Your call is being recorded…

Your call is being recorded..

One of the many things that regulation is meant to provide is a high degree of security for investors and clients. In the main, the regulator exists to keep markets fair and ensure that people are not ripped off. You may have a view about their success over the years… then again perhaps things would have been worse without them – one of those conundrums.

From time to time (for which read – with great frequency) the regulator issues Consultation Papers, in theory to outline an issue, propose some remedial solutions for comment. Today’s 500+ page (CP16/29) latest idea is for all advisers to record telephone calls with clients. This, they believe, will help reduce problems as many people cite that they were told something over the phone, upon which they acted.

1973 movie poster The Conversation starring Gene Hackman

Are you being served?

To provide some context, to buy any regulated financial product, you have to have a “Reason Why Letter” – which can take a variety of forms, but in essence is an explanation of why you have been advised to implement a product. If you have been a client of ours for anything more than five minutes you will have had this from us.

So I wonder what your thoughts are if we are to record your phone calls with us. We have nothing to hide and are in the process of installing VOIP telecoms anyway, which would enable us to  do this (though our motivation was for a better and more cost effective telecom system and the fact that BT are gradually moving everyone in this direction). However, does it actually provide you with any more protection?

As you may also know, we have been using software that enables us to hold meetings over the internet – such as gotomeeting or Skype (and others). Of course we may have called you from a mobile phone at some point too, so presumably these ought to be recorded too (if the logic applies). Then perhaps meetings (in person) should be recorded or indeed any interaction between us.

Anything you say may be used in evidence against you…

You may have a view on such an approach – all the data would be stored for at least 5 years (which is of course cyberspace that needs to be rented) – so there is a cost financially, but I also wonder how it might impact our relationship. For example, when I am on hold to a big company and they are recording the call, I’m minded to make statements like – why don’t you hire more people to answer the phones if you are so busy? Why have you outsourced the call handling around the world, where my personal data is now viewed?… or how on earth do you guys sleep at night with such a rubbish service? (but I have, to date, not said this aloud).

Its my belief that a crook, or someone that wants to take your money away from you by selling you something that simply isn’t real or realistic will find a way to do so… and not recording the call or then editing the data file would be obvious to anyone. Anyway I thought that as I’m being asked for my views, the best ones are probably yours, so email me your thoughts. I need to feedback thoughts by the end of the year… not long now!

How is your paranoia? here’s the trailer to a film on the subject… Paranoia

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

Your call is being recorded…2025-01-23T10:56:03+00:00

Should advisers fear being black listed?

Should advisers fear being black listed?

There are numerous benefits of social media. One is the ability of peers in any field to discuss topics and share ideas. Sadly this comes with the inevitable double-edged sword of whether to post under your real name or a pseudonym… or “nom de plume”. This I assume is connected to a fear of being black listed.

Of course there’s a lot to disagree about, and it appears that many will take considerable time to vent and click send. Not always a great choice, I’ve been guilty of it myself. There is a general perception, whether explicit or implied that somehow anything critical of those in power will result in some form of retribution. Hence many publish comments under false names for fear of being “black listed”.

Invariably the problem within my own sector is that of fear of the regulator. Of course on the one hand I think this is quite a good thing, advisers ought to be “afraid” of the regulator. That would really mean that they are surely there to keep people on the “straight and narrow”. So I welcome good, strong regulation – it’s in my interests (and yours). The hope is that strong regulation reduces the potential for people to be ripped off.

A critical voice brings change

On occasion, of course some criticism of the regulator is entirely appropriate (after all is anyone or any organisation perfect?). It is this that advisers fear (good ones too). The concern is rather obvious – raising a critical voice may be met with a sudden barrage of requests for information, which can prove time consuming and frankly unnecessary. I take the view that the regulator needs to be held to account and publish under my name. Frankly it is rare that I am critical of them – my main gripe is invariably a difference of approach to the way investors who have suffered scams or mis-selling are compensated following advice from “bad” advisers.

At present, the system is such that “bad” advisers rip off investors. The product, fund, adviser and their PI cover all fail and the remaining “good” advisers pay the compensation. By remaining, I really do mean a diminishing number. At one point there were about 250,000 “financial advisers” today there are about 22,000. Most advisers pass this cost onto their clients. To date, I haven’t despite a 30-day demand for payment increasing by 67% in 2015 on top of a 69% increase in the previous year! Hard to explain and pass on such fee rises in a period of virtually no inflation!

I don’t think I’m being too radical or inflammatory in my industry comments. This isn’t the 1950’s, McCarthyism has not returned (as far as I can tell). On which note, there is a very good new film out called Trumbo – the true story of a man that was blacklisted by some very unsavoury people in Hollywood. Trumbo was forced to write under a pseudonym to allow him to earn a living and he wasn’t ripping anyone off. I’m not so sure that advisers publishing under pseudonyms is really the same thing at all. I wish I had the creative writing skills of Trumbo! I only stand with him in the sense of being free to write or speak without fear of reprisal.

Oh, and you are welcome to check out my industry comments online at places like New Model Adviser, Financial Adviser, Professional Adviser.. but they are pretty dull and aimed at advisers.

Here is the trailer for Trumbo, you may recognise Bryan Cranston (who plays Walter White in Breaking Bad) and Helen Mirren has a small role, but has you piping venom… well it did for me. It has only just been released here in the UK… its one of the few films that I gave 10/10… but of course I may have been influenced by issues raised here!

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

Should advisers fear being black listed?2025-01-27T16:38:36+00:00

Money Talks

Money Talks

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

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

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

Suits you sir…

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

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

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

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

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

Dominic Thomas
Solomons IFA

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

Money Talks2025-01-23T10:56:39+00:00

Pension Exit Charges

Pension Exit Charges

I wonder if I can be honest with you about pension exit charges? I freely admit that I probably spend too much time concerning myself with what others within my industry think. I spend a lot of time improving my knowledge and this involves reading both technical papers and opinion. Yet I find myself increasingly perplexed by the comments on industry media outlets.

THIS IS A LONG ITEM, BUT PLEASE STICK WITH ME…

Like it or not, the financial services industry regularly gets berated for being nothing short of self-serving. Often different or indeed competing elements of the spectrum that make up the financial services get lumped together, frankly this is our collective fault for not clearly defining or explaining the differences, invariably made harder by really rather poor regulatory clarity.

However I was utterly exasperated with my peers on yet another comment section within the “trade press”. This concerned the issue of exit penalties on pensions. At the time Mr Cameron, the Prime Minister was expected to outline his frustration with pension companies that apply high exit fees… for the sake of simplicity, let’s call them what they really are – transfer penalties.

Old World not New Model Advisers

The comments appeared in a publication that I respect by Citywire – New Model Adviser, the article written by a very thorough journalist, Will Robbins. The publication aims to high-light good or best practice and aims to help improve the advice sector and thus help achieve better results for the investing public. So one would hope that the readers and their comments are towards the front forward-thinking end of the adviser population.

The King is dead, long live the King

On the topic of exit penalties it seemed to me that commentators reverted to their historic stances as salesmen, not advisers, preferring to defend high penalties rather than lead a revolution to have them scrapped or at least capped.

Investors are being ripped off

Yes it is true that pensions set up were contracts and that contract law is therefore under the microscope…. but there are times to simply admit that enough is enough.  I have seen some horrendous penalties (the difference between the actual value and the transfer value of a pension)… some taking well above 30% of the fund. That is simply not good enough. OK there was a contract, but neither “adviser” nor investor could have anticipated these penalties which have become increasingly pertinent as investors and advisers seek better, more efficient and cost-effective solutions. Something that I regularly do to great effect for our clients.

Analogies have flaws but…

However suggestions that imposing a cap were largely greeted with derision. I was under the impression that it is the advisers job to represent the client, not the pension company and if engaged by them, to seek the most suitable solutions. I would like to think that it is in the collective interest to allow someone to move their money elsewhere with minimal fuss and cost so that it can grow better (hopefully) – and yes it cannot be guaranteed…. at least it cannot be guaranteed in a way that your life is not guaranteed by the protection that the airbags in your 2015 car should deploy if you have an accident, as opposed to your 1986 car that doesn’t have any of the current safety features. Yes you may be maimed or even die in the accident, but which do you think is likely to provide a better journey?

Aren’t we meant to put you, the client first?

In an industry steeped in scandal and mistrust this ought to be an opportunity for pension companies and advisers to put clients interests first. I find this even more frustrating as in reality it is all to do with commission and the lie that advice is free. Old style policies are those that typically paid high levels of commission, which the pension company advanced to the adviser as payment for arranging the pension with them. Of course it didn’t help that some pension companies offered more commission for using them as opposed to others, thus bringing into question the independence of the advice and adviser. If you went to a Tied Agent or Bank, you didn’t even get any option to compare costs…. which was the job of the IFA at the time.

Thinking that is so last century…

This has been going on for years, yet alternative approaches have also been available for those willing to face some truths. In 1999, 16 years ago I formed Solomons, removing commission, charging 1% on any investment or pension product – no matter who… a level playing field. 16 years ago! The regulator eventually caught up and banned commission on investments from 2013 called RDR so since then all advisers have had to charge fees properly.

Vive la revolution

Why does this vex me so? well as someone still in their 40’s I expect and plan to remain advising clients for many years to come, so I’d like to see things improve. I would like to see the standard of advice improve and the number of scandals and complaints decrease… not least because invariably the way compensation works is that those left working within the sector pay the compensation levy, even if they had nothing to do with it. This summer I had yet another regulatory invoice for this levy, an increase of 64% on last year…there comes a point when I and many (thankfully) like me, simply cannot absorb all these costs without jeopardising our own sustainability.

If you are fed up with your pension or not even sure what its worth, please check out my free guide, which  will help you regain control of your pension planning. There ought to be a box below to download this, if not just email me.

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

Pension Exit Charges2023-12-01T12:20:04+00:00

Is Financial Services like gun crime?

Solomons-financial-advisor-wimbledon-blogger

Is Financial Services like gun crime?Gun_Crazy

Here in the UK we have some gun crime, its horrible, but it is still thankfully rare. In North America the obession with guns is perplexing, the rising death toll and increasing militarisation of police forces is alarming. We have seen further mishandling and stereotyping lead to deaths in police custody and now further riots in some American cities. I’m not anti-police, I am anti-stupidity and I don’t think I’m telling you anything you don’t already know. America has almost no gun control, you can wander into a gun store or general department store (heck, sometimes they even give them away for opening a bank account -see Bowling for Columbine) and buy a firearm and ammunition. No real checks. We tend to think this is insane.

Yet here in the UK we have an equally perplexing situation which has collectively blind-sided most people. Its in the form of pension advice. Yes that rather dull topic (believe me I know how dull). Anyway it seems that your neighbour – the one that’s tempted by all those offers of too good to be true (because it isn’t true) high investment returns is wreaking havoc with the rest of us, like a loaded gun.

Garbage in, garbage out..

Despite warnings from the regulator, or there being a regulator, believe it or not, there are some “advisers” out there peddling all sorts of… well…”junk”. These always promise high returns, but actually pay high commission (something that is meant to be banned). So I can only assume that the person that does this is greedy, gullable or vulnerable. If the latter, then they have my sympathy and support, but those that are gullable, well it may sound harsh, but at some point in life you have to take some responsibility for your actions. As for the greedy… why should the rest of us pay for your gambling habit? eh?

Back to the gun analogy. Say I am a shop keeper, I don’t sell guns, in fact I sell books, but the guy nextdoor does. Guess what? his customer went on a rampage in the mall and shot 60 people. Being a shopkeeper I am sent a bill for compensation because I am a shop keeper.

What do I mean? Well pensions are regulated products and in theory should be arranged by regulated advisers. However in some products (SIPPs – Self Invested Personal Pensions) you can hold “uncoventional” funds… or what I might call “stuff you shouldn’t ever touch”. The regulator (FCA) would call this “non-mainstream funds” and in fact categorise them as “unregulated” in other words not regulated and therefore not actually protected by compensation. However because they were bought through a SIPP (regulated) and arranged by an adviser (regulated) therefore when it predictably goes wrong (it will) anyone that is an adviser gets to pay for the compensation. Now I don’t know about you, but I thought being an adult involved taking responsibility for your actions, so being one, I don’t sue people every time decisions I take don’t work out right.

Yes inflation is 0% but fees increase 75%

I tell you this because on top of a £20million levy a few days ago in March, the new annual levy has been set, increased from last years £57million to £100million for those that arrange pensions (shop keepers). This levy always comes with 30 days to pay (thanks). This is only a fraction of the full regulatory fees that I and other adviser firms have to pay.

Nobody to blame… but the good guys can pay up right?

The pension companies that allowed these investments in their pensions claim “not guilty – the adviser did it”, the regulator claims “We can’t use our product intervention powers on unregulated investments”… so cannot stop the funds being sold (or bought).

Those that sold these things have scuttled off elsewhere, probably to re-emerge in a different guise, leaving the dwindling number of firms (now about 5,300) and advisers (now around 24,000 from about 250,000 20 years ago) to pay the bill. The bill is paid by the firm and is enough to wipeout some firms, meaning that next year….the numbers reduce, so the share of the bill increases. There is only so much “cost” that a small firm can manage before needing to pass this on to their clients. I therefore predict that as a consequence, many advisers will be “forced” to put up their fees… which means you are also coughing up for the greed of your neighbour, because they cannot be bothered to take any responsibility for believing in fairytales…

Sorry to moan, but seriously… this isn’t fair is it? Of course people that have been ripped off need compensating, but seriously, you didnt think investing in a timeshare via your pension was normal did you? Your comments would be very welcome…. perhaps I am missing something, perhaps my entire profession is… in which case I’d like to know so that I have a snowballs chance of improving it.

Dominic Thomas

Is Financial Services like gun crime?2025-01-27T16:09:57+00:00

Glass Half Full

I imagine that almost everyone has heard of the “glass half full or half empty” metaphor. However, as with most metaphors, I find myself rather conflicted. Sometimes it is half empty, sometimes half full, but frankly of late I’ve been wanting to say “of what?”… as in full/empty of what? what are the contents? because frankly if they aren’t good for me, then I don’t want to drink from the glass…and don’t really care how much is in it.

I relay this tale at the end of July, one of the hottest for… well it hardly matters does it? The sunshine has reminded us that we do have four seasons, not just two, or three at a stretch. So in the context of a joyful summer, and a month in which many British sporting interests have found the heights of success, I find myself also frustrated by various administrative blunders that have met with my ire. I risk sounding like Victor Meldrew, but frankly you wouldn’t (believe it) if I relayed some of the problems that we have experienced this month, which were entirely due to Product Providers. I could not even say that these were lesser organisations, but are in fact some of those that I respect enormously. What made me both chuckle and tut at the same time was one email that contained the phrase “…. does not guarantee that the information shown is free from any errors, omissions or inaccuracies”. Well yes and no. Yes I accept that we all make mistakes, but no, I don’t think its quite ok to cover this with a phrase that seems to indicate a lack of responsibility.

My trade press, the financial media, are ready to dress up any old topic to create a punchy headline that creates a stir. Yet invariably, the headline is rather disappointing and as ever the detail is not terribly contentious. Perhaps more column inches (remember those?) will be dedicated to whether Gareth Bale will/won’t/will/won’t/definitively won’t, certainly won’t/probably… move to Real Madrid for the “right money”. Its all a game designed for amusement. The financial press is often gets caught up in the same game. What is more amusing and concerning frankly, is the comments by other advisers, invariably hiding behind anonymous/fictional names who pounce on any opportunity to unleash vitriol against the regulator. Now, I’m not suggesting that the regulator is right all or even much of the time, but many “advisers” are tempted to comment without thought or indeed research (by which I mean reading FCA papers)… which surely are two rather vital ingredients in the skill set of any adviser in 2013. Regulation is no easy task and we need good regulation. Why? well I’m fed up of rising compensation costs, which I have to stump up in order to pay for the bad work of “bad” advisers… nothing to do with me, other than the same “profession”. Good regulation will hopefully see this trend reversed. When I read some of the comments and blogs, I am tempted to say “methinks he doth pretest too much” (and yes invariably it is a he).

None of us want to be ripped off, but many of us pay more in order to get a better service or higher quality. Just think of the car you drive or the suit you wear or the perfume/aftershave etc etc. Price is not simply a sum of parts. Value is not easy to define. I may pay a very different price for a bottle or wine or even a pint of beer, but if I am being served the same thing, in the same place and charged very differently, then that is decidedly unfair, which is essentially all the regulator is saying. Treating customers fairly is not an optional extra.

Dominic Thomas Solomons IFA

Glass Half Full2025-02-03T14:48:51+00:00
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