financial planning with calculator

Why you should take this step if receiving a bonus this year

Now may be the time for investment banking professionals to review their financial planning with an expert.

If you’re an investment banking professional, you may naturally have an understanding of financial systems and opportunities. However, managing your own financial planning and wealth creation can require time and effort and you may prefer to partner with a professional who can help you.


If you’re due to receive a bonus or pay rise in the next few months, this could be the ideal time to consider one-to-one financial planning to help you leverage your income for your future goals.

What is the purpose of financial planning?

Financial planning is the process of evaluating your current financial situation and putting measures in place to ensure you reach your goals. It covers all aspects of your wealth and income and where you’d like to get to in the future, including the lifestyle you want to live, the property you’d like to own, when you wish to retire and how you’d like to provide for your family. Crucially, it does this while making effective use of tax allowances and ensuring necessary regulations are met and paperwork is completed.

Financial planning can give you a roadmap to make informed decisions. And it can remove the workload from you when executing those decisions, giving you more time to focus on what’s important to you.

Which issues could financial planning help you address?

A financial planner can look at your finances holistically and advise on multiple relevant areas. For investment banking professionals, these may include:

1. Tax planning

Staying informed on the intricacies of various taxes and changes to the different systems may not be the best use of your time. Our experts can take this responsibility off your hands and help arrange your wealth in the most tax-efficient manner.

For example, there are proposed changes to the capital gains tax regime that may be introduced in 2021 or 2022. Many of our clients are wondering if they would benefit from taking embedded gains before the changes are introduced. They are also evaluating any potential impact on their plans to buy a home or investment property.

If you have similar considerations, our expert guidance could help you choose the right approach to maximise allowances.

Similarly, we can advise on estate planning to minimise inheritance tax. This is an area it’s wise to consider many years in advance to benefit from the allowances built into the system, which our experts can manage on your behalf.

2. Life-stage planning

Life is full of financial events to navigate, such as receiving your first bonus, getting a large pay rise, buying your first home, getting married, or having a child. There are also unexpected events such as illness, redundancy, or bereavement, which all have far-reaching monetary implications.

Our financial planners can answer your questions about how to approach these and help to ensure that your progress towards your goals is not derailed by life events.

3. Retirement planning

It’s not unusual for investment professionals to plan to retire at a relatively young age and due to the income structures in this sector, this can often be possible, with careful and regular planning.

Retirement planning involves the management of both your pension, including your allowances and tax relief and your other finances. It could help you to enjoy your retirement however you imagine it, whether this is travelling the world, starting your own business, or simply spending time with family and loved ones.

How could investment professionals benefit from working with a financial planner?

Firstly, investment banking professionals typically have far more complex income structures than the general population, which a financial planner can help to manage with specialist insight. Your income is likely to include various elements such as cash salary, bonuses and vesting stock and this increases the importance of taking a holistic overview of your finances and making decisions accordingly.

In particular, when you receive a bonus, this may focus your mind on a particular goal or you may want to maximise its value by looking at investment opportunities. At Investec our financial planning team works closely with investment advisors as well as our private bankers to ensure your short- and long-term needs can be met in one place. The value of effective financial planning has been calculated as a 3% net additional return per year (Vanguard Advisor Alpha 2014).

In addition, with a high income and high net worth comes increasingly complex tax implications, and more to gain by successfully navigating them. Public costs related to the coronavirus pandemic are likely to be recouped over time through changes to taxation, including capital gains tax. This makes this consideration all the more pressing for those who want to ensure their affairs are tax-efficient.

While investment professionals often have much more complicated financial affairs, they also tend to have far less time to manage them. Working in any demanding field reduces your free time. A financial planner can shoulder the burden of managing your finances while keeping you informed and involved in crucial decisions.

Disclaimer: This article does not offer advice and the content and information about potential investments and services are designed for general use, and so cannot be considered personal to your circumstances or your financial position.


For more information about how we can help you with your private banking needs, please get in touch today for an initial conversation.

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