Introduction to a recently divorced lady in London, came from one of her close friends.
On meeting R, she explained she was due to receive a divorce settlement payable in tranches over a 4 year period, the money was to provide education and maintenance for her two children. Whilst the amount seemed high for a Divorce settlement. R’s living expenses were almost equal to each yearly amount being paid. Being resident in South Kensington, R was aware she needed to budget more closely and preserve the amount of wealth, whilst living off this sum. R also had some ideas for a new business venture, producing luxury bread, delivered to peoples doors, and would need some working capital to get this started. R had also been recommended some new investment ideas from friends, including several private equity and start ups. Her priorities were to assemble a team of advisers that could work together, to ensure her capital was tax efficient whilst generating sufficient income to meet her living costs, and to ensure her investments were safe, low risk and able to preserve the amount of capital she was due to receive for her retirement years.
We started with an open discussion about her living costs and this seemed the most emotional subject to R, as she was having to adjust to a new life, managing her own finances, paying bills etc. Previously her husband and his personal adviser had arranged all financial affairs, bill payments, banking etc. R was able to explain her costs and where she felt she should cut back. R was surprised her capital would need to generate a return of 12% per annum to meet her income need whilst preserving the underlying capital sum. JP was able to explain that low risk safe investments might generate a return of a quarter of this, and after completing a risk assessment with R, it became clear the income need and desire to protect capital, did not fit in with the level of risk she was prepared to take.
A re-assessment of the income need, and a review of the plans for the property in South Ken followed, and it became clear to R she would need to consider downsizing the property or taking out a mortgage to release capital if required. This became the first part of her long term plan. As a result of the wealth on the ex husbands side, R felt the need to protect the children was less relevant, and preferred to focus on her needs.
JP supported opening a new banking relationship, with R preferring to bank in Switzerland for discretion and financial peace of mind. New bank cards and credit cards were provided as part of the new arrangements, and Artorius was able to review expenditure and keep R informed as the months went by, helping her understand better her actual spending.
R explained her investment experience was linked to an asset management company provided by her ex husband, who had recently invested funds in Structured products for her. R wasn’t sure what a Structured Product was, so we discussed the various types of investment, risks and returns available from all asset classes, this was extremely valuable to R. We were able to review these investments, and with a six year term, and no chance of any income being produced, it was clear these were not appropriate. Fortunately, the investments had only just been made, and the company were able to unwind these and provide R with all her capital back. R wanted a “fresh start” and felt using her own choices for the management of her affairs empowered her.
On building an investment strategy with R, it was clear she was very interested in exciting investment ideas like start ups and venture capital presented to her by friends. Again, JP was able to explain whilst these returns with success look hugely interesting, this was a high risk approach, and unlikely to produce income returns in the early years, a time when she needed it most with young children.
Regular reviews and discussions took place around building a steady robust investment approach, with impartiality and maintaining low costs at the centre of all discussions.
R’s confidence in managing her affairs, with the support of her team of advisers, her lawyer, tax adviser, local Banker, and Artorius, were able to help support and guide R through her choices and really help her with that fresh start she was seeking. Her fear of the unknown slowly turned into excitement for the future bring new opportunities and control of her life.