Happy New Year!
I wish you a happy and prosperous New Year. Life and business are full of challenges and it is a case of dealing with them as best we can. Some people’s problems are more serious than others; nevertheless, we shall all face challenges in the year ahead.
Whilst I and my team may not be able to address all your concerns, there are many which we can help with: restructuring finance on more favourable terms; raising funds for a practice purchase; arranging what might seem to be a difficult mortgage; making a Will; reviewing insurances; implementing a savings programme; deciding whether to sell a business or spend money on enhancing it. We have many and varied enquiries throughout the year and what may seem complex or difficult for you is often relatively straightforward for us. Experience is key!
You can’t buy experience. Well, obviously you can but the motto rightly infers that one has to gain it over many years. If you don’t have the requisite experience, then it is necessary to pay for it. Yes, you can acquire or buy expertise but experience is quite different. An individual experience is one thing but wider experience and knowledge are quite another. I once met with a young practitioner who didn’t wish to save in a stocks and shares ISA because of the risks involved. Her personal experience was of a product that lost her money. When was this?
2003. Having qualified in 1998 and then having spent a year as a vocational trainee, the timing of her saving was particularly unfortunate as it coincided with the stock-market implosion of 2000; a period of under-performance which lasted three years. Perhaps she shouldn’t have invested in such a vehicle, especially in her circumstances. Either way, we know that markets fall as well as rise and timing is crucial. That doesn’t make the product a bad one. Last September saw the tenth anniversary of the run on Northern Rock. The Newcastle based bank had been riding for a fall for years. Indeed, my father, Andrew, wrote warning about it in his August 2008 newsletter – a full nine years before! If he could see the problem, why couldn’t the regulators? With seductively high savings rates and the enticing offer of a 125% mortgage, if these products seemed too good to be true they most certainly proved to be so as, indeed, did the savings rates offered by the Icelandic banks.
Too Good to be True?
Bitcoins – An exciting way to lose money. No sooner had the papers been warning of the currency’s unrealistic value and of an imminent correction, the collapse in the price began.
Dentists Provident Society
Run by dentists for dentists, the DPS is a long established friendly society offering immediate sickness insurance to its members as well as tax free profits at retirement. I met with committee member, Davinderpal Kooner and member services manager, Craig Jeffery at the Dental Showcase and was reminded to draw your attention to the fact that many members who have joined in the last few years will have only the one basic share. After two years’ membership, you are entitled to have fifty shares for a modest £7.50pm. As the society benefits from a tax exempt status there is no tax to pay on its profits so any surplus after claims and expenses is distributed amongst the members. Please let me know if you would like to pursue this or simply review your cover.
The Endowment Scandal
Some of the journalists jumping on the so-called endowment scandal don’t look old enough to have been out of short trousers at the height of endowment policies’ popularity. Whilst it is undeniable that many Low Cost Endowment policies were inappropriately recommended, the commentators appear to have lost sight of the fact that the projections were exactly that – projections, not promises and certainly not guarantees. The only inherent guarantee was the sum insured, i.e. the death benefit.
The projected maturity value was based upon an assumed growth rate which will also have been largely dependent upon interest rates. The latter were very much higher in the 80s and 90s than they are now, as was inflation. Annual bonuses, once allocated, were guaranteed but were modest when compared with the terminal bonus. Obviously a company cannot guarantee what it is unable to deliver so when interest rates and inflation started to fall so did the returns on these policies. Equally, so did the interest payments to the mortgage lender so any reduction in outlay consequent upon the fall in interest rates should have been used to accelerate repayment of one’s mortgage – a point Andrew made in several of his newsletters. For many of our clients the enforced saving of an endowment policy has proved a Godsend as they have been used to meet ‘unexpected’ tax bills, school fees or a larger deposit on a new home. One of my longstanding clients used the encashment value of one such policy to meet his father’s private medical bills. As with ISAs referred to above, it was not necessarily the product that was flawed but the advice being inappropriate in the circumstances.
Integrated Implant Training
I met up with Stewart Harding, one of our longstanding members, at the Dental Showcase in October and offered to advertise The City of London Dental School through which he offers clinical implant training at varying levels.
There are four options: Clinical Implant Internship; Postgraduate Award (PGA) in Implant Dentistry; Flexible Implant Training and Maximum Implant Training. The PGA in orthodontics also offers supervised clinical training and is a foundation programme for a Masters in Orthodontics. For full details, dates and fees, please contact Stewart and his team on 0207-232-5270 / firstname.lastname@example.org
Professional Indemnity (AllMedPro)
Like the cost of fuel, the premiums for professional liability insurance seem to be increasing inordinately. It is not just in your professions, but ours too. The difference is that many of our regulatory costs are set by unelected and unaccountable quangos, whereas at least you can shop around for a more competitive price. Tom Chaston and Adam O’Keeffe, the directors at All Med Pro (All Medical Professionals Ltd) would be delighted to research the options for our members and endeavour to offer more competitive terms than those you currently have. The company only deals with specialist insurances including surgery, overheads and locum cover. Please contact them at email@example.com or on 0203-757-6950.
Interest Rates v Inflation
The rate of inflation has risen gradually post Brexit to around 3%. What this means is, apart from the cost of living rising, that you are losing money in real terms by saving in the bank or building society. With the best easy access rate paying 1.3%, you don’t need a maths degree to work out the implications of leaving cash on deposit. However, for a proportion of our savings we have no choice. Tax money, holiday funds, saving for a deposit, emergency reserves are all examples of why we need easy access accounts. The price paid for accessibility is the difference between inflation and the interest paid on your cash deposits. So, for real savings we need to expose our cash to some degree of risk. That risk can be managed, however, by using a bespoke fund management company and investing in line with your individual attitude to risk. Please ask for more information about maximising your savings and retirement funds whilst also managing the levels of risk to which they are exposed.
Currency Exchange – TorFX
Recent dealings with my father’s financial affairs, over which I have power of attorney, alerted me to the value of a currency exchange company. Moving money around the globe is not always easy – or cheap! TorFX is a well established company offering currency transfer solutions for property purchase, overseas investments or repatriating funds.
We have a dedicated account manager who works with us to ensure swift, efficient and cost effective transactions. TorFX works on smaller margins than many other currency providers which means it can offer better exchange rates. Regulated by the Financial Conduct Authority, TorFX also boasts the highest credit rating from the American ratings agency, Dun and Bradstreet. To open an account, please contact us or Natalie Collins at firstname.lastname@example.org or on 0173-633-5234.
Finance is very much like a game of chess; it pays to think a few moves ahead.
We have had a number of issues over the last year with Remuneration Trusts. They are, or at least were, an effective way of reducing one’s tax liability. The flip side is that they are also an effective way of reducing your borrowing capacity!
The impact of such a trust can last for years so if you are considering using a tax mitigation vehicle, please ensure that your accountant or adviser makes you fully aware of any associated implications. At least two clients have had difficulty in raising funds because of their ‘investment’ in these trusts and in both cases it very nearly prevented them from achieving their aims. You just never know what is around the corner, so putting a ball and chain around your ankles, metaphorically speaking, can prove very restricting!
Tax Investigation Service
Whilst we are all looking for ways to minimise our tax liability, HMRC is always looking for ways to maximise it and an investigation can prove very fruitful for them. Consequently, it would be prudent to subscribe to your accountant’s tax investigation service or join the Federation of Small Businesses which includes this. I paid £215 (inc VAT) this year to my accountants, Humphrey and Co so, after tax, it costs only £129 – Bargain or what?! Everyone who’s ever had an investigation say that is not an experience they wish to repeat, even if nothing untoward is discovered. “I should know – I was a tax officer once!” All the views expressed in this newsletter are personal and do not constitute advice – Please consult a suitably qualified and authorised adviser where appropriate.
Mediclub & Lily Head Dental Practice Sales
MediClub develops links with like-minded specialists in the sector who share our ethos of professionalism and customer service. Consequently, it was a privilege to share an evening at the 2018 Dental Industry awards recently with two of our most valued connections, Lily Head Dental Practice Sales and MediFinance, both of whom were shortlisted for awards. It was a cause for a double celebration because Abi Greenhaugh of LH was not only nominated for an individual award but had also succeeded in selling one of my longstanding client’s practice within five weeks and for more than the asking price!
Authorised and regulated by the Financial Conduct Authority.
MediClub is a trading style of Chantler Kent Investments, 2 Roberts Mews, High Street, Orpington BR6 0JP.