Anything to do with investments and those that provide and shape them

SURPRISED? BASE RATE NOW 0.75%

Surprised? Base Rate now 0.75%

The Bank of England have announced today that they have increased the base rate from 0.50% to 0.75%. This will be welcome to anyone peddingly news for the next 24 – 48 hours. It will not however mean that you get much more interest on any cash deposits that you hold. It also is not likely to have a huge impact on mortgages or loans (it will have no impact immediately if you are on a fixed rate loan of any type). The decision to raise the rate was unaminous and part of the attempt to keep inflation at 2%.

The next Monetary Policy Committee (MPC) meeting will be after the summer break, on 13 September 2018. If you wish to know more, simply click this link to the Bank’s website.

SURPRISED? BASE RATE NOW 0.75%2018-09-25T10:10:07+00:00

Brexit – Some Thoughts

Brexit – Some Thoughts

I am conscious that this is a highly sensitive subject. I have to acknowledge that 52% of voters that voted, elected to leave the EU – at least that is what is being claimed. I am rather less inclined to believe this to be a thorough explanation.

I will declare that I voted to remain, not because I think the EU is perfect, but to use a metaphor, if I’m not entirely happy about what happens in my street, leaving it solves my experience but not the problem and should I want to discuss access to the road again, I don’t really expect much of a welcome, in fact they are likely to make it a toll road and my choice will forever be yes or no, but never “what if we did it this way…”

As we all know, there was and continues to be a lot of heated exchange. It is certainly possible that the UK can exist outside of the EU and trade as “normal”. However many seem to have forgotten that the UK, (if indeed it can still be called that within a few months) has a population problem, but not the one being discussed. The problem is longevity.

Thankfully due to our rather excellent health service, most of us are living longer. This is a good thing, reflecting our progress as a society. Of course this also means that more people are alive to draw a State pension and are alive longer to draw on support from family and State. The demographics of the nation by all calculations mean that there is more pressure on the State to find the money for this ongoing “support”. Unfortunately, the ratio of people in retirement to those not yet retired is shifting, considerably. The bulk of pensioners do not have high incomes and the State pension is effectively tax free due to the personal allowance.

Its not enough…

In practice those pensions are paid for by current taxation, not historic taxation, which was merely the “membership fee”. The bulk of tax is paid from income tax raised each year. We need more people to earn money to pay tax to provide for the “system”. Indeed HMRC collected £533bn in taxes of all types for 2015/16. The highest amount ever, yet still not enough. For the record about 54% is from income tax, 19% from VAT (that nasty European idea) and 11% from corporation. In short 84% from direct taxes. If you wish to see the latest HMRC report spanning back to 1980 click here.

Not enough being born

The UK birth rate is in decline. It has fallen from 2.93 per woman in 1963 to about 1.90. This is historically how we have sustained the nation. Tracking this forwards, combined with people living longer merely confirms what I have stated. There are fewer people of working age to provide for those that are not. (click here for evidence).

Not enough jobs, yet low unemployment…

Those wanting jobs now have to compete in an increasingly global economy, unless of course it is something very bespoke or crafted locally. The technological revolution has barely started, more service and manufacturing jobs are being “automated”… whether it’s the booking of flights, paying for your groceries, renewing your tax disc, banking or calling to complain. Certainly there are new jobs and roles, but in a world where tax rates and regimes vary, we clearly value convenience and low prices over jobs and “fair” (please let’s just call it “appropriate”) taxes – I’m thinking Amazon. Ironically, the UK has just recorded its lowest level of unemployment for some time at 5.1%, the lowest since the credit crunch, which in turn was the lowest since about 1977. Click here for evidence.

All creatures great and small…

On Thursday the UK voted to end its relationship with its main and nearest trading partner. The equivalent of all those market towns that used to have an exchange, now amalgamated in London. The world is a big place, but just as we like the convenience of Amazon, so do nations like the certainty of trade agreements and low prices. The advantage of the EU is that trade prices are thought of collectively, negotiating as a block for a better deal, not the cheapest deal.

You may disagree with me, you may find many faults with the EU (who doesn’t) but what is clear is that few people really voted from a position of knowledge, but rather prejudice (anti- big brother) or simply feeling disconnected with the establishment, on the wrong end of every “good deal” and clearly do not believe that we are all in it together. I understand this to be more of a protest vote against cuts and austerity, which I fear politicians will continue to ignore the cries of people that have become so desperate that they voted for the equivalent of selling your home, buying another without first reading the contract or having a survey done – let alone agreeing the mortgage. Buyer’s remorse is inevitable.

A problem aired is a problem shared?

Yes we could simply “get on with it” but as yet nobody wishes to be remembered as the person that took the action that is likely to result in not simply the severance from the EU but also the end of the United Kingdom. There is another alternative – that of acknowledging that both sides are actually “right” or at least make some fair points. So perhaps, there is an opportunity to get all these frustrations (not just British ones) out on the table, to properly reform, thoughtfully and respectfully. I admit this is a more unlikely scenario as I attempt to find a silver-lining and a ray of hopefulness.

Of course the EU isn’t perfect – neither is Westminster

I’m sure there are lots of examples of bad EU laws, but I am not informed enough to know them all – are you?  I, like many others did sign up for and support Hugh’s Fish Fight. I do know there are plenty of sensible ones. I do know that simply counting laws is no fair or sensible way to assess them. The House of Commons Library attempted to do so and found that between 1993 and 2014 about 13% of laws relate to EU obligations or implementation of them. Again, unclear about whether they are good or “bad”.

I can’t see you….. really?

Yet here we are. A nation now blaming each other and looking terribly unfriendly to anyone that isn’t white “or from these parts”. Yes I know not all Brexit voters are racist, I doubt many are, (not all are white either) but whether you like it or not, we need “new blood” to help our economy by running services, building businesses, creating jobs and paying taxes.  Sadly, no, alarmingly the result of this vote has emboldened those with racist views, which we must now all face down in person, not merely in words. The degree of tension is palpable and this is not the Britain that any of us wanted. I hope.

Lasting security is not a high wire fence

However, all these problems are not exclusive to the UK. Indeed most of the EU has precisely the same problems of longevity and poor levels of saving with high dependence on the State. Arguably they have worse problems and likely to merely exaggerate problems. However the way to reduce envy and create greater security is to help your neighbour prosper, not collapse.

Of course, Mr Shakespeare would have seen this as very good material….. oh he did.

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

Brexit – Some Thoughts2017-01-06T14:39:15+00:00

The Big Short

The Big Short

I have been looking forward to the release of “The Big Short” for some time. I suspect that many will yawn with incredulity at the prospect of watching a film about Bankers and the financial crisis… all that jargon, which is, lets face it, all rather dull and old news… I beg to differ.

This is a story well told, but a story that is frankly unbelievable, yet it happened. I would urge you to go and see it, I managed to do so on Monday evening (no I did not claim it as an expense). It will not change your mind about the Heads of Investment Banks or regulators, it will remind you of how utterly corrupt and complicit they have been in ripping off investors for years, and I see little evidence to suggest that this will alter.

The film makers attempt to explain some of the key terms that underpin the entire credit crunch. It is reminiscent of the musical about Enron – yes a musical essentially about accountants, but as with the musical, this is really an exposure of some rather foolish human behaviour.

Whilst the vast bulk of the film concentrates on the American story, the financial services industry is of course global and the setting for the story is largely irrelevant.

Are you sitting comfortably?

There are many that will not like the content of the film. The film is damning in its criticism of Government, regulators, bankers, credit rating agencies and mortgage brokers. The only group to have really been punished for the crisis in the US were the homeowners and the poor – by losing everything (a story told very well in the film “99 Homes” – see my piece on that too).

Here in the UK, we took the collective punishment of austerity, tax hikes and pay cuts. But at least the head of the regulator (then the FSA) was even knighted for services to the financial services industry (!).

You may have some questions after watching the film, both at the practical level and the “what one earth are they thinking?” level. Here is the official trailer to get you in the mood… oh and the film is nominated for an OSCAR. Mind you, I was even more incensed having watched “Four Horsemen“…  to my mind The Big Short is the softer option (pun intended).

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

The Big Short2017-01-27T11:02:15+00:00

Money Talks

Money Talks

You’ve heard the expression “money talks” I’m sure. Well, if you have tried to open a savings account or current account with a main UK bank in the last 10 years or so you will have observed and experienced a high degree of red tape and hoops that you have to jump through to prove you are who you say you are (even if you’ve been with the bank for your entire adult life).

If you are a client, you will have gathered that we have to verify your identity, residency and source of your funds. We try to make this as painless as possible and apply common sense. This is important (sadly) because there are people out there that are involved in criminal activity, taking money made from drugs and laundering back through legitimate financial arrangements so that it becomes “clean”. Just so that you are clear, if we (or anyone in financial services) suspect this is the case, we have to report it, else risk imprisonment ourselves.

So it was with some degree of surprise that I read that Barclays received yet another eye-watering fine. This time for poor handling of financial crime risks. The fine imposed is £72million. This relates to the lack of checking done on some of their clients…. ultra high net worth clients, who were “politically exposed people” (a term used not just for politicians, but those also in positions of significant public service etc)

Suits you sir…

Barclays were caught arranging £1.9billion (pause, that’s billion)… for a few such ultra high net worth individuals, without the proper checks in place. Perhaps it had something to do with the commission that they earned in the process – some £52.3million (all in a day’s pay). This occurred in 2011 and 2012 when Bob Diamond was at the helm (until July 2012). He resigned as a result of the Libor scandal. Anyway Barclays went to “unacceptable lengths to accomodate these ultra high net worth individuals”.

The FCA have fined Barclays in the hope that it will make them think twice about similar actions in the future. The real motivation is of course the sums involved, and as the FCA’s final notice said the clients involved were ‘politically exposed persons’ which are individuals with a ‘high political profile’ or have or had held public office, and pose a higher money laundering risk as their positions may make them vulnerable to corruption.

So now you know that the regulator thinks such people are at greater risk of corruption. Yet the irony is that had this incident happend at a financial planning firm, like this one, should it have been found wanting in such a manner, a custodial sentence and lifetime ban would have probably been handed down…. so there’s more than a slight degree of “power play” at hand here. Hence a few advisers are more than a little peeved that yet again, despite the big fine, the punishment never lands anywhere other than the shareholders in the Bank… after all aren’t these senior executives remunerated for the risk that they take? isn’t that why the big bank, pays big salaries, to big names to work with other big names and get away with a big golden handshake?

What still perplexes me, is why anyone would ever use a Bank for anything other than a bank account…. yet they do, in their millions.

You can see the FCA fine notice here… for the breach of principle 2.

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

Money Talks2017-01-06T14:39:21+00:00

Budget 8 July 2015

Budget 8 July 2015

Following my recent email and Mr. Osborne’s announcements, I am pleased to confirm the following changes and amendments have been made to our App (which is available free of charge for iphone, ipad and Android platforms).

As the 2016/17 rates are being added after the Autumn Statement, there is only one small change to the 2015/16 rates and the change has already been made earlier this afternoon and is live in your App. The change was within the Main Capital and Other Allowances section of the tax tables and related to the change to the Annual Investment Allowance from 1st January 2016 from the previously announced limit of £25,000 to a new limit of £200,000.

On a separate note, the chancellor has, from April 2016, abolished dividend tax credits. This will fundamentally change 3 of the tax calculators so they will need to be changed when we complete our updates prior to the April 2016 budget. However for the remainder of this tax year, all calculators and tax tables remain fully accurate.

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

Budget 8 July 20152017-01-06T14:39:27+00:00

Investing and the unfolding Greek tragedy

Investing and the unfolding Greek tragedy

It is undeniable that the Greeks are facing an enormous decision of whether to stick or twist. The size of the Greek economy is not terribly significant on a global scale, but it is certainly signficant to those working within it – and of course it is smaller this week than it was last week, however the markets are reacting, arguably over-reacting in typical fashion when uncertainty is rife. The real concern is not really Greece, but other EU States that may be minded to opt for a similar take it or leave it approach to their economic obligations.

I think it has been well documented that the Greek tax system has been painfully inadequate over the years and the recent austerity measures have been punitive. There is a degree to which we might say that bad planning has resulted in bad results, or more colloquially – the free ride is over. However, before we get too sanctimonious, the UK also spends more than it earns and of course this isn’t sustainable in the longer-term.

Financial Planning building block – a budget

To budget seems to be a term last used as a verb rather than an idea “post-war”. The Government here has some difficult decisions and of course they are contentious, earn more (raise taxes) or spend less (cut services) seems to be the only thought processes that politicians are capable of. I am left to wonder if this binary approach to life that is taken by most Governments is really the only viable option. At its heart, people get forgotten. On the one hand more money (lower taxes) is very much like a Trojan horse – at least until we can afford to have tax cuts, equally a State that spends without apparent regard for the future, can lull us into feeling that everything is “ok”…. but ultimately the merry-go-round comes to a stop. I know this isn’t easy, who likes paying more tax?

Paying the Price…or the ferryman

I’m reminded of a Volkswagen advert that is currently around – “You Pay For What You Get”. Perhaps you know it – the guy that buys a cheaper parachute, or climbing rope, or shark cage holiday experience. Some decisions have possible life threatening consequences. We all need to make good decisions, the best we can with what we can afford. It’s unfortunate that this is invariably true in life, even love has a cost. Paris and the Trojans ultimately paid for kidnapping Helen, princess of Sparta (life lesson – don’t mess with the Spartans).

I looked back on a piece I wrote nearly 3 years ago (17 August 2012) called summer holidays come to an end. In which I warned of the problems of continued funding of nations that cannot afford the debt. We need to find alternatives.

Don’t kill the messenger (Tigranes)

Sadly, your investment will be worth less this week than it was last, due to the market valuations at present. Whilst these are unusual times, market uncertainty is decidedly usual (normal) and the key thing to remember is that investments are established for a life-long approach not the next week. Yes there is bad news (when isn’t there?) but recovery will occur…. it’s just a case of when, which is of course no small matter and something that I am keeping under review. I feel very sorry for the Greeks who are experiencing a pain that we would do well to avoid.

Here’s a VW advert that I hadn’t seen.

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

Investing and the unfolding Greek tragedy2017-01-06T14:39:27+00:00

Blue pill or red? time to decide about The Four Horsemen..

The Four Horsemen

Having recently seen The Renegade Economist film “Four Horsemen” I’m reminded of the moment in the film “The Matrix” where the character Morpheus says “This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes”. So at the risk of sounding like Morpheus, I’m giving you an opt out, right now. However if you’d like to be exposed to some alternative explanations of how the world works today, why you cannot actually buy the house you now live in and perhaps why you are feeling somewhat fed up with the amount of tax you pay, then perhaps I could encourage you to order or download this film.

Classical Capitalism v Neo Capitalism (not Marxism)

Contrary to some of the press that the film has received (it is a documentary) it is not an irrelevant rant by a bunch of Marxists. Indeed, it seems that anyone with a difference of opinion is currently branded a Marxist at the moment. This film is not anti-capitalism, it is about the form of capitalism that we currently live with. There can be few on planet earth that at some point are not prone to question why there are such huge paradoxes, vast amounts of wasted food and yet there are millions that go to bed hungry and starving. What has this to do with financial planning in Wimbledon? Well the film is engaging and inspirational. Financial planning is about creating the life you want, whilst enjoying and really living it today, this is an optimistic message and approach to life.

Eloi and Morlocks, sleepwalking into debt

I don’t know how much of what is said is true or accurate, but it makes interesting points. I am not a conspiracy theorist, I am a capitalist, yet I do believe that unbridled capitalism is gradually enslaving us all to debt, be it nationally, personally, socially or environmentally… dare I even say… spiritually? You will know that I place a great deal of emphasis in clearing personal debt, including mortgages. This is a slavery that we seem to be walking into in a trance-like, perhaps numb… state… rather like the scene from the 1960 film “The Time Machine” when the Eloi are summoned and enter the domain of the Morlocks. We don’t have the advantage of a time machine, though we do have the advantage of the lessons from history and our own minds. As ever, I welcome the conversation and debate.

So here’s the trailer… its up to you… blue pill or red? over to you..



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

Blue pill or red? time to decide about The Four Horsemen..2017-01-06T14:39:43+00:00

Royal Baby worth £243m to UK economy… come again?

Well you certainly did not hear it here first. The Royal family has an new heir. The media coverage was and presumably continues to be… well, rather daft. Our “news” channels seem unable to deliver much to us these days other than speculation and anecdotal opinion from.. well pretty much anyone that wants to be on the airwaves.

So I was intrigued to see an estimate from the Centre for Retail Research based in Nottingham that suggested the new baby would generate “around” (seems like a fairly precise number to me) £243m for the UK economy. This is money spent on “stuff” that ultimately gets counted. Now, perhaps I’m out of touch on this, but I hadn’t noticed a whole lot of “festivities” which account for £87m. This is on extra food, drink and parties to celebrate the birth…I think I must be short of an invite or two, but really? An estimated 3m bottles of sparkling wine or champagne opened to celebrate this specific event…(where?) I suppose I’m not disputing the numbers, perhaps they are right, but 3m of a 60m population about 5% of people will actually go and buy an extra bottle of bubbly to celebrate, that’s one in twenty (aged 0 to 100+). Sound right to you? This is not bubbly that they already bought, or due to an anniversary (quite a lot of people marry in the summer)..or finish school or Uni…this is extra bubbly.

The CRR also allocate £80m for souvenirs and toys. Well this is plausible, have you seen the price of London trinkets lately? Add to this a further £76m for books, DVDs and “other media”. They even suggest that pram sales will rise 13%, which I find rather incredulous, do people really decide to have children as a result of a member of the Royal family having a baby? well apparently so.

As you may have gathered, I have some reservations about the accuracy of such forecasts and predictions. If they are correct, then perhaps we should request that the Royals reproduce every year! We would soon be out of our economic doldrums…or at least somewhat overcome by the festive hats and DVDs.

I’m not in anyway knocking the Royal family. Of course the birth of a baby is, in this instance, delightful news to his parents. What I get rather concerned about is the way our national governance and economic well-being is reduced to unproven figures, be it inflation, royal birth, benefit cheats, illegal immigration, crime, cost of the Olympic games or a BBC inquiry. I am of course mindful that the figures may well be right, but they certainly don’t sound remotely accurate.

Dominic Thomas: Solomons IFA

Royal Baby worth £243m to UK economy… come again?2015-06-29T15:40:07+00:00

Is It A Good Idea To Rename Something “Old”?

1943: Old Acquaintance – Sherman
Clients with Skandia policies or investments will be seeing a different name on their statements and documentation. Today, it was announced that the Skandia name will be gradually phased out in favour of its owner’s name Old Mutual. Whilst this will bring and end to questions like “are those the people that make trucks?” I have to admit that I don’t yet appreciate the purpose of this. Certainly those at Old Mutual have already begun the marketing initiative to reassure everyone and talking of “one business, one vision” but frankly Old Mutual is a much lesser name than Skandia and it seems a little odd to be promoting anything with the term “old” in it, particularly when the industry is one that is constantly changing. After all we don’t even call a State pensioner an O.A.P anymore. Not that there is anything wrong with being old.
I know that there will be a “business justification” for this, and I’m certain that someone from Skandia will attempt to persuade me that there is. However, I can’t help but think that multi-national branding has more to do with egos rather than anything else. Skandia are not alone in this, financial services is riddled with name changes and this leaves people confused and a little fed up that so much money is wasted on a new paint job. Of course this is not exclusive to financial services, the football stadiums around the country are gradually being renamed by corporate sponsors, though again, to what end. Does anyone really fly with Emirates because it is mentioned as the stadium? or Etihad? I’m not convinced that this is marketing money well spent, though I’m sure a those involved in the marketing process are all rather pleased.
Anyhow, over the next 2 years, we will all be changing references to Skandia to Old Mutual Wealth – OMW. So I did a quick google on OMW acronyms. On My Way, Oh My Word, Old Man Winter, Online Model World, One Minute Wonder, Oh My Wow, Oh My Waffle, Organizational Mastery Workshop and Observation Monitoring Well.
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
Is It A Good Idea To Rename Something “Old”?2017-01-06T14:39:55+00:00

Better Late Than Never

1949: Death of a Salesman – Miller
I have never liked commission. I don’t think its entirely bad, it does help people to pay for advice. However, I have always argued that if an adviser is paid to sell products, then it is hardly surprising that it is products that are advised. Hence when I set my own firm up in 1999, I did so without the normal problems inherent within financial advice. I charged fees for the work and a fixed implementation fee, which was the same irrespective of the type of product. This saved our clients thousands of pounds (and continues to do so).
Today the Managing Director Martin Wheatley of the FSA, soon to become the FCA, announced that he wants to see and end to mis-selling created by sales incentives. He is particularly concerned to tackle Bank staff who are incentivised to sell their products – everything from a bank account, credit card, cash ISA, loan all has a commission incentive to the Bank staff. He said:
Why is it that every time I walk into the bank to do something simple, like pay my credit card bill, the person behind the counter asks me if I would like to extend my credit, take out more insurance or look at their competitive mortgage rates? When did this happen? Banks for me used to be a service – a place where you would go in, stand in a queue, have a pleasant chat with the clerk and go about your daily business. Some time ago, this changed – financial institutions have changed their view of consumers from someone to serve to someone to sell to.”
This does not apply solely to Banks, it applies to financial advisers, Fund Managers, Investment Companies and pretty much anyone within financial services. I’m with Mr Wheatley on this in principal, however we need to be careful not to throw the baby out with the bathwater. Motivations and incentives certainly need to be in place. People do not wake up and form a queue at my door for impartial fee based financial planning. I have to play my part to promote what I do and make people aware of why they should consider using my services. That’s even part of the motivation behind this blog post. So whilst I’m in full agreement, a note of caution as big budget Banks and Investment Companies may simply flood us all with information overload and of course if base salaries for these sorts of employees were to rise to offset the “lost” bonuses, it is likely to lead to either higher costs, passed on to us all or increased redundancies, which is passed on to us all in the form of additional State benefit burden. So yes Mr Wheatley I fully agree, but don’t let them get away with a smoke and mirrors dance on how this plays out.
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
Better Late Than Never2017-01-06T14:39:55+00:00