Arabella Denby
The disillusioned investor
Background
Arabella had a busy life. She set up her plant nursery near York about 15 years ago with her then-husband. When they divorced, she kept the nursery, and he kept the house. Her children were still young at the time, and they agreed that they would live with her.
She had since remarried. Her son, Jordan, was at university, and her daughter, Beanie, now worked in the nursery with her. As Beanie had down syndrome, Arabella foresaw her working there right from the time they started the business. Since leaving school Beanie loved working at the nursery, she was great with customers, and she also loved looking after the plants.
Financially, Arabella was very astute, be it with her business, her personal affairs, or when helping the rest of her family. She had managed to turn a profit every year that she had been in business. As soon as she had saved enough, she put a deposit down on a house, although she still had a substantial mortgage remaining of more than ÂŁ150,000.
Beanie was soon to turn 18. Arabella had been appointed her deputy via the Court of Protection, and she intended to care for Beanie for the rest of her life. Arabella and her ex-husband had been contributing to a trust fund for many years, with her and her sister as trustees.
Arabella’s father had died a few years ago and her mother was about to move into residential care. After deducting the pension income her mother received from the annual care fees there would be about £30,000 left to finance each year. Arabella was one of the named Attorneys appointed via her mother’s Lasting Power of Attorney, which enabled her to manage her money for her. She had about £100,000 in cash savings which would cover the shortfall for a while, but they had put her house on the market to help cover the fees once depleted. Her parents also had a holiday cottage on the Yorkshire coast which they were reluctant to get rid of.
Reasons for seeking advice
The first thing that Arabella said to her Good Green Money adviser was to apologise for the complexity of her situation. But that wasn’t a problem – we specialise in helping those with complex affairs.
Regarding her personal finances, she had been paying into a personal pension for years, and she had set up a group pension for her staff with the help of a financial adviser. She wasn’t sure if she was paying in enough though or what it would be worth when she retired. She also paid some money into an ISA and made overpayments to her mortgage when she could afford to do so. Was she doing the right thing?
She was unsure when she would retire, and didn’t know exactly what would happen to the nursery when she did. She shared her hopes that one day Jordan might like to take over, which would be great for Beanie if he did, but he was still young, and she didn’t want to put any pressure on him.
Beanie’s trust fund had been set up by a firm of solicitors that her parents used and the investments within it were managed by a major high street bank. Arabella had never really gotten on with them though. Whenever she asked for help or advice no one gave the impression that they wanted to help her.
For one thing, Arabella had recently discovered that it was possible to invest ethically, in good businesses that cared about what they did and who worked for them and also invest in a way that was good for the planet. She was very interested in this as she had always run her own business in this way. She wanted to invest both her own money and Beanie’s in ethical investments, but her current advisers weren’t interested. She knew that we built our entire investment process around investing ethically so was interested in moving everything to us.
Finally, there was her mother’s situation. Soon her parent’s house would be sold for about £600,000 and it seemed a waste to keep this all in cash. And should she be selling their holiday cottage too?
How we helped
The first reassurance that we gave Arabella was that she would be in safe hands. Although technically she would act as three separate clients for us – as herself, as Beanie’s deputy, and as her mother’s attorney – she would only have the one adviser and we’d conduct each of the three annual reviews for her in a single, concurrent meeting. She was delighted with this, and it meant a lot.
Rather than her coming to us, we went to see her at the nursery every year, conducting the meeting in the office at the back followed by a tour of the latest plant displays from Beanie.
For her own affairs, we mapped out a detailed, long-term plan, taking into account the financial projections for her business, the personal withdrawals she could take from it, and how she could apply these in terms of building up her own savings, paying down her mortgage, and keep putting away money for Beanie. This was a careful balancing act with lots of relevant variables.
We carefully walked her through all of the options and considerations, and between us devised a plan that should help her support both herself and Beanie. We also moved her pension and investments within our care and re-invested them in carefully, ethically filtered investment portfolios.
It was a pipe dream of hers to move to a property that would have a small annex on the side where Beanie would be able to live with some independence. We encouraged her to research how much she would probably need to spend on this type of property and built this as a medium-term aspiration to work towards within her plan.
With her sister’s agreement, as a fellow trustee, we also moved Beanie’s trust fund to our care and re-invested it in a more ethically orientated portfolio. We set up different financial models of how this might be used to support Beanie in future years.
What she really liked
For Arabella’s mother, we made sure that a large amount of her money was retained in cash to cover care fees for some time to come, with added contingency for extra spending. We invested the remainder with the intention that the long term, modest growth would add to her financial security.
Finally, we advised against selling the holiday home as it would create a large Capital Gains Tax bill. Instead, we suggested that Arabella use some of her mother’s money to do it up. She rented it as a holiday cottage with the net rental income going towards her mother’s care costs.
