November 2011
A Unique Financial Gift
Many people have told me that they have family members, friends or colleagues who need help with financial matters, but who put off contacting an adviser. To help them to get the financial advice process started, HelenK Financial Advice Ltd is launching a Gift Voucher scheme. Gift Vouchers are available at a 12% discount to the usual hourly fee - £110 instead of £125.
You could give a Voucher to anyone. For example, it could be:
- One of your grown-up children who needs to get information about repaying debts, buying a property, budgeting sensibly, saving for the future
- A friend who has mentioned that they need to plan for their retirement
- A friend or colleague who is being made redundant or retiring
- A parent who is finding it difficult to cope on their pension income
- A parent who is worried about paying for long term care but hasn’t spoken to anyone about it
- A parent who has told you they need to mitigate Inheritance Tax on their estate.
The first hour is free in any event, so a voucher for one hour would double the amount of time available to discuss the goals and objectives, current circumstances, and possible solutions. The maximum Gift Voucher is for three hours, so that’s four hours of advice for £330 – equivalent to only £82.50 an hour.
There won’t be any hard selling, and if the result is just an initial meeting or conversation, that’s fine. It’s also fine if they want to continue with the process, with a view to using tax-efficient savings, re-organising finances, and/or putting a plan in place.
A voucher could help someone you care for to overcome initial reluctance to seek advice, and get them started on the road to a brighter financial future.
The Vouchers are available for half or full hours, and will expire after six months, to give an incentive to use them promptly.
Call me on 01202 842795 or email helenkifa@live.co.uk for more information.
Some forms of Inheritance Tax Planning are not regulated by the Financial Services Authority.
July 2011
The Dilnot Report into Long Term Care
You may well have heard about the Dilnot Report, and its recommendations about the cost of long term care. Most people want to leave an inheritance to their
families, and don’t want all of their money to go toward paying care costs. The idea of having to sell the family home to pay for care is very upsetting.
Most of us also think it won’t happen to us – although the likelihood is as much as one in three as we get older. We also think we’ll deal with the situation and
cost if or when the need arises – when in fact it’s usually our children who will have to deal with it.
The Dilnot Report recommends a cap on the cost we’ll have to pay for social care (i.e. not the accommodation cost), and an increase in the amount we can
keep and leave to our families – both positive moves, which I hope (but don’t expect) the Government will take up in the near future. It also aims to make it
feasible for new insurance policies to be developed.
But insurance policies have been around before, and they were withdrawn because very few people bought them.
If you could cap the cost of your care by buying an insurance, knowing that the care could cost £50,000-£100,000, how much would you pay for the
insurance? If your chance of needing care was one in three, would you pay £30,000 to cover it? Or how much?
Ultimately, like all insurances, it’s about peace of mind, and knowing that if care is needed, you’ll go into a good home and not be moved about (long term care
annuities do a similar job at the time of needing care). Would it be worth it for you to know that you’d taken care of the issue in advance?
If you have any comments, I’d be delighted to hear them by telephone or email.
June 2011
Notes from an investment seminar
I went to an investment seminar this morning
(21 June), where four fund managers, who between them manage billions of pounds, were giving their views of the markets and sectors they know best. I thought I’d share some of my notes:
- There are different levels of fund and investment wrapper charges, so we have an increasing need to be aware of ‘Ryanair pricing’ (i.e. low advertised price, but watch out for the extras!).
- The short-term risk factors for worldwide stock-markets are the end of Quantitative Easing, Japan, the price of oil, EU debts, and tightening in the Chinese economy.
- Japan is beginning to get its production back to normal following the tsunami – US car manufacturers have been affected, because so many parts come from Japan.
- The resolution of some of the Middle East problems would help bring the price of oil down a bit.
- There is a risk of our economy slowing later this year, but inflation doesn’t seem to be a real threat at the moment. The Government would probably like some wage inflation, to help people to make their mortgage payments.
- 24 million Chinese men are looking for wives, and online dating sites are flourishing.
- A Chinese man may find it easier to get a wife if he owns one or more properties.
Quote of the day: “Every politician knows what to do about the economic situation – they just don’t know how to get re-elected afterwards!”
May 2011
There has been some lovely weather lately, and a very enjoyable period with Easter followed by the Royal Wedding. The stock-markets have been doing quite well, despite the very high levels of debt in many countries. The news from companies has often been very good, and dividends have been increasing, although many companies are still keeping a lot of cash. It will be interesting to see if they use some of it to grow their businesses, or continue to be very cautious.
I’m feeling rather cautious when it comes to investment advice. The FTSE is currently over 6,000, but there could be bad news later on (there always is good and bad news in turn), so I don’t think this is a time to rush into the markets. Whenever possible, I suggest to clients that they phase in their investments over 6-12 months, to reduce the risk of poor timing. The old adage: ‘sell in May and go away’ (i.e. until the Autumn) runs in my mind.
Another thing I have been looking at is a way for small companies to provide life assurance for employees, without having to set up full-blown pension schemes. There is a way, with a special type of life assurance. I was recently asked to set this up for two employees, because one of their friends had died suddenly, at age 43, leaving a young family. So many people take the ‘It can’t happen to me’ attitude, and it’s so sad when they turn out to be wrong. Get the peace of mind of knowing your family would be provided for if the worst happened to you.
March 2011
European Courts and all that
You may have heard about the European Court Ruling that insurance companies will no longer be allowed to discriminate by sex when setting rates for car insurance, life assurance, pension annuities and other insurances. The deadline is 21 December 2012, but insurance companies may be putting new rates into effect sooner.
So, what does it mean on a practical level?
If you’re a woman, and you insure a car, get new annual insurance as soon as you can, because the cost will rise significantly, especially if you are young.
If you’re a man, get monthly car insurance if you are renewing soon, and think about changing it in a few months, because costs should be coming down.
Be careful, though, as there may be a charge for changing your contract, which could outweigh the savings.
If you are looking to buy life assurance, the cost may come down a little for men, but go up (experts think by up to 20%) for women – so women should buy it as soon as possible.
Insurers don’t seem to know yet what effect the ruling will have on Critical Illness Cover and Income Protection – the ones I have looked at say they are considering the ruling, but are not ready to say what will happen.
Finally, if you are close to retirement, women should be better off in terms of annuities, while rates for men will come down. Rates are pretty low at the moment anyway, and the only thing that will help is a rise in inflation, which most of us don’t want. This could be another reason to consider income drawdown instead of annuities, because it gives the flexibility to wait, and maybe buy a n annuity later on if rates go up.
All that
Oh, and there’s a Budget on 23 March, and I guess most of us aren’t expecting any good news from that. A proposed rise in the Basic State Pension - possibly to £140 per week – is positive, but I pity anyone who has to survive on that. Any simplification to the benefits system is good, especially if it means that more people claim benefits that they are entitled to claim.
February 2011
What Does 'Independent' Really Mean?
If you are looking for financial advice, there are currently two types: Independent, and the other one. Perhaps you have considered Independent advice, but you’ve heard that it’s expensive, or thought for some other reason that it isn’t for you. But do you know what it really means?
Technically, it means that the adviser is accountable to you, and not to any life assurance, pension or investment company or mortgage lender. The adviser is obliged to do their best for you, as your agent.
It also means that the adviser can deal with any company in the market-place. That brings potentially huge advantages:
- If you have investments, pensions, life policies with different companies, the adviser must take them all into account when making recommendations for you. With your written authority, the adviser can find out full details of those plans, and remind you of features you’ve forgotten about – or maybe never knew before.
- The ability to compare products and tell you the pros and cons of those you already have compared to those available nowadays.
- If it is in your best interests, the adviser can help you to consolidate plans. This could be because new ones have lower charges, more flexibility, added features, more investment choices and so on.
- The adviser can help you to get money out of investments or pensions, when you didn’t realise you could do so.
- They can also track down pensions which are with companies that have been taken over by others.
For example, in the past year or so, I have:
- Helped someone to take a pension at age 60 when they thought they had to wait until 75 – they didn’t realise that there was still a good guaranteed annuity rate (albeit lower) at age 60.
- Helped a client transfer a pension pot from a very old plan with poor investment options into a modern one with much more choice and competitive charges.
- Helped older clients to simplify their savings and investments and reduce the paperwork, so it is much easier for them to manage their money.
- Helped clients reclaim tax that they should not have paid.
- Tracked down information about old company pensions for a client who is now living in Australia.
Advisers who are not independent are not allowed to do most of this, unless the old plans happen to be with the company they work for.
The experience of dealing with lots of different companies means getting to know what questions to ask about the features and charges, and about when benefits can be taken, without incurring any penalties.
So is it worth paying for Independent advice? In my experience, almost everyone who has tried it thinks that it is.
December 2010
Seasons Greetings!
I have very much enjoyed forming my own company and being in control this year, and I feel that it has been a very successful year.
I have helped several clients with new investments, and reviews of existing ones. There has also been pension work, long-term care, equity release and life assurance – so an interesting mixture. I have met lots of lovely people, been mentioned in the Mail on Sunday 17 times, and also guested on Bournemouth’s Hope FM local radio station.
There’s every indication that 2011 will also be busy and fulfilling, and that’s exactly how I like it!
Very best wishes to everyone – a very merry Christmas, and a happy, healthy and prosperous new year!
November 2010
Short-term, long-term and mid-term
American mid-term election results may have caused one or two headaches for Barack Obama, but the stock-markets are still doing pretty well, with the FTSE 100 currently at 5764.
It has been looking good for several weeks now, which is great for people who have investments, but not quite so good for those about to invest. When the next blip comes, they could find that they went in at the top of this particular cycle.
I have two main comments about this:
Firstly, you should consider moving money into the stock-markets on a gradual basis, rather than all at once. For example, a single lump sum can be ‘phased in’ over 6 or twelve months to reduce the risk of investing it all when the price is high.
Secondly (and more importantly), stock-market investments are for the medium-long term, and if short-term market movements are likely to disturb you, you might need to consider other homes for your money.
I have found that clients who are new to investing, and do not understand anything about how the markets work, need information and reassurance when the markets are misbehaving. It is usually better to ride out the ups and downs, than to take a short-term view, cash in at a bad time and realise a loss.
Do contact me if you would like further information.
Autumn 2010
Plus ça change
As the days get shorter, investment commentators seem to be singing the same song that has been their number 1 for quite a while now. Some of them think we will have a 'double-dip' and go back into recession, and some of them think we won't.
As far as I can tell, most people are just getting on with what they have to do and not trying to time things, which is just as well when there is uncertainty about.
People with large amounts in cash are complaining about the low returns, and many are looking for investments with some safeguards. I have recently used a plan with a guarantee not to fall in five years, and another with a guaranteed return on death within 10 years.
This morning I went to a seminar about Exchange Traded Funds (ETFs). They are normally linked to stock-market indices (such as the FTSE 100) and are a cheaper way of investing than unit trusts and other fund types. They aren't always easy to access at the moment, and there are some additional features and charges which have to be taken into account, but this type of investment is becoming increasingly and deservedly popular.
I have recently been looking at Ethical Funds for some clients, so I asked about Ethical ETFs. I was told that there are a few, and more coming along all the time, so I will be watching this space.
National Ethical Investment Week will be from 7-13 November, so there should be extra press coverage about the increasing choice of themes, the UN-backed Principles for Responsible Investment, and the fact that the performance of Ethical funds is often as good as that of the other funds.
However, I have found that Ethical Funds thend to be more risky than non-Ethical ones, so they will not always be suitable, and investors have to decide on their priorities in the same way as usual.
Do contact me if you would like further information.
June 2010
Thoughts about the emergency budget
Well, they said it would be a Rambo budget, but perhaps they were managing our expectations, because some of it wasn’t as bad as we had feared. The commentators I have heard and read don’t seem to be sure if it’s a kill or a cure, but time will tell.
It is in many ways a budget which is kind to businesses, which I think will help as it should enable entrepreneurs to generate more jobs and wealth in due course.
For the rest of us, well I think we knew that we would all have to help pay for the privilege of being in the most indebted country in the world (according to George Osborne). It may be a bit galling if we have been sensible with our money and haven’t over-borrowed, but we are also helping people who have been unfortunate enough to lose their jobs.
There is going to be some pain for most of us over the next few years, it seems, and I suggest that getting through it comes down to a few tactics:
- Use as many tax breaks as you can, without going too far and having the tax tail wagging the dog.
- Analyse your spending, and cut back if you need to – be strict with yourself.
- Dip into savings if you need to – that’s what they’re there for
- As always, spread your risks with a diversified wealth strategy
- Even if you thought you’d done all you could before the tax-year end in April, check again to see if you need to change anything
- Get good advice from your Accountant and/or IFA.
Do contact me if you would like any more details of how the Budget might affect you.
This information is based on my understanding of the announcements made in the 22 June 2010 Budget which may be subject to change before becoming law. No decisions should be taken or not taken on the basis of this information without obtaining suitable advice.
May 2010
As I write this, the major political parties are in talks about forming a coalition Government, the FTSE 100 Index is at 5389, having covered a little of Friday's falls, and the bank of England has kept the base rate at 0.5% for another month.
There has been uncertainty and volatility in Europe and in the stock-markets too.
Trying to time investments in today's markets is, in my opinion, nearly impossible. What matters ultimately is what you invest and what you get back as income and capital until it is finally cashed in - the level of the FTSE in between is often irrelevant.
I think it is more important than ever to use three strategies to get the best return. you can:
- spread, to minimise the downside if one investment should fail
- use all the taxbreaks you can
- consider investing gradually rather than all in one go
I have had some good press coverage in the Mail on Sunday recently and was included in an investment article on 25th April. You can read it at here.
Returns from cash are very low at the moment, but you should not invest in stock-markets unless you understand the risk involved, and are prepared to put your money away for at least five years.
January 2010
