Trick or Treat? Eurozone is no Cinderella Pumpkin

1999: The Matrix - Wachowski

I have to admit that I cannot stand Halloween. It seems that we become increasingly Americanized each year, giving way to allow children and teens to believe that it is perfectly acceptable to extract a "treat" from a stranger else suffer a "trick" the severity of which depends upon the age and upbringing of the "child". Sorry to be a killjoy, but I don't think threatening people to hand over something or be put upon, is in any way a behaviour that we should encourage.

As if to spurn all the good work from agreements in Europe, media pundits are left wondering on Halloween night just how deep the rabbit hole goes in Europe. Now resembling something akin to a Nightmare on Wall Street (as opposed to Elm Street) or a reality that is offered up in "The Matrix" the world is left to wonder just how many other Investment Banks like MF Global, bit off far more than they could chew and will themselves find a new reality of bankruptcy - or Chapter 11 as it is known in the US. The inter-connectedness (is that a phrase?) of investment bankers means that there is something of a domino effect - let's hope that it is not a house of cards. The markets are scary enough without more bad news like this. We could all do with rather less horror and rather more common sense prevailing in the financial world, which seems to become more like fiction and less like reality with each passing week at present. The Warner Brothers film "The Matrix" is one of my favourite films offering some interesting questions about the human condition and frankly seems sadly appropriate for the moment. Unlike in the fairytales, a pumpkin remains a pumpkin. It doesn't matter what time it is - the strike of midnight does not magically alter the state of pumpkins, but pumpkins can be used for more down-to-earth purposes.

DT

Is Your Bank Account In Trouble? How Does It Measure Up?

1995: The Usual Suspects - Singer

Today the FSA have warned Banks offering current accounts with "added extras". You are probably familiar with the sort of thing - travel insurance, accidental death cover, discounted tickets, gadget insurance as so on. Apparently whilst well aware that many of the features may be very good value and help you on your life journey, the FSA are concerned that some people are not able to claim on the "free cover" and some rarely or never use any of the features, therefore question the merit of providing the add-ons as "standard features".

The FSA is moving to ensure that three key steps are put in the path of eager Bank staff.

1. The Bank should check to ensure that the customer is eligible to claim under the cover that they are being offered, based upon the information provided.

2. Provide customers with an annual eligibility statement, reminding them of the cover and acting as prompt to see if circumstances have change that might invalidate the cover.

3. If a Bank staff member/sales adviser is recomending the product, they must establish that it is suitable.

This has a potential mis-selling scandal for the usual suspects (again) as in reality Bank staff are partly remunerated based upon the products that they sell - you may not think of it as a sale or purchase, but the Bank does. Hence the FSA are "concerned" particularly as they estimate that 20% of us now have these types of accounts. You may have gathered that I become rather like Victor Meldrew when I see adverts from Banks offering x,y and z all of which have nothing to do with banking, frankly because I believe that it is precisely this reason why Banks lost their way - failing to understand or remember what their main purpose is for customers, rather than simply seeking to add yet another money spinning idea and income stream to keep shareholders appropriately misinformed that "all is well". I still don't understand why nationalised banks advertise in a way that competes with one another, perhaps a marketing expert could let me know the rational - beyond retaining the facade of "brand".

Perhaps you have a Silver, Gold, Platinum, Black or Red (and so on) account that provides a long list of features you don't really need. Then again, maybe you are making dramatic savings on other insurance products. Do let me know - though I do wonder if, much like the film "The Usual Suspects" (with Gabriel Byrne and Kevin Spacey) everyone ends up losing except the one that got away...

DT

Population Warning - 007 billion

1999: The World Is Not Enough - Apted

The UN is due to produce a report any day now stating that the population of planet earth has reached 7 billion people. The rise in the global population is something like 200,000 a day which has seen the population dramatically increase over the last 50 years. That said, the forecasts for the future are about as helpful as the weather forecast (or an economic one for that matter!) with estimates ranging from falling populations (due to lower birth rates) to a continued increase at an alarming pace. The BBC has a short piece on their i-player for some interesting graphics. It remains unclear if politicians believe population increase is a good thing (more voters, more tax revenue) or not (more pressure on resources). The rest of us will begin to wonder if the world has enough space.

DT

New Ethical Funds

Historically ethical or Socially Responsible Investment (SRI) funds have been fairly pricey due to all the extra work that the Fund Managers have to do in terms of research and having stock lists approved. Vanguard have just launched two new SRI funds that buck this trend and combine a passive investment strategy. The funds launched yesterday - though perhaps launching them last week during National Ethical Investment Week might have been a more productive idea in terms of added PR and newsworthiness. Anyway, the two funds SRI European Stock Fund and SRI Global Stock Fund, both have a minimum investment of £100,000 and very low charges of 0.35% and 0.40% respectively.

It will be interesting to see how quickly the funds gather support which will probably reduce the minimum investment requirements. Vanguard is one of the biggest index tracking / passive investment Houses in the world with $1.7trillion in assets, starting life in 1975 and launching a tracker fund in 1976 (500 Index Fund). Vanguard is reasonably new to the UK, launching here in June 2009. This is a company that is serious about challenging the status quo of investing.

DT

When Values Are Challenged - Paying The Price

Every once in a while you get the sense that someone is valued for the wrong things. This occurred to me as I watched a special preview of a new George Clooney movie "The Descendants". Mr Clooney is probably known to most for his debonair looks and appeal to women - which is not really in question, but much more importantly, the guy is a really good actor and makes some cracking movies, yet this often seems to be overlooked by film critics. In time, I believe his work will make him one of the great movie stars. Anyhow, the new movie is about how a family come to terms with a very real crisis. I won't give the plot away, but it touches on key themes about the choices we make, the paths we follow and their consequences. This is examined within the context of a family living in "paradise" (Hawaii) and loosely plays with the ideas of inheritance. A good line that struck a chord with me was "I believe that you should give your children enough money to do something, but not enough to do nothing". A pretty good piece of advice when it comes to inheritance planning and something that George's character Matt King, finds woefully lacking in his extended family as the majority of them squander what they have and fail to understand the meaning of entrust or steward.

The film, directed by Alexander Payne, is not on general release here in the UK until 27th January next year, but when it comes out, it is well worth a look.

DT

National Ethical Investment Week

Yesterday I was at the Houses of Parliament for a function as a part of NEIW2011. Social Impact investing was very much on the agenda as was helping to spread the word that there are choices about investments that the vast majority of people do not access. I've been advising on ethical investment since 1992 and much has changed over the years. If ethical investing or even, alternative investing is something that you would like to explore in more detail with me do get in touch. Here is a short video from NEIW.

DT

Private Medical Insurance - Review Your Cover

Private Medical Insurance (PMI) is not an area of expertise - there are too many other things to master. Fortunately I do have a really good expert in this field that I refer work to. Private Medical Insurance can be very expensive - but so can the cost of private healthcare. We all know that some things are worth paying more for - in the case of PMI, this is particularly true, provided that you understand what you are covered for. This is one type of insurance that a comparison website is of little real value - because the key issue is whether the cover is any good.

Stephen Freedman is a Senior Account Manager with The Health Insurance Group, who specialize in both corporate and individual health insurance. Stephen, is a real expert in this field and is well worth speaking to about any PMI cover that you already have or if you are thinking of applying for cover.

This is an area of cover that is widely misunderstood. An FSA report from 2010 with data from 2008 reveals that the average PMI premium was £1,604 (which was an increase of 6.3% on the previous year, faster than inflation). In 2008 only 26% of all PMI was bought via an expert broker, the vast majority was bought online or direct. This probably explains the low average premium - which would be effected by the significant "direct sales". My concern is that it is probable that most cover is not that good, being cost driven (cheapest) rather than quality driven - which is what this sort of cover is really all about.  Obviously, if lower premiums for high quality cover can be achieved then this ought to be the goal, but this is where a thorough discussion of what is and what is not included is pretty vital.

If you would like Stephen's details please send me an email and I can get him to contact you for a review of your cover.

DT

Monthly Market Report

The monthly market report is now available. This shows what happened in September and looks back over the years as though investing in the same month. What will be of no surprise is that September 2011 was a pretty dreadful month for investors with pretty much every market index and asset class falling in value. The biggest fall in value was in Russia seeing a reduction in value of 21.9%. All of Latin America saw falls in the teens. The FTSE100 dropped 4.7%, with smaller/mid-cap companies (FTSE250) reducing 6.4% in value. Most markets and asset classes are negative in the year to date and it will take quite a year end surge to turn the year into a positive one.

Against this backdrop it will be of little comfort that the 2012/13 ISA allowance has been increased from £10,680 to £11,280 following publication of the inflation rates, which are now being used to determine many of our (UK) allowances. An increase of £600 or 5.6%

DT

Its National Ethical Investment Week

The now annual PR campaign about ethical investing has begun in earnest. You may be aware that at Solomon's we provide access to ethical investments, which many of our clients prefer. We operate two ethically screened portfolios - our Purity range and our Good Life range. The Purity portfolios only hold ethically screened funds, these are largely UK based funds with a fair amount of global specialist funds. Investment exposure to the US, Japan, Emerging Markets, the Far East and so on are very difficult to obtain within an ethical or SRI (socially responsible) fund. As a result, we offer the Good Life range, which enables better global asset allocation to be implemented, although will include "non ethical" holdings within tracker funds. If you would like to know more about this do get in touch.

I shall be attending an event on Wednesday at the House of Commons where Hugh Bayley MP is holding a UKSIF reception for those involved in helping to promote the ethical investment case. Nick Hurd MP (Minister for Civil Society) is the guest speaker, so if you have any questions that you'd like me to ask let me have them.

I suspect that the NEIW 2011 will get rather drowned out of media coverage this year due to the current protest and squat in London and various other cities around the world.

DT

A Case of Mistaken Identity?

I'm aware that the my chosen company name is not unique. Several years ago I learned that there was another firm with a very similar name - called Solomon Independent Financial Advisers Ltd, based in Hong Kong. The principal (Connie Leung) and I shared a quick email greeting one another and noted that the similarity in company names may cause confusion at some point, so to be aware of this fact. I don't have a double, much to the relief of all!

Over the weekend I read that the firm in Hong Kong had been fined $1.5m by the regulator in Hong Kong and that the principal has had her license suspended for 7 months. Just for the record, our firms are not connected in any way - the fine and temporary suspension relate to the firm in Hong Kong. This has nothing to do with me here in the UK, but I can see how this might give rise to a case of mistaken identity, particularly as there are members of staff at the Hong Kong firm that have links to both the UK and the USA.

Whilst we are on the subject - there's also a firm in Jackson, USA who are also unconnected to either myself or the firm in Hong Kong. I hope that this allays any fears - should you have come across the other company and confused it for Solomon's IFA here in the UK.

DT

Friends, Money and Predators

Today's news that Dr Liam Fox has resigned as Secretary of Defence is possibly not a huge surprise, as they say - a week is a very long time in politics. I'm sure the truth will eventually be revealed and for the time being there is media speculation surrounding the business conduct of Dr Fox and his best man Mr Werritty. I'm not privy to the inside track on this and as far as I understand, most is merely circumstantial supposition at present. The incident raises some interesting questions. How do we work with friends? do we take advantage of them? is this to their detriment? and would a professional relationship have provided a clearer position for all parties?

In the week that a British couple won an astonishing £101m on the lottery and promised to make their friends millionaires, one has to ask if there is a price to friendship. I imagine that the lottery winners may find that their relationships actually worsen rather than improve with the arrival of significant amounts of money. Rapid wealth is difficult to handle wisely, but in truth, most people struggle to some extent in their relationship with money. This is where an impartial financial planner can provide significant advantage, helping to to draw out what is truly of value to you as a person and ensuring that financial planning is built upon your values not your value.

I was also reminded this week of another relationship. The BBC programme "Planet Dinosaur" reminded us of the relationship between large prey and large, rather vicious predators with one living off the other. It also reminded me of the Simon Pegg film "How to Lose Friends and Alienate People" which is based on Toby Young's life story (well part of it) and seems to sum up the week.

Obama thwarted again - US require economic viagra equivalent

Republican senators have produced yet another blow to the US President by preventing his $447bn job creation bill  (The American Jobs Act) a significant set back. The bill brought before the American political system in September won the smallest majority a vote of 50-49 where a vote in favour required 60.

Sadly this is bad news for us all. The American system is obsessed with short-term political career manipulation, frankly its a wonder that there isn't a new American revolution as their politicians are struggling to make important decisions about their collective future. Creating jobs and decreasing national debt is not a theoretical game that politicians should be point scoring, but a vital requirement to re-establish the basic requirements of a growing economy and flourishing society. Whilst some US politicians carp at the stagnation amongst the European Union partners, there is a significant degree of pot calling the kettle black.

It is now high time that either politicians did what they are meant to do - lead nations, making decisions that work for the wellbeing of their respective populations, rather than simply attempting to secure their own futures. Obama may have been the great hope for America, but he certainly has not been given much opportunity to implement his policies to actually save the day.

Asset Allocation Review

We have posted the revised asset allocation models to clients today, these should be with you by the weekend. The printed pack will include an instruction letter for you to sign and return in the first class Freepost envelope so that we can implement the changes to your portfolio. We cannot (and will not) make alterations to your portfolio without your permission as we are not discretionary fund managers (meaning we do not act under our own impulses to move things around and then tell you what we've done after the event).

Please let me know if you do not receive this and expected to do so.

Moody Blues

Today, Moody's - the credit rating agency have downgraded their rating of several (twelve) UK banks. Before we all panic, let's pause a moment to reflect. You will recall that the credit ratings agencies failed spectacularly to appropriately rate Retail Banks, Investment Banks and Nations. To say that the credit rating agencies were left looking rather stupid in 2008 would be an understatement. In recent months and today we have seen Moody's and other downgrade the ratings for Banks and nations. Whilst there are serious economic concerns, which I would not wish to downplay, the reality is that lower gradings (or ratings) are surely more accurate and reflect the reality that many institutions are less sold than previously supposed. This does not mean that they are about to collapse. Remember that so far no major UK retail bank has become insolvent and UK savers are protected on the first £85,000 of their deposits in a single institution. See the FSCS for more information.

Good practice in the current climate would suggest spreading cash deposits across banks, but there is no good reason at this point to withdraw your cash and stick it under the mattress. We need the banking system to run our day to day lives, whilst it may have lots of problems and there are plenty of fairly dubious characters around in the industry, no one has any good reason to see the bank system stumble or fall. May I suggest that this is more a case of once bitten, twice shy.

DT

NEST: The Times They Are A Changing

I have provided another new document which will help both employers and Trustees in relation to the changes in workplace pensions. I have not been terribly creative with the title, which is "Staff Pension Schemes - Prepare for the Future". If you would like a pdf copy do let me know and I will send you one. I would also encourage a look at the Pensions Regulator website, they have some very readable documents and are the ones that really need to be most satisfied when it comes to introducing a staff pension scheme. This is a far superior site to the NEST site, which I still have trouble navigating to find what I want quickly.

Are We There Yet? in a world where the maps are being redrawn

Many of you may know that I enjoy the theatre which of course is in constant supply here in London. On Friday I saw a production of "Driving Miss Daisy" which is currently playing at the Wyndham's Theatre just off Leicester Square. I had not seen the original oscar winning film, but was looking forwards to the prospect of seeing James Earl Jones (the voice of Darth Vader) and Vanessa Redgrave. Sadly the latter was ill, but her understudy was very good indeed.

The story is set in the last century and concentrates on the relationship between two "outcasts" in American society at the time - the Jewish Miss Daisy and her black chauffeur.  This is set against the backdrop of a rapidly changing society in America - from post second world war to the civil rights movement. A time that saw America dominate global economies with high levels of production and increasing personal wealth, when America literally became the engine driving the world.

The story is wonderfully told, with a clear appreciation of the power of friendship and loyalty. This is captured by a moving performance. It reminded me that we are perhaps in the last days of the American empire as western power gradually collapses and makes way for Eastern ideas. I'm not suggesting that this will happen overnight, but it does appear to be happening. As a society develops, it tends to have a number of casualties, the construction of the US empire was predominantly fuelled by building and equipping the world with weapons, whilst providing credit to pay for them (as outlined by the economist Dambisa Moyo in her book "How The West Was Lost". Despite difficult circumstances, holding to basic principles and remaining open to change is how, in the end, we get there.

The play runs until 17th December and one that I would highly recommend. The show has come from Broadway, where it played at the start of the year to rave reviews.

Asset Allocation Review

I have reviewed all client portfolios and am urging caution in the current market conditions. I have amended asset allocations to reflect this and documentation will be issued directly to clients shortly. If you are eager to implement changes, please request the pdf version from me. You will recieve full instructions in due course.