Client Profile: Peter & Mary Martin

Peter is now 57 and looking forward to retiring on his 60th birthday.

He’s always regarded himself as an astute investor but in the last few years there has been a sizeable fall in the value of his investments and pensions.

As his retirement date approaches Peter is concerned that a further fall in his portfolio may delay his retirement.He was looking forward to enjoying several holidays a year with his wife, Mary and spending more time with his grandchildren and is keen to ensure this still happens. Only he’s concerned about making a wrong move at this crucial time.Also, after discussing the subject with his Accountant, Peter is concerned about the Inheritance Tax (IHT) bill his family could be potentially faced with in the future.

They understand they can make gifts to reduce tax but are concerned about leaving themselves short of funds later in life. They would like to consider alternative options but are unsure what the correct solution is for them.

What we did:

  • We discussed with Peter and Mary their goals and aspirations with regard to their future.
  • We completed a risk profile questionnaire and calculated the annual ‘personal rate of return’ they would require from their portfolio to achieve their goals.
  • To avoid unnecessary risk the portfolio was moved into more suitable low risk, low cost investment funds.
  • With the use of suitable trust planning we reduced their potential IHT liability whilst providing access to income and capital.
  • We prepared a step-by-step Financial Plan which clearly demonstrated the actions they needed to take to meet their objectives.
  • We used a lifetime cash flow projection to show Peter and Mary how their new strategy has been designed to ensure they never run short of money.

The results?

  • Peter and Mary are relieved that their original retirement plans remain on track
  • They are reassured that by, taking less risk, their future is more secure.
  • They are content that their IHT issue has been addressed and will be kept under review

The challenges

  • Gain a clear understanding of Pete and Mary’s income needs, both now and in retirement.
  • Determine their feeling about investment risk following their recent experiences of the investment markets.
  • Create an investment strategy aimed at delivering the returns they require to keep their retirement plan on track.
  • Balance the need to preserve income for Peter and Mary with the requirement to reduce their future potential IHT liability.
  • Agree with Peter and Mary their ‘Number’ – the amount of money they will need to accumulate to allow them to maintain their ideal lifestyle in retirement.

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