theglobe

In this issue:Investment opportunities

Protecting your assets

State pensions and Brexit

Knowledge and insight on today’s financial world | Spring 19

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FeatureWelcome

Jeremy Woodley Chairman and Managing Directorjeremy.j.woodley@thefrygroup.co.uk

Welcome to our new look client update – The Globe This new name reflects our view of the world; it’s no surprise that today’s financial landscape demands a global outlook. It also embodies the nature of our work with clients; our presence around the world for over 120 years has enabled us to carve out a niche with British citizens, wherever they may be.

This issue of The Globe explores a world view of investment markets, along with the continued complexity of tax and estate planning for individuals. When looking at global investment we see a world in which there is increasing volatility, yet not all messages are doom and gloom. Most major markets are still in positive territory but after a long running expansion phase there is always room for markets to catch their breath. This is one of the reasons why we invest clients’ money, rather than trade it; investing is about the long term and the compounding effect. Whilst we cannot control politics or markets we can help you determine and achieve your financial goals.

Our last update saw us preparing to open a new base in Dubai and I’m pleased to report that the team is now in place and the office is providing a great base to support clients across the Middle East. Our tax work in Asia is also going from strength to strength and on page 11 you can read more about our new Head of Tax in the region who will be leading a strong programme of events and workshops to help clients with their tax needs. We are also expanding our other offices with new appointments across the UK and Europe and recently have been recognised as a leading firm in our field by FT Advisor (more on page 10).

This introduction also gives me the opportunity to acknowledge two long standing members of staff. David Goodman, our UK Financial Planning Manager, is retiring after 34 years at The Fry Group – including significant time overseas - and we wish him well. I also want to thank Julian Smith - our Head of Tax - who reaches the impressive milestone of 40 years with us this May. These periods of service are not unusual at The Fry Group; many of our staff stay with us through the years, helping us to develop those close relationships with clients which are so important.

I hope you enjoy The Globe and if you would like to get in touch to discuss your own financial plans and goals please do.

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Good fi nancial planning.The gift that keeps on giving through the generations.

Local knowledge, international outlookwww.thefrygroup.co.uk

Tax News and Analysis

Growing tax billsDuring the past 20 years, tax bills have risen steadily. Even after accounting for inflation, total receipts from Income Tax are up by a third, Capital Gains Tax receipts have more than doubled and the country’s most hated levy, Inheritance Tax has increased by 75%.

The Government will need an extra £5 billion by 2023 to maintain current spending so it’s likely further tax rises will come. Not surprisingly, it’s been revealed that one third of British billionaires are in the process of moving, or have already moved to, so called ‘tax-havens’ including Monaco, the Channel Islands, Switzerland and the Isle of Man.

Tax breaks for opposite sex couples Following a Supreme Court ruling in June 2018, 3 million opposite-sex couples who live together will be able to enjoy the financial benefits of marriage without being wed. Currently, only same sex couples can form a civil partnership. Cohabiting couples are the fastest growing household group in Britain and until now long-term cohabitation offered little in the way of formal rights.

The new rules mean that a typical couple who live together for 50 years could benefit by as much as £190,000*. Opposite sex civil partners can benefit in a number of ways including:

• Using marriage allowance transfers where one partner earns less than £11,850 and the other partner earns up to £46,350 or £43,430 in Scotland (2018-19 tax year).

• Transferring assets to a lower earning spouse to use dividend allowances

• Moving interest paying bank accounts into joint names

• Combining Capital Gains Tax allowances

• Using Inheritance Tax allowances

*Based on a couple with £230,000 of investments, a dividend yield of 3% and £20,000 of savings earning 2% interest. One is a higher rate taxpayer (40%) and the other is a basic rate taxpayer (20%) and allowances rise by inflation for the next 50 years.

Will Brexit affect state pensions?We couldn’t avoid mentioning Brexit! If you are entitled to a UK state pension, you can claim it wherever you live in the world. In the UK your state pension is uprated every year in line with the triple lock which means it rises by the higher of average earnings, inflation or 2.5%. This is also the case if you live in the 27 other EU countries as well as Iceland, Liechtenstein, Norway and Switzerland. If the withdrawal agreement goes through, uprating will continue in those countries, and the Government has confirmed that in the case of no deal it will

continue to uprate state pensions for people in those countries in 2019 and 2020.

In later years, it will only uprate pensions if there is a reciprocal arrangement with the whole of the EU or with each of the individual countries. The UK already has reciprocal agreements with the USA, Turkey, Jamaica and Israel and it’s this sort of deal which would need to be done with European countries.

There are other places where many people claim UK state pensions but do not benefit from uprating such

as Australia, Canada, New Zealand and South Africa.

In order to claim the UK state pension, you must have made National Insurance Contributions for a minimum of 10 years. But if you have worked in the UK for seven years, for example, and another European country for at least 3 years, then you can still claim as your work in another European country applies. Under the withdrawal agreement, this would continue to be the case, but if the UK leaves with no deal, further negotiations would be needed.

Peter WebbInternational Tax Managerpeter.webb@thefrygroup.co.uk

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Feature

Berry Bros & Rudd, the family-run wine and spirits merchant promises customers: ‘It doesn’t matter how much you know about wine, what your budget is, whether you’re buying for a special occasion or just a midweek dinner, it’s our job as wine merchants to find something that surprises and delights you.’

The company’s historic premises at 3 St James’ Street opened for business in 1698 and from here it has supplied the British Royal Family since the reign of George III. Its wines were served on the Titanic and smuggled into prohibition-era America. A 1760s tradition, turned modern-day novelty, involves the shop’s large scales, on which customers are still sometimes weighed, joining a fellowship that includes Lord Byron, William Pitt and Beau Brummell.These days, Berry Bros. & Rudd’s services have grown to include a wine club, a cellar plan, private wine events, a wine school, an online wine broking exchange and an award-winning website. There is a new state-of the-art shop around the corner at 63 Pall Mall with enomatic wine sampling machines and hundreds of wines to buy, ranging in price from £10 to £10,000.A large cellar space beneath the St James’s Street shop, where the exiled Napoleon III was once sheltered by his friend George Berry, now buzzes with wine tasting evenings and lavish dinners hosted by winemakers and famous names, and cooked by a team of in-house chefs led by Stewart Turner (previously of the Waterside Inn at Bray). The company is still owned and managed by

members of the Berry and Rudd families. Chairman Lizzy Rudd is one of a number of inspirational women who have headed up the business, the original premises having been opened by Widow Bourne at the end of the 17th century and Lizzy’s grandmother Ethel Rudd was the company’s first chairman back in 1949.Relationships set the company apart. Just as wine develops over time into something special, so too have Berry Bros. & Rudd’s partnerships with wine growers and château owners developed over many generations. These close alliances allow it access to the very best wines all over the world, as well as the opportunity to discover gems that people have never heard of.Crucially, Berry Bros. & Rudd dismisses trends and pretension. It is keen to learn from its customers what they want to drink. It sees wine as an ever-evolving conversation, a fascinating learning journey, and it’s this refreshing, open-minded attitude that stokes the coals of its success. 

Raise a glass to Britain’s oldest wine and spirit merchant

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2019 is already proving a challenging year for the global economy, but there have been glimmers of hope - optimism regarding a potential resolution to the ongoing trade dispute between the US and China saw risk markets rebound through the first four weeks of the year. In creating a robust investment strategy it’s important to keep up-to-date about what’s happening on both the global stage and in more specific areas. Here we offer a review of the best opportunities in 2019, and where real growth can be seen.UK assetsEven before the crisis in risk markets at the end of 2018, UK assets had already fallen a fair way. For international investors, the fall in UK assets was compounded by a fall in the value of sterling. With UK equities at a long-term low relative to global markets and sterling at what many believe to be a very cheap level we think there is merit in looking to ‘bottom fish’ in the UK.

Chinese equitiesChina is big, and China will grow. Like any emerging market, there are times when investors overly worry about some of the structural challenges that face the country. Before the sell-off of markets, China was one of the significant underperformers of the year. However, the underlying economic growth rate of 5-6% is helping China to grow out of its problems. At a near 10-year valuation low we expect Chinese equities to come back onto the radar of buyers in 2019.

Where there is true growth

Technology With the Nasdaq already in a bear market, investors are already looking to the technology sector for opportunities. As a general principle, we prefer small and medium-sized companies to giants such as the FAANGs that have led the sector’s previous good performance. We are concerned that big tech will face increasing scrutiny from regulators and governments around the world.

Health care Technology is collaborating with traditional healthcare to bring significant advances that show massive potential in the future. Old healthcare, particularly drug companies dependent on old product portfolios, may find themselves under ever-increasing pressure from governments trying to rein in healthcare spending.

Investment Update

The global economy in 2019 – where are the opportunities?

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Infrastructure Climate change meets governments looking to have an excuse to spend. High government debt will mean that governments are under pressure to only spend on essential projects. Ageing infrastructure in western countries provides an excellent reason for governments to support their economies. Also, climate change puts much of that infrastructure under pressure with flooding and extreme temperatures only accelerating the demise of ageing bridges and roads.

Safe equity income will be kingGiven the recent wild gyrations in capital values of assets, ageing populations will be keen to seek out safe yields from equities. Consumer staple companies, REITS, very selective financial organisations and energy companies come to mind as potential sources of solid dividend yields and income growth that may appeal.

Risk diversifiersGold – we believe gold is poised to provide some good returns in 2019. That being said, we do not think you should just see the metal as a source of return but as a way of providing risk mitigation against fears of a significant sell-off in markets. Note that back in the financial crisis of 2007-09 gold did not make its outsize gains until late in the crisis.

Government debtInvestors will need the safety of what is coined a risk-free asset. US Treasuries are often the asset of choice during a crisis. Back in 2007-09 it was one of the very few assets that displayed its negative correlation with the equity sell off.

Health care Health care spending growth in Asia Pacific is running at 20% compared to 10% in US and Europe (Singapore Business)

Gold Gold rose 180% between August 2007 and September 2011

Technology By 2025 wireless voice and data networks will be available to every human on earth. 3 billon more people will be connected to the internet

Infrastructure The ASCE estimates the US needs to spend some $4.5 trillion by 2025 to fix the country’s roads, bridges, dams and other infrastructure

Government debt US government 10-year bond yields dropped 225bps in 2008

Julian Broom Head of Advicejulian.broom@thefrygroup.co.uk

To discuss any aspect of your own investment portfolio please contact Julian Broom, Head of Advice.

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Will my children inherit if i remarry?Dealing with inheritance after remarriage can be tricky. You may want to provide for your spouse, but ultimately pass your estate to your children. When entering a second marriage, with children from a first, it’s important to have a Will that sets out your wishes.

Without one all of your money and assets will be distributed using the Rules of Intestacy. These dictate that your spouse will inherit the first £250,000 and all personal possessions along with 50% of anything over and above £250,000. Children will receive equal shares in the other 50% but stepchildren will not receive anything. Fortunately, there is a simple way around this problem using a Will trust - a tool which will allow your spouse to live in your home for as long as they wish. They can even sell it if they want to move or downsize. After their death, the property and assets will pass to any children named in your Will.

Needless to say it’s important to use a professional who can ensure that the implications are clearly explained and that the trust sets out exactly what is intended to happen.

Estates

Keeping everything in order With an estimated £2 billion in unclaimed UK bank accounts, a recent survey has highlighted that a quarter of us aren’t sure of the details of our partner’s assets. In the event of your death it’s vital that information about your savings, pensions, life assurance and investments is readily available. If not the administration of your Estate could be significantly delayed while searches and enquiries are made. In the worst case scenario, money could simply be lost. If you don’t want your partner to have the details then you can draw up a list of your assets – together with account numbers and passwords - to be held with your Will. You should, of course, aim to regularly update the list.

Who can access your bank account?We’ve recently seen more older people giving relatives informal access to their bank accounts. A recent survey by the Co-operative Society found a quarter of over-45’s have access to the bank account of someone other than their spouse. While it might seem an easy solution the reality is there is no protection or supervision and it may become increasingly hard for you to keep a check on your finances. The question of abusing funds could also come up. A Lasting Power of Attorney (LPA) can help here. It’s a formal document giving one or more people access to your financial affairs and is simple to set up and register.

Steve Wright Head of Estatessteve.wright@thefrygroup.co.uk

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Established in 1784, John Smedley are creators of the world’s finest knitwear, made in Britain and distributed the world over. The company is home of the oldest manufacturing factory in the world, and now crafts beautiful, high quality garments that are designed to last.

The John Smedley story began during the infancy of the industrial revolution at a factory in Lea Mills, just outside Matlock in Derbyshire where the company is still based today, 235 years later. In 1784 the John Smedley factory started life manufacturing cloth - producing simple muslin fabric and spinning cotton which it sent out to local cottages with hand frame looms for making into clothes. In 1825 the company moved on to producing complex garments, using one of the first ever fully fashioned knitting machines, from which came the original “Long Johns”.

The company, which has remained in the Smedley family since it was first established, expanded over time and in 1914 began exporting its clothing around the globe. Over time the John Smedley name became established as one of Britain’s most famous clothing brands.

In the 1950s and 60s the brand picked up further global recognition after becoming the choice for many famous faces, including Marilyn Monroe, Audrey Hepburn and the Beatles. By 1980 John Smedley had become established as the go-to knitwear brand for British designers such as Dame Vivienne Westwood and Sir Paul Smith.

The year 2000 saw John Smedley open its first store on the iconic Brook Street in Mayfair, London and in 2012 cemented its style credentials by presenting at London

Collections: Men, the first ever British Men’s Fashion Week. The following year the company was granted the Royal Warrant of Appointment as a “Manufacturer of Fine Knitwear” by Her Majesty Queen Elizabeth II, a testament to the enduring and trusted quality of its clothing ranges.

Today the brand continues to innovate and recent triumphs include the re-launch of womenswear line at London Fashion Week in 2015, and a contemporary new unisex capsule collection ‘Singular’ - the first ever unisex knitwear collection launched within the UK.

Every John Smedley garment is proud to include a “Made in Great Britain” tag as a nod to its provenance. John Smedley has remained a British, family run business and is now managed by Ian Maclean, an 8th generation member of the Smedley family.

Today John Smedley is recognised for its style, timeless aesthetic and meticulous attention to detail with its collections stocked in Harrods, Harvey Nichols, John Lewis and independent stores worldwide.

FeatureFashioning a brand

THE WORLD’S FINEST KNITWEAR

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Investment insights Our annual investment conference took place in January in the UK, Dubai, Hong Kong and Singapore. Over 250 clients heard from Gary Dugan, CEO of PAM, about the major trends in 2018 and the key investment themes we believe will play an increasingly important role in 2019. We were delighted with how useful the session had been for clients and are looking forward to hosting similar events next year. An overview of the key trends discussed, together with short video clips from the event, are available on our website.

Strengthening reputationsOur reputation is important to us. For more than 120 years we’ve worked hard to deliver an exceptional service supported by an intelligent, professional team. So it’s fantastic when we are recognised for the work we do with our clients. In late 2018,

FTAdviser released its list of the Top 100 UK Financial Advisers and our financial planning arm was ranked 5th. The list, which identifies the best UK financial advisory businesses, takes into account a range of aspects including assets under management and the number of highly qualified individuals in the business. Jeremy Woodley, our MD and Chairman, and David Pugh, Head of Sales and Marketing, were also noted on International Adviser’s Top 100 list of Influential Advisers which recognises the ‘movers and shakers’ who help drive excellence within financial services.

David Goodman This April we wish a happy retirement to David Goodman, who has worked for The Fry Group for almost 35 years. David truly epitomised our international presence – working across the UK, Europe and the Far East. David joined us in Exeter in 1984 before moving to Worthing. After looking after clients across the UK, David took on international responsibilities, including travel to the Far East. His work in Singapore led him – together with his family – to set up our Singapore Office in 2001, and he spent two years establishing our presence in Battery Road. David then returned to the UK to build The Fry Group’s work in Belgium, which resulted in the establishment of our Brussels office. Since 2007 he has worked in our UK Financial Planning team, leading as Manager since 2009.

We wish him an enjoyable retirement and the opportunity to travel without the need for a stock of business cards and brochures!

News

The BIG Foundation project We are delighted to be providing hands on help for an exciting new project in Kenya. Through the BIG Foundation – set up by two Black Isle Group directors in 2017 – five staff from The Fry Group will be travelling to the Tsavo region of Kenya in June to join a team of volunteers to help build a nursery for 70 pupils at Itinyi primary school. The school is in a remote area where over 65% of people live in poverty, but the nursery will provide a clean and safe environment for the children to learn and thrive. Our volunteers are Gill Perry and Cathy Ratchford from Worthing, Edita Tsang from Hong Kong, Amanda Newell from Belgium and Aiveen McCarthy from Singapore. We wish them the best of luck for what will be a remarkable week.

Join us on an unforgettable journey, changing lives in Kenya

The BIG Challenge 9-16 June 2019

“Thank you so much for a most illuminating and realistic assessment of the current and future, short and longer term, economic climate.” UK Client attending our London event

David (seated) with the Singapore team in 2001

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Anna Warren has recently joined the team in Asia, working from our Hong Kong office. Here she explains how she came to be at The Fry Group.Where were you born and brought up? I grew up in Jersey in the Channel Islands. My parents and grandparents were also born and grew up on the island, so I always had lots of family around. Jersey is beautiful in the summer, so if I wasn’t competing on my pony, I would spend a lot of time on the beach. I’ve ridden since the age of 2 and horses have always been a huge part of my life. Having ponies from a young age and competing taught me that hard work and perseverance pay off, that it’s important to love what you do as things are not always easy or enjoyable all of the time; riding in the rain in winter was not so fun! I recently took part in a horse riding safari in Botswana - a fantastic experience and such fun, especially getting really close to lots of the animals (avoiding lions!). Cantering with giraffe’s in the Delta was a particular highlight.

How did you find your way into a career in finance? Finance is an important industry in Jersey, so was something I’d always considered as a potential career. When I was 16 I did some work experience; firstly at a law firm and then at a few accountancy firms. I discovered that I enjoyed working in audit because it introduced me to all kinds of different businesses and people.

Can you share a potted career history…I had undertaken a significant amount of work experience at

KPMG and after finishing education I joined their school leaver programme. Whilst studying for my ACA I really enjoyed my tax exams and asked to spend time in the tax department - I love a challenge, so solving some of the complicated tax issues that clients had was really appealing. After some time in the Jersey team, primarily working on UK tax and offshore trusts, I moved to KPMG in London working in the Private Client tax team, to broaden my knowledge and work directly with individuals. I have always enjoyed meeting new people and working in private client tax means you get to meet some fascinating and successful individuals. I spent over 6 years in the London team before one of my clients, a family office, asked me to work for them directly on a project I had been helping them with. It was a great experience to be client side and gain more insight into what is valued from an adviser.

Why did you choose to join The Fry Group?The Fry Group has an excellent reputation for integrity, something that I consider critical for a trusted adviser. The team in Asia is dynamic and driven, sharing a common goal of putting the clients’ needs first and delivering excellent quality and forward-thinking advice. I wanted to be part of an established group, in an environment where people

are ambitious and work together to build and develop the group.

What are you most looking for-ward to? I am excited about the challenge of working in a new environment, and looking forward to experiencing a new culture, meeting lots of new people and trying as many restaurants as I can - I’ve heard the food is great!

If you weren’t in finance what other career path appeals? I am a huge fan of real crime documentaries, so I think I might enjoy being a detective…

Meet the Team

Anna Warren, Head of Tax – Asia

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In 2018 we added Dubai to our list of global offi ces.

Local knowledge, international outlook www.thefrygroup.co.uk

The Fry Group of companies comprises Wilfred T Fry Ltd – Taxation Consultants, Wilfred T Fry (Executor and Trustee) Ltd, The Fry Group (H.K.) Ltd, The Fry Group (Singapore) Pte Ltd, The Fry Group (Belgium) SA, Wilfred T Fry (Personal Financial Planning) Ltd – Dubai Branch, and Wilfred T Fry (Personal Financial Planning) Ltd (‘PFP’). The last company is authorised and regulated in the UK by the Financial Conduct Authority (FCA number 114402) and is also passported under EU regulations. The Fry Group (H.K.) Ltd is licensed to conduct investment advisory business in Hong Kong by the Securities & Futures Commission (SFC; CE Number: ATY965) and is a member of the Hong Kong Confederation of Insurance Brokers (HKCIB; Membership Number: 0444). The Fry Group (Singapore) Pte Ltd is authorised to act as a fi nancial adviser by the Monetary Authority of Singapore - licence number FA100057. The Fry Group (Belgium) SA is regulated in Belgium by the FSMA (Reg. No. 23345 A) and is also passported under IMD EU regulations. Wilfred T Fry (Personal Financial Planning) Ltd – Dubai Branch is regulated by the Dubai Financial Services Authority (licence number F005071). Tax treatment depends on the individual circumstances of each client. All levels and basis of, and relief from taxation illustrated here are subject to change without notice.