Useless IFA on BBC 3 Counties Radio - Translation please - "12.3K CGT allowance Wrapper"

solidpro

eskbanker said:

If you read the numerous newbie investor threads on here you'll see that the most frequent recommendation is to start with one of the global multi-asset funds, available from various major fund managers and on all mainstream platforms - these can be calibrated to risk levels suited for most investors and offer broad diversification combined with simple 'buy and forget' operation.  That doesn't mean that they're the right answer for all though, but it's impossible to be specific and definitive in the absence of an individual's full financial circumstances.

I think that was my third suggestion and it's a point well made using better lingo than I. The IFA never made it, should have made it, and as eloquantly as you have. I don't know enough about the rules to know if saying this quote above as an IFA would break them.

solidpro

bowlhead99 - I guessed what wrappers were prior to this thread but I wasn't anywhere near certainty. But your beautiful description and analogies helped solidify that guess into what could sometimes be named or referred to as 'almost fact' in my brainbox.

How a three counties radio listener is supposed to feel confident about either understanding wrapper as a broad term, or how to apply that info to help save money on CGT, I am less sure.

bowlhead99

solidpro said:

If I was an IFA (and I am not). 

thanks for the clarification!

I’d probably plan to talk about:
1)      Finding and using deals with Challenger Banks you may never have heard of but are completely safe and, if you have the time, you can find an angle.
2)      Using savings to top up a pension I can access now or very soon, because the government will instantly bump up my contributions with generous ‘free’ money.
3)      Consider using one of the big, well reviewed firms which allow you to access a investing in equity with the benefits of a fund manager, highly simplified risk management (0/20/40/60/80/100 high risk) but without the need for an IFA which isn’t interested in me anyway.
4)      Consider NS&I PB as being the same as 0% interest high street savings but having the benefit of feeling ‘in it to win it’ which is more enjoyable than not expecting to win anything ever.

If he did make any of these points, he might as well have said them in Swahili because if we have determined upon multiple listens that he did mention them, it was either lost in translation or he didn't make any of the useful stuff stand out from the pointless stuff

I don't know how many 'multiple listens' you think are warranted but I think we determined on the very first listen that 1,2, and 4 were mentioned. For 3, he started mentioning how investments could be made in investment funds which are managed by a fund manager, but before he could say much about investment products, ever, the interviewer cut him by saying that's all very well with people who have got lots of money but what if you only have £15k in cash, at which point the obvious answer was that if £15k is all you have, it probably shouldn't be invested in equity funds.

If I can make those points whilst having absolutely nothing to do with personal finance 

I expect with the benefit of listening to the radio several times over you could imagine yourself a perfect conversation of how you would tell an audience what you want to tell them about your personal favourite things after making broad generalisations about what might make good radio for people with your personal circumstances.

Having not done many live broadcast interviews I would guess that probably after being interviewed on the radio by someone who doesn't understand my area of expertise and drives the conversation to wherever he wants to take it, periodically moving the goalposts, there is a certain amount of l'esprit d'escalier as you sit back and reflect how you could have made each answer more specific or concise if only you were not having to think on your feet to deal with whatever the DJ wanted to talk about based on his personal lack of understanding or faux naivety.

solidpro

bowlhead99 said:
I think we determined on the very first listen that 1,2, and 4 were mentioned. 

Mentioned doth not butter any parsnips now, does it?

I'm not saying that I create perfect conversations in advance. However, I am frequently invited to discuss a topic (to my utter distress, they're never broadcast on the radio) and the reason I've been invited, is because the inviters expect me to know what I'm talking about. An expert or, dare I say 'advisor'. In order for me to fulfil my role, I generally do a small amount of planning to compliment my expert knowledge. In  many cases 5 minutes.

Frequently these discussions end in success where everyone feels like we have moved forward, regardless of how modest that forward motion is. Everyone feels good. We all learned something.

This did not happen yesterday.

bowlhead99

solidpro said:

eskbanker said:

There isn't really such a thing as "a [specific] product which will max out his/her £12.3k Capital Gains tax relief" - any investments within a tax-free wrapper aren't subject to CGT, and any investments in any other type of 'wrapper' are subject to CGT (once over the allowance), 

So would you agree that the way the IFA on the radio described it, I would need a wrapper (commonly assumed as shorthand for 'tax free wrapper') which has nothing to do with CGT to save money ordinarily being used to pay CGT?

No, as I quoted originally, he made a few points about how to invest, starting with. 
- you can invest in wrappers (a wrapper is a type of account)
- you can make use of your CGT exemption/allowance, many people don't.
- the net returns from your investing would be down to treatment of taxation on the wrapper.

The statements are not really inconsistent.

If you are using a tax-free wrapper you will not need to use your CGT allowance. If you are making use of your CGT allowance you may not need a tax-free wrapper.

Based on the way some people use terminology around investment platforms, they may call a general investment account (GIA) offered by a fund supermarket or wrap platform a 'wrapper', as it is holding investments together on a platform... but a GIA doesn't protect against tax so to avoid confusion they may prefer to refer to tax wrappers (where the investments are 'wrapped up and protected against tax', e.g. ISA or SIPP) versus unwrapped (where they don't have a wrapper that protects them from tax, e.g. a GIA).

Unfortunately the IFA did not get to give a precis of the various different investment structures and why you would use them as that wasn't what the DJ wanted to talk about.

dunstonh

solidpro said:

eskbanker said:

There isn't really such a thing as "a [specific] product which will max out his/her £12.3k Capital Gains tax relief" - any investments within a tax-free wrapper aren't subject to CGT, and any investments in any other type of 'wrapper' are subject to CGT (once over the allowance), 

So would you agree that the way the IFA on the radio described it, I would need a wrapper (commonly assumed as shorthand for 'tax free wrapper') which has nothing to do with CGT to save money ordinarily being used to pay CGT?

Tax wrappers are not assumed to be shorthand for "tax free wrapper". A  tax wrapper is a tax wrapper with different taxation to default.

eskbanker

solidpro said:

eskbanker said:

There isn't really such a thing as "a [specific] product which will max out his/her £12.3k Capital Gains tax relief" - any investments within a tax-free wrapper aren't subject to CGT, and any investments in any other type of 'wrapper' are subject to CGT (once over the allowance), 

So would you agree that the way the IFA on the radio described it, I would need a wrapper (commonly assumed as shorthand for 'tax free wrapper') which has nothing to do with CGT to save money ordinarily being used to pay CGT?

I didn't listen to the whole piece but in the early part of the dialogue it did seem clear to me that in support of his main thrust of making use of allowances, the IFA referred to using wrappers (implicitly tax-free ones given the context) and also, as a separate point, using the CGT allowance, rather than linking the two, so I didn't interpret that segment the way you did....

bowlhead99

solidpro said:

How a three counties radio listener is supposed to feel confident about either understanding wrapper as a broad term, or how to apply that info to help save money on CGT, I am less sure.

The interview was not designed as a training session for all listeners to go away confident 'understanding wrapper as a broad term' or perhaps the interviewer would have asked questions about it. Any listener could have googled and found more information with a simple text search per my earlier screenshot.

The listener may not have previously appreciated that if you have a bunch of shares in an investment fund you can sell some of them each year to make use of your CGT exemption without paying tax, as an alternative to selling them all at once and finding your CGT exemption doesn't cover much of it and you have lots of tax to pay on your profits. Now perhaps they will think - if they have any investments, which many people in Beds, Herts and Bucks will have - that perhaps they could look at making use of that £12300 allowance.   It is more useful for financial investments (of the sort one would arrange through an IFA or DIY investment platform) than for nonfinancial investments such as second properties, as you can't sell a portion of an investment property to easily use a bite-size chunk of CGT exemption per year.

The IFA, short of time, did suggest that if you weren't sure of your rates and allowances you could easily google them.

solidpro said

Frequently these discussions end in success where everyone feels like we have moved forward, regardless of how modest that forward motion is. Everyone feels good. We all learned something.
This did not happen yesterday.

I think we established that you did not learn what you wanted to learn. The other two listeners across the three counties didn't vent their frustration here so perhaps they were fine with it. The DJ got what he wanted, which was ten minutes of filler. 

solidpro

I think we're all agreed then. The IFA was useless.

eskbanker

solidpro said:

I think we're all agreed then. The IFA was useless.

If that's what you took away from the above discussion, then it's hardly surprising that you misunderstood what was said on the radio....