September 2016 – Autumn Equinox

Today is the Autumn Equinox (well almost) which is the time in the Northern hemisphere when the length of the day and night become equal; it is the start of Astronomical Autumn. We usually say that it occurs on the 21st September but because of variations in the calendar and the movement of the earth and the stars it can occur at any time between the 20th and the 24th. This year in the UK it’s at 15.21 BST on 22nd September.
The movement of the seasons is as predictable as life itself. We all know where we are in the passage of time though it is not something that we choose to dwell on. We like to live as if we are immortal but deep down we know that time is precious and that it ebbs away with each passing day. Three of my clients have died this year: the first was 88 and the second was 91, they lived life to the full and they made me feel uplifted each time we met. They are sadly missed but as my mother used to say: “they had had a good innings”. On the other hand my third client died last month at age 37 and this is tragic. She leaves behind a husband and two children. What has made it more tragic is that despite my attempts they were always “too busy” to review their finances. They were after all ‘immortal’, and who can blame them, I felt like that at 37 and I still do! She died with insufficient life insurance and no Will in place and I am helping the husband to sort things out as best as we can (a little like bolting the stable door). Money had to be borrowed from family in order to pay the £6000 for the funeral.
PLEASE do not make the same mistake. Everyone needs to have their Will and Lasting Powers of Attorney in place and they need to be reviewed regularly. Your finances need to be organised and arranged using trusts if necessary and you need a pre-paid funeral plan in place. Many of my clients reading this will be feeling satisfied at this point because they can say that they already tick all of these boxes. However if you have yet to complete one or more do not delay and get in touch with us today. We know that the Equinox will occur within two days of the 22nd but death or disability is not so predictable.

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August 2016 – Providing Client Value and Service

I have spent over 25 years trying to help my clients navigate the maze of financial planning and I have always aimed to put people before profit. I have approached my business from the perspective of how much value and service I could provide to my clients so I was not inspired by the title of one of the sessions at a seminar for IFAs last month which was called: ‘How much should you should charge your clients for your services and make a profit’. The seminar demonstrated that many IFAs think differently to me, they put profit at the top of their priorities, and they charge considerably more for their services.

The presenter started by telling us that we are available for work 44 weeks of the year after taking out 8 weeks for holidays, bank holidays, Christmas, illness, and so on. For a 5 day week this equates to 220 working days. Two days each week are taken up with seminars, keeping knowledge up to date, regulatory reporting, and other essential matters, which leaves only 132 days for client work. If one day each year is spent on each client this means that the business can manage 132 clients, if two days are spent on each client then we can only help 66 clients and so on.

I was looking around the room at this point, many of the attendees were nodding in agreement, but I was sceptical, and not sure that I even wanted to be there. However I stayed and he next asked us how much it cost to maintain the business, he wanted the base cost before we paid any money to ourselves or made a profit. People started getting involved and various figures were mentioned, all of them much higher than mine. I operate from a room at my home address, all support is outsourced, and I use technology to maximise efficiency and drive down costs. For the financial year to 31st March my base costs were £82,000 or almost £7000 a month. It was no surprise to find that many IFA firms had a base cost much higher with some saying £15,000 a month, and for some approaching £30,000.

We were then asked to add what we thought was a reasonable personal income considering our experience, qualifications, and financial risk. This is where people started becoming animated and there was a heated discussion with some ‘loud’ differences in opinion. To the disgust of many I put mine down as £40,000 a year and they protested that the figure ought to be at least six digits. However I refused to budge so I arrived at a total of £122,000 after the base costs and personal income were added together.

I thought that we had finished but at this point he mentioned the FCA requirement that all businesses should be profitable, sustainable, and build up a capital reserve, so we had to add in another figure. I decided to keep quiet and for simplicity I added £10,000 to bring the total income to £132,000 because I had anticipated what was coming next and I wanted to keep the sums easy.

You don’t need a calculator to show that my rate was £1000 per working day but I was surprised when some said that their minimum daily rate was £5000 or more. And while I was expecting that my rates were much lower but it did surprise me to realise that after taking out the base costs and capital reserve, only £300 is left for personal income out of every £1000 received by the business. I would like to bet that very few of you know how much it costs to maintain an IFA business!

So while I was a reluctant attendee, the seminar was useful because I was left feeling satisfied that I am providing good value for the service that I provide and that clients could pay a lot more elsewhere that is if they could get independent financial advice at all. I am sticking my neck out and I hope that you agree so if you have any questions or comments I would be very pleased to hear from you.

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July 2016 – Your Financial Wealth in times of Political & Economic Chaos

“Good news we’ve voted to leave the EU” – I received this message mid-day on Friday 24th June from an IFA marketing group. The second part of their sentence said: “your clients have never needed your advice more than they will now”.

Unfortunately this attempt at being upbeat has not been reciprocated by the investment companies and financial institutions. Over the last 14 days the only companies that have been excited about Brexit have been companies which sell high risk investments which are totally unsuitable for my typical clients. These companies see the coming relaxation in regulations from Brussels as an opportunity to sell more of their products so that they can make more profit. I remember the bad old days of ‘flog for a profit and sod the client’ only too well and personally I dread any return.

So why have I taken two weeks to communicate to my clients since the referendum result? The answer is in two parts: Firstly the shock and disbelief that people would ignore the experts and vote for economic uncertainty. Secondly because I knew that my clients’ portfolios were already well placed to stand the uncertainty and volatility.

For example over the last few days several property funds have suspended activity where investors could not withdraw their money. Property funds hold a certain amount of cash to allow for investors withdrawals and so many investors have withdrawn cash that they have had no cash left. The only way to generate more cash is to sell property and selling a commercial property such as an office block or Retail Park does not happen overnight. Several years ago when our investment service proposition was put together we did not include property funds. Illiquidity was one reason among many for them not to be included and hence my clients are not affected.

There has been a lot of talk about the FTSE 100 and you will hear a lot more over coming months. It started by going down but has since recovered and gone well above where it was before the 23rd June. This is not (I repeat not) a good indicator. The FTSE 100 is made up of the largest 100 by capitalisation of companies listed on the London Stock Exchange. Almost no one holds a portfolio made up of these companies and it would not be a good investment strategy if they did. Most of these top 100 companies are by their nature global in scope and there are several reasons why they have currently increased in value. Bizarrely the weakness of the UK economy as a result of Brexit may be one of the reasons why the FTSE has increased.

My clients’ portfolios are typically highly diverse and they may have of the order of 8000 companies in their portfolios. This diversification includes global diversification which in turn means that you are less exposed to the fluctuations in the UK market. So hold tight because you are in the best place that you can be.

And what about Bonds? It seems that interest rates are likely to fall with the suggestion of 0.25% being floated. What does this mean for your cash in the bank? Well for every £10,000 in the bank if inflation is 2% that means that at the end of every year your money needs to grow to £10,200 just to stand still. Anything less and it will actually be falling in value. If you are getting 0.25% this will only give you £10,025 and you have lost £175 by keeping your money in an account where it only earns 0.25%. Holding money in the bank gives you a guarantee – a guarantee that you will lose money every year for as long as this situation continues. If you think that is bad then spare a thought for other countries such as Japan or Sweden which have negative interest rates. These mean that you are actually charged for leaving your money in the bank – a negative interest rate of 1% could make your £10,000 become £9,900 by the end of a year. Bond prices usually correlate with bank lending rates so we will be considering the potential of tilting the portfolio balance in favour of equities but there will definitely be no hurry to do so and nothing will happen until we have a clearer view of direction.

I am taking a well-earned break to the Costa del Sol for 10 days in the middle of the month. I am so pleased that I have my Euro account because I will be unaffected by fluctuations in the value of the pound. Being a financial planner and being prepared has its advantages.

Hopefully matters will be less chaotic by next month but I’m not holding my breath this side of Christmas.

As usual if you have any questions or need any help please get in touch.

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June 2016 – Your Financial Wealth and the EU Referendum

Your Financial Wealth and the EU Referendum

We are so lucky to live in the UK because we are privileged in so many ways. One of those privileges which unfortunately too many take for granted (and some abuse) is our right to hold and express our own opinions. I know that many of my clients will have different views to my own on politics and religion though I am sure that they all share high moral values, they want to do the right thing, and they want to make a difference.

On Thursday 23rd of June 2016 we all have been asked to vote in an EU referendum and according to most respected authorities there will be considerable financial implications if the UK votes to leave. Taking the FTSE 100 as an indicator it reached a low point this week and the value of the pound has also fallen with the announcements that the Leave campaign are in the lead.

Why has the investment market and the value of the pound fallen in value? I believe that is down to one word: ‘Confidence’. There have been lots of facts and figures presented by both sides and whose set of figures you believe is down to whether you are in the Remain or the Leave camp. However I believe that ‘Confidence’ is a more important factor than any set of facts and figures because the international markets operate on confidence. If it is seen that the UK is in a better financial position after June 23rd confidence will rise and the value of your investments and the pound in your pocket will rise again. If the UK enters a period of uncertainty confidence will not return for some time and you can expect your investments to linger or fall, and the value of your pound to fall with the cost of imports rising.

Regardless of where you place your vote I passionately believe that we should all exercise our democratic right and turn up to vote. However it is rare that one person’s vote makes a difference to the outcome so all that most of us can do is sit back and wait for the result. Should you make any changes to your investment portfolios? The answer is a very definite ‘No’. My clients with Dimensional Fund Managers held on the Nucleus platform are in highly diverse and low cost portfolios with a significant international element which should help to counteract any fall in the UK market if it happens. I believe that moving out of investment into cash is the wrong thing to do and if you are overweight in cash, then now is probably a good time to invest.

I have watched the EU debates and read the literature and I’ve been as confused as most of us by the facts and figures.  I have swayed between Leave and Remain and discussions with family and friends have followed extensive and sometimes heated discussions. I have made up my mind by looking at who was supporting each side and who I wanted to identify with. This might help you so my list is below: My apologies for those that I have missed from either camp because space is limited but the list was enough for me.

The following are all recommending ‘Remain’: The Governor of the Bank of England; the International Monetary Fund; The Institute of Fiscal Studies; The Confederation of British Industry; President of the United States of America; The leaders and heads of state of every other single member of the EU; Eight former US Treasury Secretaries; President of China; The prime ministers of India, Canada, Australia, Japan, and New Zealand; The chief executives of most of the top 100 companies in the UK including Marks & Spencer, BT, Asda, Vodafone, Virgin, IBM, and BMW; Kofi Annan the former Secretary General of the United Nations; All living former Prime Ministers of the UK (both parties); The Prime Minister of the UK; The leaders of the Labour Party; The Liberal Democrats; The Green Party; The Scottish National Party; Plaid Cymru; Sinn Fein; The current chancellor and his predecessors; Martin Lewis the money saving expert; The Secretary General of the TUC; The National Union of Students; The National Union of Farmers; The Chief Executive of the NHS; Stephen Hawking; Secretary General of NATO; Churches of England, Scotland and Wales; Greenpeace; World Wild Life Fund; The World Bank, The OECD; a huge number of reputable and recognised economists; Justin Urquhart Stewart of Seven Investment Management; Hundreds of leading arts figures including Benedict Cumberbatch, Sir Derek Jacoby, Sir John Hurt; Jeremy Clarkson; about 220 (96%) of Labour MPs; about 170 (60%) of Conservative MPs; I think that’s enough!

The following are recommending Leave: Boris Johnson (who many have suggested saw it as his quickest route to number 10); Michael Gove (my apologies for mentioning his name in the presence of my clients from the teaching fraternity); The Leader of UKIP Michael Farage (he seems like a nice man and shares my passion for real ale); The BNP; British First; Donald Trump; Vladimir Putin; Marine le Pen; ISIS; about 10 (4%) of Labour MPs; about 130 (40%) of Conservative MPs.

If I’ve got this right it makes the Leave camp seem rather unattractive and quite lonely.

I promise that I’ll get back to my usual newsletter next month by then we should know whether Confidence has returned (or not!)



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May 2016 – Helping clients in later life

Helping clients in later life

As we get older many of us have difficult decisions to make because of declining health or limited finances. Financial needs in these circumstances are special and they are not within the expertise of most financial advisers. The Society of Later Life Advisers, SOLLA, recognised the need and was founded in 2008 with the aim of assisting people and their families in finding trusted and accredited financial advisers who understand financial needs in later life. The following is a quote from their website:

“What is needed is not simply a well-qualified financial adviser but somebody who you feel you can rely upon to understand the plans you need to make for your retirement years. The complexities of the many decisions you or your family may need to face when looking at issues such as care funding matters or whether equity release is the right thing for you, will need careful and considered advice. SOLLA links you with an adviser who can help you explore the solutions that work for you and where they are involved, your family too.”

For the last 4 months I have been going through SOLLA’s stringent application process and I have now completed all of their paperwork requirements including verification of my qualifications and credentials. I have a two hour viva voce assessment with an assessor on June 15th and then my application will go before their committee for approval so hopefully I will have some good news for you in my July newsletter.

SOLLA provide many resources to members and opportunities for increasing knowledge. A two hour SOLLA webinar yesterday gave me a moving insight into the complexities of care and the required funding. Live in care, visiting care, day care, 24 hour care at home, the home share scheme, and staying at a care home were all considered. With state provision in the range £54 to £81 a week and the likely cost of care up to £1000 a week or more, there was never more of a need for specialist advice. Please get in touch if you would like further information.

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April 2016 – Why create a plan for your life?

Why should you create a plan for your life?

1. Because there is power in planning. When plans are carefully thought through and written out, they tend to come true, whatever the obstacles.

2. Because a life plan can serve as a guide, helping you align your deepest values, beliefs and goals with your earning power and financial resources so you can realise your dreams.

3. Because by combining proven investment strategies and an honest, heartfelt life planning process, you are quite likely to get where you want to go.

Your financial life planning is vitally important and it needs to be continually reviewed. The pilot taking off from Heathrow didn’t make his or her plan six months ago and then go to sleep. They have to continually readjust in accordance with changing circumstances so that they get to where they plan to get to. Your financial plan is no different and if you want to stay on course it needs to be reviewed regularly. If you would like us to review your life time cash flow planning to see where you will be in next year, in 5 years, 10 years, and beyond, then give us a call to arrange a financial review.

The three points above are an extract from one of the Interface Financial Planning web pages. If you haven’t visited in a while I recommend that you take a look. When every day more and more is going onto the Internet and operating in the Cloud, Interface is no different and more and more facilities are being added all of the time. Why not take a look and give us your feedback using the Client Feedback link?

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March 2016 – Technology moving so fast

Are you keeping up? Is it me or is technology moving so fast that it’s difficult to keep up?  Almost every day something else moves on line, or a new service, gadget, or gizmo becomes available.

When I started in business the post was too heavy for the postman to carry and it was delivered by a Royal Mail van. Just ten years ago Lyn spent two hours a day opening and filing the paperwork. What a change, the tiny amount of stuff that arrives by post is almost negligible and is dealt with in five minutes. But email, well there’s another story – I typically get 350 emails a day dropping into my Inbox. Even The Royal Mail communicates with us by Email!

I think that you might find the following 2015 facts from the Office for National Statistics interesting:

The internet was accessed every day, or almost every day, by 78% of adults (39.3 million) in Great Britain in 2015, compared with 35% (16.2 million) in 2006, when directly comparable records began

• Almost all adults aged 16 to 24 (96%) accessed the internet “on the go”, compared with only 29% of those aged 65 years and over

• Social networking was used by 61% of adults, and of those, 79% did so every day or almost every day

• In 2015, 76% of adults bought goods or services online, up from 53% in 2008. “Clothes or sports goods” were purchased by 55% of adults, making them the most popular online purchase

• In the last 3 months, 22% of adults purchased online once or twice, while 28% of adults purchased 11 or more times. Online purchases totalling £100 to £499 were made by 42% of adults who had bought online in the last 3 months

• In 2015, 86% of households in Great Britain (22.5 million) had internet access, up from 57% in 2006

The fact that you are reading this eNewsletter means that you are one of the winners but spare a thought for those who have been left behind, I really don’t know how they manage.

We are trying to keep up and this week we have launched a business Facebook page at – I would be really pleased if you log in and click ‘Like’.

And just to give you something to think about: in December 2014 I bought my new car on line – the first time I saw it was when I was driving it away from the Ford garage where I had arranged to pick it up.


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