The Autumn Budget | IFA 63 | November 2017

For today’s discerning financial and investment professional

Black Monday Learning from Disaster November 2017

NEWS

REVIEWS

ISSUE 63

COMMENT

ANALYSIS

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CONTENTS November 2017

CONTRIBUTORS

5 Editor's Welcome

6 News

Brian Tora an Associate with investment managers JM Finn & Co.

16 Richard Harvey a distinguished independent PR and media consultant.

Ed's Rant - Michael Wilson contrasts the chaos of Trump's administration with the strong performance of stock markets

20 Better business – Brett Davidson on why saying no

Neil Martin has been covering the global financial markets for over 20 years.

more often can improve your business success

22 Moving on up? Brian Tora assesses whether it is

Brett Davidson

time to increase exposure to European markets

FP Advance

24 The rise and rise of paraplanning – Sue Whitbread with the second in our series on the role of the paraplanner

Michael Wilson

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Editor-in-Chief editor ifamagazine.com

Marketing technology for advisers - what to look for, what to get, how to use it

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Sue Whitbread Editor sue.whitbread com

ifamagazine.

Alex Sullivan Publishing Director alex.sullivan ifamagazine.com

Black Monday 1987 – Learning from disaster

36 Financial education - helping UK employees to thrive

40 MiFID II – Compliance consultant Tony Catt explores what this new directive means for advisers IFA Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB Tel: +44 (0) 1179 089686 © 2017. All rights reserved ‘IFA Magazine’ is a trademark of IFA Magazine Publications Limited.

No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

IFA Magazine is for professional advisers only.

Full details and eligibility at: www.ifamagazine.com

IFAmagazine.com

44 There is work to be done says Richard Harvey, if we are to help those in desperate need of sound financial planning

46 Career Opportunities from Heat Recruitment

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18/10/2017 09:22

ED'S WELCOME November 2017

A good idea at the time….

Six shor t months ago, this column applauded Prime Minister Theresa May for having wrong-footed Jeremy Corbyn’s Labour Par ty with a bold and brilliant piece of strategic outmanoeuvring.

You remember that one? No? Thank goodness for that By announcing a snap election in June, we said, Mrs May had caught Corbyn with his manifesto down.

We said she had illustrated the ancient wisdom of the military strategist Sun Tzu, whose advice had been to attack your enemy at all the most unexpected moments.

What’s more, we said, she had shown how to transmogrify a narrow cross-party referendum vote for Brexit into a broad-based vote for a harder-line Tory party that had never really meant to be identified with leaving the EU in the first place.

(But that’s another story.)

“Let your plans be dark and impenetrable as night,” the Chinese sage had said. “And when you move, fall like a thunderbolt.”

Well, we have to hand it to Mrs May, she got the first part right.

Her plans were so dark and impenetrable that, four months after the disaster, we’re still trying to work out exactly what they were. As for falling, it turned out that thunderbolts didn’t have very much to teach the Premier either.

So, having turned a narrow parliamentary majority into a narrow minority that left her desperate for Facebook Friends of any persuasion, the selfproclaimed Bloody Difficult Woman has had a Bloody Difficult Conference season.

A ghastly speech, an on-stage ambush from a practical joker, and a stage set that was quite literally falling to pieces before our very eyes. And then, when former adversaries like Boris Johnson or Michael Gove urged the party to get behind the Premier, one could hardly fail to remember what happened to Julius Caesar after his Senate had done exactly that?

And so to the Autumn Budget But November is here at last, and the Prime Minister is still with us (I hope – at the time of writing you couldn’t be sure of anything.)

And Britain leaves the European Union in just 16 months (count ‘em….), and Spreadsheet Phil Hammond is due to stand up on the 22nd to deliver the most important Budget of his life.

I FAmagazine.com

And that’s the bit that worries me. With an electoral breathing space (of sorts) behind him, and with Labour’s Momentum group frothing on about land seizures and forced nationalisation and generally eating the rich, Mr Hammond has got both an opportunity and a threat in front of him.

Accept my unpleasant medicine, he can afford to say, or let the sweeping hordes of the left wash you away like Hurricanes Irma and Maria combined. Yes, I might need to chop basic pension rights that you thought were secured a hundred years ago, and I will probably need to increase the tax take. And my budget might well impact negatively on property prices. Meanwhile I will reintroduce public floggings for anyone caught misusing tax-efficient vehicles for anything that isn’t properly counterbalanced by an appropriate level of entrepreneurial risk. Yes, I realise that all this is uncomfortable.

But honestly, would you rather have the socialist alternative?

To which 25 million under-30s who can’t afford to get on the property ladder would probably shout yes, go Corbyn, bring it on. And a Conservative Party whose average age for members is nudging 70 years will have its work cut out if it wants to present itself as the continuing voice of progress.

Or, what was that phrase?

Strong and stable?

Michael Wilson Editor-in-Chief IFA Magazine

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N EWS November 2017

People, Trust, Negative Maybe it’s a sign of the times. Daniel Godfrey, the controversial former chief executive of the Investment Association, was forced to ditch his plans for a new “long-term, sustainable wealth” investment trust called the People’s Trust, only a month after putting out the public prospectus. The problem, it seemed, was that he had raised only 40% of the £125 million he needed from corporate backers despite having spent nearly a year on the networking job.

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The immediate problem, it seemed, was that the cash Mr Godfrey had raised would not be enough to fund a listing on the London Stock Exchange, or on the alternative-market Social Stock Exchange. That might have seemed surprising, since his prospectus had targeted an attractive 7% p.a. growth over a seven year period. But the back-story was that Mr Godfrey’s insistence on longhorizon investment had made him few friends in an industry which he had roundly accused of short-termism.

Godfrey had been unceremoniously ejected from the IA post in 2015 after an abrasive three-year campaign against fund manager behaviour, which can’t exactly have helped his telephone pitch. Then again, Godfrey’s failure to raise enough interest may have had something to do with the fund’s hefty 1.07% management charges.

Or with the complete lack of a benchmark. Or with the fact that he planned not to award bonuses to his outsourced managers.

Whatever could have gone wrong with that idea?

I FAmagazine.com

N EWS November 2017

A Sidecar for the Self-Employed As Philip Hammond’s Autumn Budget heaves into view on 22nd November, there has been much discussion about the possibility of changes to the pension rules.

One thing that does appear to

be a firm possibility, however, is that the government may decide to bring the nation’s 4.8 million self-employed workers into the auto-enrolment scheme.

That, certainly, formed part of the Conservative Party’s June manifesto. But how could it be achieved, given that more than half of them don’t meet the auto-enrolment criteria? Either their incomes or their working hours are too low, or they’re too old, or else they’re straddling several job functions which make it difficult to address them.

And many of the self-employed would say that their work was their pension, and that forcing them to divert cash away from their businesses would only result in harm to the business.

Anyway, they’d probably object, incomes from selfemployment jobs are often too volatile to make regular saving a viable option.

Pensions Minister Guy Opperman told the Conservative Party conference in October that the government was considering a so-called ‘sidecar option’, which would allow the self-employed to access part of their pension pots early (i.e. before 55), while keeping the rest in the scheme. It remains to be seen whether such a plan would dissuade them from continuously opting out of autoenrolment, but every little helps.

The Department for Work and Pensions is currently conducting a review of auto-enrolment, which is due to report by the end of the year.

I FAmagazine.com

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N EWS November 2017

White Knuckle Ride Bitcoin’s bumpy ride to the top of the rollercoaster continued during the autumn, with the cryptocurrency twice closing on the $5,000 level, as interest in the blockchain principle continued to grow in many parts of the world. But bumpy was the word – on 10th October it lost and regained 13% in the space of five sobering minutes.

On the positive side, cryptocurrencies such as Ripple or Etherium were gaining support among many

industry seniors – and not just in Japan, where bitcoin had received official assent: there was even a rumour that the great Goldman Sachs was thinking of opening a bitcoin trading desk. On the negative side, central banks in Russia and China announced plans to crack down on the currencies, which they said was being used for criminal money laundering.

Jamie Dimon, the CEO of JP Morgan Chase, dismissed the idea that governments would

ever tolerate the spread of currencies that were outside the control of central banks.

And Kenneth Rogoff, the former chief economist at the International Monetary Fund, told The Guardian that although the impressive technology would thrive, its price would not. Japan’s acceptance of bitcoin, he said, would risk it becoming “a Switzerlandlike tax haven”. There was no comment to be had from Switzerland.

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N EWS November 2017

Warning lights flashing on the dashboard for the adviser community Although projections are generally seen as positive, there a number of macro-economic warning lights currently flashing on the dashboard for the adviser community.

So says Aegon’s Adviser Attitudes Report, which concludes that as the stock market approaches a return to the record highs of June this year, just under half of UK financial advisers anticipate a continued increase in their clients’ investments over the next 12 months, a significantly higher proportion than the 29% who expect a fall in returns.

However, while advisers are optimistic about the positive prospects this brings for client

wealth, stock market volatility and Brexit are now seen as the biggest threats to client wealth over next two years. Another key factor is leaving financial planning too late, which remains the biggest threat to future financial security.

Pensions Director at Aegon Steven Cameron said: “Strong growth in the stock market following the Brexit referendum has resulted in a buoyant period for financial returns, and it’s encouraging that much of the financial advice community expects this to continue. However, with so much going on in the political and economic landscape, it’s impossible to know for certain what’s waiting round the corner.

“UK growth forecasts have been revised down, and clients are facing a range of new, and perhaps more present, threats to their wealth. With inflation rising above expectations and interest rates likely to follow suit, savers need support to make the right decisions. By providing tailored advice depending on the individual circumstances and life stage of their clients, advisers’ services can provide huge value. With so many unknowns, people should take the necessary steps to strengthen their finances, and advisers have a critical role to play in helping them make informed decisions to manage their money successfully.”

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N EWS November 2017

CISI winners announced at glittering financial planning awards dinner Held at Celtic Manor Resort, as part of the CISI’s annual conference, the gala awards dinner recognised the significant achievements of individuals and firms within the financial planning profession. IFA Magazine warmly congratulates all the winners and finalists on their achievements.

We have spoken to a few of the winners to get their feedback on not just winning but also on why entering such awards is important.

David Norton Award The David Norton Building Excellence Award is presented to the firm judged to have outstanding potential to develop as a successful Financial Planning firm. It is awarded in memory of David Norton FIFP CFPCM a former President of IFP and the significant contribution that he made to the profession prior to his death

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in 2005. Cheltenham-based Ashlea Financial Planning were the 2017 winners and Diane Weitz, Director at Ashlea

comments: “I was lucky enough to meet David Norton in the early years of belonging to the IFP. He had a lovely manner and gave very practical advice to members about running a feebased practice. He was always so generous with his time and committed to developing the Financial Planning profession.

“Our business has undergone a number of changes in the last three years. We have taken on

three new members of staff.

Lauren Owen who joined us as an apprentice in January 2014; Nik Marsh who joined in October 2014 having spent 15 years with Goldman Sachs and my daughter, Eleanor Clarke who joined on a part-time basis in October 2016.

“All this change means that we feel that we have reached a crossroads in our development, and entering this award was a stepping stone for us as part of our goal to becoming an accredited financial planning firm.

“The entry process we went through for the award helped us to evaluate our business and consider where we go from here. We were delighted to win.

It has provided a real boost to the team, and we look forward to making the most of the help available to us as a result to focus on our development for the future.”

I FAmagazine.com

N EWS November 2017

Accredited Firms’ Award CISI accredited financial planning firms are recognised as leaders in the profession and being judged as the accredited firm of the year is a major accolade.

All firms who have been accredited by the CISI were eligible to enter this award. Broadway Financial Planning were commended as finalists, but Magenta Financial Planning, a new business only launched 12 months previously, scooped the award as accredited firm of the year 2017.

The award recognises the impact that the firm has made on the Financial Planning profession over the previous 12 months, as well as assessing business performance, with both factors being equally weighted.

I FAmagazine.com

Magenta is a small financial planning business based in Bridgend, South Wales, and it was featured in an IFA Magazine Adviser Spotlight feature earlier this year. The business was launched in September 2016 and prides itself on a friendly approach to financial planning, working with clients from a variety of different backgrounds and sectors.

Julie Lord, Chief Executive said: “To win is a wonderful reward

for all the hard work and effort put in by the entire Magenta Team over the last 12 months.”

Gretchen Betts, Managing Director said: “We are hugely proud to win this award, giving us the recognition from our profession of Magenta’s dedication to raising financial planning standards and highlighting all the hard work we have all put in to the business.”

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N EWS November 2017

would get in the game and see how I would get on with an application. I honestly did not feel that I would win the award of CISI CFP Financial Professional of the Year, but when I got invited to the amazing ‘walkie talkie’ building in London for a panel interview as a finalist, to me I had already won just by being there.

CFP Professional of the year The competition for the award to identify the Certified Financial Planner professional of the year is always tough.

This year’s winner was Warren Shute of Lexington Wealth Management, based in Wiltshire.(Pictured above and below receiving his award) Warren comments: “I’ve been attending the IFP/CISI annual conference for over 10 years and always sat admiring the award winners receiving their trophies, yet I never entered.

This year I thought that I

“I remember when Penny Haslam announced the award and I sat thinking how great it would be to win, never thinking I would. When I was named as the winner, I was so happy – and a few weeks later I am still smiling. I have sat many of the exams, become a Fellow, and I take my CPD seriously.

But for my clients (and future clients) to have their planner independently named as the best by a panel of highprofile judges provides them an assurance that I simply couldn’t achieve on my own.

I think the CISI have really upped their game in the last 12 months with online learning, CPD, CISI TV and this year’s conference was one of the best yet. I look forward to the next 10 years of conferences,

events where I have met some wonderful friends and look forward to meeting new ones.

By mixing with some of the best financial planners in the country, together we all raise our game.”

Tony Sellon “Good Egg” Award The Tony Sellon memorial prize, or “Good Egg” Award, is awarded to the individual judged to have contributed most to the success of financial planning within the CISI over the last year.

Tony Sellon was a founder member of the IFP and a Past President. He died tragically of cancer in 2001. He is remembered in particular for his sense of fund – a real “good egg”. This year’s winner was Keri Carter of Broadway Financial Planning. The award was presented to Keri by Tony’s son James Sellon. She comments: “I’m absolutely delighted to have received this award especially as this is the second time I have been awarded it. Presented in recognition for my contribution to the Financial Planning profession, this is particularly special to me as when the award was first presented, I was responsible for buying the original trophy!

I am passionate about the Financial Planning profession and the promotion of it to others and so to be recognised for my contribution makes me very proud.”

Also presented at the event was the prestigious Paraplanner of the Year Award. This year the title went to Kirsty Stone of Dart Financial. Finally NS&I were judged by delegates as having the most innovative conference exhibition stand and also the one which had most educational value.

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I FAmagazine.com

November 2017

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N EWS November 2017

CISI conference shows financial planning profession in robust health The Chartered Institute for Securities & Investment (CISI) Financial Planning conference took place at the end of September. It showed that the financial planning profession is clearly building on the work formerly done by the Institute of Financial Planning, developing and building the profession for the benefit of practitioners and ultimately clients too.

Membership of the CISI financial planning forum has risen to 2,700 – up from 2,100 when the merger with the IFP took place in 2015. The spirit of sharing best practice and of co-operation was evident amongst the 300 plus delegates in attendance at the event. Overall the conference programme proved popular, with a varied range of sessions including keynotes from Dame Kelly Holmes, former pensions minister Sir Steve Webb and

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US planner Sophia Bera CFP, founder of Gen Y Planning, whose talk about planning for millennials was particularly well received.

The event was rounded off with a real tear-jerker of a keynote session from Nick Cann, the former IFP Chief Executive and passionate supporter of the financial planning profession (pictured below speaking at the event).

Nick suffered a major stroke in 2013 which has affected his movement down his right side.

It also had a major impact on his speech, so his courage and determination to stand up in front of a huge audience and talk about the impact of stroke was spine tingling and inspirational for all who witnessed it. Standing on the very same stage as he had done so many times before as IFP CEO and as host of the annual conference for so many years,

was incredibly powerful.

Nick bravely and proudly shared his experiences and then rounded off by singing a rendition of the Gerry and the Pacemakers song You’ll Never Walk Alone. He received not one but two standing ovations from an audience where a dry eye was hard to spot.

I FAmagazine.com

N EWS

ACQUISITION AND SALES

November 2017

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ED'S RANT November 2017

Histor y is Bunk Henry Ford knew what he meant when he declared a new historical paradigm, says Michael Wilson. But could Donald Trump say the same?

Photo: Gage Skidmore

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It sometimes seems impossible that it’s really only been twelve months since Donald J Trump was elected President of the United States, and less than ten months since he took office.

Those twelve short months have seen the arrival of what Mr Trump calls a “modern presidential” style, and what most foreigners would call a completely chaotic pattern of administration.

A tumbling carousel of top-level dismissals, which most recently included his chief of staff Reince

Priebus and his own chief strategist Steve Bannon, has left the President painfully short of allies and his staff battling to keep him from further blunders.

Trump’s recent Twitterings against his own Secretary of State (foreign minister) Rex Tillerson, who he accused of “wasting his time trying to negotiate with Little Rocket Man” in North Korea, prompted a highly conspicuous non-denial from Tillerson to the media claims that he had called his boss a moron.

And all the time, the special prosecutor’s office has been quietly subpoenaing the President’s circle into giving evidence on the “Russia thing” which has already claimed the careers of more senior figures than fell during any administration since Nixon.

Trump’s performance on the world diplomatic stage during those ten short months has first confounded, then amused, and finally horrified a world which is now coming to terms with

IFAmagazine.com

ED'S RANT November 2017

History is more or less bunk.

It's tradition. We don't want tradition. We want to live in the present, and the only history that is worth a tinker's damn is the history that we make today Henry Ford

the damage that the President is doing to America’s international standing. His direct threats of overwhelming military destruction toward North Korea have been timely and appropriate, to some reluctant ears. (Even a clock that’s running backwards is bound to be right twice a day, they say.) But Trump’s failure to abolish Obamacare, to build the Mexican wall, to nominate more than a thousand key civil service personnel, to or to keep his own industrial think tanks from disbanding themselves in disgust, all suggest that the President’s grasp of leadership is deficient to put it mildly.

This time it’s different?

Which is why it’s odd that Mr Trump’s latest plan to reform the US tax system by abandoning the principles of budget balancing hasn’t hurt the American stock markets. (Although its impact on the bond markets may yet prove to be a different matter.) The first nine months of the Trump Administration’s tenure at the White House saw the S&P500 rising by nearly 14%, at a time when the Footsie was struggling to hold onto a 2% increase and the Nikkei made 7% against a sharply depreciating Japanese currency. Among the major market centres, only the German DAX (up 11% on a much stronger

IFAmagazine.com

euro) would have made a sterling investor more money than the US. And all this in the face of US company valuations which are, by some measures, verging on the suicidal and unsustainable.

At least, by the standards of the traditional Shiller ten year p/e, which takes a decade-long average of prices and earnings and presents them as an inflationadjusted average. The Shiller average for the S&P500 at 6th October was running at 31.03 – the second highest level ever, apart from a ferocious blip in 2002 that was destined to end in tears, and just a nose ahead of Black Tuesday in 1929.

Structural issues What’s that all about? America’s popularity might be simply happening because of the US dollar’s traditional role as a reserve currency. In which both oil and gold are denominated, remember. Not even George Soros ever betted successfully against the greenback - and at a time when political and economic uncertainties are troubling the markets in Asia, Latin America and (of course), in Britain, there are sound reasons why foreign capital should favour the solidity of the United States.

We’ll come back to that possibility in a minute – there are, after all,

a number of reasons why the dollar’s momentary weakness might indeed be attracting interest from long-term players.

But for the moment let’s focus our gaze on two of the key factors that brought such a strong stock market welcome to Mr Trump when he first came to office.

The first, as you might recall, was a commitment to sink $2 trillion into improving America’s gently rotting infrastructure.

For decades, the country has been dogged by poor quality highways, awful regional airports, and trains that only the poor feel inclined to use – America does have a long-term problem with investing in public plant and equipment – and Trump’s determination to reinvigorate the communications structure proved to be one of his best electoral lines. But where is it now?

In truth, it might be better to ask where it has ever been. Trump never made it entirely clear whether he intended to fund that $2 trillion out of the public purse, or whether he would float new bond securities specifically for the purpose, or whether he would effectively privatise the infrastructure by turning over major projects to the private sector - either through private finance initiatives or through actual commercial ownership of the public facilities.

What we can say at the moment is there’s not been a peep from the White House about what’s proposed. It seems very unlikely that the public purse can afford to stick the cost onto the federal deficit bill (see below) – but where are the tenders for new public works? Where is the enthusiasm from construction companies for the infrastructural bonanza that will underpin the country’s promised explosive economic development? Why is the USA’s average broadband speed slower than Belgium’s or Romania’s?

(And only a nose above Russia’s?)

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ED'S RANT November 2017

Photo: Gage Skidmore

Tax reform and “wealth-fare” Again, you might well ask.

But that’s because the bigger unanswered question is how the Administration intends to manage the fiscal purse, full stop.

You’ll be aware that on 27th September the President announced a long-promised tax reform that was bold in its language, but about as detailed as the one-page health statement he issued before his election. It promised a doubling of family income tax allowances, and a drop in corporate tax rates from 35% to 20%, and a repeal of death duties – but, as of mid-October, there was no word as to how that huge handout would be paid for.

How huge? $6 trillion, according to one Reuters estimate. That would be about one third of the current accumulated federal deficit. So could it come from cuts to other government departments? Will the President aim to claw some of it back by abolishing deductions that are currently allowed? (We know that there’ll be a one-off levy on businesses’ accumulated offshore earnings, and that personal deductions for state and local taxes will be disallowed.)

Or will the simplification of personal tax rates (from seven tax bands currently to just three – 12%, 25% and 35% - be accompanied by a detrimental downward shift in the income brackets to which those bands apply? We might know more by the time that you read this article, but all that seems clear at present is that the axing of estate duty would save wealthier citizens around $20 billion a year – of which, says Bloomberg,

"Betting on what Trump will do is wrongheaded. Even if you guess right, presidents can do little on their own. Whatever you fear or hope happens probably won’t" Ken Fisher

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IFAmagazine.com

ED'S RANT November 2017

the President himself would account for $564 million. Small wonder that the term “wealthfare” has become a media ‘thing’.

Corker (Tennessee) has said he will lead a congressional rebellion against anything that leads to an increase in the federal deficit.

Nor are we really allowing for the fact that the vast majority of US companies don’t pay 35% tax on their earnings anyway. According to broadcaster NPR (using Congressional Budget Office figures), hefty deductions and rebates mean that the actual rate paid by US corporations is 18.6%, just behind Britain’s 18.7% - but still much more than Germany’s 15.5%, France’s 11.2% or China’s 10%. There’s plenty of scope here for a bit of sleight of hand.

Reasons to be cheerful

Deficit, schmeficit…

And that in turn doesn’t begin to tackle the question of how those $6 trillion of Trump tax breaks can be financed. The Congressional Republican Party has been pleading with the President all year to limit his posturing about ultraright-wing demonstrators and Obamacare and Chinese currency manipulation, and to start focusing on the tax reforms that have underpinned most of the stock market’s enthusiasm this year.

In theory, then, the President’s plans ought to have received a warm welcome on Capitol Hill. Instead, however, the knives are out well in advance of the necessary cuts being implemented. The best estimates at the moment suggest that Trump will either have to find $4 trillion of savings (or augmented revenue), or else to grow the deficit.

Now, it looks as though Trump can reclaim about $1.3 trillion from the abolition of tax deductions for local and state taxes, which would be a start. The problem is that both New York and California have set their faces against allowing this to happen; indeed, the once-faithful Trump ally Republican Senator Bob

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Does any of this matter, given that Trump has more than three years left in which to get what he wants past Congress? There are those who point toward next year’s mid-term elections as a defining moment – the moment when individuals’ tax bills will be either rising or falling, and when both senators and congressmen can expect to get the full blast of public opinion in their faces.

That, it seems to me, will bring an element of sanity to this matter.

But in the meantime, there are several good enough reasons why this year’s Wall Street surge might still prove to have been an entirely rational development.

• The weak dollar has brought in speculative money from abroad, which has found US stocks to be unusually cheap.

Rather like the way that London benefited from the Brexit vote in the second half of 2016.

• The likelihood of higher bank rates in the new year will probably hit corporate profits in consumer industries, but it will strengthen the dollar, which will underpin the value of any US equities that are bought now.

• Conversely, higher bank rates will probably inflict considerable damage on the US bond markets, which are currently super-sensitive to every twitch in the yield and which have a long way to fall if the worst happens. That could probably drive enough money toward equities to keep the S&P 500 bandwagon rolling.

• We mentioned earlier that the Shiller ten-year p/e ratio has been running at a near alltime high over the last year, and that this would normally imply that a major correction was on its way. But optimists

say we shouldn’t forget that the ten-year anniversary of the 2008 crisis is now approaching – which ought to mean that the worst year of the tenyear Shiller run is about to roll out of the calculation.

• Let’s not forget that US inflation and unemployment are both at historically low levels – which suggests, in turn, that there’s no sign of overheating.

And finally Let’s conclude with two very generic observations. Firstly, that the United States has not just one of the world’s most dynamic and entrepreneurial cultures. It also has probably the youngest demographic of any developed nation. And yes, the fact that this is mainly down to Latinos and illegal border-hoppers is just something that America may have to take in its stride. Compare America’s demographic position with that of China or Japan, and you’ll see what I mean.

Secondly, let’s remember the wise words of US perma-bull Ken Fisher, the founder and Executive Chairman of Fisher Investments, who told us a whole year ago that Trump’s election wasn’t going to crash the US stock market, or even dent it. As he told the Financial Times back in January:

“Betting on what Mr Trump will do is wrongheaded. Even if you guess right, presidents can do little on their own. Big change requires legislation and Congress is an undrainable swamp.

Republicans have just 52 Senate seats to Democrats’ 48, yet 20% of Republican senators didn’t endorse Mr Trump. Intraparty squabbling will be a new source of gridlock. Budget hawks will probably block huge tax cuts and major new spending. Republican leaders are pushing back on “The Wall”. Whatever you fear or hope happens probably won’t.”

Full marks, Mr Fisher.

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BETTE R BUSI N ESS November 2017

Better Business The power of no In business, the temptation for us to say yes to every opportunity which comes our way can often be hard to resist. Brett Davidson, of FP Advance, puts forward a compelling argument to suggest that saying no more often can lead to greater success Why say ‘no’?

Steve Jobs once said, “True innovation is saying no to a thousand things”. The same logic applies when you are thinking about your own business.

It might be saying ‘no’ to certain types of clients, so that you can say ‘yes’ to the clients you really want.

It might be saying ‘no’ to shiny things: ideas that seem like they might be worth pursuing, but are really just a distraction from your main goal.

Saying ‘no’ seems like such a small thing, but your future success and happiness is determined by these seemingly small choices you make every minute of the day.

Clear the clutter All the literature which has been created on the subject of achieving your goals starts with the same thing: eliminating projects, goals, or things that you don’t really want to do in your life. But, as anyone who has tried doing this will know, it’s harder than you think.

“Getting rid of wasteful items and decisions is relatively easy.

It’s eliminating things you care about that is difficult. It is hard to prevent using your time on things that are easy to rationalize, but that have little payoff. The tasks that have the greatest likelihood of derailing your progress are the ones you care about, but that aren’t truly important.” - James Clear

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So what stops us saying ‘no’ to the distractions? Here are a few things I’ve seen: 1. Politeness I know this is going to raise some hackles. I live in Britain after all, the home of good manners and politeness.

Have you ever got involved in something you shouldn’t have and then found it extremely difficult to speak up and extricate yourself? I’m pretty sure we’ve all done that. That’s politeness keeping you stuck.

Don’t do it. You can speak up honestly, and get yourself out of whatever you shouldn’t be in. You don’t need to be rude, but if other parties get offended or upset, hey ho.

2. FOMO Fear Of Missing Out (or FOMO) is another one that stops us saying ‘no’. If we don’t say ‘yes’ and this new thing actually gets off the ground and goes somewhere, how are we going to look? Or feel?

Like a goose, that’s how.

So we end up saying ‘yes’, when we should say “no”. Say ‘no and, if the other project does go well, you can be happy for the people involved while you stay focused on your contribution to the world.

3. Fear of success If we actually said ‘no’ to distractions and gave this thing, whatever it is, 100% of our focus, we might just become wildly

successful.

Yikes.

Then what?

I don’t know.

When people have spoken about fear of success to me in the past, I really thought it was nonsense. However, the longer I’m around and the more I’ve examined my own behaviour and that of the clients I work with, I think there’s something to it.

I’m less interested in the words I, or my clients, say.

I’m more interested in what I, and my clients, actually do.

Our actions reveal more about where our heads are at than all the words we spout out.

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Chasing rainbows doesn’t make you a creative entrepreneur, it makes you a person who’s not likely to succeed. What a shame.

• They miss out on your time – When you’re not focused you spend way more time than necessary achieving very little

What’s the real price of failure?

• They miss out on the financial rewards that could accrue if you ‘made it’ – The top 1% in any field, be it sports or business, earn 100 times what the rest earn

It’s hard to put a price on lost opportunity, but there are some more tangible costs that I can identify and which flow directly from the failure to say ‘no’.

• They miss out on a role model – Someone who can show them how to be effective and to truly create something from nothing out in the world How do you get better at saying ‘no’?

In my experience there is only one sure fire way to get better at saying ‘no’. It comes from knowing exactly where you are headed and what you are trying to achieve.

This all starts with having clarity of your vision. If you don’t know where you are headed, it may look like any path will take you there. If you don’t know where you are headed neither does your team nor those close to you. As a result, any form of success is immeasurable, as it’s impossible to know if an achieved outcome is in line with your goals.

The people who pay the biggest price for our inability to focus, and do what we set out to do, are our family; partners, children and grandchildren:

• What’s worth doing even if I fail?

• What are our core values as an organisation?

• What do I want my business to look like?

• Who do we serve?

• What type of clients do I love working with?

The answers to these questions have the power to transform both your thinking and your business success.

Once you get some clarity on what you want, all decision making becomes much simpler. For example: • The quality of the people you’ll need on your team • Where you should be located • Do you need an in-house team or can you outsource?

• The technology solutions you require • The quality of the paper you’ll use • How much to charge • Which clients to work with

There are some fundamental questions you need to ask yourself for success to occur:

Without this clarity almost anything can look like a good idea. You can spend your life running around in circles.

• Why am I doing this?

Just say no

• What do I want my life to look like? (what is my idea of work/life balance?)

Get thinking about where you are headed. Once you get that clarity you can start saying ‘no’ to anything that won’t advance your cause.

You won’t get bored, you’ll get good. Maybe even great.

• Why am I sacrificing myself for this project?

• What is the higher purpose? (A purpose bigger than money)

That’s the power of ‘no’.

Brett is the Founder of FP Advance, the boutique consulting firm that helps financial planning professionals advise better and live better.

He is recognised as one of the leading consultants to financial advisers in the UK. Professional Adviser magazine has rated him one of the Top 50 Most Influential people in UK financial services on three occasions.

You can follow Brett online and via social media: Twitter: @brettdavidson Facebook: www.facebook.com/FPAdvanceLtd LinkedIn: www.linkedin.com/in/davidsonbrett Website: www.fpadvance.com

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BRIAN TORA November 2017

Moving on up?

When it comes to asset allocation decisions, is it time to reassess your clients’exposure to European markets?

Brian Tora examines the details An unexpected consequence of the surprise decision of the UK to opt for Brexit has been to drive those nations that remain in the European Union closer together. One of the arguments put forward by the Leave campaign was that Europe was in danger of breaking up. How things have changed. As a fund manager friend of mine remarked recently, we’ve given those in the EU a common enemy.

Instead of fighting amongst themselves, they are now united against perfidious Albion which has chosen to flee the nest.

There is probably more than a little truth in that, though it is almost certainly the case that, economically speaking, Europe is looking a more robust place than a couple of years ago. In part this must be down to a lessening of the perceived political risk.

Following the UK referendum and Donald Trump’s election in the US, fears were rife

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that the votes due in Europe would underscore an antiEurope feeling that was being vocally expressed around the Continent.

In the event, the Dutch and French elections reinforced the pro-EU voice within these key nations, while Angela Merkel’s re-election did not disappoint Moreover, economic progress seems to be building, admittedly led

by Germany and with a few sick Eurozone members still in evidence. Overall, Europe does look a more appealing place for investors than it did a couple of years ago when Leavers were forecasting the demise of this great political and economic experiment.

This is not to say there are not issues to be aware of in Europe. Greece is failing to hoist itself out of the morass into which it descended, while Italy continues to cause concern over the potential collapse of its banking system. But the core nations are prospering and 2017, a year of elections with all that might have entailed for the future, is passing with fewer shocks than many feared.

A new agenda is being created which might ultimately lead to a Europe closer to a Federal

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model, with a single finance minister and a more common approach to foreign policy.

For investors, the calming of the uncertainty created by the referendum vote and the myriad of elections (four major national ones, not to mention the Italian referendum) has allowed a more considered approach to be adopted. For many, the focus is now on Germany.

Aside from being the largest economy in Europe, perceived wisdom has it that the Deutschmark, were it still to be around, would be significantly higher than the euro.

Germany’s manufacturing and exporting industries can only benefit as a consequence.

As I write this, the indices for both Germany and France remain below all-time highs (though not by a great

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margin which is also the case in the UK, though not for North America), the FT-SE Europe ex UK Index powers on. The belief seems to be that, without the political uncertainty of the various elections we have seen, Europe can pull together and motor on. Certainly, there does seem a lot of enthusiasm amongst fund managers for the world class companies that pepper the German market, while France is looking for a postBrexit financial sector bonus.

There seems some merit in taking a positive stance towards a Europe which does look to be pulling together in a coordinated fashion and benefiting from a more robust global economy.

The strength of the euro will, though, be causing concern in some quarters. In such an environment stock selection – and, indeed, fund selection – will be crucial.

But then, in markets as international as ours are today, where a company is domiciled is becoming less important when it comes to making your choice as to where to place your money.

As to the future, we need to be adapting ourselves to a tighter monetary environment where the central banks play a less supportive role. The extent to which the pump priming that went on in the post financial crisis period found its way into supporting financial asset valuations is far from clear. Perhaps the ending of quantitative easing will have as little effect on markets as its introduction had on inflation – the usual consequence of money printing being a rising cost of living, which didn’t really happen this time.

Investment is never straight forward. Europe is benefiting from a flight to quality at a time when the demons that have surrounded it have diminished, while those hitherto safe haven options, like the US and Japan, are beset with their own uncertainties.

Don’t forget the UK, though.

At the end of 2015 the sterling/ euro exchange rate stood at over €1.40 to the pound, making a euro worth around 71p. Even just ahead of the referendum the rate was €1.31 or a little less than 77p for a euro. Since then the euro has been as high as 93p and was just under 90p as I put pen to paper, making UK plc most competitive and German goods expensive. Happy days!

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PARAPLANNING November 2017

The rise and rise of paraplanning Par t 2 In the second of a two part series looking at the role of the paraplanner, Sue Whitbread looks at how effective integration of paraplanning can contribute to the success of a financial planning firm Last month, we looked at how effective use of the paraplanner role can be a key business driver.

But what exactly does the role entail? Broadly, it can be broken down into four main areas: • Preparing and maintaining the client file • Preparing recommendations • Implementing recommendations • Review However, the application of the role will differ from practice to practice. Also, let’s not forget there are also some excellent outsourced paraplanner businesses in existence too.

Delivering the service your clients will love Unfortunately, many advisers operate inefficiently, typically spending too much time on tasks which they are not best suited to. Over the past decade, survey after survey has pointed to advisers not spending enough time with clients and many often focusing their time on areas that their clients don’t actually value. This compounds the problem in today’s world, where clients’ expectations are high and becoming higher still.

They need to see clear evidence of real value for money – and this extends well beyond investment performance. It’s about service. And that’s where paraplanning can make such a big difference.

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Traditionally, advisers have spent much of their time preparing the plan, dealing with the implementation process and researching or making decisions about products. However, on the flip side, they often fail to allocate the same time to reviews and the ongoing service and relationship management – aspects which clients typically value very highly.

Unfortunately, many advisers operate inefficiently, typically spending too much time on tasks which they are not best suited to

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Many businesses have built a dependency around the adviser having to deal with all the client’s needs themselves. This is impractical, inefficient and in a number of cases simply results in poor client service.

When looked at in this way it becomes clear how the process can be split up or shared, depending on the skill sets and experience of the individuals involved.

Some businesses face challenges where revenue is perhaps staying flat or not increasing at the same rate as costs. This often coincides with an adviser spending perhaps only 30-40% of their time with clients. For a few notable advisers this might be just enough but imagine if this time could be doubled and full value of the time recovered for the business.

As a slight aside, let’s consider psychology and the working of the brain. Each of us tends more towards left or right brain behaviours.

The left brain is responsible for logical thinking whilst the right allows for more creative thinking. It is very unusual for people to be strong on both sides. Historically, the adviser role has required individuals to do just that - be strong in both disciplines. Indeed, this is has led to many of the problems encountered.

Splitting the process between adviser ( arguably more right brain orientated) and paraplanner ( more left brain?) allows the business to de-risk, improves productivity and profitability. Just as importantly, it releases individuals to do those particular parts of the process which they enjoy most and where they have the greatest skill and aptitude.

On the one hand the business becomes more effective, whilst on the other the adviser gains too. They can focus on the areas in which they have the greatest skill and aptitude – in client relationship management – with paraplanners providing invaluable support to the process.

This has the combined effect of increasing productivity and decreasing the risk to the business. It also extends the client’s contact to a broader section of the team so that the business is looking after their needs more effectively.

Breaking down the process The financial planning process can be broken down into: • Meeting the client, establishing a relationship and defining their goals and objectives.

• Gathering the client’s data.

• Analysing the data.

• Presenting the plan.

• Implementation.

• Service and review the plan.

A key challenge remains in changing attitudes and behaviours. Teams which specialise should flourish as they benefit from working better together and generating better results than they can do individually. They understand the benefits and excitement of delivering an effective financial planning service and are rewarded by greater profits and more satisfied clients.

Finding and motivating talented people still remains one of the biggest challenges but the role of the paraplanner offers us a vision to the future.

A Case Study - Creative Wealth Management To explore how the paraplanning function can work in practice within an established business, we are grateful to the team at Creative Wealth Management for their help. Very kindly, they have worked with us to provide the following snapshot of how their business operates in this key area.

About the business Creative Wealth Management Ltd. is a firm of Chartered Financial Planners based in Croydon. It is part of Creative Benefit Solutions Ltd. which, in January 2018, will be celebrating their 10th anniversary. The firm looks after more than 400 individual clients with over £1.3 billion of funds under advice. It currently has seven advisers, four of whom have the prestigious Chartered

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status. The others are Diploma qualified but continuing their studies to also obtain Chartered status. Within the team, three of the advisers are also Pension Transfer Specialists, a particular area of expertise to allow advice on Defined Benefit pension transfers.

There are up to eight paraplanners supporting the advisory team, provided through a combination of internal staff and external resources supplied by The Timebank.

This combination of in-house and outsourced paraplanning works well for the business.

It allows the team the ability to flex their resource depending on case volumes, complexity and any staff absences.

Additional support is provided through five in-house administration and sales support staff.

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PARAPLANNING November 2017

What is a paraplanner?

In short, at CWM, we see a ‘paraplanner’ as a person who works with a financial adviser or planner and who completes a number of the non-client facing tasks which are involved in preparing and administering a financial plan or report for a client.

A paraplanner will typically have gained many years’ experience of working within financial services and so will have developed extensive technical, product and provider knowledge.

All of our paraplanners are at least Diploma qualified, which helps to ensure that we provide the best service possible for our advisers and most importantly of all, for our clients.

Our paraplanners and advisers work together closely to provide the detailed and bespoke advice and service which our clients really value.

Working together The relationship between adviser and paraplanner is very much one of a whole team working together in order to deliver the best solution for a client – and the business too.

At Creative Wealth Management we ask that: • Our advisers provide a completed client file, i.e. factfind, meeting notes and handover/submission sheet, once their initial client meeting has been completed.

• The paraplanner appointed to the case will then have a briefing conversation with the Adviser about the client’s needs and circumstances to ensure that the they fully understand the case.

• The adviser frequently uses the paraplanner as a sounding board when formulating their advice, not just for technical queries but to ensure they fully understand the product being recommended to meet the client’s needs. We find this works very well given the fact that we, the paraplanners, are at the coalface, dealing with product providers on a regular basis.

Things that work and things that don’t • With the paraplanning team completing the more time-consuming activities of writing reports and other administrative tasks, this enables the adviser to spend their time effectively with clients and use their skills more efficiently. This allows them to feel confident in the knowledge that their recommendations will be successfully implemented.

• It is important that advisers don’t leave gaps or set out any details which could be misinterpreted in their factfinds or briefings, as this means time being wasted and/or incorrect advice being given.

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• Paraplanners are not mind readers! We ask that all advisers make their instructions clear and comprehensive, and that they work to the remit that as the paraplanner may not have been present at the client meeting, assume that they know nothing about the client’s objectives. If it’s not written down, it didn’t happen!

• Paraplanners are not miracle workers. We strive to ensure that we are given the appropriate time to provide all the analysis, quotes and reports, etc. that are required. We work on the principle that whilst we understand that clients want things done as quickly as possible, it is always better to under-promise and strive to over deliver. Manging clients’ expectations are therefore a crucial part of the relationship.

Getting the process right Two key processes that we have developed are our handover checklist and executive summary.

The handover checklist has been designed to be completed by the adviser to ensure that all pertinent instructions about the case and which the paraplanner needs to be aware of are clear. It helps to ensure that all relevant assets and liabilities of the client are identified so that valuations and statuses can be updated, and so that any charges or special instructions are clearly highlighted.

A case team, consisting of paraplanner and administrator, are given ownership of specific client cases, so we can become familiar with the details and thus minimise the risk of key points being missed. We find this makes for a smoother process and better client experience.

Using the executive summary ensures that the whole case team are aware of the recommendations and agreed solutions, and can fully implement them with ease. This is useful as often different members of a case team come into play at different times.

Paraplanning – how it works for us As we rely on the support of external paraplanning resources to provide the ability to flex our capacity based on workloads, it is very important that we ensure that this external resource works to the same standards as our internal team.

Within our internal resource is a team leader who manages our team of creative paraplanners. They also liaise with The Timebank, who we use for that outsourced function, around our need for additional support, and on the cases being worked on by them.

They have a similar lead paraplanner who will have regular calls with our team

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leader, to catch up with any changes to details, policies and procedures, and to pass on any feedback, good and bad. All relevant information is cascaded down to their team in respect of any operational adjustments that need to be made to ensure all reports are up-to-date and consistent.

Whether the paraplanner is in-house or outsourced they all perform the same role.

A paraplanner will review a case once it has been received and then make a call to the adviser to discuss any queries they may have. This is a great opportunity to clarify all the points which need to be covered in the report itself, and it also gives us the chance to double-check that the advice is appropriate.

Where additional information on existing plans is needed we use the administration and sales support team to obtain this.

Once satisfied that we have a complete file and a clear instruction to proceed, we put together the report along with the supporting documents.

When a report has been finalised, this gets handed to the administration and sales support team to package for delivery to the client (in the post or face to face by the adviser), along with all the necessary enclosures and forms needed to implement the recommendations.

Our paraplanners also carry out the additional tasks including: • Handling client queries.

• Carrying out technical research and analysis.

• Submission of applications.

• I mplementation of recommendations through to completion.

• Attending client meetings where required.

Tips for advisers and paraplanners • Communication is key!

• Assume intelligence not knowledge.

• Manage realistic client expectations – it is far better to exceed a client’s expectations rather than setting unrealistic targets which may not be met.

• Dealing with providers always takes longer than you think; dealing with Defined Benefit schemes takes even longer!

• Never assume anything – double check the details if you are unsure of something.

• Don’t be embarrassed to ask for help or advice when you need it; between the members of our team, and the resources available to us at The Timebank, there is a wealth of knowledge and experience available which can be used to provide clients with the best outcomes.

Greater job satisfaction All of us in the team get a real sense of achievement from helping our clients meet their objectives, implementing the recommendations through to completion.

We take pride in ensuring that we meet our client’s expectations, by paying attention to detail, making sure timescales are met and issuing clear communications with them throughout the whole process.

Without the role of the paraplanners, Creative Wealth Management would simply not have achieved the success that we have to date.

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MARKETING STRATEGY November 2017

Taking your marketing to the next level Par t 1 In this three part series for IFA Magazine, Sam Turner, Head of Digital at ClientsFirst, examines the factors that elevate marketing strategies from functional tick box exercises to plans that make a real difference for advisory firms’ bottom lines

Depending on your feelings towards the changing nature of the English language, ‘martech’ may be a word that makes your blood run cold.

Unfortunately for language pedants, martech has now entered the common vernacular, at least if you happen to work in marketing. For those outside of the discipline, this could seem, quite apart from being a further blight on the English language, a bit of overkill. Is marketing technology really so developed, so vital and so discussed that it needs its own coded descriptor?

Pull back the curtain just a little into the world of marketing technology, and you’ll find that you’re probably more familiar with it than you first thought.

If you are like most advisers in the UK you’ll have a website and get data on visitors and enquiries probably using Google Analytics.

You might use a CRM like Salesforce or an industry-specific version, such as Intelliflo.

Many advisers have at least dipped their toes into email marketing over the years, meaning use of something like MailChimp or a serviced proposition. This is your ‘martech stack’ and it probably already includes the above elements, even if they’re not something you look at on a daily basis.

The evolving martech stack Much of present day martech is provided as Software As A Service, or SAAS, which simply means that rather than installing software on your machine or

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server, it is delivered online, within your internet browser. Like everything else that lives online, martech is evolving quickly and significantly.

The evolution in the martech services available to you is driven primarily by a desire to innovate and provide ‘the next big thing’ and that innovation is being led by industry heavyweights. Take a recently-evolved part of your martech stack; Google Analytics launched in 2005 and since then it has largely been regarded by everyone who has used it as a great product… but slightly too technical.

To use it properly and to its full power, you essentially need a qualification in data science.

Recently, Google unveiled Analytics’ new look and a bold side product; Google Data Studio, which allows you to create graphical, drag and drop graphs from the data your Analytics collect.

You don’t need a data science degree to use it; in fact, you barely need any data knowledge at all. If you’re still muddling through Analytics trying to find key answers regarding your data, it’s a solution that’s well worth looking at.

Fitting martech to strategy Your marketing strategy shouldn’t be led by the martech that’s attractive to you, but good martech can make good strategies great and suggest further ideas that make great strategies even greater. With the above changes happening regularly, from all martech providers, that’s a lot of inspiration and new ideas to try.

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At the first stage of this journey, when you created your marketing strategy, hopefully you will have mapped your business objectives first, followed by your marketing objectives that help you achieve those business objectives and then the marketing actions that help you achieve your marketing strategy.

Using such a process ensures that all your marketing activities contribute directly to your business’ success.

Throughout that process, you will have encountered a certain level of challenge. Maybe you had a sound strategy but just couldn’t find an action that helped you to make the strategy successful.

Or maybe you thought you had a strategy that helped your business objectives, but you just couldn’t get to the figures around it; to do with ROI or otherwise.

It’s when you reach these areas that martech can provide a solution. If you’re convinced that a particular marketing-led action helps with your strategy and your objectives, then the question merely turns to how you achieve that action.

Consider the following example.

However, you might need some time to consider the second point.

You know how many visitors you currently get, but how can you increase that? What if you currently get a good number?

Is increasing the figure even the right way to help your business objective? Maybe all you need is more data on your visitors, or a way of trying to convince them to do something more on your website, like making an enquiry.

This is where martech starts to play a part. You might not have the facility currently to do the above, but there are several martech solutions out there to help you. In this scenario, softwares like Lead Forensics, WhoIsVisiting or Hubspot could all help to one degree or another.

Your job now becomes to assess which one helps you to achieve your objectives, to what degree it helps this, at what cost and with what other benefits.

Take your time. Most martech solutions feature a slick sales and marketing process and being sure that you’re choosing the solution that’s right for your organisation is a big decision with significant implications. Get it right, however, and this choice can make the difference between a simple marketing plan that never meets your objectives and a sophisticated one that helps your firm to grow.

Case study: Getting more data on your website visitors to work towards increasing enquiries Here’s an example of where your marketing strategy could be at the moment: Business objective: Increase client numbers by twelve this year.

Marketing strategy: Route to market: website. We should use the website to acquire at least two of these twelve clients.

Marketing actions: Get data on how many website visitors we currently get, then discuss how we go about turning website visitors into clients.

The first part of this action should be relatively easy. You can see monthly visitor levels in Google Analytics; or ask your web developer to provide you with the data.

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Sam’s original article, on creating a marketing strategy for your advisory firm, can be found in the August issue of IFA Magazine or on www.IFAMagazine.com.

ClientsFirst is a marketing agency which specialises in working with financial services firms.

Website: www.clƒwients-first.co.uk

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PORTFOLIO DIVERSIFICATION November 2017

Black Monday - Learning from disaster The Black Monday emergency of 1987 exposed all sorts of problems within the investment management sector, says Sue Whitbread. But 30 years on, the use of DFMs and multi-asset funds has helped create the evolution of the new investment landscape

The 19th October 2017 marked the 30th anniversary of ‘Black Monday’ - the stock market crash when the S&P 500 index lost 20.5% of its value and the FTSE 100 lost 10.8% in just one day – something which has not been seen since. From a historical perspective, of course, it’s easy to focus solely on these negative figures - but we often forget that the UK market still managed to generate a positive return over the year. More to the point, the markets learned valuable lessons about crisis management which have had a profound effect on how we do things today.

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Happy birthday The fateful crash began in the morning in highly-leveraged Hong Kong, and then followed the clock around the globe to Europe and of course to London (where a hurricane had just knocked out part of the power supply, which didn’t exactly help matters.) By the time the tsunami hit the United States, many of the world’s major markets had already declined by a significant margin and counter-party risk was spreading panic and alarm: Hong Kong, for instance, didn’t reopen for almost a week.

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PORTFOLIO DIVERSIFICATION November 2017

The story we all remember about 1987 is that the system was savaged by computerised programme trading patterns which stampeded this way and that and which quickly created havoc. We also forget that there were no automatic circuit-breakers, which would nowadays shut down a market if it moved too much in a day. So the damage on that fateful day was potentially uncontrolled.

But that was then, and this is now. We know that circuitbreakers work, because they saved Shanghai twice during New Year 2016 alone. And although the past thirty years have given us the dotcom bubble and the global financial crisis - which have shown us that things can still go badly wrong when risk taking and sentiment gets somewhat carried away – the changes for the better have been striking.

Don’t look back in anger We could start, for instance, by looking at how the financial advice profession was structured in 1987. Those readers who are old enough to remember will recall an industry where individuals could begin advising clients with no prior qualifications, or even training.

The process revolved around the sale of products, some offering the sellers eye-wateringly high levels of commission. The range of investment funds was far more limited than it is today, and the use of managed funds within single premium bonds was a relatively standard approach.

Fast forward, then, to today, where greater professionalism, competition and transparency have transformed the business of advice. Clients’ needs are put firmly at the heart of the process, with products seen as tools to enable the delivery of a service which adds real value for the client.

Advisers are required to meet the exacting treating customers

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fairly (TCF) requirements, and to comply with every speck of the the Retail Distribution Review (RDR). They must ensure that they are putting their clients’ needs first, and that they consider as wide a range of investment options as possible in order to meet client risk and investment objectives.

That need to spread investment risk, coupled with the low interest rate environment in which it is hard to get returns on cash, has been touted as some of the reasons behind the increased focus on diversified strategies.

Diversification, transparency and cost Making sure that clients benefit from having a well-diversified, balanced investment portfolio is of course crucial if advisers are to minimise the impact of market volatility and focus on the long term benefits which such diversification brings. There is no news here, of course. But transparency is also a critical factor these days.

And so, of course, is cost.

Advisers are very aware how the underlying costs of investment impacts upon long term returns.

And so, increasingly, are clients.

Hardly a week goes by when the consumer financial press isn’t reporting on this very topic. That’s one of the reasons why there has been such a notable increase in advisers’ use of passive investments such as ETFs, as part of the drive to reduce the overall cost burden on client assets under management. Together with investment trusts, which can combine active diversification with reasonable cost, the drive reflects a growing focus on the overall impact of fees and charges – something that is likely to gain more momentum in the months and years to come, as investment groups compete with the likes of Vanguard to bring costs down.

Investment management - what’s your approach?

There are many different ways that advisory firms can integrate the investment management process.

This is a crucial decision for each individual firm to determine which option, or combination of options, works best for them.

Many advisory businesses will keep the portfolio management service in house, therefore offering a “one stop shop” service to clients. For some, this extends to having full discretionary management permissions or for others using best-buy lists might be preferred, with investment operating on an advisory basis.

Whichever in-house approach is used, the responsibility for operation and compliance rests firmly with the business itself. This subject we will be covering in detail in future editions. For now, we will look at some of the outsourced options which are open to advisers.

Working with a DFM Of the advisers who outsource the investment function, many of these are opting to work with discretionary fund managers (DFM).

DFMs generally provide two main types of solution to advisers - bespoke solutions and model portfolios. With bespoke portfolios, the portfolio can be designed to meet clients’ specific needs and circumstances. Model portfolios will typically have a lower cost and will usually consist of a range of fairly standard portfolios with a range of different risk profiles.

Each DFM will have their own approach, their own processes and procedures to ensure that they can meet their overall objectives.

We’ve asked Gavin Haynes, who heads up the day to day management of Whitechurch’s Discretionary Fund Management services, to give us some insight into the key rules which are employed within his team.

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PORTFOLIO DIVERSIFICATION November 2017

Building a diversified portfolio - the golden rules Gavin Haynes, Managing Director at Whitechurch Securities, presents the discretionary manager ’s view Whether you are looking to manage monies for a first-time or seasoned investor, to have a good chance of achieving your clients’ goals, it is essential to have a robust and disciplined process.

When it comes to portfolio management, there are a number of key rules which are employed to ensure that a portfolio is sensibly structured, that risk is controlled, and that costs are kept to a minimum to ensure the best possible riskadjusted returns over the longer term.

1 Stringent risk management The increasing importance of stringent risk management of clients’ investments has been a key reason why more and more advisers are outsourcing to a DFM in recent years. In order to be effective, it is important that, when managing a portfolio, we work within clearly defined parameters.

Of course, it is very important that clients understand the risks they are taking. Technical terms such as volatility and drawdown mean very little to most investors. When risk–rating portfolios, we use a starting point in terms of the maximum exposure a portfolio will have to equity-based, risk investments. For example: 4/10 will be 35% while a 5/10 rating would mean 60%. However, it is important that a wide range of risk measures are employed when managing a portfolio. Advisers should take time to understand the DFM’s risk processes and how they come to their conclusions.

2 Meeting a client’s objective However, it is not just about risk ratings; it is important to have an equally strong focus on the actual return objective of the underlying client.

One size does not fit all. A portfolio with a risk profile of five which is looking to maximise growth should be very different from one where a client looks to maximise income. For example: an income portfolio is likely to have a materially higher bond content. This is where a tailored portfolio can provide more options than a simple model.

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3 Diversification We will invest in a well-diversified portfolio of investments spread across different asset classes and different markets. Portfolios that concentrate on only a few investments are likely to give the wrong results and fail in their objectives.

However, if the portfolio is using collectives, then a combination of around 20 funds should provide sufficient diversification for most investors’ needs. Portfolios with significantly more holdings show a lack of conviction and dilute the impact of the management team’s best ideas.

Diversification is not just about the number of underlying investments. Managers also need to understand how the different investments are likely to perform in different economic climates, so as to ensure that clients’ portfolio holdings are not going up and down in tandem.

4 Asset allocation Different asset classes offer diverse characteristics that, in turn, provide differing levels of risk and potential performance at different stages of the economic cycle. Even within asset classes, different areas have totally different characteristics (a short-dated high yield bond fund bears little relation to a long-dated Gilt fund!).

Active asset allocation doesn’t mean that a manager will be positioning a portfolio based on making big calls about what he or she predicts will happen in the future. You only have to see how bad institutions such as the Bank of England are at making projections (despite having access to the best sources of data) to understand that this is not a formula for success.

We take a pragmatic approach, and although we will position the portfolio based on our view of the investment backdrop, the process is not based on following a benchmark. We will insure the portfolio against our views being wrong. Our focus is on creating marginal gains (not taking big bets) and on ensuring consistency. This is key to meeting client expectations over the longer term.

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5 Fund selection Once we have ascertained a suitable asset mix to both meet a client’s requirements and the prevailing economic environment, our fund selection process aims to look for best of breed funds across the whole market.

We look at OEICs, investment trusts and ETFs to find the most suitable component for each working part of the portfolio.

The active versus passive debate will continue to rage, of course, but for us the starting point is to look for the lowest cost (passive) solution. If the client is going to be charged more than this, then we want a high degree of confidence that we will be receiving value for money. However, the fact that the majority of our portfolios are invested into active funds means that we do go for value rather than the cheapest possible solution!

7 Day to day management Ensuring the correct asset mix and fund selection against a constantly changing backdrop is the most complex and time consuming part of day to day investment management. Over time, things change a lot. Sectors, regions and fund managers that have performed well in the past can suddenly struggle or fall out of favour.

It is important to review portfolios constantly to ensure that potential underperformers are removed and any recognised investment opportunities are introduced. Reviewing and rebalancing a portfolio quarterly is not active management! Although we are long-term investors and aim to minimise turnover, it is important to be prepared to change direction when the facts change if we are to achieve our goal of delivering the best possible results for clients on a consistent basis.

For more details visit: www.whitechurch.co.uk

6 Stress testing Once we have built a portfolio, we go through the very valuable process of stress testing. Using risk management software, we can undertake scenario analysis to gain an understanding of how a portfolio may perform in different climates (eg rising interest rates, stockmarket crash etc). This can highlight any potential holdings that may be exposing the portfolio to greater levels of risk or damaging the performance profile and arrange for us to make any necessary changes at the design stage.

Gavin Haynes, Whitechurch Securities

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PORTFOLIO DIVERSIFICATION November 2017

Multi-asset funds Another popular way to diversify and spread risk, of course, is though multi-asset funds, a rather broad term which may cover a multitude of possibilities. The term describes funds which invest across several asset classes (traditionally equities, bonds and cash), but it may also mean spreading between many fund managers who may favour a range of different styles, strategies, sectors and regions.

Ultimately, multi-asset managers strive for consistency, creating the potential for capital growth as well as income in some cases, and it allows for the conditions where the better performers may offset the poor performers.

Multi-assets bring diversification of course, particularly for smaller investors who are not in a position to benefit from some of the more bespoke options. When market valuations are high, as they are at present, a well-balanced multi approach can produce compelling risk-adjusted returns which can prove beneficial and very popular with advisers and clients alike.

Another appeal is that multis are viewed as being a lower risk option than pure equity funds, but with greater potential for growth than a fund which invests purely in bonds.

But what goes on behind the scenes within a multi-asset fund manager? We’ve asked Barry Widdows to share his insight into how the process works within the multi- asset team at Prudential Portfolio Management Group.

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A day in the life of a multi-asset portfolio manager Barry Widdows, Head of Multi-Asset Portfolio Management at Prudential Portfolio Management Group (PPMG), explores the analytical environment and reveals the important working relationships involved in managing multi-asset portfolios The day in the life of a multi-asset portfolio manager generally starts early. It is important to be able to absorb any overnight economic news, world events and other information that might impact portfolios. Portfolio managers constantly analyse information that might affect portfolio performance. On a day to day basis the portfolio managers have numerous key responsibilities.

Keeping funds in shape We refer to the daily task of ensuring all portfolios are managed in-line with target exposures and limits as keeping ‘funds in shape’. The annual strategic asset allocation (SAA) process sets the broad shape of portfolios each year, but of course asset class position can grow or shrink as markets move, so it is important that they are closely monitored to ensure the intended risk/return attributes of each multi-asset portfolio are maintained.

A sensible balance does need to be achieved. Too much trading will incur unnecessary costs so portfolio positions are allowed to ‘drift’ within certain tolerances.

Adjusting portfolio positions following each annual SAA review also needs to be very carefully and sensibly managed. The main Prudential With-Profits (Asset Share) Fund is currently over £75 billion in size, so a 1% change in allocation to an asset class may appear relatively small in percentage terms, but it actuallyrequires patience and collaboration between operation and risk teams, traders and underlying fund managers to ensure smooth and cost effective execution. In some cases we may use futures to quickly and efficiently achieve an exposure to give a manager time to invest in real assets.

Tactical asset allocation decisions

to ensure new money is allocated appropriately across portfolios, but they also have to be very mindful of outflows and liquidity. A portfolio manager will work closely with the risk team to ensure that outflows can be covered in stressed scenarios.

Regular reviews The portfolio management team regularly reviews exposures, risks and performance across portfolios with the PPMG Risk team. A formal review of performance in relation to fund and mandate objectives, performance attribution, consistency of positions across funds and appropriateness of investment objectives, benchmarks and performance targets is held each month.

Aside from the formal performance review committee, the portfolio managers also work closely with the PPMG Manager Oversight team to understand positioning and drivers and detractors of performance within the segregated mandates and funds that make up the multi-asset portfolios.

State of the art systems allow the teams to be able to generate detailed analysis at the press of a button.

Working within an insurance company means that liability management is also vitally important. This means that hedge implementation and derivative collateral management are essential activities.

A day in the life of a portfolio manager can be extremely varied as the team is effectively the central hub of investment activity in PPMG. Close working relationships with colleagues is crucial to ensure the smooth running of portfolios, and we are always mindful that it is not our money but that of Prudential’s policyholders.

For more details visit: www.pruadviser.co.uk

Portfolio managers are also involved in tactical asset allocation (TAA) discussions. They work with teams across PPMG to review opportunities and determine any changes. Their knowledge of each portfolio is valuable to understand how and if certain investment ideas can be implemented efficiently. Once in place, portfolio managers are also responsible for monitoring TAA across portfolios.

Cashflow management is extremely important. In an organisation as large as Prudential, where many millions of pounds flow in on a daily basis. Not only does the portfolio manager need to be able

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Barry Widdows, PPMG

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FI NANCIAL E DUCATION November 2017

Financial education: helping UK employees to thrive Can financial advisers and planners do more to extend broader levels of financial capability in workplaces across the UK? Dr. Lien Luu of Coventry Business School is not only convinced that the answer is a huge yes but she also has some practical solutions as to how this might be achieved

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"Money is one form of power but what is more powerful is FINANCIAL EDUCATION. Money comes and goes."

(Roselle Adecer-Labitad) Perhaps I should apologise for starting this article with a little bit of background detail about my own financial planning journey.

However, I promise that it is relevant!

I developed an interest in financial education in 2003 after a meeting with a financial adviser.

Though I had reached the top of the UK formal

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education system by achieving a PhD, I had not been taught personal finance at university and was ignorant of money matters.

Fortunately, I was brought up in a culture where I was taught prudence and to be careful with money and so I was able to live within my means. However, when our children came along, I became frustrated and stressed as I did not know how to improve our situation to cope with the increased financial demands that having a family meant.

Learning to fly To help us to try and work things out, my husband arranged for us to see a financial adviser. That meeting was truly life changing for me. Rather than focusing on talking to us about products such as life insurance or ISAs, the financial adviser asked us three simple questions: what did we want to achieve in life (goals), what was our financial

situation (net-worth), and when did we want to achieve these goals by (timescale). On an A4 sheet of paper, he sketched out our situation and aspirations.

The meeting was so liberating because it was then I realised that we did not need to carry all our financial worries alone and that there are professional advisers who could help us work things out so that we could achieve our goals in life. I felt inspired because for the first time my goals and objectives became articulated, recorded and discussed. I also felt empowered because we now had a clear map of our future. Wow! I now understood how financial advisers and planners can play such an important role in helping people improve their lives. I was hooked. With this realisation, I changed my career as a university lecturer and re-trained as a financial planner. I quickly

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educated myself by taking all the relevant financial services exams.

I loved the learning process as I could use the knowledge I was gaining in order to help my friends, family and also clients.

In the process, I also reaped the benefits of feeling in control and confident about my own future.

Fast forward a few years, I have now passed more than 18 exams to qualify as CFP professional and a Chartered Financial Planner – in addition to having achieved financial security for myself and my family.

Making a difference I am driven by my desire to help the wider community to improve their financial capability. As well as through my work, my goal is to use whatever tools I have at my disposal to make a difference. This involves writing books and also to run financial awareness workshops so that we can introduce more people to this life changing experience.

Financial education is now more important than ever. As a society, we are living longer and so each of us needs to ensure that we will have enough money to last us throughout this longer life span. Yet, the fact remains that many people in the UK are simply not saving enough to provide them with

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the security they want and need.

More than 9.45 million people are reported to have no savings at all and the savings ratio in UK has reached its lowest level while personal debt has risen to a record height of £1.5 trillion (The Money Charity). More worryingly, the Money Advice Service reports that more than 8.3 million adults in the UK are living with the problem of debt.

Tears are not enough Given these statistics, it is not surprising that money worries are a major source of stress for UK employees – a situation which, as well as causing all sorts of problems for millions of workers in the UK, also inflicts an enormous cost on employers. Financial anxiety affects employees’ ability to go to work, their concentration at work, and their productivity and performance. 17.5 million working hours are lost annually as a result of employees taking time off work because they are experiencing financial stress. The overall cost of lost productivity, absenteeism and employee turnover amounts to £120.7 billion every year (CIPD, 2016).

Of course there are all sorts of groups of people struggling to get to grips with their finances, but those in the workplace can

often be overlooked. This is an area in which I am working hard to bring about change.

Research shows that a happier and healthier workforce will be more productive and more engaged in their roles and responsibilities (Personnel Today, 2016). To assist businesses improve productivity and profitability, Coventry Business School has designed a financial awareness programme to help employees to better understand their personal finances. In doing so, the aim is that they will feel more in control of their finances, more confident and less stressed, sleep better, resulting in improved productivity and enhanced engagement with the work they do.

Time for action In the UK where there is an enormous advice gap, financial education may serve as an important vehicle to empower people to improve their finances and their lives.

Recently, I was proud to work with three other authors, Jonquil Lowe, Tony Byrne and Jason Butler to create a manual to help today’s students to get to grips with their finances. We are now working on the second book called “Personal Finance: A

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Practical Guide for Employees”, which is due to launch in 2018.

So what can we do going forward? How can you help to extend financial literacy and capability across the workplaces of the UK? I am appealing to financial advisers to get in touch with us if you wish to help with delivery of this brand new and very exciting project to help employees around the UK to gain a greater understanding about money and financial planning. Also, perhaps there may be companies out there who may wish to support/sponsor our initiative.

There can be few such projects worthy of your expertise, time

and efforts. I firmly believe that we can work together to bring considerable satisfaction and joy to many people across the UK for many years to come. I hope you can join us and help to make a real difference.

If you are a financial adviser or planner, or simply a business who would like to learn more about what we do and support us with our financial education workshops, please contact me at ac1648@ coventry.ac.uk.

About Dr. Lien Luu Lien is Associate Head of School – Enterprise and Commercial – at Coventry Business School. She holds a PhD from the University of London and has taught at universities for more than 15 years. Lien is also a Chartered Financial Planner, a Chartered Wealth Manager, a Fellow of the CII and a Registered Life Planner.

Lien has previously worked as a financial planner and delivered many financial education workshops to major companies for the FSA. She is co-author of Essential Personal Finance: A Practical Guide for Students (Routledge, 2017) with Jason Butler, Jonquil Lowe and Tony Byrne, and is currently writing Essential Personal Finance: A Practical Guide for Employees with Jason and Jonquil.

Contact Lien by email – ac1648@coventry.ac.uk

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MiFI D I I November 2017

MiFID II – Major reforms or a big whoop?

With this new directive taking effect from January 2018, compliance consultant Tony Catt explores what it means for advisers

So what exactly is MiFID II and, more importantly for our purposes, what are its implications for advisers? These are the questions we will be exploring here.

but is now being revised to improve the functioning of financial markets in the light of the financial crisis and to strengthen investor protection.

Back to basics

The changes are currently set to take effect from 3 January 2018. The new legislation is known as MiFID II — this includes a revised MiFID and a new “Markets in Financial Instruments Regulation” (MiFIR)”.

The FCA website tells us that “The Markets in Financial Instruments Directive” is the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded.

The Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for: • investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as ‘financial instruments’), and • the organised trading of financial instruments MiFID was applied in the UK from November 2007,

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MiFI D I I November 2017

Further analysis If you’re looking for more details, then the paper from Morningstar entitled “Making the most of MiFID II – how to get ready for the requirements” – is quite enlightening. The paper reminds us that MiFID II is an EU directive and will have a similar effect throughout Europe that the RDR had on financial services in the UK. Indeed, financial advisers in the UK already meet many of the requirements of MiFID II because of the changes brought about as a result of the RDR process.

Where MiFID II is likely to have greater impact is with product providers. “A lot of MiFID II is focused around transparency, protecting the investor and putting the investor first. Firms will need to remove conflicts of interest and demonstrate how they are helping the investor.”

To be honest, I must confess to finding it somewhat disappointing that we have gone through the RDR in the UK and now MiFID II throughout Europe, in order for financial services providers and firms to treat customers fairly.

The main angles are: 1. Firms need to look at their internal and external controls • Defined target markets for investment products • Monitored distribution of investment products 2. Market structure • Pre- and post-trade transparency 3. Fee transparency • Clearer costs and charges for investment products • Forthright fees for advice 4. Investor protection • Delivery of suitable advice • Suitable product line ups • Unbundled research costs • Ban on adviser commissions This last element here – the ban on adviser commissions is quite interesting. MiFID II prohibits independent advisers from receiving commissions and rebate payments. It will be interesting to see how the European regulators deal with this. Of course, in the UK, the FCA seems to have ignored or somehow missed the concept that rather than operating on commission, advisers can now receive provider-facilitated advice fees. So, what was the standard 3% initial and 0.5%/1% ongoing commission has been re-badged as adviser fees at the same levels of payment.

Whether this arrangement will continue in the UK in the future may depend on how the European regulators police this.

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MiFI D I I November 2017

Impact on asset managers and providers One of the major changes that will have some impact in the UK is that after January 2018, asset managers will be required to provide investors and advisers more transparency on the costs of their products. The asset managers will need to show clearly the levels of entry & exit fees, performance fees paid by the fund and transaction fees related to the investment product.

Another effect that may become apparent in the coming months is a greater emphasis on providers to ensure that their products are being marketed to the appropriate clients. Previously, this issue has rested with advisers, but now providers will need to be reporting this. This could lead to advisers needing to report to providers in this respect. This may also lead onto the FCA’s wish for client investments to be regularly reviewed to ensure continued suitability to the client objectives.

An nth degree upshot of this could be that the providers will require advisers to prove that reviews have taken place before renewal/ trail fee payments are made.

A large amount of the impact of MIFID II will be on investment product providers, including fund managers, platforms, insurance companies etc. The European Securities and Markets Authority (ESMA) has produced a paper with the rather snappy title of “Regulatory technical and implementing standards – Annex 1 MIFID/MIFIR dated 28/09/15”.

Record keeping One rather scary item for advice firms from MiFID II is that firms are required to record telephone conversations and electronic communications that relate to “the reception, transmission and execution of orders, or dealing on own account”. These recordings must be held for at least five years. After consultation, the FCA stated “Based on the responses received and following extensive industry engagement, we have concluded that additional flexibility for all Article 3 retail financial advisers is appropriate.

This is because the business model of many of these firms is such that a full taping obligation may not always be proportionate.”

“As such, we will propose that these firms, irrespective of size, can comply with the ‘at least analogous’ requirement by either taping all relevant conversations or taking a written note of all relevant conversations. The decision to tape or take a note should be taken at the level of the firm rather than in relation to individual relevant conversations or the relevant conversations of different advisers. This flexibility will not be available to MiFID investment firms which can be characterised as retail financial advisers.”

Surely, every advisory firm makes notes from telephone calls? Otherwise, how do you remember instructions received, or comments made by clients?

So, for most advisers in the UK, MiFID II is unlikely to have a huge impact as the RDR has dealt with most issues. For investment managers, the watch word in the future will be transparency, in particular, the unbundling of costs and charges and the clarity of charges to clients.

Whether the clients understand what they are paying for, we will probably never know.

About Tony Catt Formerly an adviser himself, Tony Catt is a freelance compliance consultant, undertaking a whole range of compliance duties for professional advisers.

info@tonycatt.co.uk

Some advisers will still not be entirely happy about making written notes. I should have thought that was quite an easy minimum standard of compliance.

This document runs to 553 pages and appears to cover everything that a regulated provider would need to know, but were afraid to ask. Interestingly, the first chapter – Chapter 2 – covers transparency.

Perhaps chapter 1 was actually the table of contents as personally I cannot see it. However, the fact that it leads with transparency sets the tone of the expectations of ESMA.

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N EWS November 2017

Missing ad

What’s my edge?

A team of 500 investment professionals backing me up At Prudential Portfolio Management Group (PPMG), we manage over £180bn in multi asset funds and annuities. Our expert local knowledge and access to global markets means our funds are always allocated to deliver performance for your clients.

The value of an investment can go down as well as up. So your clients could get back less than they put in.

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Prudential is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at Craigforth Stirling FK9 4UE. Registered number SC212640.

This is just for UK advisers – please don’t show it to your clients I FAmagazine.com

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RICHARD HARVEY November 2017

Future perfect?

There is work to be done, says Richard Harvey, if we are to help those sections of society in desperate need of sound financial planning Did you want the good news or the bad news?

Dear reader. The good news is that these days, you and your adviser colleagues are clearly doing a cracking job of helping clients to plan more effectively for their retirement. Allow yourself an extra tincture at this Friday's after-work drinkies.

According to figures from Prudential, more people than ever before have private pension savings - in 2008, 23% of people retiring had no private pension, while today that has dropped to just 14%.

Or, looking at it from a positive perspective, 86% have tucked away money to add to their State pension.

Which will be of good cheer to successive pensions ministers, who have done their best over recent years to shift the burden of pension savings from the State onto the individual.

An unpalatable truth However, these ostensibly bullish figures mask an unpalatable truth - that the trend is much slower among women.

According to the Prudential, even with private savings, today's retirees expect to live on £18,100 a year (which is actually £600 less than the figure 10 years ago). This is the sort of income which would mean many people significantly reducing their lifestyle, and collecting coupons in The Sun for one of those £3 a day holidays in a chilly British seaside resort.

And that's always assuming they haven't been fleeced by con artists taking advantage of pension freedoms.

It is estimated that one in five women who will retire this year have no private pension pot

Reality check NeglectAssist, a firm of financial services professional negligence lawyers specialising in the pursuit of instances of mis-selling of financial products, has conducted a survey on the pension reforms, and the results are alarming.

This news probably doesn’t come as much of a surprise however, given that many of them will have earned less than their male counterparts at work, and taken time off to raise a family or look after ageing Mum and Dad.

For instance....

While younger women (who will almost certainly have to wait until they are at least 68 to claim their State pension) might have more years in which to accumulate more savings, it may well be too late to make a meaningful impact on their retirement income and therefore on their standard of living in retirement.

Only a small proportion of respondents thought it would be a good idea to have a test to ensure they don't run out of money in their old age.

What should be the government’s role?

Which takes us back to the age-old question - what role does the government have in ensuring that its citizens have a decent income on which to live a dignified retirement?

Do our politicians really mean that those retiring today on the full State pension of £159.55 a week - less than £8,300 a year - can possibly survive on that? You could be forgiven for forgetting that the UK is the fifth largest economy in the world.

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Last time I looked, the UK State pension, expressed as a percentage of average national earnings, was less than any other nation in Europe, with the exception of former Communist states such as Latvia, Estonia and Poland.

Fewer than half of those aged 50 or over have any idea of the value of assets in their pension fund.

If they had £30,000 to invest, 28% of people would not seek advice at all.

And those willing to pay for advice would expect it to cost less than £500.

It is clear that the financial planning profession has some way to go in order to appeal to a greater range of individuals, especially younger people and those of lower net worth. Helping such individuals to make better financial decisions in pursuit of their goals in life has to be properly addressed. Unless we do so, the consequences are likely to prove damaging not just to the individuals involved, but to society as a whole.

And that’s the bad news.

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RICHARD HARVEY November 2017

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thewowfactory.co.uk

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THE

WOW

FACTORY

CAREER OPPORTUNITIES Position: Paraplanner Location: London Salary: £28,000 - £32,000 The Business: Our client is a new and upcoming telephony-based independent and directly authorised advice service specialising in pensions, life assurance, mortgages and investments.

The Opportunity: This is a fantastic opportunity for a Diploma qualified professional to join a forward thinking company which will provide you with full training and all the tools you need to be successful.

What’s needed for me to be considered?

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Level 4 Diploma qualified.

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Previous experience within an advisory position is not a prerequisite.

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Willingness to expand on your knowledge and support the delivery of quality holistic financial advice.

Position: 35607 Telesales Location: London Salary: £21,000 The Business: Our client is a well-established private investment firm within London, this client has a long history and respected reputation for serving the diverse needs of high net worth individuals across a range of respected investment structures.

The Opportunity: This opportunity our client is offering is a fantastic opportunity for anyone with sales experience and who is motivated and looking for a role in which offers benefits and to become a high earner of this successful firm.

What’s needed for me to be considered?

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Sales experience.

• Identify opportunities, produce leads and book appointments for the sales force with the emphasis on high quality Leads.

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Follow up leads generated.

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Making sure your weekly targets are met.

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Motivated individual.

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Position: Senior Financial Planner Location: Southampton Salary: £45,000 - £65,000 The Business: A fantastic opportunity exists for a successful Independent Financial Adviser to join a well-established financial services practice on the South Coast. It is a growing business which has developed a great reputation. It has achieved this by focusing on the provision of a highly personalised financial planning and investment management service with the client at the heart of everything they do.

The Opportunity: This growing practice seeks a Senior Financial Planner with a proven track record. You will have the opportunity to work as a Senior Adviser within the firm, inputting to the business from a number of different levels. You will be provided with leads from existing introducers and existing clients of the practice, as well as enjoying full administrative, paraplanning and compliance support. The firm prides itself on providing unrivalled levels of service and advice to their clients so having a client- centric approach will be greatly valued. You will be given the opportunity to build your career in the industry within a supportive firm and supported to work your way through.

What’s needed to be considered?

In order to be considered for this unique opportunity, candidates need to have

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Level 4 Diploma qualified and keen to progress towards Chartered Status.

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Previous experience within a fast-paced IFA practice.

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High level of analytical capability and good communication skills.

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Excellent client facing skills.

Position: Paraplanner Location: Worcestershire Salary: £30,000 - £40,000 The Business: An experienced Paraplanner is required to join a fantastic financial services firm which focuses on providing a high quality financial planning and investment management service.

The Opportunity: During this period of key expansion, the business is looking for a technically-minded paraplanner to support the successful financial planners within the business. The firm has the flexibility to mould the perfect opportunity around each person’s specific skillset, so the role can be tailored to exactly what you want. You will have the opportunity to write high quality suitability reports independently. You will have the opportunity to work in a supportive team environment where progression is strongly encouraged.

What’s needed for me to be considered?

In order to be considered for this unique opportunity, candidates need to be Level 4 Diploma qualified or working towards this. You will also need to have a high level of analytical capability and good communication skills.

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Position: Private Client Director Location: London Salary: £60,000 The Business: This well-established, private investment firm in London, has a long history and respected reputation for serving the diverse needs of high net worth individuals across a range of investment structures.

The Opportunity: It presents a fantastic opportunity for a highly qualified financial sales specialist to join the team as Private Client Director. Benefits include working from home on an employed basis with the support from the office in London.

Clients will be transferred to you depending on your location, with the benefit of the choice of a car with fuel allowance.

You will be expected to attend client meetings and build relationships to make sure that you are providing the best, most suitable recommendations to each and every client.

What’s needed for me to be considered?

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Highly lucrative compensation structure.

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Have the flexibility to work remotely from your home.

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Focus on bringing new private clients with assets of more than £250,000.

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Level 4 Qualified, meeting RDR requirements.

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Quantifiable track record in generating new investor business.

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Highly driven and able to sustain effective activity levels.

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Highly competitive and goal-orientated sales professional.

Position: Home Based Paraplanner Location: Hampshire Salary: £30,000 - £40,000 The Business: Our client is a multi-award winning financial planning practice based in Farnborough. They specialise in providing a tailored financial advice service to private clients across the UK as well as to many large businesses.

The Opportunity: Due to expansion within the business, the company are looking for an experienced paraplanner to join the back-office team in a home-based capacity. You will be tasked with writing suitability reports, undertaking research and making recommendations to support the IFAs. What’s needed for me to be considered?

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Previous paraplanning experience, preferably including pension advice.

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Diploma qualified with an interest to work towards Chartered status.

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Attention to detail and the ability to explain complex information clearly and simply is key.

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Excellent PC knowledge and ability to operate database systems.

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Ideally you will have previous experience working in a home-based capacity.

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Position: Desk-Based IFA Location: Hampshire Salary: £35,000 - £40,000 The Business: This multi-award winning financial planning business is looking for qualified professionals to join their desk-based advisory team.

The Opportunity: Due to success in gaining several new corporate contracts and as part of the firm’s continued growth strategy, our client is looking for an experienced Diploma qualified advisor, or experienced paraplanner, who is looking to progress their career.

Responsibilities and duties: •

To provide profitable, effective and compliant whole of market financial planning advice and ongoing servicing to the company’s present client bank.

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To identify and develop new business opportunities from existing clients, introducers and referrals and achieving agreed revenue targets.

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To act in accordance with the FCA’s Statement of Principles and Code of Practice for Approved Persons.

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To promote and provide a comprehensive and compliant service to existing clients within the activities as defined and authorised by the company.

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To act and deliver in accordance with the TCF principles at all times.

What’s needed for me to be considered?

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Level 4 Diploma qualified or equivalent, as a minimum.

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Have proven experience within financial planning.

Position: Stockbroker Location: Bristol Salary: £22,000 - £30,000 The Business: The business is located in the heart of Bristol and serves investors in the South West of England and South Wales. Its team of brokers look after the needs of clients who require a more local service than is available through the firm’s London head office.

The Opportunity: This is an excellent opportunity to work with a well-established stockbroking firm in Bristol, in a stockbroker role which has scope to provide exciting bonuses and the opportunity to progress your career further as a stockbroker.

What’s needed to be considered:

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Level 4 CISI qualified.

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Experience as a stockbroker.

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Dealt with own client base and portfolio.

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Sales-driven individual.

What next?

If you are interested in any of these positions, then contact Heat Recruitment immediately. If suitable, one of our specialist consultants will be in contact to discuss the opportunity with you in detail prior to submitting your CV to the particular firm concerned. In this discussion we will aim to identify your specific skills and motivations. Where appropriate, we can also highlight other relevant opportunities that match your requirements.

And also…

If these specific vacancies are not exactly what you are looking for, please contact us to discuss other opportunities we may be recruiting for that aren’t necessarily advertised. Additionally, refer a friend or colleague to us and receive £200 in vouchers if we assist them in securing a new career.

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Visit the Heat Recruitment website for more details of these and hundreds of other jobs too www.heatrecruitment.co.uk

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