Wishing Green Financial Blog readers,
Clients, friends, suppliers and associates
a very Merry Christmas and a Happy New Year
Friday, 23 December 2011
Thursday, 15 December 2011
Born in the USA (or just visiting) ?
Are you a Green Financial Client that was Born in the USA?
Are you a US citizen, or married to a US citizen.
Or are you a green card holder or temporarily resident in the country or even just own a holiday home in the US!
If you are one of the above and a Green Financial client we may need to talk soon.
Chewing the FATCA
"The US-instigated FATCA (Foreign Account Tax Compliance Act) threatens to be a costly administrative headache for financial institutions in the UK",
says Cherry Reynard on www.adviser-hub.co.uk ,
It brings responsibilities for advisers such as Green Financial too.
And for added responsibility, read added cost :(
AdviserHub reports:
"As government coffers weaken around the developed world, policymakers have been implementing increasingly draconian legislation to generate revenue and the Foreign Account Tax Compliance Act (FATCA), introduced by the US tax authorities in March 2010, is one of the more far-reaching examples.
Some commentators, including Robin Stoakley, managing director of Schroders’ UK intermediary business, have even gone so far as to suggest that the impact of FATCA could be as significant as that of the Retail Distribution Review (RDR) (see other Green Financial Blog Posts).
It certainly threatens to be a costly administrative headache for UK-based financial institutions.
The legislation is designed to crack down on offshore tax avoidance on ‘US accounts’ of more than $50,000 (£32,000). Crucially, this is not limited to US citizens but may include other individuals potentially subject to US tax, such as those with a holiday home in the US, green card holders or those who are temporarily resident in the country.
The US authorities’ aim is to ensure that tax is paid on individuals’ worldwide income where appropriate. One of the thorniest areas of FATCA may be where US citizens are married to non-US citizens. The legislation is not yet clear on whether the income of the non-US spouse potentially falls within its scope.
This would seem to present few problems for UK-based fund managers, advisers and administration platforms were it not for the requirement that any investor holding US assets effectively ‘prove’ that they are not US citizens. This means that UK financial institutions will have to undertake a significant data-gathering exercise to ensure their clients do not fall within the remit of the legislation.
Compliance process
According to a report by KPMG, FATCA and the funds industry the data that is required for FATCA compliance in the investment funds industry is, in most cases, not held by one person. As such, advisers like Green Financial will also form an important part of the compliance process in that they will need to provide details of clients. Problems could also arise where nominee structures are held.
The KPMG report suggests as many as 32% of investment fund managers expect to have to adapt their product range to comply with FATCA. Fund of funds have a particular problem with only around 10% saying they can determine the amount of US-sourced investments.
Research by Schroders suggests the legislation may cost as much £400m for the financial services industry, potentially raising administration costs for advisers.
The full details of the legislation have yet to be finalised, with further guidance expected shortly, but Foreign Financial Institutions (FFIs) will have to register with the US’s Internal Revenue Service (IRS) by 30 June 2013 under the new rules. The deadline for full implementation of the legislation was originally January 2013, but some parts have now been moved back to 2014 and beyond.
Once registered, FFIs are expected to work with the IRS to attain ‘Participating FFI’ status. This will include demonstrating they have procedures in place to pick up US accounts among their existing clients and to implement proper account opening procedures in future.
Draconian penalties
The penalties for non-compliance are draconian. Withholding tax of 30% on income and asset disposals is payable for so-called ‘recalcitrant account holders’ – in other words, those that do not provide reasonable disclosure – and for non-participating Foreign Financial Institutions (NPFFIs).
These are called ‘Passthru’ payments and, according to RBS Dexia, may include US-sourced interest, dividends and gross proceeds on disposition of assets as well as non US-sourced interest, dividends and gross proceeds on disposition of assets multiplied by the pro-rata ratio of US to non-US assets.
Some groups are defined as ‘deemed compliant’. These are accounts the IRS views as exempt from FATCA’s rules and include certain holding companies, start-up companies, hedging/financing centres of a non-financial group and certain insurance companies. Pensions are currently under review. In practice the IRS has been tight in its definition and relatively few institutions are deemed compliant."
Adviser Hub concludes:
"Broadly speaking, fund and wealth managers have gone one of two ways in tackling the legislation. Some are moving towards full compliance, whereas others are moving out of the market altogether. In practice the latter may not be easy, given the spread of the legislation although, in July, HSBC said it planned to sever its ties with wealthy US customers who bank offshore to aid FATCA compliance. Some groups are making a virtue of necessity, setting up US tax-compliant investment vehicles through which US citizens can invest."
We at Green Financial will be working with our UK based clients to ensure full compliance with any new rules. If you think this may apply to you in any way, please do contact us to discuss.
Tuesday, 13 December 2011
Contracting Out, SERPS, S2P & all that
The powers that be are ending 'contracting out' from 6 April 2012
What does this mean?
Many people have built up pension pots since the 80s based on the fact they contracted out. This pension was known as ‘protected rights’. What happened, in simplistic terms, was rather than have a portion of their National Insurance (NI) contributions build up a second state pension (not to be confused with the basic state pension, which is not affected by this) their NI was diverted into a separate pot often alongside their personal pension contributions from earnings. The personal contributions were known as ‘non-protected rights’ or ‘ordinary benefits’. This could even be done if you didn't make any personal contributions yourself. I remember meeting a pension salesman in the mid 90s who built his entire career based on contracting out New Zealanders whilst they worked here in the UK.
The contracting out pension was once referred to as SERPS (State Earnings Related Pension Scheme) and in more recent times S2P (State 2nd Pension).
From 6th April 2012 there will no longer be the option to ‘contract out’ of S2P.
The change won’t affect any past benefit accrued in the tax years before 6 April 2012 – they’ll remain invested in the same way you have them now. However, there will be more flexibility over how you draw the benefits from the pension.
The rules and flexibility over accessing SERPS and S2P have changed in recent years. The latest big change is that at the moment (pre April 2012) you are forced to take a pension that also pays a pension to your spouse or civil partner when you die but after April 2012 this will no longer be the case – although you could if you wanted to of course.
Further reading is available on the Government website :
www.direct.gov.uk/en/pensionsandretirementplanning/statepension/DG_180010
What do you have to do now?
For most people the answer is nothing, the changes happen automatically.
However now might be a good time to review your pension contributions and what you might expect from your pension when you retire to see if it will be sufficient for your needs. It is important now, more than ever, to work out as best you can what the state will provide and therefore what gap needs to be made up personally.
I have more information on how I can help in reviewing your pension on my website:
http://www.iangreen.com/pensionperformance.php
Or my Guide to retirement guide on facebook:
(also available with many other guides here http://www.iangreen.com/education.php )
What does this mean?
Many people have built up pension pots since the 80s based on the fact they contracted out. This pension was known as ‘protected rights’. What happened, in simplistic terms, was rather than have a portion of their National Insurance (NI) contributions build up a second state pension (not to be confused with the basic state pension, which is not affected by this) their NI was diverted into a separate pot often alongside their personal pension contributions from earnings. The personal contributions were known as ‘non-protected rights’ or ‘ordinary benefits’. This could even be done if you didn't make any personal contributions yourself. I remember meeting a pension salesman in the mid 90s who built his entire career based on contracting out New Zealanders whilst they worked here in the UK.
The contracting out pension was once referred to as SERPS (State Earnings Related Pension Scheme) and in more recent times S2P (State 2nd Pension).
From 6th April 2012 there will no longer be the option to ‘contract out’ of S2P.
The change won’t affect any past benefit accrued in the tax years before 6 April 2012 – they’ll remain invested in the same way you have them now. However, there will be more flexibility over how you draw the benefits from the pension.
The rules and flexibility over accessing SERPS and S2P have changed in recent years. The latest big change is that at the moment (pre April 2012) you are forced to take a pension that also pays a pension to your spouse or civil partner when you die but after April 2012 this will no longer be the case – although you could if you wanted to of course.
Further reading is available on the Government website :
www.direct.gov.uk/en/pensionsandretirementplanning/statepension/DG_180010
What do you have to do now?
For most people the answer is nothing, the changes happen automatically.
However now might be a good time to review your pension contributions and what you might expect from your pension when you retire to see if it will be sufficient for your needs. It is important now, more than ever, to work out as best you can what the state will provide and therefore what gap needs to be made up personally.
I have more information on how I can help in reviewing your pension on my website:
http://www.iangreen.com/pensionperformance.php
Or my Guide to retirement guide on facebook:
(also available with many other guides here http://www.iangreen.com/education.php )
Friday, 9 December 2011
On an Island with who?
I was recently interviewed for Blue & Green Tomorrow Magazine on my approach to ethical investing.
You can read the whole interview here:
http://www.blueandgreentomorrow.com/features/2011/12/9/green-by-name-green-by-nature-helping-people-do-what-they-ca.html
As well as a few facts about Putney, where the office is located, the interview also asked that old favourite about who I'd like to be stranded on a desert island with.
Rather than give a fascinating insight into my psychological make-up, as the interviewer hoped, I gave a practical and logical answer, hopefully in keeping with my approach to ethical investing.
(Or was that a fascinating insight into my psychological make-up?)
Who was it? Have a read and find out...
You can read the whole interview here:
http://www.blueandgreentomorrow.com/features/2011/12/9/green-by-name-green-by-nature-helping-people-do-what-they-ca.html
As well as a few facts about Putney, where the office is located, the interview also asked that old favourite about who I'd like to be stranded on a desert island with.
Rather than give a fascinating insight into my psychological make-up, as the interviewer hoped, I gave a practical and logical answer, hopefully in keeping with my approach to ethical investing.
(Or was that a fascinating insight into my psychological make-up?)
Who was it? Have a read and find out...
Monday, 21 November 2011
Life Cover & Little Things
One of the UK life insurance companies, called 'Bright Grey' (http://www.brightgrey.com/ or 0845 6094 500)recently put out a nifty little booklet that they send people when their life insurance plan goes live.
I thought a few pages were worth sharing here.
The first is the point they make about the fact that it is the 'little things' we spend our money on that can soon add up. A few coffees here, a pizza or takeaway curry there. Bright Grey go on to demonstrate a little life cover could well cost a lot less than the 'little things' we spend money on without noticing.
But it is the next page that caught my eye. Surely the 'little things' are the real reason we need life insurance. I mean, of course, not the coffee and curry little things but the 'little things' we hold in our arms. Our children.
If you have children or other dependents that could be financially impacted if you were no longer around please consider life insurance. As Bright Grey point out it can be more complex to purchase (and purchase properly) than other insurances so please consider taking professional financial advice before applying.
Contact us if you'd like help working out the type and amount of cover you need or applying for life insurance.
The Green financial guide to insurance protection can be downloaded here:
http://www.iangreen.com/downloads/protection.pdf and life insurance information starts on page 4.
You can also look at the photo albums on www.facebook.com/GreenFinancial if you prefer
I thought a few pages were worth sharing here.
The first is the point they make about the fact that it is the 'little things' we spend our money on that can soon add up. A few coffees here, a pizza or takeaway curry there. Bright Grey go on to demonstrate a little life cover could well cost a lot less than the 'little things' we spend money on without noticing.
But it is the next page that caught my eye. Surely the 'little things' are the real reason we need life insurance. I mean, of course, not the coffee and curry little things but the 'little things' we hold in our arms. Our children.
If you have children or other dependents that could be financially impacted if you were no longer around please consider life insurance. As Bright Grey point out it can be more complex to purchase (and purchase properly) than other insurances so please consider taking professional financial advice before applying.
Contact us if you'd like help working out the type and amount of cover you need or applying for life insurance.
The Green financial guide to insurance protection can be downloaded here:
http://www.iangreen.com/downloads/protection.pdf and life insurance information starts on page 4.
You can also look at the photo albums on www.facebook.com/GreenFinancial if you prefer
Friday, 18 November 2011
Statement of Professional Standing (2011-12)
People must be approved by the FSA before giving financial advice. You can check I am approved by the FSA to give advice by going to www.fsa.gov.uk/register and searching with my FSA individual reference number shown above.
The Green Financial Advice Limited FSA firm number is 523308 if you'd like to check that.
"The Chartered Insurance Institute (CII) has issued this statement to the above named adviser. The CII has checked that the adviser meets the required qualification standard and confirms the adviser has signed an annual declaration stating that they have kept their knowledge up to date and complied with the Statements of Principle and Code of Practice for Approved Persons (APER)."
Dr Alexander Scott,
CEO, Chartered Insurance Institute
Monday, 14 November 2011
Over half of Brits would struggle financially within 3 months if illness struck
Over half of Brits would struggle financially within three months if illness struck
• 52% of UK workers could survive financially for only three months on statutory sick pay
• 23% would neglect their health; 12% would cut back on cigarettes or alcohol
• 14% say they’d have to move house if they were unable to work.
New research from Aviva – see http://www.aviva.com/media/news/14395/ for the full press release- reveals that over half of UK workers (52%) would be unable to survive financially for more than three months if they were off work with an illness. Around a third (30%) say they’d survive for less than a month. Less than one in ten (9%) say they’d remain solvent for a year or more.
Aviva’s research, conducted to highlight both employer and employee concerns about absence issues, uncovers a worrying protection gap. It also reveals that many people aren’t aware of the level of support they’d receive if they were unable to work due to illness – meaning that in reality, their finances may not stretch as far as they think.
While it’s reassuring to see that two in ten (19%) employees know how much Statutory Sick Pay they’d be entitled to, a quarter (26%) think they’d receive considerably more: 16% of respondents believe that they would be entitled to over twice as much benefit.
Worryingly, Aviva’s research reveals that if finances were tight, some people would neglect their health in favour of non-essentials. Nearly a quarter (23%) would put their health at risk - with 14% saying they’d miss important health checks and one in ten (9%) admitting they’d put up with health ailments. One in ten (12%) say they’d cut down on cigarettes or alcohol.
Nearly half (49%) say they’d eat cheaper supermarket offers and fast foods, while one in five would cut down on family holidays. A similar proportion (19%) say they’d use less heating/electricity.
Unsurprisingly nearly seven in ten (65%) workers cite financial concerns as the main reason to get back to work quickly if they are off sick. Regaining a sense of purpose (28%), getting well (21%) and providing for their families (16%) are also high priorities.
While the motivation to return to work is apparent, the research reveals that many workers are afraid of returning to the workplace after a long-term illness. A significant number of people (44%) fear that going back to work could cause a relapse of their condition and a quarter (24%) worry that they won’t be able to work to full capacity.
Steve Bridger, head of group risk, Aviva, UK Health says: “It’s understandable that over eighty per cent of people think long-term sickness is something that happens to other people. However in reality you never know what’s around the corner and few people have the savings available to support themselves and their families for very long. Employment and Support Allowance can come to as little as £67.50 a week – even less than Statutory Sick Pay - which in many cases would hardly cover a family’s food shopping, let alone their mortgage and other necessary expenses."
Ian Green: Income protection insurance – which I prefer to call ‘expenditure protection insurance’ can help address many of the issues identified above, and provide peace of mind to individuals who have enough to deal with when they are on the receiving end of unwelcome health news.
Why not have a look at my guide to protection, either at:
http://www.iangreen.com/downloads/protection.pdf
or in the photo albums at
www.facebook.com/GreenFinancial
Aviva finished by stating : Four fifths (80%) of respondents thought it was unlikely that they would actually have to deal with long term sickness, which perhaps accounts for their lack of preparation. Government figures show that over 2.1 million 18-64 year olds were claiming state benefit for incapacity in November 2009.
• 52% of UK workers could survive financially for only three months on statutory sick pay
• 23% would neglect their health; 12% would cut back on cigarettes or alcohol
• 14% say they’d have to move house if they were unable to work.
New research from Aviva – see http://www.aviva.com/media/news/14395/ for the full press release- reveals that over half of UK workers (52%) would be unable to survive financially for more than three months if they were off work with an illness. Around a third (30%) say they’d survive for less than a month. Less than one in ten (9%) say they’d remain solvent for a year or more.
Aviva’s research, conducted to highlight both employer and employee concerns about absence issues, uncovers a worrying protection gap. It also reveals that many people aren’t aware of the level of support they’d receive if they were unable to work due to illness – meaning that in reality, their finances may not stretch as far as they think.
While it’s reassuring to see that two in ten (19%) employees know how much Statutory Sick Pay they’d be entitled to, a quarter (26%) think they’d receive considerably more: 16% of respondents believe that they would be entitled to over twice as much benefit.
Worryingly, Aviva’s research reveals that if finances were tight, some people would neglect their health in favour of non-essentials. Nearly a quarter (23%) would put their health at risk - with 14% saying they’d miss important health checks and one in ten (9%) admitting they’d put up with health ailments. One in ten (12%) say they’d cut down on cigarettes or alcohol.
Nearly half (49%) say they’d eat cheaper supermarket offers and fast foods, while one in five would cut down on family holidays. A similar proportion (19%) say they’d use less heating/electricity.
Unsurprisingly nearly seven in ten (65%) workers cite financial concerns as the main reason to get back to work quickly if they are off sick. Regaining a sense of purpose (28%), getting well (21%) and providing for their families (16%) are also high priorities.
While the motivation to return to work is apparent, the research reveals that many workers are afraid of returning to the workplace after a long-term illness. A significant number of people (44%) fear that going back to work could cause a relapse of their condition and a quarter (24%) worry that they won’t be able to work to full capacity.
Steve Bridger, head of group risk, Aviva, UK Health says: “It’s understandable that over eighty per cent of people think long-term sickness is something that happens to other people. However in reality you never know what’s around the corner and few people have the savings available to support themselves and their families for very long. Employment and Support Allowance can come to as little as £67.50 a week – even less than Statutory Sick Pay - which in many cases would hardly cover a family’s food shopping, let alone their mortgage and other necessary expenses."
Ian Green: Income protection insurance – which I prefer to call ‘expenditure protection insurance’ can help address many of the issues identified above, and provide peace of mind to individuals who have enough to deal with when they are on the receiving end of unwelcome health news.
Why not have a look at my guide to protection, either at:
http://www.iangreen.com/downloads/protection.pdf
or in the photo albums at
www.facebook.com/GreenFinancial
Aviva finished by stating : Four fifths (80%) of respondents thought it was unlikely that they would actually have to deal with long term sickness, which perhaps accounts for their lack of preparation. Government figures show that over 2.1 million 18-64 year olds were claiming state benefit for incapacity in November 2009.
Tuesday, 8 November 2011
Keyperson & Shareholder Difference
Notes on Company Wealth Protection Insurance Plans
Key Person
Key person assurance is used to address the fact that although many businesses fully insure their material assets, often the ‘human assets’ are overlooked. ACME LTD are fully aware of this, and require the three key individuals of the company to be insured for the specified amounts. Should the unfortunate happen the proceeds could be used for many things, among them replacement costs, such as headhunting fees, salary for a replacement person, business interruption costs as projects may be delayed or existing contracts/contacts lost, or other financial implications such as falling profits, or cancelled loan agreements (if appropriate). We recommend you review the level of cover provided regularly as the business continues to grow.
All costs will be borne by ACME LTD and the plans are written for a 5-year term. This should also ensure that should you wish them to, HMRC will allow the premiums as an allowable deduction for Corporation Tax purposes, however we also recommend you carefully consider the potential taxation of key person policies. I can confirm that once the plans are in force you should send a letter to send to your local HM Inspector of Taxes to obtain clarification. I can provide a specimen letter if required.
In summary, Key person policies are paid by the company, for the benefit of the company.
Shareholder
The death or critical illness of a shareholder can often halt a business in its tracks because of the need to rearrange the shareholding. Problems may arise if the family of a deceased shareholder do not agree with the way the others are running the business or if a shareholder who is critically ill is no longer able to contribute to the business but still wishes to have a say and reap financial rewards thus holding the company back. In order to mitigate these problems (and others) and to enable swift action to be taken I recommend that the shareholders protect their interests in the business. We discussed the implications of individual shareholders dying or being diagnosed with a critical illness.
If any of you were to die or be unable to work through critical illness the situation would be difficult. It was agreed that the other partners should have the funds available to purchase the shareholding. This way the shares would stay in the same hands and the other party would have funds to deal with the situation as they wish. So for example, if Person A were to die, funds would be available for Person B and Person C to purchase the shares, keeping the shares in the control of those still running the company and providing Person A’s family with money to use as they wish.
The shareholder cover was based on the value of ACME LTD at XX date. I recommend that you review this amount of cover as the business grows to ensure that the cover reflects the market value of the business. Although ACME LTD will pay the premiums they will be treated as a ‘P11d’ style benefit and taxed accordingly. You should ensure that your accountant is aware of this and deals with the premiums appropriately. As you may have differing premiums you may wish to ‘equalise’ the costs, thus ensuring equal taxable benefit for each of you.
In summary, Shareholder protection provides benefits for individuals or their families, in exchange for the value of shares
Please note this is just intended to be a very basic guide.
There is more information in my downloadable guide http://www.iangreen.com/downloads/Bus_si.pdf
but please do seek professional advice before arranging these types of contracts
Key Person
Key person assurance is used to address the fact that although many businesses fully insure their material assets, often the ‘human assets’ are overlooked. ACME LTD are fully aware of this, and require the three key individuals of the company to be insured for the specified amounts. Should the unfortunate happen the proceeds could be used for many things, among them replacement costs, such as headhunting fees, salary for a replacement person, business interruption costs as projects may be delayed or existing contracts/contacts lost, or other financial implications such as falling profits, or cancelled loan agreements (if appropriate). We recommend you review the level of cover provided regularly as the business continues to grow.
All costs will be borne by ACME LTD and the plans are written for a 5-year term. This should also ensure that should you wish them to, HMRC will allow the premiums as an allowable deduction for Corporation Tax purposes, however we also recommend you carefully consider the potential taxation of key person policies. I can confirm that once the plans are in force you should send a letter to send to your local HM Inspector of Taxes to obtain clarification. I can provide a specimen letter if required.
In summary, Key person policies are paid by the company, for the benefit of the company.
Shareholder
The death or critical illness of a shareholder can often halt a business in its tracks because of the need to rearrange the shareholding. Problems may arise if the family of a deceased shareholder do not agree with the way the others are running the business or if a shareholder who is critically ill is no longer able to contribute to the business but still wishes to have a say and reap financial rewards thus holding the company back. In order to mitigate these problems (and others) and to enable swift action to be taken I recommend that the shareholders protect their interests in the business. We discussed the implications of individual shareholders dying or being diagnosed with a critical illness.
If any of you were to die or be unable to work through critical illness the situation would be difficult. It was agreed that the other partners should have the funds available to purchase the shareholding. This way the shares would stay in the same hands and the other party would have funds to deal with the situation as they wish. So for example, if Person A were to die, funds would be available for Person B and Person C to purchase the shares, keeping the shares in the control of those still running the company and providing Person A’s family with money to use as they wish.
The shareholder cover was based on the value of ACME LTD at XX date. I recommend that you review this amount of cover as the business grows to ensure that the cover reflects the market value of the business. Although ACME LTD will pay the premiums they will be treated as a ‘P11d’ style benefit and taxed accordingly. You should ensure that your accountant is aware of this and deals with the premiums appropriately. As you may have differing premiums you may wish to ‘equalise’ the costs, thus ensuring equal taxable benefit for each of you.
In summary, Shareholder protection provides benefits for individuals or their families, in exchange for the value of shares
Please note this is just intended to be a very basic guide.
There is more information in my downloadable guide http://www.iangreen.com/downloads/Bus_si.pdf
but please do seek professional advice before arranging these types of contracts
Wednesday, 2 November 2011
16 years as a Financial Adviser
Hallowe'en 2011 was the 16th anniversary of my being a licensed financial adviser.
To celebrate, I sent a small 'trick or treat' token of my appreciation to my clients.
Here is how it happened...
Hundreds of packets of sweets were placed into small gift boxes or readied for insertion into envelopes
I pride myself on a personalised service so I wrote the salutation and personally signed all the client letters before folding into the protective envelopes.
For some strange reason the blog software wants me to rotate...?
Rest assured, I didn't have to carry the bags matrix style running along the wall, although there were a few bags and a few trips.
When the last post bags had left, it was recycling time. All the packaging was recycled. As to the mailing, the vast majority of the envelopes were made from recycled or sustainably sourced stock, the plastic boxes were UK made and designed as a client gift to be reused.
To celebrate, I sent a small 'trick or treat' token of my appreciation to my clients.
Here is how it happened...
Placing the mini chocolate pumpkins, without squashing them (squash - geddit!?) with the happy halloween label facing up' into the gift boxes took the longest...
I pride myself on a personalised service so I wrote the salutation and personally signed all the client letters before folding into the protective envelopes.
 |
| Office floor space was at a premium as the mailing progressed...! |
Rest assured, I didn't have to carry the bags matrix style running along the wall, although there were a few bags and a few trips.
Green by Name...
When the last post bags had left, it was recycling time. All the packaging was recycled. As to the mailing, the vast majority of the envelopes were made from recycled or sustainably sourced stock, the plastic boxes were UK made and designed as a client gift to be reused.THANK YOU
The aim of the event was to say a big THANK YOU to clients, a number of whom have been clients since my first year, sixteen years ago. As a small business I never take anyone's patronage for granted and I truly appreciate the trust clients place in me to assist in their financial planning and when recommending my services to a friend, family member or colleague.
Beware Greeks Rejecting Gifts
Time for another update on market movements and happenings.
Those clients that I have met face to face with recently will be aware that my general thoughts on imminent future market movements are that we are unlikely to see major upwards gains in the markets in general in the near and medium future but that during that time I expect high volatility – ie lots of ups and downs.
This is good for those saving regularly as it enables the effect of ‘pound cost averaging’ to take effect - see http://greenfinancial.blogspot.com/2011/02/pound-cost-averaging.html
However for those already invested it probably represents more of a roller coaster ride.
Do remember, that the lower risk (or volatility) portfolio content you have, the lower the exposure you have to equities and the markets, so the lesser effect any drops (or rises) have on your investments.
For those in the lower numbered portfolios it is actually more like just a bumpy road than a roller coaster!
As ever, if you have any concerns, please do contact me.
Onto the commentary…
Just when the situation in the Eurozone appeared to be moving in the right direction with the agreement last week (has anyone else noticed every time I leave the country markets seem to rise…? Perhaps I should operate from abroad?) on a further bailout package and a voluntary 50% haircut on Greek sovereign debt, we had the unexpected announcement this week that the Greek government has decided to hold a referendum on the latest euro-zone package, probably in December or January.
In reality, the Greek government is simply trying to foster public support as it provides the Greek population with the decision between continuing austerity and membership of the single currency. Some might call it a gamble.
Data from opinion polls suggest that although 60% are opposed to the new Eurozone package (and continuing austerity), approximately 70% want to remain in the Euro. And let’s be clear about it… if Greece want to remain in the single currency then it will have to take the medicine prescribed by the Eurozone governments (primarily Germany and France). The alternative is for Greece to leave the Euro but this route is not (publically at least) on the table for Greece or the other sixteen members of the Eurozone.
I felt that the global market reaction to last Thursday’s announcement was overdone (again) as we had only seen headlines from the Eurozone governments with little detail on how these packages and targets would be achieved. Certainty is a crucial factor for global investment markets and the re-emergence of uncertainty has led to the significant falls in global equity markets yesterday and today (writing at 9:30 am Weds).
As I have said in the past, in my role as Advisor / Manager of your portfolio(s), part of my job is to read, research, analyse and assimilate as much information as possible to inform and then blend the asset allocation models and investment strategy. It is far from a rosy picture for the global economy at present but, as I have stated in the past, ‘investors’ or ‘the markets’ do have a tendency to overreact to “news”, either on the upside or downside, and I believe that this is the case today. Investor sentiment, rather than economic data is the key driver of global investment markets in the very short term.
Although it is far from easy, I continue to believe that patience is important, ultimately economic fundamentals will win out and the vast majority of clients should remain invested in line with the diversified Model Portfolios.
As I say at the outset of this post, I expect an extended period of volatility in global investment markets – and this will no doubt be magnified in the run up to the proposed Greek referendum, and I will continue my regular dialogue to ensure that client portfolios are positioned to meet the dual mandate of creating and preserving wealth based upon our your attitude to risk and volatility.
Those clients that I have met face to face with recently will be aware that my general thoughts on imminent future market movements are that we are unlikely to see major upwards gains in the markets in general in the near and medium future but that during that time I expect high volatility – ie lots of ups and downs.
This is good for those saving regularly as it enables the effect of ‘pound cost averaging’ to take effect - see http://greenfinancial.blogspot.com/2011/02/pound-cost-averaging.html
However for those already invested it probably represents more of a roller coaster ride.
Do remember, that the lower risk (or volatility) portfolio content you have, the lower the exposure you have to equities and the markets, so the lesser effect any drops (or rises) have on your investments.
For those in the lower numbered portfolios it is actually more like just a bumpy road than a roller coaster!
As ever, if you have any concerns, please do contact me.
Onto the commentary…
Just when the situation in the Eurozone appeared to be moving in the right direction with the agreement last week (has anyone else noticed every time I leave the country markets seem to rise…? Perhaps I should operate from abroad?) on a further bailout package and a voluntary 50% haircut on Greek sovereign debt, we had the unexpected announcement this week that the Greek government has decided to hold a referendum on the latest euro-zone package, probably in December or January.
In reality, the Greek government is simply trying to foster public support as it provides the Greek population with the decision between continuing austerity and membership of the single currency. Some might call it a gamble.
Data from opinion polls suggest that although 60% are opposed to the new Eurozone package (and continuing austerity), approximately 70% want to remain in the Euro. And let’s be clear about it… if Greece want to remain in the single currency then it will have to take the medicine prescribed by the Eurozone governments (primarily Germany and France). The alternative is for Greece to leave the Euro but this route is not (publically at least) on the table for Greece or the other sixteen members of the Eurozone.
I felt that the global market reaction to last Thursday’s announcement was overdone (again) as we had only seen headlines from the Eurozone governments with little detail on how these packages and targets would be achieved. Certainty is a crucial factor for global investment markets and the re-emergence of uncertainty has led to the significant falls in global equity markets yesterday and today (writing at 9:30 am Weds).
As I have said in the past, in my role as Advisor / Manager of your portfolio(s), part of my job is to read, research, analyse and assimilate as much information as possible to inform and then blend the asset allocation models and investment strategy. It is far from a rosy picture for the global economy at present but, as I have stated in the past, ‘investors’ or ‘the markets’ do have a tendency to overreact to “news”, either on the upside or downside, and I believe that this is the case today. Investor sentiment, rather than economic data is the key driver of global investment markets in the very short term.
Although it is far from easy, I continue to believe that patience is important, ultimately economic fundamentals will win out and the vast majority of clients should remain invested in line with the diversified Model Portfolios.
As I say at the outset of this post, I expect an extended period of volatility in global investment markets – and this will no doubt be magnified in the run up to the proposed Greek referendum, and I will continue my regular dialogue to ensure that client portfolios are positioned to meet the dual mandate of creating and preserving wealth based upon our your attitude to risk and volatility.
Thursday, 20 October 2011
The Jar of Priorities
I remember hearing this story at a conference in February 2000, a few months before my first child was due to be born. It resonated with me then and the story was recently told to me again. It is always worth repeating...
When things in your life seem almost too much to handle, when 24 hours in a day are not enough, remember the mayonnaise jar……..and the beer
A professor stood before his philosophy class and had some items in front of him. When the class began, wordlessly, he picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls.
He then asked the students if the jar was full. They agreed that it was.
So the professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between golf balls. He then asked the students again if the jar was full. They agreed it was.
The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous “yes.”
The professor then produced two cans of beer from under the table and poured the entire contents into the jar, effectively filling the empty space between the sand. The students laughed. “Now,” said the professor, as the laughter subsided, “I want you to recognize that this jar represents your life. The golf balls are the important things–your family, your children, your health, your friends, your favorite passions–things that if everything else was lost and only they remained, your life would still be full.”
“The pebbles are the other things that matter like your job, your house, your car. The sand is everything else–the small stuff.”
“If you put the sand into the jar first,” he continued, “there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you. Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical checkups. Take your partner out to dinner. Play another 18. There will always be time to clean the house, and fix the disposal. “Take care of the golf balls first, the things that really matter. Set your priorities. The rest is just sand.”
One of the students raised her hand and inquired what the beer represented.
The professor smiled. “I’m glad you asked. It just goes to show you that no matter how full your life may seem, there’s always room for a couple of beers.”
When things in your life seem almost too much to handle, when 24 hours in a day are not enough, remember the mayonnaise jar……..and the beer
A professor stood before his philosophy class and had some items in front of him. When the class began, wordlessly, he picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls.
He then asked the students if the jar was full. They agreed that it was.
So the professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between golf balls. He then asked the students again if the jar was full. They agreed it was.
The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous “yes.”
The professor then produced two cans of beer from under the table and poured the entire contents into the jar, effectively filling the empty space between the sand. The students laughed. “Now,” said the professor, as the laughter subsided, “I want you to recognize that this jar represents your life. The golf balls are the important things–your family, your children, your health, your friends, your favorite passions–things that if everything else was lost and only they remained, your life would still be full.”
“The pebbles are the other things that matter like your job, your house, your car. The sand is everything else–the small stuff.”
“If you put the sand into the jar first,” he continued, “there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you. Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical checkups. Take your partner out to dinner. Play another 18. There will always be time to clean the house, and fix the disposal. “Take care of the golf balls first, the things that really matter. Set your priorities. The rest is just sand.”
One of the students raised her hand and inquired what the beer represented.
The professor smiled. “I’m glad you asked. It just goes to show you that no matter how full your life may seem, there’s always room for a couple of beers.”
Friday, 7 October 2011
NEST Update- for employERs
Starting now, October 2012, ALL employers will have to make compulsory pension provision for their employees
But before you panic, don’t worry. This is being phased in over four years. This process is known as ’staging’
At its simplest, the bigger the company, the earlier the ‘staging’ date.
Employers with more than 50 (fifty) employees in their PAYE scheme as at 1st April (yes, really, it’s not an April Fool!) 2012 will have a staging date between October 2012 and July 2014 with the same rule applying, that the bigger you are, the earlier the date.
Anyone with fewer than fifty employees will have staging date after April 2014 but before February 2016
It is possible to bring forward your staging date if you wish to but only to a set number of dates already listed by The Pensions Regulator (TPR). There is no facility to defer or delay your staging date
The Pensions Regulator has a reasonably clear website: http://www.thepensionsregulator.gov.uk/ if you'd like to read more yourself
As the months roll by, the TPR will be communicating with employers and have promised to do so at least twice in the run up to their staging date.
For all Green Financial clients, I am happy to confirm your date, so you can be prepared in good time, as well as let you know what else, if anything, you need to do.
For me to do this please confirm:
Your PAYE scheme reference number(s) and the size of your PAYE scheme (as above).
Note: If you have more than one PAYE scheme, your staging date will be the one that's earliest.
I can also help clarify any duties you will have under the new rules and contribution levels that will apply
Please contact me if you wish me to help
Ian Green
iangreen@iangreen.com
19th October: I have been asked by a few clients what my fees are for assisting in this area- it will depend on the size of the scheme and the amount of work involved but the first stage(s) are generally just a nominal sum to cover the admin time involved if you don't want to do it yourself
But before you panic, don’t worry. This is being phased in over four years. This process is known as ’staging’
At its simplest, the bigger the company, the earlier the ‘staging’ date.
Employers with more than 50 (fifty) employees in their PAYE scheme as at 1st April (yes, really, it’s not an April Fool!) 2012 will have a staging date between October 2012 and July 2014 with the same rule applying, that the bigger you are, the earlier the date.
Anyone with fewer than fifty employees will have staging date after April 2014 but before February 2016
It is possible to bring forward your staging date if you wish to but only to a set number of dates already listed by The Pensions Regulator (TPR). There is no facility to defer or delay your staging date
The Pensions Regulator has a reasonably clear website: http://www.thepensionsregulator.gov.uk/ if you'd like to read more yourself
As the months roll by, the TPR will be communicating with employers and have promised to do so at least twice in the run up to their staging date.
For all Green Financial clients, I am happy to confirm your date, so you can be prepared in good time, as well as let you know what else, if anything, you need to do.
For me to do this please confirm:
Your PAYE scheme reference number(s) and the size of your PAYE scheme (as above).
Note: If you have more than one PAYE scheme, your staging date will be the one that's earliest.
I can also help clarify any duties you will have under the new rules and contribution levels that will apply
Please contact me if you wish me to help
Ian Green
iangreen@iangreen.com
19th October: I have been asked by a few clients what my fees are for assisting in this area- it will depend on the size of the scheme and the amount of work involved but the first stage(s) are generally just a nominal sum to cover the admin time involved if you don't want to do it yourself
Monday, 3 October 2011
Client Market Update October 3 2011
Well, I suppose it had to happen sometime, didn’t it…?
This is the first time, since early 2009, that I have had a minus figure of any note to report to clients on a quarter.
That said, given the magnitude of the numbers you will no doubt have heard on the news (‘markets down 12% in quarter’), a reduction that is ‘only’ 4-5% seems OK.
It is important to note that as always, these figures have to be produced at a point on a day – it is just a snapshot in time.
With the current volatility in the markets, had I run the reports a day or two earlier or later, it could easily have shown a small positive or a larger negative.
Perhaps most important of all is to remember that whilst it is always frustrating to see a minus figure over a quarter, that is a short term piece of data, and your portfolio is managed over the long term to match your life & lifestyle / income requirements.
Looking at the major markets like the FTSE100 and S&P500 – even though as I write the FTSE sits just above the 5,000 mark on news of Greece’s deficit, they are up around 50% since the lows of 2009.
So again, whilst I appreciate seeing the funds go down is never nice, I see no long term concern at all.
In fact this very process of rebalancing now means you’ll be buying into equities when they are low and will therefore see the commensurate gains in future when markets rise again, as they always do.
I hope you read (and enjoy – or at least find of interest) the various investment updates I send out, whether the regular monthly market commentary (MMC – next edition due within a week) or the ad hoc blog posts and emails such as this one.
If you do I am sure you’ll have read my thoughts on what is going on.
As you know, what worries me, is that much of what is reported is ‘selling newspapers’ – For example, when I was in the USA just over a week ago, when markets dropped by 5 points in a day the UK headlines I read online were along the lines of ‘crash’, ‘plummet’, ‘billions wiped off values’ etc
When markets went up by 5% last week, headlines were nowhere near using the opposite language and were quite muted – ‘markets up’, ‘rebound’, ‘rally’ etc
No talk of ‘billions added overnight!’
So that is the first thing, ‘don’t believe (all) the hype’!
And much of what is written then drives markets via investor sentiment – not facts.
I have written a number of times about market movements just because of investor sentiment when an announcement is made but actually there was no new news.
This is why I, as a professional, can take these more rational views when markets move in irrational ways.
But I am not pretending it is sunny when it is raining.
The volatility in markets is real, the problems around the world are real, and I assure you the way we manage the portfolios reflects all this.
In fact this very process of rebalancing now means you’ll be buying into more equities when they are low and will therefore see the commensurate gains in future when markets rise again, as they always do.
That is the very essence of the ‘triangle’ rebalancing process we manage for you. And as I always say, it needs ‘Time’. Those clients who, by their own defined investing timelines, have less time until the money is needed (one example would be approaching encashing a tax free lump sum in a pension), have less exposure to the markets. Those with a longer time horizon (one example would be those starting to save regularly in a pension) can afford to have greater exposure to the markets (see also http://greenfinancial.blogspot.com/2011/02/pound-cost-averaging.html
for the benefits of long term investing regularly in volatile market conditions)
What if you sold everything and went into cash now? If you sold into cash now, you would be doing the opposite of what everyone wants to do, which is “buy low, sell high”.
You’d be “buying high and selling low” – so I really can’t endorse that action.
However, if you fear that markets will continue to fall for the lifetime of your portfolio (ie until retirement and beyond) then of course you may wish to sell – but to repeat myself, that is not something I would professionally recommend in any way.
At the risk of repeating what I have written in the MMC a number of times, it is COUNTRIES that are making the headlines but it is COMPANIES that we/you invest in.
Corporate earnings are high, many companies (certainly outside the financial sector) have cash on their books and the outlook for mergers and acquisitions is positive.
The overwhelming message from leading economists at the conference I spoke at in the USA at the end of September was that markets look cheap at present (as long as you have the time to wait until they rise again)
Looking at earnings compared to equity prices (the oft mentioned p/e ratio) equities actually look cheap.
If anything, arguably now is the time to buy. And you don’t have to believe me, you can look at who many call the world’s greatest living investor, Warren Buffet, for evidence of that.
He is even buying banks!
It is always good to measure your portfolio (ie your pension and ISA etc) against what you want it to do, when you want it to do it (for example: provide a lifetime of income when you retire) rather than match it against an arbitrary index.
This is the first time, since early 2009, that I have had a minus figure of any note to report to clients on a quarter.
That said, given the magnitude of the numbers you will no doubt have heard on the news (‘markets down 12% in quarter’), a reduction that is ‘only’ 4-5% seems OK.
It is important to note that as always, these figures have to be produced at a point on a day – it is just a snapshot in time.
With the current volatility in the markets, had I run the reports a day or two earlier or later, it could easily have shown a small positive or a larger negative.
Perhaps most important of all is to remember that whilst it is always frustrating to see a minus figure over a quarter, that is a short term piece of data, and your portfolio is managed over the long term to match your life & lifestyle / income requirements.
Looking at the major markets like the FTSE100 and S&P500 – even though as I write the FTSE sits just above the 5,000 mark on news of Greece’s deficit, they are up around 50% since the lows of 2009.
So again, whilst I appreciate seeing the funds go down is never nice, I see no long term concern at all.
In fact this very process of rebalancing now means you’ll be buying into equities when they are low and will therefore see the commensurate gains in future when markets rise again, as they always do.
I hope you read (and enjoy – or at least find of interest) the various investment updates I send out, whether the regular monthly market commentary (MMC – next edition due within a week) or the ad hoc blog posts and emails such as this one.
If you do I am sure you’ll have read my thoughts on what is going on.
As you know, what worries me, is that much of what is reported is ‘selling newspapers’ – For example, when I was in the USA just over a week ago, when markets dropped by 5 points in a day the UK headlines I read online were along the lines of ‘crash’, ‘plummet’, ‘billions wiped off values’ etc
When markets went up by 5% last week, headlines were nowhere near using the opposite language and were quite muted – ‘markets up’, ‘rebound’, ‘rally’ etc
No talk of ‘billions added overnight!’
So that is the first thing, ‘don’t believe (all) the hype’!
And much of what is written then drives markets via investor sentiment – not facts.
I have written a number of times about market movements just because of investor sentiment when an announcement is made but actually there was no new news.
This is why I, as a professional, can take these more rational views when markets move in irrational ways.
But I am not pretending it is sunny when it is raining.
The volatility in markets is real, the problems around the world are real, and I assure you the way we manage the portfolios reflects all this.
In fact this very process of rebalancing now means you’ll be buying into more equities when they are low and will therefore see the commensurate gains in future when markets rise again, as they always do.
That is the very essence of the ‘triangle’ rebalancing process we manage for you. And as I always say, it needs ‘Time’. Those clients who, by their own defined investing timelines, have less time until the money is needed (one example would be approaching encashing a tax free lump sum in a pension), have less exposure to the markets. Those with a longer time horizon (one example would be those starting to save regularly in a pension) can afford to have greater exposure to the markets (see also http://greenfinancial.blogspot.com/2011/02/pound-cost-averaging.html
for the benefits of long term investing regularly in volatile market conditions)
What if you sold everything and went into cash now? If you sold into cash now, you would be doing the opposite of what everyone wants to do, which is “buy low, sell high”.
You’d be “buying high and selling low” – so I really can’t endorse that action.
However, if you fear that markets will continue to fall for the lifetime of your portfolio (ie until retirement and beyond) then of course you may wish to sell – but to repeat myself, that is not something I would professionally recommend in any way.
At the risk of repeating what I have written in the MMC a number of times, it is COUNTRIES that are making the headlines but it is COMPANIES that we/you invest in.
Corporate earnings are high, many companies (certainly outside the financial sector) have cash on their books and the outlook for mergers and acquisitions is positive.
The overwhelming message from leading economists at the conference I spoke at in the USA at the end of September was that markets look cheap at present (as long as you have the time to wait until they rise again)
Looking at earnings compared to equity prices (the oft mentioned p/e ratio) equities actually look cheap.
If anything, arguably now is the time to buy. And you don’t have to believe me, you can look at who many call the world’s greatest living investor, Warren Buffet, for evidence of that.
He is even buying banks!
It is always good to measure your portfolio (ie your pension and ISA etc) against what you want it to do, when you want it to do it (for example: provide a lifetime of income when you retire) rather than match it against an arbitrary index.
Friday, 2 September 2011
Critical Illness Positives
{EAV_BLOG_VER:231135ca83a57aec}
After the brilliant life insurance advert (see http://youtu.be/TkyoCHCZlKw ) from Aviva, they have announced there will be a critical illness insurance advert this autumn.
For this, Aviva are to be commended. Unfortunately, too often, any press regarding Critical Illness is negative, usually based around a consumer whose plan has not paid out.
A recent exception to this rule was the celebrity and broadcaster Danny baker who was diagnosed with throat cancer.
http://www.bbc.co.uk/news/uk-england-london-11668994
He told how the financial consequences of the condition were dire. By his own admission, luckily his pal Chris Evans stepped in and provided money, £30,000+, for his immediate needs as he had no Critical illness policy.
Many years ago, I attended a small gathering of financial services professionals. One of the meeting topics was Critical Illness Cover. Unknown to the select group attending there was a guest speaker, the broadcaster James Whale (at that time on a popular radio show with a popular late night TV show too).
He had been diagnosed with a critical illness, and his IFA, who was who we all thought would be speaking, had advised he have Critical illness cover as a general policy, on his main mortgage and on his substantial rental property portfolio. Mr Whale had followed his advice, despite the relatively high monthly premiums. Like the rest of us, Mr Whale thought “It will never happen to me”. But it did. My memory of the event is that he then told how, from the Critical illness Cover payouts, he had enough to pay his medical bills, his mortgage was cleared and he had sufficient cleared income from the now unencumbered rental properties to live. He could choose not to work (because without the payout he would have ‘had to’) and take as long as he needed to recover, with the best possible medical treatment over and above the brilliant basic care he said he received from the NHS. James Whale now has a charity for the specific kidney cancer condition he suffered.
As a financial adviser, I know how complex some of the forms can be that need filling in, how difficult some of the questions are to answer and how frequently clients, with no malice or forethought, ‘forget’ conditions that should be disclosed without prompting or further explaining of the question from me. Many Critical Illness Insurers are trying to improve their application process, something which I applaud.
At the other end is the claims process. Again, too often, a complex, confusing process for people or their families in the middle of dealing with a serious medical condition. Once more, a few companies are leading the way with helplines to assist with the administration and medical issues with the claim.
The Association of British Insurers introduced guidance on insurance claims in 2008 to ensure customers who made a genuine mistake through non-disclosure were not disadvantaged. The guidance emerged after the level of rejected claims hit 16 per cent in 2007. They were dark days indeed for insurers whose reputation suffered and far more importantly consumers and policy holders who had claims rejected.
Pleasingly, since the guidance was introduced, figures from the Financial Ombudsman Service show that the number of long-term protection complaints has reduced by 50 per cent.
At Green Financial we had a Critical illness claim this year that the family initially wished to deal with themselves. But frustration soon set in as the ‘computer says no’ of the insurer took over, staffed by a ‘script reader’ in a call centre. As soon as I was aware of the issues, I obtained copies of the medical evidence from the client myself, re-read the policy terms and conditions to satisfy myself the claim was valid (always worth double checking) and then contacted the claims manager. Things soon progressed and the claim was paid.
The Association of British Insurers has recently revealed the 2010 figures for Critical illness claims:
Insurers paid out a total of £776 million on critical-illness policies.
The total amount paid to customers relating to Critical Illness policies has fallen slightly from 2009, which the ABI attributes to customers cancelling their policies due to budget constraints. I would also wager that less new policies are being taken out as in recent years, the premium cost has risen, as medical science has improved our chances of surviving conditions that once would have been more serious (or ‘critical’)
So what of the regularly erroneously reported statement that 'these policies never pay out’.
11,161 critical illness claims were paid last in 2010, amounting to 89.9 per cent of all claims. 1,248 claims were declined.
Scottish Provident, a leading Critical Illness Insurer has released all their 2010 figures. Here are a few:
60% of all claims were cancer related. The average age for claim was 46
Of these, 40% were men and 60% were women.
Malignant Melanoma was 5% of claims
Heart Attack was the second largest claim group, with 12% of claims. 80%+ were male with an average age just under 50.
A further 4% of claims were for coronary artery by-pass or heart valve replacement (something I am personally likely to claim on one day due to my own congenital heart defect)
Not all companies offer child cover on their policies but Scottish Provident do. 4% of their claims were on the children of the policyholder
Strokes and Multiple Sclerosis accounted for 6% of claims for each condition.
Most Critical Illness providers offer a long list of conditions covered, indeed many compete by declaring how many they cover, but industry wide statistics back up the numbers from Scottish Provident.
Almost 9 out of 10 claims are from the ‘big 4’ of:
-Cancer
-Heart related
-MS
-Stroke
Yes, Critical Illness policies are expensive.
Yes, we all have other things we’d like to or need to spend money on
But consider the cost of having a policy and not needing it, to needing it and not having it.
For this, Aviva are to be commended. Unfortunately, too often, any press regarding Critical Illness is negative, usually based around a consumer whose plan has not paid out.
http://www.bbc.co.uk/news/uk-england-london-11668994
He told how the financial consequences of the condition were dire. By his own admission, luckily his pal Chris Evans stepped in and provided money, £30,000+, for his immediate needs as he had no Critical illness policy.
Many years ago, I attended a small gathering of financial services professionals. One of the meeting topics was Critical Illness Cover. Unknown to the select group attending there was a guest speaker, the broadcaster James Whale (at that time on a popular radio show with a popular late night TV show too).
 |
| http://www.jameswhalefund.org/ |
As a financial adviser, I know how complex some of the forms can be that need filling in, how difficult some of the questions are to answer and how frequently clients, with no malice or forethought, ‘forget’ conditions that should be disclosed without prompting or further explaining of the question from me. Many Critical Illness Insurers are trying to improve their application process, something which I applaud.
At the other end is the claims process. Again, too often, a complex, confusing process for people or their families in the middle of dealing with a serious medical condition. Once more, a few companies are leading the way with helplines to assist with the administration and medical issues with the claim.
The Association of British Insurers introduced guidance on insurance claims in 2008 to ensure customers who made a genuine mistake through non-disclosure were not disadvantaged. The guidance emerged after the level of rejected claims hit 16 per cent in 2007. They were dark days indeed for insurers whose reputation suffered and far more importantly consumers and policy holders who had claims rejected.
Pleasingly, since the guidance was introduced, figures from the Financial Ombudsman Service show that the number of long-term protection complaints has reduced by 50 per cent.
At Green Financial we had a Critical illness claim this year that the family initially wished to deal with themselves. But frustration soon set in as the ‘computer says no’ of the insurer took over, staffed by a ‘script reader’ in a call centre. As soon as I was aware of the issues, I obtained copies of the medical evidence from the client myself, re-read the policy terms and conditions to satisfy myself the claim was valid (always worth double checking) and then contacted the claims manager. Things soon progressed and the claim was paid.
The Association of British Insurers has recently revealed the 2010 figures for Critical illness claims:
Insurers paid out a total of £776 million on critical-illness policies.
The total amount paid to customers relating to Critical Illness policies has fallen slightly from 2009, which the ABI attributes to customers cancelling their policies due to budget constraints. I would also wager that less new policies are being taken out as in recent years, the premium cost has risen, as medical science has improved our chances of surviving conditions that once would have been more serious (or ‘critical’)
So what of the regularly erroneously reported statement that 'these policies never pay out’.
11,161 critical illness claims were paid last in 2010, amounting to 89.9 per cent of all claims. 1,248 claims were declined.
Scottish Provident, a leading Critical Illness Insurer has released all their 2010 figures. Here are a few:
60% of all claims were cancer related. The average age for claim was 46
Of these, 40% were men and 60% were women.
Malignant Melanoma was 5% of claims
Heart Attack was the second largest claim group, with 12% of claims. 80%+ were male with an average age just under 50.
A further 4% of claims were for coronary artery by-pass or heart valve replacement (something I am personally likely to claim on one day due to my own congenital heart defect)
Not all companies offer child cover on their policies but Scottish Provident do. 4% of their claims were on the children of the policyholder
Strokes and Multiple Sclerosis accounted for 6% of claims for each condition.
Most Critical Illness providers offer a long list of conditions covered, indeed many compete by declaring how many they cover, but industry wide statistics back up the numbers from Scottish Provident.
Almost 9 out of 10 claims are from the ‘big 4’ of:
-Cancer
-Heart related
-MS
-Stroke
Yes, Critical Illness policies are expensive.
Yes, we all have other things we’d like to or need to spend money on
But consider the cost of having a policy and not needing it, to needing it and not having it.
Thursday, 25 August 2011
Boiler Room Guidance
Last week, three people were jailed for their part in a boiler room scam dating back to 2007
http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/073.shtml
I thought it worth reminding clients that as part of our service Green Financial have long offered: “The Second Opinion Service” – this is where we make ourselves available to consider new ideas, wherever they may originate from
Over the years clients have utilised this service in many ways, from having us check the ‘small print’ on accounts offered by banks (we’ve helped clients avoid tie-ins, falling rates and hidden high charges)
Other times clients may have read in the press of an investment fund and want to know if we are aware of it and have considered it (usually the answer is yes)
TOO GOOD TO BE TRUE
More often than not it is a client’s friend or colleague who has heard of a tax wheeze, scheme or investment that seems too good to be true (and it usually is!)
One such example was a client who called up recently informing us of a ‘share opportunity’ they had been telephoned about out of the blue. They were wary and my alarm bell immediately rang. A little swift research on my part indicated the company offering the shares were not FSA (Financial Services Authority) registered and that the company appeared to only have a PO Box communication address. I warned the client off the venture and they agreed. When the company called back, the client told them they had discussed the matter with their IFA, did not wish to hear from them again, and if they did call back would pass their details to me and the FSA to deal with. There were no further calls.
BOILER ROOMS
As mentioned at the start of this post, three people were jailed last week, for a total of 19 years for a £27.5m boiler room scam.
Tomas Wilmot was sentenced to nine years in prison while his sons Kevin and Christopher were given five years each.
The trio were convicted of conspiracy to defraud. The Wilmots had a syndicate of boiler rooms that defrauded around 1,700 investors out of a total of £27.5m. Like so many boiler room scams of the past, many of the victims were elderly and often suffering from serious illness.
SO WHAT IS A BOILER ROOM?
As with the Wilmots, a boiler room is typically a ‘fly by night’ business but these days are usually well organised, well funded and seem plausible. They typically use high pressure sales techniques to sell ‘sure-thing’ (in my language, too good to be true) investments with a promise of massive returns. What they are normally selling is either worthless stock in unquoted companies or often stock in companies that don’t exist at all.
The more complex boiler rooms, rather than lasting for a while, then suddenly disappearing (only for the same people to pop up elsewhere under a different name) sometimes migrate to actually giving back a few returns initially, thus lulling the purchaser into a falso sense of security. These are then known as ‘Ponzi’ schemes , made more famous recently by Bernie Madoff.
HOW DO THEY WORK?
It is normally a telephone ‘cold-call’, using phone numbers easily obtainable from publicly available lists. Think how often you are asked for your details and how many organisations have your number. The UK actually has laws against this type of cold calling but it doesn’t stop the fraudsters. They simply base the callers abroad. It could be as near as mainland Spain, continental Europe, the US and even as far afield as India these days. This means they are beyond the jurisdiction of the FSA and can approach, anyone, anywhere, anytime.
Boiler rooms look and sound genuine. As I’ve already said they can seem perfectly legitimate and have many ways of putting this across. They may name drop companies you have heard of, have a genuine looking UK address or phone number and of course a professional looking website. The sales staff are VERY persistent and may continue to call for months in the hope of wearing down the recipient or catching them off guard.
Even those that consider themselves experienced investors may get caught out.
The FSA say that they reckon the average victim of a boiler room scam loses £20,000
I’ve said it before and I’ll say it again, if it seems to good to be true, it probably is.
WHAT IF YOU ARE CONTACTED?
If you are a client of Green Financial and you are ever approached, remember to take advantage of The Second Opinion Service before committing.
The FSA say if anyone ever telephones you univited offering shares for sale, don’t worry about being polite or offending the caller, just hang up.
You can also call the FSA on 0845 606 1234
The FSA also have more information on their website :
http://www.fsa.gov.uk/Pages/consumerinformation/scamsandswindles/investment_scams/boiler_room/index.shtml
http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/073.shtml
I thought it worth reminding clients that as part of our service Green Financial have long offered: “The Second Opinion Service” – this is where we make ourselves available to consider new ideas, wherever they may originate from
Over the years clients have utilised this service in many ways, from having us check the ‘small print’ on accounts offered by banks (we’ve helped clients avoid tie-ins, falling rates and hidden high charges)
Other times clients may have read in the press of an investment fund and want to know if we are aware of it and have considered it (usually the answer is yes)
TOO GOOD TO BE TRUE
More often than not it is a client’s friend or colleague who has heard of a tax wheeze, scheme or investment that seems too good to be true (and it usually is!)
One such example was a client who called up recently informing us of a ‘share opportunity’ they had been telephoned about out of the blue. They were wary and my alarm bell immediately rang. A little swift research on my part indicated the company offering the shares were not FSA (Financial Services Authority) registered and that the company appeared to only have a PO Box communication address. I warned the client off the venture and they agreed. When the company called back, the client told them they had discussed the matter with their IFA, did not wish to hear from them again, and if they did call back would pass their details to me and the FSA to deal with. There were no further calls.
BOILER ROOMS
As mentioned at the start of this post, three people were jailed last week, for a total of 19 years for a £27.5m boiler room scam.
Tomas Wilmot was sentenced to nine years in prison while his sons Kevin and Christopher were given five years each.
The trio were convicted of conspiracy to defraud. The Wilmots had a syndicate of boiler rooms that defrauded around 1,700 investors out of a total of £27.5m. Like so many boiler room scams of the past, many of the victims were elderly and often suffering from serious illness.
SO WHAT IS A BOILER ROOM?
As with the Wilmots, a boiler room is typically a ‘fly by night’ business but these days are usually well organised, well funded and seem plausible. They typically use high pressure sales techniques to sell ‘sure-thing’ (in my language, too good to be true) investments with a promise of massive returns. What they are normally selling is either worthless stock in unquoted companies or often stock in companies that don’t exist at all.
The more complex boiler rooms, rather than lasting for a while, then suddenly disappearing (only for the same people to pop up elsewhere under a different name) sometimes migrate to actually giving back a few returns initially, thus lulling the purchaser into a falso sense of security. These are then known as ‘Ponzi’ schemes , made more famous recently by Bernie Madoff.
HOW DO THEY WORK?
It is normally a telephone ‘cold-call’, using phone numbers easily obtainable from publicly available lists. Think how often you are asked for your details and how many organisations have your number. The UK actually has laws against this type of cold calling but it doesn’t stop the fraudsters. They simply base the callers abroad. It could be as near as mainland Spain, continental Europe, the US and even as far afield as India these days. This means they are beyond the jurisdiction of the FSA and can approach, anyone, anywhere, anytime.
Boiler rooms look and sound genuine. As I’ve already said they can seem perfectly legitimate and have many ways of putting this across. They may name drop companies you have heard of, have a genuine looking UK address or phone number and of course a professional looking website. The sales staff are VERY persistent and may continue to call for months in the hope of wearing down the recipient or catching them off guard.
Even those that consider themselves experienced investors may get caught out.
The FSA say that they reckon the average victim of a boiler room scam loses £20,000
I’ve said it before and I’ll say it again, if it seems to good to be true, it probably is.
WHAT IF YOU ARE CONTACTED?
If you are a client of Green Financial and you are ever approached, remember to take advantage of The Second Opinion Service before committing.
The FSA say if anyone ever telephones you univited offering shares for sale, don’t worry about being polite or offending the caller, just hang up.
You can also call the FSA on 0845 606 1234
The FSA also have more information on their website :
http://www.fsa.gov.uk/Pages/consumerinformation/scamsandswindles/investment_scams/boiler_room/index.shtml
Tuesday, 23 August 2011
Asset Class - Growth & Inflation
A few comparisons of investment asset classes and returns, including the effects of inflation, from the 1940's, 1960's and 1980's
£100 deposited in 1945, gross interest reinvested, now worth £7,490 but £234 inflation adjusted
£100 in Gilts in 1960, gross income reinvested, now worth £5,565 but £179 inflation adjusted
£100 in equities in 1960, gross dividend reinvested, now worth £136,107 but £4,370 inflation adjusted
Source: Barclays Capital, 2010
I wonder what results the next fifty years or so will bring?
£100 deposited in 1945, gross interest reinvested, now worth £7,490 but £234 inflation adjusted
£100 in Gilts in 1960, gross income reinvested, now worth £5,565 but £179 inflation adjusted
£100 in equities in 1960, gross dividend reinvested, now worth £136,107 but £4,370 inflation adjusted
Source: Barclays Capital, 2010
I wonder what results the next fifty years or so will bring?
Friday, 5 August 2011
Client Communication re Investment Markets
No doubt over the coming days and weeks financial journalists will have a field day with what is going on in the markets. I recently read a report in the Economist that considered the type and variety of language and grammar used in differing stockmarket conditions. Typically the language used when markets were rising was restricted in variety and impact. Fairly everyday words like ‘gain’, ‘rise’, ‘up’ were commonplace and frequent. But when markets headed the other way lesser used words such as ‘crash’, ‘slide’, ‘tumble’, ‘dive’ and ‘plummet’ all appeared along with many more such alarming verbs.
[As I type, I just read on Twitter: "FTSE dives as global rout triggers new recession fears " - I couldn't have proved my point any better if I wrote the headline myself!]
That is not to say markets are not down, just to caution against getting caught up in media hyperbole.
As a client, you will remember one of my investment mantras is “Time, not timing”. What this means is time in the markets is what matters, not trying to beat the market by timing your moves.
The recent market manoeuvre I advised was in response to a potentially extraordinary event whereby I suggested exiting many equity markets just in case the US defaulted on its debt. I didn’t think they would, nor did most commentators and as it turned out they didn’t. But if they had things could have been very bad – indeed I may have had to type words such as tumble, dive and plummet!
Going back into the markets shortly after the decision probably saved around 2%*
*actual figure per individual will depend on exactly when you came out and went back in
Since then, many world stockmarkets have fallen (or crashed, tumbled and plummeted depending on what you read) further and this is where it is good to remember the usual Green Financial Investment Management Process which we discussed in regard to your financial aims.
Next time we rebalance your portfolio, towards the beginning of September, if markets have recovered, all well and good. But if they haven’t, the regular process will continue and in taking the percentages back to your normal mixture (the ‘pyramid’, or ‘triangle’ I drew when we discussed your investments) we will be using lower volatility assets, such as cash and fixed interest to purchase more of the higher volatility assets such as stocks and shares.
In effect, there will be a sale on in the stockmarket and you will be buying when prices are low, in order to one day sell when they are higher – surely the aim of investing?
Whereas those that believe what they read in the papers and are now selling equities are doing the opposite. They bought high and are selling low. Madness!
The above, of course, relies on that word again, TIME.
I always ensure the amount of money in the markets is appropriate for your stated attitude to volatility and risk including appetite for loss and need for gain.
Stockmarkets WILL return to their previous levels. They always do. I just don’t know when that will be (and no-one else does - if they claim to, they are lying or a fool).
So if you are worried or concerned by anything you see or hear please do contact me.
[As I type, I just read on Twitter: "FTSE dives as global rout triggers new recession fears " - I couldn't have proved my point any better if I wrote the headline myself!]
That is not to say markets are not down, just to caution against getting caught up in media hyperbole.
As a client, you will remember one of my investment mantras is “Time, not timing”. What this means is time in the markets is what matters, not trying to beat the market by timing your moves.
The recent market manoeuvre I advised was in response to a potentially extraordinary event whereby I suggested exiting many equity markets just in case the US defaulted on its debt. I didn’t think they would, nor did most commentators and as it turned out they didn’t. But if they had things could have been very bad – indeed I may have had to type words such as tumble, dive and plummet!
Going back into the markets shortly after the decision probably saved around 2%*
*actual figure per individual will depend on exactly when you came out and went back in
Since then, many world stockmarkets have fallen (or crashed, tumbled and plummeted depending on what you read) further and this is where it is good to remember the usual Green Financial Investment Management Process which we discussed in regard to your financial aims.
Next time we rebalance your portfolio, towards the beginning of September, if markets have recovered, all well and good. But if they haven’t, the regular process will continue and in taking the percentages back to your normal mixture (the ‘pyramid’, or ‘triangle’ I drew when we discussed your investments) we will be using lower volatility assets, such as cash and fixed interest to purchase more of the higher volatility assets such as stocks and shares.
In effect, there will be a sale on in the stockmarket and you will be buying when prices are low, in order to one day sell when they are higher – surely the aim of investing?
Whereas those that believe what they read in the papers and are now selling equities are doing the opposite. They bought high and are selling low. Madness!
The above, of course, relies on that word again, TIME.
I always ensure the amount of money in the markets is appropriate for your stated attitude to volatility and risk including appetite for loss and need for gain.
Stockmarkets WILL return to their previous levels. They always do. I just don’t know when that will be (and no-one else does - if they claim to, they are lying or a fool).
So if you are worried or concerned by anything you see or hear please do contact me.
Playing Footsie
What is the FTSE?
or FTSE - What's in a name?
It is pronounced ‘footsie’ or for fans of phonetics: /ˈfʊtsiː/
The FTSE isn’t one thing. The name derives from the acronym of its two parent companies, The Financial Times and the London Stock Exchange, but has since been registered as a company in its own right.
The London Stock Exchange has a market capitalization of over $3.5 trillion.
Based on this measure it is the 4th largest exchange in the world.
There are, in fact, a number of indices, many of which are famous – such as the FTSE100 and the FTSE AllShare. Some though, are not so well known.
Following is a brief description of each
FTSE100
Arguably the most famous of the FTSE indices, the FTSE100 started in 1984 with a base level of 1,000
Newspapers overnight (5th August 2011) were telling how the FTSE100 fell yesterday to 5,300. The lowest it has been in the last year is 5,070 with the 12 month high 6,105
This index simply consists of the 100 largest companies (by capitalisation) in the UK. It represents about 80% of the entire UK market.
The top 5 UK shares themselves represent almost 30% of the FTSE100
The top 10 UK shares represent almost 50% of the FTSE100
(have a look at yesterday's blog post for the top 10 rundown and a few FTSE100 fun facts and figures)
The FTSE100 high is when it almost reached 7,000 – hitting 6,950 on 30 December 1999
After the so called credit crunch and economic meltdown in 2007-2010 it fell back below 3,500
In more recent times it has been bobbling around the 6,000 mark in 2011 yet was as low as just over 5,000 in the last 12 months (see above)
FTSE250
known as mid caps
The next 250 largest (after the first 100) companies in the UK
This index is about 15% of the total market by capitalization
FTSE SmallCap
This index gives values to companies not deemed large enough to be included in the 350 stocks that make up the FTSE 100 and FTSE250
There are a number of shares available that rarely trade and these are screened out of the index.
It tracks around 300+ shares – and most investors could trade in as many shares (or as great a volume) in these as they wished.
It represents about 2% of the market.
Two versions are available – one that includes investment trusts and one that doesn’t
FTSE Fledgling
Very small companies!
Too small in fact, to be included in the FTSE AllShare (see below)
FTSE All Small
Combining the FTSE Smallcap and FTSE Fledgling with around 525+ stocks making up this index – but they represent less than 4% of the total market. Like the Smallcap, two versions exist, with and without Investment Trusts
FTSE 350
As the name indicates, it consists of the companies in the FTSE100 and FTSE250.
This amounts to just over 95% of the total market
The content could be considered as the most actively traded large and medium sized companies in the UK
FTSE Allshare
This index has been in existence since 1962
It covers all 3 segments of the UK market – large, medium and small
Many would say that if your aim is to invest in the UK markets as a whole in order to follow market sentiment then this is the index to follow, rather than the more popular FTSE100
But as the FTSE100 steals the headlines on news bulletins and is a badge of honour for those listed in it, the FTSE AllShare remains the lesser known index.
FT30
Avid blog readers and attendees of my estate planning seminars will already be aware of this little known index. Much like it’s more familiar and ancient cousin from across the pond, the Dow, this index has a relatively small number of companies – 30 if you hadn’t already guessed. It consists of what are known as ‘blue-chip’ stocks.
Although rarely referred to today, it is the oldest continuous index of shares in the UK, having started life in 1935 – this also makes it one of the older indexes world wide
I hope you have enjoyed this little game of footsie.
or FTSE - What's in a name?
It is pronounced ‘footsie’ or for fans of phonetics: /ˈfʊtsiː/
The FTSE isn’t one thing. The name derives from the acronym of its two parent companies, The Financial Times and the London Stock Exchange, but has since been registered as a company in its own right.
The London Stock Exchange has a market capitalization of over $3.5 trillion.
Based on this measure it is the 4th largest exchange in the world.
There are, in fact, a number of indices, many of which are famous – such as the FTSE100 and the FTSE AllShare. Some though, are not so well known.
Following is a brief description of each
FTSE100
Arguably the most famous of the FTSE indices, the FTSE100 started in 1984 with a base level of 1,000
Newspapers overnight (5th August 2011) were telling how the FTSE100 fell yesterday to 5,300. The lowest it has been in the last year is 5,070 with the 12 month high 6,105
This index simply consists of the 100 largest companies (by capitalisation) in the UK. It represents about 80% of the entire UK market.
The top 5 UK shares themselves represent almost 30% of the FTSE100
The top 10 UK shares represent almost 50% of the FTSE100
(have a look at yesterday's blog post for the top 10 rundown and a few FTSE100 fun facts and figures)
The FTSE100 high is when it almost reached 7,000 – hitting 6,950 on 30 December 1999
After the so called credit crunch and economic meltdown in 2007-2010 it fell back below 3,500
In more recent times it has been bobbling around the 6,000 mark in 2011 yet was as low as just over 5,000 in the last 12 months (see above)
FTSE250
known as mid caps
The next 250 largest (after the first 100) companies in the UK
This index is about 15% of the total market by capitalization
FTSE SmallCap
This index gives values to companies not deemed large enough to be included in the 350 stocks that make up the FTSE 100 and FTSE250
There are a number of shares available that rarely trade and these are screened out of the index.
It tracks around 300+ shares – and most investors could trade in as many shares (or as great a volume) in these as they wished.
It represents about 2% of the market.
Two versions are available – one that includes investment trusts and one that doesn’t
FTSE Fledgling
Very small companies!
Too small in fact, to be included in the FTSE AllShare (see below)
FTSE All Small
Combining the FTSE Smallcap and FTSE Fledgling with around 525+ stocks making up this index – but they represent less than 4% of the total market. Like the Smallcap, two versions exist, with and without Investment Trusts
FTSE 350
As the name indicates, it consists of the companies in the FTSE100 and FTSE250.
This amounts to just over 95% of the total market
The content could be considered as the most actively traded large and medium sized companies in the UK
FTSE Allshare
This index has been in existence since 1962
It covers all 3 segments of the UK market – large, medium and small
Many would say that if your aim is to invest in the UK markets as a whole in order to follow market sentiment then this is the index to follow, rather than the more popular FTSE100
But as the FTSE100 steals the headlines on news bulletins and is a badge of honour for those listed in it, the FTSE AllShare remains the lesser known index.
FT30
Avid blog readers and attendees of my estate planning seminars will already be aware of this little known index. Much like it’s more familiar and ancient cousin from across the pond, the Dow, this index has a relatively small number of companies – 30 if you hadn’t already guessed. It consists of what are known as ‘blue-chip’ stocks.
Although rarely referred to today, it is the oldest continuous index of shares in the UK, having started life in 1935 – this also makes it one of the older indexes world wide
I hope you have enjoyed this little game of footsie.
Thursday, 4 August 2011
FTSE100 facts & figures
With all the stockmarket up and downs in the news, I thought I'd take a lighter look at the FTSE index most likely to be quoted on the news, the FTSE100:
Most Expensive
As at the time of this survey (March 2011), Rio Tinto was also the most expensive share in the FTSE 100 at 4088, closely followed by the company in 11th place in the size table (see below), Anglo American at 3218
A Numbers Game
Only two companies made it in with a number in their name – 3i group and G4S
Last Man Standing
In last place – the 100 in the FTSE 100 if you will, is Alliance Trust
No Happy Returns
Eight of the 100 currently pay no dividend with a further 12 paying less than 1%
Initial Thoughts
‘S’ is the most popular initial letter. 12 companies in the FTSE 100 start with this
There are 3 letters all with 11 companies. ‘A’, ‘I’ and ‘R’ although counting Royal Dutch Shell as two ‘R’s rather than one ‘S’ still feels like cheating.
Alphabetically bringing up the rear, yet in a respectable 14th place by size is Xstrata
And here, pop pickers (or should that be stock pickers?) are the Top 10 shares in UK FTSE100 as at March 2011
Company name, Sector, %age of FTSE 100, dividend yield
1 HSBC, finance (banking), 7.61, 5.49%
2 Vodafone, telecoms, 6.07, 4.72%
3 BP, oil/gas, 5.93, 0.89%
4 Shell A (properly known as Royal Dutch Shell), oil/gas, 4.98, 4.17%
5 Rio Tinto, basic (mining), 4.05, 1.64%
6 GlaxoSmithKline, health (pharmaceuticals), 4.03, 5.49%
7 Shell B, oil/gas, 3.76, 4.94%
8 BHP Billiton, basic, 3.41, 2.38%
9 BG Group, oil/gas, 3.17, 0.9%
10 BAT (British American Tobacco), goods, 3.16, 4.69%
More FTSE facts and figures if this post proves popular. FTSE - What's in a name? tomorrow
Most Expensive
As at the time of this survey (March 2011), Rio Tinto was also the most expensive share in the FTSE 100 at 4088, closely followed by the company in 11th place in the size table (see below), Anglo American at 3218
A Numbers Game
Only two companies made it in with a number in their name – 3i group and G4S
Last Man Standing
In last place – the 100 in the FTSE 100 if you will, is Alliance Trust
No Happy Returns
Eight of the 100 currently pay no dividend with a further 12 paying less than 1%
Initial Thoughts
‘S’ is the most popular initial letter. 12 companies in the FTSE 100 start with this
There are 3 letters all with 11 companies. ‘A’, ‘I’ and ‘R’ although counting Royal Dutch Shell as two ‘R’s rather than one ‘S’ still feels like cheating.
Alphabetically bringing up the rear, yet in a respectable 14th place by size is Xstrata
And here, pop pickers (or should that be stock pickers?) are the Top 10 shares in UK FTSE100 as at March 2011
Company name, Sector, %age of FTSE 100, dividend yield
1 HSBC, finance (banking), 7.61, 5.49%
2 Vodafone, telecoms, 6.07, 4.72%
3 BP, oil/gas, 5.93, 0.89%
4 Shell A (properly known as Royal Dutch Shell), oil/gas, 4.98, 4.17%
5 Rio Tinto, basic (mining), 4.05, 1.64%
6 GlaxoSmithKline, health (pharmaceuticals), 4.03, 5.49%
7 Shell B, oil/gas, 3.76, 4.94%
8 BHP Billiton, basic, 3.41, 2.38%
9 BG Group, oil/gas, 3.17, 0.9%
10 BAT (British American Tobacco), goods, 3.16, 4.69%
More FTSE facts and figures if this post proves popular. FTSE - What's in a name? tomorrow
Monday, 1 August 2011
US Update
Wise Words from Citywire:
http://www.citywire.co.uk/money/us-debt-crisis-what-should-investors-do-now/a512540?ref=citywire-money-latest-news-list
Stock markets are jumping today at relief that US politicians appear to be coming to their senses and are close to a deal on the debt ceiling talks.
[IG: This after the market slides on Friday and my extraordinary email to clients on Wednesday]
Fingers crossed, the compromise hammered out between Republicans and Democrats in the Senate and House of Representatives will avoid the US sliding towards a default on its government bonds.
Although the risk of the US not paying the interest on its debts has looked remote, the mere thought that the world’s biggest economy could screw up so badly has rightly rattled everyone – investors, consumers and businesses.
After a terrible week for shares (US down 4% and FTSE 100 down 2%) last week, Asian and European markets have bounced back today.
What is 'risk free'?
However, even if the deal gets through Congress by tomorrow’s deadline, the problems are not over. The leading credit rating agencies have made it clear that the US could still suffer an historic downgrade and lose its cherished top AAA rating.
This takes investors into uncharted territory. Although US treasuries may not slump immediately, no one is sure. This is highly significant as US government bonds have traditionally been the ‘risk-free asset’ and the benchmark against which all other investments are priced. If ‘risk-free’ is no longer that, what does it mean for other classes of investment, principally bonds, shares and commodities? Expect a period of turbulence as the world works through this one.
Ironically, the bad economic data that came out of the US on Friday may support US treasury prices. The US remains the biggest and most liquid market in government bonds so investors will presumably keep faith in it, particularly if interest payments (coupons) are no longer under threat.
However, if the US administration responds to the alarming sluggishness of the US economy with more quantitative easing (that is, printing money by buying back assets such as bonds to inject cash and confidence into the financial system) then all bets may be off. Quantitative easing may, or may not, have succeeded in saving the financial system but it sure as hell has distorted investment markets by creating a bubble in UK and US government bonds.
Greek tragedy in Europe
Meanwhile, [IG: As regular readers of the monthly market commentary will know] the eurozone’s debt crisis rumbles on. At the risk of being fatalistic it looks to me that whatever the European Union, European Central Bank and International Monetary Fund (the 'troika') decide to do, the Greek tragedy will unfold painfully as the debt excesses of the past are dealt with.
Greece has been bailed out for a second time but in such a way that the financial stability of the banking system is again being questioned (thanks to those bond ‘haircuts’) while Spain and Italy are still in the firing line with a European bailout fund that is currently too small to help them.
What it boils down to
So what does this mean for investors worried about their Sipps, pensions and ISAs? Having surveyed the recent comments of leading fund managers, I think it boils down to keeping your eyes peeled to see what happens next, staying cautious but holding your nerve for now.
[IG: I will be doing just this and writing toclients with an update and any recommended actions as soon as I think it appropriate]
Cash: The next few weeks and months may be turbulent so it is probably a good idea to have a cash buffer in your portfolio - [IG: as I recommend all clients do - I make sure of this when financial planning], to protect its value if markets fall but also to give you some fire power to invest if markets recover
IG: Nice to have my work validated and see that what I wrote out last week to clients is pretty much being echoed by a leading company such as Citywire this week
http://www.citywire.co.uk/money/us-debt-crisis-what-should-investors-do-now/a512540?ref=citywire-money-latest-news-list
Stock markets are jumping today at relief that US politicians appear to be coming to their senses and are close to a deal on the debt ceiling talks.
[IG: This after the market slides on Friday and my extraordinary email to clients on Wednesday]
Fingers crossed, the compromise hammered out between Republicans and Democrats in the Senate and House of Representatives will avoid the US sliding towards a default on its government bonds.
Although the risk of the US not paying the interest on its debts has looked remote, the mere thought that the world’s biggest economy could screw up so badly has rightly rattled everyone – investors, consumers and businesses.
After a terrible week for shares (US down 4% and FTSE 100 down 2%) last week, Asian and European markets have bounced back today.
What is 'risk free'?
However, even if the deal gets through Congress by tomorrow’s deadline, the problems are not over. The leading credit rating agencies have made it clear that the US could still suffer an historic downgrade and lose its cherished top AAA rating.
This takes investors into uncharted territory. Although US treasuries may not slump immediately, no one is sure. This is highly significant as US government bonds have traditionally been the ‘risk-free asset’ and the benchmark against which all other investments are priced. If ‘risk-free’ is no longer that, what does it mean for other classes of investment, principally bonds, shares and commodities? Expect a period of turbulence as the world works through this one.
Ironically, the bad economic data that came out of the US on Friday may support US treasury prices. The US remains the biggest and most liquid market in government bonds so investors will presumably keep faith in it, particularly if interest payments (coupons) are no longer under threat.
However, if the US administration responds to the alarming sluggishness of the US economy with more quantitative easing (that is, printing money by buying back assets such as bonds to inject cash and confidence into the financial system) then all bets may be off. Quantitative easing may, or may not, have succeeded in saving the financial system but it sure as hell has distorted investment markets by creating a bubble in UK and US government bonds.
Greek tragedy in Europe
Meanwhile, [IG: As regular readers of the monthly market commentary will know] the eurozone’s debt crisis rumbles on. At the risk of being fatalistic it looks to me that whatever the European Union, European Central Bank and International Monetary Fund (the 'troika') decide to do, the Greek tragedy will unfold painfully as the debt excesses of the past are dealt with.
Greece has been bailed out for a second time but in such a way that the financial stability of the banking system is again being questioned (thanks to those bond ‘haircuts’) while Spain and Italy are still in the firing line with a European bailout fund that is currently too small to help them.
What it boils down to
So what does this mean for investors worried about their Sipps, pensions and ISAs? Having surveyed the recent comments of leading fund managers, I think it boils down to keeping your eyes peeled to see what happens next, staying cautious but holding your nerve for now.
[IG: I will be doing just this and writing toclients with an update and any recommended actions as soon as I think it appropriate]
Cash: The next few weeks and months may be turbulent so it is probably a good idea to have a cash buffer in your portfolio - [IG: as I recommend all clients do - I make sure of this when financial planning], to protect its value if markets fall but also to give you some fire power to invest if markets recover
IG: Nice to have my work validated and see that what I wrote out last week to clients is pretty much being echoed by a leading company such as Citywire this week
Thursday, 28 July 2011
1971 and all that
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| Happy 40th Birthday to me! |
Post Birthday Blog
1971 and all that
I turned 40 yesterday having been born 27 July 1971
A friend and client was kind enough to send me a birthday card with a few numbers from 1971 on it.
It makes interesting reading...
A large loaf was 10.5p (half a penny, remember those!)
Colour TV licence was £12 (black and white licence was abolished)
Average house price £5,970 (what would that buy you now?)
Prescription charge – 20p
Cinema ticket – 40p
Pint of beer – 12p
And to pay for all this the average weekly wage for a full time working man was £32.90 (£1,710 per annum)
I then looked a little further into a few more financial differences between then and now.
In the US in 1970/1 a typical skilled working class couple with two children had one wage earner, saved around 11% of their income and had revolving credit (ie they had credit cards but paid them off in full each month). The family therefore could be thought to have a reasonable safety net: little risk of mortgage default, adequate savings, low borrowings if any and a potential additional wage earner if required.
Compare and contrast that with today. In the same type of family, typically both parents are working, and the safety net has gone. There are little or no savings and paying back credit (excluding the mortgage) takes up 15%+ of income. The loss of one job, or accident or illness would threaten the survivorship of the family finances and the fall in their house price since 2008 has wiped out any equity there.
In 1971 Inflation in the UK was 8.6%
Decimalisation hit the UK (in February admittedly) and also in February 1971 the NASDAQ exchange, beloved of all investors until the tech bubble burst at the turn of the century, started in America. Continuing the technology theme, Intel invented the first microprocessor (numbered the 4004 tech fans!)
Oil is in the news at the moment as then. North Sea Oil had just started production in Norway.
And to finish on a more serene and suitably named note, GreenPeace came into existence.
Ian Green (age 40 and 1 day)
Tuesday, 26 July 2011
Tax & Wealth Tips 2011/12
50 tips, split into chapters, covering
- Personal & family
- Property
- Retirement
- Savings & investment
- Business
- Employment
- Overseas income
- Your estate
- General approach
http://www.iangreen.com/GFA-Tax&WealthTips2011.pdf
After the budget 2011I had to wait until the Finance Act was given royal assent. This happened on July 19 2011. So now I have been able to produce this. I hope you find it useful and it saves you money.
The aim is that the tips act as a prompt, either to review, take action or contact me for further information.
Please remember the guide is just that, a guide. It should not be taken as advice to any specific person.
Monday, 25 July 2011
Faster Death Claim payouts
In a splendid piece of news the ABI (Association of British Insurers) has recently published guidance for all life insurance companies to help them speed up the time it takes to pay out life insurance claims.
Historically there have been complex legal issues (so they said) as to why claims couldn't be paid until the estate of the deceased was wound up.
Now, with what is seemingly good old common sense, the insurance and legal professions (ABI & The Law Commission) have banged heads and come up with a solution. Under the new process, the life insurance company will write to the main beneficiary under a life insurance policy and ask them to complete a declaration, that states if they receive money and it turns out they were not the rightful recipient (or the claim should not have been paid) they agree to pay back the money.
Whilst this will not eradicate arguments over the minority of cases whether a claim was ultimately payable or not it should alleviate the hardship that arises for many families when a genuine claim is delayed in payment for estate winding up reasons.
There are well over 30,000 death claims a year normally paid in the UK and the ABI think this new guidance should reduce the average payout time from 4 months to 4 weeks.
Note: There will be exceptions, where the circumstances of the death are suspicious (usually but not always with the police involved) or in some complicated estates.
Historically there have been complex legal issues (so they said) as to why claims couldn't be paid until the estate of the deceased was wound up.
Now, with what is seemingly good old common sense, the insurance and legal professions (ABI & The Law Commission) have banged heads and come up with a solution. Under the new process, the life insurance company will write to the main beneficiary under a life insurance policy and ask them to complete a declaration, that states if they receive money and it turns out they were not the rightful recipient (or the claim should not have been paid) they agree to pay back the money.
Whilst this will not eradicate arguments over the minority of cases whether a claim was ultimately payable or not it should alleviate the hardship that arises for many families when a genuine claim is delayed in payment for estate winding up reasons.
There are well over 30,000 death claims a year normally paid in the UK and the ABI think this new guidance should reduce the average payout time from 4 months to 4 weeks.
Note: There will be exceptions, where the circumstances of the death are suspicious (usually but not always with the police involved) or in some complicated estates.
Monday, 18 July 2011
UK Sustainable Investment 20th Anniversary
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| The Invitation |
Membership consists of 70+ Financial Institutions, 60+ social finance and other institutions and 50 pension funds and foundations.
I am one of just over 50 financial advisers that are members.
UKSIF supports the UK finance sector to lead the world in advancing sustainable investment through financial services.
According to their latest data (*all noted in the anniversary publication ‘Taking Responsibility: Achieving Resilience’) nearly £940 billion in assets is managed responsibly in the UK. Arguably then, responsible investment has moved from the margins to the mainstream. This view is supported by further research showing over 50% of adults would be interested in using their investments to both make money and make a difference.
GREEN FINANCIAL
Green by name and Green by nature - I offer a service whereby I manage, monitor and assist clients with ‘green’ portfolios. Probably the biggest difference I bring compared to many advisers is my mantra of doing ‘what I can, where I can’.
This means I do recycle where possible, I do buy fairtrade or organic when available, I do switch electrical appliances off at night etc – but I don’t wear 100% hemp clothes or live life without plastic! I bring that ethos to investing for clients, using ethical, socially responsible or green funds where possible but not insisting 100% of the portfolio has to be ‘green’ at all times (although it can be if you want it to be)
WORTH THE EXTRA?
And just like food shopping or utilities, my ‘green’ service does cost a little more, as it means a little more work needs to go in, but it is up to you, the end user, whether you wish to pay a little more for the green (or ethical or fairtrade – call it what you will) investment service.
EQUAL PERFORMANCE?
As I write in my latest client magazine there is no evidence to support the myth that investing in a socially responsible manner means lower performance. That is just not true.
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| see http://www.iangreen.com/ - digital magazines for Jul/Aug2011 issue |
NEIW
If you’d like to discuss Green Investing please do get in touch.
Look out for National Ethical Investment Week later in the year, 16-22 October 2011. I’ve been supporting this initiative since it was launched four years ago.
Meanwhile, here are a couple of pictures from the reception at The House of Lords.
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| Lord Deben (John Gummer) addressing the reception |
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| The famous terrace |
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