Wealth Check: 'We want to save more while investing ethically'

David and Liz Ford, both Quakers, are kept busy by work but try to make time for family and outside interests.

David and Liz Ford, both Quakers, are kept busy by work but try to make time for family and outside interests. Mr Ford is a school governor and helps manage a Quaker retirement home. Mrs Ford spends most of her spare time on DIY, decorating and gardening.

The Fords want to know whether they should cash in their investments or wait. They know they need to save more but are ethically minded and want to know where their money will work best. They also want to plan for their children to go to university, and leave college debt-free.

In terms of retirement, the Fords have several small pensions, which they are considering consolidating. They want to know whether they have enough life cover and whether they should consider private medical cover for themselves, as well as insurance for their three cats and dog.

We put their case to Darius McDermott at Chelsea Financial Services, Caroline Anstee at Destini Fiona Price and Tim Whiting at BestInvest.


Joint salary: £57,600.

Debt: None

Property: Detached house. Moving to repayment mortgage with Co-operative Bank

Savings: £3,000 a year in a Smile cash Isa

Investments: Henderson SRI Isa; Henderson Isa Taxbeater. Friends Provident, 810 windfall shares. Endowment policies maturing in 2021 for £20,000, likely shortfall around £5,000.

Pension: Friends Provident; National Mutual; Standard Life.

Outgoings: £20,000 annually on school fees. Family holidays £4,000 to £5,000 a year.


Mr McDermott says there is nothing wrong with making pension payments to several companies. As long as the Fords do not exceed their contribution limits, there may well be advantages to spreading the risk.

Ms Anstee says they should review their pension contracts, as old-style plans may no longer be competitive. They should also review the funds they hold in their pensions, to make sure they fit their risk profile.

Mr Whiting says it might be possible for them to switch to a pension plan that allows funds from several managers, in order to give their portfolio much-needed diversity. But whether that is viable depends on the exit charges for their existing plans.


Although the Fords have enough life cover to pay off their mortgage, Ms Anstee cautions that this is not enough to replace a lost income. A family income benefit would do this until their children finish university.

Alternatively, the Fords could arrange a policy, known as key man insurance, through their business. This pays a lump sum to tide the company over if either of them died. Ms Anstee recommends they also look at critical illness cover up to the amount of their mortgage, and permanent health cover for Mrs Ford. This would provide her with an income, should she be unable to work. For the pets, insurance at least means large vets' bills will be covered.


The Fords want to take an ethical stance with their investments, but the performance of their funds so far has been poor.

Mr McDermott agrees the Fords' funds performed badly during the market downturn from 2000 to 2003. But he urges them not to abandon equity investment altogether - they should take a 15- to 20-year view.

He points out that few ethical funds have performed well recently. The Fords' Henderson funds have done badly, whilst the only ISIS/ Friends Provident funds he recommends are UK Prime, European Prime, Strategic Bond and Stewardship Income. The latter is an ethical fund. To find out more, Mr McDermott recommends the Ethical Investment Research Service website (www.eiris.org).

Mr Whiting says that given the constraints of ethical investing, they are unlikely to find a better-managed fund than the Friends Provident/ISIS Stewardship fund. But he is not keen on the Henderson funds and suggests the couple could cash them in and re-invest the money with a different provider. For diversity, Mr Whiting suggests the Fords should add some general, rather than ethical, funds to their portfolio.


Ms Anstee says it will be difficult for the Fords to plan until they know which universities their children will go to, and what their accommodation options are.

Buying a property in a university town, and letting out rooms to fellow students, is one way to cut expenses. But Ms Anstee say the Fords should consider the location in the country carefully, as well as the hassle. In particular they should think about whether they would want a property in that location once their children graduate.

In the meantime, the best option is to continue to save. But Mr McDermott points out that their cash could work harder for them than it does as Smile, their current savings bank, pays 4 per cent on cash Isas, against 5.1 per cent for a postal Isa with Abbey.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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