Fi n P W la an Se ee nn ci ep k i a ag 2 ng l es 01 8& 3 9
Official Magazine of the Institute of Financial Planning
December 2013 | £4.95 |
Financial Planner
VOICE OF THE FINANCIAL PLANNING PROFESSION
Training and CPD news page 13
Wrap and Platform Survey A magic elixir? | page 20
Real Life Case Study A Widow’s Tale | page 17
Technical Update ETFs for planners | page 27
My Business
Tina Week’s business journey | page 24
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Contents | editor’s column
In this issue NEWS & COMMENT
10 | LETTER FROM REDCLIFF STREET Your Letters on a wide range of topics including the IFP Conference, mentoring and the fiduciary duties facing Financial Planners
Page 5: Financial Planning Week 2013
Page 11: Craig Palfrey in Branch Matters
10 | LETTERS TO THE EDITOR 11 | BRANCH MATTERS: Craig Palfrey CFP Craig Palfrey shares his views on the value of Financial Planning Week and what he’s doing to help and encourage more members to back the campaign. 13 | TRAINING & CPD UPDATE All the latest training and CPD news for planners and why exams may be a chore but they really matter. CM
Page 13: Lucy Courtenay of FPSB UK
17 | REAL LIFE CASE STUDY: A Widow’s Tale Damien Rylett of Brunel Capital Partners writes about how he helped a widow recovering from tragedy sort out her complicated financial affairs.
24 | My Business: Tina Weeks Tina Weeks of Serenity FP on the drivers which encouraged her to set up her flourishing Financial Planning business. 27 | Technical Update: ETFs Frank Spiteri of ETF Securities looks at how planners can best use ETFs and the pros and cons surrounding their use.
IFP MEMBER NEWS
While there is plenty of benefit in being involved for IFP members, such as the possibility of finding new clients, raising their practice’s profile and building media coverage, the IFP has always stressed that the event is more about reaching out to consumers in the widest sense than it is about marketing. Of course, encouraging consumers to plan their finances better and promoting planning at the same time is a twin benefit and inevitably some consumers will hopefully want to consult a qualified planner when they realise what they are missing. The week will mainly be about a PR and media campaign but all planners can join in, perhaps by refreshing and distributing new marketing material, updating a website or writing a letter or press release for local media, or perhaps running an open morning. There are lots of ideas on p8+9. With over 2,000 IFP members, if every IFP member devoted just one hour during the week the ripple effect would be huge. If you haven’t planned anything yet why not aim to do at least one activity or local campaign during the week? A press release about one aspect of Financial Planning you feel passionately about may be all you need to get the ball rolling. Small things can make a difference and even if just a few consumers are alerted to the benefits of good Financial Planning or taking better care of their finances your efforts would be well rewarded. Of course, if people who read your comments go on to become clients then even better.
INSIGHT AND ANALYSIS
20 | Cover Feature: Wrap and Platform Survey Geoff Mills of ratings company RSM looks at the important due diligence questions planners need to ask.
Financial Planning Week is a campaign that all planners should support wholeheartedly Spreading the message to consumers about the benefits of good Financial Planning is at the heart of the IFP’s Financial Planning Week which is launched on 24 November (see 8+9).
5 | FINANCIAL PLANNING NEWS IFP members sweep the board at the annual Financial Planner of the Year Award, Financial Planning Week 2013 is coming soon and advisers say the post-RDR world is not as bad as feared. 8 | News feature: Financial Planning Week 2013 The IFP’s Sue Whitbread takes a look at how Financial Planners can make the most of Financial Planning Week 2013 and how they can reach consumers better.
Letter from the editor
Page 17: Real Life Case Study
Some have described Financial Planning as the biggest secret in financial services – it’s time that secret was out.
Kevin O’Donnell Page 20: Wrap and Platform Survey
29 | IFP NEWS The latest news on the growth of the profession plus our regular column from IFP President Rebecca Taylor FIFP CFPCM.
Publisher and Group Editor kevin.odonnell @portfoliopublishing.co.uk @FPM_Online
32 | IFP EVENTS 33 | IFP CORPORATE MEMBER NEWS This month IFP corporate members Aberdeen and 7IM on why they are backing the IFP and the profession.
Page 34: Powwow Down South is coming
34 | DIARY A Paraplanner Powwow is being planned for the South. The official magazine of the Institute of Financial Planning Financial Planner is the official journal of the Institute of Financial Planning. Founded in 1986, the IFP is the exclusive licensee of the CFPCM mark. Financial Planner welcomes articles and correspondence from both members and non-members of the IFP but cannot be held responsible for lost manuscripts. It is recommended that contact be made with Financial Planner’s editorial team before submitting manuscripts. Views, opinions or claims in this magazine are not necessarily subscribed to by the Institute of Financial Planning or Portfolio Publishing and regulatory due diligence is not performed on authors. The IFP and Portfolio Publishing can accept no responsibility for loss occasioned to any person on taking or refraining from action as a result of the material contained herein.
©Portfolio Publishing 2013 Contact & Publishing Details: Subscriptions: 01895 678629 Full contact details p34
Institute of Financial Planning One Redcliff Street Bristol BS1 6NP 0117 945 2470 Fax: 0117 929 2214 enquiries@financialplanning.org.uk search for Institute of Financial Planning @IFP_UK
www.financialplanneronline.co.uk | December 2013 | 3
We put our advisers first. Now they’ve done the same for us. At Transact we’re delighted to have won the Aberdeen UK Platform Awards for Adviser Service and Best Large Platform Provider. Particularly because the two awards are voted for by the people who matter most – advisers. To quote from Aberdeen’s summary of our achievement: “Once again Transact picked up two very important awards, Large Platform and Best Platform for Adviser Service, both on adviser votes..... a major contender for Platform of the Decade.” These awards come hot on the heels of our success in CoreData Research’s annual platform survey in which we were rated best in an overwhelming two thirds of the key service categories. We promise, however, that none of this success will go to our heads. We are dedicated to delivering an even higher level of service in the coming years. So if you voted for us in either the Aberdeen awards
Proud supporter of the Institute of Financial Planning
or CoreData survey, we’d like to say a very big thank you.
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This advertisement is for use by professional advisers only. Unless stated otherwise, any opinions expressed are our own or based on our interpretation of relevant rules and regulation in the UK. The document is for information purposes only and does not, and is not intended to, constitute professional advice. “Transact” is operated by Integrated Financial Arrangements plc. Registered office 29 Clement’s Lane, London EC4N 7AE. Registered in England and Wales under number 3727592. Authorised and regulated by the Financial Conduct Authority (entered on the Financial Services Register under number 190856)
FINANCIAL PLANNING NEWS
IFP urges planners to back consumer focused Financial Planning Week 2013 CFPCM Professionals planners to show the and those working public and the media for IFP Accredited the real essence of the Financial Planning service they provide FirmsTM are being for clients. urged to make a The IFP says that difference by getting there are many involved with the IFP’s ways for planners Financial Planning FP Week Logo 2013 to get involved. Week campaign Practices can open starting on 24 November. their doors to the public and show, Through public relations and review and distribute marketing media coverage, the IFP will be materials, including websites and promoting CFP Professionals and promote something new such Accredited Financial Planning Firms as a new service. Social media to the media and the public as the is also recommended as a good leaders in the Financial Planning way to promote engagement as profession. This provides the ideal is writing blogs, articles or press opportunity to boost planners’ releases. Planners can also establish business profile and build brands. themselves as experts. While the IFP can promote planners’ Sue Whitbread, IFP commcredentials, it is calling on all unications director, said: “This is the time of year when the IFP calls on all
those involved across the Financial Planning spectrum to collaborate. The idea is to co-ordinate initiatives to help consumers understand what Financial Planning is all about and what consumers can do to kick start their own financial plans.” The IFP is working with Holt PR to mount a national PR campaign and will also be using Wayfinder, its new consumer brand, to encourage people at different life stages to take some simple steps to improve their financial “fitness”. The dedicated URL www.FinancialPlanningWeek. org.uk will direct consumers to the IFP’s website and the IFP is also working with Liontrust to carry out a survey of consumers’ attitudes. See Financial Planning Week Preview on p8 for details of what you can do to can get involved
Stephen Jones CFP crowned Financial Planner of Year 2013 at London awards CM
IFP member Stephen Jones CFPCM has won the Financial Planner of the Year Award at the prestigious Money ManagementIFP Financial Planner of the Year Awards. He was one of 10 IFP members who dominated the awards which are held annually and based on challenging client case studies. Mr Jones, of Chester-based 75point3 Financial Planning, received his trophy and a cheque for £5,000 from host TV presenter Angela Rippon OBE at a Gala Dinner in the ballroom of the Mandarin Hotel in Knightsbridge, London. The awards, supported by the IFP, were sponsored by Schroders. Money Management said this year’s awards saw a record number of entrants across the eight categories (see table for details of winners). Jon Cudby, editor of Money Management, said: “The Money Management awards recognise the best in Financial Planning and the first post-RDR awards saw a record number of entries.” Steve Gazzard. IFP chief executive, said: “We’re delighted that IFP members again swept the board in what is regarded as one of the most coveted awards in Financial Planning.” A widow’s tale - see page 17
Money Management-IFP Financial Planner of the Year Awards 2013 - details of the winners and runners-up OVERALL WINNER Stephen Jones CFPCM Trackers Chris Marshall CFPCM Francis Klonowski CFPCM (runner up) Investment Chris Wordsworth Sarah Del Bravo CFPCM (runner up) Protection Duncan Parkes CFPCM Jonathan Smith (runner up) Inheritance tax Carole Nicholls CFPCM Paul Gibson CFPCM (runner up) Equity release Michael Filewood Richard Barker (runner up) Investment companies Robin Keyte CFPCM Matthew Hodge (runner up) Mortgage Alan Lakey David Baker CFPCM (runner up) Auto-enrolment James Pearcy-Caldwell CFPCM Christine Harding (runner up) Source: Money Management - IFP
Sponsor/Winner Schroders 75point3, Chester Legal & General 75point3, Colwyn Bay Klonowski & Co, Leeds JP Morgan Hargreaves Lansdown, Bristol Grangewood Financial Management, Maldon, Essex LV= Old Mill, Exeter Riverpark IFA, Glasgow Octopus Investments Nicholls Stevens, Bristol Carbon FP, Aberdeen Just Retirement AGE Partnership, Leeds AGE Partnership, Leeds The AIC Keyte Chartered Financial Planners, Taunton PWC, London Woolwich Highclere, Apsley Lift Financial, London The People's Pension AISA Professional, Pewsey Harding Roberts, Alderley Edge, Cheshire
Elevate adds new features to platform AXA Wealth has introduced a number of enhancements to its Elevate platform. The changes to the Elevate platform will make navigation easier and more intuitive with improved use of icons, colours and crisper screen layouts. There will be greater compatibility for users accessing the platform from tablets and mobile devices.
Fidelity acquires Annuity Direct Fidelity has acquired the share capital of annuities provider Annuity Direct with the aim of combining both companies resources to help clients’ retirement incomes. Subject to FCA approval, Fidelity will acquire Annuity Direct and its holding company Retirement Angels.
Pershing urges advisers to reassess pricing Pershing urged advisers and wealth managers at its recent client advisory council to reassess their pricing to ensure future profitability. Pershing estimates that only 20 per cent of firms use the cost of providing services as the foundation for determining price.
Paraplanner Powwow Down South on way The South may soon see its own Paraplanner Powwow and the Powwow concept may be rolled out nationwide. Following the success of the first Paraplanner Powwow, held in giant teepees in Northamptonshire, and the smaller Paraplanner Powwow Up North, a Southern event, Paraplanner Powwow Down South, is planned. See www. financialplanneronline.co.uk
More over 65s working to boost retirement income The end of a default retirement age is resulting in a rise in older workers with 16 per cent of people saying they believe they will never be able to retire fully. Currently almost a third (28 per cent or 9.1 million) of the total UK workforce of 32.3m is over 50 - an increase of 12 per cent in five years. Research from Partnership suggests 71 per cent of 50-65 year olds feel they will need to supplement their income in retirement.
www.financialplanneronline.co.uk | December 2013 | 5
FINANCIAL PLANNING NEWS
45% of firms outsourcing investment management Research results from financial research company Defaqto has found show that 45 per cent of financial advisers are outsourcing some or all of their investment management. This figure is up from the 42 per cent seen at the end of 2011.
Royal London to focus on a single brand Royal London will move to a single ‘master’ brand for most of its UK businesses and will phase out the Scottish Life, Bright Grey, Moneyvista and Scottish Provident names. Its Ascentric wrap platform will continue to operate as a separate name and in the Republic of Ireland Royal London will continue to use the Caledonian Life brand.
Jewellers’ insurer launches Financial Planning arm Jewellery trade specialist T H March of London, a Chartered Insurance Broker, has launched a Financial Planning venture. TH March & Co, which already offers a range of services to jewellers including life insurance, has expanded its financial services by forming a new company, TH March Financial Planning Limited, to offer “bespoke holistic Financial Planning” along with investment and wealth management advice.
2.5m grandparents give money to grandchildren Financial support from grandparents to younger generations is worth £500m a year and is set to grow in future, according to new research. New research by the International Longevity Centre-UK highlights how grandparents are playing an important role in supporting the financial wellbeing of future generations. The research was supported by Key Retirement Solutions and Partnership.
Government seeks to bolster fiduciary duties The Government’s Law Commission has published a consultation paper reviewing the “fiduciary duties” that apply to investment intermediaries following the Kay Review. Published in July 2012, the Kay Review criticised intermediaries for excessive trading on the basis of short-term share movements.
Post-RDR world for advisers is better than feared according to Aviva report Retail Distribution A survey by Aviva Review (RDR) compared found that 28 per cent to a year ago, of advisers have seen according to its latest an increase in active Adviser Barometer. clients post RDR and There are several 72 per cent say clients signs to indicate that are positive or neutral Aviva’s Andy Beswick the reality of RDR has about adviser charging. According to the research, been less worrying than advisers advisers are still willing to service had originally predicted. More clients with relatively modest assets than half of advisers (55 per cent) despite predictions that advisers report no significant change in the would shun smaller clients. Aviva number of active clients they are says that a majority of advisers are servicing post RDR, with a further willing to service clients with less 28 per cent seeing an increase in their active client base. Most (52 per than £50,000 in assets. In other findings, 63 per cent cent) of these say this is largely due of advisers are taking advantage to new clients looking for advice of growth in the “at retirement” for the first time, as well as taking market but regulatory fees and on former clients of IFAs who have profitability are concerns for exited the market (29 per cent). Almost three quarters (72 per advisers. Aviva says that its survey found cent) of advisers say that their that advisers were broadly positive clients’ reaction to adviser charging about the implementation of the has been broadly positive or neutral,
up from 65 per cent in March 2013. Most of the adviser community (46 per cent) continues to service clients with less than £50,000 investible assets; only one in five (19 per cent) require clients to have a minimum of £50,000 for them to provide pension and investment advice. However, one in five admits to servicing clients at a loss (22 per cent) and a similar number (22 per cent) have not yet decided how to deal with them. Andy Beswick, intermediary director at Aviva, said: “There is a sense of emerging stability from our latest barometer findings. Advisers seem to be more optimistic about the reality of RDR compared to their predictions a year ago. “Naturally some advisers have left the market, but this has presented those remaining in business with more opportunities.”
Planners set up business to help advisers benefit from auto-enrolment boom Several Financial Planning figures have joined forces to launch a new business designed to provide an auto-enrolment compliance support service for planners. The business, the Auto Enrolment Advisory Group, is aimed at financial advisers and Financial Planners and has been launched by planners Chris Daems, Matthew Walne, Ian Highton and social media expert Bridget Greenwood. Chris Daems said: “One of the largest misconceptions about auto enrolment is that it’s all about pensions. It’s actually far more about systems and project management. “ “While financial advisers and
planners are fantastic auto-enrolment staging at building relationships date, highlighting a and using their “very small window technical expertise to of opportunity” for help develop solutions planners. for their clients, the autoenrolment group The group has used feedback we have its founders’ experience received is that auto-enrolment in this area to build the proposition. requires a whole new set of Joint group founder Matthew processes and systems to ensure the Walne said the group was a adviser can help both their corporate commercial venture and the cost and business owner clients with this of an initial report is expected to be rigorous new legislation.” about £3,000. He added that many advisers The Auto Enrolment Advisory struggle with knowing how to Group has so far had contact with profitably deal with auto-enrolment. over 100 advisers firms and says Over the next 10 months firms with many have registered at its website 62-799 employees will reach their www.aeadvice.co.uk
FCA to ‘name’ firms under investigation The Financial Conduct Authority has confirmed how it will use its new power to publicise warning notices by publishing information about proposed enforcement action. Previously, the regulator could only publish information about enforcement proceedings at a later stage in the enforcement process, once it had decided to take action. Following a period of consultation, the FCA said that
6 | December 2013 | www.financialplanneronline.co.uk
information would be made public through a warning notice statement that will usually name the firm under investigation and, in certain circumstances, name an individual. FCA enforcement director Tracey McDermott said: “We listened carefully to views from inside and outside the industry. I believe we have got the balance right so we now have in place a regime that enables us to provide information
to consumers, investors and firms earlier about the action we are taking to tackle misconduct to ensure markets work well and consumers get a fair deal.” The FCA will consider the circumstances of cases in deciding whether it is appropriate to publish a warning notice and, if so, what details to publish. Before making its final decision, it will consult the person under investigation. platforms - a magic elixir? - See page 20
FINANCIAL PLANNING NEWS
IFP appoints Sam Rees-Adams as first director of professional standards The IFP has appointed experienced education professional Sam ReesAdams to a newly created, fulltime post of professional standards director. Following the announcement earlier this year that IFP education director Sue Leech would be taking early retirement, Ms Rees-Adams is now take on this broader role which encompasses that of education director and has been extended to provide scope for greater emphasis on professional standards.
Her background has included being a qualifications manager and director of the Financial Services Skills Council. She has recently run her own consultancy business and served on the Examination Committee. She is part of the IFP’s senior management team and is leading the Professional Standards section in supporting IFP members and Financial Planning firms to meet and maintain the highest professional standards in Financial Planning. She is co-ordinating the provision
of development pathways as well as the effective education and CPD programme that the IFP operates for members. She is also responsible for auditing CPD records. She said: “I’m delighted to join the IFP, an organisation which is so well known for its commitment to excellence and high standards in Financial Planning.” Steve Gazzard CFPCM, chief executive of the IFP, said: “Sam is a great addition to the strong team we have in place here at the IFP.”
Service to help planners ‘crack’ the web Advisertech, the new website designed to help Financial Planners make the most of the internet and social media, has signed up 14 members in its first month and is on target to reach 25 by the year end. The new site has been set up by Financial Planner Peter Matthew CFPCM, managing director of
Jacksons Wealth in Penzance. Mr Matthew is an enthusiastic exponent of online communication and social media and a regular speaker at IFP conferences. He said: “I had no idea what to expect but I am really pleased that these early-adopters would favour me with their trust.”
Advisertech will educate planners on how to optimise the Internet for business use and help with content marketing and social media. The site will be a subscription service and Mr Matthew, an experienced user of social media and the internet, said he would initially have an early-bird fee of £25 a month.
Half of those near retiring unaware of options Research from LV= reveals that millions of Britain’s over-50s are unaware of how they can draw an income from their pension fund. While three in four (74%) over-50s have private pension savings, almost half (47%) admit that they are not familiar with, and have not heard of, any of the retirement income products available.
Junior Isas underline children’s common sense Analysis of the Junior Isa market by Hargreaves Lansdown has revealed that just 1 per cent of children who reached age 18 have chosen to cash in their Junior Isa and take the money.
UK to share tax data with with Jersey and Guernsey The UK has signed automatic tax information sharing agreements with Jersey and Guernsey as part of a continuing fight against offshore evasion.
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www.financialplanneronline.co.uk | December 2013 | 7
FP Week 2013 The IFP’s Financial Planning week is the consumer campaign to spread the word about the benefits of Financial Planning. Sue Whitbread looks at what’s ahead this year.
Inspiring consumers to plan their financial future Financial Planning Week (24 November – 1 December) is almost here. This is the time of year when the IFP calls to all those involved across the Financial Planning spectrum to collaborate. The idea is to co-ordinate our marketing initiatives to help consumers to understand what Financial Planning is all about and what they can do to kick start their own financial plans. Financial Planning Week is not about promoting the IFP, it’s all about educating and empowering consumers to take more control of their lives as a result of financial planning. Through the campaign, the IFP also aims to point consumers to places where they can access qualified Financial Planning advice from CFPCM Professionals and Accredited Financial Planning Firms should they require it. To help get the messages out, the IFP is working with Holt PR and mounting a national PR campaign to cover financial and lifestyle media. The IFP will also be using Wayfinder, our new consumer brand, as a tool to encourage people at different life stages to take some simple steps to improve their financial “fitness”. The dedicated URL www. FinancialPlanningWeek.org.uk will direct consumers to the IFP’s website where they will find tips, tools and resources that they can use to help them make better decisions around money. The IFP is also working with Liontrust to carry out a survey of consumers’ attitudes, finding out what people are thinking and doing when it comes to their own financial plans. The findings from the survey will create relevant statistics that can be used to highlight the plight of so many consumers who are feeling the pressure on their finances as inflation, pay freezes and low interest on savings accounts are just some of the ways that household budgets are coming under increasing pressure. Journalists have again proved keen to get involved and numerous features and news stories have already been commissioned. Building on the successes of our campaigns over the past five years, it’s great to see that more and more
UK consumers need to do more to plan ahead financially and Financial Planners can make a difference at this time of year Financial Planners can support the campaign in lots of different ways: Offer free financial surgeries to consumers in your area during the week Use the Financial Planning Week logo and branding on your website Write a blog or article, record a video or podcast for the FPW website or Facebook page - or even better – run a series of articles throughout the week. Send out a press release, or a series of releases, highlighting your support for the campaign and for Financial Planning Contact local radio or print journalists - or national journalists too if you have contacts with them - and put yourself forward as a Financial Planning expert available for commentary Use your communications tools, such as client newsletters, your website, social media channels and so on, to review their content and make sure they focus on core Financial Planning themes and align them with the campaign Establish connections with local schools to help students understand more about money education ahead of its integration into the National Curriculum in England from 2014 Contact professional connections and offer to talk about Financial Planning during the week Support the media campaign - volunteer to write
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Explaining the benefits of good Financial Planning articles, provide case studies or comment when required Help with the “Ask a Planner” facility – open to CFPCM professionals only Support the IFP’s Wayfinder facebook page – post useful tips and articles that will help consumers Join the Twitterati – Get tweeting about Financial Planning Week – and help us by retweeting other messages too – use the hashtag #FPWUK Engage in the Twitter “ interview” on Friday 29 November and help the IFP to get the hashtag trending!
IFP President rebecca taylor FIFP CFPCM - See page 29
NEWS FEATURE firms are committing resources to help the IFP put Financial Planning on the map this autumn. Joining the long list of campaign supporters this year are Liontrust, Aviva, Alliance Trust and Savings, Defaqto, NS&I, Zurich, Jupiter, M&G, Prudential, Moneysucks and Henderson Global Investors, all of whom will be playing their part in helping the profession put Financial Planning in the spotlight for the week. In mid November, we worked with Aviva to run a press briefing for the consumer media. It was particularly good to gain the support of former British Lion and England Rugby star Will Greenwood MBE. Will gave a powerful (and funny!) speech which highlighted why it is so important for people, whether they are professional sports people or not, to take Financial Planning seriously. Core to the success of the campaign is the involvement of Financial Planners and Financial Planning firms. Accredited Financial Planning firms, CFP Professionals as well as the broader IFP membership are getting involved. It’s a great way to raise awareness, but it’s also a great way for firms to build their brand with the media and show themselves as experts in real Financial Planning. Many are providing valuable support for media activities, writing blogs, providing commentary and supporting the IFP’s online “Ask a Planner” facility where consumers can get feedback from CFP Professionals to their Financial Planning questions. The power of social media is likely to play an even more significant part in the campaign this year. In previous Financial Planning Week campaigns, the IFP has used Facebook as a great way of sharing directly with consumers the articles, blogs, surgeries, information, events and other initiatives that are such a fundamental part of the campaign. Ryan Haylock, IFP marketing manager, said: “Facebook has really improved its functionality for business use and is establishing itself as the ideal way to connect with consumers online. “It’s so easy for people to pick up some of the ideas and tips that are so much a part of the campaign as they filter into timelines. We’d strongly encourage IFP members to take a good look at Facebook as a business tool. As part of Financial Planning Week, members can post their own tips, blog and ideas directly onto the Wayfinder Facebook page, both on the run up to the campaign and during the week itself. It’s a ETFS and DUE DILIGENCE - See page 27
A look back - highlights of Financial Planning Week 2012 1. Media Coverage. By working with Holt PR, the IFP secured over 300 articles and features about Financial Planning topics and news published in the week, which was 50 per cent up on 2011. National Media coverage was obtained in the Daily Express, Daily Mirror, Daily Mail, Mail on Sunday, The Scotsman among others, plus Investors Chronicle and consumer lifestyle press such as Your Home magazine and Good Housekeeping. 2. Members’ support for Financial Planning Week in 2012 IFP members’ support and direct engagement with consumers was significantly increased compared to campaigns in previous years. Members around the UK got involved with: Free Financial Planning Surgeries for consumers Running consumer seminars and workshops Taking Financial Planning into schools presentations to students Providing large numbers of tips, blogs and client case studies for the Financial Planning Week website CFP Professionals contributed to the “Ask a Planner” great way to help build your brand as well as promoting the excellence that this profession can deliver.” In 2012, Twitter proved to be a powerful catalyst for change with talk of Financial Planning extending way beyond our expectations. The IFP will be harnessing its power again this year and IFP members are encouraged to do the same. We’ll be using the hashtag #fpwuk so it’s easy to link blogs, videos and tweets into the mainstream campaign as well as
Managing money can be daunting for consumers online facility where consumers can post their money questions to be answered by expert Financial Planners There were webchats, videos and podcasts Member engagement with media – writing articles, doing radio broadcasts Social Media engagement – IFP’s first ever twitter “interview” was well supported
keep up to date with everything else that’s happening. Steve Gazzard CFPCM, IFP chief executive, said: “For me, getting involved with Financial Planning Week is a “no brainer” for Financial Planning firms. It’s such an exciting time for us to reach out and work together to connect with consumers and the media, showing them that Financial Planning is about a whole lot more than just choosing a pension or an Isa.
“Not only does it have benefits for the profession but it’s a great way for IFP members to boost their own business brand and hopefully pick up new clients too. With the RDR behind us, there’s never been a better time to get on the front foot and show people the clear benefits that Financial Planning can bring. There’s still time for members to get involved. Let’s get out and show people why we are proud to call ourselves a profession!”
Why hold Financial Planning Week? IFP organises the campaign for the following reasons: To provide the catalyst for the Financial Planning profession to connect collectively and directly with consumers, promoting awareness of the value of sound Financial Planning and its importance within people’s lives
To empower consumers to take some simple steps to plan their finances more effectively themselves
To highlight to consumers the value of taking expert Financial Planning advice
To help differentiate Financial Planning from more transactional financial advice
To promote the concept of true Financial Planning to consumers, advisers, providers and the regulator
Three Tips to Join in financial planning week 2013: Join the conversation - Financial Planning Week Twitter Interview Friday 29 November, from 1pm -2pm
Use the Financial Planning Week Logo – email Fpweek@financialplanning.org.uk for your copy
IFP will be posing a series of questions on twitter which members are encouraged to respond to, sharing their expertise and experiences using #FPWUK
Visit www.financialplanning.org.uk for more ideas on how you can get involved
Sue Whitbread communications director, IFP Since 2006, Sue has been communications director at the IFP, working closely with Ryan Haylock, IFP’s marketing manager. She is responsible for co-ordinating the IFP’s communications activities, to ensure that members, potential members and journalists are kept up to date with the opportunities provided by the organisation via email, print and online media. Sue has been actively involved with the IFP’s Financial Planning Week campaigns since launch back in 2008. sue@financialplanning.org.uk
@IFP_UK www.financialplanneronline.co.uk | December 2013 | 9
Comment Letters from Redcliff Street Time to get ready for Financial Planning Week 2014 - your support makes a real difference It’s been another busy month at Redcliff Street, the IFP’s head office. As the dust settles on another great annual conference, our focus switches to other matters. Branch chairmen have been putting the finishing touches to their programmes for 2014. They’ve done a great job, and there are plenty of excellent sessions to look forward to right across the UK. We’ve also been preparing for the final event of the year, our Scottish Conference. Meanwhile, Steve Gazzard CFPCM, Rebecca Taylor FIFP CFPCM and Barry Horner CFPCM made the long journey to Sydney, Australia for the Financial Planning Standards Board (FPSB) International Council Meeting. FPSB is the organisation that oversees the development of the Financial Planning profession globally, and is responsible for the setting and maintaining of standards relating to CFPCM certification. The IFP is proud to be the UK affiliate, joining 23 other countries representing almost 150,000 CFP professionals worldwide. Global leaders in the profession are very interested in seeing how the RDR has impacted on our market place. While IFP members, and CFP professionals in particular, are generally reporting that the RDR hasn’t meant big change within their businesses, they remain well placed to thrive. There is still concern in the UK for other segments of the market however. Financial Planning is proving to be the big differentiator when it comes to building long term client relationships. Being a part of the FPSB and the global Financial Planning community is a massive positive for the IFP as we share best practice and work together to promote CFP certification as the standard of excellence in Financial Planning. Turning to home, we’re busy at the IFP preparing for Financial Planning Week which takes place from 24 November. It’s an exciting time of year, when we pull out all the stops to shout loudly about what real Financial Planning is all about. To create demand for the services of professional Financial Planners, consumers need to be more aware of the value of good Financial Planning and that’s what Financial Planning Week is all about. This isn’t about the IFP, it’s about raising awareness of sound Financial Planning and the great service that professional Financial Planners and Financial Planning Firms can deliver. That’s where we need you. With just days left, if you and your firm have not yet made plans to support it then I urge you to do so. As has been shown in the USA and Australia, where planning is more established among consumers as a distinct process in its own right, such campaigns create a demand for the services of professional planners. Using the campaign to help build your brand and establish your credentials as a Financial Planner is the ideal way to show potential clients the value in the service you provide. Visit www.financialplanning.org.uk to see how you can get involved or email Fpweek@financialplanning.org.uk.
Sue Whitbread Communications Director Institute of Financial Planning
sue@financialplanning.org.uk @IFP_UK 10 | December 2013 | www.financialplanneronline.co.uk
Letters Financial Planner’s Letters to the Editor section is the place to have your say. Keep your letter to a maximum of 300 words. Include your full name, company name, IFP designation if appropriate, daytime telephone number and email address. You can email your letters to: FPMLetters@portfoliopublishing.co.uk. Names may be witheld from publication on request.
Innovative mentoring scheme is worth a look
Letter of the Month
Sir, readers of Financial Planner might be interested in an innovative mentoring scheme I have been involved with recently which provides virtual work experience. For the last few months, I have been acting as an e-mentor. I joined the virtual work experience programme Get In.Get On. First, I had to get D and B (formerly CRB) checked and complete some online modules about mentoring. I was then assigned my first mentee. Mentees are at school or college and interested in a career in financial services or accountancy. I explained to my mentee a little about my job and FPSB UK, the organisation I work for, she asked me a number of questions – some quite challenging. My main role was to log on to the platform once or twice a week and provide feedback to the modules my mentee had answered. There are resources to help but a lot is about where I work. Because I don’t work in a Financial Planning firm as such, I also responded from the point of view of a Financial Planner. Each mentee relationship lasts for one calendar month and is conducted wholly on line I am now working with my second mentee. I can go onto the platform anytime during the week although I get emails when my mentee has completed a module or sent me a message. It’s a great way to engage young people with Financial Planning and I’ve found it very rewarding. If you’d like to support motivated young people towards a career in financial services and can spare an hour or so a week, take a look at www.directions.org.uk Lucy Courtenay Qualification Director FPSB UK Bristol
Win £50 Voucher WIN A £50 voucher from the IFP to be used against any IFP training courses or events in the next year. To enter simply send your letter (300 words or less) to Financial Planner magazine. The Editor’s decision is final.
An amazing few days and a chance to hug Nick Cann made the trip worth it! Wow, what an amazing few days at the IFP Annual Conference! Where do I start? Well, probably like many others one of the most humbling moments was having the opportunity to catch up with Nick Cann (Editor’s note: the IFP’s chief executive recovering from stroke), a big man, larger than life and despite not being able to speak properly and give me my usual supersize ‘Cann Hug’ he was out there keeping his usual beady eye on us all! It was a great conference, it had some of the best and most innovative exhibition stands that I have seen at a conference for years. Best of all my grandma actually believed that I had bumped into royalty which was quite a giggle! But for me what made it was the response that I personally received from my session ‘Create and lead your 21st century professional practice’. I have been a member of the IFP for over five years and know many of the members; not just professionally but as friends and although I have spoken to many organisations over the years this was particularly close to
my heart and it meant the world to be asked. I had a great audience; nearly a full room which given the stiff competition of other great speakers was totally overwhelming. I could feel their engagement with me and my message and appreciated their support and encouragement through my croaky throat and sporadic coughing fits. The feedback that I received from those that attended my session, and even from those that didn’t, was unbelievable and confirms to me that my fellow IFP members are leading the way in our profession by pushing their operational and practice standards to a whole new level of excellence. It was my pleasure to be part of a fantastic conference and I wish all my attendees all the very best with implementing my ideas and suggestions within their businesses. Michelle Hoskin Director, Standards International Hitchin, Hertfordshire, SG4 7DP enquiries@standardsinternational.co.uk
The importance of fiduciary standards must be acknowledged by planners Sir, Financial Planners have a significant
Comment stake in the processes following from the recommendation in the Kay Report that investment advisers and managers be held to fiduciary standards. Kay comes from the viewpoint, shared with consumer bodies, that caveat emptor, in spite of being more and more constrained over time by FS Handbook principles and rules, can never be fit for purpose and that a fundamental change in the nature of the relationship between investors and their agents is required. The Government, in its response to Kay, said it had asked the FCA to report on the differences between the FS Handbook and fiduciary standards, “with particular reference to the issues raised in the Report around conflicts of interest.” The Government may also be mindful of similar pressures coming in time from Europe where ‘good faith’ is embedded in contract law in most countries. We’re well-qualified to answer the Government’s question. Having designed every aspect of the firm on fiduciary principles, as previously set out in my book ‘No Monkey Business’, we had already thought about the legal distinctions and identified the radical changes in business model needed to deal effectively with conflicts of interest. The convention of assetbased fees is a key candidate for change (something RDR didn’t address). They introduce conflicts between agent and client and between different clients of the same firm that are incompatible with a fiduciary. Most of the processes of ‘standardisation’ on which the economics of the industry depend also have to change. They conflict with the need for ‘customisation’ implicit when acting for individuals as a fiduciary; and they conflict with the objective of ‘maximising client utility’ – a concept rooted in goal-based wealth management and Financial Planning. A paper on the implications of fiduciary standards, ‘If Managers were Fiduciaries’, is on our website. Stuart Fowler Director Fowler Drew Limited 22 Quayside, William Morris Way, London SW6 2UZ www.fowlerdrew.co.uk
Auto-Enrolment creates a great business opportunity for planners Sir, As a lifestyle Financial Planner looking after successful small business owners I didn’t think for one minute that Auto Enrolment would interest me as a service I would be offering. Corporate and Group business has never interested me in the slightest. So why would I be interested in Auto Enrolment and workplace pensions? Unlike many current financial advisers I now see this as a window of massive opportunity that we will unlikely see again. I have to thank Steve Bee for the wake up call. If it wasn’t for his great speech at the New Model Adviser Conference back in January I wouldn’t be so heavily involved in it as I am now. It’s purely a commercial decision, which I think will be a good one. It would seem most financial advisers
I know or have spoken to don’t seem to know how they can make this work, who to recommend as the pension provider, earn fees or deliver opt out advice to employees without G60. Some of these are valid concerns, some are not. I don’t claim to know all the answers but I do know how the systems and processes work. The reason I have learnt this is through the power of collaboration with other leading financial advisers, namely Chris Daems and Ian Highton. Talking to them gave me the idea to launch a separate business, the Auto Enrolment Advisory Group, with them and also Bridget Greenwood. We now help other Financial Planners with what is a once in a lifetime opportunity. If every adviser got involved with auto enrolment there would still be enough business for everyone. For those that need it there is plenty of help available and we could all help each other to get enough business for what as I see as a very exciting time. Matthew Walne Director Santorini Financial Planning Ltd ame Loughborough, Leics matthew@santorini-fp.co.uk
Wider availability of advice is needed for pension decumulation planning Sir, The current retirement decumulation debate polarises on two planes: advice v nonadvice and annuity v drawdown. Those who sit firmly in the “advice only” camp miss three fundamental issues: availability of advice, consumer choice and marketing. Looking at these issues in turn, if there was sufficient demand from the advisory community to successfully provide open market option services to all those who purchase the 400,000 or so annuities a year, it would already be happening. Currently, advice accounts for around half of this number, as I understand, which shows there is either insufficient will or insufficient advice supply to offer advice as a default. Turning to the consumer, they should always have the option to choose - to take advice or not (and be helped to understand the consequences of either route they choose). Now marketing, the non-advised annuity brokers promote shopping around, investor engagement, on a bigger scale and arguably far more effectively than any advisory brand. This promotion helps consumers make good choices and give them good outcomes. It also supports advisers and planners as they too benefit from this consumer education and marketing and knock on business. Advisers/ planners who say it should be advice or nothing, should be careful what they wish for. Finally, and in my view, the most important thing; those who use the shopping around process, advised or non-advised get better outcomes, more appropriate annuities and higher rates. Danny Cox CFPCM Head of Financial Planning Hargreaves Lansdown Bristol Danny.Cox@hl.co.uk
Branch Matters All IFP members and branches should throw their weight behind Financial Planning Week With Financial Planning Week fast approaching, I think it is a great time for all the branches to get involved and spread the word. Financial Planning Week is the national consumer awareness campaign, organised by the Institute of Financial Planning and its members, which provides useful information, tips and tools that consumers can use to help them improve their financial “fitness”. FPW is a fantastic initiative, and is getting bigger and better each year, with more and more publications/ newspapers and broadcasters jumping on board. The more involvement from IFP members and the Financial Planning community in general, the better. Two years ago at the South Wales Branch we tried to orchestrate some “free to the public” seminars. The aim being to educate on Financial Planning and some key advice areas – unfortunately we left it too late to promote these so the idea was abandoned. However, within Penguin we offered some free Financial Planning surgeries at our offices. We emailed all our clients to tell them we were offering this to their friends/families, and we handed out some leaflets on our business estate. It went down well, we had about 10 people drop in during the day and we gave a mixture of advice around debt management, will planning and budgeting. Last year we wondered what we could do to make it bigger and better. So we contacted a number of IFP members in the South Wales Branch and asked if they would be willing to open their doors during FP week for people to “drop-in” and get some free advice from a planner. This was well received in South Wales, with Bevan Buckland, Heron House, Future AM, Blackstone and Penguin all agreeing to do this. We then approached a national financial services PR Firm called Rhizome PR/Just In Time PR and asked if they would be prepared to donate some man hours to spread the word – which they kindly did. Now the days themselves were not hugely successful but we certainly did our bit and helped some people. Engaging directly with people is the most powerful way to demonstrate the value of the service that Financial Planning firms provide. Please do open your doors to the public during FP Week. Whether it’s for a morning, a day or more, give people the chance to come and find out for themselves what professional Financial Planning is all about. You could end up with some new clients too. You might even want to liaise with other firms in your region to co-ordinate a programme of surgeries on different days across the region. The regional media would love it - so it would be a great way to get some coverage and good promo opportunities for all involved.
Craig Palfrey CFPCM South Wales Branch chairman
02920 450143
craig@penguinwealth.com www.penguinwealth.com www.financialplanneronline.co.uk | December 2013 | 11
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Professional Development
Training & CPD taking exams can often seem a time-consuming chore for many but they are an essential part of raising professional standards, as LUcy courtenay explains.
But why do I have to do another exam? Lucy Courtenay explains their value Since FPSB UK launched the new Level 6 Diploma in Financial Planning, a question I have often been by those seeking to become a CFP Professional is, “why do I need to take more exams”, writes Lucy Courtenay, qualifications director at FPSB UK. I’ll start with some background. In 2011, FPSB (UK) Limited was set up (wholly owned by the IFP) to design, deliver and award Financial Planning qualifications and is recognised by Ofqual as an awarding organisation. We took this opportunity to develop the new Level 6 Diploma in a Financial Planning. The IFP is licensed by the Financial Planning Standards Board to award CFPCM certification in the UK. Part of the global requirement for this designation is that planners must pass an exam as well as a case study within their qualification assessment. This is important if UK CFP Professionals are to be recognised around the world. The new Diploma in Financial
Planning fulfils this qualification requirement and the positioning on the QCF and the size of the qualification now give much better guidance as to the demands it makes on candidates. The syllabus for certification was also in need of updating. We carried out a job role analysis and identified the skills and knowledge that Financial Planners need in order to deliver a highly effective Financial Planning service for clients. We used the global FPSB standards for Financial Planners and took into account what has been tested by the regulator-driven diplomas. The new qualification is robust as the standards are based on an updated role profile and Financial Planner competences. Since January 2013, candidates need to take the exam before starting their case study. The syllabus for the exam is very broad but we made changes to reflect the RDR changes – we no longer test tax knowledge for example,
FPSB UK’s Lucy Courtenay provides some timely background ‘Diploma’ advice tina weeks - my business page 24
but we may test application of that knowledge. It is almost certain that during the exam, there will be at least one tax calculation to complete. For us, the exam is the ideal way of ensuring that candidates have the skills needed to complete a good Financial Plan, that is that they have all the tools ready in their toolbox. The case study in the exam is based on a reasonably straightforward scenario. Financial Planning assumptions are given so that all candidates work to the same figures. This is different from the Level 6 case study where you need to develop and justify your own assumptions making sure they are reasoned and reasonable. Typically, you will have to address one area of the client’s needs or objectives and not have to prepare an integrated solution but you will need to identify other areas to address or highlight to the client. For some time, the IFP and FPSB UK have been concerned about the low pass rates for first time case study submissions and the very low marks achieved by some candidates. It is clear from the financial plans submitted that some candidates are not preparing Financial Plans based on the required standards and also that more support is needed to enable them to prepare properly. While candidates typically show a good level of technical knowledge, they seem to struggle when applying it to a case study scenario in order to present an integrated plan of action. We believe that candidates who pass the exam will be better equipped to tackle the Level 6 case study. It is too early to have that evidence but I am confident this will happen. Contrary to what you may think, we really do want you to pass! Nobody likes taking exams but I hope that candidates will see this one as a valuable component of a rigorous and robust Level 6 qualification that really can transform the way that you do business.
Training newS Time to hone your client skills? Offering a Financial Planning service is a great way to build client trust. However, a common stumbling block is how to engage more effectively with clients so they see the value of and feel comfortable with a feebased service. Help is at hand from the IFP’s Better Client Connections Workshop which helps delegates to hone their client engagement skills. Visit IFP’s website for more.
Ready to sit FPSB UK’s Principles Exam? The easy way to find out is by attending the IFP’s Principles of Financial Planning Exam Workshop. Delegates bring a completed specimen exam paper to the workshop for marking. The tutor guides delegates through the model answers, marks allocation and shares top tips for success. The workshop includes time for revision of areas of concern, a session on what to expect in the exam itself and ends with delegates completing an action plan.
Boost your practical skills with Integrated Course The IFP’s Integrated Financial Planning Course continues to receive excellent feedback, with many delegates able to put their new knowledge and skills immediately into practice with clients. If you wish to offer a Financial Planning service and/or are intending to sit FBSB UK’s Certificate in Paraplanning or Diploma in Financial Planning, this is the course for you. Visit the IFP website for more information and to book a place on the next course (27 & 28 November) or find future dates.
More study support for CFP assessment CM
FPSB UK’s Diploma in Financial Planning is set at QCF Level 6, the same as a university honours degree and is credited with 600 learning hours (the equivalent of 11.5 hours per week for a year). The IFP does not offer 600 hours of structured training/study as much of the required technical knowledge is covered through prior learning. The IFP is reviewing its training/study options and would welcome views from candidates past and present. education@ financialplanning.org.uk
www.financialplanneronline.co.uk | December 2013 | 13
Professional Development Exam news Help with finding young and talented graduates The Graduate Foundation College can provide pre-assessed interns who have passed the Financial Services, Regulation and Ethics examination as part of their 10 week training programme. All you have to do is offer a three month paid internship (in some locations this could be funded as well). There are no recruitment costs and no future commitment but this could be an excellent way to introduce quality new talent to your firm. Contact: Nashima Huq at Nashima. huq@financialskillspartnership. org.uk or to find out more go to www.financialskillspartnership. org.uk
Principles of Financial Planning syllabus The syllabus for the Principles of Financial Planning unit is currently being reviewed. FPSB UK does not expect major changes but it will be updated and tested from February 2014. The revised syllabus can be downloaded from the website: www.financialplanning.org. uk/qualifications or found in the Certificate in Paraplanning handbook or the Diploma in Financial Planning handbook.
Be wary of copying or plagiarising work Candidates are reminded that all work submitted to FPSB UK for assessment must be their own. It is acceptable to quote material from other sources but this should be properly referenced. FPSB UK will be using software which checks for originality. Candidates are reminded that they are required to sign a declaration that their case study is their own work.
NOS Standards for Paraplanners reviewed The Financial Skills Partnership recently reviewed and revised the National Occupational Standards (NOS) for Paraplanners. These standards are valuable for firms, Paraplanners and training providers. FPSB UK used these NOS when developing the syllabus for the Certificate in Paraplanning. Revised standards will be published shortly and are available from the Financial Skills Partnership: financialskillspartnership.org.uk
Taking CPD seriously is essential for all members as IFP audits training records The IFP has been busy auditing members’ CPD records this year. It is positive that members are taking CPD seriously, often completing far more than the minimum required. However some key learning points are emerging: Identifying your learning needs is a critical first stage of the CPD process that is often missed. Learning needs should be based on your role and the FCA and IFP minimum requirements (including Ethics and Professional Standards). Maintain your competence by keeping up-to-date with changes and developments as well as refreshing your knowledge.
Select your CPD activities to meet your identified learning needs, rather than the other way round. Make sure you understand structured CPD or you may inadvertently not meet the requirements. Structured activities are those designed to achieve specified learning outcomes and are at least 30 minutes in duration. They need not be tested but may instead include a reflective statement. Unstructured activities are those without a defined learning outcome. Watch out for activities that will not count, for example, doing your day job (for example, product
research for clients, attending business meetings, or carrying out appraisals). Ensure your CPD record makes sense to anyone auditing it. Clearly record your learning objectives, activities, reflections/test scores, time spent and category of CPD. The IFP’s CPD online system is a great tool to help you record all the necessary details. If you need assistance with any aspect of CPD, just contact the Education Team 0117 945 2470 education@financialplanning. org.uk.
IFP Honours & CFPCM CERTIFICATION Passes The following have passed the Principles of Financial Planning Examination David Holmes Cooper Parry Wealth Ltd Emma Singer Russell Gibson Financial Management John Markham 2plan Wealth Management Ltd Mahlaste Moche Wise Investment Ltd Paul Sweeny Farey Associates Ltd Howard Sheard Westminster Wealth Management LLP Christopher Tweedie Old Mill Financial Planning LLP
The following have passed CFPCM Certification. Andrew Hall Berkeley Burke Joseph Hawes CBW Financial Planning
Anne Frost Robert Langley Asset Management Ltd Dominic Spalding Expert Financial Solutions Ltd Chetan Ravalia deVere United Kingdom David Hadrava The Cameron James Partnership Hazel Midwood Midwood Consulting Matthew Houghton Brooks Wealth Management LLp Richard Gross Heritage Financial Advisers Ltd Jonathan Hunt Expert Financial Solutions Ltd Andrew Ross Price Bailey Private Client Sally Price Lloyds Banking Group Oliver Moore Strategic IFA Ltd Donna Watson The Clarke Partnership (NI) Ltd Peter Blackburn Loughtons Independent Financial Advisers Matthew Clegg Crown Wealth Management Ltd
Talking Training How do examiners mark your answers? The penultimate article in this series on exam technique from Lucy Courtenay, FPSB UK. All questions used in the Principles of Financial Planning exam will have a model answer and a marking scheme. The model answer is important as it shows that the question can be answered, how long it may take to answer and how many marks it will be worth. The mark scheme will show how the marks are to be allocated. The marks should be, as far as possible equivalent, so that it is just as easy or difficult to achieve each mark. The mark allocation is a big clue as to how long you should spend answering a question. Generally, if an answer is worth four marks, expect to put four points into your answer. It is likely that the examiners will have five or even six possible answers so you should aim to give four points – you can put more down as you won’t lose marks but you will be using up your time. For calculations, you must show the steps you take to
14 | December 2013 | www.financialplanneronline.co.uk
get to the answer. This will help the examiner to follow your workings. If you make a mistake which leads to the wrong answer, you will lose a mark or so but you will get some marks if your method is correct. The model answers and marking schemes are not set in stone; candidates may give correct answers that the examiners haven’t thought of. If these are correct, then they will gain credit and may be added into the marking scheme.
Lucy Courtenay Qualifications Director FPSB (UK)
lucy@financialplanning.org.uk @lucycourtenay
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Real Life Case Study
A widow’s tale
Damien Rylett of Brunel Capital Partners helps a widow beset by tragedy come to terms with her change in circumstances and get a handle on her complicated finances as she rebuilds her life. Case Study Brief Joanna, a widow, had just turned 50 when tragedy struck. Her husband, John, a successful international airline pilot, was unfortunately involved in a tragic aeroplane crash and died. Due to her husband’s job, she had spent a great deal of time travelling and held both a Dutch and a South African passport. She decided to settle in the UK where she had purchased a home. Joanna and John did not have any children but had family back in Holland. Joanna had been the sole beneficiary of John’s estate and while the sum was substantial it was not necessarily life changing. Joanna had inherited a capital sum of £800,000 and £700,000 of this was in a Dutch investment portfolio and the remaining £100,000 in an offshore savings account in South Africa. John had always looked after the finances and Joanna was clearly vulnerable, confused and frightened about what the future may hold. She didn’t understand the portfolio she had inherited. We came away from that initial meeting with some clear objectives. Our aim was to simplify matters greatly and to put some meaning to the money.
This is a real life case study. Names and some other details have been changed to protect confidentiality. Picture posed by model.
Challenging: For many widows finances have been something they may have left to their husbands or partners
Damien Rylett MD, Brunel Capital Partners Ltd Damien is managing director at Bristol-based Financial Planners Brunel Capital Partners. While the firm has specialists in all areas, Damien’s forte is helping successful business owners plan for retirement and exit their business. Damien is a long term supporter of the IFP having chaired the Bristol branch between 2010 and 2012 and currently sits on the Events and Conference committee. He recently won the Tony Sellon ‘Good Egg’ award for his dedicated support of many IFP initiatives. Damien is married to Clare, has three young boys and enjoys keeping fit and watching rugby. damien@brunelcapitalpartners.com www.brunelcapitalpartners.com
0117 214 0870
oanna had just turned 50 when she was referred to us by her accountant. Joanna was widowed when she was 49. Her husband, John, a successful international airline pilot, unfortunately died after being involved in a tragic aeroplane crash. Due to the nature of John’s job, Joanna had spent many years travelling and held both a Dutch and a South African passport. She decided to settle in the UK where she had purchased a home and started to work as a private “live-in” carer for elderly individuals who needed help around their own home. Joanna and John did not have any children but had family back in Holland. Joanna had been the sole beneficiary of John’s estate and while the sum was substantial it was not necessarily life changing. The funds were held in Holland, South Africa and the UK which added another dimension to the case. When new clients come to us, they normally have a particular issue or problem that needs addressing. More often than not, the problem or referral relates to a particular product. It is important for us to reassure clients that their issues will be dealt with sensitively. However, we have to remember that the purpose of our first meeting is also to find out about the client, their background, their aspirations and future goals. We Continued on page 18
www.financialplanneronline.co.uk | December 2013 | 17
Real Life Case Study don’t believe we have the right to talk to clients about their money until we know more about them. Brunel Capital Partners has one service and that is comprehensive, lifestyle Financial Planning. We believe that our job as financial advisers is to help clients get and keep the life they want. We spend the majority of our first meeting with new clients asking questions. Questions about them, their background, their family, their business or job, their hobbies, their future and their goals and aspirations. By the end of the first meeting, we would have a good idea of whether we think we can help the client. The client should also know whether we seem like the right firm to work with. Most importantly, we will have ascertained whether the client is right for us in terms of assets and equally importantly, whether they are someone we might enjoy working with. In Joanna’s case, and although her accountant had provided us with some background, the first meeting was tough. Discussing her late husband’s death was clearly still difficult and the subject was still raw. Joanna had inherited a capital sum of £800,000 and £700,000 of this was in a Dutch investment portfolio and the remaining £100,000 was in an offshore savings account in South Africa. Although Joanna had family in Holland, she felt alone. John had always looked after the finances. Joanna was clearly vulnerable, confused and frightened about what the future may hold for her. She didn’t understand the portfolio she had inherited, it had no meaning. Everything seemed complex. We came away from that initial meeting with some clear objectives. To simplify matters greatly and to put some meaning to the money. After that first meeting, we started to gather the information required to build a detailed picture of Joanna’s current situation. This included obtaining details of the Dutch portfolio which was testing at times, due to language barriers. It was also important to obtain a detailed income and expenditure statement in order to ascertain the cost of Joanna’s lifestyle, now and what it might look like in the future. This was particularly difficult as Joanna’s income varied but it was important to reach agreement on the assumptions made. In addition to the invested capital, Joanna had a property which she owned outright and there was no debt. Our first priority was to ensure that matters were simplified. We worked in conjunction with Joanna’s accountants in this area. Although it is a bit of a cliché, we didn’t want the tax tail to wag the investment dog. Once we had a good handle on the make-up and structure of the portfolio, we need to be clear on the tax implications (of disposing the portfolio). We also needed to factor in the offshore savings account. As her tax advisers, they had a clear understanding of her income and capital gains tax position. We were able to dispose of the investment portfolio over two tax years to ensure we used two annual allowances. Although it meant that a small amount of higher rate tax was to be paid, the decision to bring the offshore bank account proceeds back to the UK was taken. Things were already simpler and it was evident that Joanna was more comfortable now that everything was in the UK. Work has now started to compile a lifetime cashflow forecast for Joanna. This is something that we do for our clients as we believe it is the only
way of ensuring the question “Am I going to be all right in the future?” The use of cashflow modelling software also assists greatly in the discussions around risk capacity. A meeting was then called to bring Joanna up to speed with progress and our advice to date. This meeting was held jointly with her accountant. We reconfirmed our advice to dispose of the Dutch investment portfolio and repatriate the offshore account. We then approached the subject of investment risk. The subject of risk needs to be handled carefully with a widow who has very little knowledge or experience of investments. Soon after our first meeting, Joanna had completed our online risk tolerance questionnaire. At our meeting, we had a detailed discussion around the subject and more specifically, the three elements that make up a client’s risk profile. These are risk tolerance, risk required and risk capacity. We discussed the output from the questionnaire and went through the risk group that matched the description that Joanna fell into and pointed out any inaccuracies in her answers. Once we were satisfied that the tolerance score was correct, we put that to one side and moved on to the risk required. We presented the lifetime cashflow forecast that we had put together. We use modelling software for this purpose and we entered a rate of return in the assumptions that was sufficient for Joanna to achieve her objective of ensuring that she can continue to live her current and future lifestyle, without fear of running out of money. During this discussion, we identified a gap between the level of risk that Joanna would normally choose to take (her tolerance) and the investment risk associated with the return required to achieve her objectives. Joanna’s tolerance score put her into risk group 4 (out of 7). We demonstrated that a portfolio aligned with risk group 3 would deliver a long term return that would be sufficient to achieve Joanna’s goals. We looked at the likely return characteristics of a risk group 3 portfolio and how it would have performed in the past which would give us some idea of how it may behave in the future. This was to ensure that Joanna did not end up in a portfolio that provided any surprises in the future. The software was also used to demonstrate
Joanna’s capacity for loss, which is basically her ability (or the ability of her investment portfolio) to withstand a fall and for her objectives to still be met. This meeting lasted for over two hours but it was an essential investment of time. It meant that we had reached an agreement about the future investment strategy and that we had Joanna’s informed consent to proceed. Joanna went away comfortable in the knowledge that whatever happens with her investments in the future, none of it would come as a surprise to her. Shortly after the meeting, an attendance note was produced which Joanna signed to confirm that she was happy with the discussions and agreed with the way forward. Our report that followed the meeting, detailed the specific recommendations to utilise Joanna’s Isa allowance each side of the tax year, with the balance to be invested in an unwrapped General Investment Account. In addition to six months regular expenditure, we suggested that Joanna reserve a further six months expenditure in a liquid account. Her income varied due to the nature of her work and an additional six months buffer would give her the comfort that she would not need to call on her long-term portfolio to fund day to day living expenses should there be a reduction in her hours. Joanna was keen to take an additional qualification which would involve evening classes. Once qualified, her income would be less variable as she would probably take on an employed position with more security of income. We discussed the need to protect her income from illness and disability but after her husband’s death, Joanna had been diagnosed with stress which unfortunately prevented us from going down this avenue. Death cover was not considered as appropriate, however, but we recommended that Joanna review her Will and put in place a Lasting Power of Attorney (property and health and welfare). After one final meeting, during which the paperwork was completed, Joanna asked us to implement the recommendations and make the investments in the appropriate portfolio, all through a platform. Once implemented, Joanna was put on to our system which would ensure that she received a six monthly review and an annual forward planning meeting.
What happened next Joanna was extremely grateful for the advice and support we provided. In her words, a huge load had been lifted from her shoulders. She had previously felt “stuck” but said that the “depressive” feeling had now gone. She was now feeling more in control of her life and having established a relationship with a firm with whom she believed she could trust, Joanna was able to enjoy her life more and make other life changing decisions. At the first six monthly review point, Joanna’s portfolio had fallen in value but it did not seem to faze her. In fact she wasn’t interested, she wanted to tell us more about her future plans. At the first annual planning meeting, Joanna told us of her desire to take four months off work and train in a completely different area. We gave her the green light at that meeting and she hasn’t looked back since.
Key Points
1
Joanna, a confused, lonely and frightened widow, needed help to simplify her life and understand her finances.
18 | December 2013 | www.financialplanneronline.co.uk
2
She had money but it had no meaning. We brought it to life by concentrating on her future needs.
3
A long-term plan and detailed discussion around risk gave her the springboard to take control of her life.
At Sippcentre our parent company is AJ Bell – the business that first brought online Self-Invested Personal Pensions into the world. That means we understand SIPPs inside out, but we have also inherited a passion for innovation that extends way beyond just pensions. As a fully fledged platform, we have added to the family with an ISA, Junior ISA and GIA too. And because great value runs through Sippcentre’s DNA, they all benefit from an unbundled charging structure that is tiered from just 5 to 20 basis points. The value of investments can go down as well as up and your client may not get back their original investment.
Let your clients’ investments grow in the best possible environment.
For a low-cost platform, visit www.sippcentre.co.uk or call 0845 83 99 060
2012
BEST COMPREHENSIVE SIPP PROVIDER Sippcentre
This advertisement is intended for professional financial advisers only and is not for consumer use. AJ Bell includes AJ Bell Holdings Limited and its wholly owned subsidiaries. AJ Bell Management Limited and AJ Bell Securities Limited are authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales at Trafford House, Chester Road, Manchester M32 0RS
BEST LOW-COST SIPP PROVIDER Sippdeal
WRAP & Platform survey
A magic elixir for Financial Planning?
Selecting the right platform ‘elixir’
Applying due diligence to finding the right platform is notoriously difficult. Will planners find the perfect panacea or a poison potion? Geoff Mills, of ratings company RSM, suggests some questions to ask. 20 | December 2013 | www.financialplanneronline.co.uk
WRAP & Platform survey iscussion of the benefits of platforms continues apace and some see wraps and platforms as the panacea to the many issues that have beset our industry. Of course a platform is not the sole answer to transforming a Financial Planning business any more than moving adviser remuneration to fee charging is the answer to stopping inappropriate advice being given. A platform can however play a part in helping a firm reposition its business model by improving its service proposition, streamlining the provision of data across a number of products or tax wrappers and developing more efficient administrative processes. The regulatory landscape continues to change and there are still some unknowns around the longer-term impact of the ban on cash rebates on advised business let alone the knock-on impact in the direct to consumer (D2C) space. The financial resources available to a platform operator to back its proposition is a key factor in any selection process when return on capital employed (ROCE) has in most cases been nonexistent. With the continuing focus on margins, the financial pressures on platform operators are unlikely to ease in the short term. League tables of assets under advice (AUA) serve little purpose in selection, buoyed as they are by stock market activity rather than any real indicator of service support, user engagement
or profitability. Perversely, when the value of AUA increases, say through an improvement in the stock market, the platform gains more revenue yet does nothing for it - is that treating customers fairly? Yet to some extent size does matter, but be wary and probe about profitability, commitment and the level of resources available to support ongoing (and expensive) IT development. As we will see later there is no real substitute for engaging with a platform operator at the highest level and seeing the ‘the whites of their eyes’. You have to make a business decision based on the needs of your business, rather than be swayed by some whizzy tool that might be used once. In our view, a platform is about administrative support, dealing and custody plain and simple.
Selection process Firms are looking for a logical process to follow which will allow them to decide on two important points; is a platform right for my business and if so, which is the right one? The process starts with a review of business strategy and this step will help determine whether a platform solution is suitable to achieve the longerterm business objectives. The following diagram illustrates the whole process following this initial strategic review. Let’s look at each step: Continued on page 22
Key Points
1
The FCA has indicated they will apply closer scrutiny of firms that adopt a platform so your selection and review process must be structured and robust and documented.
2
The selection process should start with a review of your business strategy and this will help determine whether a platform solution is suitable to achieve the longer-term business objectives
3
The regulator is not expecting advisers to adopt the cheapest platform, but one that delivers ‘best value’ to investors, consideration should focus on financial strength and resources, IT capability and long term commitment.
TABLE 1: Main intermediary-focused platforms Platform AJBell Sippcentre Ascentric
Owner AJBell Management Ltd Royal London Group (75%), founding IFAs (25%)
Aviva
Aviva UK Life
AXA Cofunds
AXA UK L&G
FundsNetwork James Hay Novia
Fidelity International IFG Group PLC White River / Future Capital Partners, Matrix Securities
Nucleus
IFA users (51%), Sanlam 42.5%,
Raymond James Raymond James Financial Inc (USA) 7IM Allied Zurich (49%), AEGON (15%), 7IM staff (36%) Skandia Old Mutual Standard Life Standard Life Transact Integrated Financial Arrangements plc Zurich Zurich Insurance Group Ltd Source: ‘A Guide to UK Adviser Platforms’ – from Rayner Spencer Mills Research (RSMR)
Date Started IT System 2011 The AJBell business is supported by a blend of in-house and proprietary software. 2007 All IT Is owned by Ascentric. Core service, technology and administration are all provided in-house by them. 2010 Bravura Solutions Ltd with Scottish Friendly providing systems and administration support as an outsourced TPA. 2008 FNZ leading IT software company. 2001 Contour bespoke software, developed, supported and hosted internally, together with FAST software supported by IFDS 2000 In house platform called GFAS. 2003 Proprietary system. 2008 GBST – Australian based global IT company. GBST bought InfoComp in August 2007 and this now forms core of the GBST Wealth Management division both in Australia and increasingly in the UK. GBST Composer is the software developed to administer the main UK tax wrappers available on UK platforms. 2006 Bravura Solutions Ltd, with Scottish Friendly provided systems and administration. 2006 Own in-house technology. 2001 Propriety system developed in-house. 2000 Skandia’s platform based on Tibco and Oracle products supported in-house. 2006 FNZ joint development. 2000 Own in-house technology based on company’s experience in Australia. 2012 FNZ joint venture with web support from BSB, a Luxembourg-based IT company.
www.financialplanneronline.co.uk | December 2013 | 21
WRAP & Platform survey company, the stance taken by them should also be considered to determine whether they are totally committed to continuing to back the proposition. You might want to refer to the Platform Financial Strength Ratings from AKG.
scrutinising platforms charges
Service Support
Step 1 – Review of Business Strategy The starting point for considering whether implementing a platform is right must be to review the current business strategy to determine how the use of a platform would fit in with and enhance the business and advice process.
Step 2 - Market Analysis Having made the decision that a platform is right for the business and its clients, the next step in the process is to analyse the market. The starting point should be to have a broad overview of all the main players in the platform market looking at what is offered from each one. It makes sense to only consider using those platforms that have the entire product and tax wrappers that are used on a regular basis. With regard to fund choice, while whole of market coverage would appear more attractive, in reality those with a more limited fund range may include all the funds that are generally needed. A number of the platforms have the ability to include other assets such as existing funds or alternative investments such as property or other assets. While the ability to include these assets in the clients’ overall wealth is useful, consideration should be given to how these assets are valued as most of the platforms that include this facility require the adviser to provide and maintain the information – either the valuation or the number of units held or so on. If pre-set portfolios are used, then the availability of the portfolio funds should be considered together with the ability to set up and administer the portfolios on the platform.
Step 3 - Shortlist & Due Diligence From this market information a short list should be compiled. This should be based on matching the services offered by the platform operator with those required by the business and the client base. Once the shortlist is in place, we would suggest that full due diligence is completed on each of the shortlisted operators. There are a number of key areas that should be looked at in the due diligence process, these include:
Financials A number of the platform operators are yet to move into a profit making situation, so the financials need to be carefully considered to ensure that the proposition is sustainable and that the operator has the financial capital at its disposal to continue future developments. The ownership of the platform should be looked at and, where it is owned by an insurance
The levels of service and support vary quite substantially between the different operators, and it is important to understand what support is available, particularly in the transition onto the platform, in order that this can be matched with what you require. Ongoing support should also be determined, whether this be face to face, or telephone based, to ensure that it will meet the needs of the business, together with exact support and training provided during the set-up and implementation process.
Step 4 - Decision & Implementation Taking all this information together, you should now be in a position to make a decision as to which of the available platforms will be best suited to the needs of your business and your client base. Once this decision has been taken, we then move into the implementation stage. Implementing a platform strategy can mean simply a straightforward change in the advice process, that is deciding the client circumstances in which a platform will be considered, or it can be a fundamental change to the business involving putting in place a new advice process. It is in this second scenario where the benefits of a platform will most clearly be seen. We would expect the chosen platform operator to offer support during the implementation process and they should be challenged to provide evidence and testimonials of successful implementation with similar sized firms so that this can be verified. Always seek testimonials and contact firms to seek comments on their experiences.
Step 5 - Review & Monitor The final stage in the process is the review and monitoring step. Clearly this part of the process is ongoing but it is often useful to set a specific time to review the progress of an initiative such as this. The review should consider the business objectives and strategy which were considered in step one and any changes that have been made to them in the intervening period and should determine whether the chosen platform proposition continues to be the right approach to meet the objectives and to fit with the agreed business strategy. The second stage of the review is to look again at the platform market, and at the developments that have taken place to ensure that the chosen platform operator remains competitively positioned in the market, and continues to develop the overall proposition in line with expectations. Finally, the service experience should be reviewed regularly. There are two aspects to this – firstly, and arguably most importantly, the service experience of the client. The review should consider whether the service improvements that have been made are well
22 | December 2013 | www.financialplanneronline.co.uk
received by clients, and how successful any migration onto the platform has been. As part of your TCF strategy you will already be seeking feedback from clients and their experience since the adoption of your chosen platform should now form part of that feedback, with any issues in these areas being highlighted and resolved. Secondly, review the service from the platform operator and if there are any issues here, then clearly they need to be taken up with the operator and an action plan put in place to resolve them.
WRAP & Platform survey
Until the introduction of the Retail Distribution Review (RDR), the costs associated with buying funds, including advice and platform charges plus the fund manager’s own costs, were bundled together meaning it was very difficult to determine how much each component cost and equally, realistic comparisons were also difficult. These combined or bundled charges are now being ‘un-bundled’ to make it more transparent and easier to understand. The FCA in their policy statement PS13/1 issued in April 2013 stated that they were to proceed with their core proposal that requires a platform service to be paid for by a platform charge disclosed to, and agreed by, the consumer. A number of fund management groups are launching ‘clean share classes’ which do not include commission, however, be careful in any comparison as there is, as yet, no standard for these classes. There has been significant change over the last three years and platform charges have been reduced and charging structures simplified, but more needs to be done. The table of charges below has been collated by the team at the lang cat consultancy so many thanks to them. It shows a high-level snapshot of current
charges but these are continually moving (for example, Cofunds removing the £40 charge as we go to press) so please check out individual charges in more detail. Looking further ahead, perhaps the whole basis of charging should be reviewed? It could be argued that the platform cost should be borne by the Financial Planning firm as a cost of trade, passing the cost onto the end investor via their fee or adviser charge. This happens with other business expenses such as back-office costs, telephony and research so why not platforms. Food for thought perhaps? Finally, during this period of ongoing change, advisers should obtain the best idea of costs but remember that the regulator is not necessarily expecting advisers to adopt the cheapest platform, but the one that allows the adviser to deliver ‘best value’ to their clients. In the words of the FCA it is all about “establishing a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning.” Platforms can help firms towards this goal but they are just a part of the overall solution.
sample charges at selected platforms from the langcat Provider AJBell Sippcentre
Charge Type Hybrid of tiered % and fixed charges
Ascentric
Hybrid of tiered % and fixed charges
Aviva AXA
Fixed % for ISA/GIA. Tiered for SIPP Tranched
Cofunds
Tiered % charge + annual fee
FundsNetwork James Hay
Flat % charge with an annual fee Tiered % but with minimum charge
Novia Nucleus
Tiered % charge Tiered % charge
Raymond James
3 options
7IM
Tiered % charge
Skandia
Tiered % but with minimum charge
Standard Life
Tiered % charge
Transact
Tiered % charge
Zurich Tiered % charge + annual fee (for SIPP) Source: the lang cat (www.langcatfinancial.com ). Oct 2013
Range Tiered % charge from 0.2% to 0.05%. SIPP has additional fees up to £180+VAT Starts at 0.15% + £60 for the first £60k. £1m+ charged at 0.1%. Additional dealing costs too. Flat 0.25% for GIA/ISA. SIPP tiers from 0.4% down to 0.25% Stepped charge from 0.4% to 0.28%. Unlike tiered charges, the whole fund value benefits from each level £40 pa platform charge (about to be removed) and a tiering basis points charge from 0.29% down to 0.15% over £1m £45 pa platform charge plus 0.25% Starts at 0.35% down to 0.05% for £1m+ but there is a minimum charge of £32 pm Starts at 0.5% down to 0.15% for £1m+ New terms from November. Starts at 0.35% up to £0.5m down to 0.15% for £1m+ No main on-platform SIPP. GIA/ISA there are 3 options. 0.33% flat with no trading charges or 0.15%/0.25% with variable trading charges. No main on-platform SIPP. GIA/ISA there is a tiered charge from 0.3% to 0.15% for £1m+ Starts at 0.5% down to 0.15% for £1m+ but with minimum charge of £100 pa Tiered from 0.4% to 0.1% for ISA. 0.55% to 0.25% for SIPP but with a 10bps reduction for 'Core Terms' (Advisers that place £20m+) Tiered from 0.5% to 0.0075% for funds over £1.2m. £12 pa wrapper charge for ISA. £80 pa for SIPP Tiered from 0.45% to 0.225% for £1m+. £75 pa wrapper fee for SIPP
Geoff Mills, GROUP Director Rayner Spencer Mills Research RSMR has 4,000 firms registered to use its online services, including their Rated Fund Service, plus Platform research and fund reviews, in addition to providing centralised investment propositions to over 12,000 advisers through a mix of nationals and regional firms plus a service support company. Geoff is responsible for strategy, business development and marketing at RSMR. Starting his career in financial services with Eagle Star, he later joined Leeds Permanent Building Society as insurance services manager and in 1989 established an in-house financial advisory team of 50. After the merger with the Halifax he was appointed operations director Halifax IFA with 150 advisers. He joined Bradford & Bingley in 1999 leading the Group Financial Services team which supported over 1,000 advisers. RSMR was established in 2004. geoff.mills@rsmgroup.co.uk
01535 656555
www.raynerspencermills.co.uk www.financialplanneronline.co.uk | December 2013 | 23
My Business: Tina Weeks My Business Day My days vary so much and there is no typical day, so here is what I did today: 07.30 – Got kids up for school and myself ready for work. 09.00 – Worked through emails and outstanding work. 10.00 – Got to Whetsone office and interviewed a potential new adviser. 12.30 – Met with PA and Paraplanner about plans for the week. 13.30 – Discussion with one of the other advisers about changes to our investment portfolios. 15.00 – Review meeting with existing clients for whom are conducting an estate planning and trusts exercise. 18.00 – Took daughter to her swimming lesson. 19.30 – Dinner with the family.
Financial Planner: Tina, you were chair of this year’s IFP Annual Conference committee. How was the role and have you caught your breath yet? Tina Weeks: I loved this year’s conference and truly thought it was the best yet. Myself and the rest of the events committee have caught our breath and are already busy working on next year’s conference.
Tina Weeks, founder of Serenity FP
My Business: Tina Weeks of Serenity FP Each month Financial Planner asks a leading Financial Planner to share best practice from their business and the story of how they and their colleagues built their company. This issue we talk to Tina Weeks from Serenity Financial Planning of Barnet, London. Key Points
1
Don’t tell clients you are honest and trustworthy – show them. If you act with integrity in everything you do, clients will see it.
2
Listen more than you speak. A client will value the time you let them speak and the space you give them more than anything else.
24 | December 2013 | www.financialplanneronline.co.uk
3
A well delivered and accurate Financial Life Plan gives clients such peace of mind and confidence around money that they will happily pay your fees.
FP: How do you think the conference went and what were the highpoints for you? What’s the feedback been like? TW: The conference went very well and everyone involved is very happy about it. The highpoints for me were the networking opportunities. I learn so much from my peers, many of which I now consider friends. The best surprise ever was seeing Nick Cann! The IFP team (particularly Katherine Morgans) work very hard to ensure it runs smoothly and are able to iron out any issues that arise at the time. On the whole, the feedback from delegates has been very positive. We have taken it all on board and in particular will be working on making the sessions even more exciting and relevant next year.
FP: How did you get into Financial Planning and what attracted you to the profession? TW: I started off doing three years with Allied Dunbar as a tied rep, then five years as an IFA/ mortgage broker for a large London firm. With my husband, we set up our own IFA business in 2004 (Financial Weeks Ltd) and mainly did mortgages. I always wanted to deliver Financial Planning but had no idea how to do it. After much research and study, in January 2008, I decided to slowly convert the business from an IFA practice to a Financial Planning firm. My plans ended up having to be speeded up drastically when in April 2008 my mortgage business completely dried up (literally!) due to dual pricing and changes in lender criteria; I
faced near bankruptcy in the following months, on more than one occasion. I knew my heart was in Financial Planning but I couldn’t see another firm at the time that was doing it the way I wanted to do it, so for the next couple of years I put everything I had into designing the ideal firm. I discovered Life Planning in March 2009 and knew immediately that it was the missing piece that I was looking for. I launched Serenity Financial Planning in March 2010 and have not looked back since.
FP: How has your team/company changed since the launch of the business and what has the journey been like? How many advisers do you have and what’s the annual turnover? TW: The firm has changed beyond all recognition since launch. I started out as a ‘one man band’ working with my husband. He now has a ‘proper’ job elsewhere and I am currently one of seven advisers in the firm (two started in September) with a four member support team which is growing fast. The journey has been an amazing experience so far and I feel truly privileged to work with a team of people that all believe the same things and work in the same way. This year our turnover will be around £500,000 with a healthy net profit. Next year I am confident we will do much more. I am under no illusion that a great firm without profit is not likely to be around for long. I pinch myself sometimes and try to never forget how hard it has been to get to this stage. We never set targets within the firm and we never insist clients have a certain level of assets we can manage. Instead, if they are willing to pay our annual fees and are the right fit, we are happy to work with them.
FP: Why is the firm called Serenity and what inspired you to use that name when setting up the company? TW: It was an easy decision really. I knew that so many people struggle with money, regardless of how much of it they have. I knew that to best serve and honour my clients I had to deliver peace of mind around money and the confidence to live the best life they can today, not tomorrow. Hence, with synonyms such as calmness, composure and patience, Serenity Financial Planning seemed the perfect name for us.
FP: What has been your greatest source of achievement in running your business and what are you proudest of? TW: I am immensely proud of the team of people that have come together under Serenity. We all work to the same agenda and have the same ambitions for the firm and for our clients. I am also proud that I started a business in a recession and built it up from scratch. There were many times when I questioned my sanity, especially when the finances were tight. I took a leap of faith and luckily it paid off. I am also proud to have more Registered Life Planners (RLP’s) than any other firm and this backs up our ambition to give as many people in the UK
MY Business: Tina Weeks
as possible access to Financial Life Planning. All advisers in the firm are working towards becoming Chartered and Certified too as this is part of our long term vision. I love my work and I can honestly say I am having more fun than ever before. There is nothing like seeing clients literally come alive before my very eyes. The energy is infectious and the effects run into every part of my life.
FP: Many planners are concerned about the rising cost of regulation and other threats to their businesses. What do you see as the main threats to your business? TW: I stopped worrying about things I can’t control a long time ago. I have a very clear vision of the business, where it’s going and what we want to deliver to our clients. I prepare the firm as much as possible for all eventualities and am focused on becoming as financially stable as we can be. We will deal with each thing that gets thrown at us one at a time but in the meantime we will concentrate on being the best Financial Life Planners we can be.
FP: You are a big supporter of life planning. What is it about life planning that attracted you to it and how to do you incorporate the principles into your business? TW: I had a very strong ‘light bulb moment’ when I discovered Life Planning. There I was trying to design the Financial Planning firm that was in my head but there were pieces missing. Life Planning gave me the tools to bring the vision to life and put together a client offering that only worked if each client was completely at the centre of it. I wanted to become the antithesis of the banks and the ‘bad’ advisers that had tarnished the good work that so many of us do. I just can’t see how you can deliver Financial Planning without the skills that Life Planning training gives you. At the end of the day everyone wants freedom (in whatever guise each person seeks it) and that is what we aim to deliver. We have a four stage process and Life Planning comes in right at the beginning when we are building a financial plan. We are a Financial Life Planning firm in every sense of the word. Our foundations and beliefs are around helping our clients to live the best life they can live; with no regrets. Life Planning, cashflow modelling and Financial Planning are core for
us, supported by a low cost, buy and hold investment strategy with ongoing coaching.
FP: What Life Planning training have you had and what would you recommend to others interested in Life Planning? What other training / study are you taking? TW: I completed the Registered Life Planner training which consists of a two day course, a five day course and a six month mentorship. I make sure I never get rusty and attend Life Planning Mastery, which consists of quarterly meetings and a fantastic group that helps me stick to my own life plan as well as honing my skills. For anyone, that is interested in Life Planning I would recommend that you read as much as you can about it and speak to others that have taken the training first. I am currently also studying for my CFP qualification, have just completed my first year of Strategic Coach and am working with a personal coach too.
FP: If you could change anything about the Financial Planning profession what would you choose and what’s the future for Financial Planning? TW: I believe that we are at a point of maximum opportunity, where those that truly have clientcentred businesses will thrive. If I could change anything it would be to wave a magic wand and just get rid of all the greedy advisers that line their pockets by fleecing their unsuspecting clients and give the rest of us a bad name. Financial Planning IS the future and I am so positive about how our profession is evolving.
FP: What do you like doing in your spare time outside of work? TW: With two children aged nine and 10, I don’t really have that much spare time if I am honest. I love spending time with the family and a big part of my own life plan is to be able to take all school holidays off. I do manage to squeeze in quite a busy social life with friends and it mainly revolves around my love of food and dancing. I have also discovered yoga recently and have quite thrown myself into it. It makes me laugh to think that one of the early criticisms thrown at me regarding Life Planning was that I would become a yoga-loving, treehugger – and now I AM one!
Tina Weeks Serenity FP Tina Weeks is the director of Serenity Financial Planning Ltd. She started in 1996 as an Allied Dunbar tied rep. She then worked as an IFA with a London firm for five years before setting up her own IFA firm in 2004. Serenity Financial Planning was launched in March 2010. She has given many talks on the benefits of introducing Life Planning into a Financial Planning practice and also speaks on social media and practice development. Tina is of Greek heritage and was born and raised in London where she currently lives with her husband Darren and their two children. tina@serenityfp.com www.serenityfp.com
0208 440 4788
@thefinancecoach
www.financialplanneronline.co.uk | December 2013 | 25
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Technical Update: ETFs and Due Diligence
FINANCIAL PLANNER | DECEMBER 2013 | Issue 76
Contents | Page 27 Introduction | Page 27-28 ETFs and Due Diligence
Growing retail investment use of ETFs needs diligence arket and regulatory change is altering the way planners do business and nowhere is this more obvious than in the ETF sector where retail usage of this once predominantly institutional investment class is growing rapidly. In this review of ETF due diligence, Frank Spiteri of IFP corporate member ETF Securities, looks at due diligence surrounding Exchange Traded Funds and Exchange Traded Products and asks how
planners can best assess the products available. He says that FCA and European regulators are focusing on the growing ‘retail-isation of financial products’ - including ETFs and ETFS - prompted by concerns about financial innovation, complexity and appropriateness of financial products. With this in mind, it’s natural for planners to look more closely at product offerings and internal processes but they need to take care to understand
and assess risk and reward correctly, he argues. Mr Spiteri takes a detailed look at the issues surrounding due diligence and provides detailed technical assessment of the criteria which can be used when assessing an ETF or ETP. Technical Update welcomes your ideas and suggestions. Contact: editor@portfoliopublishing.co.uk
‘Retail-isation’ of financial products brings ETFs and ETPs into topical focus with regulators as usage grows The FCA (as well as European regulators) is very much focused on the ‘retail-isation of financial products,’ an umbrella term for the manner in which financial products are distributed to retail customers. Prompted by concerns about financial innovation, regulators are reviewing the industry approach to complexity and appropriateness of financial products. A number of retail intermediaries are looking to introduce clients to exchange traded products (ETPs). ETPs have seen tremendous growth since their European debut over a decade ago. To date, ETPs have been primarily used by institutional investors, with retail investors only representing around 20 per cent of the US$350bn of total European AUM. Many analysts expect the retail market share to grow dramatically. In this article I will aim to provide a framework for UK intermediaries, ranging from Financial Planners to execution-only platforms, to better classify exchange traded products and to better analyse their risks.
ETPs: UK Regulatory Framework In the UK, there are no rules that prohibit the distribution of ETPs to retail customers. Nevertheless, advisers and planners considering services relating to ETPs must ensure that they have the necessary FCA permissions. They must also consider appropriateness requirements and the impact of RDR. Table 1 (right) sets out the current state of play for FCA permissions, appropriateness and RDR as they relate to ETPs. In our opinion, when analysing ETPs, investors should focus on the underlying asset, its risks and its payoff profile and the ETP structure. I’ll look at each of these in turn. A thorough due diligence process will help demonstrate the suitability and appropriateness of an ETP for a client’s investment portfolio. Investment vehicles come in a number of forms in the UK, of Continued on page 28
Table 1: regulation of etfs and other investment products Product Exchange traded funds
Permissions Framework As UCITS funds, ETFs are considered units of Collective Investment Schemes
Physically backed exchange traded commodities Swap-backed exchange traded commodities, exchange traded currencies and other exchange traded notes Source: ETF Securities
Per current FCA policy, these are considered debt securities Per current FCA policy, these are considered debt securities and CFDs
Appropriateness UCITS ETFs are generally considered non-complex. Certain UCITS ETFs that track so-called strategy indices (proprietary indices that involve active investment strategies) may be deemed complex Physically backed ETCs are generally deemed non-complex Swap-backed ETPs that are not UCITS funds are generally deemed complex
RDR ETFs are within the scope of the RDR rules on commissions
ETCs are within the scope of the RDR rules on commissions ETCs are within the scope of the RDR rules on commissions
Table 2: understanding The Underlying Assets For ETPs, understanding the underlying asset is key to understanding and performing due diligence on the product. The key questions to ask are: What is the market risk of the As UCITS funds, ETFs are considered units of Collective Investment Schemes underlying asset? UCITS ETFs are generally considered non-complex. Certain UCITS ETFs that track so-called strategy indices (proprietary indices that involve active investment strategies) may be deemed complex ETFs are within the scope of the RDR rules on commissions How is the asset priced? ETPs derive their pricing from their underlying assets. Although most ETPs track very transparent underlyings, there are some that track proprietary indices. If the underlying lacks transparency in its pricing, then the same will apply to the pricing of the ETP. Is the underlying asset liquid? ETPs derive their liquidity from their underlying assets. Most ETPs reference relatively liquid underlyings. If the underlying is illiquid, the creation/redemption process in the primary market will become more expensive. As a result, there will be disparities between the price of the underlying and the price of the ETP, which is known as tracking difference. In practice, this means that, in the event of a liquidity disruption, an ETP could trade on exchange, known as the secondary market, at a premium or a discount to its underlying. Are there any other When ETPs track financial indices, it is important to understand the components of the index. For components to the underlying example, withholding tax rates for equity indices can make a difference to performance. For commodities, asset that affect its returns? backwardation and contango can impact returns. Does the product provide Unlike structured products, ETPs generally have a limited set of payoff profiles. They typically provide long long or short exposure? or short exposure and may involve an additional leverage factor (although the majority of ETPs track their Is there an additional leverage underlyings on a delta 1 basis, meaning that for every 1% increase in the underlying, the ETP will increase factor? by 1%.) Products involving short exposure or a leverage factor will involve additional market risk, as will ETPs referencing actively managed indices. Source: ETF Securities www.financialplanneronline.co.uk | December 2013 | 27
Technical Update: ETFs and Due Diligence Table 3: The Product’s Structure There are a wide variety of ETP product structures, ranging from UCITS funds to debt securities. Investors should perform due diligence on each particular product structure to thoroughly understand any risks that it raises and the ways in which the product provider has mitigated those risks. Key questions to ask include: Is the product a UCITSEuropean ETP providers generally look to UCITS funds as their structure of choice. From a regulatory compliant fund? If not, perspective, UCITS are widely accepted and are (with the exception of certain strategy UCITS) deemed why not? non-complex for MIFID purposes. However, not all underlying assets can be wrapped in a UCITS fund. Physical commodities and individual commodity indices are not eligible for UCITS. As a result, issuers use alternative structures such as ETCs to provide access. Understanding the reasons behind the choice of a product structure will help you understand the product itself. Does the structure (whether Credit risk comes in many forms and can arise in many different situations. With ETPs, it generally arises in UCITS or otherwise) involve the following situations: credit risk? If so, how is that (i) The ETP uses total return swaps or other derivatives to replicate the performance of its underlying risk mitigated? asset. In these cases, the total return swap will entail credit risk to the swap counterparty. Often, product providers mitigate this risk by requiring the swap counterparty to provide daily collateral. It is important that investors understand the criteria that collateral posted needs to meet, how, where and by whom the collateral is held, and the extent to which it covers the credit exposure to the swap counterparty. (ii) The ETP engages in securities lending with the physical assets that it uses to replicate the performance of its underlying asset. While the fee from securities lending can reduce the cost of an ETP, it creates counterparty risk. It is important for investors in physical ETPs to understand the extent to which an ETP issuer engages in securities lending (i.e., the percentage of the assets that are lent), the identity of the counterparties, what collateral is provided in respect of any exposure to the lending counterparty, how any collateral is held and by whom and what happens to any profit that the ETP provider derives from the securities lending – what percentage is passed back to investors in the ETP?. Is the underlying asset liquid? ETPs derive their liquidity from their underlying assets. Most ETPs reference relatively liquid underlyings. If the underlying is illiquid, the creation/redemption process in the primary market will become more expensive. As a result, there will be disparities between the price of the underlying and the price of the ETP, which is known as tracking difference. In practice, this means that, in the event of a liquidity disruption, an ETP could trade on exchange, known as the secondary market, at a premium or a discount to its underlying. How liquid is the ETP? ETP liquidity comes in two forms: (i) Primary market liquidity stems from the liquidity of the underlying and from the robustness of the creation and redemption process. From a structural perspective, it is key that an ETP has multiple (ideally independent) market makers involved in creation and redemption. This will ensure that the arbitrage mechanism functions smoothly and that the price of the ETP tracks the price of the underlying asset as accurately as possible (ii) Secondary market liquidity (on-exchange liquidity) stems from the presence of multiple (ideally independent) market makers willing to make prices on exchange. Volume of secondary market liquidity is a reflection not of the demand for the underlying asset but for the ETP itself (e.g. the demand for one gold ETC or another). For investors that want to trade on exchange, secondary market liquidity will make a difference in terms of the bid/ask spreads they have to pay to trade the ETP. Source: ETF Securities
Table 4: assessing costs Internal costs • TER • Any rebalancing costs • Any swap spread Source: ETF Securities
+
External costs • Bid/ask spread • Brokerage fee • Tax
which ETPs are one. The selection of an ETP should be considered in comparison to these alternative types of investment vehicle. Understanding and explaining the differences between the investment vehicles will help a Financial Planner to determine which is the most suitable for their client’s needs. Investors often ask how they should calculate the total cost of buying, holding and selling an ETP. The most widely reported cost figure, the total expense ratio (TER), is often incomplete and can neglect a number of internal and external fees and costs, including transaction costs, swap spreads and bid/ask spreads on exchange. It is important for a Financial Planner to demonstrate knowledge of all the components that contribute to an ETP’s total cost of ownership, dividing them between internal costs (deducted from the NAV of the ETP) and external costs (incurred when trading the ETP).
=
Total Cost of Ownership
To help explain the most common components that contribute to an ETP’s total ownership cost, we separate internal costs (related to the product) and external costs (incurred in trading the product). Internal costs: Total expense ratio (TER): The total expense ratio is the annual cost of managing the product, expressed as a percentage. The costs included within the TER can vary among providers but usually incorporate: management expense ratio, administrative costs, index license fee and storage costs (for physical ETCs).
Rebalancing costs: The cost incurred by physical ETFs when they buy and sell securities. When the underlying index changes its constituents, the ETF must do likewise. Transaction costs depend on how many and often the index constituents change: the greater the number and frequency, the more expensive the rebalancing costs. Swap spread: The fee paid by the synthetic ETP provider to the swap counterparties for the swaps agreements. The swap fee is a matter of negotiation between the provider and the counterparty, considering commercial factors such as the cost of the counterparty hedging its swap exposure, the cost of collateral, its credit rating and its own profit margin. Generally, more illiquid or exotic exposures have more expensive swap spreads. Sometimes the swap spread is incorporated into the TER of ETPs. External Costs: Bid/ask spread: As with trading any asset on-exchange, there is a spread of prices at which an ETP can be bought or sold. Brokerage fee: Cost paid by the investor to a broker to buy or sell an ETP. Tax: Different ETPs will incur different taxes, depending on the product itself, the jurisdiction it is domiciled in and the circumstances of the investor. Investors are wise to contact tax experts in their jurisdiction to clarify any charges 2. ‘Contango/backwardation.’ ETCs tracking non-metal commodities usually track futures indices. Unlike futures, which expire, futures indices are constructed to simulate a continuous exposure to a commodity future of a particular maturity. To maintain a futures position at a certain point on the futures curve for a particular commodity, it is necessary to replace the contracts in a process known as ‘rolling.’ A futures position is rolled when contracts are sold prior to their expiry date and new contracts with a later delivery date are purchased. The futures market is in ‘contango’ when the price of the contracts being purchased is more than the price of the contracts being sold. This would represent a cost to investors. The opposite of contango is known as backwardation: when the current futures contract can be sold for a higher price than it costs to buy the new futures contract. 3. Arbitrage Mechanism: Arbitrage is the purchase and sale of an asset to exploit a price difference. Imagine a physical FTSE 100 ETP trades for £20 and the underlying assets that constitute the ETP are worth £25. The Authorised Participant in the primary market can buy the ETP on exchange and redeem it for the underlying shares. By selling them, the AP makes a profit of £5. As it buys the ETP and sells the underlying assets, it reduces the price difference between them. Eventually, the prices converge and the arbitrage will no longer be profitable. Through this process, the Authorised Participant has returned the ETP to its NAV.
Frank Spiteri Head of Retail Distribution ETF Securities
Concepts Defined 1. The Total Cost of Ownership 28 | December 2013 | www.financialplanneronline.co.uk
Frank Spiteri is head of retail distribution at ETF Securities. He is responsible for promoting appropriate use of Exchange Traded Products (ETPs) throughout the retail market. He has more than 16 years of experience in finance and previously worked at the brokerage Peel Hunt on the ETF Sales and Trading desk. frank.spiteri@etfsecurities
020 7448 4330
www.etfsecurities.com
IFP Member NEWS From the IFP president Now is the time to join in and spread the message about Financial Planning’s benefits It was great to see so many of you at the IFP Annual Conference last month. For me, catching up with people is what it’s all about and my head was buzzing by the end of it! I’m now looking forward to the Scottish Conference on 18 November in the lovely Radisson Blu hotel in Edinburgh. It’s a smaller event than the one we enjoyed at the Celtic Manor, but no less entertaining and with a great line up of speakers and delegates which always give it such a unique atmosphere. The content is new and refreshing, culminating in an emotional story of the triumphs and tragedies of climbing Mount Everest. If you’re attending, I look forward to seeing you there. By the time you read this you may already be attending or have come and if so I hope you found it of great value. I’m sure it hasn’t escaped your attention but starting on 24 November is the sixth Financial Planning Week campaign. Financial Planning is what we’re all about. It’s not just the IFP team at Redcliff Street in Bristol that should be out there spreading the message, it’s all of us. So, I’m here to encourage every one of you to get involved in some way, to help get the Financial Planning message out to the general public and be as BIG, BOLD and SUCCESSFUL as we can. After all, the more people know about Financial Planning, the more likely they are to contact Financial Planners for advice. You may or may not recall, but one of my personal ‘missions’ is to make Financial Planning available to everyone and not just the wealthy. Financial Planning week is for everyone. It encourages those with more complex needs to seek professional help. It offers others the facility to ask questions and get help and guidance that they wouldn’t normally have access to. But in my mind, one of the most important benefits is imparting knowledge for people to help themselves. Basic Financial Planning doesn’t need to be offered by a CFPCM professional, much as sometimes we would like to feel we are indispensable! During Financial Planning Week we can really make a difference to people’s lives. Information on where to start, what they need to include in their budgets, how to plan ahead and tips on simple things people can do to improve their finances lie at the heart of what Financial Planning Week is about. Could you offer a few hours to open your doors to the public and run free Financial Planning surgeries? If so then let us know. We can support you with marketing help, put you in touch with others if it can form part of a larger event, or any other help, just ask. And remember, it’s not one way traffic. This is the best opportunity we have to boost our own marketing initiatives and promote what we do too. The eyes and ears of the media and the country are on us more than at any other time during the year so let’s make the most of it!
Rebecca Taylor FIFP, CFPCM IFP President Institute of Financial Planning @IFP_Becky
IFP Member News 5 Pages of News for IFP Members | President 29 | IFP News 29 | Branch Reports 30 | Events and Courses 32 | corporate members 33
IFP represents UK at Global Financial Planning conference IFP chief executive Steve work towards the enshrinement Gazzard CFPCM, IFP President of the term “Financial Planner” Rebecca Taylor FIFP, CFPCM and in law. Many FPSB members Past President Barry Horner are also seeing shifting macroCFPCM attended the Financial economic and regulatory Planning Standards Board (FPSB) environments, so we had much international council meeting and to discuss as we look to grow the FPA Professionals’ conference Steve Gazzard CFPCM the number of CFP professionals in Sydney, Australia, last month. globally.” It was organised by the Australian Financial Steve Gazzard said: “Sydney is a long way Planning Association (FPA), and leaders from to go but the value of getting together with 24 affiliate Financial Planning and Certification the global Financial Planning community bodies around the world - representing almost cannot be overestimated. These are exciting 150,000 CFP Professionals - took part. times for Financial Planning and working Mark Rantall CFP, chief executive of the together with other affiliates really helps us to FPA, said: ”The meeting came at a significant develop the highest standards and grow the time for Financial Planning in Australia as we profession right across the globe.”
Using social media to reach out to thousands of consumers Since launching Wayfinder in July, the IFP has extended the reach of its consumer brand into Facebook and Twitter. Wayfinder has had its own Facebook page since August and last month the IFP added to this by launching @WayfinderIFP on Twitter. The IFP is using this to build a following of consumers with an interest in Financial Planning, helping them to understand more about good Financial
Planning and sound professional advice. Sue Whitbread, IFP communications director, said: “With Financial Planning Week coming soon, this is the perfect time to reach consumers via social media. It’s an exciting development for the IFP and one we’re hoping members will support. By copying in Wayfinder when releasing blogs, articles or tips, we can all promote the great work Financial Planners do.”
Financial Planning Week 2013: Calling all CFPCM Professionals CFP professionals and those working for Accredited Financial Planning Firms can make a real difference by getting involved with the IFP’s Financial Planning Week campaign which is launched on 24 November. FP Week Through PR, IFP will be promoting CFP professionals and Accredited Financial Planning Firms to the media and the public as the leaders in the Financial Planning profession and also as advisers of choice when it comes to sound Financial Planning practice. This provides the ideal opportunity to boost your business profile and build your brand. While the IFP can promote your credentials, only you can show the public and the media the real essence of the service which you
provide for your clients. There are lots of ways to get involved. You could open your doors to the public to show them what you do - you might even pick up a new client or two. You can also review your marketing materials, including your website. Make sure you highlight real life case studies where you’ve made a difference to clients’ lives. Social media is a great way to promote engagement as are blogs, articles or press releases. Establishing yourself as an expert is a proven way to generating more referrals. Make a difference and get involved! For more details visit: www.financialplanning.org.uk
www.financialplanneronline.co.uk | December 2013 | 29
IFP Member NEWS Branch Chairman What does it mean to win the IFP’s David Norton Building Excellence Award? As Kevin Deamer CFPCM, partner at 2013 Winners KMD Private Wealth Management explained: “We entered the David Norton Award because we wanted to be assessed and we felt there was no better organisation to assess us than the IFP. “One of the benefits was being forced to put down on paper details about our business, our standards of client service, philosophy and how we planned to expand and improve. Committing this to paper was a surprisingly refreshing experience. “Each time we received a message to say we had passed the latest round our confidence grew. Not in terms of winning but to have been given the thumbs up that what we were doing was considered of a high standard. That in itself was hugely rewarding and even before we reached the shortlist of three the process had been very worthwhile. I would recommend all eligible firms consider applying next year. “The stakes got higher when we had the agenda for the final interviews in London a few weeks before conference. Within a few minutes of meeting the panel we were into a client role play. “I would like to take this opportunity to say how impressed we were with the professionalism and thoroughness of the whole process. I doubt there is another organisation in our industry that could match the IFP in this regard. “We are absolutely thrilled to have won the award. It has been a great boost for the invaluable support team back in the office and we all feel a little taller.” What did the judges think? Barry Horner, CFPCM Paradigm Norton said: “It’s great to see firms like KMD Private Wealth flourishing post RDR. I’m sure that if he were still with us, David Norton would be incredibly proud of this legacy and the standard of entries for the award which so appropriately bears his name.” Brett Davidson, FP Advance, said: “KMD Private Wealth was almost the perfect firm for the David Norton Award; committed to Financial Planning, doing very well, but with loads of potential yet to be unleashed. I can’t wait to get in there and help them do just that.”
Value of Paraplanning under spotlight for Lancashire & Cumbria members As chair of the Lancashire & Cumbria Branch I feel that it is important that we are inclusive to all those involved in the Financial Planning process, especially Paraplanners, writes branch chairman Paul Jones CFPCM. Acknowledging that Paraplanners are as technically competent and qualified as Financial Planners, they can and should be given the opportunity to benefit from the same sharing of best practice, knowledge and personal development within the branch. As such, I arranged a Paraplanner focus for our September branch meeting and was glad to see a good turn out. We handed straight over to the Paraplanners, beginning with an introduction by my colleague and local IFP member Jane Holt. Jane was awarded Paraplanner of the Year by the IFP in 2012 (this accolade for 2013 was awarded to Gemma Siddle at the IFP conference). Our congratulations Gemma. Jane talked briefly about how the role of the Paraplanner has evolved and become more prevalent in the profession
Damian Davies of Timebank over recent years. Damian Davies of outsourced Paraplanning firm The Timebank was our first speaker. Damian provided a presentation highlighting the various ways a Financial Planning firm can use an outsourced Paraplanner and the services and benefits that can be accessed via this route. Damian’s presentation was well balanced, and very honest about the benefits and limitations of outsourced Paraplanning, as well as the conditions in which it can be successful. Following Damian, we were
delighted to welcome IFP President Rebecca Taylor FIFP CFPCM, director of Dunham Financial Services. Rebecca, like myself, is a champion of the Paraplanner role and was generous in her respect and praise for her own Paraplanning team. Her engaging approach delivered with humour does not hide Rebecca’s intelligence and passion for high quality Financial Planning and it is not difficult to sense how she has developed such a successful practice. Rebecca was extremely generous and candid; sharing information about Paraplanning and the process within her practice - what’s worked and not. Her presentation encouraged a lively Q&A and an open dialogue with the attendees. Rebecca epitomises the willingness of successful Financial Planners within the IFP to share knowledge and experiences to help others in the profession develop and grow. My aim is to continue to facilitate and provide valuable branch meetings for all members of our profession. I hope you’ll come along and join us soon.
Chester & North Wales members discuss importance of client review process Financial Planners spend a lot of time looking after existing clients, ensuring that their situation is regularly reviewed. The review process was the topic for September Branch meeting for the Chester & North Wales Region. It is an area of the Financial Planning process that is truly valued by most clients and varies from firm to firm. Each member who attended discussed openly with the group how they operate their review
meetings. Everyone benefited from the discussion. Much time was given to comparing the best way to systemise the review process in order to make it more cost effective. Other things considered were: the timing of when to request update information prior to the review meeting; how to conduct the investment review effectively; good ways of generating new planning opportunities and making the most
of the planner / client relationship. One member showed the group the pack that his firm uses at a review meeting. This had various items that reinforced the level of service that the client had received since the last review. This helped to show how valuable the planner’s advice was to the client because it included a breakdown of the times that the client had contacted the planner for advice. Something that clients sometimes forget.
IFP branch meetings – bringing relevant CPD to 22 regions right across the UK Getting the right kind of CPD that boosts your knowledge and skills while challenging the way you think is essential to keep your business ahead of the curve. Members regularly tell us that gaining relevant and useful CPD is not always that easy as the content of some seminars and events can disappoint. With this in mind, don’t
30 | December 2013 | www.financialplanneronline.co.uk
forget the value to be gained by attending local IFP branch meetings. Not only are these meetings free of charge but they’re a great way to gain structured CPD on topics which have been selected by Financial Planning practitioners for their relevance. Content extends beyond the technical into practice management
and personal development sessions. Local meetings also provide the opportunity to discuss topics in detail with other planners and Paraplanners. Check the programme on www. financialplanning.org.uk and look out for your hard copy of the 2014 IFP branch programme in the next issue of Financial Planner magazine.
IFP Member NEWS
Bristol Branch welcomes three speakers who share expertise on older clients Bristol Branch welcomed three speakers to cover three different aspects of planning and advice for elderly and vulnerable clients at its September meeting. Anthony Fairweather, MD of Solicitors Clarke Willmott Private Client division, provided a useful legal update on elderly care law and the court of protection in particular. Brian Fisher, Long Term Care marketing manager from Friends Life, then gave an update on
long term care reform professional advisers. including the longevity Branch chairman cap and means Julian Frere CFP CM tested thresholds. said: “I was shocked Finally, Andrew Pike, by Andy’s revelation head of intermediary that just 21 per cent of relationships NS&I gave respondents in a recent an overview of who NS&I survey would uses NS&I as so many NS&I’s Andrew Pike consider a financial are over 65 and HNWs adviser for their later who are loyal to the brand. life needs, especially as this is such He also shared some of the ways a technical area. As planners, we’ve that NS&I is boosting support for clearly got work to do!”
IFP boosts support for Paraplanners The IFP has always been a strong supporter of Paraplanners and Paraplanning. It aims to provide more resources and opportunities for this dynamic community to help Paraplanners develop their knowledge and skills. The IFP website now has a Paraplanner zone designed specifically to support the
Paraplanning community. This includes a popular Paraplanner blogspot. As well as running the annual Paraplanner conference, the Certificate in Paraplanning qualification from FPSB UK, the IFP also has Paraplanner representation at board level with Richard Allum CFPCM elected to the board by
members back in 2012. The IFP recently took over the Paraplanner of the Year Award previously run by The Paraplanners.com and was delighted to work with Parmenion on that project which saw Gemma Siddle CFPCM win the trophy recently. More is planned for 2014 too. www.financialplanning.org.uk
2014 IFP Branch Programme in next issue Your December copy of Financial Planner will contain the full IFP Branch Programme for 2014. Meetings are free to members and are excellent sources of CPD. Check out what’s happening at your local branch and why not invite a colleague along too?
Planning for 2014 is under way In early December the IFP Board meets to discuss its strategic plans for 2014. The IFP welcomes suggestions from members of what the organisation can do to support members’ needs even more effectively. Email sue@ financialplanning.org.uk
Be an IFP winner in 2014 The IFP runs several awards for members to recognise their achievement and professionalism. See the IFP website for details or contact Email sue@ financialplanning.org.uk
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IFP Event NEWS Events in Brief Conference session audio recordings now available IFP Conference sessions were this year audio recorded and delegates can access the audio recordings, slides and additional resources, where available. This provides the perfect opportunity for delegates to catch up on sessions they might have had to forego in favour of other sessions or perhaps to refresh their memory of sessions attended. This is a real value add for conference delegates considering there were almost 50 sessions in total covering a wide variety of subject matter from the technical through to personal development and ethics.
Important to check and keep CPD records As an accredited body, the IFP knows the importance of keeping accurate CPD records. At conference, delegates were scanned into sessions and the IFP therefore has a comprehensive list of delegate attendance at sessions and CPD certificates will have been sent out accordingly. Users of the IFP’s CPD online will have had their records updated automatically so just need to review these sessions for the structured CPD to show up in their log. If you want to find out more about CPD online then visit the IFP website or get in touch.
Conference Tweeting a new phenomenon The phenomenon that is Twitter continues to surprise and its use at this year’s conference demonstrated how important it is both to conference attendees but also to the wider world. The conference hashtag, #IFPconf, was very well used and attendees were using it to comment on the speakers, the sessions, to share sound bites, photos, arrange meetings and more. If you haven’t done so already, check out Phil Calvert’s blog on how Twitter and Social Media is transforming conferences and events, you can find it on the annual conference page of the IFP website.
Visit the IFP website: www.financialplanning.org.uk, to find out more. Discounts apply when booking two or more CPD workshops at the same time. Book them all at once and receive the maximum discount available.
95% rate IFP Conference 2013 "excellent or good" as planning for 2014 event starts With the dust now settled on the 2013 IFP Annual Conference and Exhibition now is for reflection. A great deal of time and effort goes into the production of the conference and not just by the team at IFP HQ but also by the speakers, the exhibitors and also the time the delegates themselves give up to attend. Feedback is therefore invaluable and the IFP is grateful to those attendees that took the time to complete what is quite a lengthy feedback survey. Almost 70 per cent of delegates were Financial Planners and 53 per cent business owners. Paraplanners made up 8 per cent
Bill Bachrach
and compliance professionals 3 per cent. As expected, the main reasons for choosing to attend were professional development, the programme itself and networking. A fantastic 95 per cent rated the event "excellent" or "good" and of those 64 per cent rated it as excellent. Delegates were asked to confirm their top speakers. The keynotes were the standout favourites, led by Bill Bachrach. Other top picks included Daniel Priestley’s 15 stages for growing a successful enterprise, Seán Weafer’s session on building your personal brand and Michelle Hoskin’s create and lead your 21st century professional practice.
Daniel Priestley
Some 98 per cent said they would recommend the conference to others and here Madeline To of Blueberry Financial tells why: “The IFP Conference combines brilliant speakers with fantastic content, amazing networking and great fun. Makes you really think about your business and how you run it for the benefit of you and your clients.” The IFP is always striving to improve the conference and keep it fresh. The suggestions for sessions, speakers and format changes are appreciated and will be considered by the IFP and the events committee. The 2014 conference returns to Celtic Manor from 6 to 8 October.
Michelle Hoskin
Seán Weafer
IFP Events Calendar 2013/14 Conferences and Exclusive Events Accredited Financial Planning Firms Conference 6 March 2014, South East TM
Paraplanner Conference 2014 22 May 2014, Chesford Grange, Warwick CFPCM Professionals’ Conference 2014 12 June 2014, Central Fellows’ Day 2014 24 June 2014, Central IFP Annual Conference & Exhibition 2014 06-08 October 2014 The Celtic Manor Resort, Newport, South Wales Scottish Conference 2014 18 November 2014 *Where highlighted, an optional dinner will take place the evening prior to the conference
Estate Planning. . . . . . . . . . . . . . . . . . . . . . 03 July 2014 [London] Practice Management. . . . . . . . . . . . . 30 October 2014 [London]
IFP Branch Meetings London. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . East Anglia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cotswolds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Birmingham. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . East Midlands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scotland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IFP Training Courses Integrated Financial Planning Course: A two day workshop focusing on the Financial Planning process with a view to producing a comprehensive financial plan.
Training and CPD Workshops
27-28 November [London]
A programme of workshops each offering over five hours of structured CPD. Multiple booking discounts are available.
Principles Exam Preparation Day
Investment Planning &Asset Management . . . 10 December [London] Estate Planning. . . . . . . . . . . . . . . . . . . . 21 January 2014 [Bristol] Retirement Planning. . . . . . . . . . . . . . 06 February 2014 [London] Practice Management. . . . . . . . . . . . . 18 March 2014 [Midlands] Ethics and Practice Standards, . . . . . . . . . 01 April 2014 [London] Investment Planning & Asset Management . 15 May 2014 [Cambridge]
32 | December 2013 | www.financialplanneronline.co.uk
03 Dec 04 Dec 05 Dec 10 Dec 11 Dec 11 Dec 12 Dec
26 November [London] CFPCM Certification Assessment Preparation Day 09 December [Bristol] 15 January 2014 [London] NB: The IFP reserves the right to amend or cancel any event or event times and dates. This includes changes to speakers, content and programme.
IFP CORPORATE MEMBER NEWS
7IM is well placed to help planners as global economy shows signs of healing Astrology is no basis for financial decisions but the financially positive Year of the Snake (2013) certainly proved helpful for most. The Year of the Horse in 2014 (a wooden male apparently) is seen by Chinese astrologers as positive and outgoing although potentially short tempered! Quite how that translates into global finances is rather unknown. However let’s put this into some perspective. We are now nearly six years on from the financial collapse, and from teetering on the edge of Armageddon, the global economy has shown some significant signs of healing albeit under a generous regime of support and stimulants. So 2014 sees a Euro-zone economy showing nascent signs of recovery although the festering issue of damaged banks and weaker government finances for some, will continue to cast a pall over the markets. In the UK the government has been rejoicing over the signs of green shoots but even here, they are careful not to overstate the recovery. The USA will see its seemingly intractable battles between the Democrats and Republicans gain
further heat as they head towards their midterm confrontations and elections. Despite that, growth is still coming through. For the Federal Reserve the challenge will be managing QE support and its effects on markets and the economy. In China the refocusing of the economy will continue. For outsiders, we should continue to be suitably cynical over the data we are fed. As a developing economy China will continue to grow, although the exuberant graphs of just a few years ago are not going to be fulfilled. While they may have avoided the worst of a hard landing, they may feel as though they are wading through a somewhat sticky swamp. Then to Japan, where the sheaf of arrows of Abe San will continue
to have their effect. The question for 2014 will be whether they are seen to have had any positive impact? The signs are encouraging but by no means certain. So this coming Year of the Horse may be no galloper, but at least it seems saddled and ready to ride in a recovering global economy. There will be “events” but hopefully not enough to “scare the horses”. Contact: Justin Urquhart Stewart, Seven Investment Management www.7IM.co.uk @Ustewart
CORPORATE MEMBERS IFP Platinum Corporate Members AXA Wealth www.axawealth.co.uk/adviser Architas www.architas-mm.com
IFP Gold Corporate Members ETF Securities www.etfsecurities.com Investec Structured Products www.investecstructuredproducts.com Legal & General Investments www.landginvestments.com
IFP Corporate Members Aberdeen Asset Management www.aberdeen-asset.co.uk AIC www.theaic.co.uk Alliance Trust Savings www.alliancetrustsavings.co.uk Ascentric www.ascentric.co.uk Aviva www.aviva.co.uk Dimensional Fund Advisors www.dfauk.com Frontier Investment Management www.frontierim.com Hornbuckle Mitchell www.hornbuckle.co.uk
Aberdeen Asset Management aims to deliver superior fund performance
Independent Health Care Solutions
Aberdeen is a pure asset management company and only manages assets for third parties, allowing us to focus solely on their needs. We now manage £209.6 billion of third party assets from our offices around the world as at 30 June 2013. Our clients access our investment expertise in three main asset classes: equities, fixed income and property, as well as tailored solutions. We package our skills in the form of segregated and pooled products across borders. We invest worldwide and follow a predominantly long-only approach, based on fundamentally sound investments – we do not chase market fads. Our investment teams are based in the markets or regions in which they invest. Clients understand our process and portfolios because
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they are transparent. We aim to deliver superior fund performance across diverse asset classes where we believe we have a sustainable competitive edge. To facilitate local decision-making and to make sure we have clear lines of control and central reporting we operate without unnecessary layers of management. To further ensure control and accountability, a central executive committee comprising the heads of all the main business lines reports to the board of directors. At Aberdeen we believe in keeping our business simple and following principles that are easily expressed and understood. These are: Integrity Quality Teamwork Ambition Challenge
For more information, tools and support visit aberdeen-asset.com where you can access information on our products and capabilities as well as sign up for our AdvisorOnline Reporting (AOLR) service. Hosted by our administrators International Financial Data Services (UK) Ltd the online reporting system AOLR will enable you to view online copies of commission statements and summaries of six monthly client statements. AOLR provides a safe and secure way to view, download and print your reports. In addition to viewing Aberdeen information you can access information from other fund groups who use this facility. The value of investments and the income from them may go down as well as up and investors may get back less than the amount invested. Contact Tony Walters Senior Business Development Manager tony.walters@aberdeen-asset.com www.aberdeen-asset.com
www.ihcs.co.uk iShares uk.ishares.com/en/fa James Hay Partnership Just Retirement www.justadviser.com M&G www.mandg.co.uk Morningstar www.morningstar.co.uk Novia www.novia-financial.co.uk NS&I www.nsandi.com Nucleus Financial Group www.nucleusfinancial.com Parmenion www.parmenion.co.uk Prestwood Software www.prestwood-group.co.uk Prudential www.pruadviser.co.uk Seven Investment Management www.7im.co.uk Standard Life www.standardlife.co.uk Suffolk Life www.suffolklife.co.uk Thesis www.thesis-plc.com Transact www.transact-online.co.uk Zurich www.zurichintermediary.co.uk
www.financialplanneronline.co.uk | December 2013 | 33
Contacts & Diary
Financial Planner THE VOICE OF THE FINANCIAL PLANNING PROFESSION
Financial Planner is the official journal of the Institute of Financial Planning and is published by Portfolio Publishing, London. Founded in 1986, the IFP is the exclusive licensee of the CFPCM mark in the UK. IFP Address: One Redcliff Street, Bristol BS1 6NP 0117 945 2470 www.financialplanning.org.uk
EDITORIAL Publisher & Group Editor: Kevin O’Donnell 01895 678629 kevin.odonnell@portfoliopublishing.co.uk Art & Production Director: Jason Taylor jason.taylor@portfoliopublishing.co.uk Email address for news releases: newsdesk@portfoliopublishing.co.uk IFP Editorial Team: Nick Cann, Sue Whitbread, Katherine Morgans, Steve Gazzard
Surprise and delight for Jones There was surprise and delight at this year’s Financial Planner of the Year Awards as IFP member Stephen Jones CFPCM scooped won the Financial Planner of the Year Award. The surprise was not because he had deservedly won the prestigious event but because he had ended the winning run of fellow planner Matthew Hodge who has won the award for the last four years running. Well done to Stephen who thoroughly deserved his award and was one of no less
than 10 IFP members who swept the board at the Money Management-IFP Financial Planner of the Year Awards held at the Mandarin Oriental Hotel in Knightsbridge, London in October (see p5 for more details of the winners). Mr Jones, of Chester-based 75point3 Financial Planning, received his trophy and a cheque for £5,000 from host TV presenter Angela Rippon OBE and Natasha Power from award sponsor Schroders at a Gala Dinner in the ballroom of the Mandarin Hotel in Knightsbridge, London.
Advertising Advertising Enquiries: 01895 672771 advertising@portfoliopublishing.co.uk
UK defies ‘Bad Granpa’ role model
General Enquiries General enquiries and advertising copy: Louise Glover 01895 672771 louise.glover@portfoliopublishing.co.uk
Publishing Published by: Portfolio Publishing, Panstar House , 13-15 Swakeleys Road, Ickenham, London UB10 8DF. 01895 678629 www.portfoliopublishing.co.uk Subscriber Enquiries: 01895 672771 Printers: PolestarStones of Banbury, Oxfordshire Audience: Financial Planner magazine readership: 5,340 per month; Monthly print circulation: 3,350. Financial Planner Online: 4,000+ unique visitors per month - Publisher Statement.
Bad Granpa, the hit US comedy movie, may be pulling in the punters in British cinemas but it appears the film is far from the truth, at least on this side of the pond. For English grandparents are definitely ‘good granpas’ and ‘granmas’, according to new research which shows that financial support from grandparents to younger generations is now worth £500m a year and is set to grow in future. Research by the International Longevity
Centre-UK highlights how grandparents are playing an important role in supporting the financial wellbeing of future generations. The research, supported by Key Retirement Solutions and Partnership, is explored in a new report entitled “Grandparental Generosity”. The research reveals that just under 2.5m grandparents in England aged 50+ (one in five) gave money to their grandchildren and across
Warpaint to spread over UK Financial Planner is published monthly and is distributed to registered members of the IFP and to other qualifying readers. Applications for subscription for non-IFP members should be made to Portfolio Publishing (Subs) at the address above. Any non-delivery issues must be reported within 60 days of non-delivery. The 12 month subscription to Financial Planner magazine is £92. All rights are reserved and no part of this publication may be reproduced in any form without the advance written permission of the publisher. For copyright or syndication enquiries please contact the publishers using the contact details above. Portfolio Publishing Registered’s Office is: 25 Glover Road, Pinner, Middlesex HA5 1LQ. Company Registration No. 5542523. Financial Planner welcomes contributions from IFP members and non-members but contact must be made with the editorial team before submitting manuscripts. This magazine is intended entirely for professional use by qualified professional advisers and is not intended for consumer use or distribution. Views, opinions or claims are not necessarily subscribed to by the Institute of Financial Planning or Portfolio Publishing and neither the IFP nor Portfolio perform regulatory due diligence on authors or submissions and can accept no responsibility for loss occasioned to any person on taking or refraining from action as a result of the material contained herein. © Portfolio Publishing Ltd
It looks like the Paraplanner Powwow ‘delegate directed’ conferences could spread all over the land and with it a fondness for Native Americanstyle warpaint. The South may soon host its own Paraplanner Powwow and the Powwow concept may be rolled out nationwide following the success of the first Paraplanner Powwow, held in giant teepees in Northamptonshire, recently and the smaller
Paraplanner Powwow Up North. Organisers are planning a south Conference (see www. financialplanneronline.co.uk) and given some delegates willingness to get in the mood by wearing warpaint the event will be colourful and useful at the same time. The South event, described as an ‘unconference’ where Paraplanners design their own agenda, may be held in London or Reading in mid-January.
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