Hope at Christmas

Sometimes, I probably stray a little too far from financial planning stuff within this blog, but that’s largely due to the fact that the clients I work for and wish to attract are people that have similar values to mine. As I have said before, if we are to work together, you may as well discard the glossy marketing and get a feel for who I am… after all there is so much more to both my clients and me than “money”. Anyway, on Saturday night I was part of a small crowd that was warmly welcomed to the home of the Kubrick’s who are generous advocates of local arts (the family of the late Director Stanley Kubrick) to support the launch of a new musician – Hope, my god-daughter.

Hope is only 15 and as you might imagine is still at school whilst making time to learn, practice and write new songs. Who knows if she will have a successful career in music, at this point she’s just having fun and seeing where it may lead. Hope’s parents are some of my closest friends since student days, and sadly her father Toby died of cancer some years ago in 2006 which was the first time that I had experienced the loss of someone close to me of my age. As close friends, Toby and his wife Kym were people that also helped me in the early days of my career, acting a little as practice guinea pigs for my evolving advice. He was also the first client that I had to make a claim for against a critical illness policy. Unfortunately Hope and her older brother have both been diagnosed with the same causal disease (MEN Type 1). This isn’t an appeal, I’m just helping to draw a little attention to her first EP, produced by a new small record label called Jacket Records which should you like can be bought at any digital music store for a few pennies and the largest store (itunes) link is here. She has a website – which you can also find out more information, her first track is called So Much More… I know her dad would have been very proud.

Dominic Thomas

Hope at ChristmasDominic2023-12-01T12:39:48+00:00

Has War Just Changed?

As is often the case, out of something that seemed trivial, we may have witnessed a “significant moment” in history without grasping the implications. In short, we are asked to wonder if war has just changed. It seems to me that war is invariably about an inability to cope with or live with difference. Often this is expressed as a conflict of ideology but of course theology too. Some regard war as a battle over land, which perhaps is the case, but I’d suggest that this is merely the physically binding frame of reference used to galvanise support along lines of difference and to physically represent the boundaries of control. This week we learned that the boundaries shifted. The vast majority of the media missed the story, selecting to reflect the inane rather than the insane.

The story? this is about a executives at a film company bad-mouthing movie stars and being caught. The real story is that national boundaries have just been obliterated by hackers, who acted to squash something they didn’t like… but not just squash, threaten. Of course, some countries operate on the basis of a few bullies oppressing the masses – this is sadly nothing new and will probably never cease. I found myself looking at an image in a magazine recently, wondering how on earth so few, odd looking irrelevant men can control an entire nation, yet it happens all over the world.

The sadness is that film-makers and journalists are meant to be the ones that keep our focus on the truth, revealing darkness and oppression, helping to inform and change. Sadly many in Hollywood shirked this responsibility for fear of reprisal and financial cost. George Clooney couldn’t get anyone to sign his petition – ANYONE. So why should we be concerned if others aren’t? – after all haven’t Sony executives themselves to blame for expressing personal opinion and hitting that send button? Well, certainly some wisdom is needed in expressing opinion in a digital age, but the truth is that I doubt anyone has not said something about someone at some point in their life of which they are now not terribly proud. However, this isn’t really the point – the point is where does this lead? Can hackers now be hired by anyone, any nation to bully another into compliance? How does this impact our free speech? and surely this isn’t simply the domaine of terrified, narrow-minded tyrants, but also enters the arena of corporations who don’t like stories about their leadership or activities. Surely this has the potential to influence how we perceive and from a financial services perspective, appearance can be everything – just ask Tesco or BP.

This story has implications for you and I, our use of social media and the freedoms we enjoy. Obviously it isn’t wise to hurl insults and the adage, if you wouldn’t say it to their face, don’t say it at all seems pretty pertinent. But we surely cannot live in a world where we are terrified of legal action or reprisal. This is a “tipping point” for the double-edged sword of the internet, offering the prospect of genuine freedom of information to all (which we take rather for granted in the comfort of the West). As for me, I have never liked bullies, whether they come in the guise of a big kid in the playground, a teacher, boss, an investment bank, politician, pseudo military general, bigot, racist, rabid fundamentalist or of course my own tendency to think lazily and turn to petulant expression in frustration, which certainly in my “madder moments” it is a very good thing that weapons are not within easy reach…and sadly my own temper is easily fuelled driving, cycling or walking these very streets all too easily… which is of course the advantage of a society that doesn’t permit liberal gun ownership, encourages thought, education, tolerance and self-reflection, but unfortunately often seems more obsessed with narcissistic reflection in the eye of… well the media.

Dominic Thomas

Has War Just Changed?Dominic2023-12-01T12:39:48+00:00

Walking With Dinosaurs

Walking with Dinosaurs

You may remember the programme “Walking With Dinosaurs” which was first broadcast on the BBC in 1999. It was a ground-breaking award winning series due to the technical special effects that some clever people at Framestore achieved. One of my clients worked on the series and has since had a succesful career in Hollywood doing similar things with monsters in movies. Anyway, interest in dinosaurs seems to have been re-kindled ever since, despite the efforts of the character Ross the palaeontologist from “Friends” who attempted to bore everyone to death.

It was only a few days ago that I was blogging about a video suggesting that IFAs will become extinct in 2014 much like the dinosaur. So it was some degree of irony that on Thursday night I was at an award ceremony run by the Financial Times Financial Adviser magazine held, you guessed it, in the Hintze Hall of the Natural History museum in Kensington. If you’ve been there, you will know features a huge Diplodocus. I’d been invited along (noted in our inducement register) by a company that we have used successfully with a number of our clients, very much a new world technology focused company, a company of tomorrow – or at least as far as we can see ahead. I hadn’t been to this annual event before and to be honest, probably wouldn’t hurry to return again.

This was a night for service awards, which frankly I thought might have extended beyond “Product Providers” the majority of whom were life and pension companies or mortgage lenders, but it didn’t.

The awards are voted for by advisers, the results were very surprising and seemed to contradict my own experience of dealing with some of the organisations over the years. I have to admit that we don’t arrange mortgages, so I have no idea today who is a good lender when it comes to service, though I have my suspicions.

Whilst I wouldn’t wish to pour cold water on the achievements of those that won, (seriously – congratulations!) it did make me pause to wonder, why advisers voted in a such a way, suggesting that many are still rather trapped in the old world and the old ways of doing things, in fact being advisers that arrange stuff rather than holistically plan, perhaps I’m wrong on this (it wouldn’t be the first time) but the results and event itself were rather… enlightening. I left wondering how many might find themselves in trophy cabinets rather than those that they clutched…. there weren’t any awards for advisers, so its not that I’m a sore loser… its just that I genuinely think the days of the giants within the life and pension industry are seriously numbered. The news on Friday that one giant (Aviva) is seeking to swallow another (Friends Life) for an initial £5.6 billion merely adds weight to my assertion that cannibalism within the financial services industry is still the main diet. Still, it was a fun evening and the people I was with, who were good company, certainly echoed similar feelings to mine.

Dominic Thomas

Walking With DinosaursDominic2023-12-01T12:39:38+00:00

Arthur Wynyard’s Retirement

We have come to the point where we say goodbye and heartfelt thanks to Arthur Wynyard who at 71 will be retiring at the end of August 2014. Arthur was my third hiring and has lasted the course longer than anyone else! We have seen huge changes and the ups and downs of life within financial services, heaven only knows how many regulators he has worked under!

Over the years, he worked in various capacities as both an adviser and paraplanner as he gradually prepared for his full-time retirement. Many of you will initially have come across him as an adviser, but he stopped this some time ago to work as a paraplanner. He has been something of a protective shield against the sometimes unhelpful tide of waffle and general incompetence that we experience from certain product providers and helped to ensure that details are correct and our clients are treated well. As with much of our work, a huge amount of what he has done has not been seen by our clients, but experienced by them, perhaps rather like the foundations to any good building

Arthur has gradually reduced his working week enabling him to pursuit his other interests which he will now be able to enjoy in a full-time capacity with his wife Liz, their 4 adult children and his several grandchildren. He is a very keen gardener and if you have visited the office lately, he is responsible for our rather marvellous hanging baskets that greet everyone upon arrival.

Thank you Arthur for all your efforts helping us to serve our clients, strive to improve what we do and how we do it. We have seen huge changes in the what, how and why of what we do – all rather different from when you joined with me all those years ago, with the aim of helping people make better financial decisions. Thank you for putting up with my constant “improvement tweaking” and sticking with me through the “ups and downs” of commercial life and remaining willing to learn new skills. Thank you too for all of the roles that you have played which are incumbent for those working within a small business. You thoroughly deserve a happy and long retirement.

Dominic Thomas: Solomons IFA

‘All good things must come to an end’ as they say and the end of my time at Solomon’s is fast approaching. It has been an exciting, sometimes stressful, always interesting and mostly enjoyable. I have met and had the privilege to deal with some really great people over the years I worked as an adviser. I started with the company in the very early days and I would like to thank Dom for giving me the opportunity to be part of an expanding and growing organisation. I wish him and Solomons all the best for the future and pray that it will go from strength to strength.

What am I going to do with my retirement? Good question as I have not really planned anything, which for someone who is supposed to be a planner is not a good example. However, my family have some ideas to do with child care, decorating and gardening for them. I hope to be able to play golf, watch cricket and other sports more often and do a bit of travelling mainly around the U.K. I am also hoping to be able to provide some hands-on support to a local youth charity called Oxygen. However, as a Christian I believe that God guides my life and He may well have plans for me that I am as yet not aware and as it states in Proverbs 16:9 ‘We can make our plans, but the Lord determines our steps’. God willing the next phase in Life will be as exciting and as fulfilling as the previous ones. He may even grant me a long period of ‘retirement’ but I am sure that He will have something for me to do throughout it.

Arthur Wynyard

Arthur Wynyard’s RetirementDominic2023-12-01T12:39:26+00:00

Out with the old, in with the…. Old?

Out with the old, in with the… Old?

Well, the day has finally come. Skandia is being consigned to ancient history. Not precisely true, the parent company Old Mutual are rebranding Skandia from the end of this month as Old Mutual Wealth. As of 22nd September all references to Skandia will cease. So as with the multitude of “rebranding” of insurance companies in the past, will this one be any different? (other than a very good day for the printer). Skandia, er.. sorry Old Mutual are adamant that this is much more than a new coat of paint and a rebrand. They believe that this marks a new start and more innovation and giving customers what they want.

Skandia have certainly been a highly innovative company. Market leaders in the world of multifund offerings, enabling IFAs to offer a broad range of funds and the ability to construct some really good portfolios for clients. In fact few could really touch them, Fund Managers beat a path to their door simply to get onto the list as the first and largest fund supermarket in the UK. Times have changed and from an outside observers perspective the key changes seem to be – technology, regulation, competition and a change of parent. It remains to be seen precisely how Old Mutual Wealth will fare, but certainly the future will be far more competitive and require considerable foresight and innovation to keep pace, let alone lead the platform market, which is now rapidly becoming a crowded place.

If you have any Skandia arrangements, you will be getting a letter from them explaining the changes and the new branding very shortly.

Dominic Thomas: Solomons IFA

Out with the old, in with the…. Old?Dominic2023-12-01T12:39:26+00:00

Clarence Darrow

I was very fortunate to have friends in the right places who managed to get tickets for Clarence Darrow, a one-man show at the Old Vic, London. The “one-man” being the highly impressive Kevin Spacey, who many will know from a considerable film career, as well as many television appearances. However, much like the character he has inspired others. In his case, much to the delight of audiences, he has inspired many leading film actors from the US to tread the West-End boards of London, at the Old Vic and elsewhere.

Courageous walk into the future

Spacey’s performance of Clarence Darrow was such that a full-house, standing ovation was highly deserved and assured. He magnified the wonderfully written legal history into a compelling story of one man’s stand for the little guy, the underdog. The text is littered with wonderful lines and I’m not sure whether this is the work of the writer David Rintel or Mr Darrow himself (as is often the case, when a great writer meets a great professional). Darrow (1857-1938) was a leading member of the American Civil Liberties Union, ahead of his time fighting injustice and prejudice. Naturally whilst the context may have been different, many of the themes sadly remain current, which is perhaps why Spacey decided to revive the role he first performed 23 years ago in the 1991 film Darrow. Darrow reminds us of our humanity when we are tempted to get caught up in blaming others, seeking to understand, be understood and ultimately to walk with integrity, appealing to take a courageous walk into the future rather than a “backward and barbarous” walk into the past.

Lessons learned and learned lessons

As we appear to be at yet other cross-roads in the Middle East and global markets react to news of extremists that step into the void created by fear, it is worth remembering that knowledge is the antidote to fear, not annihilation. This is unfortunately a well worn path that appears to be forgotten and buried much like the desert winds that shift the sands. As Darrow said “History repeats itself. That’s one of the things wrong with history”.

Dominic Thomas: Solomons

Clarence DarrowDominic2023-12-01T12:39:19+00:00

Summers here… thinking of foreign currency?

The summer is here and thoughts begin to turn towards holidays. Many people use their holiday as a chance to reflect on their future, perhaps browsing the local estate agents and casting an eye on some rather nice villas. So I thought that you might be interested to know that your foreign currency requirements don’t have to be met just by your regular bank, indeed they are often the most expensive option.

I was recently approached by a global payments specialist firm called AFEX (www.afex.com) who were keen to talk to me about any of my clients who made regular or one-off international transactions; either privately or as part of their company’s activities. During the course of the discussions and our face-to-face meeting I was given a run down on the need for clients to properly plan for and manage these transactions to avoid needlessly wasting money. The services and benefits they could provide fell into three broad categories:

IMPROVED RATES AND CHARGES

Almost every bank will charge around £25 per transaction you make in an upfront fee. AFEX only charge £3 and even then only on transactions under £5,000. However, most of the costs and charges associated with making international transactions through your bank are hidden in the terrible rates of exchange they offer clients. The difference between the ‘interbank’ rate (which is the rate banks and firms like AFEX buy currency at) and the rate at which they sell it to you is called ‘the spread’. This is essentially the profit margin they make on your transaction. Banks normally take about 3%-4% profit margin whereas AFEX typically take under 1% – how much under depends on the amount you’re sending.

MARKET GUIDANCE

Advice can be crucial, unlike your bank, most foreign exchange firms will provide your very own dedicated account manager who will be able to give you guidance on where they see the market heading. In the case of AFEX they draw on all of the firm’s 35 years of operating experience and knowledge to ensure you trade at the right time, not just the right price. You’ll have your account managers direct dial phone number so there will be no more switch boards, automated messages or account numbers. As he or she gets to know you and the type of transactions you do better they will also be able to pro-actively advise you on when a good time to trade will be. This typically saves another 2-3%.

HEDGING AND RISK MANAGEMENT TOOLS

AFEX can offer you free to use tools to take the volatility and unpredictability out of your transactions. Simple tools like forward contracts lock in rates when they’re in your favour and you can trade up to 12 months into the future. Ensuring that the dream home you want overseas remains affordable regardless of what happens in the currency markets.

Remember, this is not advice, I’m merely drawing your attention to the fact that as an independent financial adviser we have access to the entire market, providing solutions to financial problems that are often not first thought of when you think “IFA”… which is far more than pensions and investments. You will be familiar with the phrase, “its not what you know, but who you know”. For a leading “plugged-in” IFA firm, we have the connections to make life considerably better.

Dominic Thomas: Solomons IFA

Summers here… thinking of foreign currency?Dominic2023-12-01T12:39:15+00:00

Moneybox and Platforms

This week BBC Radio 4 Moneybox featured the running spat that seems to be developing in the investment platform market. Platforms are online administrative services that both advisers and clients can use to buy, sell and value investments. To say that they vary considerably in price and functionality would be an understatement. There’s an entire market for helping advisers assess what platform is best for their clients (which I pay for and use for no small sum of money). In essence there is a price war or what I might call a race to the bottom. Cheap is not always good, but then neither is expensive. Moneybox kicked the tyres on the new Hargreaves Lansdown (HL) platform, which is really aimed at DIY investors. As far as I’m aware (which means from the latest research data) they have a decent platform with a reasonable range of funds. Their new charges aren’t that competitive and whilst they provide extensive fund information (most now do) as the HL spokesman said on air, there is the belief that they provide “the best funds at the best prices”. Whilst I can understand this statement, it rather betrays the belief that selecting “the best” fund is easy to do. It isn’t. This is a convenient belief, I might suggest delusion and one that DIY investors also suffer (hence a marketing match made in cyberspace).

Here’s the big one

Ok, here’s the big issue that the financial services industry generally doesn’t want to acknowledge, but when you read the next statement, and reflect on it, you know it is true. Here it is. It is not possible to consistently outperform the market without taking additional risk to the market. You might want to re-read that. Now there are some that that do outperform, but do so over the very short-term. Given that most fund managers do not manage their fund for very long, (a cynic might suggest that they quit whilst ahead) looking at the longer term performance of winners is equally unhelpful. Suffice to say a very small percentage outperform the market over 20 years… and the proportion that do is about the same as random chance. Its also depends on when you buy into a fund and don’t forget that hundreds of awful funds are closed and if had been included, would demonstrate that an even smaller proportion outperform over the long-term. Here is a chart a friend of mine shared recently.

Experience isn’t priceless, but it is highly valuable

As for the platform, well on one hand it is an administrative system. They are not all equally as good as each other, they all have different charging structures and functionality. A key issue for me is “does it work?” and you’d be surprised at how many fail the test. Theory is one thing, reality is another. A good financial adviser will review the platform you use, sometimes it is better to move, sometimes it isn’t. Whilst it is important (always) to challenge the way things are to improve, the assertion that there is “one way” of doing things, that “cheapest is best” or that similar products are in fact “all the same”, is simply not accurate. Experience isn’t priceless, but it is highly valuable.

Profit or profiteering?

However, let us not ignore some obvious facts, there are vested interests. Financial advisers (myself included) are not charities, we are businesses. Platforms are businesses, Fund Managers are businesses. All need to make a profit to continue to exist, the real question is what level is reasonable and fair – which is almost impossible to answer to everyone’s satisfaction. Moneybox challenged the 71.5% profit margin that HL make.

Dominic Thomas: Solomons IFA

Moneybox and PlatformsDominic2023-12-01T12:38:48+00:00

Happy Christmas 2013

Happy Christmas

I would like to wish you a very happy Christmas. I hope that it will be a time of comfort, joy, peace and wonder. Christmas reminds us of many things, of course the Christian story of the birth of Jesus and our own childhood and family traditions. It also reminds us of the unquantifiable gain from giving and of course a hope for a better future, which may mean letting go of the past. This is encapsulated rather well in the new film “Saving Mr Banks” which is the story of the story of Mary Poppins and worth making a trip to cinema through the cold and wet weather.

I’m taking a break and returning on Monday 6th January, so I will also take the opportunity to wish you a very happy and prosperous New Year. So until 2014 I shall leave you with an old blessing, which seems appropriate on this wet and windy December day.

May the road rise up to meet you.
May the wind be always at your back.
May the sun shine warm upon your face;
the rains fall soft upon your fields and until we meet again,
may God hold you in the palm of His hand.

Dominic Thomas: Solomons IFA

Happy Christmas 2013Dominic2023-12-01T12:38:46+00:00

What’s the row over pension charges now?

You may have been listening to Radio 4 or perhaps seen the TV news, Steve Webb the pensions Minister is doing the media rounds having announced that charges on pensions should be capped at 0.75% which he announced yesterday and has been plugging his cause since. There is no doubt that there are many very expensive pensions and I would go as far to say that there have been lots of “rip off” pensions. There are too many vested interests, this has broken out in a row over pension charges.

Is there any such thing as a free lunch?

We now have various think tanks and Providers all taking the opportunity to price to the bottom and distance themselves from “rip off pensions” as quickly as possible. An assortment of spurious views about the impact on the final value of a pension fund is now doing the rounds. The vast majority of this is utter drivel. We are all to blame for this (advisers, providers, investors, regulators and Governments) why? Well because over the years we have colluded in the deceit that anything to do with financial services is free. It isn’t. I had hoped that this delusion would have been put to bed by the introduction of RDR, yet AE (auto enrolment) exposes the deep resistance to a shift in mindset.

Can a pension have low charges?

It is perfectly possible to use a pension that has low investment charges and by low I mean less than 0.30%. However this is merely one element of the piece. The administration costs are high due to well intentioned regulation. The “sales costs” are high due to well intended regulation. The regulation is designed to protect the investor and the wider market.

Why does AE have unique charging problems?

The unique problem that AE brings is that there are some very tiny premiums. Suppose you earn £10,000 a year and in several years time you will have contributions of 8% a year (£800) a cap of 0.75% on this would be £6… ok its based on the value of your fund, but given that most will not be more than £4,000 that’s £30 to cover the investment and administration for the year (and by the way you can opt in and out, switch funds, vary the payments creating more administration). It’s a nightmare for pension providers. Some have come up with some low cost solutions (hardly any investment choice) and some have a fixed monthly fee. Well even at £1.50 a month (£18 a year) that’s a higher proportional charge on a small fund of £1,000 (1.80% to be precise). The Government backed (taxpayer funded) NEST is loss making and will be for many years. This is typical of Whitehall delusion that they then expect commercial enterprise to replicate. We all know Governments are not good at maths… don’t we?

The solution is right under their noses

Stakeholder pensions (with low charges) failed because there were other better alternatives at a lesser or more competitive price. The Government (this one and the previous one) believe compulsory membership isn’t quite ok, so we have a “difficult not to join” approach. However, I would argue that today employers and employees already have a proper pension system. It’s called National Insurance and the State pension. We know it’s not good enough, so why not simply make it better for everyone? It has no investment risk and is already set up. For those that want (and need) more than the State pension (most of us) then there are plenty of very good pensions around, any decent adviser can structure a sensible plan – but it is not free… neither should it be. If we want to create a society of that is independent of the State, we all need to face some adult truths.

Dominic Thomas: Solomons IFA

What’s the row over pension charges now?Dominic2023-12-01T12:38:33+00:00

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