In today's episode we talk about how you can make your pension work harder for you. Make sure to tune in if you're feeling frustrated, worried, or fearful of what life might be like for you in retirement.
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Unknown Speaker 0:01 The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
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Welcome to Episode 35 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined by Mr. Kevin Whalen, the founder. Hello, Kevin. Good evening, Chris. Nice to talk to you again. Yes. How you doing? I'm doing very well, you know, but I think we had such a tremendous responsibility to webinar we did earlier in the week with 200 registrations. And although the subject was you know, according to Dr. Warren, it's a pillar to its pensions. But we introduced the whole idea of breathing new life into pensions because still the vast majority of people Chris out there or building their life
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hoping their pensions will do better next year, and they hope will do better next year, we found a way to breathe new life into pensions into something we have labeled the CPR, Chris only the CPR bringing a kiss of life to your pensions. Absolutely. And I guess we don't really want to ruin the surprise. And the webinar that we hosted last week actually was about 45 minutes long. And we've decided to replay it on this week's podcast episode, because there's a lot of value there. And we had such fantastic feedback. And we would really urge everyone listening to share this message, because it's really important one, isn't it, Kevin? Well look with so much money in last forgotten, performing miserably. And we know this is money that can be brought to life. And it can be used to build your wealth in ways that most people will never discover unless they hear it from somebody who's a bit more empowered. We just thought it was really important.
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We got the feedback, we were kind of shocked at how positive people had reacted. So we just wanted to give everybody who
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can is open minded to seeing pinches in a new light to kind of breathe new life into them. And so you know, you'll find somebody yourself and please share it with one other person, everybody's got a pension somewhere, to tell somebody else, listen to it, not just yourself. And of course, this was a live webinar, it was with slides. So you will hear us reference to slides. So if it at times doesn't make complete sense, because we might be referring to something on screen, then I think, you know, you'll still get the good grasp of it. And actually, what we're going to do is put a link in the show notes so that you can watch the webinar replay which we have online, and actually, we're also giving away a freebie. So make sure you listen all the way to the end, and then do grab that freebie, and we hope that that is a value to you. So should we hand over to our record
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Today's webinar from last week Kevin okay. And listen, Chris, you have a great time in the states doing all your marketing stuff, and I'll see you when you get back. Thanks, Kevin. So yeah.
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Good evening to you. Good evening, everyone. Delighted, you know, can't believe it, you know, 200 people want to know how they can make their pensions work harder. And it's not a tiny number, compared to the number of people who are just doing terribly with their pension funds. But anyway, let's give the people who turned up enough real good stuff so they can take some action, Chris. So, one of the Seven Pillars. pillar number two is pensions, Kevin, and how do people generally feel Oh, we should ask out to everyone on the webinar tonight. Why did you put in the chat box, there's one word man just one word that that you feel about, you know, your future pensions if they're not already. Those of you who are a bit smarter will already know some of the secrets will share. But if you haven't already taken full control of your pension, what is the what is the language
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That you feeling when you think about your future pension returns? I hope they don't get in, by the way.
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Okay, let's see what we get. Well, the first one rip off. We've got MRT we've got fear.
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What else we've got coming through here, or Glenn sang curious.
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All different words Helen, powerless. You're nervous. risk.
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Okay, untouchable. So there you go. There's a there's a few. That's quite a lot.
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And that's the challenge, isn't it? Almost every pension that, you know, people have got, pretty much now most final salary schemes are dead. And we're not going to talk about violence RV schemes tonight because, you know, they're much more complex and we can get across tonight, but almost every other kind of a pension is invested in a market, that it's simply beyond control. You know, nobody control it. Warren Buffett can't even control it. Nobody control it and this goes back to
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The 2008 when people lost 30 40% of their money in a heartbeat, and nobody took responsibility for that, it was just a loss of money, with no possibility of being able to recover from that easily. And certainly feeling powerless and helpless and empty and ripped off all those things that were were saying before. And this is true of the way most people build their wealth, Chris. And we've got a picture of property here because as we know, you know, again, back in 2008, a lot of people who perhaps were coming close to retirement and they were relying on their pension, their property investments, and there's just very little control isn't there. Of course, those are this is the standard way that people build their wealth. So they have a job, and then they pay all the taxes and all the National Insurance and then every, and they say what's left and they buy a home and that's fair play. They put some money in a pension and they hope things are better. And they put money investments again, mostly in stock market and they hope it works out
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But the real challenge about that is there is no place to build wealth in the stock market isn't building, because you can't build, all you can do is hope the diversification strategy works. So the only way it can work is if you take 40 years to do it. In other words, for the most part is just too slow. You can't control the risk. And the big word that we use a lot in wealth building is leverage. So there's no possibility to add value, there's no possibility to get more money in play. You can't use other people's money, you can't go to the bank and say, Hey, I'm thinking about investing in the stock market when you lend me 100 grand, they'll tell you to, well, they'll say no. And that's the real challenge we get the way to build wealth, we know is really all about using the right forms of leverage. And so I think the words that people use are the words that we hear all the time, Chris, which is, you know, all this sort of pain and the frustration and the feelings that
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People have got when they think about their pensions, which is next, Chris. That's right.
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Exactly. So emphasizing their lot of the common words that we hear. So the pension CPR is something that's interesting, isn't it? Chris? I'm so we're. So we've got a quite quite a short picture here. But this is leading on to three ways to instantly make your pension work harder for you. Yeah. So for pensions aren't really working we know that. So in order to breathe a bit of new life into the pensions, you know, I've got a way to at least help you if you if you're stuck with traditional pensions, the three things you just simply must do, must know must act upon. And, and I've conveniently badge this up, anybody who knows me, knows, you know, fundamentally, to be a good teacher, you need to make things resonate with people and easy way. So I use acronyms a lot.
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I use ideas a lot. So let's bring the kiss of life into the pensions and get the first one up chris.
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IC stands for charges, okay. And the key thing to understand about charges is in the absence of anything else, when when we know how the stock market works, the biggest driver of returns is actually how much you're paying in charges. And that's the shocker that most people simply do not know what they're being paid or what they're charging. I know somebody mentioned rip off because so much is hidden. And the financial industry is geared towards encouraging those charges to stay as opaque as possible. Yet even the industry leaders Chris, which is you know, next we got Hargreaves lands down, who was saying, you know that fundamentally you need to take real attention because for the average person this is not wealth building clients. This is not people taking responsibility, but just a small tiny change 1% then
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Sounds like a lot. You know, if I said can you say 1% or you paying 1% more than you should doesn't sound like a lot. But if it means 50,000 pounds worse off, in real terms is net of inflation, you know, all the figures are there and Hargreaves Lansdowne website. They're the biggest provider. And you know, they've got charges too, but what they're saying is, you know, if you can save charges, then it's going to mean a big difference in your life. And I think that's really an important point to get across. And let's expand on that a bit further, Chris, because let's think about one of the pillars that people would know if they know a little bit more about wealth building or they would care to go and look at our website and see what the other pillars are. But pillar number seven is called joint ventures, which is where you connect, collaborate, work together with other people in a genuine partnering way. Well, let's see if this stands up to the test. So let's take a typical pension the average returns let's
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Assume for the sake of an argument is 6%. And I'll give you the reasons behind that in a moment. But let's just say over the long term, when you take out the booms and the bumps, and all of the things that happen over which we have no control, the average gross return is 6%. And the average fees to achieve that taken by the industry and all sorts of different ways is about to now these are known figures, by the way, means the net profit, which is an ROI return on your investment is an average over the long term of 4%. Now, this is a known figure by all economists, and they use this as the safe what we call the safe drawdown route. In other words, all financial industries in the UK and the US will say when you want a pension, and you're looking to retire on it, probably what is safe is about drawing 4% on that. Now, if that's the case,
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if the financial services company was truly partnering with you there today
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They're putting if you think about the joint venture, would you sign this joint venture with a partner who puts none of their own money and you put on or you put in all the money, you take all of the risk, they share none of the risk at all. They take a third of the profit, and there's no accountability if something goes wrong, I just don't think it's a value proposition. It's just hidden. And most people when they get their first job, just assume that this is the way everybody does it. And I think it's an assumption that needs a challenge. We need to shoot this sacred cow squarely in the head and say, Stop, please don't sign a joint venture agreement with a third party who's taking a third of your profit. And when you get older, and you take less risk, which is more, which is true, or when people get into their 50s and 60s, they take less risk. So they reduce their returns, then they could be getting 4% return, but paying 50% of that from it. It's just not right Chris. That's what I feel about it. It makes my blood boil a bit.
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Franklin. Okay.
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Should we switch to them to the next? Yeah, you let me off. Now, Chris, I'll have a bit of a breather now. So so the P and my CPR is performance. And you know, you'll hear a lot of companies. And there's some I could mention, but don't as we're recording this, who will say, Yeah, but we outperform, you know, we've got the ability to outperform, there's no such thing as continued predictable, out performance. It's only overcharging. Now, let me tell you how it works. So let's move on Chris. So I can describe how performance actually works. Now I call this the rule of five and three. Now this isn't a rule you can Google. You know, you Google is who we're going to go looking for things. This is not a rule that's been created by anybody but me, but this is what it works in mathematical theory called. Well, I'm trying to remember what the actual mathematical formula is in a minute. But in simple terms,
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Most if phase if you meet them and you have a conversation, they'll do something called an assessment of your attitude to risk. Okay? Now those of you who've done that, can anybody acknowledge that they've done that they've met an IFA, they've done an attitude to risk and that attitude to risk gives them a score, or give them a name like low, medium, high or cautious or adventurous. Can I just check that many? Yeah, yeah, I'm not saying that but lots of yeses. We've got Brian David Robin, Helen, or saying yes, yes. Yes. Vicki Glenn. Yeah. Okay. Right. Now, this is normal. Now what they're trying to do is in that is given assessment on in, in general terms, using something called modern portfolio theory. Now, this was created way back in the in the 50s, actually, by a guy called him Harry Markowitz. But the principle behind it, is that all you can do is diversify your money because you can't know what's going to happen. Now, if you can't know
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The only thing they do know is the tolerance. So in other words, on a scale of naught to 10, with not being zero risk, then you wouldn't invest in the stock market at all. And 10 being high risk wouldn't be a surprise that most people end up at risk level five. Right? That'd be reasonable. So let's just give an example. So in risk level five, modern portfolio theory and all the models that the IPS work from, will make an assumption that 95 years and 100 so reasonably predictable and decent probability decent predictability, so I'm going to slow as I can, in 95 years out of 100.
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Your returns will be somewhere between five times your risk score a five times five, which is plus 25. So if you have a stonking year, you'll get plus 25% on your money in the stock market. If you have a bad year 95 in 100
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You get minus three times risk or so minus 15. So all they know is your money will operate between those two tolerances plus 25 minus 15. And when you average that out, you know, in terms of what happens is you'll get an average of five to 6%. Now, of course, soon as you look at the extra 5%, which is where it gets more volatile, what happened in 2008,
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it wasn't minus 15. It was minus 30. So you get these years where you get really terrible returns and those those are uncertainties that volatility is becoming more and more frequent as we get the sort of transparency in the speed of which people make decisions and the speed of which opinion and volatility gets used by I suppose social media and a whole range of different technological factors. That means people respond so much more question
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Okay, so does that make sense? So you can understand that's all they're doing. Now, if you know this is the case, if you know this is the mathematical model that they're all using,
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you can be taught this. So if this is the case, then why would you pay
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an IFA, or a fund manager, or a rapper, a high performance speaker, something that's already known, just because you don't know it, they operate it. And I'm saying, you can learn this in a weekend. And then you can dramatically cut your costs so that your gross return might still be five or 6%. But you keep much more of it, because you're not paying such a huge amount in fees. That's all I'm saying. Okay. And if you look at the drawdown right, when we look at what the average pension is in the UK, and why it's slow is for the average person in the UK at retirement.
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was a 200 grand pension. If they control it and get, you know, an average of five is 10 grand a year. If they get 200 grand and a 4%, which is deemed to be the safe drawdown right? They'll get eight grand a year. Well, then you need to run state pension because who can rely and this is the average in UK, you know, this is real numbers. This is not just made up numbers and for women, shocking and we did a podcast last week, Chris, didn't we about some of the dramatic figures that were women start with a much lower opportunity to get the same value. And just in terms of the work life and so forth, on average, their pension nationally, is less than 100 grand. So for those people, Chris, when we talk to people who want to be financially independent in Foundation, you know, the average figure we get from someone who wants to be secure, is about 4000 pounds a month, and to be completely independent. 10,000 pounds
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Well, let's say that's 50 grand a year, and 100 grand a year. So to get 50 grand a year, you need a pension of a million quid. So this is slow. And the number of people got a million quid in their pension, Chris is tiny, is less than 1%. So, you know, it's just not doable. That's why I'm saying you cannot build wealth, by saving money from a job, putting it in a pension and hope for the best that the industry profit and take your funds under management, and then hope that nothing goes dramatically wrong. At the time when you retire. If you are retiring in 2008, between two grand and you thought you're going to get 10 grand, and then the stock market took 40 or 50% off you how do you recover from that? It's virtually impossible to do that. And that's why I think, you know, there's a better way to look at that and there's just no no real activity going on. People are not actively being involved, and I want to encourage some partners.
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A patient by understanding the real risks that are taking place. Okay, on that note,
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we have our for risk. Yeah. Well look, if you take a look at what happens in stock markets, and you were to kind of draw it on a very simple diagram, what would you see? You'd see kind of steady rises and dramatic falls. Yeah, that's what you see. So in you know, so like a rising Hill, and then a sudden steep decline. And this is what happens with volatile assets. You know, you just get sudden and steep, steep declines. If you are a mountaineer, and you knew that if you are on that steep decline, you will fall down that cliff face and it would dramatically affect your wealth. What would you do? What would you well what do you see Equus? I'd be harnessing in some, some kind of stop points to stop me falling too far. Exactly. So you, you hammer in anchors to stop you from being devastated. Now when you in this point about fun Monday
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So this is I'm not trying to be too complex here, but just think about this in a simple way. If you buy a fund, a fund is known as a long only fund would a long only fund means is this is what the fund does. It's got a mandate. So let's take a footy tracker fund, for example. What's the mandate? Do we think then have a footsie tracker fund, it's to invest in funds that are the company's made up of the footsie? Now, if the footsie dramatically falls, the fund manager can diversify and invest in gold or diversify, invest in another country or another commodity or something, they just have to stay with the fund because the fund mandate says we must keep 90 or 95% of our money in the market in which we've been given a mandate. So this is the problem. The industry funds which just move in one direction, like a like a
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A ship that cannot turn. And what I'm saying is wealth builders, the people in our community need to be more fleet of foot more like the mountain is taking an active role in risk mitigation, hammering in their anchors, sometimes we call those things stop losses, Chris, because they stop your losses in these things we can teach, although we don't have a course to offer people in there, so don't get worried about it, you guys. There's nothing to offer you. But these are things that can be taught. So risk mitigation is critical when you're dealing with volatile assets. And this is the key to making sure that you're looking at wealth, not just in your where your stock market. There are risk mitigation techniques that you can use, like stop losses, like something simple that I call banking, which means as you make money, you know, when you're going up the hill, take some of that money off the table and put it somewhere else which doesn't work in the same way. You know, so you make 20% you had a great year, take 10% off and invested somewhere else.
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So that you're not just following the same pattern of the inexorable up, and then the massive decline. So these are the sorts of things that people can do. And,
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of course, you know, while these things are there, Chris, what we see for the most part is people being completely disinterested, and not being willing to take these steps, which is why so much money is lost and forgotten now there, isn't it? Indeed, and if things weren't people and thinking, wow, this is not sounded so great, then there's a huge amount. That is, as you say, sitting out there completely unclaimed. So, for everyone on the webinar tonight, think back, is there perhaps an employer back in the past when you started out, where you may have had a loss pension, and Kevin 20 billion pounds? I mean, this is not we're not talking small beer away. I mean, 20 billion pounds is the economy of some countries is massive. And this is people in the
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UK, nowhere else just in the UK who've left money, and they've forgotten it. You know, so this is the this is the thing that not only the no risk mitigation tactics going on, and nobody's teaching it because the the fund managers and the whole industry just wants you to rely on them. But those even those people who have worked in jobs or have worked in companies that have been taken over, they're simply just leaving that money behind. And you know, this worries me that the whole word pension but all that the language we heard earlier on, just not coming to life. And I think what we have to do is be on a mission Chris, in the podcast, this was a podcast we did recently wasn't a number 17 is about this last pension stuff, is you can and we you know, let's look at some people who recently Chris only in the last what few months, you know, actually found money that we press them, we prodded them, we push them and said you've got some money there. You know
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And these are three people genuine people. One of them is on the call tonight my best not to say too loud. But but he's pleased though isn't the admin then he found 50,000 you know, another client of ours in foundation or not in foundation but what certainly wealth look like
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found 100,000 and old company scheme that it just simply forgotten about, but found it in a filing cabinet. And my client, Chris, who kind of knew he'd worked for a company that can't be much care copy much every now can't be It can't be. And I bet in the case of champagne, but he still hasn't paid me the bugger. But anyway, he found 250,000 pounds in a pension scheme in his old company that is simply resigned to history. And you know, what I'm thinking is, there's got to be a way to help people take the pensions of the past and bring them into the future and make them part of their wealth in building life. Not just concerned them to history, which is what we're seeing
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So a few a few actions people can take on their own Chris, right. Yeah. Well, let's summarize where we've got to so far then Kevin. So reclaiming forgotten pensions certainly the first thing to do and have a listen to wealth talk Episode 17. We've put links in the show notes, and I can share those links. Again, there's government website where you can go online, you can trace where the old pensions might be. And it's also very easy, isn't it, Kevin, just to call up your old employer, as long as you have a few details, and all you need is your national insurance number. And the other thing about forgotten pensions is also the pension credit. So in last week's webinar, we talked about women in wealth, who we saw earlier on, often have the worst pensions of all yet, statistically, they live longer than anybody else, you know, and I said in that episode 75% of women by the time they get to their late 60s, or either single, divorced
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or without,
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you know, so it's a real serious issue if you've got a small pension
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And yet you're on your own. You know, that's not a life that's worth. I mean, that's going to be a struggle and who wants to be struggling in their in their 60s and 70s? So that's a key thing. So the pension credit is you there's a form Chris, which we should put a link to, I'm not sure we did that call it beyond 19 BR. One nine, which is a state pension forecast. So for women in particular, if you spend any time in caring that's either looking after parents looking after children, you can claim a credit to make sure that your state pension is there. But let's not forget, you know, our law, we're going to have an election soon. State Pension has been moving back and back and back and back and it's going to get less and less and less and less. So please don't rely on the state pension. But while it's there and make sure you get all the credit that you do. Okay, number two here review phase. So how can someone go about this coming? Well, the the way to do that is to be unashamed about this and just, you know, go to your whoever you're using the banks.
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Which is a great thing to be reviewing anyway, the value of what they're bringing to us, they give me a complete list of the fees and charges I paid in the last 12 months. And I wanted expressed in pounds. I don't want to express as a percentage, you know, and I want to know everything. I want to know, the transaction costs. I want to know, the penalties because a lot of companies, one in particular,
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you know, hides the fact or often they charge penalties which people don't always understand. Right. So, so you got to understand penalties, you got to understand exactly what's being charged because there's no better way to increase your return than to reduce the break that's being levied by charges. Okay. Understanding and managing risk. So we talked about a way to manage there is using what he called a stop loss, Kevin, and how does someone really dive into this
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The problem is if you're in a long term new fund, and you know the big footsie or a big management, you can't do it, you know, so you have to understand, first of all, is if you ask your
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IFA, or your fund manager wherever you get your data from two and again, and the same thing, as you're asking about fees, ask them. So what is the risk that I'm currently taking on a scale of one to 10? You know, so, in other words, some people will be risk level five in their mind. But over time, they haven't reviewed anything. And now they're risk level seven or eight. Or the other way around, you know, they could be thinking that taking a medium risk view, but over time, their funds have become even lower risk. So you have to understand what risk Am I taking, because then apply the rule of five and three in broad terms and back, we can make it more detailed than that. Because the further up the risk scale you go, you don't get you don't take double the risk level 10 By the way, risk is not a 10% return.
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It gets worse, the, you know, the bands become bigger and the average becomes lower. So it's better about a seven and a half to 8% return at level 10. So it's a physical impossibility to get more than seven and a half to 8%. In the stock market year on year, 95 years and hundred, and you'd have to in order to do that, you'd have to be taking the biggest risk possible, which means your negative could be minus 50. Just out on average, you know, so it's just too big a risk to take. So understand what risk you're taking. And then the steps that you can take what can I get myself involved in making some games, what I call counter correlate, which takes some money off the table. You know, can I put Do I understand stop losses are going to Google stop losses, or we can teach you stop losses. And you can put stop losses in place so that the market falls dramatically. You only fall a little way. So you might be hurt, but you won't be killed. Okay, and what you mean by adding value where possible, Kevin? Well, you know, it's not
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True that you have to delegate all your pension money into the hands of somebody else, you know, a lot of our clients will know that one of the things that they can do is they can take control of that pension. And when they're in control, they can make their pension reflection of them. So they can add value. They can create value, they can do something about making things work harder. And in many cases, Chris, you can get a higher return and take less risk by understanding this and we'll get to that, as we talk about what some of the alternatives. So that makes sense. It was to me and I'm keeping an eye on the questions. So there are a few questions. If you have questions, put them in the question box, and we will do a q&a at the end. So don't worry, we will come to them. But if anything pops up, put it in there. And we'll come to that shortly now Episode Two of wealth talk podcast Kevin was a real popular one, wasn't it?
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We still get lots of people who use the language and we you know, we really love that. So are you a drifter, a DIY or, or a dynamic? Here's the thing, Chris. When it comes to building wealth,
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most people will either be while everyone's going to be one of these three, and the drifters, you know, they simply bury their head in the sand and go, Oh, this is all too complicated. This is all to pinch, honey, I can't do anything. I've got to give my money to somebody else. There's nothing else I can do. I'm too busy.
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But the problem if you drift is nothing happens. You know, and if nothing happens, you cannot build your wealth. So you're at the mercy. You might just hide from it. But you're really at the mercy of whatever happens. And that's just not a great place to be to be completely out of control. Yeah, sure. You don't feel the pain. You have to learn anything. Not to do anything yet but the price up
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Hey, is up poor and retirement. And this is not a good place to be when actually you don't have the appetite to learn anymore, because you spend decades and decades and decades just drifting on to see where the stock market takes you. And that's not a good place. So drifters if you're a drifter, jump off the call you because you're not going to get any value from it. And I'm assuming because people have taken, you know, time out of their day to do something, Chris, then you know, they're not drifting.
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Dry as well. We love to dry is nothing wrong with better DIY, Chris. Nothing wrong with knowing how to Tyler a bathroom, but you can't build a house DIY, you know. So wealth is the danger with DIY and a lot of people are, Google is you know, and there's a huge difference between the tsunami of information you can google and think, well, if I google it, I can do it. Well, you know, it's not easy to do some of the things that have been saying. It's easy to do some research and think about it, but the DIY is in
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In the same way, in the end, have so many to do lists. They end up drifting. So the same nothing wrong with doing something yourself. So let's teach you what to do. So you can do something simple and do it. That's fine. But let's go back, you know, what happens in norm and normal cases CRISPR pensions, his own people might be interested. They might, but they don't. There's all this money on claim path. How How difficult is it to claim this money is so easy. You find your national insurance number, your phone, your old employer, you you right to the old insurance company, you go on to the government website, say hey, I used to have a pension with ABC Company, and they seem to have been taken over by another company, but I've no idea who then you make a phone call and they help you find that money for the number of people who are finding it. It's still 20 billion unclaimed. It means not normally
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me very much, Chris. And that's a, that's a big worry. So let's get the dry is at least a little bit of a checklist, right? So I said earlier, one complete breakdown of all your charges, including the hidden ones, right? Find out what they are, find out what your returns have been. And over whatever period of time, it's not fair to look over one year because you know, your wife, I could say, Well, you've had a great year care, you had a great year. Okay? But what's it been on average, and then have a look at your risk. See what actual risk score you are on a scale of one to 10 or zero to 10. And then calculate the fees as a percentage of returns. Now, what I mean by that is, if you know your risk score comes out at five.
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And your returns are going to be five, six, on average, forget what they've been,
Unknown Speaker 34:48
and you're paying 2%, you're paying two out of six. So you're paying a third. So just be aware of what your fees are as a percentage, probably Chris, if we're doing this again, we'd say percentage of your
Unknown Speaker 35:00
Estimated returns based on your score, because you can't be seduced by someone saying you had a great year. Because that's not how the stock market works. You know, if everybody had a great year and plus 25, we'd all be wealthy, but we can't be, you know. And that's the whole point about that.
Unknown Speaker 35:20
So
Unknown Speaker 35:21
people as well, well, for everyone who's on wires can go do it. Absolutely. So we just actually are in the sort of final putting the final touches on the checklist. So when we have a URL here for you to go to tonight, and you can pop your name and your email address in there. And as soon as the checklist is finished, we're just getting the final sort of touches put on there, then we will send you a copy of that. So you'll have a list of all the the steps basically to check your charges to improve the performance, manage the risk, everything that Kevin's talked about tonight. So if you'd like that checklist,
Unknown Speaker 36:00
Don't know if the wealth builders co.uk forward slash pension, hyphen, CPR. And I'm going to put that link in the chat box for you in a moment. And we'll send this link out after the webinar as well. So if you haven't got a pen handy at the moment, don't worry, you'll receive an email after the webinar where you can head on over there.
Unknown Speaker 36:20
Cool.
Unknown Speaker 36:23
Yeah, but the other option Chris's is to be dynamic, which means get it done, you know, don't stop, get it done, you see something, you just get it done. And we do this. And this is an example and we do something called a CPR report.
Unknown Speaker 36:42
And we take the example we look at the charges, we look at the total. And in this case, you know, this is just a dummy one. It's not a real one, but they're all completely charged these things, you know, and give a green amber red. So this one is a 2.25 annual management charge. That's a genuine charge from a company out there. That
Unknown Speaker 37:00
Massive and you know, the performance is, is again, you know, can be low relative to the US look at all of these things anyway, you get a green, Amber red, and then you can see what the actual risk that you're actually taking. And then if you take a look at this one 2.25 is a percentage of the estimated return which is in third one, which is 3.99. Because the lower the risk, the lower the expected return, but you can you see how it's almost five and three there. So five times three would be plus 15, and green. And and,
Unknown Speaker 37:34
you know, three times three is minus nine. So you know, the reason I call it the rule of five and three, because it's kind of easy to remember, statistically, it's not 100% accurate, but we're not talking about being accurate in this call. We're just talking about giving you a feeling for what you can do. Now, if I told you, Chris, that as a percentage of your expected returns, you're paying nearly 60% of your returns in charges out your film.
Unknown Speaker 38:01
Yeah, pretty, pretty painful that right now this brings it home. Right? This is the whole point. And the other points we always look at is who's the beneficiary, you know, to make sure that people are nominating their spouses and nominating the right people as beneficiaries. And of course with the new rules of flexible pensions came in in 2015. All sorts of new flexibilities came so people can take money out one when they want almost treat their pension. If they're managing well, like an ATM. Some pensions don't allow that. So again, this is something our knife a team, we use do this, and they do something called a pension CPR report. So if you want it done by somebody else, in a way that you can instantly don't have to do all the hard work and get it done. We can we can send you a link to how to do that as well. Okay. A new type of pension. Well, not new to some of the people to recognize some of the names on the call tonight, Chris, but you know about
Unknown Speaker 39:00
bridge to a new type of pension is really about understanding that there's a way instead of being on, let's say, the left bank, where you were, you're making progress into building your wealth and you want to bring the leverage that word again, Chris leverage of turning your pension that used to be managed by somebody else into something that you can manage. And you can learn how to manage that and turn that into ways you want to build your wealth in many different ways as a special name for that pension, which is Yeah, it's it's a language that I wouldn't choose if I was a marketer, Chris, I wouldn't. I wouldn't choose this language but language we which is just really part of HMRC who are the people who created this kind of language is called the the SAS or small self administered scheme. We often call it the directors pension Chris, don't we because it's, it's you have to be a director of a limited company to have that
Unknown Speaker 40:00
One of these, which puts you in complete control, you choose where to invest. You're creating essentially a tax free Trust Fund for you, your business and your family. And it gives you the scope to learn how to get much higher returns, much lower costs, and driven by what you learn how to do. So nobody else is responsible. But you know, that's a scary place. If all you like to do is get your statement now, read it and hope for the best, you know, so a SAS is not for everyone, but it's definitely for those who want to take responsibility and want to learn how to do better things. And again, Chris in the way I like to teach things, you know, we call it the freedom to do the four B's Right, so the freedom to buy assets, you know, so wealth comes from owning assets. So when you own the stock market, you really out of control of that, but what if you could buy assets that would work for you, actually
Unknown Speaker 41:00
You want to buy the stock market, you can buy the much lower price. Why? Because you're now a wholesaler. You can buy things without having to use a fund manager, you could buy something called ETFs exchange traded funds, a fraction of the price, you could learn how to buy funds, and trade us funds. So you can bring a little bit more risk mitigation in there. So there's a whole range of things you can do to buy, including buying property, buying land, buying shares in your own company, if you've got a business and so on.
Unknown Speaker 41:32
The next one, Chris is called borrow, and go in that order. So the borrow strategy means if you've got a pension plan, you can lend half of your pension to your business. So if you've got a property, business or any kind of business, then your pension fund can then help your business. Now if you went to an insurance company and said I'd like to borrow some of the money out of this fund, because I've got a business I want to grow the answer to that is no
Unknown Speaker 42:00
Which is why you have to understand that the way to be able to do all of those things is to is to think about taking control. Now bridging means being a bank, a bank make money, Chris, last time I looked, they still make money, and they make money by lending money. And you know, I'm a Bridger, I lend my money. So if I was able to lend my money to,
Unknown Speaker 42:23
say, a property transaction, where I took a first legal charge, and got a 10 or 12%, return on my money with that first legal charge and act just like a bank. So instead of having the money in somebody else's account, and I can't control it, I've got the money in my account. And I can lend that money and be a bank and get those kinds of returns, in many respects, because I'm taking less risk. But I'm getting a higher return.
Unknown Speaker 42:51
And also in your leverage, you know, so you can go to a bank and you can get money. You can go to a bank and you can get access to it.
Unknown Speaker 43:00
Other borrowed money to make your pension worth even more. So if you you know, what was the average pension plan we said Christian UK, there was
Unknown Speaker 43:08
Yeah, if I've got 200 grand and I go to again to the bank and say hey mr. bank manager, I want to buy 200 I've got water by tuna grounds with the stock with want you to lend the money, they're gonna say no, but if I said I want to borrow money, because I want to buy property, they'll lend me money one day. Now they're typically if they lend me and and a pension says 50% means if I got a 200,000 pound says, You know, I can borrow another hundred grand, which means I've now got control over 300,000 pounds worth of asset
Unknown Speaker 43:46
for 200,000 which means I can accelerate the returns my investment, okay, so the principle is not to try and teach people how all of these things work in the space of a 45 minute our webinar called
Unknown Speaker 44:00
But just to be curious, yeah, because the starting point of all wealth is education. And education only comes from a curiosity to want to learn more. And I hope that we've given you a hard enough punch in the face. If you've got a traditional pension to say, hey, I'd like to know more about some of these things that I can do to do a better job or do what I'm already doing but doing it in a way that's going to make me more money. And we've got a whole bunch of resources Chris and we can make available to people.
Unknown Speaker 44:30
Yes, we have indeed so there's a screenshot of just one of the videos on our SAS resources page. So if you'd like to watch that video and and one other as well which explain the benefits of SAS who a SAS is for, and wealth builders.co.uk forward slash SAS videos, so hope you enjoy watching those learning more. And then at the bottom of that page, there's a button if you're curious about whether a SAS could be
Unknown Speaker 45:00
right for you, then you can fill in a very, very short form, literally just a handful of questions, take less than a minute to complete that. And we will obviously receive that. And we can get in touch and have a conversation with you and find out a little bit more. Yeah. And we're not saying this as is for everyone, but do something, you know, if you've got a pension, don't have a joint venture agreement with a third party that's taking 50% or 30% of your money. Without challenge. It's nuts to do that. Do something, you know, SAS is it as an idea for a business owner, somebody who's willing to take responsibility, somebody is willing to take some guidance, you know, and learn, and do all those good things. So that concludes tonight's webinar. And thank you, everybody, for tuning in tonight. We hope that that was valuable for you do download the checklist? We'll be sending that out within the next few days for you. And Kevin, any final words from yourself?
Unknown Speaker 45:58
No, it's been just it's been great to
Unknown Speaker 46:00
See that, you know, people are actually interested in this subject bearing in mind, as we've seen with 20,000,020 billion last and most people getting a very paltry retirement from their pension. I'm so pleased that people are willing to look at this, to think about it. Hopefully, most of them are not the drifters and the DI wires, they'll actually dynamically do something and turn what's really quite a valuable sum of money for most people into something that genuinely they can influence and be part of their wealth plan, not part of somebody else's love plan. Wonderful. Thanks again, everybody. Good night, and we'll speak to you again very soon. Yeah.
Unknown Speaker 46:43
We hope you enjoyed today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth building.
Unknown Speaker 47:00
Dakota UK slash membership
Transcribed by https://otter.ai