February 2012 - Financial Planning in Wimbledon

Hockney and Reflecting A Bigger Picture

2012: A Bigger Picture – David Hockney

Financial planning in south west London affords me the ability to do many things, including visiting the latest art show at The Royal Academy. It used to be said that artists only make money once they die, however one of Britains most successful living artists has buried this misconception along with many others. David Hockney who will turn 75 this summer has had a remarkable career. Influenced at an early stage by Picasso and Walt Whitman, he brings his own perspective to his work.

The show is perhaps one of the very best that I have seen, called “A Bigger Picture” it is simply an outstanding collection of work, reminding and calling us to look again in particular at the English countryside and to get out and enjoy it. His vibrant use of colour and innovative adoption of new technology (see what he does with an i-pad) is a reminder that becoming older does not mean becoming greyer or out of touch. Indeed he remains revolutionary, as perhaps all great artists are.

Wearing my financial planning hat, his huge canvases and use of fragmented images to create a larger “whole piece” is a reminder that detail is in the large as well as the small and that different perspectives and experiences shape the overall picture. My financial planning interpretation of this is perhaps stretching things, but notes that our lives are made up of many experiences and are gradually woven together to create a masterpiece, even though the process of each experience may seem unconnected to the next at the time. Financial planning can sometimes feel disconnected – and my role is to bring the elements of the plan together, reflecting it back to my client, assessing progress and helping to shape, but more importantly understand the overall vision. Financial planning when it is done well is not really about numbers, it isn’t really a science, but an evolving artistic work – yours! and I have the great pleasure in helping frame and hang the elements to bring the pieces together.

I am a Hockney fan, which because its art won’t be the same for everyone, but the depth and scale of this show is spectacular and money well spent. A very good job has been done by the team at the Royal Academy and the exhibition runs until 9th April – tickets are in high demand. As for art as an investment, well I have to admit to being more of a traditionalist – buy what you like.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Hockney and Reflecting A Bigger PictureDominic2017-01-06T14:40:07+00:00

Bonus Cutting at Prudential

2003: In The Cut – Jane Campion

Financial planners generally are not terribly interested in the bonuses paid to investment managers, but we are concerned about Insurance companies providing with-profit investment products that seem to worsen every year. This time Prudential, perhaps the best known with-profit company has announced today that it is reducing its bonus payments (to investors). That said, they seem to be top of the pops for final total payouts when compared against their competitors.

Prudential are quick to point out that maturing policies in 2012 have increased in value against 12 months ago (though I would argue that this is merely meeting expectations), terminal bonuses remain relatively strong but the cuts have come in the form of the regular annual bonuses (reversionary bonsues) which have been reduced by 0.50% to around 2.50%-3.00%. Prudential estimate that £1bn of reversionary bonuses have been added with a further £1.1bn added as final bonuses (relative to maturing policies).

Prudential remain a strong company with a global presence and one that specialise in with-profits, in my opinion in 2012 remain market leading in this regard. As a relatively low risk form of investing this is about as traditional a financial services product that you can get, in 2012 with the much wider array of investment options, it is unlikely that most people will take out a new with-profits policy, which has longer-term implications for the with-profits product providers. That said, the traditional argument for with-profits of smoothing the volatility of the market is hard to ignore when over the last 10 years the Prudential with-profits fund has accumulated a return of 92.7% against the FTSE AllShare index of 59.5% over the same period. The story of the tortoise and the hare comes to mind.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Bonus Cutting at PrudentialDominic2017-01-06T14:40:08+00:00

Lessons with David Suchet

1956: Long Day’s Journey Into Night

Anyone that knows me, will know that I greatly enjoy the arts – particularly film, theatre and music. Hence this blog is splattered with film and literature references. As a financial planner, I think it is helpful for clients and anyone wanting to become one, that you get a flavour of who I am and why I do what I do. I’m lucky to be living and working near to one of the world’s cultural centres – London, so I try to take advantage of what is close at hand.

Last week I was at the Richmond Theatre to see David Suchet (known to most for his portrayal of Hercule Poirot) and Laurie Metcalf, who is probably best known to the world for her role in the TV series Roseanne. Both are brilliant. They play husband and wife in Eugene O’Neill’s melancholic play “Long Day’s Journey Into Night” which explores a dysfuntional family unable to speak helpfully to one about the very real struggles that they all have coping with life’s disappointments and tragedy. The story, set in 1912, itself semi-autobiographical of the author’s own experiences, is both painfully gritty but supremely performed by all four cast members.

Much like the hammer that sees every problem as a nail, as a financial planner, I could not help but think that with a good financial plan, perhaps James Tyrone would have known how much he could spend and whether he had “enough” to prevent his nightmare scenario of returning to the poor house. This may have enabled him to take a very different view of his sons and his relationship with his wife, who suffers from borderline personality disorder and is addicted to morphine. Whilst I am not pretending that money will solve problems, understanding it clearly, having a unique financial plan (that accounts for disaster) would have provided this family with the starting point to improve and possibly repair their relationships. Something that they all wanted desperately, but lacked the ability to see how this might occur.

It is this potential to help people have a better understanding of money, so that they can focus on the important things in life (not money) – which to my mind is about knowing others and being known and enjoying many of life’s wonderful experiences. So many people fail to fully live life because they have no clear idea about what they want and how much it costs. The power of financial planning, when done properly is not (contrary to what one financial planner recently suggested) about the “toys”. To my mind it is about the freedom that can be found in understanding what you really value. It is not about the money.

Tickets to the play are not easy to come by – which is a testament to the quality of David Suchet and Laurie Metcalf. The show continues at Richmond until Saturday 3rd March before moving to Milton Keynes, then Glasgow before heading for the West End from 3rd April at the Apollo Theatre with a planned run until August.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Lessons with David SuchetDominic2017-01-06T14:40:08+00:00

When the Sharks are Circling – Best Cash ISAs

1952: Loan Shark – Seymour Friedman

Vanquis Bank? Financial planning often introduces some new names, but rarely within the retail Banking sector. Vanquis Bank have a head office in London and part of the Provident Financial Group which is currently headed up by Peter Crook (great name for a Banker eh?) anyway the company is credit based and aimed at those that are normally excluded from applying for credit, which is certainly better than going to a loan shark. Despite the fact that the original organisation was founded in 1880 and made pre-tax profits of £62.3m from its 2.4m customers in the first half of 2011, I’m not so sure that I’d be first in the queue to deposit my savings. However they are today’s top of the pops which is listed for your information and amusement. Please remember to check out details carefully and remember the compensation limits.

Instant Access

Online: Santander 3.10%

Bank: Virgin Money 2.85%

Building Society: Nottingham 3.25%

One Year Deposit

Online: Vanquis Bank 3.55%

Bank: Santander 4.20%

Building Society: Yorkshire 5.00%

Two Year Deposit

Online: Vanquis Bank 3.85%

Bank: Cheltenham & Gloucester 3.80%

Building Society: Progressive

Cash ISA Vairable Rate

Online: Aldermore 3.15%

Bank: Santander 4.00%

Building Society: Newcastle 3.05%

Cash ISA Fixed Rate

Online: Royal Bank of Scotland 4.20%

Bank: Clydesdale 4.25%

Building Society: Yorkshire 5.00%

Please don’t simply look at the headline figures, the organisations within this list do not suggest endorsement or approval or advice to use them. This is merely an up to date list.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

When the Sharks are Circling – Best Cash ISAsDominic2017-01-06T14:40:08+00:00

Bogus Pension “Cash Liberation” Schemes

2009: Lies and Illusions – Tibor Takacs

It is particularly concerning when I come across unregulated and unqualified people offering advice about pensions. However badly some people think of financial advisers, using companies that are not even regulated by the FSA is very worrying and illegal. Financial planners like me, spend years learning about pension rules – which are constantly being updated and despite promises from the previous Government to make pensions simple, the reality is completely the opposite. This is admittedly a very poor state of affairs when a pension should be in every UK adult’s vocabulary of financial planning. Good financial planning involves repayment of debt, building wealth and avoiding unnecessary charges and penalties. This latest “pension liberation” scam increases debt and reduces wealth and increases charges dramatically.

There has been a spate of small adverts, some appearing on social networking sites such as Facebook which I have seen myself and are completely misleading. These are designed to entice people needing cash and having a pension pot to “liberate” the cash from the pension. There is also the suggestion that investment performance will be improved. However cash from pensions can only be taken from age 55 and is restricted to 25% of the fund. Taking more is illegal and will invoke charges and penalties from HMRC resulting in a significantly worse pension. There has been over £200m moved into these bogus arrangements already according to the Pensions Regulator, FSA and HMRC the bulk of which has occurred since May 2010.

The schemes effectively set up loans and the only people making money from them are those that are “arranging” them. The promise is one of liberating up to 50% of the value of a pension fund before the age of 55. These schemes tend to operate by paying 50% of the fund in the form of a reciprocal loan with another investor. The balance of the fund is often put into some very dubious property deals. This is a scam, fraud -swindle and thoroughly unethical. Do not be taken in by such schemes. As a financial planner I find this deeply depressing, my industry has enough jargon and mis-selling scandals without another one rearing its head from “advisers” that are not advisers and unregulated. This will not end well. See here for more details about pension liberation. Please pass this post on to your social network friends. You can also click here to see some of the more common scams and swindles that the FSA attempt to prevent.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Bogus Pension “Cash Liberation” SchemesDominic2017-01-06T14:40:08+00:00

London Fashion Week – Fashionably Early and Hem Line Investing

2006: The Devil Wears Prada -Frankel

As a financial planner, I’m not one to suggest for a moment that I’m also a fashion expert – except I suppose when it comes to fashionable investments. The London Fashion Week closed yesterday – I don’t really know if it’s my interpretation or whether a week that starts on Friday and ends on a Wednesday is fashionably late, early, unconventional or simply the next big thing….anyhow of one thing you can be sure, fashion is by nature premature – in that this was a show for Autumn/Winter 2012.. after all this is showing what will be stocked later in the year. What I can report is that hem lines look set to be a little above the knee this September. There are some of the more “out there” financial speculators that see this as an indicator of confidence and use this to inform investment decisions. Yes you did just read that here. I don’t know if there is any substance to the suggestion, but as investors tend to have a herd-like mentality (professional and private) it is possible to see that confidence could be contagious in many aspect of life, so why not the markets? After all, inflation will be lower (by mathematical analysis) and we will have gone through what transpires for Europe (though the out workings are likely to be very long-term).

To purists, fashion is designer clothing, to others it is making things that we see and use “cooler” by that read the anything pre-fixed with “i” (ipad, iphone etc). Great businesses will be seeking to ensure that their products and services are as “user-friendly” and “cool” as possible. The Chinese middle and upper classes (it seems George Orwell was right) have an appetite for luxury brands and cannot get enough of them… selling like hot cakes. So although China’s growth and inflation are slowing (which was inevitable) the new land of opportunity is proving to be something of a goldmine for those willing to create one and many will have attended the London Fashion Week.

The direct value of the UK fashion industry is reported to be worth £21bn and its wider contribution in influencing spending in other industries is over £37bn. In the UK the fashion industry is the largest creative sector for employment, with 816,000 jobs. It is about the same size as the food and beverage service industry and telecom industry. The UK is regarded as having world leading fashion colleges, so this is where the story begins. The major export markets for the UK are the USA, Japan, Russia, France, Italy, the Middle East, Hong Kong and China. Of course, much like having a tailor made suit or designer dress, a good financial plan is one that is unique, bespoke and fits you perfectly.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

London Fashion Week – Fashionably Early and Hem Line InvestingDominic2017-01-06T14:40:08+00:00

Time To Believe and Celebrate Difference

1990: Edward Scissorhands – Burton

Financial planning or more specifically, selecting investments from the global range is an awkward task these days. Today, following the latest round of not looking at a gift horse in the mouth, Greece having been granted a bail-out deal (which is not good news for anyone) have been downgraded by credit rating agency Fitch from CCC to C. They believe (as do I) that Greece is more likely to default, not less. The current package, would see a..wait for it… 53.5% “haircut” on Greek Government Bonds. Now these days I have little requirement for a trip to the hairdresser.. but imagine going to one and coming away with only half a haircut… it might have been ok in the 1980’s (passed off as fashionable) but unless you are a pop star, probably not terribly welcome. In essence this means that those holding the relevant Greek Bonds will lose half of their money… which granted is better than losing all of it.

The great sadness with this is that whilst there is much to criticise about the Greek economy, political and welfare system, this is incredibly harsh on Greek people, who are probably at melting point. This mess was caused by the credit crunch, the folly of the Eurocrats believing (as many still do) that one size fits all. Have any of them ever left their standard issue European hotel room and gone to a bar, shop or museum? Difference is the jewel that makes us human and frankly makes life so fascinating. Attempting to force a nation or region to all work in the same way, spend in the same way is Utopian lunacy. We go to the Med for holidays because of the weather, not because it is the best environment in which to build a car in a factory. I simply don’t understand the pre-occupation with the Euro. A Europe united does not mean a Europe the same. The continual denial of the reality that the Euro is broken costs us all more each day and is particularly punitive on the Greeks who are much maligned and all too unfairly. May I suggest a rewatching of Edward Scissorhands for those that continue to suggest we should all be the same or will they go on believing the “suits you sir!”.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Time To Believe and Celebrate DifferenceDominic2017-01-06T14:40:08+00:00

Credit Rating Agencies and the Smell of Fire

2010: The A-Team – Joe Carnhan

As a financial planner with expertise in investment, you may have read my post yesterday about the change in the Fund Manager of the Blackrock UK Fund. Well call me an old cynic, but today one of the ratings agencies (OBSR) has announced that it has reduced its “rating” of the fund from AA to A. One has surely got to ask the question why on earth they did not do this earlier? after all the performance has been disappointing for some time. An alternate view might be that the downgrade represents the increased uncertainty about the future due to the change in Manager, which is the sort of line that is offered. However, whilst I admit the analogy doesn’t hold entirely, this is a bit like yelling “fire” once the flames can be seen, rather than observing the smell of smoke somewhat earlier, which after all, is presumably the point of a ratings agency. The sad reality is that ratings agencies now seem to be having a disproportional impact on investment markets. Given the failings of credit ratings agencies pre-crunch, one wonders what ratings they themselves would attain. Sadly, there seems to be no plan B.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Credit Rating Agencies and the Smell of FireDominic2017-01-06T14:40:08+00:00

Rangers – What Lurks Beneath

1954: 20,000 Leagues Under The Sea

Financial planners often use the football league as metaphor for investment performance – the six top teams are fairly predictable each year and a sense that success breeds success. Relating this to the top performing funds is stretching things, though I acknowledge that sometimes this does appear to be the case. Invariably funds do not consistently perform at the highest level, with very few exceptions. There are some analogies that can be helpful, though not necessarily reliable – for example the duration of the manager, which for Fund Managers can be relatively short-term, but perhaps not quite as brief and sanguine as the very short-term tenures of the majority of football managers. The size of the football club would often suggest strength of resources (as it might for investment companies) but recent evidence would suggest (as any good business person knows) that governance and how an organisation is operated are the vital ingredients.

Take Glasgow Rangers typically either 1st or 2nd in the comparatively small pond of the Scottish Premier League. It would appear that this club (company) had forgotten (like many others seem to) how to run a business. Expenses cannot exceed income for very long. Ambition and desire can play havoc with reality. The use of tax avoiding schemes to pay staff were always questionable and certainly complex. The most recent takeover of Rangers by Mr Whyte used funds provided in advance of ticket revenues… which has a similar feel to it as using the future payments on mortgages to form a capital sum (which effectively was the mechanism that caused the credit crisis). What has this to do with investors? well nothing, unless you have invested in a particular Enterprise Investment Scheme (which is a higher risk form of investment) and run by Octopus, who amongst various holdings, have holdings in Ticketus. The money provided was essentially “working capital” that enabled Mr Whyte (having put up personal guarantees) to takeover Glasgow Rangers. Effectively swapping future ticket revenue for a lump of cash now. This is also similar to the demsie of Enron who operated on the unchallenged assumptions about the future. The implications of the arrangement and the collapse of Glasgow Rangers are being explored by both the administrators and Octopus. EIS investors know that an EIS investment is high risk and there is always a chance that they could loose all of their money, a pertinent question though, is what is the difference between business risk and carelessness? The two are obviously quite distinct.

So as fans of Rangers come to terms with the harsh reality that football is a business (however hard many try to present this reality as “inaccurate”) some investors may need to come to terms with “looking under the bonnet”. Investments can be incredibly complex, with all sorts of attractive promises, they should be designed to make money, but remember that the investor is only one party that seeks to do this, so too does the Product Provider and the businesses that are held within the portfolio. Certainly everyone makes mistakes, but the stockmarket is no place to learn life lessons, unless you really do have money to burn. Financial planning when done well involves considering investments carefully, looking under the bonnet and exposing the possibility of nasty surprises and coming to terms with the reality that there is risk in everything, but minimising these to a sensible level. Importantly reviewing and challenging assumptions in the light of real experience is also a vital part of the “work in progress” that a financial plan will include.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Rangers – What Lurks BeneathDominic2017-01-06T14:40:08+00:00

FUNDS: Blackrock – UK Fund Repeating Performance Is Not Easy

1947: Repeat Performance – Werker

Financial Planners are often caught up attempting to select the best Fund Managers and funds, anyone that knows much about me will appreciate that this is a game that I’m reluctant to play, information about my approach can be found within the resources section of the main website. In essence as a financial planner I believe that my primary task is to help clients achieve their goals, not to beat the market. Those that simply attempt to beat the market are bound to deliver disappointing results as no one has consistently been able to do this over the long term (at least no one I know of).

Today a very well known and highly respected Fund Manager from a good Fund Management Group (Blackrock) announced that he would be stepping down from his role as lead manager on the Blackrock UK Fund. Mark Lyttleton has run the fund since September 2001 and will hand over to Nick Little. Mark will continue to run the rather more successful Absolute Alpha Fund and the Dynamic Fund. His performance with the UK Fund has not been anything like as spectacular (well we can’t all be good at everthing) but when it comes to investment returns, this means that by most measures the UK Fund underperformed its peers and indeed its benchmark of the FTSE AllShare, though admittedly this does depend on which set of data is considered. This move does tend to add some weight to my assertion that consistently outperforming the market is very difficult indeed, something that this AA rated Fund Manager has not achieved with this fund, and remember Mark Lyttleton is one of the better Fund Managers.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

FUNDS: Blackrock – UK Fund Repeating Performance Is Not EasyDominic2017-01-06T14:40:08+00:00