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Noises Off – Successful Investing

I imagine that you will be aware that the world stock markets have been rising, but “readjusted” overnight and today. There has also been concern over the price of gold and a possible Bond bubble (nothing to do with 007). May I speak plainly? the vast majority of the stuff you hear in the media in all its forms, in relation to markets is largely irrelevant to you and I – unless you are trading shares and funds on not simply a daily basis, but throughout the day. This is, in my humble opinion and 20+ years of lessons learned, is a “mugs game”. It remains decidedly unclear whose interests are being served with a constant barrage of “news” about funds and investment markets – but certainly not yours or mine. This news is only really relevant to gamblers and “professional” traders.

Successful investing requires you and I to act with reason and frankly – devoid of all emotion. We all know the obvious – buy at the bottom, sell at the top – but this is rather a pointless statement as so few people actually behave in such a way – in any event, we don’t know what the “top” or the “bottom” is until after the event. Anyway, if selling helps you sleep, then who is to say that it isn’t a “good decision”. Nobody – yes nobody, can successfully consistently time the market. Nobody. There is a mountain of information on this stuff – we call it behavioural finance (google it if you like).

Successful investing means taking a long-term view. The longer investments are held, the less likelihood there is of loss. This is proven statistically. However many investors (professional and private) constantly chase the next idea or the “best performing” investment in the hope of not missing the boat. This results in under-performance, research in the US by Dalbar would suggest a significant under-performance each year by around 4% a year – yes that’s 4% a year less than the market by chasing ideas and attempting to time the market. For those of you that worry about me citing the US, it is the largest market by a country mile – 46% of market capitalisation (the sum of the value of shares) at the end of 2012… the UK was 7%, Japan 7%, Germany 3%, France 3%, Australia 3% and China 2%… just to give you some perspective.

Anyhow, whilst I find this fascinating, you may not. My role as a planner is to help clients minimise their mistakes and reduce the costs relating to investment. It is also to help figure out what returns are needed and therefore how much “risk is required” to ensure that you don’t run out of money. It is not about beating the market (which can only be done with additional risk, luck and skill – but be warned, very few investors – including the professionals actually beat the market). So please take the vast majority of investment advice and “news” with a big pinch of salt.

Have a plan
Know what return you need
Know what risk you can cope with
Think long term (10 years+)
Avoid attempting to time the market
Implement cost-effective investments
Diversity your portfolio – ie, not all your eggs in one basket

Dominic Thomas – Solomons IFA

Noises Off – Successful InvestingDominic2023-12-01T12:23:37+00:00

End of the Bank Advisers

Financial advice continues to become expensive. Sadly, despite numerous warnings from advisers about the impact of RDR which came into effect from 31 December 2013, the number of advisers continues to fall. This has particularly impacted the main high street banks and building societies. Today AXA announced that they are closing their relationship with Banks, citing the cost of getting advisers to comply with regulations profitably. AXA provide the financial advisory staff in a “restricted advice” form for the Co-Operative, Yorkshire Bank and Clydesdale it is being suggested that this represents about 450 advisers, not a huge number (unless you are one of the 450) but then again there are only around 30,000 advisers of all descriptions and the numbers are reducing all the time. The number of bank advisers appears to have halved in the last 12 months and I am yet to see a clear adviser charging schedule or fee menu from any bank, that doesn’t simply look like a rehashing of their old commissions.

The regulator (the FCA) is in a difficult position, the goal of creating an environment of clearly charged advice appears to have back-fired, with fewer people able to afford good financial planning. It is probably fair to say that most of the “problems” have been created by banks, which seems to be backed up by complaint data yet again (out today as well). I believe that the UK needs good regulation, but this has become increasingly costly and the new levy for my regulatory fees is reported to be rising an extra 15% this year. This is likely to get worse before it gets better as there are fewer firms to pay the regulatory costs.

Many advisers have been pretty scathing about RDR. Whilst I can understand many of their points, the truth is that clients / investors want clear charges and not fudged information. Commission in its various forms does not provide clarity, neither do the charges applied by Fund Managers, where in fact the costs can be considerably higher than the stated annual management charge. I am also rather sad to report that the regulator had very good reason to challenge how advisers were paid, there were lots of products that paid high commission levels and in my opinion this resulted in bad advice. However banning commission was probably not the answer, but a well regulated, level playing field with clients fully informed and the inability for product or provider bias would have been far simpler. Of course, it was possible to be impartial – I was operating in a transparent fee system from the formation of the company in 1999.

Dominic Thomas: Solomons IFA

End of the Bank AdvisersDominic2023-12-01T12:23:32+00:00

Cash ISA Rates

Here is a list of some of the better Cash ISA rates that are widely available to most people within the retail banking and building society sphere. Remember this is a list, is not advice and merely for information so that you have a guide to the general level of better rates of interest widely available.

Instant Access Accounts

Building Society: Leeds 2.00%
Bank: Virgin Money 2.00%
On-line: National Counties 2.25%

Cash ISAs – Fixed Rates of interest

Building Society: Leek United 2.75% (3 years)
Bank: Bank of Scotland 2.80% (4 years)
On-line: Bank of Scotland 2.80% (4 years)

Cash ISAs – Variable Rates of interest

Building Society: Earl Shilton 2.70% (90 day notice)
Bank: Virgin Money 2.00%
On-line: Monmouthshire Building Society 2.50% (30 day notice)

Of course rates change regularly, though this tends to be in response to announcements from the Bank of England. I would remind you that the Bank of England base rate is currently 0.50%. Once again your attention is drawn to compensation limits of £85,000 per person per banking license. So given the instability of the global economy and the potential for claims, diversifying your cash holdings is arguably as important (if not more so) than diversifying your investment portfolio. See the FSCS website for more information. Remember that you have until 5th April to use your ISA allowance for 2012/13.

Cash ISA RatesDominic2023-12-01T12:23:14+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”?Dominic2025-01-21T15:33:48+00:00

Summer Holidays Come To An End

2010: Insane – Jacobsson

I doubt that I am the only one that wonders why politicians think that each failed bailout for a failing Euro zone member must be met with yet another pile of money. If the problems are bad now, then surely simply throwing more long-term debt for future generations to struggle with is folly. In fact, I read somewhere that the definition of insanity is continuing to repeat the same mistakes expecting different results. It seems to me as though this is the perfect description of those that are more bothered about their next election than about the legacy that they leave us all.

I am deeply concerned for the younger generation who will be working longer, earning less, buying a home later, having to look after elderly parents that have run out of money and have tax rates that make ours look playful. It is beyond the point of a discussion over a glass of Pimms, but a deeply distressing situation that needs resolving. Here and in Europe, we need to stop funding the ridiculous and start funding enterprise that employs people from within their own borders. We need to rediscover self sustainability and work collaboratively with our neighbours to ensure mutual prosperity.

Importantly, I also believe that we need to abolish financial instruments that enable some to bet against a nation and effectively magnify a crisis. This facility may be part of the “investment piece” but it is deeply flawed in its connection with people. Economics should serve society, not the other way around. Markets are meant to be a place to swap things at a negotiated fair price, not murder the seller.

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

Summer Holidays Come To An EndDominic2025-01-21T15:33:48+00:00

Alarm Bells For Charity Accounts

1998: Lock, Stock – Ritchie

This is a very odd tale. It is reported that a Bristol Accountant was sacked for forging a charity’s fire alarm certificates. However after his departure it emerged that over a period of about 5 years he has misappropriated over £560,000 from the Charity “Above and Beyond”, a reasonably large sum of money. Mr Brendan Joyce from Bristol used the money to fund his lifestyle which surprised many. He was something of a car collector, but perhaps not the sort of cars you might expect, his choice was more run of the mill Vauxhall Carlton type. It is reported that he kept over 100 cars in lock-up garages across Bristol and had eventually found the monthly rental payments beyond his means. Mr Joyce has been sentenced to three years in prison.

The Above and Beyond Charity does some really great work raising money for nine of Bristol’s hospitals to improve the hospital environment, fund research, support and train staff and provide equipment. The charity provides over £3m to hospitals in Bristol each year, with 11 employees and over 400 volunteers. It is perhaps due to the financial cunning of Mr Joyce that the theft was not discovered sooner. However, this should be another reminder to business owners and charities to ensure that the Accounts are understood and checked thoroughly, which is also the responsibility of the auditors for charities, which in this case was Grant Thornton. As someone that serves on a charity Risk and Audit committee, the importance of this no small undertaking.

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

Alarm Bells For Charity AccountsDominic2023-12-01T12:22:34+00:00

Banking On Full Information

1958: The Whole Truth – Guillermin

I put in what I believe to be sensible caveats about a list of top rates being paid by Banks and Building Societies. The regulator’s own website is fairly brief when it comes to checking the Banking licenses. They have several points at which you can access information, though it would be more helpful if they could simply provide pdf, word or excel document that lists all banks and their licenses. The website “UK Banking Brands and FSCS Cover” at the moment (in July 2012) simply shows the main banks in Britain. These are the Bank of Scotland, Barclays, The Co-Operative, Halifax, Lloyds, Nationwide, NatWest, RBS and Santander. These are some of the biggest names, but of course often not shown as those that pay the highest deposit rates. Not exactly “whole of market”.

The important thing to remember is that the FSCS cover is up to £85,000 per person, per banking license. So generally it is not advisable to hold more than this amount, in fact to be on the safe side £80,000 before any interest is paid.

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

Banking On Full InformationDominic2025-01-21T15:33:48+00:00

Another Good Win?

1959: No Name on the Bullet – Arnold

The FSA recently fined and banned a commercial insurance broker who used clients’ insurance premiums to fund his business. The Lancashire based adviser, Stephen Goodwin, was fined £168,000 and had to replace the funds that he has misappropriated. This is the largest ever individual fine that the FSA has handed out. The total fine amounting to £471,846. Between 2008 and 2012 the firm used over £300,000 of money that should have been paid to insurers for their own purposes. One client attempted to claim against the insurance that they believed was in place, only to discover that it was not. It appears that this was a clear case of fraud. To my mind the FSA were right to ban and fine him.

The name of the culprit did remind me of another Goodwin, Sir Fred. Who made a mockery of the UK banking system by buying ABN AMRO without proper due diligence (as far as can be gathered) at a point when the financial crisis made it apparent to almost anyone that such a purchase would be unwise. This cost shareholders and the British public billions, and of course the legacy still rumbles on. The regulator even admitted that they could have done better. The fine for this Mr Goodwin….. well a pay off that most people would class as a lottery win. Whilst Fred may not have misappropriated funds in the same way, frankly the issue is really one of corporate governance and response to financial pressures. I find it very hard to disagree with many of those within the financial adviser community that believe that they receive far harsher treatment than those that really create a very big mess.

The story about Stephen Goodwin is another opportunity for me to remind you that we do not handle client money. All payments to us are for our fees. If and when we advise investments of any description the payment is made to that organisation. This is something that I believe is very important for the security of both our clients and our business.

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

Another Good Win?Dominic2025-01-21T15:33:48+00:00

Permission To Carry On Doctor

1967: Carry On Doctor – Thomas

Doctors have to be revalidated. In other words, they have to regain GMC approval to practice. This is a result of the Government’s decision to have a revalidation process beginning from the end of this year. I understand that the revalidation will need to be reviewed every five years, which whilst being an irritation to many already over-worked doctors, will be a relief that at least it will not be an annual process. A part of the RDR (Retail Distribution Review) is that advisers must effectively attain an annual Statement of Professional Standing certificate, provided by one of a few organisations licensed as a provider.

Doctors will get six months notice of their revalidation dates. The GMC have advised that revalidation dates for currently licensed doctors would likely be within the next three years to March 2016, with this possibly stretched over a five-year period for trainees.

Whilst there is clearly merit in ensuring that skills and competence is maintained and kept up to date, one does begin to wonder if we have simply created more form-filling and form vetting jobs without actually ensuring any significant improvements. This isn’t just an issue for doctors or financial advisers, similar principles are being adopted in many fields. I suspect that the cost of all this validation is fairly significant. I have tremendous respect for doctors, but I really don’t believe that revalidation will make any difference to the confidence I have in them and I imagine that my SPS will not provide greater confidence in me.

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

Permission To Carry On DoctorDominic2023-12-01T12:22:32+00:00

Beware of Average

1969: Beta Mathematics – Goddard

The average London house price is on a slow rise according to the research and data from the BBA (British Banking Association). The average London property is now worth £409,447 (May 2012) which is the highest average figure that has been achieved on record. This is helping equity levels within property, but of course is only a part of the picture. The reality is that inflation has accounted for a significant part of the improving property prices which slumped or devalued, whichever your preference, from around 2007. However since then, prices have recovered in most London Boroughs to levels above the 2007 peak. Indeed the average property price in Hammersmith and Fulham (4th) is now £649,114, Richmond is now 5th at £599,311, Wandsworth is 7th at £499,492, Merton is 11th at £423,689, Kingston 17th at £361,362,. The highest average property price being found in the Borough of Kensington and Chelsea at £1,439,897. The lowest average price of all London Boroughs (33rd) was in Barking and Dagenham at an average price of £175,235.

This is where statistics can often be used to suit your argument and much caution is required. Whilst it may be true that the average price of property in London is rising this and is now £409,447 the mid-point average property is actually £364,411. This is because those Borough’s at the top end distort the average number significantly by 11%. Indeed the majority (60%) of Borough’s have an average price below £400,000. All I’m really saying is that the adage location, location, location very much holds true when buying property. Of course, your residence is your home and not an investment.

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

Beware of AverageDominic2025-01-21T15:33:48+00:00