Russ is a self-employed advertising consultant and is married to Clare who is a senior executive in a multi-national chemical company.
Russ’s business has been established for a number of years and has grown steadily. He likes the flexibility of working for himself and has no desire to become a “wage slave” as he puts it.
Clare earns £90,000 per annum together with benefits as per the attached questionnaire. She is a member of her employer’s occupational pension scheme, which is invested in a balanced managed fund. She will receive full pay for the first 6 months of ill-health and 60% of her gross basic salary until retirement age under the company PHI policy. In this event, her employer’s pension contributions and death-in-service benefits would cease.
They would like to retire on their current standard of living when Russ is 59 but are prepared to be reasonably flexible on this date. Russ has made no existing pension provision.
They have two young children and Clare has recently returned to work following a period of maternity leave.
They live in a semi-detached home. Whilst it is adequate for their needs for the moment, they do think they will have to ‘up size’ sometime in the next 10 years or so and expect this to cost about £175,000 in today’s terms. They currently have an interest-only mortgage of £200,000 with an 18-year term remaining. This is on the bank’s variable rate.
Russ and Clare have been saving £1,000 (£500 each) per month into ISAs but they stopped contributions last November whilst Clare was on maternity pay. They are both keen to restart regular savings into ISAs in the new tax year.
Russ is due to receive £72,000 in the next 4 weeks or so as a result of an inheritance from his late aunt. Russ and Clare have no personal life cover or income protection and the death of Russ’s aunt has made them realise that they are mortal and need to look after the children should something unforeseen happen to either of them. Neither Russ nor Clare has yet made a will and they wish to minimise any inheritance tax liability on either of their deaths. They would consider the use of trusts if it was considered appropriate, but would like your advice on that.
Russ and Clare have just started to employ a nanny to look after the children whilst they are at work. The nanny is paid a salary of £1,100 per month.
Clients’ Attitude to Risk
Mortality and morbidity risk
How concerned are you about the risk of financial loss to you/your beneficiaries/your business caused by:
1. Untimely death?
Both: Concerned.
2. Critical illness/disability?
Both: Very concerned.
3. Medium to longer-term sickness/disability?
Both: Concerned.
4. Needing long-term care in old age?
Both: Not concerned.
Regular Savings Investment Risk
1. Are you prepared to accept that capital/contributions may fall in value and, if so, with how much of your capital can you afford to risk a short term fall in the value in pursuit of medium to long term growth?
Both: Yes, up to 30%
2. Of this amount, how much would you wish to invest in higher risk investments where there may be the prospect of higher returns but also a risk of long-term capital loss?
Both: Up to 20%.
3. To how much of your capital/contributions do you require access and over what timescale?
Both: Retirement when Russ is 59.
4. How much of your capital/contributions do you need to protect against inflation and over what timescale?
Both: As much as possible to achieve objectives.
5. How much of your capital/contributions do you wish to generate growth and if so what rate(s) and over what timescale?
Both: Retirement funds until needed.
6. Does this apply to any special purposes; if not, please explain any differences in approach?
Both: N/A
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