Tempus Fugit... so plan how to live it well

Love Song - Abi Morgan

Great financial planning goes beyond the numbers. In my opinion, its about aligning your values and lifestyle to achieve the goals or outcomes that you want. Financial planning, when done well is really about putting the financial architecture around such a plan - a Financial Plan. If this is my assertion then surely it becomes pertinent to ask about values, aspirations and lifestyle as well as all the usual questions about investment risk and so on. I have yet to come across another line of work that actively prompts and achieves this for people and believe that a well thought through values driven financial plan can make a significant difference to the quality of life that you enjoy and share with others.

By now, you will have gathered that I enjoy film, theatre and music - in fact pretty much all arts. Last night I saw a new play by Abi Morgan, the British playwright and screenwriter that seems to have come to the attention of the media due to her film work success with Shame and The Iron Lady as well as Sex Traffic, Brick Lane and  The Hour. The play called "Love Song" is currently showing at the Lyric theatre in Hammersmith (one of the coolest theatres in London). The play follows a couple in their early years interwoven with their twilight days. It is a thoughtful and at times moving story, plotting the hopes, fears, joys and sorrow of a fairly typical relationship. In part it prompts the audience to consider how and what we remember, whilst also pointing to the sadness and inescapable reality that time is short. 

When I meet with clients, all are naturally at various stages of their journey, some are better able to articulate their plans and hopes for the future than others. This is not to suggest that others don't have them, just that in my experience many find it harder to answer questions that have not been posed quite as directly before now. As a result, it is generally my experience that it takes some time to really get to the heart of... well the heart, and why patience and regular reviews can be revitalising and illuminating. This is the bit about my job that I love the most. Some call if financial life planning, for me its doing my job as a financial planner as well as I know how.

Love Song is showing at the Lyric until 4th February and stars Sian Phillips, Leanne Rowe, Edward Bennett and Sam Cox. It is produced by Frantic Assembly. After London the play moves to Glasgow and then to Cardiff.

Bonuses Cut - No not the Banks, but perhaps your with-profit policy?

1991: Shadows and Fog - Woody Allen

Financial Planning ought to be more like a light to guide rather than a fog to muddle, yet that is sadly the position that as an Independent Financial Adviser, I find myself having to navigate. Take one of my pet dislikes - "With-Profit Funds". To my mind this has always been akin to wizardry with the promise of smoothing the "peaks and troughs" of the investment markets into a flat, but upward trending line. Every year a bonus is added and cannot be removed and at the end of the policy (maturity date) a final bonus or terminal bonus is added.  This has nothing to do with the bonuses that RBS or other Banks pay. This is an amount decided upon by the Insurance company concerned. What's wrong with that? some would ask, to which my response is - it is almost impossible to ever get a real value or any sense of what the policy might actually be worth at maturity. Certainly there are annual reports and guides that might provide helpful indications about the fund, its make-up and so on, but these are also rather difficult to make sense of.

Today Standard Life has announced its bonus rates that will be applied tomorrow. The press release is, frankly rather glowing "Most plans have increased in value in the year to 1 February. Many customers are enjoying the benefit of valuable guarantees built up over the years on their with-profit plans". However, what is unclear in the 6 page press release is that despite this statement, most bonus rates are staying the same and some of them are being cut. The numbers are also woefully small, for example a unitised with profits bond has a bonus rate of 2.50%. Guaranteed rates have been honoured, but we're only talking about 3 or 4% at the most here. Other unitised life policies have seen rates cut from 1.25% to just 0.75%. Not exactly heart-warming. In practice, something like 750,000 policyholders will see bonus rates cut. Standard Life used to be a leading light in the With-Profits market. Their performance has been better than this, so there is a degree of prudence being shown by effectively holding back money, but one has to ask is this really any help to investors that want to plan for their future.

Winning Is Everything... or is it?

2011: Win Win - Thomas McCarthy

Great financial planning is all about figuring out what you want to achieve and putting this into a values based workable financial plan to achieve the results you want. Invariably life changes, so the plan needs reviewing and sometimes it is necessary to make dramatic changes. The assumptions we make and the strategies applied are tested against real experience. Financial Planning is not about winning, but it is about getting results.

In sport, the combination of the right sequence of results, will lead to someone being either a winner or not. Indeed in sport, to become "the best" you have to ultimately face the best and compete to win. As Andy Murray has found today in Australia, playing the best (Novak Djokovic) is the required experience and ingredient in order to progress towards becoming the best. Sport and in particular tennis, is particularly unforgiving - consistently playing at the highest level is vital in order to become a "winner". A momentary lapse can be the difference between winning and losing. Sadly for Andy Murray, the Wimbledon Mens Champion and current world number one proved too much today (but only just) in an enthralling match.

Financial planning and investing is not really like this. There is no "winning" the goals are not to beat other people, or the market, but to ensure that your goals are achieved. This does not mean that investment performance is unimportant, on the contrary, it is highly significant - but in the context of getting the results you need to achieve, which may mean taking very little investment risk or a lot - depending on your goals.

However, like sport, if you want your financial planning to deliver the results you are looking for, you need to find the right coach (financial planner) and have a proper strategy. Times will be testing, sometimes more effort is required, sometimes risks need to be taken, at others - perhaps a more cautious approach is necessary. Vital skills include knowing the difference between quitting and changing.

Nest: Auto Enrolment Dates

1937: Love Nest on Wheels - Keaton

Financial Planning for businesses and organisations, large or small have been given the revised dates for NEST or auto-enrolment of staff into a pension scheme. The Pensions Minister, Steve Webb, is keen to make auto-enrolment work. The financial planning implications of NEST are significant. For starters, all employers, irrespective of size must, by law, set up a pension scheme. Millions of people will be joining a pension scheme for the first time or a new scheme. A good pension scheme that is easy for employers to operate will be vital and Steve Webb is ideally looking for the system to be a "no brainer".

The dates for the roll out across Britain are listed on the DWP website which can be found by clicking here. In essence though, small firms with less than 30 staff will begin auto-enrolment from 1st January 2016 - some 4 years off. The largest companies, with 250 or more staff begin this October, any firm with 50-250 staff must begin auto-enrolment from 1st April 2014.

Many employers are getting their pension scheme sorted out early to ensure that their system works and that they have a good pension scheme for staff. Of course, it also helps them look good and ahead of the game, which in times where possibly salaries are not keeping pace with inflation, this could be seen as a good compensation. NEST will require employers to contribute 3% with employees contributing 5% (less tax relief) so employers need to be planning for additional expenses and employees need to be planning for pension contributions that for many will be higher than most currently pay.

Taxing the House

1957: House of Numbers - Rouse

 Sophisticated financial planning, often involves making the best of the tax system. Independent Financial Advisers are not Accountants, but there is some degree of overlap. To generalise, an Accountant tends to work with historic tax, whereas an IFA or holistic financial planner will attempt to use tax allowances in the current tax year and be planning for tax in the future. A good financial plan will consider tax advantages where appropriate. Often we work with Accountants. That in mind, here are a couple of pointers about tax items currently in the media.

Firstly the Liberal Democrats are fairly keen to introduce a Mansion Tax. That is, a tax on residential properties worth £2m or more. This would be an annual tax of 1% of the value of the property (thus a minimum £20,000). So those with large homes need to consider the possibility of this being implemented by the Coalition Government. On a similar theme, the Chancellor, George Osbourne, is reviewing those people that are avoiding (not evading) the Stamp Duty on property purchases in the UK when the property is bought through an offshore company. This is something that seems to have become commonplace in London and the Home Counties over the last 10 years. The sums involved are significant as Stamp Duty on property valued at more than £1m is 5% (so a minimum of £50,000).

The 31st January 2012 is rapidly approaching for people to submit their tax returns online. There is a penalty of £100 for not doing so on time. However due to a planned strike by HMRC staff, the taxman has decided to provide an extra two days grace due to the strike which may have resulted in rather more people being fined. The taxman also warned people about paying tradesmen in cash as invariably this is not declared as income by the tradesman. As a consequence this is lost revenue to HMRC and therefore the rest of the UKplc. It is essentially a tax-dodge if someone does not declare their income correctly, this is illegal and known as tax evasion. The Spurs Manager, Harry Redknapp has been in court this week attempting to explain his own actions and I am sure that this is an experience the rest of us would wish to avoid. Mind you, it seems that some politicians do not appreciate that tax avoidance is legal and tax evasion is not.

I had to share this...lessons from a forgotten disaster

1944: Lifeboat - Alfred Hitchcock

As a holistic financial planner dedicated to making things better for clients I am largely in full support of what the FSA are trying to do, in order to provide a better financial services industry for the UK. However whilst at a recent ICAEW event, I heard a really good analogy about "good intentions" (we were discussing some unintended consequences of new rules). It isn't mine and I make no apology of pinching it from Les Cantalay who has done a great job and gave a very good talk. Anyhow, he showed a picture of a ship "The Eastland" (which was launched in 1903) in the docks and then another a couple of years later showing her  capsized whilst in the Chicago docks, having just taken aboard some 2,500 passengers and looking rather like a picture of the current Costa Concordia disaster, which, in terms of loss of life, looks mercifully insignificant by comparison. The reason for the capsize? well it turns out that following the sinking of the Titanic (which will have been 100 years ago on 15th April this year), new regulation meant that ships had to carry more lifeboats (Lafollette's Seaman's Act, 4th March 1915). Within 4 months, The Eastland capsized as the new lifeboat regulation made her too top heavy. Passenger deaths from the Titanic: 818 - from The Eastland: 844. A huge loss of life, mainly women and children and largely an unknown disaster.

Yesterday, it was announced that the new regulator (that will replace the FSA) will have the power to ban financial products without any consultation. Whilst on the face of it, this does appear to be a good thing (when products are frankly "a load of rubbish") this sort of action can lead to chaos as those stuck in the products cannot easily exit. It would be far better to have clear guidance and rules that financial products must follow to be available. This might mean requiring pre-approval from the regulator before a product is launched (though this would likely lead to bureaucracy and delay as well as possible loss of competitive advantage). However, I would argue that this is probably better than having a class of products that are unregulated which advisers must be at least "considering" to retain their "Independent Financial Adviser" status from 2013 under the new rules. I can only foresee yet another avoidable disaster.

VAT, IFAs, RDR, FSA, DFMs, HMRC and more confused acronyms

2008: Chaos Theory - Marcos Siega 

As a forward thinking financial planner, keen to ensure that our clients get the very best advice, last night I attended a seminar at the Chartered Accountants Hall in London. The focus of this was in relation to the interpretation of VAT rules and how this will be new for most financial advisers from 2013. Anyone that knows Solomon's, will be aware that we have always operated on a fee basis. Anyway, (yes it was a dry topic) there has been something of a spat between the HMRC, FSA and IFA trade bodies as there is a significant degree of uncertainty about what is and what is not liable to VAT, so as you might imagine a fair number of advisers are not only concerned about charging fees for the first time, but also becoming VAT registered. One interesting point, was that under current understanding, any IFA that uses a Discretionary Fund Manager (DFM) service will have to apply VAT to this. In recent times, many IFAs have been encouraged to outsource their client investment services to "Discretionary Fund Managers" and continued to be paid as though looking after the client money. I have not been tempted by this, primarily because for our clients this is largely an unnecessary additional cost and one that does not appear to provide better results for clients. Anyhow, if the ICAEW interpretation of the rules is right anyone who has an adviser that uses DFMs will have a further 20% of VAT to add to the bill, making outsourcing investment advice less attractive.

How to use LinkedIn

2001: The Business of Strangers - Stettner

As a holistic financial planner my main role is to help my clients. Normally that means creating a workable financial plan, getting investments right and making sure that clients achieve their goals. However there are other aspects too - such as putting clients in touch with others that can also help them through my own network of connections - such as Accountants, Solicitors, Marketing Specialists and Business Consultants to name a few.

Yesterday I invested time in gaining better knowledge about social media as the more I read about the way people connect now and in the future, it seems that this is something that  a forward-thinking successful business, organisation or service will need to master. So I spent a highly valuable day with social media expert Phil Calvert who specialises in helping IFAs around the world with this topic. He provided really helpful insight into a variety of social media applications such as LinkedIn and has given me much to think about and put into action. He demonstrated how whilst originally considered to be little more than a business job site, LinkedIn is an invaluable business tool to enable networking, sharing, understanding, communicating and a great search engine. In essence it helps to communicate who you are and business wisdom is that "people buy people". So whilst networking and LinkedIn can appear to be a collection of business strangers, it can, when used correctly (suggests Phil)  be everything that Facebook is not and rather more.

I shall be taking his challenge seriously and will be improving my use of LinkedIn and many other aspects of communicating with clients and contacts, so do keep an eye on my LinkedIn profile and link to me. If you have a LinkedIn account, I now have some tips to share on how to make this a better business tool.

More Unintended Consequences?

1932: Winner Take All - Roy Del Ruth

The efforts of Europe to sure up the way that everyone borrows money and how Banks lend money has broadly been welcomed. After all, it was primarily the overborrowing that caused the credit crunch. You may be aware that Banks need to lend more carefully... which in theory is a good thing, at least if one assumes wisdom and care are linked in this instance. As a result they have to hold more reserves themselves and effectively ask borrowers to do the same with larger deposits. Interestingly here in the UK loans are not treated as being in default until they are 180 days in arrears. In Europe and in the new proposed legislation this is 90 days... so what? well the so what is that Banks use this as a part of their risk pricing and consequential fees to the borrower. In short, if the rules are applied in Britain in the same way, without doing anything else, we are likely to see borrowing costs increase. I dare say that Banks will take the opportunity to charge more because more work needs to be done proving the loan is "safe" and ultimately it will be borrowers that lose out and I doubt anyone will be too surprised that Banks will probably come out on top.

As you hopefully know, I do not arrange mortgages, this is work that I tend to refer to a mortgage broker. However, how you plan to repay debt, with a proper debt reduction strategy is a different matter. Importantly I believe that most debt is not good, so it should be minimized or cleared, there are occassions though when debt can work powerfully for your advantage. But be warned, utlimately all debts need to be repaid. Lenders tend to hold property as security and here in the UK, debts must be serviced with significant consequences for those that fail to do so.

Tax Deadline Looming - Check P800 Forms

1954: An Inspector Calls - Hamilton

It is important that you check tax documentation. A key date in the tax diary is nearly upon us (31st January) and it is hard to avoid the HMRC advertising in London. However, just because you have a document from HMRC that says this is what you owe, it is worthwhile checking as often the tax inspector estimates tax. This is particularly so for a P800 form. The form is the HMRC view about whether you have underpaid or overpaid your taxes. Remember that under self-assessment rules you are personally responsible for the accurate reporting of your tax to HMRC.  

Time is running out, but in order to prepare for each tax year you should obtain your P60 and ideally all payslips for the relevant tax year. Certificates or statements from your bank showing any interest paid and probably taxed on interest. You will also need dividend information, these form part of your income. You should also have details of any pension contributions that you made and any charitable donations. There are many other elements too - but this will depend on the nature of your investments.

I do not submit tax returns, but clearly all financial advisers have a pretty good understanding of the tax system (and have usually have qualifications for this). We ask for this sort of information so that we can get our records as accurate as possible for clients and remember that your tax position may significantly effect how your financial planning is put together and the order in which tasks are performed. Getting accurate from you information is vital. 

One End is Another Beginning - Kodak, Film and Digital

1971: The Last Picture Show - Bogdanovich

The sad news that Kodak has filed for bankruptcy in the US (Chapter 11 there) makes the collapse of Kodak one of the the biggest in US history. The precise figures will take some time to come out, but consider these - Kodak has assets of $5.13bn and liabilities of $6.75bn a deficit of $1.62bn. The share price of Kodak reached $94 a share 15 years ago, but are now only a few cents. The market value of Kodak shrank over this period from $31bn to under $200m. That is an enormous collapse.

This is what happens when businesses cannot adapt quickly enough to changing markets. I want to use the analogy of the dinosaurs, but this would be very harsh on Kodak who did attempt to adapt - providing digital camera's and ink for printers. Perhaps one of their biggest failings is that in the early 1990's they developed a digital camera, but it is alleged that the Board of Directors were so terrified of the implications of the death of film that they sold the camera to... Apple. Ever since Kodak have been playing catch up and losing, almost as though they became frozen in time, like the images that they helped us all to create. Cashflows into the company have been deteriorating each year according the the 2010/11 Annual Report and Proxy Statement.

There is concern for Kodak's UK arm, which has been downsizing dramatically over the last 10 years. In particular the deficit on its Final Salary staff pension scheme is estimated to be £576m which is now unlikely to materialise. According to the Financial Times, the company had paid £37.2m in 2010 and was scheduled to pay a further £37.7m in 2011. There  were agreements to pay roughly £37m a year to the fund to help plug the deficit each year which would be increased to £62m in 2022. However, pension members should be covered by the Pension Protection Fund and there ought to be no alteration to those already in receipt of a pension from Kodak. All members of Final Salary schemes are meant to recieve an annual statement about the scheme, this should show if your scheme has a problem. Employees are probably well placed to determine if the company is doing the right things to make profits in the future and so ensure the future of the pension scheme. If you have concerns over your pension do contact me, planning a good retirement can be complex.

Reflecting on the history and demise of Kodak reminded me of a new play currently showing at The National Theatre called "The Travelling Light" a new play by Nicholas Wright and starring Antony Sher, which is a very moving story of the the first motion pictures made by a Jewish community in Russia. It powerfully captures the joy of  a revelation and "new idea" perhaps also capturing the essence of "popular capitalism" it is thoroughly worth seeing. It will be on tour in in March and April, but can also been seen in some cinemas on 9th February 2012.

Doctors to the Ballot?

1932: Doctor X - Michael Curtiz

The report from the BMA that was released yesterday suggested that the changes to the NHS Pension Scheme will, as predicted, be a long battle. The BMA survey which was sent to members and associates in the first few days of the year had a very high level of respondents. There were 46,300 responses to the online and postal questionnaire. The results claim that 84% believe the Government's proposals for further reform of the NHS Pension Scheme were unacceptable, with 63% willing to take industrial action over the issue. This has given the BMA and Unions the necessary mandate to examine options for a ballot about possible industrial action, should the Government continue to press ahead. This is scheduled to be held on Saturday 25th February.

Those caught by the proposals most impacted are 10 years or more away from retirement. The BMA suggest that over a third of doctors would consider early retirement if the changes proceed, this is also my own experience having met with a considerable number. In essence for most the scheme will become more expensive, have a later retirement date and be based upon career average earnings for all doctors (whichever scheme they are currently members).

The NHS Pension scheme has had significant reforms already and the previous Government with intentions to restrict tax relief to high earners, scored something of an own-goal with the reduction in the annual allowance and the way that this is calculated for members of pension schemes like the NHS. An own goal, because it was poorly thought through and could lead to double-taxation of many Doctors - particularly high earning Consultants with Awards. The NHS Pensions Agency have not been able to adapt their IT systems quickly enough to provide the necessary information in time for the tax year end, last suggestions were that such information would not be available until July.

As a consequence, advice for doctors in the NHS pension scheme has become an awful lot more complex. This is of course made worse by the proposals which have not been agreed. The NHS Pension Scheme is one of the largest in Britain and one of the best. Every pay rise makes it increasingly valuable. I have over 20 years of experience advising on the scheme, if you need to discuss your options about retirement please get in touch. 

Plotting the course for your Journey

1959: The Journey - Anatole Litvak

As the media continue to cover the Costa Concordia cruise ship disaster, it seems that further revelations come to light. As yet, a proper report needs to be prepared, but certainly the reports to date seem to suggest that procedures were not followed at numerous levels. The cruise and shipping industry seem fairly convinced that most shipping disasters are the result of human error. So far things do not look good for the Captain. The video footage of people attempting to scramble into lifeboats is fairly terrifying and one can only imagine the terror that those aboard must have felt.

One message that seems to be coming from this is that the Costa Concordia seemed to be significantly "off course". Given all the gadgetry onboard, it will presumably come to light as to why this was the case, if indeed it was. Clearly it must be to some extent, as no course would have been deliberately plotted for the rocks.

This reminded me that even with all the latest technology, disaster can still happen. Indeed one still needs a trained and wise head checking and double-checking. Think of the aeroplane pilot that performs a myriad of checks before and during the flight. In practice, often the aeroplane is on autopilot, but this is not sufficient and a wise head is still required. In a similar way, a good financial plan sets the course, but it needs tweaking and reviewing to ensure that it remains on course. Sometimes the journey is difficult and that is precisely when experience will have significant benefit. It is unwise to simply set a course and not pay attention. Things change, "stuff happens" some within our control and some not. A big part of designing the plan, is to build in the need for reviews to check progress.  Now is the time to review yours if you have not done so lately.

How Reputations Are Ruined Over An Easy "A"

2010: Easy A - Will Gluck

There's the good news and the bad news... which would you like first? let's start with the Eurozone bailout fund, which had its Standard and Poor's credit rating downgraded last night from AAA. This makes the bail out fund less attractive (solid) and therefore more money is needed to put things right. The IMF might not have enough money either... so could they have some more? Mr Osbourne is being asked to contribute another wad of cash to prop up the financial house of cards. He is keen to ensure that other nations (in particular China) also put more into the tin.

The Italian PM Mario Monti is sounding more than a little anxious as he is suggesting that Germany needs to still do rather more to support the system, which in translation means provide more cash so that new borrowing arrangements are not so punitive as to make them unworkable for Italy. This is not looking much good is it? Add this to the fact that on Friday night France had its AAA status downgraded and we now have the scenario of politicians bleating that the credit rating agencies are wrong and making the situation worse, a situation that they themselves had effectively allowed to occur. The bleating is getting louder and it is my opinion that the blaming will begin rather shortly.

The financial crisis is now akin to the each credit card being maxed out and no one is left able to pay the monthly payments. That is of course unless new money is "created" which is the preferred choice of most Governments except Germany, who are all too aware of the calamity that inflation can bring. Perhaps news of China's rate of inflation decreasing together with Britain's rate reducing considerably to 4.2% and set to fall to around 3% by March if Bank of England Monetary Policy Committee Member, Spencer Dale is right, will provide some comfort that inflation is not out of control. That said the Bank of England has a target rate of 2% which it still fails to achieve. Perhaps the signs of falling inflation may move the Germans to relax their views about printing money, though as one of the only growing economies in the world, why they should change policy would surely be questionable. That is until you consider that in this global economy Germany needs to sell manufactured goods to make their own numbers work. Angela Merkel will no doubt be reflecting on how she can pull off helping Eurozone neighbours without ruining her own reputation.

So what does this mean for investors? well frankly more caution. It is important that clients keep in mind when cash (capital) is required from a portfolio - planning withdrawals and ensuring that there is enough in reserve. I also advise checking that you remain "comfortable" with the level of risk within your portfolio and that you discuss with me any changes in your capacity for loss.

FUNDS: Skandia Deposit Fund

1954: Cash on Delivery - Muriel Box

Skandia are changing their Deposit Fund. This is a fund that is available to investors on their original product range, which includes Investment Bonds, Pensions and Maximum Investment Plans (MIPs). Skandia intend to effectively move this to Blackrock and used their Institutional Sterling Liquidity Fund. Skandia believe that this will provide greater expertise and a broader and even safer fund for investors seeking the equivalent of a deposit account. The fund currently places deposits with a range of Banks and Building Societies, but this has become increasingly difficult to manage in light of the various problems with various Banks.

Skandia expect to make the changes in March and there will be no additional costs for the changeover to investors. Letters are likely to be sent to those with holdings in the fund over the next two weeks. No action needs to be taken to approve the change.

The Blackrock Institutional Sterling Liquidity Fund was launched in 1998 and consistently outperforms its benchmark which is the 7-Day LIBID (London Interbank Bid Rate).  This is the rate at which Banks lend to each other for deposits from "overnight" to 5 years. As an Institutional Fund, normally the minimum investment would be £1m. The portfolio is made up exclusively of first tier securities and must have at least half of its holdings with a short-term rating of A1+. The fund qualifies as a UCITSiii Fund. There is a Fund Fact Sheet which says it is for Professional Advisers only, but anyone can actually view it with a web search. At the end of November the fund was worth nearly £21bn.

Clients with Skandia Life products will have holdings in this fund as it has formed a part of the portfolio. The team at Blackrock are well known in the industry for providing excellent cash management and have a very good record. However I shall be keeping this under review. Skandia do not plan to rename the fund, so it will still appear as the Skandia Deposit Fund. The Skandia (Life) Deposit Fund was one of the first funds that Skandia launched way back in 1979. At the moment, the interest rate on the Skandia Deposit Fund is much like most deposit accounts - poor. My view at this point in time is that as is often the case Skandia are taking a pro-active approach and recognising that in the current environment others are probably better at providing this service - hence moving the money to Blackrock.

Golden Gongs and Going Global

1964: A Global Affair - Jack Arnold

Last night the Hollywood Foreign Press Association had their annual gong ceremony in LA. This saw "The Artist" and "The Descendants" both winning best film - in different categories. The British media picked up on "British" interests, which meant Idris Elba for his role in Luther; Kate Winslett for Mildred Pierce and Downton Abbey as best mini-series made for TV. The new film "The Iron Lady" about Margaret Thatcher also saw Meryl Streep pick up the award for best leading actress... to add to her stockpile! This does bring into question what is "British" and frankly, is it important? like most products and services, the nature of a now small world means that many people from different nations are involved. The Iron Lady was in part produced by Film4, Pathe, the UK Film Council as well as Canal+ and CineCinema to name just a few. A global film requires global distribution and it is pretty difficult to describe any film with a global reach truly "British".

This is to be in no way anti-British! It is always good to see people from Britain doing well in the film capital (in one category 4 of the 5 nominees were British). So congratulations to those that picked up awards - the long red carpet walk of award ceremonies for 2012 has now officially commenced.

Investing in "regular" investment products is also a multinational venture. A good investment portfolio will be globally diversified. Companies listed on the UK stock exchange invariably have a significant proportion of earnings generated from around the world, indeed as mentioned in recent blogs, some would be very difficult to describe as in any way "UK based". This new world order, makes protectionist policies rather daft despite all the political ranting by all parties. Certainly we should be using home-grown talent to its full advantage and providing products and services that are locally sourced where appropriate. This sometimes needs encouragement - which invariably translates as financial support. Anyone with enough money can, for example invest into films and support "British" film. If you would like to know more about this get in touch. Of course in practice, most of us are aware that we live in a global economy that requires all to benefit. Consider some of the items you are currently sitting near, most have travelled considerable distance to reach you. So thinking globally is probably rather easier than some would suggest.

Dig That Uranium - Global Mining Fund Launch

1955: Dig That Uranium - Bernds

Today Barings have launched a new fund - the Baring Global Mining Fund. This is run by Clive Burstow who was with Blackrock and had responsibility for analysis and investment of the mining sector. He returned to Barings in June last year and has a wealth of experience as an analyst and this will provide him with some of the necessary skills required to run the fund. On the face of it, this seems like a great idea from Barings, mining stocks continue to dominate the key performers of a variety of markets. Of course mining is essentially getting something out of the ground, which is problematic at the best of times.

The fund aims to have somewhere between 70-100 holdings and will used the HSBC Global Mining Index as its benchmark. The benchmark has tumbled over the last year. It will hold non-ferrous metals like copper, aluminium, zinc and tin. Interestingly it will hold ferrous metals including ferrochrome and uranium. Precious metals like gold, silver, platinum and diamonds as well as a variety of commodities including magnesium, titanium, coal and iron ore amongst many others. The fund will have a truly global feel with the UK making up around 20% of the fund.

The million dollar question is of course, will Clive Burstow outperfom his peers due to his research, information and investment strategy? My understanding (which may be wrong) is that he hasn't run a fund before but has clearly worked very closely with those that have. Lessons from the past would suggest that many themed funds launch on the back of successful historic performance that then becomes all too disappointing - rather like arriving after the event. If others are tempted to follow suit this might indicate a turning point in the short-term future performance of mining stock, which as you will be aware includes gold. We shall have to wait and see. Mining stocks have played a valuable part of a well diversified portfolio, but selecting the right stocks or the right fund is almost as precarious as mining. I suggest checking out Our Approach to Investing to see what I consider to be important factors.

Another Bad Result for Footballers

2008: Pride and Glory - Gavin O'Connor

A news item that has just come to my attention is yet another Ponzi scheme. This time, it was one that appears to have been marketed to footballers based in the Midlands. The scheme is alledged to have offered monthly returns of 20% with capital guaranteed and able to be withdrawn at any time without notice. Sadly it appears that a number of people were duped by this.

Many will say, if the item is correct, that clearly this was a case of things being too good to be true and rather obviously so. However, for those that get bombarded by emails (and I had at least 3 bogus emails over the weekend which were not really from HMRC, Santander and Barclays) and are not familar with financial limitations, it is rather harder to judge what really is too good to be true - particularly when you consider that a Building Society offering a 5% deposit rate is also, frankly too good to be true.

This is precisely why you need someone like me to assist make sense of the huge array of Banks, Building Societies, Investment Houses, Stockbrokers, Hedge Fund Managers and so on, all willing to offer the answer to financial woes with "fantastic" products and services. The truth is rather different and often more complex than I would like. I work hard to reduce the financial mistakes that my clients would otherwise make on their own. This includes everything from having a proper Will in place to an appropriate investment strategy for your financial plan. The stockmarket or financial market is no place for pride, if you don't understand something do not do it. If you want proper financial planning advice, get in touch - whether you are a footballer, movie star, business owner, member of parliament or anyone else. If I cannot help I will put you in touch with someone that can.

Divorcing Doctors or Teachers

1996: The First Wives Club - Wilson

If you are going through the experience of a divorce as either a member of the NHS pension scheme or Teachers pension scheme, be prepared for the process to take a little longer. Both the NHS and Teachers pension schemes are updating their systems which produce the valuation of pension rights that need to be considered in a divorce. This is known as the Cash Equivalent Transfer Value, essentially putting a financial figure on the pension benefits that you accrue.

The reason behind this is the changes that the Government announced in March last year and finally published towards the end of October. The pension administrators naturally want to get this rather important detail right and it has taken some time for systems to be assessed and updated. At the moment expect delays. Indeed if you have already had a CETV statement and it was dated before 26th October 2011 and had a 3 month guarantee and you submitted the request to transfer benefits, then this will be honoured provided the 3-month time-frame has not expired. This means that in practical terms there are about 2 weeks left for anyone that was in this position. If you are one of those, I suggest contacting the relevant pensions agency.

In addition anyone that is moving benefits from one State Employer to another (eg Local Government to Teacher) the same problem will persist. These Public Sector Club transfers are all delayed until the software works to permit the transfers.

Online Fraud - Mystery Offshore Bank that is not a Bank

2010: Shutter Island - Martin Scorsese

The internet provides huge advantages as we all know, however caution needs to be exercised. Today the Isle of Man's Financial Supervision Commission has issued a warning that they are aware of a bogus website calling itself the "The Irish Nationwide Bank" (www.irishnationwidebank.com). DO NOT VISIT THIS BOGUS SITE as the FSC believe that one of the frauds being committed is identity theft. This is completely different from the completely legitimate Irish Nationwide (I.O.M) which can be found at http://www.iniom.com/.

It would appear that the bogus website exists to extract data from users or money, either way financial fraud. If you or anyone you know has had dealings with this bogus site, please contact your local police or contact the FSC enforcement division on +44 1624 689311 or by e-mail to fsc@gov.im.

Whilst most people do not have offshore bank accounts, this is a timely reminder that you need to act with caution when providing personal and financial information. I suggest checking with the relevant regulator or even me. If in any doubt, don't provide the information. Financial crime is huge business and we all need to be vigilant to curtail and hopefully prevent its activity. Here is a good document that may help remind you about some basics of protecting yourself against financial fraud and identity theft which reminded me of the Leonardo DiCaprio film, "Shutter Island" which explores themes of stolen identity, delusion and missing people. 

 

Child Benefit and the Parent Trap



1998: The Parent Trap - Nancy Meyers



I'm never really sure why the media suddenly latch onto a story in a rather herd-like mentality. The Government planned and announced changes to child benefit some months ago, in October 2010, yet today the media is awash with this information and the basic gripe that it is possible that a couple both earning just under the higher rate tax threshold will continue to receive the benefit, whereas a family with one earner, perhaps just breaching the higher rate tax threshold will see their child benefit stopped.

One would like to think that this was an easy process, after all, in order to claim child benefit claimants need to record their details accurately, including information about their partner and need to provide national insurance numbers - which are unique to each person and directly link to HMRC data about income. However, the new rules, do seem to be somewhat unfair on families that have lower combined income, but where one partner earns enough to pay higher rate tax - even if this is a very small element of actual income.

The Treasury spend £12bn a year on child benefit and these proposals are expected to save £1bn. The changes were scheduled to come into effect by 2013 however the anomaly of a couple earning £80,000 and being able to claim child benefit against a couple earning £45,000 and not being able to do so has made the possibility of an easy solution less workable. The Chancellor has a Budget on 21st March, so now has a few weeks to get his think-tank working on a solution.

As mentioned before, it is possible for some people to reduce their taxable income below the higher rate level by making charitable gifts or pension contributions.

 

Lingerie Retail that went Bust

1951: Company She Keeps - Cromwell

The world of retail is a complicated one. La Senza, the UK lingerie retailer was placed into administration this week. A sign of poor trading conditions on the high street and perhaps a reminder that sometimes "niche marketing" is not always the right solution for every economic condition and where larger retailers such as Debenhams and Marks and Spencer have the advantage of a wider product line. That said, this is an "odd one" given today's news that Tesco has had the worst Christmas for 20 years. This calls into question the management of retailers as it certainly does not seem as simple as product range (either narrow or broad) as John Lewis and Waitrose continue to demonstrate good business models and management.  As for La Senza, KPMG the administrators have already sold La Senza to Alshaya UK originally from Kuwait and who manages many well known brands. Perhaps this is coincidental to the news last week that Saudi Arabia has finally permitted women to sell lingerie (previously only male retailers were able to perform this role). One might be left to wonder if retailers are changing the world or the consumer?

The apparent failure of La Senza is surprising. The UK lingerie market was worth nearly £3bn in 2010. Key Note published data in February last year suggesting that the market was overcrowded with too many retailers providing essentially the same thing. However they report continuous growth and the planned arrival of Victoria's Secret to high streets in 2012, which they suggest will create further competition. Yet Victoria's Secret are a part of the same American company Limited Brands whose share price has been on a steady rise since 2009. Limited Brands largely operate businesses on a franchise or license basis, La Senza is actually a Canadian company, it is just the British franchise that has gone into administration. The UK company was originally set up by Dragon's Den Theo Paphitis who sold the company in 2006 for an estimated £100m to private equity company Lion Capital. Lion Capital have stakes in many other well known brands such as Wagamama, Jimmy Choo, Weetabix, Findus Group and Amerian Apparel to name a few. Mr Paphitis, who clearly as an eye for timing, now runs Boux Avenue (another lingerie company) amongst many other ventures.

Whatever your thoughts about retail, it is certainly a world where brands are clearly powerful. However, I suspect that many will not appreciate quite how complex and interwoven global retail really is. The British high street is no more British than anything else it would seem.