THE WRONG KIND OF GREEN

TODAY’S BLOG

THE WRONG KIND OF GREEN

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

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

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

Life savings gone

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

Seeing the wood for the trees

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

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

Cutting it down to size…

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

How can rogues access your funds?

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

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

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

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

Dominic Thomas
Solomons IFA

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

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Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

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

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

THE WRONG KIND OF GREENDominic2023-12-01T12:17:08+00:00

Commission – I Don’t Understand it either!

Commission – I don’t understand it either!

If you know anything about me and the firm, you will know that from inception (1999) we removed commission from all financial products that we arranged. This was due to wanting to remove bias between financial products and provide better arrangements for our clients. Admittedly ahead of our time and it wasn’t until January 2013 that commission had to be removed from investments as a result of the regulator’s review of the market.

Yet only this month (January 2015) I am wrestling to understand commission on a tiny life assurance policy that I have arranged for a client. Long story short we asked to remove the commission as usual (reducing the monthly premiums by about 30%). However it appears that in this instance, the insurer only removed “initial commission” and when the terms came through, the renewal commission of £1.06 per month would be paid to us from month 49… until the policy matures in 10 years time. In short we would potentially receive commission of £1.06 a month for 95 months…. not exactly a lot of money, but not what we promised! So I request that this commission be removed, only to find that the monthly premium is reduced by just one pennny a month… rather than passed directly onto the client as I had assumed. In this scenario, the insurer merely keeps £1.05 a month extra as pure profit. Bonkers! OK I know its not a massive sum, but then that’s just because this was a small policy, the cheapest from the market, but multiply it by millions of customers…

So, it would seem to me that I should take this extra commission (not payable for 4 years) and either pass it all to the client or offset it against his fees, but to my mind this merely demonstrates how behind the times some product providers are and why I believe that so few of them have the remotest chance of surviving another thirty years. As for the regulator, in their infinite wisdom, the commission ban only applies to retail investment products… not insurance… no, I dont understand it either!

Dominic Thomas

Commission – I Don’t Understand it either!Dominic2025-01-28T14:55:30+00:00

Money and Power

Perhaps my age is showing, but it is only day 6 of the new year and I am already fed up with the election campaign. I ought to be celebrating our democracy and the opportunity to hear reasoned arguments, however inevitably we seem stuck in a cycle of who will tax or cut most, the prospect of genuine change and improvement for all seems rather unlikely with the inevitable tension around money and power.

In a more reflective moment, I remind myself that this is not a dictatorship and we at least get to vote and I don’t really think we are at the mercy of a despot who has anger issues and a twitching finger poised over an end-all button. This isn’t the case for millions of “voters” around the world who are marched off to vote for egomaniacs. This in mind, a relatively new musical to arrive via New York at the National Theatre “Here Lies Love” is based on a 2010 concept album of the same name, which gives musicals a nightclub injection. If you think that a nightclub is exclusively for the “young” perhaps think agains as, the creators Fatboy Slim (Norman Cook) is 51 and David Byrne is 62. The production has the flavour of community theatre, with the execution of high-end night club. A moving stage and audience, all combine to great effect and an entertaining, immersive experience.

Imelda Marcos

This is the story of Imelda Marcos, her rise and fall from power. Byrne and Cook wanted to explore what makes powerful people behave the way they do. I’m not so sure that this was explored terribly well, whilst displaying a delusional, drugged up Imelda, she isn’t portrayed that badly – a little bit too vanilla in Manilla – little about her excessive flamboyancy and penchant for hundreds of shoes. The story is chronological, revealing the fragility of her marriage, her inability to cope with her rags to riches story and a familar narcissism of Heads of State that seem to believe that they “give their all to their people”.

The Price of Democracy

There was little in the musical that gave me reason to believe such behaviour was understood or how to spot it in others and take precautionary action…so no tips for our elections. The world seems to have done little during the period of martial law and assassination of the opposition including the shooting of Benigno Aquino on the steps of his ill-advised return flight to Manilla on 21 August 1983 (age 50) which you may remember. In the Philippines, the Marcos regime was eventually cast out by a peaceful protest, following a corrupt election (February 1986) against Aquino’s widow following which the public simply decided enough was enough. Marcos and his family took US advice and support then fled to Hawaii along with 24 suitcases of gold bullion and jewellery. Sadly for Imelda this took precedent over her 2,700 pairs of shoes. It is estimated that Marcos stole over $10billion from the country, much was invested into various family related businesses and Swiss accounts. The Swiss have so far returned about $684 million. So for me, this musical, whilst being entertaining does little to understand how and why power corrupts so absolutely. Indeed one might argue that the catchy tunes, flashing lights distract from the real story… but then, perhaps that’s the point.

Dominic Thomas

Money and PowerDominic2023-12-01T12:39:50+00:00

Industry Figures from the FSA – Less is More

The FSA published its annual report for 2008/09 last month, the second half of the tax year reflecting the problems resulting from the credit crunch and recession. According to the report the number of regulated firms decreased to 27,340 and the number of approved persons (people able to provide financial advice at all levels) shrank to 166,420. If we assume that there are 60m people living in the UK, this equates to an average of 1 “adviser” per 360 people.

The most significant rise in figures was the level of fines levied by the FSA which rose from £4.4m in the previous year to £27.3m with 58 advisers struck off (less than 0.03% of “advisers”). These figures include the Banking sector. Ironically, the FSA did not raise enough income in fees to cover their own costs of regulation (£335m), which were short by £14m, so fees are likely to continue to rise for IFAs partly to cover the shortfall and partly due to the reduction in the number of individuals and firms. So it would appear that IFAs will continue to pay the price for regulation.

It will not help that according to some recent research conducted by MetLife, 1 in 7 of IFAs (about 15%) are seeking to sell their businesses this year. I can reassure our clients that we have no plans to sell the business.

Another irony is that the FSA’s Final Salary Scheme which is now closed to new members of staff (since June 1998) had 495 members, who may be somewhat to concerned that the scheme is still in deficit by a whopping £88.9m, but they remain committed to clearing the deficit by 2019.

I will make no comment.

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Industry Figures from the FSA – Less is MoreDominic2025-01-28T09:51:37+00:00