Answering professionals’ most pressing financial questions

When choosing a wealth manager it’s important to use a company that understands your profession and the financial demands and opportunities that come alongside it.

We know professionals have a lot of questions about their finances and often do not have the time to manage them alone. In this article we wanted to discuss some of the questions we are asked most frequently and offer some guidance on the key factors you should consider.

At what stage will I be able to retire?

Retiring is one of the biggest decisions a person can make. We often say that when you retire that you move from having a ‘river’ of income to a finite ‘lake’ of wealth. This lake must be big enough to meet your needs in retirement. This means careful planning is needed to ensure you don’t run out of money.

A good starting point is to think about when you would like to retire and what that retirement will look like. Will you take on non-executive directorships, which would also provide an income, or will you choose to do something different, such as charity work, study or leisure time?

Do you understand, and have you factored in, any retirement packages you may receive? These packages may reduce the need to take income from your investments, or delay when that happens.

Consider your current expenditure and any future one-off spending, which could include paying school and university fees, house deposits, weddings or other expenses for your children and grandchildren.

A good way to plan is by using cashflow forecasting. We regularly do this with clients and this planning should include all your income sources and expenditures, while also leaving money aside for any contingencies.

We sometimes find that people engage with us as little as six months before retirement, but for the best outcomes we recommended starting this process at least five years in advance of your desired retirement date. This means you have time to make changes when you still have years of your working life remaining. We also recommend involving your family in these conversations. You should discuss their plans to make sure their views are incorporated into any wishes.

How do I make the most of my balance sheet?

Cash is a big consideration for a lot of our clients. Many wish to remain liquid while maximising short-term returns over the next one to three years. This is because people often have large upcoming expenditure they need to prepare for, such as school fees.

You may also be in a position where you need to hold cash for tax bills, but are you getting the best rate possible? Are you disciplined in managing where your savings are held and moving if your rate becomes less competitive?

We recognise that cash management can be labour intensive, which is where Rothschild & Co comes in. We recognise that our clients often don’t have the time to manage their cash portfolio, and we can help make life easier by offering cash management services that include laddered cash and gilt portfolios. We are also able to offer services in multiple currencies to make life as simple as possible.

I don't have the time to think about this. How can you help?

We understand that it can be difficult to find the time to manage your finances alongside your busy work schedule. That’s where Rothschild & Co can assist. We have great experience working with people in your industry and we understand the time pressures and opportunities that come alongside your job.

Our solutions are relevant to you and others in your industry. We are not a mass market provider, which means we understand your circumstances and commitments.

Our aim is to look after your family and your asset base. You should consider basic housekeeping to begin with, maximising your ISA allowance and pensions. We can make sure that you are not forgetting any of the basics and then deliver a strategy that helps you preserve and grow your wider wealth in the future. Our support includes bringing you relevant ideas when appropriate. We help take the stress and time out of this equation.

How can I protect my wealth from stock market shocks?

The fact that stock markets rise and fall, sometimes very quickly, is something investors must prepare for. Of course, everyone has their own investment objectives and risk parameters, and this should be considered carefully before you choose to invest.

When we build our portfolios we include assets that we believe will still deliver solid returns, even if the wider market is struggling. We call these diversifying assets, and they are key to our investing ethos. Unlike some other wealth managers in the market, our portfolios are not simply a ‘fund of funds’.

We don’t limit our diversifiers to cash and bonds – we also use alternative strategies, put options and portfolio protection. This means that during challenging equity markets or in unusual market conditions, such as during Covid, our portfolios still have the opportunity to grow.

We often liken this to running a business. We try to prepare for every eventuality and will be able to weather shocks in the market. We do this by ensuring our portfolios are built in a sensible way that will drive returns in a wide range of market scenarios.

Why should I diversify and use a wealth manager?

It can seem like a big step to diversify from private markets to public. But there are many similarities in the way we invest at Rothschild & Co. Our ‘bottom-up’ investing approach can be likened to private equity research. You will find the same ethos behind out investment choices in liquid public markets to what you’re used to in illiquid private markets.

Our team conducts in-depth research into all investments in our portfolio to ensure the companies are aligned with our goals of long term, sustainable growth. Unlike some of our competitors, you are not simply investing in a fund of funds.

Using a wealth manager more broadly can help you take a step back from managing your finances and use your time elsewhere. It also offers you the flexibility to take investment returns in the way that best suits your circumstances. We’re also able to offer Lombard loans against portfolios, which can help with any cashflow or capital call requirements you may have.

The information above is not intended and should not be construed as tax advice. Each investor should seek their own independent tax advice.

Past performance is not a guide to future performance and nothing in this blog constitutes advice. Although the information and data herein are obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by Rothschild & Co Wealth Management UK Limited as to or in relation to the fairness, accuracy or completeness of this document or the information forming the basis of this document or for any reliance placed on this document by any person whatsoever. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, targets, estimates or forecasts contained in this document. Furthermore, all opinions and data used in this document are subject to change without prior notice.