Have you tried our new App?

Solomons-financial-advisor-wimbledon-blogger

Have you tried our new App?app icon

If you are an iphone, ipad or android user, you can now try our new app. We have invested in new technology to help clients and their friends by placing a really useful tool kit directly in their hand. The app is completely free to download from the itunes store and comes with a stack of useful features. This includes financial calculators – so that you can work out how much income tax you should be paying, how much a change in interest rates will impact your mortgage, what your IHT liability might look like and the impact of inflation on your finances, to name just a few.

Tax year information

app splash

We have also included the 2014/15 tax year information, including all of the important changes from the Chancellors 2014 Budget last month. You should gain a better understanding of tax and why we attempt to reduce this for our clients where appropriate. There are also key dates for the tax year in terms of when payments need to made or filed.

Independent thinking

I have also included a bit about us and what we do, as well as links to the website and this blog, along with a link to Morningstar, who provide independent investment research, which we also use to complement the work we do with Cormorant as part of our investment committee work.

Don’t keep it a secret…

I’d be really grateful if you would leave a rating and review of the app on itunes if you like it and can see its usefulness. Of course do let your friends and colleagues know too – after all its a free app that is really useful. If you have any problems or suggestions, please email me or pick up the phone and let me know what they are. We are already planning improvements and added features to make it a really valuable tool, but want to make sure that our clients can benefit from this fully.

Dominic Thomas: Solomons IFA

Have you tried our new App?2023-12-01T12:39:09+00:00

Net Worth Illumination

Solomons-financial-advisor-wimbledon-blogger

Net Worth Illumination

Its been another very busy week. I thought that today I might share with you some of the financial planning that I have been doing for clients – not in any disclosing way, but just some headline ideas as this week has had a theme.

I have been working on several plans for clients in the Net Worth Illumination stage. I chose this term carefully based on precisely what it is that I want to convey to clients. Sometimes there can seem to be an enormous gap between where we want to be and where we are. This can feel like a considerable gap for those approaching 50, who still may have mortgages and children at home.

Clearing that mortgage

So I have been modelling some scenarios where we clear off mortgages rapidly. I hate debt unless it is used for a specific business purpose with genuine gearing potential. Clearing a mortgage has emotional benefit as well as financial. Importantly it provides more surplus income once its gone and therefore opens up more options in terms of how much you really need to earn from your labours.

Financial discipline with a smileNet Worth Illumination

Anyway, with some reorganisation of savings and surplus income, I have worked on three clients who will all be clearing off their mortgages within 3-6 years. These aren’t small mortgages either. Its partly better use of money and partly working within an agreed budget (with ample funds for holidays, presents, entertainment and general “fun”) yet squirreling away surplus income each month and year.

The value is what financial planning adds

Without doing anything fancy, we have made enormous inroads into mortgages, saving thousands in interest payments. Keeping the process going beyond the mortgage being paid we have quickly established ample reserves , before turning to investment. The results are remarkable, not using anything strange but irrefutable maths and savy (financial planning). At the lower end, we added over £1m to net worth by proper planning. £ONE MILLION. I will repeat that with our strategy we will have added over £1m in net worth as a minimum per client. How much is that worth? Not a mention of a single financial product either. Debbie, my PA suggested that I emphasize this more in my reports to the clients, so I’ve also been working on how to do just that. Time you called me?

Dominic Thomas: Solomons IFA

Net Worth Illumination2023-12-01T12:39:08+00:00

Whats the story?

Solomons-financial-advisor-guest-blogger-Jim-ParkerToday Jim Parker highlights the need for a story as opposed to evidence.

What’s the story?

Human beings love stories. But this innate tendency can lead us to imagine connections between events where none really exist. For financial journalists, this is a virtual job requirement. For investors, it can be a disaster.”Needing to create order from chaos, journalists often stick the word “after” between two events to imply causation. In this case, the implication is the currency rose because a bank had changed its forecast for official interest rates. Perhaps it did. Or perhaps the currency was boosted by a large order from an exporter converting US dollar receipts to Australia or by an adjustment from speculators covering short positions.

Markets can move for a myriad of reasons. Likewise from another news organisation recently we heard that “stocks on Wall Street retreated today after an escalation of tensions in the Ukraine.” Again, how do we know that really was the cause? What might have happened is a trader answered a call from a journalist asking about the day’s business and tossed out Ukraine as the reason for the fall because he was watching it on the news. Sometimes, journalists will throw forward to an imagined market reaction linked to an event which has yet to occur: “Stocks are expected to come under pressure this week as the US Federal Reserve meets to review monetary policy settings.”

Narrative fallacy… i.e. BS

Broacastnews

For individual investors, financial news can be distracting. All this linking of news events to very short-term stock price movements can lead us to think that if we study the news closely enough we can work out which way the market will move. But the jamming of often unconnected events into a story can lead us to mix up causes and effects and focus on all the wrong things. The writer Nassim Taleb came up with a name for this story-telling imperative. He calls it the “narrative fallacy”.1

The narrative fallacy, which is linked to another psychological tendency called ‘confirmation bias’, refers to our tendency to seize on vaguely coherent explanations for complex events and then to interpret every development in that light. These self-deceptions can make us construct flimsy, if superficially logical, stories around what has happened in the markets and project it into the future.

The financial media does this because it has to. Journalists are professionally inclined to extrapolate the incidental and specific to the systematic and general. They will often derive universal patterns from what are really just random events. Building neat and tidy stories out of short-term price changes might be a good way to win ratings and readership, but it is not a good way to approach investment. Of course, this is not to deny that markets can be noisy and imperfect. But trying to second guess these changes by constructing stories around them is a haphazard affair and can incur significant cost. Essentially, you are counting on finding a mistake before anyone else. And in highly competitive markets with millions of participants, that’s a tall order.

Sanity is available

There is a saner approach, one that doesn’t require you spending half your life watching CNBC and checking Bloomberg. This other approach is methodical, evidence-based and scientific – a world away from the financial news circus. The alternative consists of looking at data over long time periods and across different countries and multiple markets. The aim is to find factors that explain differences in returns. These return “dimensions” must be persistent and pervasive. Most of all they must be cost-effective to capture in real-world portfolios.

This isn’t a traditionally active investment style where you focus on today’s “story” and seek to profit from mistakes in prices. But nor is it a passive index approach where you seek to match the returns of a widely followed benchmark. This is about building highly diversified portfolios around these dimensions of higher expected return and implementing consistently, reliably and at low cost. It’s about focusing on elements within your control and disregarding the daily media noise.

Admittedly, this isn’t a story that’s going to grab headlines. Using the scientific method and imposing a very high burden of proof, this approach resists generalisation and simplification and using one-off events to jump to conclusions. But for most investors, it’s the right story.

Jim Parker


1. Nassim Nicholas Taleb, ‘The Black Swan: The Impact of the Highly Improbable’, Penguin, 2008

Whats the story?2023-12-01T12:39:08+00:00

Does your website need a redesign?

Solomons-financial-advisor-guest-blogger-G-Jones

Does your website need a redesign?

Most web pages include lots of “furniture”, such as branding, navigation, images, advertising and lists of other useful things you might want to look at. Indeed, when we land on a plain text web page we tend to think it is something from the dark ages of the early Internet. These days we expect colour, graphics, video, useful links and so on.

However, new research suggests this could all be working against us, as website owners.

Blinded by science?Blink

Neuroscientists at University College London have identified a phenomenon they are calling “load blindness” – the more information that we see, the more we don’t see it. This is a particular problem in certain professions such as being an airline pilot or a surgeon, where lots of visual information has to be processed. However, it is clearly also an issue for web pages.

What the researchers found was that when we are presented with lots of information in one go, our awareness for that information decreases. Indeed, the scientists found that the impact was the equivalent of turning the lights down to dim – we just can’t see as much.

The problem for web designers, though, is how do you include all the necessary information without leading to “load blindness”?

Information overload

When you only have a small amount of information presented, added extras lead to distraction. So if you design a simple web page with one banner advert, for instance, the advertisement distracts the visitor, leading to loss of attention on what you might be wanting them to read. However, if you overload the page with extra “furniture” the distraction level appears to drop – therefore suggesting that you might get more engagement. But this new study suggests the opposite – it implies that your visitors don’t actually see as much as you think they do. The overload of information is effectively closing their eyes to what you want them to see.

What this study is really suggesting to us as website owners is that we need to think carefully about the pages we produce. Too little visual information can lead to distraction, too much visual information can lead to load blindness. Either way, many web pages could be getting traffic, but not actually having the required impact. It could explain why bounce rates are so high, on average; people simply do not see anything when they land on the pages because there is too much to see.

It is not the extent of the information that is the problem – you can have web pages with thousands of words on them. It is the amount of visual information that can be seen in a glance that is the issue. Too much “furniture” on your web pages could mean that people simply do not see what you want them to see.

Graham Jones

Does your website need a redesign?2023-12-01T12:39:07+00:00
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