Don’t score a financial own goal: here’s some financial planning tips to stick to

This article was written by Nero Patel, Wealth Planning Director, and originally published by CGWM.

How to stick to a resolution? The answer, according to psychological researchers, is making a resolution – like a financial goal - more specific and measurable¹. We think being a little more specific is better when it comes to setting financial resolutions. As such, we’ve outlined five key fiscal resolutions for our clients – all of which are realistic and easy to measure. Protect your net and use these ideas to help you become the best goalkeeper you can.  

1. Shifting sands: take your changing circumstances into account

No one’s life is static. In a period of economic volatility, ensuring that your financial plan remains relevant to your situation is more important than ever. If you’ve experienced any significant change in your personal circumstances (for example, you might have received an inheritance, decided to sell your business, or separated from a long-term partner), make sure you’ve considered the potential implications this might have on your financial plan.

Financial plans should be revisited, at the very least, annually, and there’s never a better time than now to take stock. We would encourage everyone to speak to a Wealth Planner as part of your planning – to ensure that both you and your planner can continue to work towards your secure financial future, no matter what that future might look like.

2. Strategic savings: use your ISA tax allowance

Individual Savings Accounts (ISAs) are a tax-efficient investment and cash-savings wrappers that provide a shelter from tax on income and capital gains. It’s always good to make the most of your annual £20,000 ISA allowance as you approach the end of the tax year (before 5 April every year).

Using your ISA allowance is a key part of building a broader financial plan around your savings. Speak to one of our Wealth Planners to see how else you might organise your finances to take advantage of current allowances – and how much to keep in cash.

3. Pension considerations: optimise your contributions

Last year in 2023, the chancellor announced an increase to the annual allowance for pension contributions from £40,000 to £60,000 (subject to caps based on earnings), along with other changes to pension legislation. For our full breakdown of these changes and how you might be impacted, you can read our guide here.

In terms of pension allowances, if you use your full pension allowance each year, don’t forget to do this before the end of this tax year.

Current legislation around pensions is complex, and the impact it could have on you is highly dependent on your personal situation and tax position.

4. Gifting strategies: pass on your wealth

If you’re looking to pass on your wealth, an annual inheritance tax (IHT)-exempt gifting allowance of £3,000 is available. This allowance can be carried forward one year, so if you did not take advantage of this in a previous year, you could potentially gift £6,000 completely free before the end of the next tax year.

As is true of all of these suggested resolutions, gifting in this manner fits in as part of a broader financial plan. It may work well alongside other methods of transferring wealth, such as paying for school fees, or contributing into Junior ISAs. While it’s good to make use of allowances while they are available, make sure that this aligns with your wider objectives, and ensure that you consult a Wealth Planner before moving any assets.

5. A family affair: discuss estate planning with your family

IHT planning, while important, is only one part of intergenerational wealth planning. A recent survey found that 42% of the ‘baby boomer’ generation had not discussed any form of inheritance or gifting with loved ones, while 39% of the younger generations said they were not confident about making use of any received inheritance². How can you ensure that your beneficiaries are prepared to inherit, when the time comes?

If you haven’t already, we would suggest introducing your children or other heirs to your financial planner and including them in the discussions about your wealth. This way, you can be confident that your loved ones are prepared to receive your legacy and are equipped to manage it in the best way to build a strong financial future.

Take control and keep the ball in your court

By committing to these resolutions, you will be planning actionable steps on your journey towards a secure financial future. As a can-do wealth manager, we will work closely with you to help you to build a holistic financial plan that is tailored to your personal circumstances. As such, we would recommend speaking to one of our specialists before taking advantage of any of the allowances mentioned in this article.

If you have any questions about your financial situation, please do not hesitate to get in touch. If you do not already have a dedicated CGWM contact, you can contact us to arrange a free, no-obligation consultation, to discuss how we can help you to plan for your future.

In case you missed it:

• Investing in gilts for tax-efficient returns
• Making your money meaningful
• Trusts for estate planning: what, when and how?

Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.

The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity.

The information contained herein is based on materials and sources deemed to be reliable; however, Canaccord Genuity Wealth Management and Adam and Company makes no representation or warranty, either express or implied, to the accuracy, completeness or reliability of this information. Canaccord is not liable for the content and accuracy of the opinions and information provided by external contributors. All stated opinions and estimates in this article are subject to change without notice and Canaccord Genuity Wealth Management is under no obligation to update the information.

The tax treatment of all investments depends upon individual circumstances and the levels and bases of taxation may change in the future. Investors should discuss their financial arrangements with their own tax adviser before investing.

The tax treatments set out in this communication are based on our current understanding of UK legislation. It is a broad summary and cannot cover every circumstance and it does not constitute advice.

1 https://iaap-journals.onlinelibrary.wiley.com/doi/10.1111/aphw.12172

2 https://theprogenygroup.com/wp-content/uploads/2022/10/Planning-to-pass-it-on-Progeny-YouGov-survey-on-intergenerational-wealth-transfer.pdf