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

Could Financial Services Be Beautiful?

Solomons-financial-advisor-wimbledon-blogger

Could financial services be beautiful?

I wonder how many of us watched the final of the European Football Championship. The final was a footballing spectacle, with Spain beating a very good Italian side 4-0. The sports psychologists will have something to say about the score-line, but this was a world cup winning team perhaps at its best.

The pundit “experts” were left gob-smacked by the sublime passing and control that the Spanish side seemed to have in abundance. I had every sympathy with the Italians, who despite playing with 10 men for a large part of the second half, held on nobly. However one wonders if the result would have been much different if they had fielded 15 players – and Italy are good!

I have a confession, I’m not madly into football as some are. However, I do like to see good goals, team spirit and tenacity. I don’t like all the silly falling over and cries of “foul play”. I enjoy the drama of sport, but when sport becomes predominantly about winning it loses its purpose.

I know that these days it is simply a business, but something of sport is lost when winning is the only objective, which is why finals are usually so dull. One of the pundits was so in awe of the performance that he said that “football has just been reinvented”.

This made me wonder whether the collapse of faith in the Banking sector and generally within financial services is perhaps a good thing. There is certainly a need to reinvent a better way of managing risk and oversight of it.

There is also the enormous need for good financial planning which will help determine what level of risk needs to be taken on an individual level. The competition within the sector is in all the wrong things – performance and returns. A reliable, honourable and dare I say it, beautiful banking or financial services system is all about the why and how – not the what. It is time for a collective rethink.

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

Could Financial Services Be Beautiful?Dominic2023-12-01T12:22:08+00:00

Seeking Values

1957: Something of Value – Brooks

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

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

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

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

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

A Spoonful of Sugar

1964: Mary Poppins – Stevenson

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

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

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

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

As Clear As Fog? The New Jargon

1936: A Face in the Fog – Robert Hill

Finally, today that FSA have begun the process of telling the public what is happening to financial advisers from January 1st 2013. To clients this will not be news, to regular readers it will be not terribly new information, but for those of you that have recently found my blog, this may come as a surprise.

As a forward-thinking financial planner, I have operated on a proper fee system since setting the company up in 1999. What this has meant is that clients have clear fees for the advice they receive and clear implementation costs. This was quite radical at the time. Since 1999 we have improved our services and frankly, become an awful lot better at delivering them. So you would think that I’m pleased that the regulator is making everyone operate on the same basis. Well, not entirely. In the “good old days” (they weren’t) advisers were either Tied or Independent – which meant that they either sold you products from just one company or could search for the best from the entire market. This should have been better and probably was in 90% of cases, but as providers paid different levels of commission for the same product or vastly different amounts for the same investment but into different types of product, frankly the whole thing was open to abuse. So then came Multi-Tie to muddy the waters – a third approach, with you guessed it, the ability to sell products from a limited number of companies (typically 3 or 4). The next step was to say that to call yourself independent, the adviser must offer products from the whole of the market and offer the option of paying a fee instead of commission.

The new rules go a bit further – the adviser has to agree the cost or fee with the client (you) in advance. This can be paid from the product or directly, but importantly is not determined by the company that provide or “manufacture” the product. The implication being that Product Providers cannot sway what products they want to promote or “entice” new business. This fee agreement rule applies to all advisers. They also all have to have the same minimum (enhanced) level of qualifications. However, to be termed independent, they must offer advice from a broader range of investment products – which include unregulated ones, (called Unregulated Collective Investment Schemes) which can result in huge losses to clients. UCIS cannot be promoted to the general public. It is these products that are suitable for very few “normal clients” (by the FSA’s own admission) that are causing me and many fellow forward thinking advisers some concern. Basically a lot of them (but not all) are rubbish and not relevant to 99.9% of people. Yet in theory we are supposed to consider them for all clients, by researching, assessing and then ruling them out (or not) in order to remain able to use the term independent. In the majority of cases this will be a huge waste of time and client money. Simply saying we won’t or don’t do it, means we can only use the term “restricted adviser” – which applies to an adviser that does everything but UCIS or one that simply sells one type of product. To assume that the general public will appreciate the differences once the marketing teams have “had a go” is in my opinion somewhat naive. I welcome your thoughts.

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

As Clear As Fog? The New JargonDominic2017-01-06T14:40:06+00:00

House Prices Begin A Nervous Recovery

1945: House of Fear – Roy William Neill

Perhaps your major asset – your home is on the increase in value (finally). The average house price last month was £163,803 (yes I know – where is this house? there certainly isn’t an average house in London worth this amount!) in July, last summer the average price was £163,765. You will notice that there is little real difference, but this comes after data that had previously revealed month on month price falls, this trend was bucked in March (according to Halifax) by a 2.20% rise in prices. No doubt the mathematicians amongst you will appreciate that in real terms property prices are therefore falling behind inflation. One also has to question… so what? if you live in the house, its short-term market price is hardly an issue – its only when you want to sell that it becomes a problem – unless you are a landlord. Property price rises may give rise to questions about possible capital gains tax bubbles and when/if to sell or let the property. The truth is that property is not very liquid, the buying and selling process is fairly protracted. Another property truism – is that its all about location, location, location.

Good financial planning will involve considering your options with respect to your home. Some people will find that their home provides a useful form of capital – either by downsizing and releasing equity or by taking out a loan against the value of the property. Invariably this is done to provide income to meet expenses. I would counsel a great deal of caution if you are considering taking a loan against your home. This can end badly and needs expert counsel to avoid considerable distress that many have suffered when they understand that their debt compounds with interest and can result in nothing being left – which might be suitable to some people, but on the proviso that they have understood the mechanics of the loan – which few seem to do. Great financial planning will help identify stress points in your future cash flow and provide advance warning as well as possible solutions. The art in financial planning is knowing what questions to ask.

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

House Prices Begin A Nervous RecoveryDominic2017-01-06T14:40:06+00:00

A Re-telling of Raiders and a Lost Arck

1981: Raiders of the Lost Ark – Spielberg

I have been reflecting on the difference between fairness and justice and realise that the two are completely different. Hot on the tracks of my share of a £60m bill for the failings of others, there is further news about yet another firm collapsing and as a result likely that further bills will keep arriving for me and many other financial advisers. This time is involves a SIPP provider (HD SIPP) an investment property firm called Arck LLP, an investment called Sustainable Agroenergy Plc and a couple of firms called Sustainable Wealth Investments (UK) Ltd and Sustainable Growth Group (UK) Ltd – ironically named.

The Serious Fraud Office has appointed administrators for the above, which have clearly been found wanting by the SFO. This relates to a so-called green investment fund based on tree plantations in South-East Asia (surely not the setting of the opening sequence to the Indiana Jones film?) and linked to foreign property investments held within a SIPP. I imagine the worst – perhaps that there is a foreign bank involved somewhere and a number of investors promised guaranteed returns. Perhaps this may even involve scams about pension cash liberation, it certainly has all the grubby hallmarks of one. I don’t know the detail and of course innocent until proven guilty, but I can tell you that I get emails every day offering high commissions (very high) for getting investors into these sorts of arrangements. However, quite apart from the fact that I work on a fee basis anyway, these are almost always “too good to be true” and are based on the most flimsy of information. Sadly there are still many “advisers” that will recommend this sort of rubbish, even the most basic of research should have revealed some problems. Here is the most basic financial planning principle of them all. If it seems to good to be true, it almost certainly, almost always is (i.e.not true). Here is also a helpful link to the SFO’s current known scams.

If you know anyone that may have got involved with any of these companies, here is a link that will be helpful. Sadly this is likely to mean yet another large compensation levy for yours truly, despite never even entertaining the notion of arranging these sorts of investments.

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

A Re-telling of Raiders and a Lost ArckDominic2017-01-06T14:40:06+00:00

It Seems That The Buck Stops Here…(when nobody else takes responsibility)

2006: Notes on a Scandal – Richard Eyre

You may recall that on Thursday 15th March 2012 I posted a that I was groaning about my share of a £60m bill from the FSCS.Well today it arrived (gulp!). This is all due to an American derivatives stockbroker firm, MF Global going bust and their clients requiring compensation. This is simply yet another collapse of a firm that yet again has little if anything to do with real or proper financial advisers, yet it is the IFA and Financial Planning community that are picking up the collective bill from the FSCS.

Rommel Pereira, the FSCS Director of Central Services writes “In the past year the volume and value of investment claims coming to the FSCS has exceeded our previous assumptions. The increase has partly been driven by on-going costs for Keydata Investment Services Ltd and Wills & Co. FSCS has made more decisions on Keydata claims than previously predicted with a higher average compensation payment than earlier claims. There have also been two new failures in CF Arch Cru and MF Global…..We appreciate that the interim levy will not be welcome news for firms in the Investment Intermediaries sub-class, but we have a duty to compensate consumers with eligible claims. We sympathise with firms about the unpredictability of compensation costs but funding is required to cover the costs of compensation until the next levy is raises and becomes available in July.”

This comes with an invoice and 30 days to pay from the date of the invoice or face a set of late payment charges and interest blah,blah,blah…(standard notice) and another (the full proper, big bill, arrives in less than 4 months time).

Look, I know we need a decent compensation system so that when firms mess up deliberately, investors are not left simply being ripped off. However, isn’t there a degree of mutual responsibility that is meant to happen? such as the investor reading the material and deciding that based on the information, relationship and so on, that the investment is worth taking a risk with. Similarly the adviser should be doing relevant due diligence on products before recommending them. Auditors (PWC in the case of MF Global) should be checking the truthfulness and accuracy of any product literature and finally the regulator should be checking that the product is well run and managed properly and those that are arranging it/selling it do so with all the proper caveats?

Yet how on earth do I get billed for the messes that the above clearly failed on? where I have done my part of the job and avoided this rubbish like the plague! This on the day when many of us will also be pondering how the cost of a second class stamp can really be 50p (a 38.8% increase! and 30% increase for a first class stamp at 60p) oh well at least the FSCS enclosed a freepost envelope! I wonder what your thoughts are and if you would care to let me know. I know I am sounding rather like a bleating sheep, but does it seem fair to you?

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

It Seems That The Buck Stops Here…(when nobody else takes responsibility)Dominic2017-01-06T14:40:06+00:00

VAT, IFAs, RDR, FSA, DFMs, HMRC and more confused acronyms

2008: Chaos Theory – Marcos Siega

As a forward thinking financial planner, keen to ensure that our clients get the very best advice, last night I attended a seminar at the Chartered Accountants Hall in London. The focus of this was in relation to the interpretation of VAT rules and how this will be new for most financial advisers from 2013. Anyone that knows Solomon’s, will be aware that we have always operated on a fee basis. Anyway, (yes it was a dry topic) there has been something of a spat between the HMRC, FSA and IFA trade bodies as there is a significant degree of uncertainty about what is and what is not liable to VAT, so as you might imagine a fair number of advisers are not only concerned about charging fees for the first time, but also becoming VAT registered. One interesting point, was that under current understanding, any IFA that uses a Discretionary Fund Manager (DFM) service will have to apply VAT to this. In recent times, many IFAs have been encouraged to outsource their client investment services to “Discretionary Fund Managers” and continued to be paid as though looking after the client money. I have not been tempted by this, primarily because for our clients this is largely an unnecessary additional cost and one that does not appear to provide better results for clients. Anyhow, if the ICAEW interpretation of the rules is right anyone who has an adviser that uses DFMs will have a further 20% of VAT to add to the bill, making outsourcing investment advice less attractive.

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

VAT, IFAs, RDR, FSA, DFMs, HMRC and more confused acronymsDominic2023-12-01T12:48:04+00:00

How Reputations Are Ruined Over An Easy “A”

2010: Easy A – Will Gluck

There’s the good news and the bad news… which would you like first? let’s start with the Eurozone bailout fund, which had its Standard and Poor’s credit rating downgraded last night from AAA. This makes the bail out fund less attractive (solid) and therefore more money is needed to put things right. The IMF might not have enough money either… so could they have some more? Mr Osbourne is being asked to contribute another wad of cash to prop up the financial house of cards. He is keen to ensure that other nations (in particular China) also put more into the tin.

The Italian PM Mario Monti is sounding more than a little anxious as he is suggesting that Germany needs to still do rather more to support the system, which in translation means provide more cash so that new borrowing arrangements are not so punitive as to make them unworkable for Italy. This is not looking much good is it? Add this to the fact that on Friday night France had its AAA status downgraded and we now have the scenario of politicians bleating that the credit rating agencies are wrong and making the situation worse, a situation that they themselves had effectively allowed to occur. The bleating is getting louder and it is my opinion that the blaming will begin rather shortly.

The financial crisis is now akin to the each credit card being maxed out and no one is left able to pay the monthly payments. That is of course unless new money is “created” which is the preferred choice of most Governments except Germany, who are all too aware of the calamity that inflation can bring. Perhaps news of China’s rate of inflation decreasing together with Britain’s rate reducing considerably to 4.2% and set to fall to around 3% by March if Bank of England Monetary Policy Committee Member, Spencer Dale is right, will provide some comfort that inflation is not out of control. That said the Bank of England has a target rate of 2% which it still fails to achieve. Perhaps the signs of falling inflation may move the Germans to relax their views about printing money, though as one of the only growing economies in the world, why they should change policy would surely be questionable. That is until you consider that in this global economy Germany needs to sell manufactured goods to make their own numbers work. Angela Merkel will no doubt be reflecting on how she can pull off helping Eurozone neighbours without ruining her own reputation.

So what does this mean for investors? well frankly more caution. It is important that clients keep in mind when cash (capital) is required from a portfolio – planning withdrawals and ensuring that there is enough in reserve. I also advise checking that you remain “comfortable” with the level of risk within your portfolio and that you discuss with me any changes in your capacity for loss.

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 Reputations Are Ruined Over An Easy “A”Dominic2023-12-01T12:48:08+00:00