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Wells Gibson is now a member of EBIS

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Wells Gibson is delighted to announce it is now a member of the Evidence Based Investment Solutions (EBIS) group

What is EBIS?

Wells Gibson’s investment research and development group

Formed in 2008, EBIS is a group of independent investment professionals who believe many investors are poorly served by the investment industry and inexperienced advisors.  EBIS member firms are based across the UK and as at December 2018, represent clients with c.£500 million in funds under management.

What is the purpose of EBIS?

Educating anyone who wants to learn more about evidence-based investing

The purpose of the group is to make the case for a smarter way of investing, based on global academic evidence and to provide a central resource for sharing our investment philosophy with a wider audience.

What motivates EBIS?  

Protecting our clients and our reputation from flawed industry practices

Investors seek a return on their investments however the UK investment management industry continues to transfer most of this return from investors’ pockets to those in the fund management industry, in the form of bonuses, commissions, fees and other expenses.  EBIS members have a completely different approach.

How does EBIS function as Wells Gibson’s investment committee?

Pooling intellectual capital and experience

In order to provide a good and consistent investment experience, it is necessary to apply a structured and disciplined process to the construction of investment portfolios.  This process should consider each asset class and sub-class, examine the evidence for and against holding it, and recommend whether it is likely to add risk-adjusted return to portfolios.  Model portfolios should then be tested for the most appropriate combination of each asset class, using the latest developments in Modern Portfolio Theory.  Finally, the funds available in each asset class need to be reviewed against a range of criteria, including cost and how well it fulfils its brief.

The role of EBIS investment committee is to identify and present the evidence the group needs to make asset allocation and fund decisions for their clients’ portfolios.  Our intellectual capital and experience are combined to produce what we believe are some of the most rigorously researched portfolios available.

How do clients benefit from EBIS?

Member firms are far more capable together than in isolation

EBIS is also an ongoing research and development organisation, meeting regularly to share best practice ideas and processes between our businesses.  This co-operation allows us to gain and pass on to clients a more rounded view of Financial Planning than we would be able to as an individual firm.

For more information about EBIS and the member firms please visit www.ebisgroup.org

Do you know your state pension age?

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With the state pension making up an important element of income in retirement, knowing WHEN you’re going to start receiving your state pension is an important fact.  However, a series of changes to the state pension age have left many in the dark.

New research has found that 24% of 50 to 64 year olds don’t know their state pension age.  That’s equivalent to nearly 3 million people.  The research, carried out by YouGov on behalf of the charity Age UK, was published ahead of Thursday 6th December 2018, an important date for the state pension age.  This is the date when no-one, neither men nor women, will be able to start accessing their state pension before their 65th birthday.

The state pension age has been on the rise for women since 2010, equalising with the state pension age for men at age 65, before rising higher still for both sexes.  For women, the state pension age has risen rather quickly; it was age 60 in 2010, rising to age 65 in 2018.  This age rise has hit some groups of women quite hard, particularly those born in the 1950s, and left them with little time to adjust their retirement plans accordingly.

According to the research, nearly a fifth of those surveyed made the disappointing discovery that their state pension age was higher than they expected.  Amongst those who had previously said they didn’t know their state pension age, this rose to 52%.  Even among those who had professed to know their state pension age, nearly one in 10 discovered the age at which they will actually receive their state pension is higher than they thought.  Three in 10 of those surveyed as part of the research had never checked or couldn’t remember checking their state pension age.

Looking ahead, men and women will face an even longer wait to start getting their state pension. It’s currently on track to start at age 67 by 2028 for both men and women.  This age rise is not popular.  Almost three in five of those surveyed for Age UK felt very negative about the changes. More than a third expressed their disappointment, around a third said they felt angry about the change, and one in seven felt worried.  The state pension age is on the rise because people are, on average, living longer.  That said, many people who live in deprived areas and on low incomes cannot expect the same life expectancy improvements as those who live in affluent parts of the country or receive higher incomes.

Of those who said they do not expect to be working in the two years leading up to state pension age, 29% cited health reasons, 17% cited likely unemployment, and 5% cited caring responsibilities as the main reasons. Ill health was a particular concern for those surveyed in the ‘working class’ demographic, with almost half of this group citing ill health as a reason for not expecting to work in the years leading up to their state pension age.

As a result of the research, Age UK is warning that many people – typically manual workers, carers and those who are unemployed – are likely to experience real hardship as a result of the continued increase in state pension age, made worse still if they are expecting to receive their State Pension sooner than they actually will.

Age UK are calling on the government to offer much better support and more opportunities to stay in work until reaching state pension age.  They are also urging people to check their state pension age, which they can do online at www.ageuk.org.uk/state-pension-age.  Caroline Abrahams, Age UK’s Charity Director, said:

“Clearly there is still much confusion about the age at which people can expect to receive their State Pension and our worry is that many who have few resources to fall back on are in for a nasty shock.

“At Age UK we think the most pressing and immediate concern is the hundreds of thousands of people in their fifties and sixties who are unable to carry on working today, and who are really struggling financially as a result.  We are thinking, for example, of lifelong manual workers crippled by arthritis and carers who have given up work to look after an ailing partner or parent, and who face the prospect of being totally broke as they wait to claim their State Pension.

“The Government needs to do much more to help people in this position now.  More support should be given to those who are badly affected by increases in SPA, like men and women earning low wages who are completely or mainly reliant on the State Pension to get by in retirement.  We urge the Government to allow early access to the State Pension for those who effectively have had no choice but to stop working before they reach their SPA.”

Anyone who is concerned about their retirement income or state pension age can call Age UK Advice free of charge on 0800 169 6565, visit www.ageuk.org.uk or contact their local Age UK for further information.

Another better option is to start planning ahead by working with a professional financial planning firm which can obtain your State Pension forecast on your behalf.

Money and personal well-being

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How has your personal well-being changed over the past year?  It’s arguably a difficult thing to measure.  After all, we have different views about what constitutes happiness, satisfaction and well-being.

The Office for National Statistics has devised a way to measure and track personal well-being. Their latest official figures on the subject show that average life satisfaction, worthwhile, happiness and anxiety ratings showed no overall change in the UK during the last year.  That’s despite Brexit rumbling on, despite England crashing out of the World Cup so close to that elusive final, and despite the continued rantings of US President Donald Trump.

Although no overall change to these measures, they did find that fewer people reported low happiness ratings and more people reported very low anxiety ratings.  The proportion of people reporting very low anxiety ratings in England increased; this could be driving the improvement seen in the UK for those reporting very low levels of anxiety.

Looking at the findings on a regional basis, compared with the UK, a larger proportion of people in Wales reported “poor” personal well-being ratings across all measures.

Compared with both the UK and the other countries, people in Northern Ireland continued to report better average ratings across all personal well-being measures.

There were no overall changes in Scotland across the measures of personal well-being.

Considering these figures as a longer-term trend, between the years ending June 2012 and June 2018, the proportion of people reporting “poor” ratings decreased, those reporting “very good” ratings increased, and “very good” ratings rose faster than “poor” ratings.  This suggests that the improvements for those people struggling the most has been slower over time.

However, what does money have to do with personal well-being?

The ONS concluded that the positive changes may be influenced by the improvement in certain economic indicators, such as the unemployment rate.  It makes sense to think that, when jobs are more abundant, our personal well-being should be better.  Real-term average wage rises during the last year could also have helped.

The ONS publication ties in nicely with new research from Age UK, which found that those in control of their finances feel generally calmer, happier and less worried. The Age UK research was designed to show the importance of older people feeling on top of money matters.  They found that a third of over 65s said they feel generally calmer and happier as a result of feeling in control, and admitted they worry less when this is the case.

Caroline Abrahams, Age UK’s Charity Director, said:

“Being in control of your finances, regardless of how much money you have, is clearly a key component of good mental health and can make a big difference to how we feel about life generally.”

Talking about money and any worries you might have is clearly an important step towards feeling more in control and less anxious about your personal finances.

Working with a Chartered Financial Planner or Certified Financial Planner is a great way to improve the way in which money contributes towards your personal well-being.

This is why the vision of Wells Gibson is to see lives changed, one client, one family at a time and it’s our mission, to bring clarity, contentment and certainty to your financial life.

Mental health in later life is a real issue

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Getting older is an inevitable part of life and something felt more acutely with rising life expectancy.

One consequence of living longer lives is health challenges as we enter the later stages of retirement or the winter season of our life.  Often these health challenges are focused around cognitive impairment, with dementia a big concern for some of Wells Gibson’s older clients.

One area of health that is often overlooked for older people and perhaps the majority of us, is mental health.  This can sometimes be considered to be a greater challenge for younger people, with support and resources usually targeted to this demographic.

New research for Saga has found that more than a third of their members reported an experience with mental health issues during their lifetime.  One in five of the more than 10,000 people surveyed reported that their mental wellbeing has declined as they got older.  The reasons for this decline in mental health in later life appear to be changes to our personal circumstances.  These are changes which can leave some individuals more vulnerable to feeling low, depressed or anxious.

According to Saga, the most common triggers for mental health problems for older people include grief from the loss of a loved one, loneliness, not feeling like themselves and a lack of identity brought about by leaving the workplace.  This final trigger for mental health problems is something to consider as you enter retirement, with the change in daily routine having a profound impact on some.

Talking about our mental health can be tough, with mental health still considered a taboo by many.  While younger people have become generally accepting that it’s good to talk about mental health, older generations still find it has a stigma attached and can even be considered a sign of weakness.  Men in particular tend to take a ‘bravado’ approach when it comes to mental health, with more women than men reporting an experience with a mental health issue.

The reluctance to discuss our mental health, especially in later life, could be behind the statistic that 85% of older people with depression receive no help from the NHS.  Older people are in fact a fifth as likely as younger people to have access to talking therapies, but six times as likely to be on medication.  In addition, while 50% of younger people with depression are referred to mental health services, only 6% of older people are.  Kevin McMullan, Head of Health Insurance for Saga said:

“Talking about mental health issues is clearly something that many people still shy-away from and it is important to remember that mental health is just as important as physical health.”

“With one in five of our members telling us that their mental health has declined as they got older it has never been more important for people to have the support they need in the way they need it. In fact, for many spending more time with family and friends can be all the support they need. However, it’s clear that for some the usual routes to seek support simply don’t work for them.”

This research demonstrates that mental health issues can be a real issue in retirement which in itself is one of life’s big transitions which we all need to plan for.  It’s so important to seek help when needed.

State pension age equalisation is here

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State pension age equalisation has taken place in the UK.

The gradual change now means that women qualify for their state pension from age 65, the same age as men.

State pension equalisation has taken a long time, 25 years in fact.  During that time, the age rise for women was gradually phased in, with women celebrating their 65th birthday on 6th November 2018 the first to qualify for a state pension at the same age as men.   Despite equal ages for state pensions, equality of retirement income remains a long way off.  Maike Currie, Investment Director at Fidelity International said:

“The pension system is relatively equal if people follow the same working pattern from age 20 to retirement, but they don’t.  Women are more likely to have fragmented careers, be self-employed or work flexibly during their working life as they continue to bear the brunt of the childcare or take a career break to care for sick or elderly relatives.

“Of course, these factors are increasingly affecting men too, however, the average women’s pension pot is already much lower than the average man’s so women need to have the ability to catch up. As the Cridland report pointed out, in the first year of retirement women are expected to have 25% less income than their male counterparts.”

The final report from the Cridland Review was published last year and made a number of recommendations in respect of the state pension.  Report author John Cridland, a business executive, proposed an accelerated increase in the state pension age.  It is already due to rise to age 68 between 2044 and 2046, having an impact on those born after 5th April 1977.  Cridland wants to see the state pension age rise to 68 between 2037 and 2039, bringing this increase forward by seven years.  As a result, anyone born after 5thApril 1970 would have a higher state pension age.

Further rises in the state pension age seem unavoidable in light of improving life expectancy.  Without a higher state pension age, people living for longer would make the state pension unaffordable for the taxpayer.

The Cridland Review also recommended abolishing the ‘triple lock’ for increasing state pension payments each year.  This currently gives state pensioners a degree of protection from price inflation, with their state pension income rising each year in line with the greater of average earnings, price inflation or 2.5%. Instead of having this triple lock in place, John Cridland proposed that state pensions in the future rise in line with average earnings.

One group who are unhappy with the equalisation of state pension ages for men and women are 1950s born women represented by the Women Against State Pension Age Inequality (WASPI) campaign group.  They are arguing for government compensation after claiming to be unaware their state pension age would rise, as the government did not routinely write to women to let them know about the change.

Your state pension is likely to form an important part of your total income in retirement.  It’s important to understand when you will start to receive a state pension income and how much this is likely to be.  A good place to start is requesting a free state pension forecast at gov.uk/check-state-pension and then speaking to your financial planner to incorporate these figures within your overall plan for retirement income.