Ben Smaje, managing director, Kennedy Black Wealth Management
Based in central London, we target a relatively young, affluent client base with a particular focus on City-based professionals.
We want to grow with our clients during their working lives, guiding them towards financial independence and, ultimately, retirement.
These clients tend to be financially literate and technology savvy but also short of time.
Often their personal finances have been neglected as a result. We regularly find ourselves encouraging clients to think about tangible long-term goals for the first time, with the aim of setting them on a sustainable path.
Clients need to realise that responsibility for their retirement is being shifted from government and employers to them, something their parents did not experience.
Once we have established some targets, we provide clients with the investment tools, and hopefully the discipline, to give them the greatest chance of success.
On a more technical note, we have found that recent changes to the annual allowance and the lifetime allowance for pension contributions have presented a number of questions for clients. That gives us a relatively easy opportunity to demonstrate value early on in the relationship.
What’s in your wrapper?
We operate an in-house, passive investment process. This helps us retain total control of the process and the client relationship as well as keeping costs to a minimum. While we manage portfolios on a bespoke basis, we run a range of risk-rated model portfolios that act as the starting point for the client discussion. This helps us maintain consistency throughout the process. While the majority of clients end up in one of the models, a surprising number have requirements that do not quite fit so we can and do deviate where there is rationale for doing so.
Retirement planning tips
1. The easy part is helping clients understand the cost of the task ahead: a few rough calculations can give them an idea.
2. Manage clients’ expectations.
3. Start with relatively affordable contributions and increase them over a period of a couple of years.
4. Don’t ignore the effects of inflation on annuity incomes. Most clients need some sort of escalation.
5. Link investments to specific goals: it helps clients weather market turbulence.
My favourite client case
A client approached me with an occupational pension transfer case where he stood to lose his employer’s contributions if he didn’t complete the transfer within a four-week deadline (by virtue of having not worked with his employer long enough). We completed the transfer in three and a half weeks, getting from the first meeting to the transfer of funds in that time, helping the client avoid a clawback of nearly £20,000.
We only have a handful of clients in retirement, with a pretty broad mix of drawdown pensions, ISAs and other investments generating income alongside annuities and final salary schemes. By pure coincidence, several of the larger at-retirement cases we have dealt with have involved guaranteed minimum pension benefits. Typically, these have been left where they are. The average post-retirement client portfolio size is currently £150,000.