SCAMS AND GOOD LIARS

TODAY’S BLOG

SCAMS AND GOOD LIARS

Sadly, there are lots of ways to part you from your money. Unfortunately, the criminals are getting ever more sophisticated and we are all accustomed to being so overwhelmed by choice, that we often skip the task of reading the detail or asking more questions.

The problem is that when it comes to your money, you can lose quite a lot of it very quickly. Crooks rely on several things.

  • JARGON
  • PRESENTATION
  • FRUSTRATION
  • “PROOF”

JARGON

The financial services sector is full of jargon. We also often have multiple names or terms for the same thing – for example stocks, equities and shares are all the same thing. As for Bonds – let’s not even go there

PRESENTATION

In a world of low interest rates, where your hard-earned cash is going backwards in value because of inflation. If prices rise 3% and you only get 1% interest, you are falling behind inflation and the £ in your bank account cannot buy as much as it did. So being offered something that looks and sounds like a decent return, (particularly if it’s on a nice-looking website or advert) well nobody would honestly say you are being greedy. You just want to make your money work harder. However, the adage if it sounds too good to be true…

THE GOOD LIAR MOVIE 2019

FRUSTRATION

You are fed up with jargon, bad interest rates and the news regularly reports that millions were wiped off the stock markets. Oddly they never report that millions were wiped on, at best the news may mention the FTSE100 is up by something every 15 minutes, which is utterly pointless. So something that offers “guarantees” or suggests that it has nothing to do with the stock market – perhaps investing in something that sounds green (and good) is likely to appeal to your sense of frustration.

“PROOF”

Having a celebrity promote the “investment” or business opportunity is designed to give it some credibility. After all, celebrities are nice people aren’t they? They have reputations to uphold. Well the truth is that actors are paid to speak words, sports professionals invariably are paid to have words written on them. However nice they may be, they are paid for their promotional work.

How about those reviews from previous customers? Those star ratings? Or industry awards? If you have been around long enough, you will know that whilst these can be true, they are often partially true and sometimes not true at all. As a business owner I am regularly offered awards or encouraged to do something to get them, such as join a trade body that gives the impression of some credibility, when all it really means is that it’s a marketing club

You are a target, nothing more

Scammers prey on those that have money but don’t have the time or perhaps knowledge to think through what it being proposed. They target anyone.

The Good Liar

The new film “The Good Liar” starring Helen Mirren and Ian McKellen, showcases a scammer, a pretty good one. I may have some issues with the speed and ease at which things purport to be done (establishing a Trust, combining the wealth of two people, and an oversized calculator keypad to confirm live payments for sums less than £100m) but the mechanics of a scam are all there.

You can attempt to keep up with scams on the FCA website here: Alternatively, please get in touch, if you have any doubt about what you are being told, it is worth getting us to have a look at it. How much are your life savings worth to you after all?

As for the film, I quite enjoyed it. I may think that popcorn and a drink borders on being a bit of a scam, but the movie is entertaining and just short of 2 hours. Longer than a sports match and more informative. Here is the trailer.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

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SCAMS AND GOOD LIARS2019-11-14T17:35:06+00:00

THE WRONG KIND OF GREEN

TODAY’S BLOG

THE WRONG KIND OF GREEN

I appreciate that we are now in the throes of an election campaign, I am not referring to the Green Party. You may think that I’m also about to embark on another piece about the green stuff we all know as money and how quantitative easing (QE) hasn’t worked for the right people, merely inflated markets and the balance sheets of the richest. Frances Coppola has a very good book on this topic (“The People’s Case for Quantitative Easing”).

Today is Halloween 2019. It was only a few days ago that Good Money Week concluded. This is a noble attempt to broaden the knowledge of investors about sustainable and ethical investments, these days called ESG investing.

Failing to understand the investment world whilst holding cash in a miserly deposit accounts and having a heart to do good makes for a dangerous mix. Green or ethical investment is mainstream these days. We have always offered ethical investment screening and I have recently reviewed selections within our portfolios, making some changes. As mentioned, I was also challenged to have ESG as the default portfolio for clients, having an opt out rather than an opt in approach.

WOOD FOR THE TREES

Life savings gone

About a year ago a friend of a friend got in touch about an investment that she had made. She had invested all her life savings into what she thought was a fund that invested in renewable energy. Sadly, it was a scam and scams require the Serious Fraud Office (SFO) to get involved.

Seeing the wood for the trees

Today a similar story reached my desk. Yesterday the SFO made an arrest at Gatwick airport of one Omari Bowers who together with Andrew Skeene was a Director of Global Forestry Investments (GFI). The SFO have been investigating them and their company for alleged frauds between August 2010 and December 2015. According to the report Bowers has failed to attend two Court appearances over the summer. On Monday Mr Skeene appeared at Southwark Crown Court where he has been charged with three offences of conspiracy to defraud, four counts of forgery and one of misconduct in the course of winding up.

GFI had been promoted as a safe, ethical investment in Brazilian teak plantations, with investors offered to buy land and harvest steady profits. Now pause. Read that again. Think of what we “know” about the trees in Brazil.

Cutting it down to size…

Maria Thedoulou of law firm Stokoe writes “GFI was one of two schemes run by the former directors promoting two teak investment schemes in Brazil. The Insolvency Service found GFI received £20,146,631 from the sale of plots in the Belem Sky Project and £3,863,185 from plots sold in the Para Sky Project. In respect of Belem Sky, investors were offered the chance to invest a minimum of £5,000 in the teak plantation for promised returns of “10-20%” per annum. While investors who contributed to the £24 million plus pot in fact saw little or no returns, over £13 million arising from the sale of the plots went into the bank accounts of Bowers and Skeene.”

How can rogues access your funds?

I’m sure that you will appreciate that there are rogues “out there” attempting to part you from your money. In practice the UK is tightly regulated, so by and large it isn’t easy to buy a scam investment, though adverts of Facebook and the internet generally make this possible. Most scams of this nature are done through your pension – a SIPP. Eh? Don’t I have one of those? Well probably if you are a client of ours. In the same way that you probably own a car. There is nothing wrong with a SIPP, its simply a self-invested personal pension. When used properly it is a brilliant pension. If you fill it with dross (because you can) then it will turn toxic on you very quickly. The same being true of attempting to fill your car up with chocolate. It won’t work. Yet there are “advisers” (for which I mean liars and con men) that will not only assist but promote such ludicrous schemes. One such advisory firm being “Emerald Knight” – do google them. This stuff is awful. People like Angela Brooks will be a source of some comfort as she continues to fight the good fight against these sorts of scams, which happen all the time (Angela appears in our magazine Spotlight- October 2019).

Hard wood, soft wood – would that it were so simple

I understand that the stock market may be confusing and perhaps scary. Companies go bust, we regularly hear about billions being wiped off the markets. Yet the truth is rather different. You never, ever hear “billions were wiped onto the markets today”. You rarely hear that these are actual businesses, employing people and solving problems. You simply hear about those that dodge tax. If you buy a market tracking type of fund, you own all of the companies, “good” and “bad”. These are traded in highly regulated markets every second of the day. Market fraud leads to prison. Certainly investing is not for everyone. If you have enough money in the bank to provide you with all your needs, allowing for inflation until your death, you probably do not need to invest. The rest of us do. Get proper advice about how to do this. You can apply ethical / SRI or ESG criteria to your investments, but above all use an adviser that is not promoting dross and saying things you want to hear, but deep down there are alarm bells ringing that something is desperately wrong.

If you know someone that is comtemplating investing in this sort of stuff or has mentioned “a great investment opportunity” to you please tread carefully, give them my details and tell them to get in touch before their investments go up in a cloud of smoke.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

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THE WRONG KIND OF GREEN2019-10-31T14:06:26+00:00

YOUR PORTFOLIO

TODAY’S BLOG

YOUR PORTFOLIO

I suspect that you have heard the expression “look after the pennies and the pounds look after themselves”. Well, a small win this week in that your investment costs will have reduced for clients using our portfolios. One of the fund management groups that we use (Vanguard) decided to reduce their annual management charges. Its not a massive reduction when taken in the context of a larger portfolio of funds, but every little helps. The reduced charges have been applied already.

We have also been reviewing our ESG portfolios. I was challenged the other day by suggesting that clients be opted into ESG portfolios with the option of opting out rather than being asked if they would like to opt in. I can see some merit in this, but it seems somewhat problematic when you consider that ESG portfolios are generally a little more expensive.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

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YOUR PORTFOLIO2019-10-30T15:44:16+00:00

970 BOTTLES OF BEER ON THE WALL

TODAY’S BLOG

970 BOTTLES OF BEER ON THE WALL…

I’ve been trying to think of ways to explain the benefit of long-term investing. I’m not a big beer drinker, but given that when I do go to a pub, I’m always shocked at how much a pint of beer is. According to the ONS, the average pint of beer in the UK was £3.67 in January this year. Clearly a  national average, because that wouldn’t buy much in London.

30 Years Ago… 1989

Anyway, let’s suppose I am someone that likes to buy the occasional pint of beer. As I get older, like most people I tend to remember elements of the past fondly. Particularly this time of year as students return to University. 30 years ago, perhaps you were at University or had long since left. 1989 – the time when Nigel Lawson was replaced as Chancellor by John Major. Simply Red had a hit album “A New Flame”; Challenge Anneka had aired for the first time and Nick Faldo won the Open. A pint of beer back then was £1.03.

BOTTLES OF BEER

YOUR ANXIETY

Let’s suppose you had £1000 you wanted to do something with. The memory of Michael Fish and the great storm closely followed by Black Monday was fairly fresh in your memory. You didn’t fancy the stock market. So you found a decent deposit account, rates were high causing problems for borrowers but great for savers at 14%.

Thirty years later that £1000 had risen to £2,080 by January this year. You had forgotten about it except for when you sighed with relief as economic recessions came, Y2K, Dotcom bubble, Korean crisis, 9/11, credit crunch – you had avoided them all.

Yet there is a problem. In 1989 your £1000 would have bought a 30-year younger you 970 pints of beer. Today your £2,080 would only stretch to 566 pints.

Your Uni Friend John had a PEP

Your good friend John from University had put his money into the UK stock market, he put £1,000 into a Personal Equity Plan, some quirky idea brought in by Nigel Lawson. He bought a FTSE100 tracker fund (ok, maybe not, but stay with me). He had to live with the same economic stresses and saw the topsy turvy workings of the stock market. However, at the end of 30 years his £1000 was worth £11,494. He hadn’t touched it (neither had his adviser) and so all dividends were reinvested. This sort of money enables John to buy 3,131 pints of beer. That’s 5 times more than your 556 pints.

Julia also had a PEP

John is fairly happy, but his girlfriend Julia at the time also put £1,000 into a PEP, but she put it all into the FTSE250 tracker. She figured that slightly smaller companies might do a bit better than bigger ones. Lo and behold, Julia’s £1,000 has turned into £20,818. Julia can buy 5,672 pints of beer, that’s ten times (10x) TEN TIMES as much as your 556 pints.

OK – Smallprint (or not) Caveat Emptor…

Admittedly I have taken some liberties with costs, charges and the available funds in 1989. The biggest liberty I really took was suggesting that people leave their money alone. They/we don’t. We all tend to fiddle around, attempting to find a slightly or perhaps considerably “better” option.

Long story short, when considering investment for decades, what on earth does “risk” really mean? The risk of the power of the money in your pocket being worth less (or worthless) due to rising prices? The risk of seeing your money stagnate in cash? The risk of seeing the value of investments rise then fall?

30 Years £1000

Monsters grow

What ought to be blindingly clear…. don’t let your anxiety dictate your financial planning and investment strategy. It is a dreadful guide to future performance. The monster at your door is inflation, however small it seems today, feed it for 30 years and it’s still hungry and likely to eat you alive.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

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970 BOTTLES OF BEER ON THE WALL2019-09-30T18:23:04+00:00

WHISKY – LIQUID GOLD?

TODAY’S BLOG

WHISKY – LIQUID GOLD?

I had the great pleasure of a short break in the Scottish Highlands in May this year. We stayed near Inverness, at a delightful B&B very close to the small village of Drumnadrochit. We had a fantastic view of Loch Ness, though given that I am something of a sceptic, didn’t venture into any of the monster museums.

Anyone that has been to the Highlands knows that the scenery is utterly fabulous. Huge wide open spaces, big skies, much like America. A part of our trip included visiting a friend who has set up a Whisky Bar in the distillery capital of Scotland – Dufftown. The Seven Stills has a wonderful little restaurant and vast supply of whiskys, do call in and say I sent you.

Anyway, I saw a piece on the news about a fire at a Jim Beam warehouse in the US. This reminded me of a tour around one of the distilleries we visited (well, it would be rude not to do so). The tour was interesting and by the end of the tour our guide was highlighting the merits of investing in whisky. There are huge prices being paid for whisky. Serious money snaps up “new” products (for which read, distilled and laid down about 50 years ago) and now decanted into bottles.

SOLOMONS IFA LIQUID GOLD ANGLE SHARE

Water to Whisky

I’m sure that for some there is money to be made in whisky, but not for most. Investing always comes with costs, these are explained and shown on your statements. The format has improved, but they are nothing short of useless in terms of explaining value. Stating the price of something is one way of showing a value, but.. whisky is designed to be consumed. Basic economics of supply and demand will inevitably mean that price rises with scarcity.

Angel’s Share

There are storage, security, insurance and maintenance costs incurred by a distillery for many years. The distillery I visited was holding a few barrels (casks) certainly as far back as 1967. A typical cask holds about 200 litres. The casks themselves are second-hand and from around the world, (typically Spain, Portugal and America) depending on the desired result would be changed to provide a different flavour to the whisky. Most casks last for up to 60 years. They leak and have to be fixed by a trained Cooper (there is a 5-year training process). The whisky evaporates and tends to lose 2% a year of its alcohol by volume every year! The distillers call this “The Angel’s Share”. I might call it an annual cost of 2%.

When a bottle finally goes on sale for a price of say £40 in most cases it has been in production for 12 years. The longer the production, the more expensive. To sell your cask (if you had bought one) from 1969 you are essentially selling something that has taken 50 years to produce, 5 decades of patience and “leaving well alone”. There have been 50 years of costs and inflation. This fact alone leads to the conclusion that there would be a very limited supply. Hence the £5,000 price tag for a bottle of 1969 Glenfarclas Family Cask S16, 2451. Yes, this is subjective to collector opinion. A 1999 “similar” bottle would be £265 for a 20-year-old bottle (new by comparison).

Inflation and intoxication

If we could have bought the bottle of 1969 Glenfarclas for £40 in 1969 today it would now cost £641.92 purely due to inflation over 50 years. So whilst this goes some way to explaining a £5,000 price tag, it is obviously only part of the story… the rest is in the perceived value, restraint and costs over 5 decades. In many senses there is also the survivor and success premium – of lasting the distance. You are only able to purchase what has survived. In the same way that you can buy shares in Shell but not Barings.

Leave it alone – stay off the good stuff?

If you are going to buy “alternatives” or “collectables” you basically have to leave them alone and wait for the impact of inflation, scarcity and perceived value. This might sound easy, but the temptation not to drink or consume your investment is fairly great in this instance. It is hard enough to persuade investors in mainstream investments to leave their portfolio alone each year, but for 5 decades? Even the Angels take something each year…

As for the fire at Jim Beam, it would seem that they lost 45,000 casks in the fire. This may have some impact on the price of casks sold to whisky producers around the world (in America the cask cannot be reused). It will also greatly increase the price of any surviving casks, but otherwise, I do hope they were insured against fire.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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GET IN TOUCH

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info@solomonsifa.co.uk    Call – 020 8542 8084

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WHISKY – LIQUID GOLD?2019-07-04T14:19:36+00:00

BLOOMING MARVELLOUS & SUSTAINABILITY

TODAY’S BLOG

BLOOMING MARVELLOUS & SUSTAINABILITY

The British summer – when it arrives is a wonderful time when we all complain that it is too hot and expect this to be a short-lived experience, one with remedied with regular ice lollies and ice cream and a little too much Pimm’s. The summer sports events begin and from an English perspective, invariably end soon thereafter. This year we have seen a rather better competitive endurance from the Lionesses at the women’s FIFA Football World Cup. Wimbledon has begun and we wonder whether the covers will soon appear as the rain makes an unwelcome, but regular appearance.

Many of us spend rather more time outside in the garden, soaking up the sunshine and struggle to make sense of hosepipe bans when just a few weeks earlier we were ankle-deep in rainwater. This brings its challenges to those of us that enjoy gardening. The summer also brings about rural and floral events. The RHS Hampton Court Flower Show has begun. The Tudor grounds are transformed into spectacular smaller gardens and rammed with exhibitors demonstrating their skills and ideas. It is a fantastic show that I would encourage you to attend. Conservation, sustainability and a good gin and tonic, and a three-in-one with one I tried earlier by Warner’s Distillery.

Blooming Marvellous & Sustainability

Sustainability in your portfolio

So how about sustainable investing? When I started as an adviser, rather too many summers ago, there were relatively few ethical funds at the time. The most famous was the Stewardship Fund, which was really the first ethical fund launched in the UK in 1984. This was under the backing of Friends Provident and run by the late Charles Jacob, who died 3 years ago at the age of 94. Jacob and Friends Provident both had their faith at the core of their why?

This year we have seen the introduction of 16-year old Greta Thunberg onto the world stage, and a climate crisis declared. Protests in London and David Attenborough took to the stage at Glastonbury, declaring it the largest plastic-free festival and encouraging us all to take climate change seriously whilst announcing a new series “Seven Worlds, One Planet”.

ESG is the new SRI is the new Ethical

Today, ethical investment has evolved, initially through SRI (Socially Responsible Investment) and now more recently ESG (Environmental, Social and Governance). In truth the term ESG was first coined way back in 2004 in a study “Who Cares Wins”. The criteria have shifted, partly as the discussion about sustainability has evolved. In 1984, ethical investment meant not investing in certain companies in specific sectors. However not everyone holds the same views on alcohol or tobacco in the way that Methodists and Quakers did in 1984. In short, the ethical or SRI and ESG market is globally worth over $20 trillion. New funds have been launched all in attempt to meet the concerns of concerned investors.

Many of our clients prefer “ethical investing” or at least for their investments to be screened through the lens of ethics as far as it is possible to do so. There are now plenty of solutions, but certainly no obvious ones. The cost of investing is higher which is counter-intuitive for me as an adviser, but a price many are willing to pay. Returns vary, but one may take some comfort in the logic that ultimately surely those companies that adjust behaviour to reduce carbon emissions and so forth will ultimately be the long-term winners. Yet there are no certainties in life as we all know.

If you would like to discuss ethical investing, or however you would prefer to term it, please get in touch. Either email me or pick up the phone and call me on 020 8542 8084.

In the meantime, here is the trailer for the new series by Sir David Attenborough.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

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GET IN TOUCH

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BLOOMING MARVELLOUS & SUSTAINABILITY2019-07-03T17:14:58+00:00

THE PERFECT MARKET TIMING?

TODAY’S BLOG

THE PERFECT MARKET TIMING?

We all know that Brexit has caused great division and frustration, whichever side of the “argument” that you are on. It has resulted in many people delaying decisions, attempting to time the market right. Many people are putting off large purchases until there is greater clarity about the future.

This is true too of many investors. One of the great benefits of a democracy is that we can have access to information about markets. However, this is invariably used very poorly. Investors (professional and “amateur”) attempt to invest during the ideal period and of course sell their investment at an equally ideal time. This strategy may work on occasion but is impossible to repeat in any sustainable way.

Let us look at the US experience. Why? Because the US market is about 54% of the global stock market by value. It is a mature market and a well-regulated one. JP Morgan have produced a great graphic about the flows or money in and out of funds. The blue spikes represent money moving into investments (above the line) and out of them (below). These are net inflows (or outflows).

JPMorgan research Market Timing US

The market falls, investors run

They (JP Morgan) then overlaid the US S&P 500 index. The result is startling. As markets fell, investors bailed out. Most money was taken out of funds at the bottom of market “crashes”. Most investments tend to be made at the market peaks. Investors are quite literally doing the opposite of what they have been told. They buy high and sell low. They know that they shouldn’t do this, but they cannot help themselves because of fear about the future.

Here is the newsflash. When markets crash, the media is full of disaster stories, this invokes a sense of dread and fear, which investors take as a call to get out of the market, sell, sell, sell… Once the crash is over investors return, usually once most of the gains have already been achieved.

A fantastic way to ruin

I can think of few better ways to reduce your wealth and increase the likelihood of self-imposed poverty. Yet this approach will happen this year and the next and probably for the rest of our lifetimes.

Your future is way too important to muck around trying to be an investment genius. The investment geniuses aren’t even able to consistently achieve outperformance. Many end up simply taking bigger bets and gambling with higher sums – just ask investors how happy they are with the genius of Mr Woodford about their holdings now.

It does not have to be like this!

It does not have to be like this. You can accept the reality that in life some things you simply cannot control. The markets and the returns from them cannot be controlled by you (or me). We simply must embrace reality, look to the real data and plan appropriately. We help you take the market return from the assets you invest in. Cost effectively. We take a long-term view. I mean decades long, because that is how long your money will remain invested, providing a lifetime of income to you and those you hold dear.

Don’t play the fools game. Get over the illusion of perfection and stop procrastinating. Now is the time, always. Get in touch to get yourself on track.

Call me on 020 8542 8084 or email me.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

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THE PERFECT MARKET TIMING?2019-07-03T15:29:01+00:00

ROCKET MAN

TODAY’S BLOG

ROCKET MAN

I suspect that you may have noticed that there is a new movie about Elton John – Rocket Man. As I grapple with the temptation to provide my own take on another film, attempting to find any tenuous link to life choices and money, my mind turned to a different rocket man. Whilst we are only days away from the 50th anniversary of the moon landing, I don’t mean those rocket men either. No, rather it is time to talk about Mr Neil Woodford…

Let me begin by saying that I do not know Mr Woodford, I have nothing to say against him personally. He ran the hugely successful Invesco Perpetual Income funds out of Henley upon Thames for many years, before leaving them with his departure announced in October 2013.  He went on to start his own asset management company Woodford Investment Management. He did a wonderful job at Invesco Perpetual. Most investors that owned holdings in his fund would or should have been very happy with the result.

SOLOMONS IFA BLOG - ROCKET MAN

Science Lessons

One of the few advantages of age is that gradually, lessons are learned, experience gained and sometimes there is the possibility of a modicum of wisdom. In the past I believed that fund managers were stars and their performance could be followed. Today I still believe that this is possible, but it is highly unlikely to happen. Fund Managers are often very clever, thoughtful people, but their ability to constantly beat the market or their peers is unsustainable. There is ample evidence to support this view if you can cut through the marketing and noise of “hot funds”, “Best Buys” and the latest “great idea”.

The battle for your money rages fiercely, huge marketing campaigns combined with an information culture that turns anyone into an expert and promotes the lie that investing is easy. Indeed I might argue that the financial services industry is supported by a media the prop up the belief that the improbable is highly likely. It simply fails any rational testing, if you are prepared to check your conditioning at the door. In practice, you might only need to ask yourself who is actually getting rich from your investment? However the obvious is an uncomfortable truth, so we all ignore it, well… most do until they see the light.

Epiphany

My gradual epiphany happened over the last 15 years, (remember I set up the firm 20 years ago and had been advising clients since ’91). I was familiar with market-index tracker funds, I even arranged them for clients in the 1990s (for example the Gartmore UK Index which was opened in 1989) but I, just like many (most) wanted to believe that intelligence and skill could be combined in a way that provided consistently better returns. Advisers and investors were (and still are) bombarded by information that shows “successful” short-term performance. My in-box, trade press, and conference bag are stuffed full with it.

In practice you will be investing for decades….”So I will change my investments” I hear you cry… well maybe, but that would acknowledge other detrimental investor behaviours – attempting to time the market, knowing when to get in or out of funds that are performing well or not….you may get lucky a couple of times, but frankly that is all that it would be luck – not skill. Luck is not a good strategy for your financial plan. In any event the two largest players providing advice and funds to investors only dropped the Woodford fund this week. They are far better resourced for detailed research and personal meetings with the Fund Managers…yet to absolutely no avail. You have heard of them both, nice brochures and websites.

Whilst I believe outperformance from skill is “possible”, I now recognise it as unlikely and blogged as much in 2014 implying that following a star manager is not a good investment strategy. I came to this conclusion later than some, earlier than many. I am neither genius, nor fool (I hope). In January 2010 I cited how his funds had suffered some lacklustre performance in 2009 after delivering some good returns, acknowledging that we had been users of his Invesco funds, which had delivered good results. At the time I was still advising clients to retain the Invesco fund. That changed, but not to Woodford – to a low cost, investment fund.

Number Crunching

Yesterday his flagship Equity Income fund, which was launched in June 2014 was suspended, almost precisely at the 5th anniversary. This was primarily because investors were turning away from the fund in droves. Performance has been taking a nose-dive since June 2017.

None of our clients hold the fund. None, nada – because for reasons stated. We use low cost investments and not the more expensive “actively managed” funds like this one, which typically charge between 0.65% to 1.50% depending on the fund share class. We tend to create portfolios with investment costs of around 0.3% – there or there abouts.

I do not wish Woodford anything other than success. His rocket-like performance earned at Invesco now seems to have really lost favour. Fund suspension is really something that no manager wishes to do. It does protect those remaining investors within the fund, but invariably signals the end of shelf life. The reputational damage has now been done and for a fund that relies primarily upon the manager, this is difficult to regain.

Star Gazing

This is a lesson that few learn. Over the years I have seen star managers rise and fall again and again. Yet investors will forget. They will see a new star performer and ask why we don’t hold anything in his or her fund. Sometimes this may turn into a plea to buy a fund, it isn’t my money – it’s yours, so do as you please with it, but I will not put my name to investment advice that I do not believe. Part of my job is to stop you making daft financial decisions. It isn’t rocket science…but you can follow the yellow brick road if you like, but the only records you should pay attention to are the musical type… on which note here, is the trailer for the rather good “Rocket Man”.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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ROCKET MAN2019-06-06T07:28:26+00:00

CELEBRITY ENDORSEMENTS

TODAY’S BLOG

CELEBRITY ENDORSEMENTS

If you believe much of the marketing spiel, it seems that in this life you have to become successful by becoming a celebrity. This isn’t necessarily famous, but well known within your specified field. Some call this personal branding and it’s the regular diet of entrepreneurial and self-improvement books and courses. I read a piece yesterday that resonated with me and debunked a lot of this twaddle.

It’s all Pants

What is certainly the case, is that many people will regard the opinions of others as evidence of credibility. “Celebrities” can certainly give added impetus to sales of products. Think David Beckham and underpants. It works, though I’m not sure who is kidding who when considering this particular example. I saw a video clip of a game show in which Gordon Ramsay posed a forfeit question to James Cordon “which of your endorsements have you never used?”. Forfeit taken, the money is presumably too good to forfeit with the truth.

CELEBRITY ENDORSEMENTS - SOLOMONS IFA BLOG

By Association

Many people buy or are certainly helped to buy based on the reviews or recommendations of others. That’s basically Trip Advisors entire business model, and of course most online retailers seek reviews, constantly. Hands up, we also ask clients to provide testimonials, which is much the same thing… we simply don’t shape or lead them (so they are honest).

Big Noise, Big Bucks, Big Blindspot

When it comes to investing, celebrities are now to be found endorsing all sorts of financial products that they have no real understanding of. Remember the adverts releases for the failing Equitable Life and Buzz Aldrin was promoting them in 1998? Or Anthony Hopkins promoting Big Bank Barclays, these days a task left to Simon Cowell.

Crypto – never expect good things in the Crypt

The world of financial products has become ever more complex with the rise of cryptocurrency. That specific field is full of corruption and fraud. One might say, its a bit of a jungle our there. The regulator has reported a tripling of reported fraud in cryptocurrency and foreign currency, each “investor” losing an average of £14,600. In my opinion, this will only get worse. Much worse. As more people seek easy returns to prop up the dismal interest from cash, the temptation is to try something that appears to have done well. Having a celebrity endorsement will, sadly for many, end in tears. Money talks and it walks, there are multitudes of people that will attempt to part you from yours, which is why part of my role is to act as guardian or bouncer on the door to your financial planning.

If you know someone that is contemplating a new investment that sounds too good to be true, or you suspect as much, refer them to the FCA scam smart website here. To be blunt, when it comes to investing, seeing any form of “celebrity” endorsement ought to leave you agreeing with those that make “I’m A Celebrity Get Me Out of Here”… except think.. “that’s a celebrity, get me out of here”…

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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CELEBRITY ENDORSEMENTS2019-05-21T11:22:00+00:00

SINGING LIKE A CANARY

TODAY’S BLOG

SINGING LIKE A CANARY

My twitter account got a little heated at the weekend. I, like many other financial planners am utterly fed up with financial scams. Most of us get scam emails – I have yet another only two minutes ago purporting to be HMRC with a refund… Anyway, what irritates me and many planners is the apparent ease and frequency at which scams occur.

We have a regulator and anyone that knows me will know that I believe that they play an important, arguably vital role within financial services (see Cops and Robbers in Spotlight March 2019). Yet the FCA twitter account seems unable and unwilling to accept information about suspected (or even obvious) scams.

Better but not great

An item by James Coney in The Sunday Times (12 May 2019) called “Here’s how the FCA could stop savings scams – use Google” sparked some mirth which evolved into a small, sometimes heated “debate”. Some comments suggested that regulation is much better than it was, that the scams are less costly. That the FCA is doing a good job. I am not denying that the FCA is trying, they have an enormous brief. However, there are many of us that think that too much time is wasted on the wrong things.

SING LIKE A CANARY

Climb a mountain, or use the tunnel ?

This week I will have to submit yet another 6-monthly online report to the FCA telling them lots of things about my business. It takes ages and frankly I don’t think it reveals much of any importance. In any event wouldn’t a crook would simply make up the data? At the coalface of advice regulation can also be over the top…you want to top up your ISA… well yes, that requires a report, really? To top one up? Yes. You want money out? Well a report telling you that taking too much may mean it runs out is required… Admittedly the length and depth of reports and research are not prescribed by the regulator, but very much enforced by compliance and professional indemnity insurers. Certainly there is a place for this, but often it looks and feels like “overkill”.

Scams to the left of me, scams to the right…

I cannot explain why people being ripped off is so upsetting to me. Its wired into my DNA or childhood experience I suspect. Many advisers are on the same side as the regulator, we both make a living from financial services. The flashpoint, was the suggestion that advisers will be forced to pay yet higher levies for the FSCS to make compensation payments to scammed investors. This relates to yet another “obvious to an adviser” scam of mini-Bonds of London Capital & Finance. Who made promises that they would never keep to the tune of £237m from 11,500 savers. This was not a regulated business. There was no FSCS compensation for the investors. At least that’s what should have been the case, but now it seems this is disputed and advisers will have to foot the bill… for a scam they had nothing to do with.

Virtual reality isn’t reality

James Coney, like many of my peers argues that a quick search of the web will reveal plenty of scams. Some are obvious, some less so. This is the occasion to use the word fake – there are fake websites, fake products and fake endorsements. Please don’t get taken in. Ask me or your adviser if you have one. Why take the risk for a couple of extra percentage points of interest?

Sadly, I am of the view that the system is in need of an overhaul. The regulator thought that forcing all other advisers to charge fees, and explain these each year would solve the mis-selling problem. I’m sure it has a small favourable result, but the bulk of crime is committed by criminals, who lie. No amount of legislation or disclosures will have any impact on them, what they require is the strong arm of the law and a custodial sentence.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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SINGING LIKE A CANARY2019-05-15T16:29:56+00:00