Chris Jennings

Are you using all available tax allowances to avoid paying unnecessary tax?

By David Lamb CFP™ MCSI

Nobody likes to pay unnecessary tax but are you taking advantage of all available methods to reduce your tax bill legally?

With careful planning, you can:

  • Reduce your income tax
    • Is your tax code correct, can you claim tax credits and anything from the marriage allowance or pay into a pension? You should also ensure that you meet the tax return deadline and reclaim any overpaid taxes.
  • Gain employee tax benefits
    • These could include a season ticket loan to reduce travel costs, claiming tax free childcare, switching to a low emissions company, or (my personal favourite) buying a bike on the right to work scheme.
  • Cut tax on your savings
    • This can include maximising your personal savings allowance, making the most of your ISA allowance, using the starter rate for savings.
  • Use tax deductible expenses (if self-employed)
    • Reclaiming the running costs of a car when used for business, changing your accounting year end to help with cash flow, carrying forward annual losses to offset against profits from a more successful year.
  • Cut tax on your investments
    • This may include maximising your dividends, using your capital gains tax allowance (and avoid CGT it by investing in ISAs), transferring assets to a spouse, investing in junior ISAs and switching investments to capital boosting investments. For the more adventurous, investing in enterprise investment schemes or venture capital trusts may be an option, along with bank shares through your company.
  • Save property income tax
    • By using the rent a room relief or claiming landlord’s expenses.
  • Save inheritance tax
    • This has been described as a voluntary tax paid by those who dislike their children even more than they dislike the Inland Revenue. A lot of potential tax can be saved with good planning.
  • Make charitable donations
    • Doing this via gift aid can help if you are subject to higher or additional rate tax. The charity can also benefit from reclaiming tax on the donation.

Score your financial planning at

How to tackle the biggest threat to your wealth: inflation

By David Lamb CFP™ MCSI

I have seen many investors with a portfolio that has no real relevance to their lifestyle and ambitions.

Often they have some lower risk investments in deposit accounts and then longer-term investments to provide the best returns they can get, or an income to supplement their pension.

But far more can be done to make your money support your lifestyle.

In a previous blog I discussed having an emergency fund and then investing money in lower risk deposit accounts, to fund expenditure more than income within the short to medium term (up to five years).

Longer term, inflation is probably the biggest threat to your wealth.

I have said that I see an awful lot of people taking more risk than they need to take with their investments, but almost as common as taking too much risk is taking too little risk.

People fear investing money in the stock market so they keep all their hard-earned wealth in deposit accounts, safe in the knowledge that this time next year they will have the same amount plus interest. Unfortunately, they forget about inflation.

If you have £1,000 in the bank this year and earn 1% interest, next year you will have £1,010. Unfortunately, if inflation is 3%, the buying power of that £1,010 is only £979.

Their money is actually decreasing in value but the investor does not see that; however they do see the cost of living increasing.

To counter inflation risk, over the longer term you may need to take a little more market risk, but over the longer term history shows you will maintain the real value of your money.

If you are never going to run out of money, don’t take unnecessary risks to get more money than you need; it may go the other way. Instead, reduce your level of risk to just enough to match – or slightly beat – inflation.

Another consideration when structuring your wealth should be asset allocation and cost.

This often has the benefit of enabling you to ignore the financial industry’s hype. It is an industry full of people making promises they can’t keep, promises about ‘beating the markets, picking the best stocks and promises of high returns. If it sounds too good to be true, it probably is.

Thorough research shows that asset allocation and low charges have much more influence on returns than a fund manager’s skill (which can add more risk), market timing and all the other things the ‘industry’ claims it is good at.

If you would like to know more about evidence-based investing, we have an interesting booklet that we would be happy to email, free of charge. Please email to request a copy.

It is also important to consider how your income requirements change throughout your life.

For example, in retirement you will probably want to spend more in the earlier stages (‘active’ retirement) than the later stages (‘traditional’ retirement) but many people are advised to take a level income throughout retirement. This often means they don’t have enough money when they want to spend it and too much money when they can’t spend it! 

Again, cash flow modelling can help with this.

The main purpose of wealth is to support our lifestyles. As our lifestyle changes, our wealth needs to be able to adapt to those changes. If you do not know how much is enough, you do not have a financial plan.

Keep calm and take a long term view

Investors should not panic about short term down markets following the invasion of Ukraine, and instead take a long term approach.

That’s the clear advice in our Ukraine-Russia Crisis guide, just published on our website.

The 24-page guide looks at emotional v market volatility, risk tolerance and how it is important at times like this to speak to your financial advisor who will take the emotion out of decision-making to tactically exploit market dislocations and rebalance portfolios.

Download your free copy here.

Why you need to plot your lifestyle ambitions before deciding on level of investment risk

By David Lamb CFP™ MCSI

During my three decades in financial planning I have found many investors take far more risk with their money than they need to. This often leads to tears because they have invested in poor performing or risky investments.

Financial advisers need to complete an investment risk analysis before that client invests their money, as part of the regulatory process.

To me, this process is like sticking pins into their clients to find out how much pain they can take and then deliver that pain! The adviser is happy because they have followed the regulatory process and the client is temporarily happy because they will follow the advice.

Most risk analysis processes focus primarily on market risk. This is the possibility of the loss of some of the original capital because the value of investments linked to the stock market can vary and, although the long-term trend tends to be upwards, at any time the market might dip meaning the investment is worth less than was originally invested.

This is probably most investors’ initial concern because of previous experience investing with the wrong risk profile.

But there are other types of risk, including shortfall risk and inflation risk (I will discuss the latter in my next blog).

Shortfall risk is when the amount invested to reach a financial goal at some time in the future may not reach the target amount. Where investments are chosen with no or low risk the returns are likely to be lower or could fall short of the amount targeted.

Knowing how much is enough to give you your desired lifestyle, without the fear of running out of money, will help you determine the returns you need to achieve from your money and therefore how much risk you need to take.

If you are not going to achieve your desired lifestyle with the returns you are earning on your existing investments, you may get closer to your goals if you take a little bit more risk to get those higher returns.

Knowing the returns you need to achieve will help you make an informed decision as to how much risk you should take.

If you are achieving returns above your needs, you can reduce the amount of risk you take with your money.

If you do not know how much is enough, you do not have a financial plan.

You can build your own cash flow model at and score your financial planning at

Why a bucket list is essential if you are to make the most of your life

By David Lamb CFP™ MCSI

As I mentioned in my first blog in this series, financial planning is about ensuring when you have one foot in the grave and look back over your life you have no regrets.

Because by then it will be too late to do anything about it and you will be mourning lost opportunities.

A bucket list is an essential – and hopefully fun – way of making the most of your life. After all, as far as we know we are only on the planet once!

Make a list of all the things you want to do or experience in your life and get an estimate of the cost. Crucially, give yourself timescales – or you may never get around to achieving them.

These can be built into cash flow projections and then your wealth can be structured to fund this list, as and when you want to tick each item off.

A bucket list does not have to be about frivolous or expensive things (we find that seeing the Northern Lights and campervans are the most popular) but could include paying for children’s weddings or house deposits.

Research has shown that buying experiences is generally more rewarding than buying things. Build up the memories for later retirement.

The following example shows why a bucket list before retirement is essential.

Suppose in retirement that top of your list is a very expensive world cruise. Cash flow projections may show that if you retire one year earlier you will not be able to afford that holiday of a lifetime. But if you work for an extra year, it will affordable.

If you retire before making your list and then decide (and cost) what you want to do, that ambition may be unaffordable. You may have regrets about retiring and it may be too late to return to work.

Knowing that you need to work that extra year will enable you to make an informed decision; is your priority to retire early or go on the cruise?

If you decide to work that extra year, at least you know why you are continuing and you will be working for a purpose. That extra year may therefore be less stressful.

Bucket lists are an essential element in financial planning. Don’t look back and have regrets.

Looking down memory lane as we celebrate 30 years in business

The Amstrad PWC 8256

By David Lamb CFP™ MCSI

It is a momentous week for Lamb Financial.  For it’s exactly 30 years since I launched the business which went on to become Lamb and Associates (now Lamb Financial).

And what a week the first week in February 1992 was. In other news, Foreign Secretary Douglas Hurd signed the Maastrict Treaty that formed the EU, Her Majesty The Queen was celebrating her Ruby Jubilee and a certain Kevin Keegan was named Newcastle United’s new manager.

The average price of a house in the UK was £56,500 while petrol cost around 40p per litre. Meanwhile George Michael and Elton John were number one on Top Of The Pops with ‘Don’t let the sun go down on me’.

The cutting edge of communication was the fax machine, while our computer was an Amstrad PWC 8256 that you had to stop from printing if you needed to use the telephone as it was so noisy.

If we needed to obtain a quote or illustration we faxed the life insurance company, who would then post it. Incidentally those illustrations did not reflect the actual charges for the product but merely ‘industry averages’.

Commission disclosure was rightly introduced in the mid ’90s and – even better – in 2012 advisers had to agree their fees with the clients.

At least 20 insurance companies had offices in Newcastle. Now only three names remain, and none have local offices.

Along the way there have been a few scandals – Equitable Life, pensions mis-selling, PPI and most recently the Neil Woodford saga. Many of those involved with these scandals have long since left financial services and, generally, the standard of advice is much higher.

But financial services is an industry geared to selling products and not a profession (yet), and will remain so until advisers do not rely on selling products to earn their income and provide genuine, impartial financial planning advice.

Over the last 30 years I have learned a lot, including:

  • Product providers, by their nature, want to sell products. They are not really interested in financial planning, which should be left to well qualified professional advisers, with no links to the product providers.
  • Most active managed funds do not provide good value for money. A mix of generally passive funds with an asset allocation structured towards the client’s individual risk profile and their objectives is much better.
  • It is not up to me as a financial planner to determine if I provide value for money for my clients; it is up to them. I should ask them on a regular basis if we are achieving this.
  • The financial services industry has brainwashed people to believe that financial planning is about financial products, and many financial advisers do not realise this. Financial planning (especially lifestyle financial planning which we specialise in) is not about money or financial products, but about using a client’s resources – not just their money – to support the way they want to live their lives.
  • There are more important things in life than money: health, relationships, and time being the top three.
  • It is important to focus on a balanced lifestyle. In my early years with the business I regularly worked more than 12-hour days and many evenings, only cutting back when my son was born. Running a business takes a lot of focus and energy. It is important to keep these in perspective.
  • Many of my clients have been with me for much of my 30 years (and many I’m honoured to call my friends, not just clients), and their objectives change over time. When we set out together, some wanted Porsches and Ferraris. When they get older, relationships and time are more important than the flash toys.
  • More people come to us wanting more time than more money.
  • Most importantly, all clients want to know how much is enough?  Enough to give them the lifestyle that they want, without the fear of running out of money, whatever happens.  No financial advice should be given until this is known.

There are many other things that I have learned over the last 30 years that have helped me develop a lifestyle financial planning business that I am proud of.

As a Certified Financial Planner accredited by the Chartered Institute for Securities and Investments – one of four firms in the North East and only 67 nationwide – I am confident that we are now one of the leading businesses of our type in the North of England.

The final lesson? Time flies when you are having fun!

Why financial planning needs to be designed to support your lifestyle

By David Lamb CFP™ MCSI

Many people invest their money to get the best returns possible and the financial services industry encourages this (it helps them sell more products). But within a financial plan it is essential that your investments are designed to support your lifestyle.

The first thing to consider is an emergency fund. The textbooks will suggest holding capital to the equivalent of between three and six months’ income which can be drawn as at short notice.

However, in my experience, a more reasonable amount should be what feels comfortable to the individual, giving some consideration to the cost of an emergency that is not insured.

For those in work, I would suggest a minimum of six months’ salary, to ensure you can continue to fund your lifestyle should you lose your job. This will give you a comfortable period to find a new job.

After ring-fencing your emergency fund, consider what expenditure above normal income you may require in the next five years.

This money should be invested with relatively low risk, but possibly with longer notice period. These funds can be used for funding expenses that exceed normal income, such as holidays.

Longer term funds can be invested to achieve a higher return, depending upon your personal risk tolerances, to provide wealth for retirement or funding bucket list expenditure.

There may be other specific objectives, such as children’s weddings, house deposits or university. These need more detailed planning to take into consideration:

  • The cost today
  • The future value of those costs
  • When the money is likely to be required
  • Inflation (but the Retail Price Index may not be a good inflation assumption). For example, education fees often rise at a higher rate than inflation.

Once you know the target value, and the assumed rate of returns on your investments, you can then calculate how much you need to save.

If you have a specific budget, you can calculate the returns required – and therefore the level of risk you need to take with your investments.

Score your financial planning at

Triple lock suspension leaves pensioners out of pocket

By David Lamb CFP™ MCSI

Welcome to 2022! It’s hard to believe that it is now more than two decades since people were partying like it was 1999 and worrying about the millennium bug! But time flies and, for many, retirement seems to be hurtling towards us.

It is prudent to review your pensions on a regular basis, but in this blog I’m going to update you on some changes to the State Pension, and rules relating to small pension funds.

In 2010 the triple lock was introduced to the State Pension, a guarantee that it would not lose value compared to inflation and would instead increase by the greatest of either:

  • Average earnings
  • Prices as measured by the Consumer Price Index (CPI)
  • 2.5 per cent inflation.

Unfortunately for beneficiaries of the State Pension (but possibly fortunately for taxpayers) the Government announced in September the average earnings element of the triple lock would be suspended for a year, due to an unusually high average earnings increase put down to the ending of the furlough scheme.

Office for National Statistics data showed the growth in average total pay including bonuses was 8.3 per cent for the three months to July. If the triple lock had been left unchanged this would have smashed the previous record pension rise since its introduction – a 4.6 per cent increase in 2011/12.

The temporary removal of the earnings link will result in the State Pension increasing instead by 3.1 per cent in April, from £179.60 to £185.15 each week, well below the current inflation rate (as the decision was taken before the CPI rocketed to 5.1 per cent in November).

Another change to pensions to be brought in this year is the abolition of flat fees on small pension pots below £100.

This may not seem to be much for a pension fund, but we quite often meet new clients who have several small pots created by changing jobs regularly whilst also paying into different workplace pensions.

This is good news, but I would urge anybody with a ‘frozen’ pension fund to ensure that they do not have any flat fees charged to their pension in addition to any more common percentage-based fees.

It is also worth bearing in mind that it is probably not worth paying higher pension fees to get ‘superior’ investment returns. Charges are guaranteed, returns are not.

If you need help to understand the charges on your pension funds, please do not hesitate to contact us at

Why yesterday’s interest rate rise may not be all good news for investors

By David Lamb CFP™ MCSI

Yesterday the Bank of England announced that it would increase interest rates from 0.1% to 0.25%.  This is the first rise in interest rates in three years.

This may seem good news for investors struggling to achieve value with interest rates of around 0.5%, but unfortunately the news is not all that good.

The day before interest rates were increased, it was calculated that inflation was 5.1% and the Bank of England now expects inflation to be around 5% until the spring, probably peaking at around 6% in April.

This means that, even if you can earn 0.75% interest, if inflation is 5% the real value of your money is being eroded by 4.25%.

What can you do to protect your savings?

Many may consider transferring money out of deposit accounts and investing in the stock market because, over the longer term, stock market growth usually exceeds inflation.

But this growth can often be very volatile, meaning that 100% investment in the stock market is probably too high a risk for most people.

A properly constructed investment portfolio should be designed around your lifestyle, including short-term, low risk deposit-based investments and longer term investments designed to combat the threat of inflation.

As the economic environment – as well as your lifestyle – is constantly changing, it is essential that portfolios should be reviewed on a regular basis.

Taking into consideration the effects of the Omicron virus and, its effect on the economy, one New Year’s resolution that should be kept is to review your portfolio after the Christmas period.

If you would like help with this, we would be happy to assist. Contact us at

How much is enough to support your lifestyle? If you don’t know, you don’t have a financial plan.

By David Lamb CFP™ MCSI

Do you know how much is enough to support your lifestyle, without the fear of running out of money?

This is one of the most important questions financial planning will help answer.

We see many people working longer than they need to because they do not know how much is enough.

I don’t think working past retirement age is a bad thing (and research suggests it is a good thing) but many people continue to work when they don’t want to, thinking they have to get as much money as possible before retiring.

But when can they stop doing the things they don’t want to do and start doing the things they do want to do?

Have you ever seen a gravestone with the epitaph ‘He wished he’d spent more time at work?’ No, me neither.

Knowing how much is enough will help you answer the most common planning questions, such as:

  • When you can retire
  • How much you need in pensions to retire comfortably
  • How much you need to save
  • Whether you need to downsize your home for financial reasons and not just an easier life (less housework!)
  • How much risk you need to take with your investments
  • How much extra you can spend in retirement
  • How much money you can gift to your family
  • Whether luxuries are affordable.

By analysing your assets, liabilities, income, expenditure and understanding your desired lifestyle – and by doing financial planning based around a cashflow model – it is possible to calculate the answer to the essential question.

If you do not know how much is enough, you do not have a financial plan.

We have a limited number of books called ‘Enough? How much money do you need for the rest of your life?’ by international lifestyle financial planning guru Paul Armson. If you would like a free copy (on a first come, first served basis) please contact us at

You can build your own cash flow model, for free, at

Score your financial planning at

Big increase in inflation means now is the time to discuss investment options with your financial adviser

By David Lamb CFP™ MCSI

Figures from the Office of National Statistics show that the Consumer Price Index hit 4.2% in October, up significantly from the September figure of 3.1% and the highest for more than a decade.

Governor of the Bank of England Andrew Bailey admitted this was slightly above their predictions and suggested that CPI could be as high as 5% by the Spring and that the BoE is giving serious thought to increasing interest rates.

This would obviously not be good news for those with mortgages, but is it really good news for investors? Probably not.

Whilst many people will be keen to earn higher rates of interest on the deposit accounts, they need to consider the gap between the interest rates and inflation.

If deposit accounts are earning 1% and inflation is 4%, the real value (the purchasing power) of that money is going to reduce by 3%. And unlike suffering a 3% fall due to the volatility of the stock markets, this reduction is unlikely to recover.

Investors holding fixed interest investments such as government bonds (gilts) or corporate bonds are likely to see their capital fall in value as interest rates rise. Earlier this year, we recommended that all our clients switched out of fixed interest funds to avoid this risk.

Many people with pensions, ISAs and other Stock Market-based investments invest in funds that hold fixed interest securities as well as shares, often 60/40 in favour of shares.

This means that 40% of these funds are at the risk of going down. Unfortunately, fund managers can do little about this as the objectives of these funds state that they must hold asset classes in these proportions. Even if a fund manager thinks that fixed interest is a risk, they cannot sell.

If you hold these funds, you should speak to your adviser to consider switching out of the funds altogether.

What can you do to protect your savings and investments from increasing inflation?

For money that is likely to be needed in the short to medium term, you cannot really invest anywhere else other than deposit accounts so you should look to get the best rate of interest you can find.

A word of warning though! Do not attempt to get a higher rate of interest by opting to fix your interest for a longer period as you will effectively be locking your money into the current low rates of interest. At present, a variable rate is probably the best option.

Over the longer term, historically the best way to counter inflation is to invest in the Stock Market which, over the longer term, you would expect returns higher than inflation.

However, investing 100% of funds in the Stock Market will probably exceed most people’s investment risk tolerances, so you will probably be advised to invest in other asset classes to reduce the volatility.

Historically, fixed interest has been a good tool for dampening Stock Market volatility, but given the reasons outline above this may not be a good idea now.

So to sum up, my advice is to discuss your options with your adviser. We live in strange times.

Achieving your life’s aims – the real focus for financial planning

By David Lamb CFP™ MCSI

We have looked at the ten key components that make up your lifestyle in a series of blogs over recent months.

Once you have identified your desired lifestyle, the next step is to establish how you will fund it, which brings us on to financial planning.

Many people think that financial planning is all about pensions, investment funds and life assurance. That is probably because that is what the financial services industry has led them to believe, so they can sell them more products.

The Chartered Institute for Securities and Investments describes financial planning as:

“A professional service for individuals, their families and businesses, who need objective assistance in organising their finances to achieve their financial and lifestyle objectives more readily.”

Ultimately, I think financial planning is about ensuring that you do not end up in your later years looking back over your life and having regrets.

You don’t want to feel you did not leave enough money to ensure your loved ones can maintain their lifestyle or that you will die leaving too much money, which could mean a life of wasted opportunities.

You don’t want to mourn experiences that you never experienced, or hold on to your wealth for too long when you could have passed it to your children when they actually needed it.

I have seen websites promising to produce a financial plan after a short initial meeting. But a properly constructed plan requires a lot of detail and reasoned and reasonable assumptions.

In future series I will describe the process of a structured financial plan. But over the next ten blogs I will highlight the essential questions you should be able to answer and score, to ensure that you financed planning is on track to help you achieve you and your family’s desired lifestyle.

Take our Score My financial planning questionnaire now to see how you are progressing with your plan at

Lamb Financial joins exclusive list of accredited CISI financial planning providers

Lamb Financial’s Planning Support Officer Jan Hooper, Director David Lamb CFP™ MCSI and Business Manager Laura Fairley

Lamb Financial has joined an exclusive list of financial planning firms accredited by the Chartered Institute for Securities & Investment.

We are one of only four financial planning providers in the North East, and 67 nationwide, to achieve Accredited Financial Planning FirmTM status out of more than 5,400 advice firms operating across the UK.

Those 1.2% who do make the grade need to demonstrate their professionalism by meeting the highest standards of excellence in financial planning.

To become an Accredited Financial Planning FirmTM you must be able to demonstrate that providing a financial planning service is core to your business. Your company must demonstrate the following:

  • A full financial planning service, including cashflow modelling, is offered by default.
  • The financial planning proposition is clearly communicated and promoted to clients in marketing materials.
  • Policies and procedures are consistent with the CISI’s Code of Conduct.
  • The firm’s business structure reflects a clear fiduciary responsibility to clients.
  • A clear and consistent fee structure.
  • An understandable and visible investment philosophy.
  • All staff are aware of the Financial Planning service and how it differs from financial advice.
  • That the majority of advisers are qualified with a level 6 Financial Planning qualification.

In addition, CISI accredited firms must have a defined process for financial planning which meets the CISI ‘six stage’ definition, and is offered to clients as a default part of your service:

  1. Gathering data.
  2. Establishing the client’s objectives, goals and aims.
  3. Processing and analysing information.
  4. Recommending a plan of action.
  5. Implementing the plan when agreed.
  6. Reviewing the plan regularly.

The latest professional recognition is one of a number of formal qualifications and accreditations Lamb Financial Director David Lamb has. He also holds a Certificate in Financial Planning and the Society of Trust and Estate Practitioners (STEP) Certificate for Financial Services Trusts and Estate Planning.

David said: “We have always believed that focusing on helping our clients to achieve the desired lifestyle, without the fear of running out of money, is a fundamental part of our service and that financial planning should be seen as a profession, not just as a distribution channel for the financial services industry.

“We are delighted that our values have been recognised as matching the CISI’s high standards of financial planning excellence and we look forward to helping to bring professional financial planning to the forefront of financial services.”

Sally Plant, CISI Head of Financial Planning added: “It’s a pleasure to welcome Lamb Financial to join the CISI as Accredited Financial Planning Firms. It is pleasing to see more firms wanting to gain the accreditation and recognising the value in having Certified Financial PlannerTM professionals within their firms.”

Consumers can find the list of CISI Accredited Financial Planning Firms in their area by accessing the CISI’s Wayfinder website.

Who will look after your money if you can’t?

By David Lamb

Most of us do not want to do think about our loved ones or ourselves losing mental capacity and many people think ‘it won’t happen to us, we’re fine’. But what would happen to our finances if this were to happen?

Effectively the Court (of Protection) comes along and puts a padlock on that person’s finances, and they and their family lose control of their money; cheques can’t be written, money can’t be transferred and bills cannot be paid. A deputy is appointed and so starts a long and expensive process.

The key to that padlock is a Lasting Power of Attorney (LPA), but you can only buy that key when you have mental capacity. Once that is lost it is too late.

When you set up a Property and Financial Affairs LPA you can decide immediately what duties your nominated attorneys can help you with now, or only when you are no longer able to make decisions for yourself.

The following link is to BBC Money Box programme broadcast on 23 February 2021 that you should listen to: or use your camera on your mobile phone to access via the QR code below:

When establishing a Property and Financial Affairs LPA, it would be prudent to consider a Health and Welfare LPA at the same time. 

These focus on the personal aspects which affect your health and wellbeing, such as the treatments you have, where you are taken care of and if you need to be looked after in a nursing or care home. The Health and Welfare LPA can only be used when you no longer can make your own decisions.

I strongly recommend that you consider establishing Lasting Powers of Attorney whilst you still can before it’s too late. You never know what is around the corner.

You can make your own LPA by going to, by approaching a local solicitor or contacting us for assistance.

What can I do if my pension fund is suspended?

One of the major perils in the minefield that is pension funds is a fund being suspended, which can happen for a variety of reasons. David Lamb, from The Pension Sharing Service, explains what your options are if, like Karen, this happens to you.

Karen was awarded 100% of one of Norman’s pensions, and a smaller share of another. Their solicitors have been very prudent because one pension had a guaranteed annuity that would have been lost on transfer, meaning neither party would benefit. This is the plan that Karen received the smaller share of.

Unfortunately, this order cannot be implemented because a couple of the funds the pension holds are suspended from trading.

Karen has a problem.

The transfer process explained

When a defined contribution scheme such as a personal pension is to be transferred, the assets – effectively unit trusts held by the pension trustee – are sold and the cash is then transferred to the receiving scheme. It is invested in a new portfolio of funds, ideally recommended by the pension creditor’s financial adviser, based upon their attitude to investment risk.

The issue

Many modern pension funds do not invest the money themselves, instead offering an external investment fund with different fund managers and a wide range of objectives. This is generally good but, occasionally, the funds can experience issues which can result in them being suspended from trading (cannot be bought or sold and turned into cash).

This could be for a variety of reasons, most commonly with property funds suffering liquidity issues (an inherent risk with these funds). If too many people want to disinvest, the fund may not hold enough liquid assets (cash) to pay them and therefore it may have to sell properties to raise the cash, and this can take some time.

This would not normally cause a problem for pension sharing order (PSO) as most orders are made for less than 100% of the fund, therefore other assets can be sold to provide the funds to be transferred.

Unfortunately, for Karen, the 100% order meant that the transfer must be all or nothing; the pension provider cannot transfer less than the amount stated in the PSO (for example leaving the suspended funds and transferring only those that are tradable).

Karen is currently surviving on her State pension and desperately needs the money she has been awarded.

Karen’s options

Karen has three options.

The first is to be patient and wait for the suspensions to be lifted. Unfortunately, one of the suspended funds is the Woodford Income Fund, which due to problems with the underlying investments could take years for the suspension to be lifted and be very costly to the investor. Karen cannot afford to wait very long.

Secondly, Karen could instruct her financial adviser and pension company to individually transfer all the underlying unit trusts by stock transfer, but this could take a long time, therefore incurring extra costs and is littered with pitfalls. Even the pension company advises against this and, in the end, Karen will still be stuck with funds that she cannot convert into cash for the foreseeable future to provide her with an income.

Karen’s third option would be at to apply to get the PSO amended so that she either takes a greater share from Norman’s other pension, but he could be reluctant to agree with this because he will effectively be giving up a high guaranteed income for (potentially) worthless funds.

For an easy life, Karen could write off the Woodford fund so that the transfer could proceed which she considers unreasonable because she is taking the hit, not Norman, and he would benefit if the fund recovers. In any event, if the Woodford fund makes up only 5% of the total portfolio, Karen could be losing almost £15,000.  She cannot afford this level of loss.

Do not tread on the mines!

What can family lawyers do to avoid similar situations?

I would strongly recommend that when asking for details on pensions, a breakdown of the individual funds is requested. This information will help identify any funds that are currently suspended or run the risk of suspension at short notice. If a pension portfolio holds these types of funds, a request for a PSO should not exceed the percentage of funds trading without this risk.

Where possible, spread the PSO over other pension policies to avoid having to take 100% of one particular product.

Ensure that the PSO is implemented as quickly as possible as fund suspensions can occur at any time, with relatively short notice.

I was discussing these issues with my wife, who is a family lawyer, and the very next day Aviva, which operates some of the largest property funds, gave notice that its funds (which are currently suspended) are to be wound up, with the properties being sold. Aviva has warned that this process could take up to two years.

Be aware of pensions holding this fund and ensure the order excludes the percentage held in this fund.

Don’t worry – assistance is available

If you have any concerns about the issues raised in this article, please do not hesitate to contact The Pension Sharing Service.

Tel.      0808 1781695/07708 690811



Why your biggest fear should be running out of time – not money

By David Lamb

In the last in our series of articles on the components that make up our lifestyle we look at abundance.

This is when you have more money than enough…enough to give you the lifestyle that you want without the fear of running out of money, whatever happens.

Many people do not realise they have abundance because they do not know how much is enough. This can result in them having more money than they need without realising it. And then it is wasted for years.

For many, their biggest fear is running out of money, but I would suggest that your biggest fear should be wasting your life and the time, not running out of money. This may mean that you have wasted the opportunity to use your wealth to enhance your lives and others you care about.

We only have two types of clients: accumulators and decumulators. Accumulators are, generally, those still working and therefore increasing their wealth. Decumulation would normally start at retirement.

Unfortunately, many people spend all their working lives saving for retirement but when retirement comes, they feel uncomfortable about spending their hard-earned money. This is probably because, not only do they not know how much is enough, but their brains are not wired to spend money after 40 years of accumulation.

Try this: fold your arms. Now fold them the other way. For most people this does not seem natural. This is because you have spent your whole life folding your arms one way and then, I come along and ask you to do it another way. It is a similar process, but your brain is not wired that way.

It is the same with decumulation, it does not feel right. Proper financial planning will help you rewire your brain by identifying how much is enough and then, with that knowledge, help you to structure your wealth to support an orderly the decumulation of capital. So long as it is controlled, and logical, you will feel comfortable.

Scottish-American industrialist and philanthropist Andrew Carnegie once said: “It is a sin to die with too much money.”

However, this does not mean you should waste your hard-earned wealth. When you are absolutely sure that you have the lifestyle that you want and are confident that there is nothing left on your bucket list, you can use your wealth help other people.

If you live to age 100, how old will your children be when they inherit? If you were 30 when you became a parent, your children will be 70. Will they really need their inheritance? They struggled to buy their home, put their children through university, probably worked long hard hours (possibly to the detriment of spending time with their children) and when they don’t need the money, it falls into their lap. But too late.

All the time they have been struggling financially, your wealth has been sitting in investments, not doing you any good (other than providing a feeling of security, because you don’t know how much is enough) because you are not spending it and it is not helping your family because it is lying in your investments.

It is, however, doing the financial services industry a lot of good because it is making money from your money (and it will continue to make loads of excuses why your money should continue to be invested). If you are never going to use that money, why not give it to your family now when they actually need it?

Of course, there can be other beneficiaries of your wealth, not just your family. Many people get a lot of satisfaction from supporting charities. I had a client who wanted to leave money to the Dogs Trust in his will. He was only 75 and he was never going to spend his excess wealth so why help his favourite charity in 25 years’ time? A lot of dogs would suffer over the next quarter of a century when he could be helping them now. Why wait?

I know older businessmen who still get a lot of satisfaction from work. Unfortunately, the longer they work and earn money, the bigger their inheritance tax liability. Why not use all that experience to help younger businesses and save them money and time by learning from the mistakes they had made 30 years ago? Invaluable knowledge that can be shared.

A friend of mine who is a solicitor has noticed that more and more people are investigating the establishment of charitable foundations (there are organisations that can help with this). His experience is that, because there are fewer burials and therefore fewer headstones, setting up such foundations is a nice way to be remembered.

Identifying abundance can avoid a lot of money worries, ensure that you get the most out of your life, and help other people. Do not let your money lie in investments to be passed to others when you die (because, hopefully, this may be a long time in the future). Do not die with too much; it is a waste of opportunity.

When you are aged 100, with one foot in your box, please do not look back and have regrets.

The most important thing about money? Knowing how much is enough…

By David Lamb

When I first started writing about the components that make up our lifestyle, I suggested that money was at number nine. We eventually got there!

It doesn’t matter how much money you have, if you don’t have quality physical and emotional health, good relationships, enough time, personal fulfilment, a satisfying career, enjoyable fun and recreation and financial independence, you will not have a balanced lifestyle. Life will not be brilliant.

Remember; money could make you happier, but love will make you happy.

I wrote this blog on the day that Eddie Van Halen, reputedly one of the world’s greatest guitarists died. According to the website Celebrity Net Worth, his estate is worth $100m. I would guess his family would give every cent of this to have him back with them.

Am I saying that money is not important? No.

Money provides security and safety for you and your family and pays for all the necessities such as a home, food, clothing, and general living expenses. After the basics are covered, money can provide funding for the fun things in life, especially time, fun and recreation.

An abundance of money can help others, which can provide great personal satisfaction. More on this in my next blog.

But money can also cause problems.

I have seen many people obsessed with getting more and more money and accumulating more than they need. This usually means they spend too long doing the things that they do not want to do (work), saving money to do things that they will never get round to doing. What a waste!

Money can also cause arguments. I think it is safe to assume that most of these arguments are not about having too much money.

The big question, which is a theme that has run through this series of blogs, is how much money is enough? Enough to give you the lifestyle that you want without the fear of running out of money whatever happens.

The key to a good financial plan is knowing how much is enough. If you don’t know how much is enough, you don’t have a financial plan!

A good lifestyle financial planner will identify your (realistic) desired lifestyle, calculate how much this lifestyle will cost and then answer the question ‘how much is enough’? They will then work with you, using the resources you have available, to work towards achieving that lifestyle.

Money underpins every other aspect of your lifestyle. It needs to be well managed.

Beige budget balances spiralling debt and stagnant economy

By David Lamb

Last Wednesday’s budget was quite beige, but what could Chancellor of the Exchequer Rishi Sunak do?

He must balance spiralling Government debt with an (almost) stagnant economy.

Hopefully that stagnation will turn into a coiled spring as we get closer to the end of lockdown and the £130bn that the British public has saved since the first lockdown is spent on haircuts, meals (eating in not takeaway), drink and holidays.

This massive government debt will have to be repaid, but now is too early so what has Mr Sunak done to get the British public to help repay those staggering amounts (£355bn according to the BBC)?

One way of increasing tax revenue, without blatantly increasing rates is to use inflation (not much of that now, but just wait until we get spending again).

The pension lifetime allowance – the maximum capital value you can have for your pension (LTA) – has been frozen at £1,073,100 until 2026. You may think that this is a lot of money and does not apply to you but, as inflation increases, for those in defined benefits this could become a real problem.

NHS staff could become some of the hardest hit, the weekly hand clapping long forgotten.

What can be done to reduce this?  If you are in a defined contribution scheme, you could pay in less, or reduce your investment risk profile to reduce the growth.  Members of defined benefit schemes could leave the scheme or simply work less hours (thereby reducing salary and pension benefit). 

Regardless of the type of pension, many people may become disillusioned with pensions and may consider other methods of savings, such as individual savings accounts. But all potential options have major disadvantages.

The inheritance tax threshold has been frozen at £500,000 (including the residential nil rate band) for a single person and £1m for married couples. As with the freezing of the LTA, this will raise taxes through wage inflation and asset price inflation.

Is there any other name for this, other than a wealth tax?

What can be done to mitigate this?  Possibly gifting, or spending more, but again there could be negative consequences; you could run out of money!

The annual personal allowance of £12,500 has also been frozen, as has the capital gains tax allowance, at £12,300 and the High-Income Child Benefit Tax Charge at £50,000. Because of wage inflation, more tax will be collected.

The freezes on allowances may only impact on a relatively small number of people now, but with rates frozen until 2026, more people will be caught as the years go on.

There is no easy way to mend the nation’s finances, and it is going to take a long time, but we do not want our personal finances to be negatively affected either. There are things we can do to reduce the impact of taxes (which are likely to get worse once the economy recovers), but these can have a negative effect on other areas of financial planning.

To help you make the correct decisions, it is essential to have a detailed, regularly reviewed financial plan, which will help you understand how much is enough. Enough to give you the lifestyle you want, without the fear of running out of many, whatever happens.

Once you know how much is enough, you will be in a good position to make sensible, informed, and logical decisions to adapt your plans to the current economic and fiscal climate. If you do not know how much is enough, do not have a plan.

As the old saying goes, failing to plan is planning to fail.

Who will look after your money if you can’t?

By David Lamb

Most of us do not want to do think about our loved ones – or ourselves – losing mental capacity and many people think ‘it won’t happen to us, we’re fine’. But what would happen to our finances if this were to happen?

Effectively the Court of Protection comes along and puts a padlock on that person’s finances, and they and their family lose control of their money.

Cheques can’t be written, money can’t be transferred, and bills cannot be paid. A deputy is appointed and so starts a long and expensive process.

The key to that padlock is a lasting power of attorney, but you can only buy that key when you have mental capacity. Once that is lost it is too late.

BBC Radio 4’s personal finance show Money Box featured the rules for taking care of some else’s finances in their programme last week. You can listen to it via the following link:

I strongly recommend that you consider establishing lasting powers of attorney whilst you still can before it’s too late. You never know what is around the corner…

Why financial independence may be a lot closer than you think…

By David Lamb

The next component of lifestyle, after fun and recreation is financial independence.

Financial independence can be described as having enough income to pay for your living expenses for the rest of your life without having to work or be dependent on others or a business.

At first this may sound quite difficult and daunting to achieve, but we have never had a client come through our doors where we haven’t been able to tell them to do a couple of things to achieve financial independence. It is easy!

All you need to do is:

1. Sell everything. Your house, your car, contents, everything! Turn all you have into cash.

2. Move to Malawi. Malawi is a generally peaceful country that has had stable governments since gaining independence from Britain in 1964. The cost of living is lower than the UK – the total cost of living for two people, with average consumption, for one month will be $705 (£546). The average salary for an accountant is $14,166 (£10.981), in the UK they can earn up to £60,000, or more. You will probably be the richest family in your new village and will never worry about money again!

But you may not have the lifestyle that you want……

Many people are under the misunderstanding that to achieve financial independence, they need as much money as possible. Unfortunately, we have seen many clients who continue to work long after they could have retired.

As I mentioned in an earlier blog, I don’t think it is a bad idea to work past retirement, so long as it is enjoyable and is keeping you young. But working unnecessarily often means that this is at the detriment to other areas of their lifestyle such as health, relationships and time doing the things you want to do.

Understanding your lifestyle (enjoying the good parts and being able to identify areas for improvement to give you more balance) should be at the heart of financial planning.

When you have identified the lifestyle that you want, you can then work out how much this will cost. When you have done this, using cash flow modelling, a financial planner can then calculate how much is enough. Enough to give you the lifestyle that you want without the fear of running out of money, whatever happens.

In my experience, this is quite often a lot less than people would imagine.

Financial independence may be a lot closer than you think. You just need to know how much is enough and then create a simple, realistic, and reasoned plan to get you there.

How good would you feel if you didn’t need to worry about money?

Leading investment firm highlights interest rate threat to fixed rate investments

By David Lamb

A couple of days after I wrote my last blog, highlighting my concerns about fixed rate investments, I found a very interesting article written by Giulio Renzi-Ricci of Vanguard Asset Management Limited – one of the world’s largest investment companies and a leader in passive investments.

Giulio is concerned that the correlation between fixed interest and equities have converged to such an extent that bonds can no longer be relied on to perform their primary role as an anchor in times of market stress.

He goes on to say that there is worry that portfolios are too heavily exposed to duration risk (longer term bonds) which will mean they could be vulnerable if interest rates increase.

Another issue Vanguard has identified is that the rock bottom yields are compromising the function of bonds as portfolio diversifiers. They analysed the distribution of UK bond returns when UK equity returns were negative between January 2003 and November 2020 and looked at two scenarios: when 10-year gilt yields were greater than or equal to 1%, and when 10-year yields were below 1%.

When equities fell, government bonds provided higher returns than corporate bonds and cash. Because of this, government bonds can be good ‘shock absorbers’.

There is also concern that, if interest rates rise, the returns from equities could also turn negative (it will be more expensive for companies to borrow money to fund their growth, for example).

Portfolios with high fixed interest and equity holdings could be hit twice. Giulio concludes by asking if interest rates increase because economic activity is recovering and earnings growth is also increasing?

Would equity prices move up or down?

This would depend upon the relative forces associated with earnings growth or rates growth. Higher interest rates do not necessarily mean negative equity returns. Central banks are unlikely to start increasing interest rates unless they are reasonably confident in the economic recovery. If so, expect a positive impact on equity returns.

This brings us back to my last blog: take action!

We strongly recommend that you review your investment portfolios (including your pensions) to determine how much fixed interest your portfolios hold and seek advice as to how you can minimise the threat to your wealth if inflation and interest rates increase in the capital value of your fixed interest investments falls.

Lamb Financial is here to help.

The information contained in this article is provided for information purposes only and is based on the opinion of Lamb Financial and does not constitute financial advice or a suggestion to a suitable investment strategy. You should seek independent financial advice in regard to your own personal circumstances before embarking on any course of action.

Lamb Financial is a trading style of Lamb and Associates Independent Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. FCA number 782092.

Rising interest rates: be careful what you wish for

By David Lamb

Many people are hoping interest rates will increase, but a rise in interest rates could adversely affect your wealth.

Normally I prefer to focus my blogs on using your money to support your lifestyle but as we are living through exceptional times I thought it appropriate to make an exception.

In the first three months of last year, the UK economy suffered its biggest slump on record, shrinking by 20.4%. Factory and construction output fell, and household spending plummeted. This was probably only to be expected because the country and economy were effectively ordered to shut down, resulting in the first recession since 2009.

In November, the Office for Budget Responsibility (OBR) estimated that government borrowing for the current tax year could be around £394bn. That is the highest government borrowing in peacetime. Before Covid, expected government borrowing was estimated to be £55bn.

Eventually, when the world gets back to some level of normality, the economy will recover. But because of this eye watering government borrowing, there must be longer term consequences to the economy; predominantly return of inflation.

There are two main causes of inflation; demand pull inflation and cost push inflation.

Demand pull inflation is caused when demand grows faster than supply. Cost push inflation is caused when the cost of providing goods and services increases.

There is potential for an increase in demand pull inflation for many reasons. For example, many people due to lockdowns have not been able to spend money. Whilst many people have struggled financially due to Covid, a lot have actually saved money by not having to spend money on travelling to work, being able to browse in the shops or book holidays (my fuel costs have plummeted!) 

When eventually we return to normal, I think it is safe to say we can expect a lot of money to be spent. Obviously, there will be many unfortunate people who have lost their jobs due to Covid and this will also have an effect.

Government expenditure can also increase demand pull inflation because this increases the amount of money in the economy. If people have more money, the demand for goods and services will increase. As excess demand oversupply occurs, inflation will increase. Think about how much money the Government has pumped into the economy.

When their income is less than it is spending, governments may resort to printing more money, known as deficit financing. Longer term, this strategy will be inflationary because the amount of money in circulation increases but the total goods and services available in the country remain the same.

Many economists argue that there is a close link between supply of money and inflation and therefore controlling the money supply can control inflation.

When interest rates are low, like they are now, money is cheaper to borrow and when this happens the economy grows (obviously the lockdowns are currently preventing this, but they will not last for ever). To slow the economy down, interest rates can be increased to take money out of the economy and therefore reduce inflation.

An interesting article about this can be read here:

We have many clients who are concerned that low interest rates mean that they are getting poor returns on the money they hold in deposit accounts (although this may not be strictly true – see my blog on our Facebook page dated 8 January 2021). If inflation increases, it is highly likely that interest rates will rise and many think that rising interest rates, whilst may not be good for borrowers such as those with mortgages, is a good thing.

Be careful what you wish for

Many people have money invested in fixed interest securities within their investment portfolios because they can provide a steady interest income to investors throughout the life of the bond, whilst reducing the overall risk of an investment portfolio because of their general low volatility.

These investments provide a format for governments and companies to borrow money. The Government borrows money via gilts or gilt-edged securities; companies issue corporate bonds.

The following is a very simple explanation as to how these investments operate.

Rishi (Sunak, the Chancellor of the Exchequer) asks to borrow £100 from me over the next 10 years. In return, he will pay me £1 every year over that term. This is a good investment for me because it is more than I could currently get with a bank or building society and in ten-year years there is a very high chance that I will get my money back because it is guaranteed by the Government.

Let us now assume that I want my £100 back in five years. I go back to Rishi (if he is still there!) and ask for my £100 back. Unfortunately, he says sorry you must wait another five years. I really need my £100 so say to my wife if you give me £100 for this investment you will get £1 every year from the Government and then they will give you your £100 back.

My wife (who is far stricter with money than I am) says ‘sorry, interest rates are now 2%. I am not going to give you £100 to get £1 back every year when I could be getting £2 elsewhere, but if you are really keen to get some of the money back, I will give you £50; I will get my 2% interest and you will get some money back in your hand’.

That is the risk with fixed interest securities. If interest rates go up, the capital value of your investment can go down.

If I needed my money in nine years, and my wife offers me £50 I can say but you will get £100 next year so why don’t you give me £95, you will get another £1 and then £100 at the end of the 10 years.

The closer you get to the redemption date, the less volatile the capital value.

If a large company approached me and said ‘you have just lent the Government £100 for a return of 1% per year, will you do the same for us?’ my response would be ‘you are a FTSE 100 company so you are big, but not as big as the Government and therefore there is more risk; you may not be around in ten years to repay me my money. If there is more risk, I want a higher return and therefore you pay me 2% per annum’.

The smaller the borrower, or the less financially secure, the bigger the risk, the higher the interest rate should be.

There is another interesting article on fixed interest securities at:

So, in summary, at some point the economy will recover and inflation will increase (possibly quite rapidly due to the huge amounts of money the Government has been pumping into the economy), which will increase interest rates.

If interest rates increase this may seem good for people with money in deposit accounts (although, after inflation, their money may be going down in real terms) and this may have a negative effect on the capital value of fixed interest securities which many portfolios hold to help reduce volatility.

Take action!

We strongly recommend that you review your investment portfolios (including your pensions) to determine how much fixed interest your portfolios hold and seek advice as to how you can minimise the threat to your wealth if inflation and interest rates increase in the capital value of your fixed interest investments falls.

Lamb Financial is here to help.

The information contained in this article is provided for information purposes only and is based on the opinion of Lamb Financial and does not constitute financial advice or a suggestion of a suitable investment strategy. You should seek independent financial advice in regard to your own personal circumstances before embarking on any course of action.

Lamb Financial is a trading style of Lamb and Associates Independent Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. FCA number 782092.

Why you need to prioritise fun and recreation in retirement planning

By David Lamb

We all understand the need to work; it puts food on the table and pays the mortgage.

It is so important that very early in our children’s lives we ask them ‘what you want to do when you grow up?’ Unfortunately, however, fun and recreation is often seen as an add-on; something we could do without if we had to.

But it is much more important than that.

Fun and recreation can reduce stress. Too much stress, for too long, can increase our cortisol levels, which can lead to lack of sleep, headaches, low energy levels and ultimately high blood pressure and heart disease.

Many studies have shown that people who continue to play games and learn throughout life are much less likely to suffer from dementia or prone to get heart disease.

It comes back to the following question: do you stop doing things because you get old, or do you get old because you stop doing things?

Leaving a career at retirement can leave a big gap in people’s lives and unbalance their lifestyle. It is a gap that must be filled.

What are you going to do in retirement to replace your career? This is just as an important question for retirement planning as ‘how much should I put into my pension?’ or ‘how much do I need in my pension fund?’

Other than Christmas, on which two weeks do you spend the most money? When you are on holiday.

When you retire, you will be on holiday 52 weeks each year. Calculating the cost of fun and recreation in retirement, to build into your cash flow projections, is essential. We always recommend assuming expenditure on sports and hobbies will increase and suggest doubling the cost of holidays between retirement and age 80. Everybody’s active retirement will be different, but you get the idea.

We see a lot of people who do not take fun and recreation seriously and therefore do not prioritise it. They end up not taking enough time off work and can often take work away on holiday with them! Not only can this have a massively detrimental effect on the third most important component of a balanced lifestyle – relationships – but it is not very healthy and can have a negative impact on the second most important – emotional health.

I have learned that the first thing to do when making my business plan for the year, is to allocate time for holidays because if you don’t, they can be left to the last minute, fitting around work. Ideally, work should fit around fun and recreation.

For those that don’t think fun and recreation is important, the next time you’re sat down with a cup of tea try this: Hold your full mug at arm’s-length. Is it heavy? Probably not. Now hold it there, still at arm’s-length, for 10 minutes. Is it heavy now? Yes, and getting heavier. Put the mug down for couple of minutes then pick it up again and hold arm’s-length. It will be a lot lighter than before. Fun and recreation has the same effect on your emotional health.

You need the break!

Whether you have a job, career or vocation – you need a balanced lifestyle

By David Lamb

My last blog looked at personal fulfilment. For many people, work provides a lot of personal fulfilment…if it is the right level of work.

I think there are three levels: a job; a career; and a vocation. However, at the moment many people are having to settle for any job at a time when more than 800,000 have lost theirs as a direct result of Covid.

A job

Often quite boring, with workers carrying out specific daily tasks, spending a lot of time clock watching, just waiting for their pay cheque at the end of the month.

A career

Much more interesting and requires more commitment. Whilst important, money is often not a major factor on a day to day level. My wife is a family lawyer and a few years ago, after returning from a fortnight’s holiday, she spent a Sunday afternoon in her office. I asked how much she was charging her client for working on a Sunday afternoon? Nothing. How much was she getting paid for working on a Sunday afternoon? Nothing. Why was she working on a Sunday afternoon for nothing? Because she was in court the next day and she wanted the best possible outcome for her client. It wasn’t about the money! But…the word career comes from the Latin word for cart, and later the French word for racetrack. How appropriate! How many professionals rush around, in a competitive environment, climbing the career ladder? Unfortunately, the higher up the ladder, the more slippery it is. And more stressful.

A vocation

From the Latin word vocationem, which means ‘calling’. An occupation that somebody feels strongly about doing, often regardless of pay, because they feel compelled to do so, as it gives a deeper meaning to life. A vocation is rarely stressful.

Fitting work into your lifestyle

It is important to consider how work fits into your lifestyle. A job may feel like a drain on time, a career can be a poor influence on emotional health and a vocation needs to be controlled to ensure a balanced lifestyle.

In my hierarchy of lifestyle, health, relationships and time are all more important than work.

Quite often, when I ask my clients when they would like to retire, the answer is ‘tomorrow’.  But when I delve a bit deeper, they don’t want to get away from work, what they actually want to get away from is the stress created by work.

We also see a lot of people who have retired from work, got bored and gone back to work but not necessarily doing the same job (with the same stress). People often go back to do charity work or driving delivery vans for the supermarkets is also very popular. No stress, but there is the social interaction and purpose for getting up in the morning for two or three days a week.

Planning for retirement is a major part of lifestyle financial planning (and I don’t mean put more money into your pension!) It is important to ask yourself the following questions:

• How much is enough to give me the lifestyle that I want without the fear of running out of money and when can I stop work whilst still ensuring that I have enough?

• When do I want to retire?

• Am I going to retire fully, or work part-time?

• If part-time, is it going to be the same, or similar job, to what I was doing before retirement, or is it going to be something completely different? Can the skills that I have built up over a working lifetime convert to another role?

• If I stop work, what will be the new purpose in my life?

• What am I going to do with my extra time? How much will this cost?

• What are the financial implications if I stop, or reduce my working hours?

Stopping work can open up lots of opportunities and give you more time (an essential but limited element of your lifestyle) but can leave a big gap, which many people struggle to fill, especially if theirs was a vocation.

Personally, I think working past normal retirement age is healthy, so long as it is not stressful and I plan to work for as long as I can, but not full-time, because in my experience (non-stressful) work helps to keep you young.

I’ll end with a couple of questions for you to ponder on:

Do you stop doing things because you get old or do you get old because you stop doing things?

And have you ever seen a gravestone with the engraving on ‘He wished he’d spent more time at work’?

No, me neither.

A balanced lifestyle is essential and requires careful planning.

Personal fulfilment: how a balanced lifestyle leads to a wonderful life

By David Lamb

Personal fulfilment is the achievement of life goals which are important to you as an individual. It is what makes you want to go to bed late and get up early.

It could be work, hobbies, family, fun…it doesn’t matter. It’s what drives you to fulfil your life’s goals.

Many people help to identify what will give them personal fulfilment by writing a list, a ‘bucket list’, which describes all the things they want to do before they die (kick the bucket).

A study published in 2017 found that people who write down their goals are more likely to achieve them, and psychologists suggest that these lists help connect people to something larger than themselves and lead to a sense of fulfilment when a goal is accomplished.

Daniel Kahneman is an Israeli psychologist and economist who suggests that what people remember from hedonic events are their peaks; if there are no peaks, there are no crisp memories. Bucket lists can help to create crisp memories.

We invite all our clients to complete a bucket list, including target dates and cost estimates. We can then build these into cash flow projections to help provide the funds to support those ambitions.

Research suggests that people benefit more from experiences than buying material items. I initially disagreed with this, because, if I am going to spend a lot of money on something, I want something to show for it.

Then, within a few weeks, I bought new car and went on holiday. When I first got the car, I was so careful driving it and extremely cautious where I parked it (we parked so far away from the entrance of Tesco, my wife thought it would be quicker to walk to Asda!)

A month later, I was back to driving and parking normally; the novelty had worn off. But we still talk about the holiday years later.

Remember, though, personal fulfilment should sit comfortably within a balanced lifestyle.

In the 1946 film ‘It’s a Wonderful Life’ George Bailey never achieved anything on his own bucket list. But, when reflecting upon his life he realised that because he never let his own ambitions get in the way of other people, his was a wonderful life. Which is why, seven decades later, we still watch the film every Christmas.

A balanced lifestyle leads to a wonderful life…

Don’t trade too much time for something less important – money

By David Lamb

Time is an essential component of a balanced lifestyle and, regardless of any other factors, we all have the same amount of time in any one day.

But time is a strange thing. Is it long, or is it short? It depends upon what you are doing, doesn’t it?

If you are in a new relationship time flies by, but if you are stuck in the queue at the supermarket during lockdown it drags.

Time also seems to get quicker the older you get.

Do you remember the ‘Millennium bug’, when all computers were going to crash at midnight on 31 December 1999 and aeroplanes could be falling out of the sky? I recall all the work (and time) we had to do to protect our IT systems from this potential disaster and what happened? Nothing, absolutely nothing. I did not know whether to laugh or cry.

That was 21 years ago! A fifth of a century! The frightening thing is it only seems like three or four years ago. How quickly will the next 21 years ago? Will it seem like three or four years again? How will you be in 21 years time?

It is not just our time we need to consider, but other people’s.

A couple of years ago, we went to see the Rolling Stones in concert with friends who said that they could not wait to see them again. With the Stones having a combined age of over 300 years, they had better be quick!

How quickly do children grow up? This is valuable time that should not be wasted doing less important things. One minute you are changing their nappies, the next they are scrounging money to put petrol in their cars! Have you noticed that as children grow up, when they leave you, they wave with less and less fingers?

Another strange thing with time is that people will trade it for something less important, money. They spend too long chasing it.

An important element for a financial plan should be to identify when you can stop doing the things you don’t want to do and start doing the things you do want to do. It will also help determine how much is enough which will then help you understand how much time you need to spend earning the amount money you need to support your lifestyle.

Do you have sufficient time to do the things you want to do? If not, what do you plan to do about it?

Money could make you happier, but it is relationships that will make you truly happy

By David Lamb

I have considered the importance of both physical and emotional health as part of your lifestyle in my recent blogs. This week I’m going to discuss the importance of relationships.

Do you remember all the celebrities who died in 2016? David Bowie, Prince, Mohammad Ali, Terry Wogan and Ronnie Corbett to name a few (I heard a rumour that there were a lot of celebs trying to change their name by deed poll to Keith Richards!)

But out of all of those legends of music, sport and TV, are you aware of any who had a big, lavish funeral? No, me neither.

I think that this is because, once they did not have their health, it didn’t matter what car they drove, how big their house was, how many records they sold or how much money they had in the bank. What mattered was the people around them.

Unfortunately, in this modern world, it is far too easy to lose sight of what is important because there is so much pressure to focus on consumerism, work, the stress of life and money.

My wife is a family lawyer and she sees a lot of business and career focused people who have spent years on building their business, climbing the career ladder and accumulating wealth.

Then, all of a sudden, they find themselves in the divorce process because they forgot why they started out in business or on their careers in the first place; to provide a good lifestyle for their family. And then it is too late.

So how does financial planning fit in with relationships?

Think about what you want to do for – and with – your partner, your children, grandchildren and your friends.

Do you have a bucket list? What is on it? What is on your partners bucket list? (It’s fun to discuss these things.) How much are these things going to cost? When are you going to need the money?

Do you need to spend so many hours at work? How much do you really need? How much is enough?

Once you know how much is enough, you will know how much time you need to spend on work and can then build a more balanced lifestyle.

It is important to remember: money could make you happier, but it is relationships that will make you truly happy.

Why emotional health is key to your quality of life

In my last blog, I suggested the most important factor in a balanced lifestyle is physical health. The second is emotional health.

People who are emotionally healthy have greater control of their thoughts, feelings and behaviours and are more able to cope with life challenges. They keep problems in perspective and bounce back from setbacks and they feel good about themselves and have good relationships (more on relationships in my next blog).

Poor physical health can lead to an increased risk of developing mental health problems and, similarly, poor emotional health can negatively impact on physical health leading into an increased risk of some conditions, such as heart attacks.

Common causes of poor emotional health are stress of work and money worries.

Work-related stress is often caused by demands at work that exceed how much an employee can cope with; more than 11 million working days are lost each year because of work-related stress, which can then contribute to conditions such as anxiety or depression.

Many people worry about money and one of the most common reasons why couples argue is money. These arguments are rarely about having too much money!

As a financial planner, I see a lot of people – usually business owners and members of the professions – who are working far too hard for many reasons, but quite often because they think they need more and more money.

In many cases, this is a fallacy. When they know how much is ‘enough’ they can often ease off, get a better lifestyle, and lose a lot of their stress and money worries.

Financial planning can help work-related stress by identifying how much a person needs to earn to give them the lifestyle that they want without having to work for long hours in a stressful environment. I have seen many clients relieved that they can walk away from jobs they hate.

Being financially well organised can relieve a lot of money worries. I tell my clients that with an ongoing financial plan they only need to worry about money for three or four hours a year, as part of their annual review. After that, they can spend the rest of the year focusing on what’s important, knowing that the financial aspect of their lives being well managed.

One of the best parts of my job is being able to tell people when they can stop doing the things that don’t want to do and start doing things they do want to do.

Do not let work-related stress and money worries affect your emotional health. Remember: the quality of your life is often a direct result of the quality of your emotional health.

Physical health: always number one on your list of lifestyle priorities

In my last blog, I suggested that on a scale of one to ten – where one is the most important thing and ten is the least important – money should be scored at number nine.

The most important factor in your lifestyle is physical health. If you have poor physical health, you may not be able to work or do many of the things you would normally enjoy. You may even need somebody to look after you.

Over my many years as a financial planner, I have seen numerous people who have spent too long at work chasing money and suddenly they are overweight, extremely unfit and unhealthy.

Physical activity and exercise are important for people of all ages. Regular physical activity promotes good health and you should stay active throughout all stages of your life, regardless of your body type or BMI.

Many studies have shown that regular physical activity increases life expectancy and reduces the risk of premature mortality.

Regular exercise promotes strong muscles and bones and improves respiratory, cardiovascular and overall health. Staying active can also help maintain a healthy weight, reduce the risk of type 2 diabetes and heart disease, and reduce the risk of some cancers.

A few years ago over New Year I got flu and couldn’t get out on my bike for almost a month. In the February I eventually ventured out for the first time, not looking forward to the next two hours. The rain and gale force winds were definitely going to add to my misery.

As I got to the end of my street, an £80,000 car pulled over. I noticed the driver looking down at me from his nice warm car, as if I were mad. He then got out. He was wearing a suit (at 9.15 on a Saturday morning) and was huge (I don’t mean tall, I mean wide!) and he laboured across the road.

He obviously wasn’t short of money, so he probably did not really need to be working on a Saturday morning, but he was in such poor physical condition that it is unlikely that he will get to see the benefits of all his money and there will be a good chance he will not see 60.

Focusing on number nine, ignoring number one.

How much is enough to retire: the $6m question

A friend of over 40 years said to me recently “Lamby, I’m retiring at 55 and I don’t need a financial adviser to tell me how much I need in my pension for me to retire, because I know how much I need; all I need is enough”.

And my friend was right. All you need is ENOUGH. Enough to give you the lifestyle that you want, without the fear of running out of money, whatever happens.

Most of my clients aren’t really interested in asking is X company better than Y company for pensions or should they be invested in the UK or emerging markets? What they really want to know is the answer that big question: How much is enough?

A friend of mine, Paul Armson, even wrote a book called ‘How Much Is Enough?’ (We have a limited number of free copies available on a first-come first-served basis and if you would like a copy, please e mail us at

Whilst ‘How much is enough?’ is the big question, I don’t think it is the BIG question – which is ‘for what?

To know how much is enough, we need to understand what your lifestyle is like now and in the future, so we can calculate your capital and income needs throughout your life to ensure that you have enough money at different stages of your life. As far as we know, we only get once chance at life, so be had better make sure we make the most of it!

Here’s an interesting question for you: thinking about your lifestyle, on a scale of one to ten, where one is the most important thing and ten is the least important thing, where would you place money on that scale?

Personally (and there is no right or wrong answer this question) I think money is at number nine.

Over the next few months, I will explain my conclusions and discuss the major factors that make up your lifestyle and how money fits into it.

Take a ride on our lifestyle wheel

Many people think that financial planning just involves buying financial products such as pensions or investments.

I have not met many people who really want to buy a pension; what most people really want from their money is to be able to achieve and maintain their desired lifestyle without the fear of running out of money – whatever happens.

To help our clients to do this, we have to know how much is enough. How much money do they need support this lifestyle?

To help us calculate ‘enough’, we need to understand what our clients’ lifestyle looks like. For many, especially if they have not given much thought to what they would like their lifestyle to be, this can be quite difficult.

Most financial plans will include income, expenditure assets and liabilities, but the lifestyle financial plan needs to consider the components of a balanced lifestyle that I have discussed in recent articles.

To help our clients achieve this, I developed our ‘lifestyle wheel’. This helps clients understand where they feel they are now with the lifestyle and identify areas for improvement.

Give yourself a score, on a scale of one to 10 where one is low and 10 is high, for each component of your lifestyle. Then join the dots.

If you have a good balanced lifestyle, you will have a nice big round circle. You may score low but have a nice round wheel, but this probably means you are in for a bumpy ride!

Any buckles in your wheel will suggest areas for improvement. If you need to improve your lifestyle, think about why you have given yourself that low score, what you can do to improve it, when are you going to take action and what the financial implications are.

We can then build these into a cash flow model round which we can create your financial plan which will help you achieve, and maintain, your desired lifestyle – whatever happens.

Give it a go; it could change your life!

Client case study

Jack and Jill (not their real names) owned a guesthouse. Running the business involved working seven days a week, 50 weeks of the year.

When they completed their lifestyle wheel, they scored really low on time and fun and recreation. We looked at how we could create more time and more fun but unfortunately, due to the margins in the business, there was no ability to take on more staff to give them more time off.

We eventually came to the conclusion that the only way we could find more time was to sell the business.

The business was to go for sale when they reached 55. The business would be sold for £800,000 but unfortunately the sale of the business meant the sale of their home out of the proceeds. We therefore needed to buy a house for around £300,000.

The big question was, is £500,000 at age 55 enough? Enough to give Jack and Jill the lifestyle they want without the fear of running out of money, whatever happens. And it wasn’t.

The next question was how much did they need to earn between age 55 and 67? Using our sophisticated cash flow modelling software, we calculated that, between them, they needed to earn £12,000 a year over the next 12 years.

As Jack pointed out, that was only two days a week each, working in a supermarket and five days a week to themselves.

They are now time rich and don’t need to worry about money!

If you would like more information or advice on lifestyle financial planning contact Lamb Financial at or by calling (01661) 860438.

Reducing financially induced stress

An empty high street during the lockdown

On June 12th it was announced that the UK economy shrank by a record 20% during the April lockdown.

Whilst this probably did not come as a surprise to many (other than housekeeping, what did you buy in April?) it will not reduce the strain on many people’s finances. This could cause stress for a lot of people.

Consider this: the quality of your emotional life is the quality of your life. If you’re stressed, life is not good.

So how can financial stress be managed and changed?

Reducing financial stress will enable you to focus on other more important areas of your life and be able to relax in the knowledge that you have a financial plan to help cope with life’s surprises.

The first thing to do is create a budget.

This is the best tool you could use to get control of your finances and avoid stress. It will allow you to decide when and where you are going to spend your hard-earned income; it will ensure that your basic living expenses are provided for whilst still working towards your longer-term goals.

The early months of budgeting will be the most challenging but, once you develop the habit, you will reduce the amount of time you spend on it and consequently reduce the time you spend worrying about your money.

Secondly, accumulate an emergency fund.  

This is money you can access very quickly to cover unexpected expenses and financial emergencies for example a leaking roof or car repairs. Knowing you have money tucked away for unforeseen circumstances in itself is a way of reducing financially induced stress.

My recommendation would be to have at least £1,000 in an emergency fund, then focus on shorter term debts, such as credit cards and personal loans, aiming to repay them as quickly as possible.

Once you have cleared these, aim to increase your emergency fund to around six months net salary. When you have achieved this, making overpayments on your mortgage is possibly the next thing to focus on.

I suspect, because of the Covid-19 crisis, more people will be giving more thought to larger emergency funds. How many people over the last three to four months would have felt a lot happier, and relaxed, having six months income in the bank to fall back on?

If you are struggling to make ends meet, accumulating an emergency fund may seem impossible, but start by putting a small amount away each month, £10 or even a jar of loose change (find a big jar!) Look in your garage or loft and consider what you will never use again; it is amazing what people will buy on eBay or Gumtree!

Where should you behold this emergency fund? This money needs to be able to be very accessible but unfortunately easy access bank accounts do not pay much interest. In my opinion, National Savings and Investments Premium Bonds are a great option:

If you still feel under financial pressure, it is important to seek help. The following website provides free and impartial money advice and is a good place to start:

Part-time work – the encore of your career

In my last blog I discussed avoiding a boring retirement. In my experience, I have seen many clients keen to retire but, having achieved that goal, they find that after around six months they start to get bored and many return to work, albeit part-time.

In this article I will consider the merits of working part-time, leading up to full retirement.

Working is a great way to stay mentally and physically engaged and, for many, working part-time is an essential part of their happiness in retirement and it is a growing trend amongst today’s retirees. Many of our clients, in their 60s, work part-time – not only as a way to supplement cash flow but to stay mentally and physically fit.

I have a client, Bob, who reached 65 and his employer basically said thank you very much here is a gold watch. Bob was horrified and argued to keep his job. Every birthday, Bob’s employers offered retirement, which he refused. When he reached 74, Bob’s employers insisted that he retired.

So, what did Bob do? He started his own company! If you met Bob, you would think he was at least 10 years younger, both physically and mentally.

Whilst the most obvious benefit of part-time working in retirement is the additional cash flow – which can help delay drawing down the full income from pension funds, allowing them to potentially continue to grow – there are other advantages of part time work, such as continuing to benefit from employer’s health insurance and pensions. These all help to achieve a more secure financial future.

There are, however, other things to consider.

Working part time in retirement could complicate your financial situation if you do not plan adequately enough, so it is essential to take a long-term view in your financial planning before taking any part-time roles. For example, a part-time salary on top of a good pension income could nudge you into being a higher rate taxpayer which you would probably want to avoid.

Generally, working helps you stay mentally sharp, socially engaged and physically fit. This ‘encore’ phase of your career may provide more time to give you the opportunity to focus on interests that you had to delay when you were pursuing a full-time career.

It may be the time to specialise in what you really love and potentially absorb yourself in an entirely new interest that you have always been eager to learn about.

However, part-time work can be a slippery slope.

Retirees who go back into the workforce may easily find themselves working more than part-time, usually because they are so valuable and/or good at their jobs and whilst it may be nice to be seen as ‘the’ expert, it can be difficult to set boundaries for your availability.

Some people stop working for an employer and start their own businesses, often as consultants, which is a great way to share your skills learned and developed over 40 years. But it is important to be aware that there are pitfalls; running a small business can be stressful and suck up a lot of time.

I strongly believe that working on a part-time basis throughout your 60s and possibly into your 70s is a really good idea (think of Bob), but it is also important to consider the following:

I have never seen a gravestone with the engraving ‘he wished he’d spent more time at work’.

What are your plans for easing into full time retirement?

  • If you would like more information or advice on retirement planning contact Lamb Financial at or by calling (01661) 860438.

How are you finding your first taste of retirement?

Cars line up at a drive-in food bank in Syracuse, NY

Did you see the news reports of Mercedes, BMWs and SUVs queuing at food banks in America recently?

It is quite a sobering thought to think that these apparently wealthy people do not have adequate emergency funds to support little or no income for only a few months.

Do they have the wrong priorities; nice cars, but no money to put food on the table?

It did make me wonder – if they can’t survive a few months, how will they manage in retirement when they have to live the rest of their lives without a salary?

They will probably be stuck in their homes, not being able to go out, or do things, and be totally fed up with daytime television.

Does this remind you of something?

I have been extremely lucky, being able to continue to work throughout the Covid-19 crisis. If I hadn’t, I would have been extremely bored.  I know people who aren’t as lucky and are bored.

For those who fail to plan their retirement properly, the current situation could be a rehearsal for the retirement, and a significant part of their lives could be spent in boredom.

Taking this into consideration, ask yourself the following question: Do you stop doing things because you get old, or do you get old because you stop doing things? 

Most people would probably agree with the latter.

To avoid this, plan for retirement:

  • Think about all the free time you will have – how will you fill it? How much will this cost?
  • Do you know what your expenditure will be in retirement?
  • Do you have a bucket list? What do you want to do, when and how much will it cost?
  • Do you really want to retire completely? (I know I definitely don’t) and many people have told me recently that work is becoming more and more appealing.
  • Take into consideration there are two phases of retirement:
    • Active – your time for doing what you want to do, between stopping full time work and the next phase.
    • Traditional – this will probably not be until you are about 80. Somebody one suggested to me that the first phase is ‘adventure before dementia’ and the second was ‘pipe, slippers and Werther’s Originals’.
  • Consider that your expenditure patterns through each phase will be different: you will probably spend more money (if affordable) in the ‘Active’ phase, creating memories for the second phase (this of course ignores the fact that you make need to pay for long term care at some point).

To plan properly, you need to know what your cash flow projections look like, after you have planned what retirement looks like for you. When you know understand this, you can determine how much you need to save towards retirement.

Along the way you need to consider inflation, life expectancy, growth rates, how much investment risk you feel comfortable with and your capacity for loss when stock markets repeat their recent volatility.

If this seems rather daunting, a good, fee-based financial planner can support you.

  • If you would like more information or advice on retirement planning contact Lamb Financial at or by calling (01661) 860438.

Download your FREE guide on financial support for businesses and individuals during Covid-19

During this very challenging time, I hope you are staying safe. The rapidly developing news of the spread of the coronavirus pandemic and how it is impacting on our families, friends and businesses is a huge concern for us all. Understandably, people are worried about the general economic outlook and their financial planning.

We have created a comprehensive guide, to provide information about what financial support is available to help individuals and businesses through the Covid-19 outbreak and how to look after your well being.  This can be downloaded for free here.

The Government created new legal powers in the Covid-19 Bill, enabling it to offer whatever further financial support it thinks necessary to support businesses. On March 17th, the Chancellor, Rishi Sunak, announced an unprecedented package of government-backed and guaranteed loans to support businesses, making available an initial £330bn of guarantees – equivalent to 15% of the country’s GDP.

This was on top of a series of measures announced at Budget 2020. The Government announced £30bn of additional support for public services, individuals and businesses experiencing financial difficulties because of Covid-19, including a new £5bn Covid-19 Response Fund to provide any extra resources needed by the NHS and other public services to tackle the virus.

When we consider lifestyle, as part of the financial planning process, we need to include health, relationships, time personal fulfilment, career, fun and recreation, and financial independence – not just the money.

So in the guide we also look at how to work more effectively from home (we have found this very easily and I’m saving a fortune in petrol!) and keep fit and healthy during a period of self-isolation or lockdown, which is vital for our physical and mental well-being.

If you have any queries or we can be of any further assistance, please do not hesitate to contact us.