How many corners can your portfolio look around?
Ahmer Tirmizi, Senior Investment Strategist looks at how markets can only partially predict the future.
Could you be earning up to 4% on your cash savings?
Giles Hutson, CEO of Insignis Cash Solutions, provides a simple solution to managing your cash.
Tyrone McGlinchey, Head Judge of IGPOTY, explains what it takes to make an award winning photo.
The meaning and more explained on page 14.
The information and / or any reference to specific instruments contained in this document does not constitute an investment recommendation or tax advice. Capital at risk. The value of your investments and the income from them may go down as well as up, and you could get back less than you invested. Tax rules are subject to change and taxation will vary depending on individual circumstances. Past performance is not a guide to future performance.
Since our last issue, a lot has changed. We’ve had the sad passing of Queen Elizabeth II, musical chairs at Downing Street resulting in three different Prime ministers and four Chancellors, multiple interest rates hikes, and inflation hitting a 41-year high – and that’s just in the UK. Elsewhere, the Russia-Ukraine conflict rages on, tensions continue to rise between China and Taiwan, and at the US midterms, the Republicans narrowly won back the House of Representatives and Donald Trump declared that he would run for President in 2024.
We recognise that all this change, mixed with the ongoing market volatility, can create a heady cocktail of concern. However, it’s during these heightened times of uncertainty and stress that an experienced financial professional can truly demonstrate their value by calmly assessing the situation and helping you to navigate your wealth through these turbulent times. I’d therefore urge you to speak to your Private Client or Financial Planning Director if you have any concerns whatsoever about your financial plans and goals, or if you’re new to 7IM and are interested in how we can help you, then please get in touch.
I’d like to take an opportunity to thank those who took part in our recent client survey. The feedback you provide really does matter and is critical to shaping our ongoing efforts to deliver the best possible outcomes and experience for our clients.
If you didn’t manage to fill in our survey, then we would still be very keen to hear from you, and your Private Client or Financial Planning Director will gladly welcome any feedback about them or 7IM.
Alternatively, please feel free to reach out to me directly at Colin.Rowe@7im.co.uk
In the meantime, we hope you enjoy this issue of inBrief.
Rowe Managing Director, Private ClientsGet in touch with your Private Client Director or Financial Planning Director or call us on 020 3823 8678 and we’ll be happy to answer any of your queries.
How many corners can your portfolio look around?
Written by Ahmer Tirmizi Senior Investment Strategist
Could you be earning up to 4% on your cash savings?
Giles Huston, CEO, Insignis Cash Solutions
Navigating the path to retirement: a case study in how financial planning can help
Written by Yasmin Wales, Financial Planning Director
04 08 10 14
What is IGPOTY?
Tyrone McGlinchey FLS FRSA, IGPOTY Head Judge
ColinThere are too many corners!
Investors often think markets are efficient, forward-looking, discounting mechanisms. This is a fancy way of saying; they adjust quickly for the future. Not only can they look around the next corner, but they can navigate the next several ones too. This is only partially true.
If there is just one problem to focus on, markets aren’t so bad at figuring it out. But the more things that are going on, the more corners there are to look around, the more confused they become. And right now, there seems to be a lot going on. Where will inflation peak? And what will happen to growth? And Ukraine? And Europe’s winter? And Taiwan? There are a lot of corners.
Two things happen in these situations. First, stuff that shouldn’t matter, starts mattering. Why exactly did European and US bond yields rise on the back of the UK’s unrelated budget? Second, markets find one thing, the thing they think is around the corner, and obsesses over it more than any other. This is a problem because those other things haven’t stopped mattering!
Markets are only looking around the first corner: Inflation
It’s not often that ‘Wall Street’ (the markets) cares about what ‘main street’ (ordinary people) is thinking. But right now, they do care. Because main street is focusing on inflation. How long will it stay high? When will it come down? And where will it fall to? These questions are crucial.
Inflation is created by human psychology. If we all start believing that inflation will be high for a long time, we start factoring that into our wage demands more permanently. Which then does keep inflation high. Or, if we believe that goods today will definitely be more expensive tomorrow, we might buy more of them today before those prices go up.
This rush to buy also pushes inflation up. It can be a selffulfilling prophecy. Central banks, led by the US Federal Reserve, are obsessed with this question of people’s ‘inflation expectation’. Remember that their main purpose is to keep inflation under control. To do this, they need the rest of us to believe they will keep inflation under control. This explains why interest rates have surged this year and may remain there for a while. Crush inflation at all costs – in the minds of the general population – and, eventually, it will come down.
Ahmer Tirmizi Senior Investment StrategistAs a result, Wall Street currently has tunnel vision about inflation. It’s the only thing to care about. The next corner doesn’t matter. Every inflation-related data, commodity price move, and central banker statement has been followed by extreme market reactions. The market returns are a testament to this. 2022 has seen the worst returns for bonds since the infamous 1970s. Equity markets don’t take kindly to this inflation and interest rate uncertainty either –as we’ve seen this year.
Don’t ignore the costs of crushing inflation
One of the major sources of angst over the last year has been ‘supply-chain’ problems. Stuck at home, we bought too much stuff, clogging up the global freight industry. Too many goods, not enough space. This caused a huge backlog in ships waiting to dock (most notable on the US west coast) and a surge in shipping costs. This was arguably the canary in the inflation coalmine.
As of end-August, though, the number of ships queuing to get into those same west coast ports has fallen to close to zero, with global shipping costs down by almost half and heading to preCOVID levels fast. This could well be a new canary, signalling the peaking of inflation.
In addition, the pace and extent of central bank ‘rate hiking’ has made sure that, while timing is uncertain, the job of crushing inflation will happen – regardless of what’s going on in supply chains. But something important is going unsaid and being ignored.
To bring inflation down, policymakers need to bring growth down. Raising interest rates makes consumers think twice about that next purchase, while businesses shelve investment plans. Slowing growth isn’t a byproduct of reducing inflation. It’s the essential ingredient. And to bring inflation down to comfortable levels, you need to bring down growth to uncomfortable levels. Perhaps recession levels. >>
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The Bank of England has literally said so1. The US Federal Reserve, the most important central bank, on the other hand, is not saying a recession is required. And investors, so focused on the inflation topic, are not questioning this. But we are. As inflation comes down over the next year, we need to focus on the next corner – the potential for US recession. That shift in focus could prompt further trouble in markets.
Portfolio diversification helps deal with whatever’s around the corner
Historically, US recessions have coincided with equity market falls of over 20%2. So, looking at equity returns this year, it would be easy to conclude lower growth in the US is priced in. However, we believe the fall we’ve seen so far is simply because interest rates and inflation have gone up. If rates go up, investors want a higher future return from equities (and thus want to pay a lower price). But it’s not clear that they are factoring in the hit to growth. Market earnings expectations are still predicting growth of over 10% per year, for the next few years3.
We think this is unrealistic, if a recession begins. Remember, slower growth is essential to bringing inflation down.
The natural instinct on hearing about a recession is to raise cash and run for the hills. When investors panic, they struggle to look beyond the first corner and so, only focus on the ‘solution’ to what they think lurks there. But where we face multiple challenges, investors should look for multiple solutions. They should allow their portfolio diversification to help them deal with whatever is around the corner – and the next few after that. Every 7IM portfolio starts with a Strategic Asset Allocation (SAA), built to grow over the long-run, while acknowledging that the long-run is a series of short-runs where anything can happen.
It deals with this by:
• Diversified equities exposure (not relying on US equities for returns) – When things become uncertain, it pays to reduce concentration rather than increase it.
• Diversified returns (credit can generate equity-like returns) – Right now, high-yield bonds are offering yields of almost 10%+4. Equities will need to work extra hard to deliver that!
• Diversified defensive assets (alternatives) – the last couple of years have demonstrated why bonds should play less of a role in portfolios. The 7IM alternatives basket adds the protection investors are looking for.
But we also have taken a step back and adjusted the longterm SAA for the world we see coming. We call this the Tactical Asset Allocation – choosing which of the many tools to use at a given time:
• Underweight equity risk – we think limiting equity exposure in favour of other assets makes sense.
• Global healthcare tends to be defensive – healthcare profits will stay stable as the US recession hits.
• Climate change solutions are not linked to the economic cycle – there will be no let-up towards the climate transition even as the economy slows.
• Selling market insurance during bouts of fear is profitable – as fear picks up, so does the premium to insure against it. Equity-like returns, with lower downside, are available for those that can do it.
600 Number of boats waiting to dock 800
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The canary in the inflation coalmine was global shipping costs. As we were stuck at home, mostly buying goods, the cost of transporting those goods surged, a big driver of the inflation we are seeing. As we switch to spending on services from goods, those shipping costs have started to come down. Eventually, this will feed through into falling inflation. Sometime next year, the focus will shift from falling inflation to its cause, falling growth.
1200 28/04/2015 28/04/2016 28/04/2017 28/04/2018 28/04/2019 28/04/2020 28/04/2021 28/04/2022 1 BoE Monetary policy report – November 2022 https://www.bankofengland.co.uk/monetary-policy-report/2022/november-2022 2 7IM 3 7IM
4 Bloomberg LLP
1000 WWW.7IM.CO.UK 07 @7IM_PRIVATE
The natural instinct on hearing about a recession is to raise cash and run for the hills. When investors panic, they struggle to look beyond the first corner.”
About Giles Giles Hutson established Insignis in 2015 as CEO after a 20-year career in Investment Banking. Previously he was a Managing Director at Merrill Lynch and Morgan Stanley and has held previous roles at Goldman Sachs and Barclays. He has been responsible for running a large number of financing, payment and risk management transactions across all asset classes.
Is managing your cash savings on your ‘to-do’ list? Are you keen to take advantage of this rising interest rate environment? At the time of writing, the MPC had just announced that the Bank of England had raised the base rate to 3%1, as inflation reached a forty-year high2
This followed the seventh consecutive base rate rise since December 2021, from an all-time low of 0.10%3
How can you take advantage of these competitive interest rates? Especially when many high street banks are still offering only 0.25%4 on savings accounts?
Researching and comparing different banks and their rates can be a daunting task. Combine this with concerns over some institutions and the worry that they will take our savings with them in the event of a collapse. How can we ensure we are maximising our savings and minimising our risk without the hassle of moving funds and completing multiple application forms for new accounts?
The 7IM Deposit Service, in partnership with Insignis Cash Solutions tackles this very question, by allowing you to manage your cash savings easily and efficiently. The Insignis platform provides savers access to thousands of products from 38 Banks and Building Societies, all under a single sign-up process.
Clients sign up once, removing all the bureaucracy of opening multiple bank accounts to access the best savings rates. Clients are also able to view their savings deposits as well as add, move, and withdraw funds all on the Insignis Cash Platform, taking away the need to sign into multiple banking interfaces to access funds.
The 38 financial institutions Insignis Cash Solutions partner with range from high-street Banks and Building Societies, which are well known to Clients and within the financial services industry, to challenger Banks which are usually less wellknown but offer market-leading rates. In addition, Insignis Cash
Solutions often has access to leading rates that cannot be obtained if you went directly to the Bank, supporting Clients to ensure their cash works harder for them.
In terms of risk, all of Insignis Cash Solution’s UK-based institutions are protected under The Financial Services Compensation Scheme (FSCS), which is a government-backed scheme providing protection for deposits up to £85,000 per depositor, per UK-authorised institution. This enables Clients to spread their cash across various Banks or Building Societies within the Insignis Cash service while maximising FSCS protection eligibility.
With over 2,500 savings products on the platform across multiple client types, the solution allows Clients to manage their funds based on their liquidity requirements. This helps with financial planning as you are able to spread your funds over savings products ranging from easy access to five years. All deposits are held with the chosen Bank and every Client always maintains beneficial ownership of the funds throughout the process. >>
Continued
The service is available to individual and joint accounts, businesses, charities, trusts, power of attorney, court of protection, pensions (both SIPP and SSAS) as well as many others. Furthermore, they offer savings rates for Pound Sterling, US Dollar, and Euro cash holdings.
Many 7IM Clients have benefited from this service. A recent example is an individual who used the service following the sale of a property for £750,000. With their high-street Bank, they were earning a rate of 0.25%5 and their FSCS protection would have been just 11% in the one institution after 6 months, once the funds were no longer eligible for temporary high balance FSCS Protection.
When the individual moved their funds over to the Insignis Cash Solutions platform, they were able to view all partner Banks and Building Societies and their associated savings rates, making it easy to compare and find the best rate. They moved funds into nine institutions of their choosing on the platform in products ranging from Easy Access up to one year.
Could you be earning up to 4% on your cash savings?
The Client’s FSCS protection increased to 100% and their blended interest rate rose to over 3.5%, equating to £27,427 of annual interest.
The Insignis Cash service allowed the Client to increase their return and reduce risk, something very few asset classes or services can provide.
1 https://www.bankofengland.co.uk/
To conclude, the key takeaways:
• Protecting your cash is important, but the hassle of opening accounts is inefficient and time-consuming
• Insignis Cash offers Client’s access to 38 Banks and Building Societies under a single sign-up and single interface.
• Insignis Cash has access to leading interest rates, not accessible if you go directly to the Bank.
• All of Insignis Cash’s UKbased institutions are FCA regulated, PRA authorised, and FSCS protected.
• The service helps with financial planning through the range of products it offers and can offer products for various client types and currencies.
2 https://www.bankofengland.co.uk/monetary-policy/inflation
3 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2021/december-2021
4 https://www.barclays.co.uk/savings/instant-access/everyday-saver/
5 https://www.barclays.co.uk/savings/instant-access/everyday-saver/
Please note that this article is intended for educational purposes only and should not be taken as investment advice.
The Insignis platform provides savers access to thousands of products from 38 Banks and Building Societies, all under a single sign-up process.”
The move into retirement can be stressful, and deciding how to manage your finances is a key challenge in life after the nine-to-five. Retirees across all income brackets are faced with an intimidating array of options, and the path to the best long-term results isn’t always clear.
The information and / or any reference to specific instruments contained in this document does not constitute an investment recommendation or tax advice. Capital at risk. The value of your investments and the income from them may go down as well as up, and you could get back less than you invested. Tax rules are subject to change and taxation will vary depending on individual circumstances.
One of our Financial Planning Directors recently met with a client to help them work out a route. With retirement age in view, the client had concerns over whether they could afford to stop working; given the tough economic climate, they weren’t sure it was the right time to give up their monthly paycheck. We sat down and discussed their overall position, including their existing assets, other sources of income, future state pension, financial commitments, outstanding debt and – perhaps most importantly – what they wanted from their retirement.
At first glance, it seemed that the client was in a decent position. But to understand their circumstances in more depth, we created a cash flow model. In this approach, information is fed to the model to provide a sophisticated financial picture, including assets, debt, regular sources of income, outgoings and so on – like a simulated bank account. Various parameters can then be adjusted to ‘stress test’ the bank account and understand how it would react to changes in real-world circumstances, like a rise in inflation, for example, or a change in the mortgage rate.
Yasmin Wales Financial Planning Director
Once we had analysed whether the client’s planned expenditures for the years following retirement were sustainable, we conducted just such a ‘stress test’ on their position. We modelled different inflation rates, market conditions and unexpected future costs – care fees, for instance – to identify whether further funds or a reduction in spending would be required.
Fortunately, the analysis confirmed that the client could afford to retire soon. Further, it showed they would have sufficient funds available to use in ad-hoc spending or to leave as a legacy to their family. >>
It is often beneficial for those who do not have the time, inclination, or knowledge to manage their own planning affairs and investment accounts and would prefer a professional to do so on their behalf.”
The client was keen to maintain a sufficient cash balance for emergencies and had been holding an excess amount in their high-street bank savings account – earning little to no interest. We suggested the use of Insignis Cash Solutions, an actively managed cash deposit system, to help improve returns on cash (for more details on Insignis Cash Solutions see page 8). The client was then able to spread their funds across a range of different savings providers, benefiting from an attractive interest rate – even on a short-term basis – and providing further cash for spending in retirement. Their earnings were fully protected by the Financial Services Compensation Scheme.
Following experimentation with the bespoke cash flow model, the client felt comfortable that retirement was an affordable and achievable goal. Next, we worked to establish the most tax-efficient method of taking income from their various assets.
We produced an income strategy report detailing our recommendations for accessing retirement income on a yearly basis, considering income tax, liquidity, and investment/ inflation risk, as well as wider factors such as inheritance tax. Again, cash flow modelling was used to simulate the impact our recommendations would have on the client’s assets.
The client had accrued a wide range of pensions from various roles over the years. As part of our retirement exercise, the financial planning team reviewed each plan on an individual basis to consider whether there was merit in consolidating.
While some older-style plans had valuable benefits (such as guaranteed rates of growth or a bonus applied at retirement) and were retained, we felt that others should be consolidated into one new modern plan, easily accessible via the 7IM portal. The change will help the client save time and effort in the future, as well as reduce the ongoing administration costs incurred by each pension.
Navigating the path to retirement: a case study in how financial planning can help Continued
As part of our analysis, we identified an inheritance tax liability – the client’s total assets exceeded their available allowances. The Financial Planning team prepared a breakdown of the client’s position, showing their current and projected liability on death, and provided a summary of the various mitigation options available. The client was unaware of the various allowances and gifting options that can be used to reduce liabilities and agreed to begin making small regular gifts to family ahead of undertaking some more significant tax planning in the next few years.
7IM can provide services like those detailed above on a transactional basis. But given their ongoing need for tax-efficient income advice and inheritance planning, the client decided it was best to move to 7IM’s ongoing Wealth and Investment Management Service. This bespoke client service integrates our financial planning and investment management expertise.
It is often beneficial for those who do not have the time, inclination, or knowledge to manage their own planning affairs and investment accounts and would prefer a professional to do so on their behalf.
If you would like to discuss your affairs both pre – and post-retirement, please get in touch with one of our Financial Planning Directors.
International Garden Photographer of the Year (or ‘IGPOTY’ for short), is currently in its sixteenth competition year and will open its seventeenth competition for entries in February 2023. IGPOTY continues to be one of the world’s most respected photography competitions and exhibitions, particularly within the genres of garden, plant, flower and botanical photography. The winning pictures form the basis of the travelling exhibition.
Today, International Garden Photographer of the Year is organised by Mirror Plate Media Ltd, which is a family run business.
When creating our website, it was important for us to establish a place for our entrants where they could inspire and be inspired over time.
IGPOTY is inclusive and accepts entries from both amateur and professional adult photographers, worldwide.”
It is supported by the Royal Botanic Gardens, Kew, London. The main exhibition is usually held annually at Kew, with a rolling programme of touring exhibitions in the UK and all over the world. This includes prestigious venues such as; Blenheim Palace, the University of Cambridge Botanic Gardens, Herrenhausen Gardens and numerous National Trust properties.
The main competition closes on October 31 every year. Winners are announced at the opening of the launch exhibition the following February.
Although the Competition name is ‘International Garden Photographer of the Year’ –IGPOTY has always embraced the word ‘Garden’ in its broadest definition. That is, a ‘Garden’ could be; a back/front/balcony garden, a local park, landscapes and forests; after all – Planet Earth is everyone’s Garden.
Gardening has been proven to improve mental health and physical well-being. We wish to encourage all to enjoy nature and get closer with a lens.
Ours is a positive approach to photography and inspiration is key, for it can help us see the world differently, change our perspective or reinforce a state of mind. No matter who you are or what you do, we all need it, and it is a powerful thing.
IGPOTY award-winning photographers achieve something remarkable. Their efforts continue to flawlessly communicate the timeless and vital relationship we have with flora, fauna and fungi and help us become just that little bit more connected to the natural world via a camera.
When we feel more connected, we are more likely to take ownership of the many complicated and challenging environmental issues that lie ahead.
I used a 2x magnification macro lens to capture this blend of Hippeastrum petals, which I overlaid with Lunaria seedpods.
Pentax K-3, Laowa 60mm ultra-macro lens (2x), 1/30sec at f/4, ISO 400. Tripod, remote release. Post-capture: blended multiple layers together in Adobe Photoshop, basic image management.
I created this surreal, abstract view by combining a series of images taken with a drone, encircling a tree in its autumn colour.
DJI Mavic 2 Pro Drone + Hasselblad L1D-20c, Hasselblad 28mm lens, 1/80sec at f/4.5, ISO 100.
Post-capture: converted to black and white, use of crop, contrast, dodge and burn tools, composited several frames together from drone motion sequence, to create the motion blur.
Thorsten Scheuermann // 2nd Place // Dancer Kraichgau, BadenWürttemberg,
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Laurie Peek // 3rd Place // Arrangement for Crete Rockland County, New York, United StatesMy most recent body of work In Lieu of Flowers is a tribute to my son who died in Tulum, Mexico in 2020, and also to anyone who has suffered a similar loss. I create transparent layers of flowers, plants and textural elements on vellum and add a gold or silver metallic gilded layer onto the back of the prints. These glowing arrangements counter and channel my grief with a celebration of living things.
Apple iPhone 11 Pro Max, 6mm lens, 1/1150sec at f/2, ISO 20. Post-capture: layered three images together, printed on vellum, gilded with metallic gold leaf on the back, border added using Google Snapseed app.
Gardening has been proven to improve mental health and physical well-being. We wish to encourage all to enjoy nature and get closer with a lens.”
Tell us about the different categories / the scale of the competition?
There are nine regular main competition categories each year including favourites such as; ‘The Beauty of Plants’, ‘Beautiful Gardens’, and ‘Wildlife in the Garden’, recent addition ‘The World of Fungi’, and the newly updated ‘7IM Abstract Views’, plus there are five photo projects and numerous seasonal special awards – for example – ‘Captured at Kew’ or ‘Beautiful Blenheim’.
The differing categories give photographers scope to channel their vision and translate this into fine entries, of which we receive many thousands of individual entries each year from across the world. When the latest results are announced at the Royal Botanic Gardens, Kew each year – IGPOTY attracts strong press coverage for winning entries and entrants, building year-on-year covering both domestic and international news platforms such as The English Garden magazine, the BBC News website and numerous photography and gardening publications across the world.
IGPOTY made Amateur Photographer Magazine’s feature – ‘Best Photography Competitions to Enter’ in 2022. IGPOTY is highly respected by its peers and is mentioned on the list amongst other wellestablished and respected competitions.
The top prize for the Overall Winner (best overall image from a main ‘Single Entry’ payto-enter category) is currently £5,000 GBP as of Competition 16.
IGPOTY winners achieve prestige, pride and promotion. There is a fee for entering the main competition which helps to cover the expense of administration, prizes and the exhibition tour. At the time of writing, as of Competition 16 – the fee is £15 for 4 single images (‘Single Entry’), or £30 to enter ‘Portfolios’ – consisting of 6 images.
IGPOTY is inclusive and accepts entries from amateur and professional adult photographers worldwide.
To learn more about the partnership between 7IM and IGPOTY, please visit www.7im.co.uk/private-client/igpoty
What is involved in the judging process?
We have a pool of judges including magazine editors, professional photographers, horticulturalists and designers.
The judges get to view to numerous quality entries during shortlisting (which are all blind-judged), the most difficult part of the judging process is deciding on the final places. Thanks to our website and democratic voting scoring system – it makes these decisions much more balanced and informed.
What do you think makes a winning entry for Abstract Views?
Whether infrared, innovative use of light, or a special lens, ‘Abstract Views’ is about tapping into a different side of plants and gardens using abstract photography. It’s time to enter a parallel world of artistic expression with limitless possibilities. Judges will be looking for the way in which a special technique elevates the message of that particular green subject.
Previous winners tended to choose one abstract photography technique and execute it perfectly. These photographic techniques included: overlaid images, multiple exposures, intentional movement, infrared, modified lenses, shooting through glass and digital textures. Although abstract photography can seem overwhelmingly complex with too much choice, try experimenting with different techniques, then pick the most effective one for the feeling you want to communicate.
It’s good to see the world differently and with ‘Abstract Views’ you have the opportunity to hone skills in abstract photography as well as creative communication. Challenge yourself to use a new technique or tool and develop a unique individual style for garden, plant, and nature photography.
www.igpoty.com
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