Happy Christmas 2013

Happy Christmas

I would like to wish you a very happy Christmas. I hope that it will be a time of comfort, joy, peace and wonder. Christmas reminds us of many things, of course the Christian story of the birth of Jesus and our own childhood and family traditions. It also reminds us of the unquantifiable gain from giving and of course a hope for a better future, which may mean letting go of the past. This is encapsulated rather well in the new film “Saving Mr Banks” which is the story of the story of Mary Poppins and worth making a trip to cinema through the cold and wet weather.

I’m taking a break and returning on Monday 6th January, so I will also take the opportunity to wish you a very happy and prosperous New Year. So until 2014 I shall leave you with an old blessing, which seems appropriate on this wet and windy December day.

May the road rise up to meet you.
May the wind be always at your back.
May the sun shine warm upon your face;
the rains fall soft upon your fields and until we meet again,
may God hold you in the palm of His hand.

Dominic Thomas: Solomons IFA

Happy Christmas 2013Dominic2023-12-01T12:38:46+00:00

Banking on plastic money

You may have noticed the announcement by the Bank of England that they intend to print our local currency on a special paper or polymer. This should facilitate improved new security measures and increase the life of your typical banknote. This is because the paper is more durable, in particular it is better in the wet. The argument being that fewer banknotes will need to be reprinted and therefore there will be some environmental benefits. The truth is probably a little more complex, in that paper is about as environmentally friendly as it gets, anything plastic is precisely the opposite of environmentally friendly.

The first £5 Winston Churchill note in the new format will be released in 2016 and it is expected that this will be followed a year later by the £10 note featuring Jane Austen.

Dominic Thomas: Solomons IFA

Banking on plastic moneyDominic2023-12-01T12:38:46+00:00

The soothsayers and forecasters are at it again

Well, the year is drawing to a close and most people seem to be preparing for the Christmas festivities. A clear sign of age is feelings that Christmas seems to be coming around more quickly these days. As if unprompted, my email in-box is now being filled with lots of reports and tips for 2014. If I were wishing to pour scorn on these I would keep them and then send them back at the end of 12 months. Invariably these are nothing more than guesses, which will miss the surprises and restate the obvious. Glossy and earnest yes, but invariably a pointless exercise. The point of investing and perhaps life, is that the future is not known, we are merely managing expectations and planning as best we can in a sensible fashion for what may or may not happen.

Lessons from history

For those of you that receive a birthday card from us, you will be familiar with the decade by decade summary of specific years. This has several purposes. Firstly it reminds us all that time is short, 10 or 20 years ago actually doesn’t seem that long ago when you recall information about what you were doing or what was happening in the world. Secondly it is a reminder that history has a tendency to repeat itself, not precisely, but closely. I can with a degree of confidence make a couple of predictions. That my predictive powers are no better and no worse than anyone else’s, that things will change but this won’t always occur as expected. Financial planning makes lots of assumptions which will be wrong, but are based on sensible, reasonable logic. That’s why it is important to review your planning, not because we are guessing, but because we need to adjust for what happens in reality.

Dominic Thomas: Solomons IFA

The soothsayers and forecasters are at it againDominic2023-12-01T12:38:45+00:00

Money Box asks has your pension been burgled?

Money Box asks: has your pension been burgled?

Once again pensions were in the news, the Radio 4 show Money Box took on the rather complex issue of annuities. Charges, fees, value for money Financial Services Consumer Pension and even the very funny Jeremy Hardy’s comments on The News Quiz also received some mild stick, following his joke about not wanting to understand anything about annuities, or listen to Money Box and his intention to be a burden to the State..of course he was being ironic.

Yawn… annuities are just so dull

Anyhow, Jeremy is pretty much right, annuities are very boring and not something to spend too much time worrying about… until you actually need to. So what is an annuity? Ok simple stuff… an annuity is an income for life. You can have a rising income or a level income. Importantly an annuity dies with you.. eh? When you die your annuity stops… but if you want you can build in some guarantees… such as the income continues to pay a spouse or your estate, in full or part.. you can build this in at the design stage, not later on.

So why are Money Box and the FSCP talking about annuities?

Well, most people have no idea what to do and most is a lot – something like 400,000 people retire and buy a annuity each year. It’s a large market. Most people assume that there is not much between annuities (sadly and expensively wrong) there is an enormous difference and it costs you no more to get the most suitable one (on the whole). I’ve not met anyone that likes a pay cut, particularly one of 20% or even 40%… yet that is precisely what the wrong annuity is effectively like….for life!

So can I shop around for a better annuity?

Yes, you should (no you MUST). Start by checking out the MAS site, the site that supposedly advisers dislike, yet pay for via our fees… and plug in some details. If you like to be frightened, do this now. This is only part of the story and did you notice all the disclaimers? You could then approach the annuity providers yourself and set up your annuity. You won’t get any more money than if you did this via an adviser, but the provider makes a bit more money out of you, and you carry the risk for picking your own.

So should I use an annuity broker?

Well you could, but be warned that they may simply focus on getting you the biggest annuity (which seems ok doesn’t it?). If the company provide guidance rather than advice, they are not liable for any mistake, you are. They will charge a fee for their selection. However, this might be akin to going to a garage with a car that has a flat tyre and won’t move… demanding a tyre at a decent price… but failing to observe that the car has no engine (ok it’s a metaphor). My point being that there is no context for good planning, it’s just selling or arranging products, as Paul Lewis reminded the listeners.

So should I pay for financial advice about annuities or retiring?

Well, I would say this wouldn’t I, but of course! There are lots of issues and lots of solutions. My main gripe with annuities is simply that once you set one up, that’s it, decision made for life. A bit of a straight-jacket if you ask me. More importantly perhaps the adviser is qualified and responsible for the advice.

So what will a good financial planner do?

Start by forgetting about products. Discuss your plans for your retirement and determine what that really means for you. In short, what lifestyle are you aiming for? How much will it cost? So this is about income, not products. The sort of things that need thinking about and understanding are your requirement for income, your tax position, your other assets, your marital status, your expectations about inflation, your health and how long you will live. Advisers need to help work through the tricky discussion about the risks of not knowing. There are alternatives (lots) and of course there is the option of not even buying an annuity at all. Good financial planning is not about products it’s about figuring out what you really need and then building a plan to get you there.

Do financial planners have to arrange products?

No, but we often do. I really wish that Money Box would grasp this point. A good financial planner may not ever arrange products at all (I have a dream)…frankly because arranging products is a pain and very, very dull. Solving problems and helping people to get the life they want… well that’s an entirely different matter…however if you want a job done properly…

Anyway, keep up the good work Money Box… time often seems against any proper full discussion on the main media channels, so I am currently toying with my own show…well a podcast anyhow.

Dominic Thomas: Solomons IFA

Money Box asks has your pension been burgled?Dominic2023-12-01T12:38:45+00:00

Financial Fraud in Britain

Solomons-financial-advisor-wimbledon-blogger

Financial Fraud in Britain

Financial fraud in Britain is a serious problem. The sort of frauds that I hear about are very depressing… in the sense that it’s really quite difficult to imagine someone who would do such a crime, at least based upon the people in my life, I find it hard to imagine anyone being so cold. Anyway, I was on the way home yesterday and listening to a radio show on BBC5Live…as if the cricket score was not bad enough… anyway It was the Adrian Goldberg show, which yesterday covered assaults on taxi drivers and subject of “Vishing”. Vishing is a telephone scam.

Hello… its (A big retailer) and we think you’ve been subject to fraud..

In a nutshell, the crook tricks people into giving over their bank card details. Now on the one hand you would think this is fairly obvious and easy to avoid, but the scam basically goes along the following course. You get a call from someone claiming to work for a major retailer – say Tesco, chances are you have been there. The criminal says that the company have identified a suspected fraud on your card. S/he then suggests that you get your card… which one is it? And you have a look at the number on the back to report the fraud… you politely say thank you and hang up…. but you haven’t hung up, you still have an open line (if it’s a land line), the fraudster might even play the sound of a dial tone to make you think you’ve hung up. So you pick up the phone and dial your bank, but actually you are still speaking to the original fraudster (or his/her accomplice)… and so the fraud really begins.

Distraction & Misdirection

The main way that fraudsters operate is to distract. In this instance, to distract you with help. You are thrown off guard by being told you may have had fraud on your account. Do not give your bank details over the phone (or internet) to anyone that YOU have not properly identified and be careful when you are being asked for details.

Open Lines

This fraud works due to an issue with open phone lines. At the moment 40% of the land line network closes lines within 2 seconds of you hanging up, but this scam relies on the line being kept open for longer. BT and Virgin currently keep a line open for 2 minutes (according the BBC radio show). The Police advise using a different phone or waiting at least 5 minutes before calling your Bank on their proper number.

Before you next go shopping…check out FFA UK

This sort of stuff is miserable, but it happens all the time. Anyone can fall for it. You are generally not protected against fraud if you give your details out. In Surrey 81 cases have been reported, worth £900,000 since July. The Met report over 2,200 cases in London worth over £3.5m. You have been warned. Please have a look at the Financial Fraud Action UK website for further tips and advice.

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

Financial Fraud in BritainDominic2023-12-01T12:38:44+00:00

Representing Independence

So 2013 is drawing to a close and the Christmas cards are starting to arrive. Universities and schools are drawing the term to an end and we are all hoping that the winter break isn’t too cold and that our boilers don’t give up under the pressure of winter, just when there is a house full of guests. Sadly, one of the changes for 2014 is the representation of IFAs and investors by IFA Centre. It is the only obvious advocate for independent financial advice, which has had to scale back due to a lack of support from IFAs in Britain. This is a real shame as Gill Cardy who in 2011 formed (the not-for-profit membership organisation) and runs it has worked hard to promote the importance of independent advice and championed causes to help investors receive fair treatment when they have been royally fleeced. This is the sort of change that the financial services industry has been crying out for and sadly it will not continue in the way it was hoped. The IFA Centre, of which I am a member isn’t closing completely, but will now focus on providing resources, events and other benefits to firms like ours. This will still be of benefit, but I greatly appreciated the work that Gill was doing in making representation for IFAs. Sadly, this does not seem to be of sufficient interest to enough advisers. I’m hoping that this isn’t simply an appalling attitude of not being bothered by the majority of IFA firms, but rather a “not knowing what you’ve got until it’s gone” situation.

Gill said “After over 2 years of personal and financial commitment IFA Centre’s membership does not provide the financial resources for my full time commitment to protecting advisers’ interests, let alone the resources to provide research, policy development and a member events programme. Worse, irrespective of our funding, with so few firms prepared to stand together to improve how our businesses are regulated, I simply do not have enough members to provide the decisive mandate needed to provide the representation that Independent advisers so badly need.”

She added : “IFA Centre was only launched because so many IFAs were unhappy with existing representation and told me how important trade bodies with knowledgeable, experienced and passionate leadership are. However, many of these advisers have not joined and I am forced to review what services IFA Centre can continue to provide to IFAs”.

Public thank you to IFA Centre

Anyway I would like to thank Gill for all the hard work she has done to promote and further the benefits of impartial independent financial advice and attempts to restore some credibility and trust in a largely untrusted sector. Our clients benefit from independent advice and I wish everyone else’s did too… sadly they don’t.

Dominic Thomas: Solomons IFA

Representing IndependenceDominic2023-12-01T12:38:43+00:00

University Fees – what Parents need to know

As you know, University is not free. Most courses cost £9,500 a year and accommodation is likely to set a student back £5,000 when all is said and done. Add in money to eat, drink, buy the odd book and probably £100 a week is not unreasonable to live off…. In 2013.

The impact of inflation

So let’s suppose that you have not yet even had your child. Let’s assume that you are expecting shortly in 2014. So your yet to be born student will be entering University in say 2033, aged 19. £20,000 of fees with inflation running at a consistent 3% becomes £35,070… and you have a three year course, so total costs are likely to be £108,400 (roughly). So you have 19 years before any money is needed – but needed it will be in 2033, 34 and 35.

Get an early start

If we assume an investment return of 5.50% (not exactly blowing the lights out) but this is still a real return of 2.50% above inflation investing £250 a month will do the job. However, you’ve got a lot of commitments with your new baby, never mind a possible drop in income. So you decide to delay saving… until you are clearer about educational prospects. So let’s suppose you wait until your baby is a teenager at 13 with 6 years to go before University life. The maths is the same, you simply have less time to squirrel money away and of course less time for it to grow. Well, now you need to find £1,950 a month to achieve exactly the same result.

What is financial planning?

The thing about financial planning, is that its not really about any financial products. Its about helping you to figure out what you want to do. We review our assumptions together – here we made assumptions about inflation, investment returns, University fees, going to University and when. The same logic applies to any goal, we need to figure out what something costs today, allow for inflation and the time until you aim to achieve it. So, whether you have a University challenge… here is your starter for 10… when will you begin your financial planning?

Dominic Thomas: Solomons IFA

University Fees – what Parents need to knowDominic2023-12-01T12:38:43+00:00

So what’s the fuss about annuities?

You may have come across yet more media coverage in relation to rip-off financial services. The story, like most has some truth to it, but some… well let’s just call a spade a spade…inflammatory errors. Here I shall attempt to briefly convey what the fuss is about in relation to annuities.

What is an annuity?

First off, what is an annuity? In short, its an income paid for life, most of the time paid like income (and taxable) every month. You can choose for it to stay the same (level) or rise each year (to keep pace with inflation). You effectively buy an annuity with your pension fund.

Are you getting a bad annuity deal?

Easy enough so far… so what’s the fuss about? In short, most people don’t shop around for the best deal in the belief that they wouldn’t get much more, or simply didn’t know they could. As a result many or most buy their annuity from the company their pension is with. In most instances they aren’t getting the best deal or anything like it.

A bit like Russian Roulette…

The main problem with buying an annuity is that you make your decision and have to stick with it for the rest of your life. It’s a one time deal. So any decent adviser will help you to think about the income you want well in advance of the day you decide. A financial planner will do this from the start (not just before you retire). So good planning is planning ahead and figuring out how best to tale your income and when, pensions and annuities are simply part of the picture, not the entire story.

There’s not much between them right?… wrong!

Is there really much difference? Yes. There is a massive difference. This will depend on how old you are, where you live, your life expectancy and your state of health. Bizarrely, the worse your health the better the annuity (as the annuity company won’t expect to pay it out for as long as someone with good health). Getting this part right alone could increase the income by 20%-50%. The message here is to shop around… however the reality is that this isn’t the whole truth, you really ought to use an IFA to do the shopping and set something up having discussed all of the options properly… in-line with your requirements and expectations about the future.

Planning ahead, understanding the bells and whistles

The bells and whistles… when you die the annuity stops. However you can have it pay in full or part to your spouse or your estate, you can put in guarantees. You can mix and match. You can delay. There are lots of things to think about and an IFA will do this, for a fee. This is money well spent and ultimately, if things go wrong the IFA is responsible for the advice (unlike a journalist or doing it yourself). The really important thing is to be engaged in the process and thinking about what you want your lifestyle to be in the future, when you do eventually get to the point when you can decide if you want to work or not.

One trick pony?

Annuities have their problems for sure and there are other options, but I wont drone on any longer. You give yourself more options by seeking independent advice from a financial planner, who will work to keep as many options open for you as possible (and sensible).

Please send me your questions!

That wasn’t so bad was it… any questions?

Dominic Thomas: Solomons IFA

So what’s the fuss about annuities?Dominic2023-12-01T12:38:42+00:00

Is Solomons on Facebook?

We have now updated our Facebook page, so yes Solomons is on Facebook. I have no idea if this is a worthwhile exercise and am conscious that time spent using social media is a double-edged sword and of course there are always questions about how much is too much? and not enough?.. it’s a minefield. My aim is to make our use of social media easy. It is an opportunity to provide some information and commentary on what is going on that might be entirely to do with financial stuff or frankly just about vaguely related. So if you would like to have a look and “like” our Facebook page, it is now more alive than it has been before. I’m not expecting a whirlwind of “likes” propelling a small firm onto the world stage and I’m also aware of the amount of junk I have to sift through to get to what I want, so I try hard to avoid doing the same to others. Anyhow, the little “F” on the top of your screen will take you to our Facebook page.

Dominic Thomas: Solomons IFA

Is Solomons on Facebook?Dominic2023-12-01T12:38:42+00:00

How we talk about life and love

Stories make life richer, they also inspire and remind. We have all probably been reflecting on the coverage of Nelson Mandela, who succeeded in finding a path of communication and reconciliation between two opposing world views. However, often we don’t need to go as far as South Africa or Syria, often we don’t even need to go through our own front door. Relationships are complicated and we all know that communication is the bedrock of any good one. So you may find it amusing that I went to see a new award winning play “In the Next Room or The Vibrator Play”….now what has this to do with financial planning you ask? Well, I believe its how we talk about life and love.

Hysteria

There has been a reasonable amount of coverage about the differences between men and women. I have to admit to being somewhat nervous about making such claims. In essence we are all different and negotiating and navigating our differences is a significant life skill. A play currently showing at St James theatre exposes such differences rather well. The backdrop of the story may, even in 2013, cause some to gasp and takes off from where the 2011 film “Hysteria” left off. In my lifetime there has been a significant shift in attitudes towards sex and gender. I’m assuming that this is not news to you. On the face of things, the play “In The Next Room or The Vibrator Play” is about a doctor who uses pioneering electrical devices to relieve hysteria in women…. and the occasional male. This is of course a subject shrouded in mirth, embarrassment, shame, guilt and a diverse range of opinion, indeed one could simply consider the social hysteria about the topic over the years.

The F-Word…..Finance

Despite the title, the play really examines the relationship between men and women and their failure to comprehend one another, the patriarchy of the Victorian male and the object of his affection. This is 2013 and much could still be said on the subject of women’s rights and access to equality. Others explore this far better than I. My point is really to wonder if despite the sexual revolution, the emancipation of women and the general liberalisation of society, why is it that so many women are so regularly excluded from economic empowerment. Most of my industry seems to be run by and for men. Many women (perhaps most) are put off talking about money and stereo-typed as spenders. I believe, passionately, that financial planning can be liberating. It sounds dull I know – because of the word “financial” and most people aren’t enthused by “planning” either. However, financial planning is a discussion not about money, but about your life and what you want from it. Most couples struggle to have the money conversation, this is largely due to the baggage that each carries and nobody has shown them how to discuss it well. Much like the play, the rising pressure of misunderstanding can become overwhelming and requires addressing through honest and frank discussion about what is really desired from a life together. However difficult, once experienced it is clear that there is the real prospect of a better future, there is hope.

Christmas stocking filler tickets?

I enjoyed the play and had a very enjoyable afternoon with friends. There is a great cast with some very good performances, led by Natalie Casey and Jason Hughes with strong support from Flora Montgomery and Edward Bennett. It runs until 4th January and is a stones throw away from Buckingham Palace. It is not for the easily shocked, you have been warned….then again, good financial planning isn’t for the easily shocked either.

Dominic Thomas: Solomons IFA

For a professional review: The Telegraph and The Guardian

How we talk about life and loveDominic2023-12-01T12:38:41+00:00