A Re-telling of Raiders and a Lost Arck

1981: Raiders of the Lost Ark – Spielberg
I have been reflecting on the difference between fairness and justice and realise that the two are completely different. Hot on the tracks of my share of a £60m bill for the failings of others, there is further news about yet another firm collapsing and as a result likely that further bills will keep arriving for me and many other financial advisers. This time is involves a SIPP provider (HD SIPP) an investment property firm called Arck LLP, an investment called Sustainable Agroenergy Plc and a couple of firms called Sustainable Wealth Investments (UK) Ltd and Sustainable Growth Group (UK) Ltd – ironically named.
The Serious Fraud Office has appointed administrators for the above, which have clearly been found wanting by the SFO. This relates to a so-called green investment fund based on tree plantations in South-East Asia (surely not the setting of the opening sequence to the Indiana Jones film?) and linked to foreign property investments held within a SIPP. I imagine the worst – perhaps that there is a foreign bank involved somewhere and a number of investors promised guaranteed returns. Perhaps this may even involve scams about pension cash liberation, it certainly has all the grubby hallmarks of one. I don’t know the detail and of course innocent until proven guilty, but I can tell you that I get emails every day offering high commissions (very high) for getting investors into these sorts of arrangements. However, quite apart from the fact that I work on a fee basis anyway, these are almost always “too good to be true” and are based on the most flimsy of information. Sadly there are still many “advisers” that will recommend this sort of rubbish, even the most basic of research should have revealed some problems. Here is the most basic financial planning principle of them all. If it seems to good to be true, it almost certainly, almost always is (i.e.not true). Here is also a helpful link to the SFO’s current known scams.
If you know anyone that may have got involved with any of these companies, here is a link that will be helpful. Sadly this is likely to mean yet another large compensation levy for yours truly, despite never even entertaining the notion of arranging these sorts of investments.
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
A Re-telling of Raiders and a Lost Arck2017-01-06T14:40:06+00:00

It Seems That The Buck Stops Here…(when nobody else takes responsibility)

2006: Notes on a Scandal – Richard Eyre
You may recall that on Thursday 15th March 2012 I posted a that I was groaning about my share of a £60m bill from the FSCS.Well today it arrived (gulp!). This is all due to an American derivatives stockbroker firm, MF Global going bust and their clients requiring compensation. This is simply yet another collapse of a firm that yet again has little if anything to do with real or proper financial advisers, yet it is the IFA and Financial Planning community that are picking up the collective bill from the FSCS.
Rommel Pereira, the FSCS Director of Central Services writes “In the past year the volume and value of investment claims coming to the FSCS has exceeded our previous assumptions. The increase has partly been driven by on-going costs for Keydata Investment Services Ltd and Wills & Co. FSCS has made more decisions on Keydata claims than previously predicted with a higher average compensation payment than earlier claims. There have also been two new failures in CF Arch Cru and MF Global…..We appreciate that the interim levy will not be welcome news for firms in the Investment Intermediaries sub-class, but we have a duty to compensate consumers with eligible claims. We sympathise with firms about the unpredictability of compensation costs but funding is required to cover the costs of compensation until the next levy is raises and becomes available in July.”
This comes with an invoice and 30 days to pay from the date of the invoice or face a set of late payment charges and interest blah,blah,blah…(standard notice) and another (the full proper, big bill, arrives in less than 4 months time).
Look, I know we need a decent compensation system so that when firms mess up deliberately, investors are not left simply being ripped off. However, isn’t there a degree of mutual responsibility that is meant to happen? such as the investor reading the material and deciding that based on the information, relationship and so on, that the investment is worth taking a risk with. Similarly the adviser should be doing relevant due diligence on products before recommending them. Auditors (PWC in the case of MF Global) should be checking the truthfulness and accuracy of any product literature and finally the regulator should be checking that the product is well run and managed properly and those that are arranging it/selling it do so with all the proper caveats?
Yet how on earth do I get billed for the messes that the above clearly failed on? where I have done my part of the job and avoided this rubbish like the plague!  This on the day when many of us will also be pondering how the cost of a second class stamp can really be 50p (a 38.8% increase! and 30% increase for a first class stamp at 60p) oh well at least the FSCS enclosed a freepost envelope! I wonder what your thoughts are and if you would care to let me know. I know I am sounding rather like a bleating sheep, but does it seem fair to you?
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
It Seems That The Buck Stops Here…(when nobody else takes responsibility)2017-01-06T14:40:06+00:00

Cash ISA Rates – No Strings Attached

2011: No Strings Attached – Ivan Reitman
I have had a reasonable number of emails and discussions about Cash ISAs of late. So I will stick my neck out and say I have a favourite Cash ISA (ING). Its not on this list – which is a list of “top rates” but frankly a bit of digging into most of them and you find an “if”, “but”, “maybe” and a string or two. You should always check the detail (as I drone on with each of these posts) and don’t forget to ensure you understand the availability of compensation (if the Bank collapses) covered by the FSCS.
Instant Access
Comment: I like all of these and the rates are almost as good if not better than variable rate Cash ISAs (which are untaxed) which has its own story. I like Virgin – I believe the hype that they try to do a better job than others in a fairly poor industry sector. Building Societies tend to have a deeper place in my heart than a Bank and both Coventry and Manchester are Building Societies. The Coventry account has an inflated rate for the first year (extra 1.15%) and actually you can only make 4 penalty free withdrawals a year. Manchester BS similarly actually provides 3 penalty free withdrawals.
Cash ISA Variable Rate
Comment: An alternative to these, is ING at 3.00% and its a great online account.As a Bank this is one of the best rates and its a fairly staright-forward application process. You may also wish to consider M&S Money.
Cash ISA Fixed Rate
Comment: Remember that with fixed rates comes reduced access (or loss of interest). By fixing a rate of interest for a relatively long time, you are taking a fairly big bet on where interest rates are going. You will recall that today they are at rock bottom, having been there for 3 years.
Today I have not put information about the One or Two Year deposit accounts. Having spent a bit more time digging around the data that Moneyfacts pulls up you really do need to read it carefully to ensure you are getting what you asked for. Remember this is not advice, its a list of rates.
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
Cash ISA Rates – No Strings Attached2017-01-06T14:40:06+00:00

Banks Make Taking a Punt Harder

2012: Safe House – Espinosa
One of your largest financial outlays is probably going to be your mortgage. Good financial planning will ensure that this is repaid efficiently and as sensibly as possible. For all the jargon (and there is a lot) there are really only two types of mortgage. A repayment mortgage (you repay the mortgage over the life of the mortgage – typically 25 years). An interest only mortgage (you simply pay the interest charged on a mortgage and at the end of the mortgage must come up with the money to clear the original mortgage (which won’t have decreased unless you have paid part of it off already). Not rocket science, though the way that the mortgage world works with 101 variables of these two versions, you could be forgiven for thinking it wasn’t really as simple as all that – but it is.
As a financial planner, an interest only mortgage can be a good way for clients to run their mortgage. It is not for everyone. It involves risk – that you might not have enough to pay back the loan. Historically this is an area of financial advice that has come with all sorts of problems – remember endowments? this was really just a long-term savings plan to build up money to pay off an interest-only mortgage, nothing more. Sadly most were, technical word, “rubbish” and didn’t or won’t clear the original target. However this doesn’t mean that interest only mortgages are bad. They certainly are more risky and when its your home, frankly few would want to risk a home.
Lenders have been gradually altering the terms under which they will now offer an interest-only mortgage, as directed by the FSA they have come to the conclusion that a repayment mortgage is better. I agree with this, but there are still reasons for some to use an interest-only mortgage. It is a little bit silly to assume one size fits all. Anyhow, Skipton has followed a number of other lenders by increasing the equity/deposit element of a mortgage for interest-only mortgages. Skipton now want a minimum of  a 40% equity/deposit, Nationwide want 50% as does Coventry. Santander and NatWest are fairly keen to have larger deposit/equity stakes too. So what? well not much of an impact really unless you are using an interest-only mortgage and want to move to another lender. At Solomon’s we don’t arrange mortgages, so we refer clients to expert mortgage brokers. The most important element of a mortgage is that it is properly planned, that it is affordable and appropriate provision is made should life not work out as planned – you don’t want to be left holding a larger IOU to a lender without any resources to pay. As ever caveat emptor!
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
Banks Make Taking a Punt Harder2017-01-06T14:40:06+00:00

So You Want to Understand Your Personal Allowances?

1949: Any Number Can Play – LeRoy
Sadly I have not mastered a way to put a graphic into this blog – which would help enormously to portray what really happens to personal allowances and rates of income tax. This is for everyone under 65 – sorry I know many of my clients are over 65, but the Government are intending to scrap the age allowance anyway and this is really a post about the mechanics of tax.
Now (2011/12)
Personal Allowance £7,475 = 0% tax
The next £35,000 (total income up to £42,475) = 20%
The next £57,525 (total income up to £100,000) = 40%
The next £14,950 (total income up to £114,950) = 60%
The next £35,050 (total income up to £150,000) = 40%
Everything above £150,000 = 50% 
New Tax Year (2012/13)
Personal Allowance £8,105 = 0% tax
The next £34,370 (total income up to £42,475) = 20%
The next £57,525 (total income up to £100,000) = 40%
The next £16,210 (total income up to £116,250) = 60%
The next £33,750 (total income up to £150,000) = 40%
Everything above £150,000 = 50%
Personal Allowance £9,205 = 0% tax
The next  £32,245 (total income up to £41,450) = 20%
The next  £58,550 (total income up to £100,000) = 40%
The next £18,410 (total income up to £118,410) = 60%
The next £31,590 (total income up to £150,000) = 40%
Everything above £150,000 = 45%
So if you follow this (well done!) the amount of income you need to earn before paying 40% tax is falling (from £42,475 to £41,450). Let’s do a worked example. Suppose you earn £160,000 a year and your income remains fixed.
2011/12 the actual tax (excluding any National Insurance) would be £58,000, in 2012/13 £58,126 and in 2013/14 £58,051. This is what I mean by moving the goalposts – the reality is that you end up about the same (in this example), even though at first reading it looks as though you may be a bit better off as the personal allowance has risen.
Suppose you earn £65,000 well this tax year you would pay tax of £14,010, in 2012/13 you would pay £13,884 and in 2013/14 you would pay £13,869. Not exactly massive sums, which is the point, because the Chancellor/Government/Country cannot really afford to reduce tax in the current climate, at least not for those who are generally 40% taxpayers.
This is not a political statement, its simple fact (all Chancellors play this game because they are head of the Treasury, which is a Civil Service department). Its also true that we do have a 60% rate of tax (effectively) as well as the 50%, but this only applies to those caught earning a bit above £100,000.
Of course a good financial planner will know how to help you reduce your tax liability legitimately, but tax is only an aspect of financial planning, not the main purpose.
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
So You Want to Understand Your Personal Allowances?2017-01-06T14:40:06+00:00

The Day After The Budget

1940: Blondie on a Budget – Strayer
It has been a manic few days. There was the endless speculation in the media about what the Budget would contain, then the Budget itself and today further speculation tempered by some analysis. The reality is that you and I can do nothing about what is in the Budget, all we can do is reflect, understand and where necessary make adjustments to your financial planning.
So what is the big news? well probably the gradual phasing out of the Age Allowance. This is probably welcome by most that understand it, though it would seem that a number of politicians and media journalists do not. The age allowance is currently complex in application – extra personal allowances for those over the age of 65, but these are gradually reduced once income is above £24,000 by 50p for every £1 over £24,000. Good financial planning uses allowances for those caught within this income range so that they don’t lose allowances (another good reason for ISAs) but those with larger incomes frankly tend to have their personal allowances reduced to the standard levels for all. As you will have gathered we are all having the standard personal allowance increased. I say all, but what I really mean is those earning under £100,000.
The tax tier system continues to be smoke and mirrors – pretty much standard diet to all Chancellors that I have known in my lifetime. Yes it is the case that the personal allowance (income you can earn before paying tax) is rising towards £10,000 – but then the amount of income that you pay 40% is increasing. This is a classic moving the goalpost technique. I will put a separate post about this.
The scrapping of Child Benefit has been altered, thankfully some common sense has prevailed and a few more sums have been done. Its a shame that the Chancellor couldn’t simply say that he got it wrong and amended his plan, but there you go.
Corporation tax rates are being reduced – so very good for those running Limited or Plc businesses, such as Ken Livingstone. However for most people this is probably of little interest, for those attempting to do some tax planning, the option of becoming a Ltd company may now be more appealing than self-employed as a partnership or sole trader.
The 50p rate of income tax is being reduced to 45p – but this is hardly news due to all the leaks that pre-empted much of the Budget itself. This is one of those “depend which side you sit on” issues. You will either see this as help to indicate that UKplc is no longer the highest taxed country in Europe and so “open for business” or you will see it as a backhander to the rich. It is of course both.
Pensions were not attacked, but reliefs (excluding those to pensions, VCT and EIS) so mainly capital gains losses and large charitable donations are to be restricted to £50,000 or 25% of income, whichever is the greater. This prevents very large losses deliberately realised in order to pay little or no income tax.
I’m sure you are already bored to death by the annual silly schoolboy behaviour of MPs that we witness each year and the attempt to make a donkey look like a horse. Sadly, little radical reform, much of the Budget is welcome, but the proof of the pudding…
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
The Day After The Budget2017-01-06T14:40:06+00:00

Transparent Tax System? Fact or Fiction?

1960: The Amazing Transparent Man
As a financial planner, one of the most significant issues that I have to deal with is taxation. I’m no Accountant (I believe in allowing people to specialise in what they are good at) but I have to deal with various aspects of the tax system that can be a frustrating exercise. At the moment we are counting down the days until the end of the tax year, which is always the same. We are helping clients ensure that proper allowances are used, capital gains are triggered  and so forth. Tax is essentially an emotive and highly political issue. In many ways it is voluntary, in that it is possible to arrange your affairs so that you pay hardly any tax (if any). This inevitably carries some problems – such as residing outside of the UK for a set number of days each year and a huge array of legitimate tax avoidance measures. However, there is a sense of civic duty in paying tax – to pay for our roads, hospitals, welfare system and so on. Most of us would probably think that we pay too much tax.
The Government is planning to provide taxpayers with an annual statement of how their tax was spent. The idea being that this will show how much tax you paid and how this was used. Whilst I support a clear, no-nonsense approach to public finances, I have to say that I have concerns about this initiative. For starters, it only considers direct tax (income tax) it does not include indirect taxes like VAT, excise duty, TV licenses, Road Fund tax, Council Tax. Neither does it include other taxes that are paid by businesses – employers National Insurance, corporation tax etc, not even capital gains tax or tax on investments (tax on dividends). So the data is considerably flawed. It also has a potential to mislead, your tax may well pay for schools and so forth, but the way this is funded is not directly down to you and neither is it your choice. Some might look at their tax and believe that they don’t pay enough to this or too much to that – though tax is not selective. Importantly it does not make allowance for the spending that is done on “our behalf” that is not met by taxes, but by the Government borrowing money (which is why we are in a mess and having cuts). So if the statement was for UK plc I would be happy to support it, but it won’t be. There are too many vested interests in keeping the tax system murky and frankly overly complex. I regret that this will merely become a tool for any politician, whatever their view, to support arguments based on flimsy information. As ever, the truth can be hidden in the numbers. As suggested before in this blog, I am an advocate of a full in-depth reformation of the tax system, aligning taxes, so that there aren’t differentials between the actual amounts and rates of tax paid depending on whether you pay tax as a business, investor, entrepreneur, retired person, on welfare, employee, employer or self-employed, where it does not pay to “hide” wealth and everyone contributes equally (which does not mean the same). Now that would be fair and radical, but highly unlikely.
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
Transparent Tax System? Fact or Fiction?2017-01-06T14:40:06+00:00

Women of the World… Take Cover!

1944: Cover Girl – Charles Vidor
Today it seems that some men have taken a backward step in time to an age when women had few freedoms and many suffered at the hands of abusive husbands. Sadly there is still some distance to travel for many men who are unable to move beyond thuggery. I’m not going to waste further time commenting about some rather idiotic and sadly revealing statements by a well known British actor, but instead focus on the fact that European legislation about gender equalisation (yes there really is such a thing) is due to impact British shores in a variety of ways. Ultimately this will mean that for various types of insurance women will be asked to pay rather more for cover. Rather than reflecting a lower statistical likelihood (which is how the actuarial system works) we are moving to a set of criteria that must not consider gender in relation to risk. This is a double edged sword and one that most people will not really appreciate until its too late. In short, time is now running out before the new legislation comes into effect, conveniently just before Christmas. This is certainly one gift that neither men or women will welcome.
Great financial planning will gradually reduce the need for insurance (as you build wealth and reduce debt) so it makes a lot of sense to review your progress. Some types of cover increase each year to keep the cover broadly in-line with inflation (which has now fallen to 3.4% here in the UK), some policies are re-priced every 10 years and then perhaps every 5 years – depending on the contract. So it is worth checking if you even need cover and if so whether you have the right type at the best price. This will all come from a proper financial plan, identifying what you need to achieve your goals and what risks you are happy to neglect and which you wish to insure.
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
Women of the World… Take Cover!2017-01-06T14:40:06+00:00

Cash ISA Rates – Strictly Ballroom?

1989: Tango and Cash – Konchalovskiy
A number of clients have been asking about deposit rates and which is the best Cash ISA. I’ve updated the list here, remember that this is not advice, just a list of some of the top rates. Please note that one of the Bank tricks is to entice with a short-term higher rate (a bonus rate) and often this would be withdrawn if you move money away. Also note that sometimes a higher rate may be payable as a bonus, but effectively turns a variable rate account into a fixed rate because of the need to hold the funds for a fixed period of time to receive the bonus. Yes, clarity is one of those things lacking in the marketing of interest rates. It shouldn’t be permitted. Banks tend to lead customers on a merry dance and few people would disagree with the sense that they’ve been tangoed, nothing strictly ballroom about the rules of marketing it seems. Remember to check the details, also remember the compensation limits of £85,000 per account owner per Banking License (not necessarily per Bank).
Instant Access
Online: Coventry 3.15%
Bank: Virgin Money: 2.85%
Building Society: Nottingham 3.25%
One Year Deposit
Online: United National Bank 3.30%
Bank: Santander 4.20%
Building Society: Leeds 4.51%
Two Year Deposit
Online: Nottingham 3.85%
Bank: Halifax 3.70%
Building Society: Progressive 3.75%
Cash ISA Variable Rate
Online: Santander 4.00%
Bank: Barclays: 3.05%
Building Society: 3.10%
Cash ISA Fixed Rate
Online: NatWest 4.20%
Bank: Halifax 4.50%
Building Society: Barnsley 5.00%
I would advise checking Moneyfacts, who provide a free online service to check rates. Have a good look at the detail. Remember though that the effort involved in moving an account may be somewhat overstated when rates are so dreadfully low. As ever, caveat emptor.
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
Cash ISA Rates – Strictly Ballroom?2017-01-06T14:40:07+00:00

Sorry, I’m Going to Groan..about a £60m bill

1966: Carry on Cowboy – Gerald Thomas
Financial Planning carries with it some really rather daft issues. As a firm of regulated financial planners, we are subject to the rules of the FSA and the laws of the land. Unfortunately some “advisers” decide to  break these, but then these people would probably rip off anyone. Others might simply be careless or reckless with investments. You may recall that some months ago I blogged about MF Global – well yesterday the sting was delivered to yours truly. Investment advisers have been handed an extra bill of £60m from the FSCS as yet another “interim levy” to cover the  collapse of this company. The FSCS have been inundated with claims, so far £27m this year as a result of MF Global.
Why am I moaning? well frankly MF Global are not financial planners. They are or rather were, stockbrokers. This is yet another case of an organisation classified by the powers that be as an IFA firm, when the practical day to day reality is completely different. My slice of the £60m bill will be heading over to my office at some point over the next couple of weeks – I can scarcely contain my excitement! I don’t want to bother you with the mechanics of the financial services industry, but changes (RDR) are coming from January which mainly means that advisers have to be qualified and charge fees rather than commission (finally catching up with us… since 1999) as a result it is estimated that 25% of the current advisers will retire. This results in fewer firms and therefore larger bills for this sort of thing – which ultimately will end up… well where do you imagine? Sadly I do not believe for a moment that the new rules will prevent cowboys from being cowboys and the system seems to be very broken from my perspective. The punishment for bad advice ultimately ends up with good advisers paying for it, which is a bill inevitably shared by clients.
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
Sorry, I’m Going to Groan..about a £60m bill2017-01-06T14:40:07+00:00
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