Case study

Maximising investments before selling and retirement


£3,125 pa

Charge saved for client

~£30,000 pa

Tax-free income

Quarterly

Dynamic review included in our fee

Like many practice owners, Colin had reached his mid 50s without a clear financial strategy for retirement. Having amassed a portfolio including an NHS pension, personal pensions and investments, he wanted to streamline things in the run-up to retirement, having taken piecemeal advice from a variety of advisers in the past.

What were Colin’s main objectives?

Colin and his business partners planned to sell their practice to capitalise on current strong goodwill values.

Before giving the go ahead to market the practice, he wanted to establish a few key facts on his financial position:

  • How much retirement income would his current arrangements produce?
  • Could his plans be consolidated without increasing his risk?
  • Would he exceed the Lifetime Pension Allowance of £1m?
  • How could his practice sale proceeds be invested tax efficiently?

Strategy meeting - getting to know each other

We like to get to know our clients, to give them the time to understand what we offer and decide if they would like to work with us.

For Colin, a face to face meeting was important - away from the practice and involving his spouse. After all, retirement decisions are often made jointly.

Our initial meeting unearthed the couple’s main objectives and introduced a few issues to overcome that they weren’t aware of yet.

We explained about our independence, our chartered status and demonstrated our knowledge of the issues facing dentists at Colin’s career stage.

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What next?

After discussing the service we provide and the costs involved, he instructed us to help him achieve his key objectives.

To avoid the hassle of Colin researching his existing policies and plans himself, we gained a simple adviser authority, allowing us to gather the information we needed.

Once we’d been through the whole portfolio, we made an initial assessment of his position. This included:

  • A prediction of the net income that Colin could enjoy from all sources in retirement, including the investment of his practice sale proceeds.
  • Establishing that without taking preventative action, Colin’s NHS pension would suffer a Pension Lifetime Allowance Charge of £3,125 pa.
  • Colin’s ISA portfolio and pensions lacked diversification and included some poorly rated investment funds.
  • One of Colin’s pension plans incurred a significant advice charge - but no advice was being provided.

Putting a plan in place

Some areas of advice warrant specific and swift action.

Helping Colin to apply for HMRC ‘transitional protection’ was essential. This involved some technical advice and number crunching that ultimately saved him the £3,125pa charge. Without our advice this wouldn’t have been achieved.

What about the practice sale proceeds?

Making a new investment of more than £500,000 can be a daunting prospect but at PFM Dental we do this regularly.

A carefully-crafted portfolio will use a variety of tax wrappers - ways of allowing income to be taken tax-efficiently. For Colin, this involved the use of unit trusts and Open-Ended Investment Companies (OEICs), which allow a couple to extract close to £30,000 of tax-free income each year.

With an eye on inheritance tax, we advised using an investment bond wrapped in a trust for the benefit of Colin’s children and potentially future grandchildren. This is one we’ll keep on the agenda at future review meetings.

Continuing advice behind the scenes

Colin was reassured to know that we review his investments every quarter.

Our behind the scenes investment committee and in-house research team constantly monitor the funds we provide and advise changes where appropriate. This service is included in our overall advice fee.

Reaching a financial crossroads is certainty for dentists selling their business. Making the right decisions, underpinned by professional guidance is the key to a financially secure retirement. PFM Dental have the skills and qualifications to deliver the right advice at the right time.  

— Jon Drysdale, director, PFM Dental

Need some help with your retirement strategy?

For an initial assessment of your portfolio or an open discussion about your strategy to retirement speak to our chartered financial planning team