A personal finance wish list for the incoming UK Government, regulation and consumer concerns are among the hot topics discussed in the first Scotsman Money podcast, in association with Calton.
In the podcast, Tom Ham, group CEO at Calton, and Alison Gay, senior public affairs consultant at The Lang Cat debate the personal finance issues of the day
In the podcast, Tom Ham, group CEO at Calton, and Alison Gay, senior public affairs consultant at The Lang Cat debate the personal finance issues of the day
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NewsTranscript
00:00Hello, I'm Rosemary Gallagher, and welcome to our first Scots and Money podcast.
00:09This episode is an association of Scots and Money headline sponsor of Calton, we'll cover
00:13lots of ground on topical personal finance issues.
00:17I'm joined by Tom Hamm, Group CEO at Calton, and Alison Gay, Senior Public Affairs Consultant
00:23at the Lancat.
00:24During the first half of our podcast, we'll discuss personal finance wish lists for the
00:27new government, regardless of which party is in power.
00:30We'll also cover what you'd like to see happen to pensions, mortgages, tax, and anything
00:35else in finance.
00:36We'll look at the rising when it comes to financial services regulation, and what might
00:40come down the pipeline.
00:41The second half covers what consumers in general, and Calton clients in particular, are concerned
00:47about.
00:48That could be school fees, fiscal drag, cost of living, and much more.
00:54But first, I'd like to ask our guests to introduce themselves and tell more about their roles
00:57and their careers.
00:58Tom, could I start with you, please?
01:00Thanks, Rosie.
01:01Yeah, so I'm Tom Hamm, I'm the CEO at Calton.
01:04I started the business around three and a half years ago.
01:08We've gone from working out of the back of my home in Newington, we've now got a couple
01:15of offices, one in Rutland Square in Edinburgh, and we're also down in the Borders in Peebles.
01:21We're a firm of financial planners with some investment management functions as well.
01:27Really, the main focus of our business is good financial planning for families, for
01:34senior professionals, business owners, anybody that has slightly complex needs that we can
01:40help simplify things for.
01:41Thanks, Tom.
01:42Tell me about yourself and about Calton.
01:44And now over to Alison.
01:45Yes, I'm Alison Gay.
01:48I'm a senior public affairs consultant at the Lancat Consultancy.
01:52I've been at the Lancat for almost two years, but my background is life and pensions.
01:57I had a variety of roles working in marketing, public affairs, laterally European public
02:02affairs.
02:03And then I spent 10 years working for the FSA and the FCA in a slightly unusual job
02:09working for the panels, the statutory panels, both the consumer panel and the practitioner
02:15panel.
02:16So my job was advising them on what the regulator was doing and advising the regulator on what
02:22the panels were doing.
02:23So I've seen things from both sides.
02:27Thank you, Alison.
02:28And now let's turn to what we'd like to see from the new government at Westminster.
02:32So Tom, starting with you again, what would you like the new government of Westminster,
02:36regardless of which party is in power, to focus on when it comes to financial services?
02:40So in effect, what's on your wish list?
02:42So I expect that I'm going to be quite boring in a lot of the answers I give today, because
02:47primarily we're planners and the sort of planning that we do for clients is often it's retirement
02:53planning and succession planning or inheritance tax planning.
02:57And that's really long term stuff.
03:00It's generational, multi-generational stuff.
03:02You know, if we're doing good succession planning for families, we can be looking already when
03:08we're with grandparents, looking at how stuff goes to next generation, we can be looking
03:12already at the grandchildren, how it's going to transition to them.
03:15So actually, what I'd like is a bit of consistency, because what we what we've had, what we tend
03:20to get from different governments is a desire to come in and sort of tear things up and
03:25show that they're different to the predecessors.
03:27And now I'm not saying that I stand by all of the policies that have been brought in
03:31during this government tenure.
03:33But I think rather than ripping things up and starting again, there should be tweaks,
03:38because actually what we need is consistency moving forward to be able to plan best for
03:42our clients who, at the end of the day, are the constituents of the country and who we
03:45should be looking after.
03:48So in terms of specifics, I think we will go on and talk about taxation and things.
03:54But I think I think in terms of financial services, there's some incentivisation that
03:59could be done to allow people to access advice.
04:04I think there is a study now, I'm going to not meet Alison's gaze as I say this, but
04:09I think a few years ago, there was a study that said something like, done by the regulator
04:13that said something like only 6% of adults, it's now closer to 10, I think, but, you know,
04:18are actually receiving financial advice.
04:20So I immediately feel like I've done something well, because Alison's nodded at that.
04:25But yeah, so I think there's a lot that could be done in terms of a bit of consistency,
04:31because some things I hear from people are what's the point in planning if it's all going
04:35to change anyway, and enable and some measures to enable people to access more advice.
04:42I think one thing I'd like to pick up on is the consistency point that you're talking
04:47about, about consistency of regulation.
04:49And I was at the Labour Party conference last year, and without making any heroic assumptions
04:54about who's going to win the election, the Labour Party is planning not just for one
04:59term, but for two, which gives them a chance to kind of step back and look at things.
05:04And one of the things that they're planning on doing is doing some sort of a review of
05:09retirement and savings, a fairly broad review of retirement and savings, and looking at
05:16the way that you're taking everything into account.
05:19Now, I think they could be even broader than they had suggested in their proposals and
05:23actually take it into further things like equity release and housing and property and
05:28that sort of thing.
05:29And I think this is something where we might actually see some quite interesting and innovative
05:37thinking.
05:38So, yes, that might help to address some of the issues, but in the longer term rather
05:42than in the shorter term.
05:43We talked about consistency there and the need for some things not to change.
05:47So just to pick up on that, what would you like to see the same?
05:50What would you like to change when it comes to tax from capital gains tax, inheritance
05:54tax, all areas of tax, basically?
05:57And so I think there's a couple of things.
06:00Income tax wise, there's the bit around and a lot of people listening to this podcast
06:06might sort of roll their eyes and go, this is not a problem.
06:09But there's this cliff edge when you get to, well, it's tapering, sorry, not a cliff edge
06:14when you get to £100,000 of income.
06:16So you get £100,000 of income and all of a sudden for every £2 you are over that, you
06:20start to lose a pound of your personal allowance.
06:22So by the time you're £120,000 worth of income, what you've done is you've lost your personal
06:29allowance and your marginal tax rate is in excess of 60% on that tranche, that £25,000.
06:35That to me feels a bit punitive.
06:37I think there's other ways we could be doing that.
06:43I think at any point when you start to lose over 50% of your income, that's not great.
06:50I think different rates of capital gains tax for property and other assets is possibly
06:57a bit confusing and not ideal.
07:01But again, we're planners, we work with, it's up to the government of the day to give us
07:07a regime and we will help our clients work as confidently and as effectively as they
07:13can within that, staying the right side of the line, making sure they're contributing
07:19to wider society but equally not paying any more tax than they reasonably need to.
07:24And coming to pensions, obviously a complex area which I'm sure lots of clients ask for
07:28advice on and quite a few won't understand the ins and outs.
07:31You have to hold their hands through the process, I would think.
07:33So with pensions, what would you like to see the same and what would you like to see change
07:37in that area?
07:38So again, having just made the comment about the £100,000 bit, I'm probably going to sound
07:41like with this next statement, I'm going to sound all like I'm on the side of everybody
07:44with lots of money when we actually help a whole range of people.
07:47But I think the removal of the lifetime allowance, the upper amount you could tax efficiently
07:53take from a pension was a good thing because you had the restriction on the amount you
07:57could put in, which was £40,000 a year and then went up to £60,000 with some caveats
08:03around that about relevant income and things.
08:06And then you had the lifetime allowance that was latterly just over £1.07 million and
08:12then removed.
08:13And now I think that was a good thing because what is it?
08:17What are you doing?
08:18Why we should be encouraging people to save for retirement?
08:23I agree we shouldn't be incentivising people that have the most to save.
08:28However, if you've had a restriction on the way in, why should you have a restriction
08:32on the way out in terms of tax efficiency?
08:35So I think that was a really good thing.
08:36I have no problem with a lump sum allowance.
08:39I think that would be too generous if we allowed people to 25% of £10 million in a pension.
08:49I think the death benefits piece around pensions is really tricky now.
08:55And again, we've lost lifetime allowance, but we've now got the lump sum allowance.
09:02So all of this requires some really careful planning now.
09:07So it'd be good to see some, I don't really want to use the word pension simplification
09:13because we did that back in 2006 and things seem to have just got even more complicated
09:17ever since.
09:18But I do think there's a bit of a, it's still a bit of simplifying we could do around the
09:22lifetime allowance, sorry, lump sum allowance stuff.
09:25But I think otherwise we're actually in a reasonably good spot with pension lifetime
09:31allowance now, as was.
09:33What would be a bad thing would be, there was a point where I think it's been dropped
09:38now, but where there was trumpeting, we're going to bring in the lifetime allowance,
09:41but except for doctors.
09:43I think that's, you know, I have a wife who is a surgeon and I still think that's a bit,
09:48you can't create a two tier system like that.
09:50I think it's unworkable.
09:51And also, you know, having connections to the military, I think there would be certain
09:55people in the military who would be subject to lifetime allowance who would go, well,
09:59actually I've done some dangerous things in my life and serve society.
10:02Why am I being penalized?
10:03And doctors aren't.
10:04So yeah, I think it is complicated.
10:08I think there's a bit of simplifying we could do, but otherwise I think in terms of pensions,
10:11we're in a reasonably good spot.
10:13I think that there's talk about, always talk about flat rate tax relief at the minute you
10:17get tax relief going in at your marginal rate of income.
10:20There's always sort of chat about it dropping down to around 30%.
10:24You know, some of my clients wouldn't like that for society as a whole.
10:27Would that be a good thing?
10:28Quite probably, because you get other people, you get the less well-off who need extra help
10:34saving would get the extra help instead of sort of 19, 20, 21% tax relief, they'd get
10:4030% tax relief.
10:42So that would be something that would possibly be helpful.
10:45Okay, that sounds good.
10:46I've got a few interesting points there.
10:47What we'd like to see and we'd like not to change.
10:49I don't know about interesting, but they're points.
10:51And looking at savings in general now, wealth management,
10:55once you speak to clients every day,
10:56what do you think would help them, make them more inclined to save more and think about
11:00their wealth more effectively?
11:01So there's a couple of things that I was chatting about recently.
11:05So the first thing was, you know, what about making, so we do a lot of good, right?
11:11And as a profession, obviously, I would say that, but I think good financial advice actually
11:17does a lot of good for society, because good financial advice helps people remove themselves
11:22from needing assistance by the society.
11:24I've seen examples where good financial advice has been the difference between somebody needing
11:29benefits and not and things like this.
11:31Okay.
11:32And I think if, for instance, we were able to make advice fees tax deductible, you know,
11:40things like this, if we were able to encourage the widening of access to advice, you know,
11:47there's all sorts of things like this.
11:48If we could, you know, there could be more education.
11:51I don't necessarily think it's a schools thing.
11:54There's this big fashion to say that financial education should be in school.
11:57I don't know that it should.
11:58I think if there's more resource available, there needs to be simplification.
12:04We talked, I touched on the pension simplification thing, ISAs.
12:07So we've got, you know, seven or so different types of ISAs at the moment.
12:11You know, I'm not going to try and name them all because I'll miss one.
12:13But, you know, and that's me as a financial professional.
12:16But a number of them have got slightly different rules.
12:18So actually, let's have a simplification of that.
12:21Let's make that more straightforward.
12:23Because the more, you know, there's all sorts of evidence about
12:27if the more incentivized you can make something, you know, the more people will do it.
12:31So the more we can incentivize making financial advice to be available to people through
12:35education, wider education guidance, through tax efficiency of paying fees, things like that,
12:42the more we're going to encourage people and removal of barriers,
12:45the more we're going to encourage people to access it.
12:47Then actually, we take more people because it's not just for the super rich.
12:52We actually take more people out of needing help from assistance from the state,
12:57which, you know what, frees up more resource for those that really, really, really need it.
13:02You mentioned ISAs there.
13:03And obviously, the UK government is planning to launch the UK ISA,
13:06which is going through consultation.
13:08I mean, do you think that will happen?
13:10And was that something you thought was a good idea?
13:12So from a pure investment management point of view, we look at it and go,
13:14well, actually, if you had a big enough ISA portfolio,
13:16there's a reason that you can go, well,
13:17we can get more of a UK equity exposure into that.
13:20And actually, it'd be a good thing.
13:21But away from the technical nerd in me that likes those sort of challenges, what a crock.
13:27I mean, I think it's not going to, it's too fiddling around the edges.
13:35I'm ex-military.
13:36I very proudly wore a Union Jack on my sleeve.
13:39It's an excuse to stick a Union Jack on an ISA.
13:42And that's all it was at that time from when it came out.
13:44So I, you know, it is what it is.
13:48I mean, what was the allowance?
13:49It was 5,000 or something, wasn't it, that they were talking about?
13:51You know, it's fiddling.
13:53If we want to tinker around the edges, fine.
13:54I think there's better things we could be doing.
13:56It will help, to be brutally honest, speaking to technology partners we work with,
14:01it will help our clients that are more well-off because, as I say,
14:05we can make their portfolio slightly more tax efficient by targeting the UK component.
14:10Is it going to help?
14:11Should anyone that couldn't afford to save 20k into an ISA
14:14put 5,000 pounds all into one geographical region shares and have no diversification?
14:20Probably not.
14:21So, no, I'm quite not impressed by it, I'm afraid.
14:25Simplifying the ISA landscape is something that the Labour Party are very keen on.
14:29And, well, everybody's very keen on it.
14:31I don't think, it's not so much that the British ISA will die.
14:34It will just never really be born in the first place.
14:37We haven't even had the consultation on it.
14:39So I think there may be a consultation because the Labour Party has actually said that,
14:45that they haven't, they don't have any plans to get rid of it.
14:49But I think it will just die quietly in a corner.
14:52We're also talking about the Westminster government today,
14:54but we're in Scotland recording this podcast.
14:57What would you like to see from the Scottish government in devolved areas,
15:00for example, income tax?
15:02Well, we're in Leith, so we're not too far away from, you know,
15:04where all the load of the work's really done.
15:06The big thing for me is I think this disparity of two rates of income tax,
15:11or rather, well, two different styles of income tax between
15:15the rest of the UK and Scotland isn't helpful.
15:18I, you know, I don't, I struggle with the fact we're on the same landmass
15:24and we have such, we have an increasing disparity.
15:29Now, a lot of people will say, well, it's only a little bit.
15:32It's only if you're a higher earner.
15:33I accept that.
15:34Although I think the freezing, it's not just the different rates.
15:38It's the fact that you go into higher rate tax at different points.
15:41You know, so we've got it down in the rest of the UK,
15:45you know, extra £7,000 before you hit the tax threshold that starts with a four.
15:50So I, yeah, I find that quite difficult.
15:53And I, and anecdotally, we are seeing some clients who are making,
15:56who are by nature contributing a significant amount to the taxation of Scotland.
16:03And they're fortunate enough to be mobile and they're saying,
16:06look, you know, actually I've got a house in Yorkshire,
16:10as it happens, some of them, I'll go down there.
16:13I'll re-domicile down there, sell,
16:15get a smaller place in Scotland and spend less time here,
16:18which then we don't only just lose the income tax,
16:21we lose the economic benefit of the being here.
16:23And given the size of the tax base in Scotland,
16:27you don't need too many higher earners to do that before you start to have a problem.
16:31So I feel that, I feel that needs addressing somehow.
16:34Thank you, Tom.
16:35And Alison, would you like to add anything on that area of,
16:37this is what Scottish Government has powers over when it comes to taxation and finance,
16:41what you would like to see?
16:42One of the issues with paying tax is that there's definitely a body of people
16:47who don't necessarily object to paying higher tax
16:49if they feel that it's being spent wisely and being spent on the things that they value.
16:54So a lot of people's primary concern is things like NHS,
16:58like defence that need to be funded.
17:01And I think a lot of the trust has been eroded,
17:05both from the Westminster Government and from the Scottish Government
17:08in feeling that the government of the day is not actually spending money the way they want.
17:13So it's not necessarily we want our taxes held down at all costs.
17:18I think some people would be prepared to pay higher taxes.
17:21I agree entirely.
17:22Thank you.
17:23And Alison, I'm talking to you about regulation now.
17:26When it comes to regulation of financial services,
17:28what are you expecting from any new government
17:30and what are you expecting coming down the pipeline
17:33on financial services regulation in general?
17:36Well, we're not expecting a wholesale change in the form of regulation.
17:43Liz Truss had vaguely suggested that we might do away with the FCA
17:48during her very brief term of office.
17:51I don't think that that's likely to happen,
17:53although you can never rule it out.
17:56We are at the moment in a period where we haven't seen the manifestos.
18:00We have seen the Labour Party's,
18:02what they call their financing growth paper that they produced this year,
18:05which was their plans for financial services.
18:08And as I mentioned earlier,
18:09they're planning to do a big review of pensions and savings.
18:15There are a couple of things that I think will stay the same regardless of who's in power.
18:20One is consumer duty.
18:22So this is the FCA's big initiative.
18:26Which has been in place now for a little while
18:28and the final element of it will be put in place this summer.
18:33And it requires firms to actually produce good outcomes for their customers.
18:39And this underpins everything that the FCA does
18:42and in effect gives them the tools to deal with firms that are not meeting the rules.
18:50And the Labour Party hasn't specifically said anything about consumer duty really,
18:55but it would be very odd if they were to turn that around
18:58because it's very much in line with the consumer protection that they support.
19:04So I think we will still continue to see consumer duty.
19:08The other thing is what we call the advice guidance boundary review.
19:14In normal language for normal people.
19:16There are the sort of people that Tom is dealing with
19:19who are prepared to actually pay for full fat holistic advice.
19:24And then there are other people who just want a bit of help.
19:29And at the moment it's very difficult for them to access that help.
19:33So both Labour and the Conservatives have acknowledged
19:37that something needs to be done here.
19:39The FCA has been doing a lot of work on this.
19:42And there are really two sides of it.
19:45There are the firms who don't want to go too close to regulated advice
19:50because then they have to put all sorts of things into place.
19:53And then there are the full fat regulated advisors.
19:56Now, there are three proposals that the FCA has come up with.
20:00One is clarifying exactly where the boundary is
20:03between regulated advice and non-regulated advice.
20:06So that means that all the compliance officers who say,
20:11no, you can't tell people this
20:12because then you're moving into regulated advice
20:14and you have to charge for that
20:15and you have to do all sorts of fact finding.
20:18And then the FCA are saying,
20:20well, actually you can do that under the rules.
20:22So one way of making this better is to clarify the boundary.
20:27Then you've got something they're calling targeted support.
20:31And that is, if you know a certain number of your customers
20:36would benefit from a certain product or service,
20:40you can say that people like you might benefit from this.
20:44So that would be another way of giving them some help
20:47without going into the full regulated advice.
20:51And then there's also a possibility
20:53of a more simplified advice regime,
20:55which is not the full fat regulated advice.
20:59So we've got three different options there.
21:01These may, elements of all three of them might actually happen.
21:06But I think this whole project is going to keep moving forward
21:09regardless of what government we have in future.
21:15There's a few other things on the horizon that might happen.
21:18And there is regulation buy now, pay later.
21:23The what they call high cost short-term credit.
21:29The point when you go online
21:30and would you like to pay for this
21:32in four different installments?
21:34Is it not regulated at the moment?
21:35And there were plans in place for this to be regulated,
21:38but these have been sat on for quite a long time.
21:41The Labour Party has said that
21:43they would want to take this forward.
21:44And I think this would be quite important
21:46for the cost of living crisis,
21:48because a lot of people are relying on this stuff
21:50and it's not regulated.
21:54That's quite a lot of going on
21:54in terms of consultation and regulations.
21:56So how do you think changes that could happen
21:59will impact both the financial services industry
22:01and consumers in both a good and bad way?
22:04And do you think consumers will benefit
22:06from the consultations that are happening at the moment?
22:11Tom's also mentioned the British ISA.
22:13That was going to be one of the ones
22:15I was going to mention.
22:19You've discussed the re-interaction
22:20of the lifetime allowance.
22:22That may happen, but it would be awfully complicated.
22:27The whole situation is awfully complicated at the moment.
22:33There may be something in future about,
22:35and this is quite nerdy and regulatory.
22:39The FCA has a new,
22:41what they call a secondary competitiveness objective.
22:45And this means that they have to take into account
22:48the competitiveness of the UK
22:50whenever they do any kind of regulation.
22:53Now, some people have interpreted this
22:56as a race to deregulation.
22:58So we'll just wipe out all the rules
23:00and let firms do what they want.
23:04And on the other side,
23:05they also have an objective for consumer protection.
23:08And these can be seen as being contradictory.
23:12So it might be quite interesting
23:15to see if anything changes in the future on that
23:18and whether that would increase levels
23:20of consumer protection
23:21or whether it would reduce levels of consumer protection.
23:24So that's something to look out for.
23:26Thank you, Alison.
23:27And if we do get a Labour government,
23:29as the polls are currently suggesting,
23:31what rabbits might they pull out of the hat
23:33in terms of the natural services or the wider economy?
23:36Bearing in mind they gave the Bank of England
23:37independence in 1997, just after the election.
23:42Yeah, that's exactly it.
23:44When nobody saw that one coming,
23:45when they gave the Bank of England its independence.
23:49So to a certain extent,
23:51a Labour government is kind of priced
23:53into the markets at the moment.
23:56And what we need are,
23:58we need to think about what Donald Rumsfeld
24:01would have called the known unknowns.
24:04What are they gonna do?
24:05We have to brace ourselves for
24:07wanting to make a big impact on day one.
24:11Something that's worth thinking about is
24:13they have committed to having any tax rules
24:19tested by the Office of Budget Responsibility, the OBR.
24:23The OBR takes 10 weeks to do anything.
24:26So we're not going to get a budget
24:28before the middle of September, probably.
24:32So it's very unlikely that anything big
24:34would be announced before then.
24:36So we'll be looking over the summer
24:38to see any signs of what might happen.
24:41Thank you, Alison.
24:43You're listening to our first Scots Money podcast.
24:45This issue is in association with Calton.
24:47I'm joined by Tom Hamm of Calton
24:49and Alison Gay of the Lancat.
24:51I'd like to look at more of what consumers are looking for
24:53and how consumers are feeling at the moment,
24:55given we've still got a cost of living crisis,
24:57school fees are going up, fiscal drag's an issue.
24:59So first of all, Tom, back to you.
25:02What are you hearing from your clients right now,
25:04from all types of clients,
25:05the ones that are savvy
25:06or the ones that are a bit more hands-off?
25:07What's the general theme that's coming through
25:08or questions that you're being asked?
25:11So I think people are quite fatigued
25:13in terms of our clients,
25:15in terms of the things that have gone on
25:18that have affected them personally
25:20and their wealth,
25:25especially the ones that retired.
25:27We had COVID and market volatility then,
25:31and then we rolled straight into
25:33there was the war in Ukraine
25:35and we've had interest rate issues
25:37and inflationary issues,
25:39which have, and so we had this situation
25:41where a lot of people
25:42with supposedly cautious portfolios
25:44were really badly affected
25:46by the double hit of interest and inflation
25:49on debt-related assets.
25:50So we had volatility in share prices,
25:53then we had volatility in supposedly safer assets.
25:55So a lot of people are sort of just a bit,
25:57feeling a bit battered and fatigued
25:59and all through everything,
26:02and I suspect a lot of the questions
26:04that we'll talk about just now,
26:05running through it is the theme of just,
26:06am I going to be okay?
26:08With younger clients,
26:09we've had a few conversations
26:11about school fees recently.
26:12I was speaking to someone the other day
26:15and they were saying,
26:16look, we've had not far off
26:18a double digit increase in school fees.
26:21Labour are telling us
26:22they're going to put that on them.
26:25As Alison was saying,
26:26Labour government's pretty much priced in
26:28and they've just looked at it and said,
26:29look, well, we're going to take the kids out of school.
26:31And there's actually two people
26:32that said that to me,
26:33we're just going to take the kids out of school
26:35because that's nearly a 30% increase.
26:38That's obviously a big thing in Edinburgh in particular,
26:40where so many of the population
26:41are privately schooled.
26:42Absolutely, yeah.
26:43And it's not, there's this myth
26:45that it's just the landed gentry
26:46that send their children to private school.
26:48You know, in Edinburgh,
26:49it's a good middle-class thing to do
26:51to send your kids to private school.
26:53And, you know,
26:55speaking of somebody who went to a state school
26:56in a mining village in Yorkshire,
26:57I wouldn't know, but this thing of,
27:00you know, it is,
27:01it really affects me actually,
27:04because a lot of our clients,
27:05I see the angst that it causes them
27:07because they just want to give their children
27:08the best possible start in life.
27:11And, you know, these are not,
27:12these are people that a lot of those
27:14that think it is just the landed gentry
27:16will work alongside.
27:18You know, they just maybe don't know
27:19that the other people's kids
27:20go to private school
27:21because people are quiet about it.
27:22It's Edinburgh, we don't talk about these things.
27:24I think Edinburgh is quite odd in that,
27:26in that I'm sure I've seen some figure
27:28that it's something like 30% of children
27:30in Edinburgh go to private school.
27:32Yeah.
27:33And which is far higher
27:34than the rest of the country.
27:35So it's particularly relevant.
27:39So Alison, what concerns are you seeing
27:41amongst consumers at the moment?
27:44It's absolutely cost of living crisis.
27:46And people who had made plans
27:48perhaps for their retirement
27:50had already retired
27:51or gone to working part-time
27:54or had taken a career change
27:55are having to come back
27:57into the workforce again,
28:00perhaps doing something different
28:01to what they were doing before,
28:03just because they can't make ends meet
28:04in the way that they had anticipated.
28:07So if I don't mind,
28:08I'm going to agree entirely with Alison
28:10and then add a bit more if I may.
28:12So, and this goes back to my earlier point
28:14about the good
28:15that proper financial planning can do,
28:17good, robust modelling
28:18with good tolerances for inflation
28:21and asset growth assumptions.
28:25So a number of our clients
28:28retired sort of just before COVID,
28:31through COVID, after,
28:32and they've, you know,
28:32in these formative years have been hit.
28:34And they're all okay.
28:38And this isn't me disagreeing
28:38with Alison's point at all,
28:39it's me agreeing statistically
28:41that we're seeing this is what's happening.
28:42And I bet a lot of those people
28:44that are unfortunately having to do this
28:45are ones that haven't been able to access advice
28:48or haven't known how to,
28:50or, you know, have just thought it's too complicated.
28:52That's not for me,
28:53that's just for rich people.
28:54Whereas actually, you know,
28:55we've got, I'm thinking of some clients in my head
28:58who, you know, probably have less assets
29:01and less of a pension
29:02than readers and listeners would assume.
29:06But they're fine because we've done the modelling
29:08and we've, you know,
29:09so when they've come to us quite worried,
29:11we've been able to sit there and say,
29:12well, look, this is no,
29:13this isn't touching the edge of the stress testing
29:15that we've done on the modelling.
29:16So actually you're okay.
29:18You know, we're not,
29:18we're nowhere near the worst case scenarios
29:20that we've stress tested yet.
29:21So just carry on and make the best of things.
29:24And yes, we'll increase the income
29:26that you're taking to account for inflation.
29:30So, and this, it all goes back to that thing of,
29:32if we can find a way to incentivise
29:34and make advice a bit more accessible,
29:36it'll help society in general.
29:38Yeah, I absolutely agree.
29:40This is why we need to get
29:41the advice and guidance thing right.
29:43Because they're not mutually exclusive advice and guidance.
29:47So it may be that someone goes in,
29:49gets a bit of guidance,
29:50goes away and thinks,
29:51no, actually I need to take some advice on this
29:54and actually discover it
29:55so that they could save a huge amount of money.
29:58Well, thanks both.
29:59And do you think people's concerns have changed over time?
30:01Perhaps Alison, you first.
30:03You've worked in financial services
30:04and been involved in policy,
30:06public affairs for a long time.
30:07So do you think people are concerned
30:09about different things now?
30:10Or do you think it's always the same issues
30:11that people get worried about
30:12when it comes to their personal finances?
30:15It is.
30:17I think there's a lot of thought
30:21in the older generations
30:22worrying about the younger generations
30:24and how that's going to pan out.
30:27Because to take something
30:29that's not financial services, as an example,
30:31this idea of national service,
30:35people think that it's older people that want this,
30:39but older people have children and grandchildren.
30:42So on a straw poll of the very few older people
30:46I've spoken to about this,
30:47they were utterly horrified by the idea
30:48for a number of reasons.
30:52So yes, it's all the different generations
30:56are concerned about the same things in the same ways.
31:00And Tom, talking to your clients over the years,
31:01do you think people come with the same issues to you?
31:03Or has that changed?
31:06I think it's four words,
31:07the same the whole time,
31:08will I have enough?
31:10I think that at the end,
31:12it's like when clients come to us,
31:13I always say, you don't have a money problem,
31:14you've got a trust problem.
31:16You need to find someone to trust,
31:18you can trust to work with.
31:19And it's that same thing
31:20that's at the root of everything.
31:22And it might be, to Alison's point,
31:24thinking about the next generation
31:25and the generation below that
31:27in terms of will I have enough
31:28to provide for them
31:29and give them the help and assistance I want to?
31:32Or it might be, will I have enough
31:34to simply see out my own days?
31:36But it always boils down to for me,
31:38will I have enough?
31:39And that's the biggest fear that we've all got.
31:43And do you think people are worried in general
31:45about a change of government
31:46or do you think we feel optimistic
31:47in looking for stability that it might bring?
31:51Well, I think as I said earlier on,
31:53I think people are slightly fatigued
31:55from the government that we've got.
31:56I think you always need after a while,
32:00empower people start to think
32:02that they can just do whatever they like,
32:04which I think we've seen over the recent years.
32:07And I think you do need a change.
32:08That's not a political statement,
32:10it's a statement of fact, I think.
32:12And a lot of my clients are slightly worried
32:17from, again, the straw poll method
32:19that Alison mentioned.
32:19They're slightly worried
32:21about the whole lifetime allowance thing.
32:24Is that going to be reintroduced
32:25and things like that.
32:26But by and large, again,
32:28to steal Alison's phrase,
32:29Labour government's priced in.
32:31Everybody's expecting it.
32:32I think people would be more shocked
32:34and probably slightly worried
32:35if the government stayed the same
32:36because then they would maybe go,
32:37well, God, what are they going to do now?
32:41Now they've scraped back in,
32:42what are they going to feel
32:43they can get away with now?
32:45So yeah, I think in round,
32:48as people sort of expect it
32:49and just want to crack on with their lives.
32:55Alison, would you agree
32:55that people are feeling optimistic
32:57about a new start in a way?
33:01I think optimistic
33:02might be stretching a point.
33:03I think people would quite appreciate
33:05a period of dullness.
33:10We had enough excitement
33:11of one way or another
33:12and a government that just
33:14sort of got on with doing things.
33:18Everything doesn't have to be world beating.
33:20I think at this point,
33:22we would settle for things that work.
33:26So yeah, I think that optimistic
33:30might be pushing it.
33:33So thanks, Alison and Tom.
33:35Is there anything else?
33:35We've covered lots of ground there
33:36when it comes to regulation,
33:38what might happen with the new government.
33:40Is there anything else you'd like to add
33:41we haven't covered yet?
33:43I mean, I really just want to know
33:44what Tom's clients are thinking.
33:48So it's interesting.
33:52Well, I think it is again,
33:53because I'm a bit of a nerd about these things.
33:55So every year around budget time,
33:57there's a thing called business relief
33:59around where if you've owned
34:03unlisted shares in a certain size business
34:05for over two years,
34:06they pass on free of inheritance tax
34:08or you get 100% relief against them.
34:10And every year we're told
34:11that's going to be removed.
34:13And I had lunch with
34:14or a meeting with someone yesterday
34:16and we were talking about this.
34:17And actually, it was a Labour government
34:19that bought that relief in.
34:21So I would hope that's not changed.
34:25Inheritance tax, it's a funny one.
34:27There's some people, some of our clients
34:30are very much happy to pay a little bit,
34:33but actually goes back to Alison's point
34:35about trusting the money
34:36is going to be spent wisely.
34:38We are now in a situation
34:39where if you are a married couple,
34:42you've got around a bit
34:44with a state of less than 2 million,
34:47you've got a million pounds
34:48of effectively nil rate ban
34:50between residential and non-residential
34:53and between the two of you.
34:54So it's all set up properly.
34:56But I think there is still that thing
35:00where people want to pass on
35:02as much as they can.
35:04A lot of interest in inheritance tax work
35:06we do is around estates
35:08and things like that,
35:09where you've got a big immovable thing,
35:13big bit of a farm or something
35:15or a big tranche of land.
35:17And people often see that as being some,
35:21yes, there are wonderful things,
35:22but they require care and maintenance
35:24and stewardship.
35:26And so a lot of the interesting planning
35:28is done around that.
35:30Again, I think I'd like to see
35:31not a lot of tinkering.
35:32I think we do have rather generous allowances
35:35at the moment, and that's fine.
35:37I think the whole thing
35:37where at one point the conservatives
35:38were talking about getting rid of it entirely,
35:41I think that's not the way to go.
35:45And that's not with someone
35:45who makes a living planning
35:46for inheritance tax.
35:48I think generally we do all need to look after those
35:52that are less fortunate than us
35:53and inheritance tax is part of that.
35:55I think somebody, the chap
35:57I was in the meeting with yesterday
35:58was telling me that £7 billion
35:59was raised at the last Cal.
36:02That's a lot of doctors and nurses.
36:05But equally, we need to,
36:07in my own case, if I had children,
36:09I would want to see that they've got
36:10a pretty good start in life.
36:12Thank you.
36:12Well, thanks Tom and Alison
36:13for taking part in our First Scots
36:14and Money podcast.
36:15A pleasure, thanks.
36:16In partnership with Calton.
36:18Please listen out for and enjoy more podcasts.