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Josh Matthews invited to be a panellist at the Private Wealth UK Forum

On Tuesday 21st March, Managing Partner Josh Matthews was invited to be a panellist at the Markets Group Private Wealth UK Forum in London, a meeting of Regional HNW Wealth Managers, Private Banks, and Family offices.

The day covered a broad range of topics, with Josh on the panel called ‘Opportunistic Approaches to Alternatives’.  He discussed the high yielding opportunities in alternative credit, and how in a low interest rate environment alternative credit is a good option for clients who can withstand some illiquidity.

If you are interested in hearing more about MASECO’s views on alternative credit, please contact your wealth manager.

Is Lifetime Allowance Protection appropriate?

The standard lifetime allowance (LTA) is a limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income – and can be paid without triggering an extra tax charge. As of 6 April 2016, the LTA reduced from £1.25 million to £1 million. Provided nothing changes, the LTA is set to stay at £1 million until April 2018 when it is scheduled to increase each year in line with CPI.

With the lower LTA threshold, there is a segment of individuals who, if not already addressed, should give consideration as to whether or not a form of LTA protection might be appropriate in their situation. Lifetime allowance protection locks in the level of your lifetime allowance. There are three protection programmes that remain available to individuals who do not currently hold protection or have not previously applied for protection in the past. Special attention should be paid to those who think they qualify under the IP2014 programme, noted below as an application for this is only available until 5 April 2017. These are:

Financial Prescriptions – do they cure the ailment?

Let’s run a small experiment. Imagine you go through your daily routine and every time you saw an advert for a financial product/service, you replaced the image with that of a doctor handing out a prescription.

Depending on the circles you operate in, these financial “prescriptions” can come at you pretty thick and fast.  Whether browsing websites or reading billboards, they are difficult to ignore.

The problem with accepting financial prescriptions is that one collects a random mixture over one’s life that often overlaps, contradicts each other or worse, are not designed to treat the “ailment”.

In my experience the reason people end up with a collection of random financial prescriptions, rather than a targeted prescription based off a complete health diagnosis is:

Reflections on 2016 & Beyond

A question one should ask oneself periodically is: “how is my portfolio getting along?”. Trying to get to the bottom of this seemingly simple question often leads to more questions than answers. The answer is generally a combination of fund selection, asset allocation and fees.

For MASECO, let’s reflect on asset allocation first. On the equity side, we currently tilt portfolios away from US equity into a higher allocation towards Emerging Markets. This is a long-term belief that we believe is designed to improve both returns as well as diversification (given the US otherwise represents about 54% of global equity markets). This idea had very little performance impact last year, as both equity regions produced only marginally different returns over the 12 months (comparing MSCI EM with S&P 500 in USD)1.

Consider using any unused carry forward UK pension contributions before UK tax year end

UK pensions have traditionally offered a great opportunity for UK and US persons alike to save towards retirement. From a UK perspective, pension contributions have typically allowed individuals to receive tax relief in the year of contribution, tax-deferred growth whilst funds remain within the tax wrapper, a tax-free pension commencement lump sum of up to 25%, and distributions from the pension at marginal tax rates. Additionally, UK pensions remain entirely outside of the pension-holder’s estate for UK inheritance tax purposes, providing a powerful planning tool for many families given the differential of estate tax thresholds between the UK and the UK. From a US perspective, to the extent that tax relief is limited, UK pensions have often provided a good opportunity to use excess foreign tax credits and establish cost basis in the account. This can be especially powerful if the individual anticipates living in the US during retirement where the US will generally have primary taxing rights on the UK pension under the US-UK tax treaty.

Agreeing with Warren Buffett and the evidence behind his comments

It has been known for decades that active fund managers generally underperform their benchmarks[1].  Eugene Fama penned the Efficient Market Hypothesis[2] in the 60’s proving this and there has been numerous others who have throughout the years.  In very recent times, Warren Buffet made waves this weekend with his harsh criticism of Wall Street and how investors have paid more than $100 billion needlessly in fees over the year[3].  Also, every six months S&P publishes their SPIVA report which shows this happening in practice – ‘over the five-year period, 91.91% of US large-cap (active) managers…lagged their respective benchmarks’.[4]

US pension contributions in a world of changing UK pension landscape

For many Americans living in the UK, the focus of retirement savings and contributions has typically been UK pensions as opposed to US pensions due to the generous annual allowances and tax relief offered in the UK as a higher tax jurisdiction. However, with the ever changing UK pension landscape, individuals earning over £150,000 have a tapered UK pension allowance, making funding US pensions as part of the overall retirement saving strategy slightly more attractive.

A little MASECO silverware – The Team attend City Ski

This weekend saw a return of the annual City Ski Championships, which Verbier played host to for the 2nd year running.  Since MASECO’s humble beginnings back in 2008, we have doggedly fielded a team, but in keeping with our entrepreneurial spirit, it has tended to be a triumph of optimism over reality.  There have been occasional individual successes, but the team event has always alluded…  That is until the great year of 2017!  We are delighted to report a changing of the guard: Messrs Matthews, Dorman, Armitage and Capuano (aka Team MASECO) rose to the occasion, and were the fastest men on the mountain on the day, with significant support from Messrs Sellon, Findlater and Flonaes.  For full disclosure Will Armitage and Ted Capuano are technically “friends” of MASECO rather than fully signed conscripts, but definitely not “ringers” in spite of murmurings from the competition.