Mark Barclay, of the St. James’s Place Partnership in Oxford, outlines the importance of wealth management

A bumper summer season of tennis, golf and cricket is ahead of us. The Formula One circus is back in full swing and another football season will soon be reaching its traditionally exciting climax.

These days, top sports stars enjoy enormous earnings. Tennis giant Roger Federer has a record 16 grand slams to his name and is the richest non-American athlete in the world.

In football, Real Madrid’s Cristiano Ronaldo is reportedly the highest-paid player in the world with a salary of £10.6m a year, closely followed by Wayne Rooney and Barcelona’s Lionel Messi on £9.7m.

While such eye-watering riches are clearly beyond the grasp of the majority of people, any accumulated wealth, whatever its size, should always be carefully nurtured and protected.

According to a survey by Core Data Research UK, the number of millionaires in the UK has risen in 12 months to more than 280,000, showing the country’s economic health is improving at least at the top end of the scale.

The number had fallen in the previous two years from a 2007 high of 489,000 due to the recession, property and stock market falls. So protecting wealth remains just as important as creating it.

Despite this, few of us manage our finances particularly well. The financial world is complex and fast-changing.

As personal wealth has grown in recent years, there has been a corresponding increase in the number of banks and other financial services companies offering advice to what they see as a growing market. This has simply added to the confusion.

Valuable financial advice must be based on an appreciation of a person’s individual circumstances. Developing a wealth management strategy hinges on three key areas: n Building and preserving capital, including planning for retirement n Managing cash and borrowings n Protecting family and estate against risk An investment strategy should also be developed not only with these objectives in mind, but also by minimising liability to tax.

The key is to achieve significant growth in the value of capital over time and preserve its value.

Investment, retirement planning, trust and estate planning and portfolio management are all part of building and preserving capital.

But the complexities of investment, coupled with new rules governing pensions and unforeseen inheritance tax liabilities, are not areas that should be tackled by the ill-advised.

Seeking dedicated professional advice means risks can be minimised while rewards are maximised through exploiting opportunities to make money work harder.

In building capital, for example, the management of risk is critical and diversification both by asset class and by investment manager is always the best approach.

It is also important to determine how much money should be held in cash to meet short-term needs and emergencies.

And every effort should be made to take advantage of tax-efficient vehicles available, such as ISAs, and those provided in retirement planning via the new pensions rules.

With managing cash and borrowings, advice on mortgages, commercial banking, deposit and current accounts should be considered.

Guidance on the most appropriate product or service is important to ensure interest rates are competitive, whether borrowing or depositing cash.

And in protecting family and estate against risk, it is vital to establish adequate levels of insurance and the most suitable type of cover to protect against serious risks to life and health. Inadequate planning for financial protection can be disastrous.

Protection can also be used in conjunction with certain types of trust as part of an inheritance tax mitigation strategy, ensuring as much wealth as possible ends up in the hands of chosen beneficiaries.

Everyone who has created wealth should expect to enjoy the fruits of their labours, and there is no substitute for early, careful financial planning to ensure adequate provision is made.

n Contact: Mark Barclay, 01865 793121.

Web: www.mbarclay.co.uk