May 2012 - Page 2 of 2 - Financial Planning in Wimbledon

Solomons: Morning Brew Extends Life

1931: Cafe Noir – Leslie Hiscott

As clients of ours will know, when creating your financial plan we need to assess how you currently spend your money, often there is a gap between what is stated and what happens. This is what I (and many others) call spending creep and I usually suggest that this is what all those trips to coffee houses actually cost. Unless some fairly tough decisions need to be taken, I rarely suggest that we alter “spending creep” we assume that it is indeed spent money, rather than treat it as identifiable and therefore able to be saved and put into your financial bucket or plan (as some are prone to do). Spending creep is part of life and a budget should be something that allocates money, not counts every bean. Well it turns out that perhaps not terribly helpful to your wealth, all those coffees are perhaps helpful to your health. The LA Times report that drinking coffee might improve your life expectancy. Now I’m not an expert so I couldn’t tell you if this is actually true. I have to admit to holding a great many suspicions about the links between research, business and media particularly in the US. However, if it is an accurate assessment, then perhaps coffee drinking is a new form of investment in your future… but of course living longer may bring other issues – for instance being able to afford to live or have additional need for care, which has a significant price tag.

For those of you that work and grab a coffee on the way, I wonder if you have thought about how much your spending on coffee typically is each week? I have failed to notice any good hot drink sell for less than £2 and I invariably find myself parting with something closer to £5…. I’m a sucker for the blueberry muffins. Any visitor to Paris, Venice, Florence or Rome will also be aware of the high price of a the black nectar. Well say that’s 5 days a week and something like 46 weeks a year.. around £1,150 a year… which is why I bought a decent coffee machine for the office (which clients like too). Whilst I cannot grab the coffee on a platform (or near one) my pod coffee machine is not even a tenth of the expense. “Look after the pennies and the pounds will look after themselves”. So apart from being a nice pick-me-up, if coffee is also a wake up call to longevity, make sure your financial planning ensures you have enough beans until the end!

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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

Solomons: Morning Brew Extends LifeDominic2017-01-06T14:40:02+00:00

Financial Planning to a Different Rhythm – Yours!

1992: Strictly Ballroom – Baz Luhrmann

To many people financial planning is about building up savings in a variety of financial products, coupled with trying to achieve market beating returns. This is a complete misunderstanding of what it really is. A meeting that I had this morning is an example of what financial planning is (or should be in my opinion). Financial planning is about you setting the tempo, the rhythm and pace to your own lifestory, not outside forces such as “the markets”. You don’t have to do things the way everyone else does, but if you want things to work, you need a plan and one that includes a few safety nets.

Over the last six years I have been working with a charming couple, who I always enjoy seeing, as they planned their retirement. This has now happened, though they are busier than ever before. We have put in the groundwork over the years and today was an opportunity to review progress. Over the years we have been discussing their plans about their future. Today, most of our focus was on how they plan to spend their money, provide for their children and also support charities close to their heart. We discussed how we might make sensible provision for care or assistance in their later years to ensure that their funds don’t run out, but with a significant emphasis on living generously today.

After discussion I am able to make a few minor adjustments to their plan, to demonstrate what investment returns are really needed each year, which when factoring in their lifestyle spending and giving plans is a meagre 1.44% a year after all investment costs, which clearly has implications for how a portfolio is structured and has made allowance for inflation. Our thoughts turned to the current problems in the Eurozone and the impact that this might have on selecting a few worst case scenarios (such as the stockmarkets crashing), should their portfolio suffer a 35% decline and not recover, (by which I mean no “bounce back”) investment returns would need to increase, but only to a very modest 3.15% a year. In short, we identified that they were highly unlikely to ever run out of money – the only real pressure was from their own spending behaviour (which we review, not to be controlling, but to ensure that our assumptions are broadly correct).

I would suggest that (from over 20 years experience) anyone seeking financial planning advice is not terribly interested in ISAs, pensions or investments – but whether or not their money will run out, whether they will have enough and in the event of calamity, what the consequences might be. This delivers genuine peace of mind and appreciation of the long-term “game” as well as what is really important. This is the antedote to a media filled with stories of woe and fear..which reminds me of a quote from the Baz Luhrmann film Strictly Ballroom: “a life lived in fear is a life half lived”. If this is what you would like from your financial planning, what are you waiting for? pick up the phone or send me an email.

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

Financial Planning to a Different Rhythm – Yours!Dominic2017-01-06T14:40:02+00:00

Being Wary of Men in Black Suits

2002: Men In Black 2 – Sonnenfeld

On your behalf (and mine) I have been seeking out the wisdom of “experts” again today, with the second and final day of the Morningstar 2012 conference. That said, one of the most memorable talks was from Dave Fishwick, Head of Macro and Equities Investments at M&G who pointed to the flaws in human nature to consistently seek out the opinions of supposed experts. “Men in suits”, who purport to have a valid, credible opinion. He suggested that many of those claiming to have spotted significant moments of change, invariably have only done so once, and perhaps this has something to do with luck. This was acknowledged later by contrarian investor Alistair Mundy of Investec, who talked with great honesty about the need for Fund Managers, advisers and investors to be honest about our mistakes and to learn from them, something that is often difficult for Fund Managers in particular, to do. He pointed to the abilty of humans to forget all too readily and this is something that investors need to be mindful of in the coming months as yet more market turbulence is likely as European markets eventually figure out how they will address their problems.

The world has changed though, particularly in the credit markets, what was once low risk, is now arguably high risk, for which there is a considerable premium. The Bond market has seen huge inflows of money as investors seek safety, yet many corporate bonds are actually paying lower levels of yield (income) than equities from the very same companies. Risk has been moved from the private sector to the public sector, with sovereign nations more at risk than many investment banks. This is a fundamental change in the way Bonds have worked throughout my time on earth (or indeed anyone else’s for that matter). Luke Spajic of PIMCO, argued that the new upside down credit world poses questions for portfolio construction and something that I am currently reviewing, though thankfully believe clients are well positioned.

The key points from my perspective frankly have little to do with investment selection, but everything to do with having robust, repeatable processes that are tried, tested and work. This is something that I have constantly worked on for our clients over the last decade or so. Financial planning has a fair bit to do with artistry – applying experience and professional opinion to the reality of data. Ultimately though, achieving goals is the purpose of financial planning, not calling the market (right or wrong).. but helping our clients to get where they need to go, as cost effectively as possible and ensuring that purchasing power and lifestyle are protected.

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

Being Wary of Men in Black SuitsDominic2017-01-06T14:40:02+00:00

Seeking Values

1957: Something of Value – Brooks

Today has been a “classroom day”, spent in the company of some of the leading financial planners and several top drawer Fund Managers. Today’s key themes were probably to be expected – what on earth is going on in Europe? and what will the impact be on our clients? Well, as with all investment seminars, there are as many opinions as there are people (and a few more besides). The question of Europe hangs heavily in the air, reactions are mixed. For starters, “Europe is not terribly significant” (6-9%) of the global market and shrinking each year in terms of its global impact, though the way the media cover the story one would liken its significance to a catalyst for an End Times scenario. There are better places to invest (yes I would hope so too) but what irks me is the way that the financial services industry makes blanket statements about parts of the world. We are talking about people, indeed we are talking about our peers, friends and family, not simply “them” or “the consumer”…it may be politically expedient to forget that nations are nothing more than a collection of people, but to discuss the world in such terms does rather miss the point, that business exists to serve people and investors exist to help business flourish. So whilst I might agree that, yes Europe is a mess and is only a small part of global markets, it is our neighbour and whilst its size may be increasingly diminished, failing to reflect on the societal impact of an unstable Europe would perhaps be like missing the bad apple, which will eventually pass its dis-ease to others. Only time will tell.

As for regional investment, there was mixed and arguably divided opinion on this. The only speaker to make helpful use of data in his slides suggested that investors need to focus on companies not countries. A valid point, but the cultural differences of countries, combined with their political and legislative take on life is not something that even a multi-national company can easily bypass. The truth is of course that investors need to seek out value and diversify, being mindful of where most growth is likely to reside, though historically this would also carry the highest risk, due to the size of the relevant market or exchange (and possible Government interference). Investment Management Firms need to search for the next big thing… the next Brazil, Russia, India and China (BRIC)… it was suggested that the “next eleven” or N11 would include South Korea, Turkey, Mexico, Indonesia, Nigeria, Bangladesh, Egypt, Philippines, Vietnam, Pakistan and Iran…. somewhat controversial and of course would probably require a significant change in political leadership on all sides.

Thankfully, there were signs of hope that growth is returning and indeed happening (largely in non-OECD nations) and that investors must think globally. Something that we at Solomon’s do with our clients – we aren’t UK centric in our investment approach (thankfully). Perhaps one of the most refreshing talks was an interview with Hendrik du Toit, the CEO of Investec Asset Management, who spoke of values, serving our clients and being a faithful fiduciary, something that resonated with me and I hope is clearly expressed and imbedded in our client service.

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

Seeking ValuesDominic2017-01-06T14:40:02+00:00

The World According To…

1950: Key to the City – G Sidney

It has been a very busy few weeks. I haven’t had much time to update the blog, but then perhaps little has changed… the markets remain nervous about European Governments keeping their promises (I’m sure I suggested some months ago that they wouldn’t and that the effort to retain the Euro was and is a colossal waste of money)…. the football season is nearly at an end… which simply proved that whilst money clearly provides an advantage in sport it doesn’t guarantee results. Manchester City just inched through as Premier League winners.. by a whisker and I’m sure that other large clubs that spent millions may be finding that counting their trophies is not a difficult task this year. As ever, money does not guarantee anything, but you would probably be wise to assume that it adds considerable advantage, such as securing the top players. So it will be with interest that over the next couple of days I attend the annual Morningstar conference in the City of London. Designed to keep me informed with the latest thoughts from some of the world’s leading “expert” investors. I will keep you posted, but remain mindful that talk is cheap, results are what counts.

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

The World According To…Dominic2017-01-06T14:40:03+00:00

Cash ISA Headlines

1955: Headline Hunters – Witney

Here is an up to date list of some of the top paying accounts available at the moment. As ever, this does not constitute financial advice and is merely a list. You should always check the detail (at the risk of sounding patronising, but putting in suitable caveats to satisfy regulators and PI insurers). I suggest looking at Moneyfacts for more information, but please take care as rarely are top rates much different from anyone else’s without a sweetener of some type.

Instant Access Account

Online: Coventry 3.15%

Bank: Virgin Money 2.60%

Building Society: Nottingham 3.25%

Comment: Dreary rates, though far better than leaving the money in your current account which probably pays nothing at all. These accounts are described at instant access, but check the detail carefully.

Cash ISA – Fixed Rate

Online: Skipton Building Society 4.00% for 5 years

Bank: Halifax 4.25% for 5 years

Building Society: Leeds 4.00% for 5 years

Comment: These are 5 year rates, which are really disappointing for savers. You will be effectively locking up your money to “grow tax free” at a rate that is only just above inflation. There is in practice minimal real growth and frankly wouldn’t generate much interest to tax, so the ISA status is hardly worthwhile. Think very carefully about locking up cash for 5 years.

Cash ISA – Variable Rate

Online: Santander 4.00%

Bank: Barclays 3.05%

Building Society: Kent Reliance 3.50%

Comment, how on earth the Santander account finds its way into the results as a variable rate account is beyond me, its actually a 2-year fixed rate at 4.00% (so equivalent to the 5 years Fixed Rate ISAs). Oh and if Rory McIIroy wins a golf major they will add another 0.10%, which probably won’t make much difference to you, but would to Rory! The Barclays ISA is only for Barclays customers, either with a current account or £500 saved with them. The normal Barclays Cash ISA rates are unsurprisingly bad at a puny 0.10%. The Kent Reliance ISA is a 2 year tracker rate, again look beyond the headline.

Personal Favourites

Again, this is not advice, but my personal favourite Cash ISAs (if you really want one) M&S Money – but watch out for the early withdrawal penalites. ING who are one of the easiest and better Banks (3% no quibble) to save with. Nationwide have some good rates, but better if you have an account with them. They are one of my preferred Building Societies.

Remember that the FSCS protect up to £85,000 per person, per Banking License (which may not be the same as per Bank). Please watch out for this, in the event of a Bank or Building Society collapse you need to know that your cash is fairly well protected, those with large reserves in cash be warned.

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

Cash ISA HeadlinesDominic2017-01-06T14:40:03+00:00

Credit Where Credit Is Due

1980: Airplane – Abrams & Zucker

I’m no less immune to becoming a victim of financial fraud than anyone else. Sadly over the Bank Holiday weekend someone managed to use my credit card to make a rather expensive purchase from a well-known high-end airline – for a sum approaching £4,000. Care with your personal banking is something I have often written and talked about, so it shouldn’t be a surprise that I noticed this pretty quickly and immediately informed my Bank (NatWest) that this wasn’t my purchase and was in fact a case of financial fraud – or theft as I prefer to call it. Thankfully the team at NatWest could quickly identify that this was a case of fraud (the name of the purchaser was evident to them in this instance – which was odd I thought). Anyway my account was corrected on the same day. Full marks to NatWest who have now improved my sentiment towards them for doing what in theory they promise to do anyway. My own cynicism and the experience that others have reported to me has generally left me suspicious that action in such circumstances could be as swift or helpful. I am delighted that my experience of NatWest was rather different and very helpful indeed. Sure I have had to cancel my card, which will probably create a few practical hiccoughs over the next month or so, but this is the price that I pay for proper protection. Thanks NatWest, a job well done.

How did it happen? well only really three possible options – either my card had been cloned via some terminal (which I doubt as I check these things carefully) or it had been seen by a criminal (also highly unlikely) or a website that I used it for was severely compromised. This seems to most likely explanation to me, as I had a poor experience with one site in particular – which whilst a “decent” organisation, have a really rubbish payment system. A lesson learned to back off as soon as I become suspicious of such a site again.

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

Credit Where Credit Is DueDominic2017-01-06T14:40:03+00:00

A Spoonful of Sugar

1964: Mary Poppins – Stevenson

Financial planning is not something that nations do terribly well, as we have all observed over the last couple of years. Last weeks local council elections did little to highlight much, although depending on your political leaning, perhaps your interpretation will differ. The London mayor vote boiled down to the predictable two-horse race, with Boris Johnson and Ken Livingstone collecting 84.3% of the total vote. The LibDem candidate Brian Paddick came in fourth behind the Green candidate Jenny Jones, sharing between them only 8.6% of the total first choice vote – of course this is the result of those that decided to vote (about 2.2m), the majority (3.6m) didn’t actually vote at all. The average “turnout” being 38%. So whilst Boris pulled in 1,054,811 first choice votes and Ken 992,273 (according the the BBC site) even Boris’ votes only really amount to 18% of eligible voting Londoners, fewer than one in five. For those worried about the rise of the BNP, they achieved 28,751 votes or about 0.5%… one in two hundred Londoners. The wider local council elections reflected much the same. France of course has now decided to oust Mr Sarkozy preferring Mr Hollande, to sort out their economy, much to the chagrin of Germany who had hoped France to be a major partner in seeing through austerity measures.

It would seem that the public at large are not happy with austerity measures (frankly who is surprised by this insight? and who couldn’t have predicted it?). The problem for us all is that politicians will seek to implement policies that please people and defer the the inevitable changes that need to be made, principally that spending more than you earn is not a sustainable way to run either personal or national finances. Ideologically, there are of course alternatives to a simple “cut public services” approach. It would seem to me that politicians have failed to communicate the severity or significance of the national and international crisis unless changes are made. They have failed to grasp the nettle, so-to-speak and have offered little vision for our increasingly inter-twined futures. The medicine may taste nasty and may be very unpopular, but to date, few have offered any credible alternatives. Politicians have failed to provide us with the much needed spoonful of sugar to sweeten the bitter taste… we are in need of a Mary Poppins, in which you will recall the delightful Mr Van Dyke failed to convince with his attempted cockney accent – our politicians and those in Europe need to walk the talk.

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

A Spoonful of SugarDominic2017-01-06T14:40:03+00:00

Counting the Votes

1972: The Candidate – Ritchie

As a financial planner it is difficult to assess the true impact of local elections with respect to the impact on our economy, yet clearly yesterday saw a significant vote against the Coalition Government. The markets don’t like this sort of vote. The turnout was woefully low, perhaps due to a fairly grim day, but probably has more to do with the fact that it would seem that the majority feel increasingly disconnected from post-modern politics, if this isn’t the case, then the low voter turnout is even more shocking. As we know, France is also having presidential elections. It would be reasonable to suggest that markets are a little apprehensive about the prospect of France electing someone that may not see through their own austerity measures. The knock on effect of this could be significant for Europe as France is effectively number 2 in the region, The “big one” of course is the US election in November. This is likely to mean that bad economic news is played down and played up by opposing sides and we may not have a clear indication of how well the US is doing until January 2013. As the rain continues to fall and the hosepipe ban persists, my only prediction is that this may be a summer of continued turmoil in Europe.

Sadly there are no easy answers to the economic situation. The debts of the western world are so significant that to carry on as before is really not an option. However for some, life seems to be just as good as it was prior to any austerity measures. Take the Sunday Times Rich list as an example or indeed the auction of the Edvard Munch’s “The Scream” which sold at auction in New York for an enormous $120m. The highest price paid at auction for any piece of artwork. There is a very real sense that wealth begets wealth and the converse is also true, poverty begets poverty. Whilst few in Britain are poor when compared on a global scale (perhaps you saw Ewan McGregor’s Unicef cold chain mission to Napal) the poor need to be encouraged and incentivised to find work and to create wealth. It would seem that many in Britain don’t believe that the Coalition are achieving this aim quickly or clearly enough, hence today’s market fall. In my view it is vital to have a financial plan, one that has been stress-tested and has a long-term, values based focus. This will enable you to avoid the anxiety of markets and meltdowns and the overinflated value of most “news”. Have a great Bank Holiday weekend.

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

Counting the VotesDominic2017-01-06T14:40:03+00:00