As we move into autumn at a pace that must set some kind of record, the superlatives to describe this year are almost exhausted. Suffice to say, 2020 has not been business as usual for anyone, but even now there are things that remain constant.

For Wealth Matters, one of those constants is innovation. In a sense, it’s a partner piece to the adage that ‘change is the only constant’ – we know things will always change, so our response is to continually learn and innovate. It helps us make sure we can do the very best for you today, while preparing the ground for the future you want.

In this newsletter we’re taking a moment to celebrate the recent slew of exam success right across the team. We’ll also explore what’s known as a ‘bonds first’ strategy in retirement.

Never stop learning

Innovation is of particular interest to Bruce Hallman. A technical paraplanner with a maths degree to boot, he’s gifted with the kind of brain that would make Rachel Riley trip over her numbers.

If Q from the James Bond franchise were to turn his attention from exploding pens to better ways to invest, you’d have something close to Bruce. Always keen to add to his toolkit, Bruce has now passed his R03 and R06 exams from the Chartered Insurance Institute.

Across the whole business, there’s lots going on in the field of personal development. Julian Gilbert and Bruce Nash are studying the STEP exam to gain an advanced knowledge of inheritance planning, trusts and wills. It’s a bit like going from degree level to PhD level in this subject. Elsewhere, Katherine Pautard has passed her final exam to become diploma qualified and as well as her paraplanning role she’s now begun her training as a financial planner. Congratulations also to Carmen Bacaoanu who’s already diploma qualified and has been promoted to Head of Paraplanning.

However, it’s not just about personal development and passing exams. What we’re doing is building and maintaining a team and an environment that works to the benefit of all. It means that colleagues have the opportunity to hone and develop their skills, and we make sure that with every exam success the learnings and knowledge are shared. Team members regularly exchange technical ideas at staff meetings, developing ways to provide better outcomes for all our clients.

A team that openly shares learnings but also values specialist skills is a team that can collaborate effectively while deploying specific expertise where it’s needed. Coherent teamwork with the ability to bring in laser-focused tax expertise, for example, means you benefit from a team that can take in the big picture but get the fine detail right too.

Retirement and a ‘bonds first’ strategy

How you make best use of your investments depends on several factors, including the age at which you choose to retire and the value of your investments at that point.

When you come to retire, it’s tempting to think of your investments as one big pot of ‘money’, but the reality is, they’re still investments. Some of your money will be invested in equities and some in bonds, and there are different approaches and different ratios as to how you can ‘harvest’ these investments in the withdrawal phase – essentially which investments you’re spending first.

One approach to consider is what we call ‘bonds first’, where you take your income from the proportion of your investments that sits in bonds, leaving the equity portion invested. Once the bonds portion runs out, withdrawal then moves to equities. The principle here is to protect the overall value of your portfolio, allowing it to grow as much as possible over the first 10 years of retirement, which is generally seen as the riskiest period.

A bonds first approach can be a more efficient way of taking an income with better outcomes, but it’s not for everyone. For some clients it could result in significantly larger retirement portfolios and is another example of Wealth Matters’ technical ability to enhance your returns. The way you take your retirement income depends on your circumstances, your goals, and how you feel about risk, which is why it’s important to talk it through with us. You can be sure that we’ve stress-tested every approach available, that they’re backed by solid mathematical analysis and due diligence, and that we’ll only ever recommend a strategy that’s right for you.

Investment lessons from 2020

Finally, we’d like to point you to a brand new video introduced by financial journalist Robin Powell. In this short clip, we’ll hear investment strategist Joachim Klement’s take on the lessons of the current pandemic for investors, and his thoughts on long-term investing.

While 2020 has been a high point for the use of the word ‘unprecedented’, Joachim points out that much of what we’re seeing in the markets is actually quite familiar. While the rebound we’ve seen since March surprised many, he points out that what’s happening in the economy and what’s happening in the stock market are two very different things.

He looks at how mistakes can be more helpfully thought of as ‘learning exercises’ – permissible, understandable (but not to be repeated) and how, once again, current events show that thinking long term is the best approach.