10 Things The Olympics Teaches Investors – Part 2

1981: Chariots of Fire – Hudson

#4.Scaling New Heights

Whether you are a pole vaulter or doing the high dive, gravity is a much needed reality here on earth. The saying what goes up must come down, has nothing to do with investment. Markets rise and fall, but do not fall because they rise. Markets are nothing other than a collection of numbers based upon opinion about how much assets are worth today, tomorrow or perhaps some point further into the future.

#5.A Cool Head

The most successful sports people seem to have focus and a cool head (in their field). It doesn’t matter what your sport or discipline, this is a very common observation. The game or event is won in your mind. Financial planning is something that must begin in your mind as well as your bank account. A shift often needs to be made in relation to budgeting and spending wisely. Those that live as though tomorrow will never come only need to look at the problems of continual denial of reality in many European national financial statements. Sure, not everyone lives to retirement age, but most do. Not having resources when you are not able to earn is no laughing matter. Most people spend more on their mobile phone and internet connection than they invest into their own future.

#6.A Supportive Coach

How many athletes or sports people generally can you think of that do not have a coach? Indeed there is often a large team of people around them, providing a variety of vital support to help improve performance and bring out the best in an athlete. Don’t forget the supportive family at home too. Successful people do not “do it alone”. Success, as is perhaps best revealed in the cycling, is a team activity, each having a role to play. A financial planner is much like a coach, helping to provide clarity, focus, experience and encouragement all with the aim of helping you get the results you seek.

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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10 Things The Olympics Teaches Investors – Part 2Dominic2023-12-01T12:22:28+00:00

10 Things The Olympics Teaches Investors – Part 1

1981: Chariots of Fire – Hudson

I’m told that we all like lists, I’m not totally convinced, I suspect that sometimes research can be confused by popularity. Anyway, as it is Olympic season, I wondered if there is anything that investors can learn from the Games.

#1.Planning Is Everything

London 2012 was at least 7 years in the making, but given the preparations for the bid, which was originally won in June 2005, London 2012 did not simply “happen”. Successful investing involves planning for a Specific, Measurable, Achievable, Realistic, Timed (SMART) goal.

#2.Sensible Budgeting

We have all read about the legacy of a badly planned Olympic Games. The event itself becomes bigger than the point behind it. As it is the summer and as a father of two daughters, I am aware that is also the wedding season. The cost of a wedding can be many thousands of pounds. I don’t begrudge the celebration, (I love them) but one has to question the wisdom of spending vast sums of money on the first day of marriage but then failing to invest successfully into it from the second day onwards. All great financial planning makes provision for one off events, but should be based on a long-term perspective and built upon your personal values.

#3.Timing

World records may be smashed in London, the fastest man or woman over 100 metres (which starts on 4th August) is not the same as the one that wins the marathon. Financial planning is more like the marathon (5th and 12th August) than the 100metres. It is about staying the course, endurance, pace and gradually working towards the finish line. Great financial planning has nothing to do with trying to time when you play the game, but is all about how you play the game.

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

10 Things The Olympics Teaches Investors – Part 1Dominic2023-12-01T12:22:28+00:00

Responsible Consumer Education

1943: Stormy Weather – Stone

There is a little bit of a storm brewing over how RDR is being communicated. The regulator, the Financial Services Authority is being accused that to date, little has been done to inform the public about the sweeping changes that will be upon us all from January. In essence the FSA is calling time on the myth that most financial institutions, many advisers and a significant proportion of the UK population have believed – that financial advice is free. Now of course the truth is that nobody really believed this, but behaved as though they did. This is why and how commission became the way that advisers got paid (from the policy). However, forward thinking advisers, clients and financial institutions have been saying for years, that “the Emperor is not wearing any clothes” or to put it bluntly, there is no such thing as free financial advice.

Fay Goddard, head of the Personal Finance Society has a few choice words for the 2 page online leaflet that the FSA issued a few months ago, yet still appear to have communicated little else to the public. She is reported to have said, “It was an insult in the broadest sense in the way it was worded and didn’t recognise the journey many advisers have been on”.

I have to say that I’ve been talking about RDR (as much as I don’t wish to bother you with dull stuff) within this blog since September 2010 nearly 2 years ago. Clients had been advised before this and anyway, we have been effectively a commission free firm since we set up in 1999. I firmly believe that our clients “get it” and it is little more than a minor detail. However for many people, their advisers are struggling to figure out how or what to charge for their advice, which with a little over 5 months to go, does not bode well.

Indeed on the consumer information page of the FSA site, I cannot see anything about RDR today. It seems mainly to be about PPI and Banking. RDR is a massive change. It means that advisers will have to seek a fee from you. This is something that for many will be a sharp wake up call that they will simply not want, yet as far as I can tell, you would have to search for RDR on the site to even know it exists. To save you (the consumer) the bother here is the link that seems very badly promoted. Whilst it is true that there is “nothing” for consumers to do, it is not entirely accurate, as consumers will have to pay a fee. Colin Wilcox, from the regulator has responded to criticism saying that from August “we do have plans to ramp it up from next month and we’re hoping to get a bit more traction within the national media”. Another 2 page document would be a 100% increase.

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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Responsible Consumer EducationDominic2023-12-01T12:22:27+00:00

Olympic Torch Signals The End Of Line For Many Advisers

2012: Consultation Paper 12/16

I spent the early morning in Kingston watching the flotilla and “The Gloriana” bearing the Olympic torch for tonight’s opening ceremony. The final leg of the journey to the opening ceremony is underway. Financial planners have been viewing the Olympics as a benchmark for the changes that are also being brought in from the end of this year. It will not be something that has much ceremony, but marks the end of the myth of free financial advice within the UK. I know that our clients never believed this myth and understood our approach to charge fees way back in 1999, well before Y2K and the Sydney Olympics in 2000.

The London 2012 bid was won back in 2005 when Tony Blair was still Prime Minister. It has involved 7 years of planning. A year later the regulator launched what we call RDR, so advisers have had 6 years to prepare. Like the G4S mess, I’m still somewhat shocked that for people that are meant to be planning finance for others, many adviser firms are not yet ready and will be unable to meet the 31st December 2012 deadline for “RDR”. Remember this is something that we have been ready for (bar a few tweaks) since our formation in 1999. Four Olympics will have come and gone in that time. I admit that it is no small task for commission based firms to change their business model, which for many involves completely changing the way they operate, but there has been ample time to get ready.

One of the obstacles that all adviser firms share is the rising cost of regulation which has risen dramatically. Regular readers of my blog will know that advisers have a very odd compensation system. Essentially bad advice is paid for (compensated) by the FSCS when a advisory firm collapses often because their professional indemnity insurance fails to pay up. Sadly there has been a lot of bad advice, mainly from the main Banks, but not entirely. This has involved selling products that were nothing like “what it said on the tin” (for which I have some sympathy for the advisers) but also some really bad advice too, which I simply fail to understand. The problem is that the rest of us have to pay into the collective bucket to cover this cost, which runs into many millions.

However, the regulator is reviewing how they (we as advisers) fund the FSCS. The Consultation Paper was published yesterday and by inference, input is requested. Some advisers believe that an additional product charge, like a form of insurance (yes insurance on insurance!) is the way forward. I’m not totally convinced by this. My main objection is the spiralling costs and the fact that good advice is effectively punished. To make matters worse, I believe that many firms are lumped together in a category of advice that doesn’t reflect how they work or what they do. Sadly some are suggesting that due to costs alone 30% of advisers will cease to exist within the next year. I think this is likely when combined with the other changes that start from January. So whilst I’m looking forward to the opening ceremony this evening, I’m mindful of the fact that my costs will be rising significantly, that our good advice is punished by the regulatory costs which are shared by a reducing number of firms. It also signals the end of good financial planning advice for most of the public who will simply find the process too expensive – something that we hope is not the same fate of London 2012.

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

Olympic Torch Signals The End Of Line For Many AdvisersDominic2023-12-01T12:22:26+00:00

As With Many New Year Resolution…

The Guernsey Literary Society

Resolution, the company that swallows life insurance companies for breakfast, lunch and dinner, announced last week that they would not be paying £250m back to shareholders. They describe the reason for this decision due to the uncertainty over the capital requirements of one of its many subsidiaries (one of the few working companies – Friends Life). Resolution are currently restructuring their UK life and asset related management sectors in what they call the “UK Life Project”. You may have seen Resolution appear at the centre of a Channel Four Dispatches documentary, which attempted to suggest an unhealthy relationship with HMRC and Guernsey. Sadly the reporting was somewhat confused and left many unanswered questions. I also had sympathy for some of the HMRC Board whose faces were shown in a way that implied that they were also somehow “involved”, which had that been me, I would have been rather livid at the inference. What disappoints though, is the sense that one gets when a Board member of Resolution said there was no tax reason for having the company based in Guernsey, well there may not be at the moment, but the only purpose of going offshore is to defer tax. For goodness sake just be honest about it. By the way, the wonderful Kate Winslet is due to star in a new Kenneth Branagh film based on the book “The Guernsey Literary Society and Potato Peel Pie Society” a bit of a title! The film is scheduled for next year in 2013.

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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As With Many New Year Resolution…Dominic2023-12-01T12:22:26+00:00

Banks Should Make Fewer Promises

2010: A Screaming Man – Haroun

Banks, anyone have anything good to say about them? Nationwide customers had problems with their accounts being double debited, which is not exactly a helpful experience when many people will be enjoying the summer holiday, possibly unaware of the glitch that is playing havoc with their balances. I’m afraid that I have to admit to losing my temper with my own Bank. Like many banks it has “special” accounts although I cannot see the point of most of the additional services except for those relating to identity theft and fraud, which frankly ought to be the responsibility of the Bank not me. Anyway I lost my patience with them having failed to get even the vaguest of useful website access which kept looping around back onto itself, offering the hope of delivering useful information but failing miserably. So I gave up in order to try the telephone service. Considering that this is meant to be “exclusive” (yes, I’m not that naïve) after 5 or 6 minutes of waiting to speak to a human I gave up. Banks cannot even get the very basics of what they do right. Sadly all this really does Is alienate customers, which is a salutary reminder that having an IT system does not replace personal service.

Mind you, I’m fairly sure that some people do get a great service from their Bank. Take Jerry de Missier, the former Chief Operating Officer at Barclays, who is reported to have been able to withdraw £8.75million in cash. He is accused of being one of those involved with the LIBOR rate rigging scandal that seems to engulf more Banks by the day. We all know that there is no such thing as “free banking” but it seems that Adair Turner the current Chairman of the FSA, thinks everyone should pay for current accounts. He is one of the people in the running to become the next Governor of the Bank of England. Meanwhile European shares are on the rise because the European Central Bank or rather Mario Draghi has promised “to do whatever it takes” to support the Euro. Whilst to some this provides much needed confidence, I remain very dubious about anyone that makes such a statement, which smacks of desperation and gives the appearance of having bottomless pockets, which is of course utter nonsense. I would prefer Europeans to restrict their flamboyance to their design and creation of wonderful cars, clothing, food and wine. Perhaps the sudden hot weather in London has gone to my head, but are Banks really this bad?

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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Banks Should Make Fewer PromisesDominic2023-12-01T12:22:25+00:00

Another Bumper Apple Harvest

1967: Thee Bites of the Apple

As Apple seem to be the benchmark in technological coolness, it seems appropriate to keep you posted on their financial numbers too. Yesterday they announced the Q3 results (only Apple could make 30 June mean third quarter). This revealed $35bn revenue for the quarter and a net profit of $8.8bn, which by my maths is a 25% net profit margin. These numbers are an increase on the same period last year.

All those gadgets that we are buying – amounted to 26 million iPhones (up 28%) and 17 million iPads (up 84%). Apple’s original product – the Mac, well they only sold 1 million desktop macs and 3 million portables, an increase of just 2%. Read into that what you will, but my suspicion is that the portable device market is the clear, big winner for Apple. However, this is a market with increasing competition and of course impact of the death of Steve Jobs on the direction and innovation of the company remains to be seen. If you have Quicktime, you can see the presentation here. The lion share of the revenue is derived from the US and Europe. It should also be noted that nearly half of the total revenue was derived from iTunes – some $16.2m.

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

Another Bumper Apple HarvestDominic2023-12-01T12:22:25+00:00

Doctor, Doctor…I Feel Like the BMA Aren’t Listening

1939: The Return of Doctor X

There is more woe for doctors that are members of the BMA. The union organisation had a huge amount of support from its membership who voted overwhelmingly in favour of industrial action due to reforms of the NHS pension scheme. However, the BMA seem to have backed down and decided not to take any action. There are a considerable number of doctors who are now fairly fed up that not only did the BMA get a decisive “yes” in their online vote, but this was also approved at its Annual Representative Meeting. So many doctors are feeling as though they are not being listened to by either the BMA or the Government.

The NHS Pension Scheme is a really good final salary scheme, but it has undergone some serious changes, which mainly result in increased costs for its members, particularly Consultants. There are many of us that are envious of having a scheme like the NHS, but changes to employment terms and conditions is no small matter and many Consultants are paying well over 10% of their income towards the NHS Pension scheme and many are paying 50% tax and some will even get additional tax charges for remaining in the pension, despite this being in their interests to do so. Advice to leave the NHS Pension scheme should be considered very carefully indeed.

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

Doctor, Doctor…I Feel Like the BMA Aren’t ListeningDominic2023-12-01T12:22:24+00:00

A Great Long Term Commitment To Clients

Solomons-financial-advisor-wimbledon-blogger

A great long-term commitment

I’m in the process of trying to design a new brochure for potential new clients. We shall also be upgrading the website and blog. Most clients will appreciate that we have improved our look, feel and functionality considerably over the years and hopefully the effort we put into our material is understood.

Anyway, I’m doing lots of thinking about how we explain why we are different and why we have clients at the centre of what we do (and not simply pay lip service to the idea). However, my experience is that great financial planning has to be experienced rather than discussed or watched. There is always a question of whether or not “marketing” works for small firms. In reality most of our new clients come from existing clients who act as great advocates for us.

Of course our service isn’t right for everyone and I can only work with certain people with specific needs. As our service is deliberately exclusive, it is important that we attract people who want to know the truth about proper lifestyle financial planning and not simply want a financial product to be sorted out. We are seeking to build long-term relationships with our clients on a win-win basis. As you probably know, we work with entrepreneurs, business owners, professional partners, people in the media and performing arts and medical Consultants.

As I went searching for ideas, I came across an amusing little advert by Allan Gray, a South African investment company. They have several adverts which I think convey a sense of what I am trying to communicate. I would welcome your thoughts and input into my deliberations. The advert below was made in 2007.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

A Great Long Term Commitment To ClientsDominic2023-12-01T12:22:24+00:00

Spinning The Records – The Truth About GDP

1939: Tail Spin – Roy Del Ruth

There is further bad news for the Government, which will note the growing criticism that current actions to stimulate the economy do not appear to be working. The ONS data reveals that the UK economy contracted by 0.7% in the second quarter of 2012. This is of course only an estimate, but means that the main way we measure the growth of the UK economy has shrunk for a third successive quarter. This is obviously unwelcome news. However, once again I would like to remind you of how politicians from all sides and our rather lazy media will report this.

Total seasonally adjusted GDP for the UK has data collected since 1948. Then it stood at £276,458m and last year reached £1,437,909m. A big number I’m sure you will agree. Remember that GDP naturally rises due to inflation (or should do). If I were to reveal that GDP reached its highest point in 2007 before the credit crunch, this may help provide a fuller picture.

We don’t know yet how 2012 will end, but if things remain as they I estimate a figure of £1,428,328, which would be better than 2010 and 2009 but not quite as good as last year £1,437,909. This would represent a decline in GDP by 0.66% against last year. I would remind you, not that you need it, that the crisis in Europe and world economies is probably the most serious in living memory. For the record, the top ten largest actual quarterly falls in GDP were as follows:

1958 Q2 -2.5%

1974 Q1 -2.4%

1979 Q3 -2.3%

2008 Q4 -2.1%

1980 Q2 -1.8%

2008 Q3 -1.8%

1975 Q2 -1.6%

2009 Q1 -1.5%

1975 Q4 -1.2%

The latest figures are the 22nd worst out of a possible 230 recorded. Negative or no growth is recorded in 51 of the 230 quarters. That’s about 22% of occasions. Growth under 1% is recorded in 101 quarters (44% of the time) and growth of 1% or more is recorded on 78 quarters 34% of the time. You may be interested to also know that there has been only one incident of quarterly growth of 2% or more in the last 33 years (since 1979), which was in Q3 of 1987 when 2.4% was recorded.

Whilst the media may talk of this as the worst economic data since the wheel, five successive negative quarterly periods were “achieved” from 1990 Q3- 1991 Q3 and again from 2008 Q2- 2009 Q2. The latest media feeding frenzy that this is news of a third consecutive negative quarter also occurred in 1973 Q3-1974 Q1 and 1980 Q1-Q3, and only just avoided 1974-1975. The uncomfortable truth is that we have not really recovered from the credit crunch, which anyone with a pulse knows. Certainly things are not good economically, but the way information is presented is not exactly helpful. Of course a reality check will not prevent the markets from behaving foolishly, but frankly in the short-term that is pretty much all we expect anyway. The wise proceed with caution.

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

Spinning The Records – The Truth About GDPDominic2023-12-01T12:22:23+00:00