Tony and Helen

Tony and Helen

Tony, Helen and their two young daughters moved back to London after living in Hong Kong. The family were looking to take financial planning more seriously. Having worked with a financial adviser since graduating, Tony was looking to find someone he could trust to have his and his family’s best interests at heart.

 

Client since 2007

I appreciate that Private Capital has a very deep understanding of my family.

I work in fintech on the compliance service team in Europe for a small but growing company that works with hedge funds. Helen works in education and is currently completing her master’s degree, which will hopefully be done by this time next year.

We moved back to London a couple of years ago from Hong Kong. We have two young daughters who are starting school, one has just gone to nursery and one’s going to primary school now.

We’re looking to continue to make our base where we currently are in London. We own our house here, which is good. We probably have a bit too much in the way of outgoings. We have reasonable incomes and a bit of a nest egg tucked away with Private Capital for rainy days and certainly take financial planning quite seriously to make sure that we’re not going to run out of cash, and that we’re going to be able to afford what we need to afford going forward.

 

I think making sure that we won’t run out of cash and we’re going to be able to have a reasonable lifestyle or at least have expectations correctly set.

 

That’s a good question. I don’t think I had an initial need when I started. I probably started 20 years ago when I left university and had my first proper job in London; I got introduced to a financial planner who persuaded me of the benefits of longer-term planning. There wasn’t any specific short-term need at that point, it was more the longer-term planning.

It was certainly an interesting journey. You come across some financial planners who are more dependable and trustworthy than others, so I’m sure I made some decisions which in hindsight weren’t the best, but you live and learn. Having made a few different investments in different places, I worked out, at least to a certain degree, what makes sense for me and made sure I could understand what I was buying.

 

Yeah, absolutely. If you have a bit of income and you’re a young person out of college, it’s worth putting a little bit away each month into longer-term planning.

One of the things I’ve become acutely aware of in the last few years since having kids is how quickly and massively your costs increase. Your disposable income basically disappears, so once you have kids, it’s very difficult to save, compared to before when I could save a lot more.

Yeah, I think so. Being a bit of a geek, I’ve also done my own little projections, which have helped.

It helps to kind of think longer term; your whole life. It’s very easy to think not even a couple of years ahead, but when you’re planning over 80 years, or whatever it happens to be, it’s quite tricky to do so without the proper process in place.

 

Yeah, so I guess for me it’s gone hand in hand with getting married and having kids. Having a will was something I didn’t give that much thought to, but it all seems fairly normal now; having wills and powers of attorney in place is just one of those things that you should get done. Having the reminders to do it is very helpful.

When it comes to insurance and putting all of that into cash flow planning, it was quite an interesting exercise. For example, if I disappear or I’m not around or I don’t have my earnings anymore, and Helen and the kids are left by themselves, what would that really mean over the many years to come? Seeing how insurance can help with that was certainly an interesting planning exercise and persuaded me and Helen to get some insurance, which I wasn’t planning to do.

 

It is a priority for sure. I’d say it’s a bit of an ongoing process at the moment.

Number one is figuring out where the money is actually going every month. I ended up doing that on excel rather than a program, but yeah, not too painful. So that’s where I currently am, working out where the money is going.

When we moved back to England, I let it slip for a while because I knew there would be a whole load of one-off costs, but it’s time to work on that a bit. Then it’s a matter of organising them and making sure that we’re not overdoing it in particular areas and pulling back in areas where you reasonably can. But I’ve got more work to do there!

 

Definitely. The short answer is it’s been very helpful and very beneficial.

After I left university, I worked in London for a couple of years, then I moved to Sydney and then to Hong Kong for a bit. I was then in Tokyo for a few years and then back to Hong Kong again, and then almost 20 years later I moved back to London.

Whilst I was in Asia, I had a reasonable salary, a bit more in the way of disposable income, and I saved a fair bit through Private Capital. I benefitted from the more favourable tax rates in Hong Kong and built up a bit of a nest egg there.

I was relatively lucky with a few property investments in Hong Kong, albeit with some very expensive costs in the city, you don’t have to worry about the tax regime because it’s so easy and not very high. At least for me, it didn’t really register in a lot of my thinking and my financial decisions. But that changes massively if and when you decide you want to move back to the UK.

I guess I was fortunate in a way that I had the right people talking to me many months, if not years before the actual decision to move back.

Buying a house in the UK to move back to with the family was a very significant expense. I had owned property in Hong Kong beforehand and wouldn’t necessarily have known that the stamp duty in the UK when you buy a house is significantly higher if you own another property anywhere else in the world.

Obviously, I don’t read UK tax reports very often, so I didn’t know that, but if you have people advising you, then you know you can keep your Hong Kong property if you want, but then you’ll be spending an extra 3% stamp duty. So then you have the decision: do you sell the other property you own before you buy the one in the UK? These decisions have to be thought through properly.  You need a lot of time to put things in place, and if you have a set deadline on when you’re moving back to the UK and you haven’t thought about it 6 -12 months in advance, then you’re going to get stuck.

That’s a very obvious example, but there are a number of other tax-saving examples such as pension carry forward. If you happen to have a pension when you left the UK, with all the ISAs and other yearly pension contributions, you can use capital gains tax allowances. I had very little knowledge of this stuff.

Being able to tie in the investments I had in Hong Kong with those in the UK has been very valuable. Being able to put the lump sum investments I had in Hong Kong into an efficient tax wrapper so that I don’t get charged capital gains tax or income tax unnecessarily going forward has undoubtedly saved me a fair bit of cash.

 

I think so. I think knowing that there’s a tried and tested, relatively scientific method behind the whole thing is reassuring, and you don’t need to think about buying /selling on a weekly, monthly or yearly basis. There’s a process you put it in place, and you can follow it until you’ve retired or it’s time to pass on your money through inheritance.

It’s good to know that you don’t have to make those buying and selling decisions so much. Seeing the reduced costs, the historical returns and expected future returns being pretty reasonable kind of saves a bit of stress, I would say. If you believe in the process, you put your money away and don’t think about it.

It’s still relatively early days of having my investments in the passive investment style, a couple of years, which isn’t very long in the whole scheme of things, but I’m confident over the next 10-20 years that things will work out. With the whole Covid bounce it’s been interesting, but the ‘stick-with-it’ mantra has held very true.

I had no qualms about doing exactly that, even when the markets were down 25% and as you know. I saw it as an opportunity to put more in, whereas I’m sure some people would be thinking the opposite and wanting to take it out and missing out on the bounce.

 

It definitely works from a financial planning point of view, but I do value the relationship side of it very highly. If you do manage to have beers together and just chat about family and non-work or financial planning stuff, it kind of helps.

I appreciate that Private Capital has a very deep understanding of my family in general. Not just my immediate family, but my extended family, which helps quite significantly.

One of the other things which is also worth mentioning is that I struggled with initially when I first got into planning my lifelong finances in terms of finding someone you can actually trust to make the right decisions for you. As I mentioned earlier, I made a few decisions which in hindsight weren’t the right ones; the advice I was given was not necessarily based on the benefit to me, but based on the benefits to the person giving me the advice.

When I got the relationship going with Private Capital, that was one thing which I found quite different to the relationships that I’d had before.

You have to spend time to build up that trust, but once you have it, I now feel that when I get made a recommendation by Private Capital, I don’t necessarily need to look into all the nitty-gritty and the minute detail to find out if it’s a benefit to me or Private Capital more. I know the answer already. Whereas with other firms, it’s definitely been different. That’s something for me that I value very highly.

 

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