Don’t Fear the Future
The Shiny Gold Brochure Brigade Are at It Again!
I’m sure I’m not alone when I say that I am sick of a certain, well known Financial Advisory firm shirking their responsibilities. Expensive and ambiguous, often hidden, charges coupled with substandard products top the list of grievances our clients have had with this firm, and it seems that the increasing levels of dissatisfaction are now filtering their way into the mainstream media.
In a recent undercover study conducted by Which? Money, they stated that St. James’ Place has been exposed as failing to comply with the transparency rules laid out by the Financial Conduct Authority.
Which? Money stated that, out of the 12 SJP advisers scrutinised ‘4 out of 12 failed to talk in detail about the likely costs’, ‘only seven advisers mentioned ongoing charges’ and one even said, ‘there are no charges, there are no fees, the only thing is, if you do anything, that’s when I would get paid’.
The full Which? Money article goes on to talk about a plethora of other flaws, such as ‘inconsistent explanations’, failure to explain ‘if they provided restricted or independent advice’ and out of 25 funds analysed ’11 of these has underperformed their benchmarks, according to data from Lipper’.
Reading the article was akin to a Shakespearean tragedy: the more your read, the worse it became. But what shocked me was how the financial franchise in question could get away with this behaviour? Lack of transparency is unethical, poor performance is damaging, and by not disclosing clear facts, the firm is deliberately acting with deception.
To help those effected by the problems highlighted by Which? Money, I have cleared some space in my diary to talk directly to anyone who has been stung by the ‘Shiny Gold Brochure Brigade’. If one of your friends or family members would like to hear from our impartial, independent firm, please get in touch and we will arrange to call them.
If you are looking to plan for your future, grow your wealth or simply take the first step in your financial planning journey, it’s crucial to find someone who you can trust and rely upon.
Call to ‘Ban the Cold Callers’
Some cold calls, for example those relating to mortgages, are banned. However, there are still areas vulnerable to exploitation by cold callers, and none more so than pensions.
Since 2014, nearly 3,000 savers have been swindled out of, on average, £15,000 each! Beginning the rapport that allows the thieves (because that is what they are) into the homes of those affected, could be as simple as a single email, call or text message.
We always like to remind you about being vigilant and, with so many ways for the fraudsters to get in touch, this is even more important.
The government are putting in place a ban to prevent cold callers trying to sell you a new pension scheme, including by email or text. This means that if anyone with no previous relationship with you contacts you, or if someone contacts you without your prior permission, they will face fines of up to £500,000. If you are contacted by any such person, do not respond via any means!
If you are suspicious of any communication you receive it should be reported to The Information Commissioners Office. Their website is: https://ico.org.uk/.
Tenants in Common versus Joint Tenants
Property ownership by two people can be held in one of two main ways: as Tenants in Common or as Joint Tenants. But what is the difference? I’ll start by clarifying each of these terms:
Tenants in Common – each person owns a distinct share that can be left to anybody in a Will.
Joint Tenants – on their death, each person’s share automatically passes in full to the other person. It will still pass this way even if your Will states otherwise.
The choice of which of these ways to hold property is based on what you have and who you want to benefit from it, and so is very specific to your circumstances. However, some general scenarios can help clarify.
You own property with your second spouse but you each have children from previous relationships. If you would like your children to benefit, then holding property as Joint Tenants is not necessarily the way to go. On your death, the property will pass in full to your spouse and will then pass via their Will down to their chosen Beneficiaries. There are ways around this but, again, this will depend on your situation. Tenants in Common might be a better arrangement.
You are a married couple with or without any children currently. If you would like all assets to be passed between spouses and then down to any children you may have, then Joint Tenants would work for you, as everything automatically goes to the spouse and, from there, passes according to their Will.
If you have set up Trust arrangements with us then your property is more than likely held as Tenants in Common so that we can arrange your assets more flexibly. However, it is worth noting that if you sell your property and buy a new one this should also be held as Tenants in Common.
If you are concerned about how your property is held, or would like to discuss protection products and techniques for future generations, please give us a call and we’ll be happy to help.
Provident Financial Crash
Provident Financial seemed to be doing very well indeed, with their chief executive promising they were “on the road to recovery” a mere month ago, and a profit forecast of £60 million. This is in stark contrast to the plunge in share values that we saw in late August, with shareholders’ worth being slashed by more than half and the company losing two-thirds of their profits overnight.
This crash is a result of a number of elements, but is mostly due to the reorganisation of their self-employed agents. Provident was originally set up to provide affordable credit to lower income families, where the sales force would knock on doors to collect repayments. This sales force was made up of 3,800-part time staff who mostly took the job as secondary employment. Following the reorganisation, staffing numbers decreased to 2,500 full timers who were tied into contracts, etc. The uproar from the previously flexible and self-managed workforce was enormous and caused tidal waves throughout the firm. It resulted in the loss of many experienced agents and affected Provident’s ability to both collect and issue their loans.
Add to this the fact that their credit card unit, Vanquis, is currently being investigated by the Financial Conduct Authority over one of its products and the situation is a very sticky one indeed!
Provident Financial have announced that they will not be issuing their half year dividend and a full-year pay-out is equally unlikely given the circumstances.
This just shows how quickly things can change in the world of business and investing, that such small changes can have such ripple effects across not only one company but also the markets in general, and that projections don’t always come true.
British Legend Lost
On Friday 18th August Sir Bruce Forsyth passed away at the age of 89, a British legend who will be sorely missed from our TV screens.
With a fortune of £17 million when he died, saving tax would have been an important consideration, and this is something Bruce has publicly commented on in the past. It would seem that this is the reason he left his entire fortune to his wife, Lady Wilnelia; as you are probably already aware, any assets passed between spouses, no matter the amount, are free from Inheritance Tax as part of a ‘spousal exemption’.
As Bruce did not use any of his Nil Rate Band (NRB) when he died, Wilnelia can apply for ‘carry forward’, which means she will get her full NRB when she dies (which may be larger than it is now), as well as Bruce’s full NRB (based on when Wilnelia dies, not when he died). As an example, if when Wilnelia dies the NRB is £500,000, then she will get her own £500,000 and also Bruce’s £500,000, meaning she would get a total exemption from IHT of £1,000,000, an increase on the £650,000 that makes up their two NRB today.
Using the spousal exemption is a wise move and can mean that you get potentially greater IHT savings. Wilnelia can gift large amounts of the estate to Bruce’s children, grandchildren and other relatives in her lifetime and, providing she lives for a further seven years, these gifts will fall outside of her estate. As, at 59 years, she is a lot younger than Bruce was, it is certainly more likely that she will live for a further seven years than it would have been for Bruce.
Obviously, a strong sense of trust must exist between spouses. Technically, Wilnelia could keep the money for herself, after all it is her money – Bruce gave it to her, and no conditions can be attached to the money unless it was left via a trust or other arrangements, which wouldn’t save any tax anyway.
This situation is not generic and cannot be applied to everyone, but if you are interested in saving IHT and protecting your assets then that is something we can definitely help with.
Notes on Brexit
With the last round of negotiations over and the next round beginning at the end of August, headlines are full of political soapboxing once more. We are seeing regurgitated headlines and content comprising calls for another referendum, speculation on soft and hard Brexit and numerous MPs taking a ‘firm stand’ on a position they will invariably have a very different opinion on in a few brief months’ time. Actual progress has been on continuing constructive discussions on a wide range of topics and understanding what each side needs as part of the final outcome.
David Davis’s recent letter to the Lords’ EU Committee summarised the progress of the negotiations so far. As I previously outlined, the first session was focused on agreeing the process of withdrawal. The second round, which took place across four days from 17th July, he described as intending to build trust in the process and understanding where there is room for compromise, rather than to achieve any firm agreements. His letter mentions they “achieved a high degree of convergence” around key concepts such as residence and social security issues. He acknowledges that there are areas of disagreement that they did not expect to resolve in the July session and future discussions are required, specifically mentioning the cut-off date for the agreement, and compliance and enforcement. For the next round, beginning at the end of August, he outlines the talks will consider the mutual recognition of professional qualifications and economic rights, as well as a technical analysis of social security provisions. His closing remarks are quite clear on his position that it will be our post-Brexit relationship with the EU that needs to drive our exit from the Union.
Book of the Month
Most of you will know Derren Brown as the TV hypnotist and magician. What you probably don’t know about him is that he is an accomplished scholar, with degrees in Law and German, as well as holder of the Neuro-Linguistic Programming Master’s designation. It is with this hat on that he has written ‘Happy’ – a study of … well, how to be happy.
Many of the points Brown makes go against much of the ‘positivism movement’, but are all well argued. The book is divided into three parts with the middle section focusing totally on the history of philosophy in relation to emotion and the study of happiness.
While a little meandering, the book is worth a read just to discover his five rules for happiness –though you probably won’t agree with them. At the very least, you will finish the book understanding that Mr. Brown is a very clever man indeed.
Charlie’s Mini Blog- My Super Saturday
At the start of each year I always set out my goals for the coming months, as well as revisit and revamp my 3 year goals and my lifetime goals. I do this for 8 different areas of my life, 2 of which are to be as fit and healthy as I can be, and also to be a better public speaker. I have got into cycling in recent years, but I have always had a distain for running; however, with a burning desire to take my fitness to a new level, I decided that running and swimming were where I needed to go. That’s why I set myself the goal of completing a half ironman triathlon (1900m swim, 85km bike and 21km run). I also set the goal of becoming an award-winning speaker.
On Saturday 9th September, I was up at just after 4am to attempt the first of those goals. Adding the 3 disciplines of swimming, running and cycling together, and only ever having run 21km once in my life before, I set myself the target of finishing in 6 hours & 30 minutes. I even told Caryl that the absolute earliest I would finish was in 6 hours & 5 minutes. I had lost 4 of the previous 6 weeks of training to tonsillitis, and was back at the doctors with a reoccurrence of it the Monday before the event, so it wasn’t looking good, and expectations were fairly low. I was delighted to finish at all, even more so that I did it in 6 hours on the nose; the only downside being that Caryl and the girls missed me by 5 minutes! One goal ticked off. If you failed but wanted to sponsor me, you can still do so here.
But as the title of my blog suggest, Saturday was a super day, so it doesn’t end just yet! The evening of Saturday 9th of September saw the Professional Speaking Academy Award Ceremony in London; much to my surprise I had been nominated for 2 awards. Not ideal timing, given my morning’s events, but winners can’t be choosers. Caryl kindly drove my weary legs down to London that afternoon, and we made it just in time for the Champagne black tie reception in the hope that I might be able to tick off a second of my years goals of the day. And amazingly I did. I won the award for the best ‘Solution Framework’ out of around 400 professional speakers’ entries. This was for The Efficient Money Method- the system that I have built to help educate people about making the most out of their money. I am now an award winning speaker!
So what a day the 9th of September was. It just goes to show that by setting clear, measurable, and achievable goals with a set time frame really does focus the mind, and allow you to make things happen. If you don’t do this already, I strongly encourage you to. Keep revisiting them, and watch the magic unfold. We usually over estimate what we can achieve in the short term, but massively underestimate what we can achieve in the long term. As long as we are focused, we can move closer to our goals every day.