Anything to declare?

Solomons-financial-advisor-wimbledon-blogger

Anything to declare?

Having made your way through airport lounges, delays, immigration and luggage collection, the last airport encounter will be customs. Greeted by green signs asking if you have anything to declare. I tend to find myself wishing to say something funny, but am well aware that airports are not places for humour.

Customs generally operates on the basis of trust – trusting you to tell the truth, failure to be truthful may be discovered, resulting in considerable discomfort, embarassment and possible shame, for those of us that still feel such things.

Declaration forms

Most people don’t like forms, fewer still like insurance forms. Some appear to take the view that full disclosure is optional, it isn’t. At best this is memory failure, more likely selective memory, at worst simple deception.

Full Disclosure

Admittedly insurance forms are tedious, but it is better to complete them fully – too fully, so that you disclose all of the information required. This is particularly important in relation to tax and health, as well as the more obvious identity and residency. I have not had the misfortune of any client misleading an insurer (or anyone else) however it is important to remind everyone that misleading information invariably comes back to haunt.

Lessons from Glasgow

I’m thinking of the very sad tale of the lorry driver in Glasgow, who had a blackout whilst at the wheel of a refuse lorry during a busy morning of Christmas shopping. It would appear that similar blackouts occurred before, yet were not disclosed in subsequent encounters with those charged with assessing the health and fitness of the workforce. Many may have taken a similar approach, thinking that the incidents were “in the past” and “no longer relevant”. Sadly this was a hugely costly misjudgment.

I imagine that the driver feels terrible about the accident and utterly devastated by the assertion that perhaps if he had recorded and presented information differently, his life and those lost and those families and friends effected by this terrible accident would now be rather different. In such situations, it is tempting to simply seek to blame someone, yet perhaps we could all benefit from being reminded that full disclosure is important, questions on forms are invariably posed for good reasons, (yes I know that many may not be) but honesty is there to protect us all.

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

Anything to declare?Dominic2023-12-01T12:20:03+00:00

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

Pension Exit ChargesDominic2023-12-01T12:20:04+00:00

Representing Independence

So 2013 is drawing to a close and the Christmas cards are starting to arrive. Universities and schools are drawing the term to an end and we are all hoping that the winter break isn’t too cold and that our boilers don’t give up under the pressure of winter, just when there is a house full of guests. Sadly, one of the changes for 2014 is the representation of IFAs and investors by IFA Centre. It is the only obvious advocate for independent financial advice, which has had to scale back due to a lack of support from IFAs in Britain. This is a real shame as Gill Cardy who in 2011 formed (the not-for-profit membership organisation) and runs it has worked hard to promote the importance of independent advice and championed causes to help investors receive fair treatment when they have been royally fleeced. This is the sort of change that the financial services industry has been crying out for and sadly it will not continue in the way it was hoped. The IFA Centre, of which I am a member isn’t closing completely, but will now focus on providing resources, events and other benefits to firms like ours. This will still be of benefit, but I greatly appreciated the work that Gill was doing in making representation for IFAs. Sadly, this does not seem to be of sufficient interest to enough advisers. I’m hoping that this isn’t simply an appalling attitude of not being bothered by the majority of IFA firms, but rather a “not knowing what you’ve got until it’s gone” situation.

Gill said “After over 2 years of personal and financial commitment IFA Centre’s membership does not provide the financial resources for my full time commitment to protecting advisers’ interests, let alone the resources to provide research, policy development and a member events programme. Worse, irrespective of our funding, with so few firms prepared to stand together to improve how our businesses are regulated, I simply do not have enough members to provide the decisive mandate needed to provide the representation that Independent advisers so badly need.”

She added : “IFA Centre was only launched because so many IFAs were unhappy with existing representation and told me how important trade bodies with knowledgeable, experienced and passionate leadership are. However, many of these advisers have not joined and I am forced to review what services IFA Centre can continue to provide to IFAs”.

Public thank you to IFA Centre

Anyway I would like to thank Gill for all the hard work she has done to promote and further the benefits of impartial independent financial advice and attempts to restore some credibility and trust in a largely untrusted sector. Our clients benefit from independent advice and I wish everyone else’s did too… sadly they don’t.

Dominic Thomas: Solomons IFA

Representing IndependenceDominic2023-12-01T12:38:43+00:00

Irish Medical Organisation makes Fred Goodwin look cheap

When 1 + 1 = €!!!!…. now that is leverage!

There is something very “Orwellian” about a story that was brought to my attention. This is yet another story of poor management and a dreadful lack of attention to contractual detail. Doctors in Ireland are said to be “angry” by the severance package agreed with the former CEO of the Irish Medical Organisation. It would appear that the former CEO is retiring after 30 years of service, a little early. Now don’t get me wrong, I have no idea if Mr McNeice has done a good job or a fantastic job, but for a relatively small organisation his settlement does seem somewhat large. The 2011 annual accounts for the IMO report an income of €3.8m and around €6m of balance sheet assets. So it may come as a surprise that Mr McNeice has a package of €20m+, which has forced the IMO into negotiations with him. The IMO is meant to be a doctors union, to represent them. This package dwarfs Fred Goodwin’s when you consider the money on the table.

That thing… risk and reward

I don’t have a problem with people earning large sums of money, (at least I think I don’t). We need entrepreneurs to create jobs and wealth. However this is invariably linked to risk – the prospect of losing all of an investment into a business venture. Good entrepreneurs can reduce risk through skill and knowledge and looking for the predictable that others cannot see. I’m not convinced that a union really falls into this category. Whilst the job may be difficult (I simply don’t know) I find it hard to understand why someone is remunerated in quite this way.

Are you being served?

The IMO had a 2011 membership of 5,339 (a 13% reduction on the previous year from 6,143) these members subscribe to be represented (see the latest fees here) which generates about 95% of all of the income for the IMO. There are only 24 employed staff. This is a small organisation. The 2011 staff bill was €2.1m which includes pension contributions. That’s an average of €87,500 per member of staff and of course I suspect that most of the 24 are paid considerably less than this. Little wonder that the parting €4.5m pension fund, €1.5m termination payment and further deferred payments taking his package to over €20m. One wonders what the staff feel about their former CEO now.

Play to your strengths

So Irish doctors are somewhat livid, as you might imagine. Indeed without a re-negotiation and increased fees, the organisation must surely make the remaining staff redundant and close its doors. A very sorry tale indeed. However this is a clear reminder to all that paying attention to the numbers is vital, frankly those on the Board either lack the experience or knowledge to see the wood for the trees, which is understandable if they are trained doctors, why should they also be experts in finance? As has been repeated many times before – play to your strengths. If you spend all your life working on your weaknesses, all you end up with is a stronger set of weaknesses.This is why successful business people and professionals come to me for advice. Not because they can’t plan or don’t understand money, but because it really is not their strength – and frankly the vast majority are not interested in “money”. They delegate this stuff to me. Its my job to do the numbers, however this prompts a vital question about trust and control, which of course is a question that only my clients can really answer for themselves.

As for the IMO and its parting CEO to quote “Tough decisions need to be taken… ” and many other words that come back to bite.

Irish Medical Organisation makes Fred Goodwin look cheapDominic2023-12-01T12:23:24+00:00

Desire for Trusted Adviser

2007: U23D – Owens & Pellington

Finding someone to trust with your money is never an easy task. There are often sorry stories in the media about well-known people that have been duped or taken advantage of. This is not a problem unique to celebrity, but clearly to some, the rich and famous are “fair game”. Sadly the impact of being taken advantage of invariably leaves the victim in the position of being less able to trust anyone – particularly in regard to money. Adam Clayton, the bassist from my favourite band U2 has recently experienced this problem.

Adam, like many busy people, employed a personal assistant, but this one embezzled over £2m from his various accounts to fund a lavish lifestyle. Carol Hawkins was convicted of over 180 thefts over a 4 year period. Sadly, this was someone that had worked for him for 17 years. Her employment had originally begun simply by looking after his home. Her husband became his driver and as she became more trusted, she also looked after his books and was made a signatory on two of his bank accounts. There is no doubt about her guilt (according to the court). This is not the sort of 3D experience that U2 would have wanted but living someone else’s lifestyle may be even better than the real thing for Mrs Hawkins.

Standing back, it is perhaps easy to suggest that allowing her access to bank accounts was not a shrewd move. Whilst she may have earned his absolute trust, she was not qualified for the role. However, once you trust someone, it is difficult to appreciate how this may be misplaced. History teaches us that the wrong pressures at the wrong times can make anyone vulnerable to behaving in a manner that would not be “normal”. This is one reason why I have never wanted discretionary powers over a portfolio, which is similar, but usually far bigger than a personal bank account. To my mind, it is better to remove any possibility of “temptation”. If that is too candid a statement, reflect for a moment on the Banking crisis, where there has been a plethora of lies, fraud and market manipulation by some of the most revered Banking names in the world, many of whom you would probably find to be great dining company – provided that unlike the gingerbread man, you don’t become the meal.

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

Desire for Trusted AdviserDominic2023-12-01T12:22:06+00:00

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