In this episode of Wealth Talk, host Christian Rodwell sits down with Giles Hutson, co-founder and Executive Chairman of Insignis Cash, to discuss the critical role cash plays in financial planning, particularly for those approaching retirement. With over 20 years of experience in investment banking at firms like Merrill Lynch and Goldman Sachs, Giles shares his journey from the corporate world to entrepreneurship and the mission behind Insignis Cash.
Welcome to another insightful episode of Wealth Talk, where we dive into the vital role of cash in building a resilient financial plan. This week, host Christian Rodwell is joined by Giles Hutson, co-founder and Executive Chairman of Insignis Cash. With a wealth of experience in investment banking and entrepreneurship, Giles shares practical strategies for optimising cash, managing risk in retirement, and future-proofing your financial decisions in a changing economic landscape.
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Why Listen?
If you’re looking to optimise your cash management, reduce risk, and better understand the role of cash in building a secure financial future, this episode is packed with actionable insights. Giles also offers a behind-the-scenes look at the evolution of Insignis Cash, its innovative platform, and how it’s empowering individuals, businesses, and pension trustees to make smarter financial decisions.
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Speaker 1 (00:00.078)
A lot of people think of an organization like ourselves as it's all about the yield. That is true, but actually behaviorally again, our pie base reduce risk before they maximize return. So what does that look like? It might be an SME or a pension pot. All of that money tends to be broken down into multiple banks. My 340,000 pounds placed in four banks, might be a million pounds based in 12 banks, whatever happens to be. But the key point is that it's about reducing risk first.
The rest is just maths. We produce the highest yielding portfolio for the cash based on the liquidity and the risk parameters set by the client.
Speaker 3 (00:38.466)
Welcome to this week's episode of Wealth Talk. name is Christian Rodwell, the membership director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hi, Kevin.
Hi Chris, good to be with you again and a very interesting, often overlooked, almost definitely ignored valuable benefit today for all of our listeners.
Absolutely. Cash is king, some would say, but today it's all about cash. we have Charles Hudson, Executive Chairman of Insignis Cash, as our guest today. For anyone who doesn't know Insignis, they're a multi-bank solution. They give access to the best saving rates in the UK for individuals, businesses, or even money that's in your pension cash. And you can open and manage multiple savings accounts from over banks and building societies all in one place. So very, very easy and efficient.
Yeah. And you need that, you know, you need that efficiency. I use Insignis in my own SaaS and I know lots of business owners who use them to manage their business bank accounts, you know, because often business owners will have money in cash because you know, business costs money to run. So you need a buffer. So to getting the most out of any cash that's not immediately needed is a very powerful thing to do because every penny you can earn.
is money that reduces your overall costs and improves your bottom line. So a very, very powerful message, often overlooked as I've said, and definitely can work for anybody who's listening or people that they know have got a reasonable sum of money, a reasonable sum of money in their business or a reasonable sum money in their pension, all would benefit from listening to what Jars has to say.
Speaker 3 (02:18.418)
thing. okay, let's hear from the man himself and head on to our conversation today with Mr Giles Hudson.
Giles, welcome to Wealth Talk today. How are you?
I'm very well. Thank you very much for having me, Christian.
Good to have you here. Now, Giles, you are the co-founder of Insignis Cash and we're going to find out more about Insignis in just a moment. But there's so many areas that I'm looking forward to diving into today, you know, talking about cash, cash inside of pensions as well, interest rates, maybe some predictions and the impact of the Trump tariffs. see what your views are on that as well. So let's start with telling us a bit more about exactly what Insignis Cash does as a business.
Thank you. Thank you again for the time. Our business is designed to make it easier for clients to access the UK banking system. It's really as simple as that. In practical terms, what does that mean? It means we work with a panel of 49 banks who allow us to do the onboarding on their behalf, which means that our clients only have to open one account with us and they gain access to the savings and deposits products of those 49 banks.
Speaker 1 (03:29.164)
So our benefits to clients are really simple. Your risk goes down because you're using more banks, that be for FSCS protection or just for diversification reasons. Your yield goes up in all our cases because a lot of cash in the UK is not necessarily being paid what it's due from an interest perspective. And then hopefully you can achieve both of those two benefits efficiently through one platform.
Yeah, very nicely explained. Thank you. And you've had a distinguished 20-year career in investment banking, Charles. Senior roles, Merrill Lynch, Morgan Stanley, Goldman Sachs, and Barclays. So what inspired you to transition from that world to co-founding in Cygnus back in 2017?
think two things happened. Number one, there was an opportunity in the UK that the FCA actually wrote a report on around the state of the savings market in the UK. When I say savings market, I'm talking for businesses, for charities, for trustees, for pensions, for individual savers, for everybody, saying frankly the market was uncompetitive. And so it was very attractive to potentially build a solution to that problem as defined by that FCA piece of work.
The other half of the answer to the question is just the entrepreneurial streak, but actually do I really want to live back on life and say I've been an investment banker for what would have then been 30 or 40 years? Sociologically, people might think that wasn't necessarily the best thing in the world. So the opportunity to step away from that industry and build something with my co-founder was very compelling.
you now hold the role of executive chairman as well. how's your role evolved? What are your primary focuses in this position, Giles?
Speaker 1 (05:08.174)
It really does evolve based on the size of the business. So when you start a business, you have a big tie fall and you are changing the light bulbs and cleaning the carpets and emptying the bins and doing all of those work. so you have to have a great deal of humility and flexibility as the business reaches a certain level of complexity. You also have to recognize that there are people out there, potentially even people in your own team who may do a better job of running the business. just recently, just three weeks ago, we handed over the CEO role to a lady called Kate Timmati.
who is significantly more sophisticated, significantly more technical than I am. And so my new role will be much more externally facing, spending much more time with our clients, our financial advisors, our banks, leaving Cape to run the business on a basic basis.
How big is the team now, Giles?
So we've got about 150 people across both our Cambridge office and our London office.
look now at what role really does holding cash play today in financial planning, particularly for those approaching retirement. So let's start there.
Speaker 1 (06:09.23)
So again, very topically from a regulatory perspective, the FCA published a document recently called the Retirement Income Review, where the implicit core message to pensioners and retirees, as well as their advisors, was think about the decumulation stage, i.e. as you head towards retirement and after retirement, as much as you think about the accumulation stage, which is building your wealth up until let's say you're mid-50s, as a good example.
So what we see behaviorally from clients is someone with a pension pot, whether it's in a SIP environment or a SaaS environment, taking increasing risk off the table as you get closer to the planned retirement date. And the risk of being heavily exposed to a single asset class, let's say the equity market, and having that equity market drop 20%, which as we will see from recent history is not inconceivable, just to the point of retirement.
is called sequencing risk and it's potentially pretty unpleasant for the individual concern. So we see people taking chips off the table, usually putting two to three years of living expenses into a cash empowerment, which enables them to then stay invested, whether it's equities or commercial property, wherever it happens to be, in the other asset with the majority of the action. But if there was a crash or a difficult moment, they're not forced sellers.
because they've got that three years of living expenses in cash. So that's what we're seeing as a result of the retirement income review behaviorally, both from the clients and their financial advances.
So how does Insignis work for optimizing? mean, I guess there's two sides, right? You've got the optimization of the returns. You've got the managing of the risk. Tell us a little bit more about each of those.
Speaker 1 (07:57.464)
So a lot of people think of an organization like ourselves, it's all about the yield. It's getting a better yield on your cash. And that is true. But actually, behaviorally, again, our pie base reduce risk before they maximize return. So what does that look like? It might be an SME or a pension pot with a certain amount of money in it. All of that money tends to be broken down into multiple banks. So it might be an 85,000-pound chunks in line with the FSTS protection and eligibility.
might be £340,000 placed in four banks, might be a million pounds placed in 12 banks, whatever happens to be. But the key point is that it's about reducing risk first. And then once we understand the client's risk parameters, i.e. how much they want in each bank, and their liquidity parameters, i.e. how much they want on easy access versus one year, etc. The rest is just maths. We produce the highest yielding portfolio for the cash based on the liquidity and the risk parameters set by the client.
So it's relatively simple in that respect, but the key thing is we are a multi-bank solution because actually in this country, it is quite painful managing large numbers of bank accounts. It's moderately painful as an individual. It's extremely painful as an institution. And if you move into specialty client types like pensions and powers of attorney, court of protection, things like that, it becomes difficult bordering on impossible.
And we've been working together for a while Giles and our members will know obviously what a great platform and great service you provide. But just explain a little bit about, know, for someone new who was looking to work with you and you know, what does that look like? How do they onboard? How simple is the process?
Sure. So the first stage in the journey is usually to request an illustration. So this is if you use the service, this is what the outcome would look like. It's an example. It's not a hard coded response, but it provides you with an example portfolio of how your cash could be spread and the kind of interest income you could receive as a result. So it gives you bit of a before and after. You're currently sitting in one bank earning X. You move into four, five, six banks earning X plus, you know, two, three, four percent.
Speaker 1 (10:03.512)
That if you like the illustration as a client, you then move to onboarding, ad-opening an account. Once the account is opened, then again, as I said earlier in this conversation, you have access to all of the banks in perpetuity. So a lot of people who think about it from a corporate perspective, it's almost like an outsourced treasury function. You get to have loads of banks without the hassle of opening all the accounts, closing all the accounts, tracking the rates, and there is a getting the cross-sell from all the respective banks if you would do that with them directly.
And in terms of any minimum requirements for someone to join, what would they be?
Sure. So we set a minimum of £50,000. Because once you're below that 85, really you can open one bank account. So we see the benefits of our service as providing multiple banks and therefore reducing the hassle and friction of that. So we set a minimum of £50,000 because below that we feel should a client really be paying a fee to us for something that they could do themselves with the same bank.
than distributing across multiple accounts. Is there any other tips for navigating the risk of another potential bank collapse in the future?
think there's two things. One, obviously, if you think about Silicon Valley Bank, for example, a lot of companies in the US had all their eggs in one bank. And that's not just about the solvency of the institution, whether it ceases to exist, whether you get your money back, but there's also about access to money. So not only should clients be in multiple banks to avoid solvency risk, they should also be in multiple banks to make sure if there's a tech issue, I mean,
Speaker 1 (11:38.86)
So many of our big banks have tech issues on a pretty regular basis that you can still pay your employees, pay your parents' care home fees, buy the property that you wanted to buy, et cetera, et cetera. So it's really about bank solvency, but it's also about access to your funds when you.
You've mentioned already pensions, SIPs. Many of our listeners will also be aware of the SaaS pension, will be SaaS trustees. Are there any key differences with regard to holding cash inside of a SaaS pension?
There some differences around the FSCS protection calculations, which are quite important. So the calculations are quite specific to the beneficial ownership percentages of the members of the SAS. So we have a model here that calculates that for our clients. But it's not just everybody who's a part of that SAS gets the 85,000 pounds. It's a little more mathematical than that. So clients definitely need to be aware of that. We do see a lot of usage of our service for cash within a SAS.
It might be a SaaS that owns its own commercial property, sells a commercial property, sits in cash for a period of time, may plan to buy another one, may not. So maybe it was transmission mechanism, so the cash is safe during that period it's in that asset class, or it may just be a generic cash position from the income on a portfolio of properties where there's just a steady drip feed of income and having it sit in a current account in perpetuity may not be the best risk reward possibility available to the class.
Okay, so let's have a look into the interest rates. Obviously, this is a key factor for people thinking about depositing their cash. We've seen them go up, we've seen them come down slightly. Where do see the landscape over the near term for this?
Speaker 1 (13:19.79)
So I think let's do a quick before and after. Before the tariffs, which in inverted colors, we were looking at two Bank of England rate cuts this calendar year. So going down from four, a half dot four, we'd probably increase that to three to four cuts now. And so we're looking, we think around 3.5 to 3.75 by calendar year end. So a little bit faster on reduction side. That's obviously the bad use per se was the
better news for savers is potentially longer term, there is no doubt that tariffs endemically are inflationary. There may be disinflationary for a short period of time while stuff that's been built finds a new home when a big buyer like the US pulls out of the market. But in the longer term, they are inflationary and inflation is going to stay stickier and higher for longer than what we call the terminal rate, i.e. where we think rates will settle down on a long-term basis will be higher.
which we think again will be about three to three and a half percent on a longer term basis. So if your base rate is three to three and a half and your 90 day notice or one year accounts are sitting at around four, potentially four and a half for the two to three year accounts, we still find that exciting from our perspective in terms of attractive proposition for clients.
are there any other strategies or things to be aware of to kind of manage their cash during this period?
So I think easy access is probably a good two word answer to that. If your clients are between asset classes, if they are not currently confident about entering the equity market, for example, but would look to do so long-term, then one would keep the cash at easy access. If one is moving to a longer term cash environment, as I mentioned, if you're beginning to think about retirement, you're actually coming out of the equity market structurally.
Speaker 1 (15:09.976)
to avoid the sequencing risk I talked about earlier on, then you can afford to take a much longer term view on how long you tie your money up for. Obviously, the longer you tie it up, the higher the yield. So I think it's about the time frame for when you need the money back. That's the key determinant here.
Yeah, it's a question that we get asked quite regularly actually, Giles. People have maybe sold a property, they've got a lump sum of cash. What do they do? How long do they tie that up for? Obviously, you've got the opportunity cost if it's tied up for a long time that you can't move so quickly if another deal comes in. I guess there are many short-term options through the platform just for getting the best return possible in relatively short time period.
Yeah, we see people who in the property space really stay that easy access to kind of 90 day notice space. Because if you're in a 30 day notice account, for example, you're unlikely to execute property transaction in 30 days. So as soon as you knew it was a possibility, you give notice on the account, you start the clock ticking up getting the money back in 30 days. It's unlikely, certainly having been through a couple of times myself, that you're going to go from from nought to 60 on the purchase of property in 30 days. So
It's really about managing what you think the timeframe for requiring those funds is versus the products that you choose on the platform.
I'd love to know a bit more about behind the scenes of the business then Giles, in terms of future development, now looking at technology, AI, everything that's rapidly coming into play. Are you embracing this? Is there any changes that you're looking at now?
Speaker 1 (16:42.99)
There's a lot of binary discussion around technology versus human beings. We don't really subscribe to that. We see technology empowering human beings, making their jobs more interesting, making them more productive. So it's the removal of day-to-day, day-to-entry tasks, for example, the removal of repetitious tasks that can be done better if digitized, whether that's existing digital infrastructure or pro forma AI digital infrastructure.
We certainly don't plan, for example, to reduce headcap because of technology or AI. We just plan to do more exciting and interesting products, more growth with the headcount that we have. So I don't subscribe to that binary piece of jigsaw. AI is, I think, particularly valuable as it ascribes to data as well, because obviously people are used to when dealing with financial services, lots of application forms, lots of form-filling.
It's a relatively unpleasant process, frankly, opening an account. We continue to work hard to reduce the friction involved in opening an account. And the more data we can drag in from third-party sources, the easier it is and the shorter the application process is for the client going through it.
It's obviously an approach very quickly on the great wealth transfer, they're calling it, baby boomers. Any thoughts at all, Giles, for someone that's in that position, who's thinking about legacy now, how they can approach a smooth transition to the next generation?
That's really interesting. We see a lot of this. There's been a million column inches written about intergenerational wealth transfer. What's less popular from a sort of column inch perspective is the fact that it'll all go through cash. And the asset class of choice for the grandparents generation may be very different from the asset class of choice from their children or grandchildren. They may just need cash. So it's about making sure that you've got control of the assets the whole way through the process, making sure that
Speaker 1 (18:43.15)
You're not just moving the value of stuff from one generation to the next, but actually you're choosing the right asset class as it reaches that generation. What we see on our platform is a lot of the grandparental generation opening accounts for their children and grandchildren. And then they are feeding effectively those, those insignis savings accounts directly from their savings account. How much and how frequently that's up to them from their own tax planning perspective. But that feeding system that drip feed it to the next generation can be very efficient.
And obviously it automatically puts that money into a savings environment, which has a kind of return of its management.
throw a bit of a curve ball at you then Giles. Is there any fear that at some point in the future day, there may no longer be any cash and everything may be completely digitized and how would that change things for you?
I guess there's three levels of this. There's physical cash, which we never touch. There's the current digital cash environment, which is obviously our bread and butter. And then there is the tokenization of the central banking projects. We're pretty excited about those, actually. think, Peter, that the value of an endemic system for the trading of goods, which is what cash is, will always have to be there. Whether it's tokenized, whether it's
Blockchained, whether it's any of those other buzzwords, central bank digital currency is the acronym. Those environments still apply to the service that we offer. Still getting the best return on those versions of cash, if you want to call them that, and still diversifying the risk around those versions of cash is something that will be required. Even if you're holding a certain amount of money with the central bank, which is where the central bank digital currency could go.
Speaker 1 (20:31.404)
It's highly unlikely that the central bank will want all UK citizens to hold all their money with the central bank. I think that's a, there's still going to be a banking system effectively. You're still going to be required to diversify across the banking counterplot.
I guess for you, Giles, having been in the financial world for 20 years or so now, looking back 10 years, where we were with technology and some of those new digital currencies perhaps that we're discussing now, compared to where we will be in 10 years' time, are you seeing the speed of movement from the inside from your position?
Yeah, absolutely. mean, every, if I look back, we said the business about eight years ago, we are currently going through a massive rebuild of our entire tech stack and the obsolescent rate, if that's one way of describing it, is getting shorter and shorter. The good news is that there are also, there's also a technology ecosystem, which is particularly prevalent and powerful in the UK that allows you to outsource some of that software to people who are building it for a living.
and building it better than you would build it if you managed it in-house. So the key thing for us from a technology perspective is to get the right balancing right, the right balance between what we tend to be rent from people who are building areas of expertise to a very high standard, plus what we build, is our intellectual property. I think that's what's really evolved over the last 10 years. It's not about we're going to build it or we're going to get someone else to build it. It's the balance between the two.
defines our business and will continue to do so.
Speaker 3 (22:07.48)
So Jaws, anyone who's listening now who would like to get in touch, what would be the best way for them to take that first step?
Sure. So I think the website is probably the best place to go. It's insigniscash.com and there's a team of UK based people, both client services and the account management team based in Cambridge, London respectively, who would be delighted to pick up and have conversation with anybody who's interested in any of the different client types, they're at the individual level, the corporate level, the pension level and many more hard touch on.
And yeah, if you're an existing WealthBuilder member, then you'll be able to obviously access and get in touch directly with Insignis through our Wealth Hub. So Giles, really appreciate you taking time out from your busy schedule to speak to us today. Thank you.
That's a great feature. Thank you for your time.
Speaker 3 (22:54.904)
Thanks to Giles there for sharing all of those insights. We normally would pull out a TrustPilot review, Kevin, but I know you've been out and about a lot recently and receiving some rave reviews yourself from different event hosts.
Blushing Chris, blushing. No, no, it's, it's, it's, you know, we talked on a previous podcast about the value of being, having a membership business is it keeps you on your toes and it keeps you on your metal. And I'm a, I think I'm called the visionary in the company, which means, you know, I set the tone, I set the vision and more often than not, although by the way, we are looking for other speakers, right? So if you are a listener and you love our message.
And you'd like us to train you to be a brilliant public speaker on the subject of wealth building, then let us know. And we're looking to expand that because Kev's getting old anyway. Joking apart, you know, I love to speak, love to share. And I always ask the host of a meeting, whether it's a property meeting, a business meeting, or even one of our wonderful friends at Action Coach, who often invite me to speak, so a big thank you to them, is did we deliver the right message, the right tone?
the right value because we're always mindful that whenever we're invited to speak, somebody's putting their own reputation at risk. You know, so if I do a bad job, their members, their clients that they've worked tirelessly to get, you know, could be undermined, couldn't it? If I do a terrible job or I try and sell from a platform, which I'd never do. And it just reminded me that we've had three or four different pieces of feedback.
just because I've been out and about wanting to compile those and asking one of our team members to compile them. And then reading them back, it's just great to hear that people feel that their clients' minds are opened, they're transformed in some of their thinking, often sometimes a bit sort of mind boggling or mind bending, I guess, because some concepts are quite tricky for the business owners. Then when we get into a little bit more detail, but always
Speaker 2 (25:02.914)
combination of informative and a little smattering of entertainment as I need to enjoy myself too. So, you we can post those, but you know, some great ones from Julia just recently, just saying how much she enjoyed hosting me at her meeting in Crawley, which is not too far from where I live. So great to meet with her, with Julia. And thank you to Julia for her feedback and for many others who've given us feedback too.
So, a familiar story actually that Giles shared with us of someone in the corporate life who thought, oh, hang on, I could just carry on doing the same thing for the next 20 years as I have for the last 20, or I could take that kind of scary leap and start a business. And that's exactly what Giles has done and 140 plus employees now. So things are going well and congratulations to Giles for that. Moving on, investment banking world.
I mean, and of course you've mentioned that, but don't you just love it when somebody spots a niche? We talk about that a lot in business in wealth builders, don't we? For those who choose business as one of their primary pillars within which to build wealth. And we love to see outstanding businesses. We look for them, we seek them out both as potential members to offer a benefit to our own members, but also for people sharing wisdom, lessons that they've done. And this is a familiar story.
of grinding with consistency and tenacity to get to a solution that ultimately was very powerfully received. I just wish it was received by more people because as I said at the beginning, Chris is relevant to a person, is relevant to a company, is relevant to people with pensions and SASs in particular for which we're well known for. And anybody could benefit from that. A low access point, convenient, no hassle.
And you know how hard it is to open a bank account, goodness me, using technology, easy to get the best rates because that's their role is sort of, and we've heard that, you know, if you remember we had a podcast recently with LNPG, who talked about the contract pricing for, you know, buying things that landlords need to develop or enhance properties. It's similar here. It's the ability to be able to get more value with less work to make hard earned money.
Speaker 2 (27:20.716)
work a little bit harder than it would be by just languishing in a typical bank account. Where of course most people probably realize, but they don't think about it, don't quantify it. If you leave your money in a common or garden bank account earning nothing, it ain't earning nothing for them. You know, the arbitrage or the extra benefit they gain is they pay you nothing and lend it out to five, six or 7%.
And in some cases, even if you're getting 0.1, if they're lending it out to 5%, they're getting such a huge multiple of an ROI on your money. When Giles and his team were advocating, you should get that. Get that return. Even if you don't necessarily need it, it's good to get it because it offsets costs or it just adds more to your bottom line. It just makes you feel like a business owner, you're more in control or a person you're more in control.
And certainly as a SaaS trustee, is what I am, sometimes we leave our cash, especially property investors, they leave their cash waiting for a great property opportunity. So rather than doing nothing, have it do something. And I think as Giles mentioned, you know, nobody does a property deal within, with 30 days notice. Normally it's a 90 day period. make an offer, even if you appoint the lawyer.
The same day, it's still 90 days. So having your money on some form of notes account and spreading it to avoid banking risk, know, all those sorts of things just make common sense, Chris, because, know, risk is inherent in everything we do. There isn't anything that doesn't involve risk. So managing risk is an important part of being a wealth builder as important part of life. And I've got some distinct views on the management of risk.
from a wealth builder perspective that if you do ask me a question or two, I might share.
Speaker 3 (29:17.742)
Oh, go on then. What are your views then, Kevin, on the different types of risk?
Well, you know, my first view is there's risk everywhere. think it was Spinoza who said, no matter how thinly you slice anything, Chris has always two sides. And there is, there is no one absolutely right outcome for everybody in terms of the strategy or the tactic they use to do it. So stated differently, what I do when I'm meeting with wealth builder members and people I interact with is if there's risk in everything, your job is the person
taking the risk or assessing the risk is first of all to understand it. What is the quantum of this risk that I'm now considering? And then we'll give an example in a minute. And then once I understand the risk, do I A, accept the risk as being quite reasonable? I'm quite willing to tolerate that risk given the cost and the benefit. B.
Do I mitigate the risk? Do I find a way to offset some of that risk? C. That's too big a risk in my life. I'm covering that risk 100%. Right? And once you can see that you're in control of your view of risk, then your first obligation, I believe, as a wealth builder is to start to understand the risks that you're taking.
Because people sometimes just without thinking actually ensure risks that they shouldn't ensure. see this when people do their debits process, Chris, which is the process we encourage our members to go through to look at a number of the expenses in their lives, not with a view to cutting out cappuccinos, but with a view to looking at what you're genuinely paying and should you be paying it, no more so than insurance, for example.
Speaker 2 (31:18.36)
You know, so, you know, I have an iPhone as you know, in fact, me, you and Paul have got iPhones in the company and you know, the risk I'm taking by having my iPhone, could I drop it? Yes. Could I drop it down the loo? Yes. You know, what are the, but my risk I'm willing to tolerate it. I'm willing to accept that if the iPhone goes, we'll get another one. So I choose to accept that risk. You know, but if I was to look at.
I don't have a mortgage, so I don't need to have insurance on my house for a mortgage purposes, but I live in a nice house in Surrey. But do I want to ensure that if it burns down, I want the full value of that. So my house is repaired and refurbished to the best, absolutely, I want to do that. So I look at that and say, not willing to just cover it a bit. I want it fully covered. there's a continuum between that, Chris.
Whether we're looking at our risk of life, risk of health, risk of death, all sorts of risks, risk of investing. And I think Buffett said it best when he said risk is when you don't know what you are doing. So the risk is inherent in the people who often make decisions without fully assessing the risk and then quantifying their reaction to either accept it, mitigate it, or fully cover it.
There are so many risks in life that in fact, Charles mentioned one of them, didn't he? Particularly when he talked about pensions and people reaching retirement ages and often we know when people reach retirement, they can take their tax-free cash. You know, at 55 currently moving to 57 in 2028 and the big risk for people who are reaching retirement, do you remember what that risk was called Chris? Sequencing risk, absolutely right.
And by the way, you ask great questions of Giles. So you're doing a great job on behalf of our listeners. And I appreciate that. And the, the sequencing risk is such a huge risk. I don't think people are paying attention to that risk. What it means is if you go back to 2008, which is the biggest time when I've seen sequencing risk completely annihilate people's lives of certainty. Now let's take a principle wealth.
Speaker 2 (33:43.106)
building or wealth is the process of creating multiple streams of recurring income to create income certainty when life fundamentally is uncertain. Fair enough? Okay. When you get to retirement and if you put all your eggs in baskets, mostly in the stock market, in other words, you're placing bets on a value, not generating an income,
All of a sudden then, on a day or a few days or a few months, you've now got to start making decisions about how you're going to convert the pot that you've got into some form of income. Now that changed in 2015. For 10 years now, we've had pension freedoms. And my concern, big concern, is pension freedoms requires responsibility of understanding the risks. People don't.
And what happened in 2008 is people just accumulated, they hoped their money would be okay. They saw their pot. Let's say somebody had a decent pot, say it was 400 grand, nice, easy number, expecting to get a hundred grand tax free, which then you would hope they'd do something with the cash, 300 grand left over. And then all of a sudden you get a sequence of stock market plus credit.
plus bond markets, plus everything, instead of working in different ways, they all fell at the same time. And then you lose 30%, 40 % of your money. So say you lose 25%, you've either lost basically the equivalent of your tax-free cash, a hundred grand in a heartbeat. And if you're in your sixties, how the hell do you recover from that? I'm very, very worried, Chris, about people getting into their late fifties.
And early sixties not understanding sequencing risk, longevity risk, you know, the risk of living a long age. And then you've got to eke that money out for the rest of your life when you've lost a whole bunch. So I think there's this decumulation, this process of you spend your life accumulating money. And all of a sudden you stop accumulating, you're not putting money in and you got maybe some growth coming in on the one side, but you've got.
Speaker 2 (36:07.557)
three sorts of money going out on the other side, reducing your fund fees and charges, which we talk a lot about. You've got the risk of losses, not just stock market wobbles, but sequencing risk. And goodness knows what Mr. Trump did, nothing to do with fundamental economics. It was all to do with politics and sentiment. And when politics and sentiment can rob you of 25 % of your money.
You're taking a risk you shouldn't be taking, you know, should be doing something about that. So that's my big concern that people are taking those big risks without knowing how to deal with those risks. And of course then they've got to take a third sum of money out, which is the money they want to live. And all the evidence is Chris, that people who are retired with pension freedoms are drawing more money out than is sustainable. In other words, they're going to run out of money before they run out of life. And that has two fundamental consequences.
One is a life of compromise, people feeling weaker when they should be feeling strong and feeling uncertain when they should be feeling safe and not leaving a legacy because, okay, inheritor's tax is changing it, but not leaving the wisdom about how to build recurring income and just trusting that the old processes of putting your money in somebody else's hands and hoping for the best, it's not a good strategy. I'm not going to go too much more into risk risk because I'll get on my soapbox.
But decumulation, longevity risk, sequencing risk, concentration risk, putting all your eggs in one basket, you know, these are all worries for me. And of course, one of the big risks for which we saw in the credit crunch was banking risk. You know, we saw banks go bust and that's one of the reasons why, you know, most people are encouraged to keep 85,000 and no more with any one bank. But then it's difficult to keep track because banks get bought by banks and then you don't know who's who.
So that's the good job that Giles does and his team at Insignia's is to make sure that your money is safe from banking risk. All those other risks, by the way, are yours. You've got to deal with that and make that decision about understanding it and then deciding which of those three actions you want to take when you're assessing risk. as we're coaches and we're wealth guides, we help people understand that risk if they're willing and open-minded enough to have a chat with us about it. anyway.
Speaker 2 (38:33.164)
I'll jump off that one Chris, hopefully that was a decent answer.
No, indeed it was. Yes. And talking about getting in touch. If you wanted to get in touch with Giles, contact Wealthbuilders. Easy to get in touch with us. If you want to have a chat, anything that Kevin's just spoken about there, if it's concerns that have been on your mind, then book in a call. Let's have a chat. Let's see how we can help you. Easy to drop us an email. Hello at wealthbuilders.co.uk. Head to wealthbuilders.co.uk website and you'll see a big button at the top of the screen saying book a call. Feel free to do that. Our team will be more than happy to have a chat.
And it's free, you know, we don't charge for initial calls. We're always happy to chat to people because we know that if we have a chat and we give good guidance, sometimes just a free resource, sometimes just consider this. Sometimes it might lead to people working with this and that's fine Chris, but it's not our fundamental outcome. It's just to make sure that people understand what they're doing back to Mr. Buffett risk is when you don't know what you are doing. So learn what you need to do, get a better education, including how to.
manage and maximize the value of the cash that's in your life.
that note, we'll say thank you for listening that we hope you enjoyed today's episode. And as always, if you did, please hit the share button and send it to a friend. Kevin, we'll be back same time, same place next week.
Speaker 2 (39:51.98)
Well assuming we accept the risks of that Chris, and until then see ya.
you
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