Eight tips for building a career development plan

Eight tips for building a career development plan

Are you keen to take another step up the career ladder? Whilst it can be tempting to simply do your job well and wait for opportunities to find you, it can mean missing out. Creating a personal development plan with your career aspirations in mind can help you hone the skills you need and give you focus.

A personal development plan should be a written account of the areas where you want to improve, in this case, with a focus on your career. It’s a place where you can detail an action plan and help give your efforts a sense of direction. A well thought out personal development plan should help you recognise your strengths and weaknesses, as well as the actions you need to take in order to reach your goals.

Whilst putting together a personal development plan can seem time-consuming, it’s easy to put off tasks you know you could benefit from without a clearly defined blueprint to follow.

But what should you be thinking about when you start to build your personal development plan? These eight tips can help spur you on to your next career accomplishment:

  1. Look at what you’ve already achieved: We all need some motivation at points and using achievements already ticked off to build the foundations of a plan can help. Looking at the progress you’ve already made can help encourage action to further progress goals. It can help you feel like you’re not starting from scratch, whilst also highlighting where further efforts need to be made.
  2. Set clear, defined goals: When setting out targets, it can be tempting to keep them vague. However, your goals should be defined with a clear time frame of when you want to reach them. This makes it easier to see how small steps you’re taking are leading to a bigger achievement and allows you to track whether you’re on the right path. Be realistic when setting out goals, striving towards the unattainable can be incredibly demoralising.
  3. Remember to be flexible: Goals are important, but so is being flexible. There may be times when you realise, you’re going to fall short or an opportunity comes along that will take you off track. Your career development plan should give you a path to follow, but it isn’t set in stone. Regularly going back to your plan and seeing if it still reflects your situation, aspirations and more is crucial.
  4. Actively look for opportunities: We’ve probably all been guilty of wanting a change, but doing little to encourage it at some point. If you want your career to move forward, you need to take responsibility for this and search out opportunities. This may include looking at courses to boost skills or taking on different tasks at work to grow your skill base.
  5. Keep your CV up to date: Whether an internal or external position has caught your eye, you’ll still need to apply. With plenty of competition in many sectors, job openings may only be accepting applications for a short period of time. For this reason, it’s far easier to keep your CV up to date, as well as a list of achievements, and to hand, ready for when you need it.
  6. Join a professional association: If you’re not already part of one, joining a professional association can be invaluable. First, it can enhance your professional image and may help you stand out from the crowd. Second, associations typically offer excellent networking opportunities that may be just what you need to take you where you want to go. You’re also likely to find resources for keeping skills up to date, seminars and conferences, and job opportunities.
  7. Find a mentor: Seeking out someone within your sector that you admire can help push you forward. A mentor can offer a wealth of experience and an established network to tap into. If you’re at the stage in your career where you can mentor someone in a more junior position, this can help too; from honing leadership skills to showcasing your knowledge. Whether you think you’d benefit from a mentor or have something to offer another person, it’s an excellent way to expand your connections too.
  8. Be prepared to move around: You may be happy within your current work environment. But if you really want to progress you need to be prepared to move where the opportunities are. However, remember not to burn bridges. Always leave on good terms where possible, you never know where the next opportunity may come from.

Remember as you progress through your career to ensure it’s reflected in your financial plan too. Whilst increased salary and benefits may not be your main motivation, they do have an impact on your lifestyle. As your salary rises or you receive bonuses, it’s worth thinking about your long-term financial security. You may decide that increasing investments, pension contributions or rainy-day savings are right for you, for instance.

Exiting a business: Six steps you should take to prepare

Exiting a business: Six steps you should take to prepare

Are you thinking about selling a business? It’s often a difficult decision that comes with challenges. As well as the practical challenges, there are likely to be emotional ones too. After all, it’s your business that you’ve spent countless hours building up to get to this point. Setting out the steps you need to take as you prepare to hand over a business can help you stay focused and increase value.

So, what essential actions should you be considering?

  1. Timing the sale: Deciding that you’d like to sell a business is just the first step, the first question to ask is ‘when?’ Depending on the nature of your business, there may be natural high points each year, if your business is seasonal, for example. As a result, timing could affect the number of interested parties and offers you receive. It’s also worth looking at what’s happening on a wider scale within your industry too.
  2. Getting the financials in order: It should come as no surprise that potential buyers will be keen to delve into the financial side of the business. Make sure your profit and loss accounts, balance sheets and future projections are up to standard. Ensuring they’re as detailed as possible can help the buying process go through quicker.
  3. Organise paperwork: It’s not just the accounts and balance sheets potential buyers will want to see. Keeping other paperwork, such as contracts, organised and readily accessible when needed is just as important. Anything that helps potential buyers get an overview of your business and why they should be interested can be useful.
  4. Creating a ‘how to’ manual: You might know how your business runs inside out. But even those familiar with the industry could find your processes perplexing. A ‘how to’ guide that sets out how to keep things running smoothly can be invaluable for potential buyers. Detailing how everything works is also an excellent opportunity to consider if you’ve been working as efficiently as possible. Looking at how your firm operates from another perspective could highlight where you can streamline and improve.
  5. Considering potential buyers: Do you know who might be interested in buying your business? Defining the buyer gives you an opportunity to organise paperwork and market the sale in a way that appeals to them. A buyer might be a competitor, businesses expanding into new sectors or an entrepreneur that wants a head start, for instance. These different buyers would all be looking for something different within your business. Taking some time to think who your business is likely to appeal to can speed up the process.
  6. Take a step back: Up to when you start to consider selling your business, you’ve probably put in an enormous amount of work, effort and expertise. However, if you’re a key asset to the success of the business, it could actually hinder the sale. After all, a buyer isn’t going to want to purchase a firm that isn’t going to be as profitable once you hand over the reins. You need to take a step back and demonstrate that the business can still run as efficiently when you’re not there.
Planning for the next stage of your life

When you’re selling a business, it’s often the case that business owners focus on this. But planning for your own future is just as important. Taking time to define what you want to achieve after the sale of your business and the lifestyle desired can mean making decisions that are right for you.

By starting with aspirations after selling a business, you can build up a picture of how much money you will need to achieve this. As a result, taking this step as you prepare to sell can help you reconcile the figure with how much your business is worth. It can help you understand what’s realistic and inform decisions. You may decide to accept a lower offer than your original valuation, for instance, knowing that it’s enough to fund aspirations rather than hold out for a higher price that could take months to come, if at all.

If you’re in the process of selling a business and want to understand how it’ll affect your financial future, please contact us. Our goal is to give you confidence as you embark on the next journey, whether you plan to kick back in retirement or embrace entrepreneurial opportunities again.

Why you should link lifestyle goals to a financial plan

Why you should link lifestyle goals to a financial plan

When you think about the goals you hope to achieve, do you have a clear plan in place for the cost of doing so? Without a blueprint to follow, it can become all too easy for goals and opportunities to pass by whilst focussing on the day-to-day.

You might have a range of goals that you’re working towards, but it’s likely that at least a significant portion of these depend on your finances too. Whether you hope to support children through university or want to start retirement by travelling to exotic destinations, it’s money that will help you tick off these lifestyle aspirations.

Linking lifestyle goals with your financial plan has numerous benefits, including:

1. Motivation

We’ve all set out a goal with the best intentions, only for the steps needed to reach it to slowly fall down our list of priorities. Whether you hope to make regular contributions to savings accounts, overpay the mortgage or boost your pension, without linking it to a goal it’s easy for it to be forgotten about.

Linking it to a lifestyle goal can provide you with the motivation needed. Making a sacrifice now, knowing it’s going to fund your dream to give up work can spur you on. Knowing that retiring early means keeping on top of finances can encourage you to engage with pensions and other assets more frequently.

2. Assessing how realistic they are

You might have a grand plan, but is it realistic? Working towards a goal that isn’t going to be achievable can lead to disappointment. When you’re setting out goals, taking a look at your financial situation can help you see how realistic they are. You might find you need to scale back or alter plans in some way, but, on the other hand, you may find you’re in a better position than you thought, and you can start dreaming bigger.

3. Put them into context

On top of understanding how realistic your goals are, the process can also help you put them into context. Whilst you might be hoping to pay off your mortgage ten years early, how will this positively influence your retirement plans, for instance? The answers can provide you with financial motivation to continue working towards the bigger picture. Alternatively, if you knew spending your savings on travelling for an extended period of time now would have an impact on your long-term income, would you still do it? Putting goals into context can help you set out a blueprint that brings together multiple aspirations covering the short, medium and long term.

4. Confidence

Being able to track your progress and refer back to your initial goals, with an idea of how financial steps will help fund them, can boost your confidence. Sometimes, the effort you’re taking towards goals can seem abstract and there may still be concerns about how likely you are to reach them. But knowing you have a financial plan in place to support them can give you peace of mind when it’s needed.

5. Prepare for the unexpected

No matter how carefully we plan, obstacles and challenges will come our way. Linking your goals to your overall financial situation can help you reduce the impact of these. Building up a financial buffer can help absorb unexpected costs, while other steps, such as diversifying investments, can keep you on track even when things outside of your control happen. It’s not possible to predict what will happen in the future, but considering possibilities can help you create a robust plan.

Financial planning puts your goals and priorities at the centre of a financial plan. It’s an approach that can help you improve financial security and build the lifestyles you want, to discuss your aspirations, please get in touch.

The effect the media has on your financial decisions

The effect the media has on your financial decisions

In the digital age, it’s impossible to escape the media. But you might not realise the influence it’s having on your financial decisions. Often, it’s subconscious, but being aware of the impact it could be having mean you’re in a position to better understand the decisions you’re making and ensure they’re right for you.

The news and media aim to sell. And, as a result, it often sensationalises headlines and content to catch your attention and draw you in. When reading the financial section of a newspaper, how many times have you seen the words ‘dive’, ‘crash’ or ‘plummet’ to describe a fall in share price that is relatively short-lived? It’s the same story for shares that have performed well.

It’s not just the financial sections of media that may have an impact on how you view financial decisions either. Headlines on the state of the economy, which industries are fast growing, or challenges on the high street, for example, could affect your decisions. Whether you read the news in the paper or use social media to keep up to date, it can be challenging to filter out the sensational news and understand what matters to you.

Does it really have an impact? You might feel as though you’re rarely influenced by the media when making decisions, but it has probably happened at various points throughout your life, for instance:

  • After seeing multiple sources citing that the economy was suffering, you decided to slow down investment deposits and instead hold savings in cash. If a slowdown did come, you might have felt satisfied that you’d minimised the impact. However, typically, investments outperform cash over the long term and media influence may have actually meant you lost money.
  • Alternatively, after seeing several news stories looking at funds that have outperformed or individuals that have made their fortune through investing, you may be tempted to take on more risk. Seeing regular media sources claiming how others have secured above average returns can make you feel it’s more likely to have than the reality.
The solution: Financial planning

So, what can you do about the media influence on your financial decisions? Financial planning can offer a solution for five key reasons.

  1. Bring the focus back to you: Often in the media, stories will be conflicting. Differing opinions and outlooks mean that people will have very different views on the best financial steps to take. This is because which route is best for you will depend on a whole range of personal circumstances. Financial planning helps bring financial decisions back to you and what you want to achieve.
  2. Ensuring regular reviews: Aspirations, opportunities and risks all change over time, and this should be reflected in your plans and decisions. Engaging with a financial planner on an ongoing basis means you can take advantage of regular reviews to ensure you remain on track and bring up concerns. So, if you’re worried about how the economy is performing and the impact on investments, for example, a review can either ease your concerns or lead to adjustments where necessary.
  3. Visualise the long-term impact of decisions: When making a financial decision, it can be difficult to comprehend the impact beyond the immediate. For example, reducing the amount you put into your pension may free up some extra cash now, but what impact will it have had in 30- or 40-years’ time? Through using cashflow planning tools, financial planning can give you a visual representation and put decisions into context with long-term aspirations.
  4. Offering an outside perspective: Media influences can be hard to recognise in ourselves. You may make a subconscious decision, believing it’s right for you, when an alternative would be better suited. Working with a professional financial planner means someone else takes a look at your plans. Another pair of eyes and a different perspective can be hugely valuable when weighing up what you should do.
  5. Confidence: It’s important to have confidence in your overall financial plan and the decisions you make. This is what financial planning should aim to achieve. With a plan that’s tailored to your short, medium and long-term aspirations, it can help block out some of the noise and influence from the media, which may not be right for you.

If you’d like to discuss your financial plan or concerns you may have with a professional, please get in touch.

Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Trusts: What are they and what are they used for?

Trusts: What are they and what are they used for?

A trust may be one of those financial tools you’ve heard of but know little about. In some circumstances, they can be an excellent way to help manage assets and reduce tax liabilities. However, it’s important to understand what they are and where setting up a trust can be useful before proceeding.

What is a trust?

Even the basics of a trust can seem complicated due to the legal jargon used. But the principle is relatively simple.

A trust is simply a legal arrangement for handling assets to one or more people or a company (trustees) to control on behalf of one or more people, known as beneficiaries. Whilst the trustees have control of the assets, they must act according to rules set out by the person that set up the trust (the settlor) and with the interests of the beneficiaries in mind.

Say, for example, you want to ensure a child in your family would be taken care of should something happen. A child won’t be able to take control of an inheritance, but you may not want to hand over money intended for the child to another adult without being able to stipulate how it can be used. A trust allows you to set out some rules and have peace of mind that the trustee must act in the interests of the child.

Many different assets can be placed in a trust, including money, investments or property.

There are many different types of trust, which may have different advantages depending on your needs. Among the most common types of trusts are:

Bare trusts: As the name suggests, these are the simplest types of trust. The beneficiary has the absolute right to the assets within the trusts, as well as any income they may generate. Whilst, the trustee will take responsibility for managing the trust’s assets, they have no say in how or when the assets or capital is distributed.

Discretionary trusts: This is where you give the trustees the power to decide how to use the income assets which the trust generates. How much power they have is stipulated by the settlor in a letter of wishes. They may, for example, have the power to decide the portion of income that is paid out, which beneficiaries beneficiates will receive income and how frequently disbursements are made.

Interest-in-possession trusts: In this case, a beneficiary has the right to receive an income generated by the trust’s assets or the right to use assets it holds. This can be for life or for a defined period of time. For instance, a beneficiary may have the right to live in a property that is held in trust until they die.

Settlor-interested trusts: If you or your spouse or civil partner will benefit from the trust, this is known as a settlor-interested trust.

Mixed trust: This is an option that blends multiple types of trusts. So, a portion of the assets held in trust can be set aside as an interest-in-possession trust, whilst the remainder can be treated as a discretionary trust, giving trustees greater control over a portion of the assets.

The above are examples of just a few of the types of trusts available. There are other options, which may be more suitable for your circumstances if you’re thinking of using a trust.

When can using a trust be useful?

There are many instances where a trust can be a useful way to hold assets, including:

  • Providing certain conditions are satisfied, assets held in trust aren’t considered part of your estate. This means they will not count towards a potential Inheritance Tax bill when you die.
  • Having greater control over how and when assets are distributed after you die.
  • Preserving the assets rather than splitting them up between beneficiaries. This may mean the wealth you’ve accumulated is able to grow further and still benefit loved ones.
  • Holding and managing assets for people that are not ready or are unable to do so themselves. This may include children or vulnerable people.
Setting up a trust

If you think that setting up a trust is right for you, it needs to be a carefully considered decision, from both a financial and legal perspective.

Once a trust has been set up it may be impossible or very difficult to reverse the decision. As a result, it’s vital that you ensure it’s the right choice for you financially before you take any further steps. Ensure you look at the medium and long term when assessing how appropriate a trust is for your financial situation. It’s also important to note that beneficiaries may pay tax on distributions they receive, this may play a key role in understanding if it’s a good idea for you.

From a legal perspective, a trust needs to be precisely worded. For this reason, you should use a solicitor to help you set it up. You can expect solicitor fees to be around £1,000 or more, though this will depend on your personal situation and the complexity of the trust. It’s a fee that could save you from making costly mistakes.

If you’d like to discuss the financial merits and drawbacks of a trust with your situation in mind, please contact us.

Please note: The Financial Conduct Authority does not regulate wills, trusts, tax or estate planning.

How to make sure your pension lasts a lifetime

How to make sure your pension lasts a lifetime

Thousands of retirees are shunning Annuities when they reach retirement age. Instead, they’re taking advantage of the opportunity to access their pension savings flexibly. It can be a fantastic way to match your income and lifestyle, but figures suggest many are withdrawing unsustainable amounts.

There are many benefits to taking your pension flexibly. However, you need to keep in mind that you’ll be in control of when withdrawals are made and at what point it may run out. If it’s an option you go with, ensuring sustainability and building an income stream that will last a lifetime is crucial.

How much are people withdrawing from their pension?

The latest figures from HM Revenue & Customs (HMRC) indicate the average pension withdrawal in the UK is £7,254 each year. That may not sound like a lot, but when you consider the average pension entering drawdown is between £80,000 and £123,000, it’s a sizeable chunk. This means the average retiree using Flexi-Access Drawdown is accessing their pension at a rate of between 6% and 9% annually, far higher than the recommended percentage.

Of course, the figures only give a snapshot of the state of pensions across the UK. For instance, retirees may be running down smaller pensions or know they have other sources of income or savings to fall back on. However, overall it suggests pensioners are taking too much too quickly out of their pensions.

What is a sustainable amount to withdraw from pensions?

The general rule of thumb that’s often cited in response to this question is 4% annually. But given increasing life expectancy, some people suggest it should be lower than this to ensure long-term sustainability.

In fact, research indicates that withdrawing 4% a year means there’s a 25% chance that a pension will be completely depleted within 30 years. It’s not uncommon for modern retirees to spend 30 or 40 years in retirement. If your pension was depleted and you had another ten years left to live, would you be able to cope financially? For this reason, it’s important to understand what’s sustainable for you, whilst balancing it with aspirations.

There’s another problem with the often mentioned 4% annually figure; it assumes retirement spending is static.

Retirement today is rarely linear. Depending on plans, there’s likely to be points where you’ll take more or less income to reflect lifestyle changes. Perhaps you’ll spend more in the first couple of years of retirement, fully enjoying the extra free time you have, before settling into a more relaxed lifestyle that requires a lower income. However, ten years down the line you may decide to provide financial support to family, book a once in a lifetime holiday or take up some form of work, changing the amount you need to take from a pension. As a result, defining a sustainable withdrawal level is often far more complex than it first appears.

Making your pension last a lifetime

Whilst calculating a sustainable level of income to withdraw from a pension can be difficult, it should be considered essential if you choose to use Flexi-Access Drawdown. So, what can you do?

  • Consider longevity: No one wants to think about dying, but life expectancy plays an important role in pension planning. Thinking about how long you’re likely to be in retirement for is a step in the right direction for making sure your pension lasts a lifetime. It’s worth noting here that many people in their 50s and 60s underestimate their life expectancy, potentially placing them in financial difficulty in their later years.
  • Think about your ideal lifestyle: As mentioned above, some retirees will see their required income rise and fall throughout their life. Having a rough idea of the lifestyle you want and whether it’s likely to change as the years go by can help you plan for these peaks and dips. Taking out more at certain points may be viable if you reduce income at other times.
  • Frequently review plans: Whilst the above is important, plans can and do change. What you want from retirement now may turn out to be vastly different from what you want in five years. For this reason, it’s essential to keep coming back to your withdrawals and value of pensions.
  • Maintain some investments: In the past, it was common to lower investment and risk as you entered retirement to reduce exposure to volatility. However, investing can be a way to deliver returns on a pension, increasing how much can sustainably be withdrawn. When you look at how long retirement will last, it’s likely you can take a long-term investment approach with at least some of your pension savings. Of course, investing needs to be weighed up with other areas of finances, as well as overall attitude to risk.
  • Plan for scenarios out of your control: The unexpected can still happen in retirement. What would you do if investment volatility meant pension values dipped in the short term? How would you pay for an unexpected, large bill? Could you cover the cost of care? Building some leeway into your financial plan and withdrawal levels to cover the unexpected can make your strategy more sustainable.
  • Work with a financial adviser: It can be hard to understand how your wealth will change over time, and numbers on a page can offer little context. Working with a financial adviser to discuss your initial retirement plans and reviewing regularly can provide you with a plan you have confidence in. Tools like cashflow planning can also help you visualise how different withdrawal rates will have an impact.

As you approach retirement, it can seem like there are many complicated decisions to be made, not least how much to withdraw from your pension. We’re here to offer you guidance and support as you plan your retirement finances in a way that suits your aspirations, priorities and lifestyle.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.