Investor Magazine - Spring 2023

Tune out the noise

How financial advice keeps you focused on your long-term goals

Welcome to the latest issue of The Investor Does it feel like every time you check the news, there’s nothing but negative stories and opinions that make you worry about your finances? We believe it’s important to look beyond the headlines – otherwise there’s a risk of making poor decisions that could damage your long-term financial plans. In our cover story, we discuss some of the positive behaviours you can adopt to ‘tune out the noise’, keep sight of the bigger picture and stay the course with your investments, despite short-term fluctuations in the global economy.

Elsewhere, we examine what to do if, in a relationship, you and your partner have different ideas about money – and the role of advice in helping you to find common ground for your shared financial future.

We also seek expert views on how businesses, and financial services in particular, are adapting to changing customer expectations. Plus, there’s an overview of the current state of global cybersecurity; a powerful argument for the importance of planning what will happen to your assets after you’re gone; and a demonstration of the value of making the most of your annual tax reliefs and allowances.

We hope you enjoy the issue. As ever, please contact us with any feedback, as we value your comments.

Claire Blackwell Chief Client and Reputation Officer, St. James’s Place

4 IN BRIEF

Celebrating ten years of training financial advisers; a partnership to bring financial education to schools; the latest tax rules; and SJP’s new digital services

18

All facts and statistics in this issue of The Investor are correct at the time of going to press.

7

RAISING THE BAR

Ahead of new regulations from the Financial Conduct Authority, we explore how delivering great experiences can lead to positive

18

FOR RICHER, FOR POORER

You might not always agree with your partner about money. We look at some common conflicts –and how to solve them

24

WHERE THERE’S A WILL

Many of us don’t have a legally sound plan for what will happen to our assets after we’re gone. Here’s why estate planning matters

28

PATTERN RECOGNITION

A close look at the behaviour of employees or customers can reveal hidden trends to drive business performance

32

WEB OF DEFENCE

In our increasingly interconnected world, we need a constantly evolving approach to cybersecurity

Avoid information overload, and discover five ways to block out the noise and stay on track for

FAMILY FORTUNES

7 the future you want add up for one family?

15

How can a lifetime of tax savings

The information contained within this issue of does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Full advice should be taken to evaluate the risks, consequences and suitability of any prospective fund or investment. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2023. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication. PUBLISHED FEBRUARY 2023

SJP

In brief

Last year saw the tenth anniversary of the launch of the marketleading St. James’s Place Financial Adviser Academy.

Since 2012, more than 1,000 graduates have completed the Academy’s training programme, helping to fill the gap for financial advisers to service the growing demand in the UK.

Median net household wealth in Britain is more than £300,000, according to the Office for National Statistics.1 Meanwhile, there were more than 2.8 million people with wealth of more than US$1 million (£800,000) in the UK in 2021, up from around 2.6 million in 2020.2

However, with only around 35,000 financial advisers,3 there is a shortage of experts to help them invest their money wisely. The Academy is helping to meet that shortfall, with more than 80% of its graduates still working as financial advisers today.

“The demand for personal financial advice is stronger than ever,” says Andy Payne, Head of Academy at St. James’s

Investing in the next generation of talent

St. James’s Place celebrates ten years of training financial advisers

Place. “Our Academy offers a market-leading programme that helps people gain the qualifications, skills and experience they need for a rewarding career as a financial adviser. It’s established as among the leading programmes of its kind in the UK for individuals from all backgrounds to train to become a successful financial adviser.”

Around 60% of graduates had no background in finance before joining the Academy. There’s no need to have prior knowledge of finance or excel at maths. Entrepreneurial spirit, a

Changing tracks

What do a golfer, an entrepreneur and a Pilates instructor have in common? They’re all graduates of the SJP Financial Adviser Academy

THE GOLFER

willingness to learn and strong interpersonal skills are far more valuable. Advisers trained through the programme have come from industries as varied as hospitality, professional services, logistics, sport and the Armed Forces.

Sources: 1 Household Total Wealth in Great Britain: April 2018 to March 2020, Office for National Statistics, January 2022

2 Global Wealth Report 2022, Credit Suisse, September 2022 3 The Retail Intermediary Market 2020, Financial Conduct Authority, July 2021

Richard Tidy was a pro golfer, who went on to run the golf services for a hotel chain. In search of a better work-life balance, he joined the Academy in 2016, and his Partner practice now has 300 clients. While the link between golf and financial advice may not seem obvious, Richard says it’s all about relationships.

“I’ve always been client focused, whether on the golf course or in the office,” he says. “It’s the same skill.”

THE ENTREPRENEUR

Nicole Gunter was just 21 when she launched a freightforwarding business, which she ran for 20 years. After taking advice on her own financial situation from an SJP Partner,

she realised she was ready for a change; she qualified as a financial adviser in 2018.

“My network helped me build up my business,” she says. “So often, the last people business owners take care of are themselves.”

THE PILATES INSTRUCTOR

Stephanie Smith had left her corporate career to be a Pilates teacher and wellness coach. But on realising that money stresses were troubling her clients, she retrained as a financial adviser. She now provides financial-wellbeing services to corporate clients.

“I feel that with this new role, I can have a greater impact,” she says.

Act before tax year-end

The 2023/24 tax year starts on 6 April, bringing several major modifications to tax rules. It’s therefore worth noting what’s going to change – and, more than ever, seeking expert advice to ensure you’re adapting your tax plans to make the most of your money. As a reminder, the three biggest changes will be:

Capital Gains Tax

The tax-free allowance will fall from £12,300 to £6,000. It will then reduce further in 2024/25 to £3,000.

Dividend Tax

The tax-free allowance on dividends will be halved from the current level of £2,000 to £1,000. It will be halved again to £500 in 2024/25. However, shares held in an ISA will remain free of Dividend Tax, Income Tax and Capital Gains Tax.

Income Tax

Although rates will remain the same, the threshold for the additional rate of Income Tax (charged at 45%) will be lowered from £150,000 to £125,140. More people will fall into this band, especially as salaries are increasing at the highest rate for years.4

For more on the long-term benefits of tax planning, turn to page 15.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Source: 4 Labour Market Overview, UK: January 2023, Office for National Statistics, February 2023

This issue’s contributors

Ciaran Martin, Professor at the Blavatnik School of Government and former Chief Executive of the National Cyber Security Centre

Sheldon Mills, Executive Director for Consumers and Competition at the Financial Conduct Authority, the UK’s financial regulatory body

Sarah Murphy, Chair of the Law Society’s Private Client Committee and Head of Private Client at law firm Brabners

Plus: Claire Blackwell, Chief Client and Reputation Officer, SJP • Sharon Bonfield, Propositions

Manager, SJP • Tiffani Bova, Growth and Innovation

Evangelist, Salesforce • Tony Clark, Senior Propositions Manager, SJP • Daniel Crosby, psychologist, behavioural finance expert and author of The Behavioural Investor • Peter Cross, Retail Consultant and former Customer Experience Director, John Lewis Partnership • Carol Cummins, Consultant, Clarke Willmott • Ceri Griffiths, SJP

Partner • Adam Joiner, Consultant Psychiatrist, Psychiatry UK • Rachel Lacey, journalist specialising in personal finance • James Lawrence, journalist specialising in finance, business and technology • Howard Marks, Co-chair, Oaktree Capital Management and Co-manager, SJP International Corporate Bond fund • Simon Martin, Chartered Financial Planner, Technical Connection • Andrina Nisbet, Head of Division – Development & Technical Consultancy, SJP • Dr Sarah Ruggins, Head of Multi-Asset Research, SJP • Jeff Salway, financial journalist and mental-health counsellor • Sam Shaw, journalist specialising in finance, business and technology • Matthew Smith, Head of Cyber and Information Security, SJP • Chris Stokel-Walker, journalist specialising in digital technology and culture • Melanie Wright, financial journalist and Money Editor, Rest Less UK

For St. James’s Place

Marketing Content Manager: James Busby

Marketing Content Specialist: Tamily Nolan

Brand Consultants: Nikky Cosh, Will Leicester

Head of Content: Chris Marais

Chief Client and Reputation Officer: Claire Blackwell

For Dentsu Creative

Group Editor: Stuart Knott

Senior Art Director: Tan Parmar

Editor: Lucy Douglas

Editor-at-large: James Lawrence

Sub-editors: Susannah Ewart-James, Lisa Walmsley

Account Director: Emma Ferguson

Group Business Development Director: Chris Dicey

Fromleft: Richard Tidy, Nicole Gunter and Stephanie Smith all found new careers after training with the Academy

Thinking about a change in career?

Time to make it easy

St. James’s Place clients can now track their investments digitally. By switching to our Online Services, you can easily view your investments or top up an ISA with just a few clicks and receive digital notifcations when a new document is available.

Class action

SJP brings fnancial literacy to schools

A new education programme will help children across the UK develop good money habits

It’s never too early to begin the journey to fnancial wellbeing.

That’s why St. James’s Place is committed to helping children and young people learn fnancialliteracy skills. This year, SJP has teamed up with charity Young Enterprise to support seven education providers – including primary and secondary schools –in becoming Centres of Excellence for fnancial education.

With funding from SJP, a consultant from Young Money, a subsidiary of Young Enterprise, will work one to one with individual schools to develop a fnancialeducation programme.

“By creating lesson plans and facilitating fnancial-education training sessions for teachers, we’re taking practical steps that are fundamental to developing and expanding fnancial literacy across

the UK,” says Vicki Foster, Divisional Director, Responsible Business at St. James’s Place.

The partnership will run for three years, working with seven schools each year. The frst three schools for this year’s programme have already been selected. They are Tonge Moor Primary Academy in Bolton, Greater Manchester; Whitefeld Primary School in Liverpool; and Moor House School & College, a special-education school in Oxted, Surrey. SJP will be forming four further partnerships in the programme’s frst year with schools in Swindon, London, Solihull, and Leeds, with schools to be confrmed later in 2023.

The programme is also supported by local SJP Partners as well as employees from across the wider business, to help improve access to fnancial education.

More than 330,000 clients have already made the switch to paperless correspondence, viewing documents at their own convenience and helping SJP to reduce its environmental impact.

Clients can register for Online Services with an activation code, which you can get from your SJP Partner. To say thank you, we’ll donate £5 to the St. James’s Place Charitable Foundation for every client who chooses to go paperless. The Foundation funds small and medium charities and aims to make a difference to those who are economically or socially disadvantaged or suffering from a mental or physical condition.

Have you ever had a bad experience when buying a product or service and refused to deal with that business again? Conversely, have you been treated so well by a company that you consider yourself a customer for life? Either way, you’re not alone.

As consumers, our expectations have never been higher. A huge amount of this centres around our experience before, during and after a sale. In a recent survey by software company Salesforce, 88% of customers said the experience a company provides is as important as its products.1

The consumer-facing companies that succeed are likely to be those that pay close attention to their customers. The ultimate result? The best bottomline performances and long-term success for stakeholders.

In the fnancial-services sector, a new set of regulations from the Financial Conduct Authority, the Consumer Duty, is set to be introduced. The expectation is that it will ensure all fnancial providers meet very high standards for consumer outcomes. The regulations, which roll out from July, focus on four areas:

Communications that equip consumers to make effective, timely and properly informed decisions about fnancial products and services. Products and services that are specifcally designed to meet the needs of consumers, and sold to those whose needs they meet. Customer service that meets the needs of consumers, enabling them to realise the benefts of products and services and act in their interests without undue hindrance.

The price of products and services represents fair value for consumers.

Overleaf, four experts share their views on how companies can deliver outstanding customer experiences.

Source: 1 State of the Connected Customer, Salesforce, May 2022 (Based on a survey sample size of 13,020 consumers and 3,916 business buyers)

BY JAMES LAWRENCE

the bar

How delivering great experiences leads to positive outcomes for businesses and consumers alike Raising

Claire Blackwell

Chief Client and Reputation Officer, St. James’s Place

CONSUMERS’ EXPECTATIONS of financial services are being set by their experiences in other sectors: personalisation, on-demand servicing, frictionless purchasing and so on. The experience you get with Amazon is a perfect example: the ‘one-click’ approach and being able to access or return anything at any time, day or night. In short, the option to consume retail goods in the way that suits you best.

Financial services need to respond, to ensure clients are serviced in the way they want to be. For example, I recently bought a product online that took ten days to arrive, when I’d been told shipping would be three days. I then had to return it, which was expensive and convoluted. The result is that I’ll never buy from that company again. Equally, if you create that kind of friction in financial services, you’ll lose trust and, ultimately, lose clients.

With regard to the introduction of the Consumer Duty, we welcome all measures that will improve customer outcomes.

Here at St. James’s Place, we believe we’re starting from a good place, as consumers are already at the heart of everything we do. We’re constantly striving to create good outcomes for our clients.

However, that doesn’t mean we’re resting on our laurels, as we have a strong culture of continuous improvement. Therefore, as a business, we’re spending a lot of time gathering evidence, looking for gaps, testing with clients, testing with non-clients, looking for points of friction and looking at outliers, to ensure every client has the opportunity to get the outcome they want from the services we offer.

We take this responsibility very seriously, as when someone is trusting you with their financial future, the stakes are incredibly high. We’re particularly conscious that there are many people who would benefit from financial advice but who don’t currently receive any (known as ‘the advice gap’). People often assume advice is only for the wealthy, but that’s just not the case. If we’re going to close the savings and pensions gaps that currently exist in the UK, we need to provide more advice to less wealthy people.

Overall, the Consumer Duty is set to improve outcomes for clients right across the financial-services industry, which is good for everyone. I therefore hope and believe that it’ll help us deliver on our mission to create a greater sense of financial wellbeing for all.

Sheldon Mills

Executive Director, Consumers and Competition, Financial Conduct Authority

I REMEMBER the day I opened my first bank account. I was six or seven years old, visiting my local branch with my grandmother. I was given a calculator, ruler, notepad and pencil. I used the notepad to record how much of my pocket money I loaned to my uncle – and, of course, the interest I’d charge him! I remain faithful to that bank to this day, even though I’ve used other banks for other products and services.

That story is an excellent example of a good consumer journey. It met my grandmother’s need to start me saving at a young age. And it made a young customer feel great and excited.

At the Financial Conduct Authority, we want every interaction with financial services to be like this. Consumers should come away satisfied, with their needs met and understanding the product or service.

That’s why we’re introducing the Consumer Duty, which is at the heart of our commitment to make financial services work well for all consumers. It means putting customers in a position where they can make informed decisions; where they’re presented with suitable products and services for their individual needs; and where they receive fair value for those purchases. The duty will require all firms, whether designing, selling or advising on products and services, to put their customers’ needs first.

What’s more, it’ll help build a trusted financialservices industry that achieves good outcomes for people and small businesses. Ultimately, confident consumers and businesses contribute to productivity and growth in the UK economy.

When we get this right, we all win: consumers, who’ll get the right products and services at the price that’s fair; firms, who’ll retain customers and attract new ones; regulators, who’ll need to step in less often; and, importantly, the wider economy.

Confident consumers contribute to growth in the UK economy

Tiffani Bova Growth and Innovation Evangelist, Salesforce

OUR RESEARCH at Salesforce has shown that the fastest way for a business to get customers to love their brand is to get their employees to love their job. In other words, strong customer experiences (CX) that meet expectations must start with employees – they can’t start with customers and work backwards.

There have always been leaders – such as, famously, Virgin’s Richard Branson – who have bought into this concept: “If I take care of my employees, I take care of my customers”, which leads to better growth rates, happy shareholders and so on. Our research bears that out: we found that companies that got those two things right – employee experience and CX – grew almost twice as fast as those that didn’t.2

But if that’s so obvious, why isn’t everyone doing whatever it takes to get this right? One of the reasons is that the relentless push to improve CX, driven by heightened consumer expectations, has taken place without understanding the implications for employees. Companies have spent billions of dollars on improving CX, primarily aiming to reduce the effort a customer needs to put forth in order to do something with them, be that online or offline. And, over time, the experience for customers has exponentially improved – for example, being able to check your bank balance on an app in two clicks, rather than having to visit a branch.

But while experience for customers has gone up and effort has gone down, the opposite is often true for employees. For them, effort has gone up and experience has gone down as it’s become harder and more complex to service those customer needs. Ultimately, the harder it becomes for people to do their jobs, the more it impacts negatively on customer experience.

That’s why businesses need to focus on the full ‘experience’ picture. If they focus only on the customer, they’ll get a little bit of a CX lift. And the same is true if they focus only on employees. But focusing on both is the way to get an even bigger improvement in growth.

Source: 2 The Experience Equation: How Happy Employees and Customers Accelerate Growth, Forbes Insights in association with Salesforce, accessed January 2023

Peter Cross Retail Consultant and former Customer Experience Director of John Lewis Partnership

IF YOU’RE in the business of serving customers, whatever sector you’re in, meeting expectations is fundamental. There have been lots of different definitions and all kinds of jargon attached to this over the years, but at its heart, what customers want hasn’t changed. They want to be recognised, they want to be inspired, they want convenience and they want these things consistently.

However, what’s changed – largely with the advent of digital technology – is how they’re getting this. What’s more, consumers move in only one direction with their expectations, and that’s forwards. Once they’ve learned new behaviours and have increased expectations, they don’t go back.

At the same time, the business of ‘doing business’ has become far more complicated in recent years, owing to digitisation, global economic factors, the pandemic, Brexit and so on. Amid all this complexity, the customer has frequently not won. Customercentricity is very easy to talk about, yet actually having a truly customer-focused business that delivers brilliant experiences is, sadly, rare.

The companies that get it right are always likely to be the winners in the long term. Typically, they will have three essential qualities.

First, they’ll truly understand what the customer wants and needs from them. And they’ll build that business based on those needs, as opposed to what they sell or their particular technical capabilities.

Second, there’ll be a genuine, insight-driven proximity to the customer, and the company will be attentive, responsive and agile enough to adapt to changes. We live in a world of constantly increasing expectations where consumers’ benchmarks are no longer defined by product or sector. Instead, they’re very holistic, constantly comparing: every good experience they have with one company is benchmarked against others elsewhere in their lives.

And third, companies need the right leadership and culture. A leader who cares about customers is the most powerful attribute, as opposed to a leader who is purely focused on the bottom line or the stock market.

All of this requires hard graft, good instincts, insight, innovation, being close to customers and having the right culture. These are the core basics and they haven’t changed in a thousand years.

Tiffani Bova’s latest book, The Experience Mindset, will be published in May 2023

BY

In a world full of we can easily suffer from information overload, which results in making poor financial decisions.

Here are five positive ways to help you block out the chatter and stay on track for the future you want

JEFF SALWAY

Until relatively recently, unless we perused the newspaper money pages every day, it was hard to monitor the performance of our investments. Keeping on top of day-to-day market developments was very much the preserve of hobbyists and professional investors.

Now, however, we’re in what might seem to some like a golden age of engagement. Investors can obtain real-time updates at the click of a button and see how their investments are performing whenever and wherever they like. In another few clicks, they can make trades or changes in response to events or price fluctuations (whether this is a good idea is another matter, however).

On the face of it, easier access to this data should enable more informed decisions, empower ordinary investors and drive more people to engage with their pensions and investments. But there’s a significant downside – because, for all the benefits of having vast amounts of information at our fingertips, it can get a bit noisy.

Information overload

The range of data on the factors that affect our investments – from monetary policy to economic performance and political developments – can be overwhelming.

What’s more, it’s easy to get caught up in the news and become sucked into social media through endless ‘doomscrolling’.

Investors are vulnerable to habits such as checking their savings and investments from hour to hour and day to day to see how developments have impacted them in the short term. This kind of behaviour leads inevitably to anxiety, fear and an increased urge to ‘do something’.

This is an example of action bias, says behavioural finance expert Daniel Crosby, author of The Behavioural Investor. “Action bias is insidious because it serves us well in other ways,” he says. “In other areas of our lives, doing more tends to get us more.”

However, if you’ve set your financial objectives and have a long-term plan in place, the best option will often be to do nothing. “That can feel counterintuitive, as it flies in the face of conventional wisdom that works elsewhere,” he explains.

When investment decisions are driven by emotions such as anxiety, fear or even excitement, the outcomes are rarely good. Investors might try to ‘time the market’ or retreat to perceived safety in a way that actually increases their exposure to losses.

Fortunately, there are strategies to help us engage with our investments without being blown off-course by hot air blasted from news and social media – or even the self-appointed ‘expert’ down the pub.

When investment decisions are driven by emotions, the outcomes are rarely good

Illustration: Ben Fearnley

See the bigger picture biases

IT’S HARD TO REMAIN CALM when the headlines warn of market turbulence. Yet those news stories usually relate only to the coming days or weeks. They are short term in nature, with little relevance to broader time horizons, whereas successful investing tends to be measured in years and decades.

“The least important thing for investors is the short run,” says Howard Marks, Co-chair of Oaktree Capital Management and Co-manager of the St. James’s Place International Corporate Bond fund. “Nobody should change their portfolio wholesale in response to what they think is going to happen over the next six months. The next six months isn’t what matters.”

That’s why it can help to set out and make a note of your fnancial goals. If we can keep in mind exactly why we’re investing and where we want to get to over time, we’re less vulnerable to knee-jerk reactions to short-term events.

“What happens in a moment of stress is that we can become very myopic in our thinking and focused on every up and down of the market,” says Daniel, noting that investors who have a clear idea of their goals are less likely to panic and make ill-informed changes to their portfolios.

WHAT TO DO: It might feel counterintuitive in times of stress, but the best course of action is probably to do nothing. Avoid making impulsive changes to your investments. If you’re concerned, check in with us.

Understand your

GIVEN THE STAKES, it’s no surprise that our investment decisions are governed, at least in part, by our emotions. The problem with this is that emotions aren’t logical. For instance, while logic dictates that the worst time to sell is when prices are falling, our emotional response may lead us to do exactly that.

We’re also vulnerable to cognitive biases that shape our decisions and can be exacerbated by the sheer volume of noise. Daniel identifes four biases that investors should be aware of.

The frst is ego bias, which includes the various forms of overconfdence. “Ego is the grandfather of all the other biases; if we have suffcient ego, we don’t even know we need help,” he explains. “We’re more likely to go it alone, fail to take advice, invest in individual stocks and not diversify.”

The second, emotion bias, can have a similar effect, leading us to confuse our heads with our hearts and use gut feelings to guide investment decisions. “This can work at other times in life, but it doesn’t work well in markets,” says Daniel.

We can also tend to confuse what’s loud with what’s likely. This is known as attention bias.

The fnal bias is conservatism, or our preference for the familiar. This can be most evident in ‘home bias’, where investors hold a disproportionate number of stocks from their own country.

WHAT TO DO: Simply being conscious of these biases can help reduce their negative impact. Try to refect honestly on how they might be affecting you.

3 4

information wellbeing Curate your fow of

ALONGSIDE THE FOUR MAIN BIASES highlighted by Daniel, it’s also important to be aware of negativity bias – our propensity to hear and remember bad news, which means that we’re more likely to be drawn frst to negative headlines.

This makes sense from a survival perspective: our brains are hard-wired to be vigilant for threat and danger. For investors, however, it’s unhelpful.

As a clinical psychologist, Daniel worked with women with eating disorders. “We started by helping them become informed consumers of the messages aimed at them, so they could critically evaluate how they were marketed to,” he explains.

“A similar thing needs to happen for investors. You need to know that because bad news is more resonant than good news, organisations have an interest in publishing things that are negative.”

So, taking steps to reduce our exposure to news can reduce our vulnerability to poor decisions. That might mean identifying our trusted sources, critically evaluating what we read and hear and fact-checking what we’re told before acting on it.

“It doesn’t do any good to see what was up or down yesterday. People do these things for inappropriate reasons,” says Howard. “Set a portfolio that makes sense for your life circumstances – and then leave it alone.”

WHAT TO DO: Feeling overwhelmed by news may be a sign it’s time for a screen break. Consider blocking news alerts and limiting your access to certain websites using productivity apps such as StayFocusd, Cold Turkey and Freedom.

WE’RE LESS LIKELY to make good decisions when we feel anxious or overwhelmed. The human brain is wired to react when we’re tense, making us vulnerable to rushed and binary decisions without taking time to consider all the options.

Stress triggers the fght-fight-freeze responses in our limbic system, effectively pushing the prefrontal cortex – the rational, cognitivereasoning part of our brain – offine.

Simply understanding this and recognising our personal stress signals can be enormously helpful. If we notice that we feel tense and anxious, we can take time before making any big calls. Instead, we can use that time for calming strategies, such as deep breathing, light exercise, going for a walk, talking to someone or any other healthy coping mechanisms you can access.

WHAT TO DO: If you’re feeling stressed or anxious, give yourself a time limit before allowing yourself to make any decisions. You might fnd that after a few days, you’re less stressed and your concerns no longer seem so troubling.

Manage your overall

Being conscious of our cognitive biases can help reduce their impact

5

Outsource your

decision-making

ANOTHER COMMON RESPONSE to stress and anxiety is avoidance. While this might sound like the opposite of too much noise, burying our heads in the sand is rarely a positive coping strategy.

One way of overcoming this and dealing with all the other biases and challenges is to seek advice. “What people should be talking to their advisers about is primarily: is my portfolio right for me? What’s right for everybody is different,” says Howard.

An adviser can help you set out a purpose-based plan with medium and long-term goals that override any knee-jerk reactions. They can also build and maintain a diversified portfolio, take the emotion out of decisions, distinguish noise from useful information and provide expert guidance when you’re making big decisions.

WHAT TO DO: Tuning out the chatter is difficult. But if you only take one step to manage the challenges mentioned here, whether it’s overconfidence, shortterm thinking, financial stress or emotion-driven decision-making, it should be to take financial advice.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Banish the bad-news blues

Anxiety is a natural response to a constant stream of bad news, says Adam Joiner, a Consultant Psychiatrist at Psychiatry UK. Here, he advises how to manage this and improve your wellbeing

Anxiety is an evolutionary fight/flight response to perceived dangers in our environment, whether or not those dangers are actually real. But even when we can recognise that a perceived threat isn’t significant, we can still struggle to deal with our reactions.

It can often be a response to the unknown, something that doesn’t fit an expected pattern. So it’s unsurprising that our anxiety levels are affected by the news and the way in which it can be amplified by social media.

We’re often faced with a lot of bad news and increasingly, we see genuinely life-threatening stories in the headlines, such as climate catastrophes and war in Europe. So it makes sense that exposure to them provokes anxiety. That’s normal, but the more exposed to them we are, the more we’re going to feel anxious.

So, managing our anxiety might start with finding a way to reduce the amount of noise to which we’re exposed.

Knowing when and how to ignore noise is something that can come with experience. I once heard a surgeon say that it takes three months to learn how to remove an appendix, three years to learn when to remove it and 30 years to learn when not to remove it. We can apply the same principle to other areas of knowledge.

We can think about digital detoxing, digital minimalism and exposing ourselves less to noise and more to real-life experiences, such as socialising with friends and going for walks. From an evolutionary perspective, we’ve evolved both to be social creatures and creatures that thrive in nature, so these experiences can have a soothing effect on our nervous system.

It’s also about things that bring us a sense of joy, wellbeing, achievement or pleasure –even trivial-sounding activities such as sewing or reading a book. It sounds trite but it works, because it can act as an antidote to the physical experience of high anxiety.

For help with staying on course to achieve your financial goals, contact us today

Financial advice

multigenerational thinking

long-term tax planning

Securing your family’s financial future

How a lifetime of tax savings adds up

BY RACHEL LACEY

Tax planning often feels like a chore, and it can be tricky to visualise how it will impact your future wealth and financial wellbeing. It shouldn’t be ignored, however. It’s a vital step in creating the financial future you want, with its real value often made clear well down the line.

“Over time, tax planning can make a big difference –not just to your own wealth, but to that of younger generations too,” says Simon Martin, a Chartered Financial Planner at Technical Connection, a subsidiary of St. James’s Place.

On the following pages, we meet a fictional fourgeneration family to see how the benefit of financial advice can help them lay the foundations for financial wellbeing. Our family is purely for illustrative purposes and in no way meant to be typical, as we know that everyone’s circumstances are different. But we hope it shows the long-term value of making the most of the tax reliefs and allowances available to you.

GREAT-GRANDPARENTS JOHN, 86, AND ROSE, 85

Sitting at the top of this family tree are John and Rose. They’re lucky enough to have a sizeable estate – well above their available Inheritance Tax (IHT) nil-rate bands of £325,000 each, which aren’t subject to IHT. So they’ve been taking action to ensure they don’t land their family with a big IHT bill when they die.

The couple have each been making the most of their £3,000 annual gifting allowances to reduce the size of their estate, giving the money to their only granddaughter, Jasmine, and her husband, Simon. Over 20 years, this would remove £120,000 from their estate calculation above their IHT allowances. With IHT charged at up to 40%, this could potentially save their family £48,000.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

MEET THE CLEVERLY FAMILY

Four generations of the same family who are benefiting from smart tax planning

John and Rose are gifting

AT A GLANCE each per year

per year

Over a 20-year period, this would remove from the taxable portion of their estate With IHT charged at up to 40%, this could save their family

£3,000 That’s £6,000 £120,000 £48,000

Images: iStock, Adobe Stock (posed by models)

GRANDPARENTS

BRIAN, 61, AND JILL, 65

AT A GLANCE

PARENTS JASMINE, 39, AND SIMON, 40

Thanks to clever planning, they

was set up by her parents. As this is coming from surplus income, it will will take £90,000 out of their estate,

The value of an ISA with St. James's performance of the funds selected

Amount paid annually into Brian and Jill’s Stocks & Shares ISAs for the past six years: £20,000 £40,000 £255,000

Jasmine and Simon receive £6,000 a year in gifts from John and Rose. Because Jasmine is the breadwinner and pays higher-rate tax, they’ve decided to pay this money into her pension.

With 2.4% growth over this six-year period, the annual investment has given them combined savings (free of Income Tax and Capital Gains Tax) worth just over

Tax relief, claimed via Jasmine’s individual tax return, at 40% boosts those £6,000 annual contributions to £10,000, meaning that after 20 years, she could have a pension worth £253,000.*

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

* Figures based on growth after charges of 2.4% per year. The figures are examples only and not guaranteed. They are not minimum or maximum amounts.

They’re also paying

After 18 years, these could

and may fall as well as rise. You may

Trusts are not regulated by the Financial Conduct Authority.

* Figures based on growth after charges of 2.4% per year. The figures are examples only and not guaranteed. They are not minimum or maximum amounts. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.

AT A GLANCE

more or less than this. £6,000 £10,000

received in gifts from John and Rose each year

Tax relief, claimed via Jasmine’s individual tax return, at

40% £253,000

boosts those £6,000 annual contributions to After 20 years, Jasmine’s pension could be worth

Brian and Jill are about to retire

Images: iStock, Adobe Stock (posed by models)

Tax planning

can make a big difference both to your wealth and to that of

YOUR KEY ALLOWANCES FOR 2022/23

Each year, you have a range of tax allowances. Get in touch to ensure you’re making the most of yours, where possible, before the tax year finishes on 5 April 2023.

ISAS

You can contribute £20,000 per person (£40,000 for a couple) into an ISA, and £9,000 per child into a Junior ISA each year.

PENSIONS

AT

When Olivia turns 18, the Junior ISA her grandparents are paying into could be worth close to £114,000.* And there’s also the £200,000 her grandparents have invested in a trust, which is there to support Jasmine, Simon, Olivia and any further children with anything from school fees to home improvements or house deposits.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

* Figures based on growth after charges of 2.4% per year. The figures are examples only and not guaranteed. They are not minimum or maximum amounts. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.

Trusts are not regulated by the Financial Conduct Authority.

£200,000

You can pay up to £40,000 (or 100% of your earnings, whichever is lower) into your pension each tax year without it being subject to Income Tax. And you can carry over three years’ worth of unused allowance.

GIFTING

You can gift £3,000 per year that will be exempt from Inheritance Tax, and carry over one year of unused allowance.

has also been invested into a trust to support Olivia and her parents Contact

younger generations

What do you look for in a partner? Perhaps it’s intelligence, kindness or a good sense of humour. It might be common interests or a sense that you share the same moral values or ambitions for the future. But what about financial compatibility?

Having the same financial goals or agreeing on how much to put aside for the future may not seem like the stuff of great romance. But money is frequently cited as a top cause of strain on relationships – in a survey by Royal London, it was the number-one issue couples disagreed on, with 62% arguing about it.1 Therefore, making sure you’re on the same page about finances is a vital ingredient of lasting love.

“For me, financial compatibility isn’t necessarily about having the same views – it’s about understanding your partner’s outlook and priorities, and having plans that make both of your goals a reality,” says St. James’s Place Partner Ceri Griffiths. “It’s open discussion, it’s regular conversations around money and it’s about having an equitable approach that’s fair.”

“It’s

She recommends beginning to talk about finances early on in a relationship and then

(continued on page 20)

For richer,

for poorer

You might not always see eye to eye with your partner about finances. Here are five common money conflicts – and some tips on how to resolve them

BY LUCY DOUGLAS

Janet’s boyfriend has received

ISA or bike?

a £5,000 bonus from work

I know Charles has his eye on a new road bike. But it’s so expensive! And it seems silly to spend all his bonus in one go. I wish he’d put that money aside for our future…

Childcare conundrum

YOU or your partner receiving some extra money, such as a bonus, could be the catalyst for a chat about money.

“You have to be aware that what you do with your money could impact your partner,” says St. James’s Place Partner Ceri Griffiths.

It’s also worth considering the longterm benefits of investing as early as possible in life.

“By putting some of that money in a pension, you get extra money in tax benefits and possibly

matched contributions from your employer,” says Sharon Bonfield, Propositions Manager at SJP. “It might seem like a small amount when you’re young, but it’s got so much time to grow.”

That’s not to say extra cash shouldn’t be enjoyed; you can still make space for big purchases alongside your savings. For example, as well as buying that expensive new road bike, you could commit to putting some money into

an ISA every month.

EVEN if one partner’s pay will be spent entirely on childcare, you may still be better off by continuing to work.

“Take into account what your employer might put into your pension, and your National Insurance (NI) contributions as well,” says Sharon.

Women taking career breaks to care for family has contributed to the gender pensions gap, with women’s retirement income, on average, 38% lower than men’s.2

This is a key time for couples to look at their finances. “Some people

Oh my gosh!

may decide to defer their NI contributions until later, but it can be quite difficult to catch up,” says Sharon. “You could alternatively think about your partner paying into a personal pension for you.”

Careful consideration now could help ensure you’re not vulnerable in later life. “You may still give up work, but you do so knowing the implications,” says Tony Clark, Senior Propositions Manager at SJP.

Source: 2 What is the Gender Pension Gap?, Prospect, September 2021

Denise and Wayne can’t agree on whether she should return to work full time

With two children, Denise and Wayne know their childcare will absorb denise’s income once she goes back to work!

Illustrations: Jacquie Boyd

Sally wants to use the family’s savings to help their children pay for big life events

(continued from page 18)

maintaining regular conversations, so when your circumstances do change, you’re already familiar with your partner’s point of view.

But that’s often easier said than done. Whether it’s because they’re too busy to find the time or they feel worried about how the conversation might go, even couples who have been together for decades often neglect this aspect of their relationships.

“It might feel awkward to have those conversations, but you need to come at [your finances] from an informed position,” says Sharon Bonfield, Propositions Manager at SJP. “A financial adviser can be a facilitator of that conversation. They can help you map how your life might pan out and have different scenarios in mind so you feel secure in the knowledge that you have things covered.”

Hearing every voice

Even within a relationship, it’s important to consider your individual position, says Sharon. “The quandary in any relationship is: do you plan together or do you plan for yourself? I think it’s both,” she says. “You’ve got to achieve a balance of independently taking care of yourself as well as working together.”

Whatever your individual circumstances might be, it’s key that both parties are involved in planning the finances. Making it the responsibility of just one person could leave the other partner in a vulnerable position in the event of a death or if the relationship were to break down.

However, it’s common for one partner to take control of the financial planning, says Ceri.

“When you’re a busy couple, one person owning the finances is a really efficient way of doing things, so I tell them not to beat themselves up, but just to

(continued on page 22)

WHETHER to support adult children through key life milestones – such as university, a wedding or buying a home – could be a point of contention for parents. One partner may want to help the kids as much as possible, while the other may think it’s important for them to stand on their own.

“Those conversations can be difficult,” says Tony. “An adviser can help by taking some emotion out of the equation.”

Working with an adviser could provide reassurance about your financial position, which could make supporting children seem more feasible.

“One of the drivers for wanting to hang on to your money can be that you think you won’t have enough in later life,” says Sharon. “By understanding how much you do need, you might feel more comfortable sharing some of that money.”

As well as advising you

A financial adviser can facilitate conversation and map how your life might pan out

I’d like to support the girls through university and help them pay for a wedding. But Fred is so set against it! He keeps saying they should stand on their own two feet…

on the tax-planning implications of gifting, a financial adviser could help broaden out the conversation to other members of the family, such as grandparents.

“Will grandparents be able to help grandchildren with getting on the housing ladder? Often, financial planning happens in isolation, whereas if you plan together as a family, some of the solutions might present themselves,” says Tony.

Ready to retire?

Debbie is keen to retire, but Harry isn’t so sure

DISCUSSING your financial goals early on –with each other and with an adviser – can help you to avoid conflict before it occurs, says Ceri.

“It’s important that you and your partner are on the same page, because they might have a different set of priorities,” she explains. That may mean having different ideas about when and how you retire.

“Later life now is about doing what you really

want to do,” says Tony. “That might be another job, rather than stopping work. For a lot of people, it’s turning a hobby into a small business.”

Whatever your views – and your partner’s –this is a key time to take advice from an expert, in order to better understand your position.

“It’s important to know what you need and why, and then to overlay your personal goals and aspirations,” says Sharon.

I can’t wait for us to slow down and give up work – but Harry is worried we won’t have enough to see us through! I’d rather we cut back now than stay in the rat race for longer.

Save or splurge?

Amy and

have different ideas about reasonable living expenses in retirement

(continued from page 20)

recognise that’s what’s happened and to take steps to resolve it,” she says.

This is another area where taking professional advice can have multiple benefits. “If one partner is more dominant in the decision-making dynamic, an adviser can ensure that they capture the other person’s ideas as well,” says Tony Clark, Senior Propositions Manager at SJP. “Sometimes there are differences and they need to be taken into account. If you’re financially planning as a couple, you have to make sure that both voices are heard.”

This is particularly important if one partner feels intimidated by the topic of finance. “An adviser has got time to help you understand this,” says Sharon. “They can talk to you about your life and your goals in a way that’s relevant to you.”

Throughout a life together, there will be many occasions when your joint finances crop up as a topic for discussion. Here are some typical scenarios that our SJP Partners come across and that you might find familiar – and guidance on how to resolve them.

Source: 1 Love and Money: Couples Agree They’re Poles Apart, Royal London, February 2022 (Based on a survey sample size of 2,000 nationally representative UK adults)

Julia

If you’re planning as a couple, you have to make sure both voices are heard you to

I don’t want to spend thousands on a cruise – I’d rather make sure we’re leaving something for the grandchildren…

How about that Antarctic cruise?!

NO MATTER what stage you’re at in life, if you and your partner don’t see eye to eye on how you should spend, you’re likely to run into conflict. And understanding how much you can afford to spend is particularly important in retirement. As we’re living longer lives, pensions and retirement savings need to stretch further, and it’s crucial to make sure that both you and your partner fully understand your financial position.

“You have to be mindful

of additional costs that could be on the horizon, such as long-term care, which isn’t cheap,” explains Tony.

This could also be an opportunity to involve other members of the family in financial planning – particularly when it comes to passing on wealth to future generations.

“On average, the age at which inheritances are being passed down is getting later. It might be that a couple’s adult children could be well into

their 60s, and they might not need the money by then,” says Tony.

“There are a lot of adult children looking at their parents, thinking: ‘We’re OK, we’ve sorted our mortgage, we’ve got our own pensions. We want you to be secure in your retirement, comfortable if care is needed and to enjoy yourselves.’”

Want help navigating your finances as a couple? Call us today

Talking about death is rarely easy, which might explain why 56% of adults don’t have a valid Will,1 even though passing away without one may mean their assets don’t go where they wish.

Not having a Will can potentially leave your loved ones facing a serious fnancial and administrative headache after you’re gone, as your estate will have to be divided according to set rules, known as intestacy. Under these laws, only spouses or civil partners and certain other relatives can inherit.

Here, we explore why having a Will and estate planning is so important, as well as how to bring up the subject with your family.

WHY WRITE A WILL?

If you have a long-term partner but aren’t married, under intestacy laws, they have no automatic right to inherit anything from you in the event of your death, even if you live together. So writing a Will is more important than ever in these circumstances.

Many households today have less-traditional set-ups, including ‘blended’ families, where each partner has children from previous relationships; co-habiting couples (3.6 million, an increase of 144% between 1996 and 2021, according to government data2); and couples where one partner lives overseas.

Andrina Nisbet, Chartered Financial Planner and Head of Division - Development & Technical Consultancy at St. James’s Place, says: “In very basic terms, the laws of intestacy give preferential treatment to spouses or civil partners and to children. So if you’re part of a blended family or are unmarried, that can create huge problems if you die without a Will, because you can end up effectively disinheriting your family.”

A Will enables you to leave your estate to whomever you want and appoint executors you trust to carry out your wishes. It can cover both physical assets (such as property and possessions) and digital assets (cryptocurrency, for example), plus your log-in details for more-traditional accounts.

“Some law frms are starting to introduce electronic ‘cloud’ document storage now, not just for Wills but also for passwords and digital documents, so everything can be held in one place and accessed easily by your executors when you’re no longer here,” Andrina explains.

You can also state what you’d like to happen to your assets if any of your benefciaries die before you.

Andrina says: “A good lawyer will always have a list of questions to ask you when you write a Will to make sure you cover all those ‘what ifs?’ that you wouldn’t normally consider.”

WHAT IF SOME OF MY ASSETS ARE OVERSEAS?

Careful estate planning is essential. “Legal systems can be very different in different countries,” says Andrina. This applies closer to home, too – Scotland is under a different legal system from England and Wales, so it’s vital to speak to a lawyer with specialist knowledge of the rules in both jurisdictions.

BY MELANIE WRIGHT

Where there’s a Will

Death is one of the few certainties in life – but many of us don’t have a legally sound plan for what will happen to our assets after we pass away. We explore why estate planning matters

“There can be things such as enforced heirship provisions that need to be taken into account. There could also be language barriers, so it’s important Wills are interpreted the right way. If you have assets overseas or family members living abroad, it’s crucial to seek advice to ensure no-one ends up disadvantaged or paying unnecessary taxes,” says Andrina.

HOW MUCH INHERITANCE TAX (IHT) WILL BE OWED?

The current rate of IHT is 40%. However, there’s no tax to pay if you leave your estate to your spouse or civil partner, while the first £325,000 of what you leave to anyone else is also tax free. What’s more, if your home is included in your estate and you pass it on to your children or other lineal descendants, the tax-free threshold increases to £500,000 per person, as long as the estate is worth less than £2 million.

If you leave your estate to your spouse or civil partner, your allowances can be combined –meaning up to £1 million can be passed on tax free after they die. However, it’s worth noting that soaring property prices have pushed more and more estates above the tax-free thresholds.

WHICH ASSETS ARE AND AREN’T SUBJECT TO IHT?

Your estate includes the value of your property, less your mortgage, and your possessions, plus any investments. IHT usually doesn’t apply when you pass on pension money, as it isn’t part of your taxable estate. However, some older-style pensions may fall inside your estate, so seek advice if you’re not sure.

Any life-insurance payout will also form part of your estate, unless the policy has been written in trust, which will usually separate the payout from your estate.

Careful estate planning can help you reduce any potential IHT liability and ensure you make use of your annual allowances. For example, you can give up to £3,000 away free of IHT each tax year; couples can give away £6,000 between them. You can also make as many £250

gifts per person as you want, but not to anyone you’ve already given your £3,000 allowance to.

If you own business assets, Business Relief is a very valuable relief from IHT – and can reduce the taxable value of those assets to nil.

“Where you have shares in a [private] company, or a trading business, they can pass to the next generation free from IHT if things have been structured correctly,” says Carol Cummins, Consultant at law firm Clarke Willmott.

“Say you had a successful business and left your estate entirely to your partner and that was spousal exempt [from IHT], and they then decided they wanted to sell the business. They’ve immediately got a taxable asset in their own estate, so a Will that banks reliefs while still allowing access for the surviving spouse will be really important for them and the children.”

What if my situation is complicated?

For many people, writing a Will isn’t as simple as leaving everything to your partner or children.

Here, Sarah Murphy, Chair of the Law Society’s Private Client Committee, answers some of the most common questions that lawyers encounter when things aren’t straightforward.

What if I can’t decide who gets what?

If you aren’t sure who to pass your wealth onto, it shouldn’t stop you making a Will. If you’re feeling uncertain, you can build a discretionary trust into your Will – then what happens to your assets after you die will be decided by its trustees, who are appointed by you. If you have trustees you can rely on, and leave a

letter of wishes, they can use this as guidance on how to distribute the funds. Your letter of wishes can be amended as many times as you like in your lifetime.

What if my beneficiaries are vulnerable in some way?

If the beneficiary is disabled or has a longterm condition and will need someone to look

increase in the number of co-habiting couples in the UK2

144 %

SHOULD I SET UP A TRUST?

Trusts can be an essential part of estate planning, helping to protect your wealth and ensuring that assets are passed to the right people at the right time.

“Trusts are a way of ensuring that you can specify your benefciaries, and how they might beneft,” says Andrina. “If, for example, you have young children or grandchildren, you might want to specify when they will beneft. You’re obviously legally an adult and can take control of assets at age 18, but some people prefer 21, when they might be leaving university. I recently heard a solicitor say that 25 is a reasonable age for children to inherit, as that’s when brains are fully developed, and it means they’re then able to make sound decisions about their assets.”

Trusts can also be used to mitigate Income Tax, Capital Gains Tax and IHT, and to preserve wealth that might otherwise be diluted if a benefciary divorces.

“Lots of people worry about their children’s spouses – essentially, their children losing their inheritance due to divorce, which a basic Will won’t help with,” says Carol. “Trusts, however, will give some ring-fencing to the inheritance.”

Trusts and estate planning can be complicated, so if you’re not sure how to proceed, or need help working out how to best make use of IHT allowances, it’s a good idea to seek fnancial and legal

Inheritance Tax liability

advice. Remember, too, that tax rules can and do change over time, so it’s important to regularly review your position and how current legislation affects you.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Will writing involves referral to a service that is separate and distinct to those offered by St. James’s Place. Wills and Trusts are not regulated by the Financial Conduct Authority.

Sources: 1 Only One in Five Young Adults Have a Will, Royal London, October 2021 (Based on a survey sample size of 2,000) 2 “Common Law Marriage” and Cohabitation, House of Commons Library, November 2022

TOUGH TALK HOW TO HAVE THE DIFFICULT CONVERSATION WITH YOUR LOVED ONES

Talking about what you want to happen to your estate after you’re gone can be tricky, but rather than avoiding the subject, it’s best to be upfront with your family.

If you fnd it hard to raise the topic face to face, consider sending an email or text message saying you’d like to have a chat about it at a particular time. That way, they have the chance to digest the idea and to think of any questions they might want to ask. You can also make a note of all the things you’d like to cover.

Pick a time and place that suits everyone. Make it clear that the purpose of the meeting is to let them know your plans so that both you and they are comfortable with how everything will be distributed when you die.

after them after you die, you can set up a discretionary trust or a trust for vulnerable benefcaries for them.

What if the people I want to inherit from me die before I do?

People don’t always die in the order you assume they will. You therefore need to ensure you make a provision in your Will for someone else to inherit if they die before you – for example,

their own children. It’s always worth discussing various scenarios with your lawyer.

What if I don’t have any descendants to leave my estate to?

You can leave your wealth to whomever you want. In cases like this, charities are a popular option and anything you leave to charity has the bonus of passing to them completely free of tax.

You could bring up an example of someone you know who didn’t discuss their plans, which perhaps resulted in family confict when they died. This may help your loved ones realise the benefts of having the conversation now, so that any arguments or misunderstandings can be avoided after you pass away.

Careful estate planning can help you reduce any potential

Images: Stocksy

For help with passing on as much of your wealth as possible, call us today

Pattern recognition

A close look at the behaviour of humans in businesses

– whether it’s employees or customers – can reveal hidden trends to drive corporate performance

enlightening behaviours. But while it has its origins in academia, its principles can be applied far more broadly, with leaders across the corporate sphere eager to improve the effectiveness of their most prized asset: the people in their ecosystem.

Anthropology is the study of human societies and cultures. If psychology and behavioural science teach us how we think and act (and react) as individuals, anthropology, ethnography and their related disciplines teach us about how we behave as groups. This thinking can be applied across every part of an organisation – executive boards and teams, customer segments and target audiences worldwide, even global supply chains – providing invaluable data for businesses.

So how have successful companies applied these learnings from academia, and to what extent have cultural or sociological insights helped them generate long-term performance?

products but the experiences those products enable.

Samsung looks at emerging trends alongside cultural, social and technological changes to inform a ‘human-centric’ design philosophy, also claiming to always consider the planet and environment. The tech giant asks: what does technology enable our customers to do? How does it improve their lives? What matters to those using it?

Take the humble television. As well as looking at the latest innovations in technology, Samsung is increasingly interested in how household dynamics are evolving, especially since the pandemic.

In collaboration with anthropologists, it studies people at home, looking at how they communicate and how decisions are really made over things such as room layouts and furniture positioning. These assessments help the company to better understand the role of the TV in today’s homes.

by remaining relevant

these that Samsung remains relevant today. Founded in 1969, it’s the second-largest technology company in the world by revenue, with a market capitalisation of $310.44 billion. start of March 2020, its share price gained 98.3% over the ten years to December 2022.

has been stellar – from a market share of 3% in Q2 2009, it now accounts for 21.2% of all smartphone shipments worldwide.

Image: Getty Images

Mars Petcare Trialling pouches for pooches

Faced with a major challenge in Latin American markets, Mars turned to the ethnographic expertise at Ipsos to help. In countries such as Brazil, Mexico and Argentina, pet ownership signifies status: it means the owner has time and money to take care of a dog, for example. Animals are treated as family members and fed accordingly – with specially prepared, freshly cooked meals or human-food leftovers.

For owners, Mars Petcare’s dry kibble fell short of the love-laden meals they prepared. Meanwhile, acceptance that dogs’ dietary requirements differed to those of humans was eluding Brazilian consumers.

Ruling out food cost as a hurdle, Ipsos’s team of ethnographers conducted an experiment that leaned into Brazilian social norms. Instead of dry kibble, it trialled ‘wet’ food pouches, containing real pieces of meat produced for canine diets. The real meat equated to ‘real food’ in consumers’ minds, while a rethink of the pouches’ placement in store – in the fruit and vegetable aisle, to be seen when shoppers were meal-planning – meant pets’ food options were being considered directly alongside their families’.

Surprising success through social nuances

This experiment saw Brazilian sales of ‘wet’ pouches increase by $10 million in the first year.4 The ethnographic insights gleaned prompted a similar

scenario in Mexico – to highlight the importance of home cooking, Mars Petcare brand Pedigree launched a dog cookbook. While reinforcing people’s social norms, it, too, drove a multimillion-dollar sales uptick.

Mars currently boasts $45 billion in annual revenues5 and is parent to some of the world’s leading FMCG (fast-moving consumer goods) brands, including Pedigree, Felix and Snickers. Mars Petcare is active in 130 countries, delivering veterinary health and nutrition.6

LPL Financial Curating better collaboration

A NASDAQ-listed financial-services firm, LPL Financial was founded in 1989 as an alternative to Wall Street culture.7 Its primary offices are in Austin, Boston, Fort Mill and San Diego, which it describes as “vibrant cities that contribute to the LPL work environment and culture”.8

LPL recognised that its physical office spaces had a role to play in fostering that culture. So it sought an anthropological approach to the design of its San Diego office when appointing architecture firm Gensler.

The company put effort into designing its new office to facilitate broader collaboration between employees, using anthropological insights to achieve its goal. The theory was that more diverse inputs (pulling in views and ideas from employees across the company) would generate more innovative results – for example, seeing problems in a new light, or applying divisional frameworks elsewhere in a novel way – and ultimately lead to more robust decisions.

Samsung looks at trends alongside

Federico Casalegno at Samsung leads a team that gleans anthropological insights to inform its ‘human-centric’ designs, such as its Galaxy Z Fold4 phone

cultural, social and technological changes

Business success rooted in the work environment

A leading financial-advisory firm with more than 21,000 advisers across the US, LPL has seen its share price gain a staggering 735.5% over the past ten years.9 Its latest financial statement to 30 September 2022 reports net income of $232 million and $101 billion organic net new assets over the past 12 months, representing 9% growth.10 Dividends paid in Q3 2022 were $20 million.11

Sources: 1 Market Capitalization of Samsung, Companiesmarketcap.com, accessed December 2022

2 Stock Chart, Samsung.com, accessed December 2022

3 Samsung’s Share of Global Smartphone Shipments, Statista, October 2022 4 Impact, Market Research Society, October 2021 5 Mars CEO Grant Reid Handing Over Reins to Head of Petcare Division, Mars.com, July 2022 6 Mars Petcare homepage, Mars.com, accessed December 2022 7 Our History, LPL Financial, accessed December 2022 8 Careers at LPL, LPL Financial, accessed December 2022 9 Investor Relations, LPL Financial, accessed December 2022 10, 11 LPL Financial Announces Third Quarter 2022 Results, LPL Financial, accessed December 2022

The lobby of LPL Financial's San Diego office. Each of the company's workspaces are designed to encourage collaboration

“CORPORATIONS ARE NETWORKS OF HUMAN INTERACTIONS MADE MATERIAL”

Dr Sarah Ruggins, Head of Multi-Asset Research at St. James’s Place, explains how an anthropological approach helps inform our investment decisions

The tenets of corporate anthropology are woven into both our managerselection process and that of many of our managers.

Simply stated, corporations are networks of human interactions made material. Therefore, companies will thrive or fail because of their people –

their staff, the relationships with customers and how well they understand their supply chain. The quality of the environment in which people build relationships and make decisions is thus paramount to the quality and long-term resilience of the company; they cannot exist independently from one another.

The evaluation of a fund manager’s team and their firm’s culture is an integral pillar of our managerselection process. Our equities team, for example, will take a probing, behavioural-focused approach when speaking to an investment team. They conduct multi-day, observational site visits with fund managers before we appoint them. They

sit in on team meetings and speak to former employees, current clients and management. They are essentially taking an anthropological approach to gathering qualitative data that forms part of our due diligence. This runs parallel to the quantitative assessments of the manager’s performance.

Truly understanding an investment firm’s organisational culture, how they debate and how they treat each other helps inform which companies are creating an appropriate environment for robust and wellinformed decision-making – and which are not.

Our fund manager WCM Investment Management, for example, has a

dedicated businessculture analyst to lead a proprietary cultural assessment of the companies in which it invests. Their job is to analyse the business culture and its impact on decision-making, which uses anthropological thinking to surface quite unique insights on the businesses they might bring into their portfolios.

Head to our website to read more expert insights

Web of defence

In our interconnected world, where the digital and physical are increasingly intertwined, we need a constantly evolving approach to cybersecurity

BY CHRIS STOKEL-WALKER

Athe UK government. And WannaCry hit the NHS as collateral damage: the ransomware virus was designed to spread to any device in the world that was unpatched against its defences – and did.

Nor are cyberattacks limited to halting heat and healthcare. A 2021 attack against the IT servers of the world’s biggest meat processor, JBS Foods, meant it had to close down several plants, threatening supply, and ended when the company paid $11 million in ransom money.3

It’s not just an operational impact that cyberattacks have, either. They can make or break a company’s reputation, and with it, their share price. Studies into the correlation between disclosures of security issues or breaches by companies and their share price suggest that cyberattacks can hit a company’s bottom line.4

As society evolves, the digital and physical elements of our lives have become ever more closely intertwined. Few parts of our daily routine and economic and social activity are untouched by a digital footprint – and the consequences of this may be serious and far-reaching.

“Digital technology is everywhere, but there’s both a negative and a positive to its adoption,” says Ciaran Martin, Professor of Practice in the Management of Public Organisations at the University of Oxford’s Blavatnik School of Government, and former Chief Executive of the National Cyber Security Centre, part of GCHQ.

The internet-connected world in which we live has plenty of benefts. You can check your bank account whenever and wherever you want. You can speak to your fnancial adviser while on a train, and you can order food using your phone. The convenience that comes with digital ubiquity has changed our lives for the better.

But it comes with its own problems, too. Global cyberattacks are on the rise – in the third quarter of 2022, it’s estimated that they increased by 28% compared to the same period in 2021,1 while the average number of weekly attacks waged against a typical organisation reached more than 1,130 in the same quarter of 2022.2

The attacks wreak havoc when they hit: far from being an annoying inconvenience, they can be truly shattering to those they affect – not just fnancially, but also reputationally and emotionally.

Devastating impacts

Attacks on infrastructure and essential services are often the most destructive – for example, recent attacks against critical infrastructure have contributed to power systems in Ukraine frequently going offine.

The WannaCry ransomware let loose in one part of the world in 2017 exploited a vulnerability in the Windows operating system and ended up shutting down large swathes of the NHS, with a massive cost to

When credit agency Equifax was hit with a 2017 cyberattack that breached user data, it saw its share price plunge. Research into 34 companies listed on the New York Stock Exchange that suffered data breaches showed that share prices fell -3.5% on average.5 “It often comes down to how companies handle the incident, and how much confdence they can instil in shareholders and investors that they’ve done the right thing,” says Ciaran.

Often, companies’ share prices will dip when they’re victims of a cyberattack, only to return back to their baseline within a couple of weeks.6 “But the major thing that can’t be recovered is often the reputational damage,” he explains.

“A lot of us in cybersecurity are concerned about the economic model. There can be huge loss of data and intellectual property.”

A cat-and-mouse game

One of the main issues security professionals face is the interconnectedness of so many things on which our lives depend. Everything from mechanisms to control the release of fuel in nuclear reactors to banking infrastructure are now connected to the internet. “They’re all being driven by digital

Cyberattacks wreak havoc: they’re shattering not just fnancially, but also reputationally and emotionally

increase in global cyberattacks1

(in Q3 2022 compared to Q3 2021)

28 %

Image: Stocksy

A cyberattack that affected the NHS (above) cost the UK government millions, while one that hit Equifax caused its share price to drop

systems,” says Matthew Smith, Head of Cyber and Information Security at St. James’s Place. “Ten or 15 years ago, those systems might have been quite niche and isolated, but more and more, they’re connected.”

One of the key issues is that there remains a gap between how the internet was established and how it’s used today. “Nobody thought they were laying the foundations of the modern economy,” says Ciaran. “They weren’t dwelling on who was trying to break the system. But as technology changes, we’re thinking more about who is trying to do that.”

The problem is also muddied by people thinking of cyber ‘weapons’ being used in attacks, he adds. “We should avoid thinking of cyber capabilities as weapons, because they’re not really primary weapons in that way,” explains Ciaran. The reality is far more complex and harder to discern.

The result is a cat-and-mouse game between those trying to sow chaos and those trying to keep IT systems secure. “Technology always advances and you go in lockstep,” says Matthew. “As an attacker gains an advantage, the defence also looks at what to change.”

The shifting sands of cybersecurity require regular evolutions in best practices, both for businesses and individuals. New-generation technologies such as the blockchain can help by providing an unchangeable public record of all actions, preventing nefarious events and ensuring cybersecurity is kept strong.

Such innovations can provide a barrier against criminals and bolster everyday users’ security –important, as the risks to individuals are just as great as those to businesses. “The challenge is there’s a lot of advice from lots of different sources and it’s not always good,” says Matthew.

But rather than throwing in the towel because it’s too difficult, it’s important to invest the time and effort into ensuring you seek out, then follow, the best advice to stay secure – whether you’re an individual or an organisation. “What makes today’s threat so dangerous,” says Matthew, “is that we’re in the position where there are a lot more actors with a lot more capabilities who can go after people more effectively.”

That’s why it’s important to ensure you have trusted names such as St. James’s Place watching your back.

HOW WE WORK TO KEEP OUR CLIENTS PROTECTED

Matthew Smith, Head of Cyber and Information Security, St. James’s Place

Keeping ahead of the game when it comes to cybersecurity is tricky – but it’s vital to do so and is something we keep at the core of our mission. “One of the things we’ve looked at and leveraged is a combination of machine learning and artificial intelligence to augment our security team,” says Matthew. The combination of first-inclass human oversight and first-in-class computerised support boosts our monitoring and detection capabilities, he explains.

SJP uses data analytics and analysis of how customers interact with our systems to head off issues. “We’ve observed that the majority of cyberattacks involve leveraging a valid identity,” he says.

Of course, top-down support and security are only part of the story. Keeping your information secure starts at home. “One statement I always see is: ‘Password books [where users store their passwords in a physical

booklet] are a terrible idea’. They’re not a terrible idea if you keep your password book safe and you’re using different passwords for your online accounts,” says Matthew.

This point about oversight with regard to who gets access to critical information, and in what format, is vital for both individuals and organisations. Limiting the number of users with access to key systems can reduce the potential points of failure for any hacker looking for a way into a business.

Generally, when it comes to cybersecurity, the biggest weakness is often the human, who falls victim to social engineering or phishing attacks. Therefore, keeping your wits about you –and investing time in understanding and following the latest security best practice – is a strong line of defence to prevent falling victim to such attacks.

Sources: 1, 2 Check Point Research: Third Quarter of 2022 Reveals Increase in Cyberattacks and Unexpected Developments in Global Trends, Check Point, accessed December 2022 3 JBS USA Cyberattack Media Statement, JBS Foods, June 2021 4, 6 A Walk Through Historical Correlations Between Security Issues & Stock Prices, Alejandro Hernádez, Blackhat Asia 2021 5 How Data Breaches Affect Stock Market Share Prices, Comparitech, February 2021

For guidance on staying safe online, visit the client area of our website

Need-to-knowinsight

Our online Insights hub includes our latest articles, videos and much more – focused on topics that matter the most to you. From market updates to investment views and financial advice, it’s all brought to you by our news desk, investment team and industry experts.

Some of our recent features

Making 2023 less stressful

How to get into better money habits now

Tax year-end

Making the most of your reliefs and allowances

before 5 April

Cost-of-living crisis

The tax advantages of gifting to help a struggling loved one Business owners

The benefits of offering executive pensions to your company directors

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

For all this and more, visit our website today.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.