September 2010 - Page 2 of 3 - Financial Planning in Wimbledon

Investment Bonds

Investment Bonds are a useful part of an investors armoury – providing a degree of flexibility. In essence a lump sum investment into an Investment Bond (life assurance bond) can provide investors with some good options.

1. You can take up to 5% of the original amount invested each year without giving rise to any tax liability. This is in part taking back part of your original capital, but makes a very useful tax and income planning option. You can also roll up any unused 5%’s – so that you could take several years worth at once. Note that a year is a policy year and not necessarily a tax year.

2. There is no capital gains tax to pay, funds are switched without giving rise to any capital gains. This is currently 18% or 28% depending upon your income.

3. If your Bond has grown after a number of years and you have not withdrawn money from it, it may be in your interests to surrender it and then invest into another Bond. There are some issues here – firstly you might be subject to income tax if you are a higher rate taxpayer at the point of surrender. Secondly this smacks of “churning” replacing a policy with another to generate a commission. That’s why we don’t apply any initial charge on the new Bond. My thinking is that we are already being paid to look after the investment, and that this is merely a part of that “looking after”. The reason you would do this, is simple – the 5% allowance is based upon the original investment. So if your Bond was worth £80,000 and your 5% was therefore £4,000 a year, but you left it to grow – and it is now worth £160,000 the new 5% Bond is £8,000 a year.

I have recently reviewed portfolios within Bonds and sent my advice to clients. These were sent out yesterday. I have advised some fund changes and these need to be returned by Monday 4th October 2010.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Investment BondsDominic2023-12-01T15:32:04+00:00

Email to clients

I’ve tried to send a prompt to clients this afternoon via email. Look out for it in your inbox. The subject heading is “Message From Dominic Thomas At Solomon’s IFA – Word Doc Attached”.

The problem is that my usual signatire isn’t there – so it may be confused as spam. So please also check your junk/trash file within your email application. There is a word document attached, it starts with the letter D and then has some numbers after it. You will see the Word icon.

I’d value your feedback.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Email to clientsDominic2023-12-01T15:32:05+00:00

Funds: Investec

With effect from 1st October 2010 several Investec funds will have higher charges. On the Skandia Investment Solutions platform the following will apply:

Investec Cautious Managed
AMC increasing from 1.25% to 1.50%

Investec Global Bond
AMC increasing from 0.75% to 1.00%

Investec Managed Distribution
AMC increasing from 1.25% to 1.50%

Investec Monthly High Income
AMC increasing from 0.95% to 1.25%

Investec Strategic Bond
AMC increasing from 0.75% to 1.00%

On the old Skandia Life platform charges have also risen for:

Skandia Investec Cautious Managed
TER up from 0.90% to 1.15%

Skandia Investec Monthly High Income
TER up from 1.10% to 1.40%

Skandia Investec Strategic Bond
TER up from 0.80% to 1.00%

Mumbo jumbo… AMC = Annual Management Charge. TER = Total Expense Ratio. The latter represents the annual cost an investor can expect to incur. It is actually the sum of the Fund Managers annual management charge and all other expenses incurred directly by the fund.

These funds are not currently within our portfolios, however some legacy clients may have these funds. The good news is that there are no fund switching costs within any of the Skandia products should you wish to switch away from these funds.

I have written to those that hold these funds.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Funds: InvestecDominic2023-12-01T15:32:05+00:00

Schmarketing

The changes that are being imposed on IFAs by the FSA as a result of RDR that is due to begin from 2013 are wide and varied. Perhaps the most obvious question to ask is “at the end of all this, who will use an IFA?”. Therein lies a question prompting a plethora of responses and business models. An equally important question is – who will not be able to use an IFA? (because we will all be charging fees). The short answer is – most people and probably anyone that doesn’t pay 40% (or more) income tax. This is of course an issue that I have had at the heart of the business since I formed it in 1999, but new for most IFAs.

So I was intrigued by one of todays PFS topics about segmenting your client bank a strategy apparantly an outcome of RDR. I can’t stand being put in a marketing box and frankly doubt anyone else can either. Yet marketeers continue to attempt to redefine what we all know by meeting people and frankly I think that most of it is complete hogwash. So much is read into consumer spending and responses to telephone surveys that ask questions like “do you have a private pension?” yet I dare say that most respondents are fairly flippant in their answers… “Do you have any investments?” asks the market researcher… something tells me that I’ll say what you want to hear or say no, just to stop you from flogging me something.

Surely people are alike and different. We are much more complex than the surveys would have us reduced to. Who would I prefer to advise? well surely its obviously people that WANT my help and can afford to pay for it. People like my existing clients, who knows people like my existing clients?… my existing clients. Surely that is the marketing (based upon delivering results and service) that any business needs.. or am I being too simplistic?

Anyone fancy a mailshot?…. give me strength.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

SchmarketingDominic2023-12-01T15:32:06+00:00

When Insurance isn’t Insurance

It may sound very odd for me to say, but today I have learned some very sad news about “my competitors”.

Today I learned that “thousands of IFAs are facing bankruptsy” this is the headline in this mornings trade paper “Professional Adviser”. As IFAs we all have to take out professional indemnity insurance each year and are not permitted to trade without it. Much like car insurance, we have to pay the excess which is typically between £2,500 and £10,000 per complaint. PI cover is expensive. Unfortunately many IFAs appear to have failed to realise that this is per claim and not per “type of claim”. This has come to the fore due to the ongoing saga of Keydata – a firm providing investment products that has since gone bust. I have commented about this before so won’t bore you with further detail. In summary it would appear that many IFAs who advised their clients to use Keydata may now themselves become bankrupt if they receive a spate of claims.

I meet quite a lot of IFAs these days and ok, they tend to be people at the top of the industry, I have not met one that would deliberately rip someone off. There are good and not so good advisers for sure, but the FSA is working hard to get everyone to the same sort of standard and moving advisers away from a sales culture (at last!)… though that is pretty much all PI insurers and the FSA are actually interested in within their forms. So I have to say that I’m not rubbing my hands with glee that others face bankruptsy. This merely is yet another indicator that the industry is poorly structured and the redress system is somewhat ridiculous. No one goes through life without making mistakes…at least no one that I know or have ever met in person.

We have got to get away from this puerile litigious culture and move towards a considerate and more mature approach to how we deal with wrong doing, deliberate or accidental. I fully accept that where someone has lost their entire wealth due to the unscrupulous behaviour of an adviser – such as Mr Maddoff serious redress needs to be provided for. However giving your life’s wealth to one fund manager is painfully suggestive of folly.

There has got to be common sense and reasonableness. Our industry must reimagine itself and not just adopt another set of rules that someone, somewhere will inevitably find loopholes.

We all make mistakes, it is what we learn from them that is actually rather more important so that we don’t get tempted to make them again. So whilst our clients have not been subject to any such problems and I adhere very closely to the simple notion of not advising on anything that I don’t clearly understand, like everyone else I am prone to error… there but for the grace of God go I..

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

When Insurance isn’t InsuranceDominic2023-12-01T15:32:06+00:00

Ethical Investment

For those of you that are interested in ethical investment, here is a very good summary of the main issues provided by Skandia. Skandia act as a platform or “supermarket” enabling access to hundreds of funds, including ethical funds, hence the interest and the information – which is very well put together.

Of course the problems in selecting investment funds still has two main problems – assessing which fund manager is likely to provide acceptable performance and add advantage, the other being charges. Whilst my crystal ball is no better than yours, clearly I have some valuable experience and insight that will assist in this process.

Have a look at the mini site provided by Skandia if this subject interests you.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Ethical InvestmentDominic2023-12-01T15:32:07+00:00

FUNDS: Skandia Life Pension

Skandia Life have decided to close the Skandia Fidelity Managed Fund from 21st October 2010. Those with holdings in the fund will be automatically switched into the Skandia Fidelity Flexible Managed Funds. Investors can of course select any fund from the 300 or so available on the Skandia Life pension range.

The replacement fund is more expensive with a total expense ratio of 1.3% as opposed to 0.9%. However the fund will be run without oversight from Skandia – i.e. letting Fidelity do what they do best.

This is the latest fund sheet

This has been a consistently second quartile fund and is over 24 years old but seems rather “old school” by comparison to other fund alternatives these days. This has been a successful long-term working partnership between Skandia and Fidelity – two of the top companies within the multi-fund world and certainly with the longest UK track records.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

FUNDS: Skandia Life PensionDominic2023-12-01T15:32:08+00:00

Talking Money

We have mailed the hard copy of Talking Money to clients today. If you would prefer to cease this (as it is now available via our website) please let us know.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Talking MoneyDominic2023-12-01T15:32:08+00:00

BBC interview with stressed HMRC employee

The BBC managed to persuade a tax collector to talk to them (albeit in disguise) about the pressures that HMRC are under. Listen to this 5 minute interview, the inspector says that there are over 1 million pieces of unanswered post.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

BBC interview with stressed HMRC employeeDominic2023-12-01T15:32:09+00:00

Email Update

I am planning to email clients requesting feedback and to act as a test for future emails. Unfortunately our email system will not put a signature on the email, so I hope that by completing the subject line you will receive it properly. There is a Word document attached.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Email UpdateDominic2023-12-01T15:32:09+00:00