Client profile: Rathstones Financial Ltd
- Bought out business partner
- “I see PLF as low risk because I’m in control of the money and want my pension fund to have it."
- Existing pension pot transferred into a SIPP
- Made preference share investment in business with 15% coupon
Achieving everything you set out to do on day one takes some beating but the longer-term impact was more important to Laurie Baugh; he was now in control of his finances . . . and his business.
He had his heart set on running his own broker business after leaving his banking job. The all-too-familiar lack of finance stood in his way but it was an unfamiliar source that delivered the instant payback and the lasting benefits that confirmed Laurie had made the right decision.
He had bought out his partner and his new business was paying interest on the finance back to his pension.
“It was about making your pension work for you and ultimately having that control,” the 38-year-old said. “On the day I bought the shares, I managed to declare a dividend and pay off all my finance agreements. The investment from my pension secured my long-term cashflow.”
A perfect result for the Commercial Finance Packager who turned to Pension-led funding initially to help a client finance a property deal but decided the best way to understand the business funding possibilities, and become his own boss, was to go through the process himself.
His Camberley-based business, Rathstones Financial Ltd, is ticking along nicely, focusing on the commercial property sector helping his select portfolio of clients access property developing finance, commercial mortgages, bridging loans and buy-to-let mortgages.
Rathstones has access to 40-50 property-specific lenders and a wider panel of 140 plus business loan and leasing companies to work with as part of the Synergy Commercial Finance network.
But it was Laurie’s pension scheme, a legacy of seven years with the Royal Bank of Scotland, which proved key to financing his dream.
“As a broker a pension is one asset you are likely to have. Commercial property deals can take up to 18 months to two years to write. Starting up you probably have to fund yourself for 18 months. That is a challenge.”
The business now has a healthy turnover, allowing Laurie to work at a level he is comfortable with.
He said: “I work with brokers from a broad spectrum and, as a property specialist, I support them in obtaining the best financial terms for their clients. Unless developers and investors have got 50 per cent to put into the deal the High Street banks are not interested. They need access to the Challenger banks and the specialist property funders.”
Laurie’s existing pension pot was transferred into a Self-Invested Personal Pension (SIPP) and 42 per cent used to make a preference share investment in his business with a 15 per cent coupon, the remainder placed in a low-risk investment profile with PLF sister company and pension provider Morgan Lloyd.
“I see PLF as low risk because I’m in control of the money and want my pension fund to have it. Paying back a preference share dividend free of tax is a very strong reason. It was by far the best option to do what I wanted,” he said.
“I’ve got the opportunity to make the money work. I would rather the interest goes back to my pension than to anyone else. The company is paying back into my pension fund at a 15 per cent interest rate.”