Ask the Experts roundtable: Financial planning

Saving, earning and planning for the future – the topic of money is top of mind for many during these times where COVID-19 prevention measures have shut down down businesses and left many unemployed.

On Monday, 27 April, several of Cayman’s leading financial advisors joined the Cayman Compass for a live roundtable discussion. They include: Liberty Wealth Partners’ Georgie Loxton, Butterfield Bank’s Monique Frederick, NCB Capital Markets’ Alessandro Sax, Helix Advisory’s Amy Hubble, International Financial Planning’s Luke Rudd and Neville Hicks and Scott Elphinstone, from Five Continents Financial.

Here are some of the highlights:

Q: Big news is changes to the Pensions Law. What are you hearing from your clients?

Frederick: “Obviously there are individuals that truly need the access at the moment, right? There will be members of our community that either had a loss of a source of income or don’t necessarily have the savings that they can draw on to help them through these challenging times. So I think for those individuals, obviously, this is a way or for them to mitigate the the financial impact. But for others, you know, if they don’t necessarily need all those funds – so the $10,000 plus up to 25% percent of the remaining cash balance – I think that the advice would be not to necessarily take out what you do not need. Because what is happening – and what many individuals sometimes do not realize – is that the amount that you’re taking out today; just by way of example, you know I did some rough calculations if you were a 40-year-old and you had $25,000 in your pension today and you take out the $10,000 plus, you know, the 25% of the remaining balance – so you’re basically taking out a little bit above the $16,000 –  25 years from now, which is when your retirement age, you potentially could have given up over $56,000.”

Elphinstone: “One thing you might want to consider is you have a pension holiday where you’re going to get 5% more of your pay for those who are working. It feels sad for those who aren’t working but for those who are working you might use that to pay down your debt, you know, if you’ve got credit card debt that you you’re rolling every month – and quite a few people do – it’s a sure thing, 15% 16% gain by just paying your debt down. So that might be an opportunity with the pension holiday.”

Sax: “From what clients are saying about it – and it’s more so being able to take control over their own pension assets – and a lot of people, I think, in Cayman have been disappointed on on the returns that they’ve been getting in their pension. So a lot of my clients are people talking to me or saying ‘I’d love to get access to that cash so I can invest it in maybe something that was gonna give me a little bit of a higher return over time. So it’s really that getting access to the cash – still keeping it invested obviously to be prudent for long-term retirement savings – but really having some more direction and how they’re investing that cash and the type of return they’re gonna get on that cash. So those folks, those individuals that, you know, are still working, still contributing to the pension, to want to maybe invest in some other opportunities than the traditional ones that they’ve been getting in their limited options and Cayman pension.”

Hubble: “I don’t think most people have seen a (pension) statement for the end of March, certainly. And there there will be some surprise at how significant those numbers have done down. But then you look April and, so far, I mean I’m looking at my screen.. we’re up over 10% and just about at 10% for the month. Now I don’t know if that will continue. Nobody on this panel knows when the recovery will happen but I think that everyone would agree that it will happen. We’re just not sure when. So even if you’re able to maybe put off this decision a little bit longer, I think the holiday is going to kind of… the window is going to be open for the next six months. You know, kind of make sure that you’re not acting out of stress. We don’t make the decisions in high emotional times and the pension plans are obviously going to be strapped. There’s no real benefit of getting in front of somebody else in trying to get your money out. This is your money that’s being tracked for yourself so maybe give yourself a few months see how it feels see if the recovery comes out.

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