Hope at Christmas

Solomons-financial-advisor-wimbledon-blogger

Hope at ChristmasHope

Sometimes, I probably stray a little too far from financial planning stuff within this blog, but that’s largely due to the fact that the clients I work for and wish to attract are people that have similar values to mine. As I have said before, if we are to work together, you may as well discard the glossy marketing and get a feel for who I am… after all there is so much more to both my clients and me than “money”. Anyway, on Saturday night I was part of a small crowd that was warmly welcomed to the home of the Kubrick’s who are generous advocates of local arts (the family of the late Director Stanley Kubrick) to support the launch of a new musician – Hope, my god-daughter.

Hope is only 15 and as you might imagine is still at school whilst making time to learn, practice and write new songs. Who knows if she will have a successful career in music, at this point she’s just having fun and seeing where it may lead. Hope’s parents are some of my closest friends since student days, and sadly her father Toby died of cancer some years ago in 2006 which was the first time that I had experienced the loss of someone close to me of my age.  As close friends, Toby and his wife Kym were people that also helped me in the early days of my career, acting a little as practice guinea pigs for my evolving advice. He was also the first client that I had to make a claim for against a critical illness policy. Unfortunately Hope and her older brother have both been diagnosed with the same causal disease (MEN Type 1). This isn’t an appeal, I’m just helping to draw a little attention to her first EP, produced by a new small record label called Jacket Records which should you like can be bought at any digital music store for a few pennies and the largest store (itunes) link is here. She has a website – which you can also find out more information, her first track is called So Much More… I know her dad would have been very proud.

Dominic Thomas

Hope at Christmas2023-12-01T12:39:48+00:00

Has War Just Changed?

Solomons-financial-advisor-wimbledon-blogger

Has War Just Changed?

As is often the case, out of something that seemed trivial, we may have witnessed a “significant moment” in history without grasping the implications. In short, we are asked to wonder if war has just changed. It seems to me that war is invariably about an inability to cope with or live with difference. Often this is expressed as a conflict of ideology but of course theology too. Some regard war as a battle over land, which perhaps is the case, but I’d suggest that this is merely the physically binding frame of reference used to galvanise support along lines of difference and to physically represent the boundaries of control. This week we learned that the boundaries shifted. The vast majority of the media missed the story, selecting to reflect the inane rather than the insane.Good Night and Good Luck

The story? this is about a executives at a film company bad-mouthing movie stars and being caught. The real story is that national boundaries have just been obliterated by hackers, who acted to squash something they didn’t like… but not just squash, threaten. Of course, some countries operate on the basis of a few bullies oppressing the masses – this is sadly nothing new and will probably never cease. I found myself looking at an image in a magazine recently, wondering how on earth so few, odd looking irrelevant men can control an entire nation, yet it happens all over the world.

The sadness is that film-makers and journalists are meant to be the ones that keep our focus on the truth, revealing darkness and oppression, helping to inform and change. Sadly many in Hollywood shirked this responsibility for fear of reprisal and financial cost. George Clooney couldn’t get anyone to sign his petition – ANYONE. So why should we be concerned if others aren’t? – after all haven’t Sony executives themselves to blame for expressing personal opinion and hitting that send button? Well, certainly some wisdom is needed in expressing opinion in a digital age, but the truth is that I doubt anyone has not said something about someone at some point in their life of which they are now not terribly proud. However, this isn’t really the point – the point is where does this lead? Can hackers now be hired by anyone, any nation to bully another into compliance? How does this impact our free speech? and surely this isn’t simply the domaine of terrified, narrow-minded tyrants, but also enters the arena of corporations who don’t like stories about their leadership or activities. Surely this has the potential to influence how we perceive and from a financial services perspective, appearance can be everything – just ask Tesco or BP.

This story has implications for you and I, our use of social media and the freedoms we enjoy. Obviously it isn’t wise to hurl insults and the adage, if you wouldn’t say it to their face, don’t say it at all seems pretty pertinent. But we surely cannot live in a world where we are terrified of legal action or reprisal. This is a “tipping point” for the double-edged sword of the internet, offering the prospect of genuine freedom of information to all (which we take rather for granted in the comfort of the West). As for me, I have never liked bullies, whether they come in the guise of a big kid in the playground, a teacher, boss, an investment bank, politician, pseudo military general, bigot, racist, rabid fundamentalist or of course my own tendency to think lazily and turn to petulant expression in frustration, which certainly in my “madder moments” it is a very good thing that weapons are not within easy reach…and sadly my own temper is easily fuelled driving, cycling or walking these very streets all too easily… which is of course the advantage of a society that doesn’t permit liberal gun ownership, encourages thought, education, tolerance and self-reflection, but unfortunately often seems more obsessed with narcissistic reflection in the eye of… well the media.

Dominic Thomas

Has War Just Changed?2023-12-01T12:39:48+00:00

Meet the new Boss (of Japan)

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Meet the new Boss (of Japan)

There was little doubt that Shinzo Abe would be granted a third term as Prime Minister; the ruling coalition’s majority was almost entirely insurmountable, certainly from the perspective of an opposition party in a state of disarray . In the event, the inevitability of it all encouraged the lowest voter-turnout in living memory (at 52.4%).

Actually, Abe’s victory was not entirely a compelling one. The Liberal Democratic Party (LDP) lost 3 of the seats they gained in the 2012 election while their coalition partners, Komeito (described by the Financial Times as ‘pacifist-leaning’), gained 4 seats. Together, they attracted just shy of 50% of votes compared with nearly 23% for the Democratic Party of Japan.

As an aside, a fall in the share of seats for the LDP coincided with a rise in seats for Komeito. The numbers are small (3 lost versus 4 gained) but that ought to help calm fears that Shinzo Abe will shift his focus from domestic economics to a more aggressive form of foreign policy. Komeito’s 2014 manifesto committed them to ‘improving relations with China and South Korea’ and renewed their desire for a ‘zero-nuclear world’. Indeed, the bulk of Abe’s victory speech focused on domestic issues and contained a promise to ‘further push forward our economic policies in a firm and dramatic manner’. crouching-tiger-hidden-dragon3

From the outside looking in, Abenomics 2.0 looks very much like Abenomics 1.0. The only real difference is in the timetable for the remainder of the consumption tax hike (from 8% to 10%) which, barring any more surprises, has been delayed until 2017. Of course the next few weeks will bring policy announcements intended to boost consumer spending and cushion the more harmful effects of a hugely depreciated yen. But these will be fixes – attempts to mask the side effects of established policy – rather than newly originated measures.

In spite of the excitement of the last few months our benchmark for success remains the same – Japan will be significantly closer to sustained growth if real wage rises can be generated in the first instance and maintained in the second instance. Without real wage rises, consumers will see their standard of living eroded while monetary policy supports surging share prices and inflated corporate profits. In time, that will undermine a sense of fairness – a feeling that the gap between the ‘haves’ and the ‘have-nots’ is widening – and support for the government will fade.

That is why we place so much emphasis on the package of measures comprising the ‘third arrow’. A tighter labour market (unemployment stands at just 3.5%) and a threat to tax retained corporate earnings might be enough to encourage wage rises which exceed inflation in the short term but far-reaching structural reforms are probably more important in the medium term.

Make no mistake though, Shinzo Abe faces a task of Herculean proportions. In pushing through his reform agenda, to encourage competition in hitherto protected industrial sectors, he must combat powerful vested interests. Japan’s aging and shrinking demographic brings great danger in the long term. But the Japanese have long enjoyed a very high standard of living and Mr Abe’s reforms threaten to disrupt the status quo in the short term.

Steve Williams

Meet the new Boss (of Japan)2023-12-01T12:39:47+00:00

High Charges On Pensions

Solomons-financial-advisor-wimbledon-blogger

High Charges on Pensions

Olivetti Typewriter

The Independent Project Board released their report about old-style pensions yesterday. Their findings suggested that there is around £26billion held in pension funds with high charges (high by today’s standards) in pensions prior to 2001.

Many will know that I have long advocated regularly reviewing pension providers to ensure that you are getting more competitive terms. The pension industry has moved forward enormously over the last 20 years or so. I still occassionally come across an old-style pension which has half a dozen fund choices and huge exit penalties, some thankfully have lower exit penalties, but this can still feel punitive and rather hard to accept.

In practice when I started Solomons in 1999, every pension that we set up didn’t have any penalties, the reason being rather simple – we removed contractual commission. At the time this was unusual and it wasn’t until 2013 and RDR that all advisers had to follow suit. Today a pension is little more than an investment portfolio with a pension tax wrapper around it, with access to thousands of investment choices and available to view online.

Perhaps you still have an old style pension or know someone that does. We have saved clients thousands of pounds in charges and improved returns by having an up to date arrangement. I liken the degree of change within pensions as the typewriter to the ipad or tablet, with its vast array of options and ease of correcting mistakes..ipad

Dominic Thomas

High Charges On Pensions2023-12-01T12:39:46+00:00

About Time

Solomons-financial-advisor-wimbledon-blogger

About Time

I recently watched the 2013 Richard Curtis film “About Time” starring Bill Nighy and Rachel McAdams. It is the story of how the males in one family have the ability to travel in time once they reach their 21st birthday. As with many Richard Curtis films, it is somewhat sentimental, but contains some good points. Many of us have at times, wished we had the ability to alter the past to the benefit of the present or future. Certainly hindsight would be of considerable value to investors, which is the only time in which timing the market is actually possible. However, I wonder if such ability is really that helpful.

In thAbout Timee film, the lead character Tim (Domhnall Gleeson) uses his newfound time travelling abilities to correct or “improve” his first and subsequent impressions.  Whilst I recognise that this is tempting and done for dramatic effect, initially it conveys the idea that Tim cannot handle disappointment or failure, unless things go his way in a perfect sequence, then he cannot manage the imperfection. I imagine that this may have resonance for a Director or Writer, but for the rest of us, even with the advantages of technology, there is only so much editing and “perfecting” that can be achieved.

Financial planning is not about designing a perfect life, full of wonderful experiences and things. Certainly it can (and hopefully does) contain those, but life happens and we make of it what we can. Motivational guru’s talk about living deliberately or intentionally and having life plans, goals and surrounding yourself with people that help you achieve… but the reality is that character and life experiences are largely formed through the journey of life, all of its ups and downs, not simply the high points. Surely what makes us deeper people is our response to them (the highs and lows). At a seminar recently I was reassured to hear a very notable lawyer remind us all that everyone makes mistakes. The question is presumably whether they were or are deliberate and how we respond.

The film concludes neatly and I won’t spoil it for you, but Tim learns some life secrets that are worth reflecting on, particularly in relation to any financial planning for life. I ask clients about their expectations from life and even how long they expect it to be, on many occasions we work to bring forwards some of their “lifetime ambitions” as however well planned things are, none of us know when we will depart this mortal realm and as we all know… time flies..#tempusfugit. Here’s the trailer.

 Dominic Thomas

About Time2023-12-01T12:39:46+00:00

Dementia – Suppose I Lose It

Solomons-financial-advisor-wimbledon-bloggerDementia – Suppose I lose It

Radio 4 will be running a programme this evening at 8pm, which will be a highly personal view of dementia. It features a well-known married couple – Timothy West and Prunella Scales who are interviewed by their long-time friend Joan Bakewell. The preview this morning sounded enganging, expressing the very practical, personal and real problems that anyone suffering dementia can face.fawlty towers

Becoming infirm is not a topic that many people wish to talk about, yet it is, in my opinion a vital part of proper financial planning. After all, the job of a financial planner is the attempt to make your money last as long as you, ensuring that it doesn’t run out. Yet we all know that should we ever require care at home or in a residence, this can be incredibly expensive and is often referred to as a “ticking time bomb” within press and political circles. One of the scenarios that I model for clients is precisely this problem and of course there are implications for ensuring that not only your Will is up to date, but also that you have Lasting Power of Attorney in place.

The broadcast promises to be interesting and is on this evening at 8pm, Radio 4, called “Suppose I Lose It”. It will be available on the BBC i-player afterwards presumably for the usual time-limited period.

Dominic Thomas

Dementia – Suppose I Lose It2023-12-01T12:39:45+00:00

Inflation rate now 1%

Solomons-financial-advisor-wimbledon-bloggerInflation rate now 1%

Today, the ONS revealed that the inflation rate has fallen to 1.00%. On the one hand this appears to be good news – prices are not rising rapidly so we dont have to spend quite as much paying for goods and services. On the other hand there are some negative issues with this too. Firstly, whatever any Government says, inflation effectively devalues and reduces debt in real terms, so a degree of inflation for any economy carrying huge national debts (like ours) is actually rather a helpful tool. Secondly low inflation means that Government doesn’t have to worry too much about price rises and attempting to offset this with tempting offers not to spend (i.e. increasing interest rates which encourages saving rather than spending). So low inflation would suggest further long-term low rates of interest, which will displease anyone with cash in the bank using it to provide income.High cost of living

The main causes of the reduction in CPI (Consumer Price Index) are described by ONS as falls in transport costs (fuel, air transport and second hand cars). A little delving into the data reveals that food and non-alcoholic beverages decreased by 1.7%, clothing by -0.2%, transport by -0.2% and thet delightful category “miscellaneous” decreased  by -0.8%, all essentially deflation. However costs rose 4.0% for alcoholic beverages, 3.3% for electricity, water and gas, 2.0% for health, 2.4% for restaurants and hotels. Education costs rose 10%… which I assume consists in part of University costs. So your personal rate of inflation will rather depend on what you spend your money on. If you wish to delve more deeply into statistics, here is the official excel spreadsheet link.

Personally, I would be less inclinded to reply on national statisitics for your personal financial planning. It is not that I don’t trust the figures, it is simply that they include many things that you may not buy regularly. The weighting of the “basket” of goods and services is defined by others and when planning your own finances, it is much more sensible to consider how relevant it is that education costs, new or second hand cars are as part of your normal budget…. perhaps not much, so peak at the tables may provide clues to your own personal CPI.

Dominic Thomas

Inflation rate now 1%2023-12-01T12:39:45+00:00

NS&I Pensioner Bonds

Solomons-financial-advisor-wimbledon-blogger

NS&I Pensioner Bonds

Her Majesty’s Treasury announced the new rates for the NS&I Pensioner Bonds last week. These look incredibly competitive for fixed interest rate cash deposits (bonds). These will be offered in the new year at some point in January. There will be a 1 year fixed rate of  2.80% and a 3 year rate of 4.00%.  There is a maximum investment of £10,000 into each. You can have both (£20,000 in total). The interest will be added at each anniversary.

bond-pic-2-600x325

The World Is Not Enough… well £20,000 isn’t

When comparing Bond rates for cash against market equivalents, they are incredibly good – but clearly restricted to a maximum holding of £20,000 per person, I expect that there will be a high demand and as a result the offer could be withdrawn fairly quickly. Blink and you may miss it.

If you would like more information about this please consider the NS&I website. Remember that this is for cash balances that you can afford to lock away for 12-36 months. If you expect to have this money longer than that, then please consider proper investment advice as despite the fact that these rates are “good by comparison” they would be an unwise use of your money as a long-term investment plan (5 years or more). Cash is for your emergency safety net and planned expenses in the 0-48 month window.

Pensioner Bond

The “Pensioner Bond” is only available to those aged 65 or over… which if you are interested would enable 4 of the living 6 actors that played James Bond, 007 to apply.

Timothy Dalton (70); George Lazenby (75); Sean Connery (84), Roger Moore (87). The current James Bond Daniel Craig is 46 and his predecessor Pierce Brosnan is currently 61. The other Bond story is that the new 007 film “Spectre” is scheduled for release in November 2015.

Dominic Thomas

NS&I Pensioner Bonds2023-12-01T12:39:44+00:00

Annuities

Solomons-financial-advisor-wimbledon-bloggerAnnuities

An annuity is an income paid for life. Simple. Generally people buy an annuity with a pension fund, which for the vast majority of people is when they retire. The rules changed recently with George Osbourne’s Budget in the Spring, this meant that from 6th April 2015 nobody has to buy an annuity if they dont want to.teh big steal

Why?

This is an acutaries field day, but let’s keep things simple. Annuity rates are closely linked to interest rates, investment returns and life expectantcy. Over the last 20 years interest rates have fallen considerably (as anyone can observe) so too has inflation and with that investment returns, though “real” (after inflation) returns have been fairly constant over the long term. People are also living longer (on average) – meaning that any income needs to be paid for longer. So actuaries do their sums and review their sums based on these factors.

As a result annuities have fallen from double-digit rates in the 1980’s and early 1990’s to very low and comparativley measly figures today. As a result people understandably look at the size of their pension pot and the projected annuity income and don’t like what they see. Hence pressure over the years to abolish the requirement to have an annuity, which is essentially a decision made once at 65 that cannot be altered and one you have to live with for life.

Regulatory Review MS14-32

The current regulator (my fifth!) has recently published its findings about annuities and how they have been sold. Most of the report is nothing new, myself and other advisers have been calling for change for years. The main problem being that the vast majority of people do not think to consider the options at retirement properly. Far fewer still do any proper planning (working out how much income is needed, when and for how long etc). Most assume, rather strangley, that their existing pension company is simply offering them the “best deal” which is rarely the case… I’m reluctant to say “never the case” but I am tempted to do so. This is why people need to “shop around” but more sensible still – engage a financial planner to properly assess and explain your options. There can be enormous differences from simply getting a better deal, let alone the most suitable, which takes account of your needs, tax and so on.

Whilst the press have been covering Mr Osbourne’s pension freedoms, annuities certainly still have a place and are one of a number of “tools” to consider. For starters, of all the options, they are the only ones to provide guarantees. So if you know anyone that is in the process of retiring don’t let them get confused by the media noise, but encourage them to seek advice from a financial planner – like me.

Dominic Thomas

Annuities2023-12-01T12:39:43+00:00

Professional Adviser Awards 2015

Professional Adviser Awards 2015

I have to admit to being pleased that we have been short-listed to the last 7 firms in the “Best financial adviser in London” category again – for the second year in a row! The award ceremony isn’t until mid February next year which is when we find out who won.  If you are interested, the entry involved selecting one of three case studies and outlining how we do what we do for our clients, though in this instance, it was obviously a fictitious one.

professional adviser 2015 awards

I know some of the firms and I am very pleased to be on the short-list, whatever the outcome it is not bad for a very small financial planning firm to be down to the last 7 in London. Its a good way to sign off the year and I’m pleased for the whole team and of course our clients.

Dominic Thomas

Professional Adviser Awards 20152023-12-01T12:39:43+00:00
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