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Case study: blending execution-only and managed investments

A client who was introduced to the bank by a business partner has since used the bank extensively to support his family and diverse finance needs.
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George was introduced to Nedbank Private Wealth by his long time business partner, John, and who is also a client. After a distinguished military career, George went into business with John providing security services to high value premises. George is UK domicile, but is not tax resident in the UK, and had been managing his savings on his own, picking the stocks and shares he found interesting and buying through a broker.

George had experienced some success following on from his investment decisions, but had also experienced losses. As he was now retired, married for a third time and raising a 7-year old son, he wanted to set aside £1 million for his son’s future, and be confident in his future finances.

The support of a private bank

As a consequence of his losses, George recognised the opportunity for the professional management of his portfolio and invested into a discretionary portfolio, with a 20-year time horizon allowing him to take an asset allocation bias towards equities.

Shortly into the relationship, a property next to George’s sister house in the UK came up for sale. George wanted to buy it because of its proximity to his family, for when he was in the UK. It had been put up for sale because the owners had moved into a care home and, as the costs of their care had exhausted their savings, they needed to sell quickly.

We granted George a short-term lombard loan, using his investment portfolio as the security, allowing him to purchase the property next door to his sister as a cash buyer. The speed of the loan approval enabled George to secure a preferred buyer status and complete at speed, without any bids from other prospective buyers to delay the process.

By borrowing against his investment portfolio, George was also able to use the surplus finances to make minor improvements to an existing property that he owned in the UK, and which he put up for for sale, This ensured that it had the best chance of achieving his sale price ambitions, which were achieved, and George repaid his loan within a year.

Subsequently, George had reason to request the use of another loan facility against his investment portfolio so that he could buy his daughter a house. We introduced George to a tax adviser in order to receive tax advice on whether to gift the money for the purchase, or to loan his daughter the money before her property was purchased, to achieve the best outcome for George and his daughter, with the team at Nedbank Private Wealth working closely with the tax advisor to ensure that the requisite steps were taken.

The results

George is confident that the savings he achieved on the purchase of the property next to his sister, and the the increased price he was able to achieve on the sale of his previous home, covered the cost of the loan interest many times over.

George continues to self manage a portion of his investment portfolio, focusing on interesting selections that he research and selects. Knowing that his main portfolio is being managed professionally at a lower level of risk, and that his young son’s finances are assured, George is also able to take more risk and invest in individual stocks, such as alternative medical companies.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)1624 645000 to speak to our client services team.

 

If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link below.

Investment values can go down, as well as up, to the extent that you might get back less than you originally invested. The value of your investments may also be affected by exchange rates. The inclusion of any investment structures and wrappers is for information only and should not be taken as advice or a recommendation. You should seek the necessary advice, specific to your circumstances, before making any financial decision. 

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