Independent Financial Advice for Businesses
Our Independent Financial Businesses Advisers or IFA's can add value in three main areas:
- Partner or shareholder protection: if a shareholder in a business dies unexpectedly, then the other shareholders are faced with the possibility of suddenly being in business with the beneficiaries of the deceased’s will. For many, this will be a decidedly unsatisfactory state of affairs. It can be solved relatively simply and inexpensively by using life assurance, trusts and cross-option agreements. This arrangement would allow either the deceased’s beneficiaries or the remaining shareholders to elect for the remaining shareholders to buy out the deceased’s share of the business using proceeds from the insurance policy.
- Key man protection: if a key employee (including owners and directors) dies or contracts a dread disease, the company’s financial position may be seriously compromised. For example, if a shareholder guaranteeing an overdraft dies, this could make the bank extremely nervous about maintaining that facility. As another example, a key salesman’s absence could affect the company’s profits significantly. These risks can normally be insured, so that a lump sum insurance payout would supplement the company’s profits or bolster the balance sheet whilst a replacement member of staff is brought on board and made fully effective.
- Group personal pensions: The Pensions Act 2008 requires that employers will soon have to auto-enrol all employees in a pension scheme if they are aged between 22 and state pension age and earn more than £5,035. Employees may opt out but, since employers will eventually have to contribute at least 3% of earnings, it would be foolish for most employees to do so. In the absence of a suitable pension scheme, the proposed “personal accounts” scheme will have to be used. Although the details have yet to be announced, these personal accounts are likely to be very cheap, with very limited investment choices. We feel that responsible employers would want instead to consider using group personal pensions as they could provide a much better overall result. Who, after all, would want to see 8% of their earnings going into a less than optimum scheme for perhaps 40 years of their working life?
Contact us to find out more
If you are interested in finding out more about our Financial Advice for Business services in Berkshire and Buckinghamshire please call us on 01494 461221 (High Wycombe, Buckinghamshire) or make an online enquiry via our form.