For today ’s discerning financial and investment professional
Financial Sector Recruitment Oil and The Global Economy The 2015 IFA Magazine Readership Survey
STRONGER TOGETHER
THE IFP/CISI MERGER, AND WHAT IT MEANS FOR YOU OCTOBER 2015
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CONTENTS C O N T R I B U TO R S
Brian Tora an Associate with investment managers JM Finn & Co. Lee Werrell a senior compliance consultant and industry adviser. Richard Harvey a distinguished independent PR and media consultant. Michelle McGagh brings a wealth of experience on industry developments. Neil Martin has been covering the global financial markets for over 20 years.
Editorial advisory board: Richard Butler, Michael Holder, Ian McIver and Mark Pullinger
7 News All the big stories that affect what we say, do and think
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Oil Be Blowed Never ignore the effect of oil price slumps on the global economy, says Brian Tora – or the spikes
10/15
THE FRONTLINE: From 1 November, the IFP and CISI will be one organisation. What does it mean for members?
Editor: Michael Wilson editor@ifamagazine.com
Art Director: Tony Merlini
tony.merlini@thewowfactory.co.uk
Publishing Director: Alex Sullivan alex.sullivan@ifamagazine.com
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18 The IFA Magazine Survey Results So, what do our readers see as their main priorities these days? Simple, we asked them
21 Turning Up The Heat We talk to Steve Preston, of Heat Recruitment, about trends in a fast-moving marketplace
24 IFP/CISI Merger: The Way Ahead Highlights from the 2015 IFP Conference at Celtic Manor
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CONTENTS
October 2015
38 Compliance? Why Bother? Compliance expert Lee Werrell on the growing weight of officialdom. But ignore it at your peril
42 When You’re Dead, You’re Dead Why pay for a funeral pre-payment plan, asks Richard Harvey? Spend your loot while you’re alive
‘IFA Magazine’ is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.
IFA Magazine is published by IFA Magazine Publications Ltd The Old Wheelwrights, Ham, Berkeley, Gloucestershire GL13 9QH Tel: +44 (0) 1179 089686 ©2015. All rights reserved IFA Magazine is for professional advisers only. Full subscription details and eligibility criteria are available at: www.ifamagazine.com
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“Wolde ye bothe eate your cake, and have your cake?”
John Heywood, 1546
The Witan multi-manager approach – aiming to deliver both income AND capital growth. Some people don’t think it is possible to do both. At Witan we think differently and, since 2004, our specialist investment managers have helped enable Witan shareholders to have their cake and eat it too. Witan is the only fully multi-managed global equity investment trust. Our carefully selected range of fund managers picks the stocks while Witan directs the overall portfolio strategy. The goal is to outperform the relevant equity benchmark and to grow the dividend faster than the rate of inflation. Naturally, this cannot be guaranteed so please read the risk warnings carefully. By playing to the individual strengths of our managers we strive to reduce volatility which can arise from being dependent on a single manager. What’s more, Witan offers exposure to the world’s major equity markets, diversified by manager, geographical region, industrial sector and individual stocks. All of which could help your clients to both have their ‘investment cake’ and eat it… Your clients can invest in Witan Investment Trust plc in a number of ways. Witan’s shares can be traded through many online platforms. Witan is also available for investment via an ISA, share plan and children’s savings schemes. 40 year growth in Witan’s dividends per share versus UK Retail Price Index † 5000 4000
Witan Investment Trust plc is an equity investment. Please remember that past performance is not a guide to future returns. The value of an investment and income from it can fall as well as rise, as a result of currency and market fluctuations and you may not get back the amount originally invested. *
Witan dividend (pence per share) RPI Index
3000 2000
1000 0 1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
†SOURCE: Datastream. Both data series have been re-indexed to 100.
Visit www.witan.com Available on a number of online platforms *
40 YEARS OF CONSECUTIVE DIVIDEND GROWTH FOR FINANCIAL ADVISERS ONLY. Issued and approved by Witan Investment Services Limited. Witan Investment Services Limited is registered in England no. 5272533 of 14 Queen Anne’s Gate, London SW1H 9AA. Witan Investment Services Limited provides investment products and services and is authorised and regulated by the Financial Conduct Authority. We may record telephone calls for our mutual protection and to improve customer service.
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WORDS OF WILSON
October 2015
Take-Off Delayed Ladies and Gentlemen, we regret to announce that the 2015 departure for Sunny Side Up has been delayed, due to unexpected turbulence over the South China mainland and the late arrival of the oil price recovery. Please remain within the departure area and await further updates. Thank you Good heavens, Moira, is it that late already? We packed away the holiday stuff months ago, and now it’s November that’s bearing down on us at the speed of an Atlantic jetstream. Normally we’d expect the autumn to be a pretty decent season of strong (or at least steady) growth – the combined result of a return of retail demand and the arrival of those autumn forecasts that usually serve to blow the froth off those heady summer estimates and show us where we’re really heading. But this year’s summer wasn’t very normal at all, unfortunately, and this unusually chilly autumn has got the flight controllers wondering how much longer they can keep us all on the ground without ruining the schedule. ‘Sell in May and Go Away’ proved to be unusually prophetic – the nasty equity slide that started in June had chopped a full 17% off the Footsie by the time September ended, and even the super-confident S&P 500 had stumbled by 7% during a panicky run in August and September, as Fed chairman Janet Yellen played her will-she-won’t she game with US bond rate expectations. Holding Pattern Okay, we don’t really need to spend too much time reminding ourselves
about the disappointments in China or the endless languishing of the oil price. We can all do the maths, thank you very much. The VIX volatility index has been telling us that the institutional investors are still edgy – it spiked from 13 to 41 in August, its highest level since October 2011. Emerging markets are still on the slide. And the recent day-to-day price volatility
in major market indices has been a bit scary too. No autumn feelgood there, then. Not even for gilts, which have seen their widely-trailed rise in yields going into reverse over the last twelve months, with ten year paper moving from 3.1% to 1.7% and all points south. (That’s a problem in the making if ever there was one.) US retail trends are stumbling – and it takes a lot to do that. And how funny, nobody’s mentioned Greece for months… Home By Christmas? But all might not be lost after all. For one thing, as advisers, we can expect a surge of chilly-weather activity from our clients as the nation turns its thoughts to laying in the winter fuel. There are sound reasons why fund sales boom in the final quarter, and only some of them are down to the incoming season of goodwill. There’s end-of-year squaring; there’s pension saving and tax optimisation, which always makes more sense when you’re not rushing around in summertime mode; there’s this year’s added impetus from UK retirees stashing their liberated pensions into something (anything) better than annuities. And finally there’s the general expectation that, heck, 2016 has got to be better than this. Hasn’t it? Mike Wilson, Editor
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“Anyone can hold the helm when the sea is calm.”
Publilius Syrus (100 BC)
When markets are volatile, you need a steady hand on the tiller. Witan’s multi-manager approach could offer you a smoother course through choppy waters. Witan is the only fully multi-managed, global equity investment trust. Which offers you a double benefit - we’re constantly striving to perform better than global equity markets and deliver a growing income - and by virtue of being a multi-managed fund we aim to smooth out the volatility associated with a single manager. In essence, Witan offers you diversified exposure to the world’s major equity markets so that you gain diversification by manager, geographical region, industrial sector and individual stock. It’s all designed to help you enjoy a smoother passage to help realise your investment goals. At Witan, we hope many years of plain sailing await you. Anchors aweigh! Contact us today, to find out more.
Witan Investment Trust is an equity investment. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise, as a result of currency and market fluctuations, and you may not get back the amount originally invested.
Visit www.witan.com
Call 0800 082 81 80
Issued and approved by Witan Investment Services Limited. Witan Investment Services Limited is registered in England no. 5272533 of 14 Queen Anne’s Gate, London SW1H 9AA. Witan Investment Services Limited provides investment products and services and is authorised and regulated by the Financial Conduct Authority. Calls may be recorded for our mutual protection and to improve customer service.
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NEWS
Downstream
Things Are Looking Better
Fairstone increases revenues and reduces losses
Financial services group Fairstone has announced a 29% increase in revenues to £17.4m for the year ended 31 December, 2014. There also was a 42.5% improvement in underlying EBITDA performance, with losses reduced to £585,000.
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Other highlights included a 152% growth in recurring income and operational results for 2015 already ahead of forecast. As at the end of September 2015, Fairstone had £5bn of client Funds Under Influence, of which £2.1bn is classed as Funds Under
Management. What’s more, current revenues now stand at £30m with over 230 financial advisers contracted within Fairstone’s regulated businesses. There are also over £100m of client funds within its managed portfolio products, which operates under the regulated entity,
Fairstone Private Wealth Limited. Fairstone said that its continued growth is mainly down to significant traction in its Downstream Buy Out (DBO) programme, with a series of 11 deals with partner firms completed at various stages within the reported 2014 financial year.
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NEWS NEWS IN BRIEF
We’ll Keep The Red Flag Flying Here The UK laid out the red carpet, and the red flags, for China as their leader President Xi Jinping made a state visit and was accorded all the ceremonial niceties that this nation does so well. The real purpose of the trip was hard business though and deals worth some £30bn were signed.
Leaving it all Behind One in three Senior IFAs plan to retire over the next ten years
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Mark Stevens
New research reveals that 36% of intermediaries that own all, or part of their firm, plan to semi-retire, or retire fully in the next decade. The findings come from Investec Wealth & Investment which concludes that despite the numbers retiring, a dramatic departure of senior industry advisers is unlikely. This is because, says the comprehensive study, around (80%) of advisers are expecting to semi-retire, or take a phased approach to retirement before stopping work for good. But, adds the report, retirement plans will lead to a significant number of business ownership changes with almost half (49%)
of advisers planning to sell their firm entirely on retirement. Some 30% plan to recruit a successor from outside the business. Interestingly, only a fifth (21%) of advisers believe their successor will come from the existing team and just 12% expect family members to take over the business. On a wry note, the report says that 62% of IFAs admit they are
better at discussing retirement planning with their clients than they are in executing plans for themselves! Head of Intermediary Services at Investec Wealth & Investment Mark Stevens said (pictured above): “The survey provides a useful snapshot on succession planning among IFAs. It’s clear that advisers consider all options very carefully with
continuity of client service at the core. As most advisers plan to look outside their firm for a new owner when they decide to call it a day, the research suggests the right fit is vital and retirement will continue to be a key driver towards further consolidation in the sector. “While IFAs have to be experts in retirement planning, it doesn’t follow that they will have all the answers to their own situation. That just 12% of advisers have fully agreed a succession plan underlines how complicated the process can be and in many instances the outcome only becomes clear when full retirement beckons.”
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Tel: Tel: 020 020 7291 7291 4700 4700 22/10/2015 11:17
NEWS NEWS IN BRIEF
Democratic Advice DIY Profit Warning
Hargreaves Lansdown has made major changes to its
Argos and Homebase owners, Home Retail Group, warned the market that its full year profits would fall below what the City expected. The company described its retails markets as challenging, which is making some economists worry about the real state of the UK recovery.
advisory service in an effort it says to democratise advice It has dropped the independent label and will now only offer ‘restricted’ services. The changes are effective immediately. Hargreaves Lansdown says that the downside of being an independent adviser is that it is obliged to research investments that its clients rarely hold and that are, they think, either overly complicated, opaque, expensive, or carry excessive investor risk. By restricting the advisory service it offers, the firm says it can now focus all its advisory research and resources on the areas that actually matter to its clients. They plan to improve the advisory services
Prancing Horse Debut The iconic car brand Ferrari, which is controlled by the less salubrious motorcar manufacturer Fiat Chrysler Automobiles, made its debut on Wall Street, priced at the top end of the range. Its moniker on the New York Stock Exchange is, appropriately, ‘Race.’ The IPO was a tactical success.
they offer, simplify their fee tariff and remove the minimum portfolio size for advice. The firm’s advisors will now change to the restricted model. There is no change to the HL Vantage Service. Hargreaves Lansdown aims to democratise advice and has laid down the groundwork to develop a telephone-based advice proposition. The size of an individual’s portfolio won’t matter, but they will be subject to a minimum fee of £495. Head of Communications at Hargreaves Lansdown Danny Cox said: “This change will set the groundwork for us to simplify and reduce
our advisory charges, develop our telephone based service and increase the use of technology to improve the efficiency of the advice process. At the same time we want to ensure everyone who wants personal advice can have advice and are removing our minimum portfolio requirement. “In reality investors will see very little change in what we advise over. We shall continue to offer the same broad range of investment advice, including portfolio management, investment and pension advice, retirement planning and inheritance tax mitigation as we do now.”
“In reality investors will see very little change in what we advise over”
Danny Cox
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Corpo
Intelligent access Commodities FX Equities Fundamental fixed income via our partnership with Lombard Odier Asset Managers
We offer one of the most comprehensive ranges of specialist exchange traded products (ETPs) providing a range of exposures from delta 1 through to short and leveraged.
etfsecurities.com This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited which is authorised and regulated by the United Kingdom Financial Conduct Authority. Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances. Short and/or leveraged exchange-traded products are only intended for investors who understand the risks involved in investing in a product with short and/or leveraged exposure and who intend to invest on a short term basis. Potential losses from short and leveraged exchange-traded products may be magnified in comparison to products that provide an unleveraged exposure.
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NEWS NEWS IN BRIEF
New Opportunities Octopus has A Skinny Tax Latte Starbucks got a shock as the ubiquitous coffee house was told that it must pay back between €20m and €30m in taxes. The European competition commissioner Margrethe Vestager said that certain tax deals were actually state aid. She is quoted as saying: “All companies, big or small, multinational or not, should pay their fair share of tax.” Which has to be music to Chancellor Osborne’s ears.
Government Borrowing Down The ONS said that public sector borrowing was down 13.9% between April and September from a year earlier. However, some observers maintain that fiscal consolidation is still not entirely on track and that more austerity is needed if the Chancellor is to hit his target of a budget surplus by 2019-2020. Tory MPs will enjoy selling that one to the voters!
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created a new £90m fund The UK fund management company which specialises in smaller company investing has launched Octopus Zenith Opportunities II LP. It’s aimed at providing growth capital to successful, fast-growing laterstage companies across Europe. Now closed for investment, the fund follows-up on investments into some of the most successful companies within the Octopus Titan Venture Capital Trust (VCT) and Octopus Eureka Enterprise Investment Scheme (EIS) portfolios. The new fund can go beyond the legislative limits of the VCT and EIS funds, as well as back later stage high growth businesses new to Octopus. A statement from Octopus said: “With the latest Finance Bill imposing a new lifetime investment cap for VCT and EIS funding in addition to pre-existing VCT and EIS limits, the Octopus Opportunities fund will see Octopus backing companies further into the later stages
of development while continuing to optimise value in those companies for existing VCT and EIS shareholders.” It added: “The first investment from the Octopus Opportunities fund has already been made, with Octopus leading the recent £38 million round with Google Ventures into Secret Escapes, the London-based members only luxury travel site.” Head of Octopus Ventures and fund manager of Octopus Titan VCT Alex Macpherson said: “At Octopus we seek unusually talented entrepreneurs, and we want to be there supporting them from the beginning of their business journey to the later stages of company growth and maturity. The Octopus Opportunities fund is a really exciting development that enables us to keep travelling with
some of our existing entrepreneurs for longer, while also providing additional funding to find new investment opportunities.” He continued: “We have a strong pipeline of investment opportunities for Octopus Titan VCT, from which we handpick a small selection of the very best early stage investments. The launch of the Octopus Opportunities fund means that Octopus is now an even more attractive backer to the best entrepreneurs seeking investment as we are capable of supporting a business all the way through to later stage growth, beyond the limits imposed by the latest VCT and EIS legislation. This increased funding flexibility means that our Titan VCT investors can potentially benefit from Octopus’ continued partnership with successful growth businesses for longer.” Previous Octopus investments include Zoopla Property Group, Secret Escapes, SwiftKey and graze.com.
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NEWS NEWS IN BRIEF
Sustained Growth Mattioli Woods buys pension administration business and looks for more
Mattioli Woods has acquired the pension administration business of Lindley Group for a total cash consideration of £199,001.
Mattioli Woods said in a statement that the acquired business, which was formed in 1979, provides trustee and administration services to over 130 small self-administered pension (“SSAS”) schemes, with assets under administration of over £116 million.
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Ian Mattioli
The deal was funded by the company’s own cash resources and comprises the pension administration business of Lindley Group and 100% of the share capital of Lindley Trustees from Lindley Group.
“We anticipate there will be further opportunities to expand”
Chief Executive of Mattioli Woods Ian Mattioli said: “This acquisition extends the existing relationships we have with intermediaries like the Lindley Group, where Mattioli Woods has proven to be a sound strategic partner with the expertise, scale and systems to give the very best SIPP and SSAS administration, delivering an enhanced service and long-term security for clients. “With increasing complexity and continuing consolidation in both the SIPP and SSAS sectors, we anticipate there will be further opportunities to expand Mattioli Woods’ pension administration business by acquisition, accelerating the Group’s growth.”
Euro Yes/No Campaigns in for Long Haul Just weeks after the various campaigning groups got their act together to argue for a withdrawal from Europe/ stay-in Europe, already the campaigns look somewhat stilted and lacklustre. Some wag commented that what is needed is more celebrities, but there is no news of ITV commissioning ‘I’m A Celebrity, Get Me Out of Europe’, yet!
New Film Charts Bright’s Move to St James’s Place A film which describes why financial advisers Bright Wealth Management decided to join wealth management company St James’s Place has just been published. The firm was made for St James’s Place by Halo and its agency partner Clifton Media Lab. It charts the transition of Bright from what motivated their move, what St James’s Place offered and what made it successful. Halo filmed the Bright team at their offices in Warrington and St. James’s Place directors in Manchester and Leeds.were credited for the growth.
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NEWS
Cornish Vision Rathbone Brothers has now acquired all of Cornish IFA firm Vision Independent Financial Planning, buying the 80.1% stake in the business which it didn’t own Back in October 2012 it acquired a 19.9% stake in the group for a reported £2m. The Vision Group is a made up of Vision Independent Financial Planning and Castle Investment Solutions. Discretionary fund manager Rathbones is paying £5m for the stake plus, when the deal completes, the net asset value of the business. From then until 2020, a further £13m could be paid out if Vision meets certain agreed growth targets. Vision focusses on wealthy private clients and has 78 advisers throughout the UK with around £925m assets under advice. In a statement Rathbones said that the acquisition of the remaining stake in the Vision Group is part of their strategy of broadening its distribution and accessing a greater share of new business intermediated by financial advisers. Philip Howell, CEO of Rathbones Philip Howell, CEO of Rathbones Chief Executive of Rathbones Philip Howell
said: “Our decision to acquire the Vision Group is a reflection of its proven ability to grow and the strong relationship we have built up in the last five years. We very much look forward to sharing in its continued success.” Executive in charge of distribution Mike Webb said: “The acquisition of this high quality financial advice network reinforces our on-going commitment to intermediary distribution. Vision’s independent status will remain intact, securing an unequivocal focus on clients’ interests and suitability.” Founders of the Vision Group Roger Edwards and Paul Sweaton said “We are delighted to have secured the further backing of such a prestigious company as Rathbones, and one with which we share so many values. It was vitally important to us that any future partner understood the unique Vision culture and ethos that exists within our business, and we look forward to continued growth under new ownership.”
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The Association of Investment Companies The Association of Investment Companies
A new direction for your clients Discover more about investment companies A new direction for your clients Discover more about investment companies
Investment companies can help advisers add value to their clients’ portfolios. The AIC is the trade body for closed-ended investment Investment companies can help advisers companies. We help our members deliver better add value to their clients’ returns for their investors. portfolios. The represent AIC is theatrade investment We widebody rangeforofclosed-ended investment companies companies. We help our members deliver better including investment trusts, offshore investment returns for their investors. companies and venture capital trusts (VCTs). We represent a wide range of investment companies including investment trusts, offshore investment companies and venture capital trusts (VCTs).
Access to training We offer face-to-face and online accredited seminars across the UK and bespoke training for individual firms. Access training In-depthtoinformation We offer face-to-face anddata online We provide guides, daily on accredited investmentseminars across the UK and bespoke training for individual firms. companies and industry news and opinion. In-depth Register information We guides, data on investment Findprovide out more on thedaily AIC’s adviser site: companies and industry news and opinion. www.theaic.co.uk/financial-advisers
Register Find out more on the AIC’s adviser site: Issued by AIC Information Services Limited, wholly owned by the Association of Investment Companies. www.theaic.co.uk/financial-advisers Registered Office: 9th Floor, 24 Chiswell Street, London EC1Y 4YY.
Issued by AIC Information Services Limited, wholly owned by the Association of Investment Companies. Registered Office: 9th Floor, 24 Chiswell Street, London EC1Y 4YY. J12344 AIC Money Management Feb Ad AW v1.indd 1
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October 2015
B R I A N TO R A
Day of Atonement Brian Tora looks to the past to understand why the current drop in oil prices will ultimately have a negative impact on global economic growth A little over 40 years ago I was taught some important lessons in the business of investment management. The worst bear market in living memory took place against the background of a soaring oil price, industrial unrest and a banking crisis. Between the summer of 1972 and the end of 1974, shares in London shed some 70% of their values. On the first trading day of the New Year a major oil company went bust, but by the end of the first quarter of 1975, the FT 30 Share Index (there was no Footsie then) had risen by more than 150%. Lessons Learned Lesson number one was that shares always overreact – in both directions. But lesson
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number two was just as important. The trigger for the collapse in confidence amongst investors had been the so-called Yom Kippur war when Arab states invaded Israel to try to retake land lost in the Six Day War. They did not succeed, but the West paid a heavy price, with the cost of oil quadrupling and the threat of petrol rationing being introduced in the UK. Lesson number two was that oil matters. While the investment carnage that saw the FT Industrial Average fall from over 550 to just 145 as an intra-day low had as much to do with the three day week and the collapse of a number of secondary banks, the rapid
rise in the oil price was the catalyst and led to severe economic consequences. It was not long after this that inflation reached close to 25% a year and the then Chancellor of the Exchequer, Dennis Healey, had to go cap in hand to the IMF for emergency funding. Of course, the background then was a rise in the cost of oil. Recently we have seen oil fall in price, but once again there are significant consequences. While the initial reaction was arguably favourable, the balance of opinion has swung round to
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October 2015
accept that this fall will have a negative impact on global economic growth. True, it is not just the fall in the oil price that is having an effect – other commodity prices have come down as well – but it is oil that has been making the headlines. Oversupply and Demand The reasons behind the oil price fall are complex. China’s slowing economic growth is clearly important and is the cause of other commodity price falls. However, the Saudi decision to maintain output despite the oversupply in an effort to knock out marginal producers has influenced things massively. Much will depend on whether they consider this strategy now to have run its course as the low oil price is hurting Saudi Arabia too. On the plus side, a lower oil price has reduced inflationary
expectations and put more money in consumers’ pockets. Perhaps I should qualify that by saying some consumers’ pockets. And this is where the negative influences come into play. Many countries dependent on exporting oil and other commodities have seen their economies suffer. This has been particularly true of the emerging world where we have seen currencies hit as well. Long Term Gain Means Short Term Pain A further negative aspect has been the cutback in investment and capital expenditure on oil and other commodity related projects. A recent report from CSFB calculated that this alone had knocked around 1% off global growth in the past year. While the IMF has stated that cheaper oil will assist economic growth in the longer
term, in the near future we can expect more pain to be felt within developing, commodity sensitive countries. Indeed, they recently lowered their target for global GDP growth target for the current year. Oil Matters But just as share prices overreact, so do commodity prices. Less investment means less availability a few years down the line. An uptick in growth could well place supply under pressure, with all the consequences of another upward spike in prices. If, as some believe, we are likely to be entering a phase of relative stability, then perhaps the worst of the consequences of the fall in the oil price is behind us. Perhaps there are even some opportunities out there as a result. Don’t forget though – oil matters.
An individual approach At JM Finn & Co, we understand the importance of treating you and your client as an individual. This is why our Tailored Platform Solution is a discretionary service that can integrate seamlessly into your proposition. Mike Mount T 02920 558800 E mike.mount@jmfinn.com
www.jmfinn.com LONDON
BRISTOL
LEEDS
BURY ST EDMUNDS
IPSWICH
CARDIFF
JM Finn & Co is a trading name of J. M. Finn & Co. Ltd which is registered in England with number 05772581. Registered Office: 4IFAmagazine.com Coleman Street, London EC2R 5TA. Authorised and regulated by the Financial Conduct Authority.
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October 2015
IFA MAGAZINE SURVEY
Getting the me s
“With hindsight, 2010 was perhaps not the ideal date to launch a new magazine into a sector planning seismic changes,” admits Sullivan
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“but thankfully, we knew with the first few issues that we had hit on a winning formula. From the start we realized that few advisers had a voice in the media, so our approach was to ask what the people in the industry had to say.” Thriving Media Stable IFA Magazine is now one of a number of titles within a thriving media stable which includes EIS Magazine and ETF Magazine. More titles are in the planning stage. Sullivan is also supported by a highly experienced team of business development, editorial and advertising specialists.
Alex Sullivan
For five years now IFA Magazine has been providing an important media platform for independent financial advisers and for the wider financial services sector. It has, with publisher Sullivan at the helm, steered a steady course through one of the most challenging periods in the adviser sector. The backdrop was the worst financial crisis for many generations and with RDR, IFAs were about to experience the most radical shake-up of their business ever.
“Our experience from the first five years and this annual readers’ survey, gives us great confidence to start out for the next five years.”
Sullivan decided that a comprehensive readers’ survey would be one of the best ways to mark the fifth-anniversary. He
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October 2015
e ssage across
As for IFAs telling Sullivan what they required, the analysis from the survey was wide-ranging and included 75% advisers saying that they would be keen for the magazine to develop a CPD guide to Pension drawdowns and 62% requested an IFA CPD guide to Tax efficiency. We’ll certainly be following up on that insight as soon as possible! Also, seminars and events are very popular with advisers. Last Word
IFA Magazine is celebrating its fifth year and to celebrate this important milestone, founder and publisher Alex Sullivan commissioned it’s largest ever readers’ survey
said: “We wanted to ensure that we knew exactly what IFAs want to read about and importantly, what they want to learn about through our successful CPD accredited events programme in 2016. In short, we wanted to learn what our readership wanted from us next year.” And rather than reply on a simple questionnaire, Sullivan decided to commission a report from independent market researchers, Painted Dog Research. Researchers The researchers led by Matt Gibbs, at Painted Dog’s Bristol offices, started out by looking at the magazine’s readership which they concluded is made up of qualified financial sector
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specialists, the majority of whom are fully chartered advisers, or certified financial planners. It then looked at individual aspects of what interests IFAs, including IMA Funds and Sectors. Here, there was a threeway tie at the top, with Capital Protection, Multi-Asset Income and Multi-Asset Growth Sectors. What’s more, network category IFAs tend to be most interested in Capital Protection and MultiAsset Growth, and generalists hold Multi-Asset Income in high regard (they are significantly less likely to be interested in Fixed Income). And specialist investors don’t hold a clear preference for any particular Sector, rather they seem to spread their interest across the full range.
Last word goes to Sullivan: “It was great to get this feedback and we’ve listened to what our readers want for 2016. We are putting together a list of guides, both as special magazine supplements and digital downloads, and we are increasing the number of future events. Our experience from the first five years and this annual readers’ survey, gives us great confidence to start out for the next five years.” To read the full IFA Magazine Readership Report, visit http://tinyurl.com/nf9cs5d
Painted Dog Research is based in Bristol, but also has an office in Perth, Australia. It provides specialist market research services to a wide range of organisations, from small local firms through to major multinationals. The company is named after the endangered African Hunting Dog, the most successful wild predator in Africa. painteddogresearch.com
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Contact Sarah on 07881 272934 or email integrityprotect@gmail.com Integrity Protect. 11/12 Jellicoe Court. Admirals Landing. Atlantic Wharf. Cardiff. CF10 4AJ
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INSIDE TRACK
October 2015
Turning Up The Heat As specialist recruitment agency Heat underwent a complete corporate design makeover, Neil Martin took the chance to speak to Steve Preston, CEO, about the trends in the financial recruitment sector
Bristol-based Heat busies itself with the recruitment of people for the financial services, accountancy, information technology, and legal and general insurance sectors. It supplies staff for both permanent and temporary employment.
of trends emerging. Foremost is the fact that a lot of firms are currently actively growing their customer base and are seeking qualified back-office staff such as paraplanners. The emphasis is on qualified, since few firms will now accept unqualified paraplanners.
Heat quickly pick-up on changes in each of their business areas and with IFAs, they reckon there are a number
“The level 4 Diploma is now the entry level to a paraplanning role,” explained Preston, who continued
“and there seems to be a real shortage of qualified and experienced people at the moment, so they can be hard to find at times.” A consequence of this shortage of paraplanners said Preston, is the growth of paraplanning companies offering outsourced services. Another key trend, at the IFA level, is that many advisers are now not
“A lot of people are steering their own career, searching for what they want rather than sitting in a company waiting for a promotion. The market is very much candidate led and if their current company can’t give them what they want, they will find it somewhere else”
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developing client banks when joining some of the larger firms, so are not as tied down as they once were, so this encourages individuals to “jump positions more frequently.” When asked about any major changes on the horizon, Preston believes there’s nothing currently obvious at their end of the business. What he did remark on however was that compliance is becoming more and more important for firms, and a growing area of focus. Interestingly, as with companies being established to offer paraplanning services, the same can be said of companies which offer outsourced compliance services. This, thought Preston, comes simply down to the complexity of the subject and resources needed to complete these tasks. Many IFAs are preferring to outsource parts of the business which are not wholly advisory. As for how generally Heat is finding the IFA sector, Preston is upbeat: “It’s good, with lots of people to talk to and to try and help.” He puts
this down to the fact that lots of firms seem to be growing and have solid business plans. He also thought that another major factor which is helping is that trust in financial firms is starting to improve. What’s more, returns on investment for many firms is also improving. But here’s a warning from Preston for any IFA that doesn’t worry about the career progression of its staff: “There are a lot of people steering their own career, searching for what they want rather than sitting in a company waiting for a promotion. The market is very much candidate led and if their current company can’t give them what they want, they will find it somewhere else.” Preston formed Heat ten years ago and the company has quickly grown to be a major player in the financial sector. He puts its success down to not only the skill and motivation of their staff, but the quality of their candidates and a blue-chip client list. Preston and his team have recently updated the
company’s corporate identity, a process outsourced to Bristol-based agency Fanatic Design. In the end, Heat came out with an evolution of the original brand and logo via the rebranding into a new modern look, with the benefits of learning to understand who they are and what they were trying to communicate to their customers. As Preston admits: “I also learnt a valuable lesson, a rebrand doesn’t mean that you have become a different person, not at all, our values are still the same. What’s changed is our ability to communicate who we really are to our audience in a much clearer way. Just as people get older, they are still the same, outlooks may alter, knowledge develops, styles come and go, and ultimately the story continues.” It’s a fair bet that Heat will be a first-call for many IFAs expanding in the near future, looking for the right staff that will carry them forward.
“A rebrand doesn’t mean that you have become a different person, not at all, our values are still the same. What’s changed is our ability to communicate who we really are to our audience in a much clearer way”
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Professional Clients only 1Defined as CCC bonds directly exposed to the shale oil market
Jan’14
MARKET BOOMING for American Shale Oil Fledgling companies continue to issue low-rated, high-yield bonds1 Investors see benefits despite high risk, with attractive income opportunities on offer
The team decided NOT TO INVEST We felt that the level of risk did not reflect the yield available at the time. The team focused on other asset classes
Jan’15
Oil supply increased², plummeting sale prices and devaluing these bonds¹ by more than 23%³
We know
WHEN TO INVEST and when not to
Global Multi Asset Income from BlackRock No one can predict the future, but there are ways to see several steps ahead. With knowledge and expertise from the best of BlackRock, backed by industry leading risk management capabilities, our team has the foresight to know when to invest and when not to. This strategy is now available to UK investors via the BlackRock Global Multi Asset Income Fund For a compelling balance between income and risk, visit: BlackRock.co.uk/GMAI
Trusted to manage more money than any other investment firm in the world4 This material is for professional clients only and should not be relied upon by retail clients. Sources: 2. Info Energy Agency – Q1 2015. 3. Barclays High Yield Oil Field Services Index 01/01/14 – 31/01/15, CCC bonds fell by at least 23% (USD). 4. BlackRock as at 31/12/14, AUM based on $4.525 trillion. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. © 2015 BlackRock, Inc. All Rights reserved. BLACKROCK, BUILD ON BLACKROCK, are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Ref: RSM-0547
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October 2015
IFP CONFERENCE
Three Days in Wales The 27th IFP Annual Conference took place in October, sponsored by Partnership, with record numbers of delegates attending the three day event at the Celtic Manor Resort
With the merger between IFP and the Chartered Institute for Securities & Investment (CISI) going ahead on 1 November, it was the ideal opportunity for delegates to find out more about exciting plans for the future growth of the UFK Financial Plannning profession. Damien Rylett of Brunel Capital Partners in Bristol was the conference chairman. According to Rylett, “I and the IFP conference committee
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October 2015
had been working on the programme for the best part of a year to make sure we got the balance right.” Rylett went on, “Delegates expect a good mix of technical as well as personal and business development sessions. We also need to give them plenty of choice as well as the great networking opportunities that the event is so famous for. Feedback was very positive so hopefully we got it right.” At the conference, delegates could choose from over 30 sessions spread over the three days giving CPD opportunities aplenty.
Damien Rylett Brunel Capital Partners Conference Chairman
Keynote sessions on good communication from Andy Bounds, on living to 100 years of age from Dr James Rouse (invited back by popular demand as feedback from his session last year was so positive!) and on the new pension freedoms from Steve Groves of Partnership were all well received. To close the conference, delegates enjoyed a truly inspirational session “The adventures of Jam Boy” from Fraser Doherty MBE which rounded things off perfectly.
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IFP CONFERENCE
October 2015
Talking Technical Lifting the lid on pension freedoms At a gathering like this, it was fair to assume that all delegates were fully aware of the April rule changes, so the emphasis in this session was on providing focus for planners on how best to put the rules into practice to ensure the best outcomes for clients when it comes to retirement income strategies and transfer of wealth.
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The session was based around a case study. It covered a range of key areas such as how a multi-wrapper strategy can benefit clients, what to fund in what order, the most tax efficient ways to draw capital/ income, the position on death and new death benefit options as well as spousal bypass trusts both existing and new.
Mike Hague FIFP CFP
CM
Investment for Life Mike is a Financial Planner at Investment for Life. He’s an IFP Fellow, one of the first people in the UK to become a CFP Professional and also a Chartered Financial Planner.
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ADVERTORIAL
Peter Georgi of Halo Films talks about why IFAs needs an “About Us” Video The About Us page is the second most important page on your website – only behind the home page. This is your one chance to talk about yourself, and not about your customers. This is the opportunity they give you to impress them. Your “About Us” is your audition - Seems self-evident to make it quality, right? 1 – Make your Branding Message Who are you? What do you do? Clients want to have a deeper understanding of the people who they will be dealing with if they select your company. And remember, it’s also a chance for you to talk about areas of speciality and identify who your ideal client is – this can be a good way of weeding out the unsuitable clients at an early stage. 2 – For Potential Employees When people hear about your company’s job openings, they will almost assuredly visit your website and check out your About Us page. Having a video that prospective applicants can watch is a great idea. They can get a feel for who you are and who you serve. They should also gain a greater understanding of your values and your mission. It’s also a great idea to include your staff in the video so that the job seekers get a feel for your company’s diversity and the attitude and demographics of the people working there. Prospective clients and job seekers should also learn the history of the company. Through all of this subtle information, the applicant finds out whether they might be a good fit for your company and whether your company is a good fit for them. Today’s employers realize the value of recruiting someone who feels at home and will stay. The About Us video is another tool for engaging prospects and helping to reduce the wasted time of interviewing someone who really wouldn’t be a good fit and doesn’t realize it until they show up at your office.
3 – For Current Employees Having an About Us page isn’t just about new employees. It’s to help focus and align your current ones as well. A good About Us page gives your employees identity and a sense of proudness to be working for this company. It’ll also help your employees explain who they work for and what they do.
With thanks to Kirstie of WarroomInc.com
For more information on how we can help with a home page video, or any other aspect of video marketing, please get in touch: phone: 01453 810914 email: info@halofilms.co.uk You can also view examples of our work at: www.halofilms.co.uk
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IFP CONFERENCE
October 2015
Philanthropy A Financial Planner’s perspective This session gave a Financial Planner’s perspective of philanthropy. Philanthropic giving is an area of Financial Planning which has huge potential but few planners actually get involved with it. The session from Murray McEwan drilled down into
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the opportunities that exist to help clients achieve their philanthropic goals and also to grow their businesses. His Financial Planner’s toolkit was well received, and gave 10 tools to help planners achieve great outcomes.
Murray McEwan FIFP CFPCM
Flowers McEwan Murray is chair of the IFP Leeds Branch and has been a director of his own Financial Planning firm for 13 years. He has been providing fee-based holistic Financial Planning since late 90s, prior to that having worked as an IFA. He has a number of clients for whom philanthropy is important and is experienced in helping them organise this.
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4 EXCITING EIS / SEIS OPPORTUNITIES BROUGHT TO YOU BY INNVOTEC Anglo Scientific EIS 2015 The seventh annual EIS Fund from the Innvotec / Anglo Scientific collaboration provides further opportunity for private investors to invest behind the well regarded, specialist and dedicated team of technology entrepreneurs that is Anglo Scientific, under a discretionary management agreement with Innvotec, one of the UK’s longest established VC’s backingangloscientific opportunities in the broad technology sector. C R E A TING SOLU TIONS
Anglo Scientific has built a portfolio, all EIS qualifying, of highly promising tech-enabled companies and Anglo Scientific 2015 EIS, like the predecessor funds, provides the opportunity to invest in five or six of these companies. Performance across the earlier funds is impressive, an average gain on portfolio cost of 77% equating to a notional IRR across all Funds of 19%, with no fund being valued below cost.
Startup Funding Club SEIS 2015 The second annual SEIS Fund from the Innvotec / Startup Funding Club collaboration, the first having been deployed across a well-diversified, fifteen company portfolio. Startup Funding Club is one of the most successful “boutiques” working with companies seeking seed and early-stage finance, especially those companies that own proprietary intellectual property (IP) capable of being exploited globally and whose founders possess the stamina and knowhow to meet the challenge. The Startup Funding Club’s network ensures that opportunities are sourced from many of the UK’s best regarded “incubators and accelerators”. Whilst the portfolio will have a technology-bias, it will also include product based companies and those in the food sector. Integral to the success of the Fund is a mentoring programme in support of the entrepreneurs.
Odyssey Mission SEIS 2015 UK based private investors have a novel opportunity to invest in the Innvotec-managed Odyssey Mission 2015 SEIS Fund, a portfolio of early stage businesses led by Asian Entrepreneurs. Investors have the prospect of strong capital appreciation whilst helping an “affinity group” and obtaining attractive personal tax reliefs in so doing. The Fund is geared to providing start-up /early stage funding and mentoring support to the best of the next generation of Asian graduate entrepreneur that wish to build their businesses in the entrepreneurial-friendly United Kingdom, some of whom will require a Tier 1 graduate entrepreneur visa so to do. The “Odyssey Mission” itself is a big project of which the SEIS Fund is the startpoint.
OION SEIS 2015
2015
SEIS FUND
The OION 2015 SEIS Fund is an Innvotec-managed growth fund, providing private investors with an opportunity to invest in a portfolio of early stage businesses located in Oxfordshire and its surrounds, whilst offering the prospect of strong capital appreciation and at the same time accessing attractive personal tax reliefs. The companies that will form the OION 2015 SEIS Fund will use the proceeds of investment to advance them on their business growth curve and it is at these earliest stages of commercial exploitation that there is the potential to generate significant capital appreciation. The Fund benefits from the participation of Oxford Investment Opportunities Network (OION) in generating quality dealflow and the provision of mentors to support the entrepreneurs.
For full details on any of the above EIS / SEIS Funds or any other information please contact Innvotec on:
Tel: +44 (0) 20 7630 6990
Email: info@innvotec.co.uk
Web: www.innvotec.co.uk
Issued and approved by Innvotec Limited, Business Design Centre, Suite 310, 52 Upper Street, Islington, London, N1 0QH Innvotec Limited is a registered company in England & Wales. Registration Number: 2030086 Innvotec Limited is Authorised and regulated by the Financial Conduct Authority. VA0115
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R
IFP CONFERENCE
October 2015
The investment problem no one’s talking about? Successful multimanager investing involves more than just picking good funds. Marcus Brookes from Schroders explained why he selects funds based on a forward-looking view of where markets and asset classes are likely to go.
He also outlined the techniques used to limit the downside when markets represent more risk than opportunity. With asset allocation playing a key part in the process, delegates were treated to an in-depth understanding of the opportunities and threats in the current economic climate.
Marcus Brookes MSc Schroders Marcus is head of the Multi-Manager Diversity team at Schroders. He is regularly seen in print and on screen giving his views on the importance of asset allocation when selecting funds. Marcus graduated from the University of Stirling with an MSc in Investment Analysis and has over 20 years of investment experience.
n:
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October 2015
IFP CONFERENCE
Real and emerging regulatory risks, and how to protect yourself The panel approach to this topic was covered by Mel Holman of Compliance and Training Solutions, Jamie Newell O3 Insurance Solutions and Rory Percival of the FCA. Globally regulators have identified current and emerging risks that
practitioners need to be aware of. Delegates welcomed the panel’s overview of how the regulators view global risk, as well as what is currently on the FCA agenda for the UK. There were also some practical lessons for planners on how to protect themselves from such risks.
Jamie Newell O3 Jamie founded a Lloyd’s of London Insurance broker and a PI underwriting agency. Now exclusively acting for Financial Planners Advisers and Wealth Managers for their PII requirements. Rory Percival FCA Rory worked in the industry for 20 years prior to joining the regulator in 2006, and has Chartered Financial Planner status. Mel Holman CFP
CM
Compliance and Training Solutions Mel has worked in the compliance for 18 years, the last 10 with CATS which she founded in February 2005. Mel was an IFP board director from 2012-2015 and also chaired the IFP’s membership committee.
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C361
AV I VA I N V E S TO R S For absolute income
AIMS TARGET INCOME FUND The Aviva Investors Multi-Strategy (AIMS) Target Income Fund is designed to deliver absolute income by targeting consistent, sustainable income while seeking to preserve capital. It aims to deliver annual income of 4% above the Bank of England base rate before corporation tax, with less than half the volatility of global equities over any three-year period. And by combining diverse long-term investment strategies with the flexibility to adjust the portfolio if the outlook for markets and economies shifts, the fund’s managers target absolute income in all market conditions. To find out more call 0800 015 4773* or visit avivainvestors.com/absoluteincome absolute income
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For professional clients and advisers only. Not to be distributed to or relied on by retail clients. The value of an investment and any income from it can go down as well as up and outcomes are not guaranteed. Investors may receive less than the original amount invested. The fund’s income target is based on the daily value of the fund and is measured from 1 April to 31 March each year. Corporation tax (currently 20%) is payable on some of the fund’s income. As a result, the income received by investors may be up to 20% less than that generated by the fund. Although corporation tax paid by the fund cannot be claimed back by investors, distributions from the fund will carry a tax credit which may reduce their overall tax liability. The Aviva Investors Multi-Strategy Target Income Fund is a sub-fund of the Aviva Investors Funds ICVC. For further information please read the latest Key Investor Information Document and Supplementary Information Document. Copies of these documents and the Prospectus are available in English free of charge on request or on our website. Issued by Aviva Investors UK Fund Services Limited, the authorised Fund Manager. Registered in England No. 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: No. 1 Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.com *Telephone calls may be recorded for training and monitoring purposes. Calls are free from landlines and mobiles. CI063495 08/2015
C36127.009_Aviva_Investors_AIMS Retail A_IFA Magazine_297x210_v1.indd 1 Guest Feature - IFP.indd 33
08/09/2015 12:40 14:46 22/10/2015
October 2015
IFP CONFERENCE
Islamic Investments - superior returns in an ethical manner Hassan Motala from Oasis Crescent (UK) presented an overview of the Islamic investment market and its relevance to the UK investor and Financial Planners. He looked at the fundamental characteristics of Islamic investments (the
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ethical approach), and how its avoidance of speculative activity and gearing could lead to a sustainable source of returns. The session unpacked some key components of Islamic investment & provided clarity on issue/ concerns of advisers.
Hassan Motala MSc Senior Investment Analyst, Oasis Crescent (UK) Ltd Hassan is a Chartered Accountant, qualified auditor and completed his CFA in 2005. He joined Oasis as an investment analyst and has over sixteen years of investment management experience. He has an in-depth understanding of global financial markets and serves as a senior member of the Investment Committee at Oasis. Hassan is also responsible for the institutional client services function and financial advisor relations.
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October 2015
IFP CONFERENCE
How to protect your clients’ assets from being wrongly taken to pay for care Thousands of people pay care fees that should be funded by the NHS. Looking in detail at this key topic, Angela Sherman of Care to be Different emphasised how a person’s obligation to pay for care does not depend on their money. Advisers need to understand NHS Continuing Healthcare and avoid making mistakes in a care fees conversation with a client that may lead to means testing. She reinforced the difference
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between social care and healthcare and the need for advisers to understand how different health and social care budgets often lead to illegal care fees being charged to clients. Some of the fundamental mistakes often made in care fees planning right at the start were highlighted- and why the new Care Act should really be called a ‘Social Care Act’. It’s important that advisers understand the biggest myths about care fees and care funding and how these can affect clients.
Angela Sherman Care to be Different Angela writes and speaks about NHS Continuing Healthcare funding in England, helping professional advisers better understand how to assist clients in this respect. Her website also contains practical information and advice, drawing on her own experience, plus that of over 900 families battling for care funding. She speaks at length about Continuing Healthcare on radio, TV and in the press
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October 2015
Compliance? Why Bother? The general attitude amongst IFAs hasn’t seemed to change much in recent years, says compliance consultant Lee Werrell. Most are still behind the curve of regulatory and risk change, and are losing out
For the last 27 years, the UK Financial Services industry has been regulated under an act of Parliament. Ever since the SIB (Securities & Investment Board – later becoming the FSA) revoked the recognition of The Financial Intermediaries, Managers and Brokers Regulatory Association (FIMBRA) as a SelfRegulatory Organisation (SRO) in the United Kingdom in June 1994, things started to get more professional and consumer centric.
attitude of the past, as their own necks are increasingly on the block. Is this the only reason that they have changed?
Reason Why Letters (to become Suitability Letters) were enforced and regulation took on a new impetus. Yet still many advisers look on Compliance as an unnecessary extra, an add-on that encumbers the sale unnecessarily.
n A process
If retail financial services firms are so well run, why are their criminal convictions, bans and fines for fraud, dishonesty and other crimes against the public? Most advisers are totally honest and want to do the very best they can for their clients, but is this enough? In the modern age of 2015, many larger firms have had to wake up and adjust their management style to incorporate the huge changes that they had ignored up until now. Boards of directors are no longer looking at strategy, risk and compliance plans with a “review and agree”
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No. Many now realise that there are huge benefits to getting the business model right. In today’s digital world you need to have three major elements of your business at the forefront to operate in the smaller margin, competitive and scrutinised marketplace. The three elements you need are; n A brand n A product A cold hard look at most IFA practices will reveal that they may very well have a product, the same product they have always sold, the intangible “peace of mind” or “future security”. They may have a process, although it may be flawed and actually distant from their actual belief of what they want to achieve. Very few practices have a brand, just a name. A search of many common social media platforms reveal no comments, testimonials or recommendations for many local firms from their alleged devout followers. A random nationwide selection of some Twitter accounts and Facebook pages quickly demonstrates that very little activity has taken place recently, and the following is small and often dwindling.
Many practices are simply a logo and an outdated webpage. So What Has Compliance To Do With A Brand? Obviously, in establishing a brand financial promotions is the first element to spring to mind, but there are also a number of other areas of consideration too. These will include a strategy, governance (a Social Media Policy as well as others), Compliance Monitoring, Audit, outsourcing controls, risk assessment, data security and protection, Advertising Standards Association rules and a number of other peripheral impacting areas. Investec, Jupiter & Old Mutual are all successful brands that small and large companies look up to. They understand how to deeply connect with people. They are based on specific philosophies and purpose. The companies, through their brands have been able to tap into their own authentic heritage enabling them to articulate a point of view that resonates deeply with the values of certain communities. Additionally, they are both intensely focused on building their brand. To build any brand involves starting first with purpose and brand philosophy. Once the purpose is established and your staff believe in it, invariably brands, business units, and ultimately companies
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COMPLIANCE DOCTOR
perform better as shown in Jim Collins’ book “Built to Last”. What’s Wrong With My Process? Maybe nothing at all. However, in many firms you need to have an independent analysis, somebody to take a step back and look over the entire system, to identify weak areas or even incongruences. Working in remedial compliance work, as we do for over 90% of our time, we see some great processes, but they are often devoid of any connection to reality. Sometimes we see superb processes working well in the business, but if something happened, the policies or company strategy are too weak to support any changes that may be made. This can therefore result in the whole process moving away from the company ideals and objectives. Often, without the rigour of strong governance it has unintended consequences that add greater running costs, diminishing the value and effectiveness of the company. As the regulatory wave swells, boards are putting a new focus on compliance and its value throughout the Governance, Risk & Compliance (GRC) function. This GRC is typically the role that Compliance adopts in small to medium sized companies. The past year has seen a worldwide spike in compliance spending and the hiring of qualified and skilled compliance staff, according to data collected by intelligence firm Thomson Reuters. In a recent EY report, given the heightened regulatory and public attention to misconduct in the industry,
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many firms reported increased attention to conduct risk. Because of these concerns, many firms have undertaken special initiatives aimed specifically at strengthening conduct risk processes and controls. As one respondent described their activities, “We are treating conduct risk as one of our principal risk types, and we have a huge amount of activity going on with conduct risk at the moment; defining the governance structure, strengthening policies and procedures, challenging and adjusting the metrics. It’s a significant investment of time and resources.” Firms also expect to dedicate a considerable amount of time and staff to compliance processes and procedures in the future. A lot of this change is due to the way the regulators are managing their objectives. We now need to understand what is meant when we hear regulators saying things that were barely known in financial markets a decade ago. These phrases include “risk culture”, “behavioural regulation”, “conduct risk”, “behavioural economics” and “de-biasing”. Where previously, regulation and supervision mainly relied on internally-produced reporting of transactions, the new regulation looks beyond the regulated organisation for external signs that customers are experiencing good advice, and good behaviour generally. Regulators that follow this behaviour-based regulation approach examine firms’ processes, decision making and how they design systems for employees. Moreover, they
October 2015
look at how these organisations behave in financial markets and how they interact with their customers in real time. So What Are The Benefits? By incorporating risk and compliance into your firm, with a clear risk framework encompassing compliance, you can benefit from; n Increased communications clarity from and to Senior Management n Identification and mitigation of specific risks to your firm n Identification and mitigation of excessive costs n Effective risk management of your advisers and staff n Process execution metrics that can reveal bottlenecks and time-wasters n Increased profits due to a streamlined process n Better regulatory understanding as it affects your business specifically n Segmented clients into value, potential value and basic service offering n Greater intrinsic value depending on the valuation (there are around 7 different ways) of your firm’s worth on exit or retirement n And again, if exit or retirement, a cleaner easier and cheaper due diligence, increasing the net worth. If you need any assistance in implementing any of these areas or overhauling your systems with a GRC focus, please contact a Compliance Consultant immediately or go to www.complianceconsultant.org
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T H E OT H E R S I D E
October 2015
It’s Your Funeral Don’t waste good time and money on planning for your demise, says Richard Harvey – try planning your future instead There are times when I feel the strain of adopting an unnatural position - one foot in the grave, the other on the ladder of opportunity. Doing the philosophical splits is a 21st century, older generation thing, which is rendered challenging by the competing possibilities of an active later life and, er, the alternative. Having recently entered my eighth decade, I am a prime target for the sort of mailshot from Age UK which has just dropped through the letterbox. Atop a picture of a pair of tanned, snowy-haired senior citizens, positively radiating smile-y good health, the headline read: “A conversation about funeral planning with Age UK”, encouraging me to take out an insurance policy to help the family at that “difficult time”. Difficult? I rather hope that my nearest and dearest will collectively stump up for the mother of all kneesups, long remembered for reprehensible behaviour and heroic alcohol consumption. Age UK’s funerals are provided in association with Dignity - for one startling moment I though it said Dignitas - which are described as the UK’s leading funeral plan provider. Like, I suspect, most people, I have absolutely no intention of saving for my funeral, believing that the cash would be more wisely invested in having a good time while I’m here. Which may be selfish, but if the family are going to have a “difficult time”, then they might as well have the added frisson of the undertaker’s bill.
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Olderpreneur However, one interesting trend means that many oldsters won’t have to worry about funeral finances, because they will have stacked up plenty of lolly while staving off the Grim Reaper. Apparently, one in six new businesses in the UK is launched by someone over 50. These ventures are way more likely to survive than those started by younger entrepreneurs; they are growing faster than the UK economy; and even the heir to the throne has got in on the act by founding The Prince’s Initiative for Mature Enterprise. ‘Olderpreneurs’, as they are called, don’t even have to worry about start-up capital, because if they have pension savings, it’s right there and available, thanks to the new rules. Apart from the potential financial rewards generated by a later-life business, olderpreneurs can look forward to longer, healthier lives by staying engaged with the world of work, and continuing to exercise the grey matter. Let’s face it, running your own show is considerably more stimulating than an afternoon spent in front of Jeremy Kyle.
despatches from around the world well into his 80s. Affectionately parodied in Private Eye’s ‘Dear Bill’ column, he worked well into old age, thereby keeping his mind and sense of humour sharp as a razor. I once saw a picture of him in his later years at the Telegraph Christmas party - dressed as Superman! So the next time one of your clients frets that their pension pot isn’t going to provide them with a leisurely retirement, suggest they spend a few bob starting up their own business. And if they worry about having to familiarise themselves with IT - probably the most significant challenge for many older people - Age UK runs computer training courses. Which strikes me as a far jollier investment than a funeral plan.
Dear Bill Some view Ray Kroc as a pioneer of later life entrepreneurial success, a man who launched his first burger joint at the age of 52, and then built it into a behemoth called McDonalds. For me, it’s the late Lord Deedes, ex-government minister, army officer, mentor to Lady Diana, and editor of the Daily Telegraph, who was still filing vivid newspaper
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ACQUISITION AND SALES
O F I FA BUSINESSES Retirement? Time for a change? There are countless reasons to dispose of an IFA business, just as there are countless reasons to get hold of one.
WE ARE A S P EC I ALIST F I NANC IAL S A L E S , CO N S U LTA N CY A N D BR O KE R AG E BUS I N ES S . Gunner & Co.’s mission is to work directly with you, whether you are looking to realise the capital in your business, or you are looking for growth through a merger or acquisition. We consider every business to be unique, and therefore finding the right solution for you starts with a thorough understanding of your business operations and your wish list. Only from here can we make valuable introductions which align to both party’s needs. If you would like to discuss options to sell, exit or retire, or acquire IFA businesses, please get in touch for a confidential discussion.
louise.jeffreys@gunnerandco.com
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Compatibility: Requires IOS 6.0 or later. Compatible with iPhone, iPad, and iPod touch. This app is optimized for iPhone 5. Available on Android. The Other Side.indd 42 1 IFA Magazine App.indd
Twenty Four Seven IFA Magazine, Britain’s premier online portal and print publication for financial advisers, has launched its ver y own app designed to help you stay up to date with all the latest financial and economic news as it happens.
Main Features: Reviews Features Funds Market and Economics Trading Expert FCA Compliance Jobs
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For Adviser use only, not for onward distribution or use with clients. No other person should rely on the information contained in this document.
PruFund. The proof of the pudding… We launched our PruFund Growth Fund in November 2004 with the aim to deliver smoothed investment returns, setting an initial Expected Growth Rate of 6.6%. Over 10 years the fund has achieved an actual annualised return of 6.9%. Providing quarterly updates on growth expectation has helped advisers to confidently continue recommending PruFund to clients, providing some reassurance at review time. We now have 6 PruFunds which are available across a range of six products including the Prudential ISA and our Flexi-access Drawdown. To see all the ingredients for smoothed returns visit www.pruadviser.co.uk/10years
Past Performance Proof Annualised performance of the PruFund Growth Life Fund over the last 10 years. 3 years to 31/07/2015
5 years to 31/07/2015
10 years to 31/07/2015
7.2%
8.3%
6.9%
Percentage growth since 25 November 2004 Prudential PruFund Growth Life Fund 120.0% 100.0% 80.0% Performance %
…is in the eating.
60.0% 40.0% 20.0% 0.0% -20.0% Nov 04
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25/11/04 to 31/07/2015
Source: Financial Express, bid to bid, net income reinvested but net of fund tax Prudential PruFund Growth Life Fund ABI Mixed Investment 20%-60% Shares PruFund Performance shown is gross of all applicable charges. Please note that some if not all of the Funds comprising the sector average will have fund management charges deducted from their performance. Past performance is not a reliable indicator of future performance. The value of investments can fluctuate which will cause fund prices to fall as well as rise, investors may not get back the original amount of capital invested. The charges will vary depending on the product. Visit www.pruadviser.co.uk for details on the products (including charges).
“Prudential” is a trading name of the Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered office at Laurence Pountney Hill, London EC4R 0HH. Registered number 15454. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
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