Open, Random and Supportive? Not something that too many Life, Pension and Investment providers have grasped yet

Wed, 16 May 2012 13:18:17 GMT

I've been looking for something that sums up the attitide that Providers and financial brands need to adopt if they are to stay relevant in today's Internet world.

Providers consistently tell me that they "have been looking at using Social Media to engage with IFAs, but don't have the resource, don't have the time, don't have the expertise, are not sure about Compliance and don't know where to start", and finally adding "...and we don't want people talking about us in online forums".

In other words,

Providers realise they have been slow out of the blocks to embrace Social Media
they are very keen to embrace it now, but can't/won't for a whole host of reasons
they want all the benefits, but without going through the pain of a change of mindset and behaviour in how they engage with IFAs.

With so many people professing to be knowledgable on Social Media, it's often difficult to know who to listen to - but it didn't surprise me that in the end it was my friend Thomas Power (co-founder and Chairman of Ecademy) who had exactly what I was looking for.

Thomas has a unique ability and instinct to understand and correctly predict trends online. And yet again he comes up trumps. Please watch, enjoy and comment on this great video of Thomas speaking at a TEDx event.

If you like this video, please share it to LinkedIn and/or click the tweet button below.

Phil

Philip Calvert
Founder of IFA Life

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Make things up to truly engage your online visitors. How well do IFAs engage their website visitors?

Fri, 11 May 2012 08:12:15 GMT

Once upon a time there was a website visitor who started reading a blog post about making things up. The reader sat in his office surround by books and files gripped by the words scrolling past his eyes. Surely, it could not be true, he thought. The blog post was telling him not to tell the truth on his own website. The website visitor sat their stunned, staring at the screen with his mouth wide open in amazement. How on earth could it be worthwhile making things up instead of telling people the truth, he thought.

You might be thinking the same as our blog reader – surely I can’t be advising you to make things up on your website. But I am. Honest…!

New research shows that when people read fiction they become much more emotionally engaged with the subject. The researchers used fictional accounts of voters and gave them to people who were due to vote in elections. The people who read stories where the main character was very similar to them actually voted in higher numbers than people who read stories where the characters were remote. In other words, when people read fiction with which they identified it changed their behaviour.

Story telling is an essential component in all communication. Indeed, news media call everything they do “stories” and when you watch TV shows like X-Factor you get the story behind each contestant, which often looks at their triumph over adversity. And what do the judges do? Well they ensure there is conflict – an essential component of a good story. The show may parade itself as a talent contest, but in reality it is a series of stories – and that’s central to its success.

This new research adds to the massive amount of material available which shows how fundamental the concept of story is to communication. It suggests now that by using stories you can change behaviour. If you want your website visitors to do certain things, then telling them fictional stories about what other people have done could help. Of course your stories must be realistic and you need to identify the fact that they are made up (otherwise you’ll generate mistrust once you are found to be lying). But if you use stories then you can increase engagement and produce behavioural changes in your website visitors.

So, for example, imagine you are a business consultant offering management advice. A set of fictional tales about managers in certain situations could well help engage people. Similarly, what if you are an SEO company? You could produce a set of short stories about people desperately trying to get better placings on search engines. Think of them as case histories you make up. Just as long as you make it clear that these are fiction, you can engage your readers and make it likely that they change their behaviour – such as taking that trial of your SEO software or booking an appointment with your management consultancy.

Stories are important, whether fiction or fact, but too few websites use the concept of story telling – much to their detriment.

Graham Jones
Internet Psychologist
http://www.grahamjones.co.uk/

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Head of Asian Equities provides views on future growth in China

Fri, 11 May 2012 07:38:50 GMT

At least since China's accession to the World Trade Organization a decade ago, the Chinese economic growth model has been a simple one: export led growth supported by large amounts of Fixed Asset Investment growth, particularly when export markets have not been supportive.

For a number of reasons this model no longer makes sense. Export markets are likely to remain subdued for some time: China's share of world trade, although still growing, cannot continue to increase at such a strong rate, particularly when wage growth is reducing low end competitiveness. Fixed Asset Investment is also unsustainably high and the country is in danger of moving towards a situation where it ends up building roads to nowhere.

However, this is not the end of China's growth story. We can be fairly sure that the days of growth remaining constantly above 8% will soon be a thing of the past, but that does not mean that the country is going to descend into stagnation and anarchy. I do not know what the sustainable rate of growth for China in the future is: nobody does. What I do know is that the most important building blocks for growth remain in place. These include:

1. A willingness to change - At both the government and individual level there is very little complacency. The Chinese government realises its only source of legitimacy arises from its ability to preside over a stable and growing economy. It is desperate to reform the economy in order to survive itself and willing to ask for help from anywhere, as demonstrated by the recent partnership between the Ministry of Finance and the World Bank to examine China's long term challenges. At the individual level, there is a tremendous hunger for betterment, encapsulated in the long working hours which hundreds of millions of Chinese are willing to endure. It is also reflected in the thirst for knowledge which can be seen every time you walk down a Beijing high street and get accosted by Chinese wishing to practise their English on you.

2. Cheapness and improving productivity - The world's manufacturing base is not going to move from China. Nowhere else has the combination of cheapness, scale, infrastructure and stability which China represents. The huge increase in Chinese patent lodging is evidence of increasing innovation. So too is the ability of companies such as ZTE, Lenovo and Huawei to come from nowhere and challenge established global brands.

3. Availability of capital - High savings rates and a solvent banking system are available to provide the capital for future investment. The Chinese banking system is deeply unsophisticated. It is the economy's Achilles heel. High double-digit capital ratios will give it the breathing time to reform even though bad debts from the last infrastructure binge will undoubtedly rise.

These are huge positives. The negatives are also troubling. These include: the lack of domestic base material resources and good quality agricultural land which is leading China into areas where it has little knowledge and where the scope for mistakes is huge. China's lack of alternative investment vehicles has also led to an unhealthy storage of wealth in high-end properties in the major Chinese cities. Furthermore, China's demographic profile is changing and its population is set to age over the next decade. Finally, corruption is endemic.

However, the balance of probabilities is that these issues will slow but not reverse the growth of the Chinese economy. For example, even now after a concerted effort to reduce property price appreciation, the thirst to get on the property ladder is huge. This is an interesting contrast with Japan after its bubble burst in the early 1990s. So too is the continued >20% growth in tax take; the best evidence that Chinese growth is real and the government still has the ability to control.

As to the political situation, the demise of Bo Xilai is probably a good thing. Commentators have said that this is probably the most important political event in China since Tiananmen Square. That is probably correct. But it says more about the country's political stability over the last 20 years than anything else.

The thirst for Western style democracy in China can be exaggerated. The reverence for such undemocratic figures as Chairman Mao and Deng Xiaoping does not sit comfortably with a desire for full scale western democracy. What is needed (and again this is something which the Chinese government recognises) is the existence of a number of items which are associated with western style democracy: the rule of law, decent living conditions and an environment in which it is possible to bring up a family and better yourself. With these things available but without the opportunity to choose your leader directly, then many Chinese consider it a small price to pay.

Finally, it is worth ending with a word on portfolio positioning. Our Asia ex Japan equity portfolios generally have overweight positions in China/HK relative to their benchmark, and have done for a number of years. In terms of asset allocation, this would not have been correct, but we do not own the index, we select stocks. Stocks like Jardine Matheson, one of our biggest holdings, have been great stocks for us in terms of total returns, for nearly a decade. In the last couple of years Hengan and Daphne have been significant adders of value to our portfolios.

We also have high expectations for a number of our holdings in internet gaming-related stocks. However, I consider the Chinese market to be cheap for a reason: even at low valuations too many of its index components are likely to prove to be value traps as the rate of economic growth slows and these companies are unable to adapt successfully. But there is a huge opportunity in the stocks which can tap into Chinese growth and which have not already become overvalued.

Stuart Parks, Head of Asian Equities at Invesco Perpetual

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Social businesses make more money. How Social is your IFA business?

Thu, 10 May 2012 12:02:49 GMT

Forgive me, but every time I see a blog post like this one saying that social media helps your business I let out a very loud “OMG”. Almost everywhere you look online these days there is some debate about whether or not social media can actually help your business. Each week there are new tools to help you measure the return on investment of being social. And there are all sorts of experts helping you understand how being social can boost your sales.

The reason for my amazement is that this all appears to be a surprise to people. It’s as though there has been some kind of revolutionary awakening with business leaders going “Goodness me, being social and actually talking to our customers helps? We must try some of that.” Let’s get the facts straight: business has ALWAYS been social. It has always been about PEOPLE connecting with other people. Period. That’s business. Social media is NOT NEW. Indeed, those of us old enough to recall the late-1970s mainframe driven technology revolution will remember “bulletin boards” where business people used to chat online with their suppliers and customers. That was social media – 35 years ago…!

And when the Encyclopedia Britannica relied on door-to-door sales staff who would come knocking on your door of an evening and get your Dad to buy a set of books and a lovely shelf to put them on, guess what – that salesman was being social. Gosh, your Dad even invited him in and gave him a cup of tea. And every Friday after school I used to rush home because that’s when the United Friendly Insurance Man came to call and he always had a tube of Fruitgums for me. He was social.

Every business activity is social. Every business activity involves people talking with other people. Shop keepers talk to their customers, suppliers make friends with their customers and people who buy things go back to certain places because the “people there are friendly”. Social activity is what makes business survive. So why are so many business owners surprised that online social tools can help their business?

Indeed, there is reticence amongst many business leaders to engage in online social activity. They want “proof” it works, it seems – which kind of suggests they haven’t yet “got” that their business IS social. Business leaders also are frightened that being social online will expose them to all sorts of mayhem and problems.

However, new research confirms – yet again – that the fears are ungrounded and the successes are there for the taking.

According to a study from Pulse Point Group, businesses that are socially engaged are earning up to 7% more than similar businesses which avoid online social technologies. This merely adds to previous studies which show that the companies which do the most social media have increased their profits and also have raised their share prices. In other words being social – whether that’s online or offline – increases your bottom line and raises the value of your business.

The United Friendly insurance man who came to my house every Friday afternoon realised that. It seems he was way ahead of many of today’s business leaders who are still searching for “evidence” that being social is going to help their business. OMG.

Graham Jones
Internet Psychologist

http://www.grahamjones.co.uk/

Please share this page to LinkedIn

Please click here to retweet this on Twitter

This persistent weakness in the UK economy is unprecedented

Fri, 4 May 2012 07:38:04 GMT

More than four years after the start of the recession, the economy is well over 4 per cent below its pre-crisis peak. This persistent weakness is unprecedented.

Growth this year will be close to zero, but about 2 per cent in 2.3 per cent in 2013. This is essentially unchanged from our January forecast.

Although our inflation forecast has increased, largely as a result of the increase in oil prices, we still expect it to fall below target by the end of the year
We expect the cyclically adjusted current budget to be in slight surplus in 2016-17.

We expect the unemployment rate to rise to almost 9 per cent at the end of this year, and to remain elevated throughout the forecast period. This will do permanent damage to the UK's productive capacity.

The UK economy contracted in the first quarter of this year by 0.2 per cent, returning the economy to recession. Of course, revisions may change this. However, small quarter to quarter movements of this sort are largely irrelevant to the broader picture of an economy that remains very weak. Our monthly estimate of GDP suggests the level of economic activity in the economy in March 2012 was the same as in September 2010. This clearly does not constitute a sustained recovery, so the question of whether or not the economy is technically in a double-dip recession is moot.

Such weakness is likely to persist over the next couple of quarters, and means that growth this year will be close to zero. But from the start of next year we expect more robust growth, with a sustained period of above-potential growth from 2014, which is necessary to reduce the output and unemployment gaps.

The unemployment rate will rise to about 9 per cent this year and remain high throughout the forecast period. Elevated unemployment for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs. Our central forecast is that inflation will fall below the 2 per cent target at the end of this year.

It remains our view that fiscal policy could be used to raise aggregate demand in the economy with little to no loss of fiscal credibility. We have never and do not now advocate scaling back the government's medium- to longer-term policy of fiscal consolidation.

However, the UK also suffers from a lack of demand in the short term. As we noted in our January Review, a 1 per cent of GDP increase in government investment this year would boost GDP by around 0.7 per cent, assuming no reaction by the MPC. A temporary boost to net investment, which has been cut extremely sharply, would have no direct effect on the government's primary fiscal target of balancing the cyclically-adjusted current budget in 2016-17.

The forecast for the UK economy is published in the National Institute Economic Review, no. 220, April 2012

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Should every investment portfolio be insured?

Tue, 1 May 2012 16:43:10 GMT

The ideal position for any investor is to get the perfect balance between risk and reward on their invested money. There are also good reasons why some investors need to aim for higher returns, for example in an Income Drawdown plan to meet the required income levels to make the Drawdown work efficiently.

To get higher returns requires higher risk and the challenge for investors and advisers is how to trade this position.

One of the ways that the ideal position may be achieved is through portfolio insurance. There are several ways invested monies can be insured against falls or against falling (these are not necessarily the same thing). The use of derivative products and inverse ETFs are two examples. At SVS we work through many different client scenarios where the aim is to build in insurance to protect against a fall or even in some cases to leverage on a downward market (we have clients who will want to do this from time to time).

In every such scenario we are able to provide estimated costs and produce a report which shows how this can be achieved depending on the client’s requirements.

It appears that in the IFA world there is limited usage of this fantastic planning tool. If we go back to the example of Drawdown, there may be many cases where an investor wants to use Drawdown (because they require flexibility and/or they need the possible improved death benefits) and need to generate a reasonable return to make this work, but they don’t have the risk appetite (because a big fall would decimate the capital and income of their most important retirement asset). In this case some form of portfolio insurance could be arranged to limit their down side risk.

The important element here is this: How often is this considered; how often is this priced up? It may be that it won’t work in many cases, but surely that is not a reason to ignore this. Advisers naturally always look to cover every angle and make sure they have considered all the possible ways of achieving their client goals.

As part of the SVS Preferred Partner Programme (www.svspartners.com) we will be working closely with our Regional Partner firms to make this service available to all clients wherever it is required and we can support the IFA with the requisite advice and costs. We know from experience that investors react to this incredibly well, liking the idea of insuring their positions wherever possible, so for an IFA having this additional facility available to them in their armoury creates a huge differential, which can also be used with accountants, solicitors, trustees, charities – anyone who has responsibility for looking after other people’s money. It is definitely a business winner.

Philip Pooley
Director

SVS Securities Ltd

www.svspartners.com
www.svssecurities.com

[Sponsored article by SVS Securities Ltd]

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Guidance on funding DB pension schemes

Fri, 27 Apr 2012 14:58:42 GMT

Today's announcement by the UK Pensions Regulator brings some disappointment, but also some breathing space for trustees and sponsors.

The Pensions Regulator (tPR) has released guidance on how trustees and sponsors of UK Defined Benefit Pension Schemes should approach funding in the current difficult economic climate. Those hoping for leeway on the discount rate, given current low bond yields, will be disappointed. However,we see some potential breathing space for those schemes with sound integrated funding and investment plans.

No leeway on the discount rate

Long-dated gilt yields are at historic lows, which has driven up liabilities substantially (as much as 20% for some schemes in 2011). Many had hoped for leeway from tPR on Technical Provision discount rates, with schemes potentially being able to smooth away some of the impact of lower yields. However, the tPR has ruled this out.

tPR has pointed out that current yields are a combination of a number of economic factors. Some of these might be considered ‘short term' such as QE and the status of the UK as a safe-haven relative to our European neighbours. However, broader issues such as supply and demand have existed for a number of years and are likely to persist for some time. Also, it is not clear how ‘short term' the short term factors will be. As my colleague, Azad Zangana, pointed out on Wednesday, it would be remarkable if the Bank of England did not respond to the current double-dip with a further round of Quantitative Easing.

These considerations point to lower yields for longer, which makes (in tPR's view) smoothing of the discount rate, or assuming higher more ‘normal' yields, hard to justify.

Some breathing space for schemes

tPR has signalled its willingness to accept longer recovery plans for schemes whose sponsor covenant has weakened as a result of the economic climate. This will be welcomed by those who feared that additional contributions could be the ‘final straw' for struggling employers.

tPR has also suggested that trustees might make allowance for improving economic conditions in the recovery plan, provided appropriate contingency plans are in place should improvements not materialise.

However, this increased flexibility is not a free lunch. tPR has stated categorically that, where schemes have bought themselves some more time, it will ‘consider the extent to which trustees have brought the funding, investment and covenant strands together to produce a complete financial management plan'.

Implications for investment strategy

Schemes need to prepare themselves if yields continue to fall, as it now looks unlikely that that tPR will provide a lifeline. For many trustees, this will push funding level risk management further up the agenda.

Furthermore, more so than ever, it is clear that schemes need to think holistically about how they fund their scheme and invest their assets. In its guidance tPR emphasises that any risk in the pension scheme must be supported by the sponsor's covenant (i.e. its ability to plug deficits if risks do not pay off). For schemes with weaker covenants this means thinking carefully about the types of risks they are taking, be they rewarded or unrewarded, and potentially using a wider range of tools to mange risk and generate return.

Finally, trustees need to be able to demonstrate that they have a plan - a plan if things continue to deteriorate, but also a plan to capture funding level gains if these do materialise.

Jonathan Smith, UK Strategic Solutions, Schroders

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Advisors must shift LinkedIn to the top of their Social Media strategy (if they had one)

Fri, 27 Apr 2012 10:09:05 GMT

Advisors who want to connect with their peers and expand their businesses should create blogs and LinkedIn profiles, then master the compliance rules needed to run those accounts effectively, said speakers at the Women Advisors Forum in New York on Thursday

Like what you see? Click here to sign up for Financial Planning's daily newsletter to get the latest on advisor market trends, investment management, retirement planning, practice management, technology, compliance and new product development.

The numbers are compelling, as 61% of advisors using a LinkedIn account said they have acquired a client through it, says Marie Swift, president and CEO of Impact Communications, citing a Hubspot 2011 survey of 611 advisors. Also, 47% of advisors using a blog said they had acquired a client through it.

“When we think back 10 years ago, the thought was: ‘What is the use of a Web site?’” says Swift, who is also a regular blogger for Financial Planning. “When we look back, social media will be the norm. It’s the way the way we’ll communicate and connect.”

Advisors should use industry keywords throughout their LinkedIn profiles and include working URLs, so the profiles will always appear high on Internet searches Swift says.

Morgan Stanley Smith Barney is pilot testing social media protocols, says Valentina Chtchedrine, the company's vice president of strategy and experience. LinkedIn is the hands-down preferred mode of social networking for advisors, she says. It is a gathering place for professionals, so it offers plenty of resources to gather client leads and do so with lots of personal privacy.

LinkedIn allows users to search for firms and personal connections based on zip codes. The site displays results according to which users are in the advisor’s network, Chtchedrine says.

The firm is finding that Twitter is a useful information-gathering tool, as opposed to one where advisors volunteer a lot of information, she says.

Facebook, the overwhelmingly popular social networking tool, can be useful for business purposes if advisors use it correctly, Swift says. Business Facebook accounts should use photos and be rich in other visual media, but advisors should always be circumspect about what they share on those Web sites.

Read the full article at Financial Planning here.

Want to learn how to leverage LinkedIn in your IFA business?

Join us for the ultimate guide for financial advisers using LinkedIn - 25th May 2012. We guarantee an immediate and measurable difference to your visibility on LinkedIn - or your money back. Sign up now.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

The FSCS Levy Action Group is asking for your help

Wed, 25 Apr 2012 09:48:46 GMT

This week the IFA community and other investment intermediaries are paying a whopping £60m bill to the Financial Services Compensation Scheme (FSCS) to bail out investors in failed fund managers and stockbrokers.

IFAs need a fairer FSCS.

Today, the FSCS Levy Action Group is asking for help from Financial Secretary to the Treasury Mark Hoban MP. Please take part in this day of action and help by spreading the word to every IFA you know.

1. Take a look at who's signed the petition so far and add your name
http://www.fscslevyactiongroup.co.uk/action/

2. If you are on Twitter, encourage others to sign too and add the tag #HelpUsHoban

Please do it right now. Thank you.

Kind regards.

Phil

Philip Calvert
Founder of IFA Life

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Delivering effective corporate governance: the financial regulator's role

Tue, 24 Apr 2012 12:20:07 GMT

Hector Sants, chief executive of the Financial Services Authority (FSA) delivered a speech today in which he reviewed the progress of regulatory reforms since the financial crisis and, in particular, focused on how more action is needed to deliver effective corporate governance. He stressed that this was crucial to delivering financial markets and institutions that we can trust and that act in the interests of everyone.

He explained that the principal regulatory deficiency, pre-crisis, was the inadequate capital and liquidity standards in banking. A great deal of progress has been made in addressing this deficiency and this will go a long way towards dealing with the symptoms of the crisis but he warned that less progress had been made on the specific issue of delivering effective corporate governance and that this needed to be urgently addressed. Hector Sants said:

"Management are responsible for running firms and ultimately firms fail because of the decisions taken by their boards and their management. These decisions are made within a firm's corporate governance framework. The crisis exposed significant shortcomings in the governance and risk management of firms and the culture and ethics which underpin them. This is not principally a structural issue. It is a failure in behaviour, attitude and in some cases, competence."

He stressed that:

"Ultimately, the purpose of financial markets is to serve everyone, not the personal interests of individuals. We will only really have learnt the lessons of the crisis when this is recognised by all."

He highlighted the regulator's role in achieving this goal and talked about the Significant Influence Function (SIF) interview process. He explained that, in his view, the crisis exposed that there were many senior executives and non-executives in key board positions who lacked the technical skills to manage the risks in their banks. There was, in consequence, a general recognition that the regulator should seek to address this problem. The FSA does this by assessing the suitability of a candidate to undertake a role, and crucially, by ensuring an appropriately robust, rigorous and yet proportionate appointment process is undertaken by the firm. This assessment needs to take into account the overall composition of the board as well as the individual's knowledge and competence. Importantly, however, he said:

"The FSA is certainly not trying to be ‘gate keeper' to everyone. When we revised our SIF process we made clear that our focus is on the Chair, the senior independent director, the chair of the risk and audit committee and on the principal executive functions: CEO, finance director and chief risk officer. Outside of these functions the need for an interview for other individuals is judged on a firm specific basis."

He explained:

"Except in rare circumstances the FSA will not interview non-executives unless they intend to occupy senior non-executive roles. There may be exceptions to this but in those circumstances firms should expect their supervisors to explain the reasons behind this decision."

He also made clear that the FSA is assessing whether the board collectively understands and can address the breadth of the business. The FSA does not expect all non-executive directors to be technical experts in financial services and it does not expect every member of the board to have the same degree of technical knowledge. Indeed, if that were the case, it would bring a different set of issues. He said:

"A diverse board encourages creativity and is less likely to demonstrate ‘group think' and ‘herd mentality'."

Hector went on to discuss the role that incentives play, explaining that too often reward structures continue to encourage short-term gain and excessive risk-taking. He said:

"It is also important to recognise that whilst progress is being made in relation to these issues, this will need patience and resolve in the face of the market's remorseless focus on the next earnings announcement."

Crucially, he concluded by explaining that, central to achieving good governance, is a firm's culture. He re-emphasised it is not for the regulator to determine culture. He said:

"Ultimately, however, even a successful regulatory regime will not be sufficient to ensure good outcomes. Crucially, firms need to have an appropriate culture and one that is focused on the firm delivering the right long-term obligations to society. The right cultures are rooted in strong ethical frameworks and the importance of individuals making decisions in relation to principles, rather than short-term commercial considerations. In particular, this means that when a regulator expresses a clear instruction then firms should not continue to resist for reasons of expediency and short-term gain."

He concluded that history has shown that we cannot rely on the self-motivation of individuals alone and that we do need credible enforcement to require individuals to be driven by principles rather than just by commercial expediency. He said:

"Commercial success should not place an individual above the law."

The full speech can be found on the FSA website.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

The STEP Certificate for Financial Services (Trust and Estate Planning) now open for enrolment

Tue, 24 Apr 2012 09:46:26 GMT

This popular certificate will enable professionals in financial services to gain a better understanding of trust and estate planning work and to liaise more effectively with trustees, solicitors and accountants.

Enrolment for the Certificate closes on 27 July 2012. The Certificate is distance-learning based and takes four months to complete, course material covers both English and Scots Law. Assessment is a three-hour-closed book examination on 12 November 2012 in London, Manchester, Birmingham, Bristol, Leeds, Glasgow and Edinburgh.

The combination of the Legal Services Act 2007, the Retail Distribution Review (RDR) and Treating Customers Fairly (IFC) in Financial Services has created new opportunities for those focusing on estate planning advice to work more closely together. The RDR has also raised the bar with professional qualifications within the financial services sector.

In response to these factors the Society of Trust and Estate Practitioners (STEP), the professional body for trust and estate practitioners worldwide, have introduced The STEP Certificate for Financial Services (Trusts and Estates). This highly popular certificate is the only trust and estate planning qualification to address the common ground between solicitors and those working in the financial services sector and will enable candidates to become more confident when talking to other professionals on issues relating to the use of trusts in estate planning.

The course supports investment advisors, financial advisors and those working in the banking sector dealing with trusts and estates who are looking for a more integrated approach to their client work.

The needs of trustee clients, incapacitated clients and charity clients are all covered in the course, as well as up-to-date coverage of Will Trusts and the transferable nil rate band. The Certificate has been accredited with the C11/PFS and will gain the successful candidate 20 technical credits towards the Diploma in Financial Planning benchmarked as a Level 4 qualification.

The core text was designed and edited by Julie Hutchinson, Head of Estate Planning at Standard Life, and a well-known writer and presenter within the financial services community, together with significant contribution from a team at Boodle Hatfield led by Emma Haley.

Successful candidates will also be eligible to become an Affiliate of STEP. Affiliation will associate candidates with the premier professional body dealing with the stewardship of personal wealth thus enhancing candidates professional credibility. Affiliates of STEP will be better placed to win new clients, in particular from law firms, and increase business through developing a wider, more fruitful and profitable network.

For more information and to enrol on this course visit the STEP website.

[Sponsored article by Society of Trust & Estate Practitioners (STEP)]

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Spring clean your finances for the new tax year

Tue, 17 Apr 2012 11:56:16 GMT

As the 2012/2013 tax year begins unbiased.co.uk, the professional advice website, provides top tips on getting your personal finances in order for the year ahead, with the help of its panel of independent financial advisers.

1. Karen Barrett, Chief Executive at unbiased.co.uk

"The new tax year is the perfect time to spring clean your finances and get your affairs in order. Review your financial goals and ask yourself whether you are on track in achieving these. You may be surprised how much money you can save by putting some new plans in place and finding ways to be more tax efficient with your cash.

"The new tax year brings a host of changes with new tax rules coming into force that will affect the current tax credits system. Some of these changes can be confusing and if you unsure of the impact this will have on your finances then seek guidance from an independent financial adviser (IFA). As well as explaining the impact of any new regulatory changes and new options available, an IFA will also take time to review your finances and recommend products which are both affordable and suitable for you. Just go to www.unbiased.co.uk and search free and confidentially for an adviser close to your chosen postcode."

2. Joss Harwood (Eldon Financial Planning) - Imagine that the tax year ends in the summer

"Imagine that the tax year ends in the summer, not next March and resolve to consider the tax efficiency of your affairs by the end of September. That gives plenty time to receive all the paperwork relating to the tax year just past, and clear up any queries. This also leaves you time to submit a self assessment return by the end of October if appropriate. You will also give yourself a longer period to make tax efficient regular contributions to pension arrangements and ISAs in the tax year and ultimately you can have a well-deserved moment of self satisfaction!"

3. Alistair Cunningham (Wingate Financial Planning) - A great year for pension contributions

"2012/13 will be a great year for making pension contributions, with up to £200,000 possible contributions to a pension in some cases. Those earning over £150,000 in 2012/13 will have a limited window of opportunity to get 50% tax relief, as in 2013/14 their highest rate of tax will fall to 45%. 2012/13 will not see any end to the effective rate of tax of 60% for those earning from £100,000 to £116,210. This is because these individuals see their personal allowance of £8,105 whittled away by £1 for every £2 they earn over £100,000. Pension contributions (or gifting) can be used to reduce this tax rate."

4. Jon Hill (Milford & Dormer Solicitors) - Think about protection

"Think about protection - think about your life, health, earnings. Who will pay your mortgage if you are off work? Plan ahead and don't rely on future increases in property prices to repay your mortgage and provide funds for retirement."

5. Danny Cox (Hargreaves Lansdown) - The early bird catches the ISA worm

"The early bird catches the ISA worm. If you use your ISA allowance early in the tax year then you benefit from up to 12 months more tax-free growth and tax efficient income."

6. Mel Kenny (Radcliffe and Newlands) - Don't forget to claim your tax relief

"It's that time of year where lots of people give to charity whether it be via the London Marathon runner or otherwise. If you are a higher rate tax payer, then you need to pro-actively contact your tax office to claim the additional 20% tax relief owed to you. Unfortunately few do this and are missing out on potentially hundreds of pounds. If you have been missing out on this relief for years, the good news is you can make a backdated claim. The same principle applies if you have been contributing to an employer's group personal pension or simply a personal pension scheme out of your after tax pay - higher rate tax payers have to claim their extra relief. Be careful, you might find you have additional taxes due too!"

7. Christopher Wicks (Bridgewater Financial Services) - Consider ways of protecting your personal allowance

"It is not necessary to leave things until you get to the end of the tax year. Pension contributions, despite concerns over annuity rates, are a very good way of protecting the personal allowance because they have the effect of reducing income for tax purposes. People with earnings around the tax threshold where they lose some of their personal allowance, can make a lump sum pension contribution at the beginning of the tax year to bring their income back down to £100,000 and thereby restore their personal allowance. If they HMRC are notified in good time the personal allowance can be restored to the full rate and effectively 40% tax relief will be gained more or less at source."

8. Jason Witcombe (Evolve) - Make the most of tax breaks

"Take time to understand your tax position so as to make the most out of tax breaks on pensions and charitable donations. For people under 65 your 20% income tax starts at £8,105, 40% tax starts at £42,475, there is an effective 60% tax rate for income between £100,000 and £116,210 and then 50% tax starts at £150,000. Furthermore, child benefit will start to be lost at £50,000. Planning around these thresholds can make your money work much harder for you."

9. Dan Clayden (Clayden Associates) - Check if you're holding your investments in the correct tax wrapper

"Making sure that you select the correct tax wrapper for your savings and investments is now probably more crucial than ever. The currently tax regime sees individuals liable to income tax at the ‘additional' rate of 50% on income over £150,000, personal allowances reduced when income exceeds £100,000 and for higher rate tax payers, capital gains are now taxed at a rate of 28% - which now affects even more taxpayers since we've seen the basic rate tax band reduced in April. So if you don't choose the most appropriate tax wrapper you'll probably end up paying more tax than you need to ... and no-one likes doing that!"

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Should the IFP and PFS follow the MDRT model? How have you benefited from MDRT?

Mon, 16 Apr 2012 08:38:49 GMT

As we speak, hundreds of delegates are enjoying the opening day of the Middle East MDRT day (Million Dollar Round Table). Indeed, our own Michelle Hoskin is one of this year's speakers at the event.

Some of the UK's top financial advice professionals are also in attendance - several of whom have been MDRT members and supporters for many years.

Founded in 1927 MDRT is a global association of nearly 36,000 members recognised for its commitment to the highest standards of professionalism and ethics. Yet for many, it still has a very 'salesy' feel to it and some question whether that is appropriate in a today's 'new model' environment.

Clearly sales is still a very important factor in a modern financial advice business, but with the emphasis switching more from sales of products to sales of your proposition.

* Have you benefited from being a member of MDRT?
* Is MDRT the future of 'trade bodies/associations' for the financial advice profession?
* Should bodies like the PFS and the IFP model themselves more on the MDRT approach?

We would welcome your views please.

Phil

Please share this page to LinkedIn

Please click here to retweet this on Twitter

CFP board to out planners who go bankrupt

Thu, 5 Apr 2012 21:30:24 GMT

Highlighting such filings should help the public make more-informed decisions when choosing a financial planner, group says.

As the number of certified financial planners declaring bankruptcy grows rapidly, the organization that grants the credential is trying to make it easier for the public to know whether a planner has gone belly up.

The Certified Financial Planner Board of Standards Inc. today announced that it will no longer initiate disciplinary proceedings against a planner after his or her first bankruptcy. Instead, the board will highlight the bankruptcy on the planner's profile on the CFP website and include his or her name in a news release.

The new bankruptcy rule, which will go into effect July 1, is one of several that the CFP Board has approved. Another reduces the full-time experience requirement from three years to two years if a CFP candidate has worked directly with clients under the supervision a certified planner.

The organization also amended its disciplinary rules so that a CFP who does not respond to a request for information during an investigation will be considered to have admitted to the allegations in the complaint. The experience rule will take effect Sept. 1, while the disciplinary changes are effective as of June 1.

Read the full article at the excellent InvestmentNews.com here.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Battle of the Sexes to end in 2012

Thu, 5 Apr 2012 13:49:04 GMT

I think it’s fair to say that, with the exception perhaps of those who have been living in a cave, everyone in the industry now knows that 21st December 2012 is an important day as far as sex goes. It’s the date by when all insurance must be priced on a unisex basis following the EU ruling on gender neutrality. For protection providers that focus only on price it means they will need to rethink their approach before then.

In the run up to the deadline insurance companies across the UK need to gear up and prepare properly for such a major regulatory change that will impact the entire protection industry. Focusing on quality instead of price could be a better strategy with such a significant shift in pricing imminent.

It is vital make the change as seamless as possible for customers and advisers. So work has been ongoing since March last year when the ruling was made to ensure that appropriate strategies are in place. But when should these changes actually be implemented and who will be first to do so?

21 December is non-negotiable and all providers will have to offer gender neutral terms by then. Some may introduce rates sooner or at least announce what their rates will be after the deadline date. As well as competitive pressures the issue of selection will be a key consideration for those who change rates before 21 December.

Broadly speaking, women will pay more for life insurance, while pension annuities for men will cost more when unisex pricing comes into force. Obviously once gender is no longer used as a rating factor, there will be costs associated. These costs are most significant where gender is highly correlated with risk, and it is important that the industry is ready for the change.

It is important that advisers fully understand what the changes will be in detail in order that they are well prepared to take advantage of the opportunities the ruling will bring to the industry. With any change as large as this there are likely to be pitfalls, so it is equally important that advisers are clued-up on what the possible complications may be, so that they’re on hand to iron out any teething problems.

If you think that gender neutral pricing is a big enough minefield there are also changes in the way that Life Companies are taxed looming on the horizon. In a nutshell this means that for life and critical illness products premiums may increase by around10%, while income protection products will be unaffected. So gender neutral pricing and these proposed tax changes mean we all face a very turbulent time for the foreseeable future.

Steve Casey, Head of Marketing and Intermediary Proposition Development, Friends Life

[Sponsored article from Friends LIfe]

Please share this page to LinkedIn

Please click here to retweet this on Twitter

How to choose a passive fund

Thu, 5 Apr 2012 13:24:48 GMT

Part of the process of growing up is realising that the people you trusted more than anyone else in the world lied to you regularly, consistently and for a very long time. No one lies more than parents do to their children. It starts off innocently enough. First they tell them that Father Christmas will give them lots of presents then they promise visits from the Tooth Fairy. Later on it becomes the promise of borrowing Dad’s car if you pass your exams.

By the time the child has grown into adulthood he or she is pretty cynical about most things. But there is one great fiction they can hang on to. Out there, in the gleaming spires of London town, or maybe Canary Wharf, there is someone who actually understands capital markets. Even better, this mysterious person can not only comprehend what has just happened but is poised to make a killing from the next large, and unforeseen by everyone except him, movement in multifarious assets.

He is the Alpha Man that can beat the markets with a single bound.

Alas, the grown up now has one last disappointment to face. Middle aged, with a mortgage, two kids of his own to deceive to and faced with just a few years in retirement between leaving work and being moved into a care home he now realises that:

There Is No Alpha; just risk and luck.

Like the child learning that Mum and Dad actually bought him Buzz Lightyear and not Father Christmas he resigns himself to life as it is, not what he would like it to be. So he becomes a passive investor. But far from being a simple exercise the process of selection is actually quite difficult. What is the difference between an AMC and a TER and why doesn’t a TER include all the costs like dealing? And who gets the revenue from stock lending; does he or the fund manager? And what are the risks of the fund lending out shares it owns to a hedge fund? Does he really benefit if that trader then sells them short and trashes the value?

Corporate governance is becoming more important these days. Do passive funds just sit, well passively, as big companies run themselves as they like without any oversight from the providers of the capital?

Which index does he track? And why has the FTSE 250 done so well over the last four years when it consists of unpronounceable foreign sounding stocks doing things in countries that didn’t even exist when he was at school. All he wants is exposure to large, solid companies like GlaxoSmithKline, Shell and Vodafone.

And then there are ETFs. Why do some of them have turnovers of 100% when they are supposed to be such simple vehicles? Besides, what does it means when an ETF trades in “financial instruments” when all he wants is a simple thing that holds all the shares in the index and trades as little as possible. Having made a selection based on advertised costs the aspiring pensioner then feels excluded when some funds won’t accept investments of less than £100,000. And they charge 0.5% up front after promoting themselves as low cost.

One more thing might concern the investor actively seeking the best passive fund. Does it really make sense to allocate money on the basis of price alone? After all, when he is told to get the vegetables at the weekend he doesn’t buy more asparagus than potatoes simply because they are more expensive. Yet that is what most passive funds do. New money coming in is allocated to the largest company by price, not by value. Doesn’t that just create a bubble as we saw in the dot com boom?

These questions, and many more, will be asked more frequently this year as two big changes to the investing world arrive in 2012. One is auto-enrolment for pensions starting in October and the other is the run up to the implementation of the Retail Distribution Review (RDR) in January 2013.

Both of these events will increase the responsibility of investors to understand funds that will be so important to their future, whether active or passive. Those who still believe in Father Christmas and seek active funds will have a tough challenge despite all the advice in the press. However, the task is not easy even for those savers just looking for passive funds. These funds are sometimes referred to as beta funds because they aim to deliver the return of the index, which is known as beta.

To help this group Fundamental Tracker has built a website that aims to provide more information on beta funds. It also includes data on so-called smart-beta funds. These are funds that use tightly defined processes that aim to deliver the returns of an index in a better way than conventional market capitalisation, or price, based funds.

The data is not exhaustive and some of the information is incomplete or not available. But it may form a starting point for those who are desperately seeking beta; the market return at the lowest risk.

www.smart-beta.co.uk

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Financial services sector growth continues and optimism improves with unexpected rise in employment

Mon, 2 Apr 2012 12:22:32 GMT

The volume of business in the financial services sector grew for the eighth quarter running, at well above the average pace, in the three months to March, according to the latest CBI/PwC Financial Services Survey.

This growth is reflected in the first rise in optimism among financial services firms (+32%) in a year and an unexpected increase in employment in the sector (a balance of +19%). Companies also plan to invest more in IT over the next year.

Of the 95 financial firms that responded, 44% saw volumes rise in the quarter to March, and 21% reported a fall. The resulting balance of +23% was well above the long-run average (+12%) and driven primarily by business with private individuals. In the coming quarter, companies expect growth to accelerate somewhat (+34%), again mostly coming from business with individuals.

The rise in incomes was driven by fee, commission, or premiums (+13%), with the value of net interest, investment or trading remaining flat (+3). Meanwhile, average spreads widened further this quarter (+11%), building on already solid growth in the previous quarter (+43%).

The growth in income more than offset the impact of the sharp increase in total costs, allowing profitability to rise more rapidly than in the previous three quarters (+21%).

Numbers employed in the financial services sector rose unexpectedly (a balance of +19% compared with an expectation of -18%). A similar increase is expected in the next quarter (+20%).

Financial services firms resumed investment in both marketing (+16%) and information technology (+47%) in the three months to March, after a slack period last quarter. Spending intentions for IT were the strongest in a year, as financial services companies looked to increase efficiency.

As has been the case over the last year, companies continue to cite uncertainty about demand (+55%) and inadequate net return (+46%) as the factors most likely to limit capital expenditure over the next twelve months. The number of firms highlighting the shortage of labour as a significant constraint increased this quarter (+35%).

Level of demand (75%) and competition (52%) continued to be the two most significant factors likely to constrain business expansion in the coming twelve months.

Ian McCafferty, CBI Chief Economic Adviser, said:

"Financial services sales volumes and income continued to rise this quarter, putting the sector's recovery on a firmer footing.

"Optimism levels and business investment intentions have also improved, in contrast to last quarter as some of the worst risks around the euro area crisis have eased.

"The unexpected rise in employment is a further encouraging sign for the sector. But with the current level of business regarded as below normal, conditions still remain challenging for financial firms."

Analysis by sector

Banking

Banks reported a notable rise in optimism, with business volumes expanding for a second consecutive quarter, and a similar rate of growth expected in the three months ahead. However, total costs rose sharply over the past three months. Despite growth in business volumes and income values, the rise in costs prevented any growth in profitability. Numbers employed rose unexpectedly and firms expect to add to headcount further in the next quarter. Banks plans for expenditure on IT are higher than average. Statutory legislation and regulation is widely cited as an investment motive.

Building societies

Building societies were considerably more optimistic about their overall business situation compared to the last quarter. Business volumes grew at the fastest pace since June 2011 this quarter, despite predictions that volumes would remain broadly flat. However, the level of business was seen as below normal. The volume of business is predicted to be broadly flat in the coming quarter. Building societies plan to increase IT expenditure in the coming year, with increasing efficiency/speed, replacement, and statutory legislation and regulation given as the main reasons.

Finance houses

Optimism amongfinance houses increased over the last three months. Business volumes fell strongly over the last quarter, and finance houses reported the level of business as below normal. However, a solid rise in volumes is expected next quarter. Numbers employed fell in the three months to March and headcount is set to fall further over the next quarter. Expenditure on IT is set to increase in the year ahead relative to the past 12 months. Increasing efficiency/speed and replacement were the main reasons given, followed by reaching new customers.

Kevin Burrowes, UK Financial Services Leader at PwC said:

"More positive economic data and a slightly more stable environment in the eurozone mean that banks are much more confident about their sector. This confidence is translating into recruitment with many banks reporting that they plan to increase headcount over the coming months. Banks are also planning to invest in their businesses, particularly in their digital offerings, and customers should reap the rewards of this.

"The picture is not so rosy for building societies which, while displaying more confidence than in the last quarter, are still concerned about asset quality and the impact of the regulatory burden. However, the relatively high level of home loan approvals in December and less turmoil in the eurozone mean that confidence among building societies is higher than in the last quarter.

"There are still choppy waters to be navigated and, as ever, stringent cost and risk management will be key."

Life insurance

Business volumes increased for a ninth consecutive quarter, with further growth expected in the next three months. Income expanded modestly, but stronger rates of growth are forecast. Life insurers reported an unexpected rise in profitability and optimism about the business situation rose marginally. There was a rise in headcount and a further increase is expected. Investment intentions are reported to be above average.

General insurance

Optimism amongst general insurers rose very modestly over the three months to March. Business volumes expanded slightly for the second consecutive quarter, although more slowly than expected, and growth is expected to accelerate over the next quarter. Profitability rose strongly over the past three months and is expected to rise robustly in the next quarter. Average commissions, fees and premiums paid rose at their fastest rate since December 2010 and are expected to rise at a similar pace next quarter.

Insurance brokers

Optimism amongst insurance brokers rose in the three months to March. Business volumes fell for the third consecutive quarter albeit at a slower pace than in the previous two quarters. However, volumes are expected to grow strongly in the three months to June. Overall profitability rose for the first time in a year, albeit modestly, and is expected to rise again next quarter at a slightly faster pace. Insurance brokers are planning to spend more on IT in the year ahead, driven by a need to increase efficiency/speed and by replacement.

Mark Stephen, UK Insurance Leader at PwC, said:

"There are a number of reasons for general insurers to be feeling positive as business levels are growing, price increases are starting to come through and claims growth is slowing at last. This positive backdrop has given insurers the confidence to start hiring again - a welcome reversal after two quarters of headcount reductions. However, the commercial sector is an area of concern as business has fallen to disappointing levels.

"Strong rises in customer demand and levels of new business has finally ended life insurers' run of pessimism. This positive backdrop is allowing life insurers to invest heavily in IT, marketing and performance measurement to ensure they are well placed to respond to the upcoming retail distribution review and the challenges it will bring. Life insurers are also looking to boost staff numbers, although there are concerns over the availability of professional staff due to the range of investment and regulatory projects companies are tackling."

Investment management

Business volumes rose strongly over the past three months, defying expectations of a small decline. Volumes are expected to rise at an even faster pace in the quarter ahead. Investment managers were significantly more optimistic about the business situation than they were three months ago, and profitability rose at its strongest in a year. Firms' plans for expenditure on IT are now well above their long run average, although the proportion of firms citing uncertainty about demand as a constraint on investment is the highest since September 2009.

Securities trading

Business volumes in securities trading declined in the three months to March, and a further fall is expected next quarter. Income fell, defying expectations of growth. Profitability declined for the fourth successive quarter, despite a fall in total operating costs, as shrinking business volumes drove up average costs. Numbers employed dropped after nine consecutive quarters of growth and headcount is expected to fall again next quarter. The level of demand and competition are the main factors likely to inhibit business expansion over the next year. Overall, investment is expected to be broadly flat over the coming year, although a slight rise in IT expenditure is planned.

Pars Purewal, UK Investment Management Leader at PwC, said:

"Investment managers have shown much more confidence in their sector compared with recent quarters. Growth in investment management is expected although continued cost reduction programmes across the sector mean that further headcount reductions are likely. Investment managers also need to look to the regulatory changes on the horizon and factor these into their plans and business models.

"Falling levels of business and higher costs per transaction mean that security traders have reported very downbeat predictions in the sector. The long-term outlook is negative among traders and concern about the impact of upcoming regulatory changes could depress this even further. It therefore seems likely that further job losses are inevitable."

The full survey results can be obtained on subscription through the CBI website at: /ndbs/Forms.nsf/survorderw?OpenForm.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Britain 'heading for crisis' as cash-strapped families put off big decisions

Fri, 30 Mar 2012 10:51:40 GMT

British families are failing to plan ahead for life's big decisions, such as getting married, changing jobs or having more children, according to a new report by global insurer Zurich. In today's uncertain economic climate, most Brits are choosing to keep their options open or focusing on day-to-day decisions, like how much to spend on the weekly food shop or whether they can afford to turn on the heating.

Only a quarter of Brits (25%) say they plan for the long-term future, when asked to describe their overall approach to making big decisions
Higher social groups (ABC1) are more likely than lower social groups (C2DE) to say they plan for the long-term future
Only one in ten (10%) usually think about the life-long impact when making life-changing decisions
One in twenty (6%) actually define the ‘long-term' future as less than one year

But with higher education becoming more expensive, the competition for jobs fiercer than ever, and pension pots shrinking, this ‘here-and-now' thinking could be costly in the long-term.

It appears that our individual economic resilience as well as the wider economic climate affects how we make decisions. The richer we feel, the more comfortable we feel planning for our future, according to Professor Michael Hulme's findings in the Zurich Big Decisions report.

29% of those in higher social groups say they plan for the long-term future, compared with 19% of those in lower social groups, when asked to describe their attitude to making big decisions;
Those in lower social groups (22%) are twice as likely as those in higher social groups (11%) to say they make decisions to help them get by on a day to day basis, when describing their attitude towards making big decisions.

The report's author, Michael Hulme, Honorary Professor at Lancaster University and a specialist in decision research, said: "Britain's attitude to planning has been shortened by the recession. To cope with economic uncertainty Britain's families are reining in their horizons and delaying the big decisions about their lives. But this outlook is unsustainable. If we don't feel confident about investing in our future - be it through education, the property ladder or security for our old age - society as we know it is heading for breakdown.

"If this short-term decision making carries on, 10 years from now we might be facing decision-paralysis. We will be making so many short term decisions, so often, that we are unable to cope with the surprises life throws at us. It's time to start being honest about which choices are trivial, and which are life-changing, and plan accordingly. And not only thinking about the next few days or years, but what affect those decisions will have over a lifetime."

Zurich Big Decisions warns that Brits today are making life-changing decisions without considering the long-term consequences. 45% consider the impact their big decisions will have over the next year or less. Only one in ten (10%) think about the life-long impact. A further 9% only consider the immediate impact - not thinking any further ahead than the end of the week.

A surprisingly large proportion of Britons also have a short-sighted approach to what they perceive as ‘long-term'. Around one in twenty (6%) define the ‘long-term' future as less than one year when making big decisions. The majority (73%) define ‘long term' as up to 10 years. Only one in 20 (6%) consider ‘long-term' to be 20 years or more when making big decisions.

Kay Martin, UK Chief Marketing Officer at Zurich, said: "Given that household budgets are being squeezed from every angle it's not surprising our attention has turned to getting by over the next week or month. But this ‘cope and hope' approach to life's big decisions could be a false economy, with short-term scrimping potentially meaning losing out in the long-term.

"It seems that attitudes to life planning - and indeed financial planning - are changing. But whatever the financial situation and outlook, the act of analysing all our options and looking to sources of advice can help play an important part in getting back that feeling of control, and a sense of having acted responsibly.

Zurich's advice for families making ‘Big Decisions':

Plan ahead: many people take decisions by relying on their habits and routines. But planning ahead and prioritising life's big decisions can help you and your family make informed and risk-based choices. There are some decisions you know you might need to make in the future - about your home, your children, or your career - and looking beyond your day-to-day challenges can help you deal with those bigger choices when they come around.

Seek advice: most of us find advice from partners (94%) and friends (81%) influential when making life-changing decisions. It's important to use a wide range of sources to help you make your mind up - financial advisers, on-line money experts, comparison websites, and even your workplace are all potential sources of advice which could help you in making the right decision.

Don't delay: the ‘Big Decisions' survey shows that austerity can force us to reign in our horizons, but there is a risk that prolonged economic uncertainty will lead to more families delaying tough choices. Pushing-back big decisions to a later date can seem like the easy option when times are tough, but being prepared can make a big difference to our resilience to unexpected financial and personal events.

Find out what type of decision maker you are by taking the Zurich Big Decisions Test at www.zurich.co.uk/bigdecisions.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

The Budget gives the Chancellor an ideal chance to show he understands the dangers of destroying confidence in long-term savings

Tue, 20 Mar 2012 13:41:27 GMT

The Budget gives the Chancellor an ideal chance to show he understands the dangers of destroying confidence in long-term savings. Recent policies have constituted an assault on savers and the message being sent to younger generations is not to bother saving for their future, because the Government could just decide to take the money from you by stealth. Low interest rates and Quantitative Easing have wrecked the retirement plans of many who worked and saved hard for their future.

Yet, pension assets and savings constitute a major potential source of benefit to the economy. Helping older consumers feel more confident and using pension assets to stimulate the economy directly would be a win-win for all, creating more growth and jobs than the current policy of buying gilts. We need measures to alleviate some of the worst impacts of ultra-low interest rates and Quantitative Easing and harness the power of pension fund money to help growth.

QE money should underpin direct small company lending, bypassing banks: Use any newly created money to underpin direct small company lending, bypassing the banks, would be far more effective than credit easing which still relies wholly on the banks to lend at decent rates. A 1% subsidy will not help if banks just increase their overall lending rates!! We should end the gilt-buying spree that has such dangerous consequences for our pension system and use any new money to set up a fund to lend or underwrite lending to improve growth and jobs prospects. £325billion has been spent on buying up Government debt, but there is precious little evidence it has stimulated the economy.
Issue longevity gilts to help improve annuity pricing and pension deficits: Issuing longevity gilts would be far better than 100-year government bonds. Pension and annuity firms would be better able to match their liabilities and taxpayers could benefit from cheaper short-term funding
Remove ISA investment restrictions to allow pensioners to hold all cash: The current low interest rate environment is penalising pensioners who cannot afford to risk their money in the stock market. They are only allowed to hold half their annual ISA allowance in cash. The Chancellor should remove these artificial restrictions on ISAs and allow investors to choose how to use their whole allowance. Encouragement of corporate ISAs and long-term savings for later life care needs would also be long overdue.
Use pension assets to fund infrastructure investing: By providing a government underpin, or guarantee of a future inflation-linked return, Government could kick-start investment in our outdated infrastructure which would help growth both short-term and long-term.
Don't undermine confidence in pension saving just as auto-enrolment starts: Any restrictions on pensions tax relief should have as little impact as possible on pension confidence. A temporary reduction in the annual allowance, or restriction of 50% relief would be less damaging than removing all higher rate relief.

Dr Ros Altman

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Should advisers choose active or passive funds for clients?

Tue, 20 Mar 2012 13:35:11 GMT

With approximately nine months left until the Retail Distribution Review (RDR) is implemented, advisers are under increasing pressure to deliver robust and suitable investment solutions for their clients.

According to independent financial research company Defaqto, the choice between active and passive funds is just one of a myriad of investment decisions that advisers need to consider. In addition, within this, there are a number of potential approaches that advisers can take - active only, passive only or both in unison.

Defaqto's Guide to Active and Passive Funds, published today, suggests that the cost pressures posed by the RDR may lead to the continued increase of new money being invested in passive funds - however, combining both active and passive funds in an investment solution could reduce costs and relative volatility, while still offering advisers and clients enough latitude to invest in active and specialist funds.

The guide highlights the key areas of due diligence that advisers should consider in order to identify active or passive funds that meet the needs of their clients, including:

Assessing the fund manager's investment philosophy
Assessing the fund manager's team and decision making process
Objectively analysing costs and performance
Identifying the index that passive funds are tracking and replicating
Assessing how passive funds are replicating the index performance

Adrian Gaspar, Senior Consultant at Defaqto, said:

"Passive investing has certainly been a theme that has gained momentum in the UK, and the debate about the advantages of passive investing has been raging for many years in the US. Certainly, passive investing in retail funds in the UK has not gained as much traction as in the US. However, the RDR is likely to result in a level playing field in this regard.

"Both passive and active funds have their own distinct advantages. To the end investor, passive funds can result in low cost and relatively predictable performance. Active funds however do have the potential to outperform their indexes, if handled by talented managers. Advisers should bear in mind though that they must undertake thorough due diligence in order to establish preferred funds."

Advisers can download Defaqto's Guide to Active and Passive Funds at: www.defaqto.com/adviser/ifa/guides.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

IFA Life Co-Founder takes on Marathon challenge. Fantastic support from IFA Life members

Tue, 20 Mar 2012 10:11:50 GMT

IFA Life Co-Founder Sarah Calvert will be running on behalf of the Stroke Association in the Virgin London Marathon on 22nd April.

Following her Dad Peter suffering a massive stroke in July last year, Sarah wanted to do something to help other victims. After seeing London IFA Tina Weeks training for the Great North Run, she was inspired to dig out her running shoes and set about an intense training plan for the gruelling run round the streets of the capital.

“It’s been an exhilarating challenge but at times also a nightmare!” said Sarah. “Everyone I’ve spoken to seems to have a different view on the best way to go about training – even professional runners!”

“I’ve had a really sore foot, but despite that I’m making great progress with my training. IFA Life members have been so generous with sponsorship and I’m well on my way to reaching my fund raising target of £2,000.”

In addition to sponsorship for the race itself, Sarah has raised money by hosting a comedy night in her local village hall, and this week will be hosting a quiz night.

Sarah added:

“Something like this brings the best out in people and some fantastic prizes have been donated, with Friends Life offering the latest must-have gadget a new iPad - as well as tickets to the finals of the t20 cricket competition which the company sponsors. Local IFAs Informed Choice are also generously supporting the event.”

Friends Life Head of Public Relations, Peter Timberlake said today:

“The stroke statistics in the UK are a surprise to most people, despite the exposure the condition has had on the television with the ‘Act FAST’ campaign. It is the third largest cause of death after heart disease and cancer, with around 150,000 people suffering strokes and over 50,000 deaths in the UK each year. We at Friends Life are very conscious of the fact that, the number affected by the condition is far greater than the statistics suggest, because like most major illnesses, the impact on families and friends is also significant. While Critical Illness policies can provide funds at the right time to those who suffer a stroke, The Stroke Association helps raise awareness and offers much needed support to everyone. So Friends Life is delighted to support Sarah’s efforts to raise funds for The Stroke Association.”

Martin Bamford, Informed Choice Managing Director said:

“We are delighted to support such a worthy cause. Coming up with some questions for our sponsored quiz round on the theme of money was a lot of fun. We wish Sarah every success for the quiz night and the big race itself.”

Speaking about her Dad, Sarah said:

“He was cooking dinner at the time and it happened without any warning. Retired from a career in Financial Services, Dad was a fit, active, happy 74 year old, who was still working and living life to the full. He had been skiing earlier in the year and even went clubbing in Ibiza!”

“He is now totally dependent, wheel-chair bound and with significant brain damage. Sadly he has no memory at all of his life before his stroke and communication is extremely difficult which is the thing he finds most depressing. But he is a stroke survivor.”

“Dad ran two London Marathons for charity and I want to follow in his footsteps now and raise money for The Stroke Association. I also hope that my efforts will raise awareness of this terrible condition which is the third biggest killer in the UK.”

Donations can be made on Sarah’s Just Giving page at: http://www.justgiving.com/SarahCalvert666

Read my Blog here.

Please share this page to LinkedIn

Please click here to retweet this on Twitter

Recent Articles From IFA Life

Open, Random and Supportive? Not something that too many Life, Pension and Investment providers have grasped yet

Make things up to truly engage your online visitors. How well do IFAs engage their website visitors?

Head of Asian Equities provides views on future growth in China

Social businesses make more money. How Social is your IFA business?

This persistent weakness in the UK economy is unprecedented

Should every investment portfolio be insured?

Guidance on funding DB pension schemes

Advisors must shift LinkedIn to the top of their Social Media strategy (if they had one)

The FSCS Levy Action Group is asking for your help

Delivering effective corporate governance: the financial regulator's role

The STEP Certificate for Financial Services (Trust and Estate Planning) now open for enrolment

Spring clean your finances for the new tax year

Should the IFP and PFS follow the MDRT model? How have you benefited from MDRT?

CFP board to out planners who go bankrupt

Battle of the Sexes to end in 2012

How to choose a passive fund

Financial services sector growth continues and optimism improves with unexpected rise in employment

Britain 'heading for crisis' as cash-strapped families put off big decisions

The Budget gives the Chancellor an ideal chance to show he understands the dangers of destroying confidence in long-term savings

Should advisers choose active or passive funds for clients?

IFA Life Co-Founder takes on Marathon challenge. Fantastic support from IFA Life members