Is your financial planning match-fit for today’s world?

Everyone has their own set of circumstances, goals and needs when it comes to their finances. With good financial planning, you can map these out and identify steps you can take to protect and make the most of your income, assets and wealth.

You will benefit most from reviewing your financial affairs not in isolation, but as a whole. This means looking at your savings, investments, other assets, tax planning, pensions and estate planning together. How are they currently structured? Do they affect each other? What are your options, now and in the near future? What will work best for your family and your unique situation, objectives and risk appetite?

Protecting your wealth

It is only natural that you will want to preserve your wealth and see it grow over time. There is invaluable peace of mind in securing financial security for your family, no matter how long you live or what health issues may come your way. You may also want to help the next generations by leaving a lasting legacy.

However, today’s economic and political climate presents many challenges to both protecting and growing your capital.

Take the prolonged period of low interest rates: this has made it harder to achieve decent returns on bank deposits and lower-risk investments. Meanwhile, creeping inflation has further eroded the value of capital and income. This has also been a time of heightened global tax scrutiny, with frequent changes to tax and pensions legislation. And, of course, Brexit is likely to continue generating economic uncertainty and fluctuations in the value of the pound and euro.

At times like this, careful planning plays a particularly important role in securing your financial security over the long term. You need to weigh up which issues affect you most and establish what you can do to protect against them.

Personalised, expert advice

While some choose a DIY approach to financial planning, most people who have built up or inherited wealth will benefit from an independent and expert review of their finances. After all, it is difficult to take a step back and look at your broad financial situation from a truly objective point of view, or fully understand the complex tax implications and keep up with the changing rules.

For the best results, take professional advice from an experienced, locally-based financial adviser. Since wealth management is such a personal issue, they should take time and use the necessary tools to thoroughly understand your unique situation, needs and objectives, including how you want to shape your legacy.

Investment planning

Investment is probably the area where people are most concerned about losing money. While all investments – even bank accounts – carry risk, a suitably diversified portfolio can help manage risk within your comfort level. It is essential to establish a clear and objective view of your risk tolerance to determine the investment approach that will best suit you. Your adviser is best placed to do this objectively using psychometric testing, for example, combined with their knowledge of your family’s situation in Portugal and your financial goals.

Understanding local taxation

If you live here, all elements of your financial planning – from investments to estate planning – need to be set up for Portugal, not for the UK. Ideally, your adviser should be based in Portugal and have first-hand experience of the issues facing expatriates here, financial and otherwise. Crucially, they should also have in-depth understanding of cross-border tax planning, including the Portuguese tax regime and how it interacts with UK rules.

A local adviser can also react quickly and help you make adjustments if your personal circumstances change, or if there are Brexit developments or tax reforms that may affect you – including new opportunities. If you decide to relocate again or return to the UK at any point, they can help you navigate the tax regimes and residency rules of both countries.

The importance of regulation

Make sure you only deal with an adviser that has suitable, higher-level professional qualifications. The advisory firm should be authorised by a reputable regulatory body, such as the UK’s Financial Conduct Authority (FCA), and also authorised to give advice here in Portugal.

Note that for certain transactions, using a UK-regulated adviser is mandatory. For example, if you want to transfer more than £30,000 from a ‘defined benefit’ pension scheme, you must take advice from a UK FCA-regulated firm.

Remember: if you are living in Portugal, your finances should be set up for your life here, not for your old life in the UK. The sooner you review your financial planning and set up a strategic, long-term vision to protect your wealth, the sooner you can relax into a prosperous future in the Algarve.

All advice received from Blevins Franks is personalised and provided in writing. This article, however, should not be construed as providing any personalised taxation or investment advice.

By Dan Henderson
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Dan Henderson, Partner of Blevins Franks, is a highly experienced financial adviser, specialising in retirement, investment and succession planning. He holds the Diploma for Financial Advisers and advanced CII qualifications in pensions and investment planning.