April 2013 - Financial Planning in Wimbledon

We’re Not Broke

There’s a new film out – “We’re Not Broke“. Its along the theme of large, multinational companies basically avoiding paying tax. This has become a pretty big issue and the big four Accountancy firms have been experiencing the wrath of vaguely interested politicians. The truth is that nothing illegal is being done… well, at least in theory, there is nothing “wrong” with arranging finances in a way that minimises tax payments. However, most of us probably question the morality of this. How is it that you and I pay more in income tax than many multi-national companies. Something does not sit right with this does it? or is it just me? If you have followed my blog, you will know that on occasion I get a little pithy and peeved by the way that there appears to be different sets of rules. I am not against people being rich – not at all, that’s not where I’m coming from – but I do think that if you want to operate and trade in Britain, you ought to pay British taxes and vice versa. It is only by paying taxes locally that Governments can eventually figure out that they need to set up better tax regimes, that aren’t based on envy, but on sensible measures. At the moment we have a daft tax system, where middle income (£20,000-£1m – yes that wide) are the ones being squeezed for more. A single rate of tax would, in my opinion be far more sensible and allow financial planners to concentrate of helping people plan their finances, not constantly seek new ways to avoid tax. Tax will continue to feel “unfair” until it is fairly charged to everyone.

Dominic Thomas: Solomons IFA

We’re Not BrokeDominic2023-12-01T12:23:36+00:00

Focus – lessons from Sundance

I’m lucky enough to have fairly easy access to London and as a consequence, some really great stuff. At the weekend I managed to spend time at the Sundance London film festival (which I also attended last year). This is a showcase of independent films, largely brought over from Utah, where the Sundance organisation, set up by Robert Redford is based. The great thing is that you get to meet and hear from people that love making films. Their common trait, forgive the pun, is their focus. There is an unmistakeable sense of “doing the thing they love”. Not simply for those in front of the camera, or whose name you may know, but a real sense of drive and desire to make something that says something of value.

David Arnold, is a successful British composer, who has already built a considerable body of work within the film world. You might know him best for his work on the more recent James Bond movies. Now I enjoy music and listen to a lot of it, but to my shame, I’m not terribly much of an expert when it comes to classical music, despite my father’s operatic background, and my years in the school choir – I’m certainly no composer. So I am in some awe of those that can create music, but I had never seen the process of scoring a film so wonderfully explained. David walked the audience (of which around 50% were composers) through his catalogue and his process. He then demonstrated the various techniques he uses to structure the music to the film and build it layer by layer, whilst all the time being mindful that changes may need to be made due to editing of the film itself. It was fascinating. There was a real sense of his humility in being able to appreciate the contributions of others, whilst also remaining focused on the task at hand – for which he has a clear passion.

Whilst I’m not making music, his explanations and processes resonated with me. When I’m constructing a proper financial plan based upon someone’s values, it is very much a layered approach, with the need for editing and re-working. I like to think that on occasion I really help people find their personal rhythm in their own lives and values, but I’m stretching things. I certainly love what I do and enjoy the creative aspect of my work, but it isn’t really a masterpiece, but I do hope that I’m helping others (my clients) to make a great work of their lives, by really thinking about how they want to live them out…. not your run of the mill financial stuff.

Dominic Thomas: Solomons IFA

Focus – lessons from SundanceDominic2023-12-01T12:23:35+00:00

King to Pawn and seedy money? The Look of Love

Celluloid Reflections: The Look of Love

The Look of Love is a new film that was shown at Sundance London last night. It goes on general release this weekend. The film explores the life of Paul Raymond who at one point was the richest man in England. I’m not really clear who the film is aimed at. Mr Raymond derived his fortune from strip clubs in Soho and pornography, the film is most certainly an “18” and many (perhaps most) will find the admittedly “probably necessary” nudity (given the context) rather excessive. Then again, part of the purpose of the film is to help reveal how our attitudes towards sex have altered over the last 40 years or so. However, it is not a film about sex, nor is it a sex film and whilst it has comedic moments and a plethora of current comedians in the cast (including the lead Steve Coogan) it isn’t much of a comedy either. It is much more of a biopic of a man that “had it all” but actually had nothing, rather more of a tragedy.

The main plot of the story reveals fragile relationships, a deeply dysfunctional family and an inability to draw boundaries. We see a disturbing portrayal of his relationship with his daughter, which at best might be described as “unhelpful” and at worst, deeply irresponsible. There is a sense of self-importance “we’re not normal people” and a disconnection with the reality of real relationships. A long-lost son “managed”, another son bullied and a daughter indulged, who dies of a drug overdose (I’m not giving the plot away – opening scene). A habit that was used, as is often the case, to dull the pain of reality. If the film is even vaguely accurate, Mr Raymond was certainly someone that was very confused about love and relationship. Materially successful, but emotionally bankrupt, I assumed the title of the film ” The Look of Love” is deliberately ironic.

Whilst Paul Raymond’s life may have been somewhat extreme, it is a reminder (not a new one) that few people go to their deathbed, wishing that they had spent more time at the office. To be known is to be human. Money is little more than a tool, it is not real security and it certainly is no compensation for a lack of relationship. A good financial planner doesn’t just point out that you will die one day, but will help prompt you to reflect on what you value and want from life and then build a plan around your values. Being the richest man in Britain is little more than a game, in the end all the kings and pawns go back into the box.

Dominic Thomas: Solomons IFA

King to Pawn and seedy money? The Look of LoveDominic2023-12-01T12:23:34+00:00

Financial “Services” should be renamed Financial Waste

I have been asked the same question a number of times in the last few days from a variety of sources including a financial journalist or two. The question was “What is your biggest business challenge?”. I imagine that I was expected to respond by saying something about the new FCA rules, rising compliance/PI/IT/regulatory costs, a tough economy. Frankly these are insignificant next to the plethora of wasted time and money that most advisers and their staff experience on a daily basis.

It is 2013, technology rules, yet our post bag (invariably delivered only just before lunchtime) is full of rubbish. By way of a few examples from today: a 12-page valuation of a pension that no longer exists, showing a value of £nil. A 4 page letter confirming that funds have finally passed from a pension to an annuity (a one-line email would suffice). A (I cannot be bothered to count them – so guessing 15 pages) note that an income protection policy is due to increase by a couple of quid in June. A wad of paper about a client that has not engaged with us for over a decade about his pension that matured last week (thanks!). We are inundated with “stuff”. Most of which is rubbish. Yet we have to note, scan, rename, file and shred it. Not my job, but largely a waste of time, when the same information could have been emailed or put onto a website for “secure download”.

Despite all the advances of technology, it seems that financial services is awash with paper. Each company is really doing little more than covering its back from perceived threat of compliance breach. So it is at least heartening when a good company actually asks for insight into what might actually be helpful and have the opportunity to discuss what technology will really benefit both advisers and clients, as was the case today at Morningstar. Sadly, this is rarely something that the product providers ever dare to ask, yet I am encouraged to vote for them in another pointless round of awards for service. I don’t really think that many of them have the slightest clue about proper service.

Unfortunately, there are lots of investors out there that also have not had a good service. Clients do leave us (yes its true) but I cannot think of an instance where this was to do with our service, it is normally simply a geographical issue, or perhaps a cost or simply “not getting” what we are all about – the “wrong fit”. So in theory when a client leaves, his or her policy/investment/whatever ought to be taken over by the new local adviser. Often this is not done properly (or at all). Hence ten years later we are still getting copies of “stuff” (which we don’t want). Of course, this could mean that there is not a new adviser, the ex-client hasn’t taken any advice or simply left things “ticking over”. Sadly this is a very costly and wasteful mistake. I find this rather depressing, as we could have made the situation much better for them. In an effort to be helpful and not see the client waste more money, by simply using the annuity provided by the pension company, I write (hopefully to the right address) explaining various options and the importance of getting advice. Call me or find someone local (I will help) – I don’t mind, but don’t ignore it any longer. The sums of the amounts involved aren’t insignificant, OK advice is not free (it never was), but getting the right advice is, well… almost priceless?

Dominic Thomas: Solomons IFA

Financial “Services” should be renamed Financial WasteDominic2023-12-01T12:23:34+00:00

Once Muscial Dreams and Action – Film to Stage

A new musical play has arrived in the West End. Once. This is an adaptation of the 2006 film of the same name, which I first saw a few years ago on DVD and enjoyed which starred Glen Hansard. In a nutshell, set in Dublin, it is a tale of how one broken-hearted musician finds the necessary encouragement to regain inspiration and to follow his heart. It won’t be to everyone’s taste, but I love it (as it seems the critics on Broadway also do). There are some great performances, notably from the Zrinka Cvitešić who is fantastic in her role – though the entire cast provide a great ensemble performance. I wish I was as talented.

Anyway, what has this to do with financial planning? you might ask. Well not a lot, but on the other hand…quite a bit. I won’t spoil the plot by saying that having the funds to launch is a vital ingredient for “success” in this instance. Dreams can often remain little more than dreams without adequate resources – money, determination, encouragement and persistence, something that most entrepreneurs will recognise.

Dublin provides the beating heart metaphor of a connected community seeking guidance to shape and fulfil dreams. As in the play, having the resources is not enough, you have to take action. Great financial planning enables (perhaps for the first time) the ability to express dreams and desires. My role as a planner is to help sift through what is truly important, and what is probably a pipe-dream and then agree a plan, to take action and build towards achieving this. I love stories. I love listening to clients tell me about where they have come from and where they hope to be heading. I help them think creatively and perhaps differently about the future. There’s a part in the play, where the owner of a struggling music shop is encouraged that his part is the life of Dublin is needed. To provide the tools for others. It reminded me of how we are all rather more reliant upon one another than may appear to be the case and the roles that yes, even a bank manager can play. I understand that we get one life, once. So if you want a some inspiration, some great songs and a good yarn, head over to the West End, alternatively a trip to Dublin beckons – or of course your financial planner!

Dominic Thomas: Solomons IFA

Once Muscial Dreams and Action – Film to StageDominic2023-12-01T12:23:33+00:00

Investment Platforms – Trials, Trails and Tribunals

In 2013 most advisers use a platform or a “wrap” as an administration system to buy, sell and switch investments for clients. Today I was at the conference for the leading independent research group that helps advisers identify suitable investment platforms for their clients. In an ideal world, this would be an easy task, but with evolving and lagging technologies, promises (met and unmet) of innovation, complexities of regulation and taxation, it is all rather “involved”. So much so, that I spend a “fair amount” of money on research tools to ensure that we have a really thorough approach to the problem.

Sadly, it is not all about price (the cost of the platform) but an awful lot more. Getting the wrong platform that then decides to pull out of the market as a notable player did relatively recently is more than a “nuisance”. It provides considerable problems. However, it should not be forgotten that a platform (or Wrap) is little more than a tool and one that needs to be workable, providing a good service. In my opinion, the adviser should have no bias between platforms, however clearly there does need to be a sensible selection process – which equally applies to the construction of investment portfolios. Sadly there was yet another reminder that there are still a considerable number of firms lacking processes and failing to treat their own clients fairly. As yours truly ends up picking up the bill for failed IFA firms, I am fairly fed up that this still continues in 2013. Bad financial advisers are not in anyone’s interest – yours or mine.

Dominic Thomas: Solomons IFA

Investment Platforms – Trials, Trails and TribunalsDominic2023-12-01T12:23:33+00:00

End of the Bank Advisers

Financial advice continues to become expensive. Sadly, despite numerous warnings from advisers about the impact of RDR which came into effect from 31 December 2013, the number of advisers continues to fall. This has particularly impacted the main high street banks and building societies. Today AXA announced that they are closing their relationship with Banks, citing the cost of getting advisers to comply with regulations profitably. AXA provide the financial advisory staff in a “restricted advice” form for the Co-Operative, Yorkshire Bank and Clydesdale it is being suggested that this represents about 450 advisers, not a huge number (unless you are one of the 450) but then again there are only around 30,000 advisers of all descriptions and the numbers are reducing all the time. The number of bank advisers appears to have halved in the last 12 months and I am yet to see a clear adviser charging schedule or fee menu from any bank, that doesn’t simply look like a rehashing of their old commissions.

The regulator (the FCA) is in a difficult position, the goal of creating an environment of clearly charged advice appears to have back-fired, with fewer people able to afford good financial planning. It is probably fair to say that most of the “problems” have been created by banks, which seems to be backed up by complaint data yet again (out today as well). I believe that the UK needs good regulation, but this has become increasingly costly and the new levy for my regulatory fees is reported to be rising an extra 15% this year. This is likely to get worse before it gets better as there are fewer firms to pay the regulatory costs.

Many advisers have been pretty scathing about RDR. Whilst I can understand many of their points, the truth is that clients / investors want clear charges and not fudged information. Commission in its various forms does not provide clarity, neither do the charges applied by Fund Managers, where in fact the costs can be considerably higher than the stated annual management charge. I am also rather sad to report that the regulator had very good reason to challenge how advisers were paid, there were lots of products that paid high commission levels and in my opinion this resulted in bad advice. However banning commission was probably not the answer, but a well regulated, level playing field with clients fully informed and the inability for product or provider bias would have been far simpler. Of course, it was possible to be impartial – I was operating in a transparent fee system from the formation of the company in 1999.

Dominic Thomas: Solomons IFA

End of the Bank AdvisersDominic2023-12-01T12:23:32+00:00

A Fresh Start

After a while the April Fool’s jokes became indistinguishable from the real news, which is a rather telling statement to make about the state of the world’s media. One April 1st Bank Holiday story which was not a joke, was that the FSA died and rose again to form the FCA. Whilst we may have celebrated Easter over the weekend, many may not have realised that the UK financial services industry was given a fresh start by a new regulator. Well, I say fresh start, its the same people, working at the same office and I imagine that you can spot the difference in the logo (and a new website).

I for one am hopeful that the FCA will be a force for good, with an ability to stop malpractice in a timely manner so that it does not become contagious and repeating previous experience of the better firms and advisers having to bail out the cowboys (various FSCS/FOS levies running into multiples of £millions). Regulation is not an easy task and it is very easy to have a swipe at the previous incumbents for failing to stop the credit crunch and a vast array of mis-selling. However, we all know that hindsight is very easy to have. What I would hope for from the new FCA is a sense that advice will be clear and not burden investors and clients with mountains of paper. I also hope that the FCA provide good guidance on best practice, rather than choosing to never to endorse anything as “good” and merely punish bad practice. This has approach has left many advisers falling short of good standards, which doesn’t (or didn’t) help consumers.

So whilst I have my reservations and am realistic, I would like to wish the FCA every success in partnering with advisers and investors to create a better, stronger and more transparent financial services here in the UK.

Dominic Thomas: Solomons IFA

A Fresh StartDominic2023-12-01T12:23:32+00:00