want for you and your family both during your working career and, more importantly, in retirement. This is ultimately everyone’s goal. However, many people in the UK spend more time planning their summer holiday than they do planning their financial future.
Bowmore Wealth Group is an independently owned wealth management business with both in-house chartered financial planning and investment management. Bowmore are passionate about helping individuals and business owners to not only invest successfully but get themselves properly financially organised so that they can optimise and achieve the most from their assets.
Focusing on the core services – cash flow planning, generating income in retirement, building wealth through investments, school fee planning, passing wealth onto their next generation (Inheritance Tax Planning) etc – combined with increasing clients’ financial awareness to demonstrate why financial planning is so important, is what has been Bowmore Wealth Group’s USP in becoming one of London’s fastest growing wealth management businesses.
Charles Incledon, Client Director and Chartered Wealth Manager at Bowmore Asset Management, said:
“Building wealth can be relatively straightforward, and you don’t necessarily need a financial planner to do it. However, like with most things in life, there are always smarter ways of doing things. What a quality professional planner will do is dramatically speed up the process of building wealth and therefore achieve your financial objectives sooner than you originally thought possible.”
Charles referenced three key disciplines to building wealth:
Paying yourself first: you would be surprised how many people go from one pay cheque to the next without actually paying themselves! As soon as money hits their bank account, they are busy putting money in other people’s pockets rather than their own (spending) and before they know it, they get to the end of the month and there is nothing left for themselves. You must be disciplined here if you want to build wealth.
Understanding tax subsidies: being smart in how and where you hold/invest your money. By no means are we talking about avoiding tax, just making use of the tax concessions currently available. This is an area that has become quite complex, but as an example, if an individual wants to save for retirement; pension is a very effective option. For a higher rate taxpayer, the net cost of saving £40,000 into a pension is only £24,000 when HRMC subsidise the investment by the marginal rate of tax you pay. Compare this to investing in an ISA and you are £16,000 better off before you’ve invested a penny.
Finally, understanding compound growth: Albert Einstien famously referred to compound growth as the eighth wonder of the world stating, ‘those who understand it, earn it and those who don’t, will pay it’. As assets grow, the same level of percentage return each year equates to a larger monetary return/value (i.e. a 10% return on £1000 is £100, a 10% return on £1,000,000 is £100,000). Getting your head around compound growth can be the kickstart you need to start saving now.
“Planning is not just for the wealthy,”
said Charles.
“Everyone should have a financial plan regardless of whether they have put it together themselves or had help from a professional. It doesn’t matter how much you have, or how much you earn, there are basic saving and investment strategies that will set you on the path to financial independence and building serious wealth.
“What a good financial planner will do is facilitate and help you to clearly define your objectives and then show you how to achieve them as efficiently as possible. The vast majority of people have all of the answers, but don’t necessarily ask themselves the right questions. Therefore, guidance to actually make the right decisions and understanding the subsequent financial impact of these decisions is absolutely key to optimising your wealth. Understanding the impact of a decision before you actually make it gives you the confidence to make good choices and provides the peace of mind you are looking for when thinking about your financial future.”
A major part of a financial planner’s job is educational as people often focus on the wrong things. A good planner should help re-frame how people position building wealth in their own minds and what their main focus is. Charles’s background is investment management and he spoke about the fact that many people get hung up on achieving the best possible investment return.
“Lots of people that I speak to, initially, are just interested in whether our investment proposition might be better than their current investment strategy. They see achieving an optimal investment return as the most important factor in building wealth. But the reality is, those that have a proper financial plan that works hand in hand with a well thought out investment strategy, will ultimately build wealth much faster. Why? Tax is the largest drag on personal wealth. Lots of individuals involuntarily pay too much tax without realising it… needlessly giving away wealth that could be building their own financial security. Help on this front will make the investment return pale into insignificance. In other words, an individual with a great financial plan, but sub-standard investment portfolio is still likely to end up better off than someone with no plan. The ideal scenario is you have the best of both and the two are working hand in hand. That’s our job, to make sure this happens.”
Financial planning isn’t like the legal or accountancy profession. Those with a legal matter or accountancy issue often have no choice but to engage with a lawyer or an accountant.
Charles said:
“Unfortunately, people don’t often view a financial planner as essential, our job isn’t like those of lawyers or accountants where, if you have a legal issue, you instruct a lawyer, if you need a tax return completing, you instruct an accountant. People can DIY their own financial planning and investments. Until they’ve had first-hand experience what good financial planning really looks like and the difference it makes, they don’t know what they are missing out on. However, this actually makes the job far more rewarding as more often than not we end up having a significant impact on their life”.
When asked what was the key differentiator for Bowmore, Charles spoke about the firm’s expertise in financial modelling. Bowmore Financial Planning was an early adopter to introduce holistic financial modelling as the foundation stone of its service offering back in 1994. This was a milestone for the business and has been instrumental in its continued growth and expansion.
When asked to describe what financial modelling actually entails for a Bowmore client, Charles had a simple answer:
“It’s applying business principles to personal planning. We work with a lot of business owners, so they find this phrase relatable. When you set up a business, you start with an opening balance sheet showing your current position (assets and liabilities), then you produce a profit and loss account and finally a cashflow projection to ensure you have sufficient capital for the business to remain profitable.
“We build exactly the same but for personal finances and extend the cashflow for life. This allows both us and our clients to understand where they are today and what they need to do in order to get to where they want to be. From here we build the base plan and start to reorganise their affairs to reach their targets in the most efficient way possible and, of course, adjust things along the way depending on circumstances or changes in legislation. What we tend to find, is that once someone has everything laid out in front of them and they can actually visually appreciate their current position, they fully buy into the process. This base plan also acts as a reference point for plotting the progress they make over years to come. A few simple tweaks to the model will show what a massive difference it could make to their overall wealth in the longer term. Based on this information, we can make a series of well-informed recommendations and off we go, this is the start of their financial planning journey.
“One of the most fantastic things about my job is seeing clients leave a meeting with a new spring in their step, happy that what they want to achieve is possible, and with a plan for how to do it. The whole process can be very motivational”
Bowmore Wealth Group is an independently owned business based in London and Bristol, specialising in financial planning and investment management. Within Bowmore Wealth Group sits Bowmore Financial Planning, a Chartered Financial Planner for private clients, trustees and corporates, and Bowmore Asset Management.
Bowmore Asset Management Ltd and Bowmore Financial Planning Ltd are authorised and regulated by the FCA
The value of investments may go up as well as down and in no way does any of the above constitute advice. Past performance is not a guide to future performance
The tax treatment of certain products depends on the individual circumstances of each client and may be subject to change in future
The Financial Conduct Authority does not regulate cash flow planning.
Neither Bowmore Financial Planning Ltd nor Bowmore Asset Management Ltd are regulated to provide tax advice.
Find out more about Bowmore Wealth Group on 0203 617 9206 or visit bowmorewealth.com
