July 2012 - Page 3 of 4 - Financial Planning in Wimbledon

Slippery Big Fish

2002: Whale Rider – Caro

It is always a “bit concerning”, when those paid to look after money get their maths badly wrong. However it seems that JP Morgan has taken this to a new level. They announced that their losses were double the amount previously stated. We aren’t talking small sums or the odd decimal point, but £2.8bn.

The “London Whale” (not the Olympic stadium) was a JP Morgan trader called Bruno Iksil who had got his positions significantly wrong. He was trading in the more “awkward end” of financial products – credit default swaps. However it appears that other traders were also concealing the scale of their own losses as well. As a result, just 45 minutes before releasing the Q2 results, the Q1 statement has been revised or “restated” in their language (which seems like spin if ever there was to me). Now frankly, I don’t see much difference between this and fixing Libor, the issue is one of deceit. At a corporate level, there appears to be a complete lack of robust systems and controls that are worthwhile. I know that many traders are very clever people and under the wrong pressure may seek out loopholes or weaknesses in the system. This begs the important question, why is it so difficult to be honest in some of these large investment banks, where the premise is that markets rise and fall, they are in the business of risk and surely know that all decisions cannot be right. I suggest that they re-read their own business principles document and apply them.

It may not surprise you to learn that it doesn’t matter to me how “great” a fund or product is that is marketed by organisations such as these. I will not be deliberately exposing clients to the investment “expertise” of organisations where there is continued suspicion about behaviour and the integrity of vital numbers, and yes I don’t really care how many “ring fences” are in place, it isn’t on.

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

Slippery Big FishDominic2023-12-01T12:22:16+00:00

The Robin Hood Banker?

1991: Robin Hood Prince of Thieves

Whilst some investment bankers may get away with what often looks and smells like theft, one commercial manager at a local HSBC branch in Norwich was recently sent to prison for two years for theft and false accounting. It seems that he moved money from healthy business accounts to help businesses that were struggling with repayments on loans that he had agreed. It is also reported that he also siphoned off some of the money to fund some relatively minor expenses. He pleaded guilty at Norwich Crown Court to theft and false accounting over a 7-year period from 2004-2011. He falsified customer bank statements to cover his tracks. He admitted that he moved money to disguise bad loan decisions that he had made to failing clients. The Court learned that he benefitted by more than £45,000 personally, but the HSBC losses were closer to £200,000.

This is an unusual case, one where it appears that the theft was mainly used to help ailing businesses. One might ask why? I would suggest that this may have something to do with internal commercial targets set by the Bank, which presumably includes an element of “negative scoring” for loans that default. To my mind, this is probably the root cause of the crime, which is based upon a culture of sales targets rather than good lending or indeed good banking. It would be wrong to single out HSBC here, as a similar problem is faced by most bank staff. It is also concerning that it took so long for the Bank to identify the problem and indeed several businesses from whom he stole, failed to identify the theft at an early stage. This is more evidence of the need to check your bank statements very carefully. I have to admit to being somewhat perplexed by the time it took to notice this crime, one would have liked to have thought that an Accountant or business owner would have been able to spot a glaring hole in their business account. As a footnote he asked for a further 46 other offences of false accounting to be taken into consideration.

Transparency is a key issue in financial services, as is trust. This is something that I have spent years attempting to provide.

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 Robin Hood Banker?Dominic2023-12-01T12:22:16+00:00

Feeling Horse Whipped?

1926: The Great K&A Train Robbery

Banks have been taking a hammering of late in the press. Co-Operative look set to swoop in on the fire sale of 630 or so branches of Lloyds TSB (who don’t forget also have Halifax and C&G branches). This will obviously increase the presence of the Co-Op, who will, if successful, control around 10% of UK branches, which will almost triple its current share of the high street. The sale was originally priced at £1.5bn, but it is widely reported that this will be significantly discounted. Remember that Lloyds are still heavily owned (40%) by the UK taxpayer. Personally, I would imagine that Lloyds would welcome being forced to get rid of branches, they are invariably expensive cost centres and with the advancement of online banking, it is hard to justify why (beyond local community reasons) they are maintained. The banking system is undergoing the equivalent revolution that the steam railway faced. You may have seen the Lloyds “for the journey” high speed train adverts, perhaps not an intended link – the internet is certainly the future of banking, which is admittedly about user experience, but not exactly about the journey. To add a little fuel to the fire, the Office of Fair Trading has begun another review of the market, this time with emphasis on current accounts. The last OFT review was in 2008, which was mainly concerned about overdraft charges. I couldn’t resist using the image of this film poster despite it not being a black horse.

The Labour leader, Ed Miliband has been complaining about the charges on pensions. I’m not sure where he has been getting his information, but the sort of charges that he is citing (5%)are for old style pensions and he may have forgotten that whilst charges are an important element of building a pension fund, they are by no means the most vital part. The ABI and many advisers are rather cross. Stakeholder pensions, with charges capped at 1% were introduced by the Labour Government and have been a complete disaster in terms of the number of people using them. Sadly, it is hard to get the majority of people to plan for their futures and however cheap the pension, does not lead to improvement in the numbers doing so.

I don’t have too much of a problem with his basic gripe, though his information does seem very out of date. Anyone that has a more modern pension will have far lower charges than he is suggesting, and frankly it seems a little bit like posturing rather than offering solutions. Successive Governments have made a complete mess of pension legislation, which has become more complex and more restrictive. The Coalition have delayed the review of the State Pension, which could get kicked into the long grass for some time. Sadly, these matters are important and reliance on politicians to sort the system out is about as good an idea as a chocolate teapot. One thing he is right about though is, “A lot of people are going to say, when they retire, I had no idea what was coming my way”. This is why financial planning is important, coupled with financial education (to reveal the future with the chance to change it if you don’t like how it looks). Taking responsibility is the first step towards planning for your retirement, finding a good financial planner to help figure out what you need to support your lifestyle and offering different ways of achieving this is what we do for our clients.

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

Feeling Horse Whipped?Dominic2023-12-01T12:22:15+00:00

Shopping For Dreams That Work

2001: Shrek – Adamson & Jenson

If you are a regular reader of my blog, you may recall a pieces called “Déjà vu Investing and the Sequel of Ker-ching”. Well the guys at DreamWorks Animation are in talks to set up a theme park in New Jersey (according to Studio Briefing). They are currently exploring options with developers Triple Five who are keen to develop the theme park 10 miles west of New York, further adding to the list of attractions at the Big Apple.

Dreamworks produced films like Shrek, Madagascar, Kung Fu Panda as well as the Nick Park films like Chicken Run, Flushed Away and Wallace and Gromit. The idea is that this will be an indoor themepark, its no surprise that Triple Five are experts in shopping malls in the US, which does fit rather nicely with the idea of a themepark, which is often accused of being a shopping centre with a ride attached. It remains to be seen if this will make a dent in the number of UK holidaymakers that head to Florida to see Disneyworld, SeaWorld and Universal Studios. The new park is unlikely to open until 2014 at the earliest.

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

Shopping For Dreams That WorkDominic2023-12-01T12:22:15+00:00

Funds For Business Owners

If you run your own business or are thinking of setting one up, here is a new idea that may be of interest to you. Banktothefuture.com launches on 23rd July 2012 and this little video gives a taste of what they may be able to help with. As it has not yet launched, I have not had the chance to fully investigate, but thought that it was worth bringing to your attention.

As you may know, I specialise in helping business owners with their financial planning and of late the availability lending funds is somewhat strained, despite Government efforts to push the banks to lend to businesses. Perhaps this is a much needed source of capital.

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 For Business OwnersDominic2023-12-01T12:22:14+00:00

How To Clear Your Mortgage

2008: Fix – Ruspoli

If you thought interest rates were low and can only go up, then give a thought to HSBC’s new 5 year and 7 year fixed rates. These have been set at just 2.99% and 3.99% respectively. This gives an indication of what HSBC think will happen to interest rates. The rates are available to those with 40% equity in their home. If you have a mortgage, it is worth reviewing it with a mortgage broker who should be able to source a suitable rate and product for you. I’m not a mortgage broker (way too stressful for me). However, we provide a debt elimination programme for clients. Typically this is a properly put together plan to clear your mortgage (and any other debt) over a short period of time, certainly much shorter than the original mortgage schedule.

Clients tend to be in one of three programmes (unless they are a business owner, where things are a little more complex and certainly different). In essence the service we provide depends on your life stage, by that I mean financial life. This is debt elimination, wealth accumulation and finally wealth preservation. Now, there may be some overlap, but in general the overarching goal or focus will be on the associated stage.

A mortgage is a big commitment, clearing it feels very liberating and can open up new possibilities for you – perhaps changing your role or even your job, now that you don’t have to pay a mortgage each month. I also encourage clients to regard their house as a home, not as an investment. It doesn’t form part of their portfolio. Indeed it only ever could if equity is released from the house, either due to selling and moving to a less expensive property or using an equity release scheme, which is generally an action of last resort and only available to those in retirement.

So if you would like to know more about our debt elimination programme, get in touch (it is not debt counselling). If you want your mortgage reviewed, I can put you in contact with a great mortgage broker.

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

How To Clear Your MortgageDominic2023-12-01T12:22:14+00:00

The Key To The Future

Security is a big deal in financial services; essentially providers of every description want to know you are who you say you are. For a variety of reasons fingerprint technology, which is by all accounts unique to each person, it not widely available. However most of us possess a key to a car. BMW have come up with a few options for their car key, which they are trying out. Anyone with a newish BMW will already know that a traditional ignition key is a thing of the past; the “key” is more of a small remote control device that needs to be within the car whilst driving. As ever, BMW have taken this a step further – using the key as an information device key. Here is a short video showing the ability to use the key as a replacement to a debit card, hotel door card key and a Bluetooth device to check the car status for fuel, if it is locked, where it is parked and what if anything needs servicing.

Pretty clever stuff. Thinking ahead, when you are making your investments or checking up on them, I imagine that not too way off into the future, we shall be able to provide something similar. We already do our best to minimise real paper and provide online service, but having to sign forms and remember passwords is getting more problematic for most people as they have an enormous number of “accounts” with online suppliers of all descriptions.

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 Key To The FutureDominic2023-12-01T12:22:13+00:00

We Can Do Better

2012: The Newsroom – Sorkin

I wonder if you have come across a new television show called “The Newsroom” beng shown on Tuesday night on Sky Atlantic. The main creative writer is Aaron Sorkin who wrote The West Wing, amongst others. The first episode was a fairly fast moving story, establishing characters and building on a familiar global news story – the BP Deepwater oil rig disaster. As the viewer we have the advantage of hindsight, quite a clever approach for a first episode.

I enjoyed the drama and it felt very familiar, yet new. The backdrop is a desire for a better world and in particular better Government and better governance, something that is a Sorkin legacy from The West Wing. This is of course rather timely, given the lack of good governance being displayed by various “key players” within financial services and in particular the banking community. There is a very palpable sense of annoyance with Bankers in the country at the moment – indeed with regulators and Government too. Everyone has an opinion. What is evident is that “we” can and must do better. So it is good news that my professional body the Institute of Financial Planning is getting involved in “The Question of Trust” campaign which aims to advocate good practice and genuinely listen to those with suggestions about how to rebuild trust. I’m also getting involved and if you have any bright ideas do let me know. The same of course is true for the general state of journalism in Britain which is currently still under investigation. It is perhaps a little ironic in this Jubliee year, that with so much flag waving, we still need to give considerable thought to what exactly are our collective British values. I believe that we can do better. Oh and here’s a clip.

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

We Can Do BetterDominic2023-12-01T12:22:12+00:00

Banking In The Good Old Days?

2001: The Bank – Connolly

The Banks are all having to rethink their purpose. There is an uneasy dilemma unfolding. Retail banking provides the mechanism for the world to trade easily. Anyone living in or around London, will appreciate that retail banking is possibly quite a small element of “Banking”. Indeed if you work in banking, it is more likely that you work within investment banking and this is probably what people assume.

The main problem being understood by Politicians is that retail banking is different and needs separating from investment banking. I tend to agree with this, but would also add that banking is not insuring or “financial planning” which is also offered by retail banks and done very badly (see the FSA complaints register). Add to this the desire of regulators and politicians to monitor and control risk. But hang on, without risk, there is no reward in the capitalist system. This is really where things start to become less “easy”. In the good old days that pundits hark back to, your Bank Manager would make decisions and decide whether to back you or not. This was risk. Sometimes it would be the wrong decision, but often one that was not too onerous to correct or take on the chin. The model was based upon a working local knowledge and understanding of your circumstances.

The main problem with this system was that Bank Managers were sometimes not very helpful, indeed sometimes very unhelpful and arguably had little real knowledge of the bigger world, particularly when something new was being proposed. This gave rise to specialist Bankers, that acquired skills to assess new ideas and risk, but gradually the numbers got larger and larger resulting in the need for more niche and specialism.

We cannot go back to “the good old days”. These you may remember were good for some, but not for all. Certainly they seemed more simple, but actually involved layers of relationships. Today, there is hardly any real relationship between the “bank” and the “customer” an easy space for a half-decent financial planner to fill, let alone a really good one. I would suggest that it is the commoditisation of risk and the death of relationship that has caused the problems for banks today, not the actual risks themselves. However, I also believe that no Bank should be too big to fail, which means that breaking them up once they reach certain “sizes” is probably the better way of containing and avoiding disaster.

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

Banking In The Good Old Days?Dominic2023-12-01T12:22:12+00:00

How To Live Beyond 100

1985: Cocoon – Ron Howard

Financial planning involves making a considerable number of assumptions; perhaps the most important is how long you will live. This is something that I have written about recently. In essence great financial planning ensures you’re you do not outlive your money. We use a variety of sources to help estimate how long this would typically be. However, in general, people are tending to live longer, due to improved diet, medicine and lifestyle. I it with this in mind, that I wonder if you saw the BBC1 programme “How To Live Beyond 100” on Monday 9th July 2012 at 10:35pm.

This was an interesting little programme about the a number of people that are now over the age of 100. There are currently in the region of 12,000 people over the age of 100 living in Britain. Its not a huge number I know, but still pretty significant if you live to be over 100 years old. One seminar I attended recently suggested that actuaries are working on the basis that about a third of babies born this year will live beyond 100. That is quite a staggering statistic and of course has all sorts of implications for the UK State system. You can view this on the BBC iplayer.

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

How To Live Beyond 100Dominic2023-12-01T12:22:11+00:00