Cash windfall forces entrepreneur to focus on finance
Managing director and controlling share holder of Hyde based Shawston Piping Solutions, Rob Davenport, has for the first time drafted in the support of a wealth manager after the restructuring of his business in 2008.
Sell out
Rob said: “The restructuring involved the disposal of a minority stake in the business to a member of the existing management team and we were working to the tight April 5 2008 deadline so the deal fell within the 10% Capital Gains tax rate as opposed to the new 18%. We met the deadline and the transaction went through on an ‘earn out’ basis meaning I receive proceeds from the sale periodically over a two year period which is far more tax efficient.”
Rob was then left with the headache of what to do with his current and potential windfall investments. “It was such a manic time with the business I didn’t have the time to get my own house in order. I had a real mish mash of investments, and didn’t have a steer on how they were performing with some at a loss.”
Changes
With the first wave of money coming through from the sale, it was a logical time to draft in the services of an independent financial planner to get his personal wealth in order.
“Up until that point I’d been using the private banking arm of a multi national. I’d become increasingly frustrated as I wasn’t getting the level of service I expected for the fees I was being charged. It was almost impossible to speak to my ‘ personal banker’ and get the answers on my policies that I wanted,” added Rob.
Rob had his financial portfolio assessed by an independent wealth manager and it was clear his combination of unit trusts, isas and investment bonds were underperforming the market and as a whole there was no clear objective to his investments.
For starters the chartered financial planner who Rob appointed recommended that the cash tied up in isas and unit trusts with the bank were taken out and amalgamated with Rob’s first tranche from the business re-structure and put into a discretionary fund portfolio.
“A good wealth manager will go back to basics, ascertain your financial objectives, and the amount of risk you want to take. My investments have been simplified and are now not only out performing the market but are far more tax efficient. I can talk to my fund manager whenever I want and I’m far more in control of what’s happening.”
Initially, Rob envisaged this fee based bespoke advise would prove costly. He added; “When I dealt with the bank it very much felt like ‘one size fits all ethos’, but in reality I was paying far more in policy fees and getting no value monetary and service wise back. Having a personal wealth manager sounds grandiose but it gives me far more value for my money.”
The future
As well as his current financial situation Rob was keen to set up some kind of long term financial provision up for his children. As well as taking full advantage of the tax efficient child trust fund he wanted to secure their long term future.
“It was recommended I set up stakeholder pensions for my two children which would give me piece of mind for their future and means there isn’t the temptation to ‘fritter’ all of their provision in their late teens and early twenties. At the same time I was advised to update my will and set up a power of attorney.
“The good thing about this whole process is that it’s made me look at the wider picture of my finances. It’s made me far more focused but equally it’s work in process. I’ve built up an excellent relationship with my wealth manager and I trust that his recommendations give me genuine value”.
