Money Matters: 10 Years of Belper IFS: Our First Decade Money Matters: Too Risky Money Matters: 10

10 years ago, Belper Independent Financial Solutions was formed after its founder (me, Kevin Glover) was made redundant from The Derbyshire Building Society.

Years of Belper IFS: Our First Decade

The word ‘risk’ is provocative and emotive. Most of us treat the word with alarm and think of loss, but what about gain?

10 years ago, Belper Independent Financial Solutions was formed after its founder (me, Kevin Glover) was made redundant from The Derbyshire Building Society.

Psychologists Tversky and Kahneman suggested that we value losses about 2.3 times more than gains of the same value, while other studies proposed that the true ratio is closer to five.

that the need for financial advice and a solution should not be seen as a one-off. Financial products and solutions were probably right at the time, but just how much has changed since their inception?

rise for the first time in over 10 years; returns of 4% per annum on some bank accounts were not hard to find. However, with inflation running at over 10%, the real return was minus 6%. 6% loss of purchasing power.

that the need for financial advice and a solution should not be seen as a one-off. Financial products and solutions were probably right at the time, but just how much has changed since their inception?

Legislation Risk – a new Chancellor can change the investment landscape. In 2015, pension reforms led to more accessible pensions. This could change again with another Government who may decide to repeal some rules such as reducing or removing the tax-free cash element, or capping ISA allowances.

Since then, Belper has seen the loss of The Derbyshire, Woolworths, Somerfield, Thomas Cook and Britannia Building Society to name but a few long-standing institutions that are now confined to history Generations of people have been served or been customers of these organisations. You are probably one. State Pension Age has changed several times and will most likely do so again. At least interest rates have not changed much! Rubbish then and not much better today.

Since then, Belper has seen the loss of The Derbyshire, Woolworths, Somerfield, Thomas Cook and Britannia Building Society to name but a few long-standing institutions that are now confined to history Generations of people have been served or been customers of these organisations. You are probably one. State Pension Age has changed several times and will most likely do so again At least interest rates have not changed much! Rubbish then and not much better today

Investment funds (whether held in pension wrappers or alternative structures such as Stocks and Shares ISAs), are mostly run by fund managers who are also human beings. As humans they may retire, defect to other companies, or run out of luck! Solutions that may have been right at the start may no longer be suitable or effective. Leading fund managers in 2009 may no longer be leading fund managers as we approach 2020.

Investment funds (whether held in pension wrappers or alternative structures such as Stocks and Shares ISAs), are mostly run by fund managers who are also human beings. As humans they may retire, defect to other companies, or run out of luck! Solutions that may have been right at the start may no longer be suitable or effective. Leading fund managers in 2009 may no longer be leading fund managers as we approach 2020.

There are lots of different investment-related risks. Here are a few:

Interest Rate Risk – historically, low risk assets such as GILTs and Corporate Bonds (bedrocks of many pension schemes, used as a lower risk diversifier in a portfolio) respond when rates change. Interest rate rises (as in 2022) have a negative impact on the capital values of such assets, seeing them behave more like higher risk assets with falls of over 20% not uncommon.

Consider this – joining the EU was considered the right decision once upon a time.

Consider this – joining the EU was considered the right decision once upon a time.

From my dining room in 2009, to an office in Heanor, back to Belper and now to the present location, much has changed including the greyness of my hair and the size of my waistline! Now as a team of 8 we have seen the client base expand over the years. ‘Generous’ successive Chancellors introduce new legislation impacting the public and signposting the need for financial advice.

Market Risk – people understand most investments (bar cash) rise and fall in value daily depending upon various factors. The fund may have invested and made poor decisions, or there could be investor disarray and a general sell off. Good funds don’t become bad funds overnight though; the reason for a sale might be simply because markets and investors are spooked. Fund managers are powerless over investor masses who, following a crowd, start a selling frenzy. I worked for the Derbyshire Building Society in 2008 when the Banking Crisis was in full effect. The former Newcastle Building Society was under pressure and queues of depositors wishing to withdraw funds formed outside branches. At our branch of the DBS a till broke down, forming a queue outside the door. Panicked passing investors put 2 and 2 together and made 5, incorrectly jumping to the conclusion that the DBS was going bust too. Believing they could lose money they behaved with pack mentality.

In April 2015, pension regulations changed. They will almost certainly change again. Pensions from prior to this time may no longer be suitable – but just how would you know? So, as you sit munching your turkey over the festive period, consider how many of these questions apply to you and see what may benefit from having a review

From my dining room in 2009, to an office in Heanor, back to Belper and now to the present location, much has changed including the greyness of my hair and the size of my waistline! Now as a team of 8 we have seen the client base expand over the years. ‘Generous’ successive Chancellors introduce new legislation impacting the public and signposting the need for financial advice.

What about you – what has changed in your lives over the last 10 years? How many jobs have you had? Has your family extended or tragedy struck? How many times have you moved house? How many pension schemes have you been a member of and simply left, through one reason or another? How many cars, partners and other life events have occurred?

Currency Risk – most UK-based investment funds trade in Sterling but can buy shares in overseas currency. Currency rates move which can act favourably, but a good fund can look less if the exchange rate moves in the wrong direction. A holding in the company or the company itself may have fine virtues but the revaluing of currency markets could work against the investor, resulting in losses or gains and the company and investor suffering.

What about you – what has changed in your lives over the last 10 years? How many jobs have you had? Has your family extended or tragedy struck? How many times have you moved house? How many pension schemes have you been a member of and simply left, through one reason or another? How many cars, partners and other life events have occurred?

How many investments have you made and when were they last reviewed and looked at? My point is

Inflation Risk – the real return on your investment needs to be offset against inflation. 2022 saw interest rates

How many investments have you made and when were they last reviewed and looked at? My point is

Liquidity Risk – the ability to withdraw from an investment fund. Sometimes there is no cash in the fund and the manager has to sell assets to cover a withdrawal. This is fine providing there is the ability to sell the assets (and a willing buyer!) to cover the withdrawal … but not so good if there isn’t.

In April 2015, pension regulations changed. They will almost certainly change again. Pensions from prior to this time may no longer be suitable – but just how would you know? So, as you sit munching your turkey over the festive period, consider how many of these questions apply to you and see what may benefit from having a review.

Is 2020 the time to take a look at your financial arrangements once again and get them fit for purpose?

Is 2020 the time to take a look at your financial arrangements once again and get them fit for purpose?

Wishing you a happy 2020 and a prosperous next 10 years.

Timing Risk – sometimes events overtake the necessity to make a withdrawal from an investment fund. Some events are unplanned and, when they occur, there can be little option but to draw monies from investment funds under distress, potentially turning a temporary ‘paper loss’ into a ‘real loss’. Ideally, we plan withdrawals (or deposits) and hope the time is a good time.

Wishing you a happy 2020 and a prosperous next 10 years

By Kevin Glover, Belper IFS

By Kevin Glover, Belper IFS

By Kevin Glover, Belper IFS

This information is general only and is not intended to address your particular requirements. The data above should not be relied upon in its entirety and shall not be deemed to be or constitute advice No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation.

This information is general only and is not intended to address your particular requirements. The data above should not be relied upon in its entirety and shall not be deemed to be or constitute advice. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation.

This information is general only and is not intended to address your particular requirements The data above should not be relied upon in its entirety and shall not be deemed to be or constitute advice No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation