Podcast Summary
Effectively find candidates on LinkedIn: 70% of LinkedIn users aren't on other job sites, making it an effective platform for small businesses to find potential hires.
LinkedIn is a valuable resource for small businesses looking to hire professionals, as over 70% of LinkedIn users don't visit other leading job sites. This makes LinkedIn an effective platform for finding candidates who might not be actively searching for a new job but could be open to the right opportunity. Additionally, the end of the pensions death tax, a topic discussed on The Money Show podcast, may not benefit every hardworking family as claimed by the government. The death tax, which was scheduled for review as part of the chancellor's annuity reforms, was previously set at an anomalously high rate of 55%. Many expected it to be reduced to 40%, but the chancellor went further and claimed it would benefit hardworking families. However, its true impact and effectiveness in encouraging responsible retirement savings remains to be seen.
Tax-free inheritance of pension pots: The chancellor's pension reforms allow tax-free inheritance of pension pots for those under 75, making them a more attractive option for inheritance planning.
The chancellor's pension reforms mean that many people will now be able to bequeath their pension pots to their beneficiaries tax-free if they die before the age of 75. This applies to defined contribution schemes, and there are also concessions for annuity and final salary schemes. This is a significant shift from the previous punitive tax regime, making pension pots a more attractive option for inheritance planning. However, it remains to be seen whether existing annuity and final salary scheme customers will be able to benefit from these changes. Additionally, there is a risk that some people may feel incentivized to overfund their pensions to avoid inheritance tax.
New incentives for keeping pension pots untouched for inheritance tax planning: Chancellor's pension reforms encourage individuals to leave pensions untouched until death, enabling tax-free income for beneficiaries and potential inheritance tax savings.
The UK chancellor's recent pension reforms have created new incentives for individuals to keep their pension pots untouched until death, making pensions a potential tool for inheritance tax planning. This means that pension providers are now exploring ways to allow beneficiaries to continue drawing income from the pensions, preserving the tax-free status. However, the rushed implementation of these reforms, which comes only months before another set of major pension changes, raises concerns about whether they are properly thought through and if there might be necessary revisions in the future. The uncertainty around the political landscape also adds to the potential for changes if there is a shift in government. Overall, the pension landscape is set for more changes, and individuals and providers will need to stay informed and adapt accordingly.
Mortgage regulations prevent some borrowers from porting or remortgaging: Despite meeting criteria, some borrowers can't port or remortgage due to stricter mortgage rules, leading to mortgage prisoners being trapped on high rates.
Despite the Financial Conduct Authority (FCA) introducing more stringent mortgage regulations this year to prevent irresponsible lending, many borrowers who have a good payment history and don't want to borrow more are still being denied the option to port their mortgage to a new provider or remortgage to a better deal. This is because some lenders are ignoring the transitional arrangements that allow them to waive the new rules for such borrowers. Instead, they are applying the same stringent tests to all borrowers, leading to increased paperwork and processing costs for the lenders. However, these lenders are focused on high volumes of business with minimal processing costs, making the transitional arrangements less appealing. As a result, mortgage prisoners, those trapped on their current mortgage rates, continue to face difficulties in remortgaging or porting their loans, despite meeting the criteria to do so.
Difficulties for borrowers switching mortgages with existing lenders due to MMR rules: MMR rules have made it difficult for some borrowers to switch mortgages with their existing lenders, but lenders have discretion to waive these rules for retaining business.
The Mortgage Market Review (MMR) rules implemented in 2014 have led to some borrowers facing difficulties in switching mortgage deals with their existing lenders, even if they stay within the same product. These transitional cases are not worth the investment for lenders due to the additional training and systems required. However, lenders have the discretion to waive these rules if they see a clear case for retaining business. For borrowers with unchanged circumstances, moving from one mortgage term to another may be less problematic. The Financial Conduct Authority (FCA) has expressed disappointment over this issue but cannot force lenders to use the transitional arrangements. The introduction of upfront charges for financial advice in 2012 led to a gap in advice for the less well-off, and managed portfolio solutions have emerged as an alternative. But the quality and effectiveness of these solutions remain to be seen.
Managed portfolio services for smaller investors: Managed portfolio services offer access to low-cost model portfolios, primarily ETFs, but costs and level of customization vary. Consider the trade-off between fees and expertise before choosing.
There is a growing trend of financial firms, both new and traditional, launching managed portfolio services targeting smaller investors who cannot afford the high fees of traditional wealth managers or private banks. These platforms offer access to model portfolios made up of low-cost funds, primarily exchange-traded funds (ETFs), to keep costs down. While the costs are higher than doing it yourself through an execution-only broker, the appeal is the supposed expertise of these fund managers in allocating assets for optimal returns. However, not all platforms require investors to fill out risk questionnaires, and the level of individualized attention and customization varies. Ultimately, it's essential for investors to weigh the costs and potential benefits before deciding which option is best for them.
Understanding the Risk on Online Investment Platforms: Investors on online platforms need to assess their risk tolerance accurately and consider their investment goals and financial situation before choosing a risk-graded portfolio, as these platforms don't provide financial advice and investors won't have an extra layer of protection if things go wrong.
When using online investment platforms like Nutmeg, the level of risk you're willing to accept is a crucial decision that rests solely on your shoulders. These platforms offer risk-graded portfolios, but it's essential to understand that they don't provide financial advice. The Financial Conduct Authority (FCA) is addressing this issue by consulting on making the distinction between financial advice and guidance clearer for investors. While the FCA encourages these platforms as an option for those who can't afford professional advice, investors must be aware that they won't have an extra layer of protection if things go wrong with their investment. So, it's vital to assess your risk tolerance accurately and consider your investment goals and financial situation before making a decision.
