The PFS Q1 Conference – A paraplanners perspective

Our Trainee Paraplanner David went to The PFS Q1 2016 Conference recently and provided a summary of what was covered on the day.

1. Will 2016 be a better year for financial markets?

Neil Dobson from Invesco Perpetual presented first at the event and gave an overview of the economy.

2015 was a challenging year for investors. With equities, there has been significant divergence across the different global regions and sectors. Fixed Interest Securities appear to be over valued and have struggled over 2015, but have made positive returns over most indices. This has lead to some investors turning to property to seek returns.

In 2016, global growth is expected to be sub par. The US is near the end of the process but other economies – the UK, and then the Eurozone and Japan – are lagging further behind. One thing that is guaranteed about the future is uncertainty.

There is continued speculation of whether there will be more Quantitative Easing in the future. Uncertainty continues about when (or if) interest rates will increase. There are now predictions that interest rates will stay low for a good few years yet.

2. The new dividend tax regime in April 2016

Andy Woollon from Zurich gave a presentation and provides example scenarios on the new dividend tax regime. This will affect many business owners, investors and trustees of discretionary trusts in the UK. It is expected that the impact will be much greater to clients than they may be aware. The following is a summary of is now in place:

• The 10% tax credit previously in place has been scrapped.
• There is a new Dividend Allowance of £5,000 a year, but this will not apply for trustees of discretionary trusts
• Basic Rate tax: from 0% to 7.5%
• Higher Rate tax: from 25% to 32.5%
• Additional rate tax: from 30.6% to 38.1%
• There will be a net dividend approach in the future, rather a gross up approach
• The Dividend Allowance will not reduce total income for tax purposes. Dividends within the allowance will still count towards an individual’s income.

Andy also discussed the new personal savings allowances coming into force, £1,000 for basic rate and £500 for higher rate.

3. There are even more changes to pensions that may happen in the new tax year

Partnership gave a presentation to highlight the changes in pensions that may happen in the new tax year. There is much in the press to suggest people are losing faith in pensions. Following much speculation, the only confirmed changes are:

• All Pension Input Periods now aligned to the tax year, with the standard Annual Allowance at £40,000.
• Tapered Annual Allowance will result in a £1 reduction for every £2 over £150,000. The minimum Annual Allowance will be £10,000.
• The Lifetime Allowance has been reduced from £1.25m to £1m and may be indexed annually in line with CPI from 6th April 2018.
• Fixed Protection 2016 and Individual Protection 2016 can both be applied for from July. There is an interim process available for those looking to crystallise their benefits before then.

In addition:

• There are ongoing talks about a second hand annuity market still happening.
• There are talks about capping exit charges to make the transfer out process smoother.
• The introduction of the LISA has continued to fuel speculation about an eventual change to the pension tax relief system.

4. Are clients who own businesses protected?

A case study was done to give an example scenario of two owners of a business and the implications that would occur in the business on death. Businesses need to consider how they would protect against having to repay loans, what to do when they suffer loss of profits and recruitment for example. The case looked into the various options within business protection.

5. Are you talking to clients in the right way?

Throughout the day, Bernie De Souza gave his words of wisdom on the phrases advisers should use with clients to secure client meetings. In short, he suggests you should slot in the following phrases to help build rapport with clients.

• Well you know how…. (discuss event)
• I’ve just found out…(discuss what happened)
• Would it be okay if…
• So I’ve prepared an agenda, do you want to add anything or is this okay?

This is just a brief summary of the days events, but it was a good mix of technical, updates on the many, many changes, and some softer skills. I highly recommend getting along to one of your local quarterly events if you haven’t already.

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