If you're just walking into the movie half-way through, this is the second part of an article series in which I met with a financial advisor from St. James's Place, the largest wealth management firm in the UK, to see if it might be possible for me to salvage an idlyic retirement situation from this damn working life.  The question: Based on what I am making right now and what I will probably make in the future, could I buy a beach shanty some place in Thailand, and literally sail off into the sunset at the end of it all?

I met with Associate Partner Pete Worth (that's a very apt name, Pete) and Head of Marketing, Matt Mitchener, to tell them my complete current financial situation.   They specialize in in-house investment solution wizardry.  They call it "wealth management".   In our first meeting we constructed my “CFR” -- my Confidential Financial Review. I told them everything I have in the world and how much money I make.  

Click here to read that. 

This is the second meeting. They've gone away and done the math.  Now they're coming back with a workable fiancial strategy to help me realize my dream.   They're going to try to help me get to there from here.  

My Financial Strategy Session aka CAN I BECOME UNSCREWED?

Pete: So, this report inputs all the numbers that we’ve been through and fast forwards down the decades, taking into account inflation, to get an realistic picture of what would happen if you carried on doing what you are doing now and what we need to do mathematically to change that to achieve your goals.   We’ll look at the scenario that, right, you are in a situation now, wherein your emergency funding is taken care of and you can invest X amount of money, initially or on an ongoing basis, what impact that would have on your financial sustainability. 

Matt: We want to discuss where you are now and then present all the things we can help you with. This is the direction we need to rowing.

SmSh: Right.

Pete: Just so the first thing just to be very clear, given your personal situation, we wouldn’t do any of this because you’re a Canadian citizen and we don’t deal with Canadian clients, because of Canadian tax implications.  Our meeting would be, “thanks very much, here is some advice and resources.”  And we would advise you to do something as it relates to repatriating back to Canada with advisors who are in a better position to address Canadian pension and tax laws.

For the purposes of your article though, we’ll go through this anyways just to show you the whole process.

SmSh: How's it lookin'?

Pete: So, there are four scenarios that we map out.

Firstly, we’re going to look at if you continue to do what you’re doing now, how is this going to pan out. 

Secondly, we’ll look at your situation if you made an investment now within your comfort to do so.

Thirdly, we’ll use cash flow modeling software, to overlay your current situation, with an investment, overlaid with actual market data.

And the final scenario we’ll look at, as per our goal to provide you with a sustainable income for as long as possible, one thing we can factor in is a slightly reduced retirement income, as would be our suggestion to increase your financial longevity.

In addition to these charts we’ve got yearly profits and losses reports for every year for each of these scenarios. These take into account your income streams — from your salary now, the extra salary for freelance, the income from the F&B business, you salary when you get back to Canada — versus you expenditures in China, expenditures in Canada, expenditures for living in Thailand, expenditures for the 150K USD property you wish to purchase outright, university support potentially for a child…

SmSh: Put that at the bottom of the list.

Pete: Bottom of the list, right. [Laughs.]

Okay, starting from scenario one.  Here’s what it looks like if you maintain the situation as-is, and we continue to do absolutely nothing, This is a very straightforward forecast, cost of living is the blue and the red is the deficit.  So, you would be able to retire at 60, as is your goal, but by the time you get to 67, you would be running a deficit.   It’s also important to note that we factor in 2.5% inflation.

SmSh: I’m in the red.

Pete: You’re in the red. Not something we want to see from a retirement perspective.

This, first of all, identifies the need to do something financially to maintain your quality of life in retirement.  Our goal here, is, ideally, you could live to be 100, for argument’s sake, without any financial worries.  So, the idea is to extend your financial longevity for as long as we can within your capacity to do so, and finding the math that helps us reach that outcome.

So, scenario two. Here, we’re based it on the current situation, again everything else remains largely the same, apart from what we’ve factored in here which is an annual contribution from your F&B income, so not quite all of it but a reasonable portion per year for the years that you are in China, from 43 to 48, and then an investment whilst you’re in China from your surplus monthly income, and then a reduced a reduced contribution from 48 until you retire at 60, so it’s conformable with your situation, including your repatriation. 

So, then everything else stays the same, and what that does is extends your financial longevity to 77 or 78 years old.

SmSh: Jesus, that more than enough. 

Pete: Yeah, ten more years.  And then we also have here your profits and loses with this projection per year. 

Moving then to the third scenario is basically a carbon copy of scenario two but using market data from the software.  For the investment, we’ll just put in a fixed rate of return of 5% which is quite conservative, but we all know that markets sometimes don’t behave as they’re supposed to. So, that will keep you going for a little bit longer still.  This is taking into account all the positive years and all the negative years. 

And the final one, as per our goal to provide you with a sustainable income for as long as possible, one thing we can factor in is a slightly reduced retirement income, because one thing that might change is your appetite for spending at 60 versus 70 or 80.  Again this is a carbon copy of scenario 2 but from 60 to 70, I’ve factored in the 2.5K, and then from 70 to 100 Ive factored in a reduced income, as you don’t travel as much or your spending might be reduced.

And that provides you with longevity up to 80.

SmSh: Wizardry.

Pete:  Also, in addition to the things covered in the CFR, I’ve got some further information for you about consideration for purchasing and land ownership in Thailand.  What you can borrow, what you cant borrow. Which properties as a foreigner you can own and which you can’t. The company structures you would need to consider if you wanted to own land as a foreigner. Some tax information you would need to be mindful off.

SmSh: Oh, right on.

Pete: We’ve also got information on selling your business in China, based on your tax residency. Capital gains on what you can be expected to pay on any the disposal of any business.  Also, we’ve got information on company shares and how you could structure it to reduce and mitigate tax. 

And then we’ve got a little bit about Canadian IHT (inheritance tax), which again, is not part of our official line, but again we’re just looking to add value and insight above and beyond the financial investment side of things.

So, we could go through all that…

SmSh: Ah, maybe just tell me how the financial investing thing all works and how much it costs?

How the Financial Investing Thing All Works…

St. James’s Place has access to a range of individual funds and risk-rated portfolios to help spread investment potential across different asset types and markets.  They do not employ in-house fund managers to manage your money. Instead, they work with fund management firms around the world, to subcontract the management of aggregated client funds to people who they believe to be the most talented in a given asset class.

They work with both very large and austere fund houses — BlackRock, Schroders, PIMCO, Aberdeen — and smaller, boutique fund houses — small but also still managing hundreds of billions of dollars — to diversify investment possibilities into an international arena across a varied asset range.  The sheer size of St. James’s Place — they have 820 or 825,000 clients constantly supplying 1.1 or 1.2 billion pounds a month — enable talented fund managers to be in unique position to take advantage of investment opportunities.

Managing a Dream Team

Essentially, what St. James’s Place does is manage their fund managers, creating a dream team of 60 or 70 fund managers at differently scaled fund houses working in a diverse spectrum of assets and at different capacities.  Their investment committee of 7 individuals in the UK is advised by 9 independent consulting firms, and one of their jobs is to identify fund manager talent wherever it crops up, to which St. James’s Place capital doth flow.

Yeah, Yeah, What’s It Cost Already?

The costs are  different for everybody, as there are a range of solutions, and each consultation is tailored to an individual. However when they revealed the cost structure for my consultation and my circumstances, I was surprised. It's not as expensive as I thought. Actually it's damn reasonable. No upfront costs, and they deduct from what you invest, so it's not like you get slapped with a giant bill at the end of the year. Really reasonable. Super easy.  Trust me - it's not as expensive as you think with this 'wealth manager' assumption. 

I'd say it's worth having a chat and sitting down with them to understand your options. 

So Am I Getting the Beach Shanty?

Pete: Obviously, it’s very difficult to determine what your aspirations will be at 55 or 60 years old — if it is still a one bedroom beach house in Thailand somewhere.  But you’d be in a better financial position and more importantly, you’d be in a position to adapt to change in your plan according to your model.  It might be that we completely revise the strategy at some point. It might be that you've landed on some kind of job somewhere and earn significantly more and you want to get something else.

But the idea is to evolve and change with how life does, and we change advice accordingly.  The most important thing that we provide, from what my other clients tell me, is that we provide the proverbial peace of mind — a safety blanket — because we can work through your options.

People usually see, “financial advisors”, “investments” — ‘oh you're going to sell me something’.  Which to a degree, yes we are selling ourselves and our services, and what we do, but it’s also about helping people navigate through the important points in life, and having that relationship where you have a two-way, open, and trustworthy service where you can help people address these really, really important things. 

Thats the rewarding aspect of what we do. 

If the beach shanty in Thailand is something you really want, I think we can find a way to get you there...

If you think it might be time to get your "stuff" together, go have a  you to have a chat with the team at SJP - it was enjoyable and enlightening.

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They have some nice offices right near Azul in Shangkangli.

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