Monthly Archives: June 2016

BREXIT – An Opportunity To Plan

shutterstock_439389007It is impossible to avoid the endless debate and commentary on what the future holds for the UK following last week’s vote. Businesses will undoubtedly be affected but SME owners should use this opportunity to review their plans for the future and consider the options they have available to them. Those with growth plans should not put these on hold but ensure they have made themselves aware of any issues that leaving the EU may give rise to.

Having spoken to a number of banks, the fear they have is that businesses will not want to take on additional borrowings for the foreseeable future. This seems absurd when they are keen to lend. Businesses should keep in regular contact with their bank and discuss their plans with them. They will more often than not be supportive.

The availability of debt presents an excellent opportunity to those business owners who are planning to sell in the next few years. This may have been originally based upon a sale to a third party. However, the current uncertainty will probably lead to a reduction in the number of potential trade buyers and will have an impact on the multiples buyers are willing to pay. A Management Buy Out (MBO) could be the obvious answer.

There will be a number of businesses that have a management team in place, that given the opportunity to undertake a MBO, will jump at the chance. The message to the owners of these businesses is start talking to the management team NOW!

For those businesses that do not have the necessary management structure for a MBO, the current economic climate gives them time to plan and put the required team in place. This requires careful consideration and the requisite advice should be obtained as part of this process.

Therefore, business owners who want an exit in the short to mid-term, should seriously consider if an MBO is an option. If it is, then speak to your bank or your adviser. I have been involved in a significant number of MBOs and PM+M Corporate Finance are currently advising on a number of MBOs. Therefore if you want to pick our brains on the subject, please feel free to give us a call.

Tim Mills – Corporate Finance Partner 
Jim Akrill – Corporate Finance Partner 

Don’t panic! A brief message to PM+M Wealth Management clients following the Brexit announcement

Whatever your views on this morning’s result, it has predictably led to some uncertainty and the one thing markets don’t like is uncertainty.  As I write the FTSE is trading at 6,190 having opened the day at 6,350 and having recovered from a low of 5,806 early this morning.  So we can expect some volatility in the short term!

You should bear in mind the following points:

  1. Our investment process involves regular portfolio reviews face to face.  Probably the most important issue we cover at a review meeting is to assess how much cash to hold on deposit and how much to invest.  We encourage our clients to hold sufficient cash on hand to ride out any storms.  It means you can sleep comfortably at times like this because you don’t have to sell when the markets are down.
  2. Not all your portfolio is held on the stock markets and we help you make sure you don’t have all your eggs in one basket.
  3. Sharp falls in markets can happen as a result of economic news or political crises.  The biggest gains can also can be just as unpredictable and often clustered together.  For this reason we recommend sitting tight during times of turbulence.  Missing the best gains can seriously affect your long term returns.

We’ll keep you posted on our views on regular basis over the next few weeks and months.   In the meantime, if you have any concerns please don’t hesitate to contact one of the team.

Tony Brierley – Managing Director, PM+M Wealth Management

PM+M Wealth Management is authorised and regulated by the Financial Conduct Authority.  

PM+M Managing Partner Jane Parry Reacts to Brexit

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Following this morning’s result, we are now in uncharted territory and likely to see continuing instability across the economy and political arena for some time to come.

For North West businesses who desperately need the confidence and certainty to be able to plan ahead, that isn’t likely to be in place any time soon.  Businesses who rely on export markets who will see the short term benefit of the fall in sterling but at the cost of long term instability and uncertainty. Conversely, businesses who rely on imports will see immediate pressure on prices coupled with longer term uncertainty.  However, the effect is likely to be felt across the whole business community and wider economy.

The immediate priority for businesses is to understand what they can do to give comfort and confidence to investors and funders and to start to put a plan in place to navigate the business through the next 2 years.

For private investors and those who rely on investment income, the immediate advice has to be to sit tight and not make any immediate decisions.  Get some advice once the initial post result turbulence has settled down and then start to make some informed decisions.

To quote the wartime poster, we have to just keep calm and carry on.

If you have any questions or concerns, please pick up the phone and give the team a call on 01254 679131.

How To Make Your MBO Successful

shutterstock_72605086I was struck recently when reviewing recent MBOs just what a wide range of industries were being covered. And not just traditional, asset rich businesses either. There were several professional service businesses too which can be much more of a challenge when trying to secure funding.

This led me to think again about what makes a good MBO opportunity. A complete and competent management team, a growth story and a flexible seller willing to do a deal which is affordable. Tick these three boxes and you are on your way.

Moreover, general optimism about the economy combined with an increasing number of older business owners looking to retire has created a favourable climate for MBOs.

Only one thing left then. A quality team of advisors. Contact “The Real Deal” Team. To find out more about the PM+M Corporate Finance team visit www.pmmbusiness-sales.co.uk or contact:

Tim Mills – Corporate Finance Partner (tim.mills@pmm.co.uk)
Jim Akrill – Corporate Finance Partner (jim.akrill@pmm.co.uk)

The Low Incomes Tax Reform Group Urges Taxpayers to Reclaim Tax on Interest

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The Low Incomes Tax Reform Group (LITRG) is urging people to claim back tax deducted from savings income in recent years now that they have received their P60s.

Up until 6 April 2016, financial institutions had to deduct 20% basic rate tax from interest paid to individuals’ bank accounts. The only exception was if you were a non-taxpayer and had registered to have interest paid gross.

Under the new savings regime introduced from 6 April 2016, financial institutions are no longer required to deduct basic rate tax from most interest payments. However, basic rate taxpayers can now have tax-free savings income of £1,000, while if their total taxable income is £17,000 or less, they will not pay any tax on their savings income.

Jane Parry, Managing Partner & Head of Tax, commented: “Anyone who has had a low income and been able to reclaim tax on their interest income should make sure that they do so for the 2015/16 tax year and any earlier years not yet claimed. The rules have now changed, but it’s important not to forget that you can still claim for the period up to 6 April 2016.”

For more information, please contact our tax team at tax@pmm.co.uk or call 01254 679131.

What Does Lancashire & The North Need To Do If The UK Votes Leave?

shutterstock_374884033There is vast noise surrounding this referendum and most people with opinions seem very certain of the right thing to do.  I am far from convinced that enough thought has been given to what we (business and public leaders in Lancashire and the North) actually do on 24 June if the British people vote to Leave.

On announcement of a vote to leave, the Westminster village will ferociously navel gaze as politicians squabble and plot to decide on the new Prime Minister and Cabinet.

Meanwhile enormous decisions will be needed on key areas for real people where policy has in effect been agreed with the EU for decades – especially:

–          Agriculture
–          Fishing
–          State Aid
–          VAT classifications
–          International trade
–          Movement of labour

We have no idea what the party elected into government (or indeed any other political party) would actually want to do in these areas following a Leave vote.

We can expect that the Scottish Parliament, the Welsh Assembly, the London Mayor and the government in Northern Ireland will immediately be putting teams together to lobby intensively to look after the interests of their constituents.

It is probably worth looking at the two of these issues where there has at least been a volume of commentary in the referendum discussions: international trade and movement of labour.

We know that there will be acute uncertainty on international trade until the terms of our new relationship with Europe have been agreed.  Many commercial supply agreements run for several years and uncertainty over how they will be regulated will not help Northern exporters at all.

The civil servants in the trade team in London will have to agree not only trading terms with the EU but reach replacement agreements with every country we currently have a deal with through the EU.  This will be a new experience for almost all of them and risks being very time and resource pressured.  It is a very challenging idea that this group of bureaucrats in this situation are going to agree deals that are balanced, fair, look properly after the interests of the whole country and in total better than the existing agreements.

On the topic of movement of labour it is worth noting that from a business perspective skills shortages are the leading restriction on business success.  Changes in the movement and availability of labour could have very significant impacts on business.  There are two credible (and completely contradictory) suggestions on how migration will change after the referendum: – either there will be a rush of new EU migrants seeking to take advantage of the opportunity to work in the UK before the rules may change and they may be barred; or existing working migrants within the UK will immediately start looking to leave so that they can establish themselves with a job somewhere with a degree of security.

Either of these is likely to be bad for Britain, with the second in particular likely to be worse for Lancashire as it is would deepen the skills shortage and likely lead to a greater flow of talent from here to the initially higher paying economy in London.

In addition to the huge new areas where we need political leadership following a leave vote, there will be great new challenges on the Treasury.  The disruption caused by leaving the EU is almost certain to slow growth in the short term, placing additional pressure on the deficit.  There is also an additional gamble on the availability of funders for the deficit at our historically low interest rates with the additional uncertainty of leaving the EU.  While George Osborne has missed every target he has set himself since he became Chancellor, it is far from clear that a new head of the Treasury would be able to deal with these problems more effectively, especially with an unclear political mandate.

In summary, the changes which will come from a Leave vote will give vast power into the hands of London civil servants and policy makers.  We in Lancashire and the North will need to commit a lot of time and resources and be at the top of our game to make sure that the decisions that are made are fair to us and not just for London politicians.  Leaders of all opinions, backgrounds and parties will need to work together immediately to make sure the North of England gets the deal it deserves.

David Gorton – Senior Partner

Quarterly Economic Review

shutterstock_256451812Each quarter, the East Lancashire Chamber of Commerce gives you the opportunity to tell the Government what it’s really like being in business in 2016. The quarterly survey is taken seriously by Central Government and provides a highly respected snapshot of economic conditions for business.

It is important that as many businesses as possible complete the survey. This ensures that the results reflect the experience of businesses across all sectors and geographical areas which should then help influence the decisions taken by Government and other policy makers over the next few months.

Your input is crucial in helping us understand the local economy and beyond. To complete the survey click the button below.

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What Is Wealth Management?

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This is a question clients often tell me they were afraid to ask.

First and foremost, Wealth Management isn’t a barrier to having a conversation with me or one of the PM+M team. Don’t think about in terms of ‘I haven’t got any wealth to manage’ but rather ‘have I got financial plans for my future?’

There is no limit, value or threshold on who we talk to and who we don’t.  Everyone needs financial planning advice at some time or other and we are always happy to have an initial no obligation conversation.

The term Wealth Management has grown from the segmentation within the financial service industry of those who sell financial products, from those who actually advise. Fundamentally it represents a branch of the industry that turned its back on receiving commission where costs were shrouded by smoke and mirrors, turning instead towards clear and transparent charging for the time, skill, expertise and experience of finding the best solutions to meet client needs.

This ‘new model’ of advice became an industry standard on 1 January 2013 when commission payments were banned under legislation brought in following the Retail Distribution Review. The legislation also meant that a higher minimum level of qualification was required of financial advisers. Here at PM+M this ‘new’ model has been followed for almost 15 years, whilst the professional qualifications have not only been met but have exceeded the new standards.

What does this mean? Simply it means that we put our clients’ financial planning needs before anything else. Of course we expect to cover our costs and to make a profit – in fact it is essential (a non-profitable financial advisory firm is unlikely to remain open) as a profitable firm is likely to be there for many years to come supporting its clients for the long term as well as having the ability to invest in its people and systems.

In very simple terms, whether you call it Wealth Management or Financial Planning, there are three basic steps that drive our actions on behalf of you, the client. These are:

1. Plan for your future
2. Minimise your tax
3. Optimise investment returns

There is a second process that underpins this to give you peace of mind:

  • Assess and understand
  • Set your goals and objectives
  • Detailed plans and recommendations
  • Implementation
  • Monitor and review

Our aim is to support your financial planning journey, as well as that of your family, for many years to come. This is done by giving you the confidence that you have a team of professionals working on your behalf for your best interests.

One thing that helps to separate PM+M from the competition is the fact that we are much more than Wealth Management. The firm was and still is predominantly an accountancy practice with almost 100 years of history and growth. Originating in Blackburn and still based here, as well as having offices in Burnley and Bury, we currently employ 90 people across our various departments providing a range of financial and business services to individual and business clients of all shapes and sizes. Within Wealth Management there are 8 of us, of which 4 are advisers, but in reality our team is closely linked with our wider team of specialists across the firm.  Specialist departments include Tax, Audit, Payroll, Corporate Finance, IT and the ever growing Run My Business. Our specialists are as likely to be found dealing with the tax return of a mobile-hairdresser as they are advising on a multi-million business acquisition.  We work particularly closely with our tax colleagues in providing a complete estate and capital taxes planning service.  Corporate finance can also be very handy if part of your financial planning involves selling your business when you retire.

The fact that we see our relationship with our clients as long term also means that, unlike some advisers, we aim to recoup our reasonable costs over the fullness of time rather than front-loading them with high initial charges. This is a different business-model to most, but reflects the fact that we look after a very significant amount of money for our clients and have done so for many years.

Hopefully, this has helped paint a picture as to what we do and how we do it. What this blog can’t convey is the spirit in which we aim to deliver our service as one of our core values is to have fun – happy people make for a happy firm which makes for happy clients – it really is that simple!

If you want to know more, please get in touch or attend one of our informal seminars where you can get a feel for who we are, what we do and how we do it.

 Neil Welsh – Wealth Management IFA 

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

 

 

The Rise & Fall Of The Interest Rate – Why A Review Of Client Bank Accounts May Be Overdue

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Without giving away my age, when I was born, the base rate stood at 5%. When I left school, it had risen to almost 15% and then when I left university, it had fallen back down to almost 5%.  We are all acutely aware that the base rate has been at 0.5% since March 2009, a timeframe of over 7 years.

Thinking about those days where interest rates were much higher, law firms were in an enviable position of being able to make a profit and generate cash flow from the interest earned on client funds held in general client bank accounts. For some law firms, this created an additional layer of profit for sharing amongst the partners of the day or for re-investment back into the firm; for other law firms, it masked the true profitability of delivering legal services and no doubt created financial pressures as the recession hit in 2008/09 and the demand for legal services fell and changed.

It has been the case that law firms have not been able to generate the same levels of profits from bank interest for many years now and I wonder whether there has been some complacency about checking whether the best deal in the marketplace is still being obtained. The rules remain in place of where client money can be banked and how it must be ring fenced from monies belonging to the firm itself; however, there are numerous options and providers of client bank accounts.

I would encourage a regular review of the client bank accounts being used to ensure that law firms are able to take advantage of any preferential rates. There is no shame in making the money work harder. Where interest becomes payable to a client under the rules, it can also generate a better return for the client depending on your interest policy  – which incidentally should be in writing. Surely this can only be a good thing in providing legal services in a day and age where competition and pressure on margin is ever increasing.

Helen Clayton – Head of Corporate Services & Legal Specialist