Why do I loathe Trick or Treat?

So its Halloween, the silly scary night. I’m not a fan, in fact I loathe Trick or Treat, largely because in reality this is a hugely commercialised North American event and adds more pressure to parents to “conform” to social pressures. If you don’t participate then you are a bit of a killjoy.. right? there’s something of party-pooper if you don’t join in. Well… I’m past caring. Yes I know for some its just a bit of silly fun, but I still find the entire “trick or treat” somewhat disturbing. It seems that despite all the parenting and citizenship education, we seem quite willing to allow our children to knock on the doors of strangers with a dialogue of extortion to occur on this night each year (ok set aside the politicians, bankers, journalists, financial advisers, police… and anyone else that has at some point been lumped together with unethical “professional” practice who clearly have an all year round the clock approach). Where are calls for individuality and cultural identity when we simply adopt an American one? (to be clear I am not anti-American, I am just not American).

Intimidation is the opposite of co-operation

Trick or treat is essentially open season for intimidation. Obviously for a group of very small children accompanied by adults it’s not such a big deal, but then again….we didn’t send invitations to be door-stepped. Let alone the brazen inference – give me something or I’ll do something that you will have to clean up. Is this the good role model that we suggested we set for children? Is it any wonder young people are confused by our double standards and ability to live them? Look I know its meant to be just a bit of fun, (though based on some very weird stuff) so why not just have a private party? The prospect of several people turning up at the doorstep of say a nervous individual over the age of 80, dressed in a manner that prevents any identification, demanding stuff is rather bizarre. My doorstep – well I’m over 6 feet tall so I’m generally more intimidating that intimidated… but that’s hardly the point.

Taking the pumpkin

I guess I struggle to see the value or purpose in Halloween (Trick or Treat in particular) other than yet another attempt to part people from their money, (about a week before Bonfire night and 7 before Christmas) most of whom have far more important priorities for it, yet we are coerced into stumping up cash which invariably goes straight into the pockets of profiteers. In all other aspects of life, including finance, we would all decry attempts to hide identities and demand things at the threat of “mischief”. If the pumpkin is a warning of anything it should be a warning that we can turn something good (vegetable.. or fill in the blank) into something much more sinister if we simply conform to the crowd.

As ever, happy to listen to alternative points of view and I do recognise that some cultural celebrations get lost in translation.

Dominic Thomas: Solomons IFA

Why do I loathe Trick or Treat?Dominic2023-12-01T12:38:34+00:00

What’s the row over pension charges now?

You may have been listening to Radio 4 or perhaps seen the TV news, Steve Webb the pensions Minister is doing the media rounds having announced that charges on pensions should be capped at 0.75% which he announced yesterday and has been plugging his cause since. There is no doubt that there are many very expensive pensions and I would go as far to say that there have been lots of “rip off” pensions. There are too many vested interests, this has broken out in a row over pension charges.

Is there any such thing as a free lunch?

We now have various think tanks and Providers all taking the opportunity to price to the bottom and distance themselves from “rip off pensions” as quickly as possible. An assortment of spurious views about the impact on the final value of a pension fund is now doing the rounds. The vast majority of this is utter drivel. We are all to blame for this (advisers, providers, investors, regulators and Governments) why? Well because over the years we have colluded in the deceit that anything to do with financial services is free. It isn’t. I had hoped that this delusion would have been put to bed by the introduction of RDR, yet AE (auto enrolment) exposes the deep resistance to a shift in mindset.

Can a pension have low charges?

It is perfectly possible to use a pension that has low investment charges and by low I mean less than 0.30%. However this is merely one element of the piece. The administration costs are high due to well intentioned regulation. The “sales costs” are high due to well intended regulation. The regulation is designed to protect the investor and the wider market.

Why does AE have unique charging problems?

The unique problem that AE brings is that there are some very tiny premiums. Suppose you earn £10,000 a year and in several years time you will have contributions of 8% a year (£800) a cap of 0.75% on this would be £6… ok its based on the value of your fund, but given that most will not be more than £4,000 that’s £30 to cover the investment and administration for the year (and by the way you can opt in and out, switch funds, vary the payments creating more administration). It’s a nightmare for pension providers. Some have come up with some low cost solutions (hardly any investment choice) and some have a fixed monthly fee. Well even at £1.50 a month (£18 a year) that’s a higher proportional charge on a small fund of £1,000 (1.80% to be precise). The Government backed (taxpayer funded) NEST is loss making and will be for many years. This is typical of Whitehall delusion that they then expect commercial enterprise to replicate. We all know Governments are not good at maths… don’t we?

The solution is right under their noses

Stakeholder pensions (with low charges) failed because there were other better alternatives at a lesser or more competitive price. The Government (this one and the previous one) believe compulsory membership isn’t quite ok, so we have a “difficult not to join” approach. However, I would argue that today employers and employees already have a proper pension system. It’s called National Insurance and the State pension. We know it’s not good enough, so why not simply make it better for everyone? It has no investment risk and is already set up. For those that want (and need) more than the State pension (most of us) then there are plenty of very good pensions around, any decent adviser can structure a sensible plan – but it is not free… neither should it be. If we want to create a society of that is independent of the State, we all need to face some adult truths.

Dominic Thomas: Solomons IFA

What’s the row over pension charges now?Dominic2023-12-01T12:38:33+00:00

Does social media take life and death seriously?

The storm (or lack of) depending on your experience of it generated some interesting insights into the way we express our views. Many experienced no loss or damage, some had damage to property and a small number of people lost their lives. There were many that expressed fairly widespread sentiments that the storm was not really that much of a storm – when we compare it to 1987 or indeed other storms around the world. Whether these views were expressed well or poorly, there were a number of people that pointed out that making light of the storm was inappropriate given that some people had died.

Death is a natural part of life

Certainly an unexpected sudden death is a terrible experience for the family and friends of the person that died and anyone that has experienced such a loss would not want it to be taken lightly or dismissed as irrelevant. However, I wonder if chastisements for comments about a storm are really well founded. It seemed to me that we are in danger of policing comments for fear of offending anyone at all. Death is a part of life, we all know this, but few of us live as though this is a daily reality and normal.

Have you heard about the other 1% of society?

The UK population is now estimated at 63.7million by the ONS. The death statistics (sorry I couldn’t think of a nicer term) for the UK were last published to the end of 2010. This revealed that the number of people that died in 2010 was only 1.1% of the population, of which 58% were male and 42% female. Bringing this marginally up to date, 1.1% of 63.7m people is 700,700 people a year, or to put it another way, that’s 1,920 people a day (1,114 males, 806 females) each day, every day (on average). Of course the bulk of these are aged 80 or more, but there is a reasonable difference between males and females. For more women die at an older age, or to put it another way, females live longer. In 2010 nearly 85% of male deaths were aged 60+ but 91% of female deaths. This is primarily because far more men die between the ages of 35-59 than women (12.1% opposed to 7.4%). So back to our figures of averages on a typical day, irrespective of media coverage of mass shootings, crashes, natural disasters, the law of averages in the UK suggests the following will happen today and each day.

Age Range	Males	Females
Under 15	11	5
15-34	22	7
35-59	135	60
60-79	464	234
80+	482	500

I am not suggesting that these figures could not alter, but death is not a question of if, but of when. It is as natural as life itself. As a progressive society we do our best not to hasten life or take it, but death is ever present. Some will read this as a rather depressing insight… but an alternative view might lead to taking the opportunities that life affords today and living it fully. In reality these are nothing more than statistics and of course each life should be cherished,we are all more than a number. For the bean counters of you… there is a death in the UK every 45 seconds…how long did it take you to read this piece?

Dominic Thomas: Solomons IFA

Does social media take life and death seriously?Dominic2023-12-01T12:38:33+00:00

Blue pill or red? time to decide about The Four Horsemen..

Solomons-financial-advisor-wimbledon-blogger

The Four Horsemen

Having recently seen The Renegade Economist film “Four Horsemen” I’m reminded of the moment in the film “The Matrix” where the character Morpheus says “This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes”. So at the risk of sounding like Morpheus, I’m giving you an opt out, right now. However if you’d like to be exposed to some alternative explanations of how the world works today, why you cannot actually buy the house you now live in and perhaps why you are feeling somewhat fed up with the amount of tax you pay, then perhaps I could encourage you to order or download this film.

Classical Capitalism v Neo Capitalism (not Marxism)

Contrary to some of the press that the film has received (it is a documentary) it is not an irrelevant rant by a bunch of Marxists. Indeed, it seems that anyone with a difference of opinion is currently branded a Marxist at the moment. This film is not anti-capitalism, it is about the form of capitalism that we currently live with. There can be few on planet earth that at some point are not prone to question why there are such huge paradoxes, vast amounts of wasted food and yet there are millions that go to bed hungry and starving. What has this to do with financial planning in Wimbledon? Well the film is engaging and inspirational. Financial planning is about creating the life you want, whilst enjoying and really living it today, this is an optimistic message and approach to life.

Eloi and Morlocks, sleepwalking into debt

I don’t know how much of what is said is true or accurate, but it makes interesting points. I am not a conspiracy theorist, I am a capitalist, yet I do believe that unbridled capitalism is gradually enslaving us all to debt, be it nationally, personally, socially or environmentally… dare I even say… spiritually? You will know that I place a great deal of emphasis in clearing personal debt, including mortgages. This is a slavery that we seem to be walking into in a trance-like, perhaps numb… state… rather like the scene from the 1960 film “The Time Machine” when the Eloi are summoned and enter the domain of the Morlocks. We don’t have the advantage of a time machine, though we do have the advantage of the lessons from history and our own minds. As ever, I welcome the conversation and debate.

So here’s the trailer… its up to you… blue pill or red? over to you..

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

Blue pill or red? time to decide about The Four Horsemen..Dominic2023-12-01T12:38:32+00:00

Did you enjoy Le Weekend?

Something for Le Weekend?

I am glad to report that I returned home safely last night, ahead of the then impending storm but still somewhat perplexed at the speeds some drive in heavy rain along the M4. I hope that you had a good weekend, mine was spent with good friends in my old home town of Bath and was reminded yet again of the immeasurable wealth that friends provide in life. I also had a moment to watch a new film “Le Weekend” a story about an older couple, who return to Paris to celebrate their 30^th wedding anniversary.

Honesty and Avoidance

I have to say that whilst there were many good moments in the film, I didn’t really “get it”. This, it seemed, was a couple near to retirement, who were worn down by life’s disappointments. Their marriage is in crisis as they navigate the “empty nest syndrome”, but still manage to hold the relationship together with some tenderness and honesty… just. This is a common experience of course. Theirs seemed exaggerated, rather than an opportunity to reflect and determine the next course for their lives from the wide menu on offer… much like the indecision or disagreement about where they will literally eat their next course. This was more of an adolescent tantrum, displaying their folly in a single weekend that had presumably accompanied them on the previous 30 years and many poor decisions or at least their denial of reality and a possible sad last gasp for adrenalin, now a distant memory in their relationship.

Setting your own agenda or determined by others?

I often encourage clients to take a weekend break (or longer) to figure out what they really want from life and each other so that we can build a plan around what they really want, not what they think they should want. This isn’t a quick process and can take significant time, but it is a vital element of a good financial plan. However, this couple, wonderfully played by Jim Broadbent and Lindsay Duncan, have deep disappointment, which neither of them properly discuss together, despite their apparent honesty and a life spent educating others about the meaning of life. There is little or no attempt to reflect how things might change…how they might be. They have a “needy son” who is described in impoverished terms, yet seems to be merely a reflection of their own inability to attend to what is important. They are profligate with what little they have, deliberately avoiding responsibility for their actions, culminating in their own dependency on an old friend (Jeff Goldblum), for whom Meg and Nick appear to have little real regard. It wasn’t the ending that I was expecting, but precisely the scenario that I help clients to avoid as they plan for their future, however long and whatever it looks like, but based upon their own values and objectives, not simply keeping up with the Blairs…as they do when they take on a “whatever it costs” luxury suite in a luxury Parisian hotel “once rented by the Blairs”. The thing is, “whatever it costs” has rather more to do with honest reflection than the ability to pay the price tag.

Le Weekend is now on general release. Here’s the official trailer.

Dominic Thomas: Solomons IFA

Did you enjoy Le Weekend?Dominic2023-12-01T12:38:31+00:00

What Is Evidence Based Investing?

What is evidence based investing? in short it is the use of data and mathematical formula to prove a rationale for investing. The Efficient Market Hypothesis says that market prices are fair: they fully reflect all available information. This does not mean that prices are perfect; some prices may be too high and some too low, but there is no reliable way to tell. In an efficient market, investors cannot expect to earn above-average profits without assuming above-average risks. Market efficiency does not suggest that investors can’t “win.” Over any period of time, some investors will beat the market, but the number of investors who do so will be no greater than expected by chance.

Successful investing, like many things, begins in the mind…

It is important that an investor has an investment philosophy, for this guides and shapes decisions. Even if the theory is one of random chance, this would require a consistent approach to implement it. The problem with investing is that it becomes an emotional experience – and it shouldn’t. When you see your portfolio rise or fall in value, you have a gut reaction, often this is not good for you. There is a temptation to believe that beating the market is due to additional skill or knowledge, a belief forcefully proposed by active fund managers, who make their living by beating the market – or trying to. The sad reality is that few of them do (really few) and when taking a long-term perspective it is very difficult indeed to pick those Managers that can consistently outperform. Most Fund Managers don’t hang around for long, many funds get closed and when you consider the charges they apply, few (and I really mean a few) actually outperform.

Would you prefer evidence or guesswork when planning for your future?

My role is to help investors achieve the market returns for the various assets into which they invest. The main point being that when investing your money, I do not see any advantage in putting it at additional risk. This is essentially what most investment managers have to do in order to beat the market. Economic theory has backed up and evidenced this approach over the long-term and you may have seen me recently tweet at Eugene Fama was awarded a Nobel prize for economics. His research and theory together with that of others has helped inform the research used and investment philosophy that we adopt for our clients. Here is a short video about his pioneering work.

Dominic Thomas: Solomons IFA

What Is Evidence Based Investing?Dominic2023-12-01T12:38:31+00:00

When does Auto Enrolment start?

I have had a number of queries about auto-enrolment, in particular when does auto enrolment start? The short answer is that it already has started – at least for large firms with upwards of 800 staff. Next month (November 2013) the next tier of employers must implement their schemes – those with 500-799 staff. Small firms, which generally means those with fewer than 50 staff have a staged launching date beginning in June 2015. All firms have a “staging date” and this can be found on the pension regulators website, all you need is your PAYE reference number (as the employer).

However small firms should not be under the impression that time is on your side. Setting up a scheme involves certain processes and assessments to be completed. This takes time. Whilst the Government have sensibly staggered the start dates, the reality is that most firms in the UK are small and there will be a rush and backlog. Given the prospect of fines and the amount of advanced warning, I don’t think it wise to hang around on this. I’ve been advised by various pension companies offering a scheme that they are already struggling to cope… and we’ve only just begun. So the time to begin to act on this is now. Here’s a good little video about auto-enrolment.

Dominic Thomas: Solomons IFA

When does Auto Enrolment start?Dominic2023-12-01T12:38:30+00:00

Does the latest “Women and Pensions” report tell us anything of value?

Our survey says… 8 out of 10 cats…

I admit to being somewhat of a sceptic when it comes to surveys and just because a series of surveys reveals the same basic information, does not necessarily mean that the information is fair. I’m no chemist, but I’m not terribly impressed by a lot TV adverts about “age reducing” products that contain something that sounds scientific but may as well be called “somethingcomlplexsoyoubelieveus” which is then endorsed by 92% of women, but the small print suggests that the marketing surveyor probably didn’t even leave the building to question punters. So it is with this in mind that I read this mornings latest “women and pensions” report (commissioned by Scottish Widows) and ask myself if it tells us anything of value?

You’ve been framed

The online survey of 5,200 adults (considerably larger than those TV adverts) is probably not large enough to draw too many concrete opinions, but sufficient to reveal the continuing relative savings gap between men and women. The numbers are startling in any event, with only 45% of people preparing adequately for retirement (49% of men and 40% of women). Over a third (37%) of women have no pension at all whereas for men the figure is lower at 27%. This may be for a variety of reasons – other financial commitments, lower incomes than men, and higher focus on debt repayment to mention a few. However, something that the survey doesn’t pick up on is the perception of the financial services industry and pensions generally. I’m not sure that given the choices of possible answers to a question “why aren’t you saving more for your retirement?” that responses about affordability and other priorities are really the full picture. I would argue that for many women, financial services are simply not sufficiently engaging. It’s an industry generally run by and run for men. I am generalising of course, there are examples of notable females in the field.

Its a knock-out

This is not to suggest that the findings of the report aren’t valid, with clearly identified practical barriers that prevent women from saving. However, I think this is only part of the problem. The main problem is that financial services are generally not marketed in a way that resonates with women (tell me if I’m wrong on this). So whilst there is some merit in the statistical information about how many men versus how many women know about auto enrolment (or fill in the financial product blank) I’m not convinced that this is even vaguely dealing with the real issue. Indeed, if anything the statistics reveal that neither gender is particularly good at engaging with financial services. A product provider like Scottish Widows, as nice and well-meaning as they are – focus on financial products and education about them.However well-intentioned, the joker in the pack is frankly that people of both genders, simply don’t get enthusiastic about financial products… or have I been missing something for these past 20+ years?

A very long engagement?

However what we have missed (as an industry) is a connection made to personal values and lifestyle (and one that goes beyond an ad I saw some years ago, that went along the lines “shoes by Jimmy Chew, bag by Prada, income protection by…”). Financial planning does this (if it’s done well). Whilst I do get enquiries from people about “their pension” in reality they are no more interested in pensions than I am. What the missing link is really about is what lifestyle you want now and later on and when you can afford to decide to stop “working” if you want to, because you have enough to provide the lifestyle that you want. A pension is one of potentially hundreds of ways to provide for the future. As far as I can tell, most women’s magazines and interests are all about lifestyle (just like men’s) yet the financial services industry seems to believe it is somehow different and all about products. Hardly engaging and little wonder that few are listening.

Great financial planning – because your life is worth it!

Dominic Thomas: Solomons IFA

Does the latest “Women and Pensions” report tell us anything of value?Dominic2023-12-01T12:38:30+00:00

What is social impact investing? is it a lost cause?

What is social impact investing?

Social impact investing is something that is pretty much as old as the hills, yet brand new. In essence it is a way to use money that is not really “normal investing” and neither is it charity – giving money away. Social impact investment is the provision and use of capital with the aim of generating social as well as financial returns. Social investment carries and expectation of repayment of some or all of the finance. It can cover loans, equity, bonds and is sometimes used alongside other instruments, such as guarantees or underwriting. As with any other investments, whether the investee business performs well, returns generated may be principally reinvested in the business, as well as offered to investors.

Good guys finish second don’t they?

Social impact investment is a venture that is designed to improve society. This might be investing in a mechanism to reduce homelessness or the re-offending rates of prisoners. Often there will be a fixed lock-in period (typically 5-8 years) as the project concerned is usually long-lasting. A rate of return is offered, which is normally fairly modest and should the project fail you may not get your money back.

Reaching the reformist in you

My statement that social impact investing is as old as the hills is right in the sense that landowners and industrialists have often invested into community projects. However as we have become ever more reliant upon a State system that appears no longer able to cope, it has returned to discussions. As the money is not gifted, there is a fundamental assumption that the specific project is of significant interest to the investor, who is risking providing some of their capital to help (with an understanding that it should be repaid with a bit extra back, but may not be repaid at all if things don’t work as planned).

Want a better dinner party story?

I wonder if you would discuss this aspect of your portfolio more freely at a dinner party? “Part of my portfolio is helping to get young offenders back into employment and you’d never believe the massive difference it makes to the rate of re-offending. Do you realise that in the UK we spend the equivalent of an Olympics each year on the penal system.” Its certainly a lot more interesting than opinions about the Bond market. I imagine that Slavoj Zizek would have some thoughts to offer about this (which I would find interesting) as it can be construed unfairly as “social conscience investment” – securing the feeling of doing something good, arguably paying more (in opportunity cost terms of missed “normal” investment) or forgoing returns in exchange for a feel good factor. Zizek considers buying your ethical coffee from Starbucks and if you want to get your brain thoroughly overloaded try “A Perverts Guide to Ideology” a truly interesting documentary film. Anyway, however accurate (or not) this may be, it is certainly the case that the Welfare State is not coping and specific targeted projects are having a favourable impact.

Cause and Effect

There will be questions about the real benefits when the data is washed through carefully, but there is certainly a need and genuine attempt to help society. Naturally careful selection of the right project is vital and given the additional risks to capital, requires significant investor sophistication. The problem that advisers have is the knowledge about this sector in the first instance and then struggling to make it fit into a suitable investment strategy that the regulator will also understand. No easy feat, but then to achieve great things effort is always required and certainly no lost cause…

Dominic Thomas

What is social impact investing? is it a lost cause?Dominic2023-12-01T12:38:29+00:00

The Wealth Inequality

What is the Wealth Inequality?

I risk sounding ever so political and I am well aware that there are no easy answers. However, as I provide financial planning advice to people in Wimbledon (and wider afield) I imagine that bringing information to your attention about money and wealth is probably important and in particular the wealth inequality. On a global scale most of Britain is wealthy. My clients are all wealthy in terms of the UK, some very wealthy, however I don’t currently advise the mega wealthy (£10m+).

What is the market value of the US?

So have a look at this video, it takes US opinion and US data, but in practice the same phenomena is happening in most nations. To give a little more background, at the end of 2012 the US stockmarket was worth about 46% of the total world stockmarket at £10,540 billion (the UK worth 7% at £1,717 billion). This does not include the value of property or all assets, just the stockmarket capitalisation values. The video mentions 312 million Americans so 1% of this number is 3.12million Americans actually own 40% of the US wealth (and therefore 18.4% of all wealth). It is estimated that the world population is now 7 billion.

How does the wealth inequality impact tax policy?

The problem for politicians is that due to the disproportionate amount of wealth that is owned by the top 1%, there is a fear that changing tax policy would mean that this wealth would leave the country. Increasingly I am of the view that this is the basic fear now underlies most economic policy and why the middle classes in particular are paying far more tax (proportionally) than anyone else. The top 1% has greater access to offshore tax regimes and can afford to risk very large sums of money on tax avoidance schemes that may not work. All of my clients can make use of legitimate tax avoiding and tax reducing schemes, but not on the same scale or with the same degree of cavalier attitude.

You don’t see hearses with luggage racks

I risk offending the wealthy or even putting them off appointing me as their adviser which I don’t mean to do in the sense of a personal attack, but merely to raise the huge problem of inequality. Certainly our politicians misuse our taxes, we need wealth to create jobs and security, however unless I have missed something, when you die, you don’t get to take it with you. Great financial planning is about working out what it takes to support your chosen lifestyle and is not simply about amassing more.

Dominic Thomas: Solomons IFA

The Wealth InequalityDominic2023-12-01T12:38:29+00:00

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