IFA Magazine October 2012

N E W S R E V I E W C O M M E N T A N A LY S I SA N A LY S I S

For today’s discerning financial and investment professional

OC

TOBER

2012

■ ISSU

E 15

WILL RAJOY MAKE THE RIGHT MOVES?

WILL RAJOY MAKE THE

THE PAIN IN

SPAIN

ST JAMES’S PLACEWHAT’S THE ATTRACTION?

BANKS AFTER VICKERSBUNGLES AND DISASTERS SPOIL THE IMAGE

This communication is for fi nancial advisers only. The stated returns are paid if there is any increase in the FTSE 100 at the end of the Plan. If, at the end of the Plan, the level of the FTSE 100 is equal to the level at the start of the Plan clients will only receive back their initial investment. Investec Structured Products is a trading name of Investec Bank plc, registered address 2 Gresham Street, London EC2V 7QP. Investec Bank plc is authorised and regulated by the Financial Services Authority.

Best Structured Products Provider 2010 & 2011

C31022.016_SP_Geared Returns_IFA mag_Oct12_297x420_v2.indd 1 21/09/2012 15:47

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C31022.016_SP_Geared Returns_IFA mag_Oct12_297x420_v2.indd 2 21/09/2012 15:47Contents.indd 3 07/10/2012 14:43

regula

rsreg

ulars

features

features

57

17

34

NewsAll the big stories that affect

what we say, do and think

Financial PlanningThere’s no time like the present to beef up

your department, says Sue Whitbread

FSA PublicationsOur monthly listing of FSA publications,

consultations, deadlines and updates

Thinkers: Bill GrossPIMCO’s star performer has had a bumpy

couple of years, but the markets still love him

Editor’s SoapboxTaxing pensioners. Hasn’t it been rough enough for those 9.2 million voters lately?

Calendar DazeIt’s true that the stock market year has a cyclical pattern says Brian Tora

54The Compliance DoctorLee Werrell of CEI Compliance looks at the top current issues of interest to IFAs

44

52

48Pick of the FundsProperty funds are looking like good value these days, says Nick Sudbury

Times They Are A-ChangingWho do you turn to at a time like this?

Why, Bob Dylan, of course, says Steve Bee

CO

NTR

IBU

TOR

S

This month’s contributors

Editor: Michael [email protected]

Art Director: Tony [email protected]

Publishing Director: Alex [email protected]

THE FRONTLINE: Just when you thought it was getting safe again, events are proving us all wrong10

.12

32

8

60The IFA CentreSolicitors – huh, exactly what do they know? Gill Cardy despairs

Nick Sudbury is a fi nancial journalist and investor who has also worked as a fund manager.

Kam Patela former deputy editor at Hemscott. He is a qualifi ed investment adviser.

Monica Woodleyis a senior editor at the Economist Intelligence Unit.

Lee Werrell is the Managing Director of leading UK consultancy, CEI Compliance.

Brian Toraa Communications Associate with investment managers JM Finn & Co.

Richard Harvey a distinguished independent PR and media consultant.

Gillian Cardy managing director of The IFA Centre.

Editorial advisory board:Richard Butler, Michael Holder, Ian McIver and Mark Pullinger

65The IFA Calendar

Conferences, economic summits, race meetings... All the dates you daren’t miss66

The Other SideLook out, everybody, here comes Generation Y, says Richard Harvey . And it knows its rights

N E W S R E V I E W C O M M E N TC O M M E N T A N A LY S I S

magazine... for today ’s discerning financial and investment professional

N E W SContents.indd 4 07/10/2012 14:44

features

features

The Pain In SpainReform isn’t working any better than the banking solution, says Monica Woodley. Can we fi x it in time?

Regulating Wine Investment

Rogue traders have got the wine investment business a bad name. Vin-X’s

Peter Shakeshaft explains how a new self-regulatory body will change all that

Asset Allocation Arjent’s Adam Sketchley explains why you need a long-term perspective to succeed

Vickers, One Year OnThe banks might have got away

with it, says Kam Patel, but for a series of PR disasters that have

slammed the brakes back on

Taking the PlungeWhy so many independents are signing up with St James’s Place

22 COVER STORY

28

36 INSIDE TRACK

Declining GDP, shocking

unemployment, shaky banks.

Spain isn’t Greece, but what if it’s

another Ireland?

IFA Magazine is published by The Wow Factory Publications Ltd., 45 High Street, Charing, Kent TN27 0HU. Tel: +44 (0) 1233 713852. ©2012. All rights reserved. ‘IFA Magazine’ is a trademark of The Wow Factory Publications Ltd. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

40

46 CASE STUDY

CO

NTE

NTS

RecruitmentRecruiters can learn much from IFAs,

says Stuart Leaney of Recruit UK

58

IFA Magazine is for professional advisers only. Full subscription details and eligibility criteria are available at: www.ifamagazine.com

A N A LY S I SN E W S R E V I E W C O M M E N T A N A LY S I SContents.indd 5 07/10/2012 14:45

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01.10.2012_IFA_297x210mm.indd 1 20/09/2012 15:12

Ed's Welcome.indd 6 07/10/2012 15:06

Three days of non-stop learning, debating, networking and eating and drinking far too much, with some 50-odd events going on in the various auditoriums and committee rooms. A chance to catch up with old friends.

Downstairs in the lobby, a Fringe stage had been set up where a succession of pros and gallant amateurs honed their vital points right down into ten-minute crowd-pleasers. And the wifi system was buzzing in real time with blogging, twittering, network and forum activity. Conferences never used to be so connected as this.

The clear focus of this year’s event, just in case you were expecting any surprises, was of course RDR and the way it changes the game for planners, IFAs and wealth managers alike. Due diligence, platform choice, outsourcing and – not least – the rising cost of professional indemnity insurance in the new environment seemed to have taken over temporarily from more traditional planning topics such as tax solutions and trust law.

And rightly so. The conference’s theme, “Inspiring Trust”, neatly encapsulated the key dilemma that many advisers will face once the new fee structures kick in. There are those who say that Mr and Mrs Average will disappear to the execution-only platforms as soon as January arrives - and that, for all but the wealthier clients, it’ll be a matter of accepting dumbed-down fi nancial advice from a bank instead of a properly accredited fi nancial planner. Unfortunately, some of this is probably true.

But those advisers with the necessary determination and the right mindset will fi nd that RDR presents a huge opportunity. If planners can engage the trust, the loyalty and even the affection of their clients, the scope is there to make themselves a central part of their lives. And that’ll be a good place to be in the coming decades.

But this isn’t something that will come instinctively to those advisers who still focus on the advice part of the job and play down all the rest. Tomorrow’s successful advisers are learning ‘soft skills’ - how to listen before they recommend, how to ask the right questions, and how to be sensitive to vagueness and evasiveness and turn them round so as to achieve the right result for the client, not the adviser.

And it isn’t as easy as it sounds. But there’s no time like the present to start.

BUILDING TRUSTW

OR

DS

OF

WILS

ON

Write to Michael [email protected]

JUST BACK FROM THE INSTITUTE OF FINANCIAL PLANNING’S OCTOBER CONFERENCE IN NEWPORT, SOUTH WALES, AND WHAT AN EYE-OPENER IT TURNED OUT TO BE.

Michael Wilson, EditorIFA magazine

Mike

www.IFAmagazine.com October 2012 7

Ed's Welcome.indd 7 07/10/2012 15:06

sho

rtsAs it became

clear that the Spanish

banking system might

need €60 billion of banking aid, and that

Catalonia was getting angry about its own multi-billion fi scal

shortfall from Madrid, the whole size of the task started to look too

immense to contemplate. Even Prime Minister Mariano Rajoy’s substantial

€18 cushion for regional support was starting to look inadequate. And,

as suddenly as it had started, the mutual backslapping that had

followed the European Central Bank’s brave announcement

on unlimited bank support, just two

weeks earlier, was left faltering as the deal started looking too weak to be practicable.

Oh yes, and pain’s two year bond yields, which had dipped at one point to 3%, were heading up toward 7% again as the country delivered another depressing set of results on second quarter growth. (Or, to use the correct word, shrinkage.)

You can read more about Spain’s particular economic torment in Monica Woodley’s feature article on Page 22. And about why the ECB’s Outright Monetary Transactions (OMT) scheme is already looking right out of court. But for the moment, let’s return to the bigger issue. Can the euro survive at all?

The GoodThe good news, for Brussels, is that the German Constitutional Court has fi nally given its blessing to the country’s participation in the European Stability Mechanism (ESM) – thus ending a long and nail-biting wait for Berlin’s approval.

Although, we should add, Chancellor Angela Merkel is still expecting trouble from her

own voters for allegedly giving in to the idle spongers from the south.

The less good news comes from three different

directions.

Britain’s economy shrank by only 0.4% in the second quarter, according to a ‘fi nal’ set of fi gures. The August guess had been -0.5%; the original estimate a rather worse -0.7%. Construction slumped by 3%, and manufacturing fell by 0.8%, better than the previous -0.9% estimate. The Diamond Jubilee bank holiday in June was listed as a negative factor; but the Olympics will probably boost the third quarter.

FOR A FEW EUROS MORE... OTRA VEZAs Europe’s politicians converged on Spain, intent

on propping up the government in the face of growing unrest, the chances of getting a more

permanent deal for the euro looked set to disappear once again into the distance.

The BadFirstly, Greece has demanded an extra two years in which to reduce its government defi cit target to the levels

N E W S R E V I E W C O M M E N T A N A LY S I SN E W S

magazine

News.indd 8 07/10/2012 13:38

NE

WSJapan’s relationship

with China hit the rocks, literally, as a growing confl ict about the Senkaku Islands in the East China Sea escalated into political name-calling and threats of Chinese trade sanctions. Toyota and Honda ‘temporarily’ closed down their Chinese factories. The islands are also formally claimed by Taiwan - and they are uninhabited.

Witan Pacifi cannounced a 2.9% increase in net asset value during fi rst-half 2012, against a benchmark total return of minus 1%. Total shareholder return was 7.4%.

FOR A FEW EUROS MORE... OTRA VEZ

For more comment and related articles visit...

www.IFAmagazine.com

demanded by the EU and by the International Monetary Fund. And the IMF is reputed to be trying to persuade government lenders to write off some of their Greek exposure.

The second cause for concern is that Spain’s lurch into troubled territory is mirrored by Italy, whose own economic performance leaves much to be desired. The Italian government admitted last month that economic shrinkage during 2012 would be twice the forecast rate.

Well, perhaps ‘mirrored’ isn’t the right word. Italian and Spanish government bonds are on the two ends of a nasty see-saw at present, and whenever Spain’s bond credibility rises the resulting outrush of cash from similarly-troubled Italian bonds causes a problem for Rome and Milan. But you’ll have noticed that there hasn’t been much credibility in Madrid for a week or two, so Italian paper has been doing better. (Or at least, less badly.)

The worry being expressed has been that the markets might simply tire of playing off the two big Mediterranean losers against one another and simply head off for the less profi table (but safer) shores of Britain. Ugh, more foreign demand for gilts? More pressure on gilt yields? No thanks.

The UglyBut the third and most potent worry is simply that the Euro Club members are squabbling about policy again. The enthusiasm whipped up during June for a pan-European banking regulator, and for formal government support for bank bail-outs, has already subsided drastically, as the likely timetable for such a move (4-5 years) is increasingly recognised for the no-hoper that it always was. Europe doesn’t need a slow fi x for a fast puncture.

Meanwhile, Germany, Finland and Holland are tearing into the terms of the deal itself, by declaring that the recapitalisation of Spanish and Italian banks (and Irish and Portuguese ones too) must exclude so-called ‘legacy’ assets.

Can the single euro survive without a Greek exit? Frankly, that’s not the big issue any more, because it seems to have been priced into the market. It’s what happens if the rest of the Mediterranean heads for default that’s keeping the politicians awake at night.


www.IFAmagazine.com

A N A LY S I SN E W S R E V I E W C O M M E N T A N A LY S I S

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News.indd 9 07/10/2012 13:38

NE

WS

Jam Tomorrow?

In fact they save even less of their earnings than the over-75s - a worrying sign, it seems, at a time when we’re all under pressure to improve our readiness for a generally tighter pensions and public spending environment in the future.

Aviva’s Real Retirement survey found that the average over-55 household saved £52 a month, equivalent to 3.6% of its £1,464 net monthly income – but that the 55-64 age group put only 39% (2.5%) away, while the 65-74 band saved £62 (4.2%) and the over-75s squirrelled away £61 per month (also 4.2% of a net monthly income of £1,451).

A note of caution is in order here, because these fi gures exclude pension contributions – which means, in effect, that comparing the 55-64 cohort who may be in work with the older segments who are more likely to be retired is a little misleading. The former, 75% of whom say they have a pension plan in place, will obviously be experiencing greater pressures on their household fi nances than their older counterparts. And the most elderly contingent are less likely to be running complex lives with multiple responsibilities. But even so, there are other reasons for concern.

38% of the 55-64 age group say that they’re not currently saving, and an alarming 18% say they have no savings pot at all with which to pay for unexpected expenses such as car repairs or fi xing the boiler. The 65-74 and 75-plus age groups do rather better, with only 33% and 30% saying they don’t save, and with 6% and 8% respective saying they have no savings to draw on.

The crunch period for the 55-64 age group comes at a particularly awkward time, when parents are being encouraged to open up the Bank of Mum and Dad chequebook on behalf of their home-hunting offspring.


www.IFAmagazine.com

Not at this rate. Savings are still on the back burner as far as most pre-retirees are concerned, according to a recent report by Aviva Investors.

Mario Monti, Italy’s ‘technocrat’ prime minister, disappointed the markets by declaring that he wouldn’t be standing for election in 2013. Monti had been appointed in 2011 to sort out the chaotic situation left by his predecessor, Silvio Berlusconi, who had fi nally quit under unstoppable parliamentary pressure. Mr Berlusconi is letting it be known that he is considering making a comeback.

Cofunds became the second platform provider to open up its unbundled pricing model (‘Explicit Pricing Model’), following on the heels of Fidelity Funds Network, which had set out its own plans in April. Unlike Fidelity’s fl at-rate scheme, Cofunds is to charge fees according to the portfolio size. Skandia’s own programme, announced in August, will go live in December.

N E W S R E V I E W C O M M E N T A N A LY S I SNews.indd 10 07/10/2012 13:38


NE

WS The Financial

Services Compensation Scheme (FSCS) is to be allowed to make payouts on small claims without investigating the eligibility of claimants, the FSA confi rmed. But plans to allow claims from directors of failed fi rms have been abandoned.

More trouble from Argentina, whose president Cristina Fernandez rejected the “pressure and threats” from the International Monetary Fund that are thought likely to lead to a downgrading of the country’s debt ratings. Faced with the possibility of bond defaults, a sceptical IMF has given her until 17th December to produce ‘credible’ fi gures on growth and infl ation. Don’t hold your breath.

The Worst Is Yet To ComeYou could almost hear the knuckles clicking as Martin Wheatley, the managing director of the Financial Services Authority and the future CEO of the FCA, delivered his report into the London Interbank Offered Rate (Libor) rate fi xing scandal.

“The reason we are here,” he told his audience, “is that we have been misled. The system is broken and needs a complete overhaul. The disturbing events we have uncovered in the manipulation of Libor have severely damaged our confi dence and our trust – it has torn the very fabric that our fi nancial system is built on.”

Ouch. And that was just for starters. Mr Wheatley went on to say that the British Bankers’ Association (BBA), which runs the present Libor system, was out of a job as far as this task was concerned, and that it would be allowed “no further role” in the matter. And that he was inviting other groups to apply for the Association’s role, to include drawing up a code of conduct and carrying out regular audits.

A totally new Libor structure would be needed, he said, together with new safeguards. The present fl awed system, whereby banks have been allowed to volunteer their own information about the interbank rates that they’re paying to other banks (and have frequently lied) is to be replaced by a new system that relies on the actual rates paid.

The size of the reporting sample itself is to be extended beyond the current group of 20 rate-

setters, so as to include many smaller banks. But the worst news, for the bankers themselves, is that Mr Wheatley is after criminal convictions.

He told the BBC, not unrealistically, that society wants people who committed these sorts of acts to “pay the price” - and that “if that includes jail for the most extreme fraud in the system, then that’s what should happen”. Goodness, was that a cheer from the Occupy lobby? The report can be read at:http://tinyurl.com/bpzgmav

Well, that’s the way it looks for Britain’s banks at the moment.

“THE SYSTEM IS BROKEN” SAYS WHEATLEY


www.IFAmagazine.com

N E W S R E V I E W C O M M E N T A N A LY S I SN E W SN E W SN E W SN E W SNews.indd 12 07/10/2012 13:38

NE

WSFrance has confi rmed its intention

to raise income tax rates to 45% for people earning €150,000 a year, and 75% for more than €1 million. The move, which had been widely dismissed as left-wing blustering before the election of socialist president François Hollande in June, forms part of a €20 billion tax-raising package accompanied by €10 billion of spending cuts.

Prime Minister David Cameron let it be known that he was actively considering a UK referendum on Britain’s continued membership of the European Union. But not until after the next election.

It’s About the Economy, StupidEconomy, StupidEconomy,


www.IFAmagazine.com

...you can hear everything you might wish to hear about whether 47% of the electorate are feckless dependants who don’t pay taxes, or whether an aeroplane window ought to open. (Two of Mr Romney’s less illuminating ideas.) Or whether watching Fox News makes you stupid and stubborn. (One of Obama’s.)

And about the challenger’s tax affairs too. Yes, it seems Romney failed to take all the available reliefs on some large charitable donations that he made in 2011, thus pushing his tax burden up to an unnecessarily high 13%. We now know that Romney’s donations amounted to 30% of his income, compared with

only 21.8% for Mr Obama. There’s nothing like PR to concentrate the mind on giving, is there?

But you’ll still struggle to hear anybody saying anything very much about the fi scal defi cit. Yes, everybody knows that the United States is scheduled to drive off a ‘fi scal cliff’ in December when George Bush’s tax cuts expire – raising standard income tax by 2%, and many business deals by much more. And everybody is aware (or at least, they ought to be) that unless the Democrats and the Republicans can come up with a lifebelt for the defi cit by the end of this year, deep automatic cuts will come in that will affect welfare, medicare, and whisper it gently, defence. The overall impact of December’s slash and burn is estimated at $600 million – which is equivalent to around 4% of GDP – and seasoned pundits are guessing that the overall effect may be to wipe 3.5% off the economy.

The current debt threshold, in case you were unaware, is $16.4 trillion. But oddly, or perhaps not, nobody wants to discuss it. The optimists insist that the issue can wait until the new president is safely installed. Then the White House can take special actions to forestall default until early in 2013. When it’ll start all over again. Can’t wait.

As Mitt Romney and Barack Obama square up for the fi nal phase of the presidential election campaign...

A N A LY S I SN E W S R E V I E W C O M M E N T A N A LY S I SN E W SN E W SN E W SN E W S R E V I E WR E V I E WR E V I E WR E V I E W C O M M E N TC O M M E N TC O M M E N TC O M M E N T A N A LY S I SA N A LY S I SA N A LY S I SA N A LY S I SNews.indd 13 07/10/2012 13:38

NE

WS Bank of America paid out

$2.4 billion to settle a lawsuit from investors over its acquisition of Merrill Lynch in 2008. The investors had claimed that BoA had released misleading information about both companies. Either way, it was still in trouble. BoA’s third quarter results will be hit by a $1.9 billion hit on credit spreads, plus another $800 from changes to UK corporation tax.

Lloyds Banking Group is to withdraw its mass market investment advice service for investors with portfolios of less than £100,000. The changes, which take effect in November, follow an “extensive review” into the profi tability and behaviour of less affl uent investors after RDR.

ETF Sales SoarSales of exchange traded funds have soared to the highest levels since December 2008, according to new data from Blackrock, as investors take heart from what they clearly feel to be an improving investment climate.


www.IFAmagazine.com

Total sales worldwide in September were $43.3 billion, bringing the year’s tally to $182.6 billion, a 42% increase on the same three quarters of 2011, and already ahead of last year’s full-year total of $173.4 billion. And the industry believes that 2008’s record intake of $259.7 billion may be up for grabs.

Blackrock says that investors have been turning to ETFs to invest quickly across a wide range of asset classes – a thought that would seem to suggest that individuals are getting more savvy

about macro factors, and more inclined to back their judgement. But Lipper research in the US says that, although US-domiciled fund sales ($12 billion in August) are surging too, it’s mainly the institutional investors that are going for equity funds. The private investors, it says, are pushing their money into bonds, both corporate and government.

The stunning growth of the ETP sector is the subject of three upcoming seminars in which IFA Magazine is involved.The fi rst, to be held at the London Stock Exchange on 31st October, is to feature IFA Magazine editor Michael Wilson - and will focus on the functions and uses of ETFs.www.londonstockexchange.com/ifa

The second, organised by JM Finn in collaboration with IFA Magazine, will be held in London on 15th November, entitled: “A Comprehensive Adviser Guide to ETFs”. The event will look at the current ETF environment, using ETFs as part of client portfolios, the best advice imperative and the issues surrounding physical and synthetic ETFs.http://tinyurl.com/8rf6gdg

A third JM Finn seminar, on the changing relationship between intermediaries and DFMs, will be held in Bristol on 4th December.http://tinyurl.com/8dcb2da


A comprehensiveadviser guide to ETFs

www.jmfi nn.com www.ifamagazine.com

magazine

IFA Magazine and JM Finn & Co are delighted to present:

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This invaluable seminar will give you a detailed understanding of the history, future trends, costs and suitability for you and your clients. Presented by the foremost experts in the ETF fi eld.

This event will be taking place at JM Finn & Co’s City of London offi ces.

To register please visit www.ifamagazine.com/events or e-mail [email protected]

Speakers and topics include:

10.30am : Open for refreshments

11am : Seminar begins

Brian Tora : Introduction and overview of the current fi nancial climate

Neil Cowell : Using ETFs in client portfolios, client suitability, cost, charges and distributions

Gillian Cardy : Whether incorporated in portfolios or not, what does FSA expect of IFAs considering ETFs for their clients?

Matt Arnold : The makeup of the European ETF market (past-present-future), trends and fl ows we’re seeing

12.30pm : Over lunch, England and Surrey cricketing legend Alec Stewart OBE will regale us with tales of cricket, football, leadership and building professional relationships

1.30pm : Following lunch there will an opportunity for networking, questions and individual time with guest speakers

2pm : Close

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27654_sippcentre_210x297.indd 1 20/1/12 13:01:42News.indd 16 07/10/2012 13:39

“Darling, I’ve done a bad thing. Don’t be angry….” As introductions to a party conference week go, Nick Clegg’s apology to the Liberal Democrat faithful for having given way on student tuition fees took a bit of beating. But the poor sap then made it worse by adding, on the Andrew Marr Show: “I think what we did was a mistake, I think it was wrong, and I’ve been meaning for some time to put my hands up and say ‘We made a mistake.’”

‘For some time’? I nearly choked on my coffee. Surely, the time for a party leader to say what he means is right now, and not a year after the event? What does a delay like that do for a man’s credibility? But fortunately for the faithful, the Deputy PM was not to be so easily embarrassed. As the Brighton conference got under way, Mr Clegg turned his attention manfully to the troubled future of the welfare budget.

It started gently enough, with a declaration that welfare “cannot be immune” from efforts to fi nd government budget savings after the next general election in 2015. In a series of televised interviews, Mr Clegg reiterated his determination that the rich must bear the brunt of an estimated £16 billion of extra cuts that he says will

AgeConcernCALLS FOR CUTS AND NEW TAXES ON THE ELDERLY MIGHT SEEM LIKE THE LAST GASP OF LIBERALISM, SAYS MICHAEL WILSON. BUT RELAX, THEY WON’T HAPPEN

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NICK CLEGG: “I THINK WHAT WE DID WAS A MISTAKE, I THINK IT WAS WRONG, AND I’VE BEEN MEANING FOR SOME TIME TO PUT MY HANDS UP AND SAY ‘WE MADE A MISTAKE’”


Eds Soapbox.indd 17 07/10/2012 15:11

be needed in 2015/16 to meet the coalition’s defi cit reduction targets.

A Ghastly Piece of TimingSo far, so good. And he probably also assumed that he’d scored a good point against David Cameron by attacking the PM’s reluctance to impose a ‘mansion tax’ on properties worth more than £2 million. (The Tory line is that wealth taxes on houses that have been owned for maybe decades would be an unacceptable retrospective penalty on householders.)

But then the mixed messages started coming in thick and fast. On the one hand, Mr Clegg said that the Lib Dems would begin their cost-cutting by chopping “universal benefi ts” such as bus passes, free TV licences and winter fuel allowances from pensioner households with total assets of more than £1 million, with effect from 2015/2016. And, in a ghastly accident of timing, the Lib Dem Chief Secretary to the Treasury Danny Alexander told the Mail on Sunday that an extra 100 HMRC staff would be assigned to fi ghting tax avoidance by people with assets worth more than £1 million. (Previously the threshold had been £2.5 million.)

A Nation GaspsIt was a diffi cult moment. Was the conference really being told that pensioners, too, would be getting the thumbscrew treatment from HMRC inspectors in the middle of the night if their houses, savings and lifetime pension pots exceeded £1 million? It certainly sounded that way. And it still does. That’s an issue that will concern every fi nancial planner in the country in the next three years.

It certainly concerns a lot of pensioners who’ve been beefi ng up their depleted pension incomes by buying rental properties recently, and those who’ve been preferring ISAs and cash drawdowns to annuities. Within days of the announcement, planners were reporting a tidal wave of over-50s enquiring about QROPS and other strategies that might enable them to slip the country if the worst should ever come to the worst.

By threatening to slice away at the entitlements of middle class voters in the name of fi scal cost-cutting, Mr Clegg’s party has placed itself ahead of Margaret Thatcher, the last leader who might have been bold enough to risk such a guaranteed vote-loser.

Okay, I’ll grant you that the Conservatives might have changed their offi cial line by the time you read this – the Tory conference in Birmingham was due to be held in the second week of October. And, to be fair, the ‘granny tax’ in George Osborne’s last budget (the freezing of age-related allowances) wasn’t exactly pensioner-friendly either. But, at the time of writing, Mr Cameron’s team were still holding the line against chopping universal benefi ts and were sniggering quietly at the political fi x that their junior coalition partners had talked themselves into.

So What’s a Pensioner Really Worth?But the real question is, can Clegg’s plan produce the savings? Let’s run a few fi gures through the calculator. Of course, we have almost no way of determining how many UK pensioners are really worth more than £1 million each,

because that would mean having privileged access to the valuations of all their houses and all their bank accounts. So there’s a fair degree of guesswork and extrapolation involved.

We also need to remind ourselves that we can’t learn anything useful from calculating average asset ownership levels, because Clegg’s plan is merely to skim off the ones with the million-plus peaks and leave the rest unscathed. But the fi rst indications are that the millionaire pensioner contingent isn’t going to be big enough to be much of a milch-cow. Let’s start with some basic statistics...■ The 2011 census found that we have 9.2

million over-65s, about 10% more than a decade earlier. Meanwhile the 2008/9 Family Resources Survey had added that the UK pensioner contingent consisted of

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LORD SUGAR*: “THAT TWIT NICK CLEGG MOANING ABOUT ME

HAVING A BUS PASS. IDIOT, I HAVEN’T GOT ONE. EVEN IF I DID, I’VE PERSONALLY PAID

TENS OF MILLIONS IN TAX”


18 October 2012 www.IFAmagazine.com

Eds Soapbox.indd 18 07/10/2012 15:11

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6.5 million households – of which 2.6 million were couples, 1.1 million were single males and 2.8 million were single females (who, of course, need to be only 60 or over to qualify.)

■ Only 24% of pensioner couples had an income of £25,000 a year in 2008/9 - falling to 3% among single men and just 1% among single women. At the other end of the scale, 50% of single women pensioners and 41% of male pensioners were getting by on less than £10,000 a year. Do you see much scope for rich pickings for the taxman there? No, me neither.

Of course, you might object, income isn’t the be-all and end-all of this calculation. There are millions of pensioners who are quite correctly described as asset-rich and cash-poor. After all, any kind of a semi-detached house in the London conurbation is probably worth £300,000 plus these days, and by the time you’ve added in a professional pension pot of another £300,000 or so you’ve got – ooooh, still nowhere near enough people approaching the £1 million mark….

But no, that’s still too vague. Shall we try and fi rm up that property guesstimate a bit? ■ According to The Law Commission’s

2009 consultation paper Intestacy and Family Provision Claims on Death (http://tinyurl.com/bl4qlqo), the average size of an estate where the deceased had left a will was only £160,000 – and that was half of the nil rate band for inheritance tax at the time.

■ A Saga report published in September 2012 (http://tinyurl.com/cgmj2yt) found that UK pensioners are currently sitting on £756 billion worth of housing equity. Of which a third is concentrated in London and the South East.

It follows, then, that if there are 6.5 million pensioner households in the country with a combined £756 billion worth of housing equity, then that’s an average of £116,000 per household – or £332,000 per property-owning household if you were to assume that half of all pensioner households were living in care or in rented accommodation. Hmmm, that still doesn’t smell like a guaranteed £1 million-plus goldmine, does it?

Overall, I’d be amazed if more than half a million pensioner households (i.e. one in thirteen) turned out to be worth £1 million each, all counted. So

suppose that we took away that half million’s winter fuel allowances (£200 maximum per household), their free TV licences (£145.50) and the real average cost of their bus passes (maybe £250, allowing for the large majority of unused passes). We’d save about £300 million a year. And that’s roughly what we spend on lottery tickets every twenty days. It’s not a big harvest, considering the electoral damage that it would do to the government of the day.

But let’s take it to a much more drastic level. What if a future government, of any colour, were to halve the basic state pension for these half million households? You’d be looking at a ballpark annual saving of around £2,500 per person, or £4,500 per household, or £2.25


Eds Soapbox.indd 19 07/10/2012 15:12

billion. Nope, still not enough to make a real difference.

You haven’t thought it through, Mr Clegg. Now, what was that you told the conference about providing extra money for 110,000 schoolchildren who are struggling with their maths?

What’s a Million Pounds Anyway? There, that’s got your attention. And no, I’m not being fl ippant. At present, to be sure, not very many pensioners have seven fi gures’ worth of assets. But fast-forward by ten years and the situation might well be different.

It isn’t just that having a house – any house – puts you well on the road to millionaireship. The Land Registry says that sale prices for an average detached house were £327,638 across the country in August, and £753,793 in Greater London. A semi would fetch £200,165 across the country, or £463,851 in the London area, and even a fl at in the smoke would get you an

average £388,408. Give or take a mortgage, of course. But many pensioners don’t have those.

Now, let’s look at what we get by adding pension funds and savings to the mix. At present, of course, the average private-sector pension pot is an appallingly low £50,000. But that includes a lot of non-savers who won’t be non-savers after automatic enrolment comes in. A more realistic fi gure comes from Scottish Widows, which currently reckons that the average saver is on course for £150,000 at retirement.

But that’s still a long way short of the half million that I’m being told I shall soon need if I’m to secure a decently comfortable professional pension for my old age. Pause for merriment, because impoverished journalists don’t generally make that sort of cash. But as the economy recovers, we can expect that growing numbers of quite ordinary professionals will trip the half-million pound switch without being noticeably affl uent.

And another thing. If it’s determined that my half million pounds, once dutifully saved and accumulated, will count toward my eligibility for the million pound club, I’m going to feel

really quite aggrieved. And if it’s simultaneously decided that other employees from my cohort who have Defi ned Benefi t pension plans (i.e. with no capital value to them) are allowed off the million pound hook, I’m going to make a bit of a noise. We can only await the details.

Thumbscrews In The Night Alas, the millionaire issue moved into different territory with the unhappy timing of Mr Alexander’s near-simultaneous announcement on enhanced levels of tax investigations for people with more than a million in assets. Was it really possible, people asked, that the same group of over-60s who were about to lose their bus passes might also be having to tangle with the tax investigators in the future? The silence so far has been deafening.

Now, it’s at this point that I need to declare a personal interest. Some years ago, my wife and I found ourselves on the sharp end of a ‘routine’ in-depth tax investigation, and the

pain still lingers. Apparently I’m not allowed to tell you about HMRC’s techniques, but rest assured that they were unexpectedly blunt and that you wouldn’t have liked them much.

And that when, after four pretty nasty months, the investigator suddenly discovered that she’d made a catastrophic accounting error, and that we were actually due for a tax rebate instead of a fi ne, we were too exhausted to protest. We were just whimperingly grateful that the pain had fi nally gone away and we could get back to running our lives. We never got an apology.

Now, if you put thousands of pensioners under that sort of emotional stress, I will pretty well guarantee that a fair few of them won’t survive the experience. It’s not the sort of measure to be undertaken lightly, or for political favour. Is it?

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Do you have a good reason for the Editor to jump back onto his soapbox? Not that he needs any encouragement, please send your requests to [email protected] and stand well back!

DANNY ALEXANDER: “AN EXTRA 100 HMRC STAFF WILL BE ASSIGNED

TO FIGHTING TAX AVOIDANCE BY PEOPLE WITH ASSETS WORTH

MORE THAN £1 MILLION”



Eds Soapbox.indd 20 07/10/2012 15:12

The evolving role of the DFM and the Intermediary Business

Add to register or for more information, visit www.ifamagazine.com/events or e-mail [email protected]

Sponsorships are available – please contact IFA Magazine for details [email protected]

magazine

IFA Magazine and JM Finn & Co are delighted to announce a series of seminars for the IFA community

This is the second in a series of lunchtime seminars that will bring together some of the UK’s leading

industry experts and fi nancial intermediaries to discuss the current fi nancial environment and the

evolving role of the discretionary fund manager and the IFA in the run-up to and post RDR world.

Speakers and topics include:

BRIAN TORA : THE INVESTMENT ENVIRONMENT Topical insight from one of the industry’s leading commentators.

MIKE MOUNT : RDR IS EVOLVING THE ROLE OF THE DFM What options can the modern DFM bring to your investment proposition?

STEVEN ANDREW, M&G : INVESTMENT PHILOSOPHY AND PRINCIPLES OF MULTI ASSET INVESTING Steven will share his thoughts on the current macro economic environment and indicators and as a consequence, how he is currently positioning his own particular portfolio

ALEC STEWART :Renowned international cricketer and speaker. Over lunch Alec will regale with stories and thoughts on key values of a strong team culture, independence of thought and building long term relationships.

The Bristol Hotel is just a short stroll from Brunel’s SS Great Britain, the At Bristol science centre, the Arnolfi ni contempary arts centre and the Gothic splendour of Bristol Cathedral.

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Spain.indd 22 07/10/2012 15:22

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Another switchbacking month, and another good time for a European to ignore all the stormclouds and put on a sunny smile. On the plus side, European markets were briefly cheered in September by an announcement by European Central Bank president Mario Draghi, in which he introduced a new scheme to buy the sovereign bonds of troubled EU countries, “without limits”, in order to bring down yields. On the minus side, however, reality lost no time in bringing us all back down to earth with a bump. Sigh, it was ever thus, it seems.

On the face of it, the ECB’s Outright Monetary Transactions (OMT) scheme does indeed seem to be the tangible fulfillment of Draghi’s promise in July to do “whatever it took” to save the euro. And indeed, Spanish two-year bond yields had fallen briefly to 3% even before the OMT was actually unveiled. (Although ten year paper remained at 5.8%, 4.2 percentage points above bunds.)

But just look at what happened next. Spain’s government announced a worse-than-expected second-quarter result, the Catalans revolted about their tax-raising sovereignty, and Europe’s markets recognized the inevitable and went back into retreat. By the first week of October the Madrid stock market was back into gloom – 8% down on the year (against London’s 3.5% rise), and those damned bond yields were almost right back where they started. Those two year bond yields had slithered back down from 3% to 4.75%. Ouch.

A Country In Denial It’s quite hard to know how to read this scenario. There’s help being offered by Brussels and Frankfurt, but no clear message from prime minister Mariano Rajoy as to whether he really wants it.

Unfortunately, the country’s prime minister Mariano Rajoy seems determined to studiously ignore reality. Even though the OMT was effectively designed to bail out Spain and save the euro, Rajoy continues to insist that the country may not need to be rescued after all. And by the end of September, as ECB officials sat down to try and analyse the mess, two year paper had slithered back down from 3% to 4.75%. Ouch.

Part of the premier’s defiance is no doubt down to pure political fear. His government has lost a third of its popular support in six months – and, if the examples of Portugal, Greece and Ireland are any indication, bailed-out governments do not stay in power for very long.

But another part of his reluctance is down to pure denial. Rajoy continues to claim that Spain will be able to cut its budget deficit and meet the target of 4.5% set by the EU. That is a tall order, considering that last year’s deficit was 8.9%: he will have to find another E20bn in savings or new revenue to meet the target, and he has already cut spending and raised taxes.

Whether Rajoy wants to admit it or not, Spain has a banking system that is nowhere

near out of the woods, and unemployment of 25% - with youth unemployment double that level. It’s also facing a double-dip recession that looks likely to stretch well into 2013. And then there is the small problem of Catalonia. Of which more anon.

Bank Reform (Again)Rajoy’s government has at least finally recognised the need to take banking reform more seriously - setting up a ‘bad bank’ that will force banks to admit their losses on the toxic real estate on their books – estimated at €180 billion. And the new reforms also set out steps for winding down banks that cannot be saved.

That’s good. But Rajoy didn’t exactly have much choice

in the matter. Spain’s fellow eurozone countries imposed the reforms as the price for providing €100 billion in badly-needed rescue funds for Spain’s banks. But the other requirement stipulated by the eurozone enforcers will be harder to stomach for Spain’s savers.

You see, many of them are exposed rather more heavily to the banking system. Over the last few years, many thousands were lured by high interest rates into buying

UNFORTUNATELY, SPAIN’S PRIME MINISTER MARIANO RAJOY SEEMS DETERMINED TO STUDIOUSLY IGNORE REALITY


Spain.indd 23 07/10/2012 15:22

preference shares in banks, which are now certain

to be hit as the banks admit their losses to the government. Many are now claiming that they were mis-sold the shares – having been cold-called by aggressive bank staff who’d claimed that the complex products were safe investments.

At present, then, any banks’ losses will have a particularly wide impact, because about 60% of their subordinated debt is held by Spanish retail investors. (Excluding that of Santander and BBVA, which are healthy). So the government is in a Catch-22 situation. While it agrees that preference shares never should have been sold in this way to small savers, it is also forced to recognise the unpalatable need for these debt-holders to shoulder some of the banks’ losses. And if that sounds bad, it is. In Ireland, by comparison, losses of 80% were taken by subordinated debt-holders.

The Lost Generation Rajoy knows that all this will hit Spaniards hard – and that they are likely to blame him for it. So he’s trying to soften the blow - negotiating with the EU to reduce the hit taken by preference shareholders. His government has also extended a temporary €400 a month payment to the long-term unemployed.

Overall, banking sector liquidity has improved and profi tability has rebounded since 2009. Capital adequacy is strong, lending is growing and the volume of non-performing loans has started to decline. However, reforms in regulation and supervision are still needed. A stress test in 2011 by the RCB found that in a scenario similar to the crisis of 2008, almost half of Spain’s banks would have less than the required capital adequacy levels. Although a banking crisis seems unlikely while the economy continues to recover, a downturn would probably mean major diffi culties for many banks.

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As well he might. Unemployment stands at 25%, and it doesn’t look like it will improve any time soon. The Economist Intelligence Unit predicts that unemployment will hold steady through 2013 and 2014 before fi nally dropping to 23% in 2015 and “only” 21% in 2016.

The problem is very much worse among the young. Youth unemployment is over 50% - the highest level of joblessness of people aged 16 to 25 in the EU. But talk of a “lost generation” is perhaps a little overdone. The percentage of young people

who are unemployed, looking for work and outside education or another form of activity is actually just 23% - still large, but not that much more than the total for all workers.

Spanish unemployment fi gures have always been subject to certain distortions which have lent credence to the idea that they are understated. One explanation for the anomaly among younger workers is the pervasiveness of informal work in Spain. If young people are paid with cash in hand, they might still be counted as offi cially jobless. About a fi fth of

Spain’s GDP may be from the so-called “submerged” economy.

The Double-Dip With a large chunk of the population out of work – and a fi fth of the economy operating outside of the tax system – it follows that tax revenues are unlikely to rise without raising rates. But Rajoy needs to realise that turning the screws tighter might actually back-fi re, and might not give him the solution he needs to his defi cit problem.

Right now, it doesn’t look like he can count on a

UNEMPLOYMENT STANDS AT 25%, AND IT DOESN’T LOOK LIKE IT WILL IMPROVE ANY TIME SOON

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Spain.indd 25 07/10/2012 15:22

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growing economy either to fi ll the government

coffers. GDP is forecast to continue contracting through 2013 - although at the lesser rate of -1.2%, compared to -2.1% this year, according to the Economist Intelligence Unit.

A Return to Catalonia And then there’s the Barcelona question. Catalonia, a fi ercely independent-minded ‘autonomous region’ which accounts for 19% of Spain’s GDP, has reacted particularly angrily to Rajoy’s insistence that all the 17 regions must institute severe budget cuts. Catalonia has long been demanding more fi scal autonomy from central government, and its precarious situation – it currently has the highest debt of all the Spanish regions – means that it is prepared to fi ght.

One reason why the regions are angry is that the government has changed the value added tax rules in a way that will make their 2012 fi scal targets even harder to meet than usual. Normally, the 17 regions receive half of the VAT revenues that come in, but the most recent regional funding agreement requires them instead to transfer all the additional revenues from a rise in value-added tax to the federal government itself.

That’s especially painful because most of the regions are unable to access debt markets in the normal way. So they view VAT as a particularly vital source of revenue.

Acknowledging the diffi culty, the central government set up an €18 billion credit line in July that would help the regions through their liquidity crunch. Catalonia is one of three that have asked to tap the fund - seeking €5 billion to help pay its debts and social service providers – but you can bet that there’ll be others queuing up for the cash before long.

Catalonia’s campaign against the fl awed regional fi nancing system revolves around the claim that the regions have control over expenditure on healthcare and education, but no say over income. Accordingly, a more permanent regional funding mechanism is urgently needed. But even that might

not be enough to satisfy them. In mid-September about half a million of them marched in Barcelona demanding complete independence from Spain. That’s a call that hasn’t been heard since the 1980s. And you can bet that the Basques in the north and even the Andalucians in the south-east will be listening carefully.

Where To From Here, Rajoy? With banks continuing to report losses, unemployment holding steady and the economy continuing to contract, Rajoy’s hands are tied. If he wants to avoid an EU bail-out, he must continue tapping debt markets to pay the bills.

But, with each new bit of bad news, yields climb higher. At the time of writing, they stood at 5.86% for 10-year debt – horrifi c compared to the 1.65% paid on German bunds of the same maturity, or 1.93% for 10-year UK gilts – but still lower than they were earlier this year.

The EU knows that if the eurozone could not handle Greece leaving, it certainly couldn’t survive if the markets had reason to believe that a country the size of Spain was on the brink – which is why Draghi created the OMT in the fi rst place.

Despite the political consequences of asking for a rescue, it looks as though Rajoy may need to grit his teeth and take the cash. Just as the eurozone continued to fl ounder

due to indecisiveness, Spain is likely

to do so as well until a bold move is made. Simply pretending that a bail-out is not

necessary will not make it so.


IFAmagazine.com

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Spain.indd 26 07/10/2012 15:22

Step-Down Defensive Kick-Out PlanOur new six year growth plan offers investors:

n The opportunity for a return of up to 51% even if markets fall by up to 50%

n A potential return of 8.5% (gross) of the money invested for each year that the Plan is in force

n Return of capital provided markets do not fall by more than 50%

n It is possible that investors might not receive any growth at all

n This is a capital-at-risk product and capital return will depend on the performance of the FTSE 100 Index and S&P 500 Index

n This Plan is subject to counterparty risk.

For details on how this Plan works plus our other offerings can be found on our website: www.meteoram.com or alternatively, please call us on 020 7904 1010 for more information.

This advertisement is for professional advisers only and should not be relied upon by private investors. Meteor Asset Management is authorised and regulated by the Financial Services Authority, FSA Number 459325.

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WHY WE NEED TO SELF-REGULATE

WINEVIN-X FOUNDER PETER SHAKESHAFT, A FOUNDER OF THE WINE INVESTMENT ASSOCIATION, EXPLAINS WHY THE SELF-REGULATORY BODY’S LAUNCH IN NOVEMBER WILL BRING SOME STABILITY TO THE INDUSTRYThe growth of SWAG investments (silver, wine, art and gold) is well documented over recent years. And, on the face of it, wine in particular seems an attractive investment option for 10% of a client’s portfolio.

Like other alternative investments, wine has been generally insulated from the volatility that has plagued the more traditional investment markets, and it has enjoyed double digit growth over the present Queen’s reign. But even so, the industry has been beset by issues around fraud and poor practice.

At present, wine investment remains unregulated by the FSA – and, unfortunately, there have been a number of reckless firms

who have muddied the process and not provided enough security or transparency to protect investors. As a result, it is estimated that over 50 wine investment firms in the UK have collapsed in the last four years.

A New CharterChange is needed. We must start with, at the very least, a standard of good practice for those who introduce fine wine as an investment commodity to consumers. At Vin-X we have a number of measures in place that, we believe, could significantly reduce the risk of fraud and mis-selling for investors if they were adopted as industry standard. These measures include: n The independent auditing of wine to verify the

wines bought by clients and held in storage.n The recording of all telephone conversations.n A seven-day cooling off period after sale.n A guarantee that wine sold is owned

by the organisation (i.e. that there is a right of ownership title to be transferred to the investor).



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n The provision of reference details and certifi cates of ownership of wine.

n The ability for clients to see and move their winen A guarantee that wine secured en primeur

(i.e. before bottling) is sourced from approved suppliers only who are fully insured.

We will also be launching road shows to help educate IFAs about wine investment to ensure they too give the best possible advice to their clients.

A Time For ChangeChange is now within reach. Over the last few months, I and other fi gures have been busy formulating the Wine Investment Association (WIA) – a self-regulatory body formed by a number of wine investment companies, which we believe represents a signifi cant development in terms of protecting investors. The WIA has spent these months on developing a charter which is due to be released for consultation later this autumn, and which we hope will fi nally self-regulate the industry.

A crucial element of the WIA charter is to form an independent commission that will rigorously oversee the compliance of the charter, without favour to its members. The Association is now looking to recruit individuals from both the legal and regulatory compliance professions - on a pro bono basis, during its fi rst year - who will look out for those in breach of the charter and who will deal with any complaints that may arise.

If managed properly, and with integrity, fi ne wine is an excellent option for investors and has a long list of benefi ts. We are getting close to proper self-regulation, and we need everyone involved in the wine industry to pull in the same direction if we are to make it a reality.

THE GOOD NEWSn The global fi ne wine investment market is

valued at US$4 billionn Fine wine investment has outperformed

almost every major fi nancial index in the last two decades and in some periods outperformed gold and crude oil investments.

n Fine wine has a low correlation to other investment classes and has demonstrated historically that it is a recognized “safe haven” during periods of recession and fi nancial turbulence.

n Growing global consumption has been strongly infl uenced by the new wine investment consumers from the BRIC countries.

n Wine is a global and physical commodity which offers the opportunity to hedge against currency movement or, in other circumstances, against devaluation.

n Fine wine is a tangible investment. You can consume it!

n Wine is generally CGT exempt. (Clients should take specifi c advice)

n VAT and Duty are not payable on investments whilst held in bond.

THE BAD NEWSn People investing money in fi ne wine

have lost an estimated £100 million over the last four years following the collapse of unregulated wine investment fi rms, the BBC claims.

n It is estimated that 50 UK-based vintage wine investment fi rms have collapsed in the last four years.

n The FSA’s consultation paper published August 2012 with reference to UCIS and investment advice did note that assets such as fi ne wine have been sold within a UCIS and more importantly who should be allowed to invest in fi ne wine (HNW’s only). The fact is fi ne wine is unregulated, investors do not have to participate in a UCIS to invest in fi ne wine and it is currently available for all.

n The new body’s task, therefore, will be to regulate and stabilise the market through its charter, improving standards and avoiding turbulence in future.


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44192 Blackrock Phase 3 Premise Print_WSJ_PE_long_copy_543.5x355.6Description: BlackRock Print AdArtwork Size: 543.5x355.6Publication: WALL STREET JOURNALInsertion: N/ATraffic: Alex Fuller

Artworker: Proof: DATE:RJ 04 29.09.12RJ 03 29.09.12IA 02 28.09.12IA 01 27.09.12

VERY IMPORTANT FOR REPRO: Please check A/W files for correct trapping. This is your responsibility.

*Source: BlackRock, DataStream, Yield comparison based on: German 10 year bunds 1.35%, MSCI Europe Index 3.96% – as at 31/08/2012. Past performance is not a guide to future returns and should not be a sole factor of consideration when selecting an investment. The opinions expressed are those of BlackRock as of 10/2012 and are subject to change at any time due to changes in market or economic conditions. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy. BlackRock has not considered the suitability of investment against your individual needs and risk tolerance. All financial investments involve an element of risk. The value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. Overseas investments may involve risk of capital loss from unfavourable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Investments in fixed interest securities such as corporate or government bonds pay a fixed or variable rate of interest and behave similarly to a loan. These securities are therefore exposed to changes in interest rates which will affect the value of any securities held. Companies which issue higher yield bonds typically have an increased risk of defaulting on repayments. In the event of default, the value of your investment may reduce. Economic conditions and interest rate levels may also impact significantly the values of high yield bonds.

Under certain market conditions, liquidity in bond markets may fall significantly without warning. Therefore it may not be possible to sell a security at the last quoted price or at a value considered to be fair. While the compounding effects of reinvesting income can enhance capital returns, higher yielding investments tend to exhibit lower capital returns. iShares ETFs seek to track a benchmark and holdings are not altered during rising or falling markets. Some iShares ETFs are optimised and therefore may not hold all securities within the benchmark index. Performance may differ from the underlying benchmark index. iShares ETFs trade on exchanges intraday at the current market price which may differ from net asset value. Transaction or brokerage fees will apply. Liquidity is not guaranteed. Active funds may not meet their performance goals and may underperform due to stock selection. Diversification and asset allocation may not protect you fully against market risk. Issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Services Authority). Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Registered in England No. 2020394. Tel: +44 (0)20 7743 3000. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. © 2012 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ALADDIN, iSHARES, LIFEPATH, SO WHAT DO I DO WITH MY MONEY, INVESTING FOR A NEW WORLD, and BUILT FOR THESE TIMES are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Ref: 7305.

39% 47

€272K 76 €1.9 TRILLION €76,840

NEW WORLDTHE (for simplicity

by numbers

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1. For illustrative purposes only to demonstrate the effect of inflation on purchasing power. Based on Euro area . 4. Cost of a Child: From cradle to college, LV= - 2012. 5. Neelie Kroes, Vice-President of the European Commission – 03/2012. 6. United Nations - 2011.

NEITHER IS YOUR FUTURE.BLACKROCK WAS BUILT FOR THESE TIMES.It’s a new world of investing. But BlackRock was built for these times – with the global market insight, risk management expertise and unrivalled breadth of capabilities that are relied on by some of the world’s largest investors, companies and governments. And we put those same capabilities to work for you. We believe it’s our responsibility to help investors adapt to today’s new world of investing – and build the new portfolios these times require.

ASK YOUR ADVISER ABOUT THESE BLACKROCK INVESTMENTS.To Broaden Your Income Sources: BlackRock’s fixed income capabilities span a range of markets, from corporate bonds in Europe, to global high yield and government bonds in emerging markets.

To Take a Fresh Look at the Stock Market: BlackRock’s equity income fund managers aim to provide income above the market average with the potential for capital growth across markets.

To Put Indexing at the Core: iShares ETFs offer the ability to efficiently and transparently access a diverse range of companies, markets and asset classes.

As with other investments your income and capital are at risk.

No matter where you’re standing, the financial world is more uncertain than ever. Investors have endured an exhausting succession of seismic events. And no one knows what the markets will do next.

It’s no wonder millions are stepping away from the stock market and seeking the safety of cash or ‘safe-haven’ bonds. They trust that, for a while at least, their money isn’t going anywhere.

TOMORROW MAY BE TOO LATE.Yet that’s just it: your money isn’t going anywhere. It may not be growing. And with today’s low interest rates, that means it may not even be keeping up with the cost of living.

Household bills and the cost of further education are climbing. Retirement is moving closer and is likely to be longer and cost more.

The truth is, to meet your goals, you may need to do more than simply preserve what you have today – you also have to build what you will need tomorrow. This may mean reassessing your portfolio. So don’t put off speaking with your financial adviser – the sooner you start the better.

“ So what do I do with my money?”Begin by changing your point of view. Look beyond today’s headlines and focus on tomorrow. You’ll see there are other avenues of opportunity in this new world of investing. And they can be yours if you have a portfolio built to take advantage of them.

A PORTFOLIO BUILT FOR THESE TIMES.So, start taking action. Build a more dynamic, diverse portfolio that can work for you – based on your goals, your investment time horizon and your appetite for risk. Consider a broader mix of assets than ever before – at home and abroad. And combine the best of active and index investments to get the right mix for your objectives.

It’s important to remember that all financial investments involve an element of risk and the value of your investments is not guaranteed. Moving out of cash and ‘safe-haven’ bonds in search of higher returns will involve accepting a greater risk of capital loss.

Talk to your adviser about which investments are right for you. Here are some steps to discuss:

1 Seek Income Early and Often: Critical in retirement, income investing can also be an effective tool to build wealth while you’re still working. But with today’s low yields, you may need to cast a wider net to find it. Consider opportunities in dividend-paying shares and corporate bonds.

2 Focus on High-Quality Shares: Not all shares are created equal. But many high quality shares are currently delivering twice the yields of benchmark government bonds* and offering the potential for capital growth. Consider dividend-paying shares: many of these companies have strong balance sheets and attractive growth prospects in faster-growing areas of the world.

3 Access the Same Indexing the Professionals Use: Funds which track a market index, whether traditional investment funds or Exchange Traded Funds (ETFs), are being used more and more as essential building blocks by investors. They are a low cost way to quickly execute your best ideas at home and around the world and to easily tailor your portfolio to your individual needs. But not all products and providers are the same. Now more than ever investors need ETFs that are built for these times, the same ETFs the pros use – iShares.

Isn’t it time to be an investor again? Talk to your adviser or visit blackrock.com/newworld







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Purchasing power of €100,000 of cash in 10 years (for simplicity assumes 2.6% inflation and no interest return)1:

Annual European pensions saving gap2:

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1. For illustrative purposes only to demonstrate the effect of inflation on purchasing power. Based on Euro area inflation rate of 2.6%, European Central Bank Harmonised Index of Consumer Price Indices – 08/2012. 2. Mind the Gap – Quantifying the Pensions Gap in Europe, Aviva – 09/2010. 3. ING International Survey on Pensions and Long Term Savings – 2012. 4. Cost of a Child: From cradle to college, LV= - 2012. 5. Neelie Kroes, Vice-President of the European Commission – 03/2012. 6. United Nations - 2011.



















Wine.indd 30 07/10/2012 15:34







39% 47

€272K 76 €1.9 TRILLION €76,840

NEW WORLDTHE Percentage of Europeans who have no

long-term savings3: Average global lifespan in 19506:

Average cost of raising a child from birth to age 214: Average global lifespan by 20506:

(for simplicity

by numbers

DOUBLE The number of European over-65s in the next 50 years5:

1. For illustrative purposes only to demonstrate the effect of inflation on purchasing power. Based on Euro area inflation rate of 2.6%, European Central Bank Harmonised Index of Consumer Price Indices – 08/2012. 2. Mind the Gap – Quantifying the Pensions Gap in Europe, . 4. Cost of a Child: From cradle to college, LV= - 2012. 5. Neelie Kroes, Vice-President of the European Commission – 03/2012. 6. United Nations - 2011.

THE NEW WORLD OF INVESTING ISN’T STANDING STILL. NEITHER IS YOUR FUTURE.

BLACKROCK WAS BUILT FOR THESE TIMES.It’s a new world of investing. But BlackRock was built for these times – with the global market insight, risk management expertise and unrivalled breadth of capabilities that are relied on by some of the world’s largest investors, companies and governments. And we put those same capabilities to work for you. We believe it’s our responsibility to help investors adapt to today’s new world of investing – and build the new portfolios these times require.
























39% 47

€272K 76 €1.9 TRILLION €76,840

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39% 47

€272K 76 €1.9 TRILLION €76,840

NEW WORLDTHE

by numbers

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1. For illustrative purposes only to demonstrate the effect of inflation on purchasing power. Based on Euro area inflation rate of 2.6%, European Central Bank Harmonised Index of Consumer Price Indices – 08/2012. 2. Mind the Gap – Quantifying the Pensions Gap in Europe, . 4. Cost of a Child: From cradle to college, LV= - 2012. 5. Neelie Kroes, Vice-President of the European Commission – 03/2012. 6. United Nations - 2011.



















Wine.indd 31 07/10/2012 15:34

ALL CHANGETOMORROW’S FINANCIAL PLANNERS WILL FOCUS FIRST ON CLIENT NEEDS, NOT SALES, SAYS SUE WHITBREAD FROM THE INSTITUTE OF FINANCIAL PLANNINGWith the RDR just around the corner, the world of fi nancial advice is facing perhaps its biggest shake-up since 1986. And, as we approach that deadline, many fi nancial advisers and planners have been understandably guilty of focusing largely on complying with the qualifi cations and professionalism requirements to make sure they get their Statement of Professional Standing (SPS) in good time...

…And not on the much bigger piece of work – the task of business transition, and particularly the development of new skills by advisers to ensure that they can deliver a service that their clients are prepared to pay for in the new environment. If an adviser business is to fl ourish in the new regulatory environment, a robust client proposition needs to be in place. Because, without it, the business will surely struggle.

A Shift of Focus Clients will need to know right from the outset what service they can expect, and what the process will be – not just what they’ll be paying. Training for advisers in core areas is therefore essential to make sure that they have the right skills to be able to deliver that service profi tably.

A signifi cant part of the RDR reform lies is the way that the focus moves from products and solutions to the provision and sale of a service. Now, let me explain what I mean.

At present, clients will often approach an adviser initially to talk about a specifi c need, like a pension or an investment. And at present, as you’d expect, the adviser will typically deal with this approach by gathering information, asking some more questions, and then recommending an appropriate solution. And then, of course, completing the transaction in a compliant and professional manner. There’s probably a lot of technical jargon involved usually, around areas like taxation, charges, fl exibility etc - which, while certainly important, has the disadvantage that it takes the emphasis away from why the transaction is being considered in the fi rst place.

The Interview Process, RemixedBut the Financial Planning process dictates that, from the very outset, the adviser has to change the direction of thinking for the client - helping them fi rstly to understand where they want to go, and then exploring how they may be able to get there.

Many advisers will encourage – or even insist - that a client’s partner is present so that a full discussion can take place. But, whereas the adviser is keen to get an outline understanding of the client’s situation, it is more important to understand that he or she is looking to identify key areas where they can add real value to those clients’ lives.

Having reached an understanding, and having established trust, the Planner will then progress to gain a far deeper understanding of the client, and of all the important goals and objectives in his or her life. In practice, very few clients will have already thought this through before coming to the fi rst meeting with an adviser – or even, in a number of cases, discussed these important things properly together with their partner.

Communication Skills It is essential that advisers develop good communication skills so that they can encourage their clients to give full consideration to what is really important to them. Then, a series of short, medium and longer term goals can be identifi ed.

Those advisers who have attended courses run by the likes of George Kinder and Maria Nemeth will already have learned that good listening and questioning techniques are fundamental to if they are to do a great job of planning. A range of excellent adviser training courses in these development areas are available, and they can really transform the way that the service is delivered. Not only does a course like this create value for the clients - it’s also a great way of boosting the satisfaction for advisers themselves. Knowing that you’ve made a real difference to someone’s life is a hugely rewarding and empowering experience.



RDR Financial Planning.indd 32 07/10/2012 15:38

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work with the information provided. So “rubbish in” will lead to “rubbish out”. This awareness will motivate the client to provide all relevant and necessary information – leading, perhaps, to far more planning opportunities, including an agenda of actions for the next few years. No longer will clients isolate accounts from your advice because of nervousness or a lack of confi dence.

The other benefi t of this approach, of course, is that it will lead to a higher number of referrals. The thing is, marketing has traditionally been a tricky area for many fi nancial advisers and planners – because, while their technical knowledge is usually excellent, they often feel uncomfortable when it comes to marketing in particular, asking satisfi ed clients for referrals. But, because of the value that clients have gained from what has been (for most) a completely new


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A large part of the discovery process consists of looking at the various planning assumptions that must be made. The assumptions should always be those of the client, of course - but often, the client needs help and direction from the adviser to agree what they ought to be! The expertise of the adviser will help the client to reach conclusions that they can relate to as the plan develops. In the future, these assumptions can then be reviewed against changing economics and personal viewpoints.

Interactive Modelling Approach Having fi rst obtained a clear understanding of the direction of travel, it’s now time to gather some of the hard facts and put together the income and expenditure statement, as well as the asset and liability statement of course. The fi nancial or cash fl ow modelling can then take place to see how achievable some of those goals actually are.

Work will be undertaken on the client’s risk profi le as the plan starts to come together. “What if” scenarios can then be considered, so as to understand the impact of different decisions, and these outcomes can then be discussed with the clients.

So what are the benefi ts of this approach? Firstly, clients can see that the service is adding real value to them and for their family. Trust and rapport are built quickly as discussions focus on them and their goals in life, rather than on fi nancial products and technical jargon.

Cross-Selling Opportunities The trust that this process engenders helps to ensure that business can be done in a much better environment. And the planning process - properly applied – is also going to deliver better business volumes for the fi rm itself. Once the client understands that process, he or she will also appreciate that they need to tell their adviser everything about their fi nances – or the whole exercise will be a complete waste of their own money and their own time.

If fi nancial planning software is used, of course, it’ll be clear to everyone that it can only

and refreshing experience, they themselves are likely to act as fantastic ambassadors for their adviser, and for the fi rm itself.

Summary Going down the Financial Planning route is also having a massive impact on professional connections where the focus has moved away from the product to the service and experience. All parties can easily buy into a process which aligns all interests, including of course those of the client, on the same side of the table.

This is a business model that really works. It’s already been proved by Accredited Financial Planning fi rms - and what they’re already delivering ought to inspire others to follow at a time of such signifi cant change.

Establishing the script and processes, along with the technology, people and skills to support it, will lead to a dynamic business providing a valuable service - for which happy clients will be more than prepared to pay the required fees.

“Good questioning and listening techniques are fundamental if advisors are to do a great job of planning”


RDR Financial Planning.indd 33 07/10/2012 15:38

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You know, September can be a tricky month. That was the month when Lehman Brothers went bust in 2008, kicking off the second wave of the fi nancial crisis and plunging us all into – well, all this mess, really. But to tell you the truth, October isn’t always a bundle of laughs either. The Great Wall Street Crash was an October event - as was Black Monday in 1987, when shares shed a quarter of their value in a single day.

Now that was a day I remember all too well, recovering as I was from the hurricane that had swept through South East England the previous Friday, and which had devastated my garden. Hard to believe it was 25 years ago…

But enough of such daydreams. Can investors read anything into the apparent seasonal infl uences on market movements? Not really, although there are certainly some reasons as to why shares might behave in the way they do at particular times of the year.

Decembers, for example, show a historical preponderance of stock market rises over falls. Some people might claim that this is simply down to the effect of the festive season, with fund managers generally feeling more glowy and positive about life in general. But the reality is probably more that most institutional fund mandates are run on a calendar year basis – which means that a full report is due in early January, based upon the portfolios position at the end of December.

So, you guessed it, fund managers will typically spend the run-up to Christmas adjusting their positions so as to ensure that the reports they deliver will make good reading. Interestingly, this often means spending cash that has accumulated on the account.

Spring in the stepThen there’s the so-called January effect. In America there is an old saying – “As goes

January, so goes the year”. All well and good, but it didn’t appear to work this year because the gains made in the fi rst quarter were all handed back in the second. though markets did pick up in the summer, and it’s still too soon to make a fi nal judgment on the year as a whole.

But, rather as December appears to be infl uenced by the reporting calendar, so January is the time when managers can safely shake up their portfolios in the knowledge that it will be three months or more before they are held to account for their actions. As you’d expect, this can lead to some pretty wide variations in the price performances of individual companies – but, on the whole, taking too much notice of what happens in January would probably be unwise.

Slimming for the beachAs for the summer, what we can be sure of is that markets can often be driven by tiny volumes. The holiday season will leave vast portfolios under-managed, or perhaps in the hands of juniors as their bosses take themselves off to the beaches. We should be wary of taking too much notice of major moves during those periods when trading is limited by virtue of absences – but, even so, this can be a time of opportunity for stockpickers.

And so to October...So we approach October with no real reason to fear a repeat of the upsets that have characterised this month in the past. And actually, even the swingeing falls of Black Monday 25 years ago owed a lot to sheer bad luck and a convergence of disasters. The London Stock Exchange had been closed the previous Friday, due to the hurricane disruption in London, and then on the Monday we had to contend with two grim days on Wall Street which echoed around the world and nearly bust a few banks.

Not an experience I ever wish to repeat. And nor, on the balance of probability, something that’s really likely to happen again. Fingers crossed.

BRIAN TORA GOES ALL AUTUMNAL ON US


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JM Finn.indd 34 07/10/2012 15:40

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“The Great Wall Street Crash was an October event - as was Black Monday in 1987, when shares shed a quarter of their value in a single day”


JM Finn.indd 35 07/10/2012 15:49

UNCERTAIN TIMESAt Arjent we firmly believe that asset allocation is key in order to provide an investment portfolio that generates consistent positive returns over a medium-to-long term time horizon. But it can be a difficult task deciding on the correct asset allocation in the current climate, and there are many uncertainties that we need to overcome before we gain a clear picture of how ‘the future’ may pan out - and of which asset classes and geographies are likely to provide the best returns in a given economic scenario.

Right now, given the bleak global economic backdrop, the challenge is to identify the asset classes that are likely to provide a consistent and compelling investment proposition when constructing a client’s portfolio. And the reality is that, at present, generating material real returns after fees is a tough task. For example, what allocation, if any, should you give to sovereign debt given the record low yields –which in some cases have even turned negative?

New Benchmarks Needed Many discretionary fund managers, of course, revert to common industry benchmarks to provide an asset allocation framework – but, to our minds, these benchmarks are dinosaurs of the past that really don’t stack up on a risk-adjusted basis, and a more contemporary quantitative approach to asset allocation is required. Believing as we do that clients should receive the best level of return for the minimum amount of risk, we start by analysing the performance of various asset classes over a twenty year period, so as to formulate an ‘optimum’ strategic portfolio asset allocation for a predefined level of risk.

By taking a ‘strategic’ medium/long-term approach to asset allocation, we maintain exposure to asset classes that others would probably prefer to avoid in the current climate. For example, although Arjent is generally negative (‘underweight’) European equities and benchmark sovereign debt, we do maintain an



Inside Track - Arjent.indd 36 07/10/2012 15:47

allocation - as indicated by our analysis of European equity and benchmark sovereign price data over the twenty-year period.

Some, of course, may protest that historical performance is no indication of future performance and that hindsight is a wonderful tool. But, to our mind, historical performance actually provides a good foundation from which to construct certain strategic assumptions.

So how does Arjent incorporate its tactical macro positioning into asset allocation decisions? Quite simply, when conducting the selection of collective investment constituents, we ensure that current thinking is reflected within a specific active investment. In Europe for example, we currently use the BlackRock European Dynamic fund, which provides us with large ‘multinational’ European equity exposure – thus helping to mitigate some of the uncertainties and concentration risk that the eurozone currently presents. Arjent’s current macro stance, based on our own top down view of the world, is discussed in greater detail below.

Eurozone (Underweight) We accept that the European Central Bank’s recent announcement that it will do “whatever it takes” to maintain the single currency is encouraging. Better still is the Central Bank’s new programme of short-dated bond purchasing or ‘Outright Monetary Transactions’ (OMT). The OMT may well reduce the unsustainable

level of borrowing seen in Spain and Italy of late - but only if these two nations sign up to (and abide by) the measures laid out by Brussels and the International Monetary Fund (IMF).

Then there’s the ‘Grexit’, and the question of how, when and whether this might take place. Ultimately, of course, a eurozone breakup would be the worst case scenario for global markets, but with the most recent ECB announcements this now appears to be a very unlikely tail event. For our mind there is no ‘short-term’ fix, but we now appear to be on the right track. For the moment, we remain ‘underweight’ on the eurozone until we see evidence of a progressive improvement in conditions.

UK (Neutral) Closer to home, the economic picture in the UK is far from rosy. On the upside we do have our own currency – plus and a central bank that is willing to stimulate the economy when deemed necessary. Even the issue of ‘negative outlook’ statements by credit rating agencies has failed to hurt the UK’s safe haven status.

But UK plc is not immune from the Eurozone troubles, because trade links can act as an umbilical cord for contagion. We continue to see low wage growth and high unemployment. Austerity measures are hurting the UK consumer - and, in turn, the high street. Government initiatives have not eased the constraints on lending to small and medium-sized business – a factor which is suffocating the UK economy.

At Arjent we currently take a neutral stance on the UK, even though we’re encouraged by the nation’s monetary dislocation to the Eurozone. We don’t see a dramatic improvement, looking forward – and, like the eurozone, a protracted economic recovery is the most likely outcome here.

US (Overweight) As we move towards the 57th presidential election, let’s not forget that we are only a few months away from a significant pre-programmed reduction in the budget deficit if specific laws are allowed to automatically expire or go into effect at the end of the

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KUNCERTAIN TIMESADAM SKETCHLEY, HEAD OF INVESTMENTS AT ARJENT, EXPLAINS THE IMPORTANCE OF MULTI ASSET DIVERSIFICATION

Arjent provides ten low-cost risk-adjusted strategic model portfolios

aimed specifically at the IFA market. The Arjent Managed Portfolio

Solution is available direct to IFAs on a discretionary basis or via the

company’s wrap platform providers and it can be tailored to meet various risk profiling software where required.



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year such as across-the-board cuts in defence and social welfare spending post December 2012.

The knock-on impact of Obama’s automatic cuts could well drag the US economy into a double dip recession at in Q1 2013 - potentially wiping some 4% off US GDP in 2013. At present this issue appears to be masked by the ongoing political posturing ahead of November’s presidential election. But a wholesale extension to the current fi scal situation does not appear viable as this would cause an even greater step-off in subsequent years.

For our mind, the most likely outcome here would be that Congress agrees a last minute deal to prevent the US from tipping over the fi scal cliff by delaying the diffi cult decision until the summer of 2013. Federal Reserve Chairman Ben Bernanke is certainly aware of fi scal inaction, and he is attempting to push this issue up the political agenda, which is a hard task.

In the short term, the focus in the US will be on the Fed’s anticipated additional stimulus package, in the form of a third round of quantitative easing. If it’s deemed necessary, this central bank action will boost liquidity and support economic growth. On the whole, then, we think the economic picture in the US appears moderately attractive compared to its developed-market peers. Consequently, on a relative basis, we currently take an ‘overweight’ stance here.

Emerging Markets (Overweight) The main talking point here is economic cooling, with the focus mainly on China. Beijing’s GDP growth for Q2 2012 came in at 7.6% on an annual basis - the slowest pace in three years. That said, when compared to anaemic developed world economic growth, China’s Q2 number still appears very attractive. At Arjent we accept that there will be a period of short-term cooling, but we remain committed to the Emerging Market medium-to-long term growth story, taking an ‘overweight’ stance in these regions generally.

Summary Overall, we believe that certain asset classes may underperform in the near-term - such as benchmark sovereign debt, particularly if some of the question marks hanging over the global economy are lifted. But it is the asset allocation, and specifi cally the diversifi cation of asset classes across multiple geographies, that ought to provide consistent positive portfolio returns over the medium to long term.


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*Source: Lyxor. As of the 2nd May 2012. Lyxor and Lyxor ETF are names used by Societe Generale to promote the products of Lyxor Asset Management. Societe Generale is a French credit institution (bank) authorised by the Autorité de Contrôle Prudentiel (the French Prudential Control Authority). Societe Generale is subject to limited regulation by the Financial Services Authority in the UK. Details of the extent of our regulation by the Financial Services Authority are available from us on request. The products described in this advert are not suitable for everyone. Through Lyxor ETFs, investors are exposed to counterparty risks resulting from the use of an OTC (Over-the-Counter) Swap with Societe Generale. Investors should not deal in these products unless they understand their nature and the extent of their exposure to risk. Prior to any investment, investors should make their own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. Lyxor ETFs are open-ended mutual investment funds established under French Law or Luxembourg Law. The funds may not be sold to US persons or in jurisdictions where such offering or sale has not been authorised. Calls to the freephone number may be recorded.

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PAST IMPERFECT, FUTURE TENSE...THE BANKS WERE ALL SET TO GET OFF LIGHTLY AFTER LAST YEAR’S VICKERS REPORT, SAYS KAM PATEL. AND THEN THEY WENT AND MESSED IT UP WITH A STRING OF PR DISASTERSBelieve it or not, it was only just over a year ago that Sir John Vickers, the chairman of the Independent Commission on Banking, proposed big changes in the way UK banks operate. And, at the time, IFA Magazine commented that the banks had got off lightly. Vickers’ proposals could actually have been far more profound, we said – and the banks could count themselves fortunate to have been spared the kind of drastic prescription being championed by the likes of

Mervyn King, the Governor of the Bank of England.

Not only that, but the Vickers report gave the banks another present in the form of the 2019 implementation deadline – a massive time in which to lobby for a watering-down of its proposals, especially with respect to ‘ring-fencing’ – by which it meant the separation of their retail and wholesale units.

A Year To ForgetAlas for the banks, a stream of banking scandals since the publication of the Vickers report has ensured that banks are very much in the public eye, and very much on the back foot again.

Those scandals have included rogue trading at the London arm of JP Morgan (London), revealed in May, that resulted in the US bank taking a multi-billion dollar derivatives loss. Then we had the Libor scandal, in which various banks were accused of fixing the London interbank offered rate for half

a decade. Barclays has already been fined £290 million for its role in that particular affair.

More recently we’ve had money-laundering-allegations at HSBC - and, in August, the spectacle of Standard Chartered being forced to settle over charges of sanctions busting with Iran. The bank coughed up $340 million to settle with New York’s banking regulator,

after being accused of concealing a massive $250 billion of transactions with the ayatollahs.

Luckily for the banks, most of these scandals emerged after they had managed to get some lobbying in over Vickers. But it did them little good. The UK government was very quick to accept Vickers’s recommendations, and in June it produced a White Paper, ‘Banking Reform: Delivering-Stability and Supporting a Sustainable Economy’, which was based on the ICB’s proposals.

A Partial Victory But Vickers didn’t get it all his own way, because the White Paper reveals a watering-down of his proposals. The smaller banks were allowed an exemption from the ring-fencing rule; the high capital requirements demanded by Vickers were reduced; and banks were to be allowed to sell derivatives to retail clients.

The capital requirements issue has been particularly vexed all along, and the banks have been at pains to demonstrate they are behaving much better on this front. The British Bankers’ Association, for instance, has been stressing that the UK banks were the very first to increase the amount of capital they held - and that they not only now hold three times the capital they did at the time of financial crisis; they have also greatly increased the amount they hold in liquid deposits.

“Just over a year ago Sir John Vickers

proposed big changes in the way

UK banks operate”



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PAST IMPERFECT, FUTURE TENSE...

Everything Still to Play For With Vickers It won’t be until May 2015 that we see the full extent to which Vickers is implemented, because that’s the deadline by which the government is due to have completed the primary and secondary legislation related to the reforms. Banks will be expected to be compliant as soon as practically possible thereafter.

The snag for the banks is that the consultation period for the White Paper ended only last month – which means that the various banking scandals and bad-boss behaviours could yet mean that some of the concessions won by the sector will be clawed back again – resulting, perhaps, in a much more Vickers-oriented regime.

Just how fluid the situation has become recently is manifested in the fact that, as recently as August, the Lib Dems declared that they were pushing to reopen talks on the UK banking reforms. The recent flurry of major scandals to hit the sector had changed the circumstances, they said. And, at the risk of further raising the political tensions within the coalition government, the Lib Dems want in particular to re-examine whether banks’ retail operations should be allowed to sell complex derivatives products.

Vickers’s original report had recommended a ban on the banks’ retail arms being able to sell interest rate and currency

swaps; but intense lobbying from banks had subsequently led to this proposal being rejected in time for the publication of the White Paper. So what had put them back on the agenda? Well, interest rate swaps had been at the centre of another recent scandal, following the revelation that nearly a dozen banks had mis-sold them to small and medium sized businesses that did not understand the risks.

For the banks, not surprisingly, the long lead time to full implementation is not the only reason why Vickers

is not currently top of the agenda. There are, after all, rather more pressing problems associated with getting their own banking operations back on track following the financial crisis. And all this against a backdrop of on-going headwinds over the Eurozone crisis....

Ring-Fencing RamificationsYet it is absolutely certain that, no matter what changes

happen to Vickers’s legislation proposals between now and 2015, ring-fencing will remain broadly intact in some form or other. And that banks with a big exposure to investment banking are thus likely to be particularly hard hit, due to the restructuring-costs involved.

Barclays, with its huge investment banking arm, looks set to be the most challenged by ring-fencing. RBS, which is 80% government-owned, is already downsizing its investment banking and is currently far more focused on cleaning up

its balance sheet. As for Lloyds and HSBC, however, their investment banking interests have always been small-scale, so they’ll have a little less to lose.

Ring-fencing in practice will throw up many new

issues for banks andinvestors to consider. Clearly the non-ring-fenced operations are likely to be deemed by markets to be riskier than

“RBS, which is 80% government-owned, is already downsizing its investment banking”



those that are ring-fenced, and this may

prompt the ratings agencies to assess the two separately - assigning a lower credit rating to the non-ringfenced operations, which in turn would imply higher funding costs for activities within them.

Redirection, Redirection, RedirectionAmidst all the politicking and lobbying that goes with Vickers, it’s easy to forget that its primary aim is to protect consumers, clients and taxpayers from the collapse - ever again - of a bank that has taken too many risks and engaged in too many dubious practices. And that raises another issue.

Aside from the operational requirements of banks in areas such as ring-fencing and capital buffers, Vickers has come up with a radical proposal that really should help encourage retail clients to exercise power when they’re dealing with banks that have failed to deliver satisfactory service.

The report demands that a free current account redirection service should be set up by the banks, which will help consumers transfer their accounts from

that were originally proposed for them. But since the original proposals were published, the FSA has steadily toughened up its stance – with the result that RDR, as it now stands, amounts to pretty much the same regime for both independent and restricted advice. Earlier this year, the FSA rammed the point home by declaring that it would absolutely not water down the rules for simplified advice – something that the banks had been lobbying intensely for.

So it’s not surprising, then, that institutions operating in the advisory arena have been busily rethinking whether the economics stack up for them to continue offering the service at all? Last year, Barclays broke ranks by announcing that it was killing off its branch advisory service. In April this year, HSBC announced that its tied advice business was being axed – although, it said, it will be keeping its whole-of-market services.

In June, RBS announced that, as a direct result of RDR, it was closing its financial planning advisory unit so as to focus on restricted advice. The new RBS service is expected to launch in October 2012 and will offer a full advice service to customers under a restricted badge. The final panel proposition is expected to comprise solutions from within the RBS group as well as from a set of third party providers.

Hunting for RDR OpportunitiesAmong the big banks, only Lloyds appears to be bucking the trend with a declaration of enthusiasm for RDR. The reforms, it says, will result in an

one bank to another with the minimum of grief. At present, the complications, the paperwork, the mislaid direct debit orders and the general hassle of switching bank accounts represent a daunting hurdle to anyone who’s hoping to simply get on with a normal daily life during the transfer. And we’re not particularly surprised to hear that the average consumer changes his spouse or his partner more often than he changes his bank account provider.

The new service will require an improved system to net all credits and debits going to a customer’s old, closed account, including any automated payments on debit cards and direct debits. And all this by September 2013 at the latest! What are the chances?

And Then There’s RDR...Banks may have got time on their side with Vickers, but there are other big, pressing challenges for them to deal with, the Retail Distribution Review being one of them. No surprise there, then.

It was widely accepted that RDR, as originally envisaged by the FSA, could actually have been of advantage to the advisory arms of the banks and life firms, because of the more relaxed qualification and charging rules

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“Legal & General reckons the

restricted advice market is set to grow

as a result of RDR”





IFAmagazine.com

advice gap for the mass market that it can tap into. Accordingly, it plans to split its present direct advice arm into two - with one specialising just in protection and the other on investments and protection through qualifi ed fi nancial advisers.

Some other institutions are also upbeat about the opportunities under RDR. In August, Legal & General revealed that it had secured sole-tie distribution deals covering 70% of the UK’s building societies across 1,100 branches, as part of a move to ramp up its restricted advice business in the run up to RDR.

The life company reckons that the restricted advice market is set to grow strongly as a result of the new RDR rules - with particular growth in the consumer demand for passive funds running at low costs. It believes that building societies are particularly well placed for the effi cient provision of fi nancial advice after RDR.

Clearly, there‘s a difference in views across institutions as to the likely impact of RDR. On the one hand, the likes of Barclays and HSBC have concluded that the Review will push up costs, making the economics too challenging for mass market services – and, accordingly,

they have cut back heavily on their advisory businesses.

On the other hand, Lloyds and the (not strictly comparable) L&G insist that RDR presents them with solid upside potential - presumably because they have concluded that the new rules will force IFAs into focusing much more on high net worth customers, thus opening up opportunities for pile-it-high restricted advisers.

Which is them is right? Only time will tell.

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This advertisement is directed at investment professionals in the UK only and should not be distributed to retail investors. The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions. The value of investments and the income from them may rise or fall and investors may get back less than they invested. Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Services Authority. © 2012 Vanguard Asset Management, Limited. All rights reserved. UK12/1770/0513

VAN_1786 IFA 122x155mm Experts v1.indd 1 03/10/2012 09:44


TRAVELS WITH MY iBOB

THE FREEWHEELIN’

STEVE BEE IS ON THE

ROAD AGAIN

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Seeing all the recent mania surrounding the new iPhone reminds me of the time, a

few years back, that I bought my iPod. We were in New York on holiday

and thought it would be a good idea to go and

see the Apple store that we’d heard so much about. My three top heroes

during my life are Stan Lee, Bob Dylan and Steve

Jobs, so that New York trip was all about Greenwich Village and

Manhattan Island, for me at least.

Anyway, we happened to go to the Apple store on the day the iPod hit the streets. Two things:

one, I’d never seen so many people in a queue in my life, and two, I joined it and ending up

buying my iPod. As it turned out, though, no-one I know ever calls it my iPod - mainly because the only songs it’s got on it are my Bob Dylan records (although I do have a few tracks by other artists, but only those where they sing Bob’s songs). Instead, everyone I know calls it my iBob.

So, we went on another holiday a couple of weeks ago - this time a road trip around France with our friends. And obviously, my iBob went along too, so that we could listen to it while driving.

To be fair on my travelling companions, it didn’t come up as an issue until we reached Antibes - and even then it was a very mild “Surely there’s something else we can listen to?” sort of a comment. So I put it into shuffl e mode to mix things up a bit

Bringing It All Back Home



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while we followed Napoleon’s route through the Alps.

Fortunately we arrived in Lyon on the 11th of September, the day Bob’s latest album Tempest was released in Europe. And I was able to get my copy in a cute record shop in the old part of town. There are some great tracks on it (particularly Scarlet Town, which I think is a classic), and it gave us something new to listen to as we headed back home through the northern lowlands.

The point I’m trying to make here is that, although I’ve got older, I haven’t really changed that much. I’ve always bought Bob’s records the day they come out, wherever I happen to be, I’ll stand in line for anything made by Apple and I read Marvel comics more often than I read newspapers. It’s sort of what I do - that and the pensions stuff, of course.

So, back to business. While we were away, there was a U-turn of sorts on the pensions front, which I’m sure you’ve heard about. You’ll know that the new auto-enrolment reforms will nudge millions of people into workplace pension schemes, and also that the reform of the Basic State Pension to provide a fl at-rate £140 a week will ensure that those savings will not be eroded in value by clawbacks to allow for means-tested handouts for the future elderly.

Steve Bee, a well-known campaigning pensions activist, is the managing pensions partner at Paradigm and the co-founder ofwww.jargonfree pensions.co.uk

That’s right, and the reforms that kicked off on 1st October will only work if they are implemented in full. The nudging of millions into saving can only be justifi ed if every pound saved makes savers a pound better off than non-savers.

I hope the government people realise they’re taking the wrong road here, and that as soon as they reach the next roundabout they’ll turn around and get back onto the road to reform again. In fact I wouldn’t be surprised if their satnav isn’t going on and on about it to them right now. Satnavs are like me. They don’t like U-turns either.

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Steve Bee.indd 45 07/10/2012 16:03

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At a time when the pressure is growing on advisers to beef up their service levels to clients while also meeting tighter regulatory standards post-RDR, there are many who are opting to outsource various parts of their operations to expert services – whether it’s risk assessment, back offi ce management, compliance, you name it.

As you’d expect, IFAs have been adopting different solutions to the RDR challenge. Some have signed up to networks or federations; some have outsourced their compliance and technology activities so as to concentrate on the main tasks of giving advice; and some have sought new and expanded roles as chartered planners or as providers to small businesses.

For Julian Howes Wealth Management, a sole practitioner operating out of Cirencester in the leafy Cotswolds, the preferred option has been to leave the worrying to somebody else and to sign up instead to the St James’s Place Partnership. The lost ability to call himself independent has been more than compensated, he says, by the sheer relief of having all that compliance backup on hand, and all that support when it comes to the fi ner points of fi nancial planning.

Local HeroOn the one hand, Howes says, the St James’s Place tie-up allows his business to retain its local feel for the clients he serves in his home area; on the other, the link-up with London

provides him not just with the aforementioned expert backup, but also with a physical base at St James’s Place’s London offi ces where he can meet clients from all over the south east. That’s a balance between town and country that wouldn’t have been possible twenty years ago.

Howes has been in the business for some 33 years, having started out initially at the age of 19 as the “man from the Pru” and working as a tied agent for Friends Provident before becoming an IFA in 1997. “It was very clear at the time,” he says, “that customer awareness was very much pro IFA, and that I was losing business as a tied agent.” But for him, RDR has raised important questions about the viability of the independent model.

The practice’s client base includes a high proportion of high-earning individuals, many of whom have been with Howes since the very beginning – and many of whom have established their own businesses and use him for various fi nancial transactions beyond their own personal needs. His ideal scenario, like that of so many other smaller IFAs, is to maintain this loyal client base for as long as he continues to run the business.

But even with this clientele, he says, the shift to hourly based fee-charging would have brought serious consequences. “I did a small sample survey among my clients,” says Howe, “and the majority were clearly against this type of fee-based advice, which I suspected would be the case. Obviously I’d still be happy

to work on a fee basis if they required me to – but ultimately, I’m running a business, and the thought that wealthy clients might go elsewhere was clearly a worry. To put it simply, could I be sure of getting enough of an income via hourly based fees?”

(Although St.James’s Place will have adviser charging fees - just like all advice fi rms - as a vertically integrated business, they are able to facilitate the payment of advice fees on behalf of their clients.)

Accordingly, Howes says, he made the decision to join up with St James’s Place in June 2011, “having considered my options very carefully”. And so far, he says, it’s been a positive experience.

De-Risking The BusinessFirstly, of course, the compliance advantages are fairly obvious. “Dealings with the FSA are purely with St James’s Place, and not with me,” he says. “So they’re taking on all the time that I would have spent on dealing with all the compliance side – or on the cost of employing somebody to deal with it. What also disappears is the fi nancial liability, in terms of minimum assets, because that’s down to St James’s Place as well.”

More important, probably, Howes says, is the fact that the compliance procedures on offer are “incredibly robust” – more so than he found when using a network. The in-house compliance people are professionally attuned to the sorts of things that might cause problems with the regulator,. And whenever something comes up that’s a little more complex

TAKING THE PLUNGEIFA MAGAZINE TALKS TO ADVISOR JULIAN HOWES ABOUT SIGNING UP WITH ST JAMES’S PLACE



Case Study - St James's Place.indd 46 07/10/2012 16:04

than usual – pensions transfers, for instance – the advice you give the client is pre-approved before you actually give it.

Marketing and AssistanceEqually attractive has been the ability to draw on an “absolutely brilliant” marketing service client communications from St James’s Place – newsletters, weekly market reviews, investment and performance reviews and various ad hoc articles – which can be emailed forward to clients on an opt-in basis with the adviser’s own name on the bottom. “That to me is a useful service,” he says, “because my name is in front of them and I’m giving them good, professional information that’s really useful to them.”

“It’s the sort of thing I always liked to do myself,” says Howes, “but it’s very time-consuming, and that’s one less thing I have to do now. And it’s all compliance-approved, obviously.”

What’s more, the support structure is always there, he says, if his fi rm should ever branch out into more specialist areas of services to business, or perhaps into retirement seminars and so forth. You never know where you’re going to need extra help next.

Restricted Status IssuesHas anything been lost by the ability to sell only St James’s Place’s own plans? Not signifi cantly, he says, because the range of plans is wider than people generally appreciate. At the core are the group’s branded investment offerings

covering pensions, unit trusts, bonds and so forth, which are run by external fund managers who are contracted in for the purpose. In addition, there are dozens of external providers of products and services – all vetted by SJP – which are available to Howes and his colleagues.

“I sat down and looked at SJP’s own plans, and at the managers who were running them,” he says. “People like Neil Woodford from Invesco, or Hugh Young from Aberdeen, or Jonathan Asante from First State, and I thought, “well, actually I’m recommending these people already.” It’s a different approach to the best advice issue, he agrees, but it’s no less effective from the client’s perspective.

But, as we’ve said, these funds aren’t the only way forward. “If I want to do SIPPs or EIS or VCT, I have access to providers like Octopus in addition to the core branded products. It’s a lot wider than people think.”

Does the St James’s Place link-up affect the way that conventional fi nancial planning activities progress? Not in any way, he says. “Whether I’m branded as an IFA, or as giving restricted advice, my advice is still the same. I’m not performing that activity from a product-led basis, and that hasn’t changed.” But the backup from St James’s Place is valuable, particularly with regard to more complex areas such as tax and trust activity. “There’s always a departmental helpline available. And if there’s a complex total tax situation,

their tax and trust team will come in and do reports for you.”

What Did the Process Involve?How long did the whole joining-up process take? Only about four months, he says, once the initial decision had been taken. It began with an induction course, which always needs to be completed before anything else can happen. But after that the paperwork stage itself lasted only a few weeks.

At the end of it all, he says, there’s the not inconsiderable comfort of having a clear exit strategy when the time eventually comes to sell the business and move on, or perhaps to retire. Whenever a small IFA looks at this thorny issue, there are always uncertainties about how much the business will be worth, or sometimes whether it will be saleable at all. Whereas St James’s Place do have a buyout strategy, relating to the adviser’s own profi le, that gives him that little bit more confi dence about the future.

Last question. Any regrets? “Only one,” says Howes. “That I didn’t do it years ago.”

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YTAKING THE PLUNGEIFA MAGAZINE TALKS TO ADVISOR JULIAN HOWES ABOUT SIGNING UP WITH ST JAMES’S PLACE

If you would like more information on St James’s Place or would like to discuss St James’s Place as an option, please e-mail: [email protected] or telephone: 0117 908 9686


Case Study - St James's Place.indd 47 07/10/2012 16:04

WITH INTEREST RATES AT ROCK BOTTOM AND QE3 INJECTING CONFIDENCE, NOW COULD BE THE PERFECT TIME TO INVEST IN PROPERTY. NICK SUDBURY HAS A LOOK THROUGH THE KEYHOLE

It uses the local knowledge of property specialists based in the UK, US, Asia and Australia to spot the best opportunities

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First State Global Property Securities Clients looking for a diversifi ed and liquid exposure to property would be well advised to consider a fund that invests in global real estate securities. These have the scope to target the regions with the best growth prospects and are more nimble than a vehicle that invests in the actual buildings.

One of the most successful open ended funds is First State Global Property Securities, which has consistently been ranked in the fi rst quartile of the sector. It is up almost 64% in the three years to the end of August, and it’s currently yielding 2.5% with the dividends paid semi-annually.

The fund’s portfolio is benchmarked against the UBS Global Real Estate Investors Index, with the largest geographic weightings being the 57.4% exposure to the US and the 21.4% in the Pacifi c ex Japan region. There are also less signifi cant allocations to Europe, the UK and Japan.

It’s only a small fund, with £160 million in assets under management that are spread across 70 separate holdings. The largest sub-sector is a 35.7% investment in retail, with offi ces making up a further 19.1%, diversifi ed 18.8% and residential another 15.9%. The remainder is divided between industrials and hotels.

First State has a well-resourced team with property specialists based in the UK, US, Asia and Australia. This gives it the local knowledge to spot the best opportunities in each of the different markets and spend a lot of their time meeting the respective companies to assess their prospects.

When looking at a potential investment, the

South facing aspect

team takes into account the value and quality of the underlying assets, as well as the ability of the managers and the fi nancial leverage. They then combine this with a view of the local property market and the prevailing economic conditions.

It’s important to remember that a property securities fund provides a very different kind of exposure to simply investing in the actual bricks and mortar. These funds are much more liquid, which makes them susceptible to changes in sentiment and gives them a higher correlation to equity indices. This reduces their ability to diversify a client portfolio, but it all helps to keep the costs to a reasonable level.

First State Global Property Securities has been pretty volatile, with double-digit returns in most years since launch. The fund has sold off heavily in recent years, along with the wider market, yet despite this it has still achieved an excellent long-term return. It’s well worth considering for clients who want a diversifi ed property exposure as part of their portfolio.

FUND FACTSName: First State Global Property Securities

Type: UK OEIC

Sector: Property equities

Fund Size: £160m

Launch: Sept 2006

Portfolio Yeild: 2.5%

Charges: Initial: 4%, Annual: 1.5%

Manager: First State Investments

Website: fi rststate.co.uk

A PLACE IN THE SUNmagazine...


Product Reviews.indd 48 07/10/2012 16:15

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An good option for income seekers, with the progressive dividend policy likely to produce a sustained increase in the distributions

Investors in Global Real Estate The nearest equivalent in the closed-ended sector is Investors in Global Real Estate, a Guernsey incorporated investment company that trades on the LSE. It is valued at £87 million, and it aims to provide an attractive total return from a portfolio of global listed and unlisted real estate securities. Over the last three years the shares are up 83%, and they are currently offering an enticing 4.1% yield with dividends paid quarterly.

The largest geographic exposure is the US with a weighting of 40%. This is followed by 16% in Australia, 14% in Canada and 9% in the developed markets of Continental Europe. There is a further 8% exposure in the UK, with Hong Kong and Singapore each representing an additional 4%.

At the end of July, the top ten holdings accounted for 36.1% of the fund. The biggest allocation was retail, at 28%, with 23% in diversifi ed, 17% in residential, 13% in offi ces and 12% in industrials.

One area of concern has been the discount to NAV, which has averaged 16% in the last year. But in 2011 the directors announced plans to offer a 10% annual tender at a discount of 10%. They have also recently decided to sell the unlisted securities that make up 11% of the fund. Both these measures have had an immediate impact, with the discount narrowing to less than 8%. Which isn’t bad, considering that the managers estimate that the shares of these companies trade at an average 4% discount to NAV. And they add that recent property company earnings have been in line or better than expectations, and that the fundamentals for the sector continue to show signs of improvement.

The fund is managed by CBRE Clarion Securities, which charges an annual management fee of 1%, plus an additional performance fee of 10% per annum of the total return over a hurdle rate of 8% capped at 2% of NAV. This only applies once any underperformance in previous years has been made good.

Despite the fact that the fund is not currently geared, it is very much a ‘risk on’ type of holding, as are most of the other vehicles in the property sector. The new measures to control the discount make it an attractive option for bullish investors, especially for income seekers, with the progressive dividend policy likely to produce a sustained increase in the distributions.

Viewing highly recommended

FUND FACTSName: Investors In Global Real Estate (IGRE)

Type: Investment Company


Fund Size: £87m

Launch: M ay 2006


Ongoing Charges: 1.62%

Manager: CBRE Clarion Securities

Website: igre.co.uk



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A portfolio of quality UK commercial real estate, with a focus on prime properties in Central London, especially the West End.

FUND FACTSName: F&C Commercial Property (FCPT)

Type: Investment Company

Sector: Property direct

Market Cap: £754.5m

Launch: Mar 2005


Ongoing Charges: 1.64%

Manager: F&C

Website: fandc.com

Plenty of original features F&C Commercial Property (FCPT) Funds that invest in real estate securities provide an indirect exposure to property, whereas those that own the actual bricks and mortar are much more closely aligned to the performance of the underlying premises.

A portfolio of different buildings is an illiquid type of investment that is best suited to a closed-ended fund where the manager does not have to realise assets to meet client redemptions. This was vividly demonstrated during the diffi cult conditions of 2008 and 2009, when many open ended funds in the sector were forced to prevent investors from selling their holdings.

There are no such concerns about F&C Commercial Property, with its excellent track record and fi rst quartile performance over the last 1,3, and 5 years. This UK-orientated closed-ended fund weighs in at just over £1 billion, of which £230 million is funded by debt in the form of Triple A rated secured bonds and supplemented by a £50 million secured bank loan.

FCPT owns a portfolio of quality UK commercial real estate, with a focus on prime properties in Central London, especially the West End. Its top ten holdings include St Christopher’s Place, W1, and Charles House in Regent Street that together make up 18.2% of the assets. The 10 largest investments represent 61.1% of the fund, with 38.1% relating to offi ce space and a further 25.7% in retail.

In the last three years the share price has risen by an impressive 45%, and there is also a very high yield of 5.8% with dividends of 50p a share being paid

every month. This makes the fund an attractive option for those looking for a secure and regular source of income.

The managers are entitled to an annual fee of 0.5%. There is also a performance fee of 20% of the total return in excess of 110% of the benchmark as measured over a rolling 3 year period capped at 0.6% of gross assets. When you take this into account, the Ongoing Charges fi gure is 1.64%, which is reasonable for this type of mandate.

A portfolio of top quality properties provides a decent defensive exposure, especially when you take into account the high and secure level of income. The only downside is that the shares typically trade at a small premium to NAV (currently 4.7%) - whereas most of the other closed ended property funds are available at hefty discounts. This looks like a small price to pay for the extra security.




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If the American residential market continues to recover the fund should be able to deliver a decent return

Convenient central location

The majority of property funds focus mainly on commercial property, but there are several ETFs that diversify into the residential market. One such is the NYSE-listed iShares FTSE NAREIT Residential Plus Capped Index, which has around 48% exposure to US house prices along with a further 15% in the related area of self-storage - with most of the

remainder invested in properties in the healthcare sector.

The fi nancial crisis of 2008/09 originated in the American housing market and led to sharp falls in property prices right across the country. Initially, this was mirrored by the performance of the ETF, with the share price falling sharply – but in the last three years it has come back

nicely, with the fund rising 34%. If the US economy continues to strengthen, it is likely that this positive trend will continue.

REZ invests in a portfolio of Real Estate Investment Trusts (REITs) that trade on the New York Stock Exchange. There are 34 holdings in total, although the 10 largest account for 65% of the fund. The main exposure is a 47.5% weighting in equity apartments, which is followed by 34.1% in equity healthcare and 14.8% in equity self-storage.

The fund’s largest single investment is the 9.7% allocation to HCP Inc, a REIT linked to the US healthcare industry. This owns a portfolio of nursing homes, life science business premises, medical offi ces and hospitals. Another major holding, Equity Residential, acquires, develops and manages high quality apartments and has more than 400 of these properties on its books.

To be classifi ed as a REIT, a real estate company must pay out at least 90% of its taxable income to its shareholders in the form of dividends. This allows the ETFs that invest in them to generate an attractive and sustainable yield. REZ is currently paying around 2.9% with distributions every quarter, although clients will need to complete a W8-BEN form to escape the 30% US withholding tax.

iShares FTSE NAREIT Residential is one of the best performing ETFs in the US property sector, with the exposure to healthcare premises giving it a more defensive portfolio than most of its peers. If the American residential market continues to recover the fund should be able to deliver a decent return.

FUND FACTSName: iShares FTSE NAREIT Residential Plus Capped Index (REZ)

Type: ETF listed in the US


Fund Size: $236m

Launch: Jan 2007


TER: 0.48%

Manager: BlackRock Investments

Website: us.ishares.com

iShares FTSE NAREIT Residential Plus Capped Index (REZ)



FSA PublicationsOUR MONTHLY SUMMARY OF THE LATEST OFFICIAL PUBLICATIONS BY THE FSA These listings exclude the FSA’s routine monthly handbook updates.

Regulatory Reform: PRA and FCA Regimes Relating to Aspects of Authorisation and SupervisionConsultation Paper Ref: CP12/2412th Sptember 2012 302 pages

The paper, compiled in consultation with the Bank of England, sets out the proposals for changes to existing regulatory rules and guidance, in the context of the Financial Services Bill in January 2012.

The Bill provided for the creation of the new UK regulatory architecture, including the creation of the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). It also proposes changes to the Financial Services and Markets Act 2000 and various other Acts of Parliament.

The FSA says that the creation of the new PRA and FCA rulebooks will involve substantive changes to the existing FSA Handbook, so that the new rulebooks can be aligned with the future objectives and functions of the PRA and FCA.

Consultation period ends 12th December

Addressing the Implications of Non-EEA National Depositor Preference RegimesConsultation Paper Ref: CP12/2311th September 2012 41 pages

The FSA is anxious to address a problem which occurs in certain non-EEA countries, whereby domestic depositors take precedence over non-domestic depositors if a fi rm should become insolvent.

The FSA is anxious to address a problem which occurs in certain non-EEA countries, whereby domestic depositors take precedence over non-domestic depositors if a fi rm should become insolvent.

The agency is therefore calling on fi rms from non-EEA countries that operate these national depositor preference regimes to take appropriate steps to address the subordination of UK branch depositors (specifi cally) compared to those of home country depositors.

Of interest to fi rms from non-EEA countries which operate deposit-taking branches in the UK and which are subject to national depositor preference regimes in their home countries.

Consultation period ends 11th December

Client Assets Regime: EMIR, Multiple Pools and the Wider ReviewConsultation Paper Ref: CP12/226th September 2012 108 pages

This discussion paper concerns the client assets regime: European Market Infrastructure Regulation (EMIR), and aims to consult on changes to the client assets regime that will be necessary to adhere to a European Regulation. It will also propose a radical change in the client money rules that may affect all fi rms holding client money relating to investment business.

The eventual purpose is to introduce changes to CASS, so as to make it compatible with Articles 39 and 48 of EMIR; to introduce multiple client money pools; and to start a discussion on still wider changes to the client assets regime.Consultation period ends 16th October (Part 1), or 30th November (Parts 2 and 3)

Risks to Customers from Financial IncentivesGuidance Consultation Ref: GC12/115th September 2012 32 pages

Of interest to all fi rms in retail fi nancial services with staff who are part of an incentive scheme and who deal directly with retail customer transactions.

The FSA has fl agged up its concern about incentive schemes with high risk features and the potential for sales staff to earn signifi cant bonuses were common across the fi rms we assessed. Most fi rms did not have effective systems and controls in place to adequately manage the increased risks of mis-selling arising from their incentive schemes.

The agency’s guidance aims to help fi rms identify and manage the risks from incentive schemes, in accordance with the relevant requirements set out in the FSA Handbook.

It says it expects fi rms to:

• Properly consider if their incentive schemes increase the risk of mis-selling and, if so, how;

• Review whether their governance and controls are adequate;

• Take action to address any inadequacies – this might involve changing their governance and/or controls, and/or changing their schemes;

• Where risks cannot be mitigated, take action to change their schemes; and

• Where a recurring problem is identifi ed, investigate, take action and pay redress where consumers have suffered detriment.

Consultation period ends 31st October



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Short Selling Regulation – Handbook ChangesConsultation Paper Ref: CP12/2130th August 2012 50 pages

The Paper invites comments on the proposed amendments to the FSA Handbook relating to the EU Short Selling Regulation (SSR), which applies from 1 November 2012.

The SSR introduces requirements for reporting signifi cant net short positions in shares and sovereign debt. It is directly applicable in the UK, although in some situations involving other EU member states, discretion may be awarded to foreign authorities.

Consultation period ends 20th September

Restrictions on the Retail Distribution of Unregulated Collective Investment Schemes and Close SubstitutesConsultation Paper Ref: CP12/1922nd August 2012 92 pages

Of relevance to fi rms providing and promoting UCIS and close substitutes to retail customers through marketing materials or advised sales; fi rms which allow access to them through investment wrappers; and providers of certain other investments, including structured products, where they take the legal form of securities issued by a special purpose vehicle.

The FSA is seeking to change its rules to ban the promotion of unregulated collective investment schemes (UCIS) and close substitutes to ordinary retail investors in the UK. It says its researches have identifi ed signifi cant levels of retail promotions and sales of UCIS which fail to meet requirements, exposing ordinary investors to signifi cant potential for detriment.

In particular, the structuring of certain other products through special purpose vehicles was felt to be a backdoor form of UCIS-like investment, and the FSA is generally seeking to widen out the scope of the ban to include these vehicles.

Consultation period ends 14th November

Review of the Client Money Rules for Insurance IntermediariesConsultation Paper Ref: CP12/2028th August 2012 136 pages

Of relevance to all insurance intermediaries to whom CASS 5 applies. It would also interest insurers, particularly the discussion on risk transfer.

The paper follows a review of the applicable client money rules relating to how general insurance intermediaries hold client money. In particular, it aims to consider whether enhancements can be made to the regime itself or to the detailed rules.

The FSA says that its review of CASS 5 showed up problems that included a poor understanding of the Rules and subsequent poor compliance, missing or incomplete documentation such as trust deeds and trust letters. This Consultation Paper (CP) contains various proposals for changes to the CASS 5 rules.

Consultation period ends 30th November

Data Collection on Remuneration PracticesConsultation Paper Ref: CP12/181st August 2012 62 pages

Of relevance to all FSA-authorised banks, building societies and Capital Adequacy Directive (CAD) investment fi rms. Although not to exempt CAD fi rms such as credit unions.

The FSA proposes to consult on remuneration data reporting requirements for BIPRU fi rms and third country BIPRU fi rms, in the light of amendments to the Capital Requirements Directive (CRD3). Member States are responsible for drawing up data on remuneration practices, and for transmitting it to the European Banking Authority (EBA), which produced its own guidelines in July 2012.

In particular, this consultation looks at the Remuneration Benchmarking Information Report and the High Earners Report.

Consultation period ends 30th September

Sale and Rent Back Review 2011Finalised Guidance Ref: FG12/1831st July 2012 12 pages

The guidance follows on from the March review after complaints of poor practice among SRB fi rms, and it lists the main fi ndings:

• Appropriateness and affordability were not assessed correctly.

• Disclosure was insuffi cient, inadequate and was not given at the right time.

• Record keeping was inadequate.

• SRB agreements contained incorrect information and did not meet requirements for tenancy agreements.

• Financial promotions were not compliant with the rules.

• Sales processes did not follow the structure set out in the rules, or allow fi rms to gather enough information from customers to assess appropriateness. Customers were not given enough time.

• Training and competence and compliance monitoring were inadequate.

Mortality Assumptions for Pension KFIsPolicy Statement Ref: PS 12/1427th July 2012 21 pages

Of interest to life insurers and other providers of personal pensions and also to fi rms that advise on personal pensions. Also to consumers.

The FSA aims to help consumers to consider the wide range of possible outcomes involved in Key Features Illustrations when buying packaged products that do not come within the scope of the Markets in Financial Instruments Directive at the point of sale. Also to help them compare the charges of different products.


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Risks to Customers from Financial Incentives

Through good management information and business monitoring combined with an effective risk based approach to their adviser monitoring, fi rms should be assessing the risk arising from the features of their incentive schemes. (GC12-11, http://tinyurl.com/9e5osz3) These sales driven, commission based legacy schemes are a complex issue and they contain and many unmanageable features or aspects which could provide a wide range of mis-selling risks.

All fi rms should consider factors and risk impacts from type of product and the method of distribution, for example, advised or non-advised, face-to-face, distance (internet calls) or telephone.

Firms may need to take steps to remove features or change their incentive schemes if they are unmanageable or unclear on their impact on TCF.

The FSA have found in their review that:

■ Most fi rms did not properly identify how their incentive schemes might encourage staff to mis-sell.

■ Many fi rms did not understand their own incentive schemes because they were so complex, making it harder to control them.

■ Firms did not have enough information about their incentive schemes to understand and manage the risks.

■ Most fi rms relied too much on routine monitoring, rather than risk-based monitoring, such as performing more checks on staff with high sales volumes.

■ Some fi rms had sales managers with a clear confl ict of interest that was not properly managed.

■ Many fi rms had links to sales quality built into their incentive schemes that were ineffective.

■ Some fi rms had not done enough to control the risk of potential mis-selling in face-to-face situations

Firms may need to take steps to remove features or change their incentive schemes if they are unmanageable or unclear on their impact on TCF.

Clients are likely to lose out if:

■ Firms reward staff through material incentive schemes based on sales volumes, fee income or similar measures;

■ Firms’ incentive schemes include features that are harder to manage;

■ Management do not understand how the specifi c features, complexity and value of their incentive schemes could increase mis-selling; and/or

■ Poor quality sales or mis-selling are not adequately refl ected in the eligibility for, or level of, incentive payments.

So what areas are likely to cause confl icts and raise the ire of the regulator, but more importantly could lead to clients losing out on the level and impartiality of advice that they should expect to receive?

There are a number of problem areas to consider, and all are based on the qualifi cation for disproportionate or inappropriate rewards due to volumes or tiered rewards for volumes of sales, such as;

Problem areas

■ Disproportionate rewards for marginal sales

■ Accelerators (or stepped payments)

■ Inappropriate incentive bias between products

■ Variable ‘salaries’

■ Inappropriate requirements to determine if incentives are paid

■ 100% variable pay/commission only

■ Inappropriate levels of incentives for sales of additional products.

Lee Werrell, Managing Director of CEI Compliance Ltd, gives his personal round-up of the key issues that are currently shaping the compliance agenda.



Compliance Doctor.indd 54 07/10/2012 16:19

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See also the listings of FSA publications on Page 52 of this issue

Adviser Charging, Permissions and Disclosure Documentation

Although the new rules on adviser charging come into force on 31 December 2012 it is critical that you have all of your client contact documentation up to date beforehand. The new rules will make the process of adviser remuneration more transparent, so clients will know exactly what they are paying for.

The FSA’s new rules will mean consumers can be confi dent that the advice they receive is not biased by commission, as the adviser’s remuneration will be agreed between the adviser and customer instead of being determined by a provider.

The new adviser charging rules mean that all fi rms such as banks, independent fi nancial advisers, wealth managers, stockbrokers and product providers on their own products that give retail investment advice will have to:

■ set their own charging structure;

■ have a charging structure based on the level of service they provide;

■ disclose charges to clients upfront, using some form of price list or tariff; and

■ deliver an ongoing service when an ongoing fee is levied, unless the product is a regular payment one.

Many fi rms have already prepared their post RDR SCDD or CIDD, with some writing their own. There is a problem if this was done before the beginning of August. After this time the latest rules were published and you are

required to make sure your documents contain at least the guidance in the COBS 6 Annex 1 Guidance at http://tinyurl.com/8ll4w96

Although there are no surprises in this document there are certain areas and headings that the document should have with specifi c wordings within those areas. Obviously the need for minimal information in a prescribed format is necessary for the effectiveness of mass market delivery and subsequent review, but the format and remainder of the content is down to the fi rm concerned. The disclosure documentation needs to be ready and accurate, and this would be a good time to check other critical aspects like your permissions.

Do you have the right permissions?

It is important to check this, because from next year, if you hold permissions to provide advice on retail investment products you will be subject to the new RDR reporting requirements, even if you do not provide this advice.

If you think this could apply to you we recommend that you apply for a Variation of Permissions.

Remember: IIf you have any concerns regarding these issues, please contact your compliance department or an independent consultant who is a member of the Association of Professional Compliance Consultants (APCC), recognised as a trade body by the FSA

Other scheme features that could cause issues are;

■ Thresholds

■ Incentives linked to the level or type of premium, investment amount or length of term

■ Competitions/promotions.

Clients are likely to lose out if: Many IFAs will dismiss most of the above as “bank sales force” practices or national IFA or network issues, however there are issues around higher risk features in incentive schemes the smaller fi rms, which include;

■ Variable pay – many small fi rm mortgage and investment intermediaries pay advisers purely based on the revenue they earn. This is a form of 100% variable pay, so these fi rms should be aware of the increased risk of mis-selling and have adequate controls to mitigate the risk. Advisers can also receive additional bonuses for exceeding a revenue threshold, which acts like an accelerator on their earnings.

■ Reducing costs – advisers can have costs relating to compliance and T&C deducted from sales revenue, and these costs might be reduced for future business if the adviser’s revenue passes a certain threshold. This can create a disproportionate reward for marginal sales if advisers are trying to reach the threshold towards the end of any qualifying period, as the reduced compliance costs effectively increase future earnings.

The Answer?

All fi rms should ensure that they actively monitor, assess and manage;

■ Management information (MI)

■ Business quality monitoring

■ Sales managers’ confl icts of interest

■ Controls for inappropriate behaviour by sales staff

■ Governance arrangements.


Compliance Doctor.indd 55 07/10/2012 16:19

How can MyTouchstone help your firm?

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Visit www.MyTouchstone.co.uk to register or call 01236 794 120

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rate from £125 to the average for my area of £160”, said Mike Grant of Montgo Consulting Ltd, East Sussex.

1) Investigate ‘Hotspots’ of investor activity on Google maps.2) Discover your firm’s ranking and market share in our IFA League Table: Per location/per specific area of advice.3) Adviser Charging Guide: How do your fees compare with your peers in you location?4) RDR Survey: Understand how many firms are RDR ready and the biggest hurdles still to over come. 5) National & Regional Support Services to IFAs: Rankings for networks, broker service provider, outsourced fund management, wraps and platforms.6) New Business Trends: Discover how business is changing from one quarter to the next.7) Access our ‘Fund Focus’ page created in association with FE & Rayner Spencer Mills - gain a unique insight into the latest fund selection and performance trends. 8) View our ‘Platform Page’ to find out the latest trends in the platform & wrap market, updated quarterly with the latest stats, reports & insights. 9) Download the latest FSA RDR Guide.

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www.MyTouchstone.co.uk

Thinkers.indd 58 07/10/2012 16:21

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America’s number two investor Behind Warren Buffett, of course. The co-founder of Pacifi c Investment Management (PIMCO) built his $1.8 trillion fund business substantially on fi xed-income. But “the Bond King’s” often startlingly perceptive observations on commodities and macro developments have earned him an outstanding reputation. Well, mostly.

Early promisePIMCO started in 1971, which was a tricky time for bonds because of the vast US government issues. But it was the 1990s that really delivered the goods – and not least because of two best-selling books entitled Bill Gross on Investing and Everything You’ve Heard About Investing is Wrong (1997). No risk of modesty there, then. But his remarkable gift for macro timing soon justifi ed the hype. PIMCO is by far the world’s biggest and most successful fi xed interest operator.

How did it go in 2008 then? Well, to start with. Gross was among the fi rst (in January) to warn about the dangers of credit default swaps, which he reckoned could cost the global banking system $250 billion, not counting another quarter-trillion of subprime loses themselves. (Aaah, if only it had been as little as that.)

It wasn’t so good for PIMCO’s $25 billion of commodity funds, which lost 43% – thus taking some of the shine off a ten-year average growth of 9.4%. But hey, who’s counting? The funds had already gained a heady 24% in 2007, and they subsequently made 40% in 2009 and 24% in 2010. Not bad.

And in 2011? Red faces again, unfortunately, although this time the bad news was about bonds rather than commodities. Gross started his annus horribilis with a loud recommendation to reduce exposures to government bonds like a hot brick, because he said

the ending of quantitative easing in the summer would see yields soaring and prices collapsing.

Oops. Instead it was the prices that soared, as the extent of the equity and banking mess became clearer. Worse, PIMCO’s own holdings had slimmed down their bond exposures while all around were increasing theirs. And in October Gross issued a public apology for his disastrous performance. It was reported that his funds had ranked 536th out of 584 bond funds during the year to date.

And 2012?It all went back into blissful reverse for the PIMCO Total Return fund. By June 2012, the entire net outfl ow from 2011 had been recouped and it had outperformed 96% of the market. August alone brought $1.3 billion of new cash, bringing the total for the year to $9.3 billion.

So that was all right then?Not entirely. In July, Gross described equity investors as “cult followers”, and equity investing itself as “a Ponzi scheme”, which didn’t go down so well. By September he was proclaiming the return of infl ation and the need for equity investors to downsize their future growth expectations to 3-4%. Permanently....

And yes, that means downsizing on corporate bonds, especially high yielders. And buying gold, because that’s where QE3 will take us. “Gold as a real asset will be advantaged if the US Federal Reserve or European Central Bank start to write checks in the trillions.”

Biggest self-confessed mistakes?Not buying into Wal-Mart or Warren Buffett’s Berkshire Hathaway in 1974, he said, because they didn’t pay enough attention to appearances. And then lending $5 million to a shiny company called Itel “because I liked the carpet, and the secretaries”. Oops, it failed.

“We are witnessing the death of abundance and the borning of austerity.”

STOCKSARE DEAD

William Hunt “Bill” Gross Born 1944 in Middletown, OhioCurrently managing PIMCO funds at Newport Beach, California


Thinkers.indd 59 07/10/2012 16:21

POLES APART?IFAS AND RECRUITERS HAVE MUCH IN COMMON, SAYS STUART LEANEY, DIRECTOR AT RECRUIT UK LIMITED A few years ago, I ventured into the world of seeking fi nancial advice. And, having my own links to the industry, I quickly decided that I wanted to speak to an advisor with a whole–of-market proposition. So I did my research, contacted various people I knew who were fi nancial advisors, and started talking to a candidate who I had placed seven years previously.

He was a very professional, courteous candidate, and this came right through in the no-nonsense, logical, clear and concise approach that he took toward me, my family, and our fi nancial needs and long-term aspirations – or, as he called it, our “number”. My wife and I never once felt baffl ed by jargon, rushed or sold to. It really was ‘best advice’.

You might be wondering why I’m telling you about our positive experience from four years ago? After all, it’s one which I’m sure a thousand others could also tell. Well, the reason is that I’ve recently been looking into the training and development of recruiters within fi nancial services, predominantly within the regulated sales arena. And it’s struck me that how a recruiter should work carries many similarities to how I believe an IFA does work.

At this point it’s probably best to point out the obvious. Financial services and recruitment are at opposite ends of the regulatory ladder. We recruiters have a professional body that represents us (and by us I mean the 100,000 recruiters and the companies that employ them) - but in terms of how recruiters themselves work there is very little regulation. It’s rather different for advisers.

A Professional ProcessSo let me go back to the experience that my wife and I had. An initial telephone conversation about us, our family and hobbies, our careers, aspirations - a rapport/relationship building process, if you like – was intended to lead on to a face-to-face meeting where we could talk through the critical detail, or the “fi nancials” as my wife likes to call it. Now, I see no difference in how a good recruiter would approach an initial conversation with a prospective candidate. It isn’t about the end result at this stage, it’s about the here and now. Or, in other words, “How can we help?”

The face-to-face meeting was relaxed but structured. It involved a fair amount of information but it was backed up by paperwork so that we could read and absorb it all in our own time. Again, a good recruiter will explain exactly what they

do, and who they recruit for, and the resources they have access to. And they will provide documentation accordingly. If you then wish to take it further, then that’s your choice.

Our IFA followed up the meeting with a call to establish feedback and to answer any questions. My wife bombarded him with questions, some of which I’m sure he’d heard a million times before, and no doubt similar to the questions I’ve been asked. (“What’s the average salary for an IFA?”) All of these were handled professionally,

We had a second meeting and happily signed on the dotted line, and off we went into the world of pension planning, stocks, shares and child trust funds. All of which again underlined the similarities. After all, a good recruiter won’t submit your CV to any company until you have given your permission, or signed on the dotted line...

The Continuing RelationshipFrom there on, we weren’t left to our own devices. Our IFA was very helpful in answering further questions, updating us on paperwork and so forth - and not once did we feel he had ‘moved onto the next case’. I mean, think about it. Would you expect a recruiter to forget about you once you’ve secured



Recruitment.indd 58 07/10/2012 16:25

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an interview? Or would you want guidance, support and most probably some further questions answered?

I meet up with my IFA now and again - over a coffee, or something stronger, or maybe over lunch. I don’t really pay much attention any more to the sales calls that I get from my bank about some offer or other, because when I really need

further advice I know exactly who I’ll be using, and who I will continue to refer my friends to.

A good recruiter will generate your trust. He will add value in your quest for a job – because if he doesn’t, why bother using one? A recruiter should act as a conduit between the two most important aspects of recruitment, the company and the individual. I’d say the parallels with IFAs are clear.


IFAmagazine.com


Recruitment.indd 59 07/10/2012 16:25

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While fi nancial advisers have been focused on the Retail Distribution Review for several years now, the Solicitors Regulation Authority is still (as I write) deciding how to respond to the changes which are now only three months away. The great debate of the moment is how professional connections are going to adapt their rules to accommodate the new terminology of Independent and Restricted advice? So far, they seem to be making heavy weather of it.

Now, most fi nancial advisers aspire to build connections with local fi rms of solicitors and accountants. In this way clients can expect to get a holistic view of their personal and business fi nances, taxation, trusts, wills and estate planning.

‘Holistic’, you ask suspiciously? No, it’s not some ‘new age’ term, to be dismissed as just the preserve of a set of alternative therapists. The term was fi rst coined by Jan Smuts, the South African statesman and philosopher, to describe a society in which the whole was greater than the sum of the parts. When applied to medical or fi nancial matters the point is well made: a group of professionals working together with their combined knowledge and experience greater than the sum of the individuals’ area of expertise.

Do We Really Need a Rule Change? So, back to the point. The Solicitors Regulation Authority Code of Conduct currently requires those under its supervision to refer clients needing investment advice to Independent intermediaries. However, as I write, we still await the outcome of a consultation on a potential rule change on this point. The current preference, it seems, is to remove this requirement ‘such that clients are in a position to make informed decisions about referrals in respect of investment advice’.

It looks as though the legal eagles’ concern - probably driven by ill-judged outpourings of vociferous doom-mongers predicting the death of the Independent adviser - is that they might be unable to fi nd enough Independent advisers to meet demand after RDR, but that they’d be unable to refer clients instead to discretionary managers opting for Restricted status.

Well, my concern is whether solicitors are actually knowledgeable enough to judge what sort of advice might meet their clients’ needs? The ICAEW code of ethics points out that accountants ‘may not necessarily know enough to be able to completely assess whether the third party is the optimum choice or not’. Precisely.

A Matter of TrustReferral to Independent advisers is the only way that professionals can continue to comply with their over-arching obligations on professional competence, independence, objectivity and clients’ best interests. And it’s not just me that thinks that.

In one research project, when asked what advice services people wanted, almost all respondents rejected non-independent advice, mainly because they wanted advice across the whole market. They quoted one ‘mass affl uent’ client:

“Why would you go to [a non-independent adviser] when you can go to somebody who will search the whole market?”

For high net worth investors, the concept of advisers who are not able or allowed to advise on all products and services in the market was highly unappealing, with concern being expressed that customers would not receive the best advice:

“I’m a bit suspicious of it: are they restricting it to their own products or something just to benefi t themselves? Is it going to be the best for me?”

Regardless of any rule change allowing referral to Restricted advisers, clients repeatedly express a clear preference for Independent advice. And clients should insist on nothing less from all of their professional advisers, legal, tax and fi nancial.

ANYONE WOULD THINK INDEPENDENTS WERE A VANISHING BREED. GILLIAN CARDY ISSUES A WAKE-UP CALL TO M’LEARNED FRIENDS


www.IFAmagazine.com



IFA Centre.indd 60 07/10/2012 16:37

Senior Financial Planner - Gloucestershire

This is a fantastic opportunity for a highly skilled and experienced Financial Planner to workwithin a vastly reputable wealth management firm. No requirement for a transferrable clientbank as you will be capitalizing on internal business sources as well as developing a presencein the local area. This opportunity would suit a proactive and dynamic individual; preferablyat Chartered status. You must feel comfortable dealing with wealthy individuals and haveexperience in meeting their exacting demands.

Please contact Danielle at: [email protected] or on 01727 884 662

Basic to £70,000 plus benefits and bonuses

Please contact James at: [email protected] or on 01727 884 662

Senior Financial Planner - Investment Management firm, The City

Our client, a highly respected Investment Manager with a very established wealth planningdivision are currently looking to appoint a new Financial Planner to their London office.Working closely with the discretionary team, you will be responsible for offeringindependent, holistic advice to the firms existing client base, mainly consisting ofprivate clients with between £2-5 million. The ideal candidate will have exceptionalinterpersonal skills, HNW client exposure and be qualified to Chartered Status.

Basic to £80,000 plus benefits and bonuses

Ground Floor, Mayesbrook House, Lawnswood Business Park, Redvers Close,Leeds LS16 6QY Telephone: 0113 274 3000 Fax: 0113 274 3031

Sales Proposition Trainer - London Based/UK Travel

Are you an experienced Financial Services Sales Trainer? BWD Search & Selection are workingwith one of the UK’s leading Platform providers to recruit a ‘Sales Proposition Trainer’ in theSouth East. Candidates must be in easy reach of Central London and be able to demonstratesignificant experience in delivering training to support the Proposition and Sales Developmentteam. A highly competitive package is on offer, along with the opportunity to join a market-leading Financial Services organisation.

Please contact Adam at: [email protected] or on 0113 274 3000

Highly competitive package

Suite 4, Ground Floor, Breakspear Park, Hemel Hempstead, HP2 4TZTelephone: 01727 884 662 Fax: 0113 274 3031

www.bwd-search.co.uk

Regional Admin Manager - Accountancy Practice, East Midlands

Our Client is a top tier accountancy practice with a widely respected Wealth Management armwho seeks to appoint a Regional Administration Manager. The role is to provide managementand leadership to the local Administration Managers & support teams within each regionwhilst achieving the Group’s wider business targets and service standards. Knowledge ofmanaging support teams and experience within financial services is essential as well asexceptional communication and leadership qualities. This is a key hire and you will beexpected to travel to the Group’s regional network. A rare opportunity not to be missed.

Please contact Gary at: [email protected] or on 0113 274 3000

Basic to £35,000 plus benefits and bonus

Visit our website at

Employed Financial Planner - North West

This well established, reputable and profitable IFA firm is looking to recruit a QCF level 4financial planner as it looks to continue expansion plans into 2012. The business model isRDR ready and also provides full support in terms of admin and paraplanning. There will beadditional client allocation and leads provided as and when, as well as the opportunity to linkin with other areas of the business and account manage and take and develop lead provisionfrom them. A great opportunity to develop yourself, your client base and consequently yourearnings further.

Please contact James at: [email protected] or on 0113 274 3000

Basic to £50,000 plus car allowance, flexi benefits and bonus

Head of Corporate - Midlands

An employee benefit consultancy is seeking an experienced hire to grow the Midlands. Youmust have an EBC background with knowledge across Trust and Contract based pensions(DB and DC) and ideally Risk and Flexible benefits and be accustomed to working on a feebasis. Your technical knowledge must be strong. You must also have experience of building,managing and coaching a team of corporate consultants and exceeding revenue targets forboth new business and retaining existing clients. Level 4 is expected as a minimum whetherAPMI/ACII/DipPFS/FIA qualifications.

Please contact Zoe at: [email protected] or on 0113 274 3000

Excellent package including bonus

the financial services e-learning specialists

T 0845 850 9995 F 0113 274 3031 E [email protected]

Wanted: Quality financial advisers....Only those with Level 4 Qualifications need apply

More and more large groups are demanding that candidates have already achieved at least Level 4 qualification. In fact, many haven’t even picked upa book yet. Without large numbers of qualified advisers the FS sector has a difficult future to say the least.

The BWD Group, an established search & selection firm, have taken action to help with the launch of a new service - BWD development.

• Advisers and others taking the Level 4 exams can now access e-learning programmes and on-line mock exams. • This allows candidates to learn at their own pace - at a time and place to suit them• They can take on-line assessments along the way and take up to five mock exams to make sure they are on track to pass the live examination

If you like the sound of this, go to www.bwd-development.com where you can seea full demonstration of the service or call BWD development on 0845 850 9995

Get your skills up todate the easy way


IFA Centre.indd 61 07/10/2012 16:37

Financial ServicesRecruitment Specialists

Independent Financial Adviser

Bristol

Up to £38k basic + bonus + car

An award winning and established company who specialise in providing Independent advice on all types of investment, pensions and life assurance for individuals and businesses on a discretionary and advisory basis.

My client offers two in-house discretionary management services; the fi rst a groundbreaking service offers 6 risk profi led strategies to clients with modest sums to invest and the second a prestigious service for clients with 100k+

A holder of the prestigious ‘Chartered Financial Planners’ title, my client is committed to reinforcing the highest standards of professional practice in their business dealings and with continued growth and success, they are looking to expand their Bristol based team with an investment driven IFA to provide quality advice across the local area and the UK.

Ideally you will be a fully level 4 qualifi ed IFA with CAS status, or have a minimum of 1 exam to completion of the diploma.

In return, my client is offering a basic salary of up to £38k with bonus of 75% of business written (minus costs and salary e.g. 100k = OTE 65k) an excellent offi ce in a prestigious part of Bristol, full paraplanner support and quality client/leads provided with investable assets of £100,000+, so own client base is not essential.

This is an exciting opportunity for a fi nancial professional who is seeking an opportunity to enhance their client base and work within a true RDR ready IFA practice.

Wealth Adviser

London, Gloucester, Surrey, Kent, Devon & Cornwall

Circa £60k per annum + bonus and benefi ts, OTE £100k in year 1

A renowned Private Banking and Wealth Management company. With offi ces in the UK, the Americas, Middle East and Europe they have a reputation for delivering highly evolved fi nancial services to Business owners, Sportspeople amongst a valued client list of UHNW clients.

Although this company has a strong historical background, they have moved signifi cantly with the times and have embraced forthcoming regulatory change becoming RDR ready; this is in tandem with an ongoing commitment for quality and product development.

As part of their continuing expansion they are seeking candidates with a strong academic background, with experience of both regulated advice and Investment management, who are adept at providing regulated fi nancial advice. Chartered with PCIAM or soon to be qualifi ed is important; however there may be exceptions for the right candidate.

Working alongside a Private Banker, you will have responsibility for providing regulated advice across a wide spectrum of products with an emphasis on Tax, Trust and Pensions.

A natural communicator, you will be able to articulate complex fi nancial solutions and work with other professions assuming authority when the need arises.

Chartered Senior Financial Advisor

Edinburgh

£50k + bonus

An award winning Chartered Financial Planning fi rm who provide a comprehensive, innovative and practical fee based wealth management service to individuals and businesses currently has a unique opportunity in their Edinburgh offi ce.

My client are seeking a Chartered and experienced IFA to join their growing and well regarded Team and provide a Holistic planning service to HNW clients in line with the requirements of the company.

This is a unique position that will offer the successful individual an established HNW Client bank with trail income in of £100k plus a new group scheme. Salary depends on experience/qualifi cations, but will be circa £50k and you will be eligible for 30% bonus payments upon 100k being reached (trail is taken into consideration) which will increase when income reaches above target revenue of £200k.

To be considered for this role, my client requires a fully chartered advisor who has no less than 5 years relevant industry experience. You will have substantial experience in relationship management and lead generation as you will be developing a client bank of your own and maximising opportunities. A proven track record in exceeding targets and expectations is essential.

In return for expertise and commitment, my client offers the successful individual the opportunity to work within a mature and driven team environment with full administration and paraplanner support.

IFA Centre.indd 62 07/10/2012 16:38

Director IFA

Manchester

£60k basic (negotiable) + equity + bonus

Are you currently an IFA who is concerned with the direction of your current employer? Worried about RDR? An entrepreneur who wants to be part of a business not just and adviser!? If this sounds like you then my client a boutique IFA based in south Manchester want to speak to you.

An opportunity has arisen within this practice for a successful IFA with a trail of circa 100k to join the business as a director. You will be responsible for the growth of the company, contribute towards the management of staff, compliance, FSA issues and have a vested interest in running and growing this business over the next 5-10 years. You will benefi t from a wealth of Entrepreneurial and creative experience from the existing Adviser Team and a strong fee based business model.

My client has been established for over 7 years they are RDR ready, debt free, and have an increasing high net worth client base, professional introducers and a realistic and credible business plan of increasing trail to £1million in 5 -10 years. The practice is FSA directly regulated offering the full range of Tax and Investment solutions enabling an adviser to satisfy HNW clients demands fully .

In return my client is offering a basic salary of circa 60k, bonus and future equity. You will be based within their modern offi ces, benefi t from a personal individual offi ce, full paraplanning/admin support and the realistic long term prospect of a lucrative, secure career and credible exit strategy.

An exciting opportunity for the right IFA who wants more control over the direction of their business and future earnings.

Business Development Manager

UK

£50k + bonus

A Private Client Investment company with a reputation for high quality personal service and prudent investments. They can trace their history back to the very beginnings of the industrial revolution and have been witness to the political and economic upheavals of the 20th century.

Obviously there have been a number of changes within stock broking and commerce in general during that time, but there are inexorable values which are as true then as they are now which contribute greatly to the continuing success of this organisation.

A personal approach to doing business is a constant thread which runs the length of the organisation; this is coupled with experienced, knowledgeable Investment managers who take the time to understand client’s fi nancial goals and objectives fully. To complement this, there are award winning Investment products on offer, with three nominations in this year’s share awards.

As part of their continuing growth they are seeking business development managers to grow their established DFM proposition to IFA’s and Wealth Managers throughout the UK. There are over 20 offi ces in the UK who can support you with everything you will need. The expertise and sales ability will come from you and your knowledge of the IFA Market.

Ideally you will have a background in intermediary sales and be qualifi ed with an IMC or similar qualifi cation. Experience building robust relationships with IFA’s is a prerequisite for the position, as is the determination and drive to further your goals and ambitions.

If you are seeking a long term position with a private client stockbroker that is RDR ready and a reputation for personal service, Please apply in confi dence.

Employed IFA

London

Up to £70k basic + Bonus

A self funded Boutique IFA practice who specialise in Wealth Management, my client has a strong reputation within the market as a fi rm offering a high degree of service to Ultra HNW individuals across a multinational and multi cultural environment.

Currently looking for experienced and RDR compliant IFA’s who have a signifi cant amount of business to bring with them, my client is offering a basic salary of £65k and they will pay a 1% transfer bonus on assets transferred across to their discretionary management service and a further 25% bonus on all recurring fee’s through your clients.

Alongside an employed package, the fi rm operate a specialist technical support function that includes paraplanners and administrators, enabling each adviser to focus on their clients and write excellent levels of business.

Other benefi ts include; ■ Unique offering for advisers with client

funds under management which provides a sound secure future for the adviser.

■ Highly competitive salaries with generous benefi ts.

■ High quality level of advice covering whole of market.

■ Fee based business.

■ Ability to advise clients who wish to direct their own portfolios.

■ Consistent returns provided by Investment committee who have a clear objective to maintain low volatility.

■ Highly ethical organisation.

This is a boutique practice that is situated in a great central London location that also offers the opportunity to work from home. They have an aim to become a chartered practice in a short timescale therefore they need professional, teamorientated individuals with the passion, drive and creativity to undertake this role to the standard expected and with the outlook to advance qualifi cations.

Contact us to discuss our latest opportunities:

T 0844 371 4031 E [email protected]

IFA Centre.indd 63 07/10/2012 16:38

Institute ofFinancial Planning

To find out more or join visit www.financialplanning.org.uk or contact us on 0117 9452470

Support you through regulatory change Engage with a community of professionals Follow a structured career path Increase your personal and business potential Harmonise your goals with those of your clients Keep up to date with relevant issues and news

Post RDR, it will become even more important for advisers in the UK to align themselves with a relevant professional body or accredited body. Membership of the IFP offers you support and guidance whether you are a Financial Planner or Paraplanner. With a huge range of benefits, why not have a look at some of the ways in which we can help you?

THE PROFESSIONAL BODY FOR FINANCIAL PLANNERS AND PARAPLANNERS

IFA Calendar.indd 64 07/10/2012 16:38

magazin

e

magazin

eIFA

CA

LEN

DA

RDates for your diary

Retail Distribution of Unregulated Collective Investment Schemes and Close Substitutes)

Financial Planning Week (Institute of Financial Planning)

Financial Advisor Service Awards winners announced

Consultation period ends on CP 12/22 (Client Assets Regime: EMIR, Multiple Pools and the Wider Review)

Consultation period ends on CP 12/20 (Review of the Client Money Rules for Insurance Intermediaries)

DECEMBERPrivate Wealth Management SummitLas Vegas, USA

Consultation period ends on CP 12/23 (Addressing the Implications of Non-EEA National Depositor Preference Regimes)

Consultation period ends on CP 12/24 (Regulatory Reform: PRA and FCA Regimes Relating to Aspects of Authorisation and Supervision)

EC Directive on the ending of gender-based insurance premium differences comes into force

Retail Distribution Review operational from midnight

New rules on SIPP disclosure come into force

OCTOBERInstitute of Financial Planning Institute of Financial Planning annual conferenceannual conferenceNewport, South WalesNewport, South Wales

Changes to the UK Corporate Governance Code and the UK Stewardship Code come into effect

New Conduct of Business Rules come into operation on pensions

World Economic Forum MeetingMoscow, Russia

Consultation period ends on CP 12/14 CP 12/14 (Tracing Employers’ Liability (Tracing Employers’ Liability Insurers - Historical Policies)

European Council MeetingBrussels, Belgium

Consultation period ends on CP 12/16 (FSCS Funding Model Review)

Consultation period ends on CP 12/17 (Packaged Bank Accounts)

Deadline for self-assessment tax returns 2010/2011 (paper only)

NOVEMBERSolvency II – new regimeSolvency II – new regimetakes effect

Presidential and Congressional Election DayUSA

Money Management Financial Planning Awards

World Economic Forum Summit on the Global AgendaDubai, United Arab Emirates

AIFA annual dinnerLondon

Consultation period ends on CP 12/19 (Restrictions on the (Restrictions on the

Have we forgotten anything? Let us know about any forthcoming events you think ought to be in our listings. (Sorry, press and offi cial events only.) Email us at: [email protected], and we’ll do the rest.

OCT - DEC 2012

Institute ofFinancial Planning

To find out more or join visit www.financialplanning.org.uk or contact us on 0117 9452470

Support you through regulatory change Engage with a community of professionals Follow a structured career path Increase your personal and business potential Harmonise your goals with those of your clients Keep up to date with relevant issues and news

Post RDR, it will become even more important for advisers in the UK to align themselves with a relevant professional body or accredited body. Membership of the IFP offers you support and guidance whether you are a Financial Planner or Paraplanner. With a huge range of benefits, why not have a look at some of the ways in which we can help you?

THE PROFESSIONAL BODY FOR FINANCIAL PLANNERS AND PARAPLANNERS

17

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31

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1214

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21

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30

30

11


IFA Calendar.indd 65 07/10/2012 16:39

THE

OTH

ER

SID

E...

BETTER BUNKER DOWN IN THE HR DEPARTMENT, SAYS RICHARD HARVEY. THE FACEBOOK GENERATION KNOWS ITS RIGHTS

As the glorious summer sporting triumphs of Jess and Mo, Jonnie and Ellie, and – at last – Grumpy Andy momentarily took our minds

off the longest double dip recession since Methuselah was a lad, it’s back to chilly reality as millions of workers are about to see a drop in their take-home pay.

Pay now, enjoy laterPicture the scene at the end of this month, as employees of big companies which have introduced the new National Employment Savings Trust scheme open their salary slips and realise that, along with tax, National Insurance and the social club subs, a few quid has also been docked for pensions.

Folks working in HR departments should buy their tin hats and fl ak jackets now, because although the deduction will be minor – somewhere in the order of £22 a month for an employee earning the average wage of £26,200 – the reaction is likely to be as hostile as that accorded to Messrs Cameron and Osborne when they handed out the Olympic gongs.

Because NEST – as laudable in concept as it is fl awed in ambition – is particularly aimed at encouraging younger workers to save for their retirement.

We’re talking here about Generation Y, the 30- and 40-somethings who sociologists will

tell you are accustomed to free internet, cheap mortgages or living at home with Mum and Dad. They’re keenly aware of their rights, and that includes not having their pay-packets pillaged.

They will understand that, although everyone is automatically opted-in to NEST, there’s an opt-out available too. After all, many will reason, would I prefer to save a few bob each month towards a pension - or spend it on a gym subscription or a night out clubbing? No contest.

Off-messageThe introduction of NEST also ignores the fact that many savers prefer putting any surplus cash into ISAs, where at least they’re guaranteed a tax-free return. The Institute of Directors recently highlighted the ISAs vs Pensions anomaly, blaming a “failing pension architecture” which they condemned as complex, unattractive and lost “in a forest of regulation”.

To its credit, the government understands that any publicity campaign which forecasts a miserable old age for those who fail to save just won’t work. Instead, Downing Street launched a public competition to promote the benefi ts of NEST, eliciting slogans such as “Do you want to be a grandma or a glam-ma?” “Saving for a sunny day” and “Life’s full of little pleasures – why not make sure it stays that way?”

I sent in an entry which read “If the Danes can pay a decent State pension, why can’t we?” I don’t think it’s going to win.

SAVE YOURSELVESYOURSELVES

magazine...


The Other Side.indd 66 07/10/2012 16:42

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The magazine all the top IFAs are talking about... To get your free subscription simply fill out the form online at:www.ifamagazine.com/ content/subscribe

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e


agazine

date info useable, very good and easily read.date info useable, very good and easily read.good articles, relevant to my work. m

agazine

good articles, relevant to my work. good articles, relevant to my work. date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.

magazin

e

date info useable, very good and easily read.date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.date info useable, very good and easily read.

production with some good thought provoking articles production with some good thought provoking articles production with some good thought provoking articles

magazin

eproduction with some good thought provoking articles production with some good thought provoking articles production with some good thought provoking articles and useful information. production with some good thought provoking articles

magazin

eproduction with some good thought provoking articles production with some good thought provoking articles and useful information. production with some good thought provoking articles production with some good thought provoking articles production with some good thought provoking articles production with some good thought provoking articles production with some good thought provoking articles

magazin

eproduction with some good thought provoking articles production with some good thought provoking articles and useful information.

magazin

eand useful information. and useful information. production with some good thought provoking articles and useful information. production with some good thought provoking articles

magazin

eproduction with some good thought provoking articles production with some good thought provoking articles and useful information. production with some good thought provoking articles production with some good thought provoking articles

useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format

read. rather than usual newspaper. read. rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. read. rather than usual newspaper. read. rather than usual newspaper.

NEWS

For today’s discerning financial

and investment professional

MA

R 2

011

■

ISSUE

1

V ICKER S ’KN ICKERSHAS THE IBC’s NEW

CHAIRMAN GOT WHAT IT TAKES?

REDBOX DAYWILL THERE BE ANY RELIEF

IN THE BUDGET BOX?

NOTHING UP

MY SLEEVESIS GEORGE SERIOUS

ABOUT ENDING THE

ANNUITY TRAP?

LOOK

NORTH A FR ICAN CR I S I S

BUT EUROPE HAS NOTHING

TO BE SMUG ABOUT

➹

L EAV ING PART YRDR, SORTING THE STAYERS FROM THE LEAVERS

date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.

Very impressive read and lots of good articles, relevant to my work.

Very impressive read and lots of good articles, relevant to my work.

useful articles nice to see it in “magazine” style format Very impressive read and lots of

useful articles nice to see it in “magazine” style format Very impressive read and lots of

date info useable, very good and easily read.date info useable, very good and easily read.LOOK

read. content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many read. content, appealing to the female reader as many


agazine

date info useable, very good and easily read.date info useable, very good and easily read.

rather than usual newspaper. read. rather than usual newspaper. read. rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format

read. rather than usual newspaper. read. rather than usual newspaper.

BOX DAYWILL THERE BE ANY RELIEF

IN THE BUDGET BOX?

NOTHINGMY SLEEVESIS GEORGE SERIOUS

ABOUT ENDING THE

ANNUITY TRAP?

LOOK

➹➹➹ANNUITY TRAP?➹

ANNUITY TRAP?

Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for



JUN

2

011

■

IS

SU

E

2

STRUCTURED THINKINGINVESTEC - NEW THINKING ON STRUCTURED PRODUCTS

THE FSA HAS FINALLY HAD ITS PRAYERS ANSWERED OVER PPI MIS-SELLING

SANTSA S IMPLER TAX CODE?DON’T HOLD YOUR BREATH

AFTER THE GREAT WAVEJAPAN - IT ISN’T OVER YET

DAY OF THE MIFIDCOMING SOON TO A SCREEN NEAR YOU

AND SINNERS

useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format

Very good layout and informative. rather than usual newspaper.

Very good layout and informative. rather than usual newspaper.



layout and easy to read. for IFA market. Really good.layout and easy to read. for IFA market. Really good.layout and easy to read.

what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community.

useful articles nice to see it in “magazine” style format useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format

Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for


SANTSAND SINNERS

N e w s r e v i e w c o m m e


JUL

20

11 ■

is

sU

e

3

structured thinkinginvestec - new thinking on strUctUred ProdUcts

the fsa has finally had its prayers answered over ppi mis-selling

USAA s imPLer tAx code?don’t hold your Breath

After the greAt wAvejapan - it isn’t over yet

crisis

content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many




with good content which is plain talking. Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for

fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the



read that I would be happy to have delivered It looks like an interesting and enjoyable



what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community. c o m m e

content, appealing to the female reader as many content, appealing to the female reader as many

N E W S R E V I E W



SE

PT

20

11 ■

I S

SU

E

4

IS IT GETTING TOO

HOT TO HANDLE?

BRAZIL

BRITAIN AFTER THE RIOTSWHAT HAVE WE LEARNED?

KEEP IT LEGALDO YOU KNOW THE UCIS RULES?

CL IMBING A WALL OF WORRYHOW DO WE GET OUT

OF THIS ONE?

MULT I -ASSET FUNDS

AND WHY YOU CAN’T IGNORE THEM

with good content which is plain talking. Good Good Not seen anything like this Not seen anything like this

with good content which is plain talking. Not seen anything like this

with good content which is plain talking.

Worth reading. Interesting Worth reading. Interesting Not seen anything like this

Worth reading. Interesting Not seen anything like this Not seen anything like this

Worth reading. Interesting Not seen anything like this

Very professional and upmarket, exactly Very professional and upmarket, exactly Worth reading. Interesting

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Absolutely Absolutely Very professional and upmarket, exactly

Absolutely Very professional and upmarket, exactly Very professional and upmarket, exactly

Absolutely Very professional and upmarket, exactly

fantastic. Not cluttered by endless comparison fantastic. Not cluttered by endless comparison Absolutely

fantastic. Not cluttered by endless comparison Absolutely Absolutely

fantastic. Not cluttered by endless comparison Absolutely

tables. Punchy contemporary style.. More of the tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the tables. Punchy contemporary style.. More of the same in the months to come please. A very readable same in the months to come please. A very readable tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the

It looks like an interesting and enjoyable It looks like an interesting and enjoyable same in the months to come please. A very readable

It looks like an interesting and enjoyable same in the months to come please. A very readable same in the months to come please. A very readable


read that I would be happy to have delivered read that I would be happy to have delivered It looks like an interesting and enjoyable

read that I would be happy to have delivered It looks like an interesting and enjoyable It looks like an interesting and enjoyable


to the office - not something I could say about to the office - not something I could say about read that I would be happy to have delivered to the office - not something I could say about read that I would be happy to have delivered read that I would be happy to have delivered to the office - not something I could say about read that I would be happy to have delivered

many financial publications! to the office - not something I could say about many financial publications! to the office - not something I could say about

Great - look forward Great - look forward to the office - not something I could say about

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Great - look forward to the office - not something I could say about

to subsequent editions. many financial publications! to subsequent editions. many financial publications!

Brilliant! many financial publications!

Brilliant! many financial publications!

Very impressive Very impressive and interesting publication. to subsequent editions. and interesting publication. to subsequent editions.

Looked and felt like Looked and felt like Very impressive

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Looked and felt like Very impressive

a proper magazine rather than other cheaper a proper magazine rather than other cheaper and interesting publication. a proper magazine rather than other cheaper and interesting publication.

Breath of fresh air and topical Breath of fresh air and topical a proper magazine rather than other cheaper

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I’m going get it instead of the I’m going get it instead of the Breath of fresh air and topical

I’m going get it instead of the Breath of fresh air and topical Breath of fresh air and topical

I’m going get it instead of the Breath of fresh air and topical

to subsequent editions. all the top IFAs to subsequent editions. and interesting publication. all the top IFAs and interesting publication. to subsequent editions. and interesting publication. to subsequent editions. all the top IFAs to subsequent editions. and interesting publication. to subsequent editions.

a proper magazine rather than other cheaper are talking about...a proper magazine rather than other cheaper Breath of fresh air and topical are talking about...Breath of fresh air and topical

a proper magazine rather than other cheaper Breath of fresh air and topical

a proper magazine rather than other cheaper are talking about...a proper magazine rather than other cheaper Breath of fresh air and topical

a proper magazine rather than other cheaper

read that I would be happy to have delivered to the office - not something I could say about read that I would be happy to have delivered to the office - not something I could say about read that I would be happy to have delivered

BRITAIN AFTER

WALL OF WORRY



with good content which is plain talking. with good content which is plain talking. Not seen anything like this


with good content which is plain talking.

BRAZILwith good content which is plain talking.

BRAZILwith good content which is plain talking.

Not seen anything like this with good content which is plain talking.

Not seen anything like this with good content which is plain talking.









tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the






BRAZIL

It looks like an interesting and enjoyable read that I would be happy to have delivered

It looks like an interesting and enjoyable read that I would be happy to have delivered

It looks like an interesting and enjoyable




Very impressive Looked and felt like

Very impressive Looked and felt like

Very impressive

a proper magazine rather than other cheaper Breath of fresh air and topical N E W S R E V I E W

a proper magazine rather than other cheaper C O M M E N Ta proper magazine rather than other cheaper Breath of fresh air and topical

C O M M E N T


Breath of fresh air and topical a proper magazine rather than other cheaper C O M M E N Ta proper magazine rather than other cheaper

Breath of fresh air and topical a proper magazine rather than other cheaper C O M M E N T A N A LY S I SLooked and felt like

A N A LY S I SLooked and felt like a proper magazine rather than other cheaper A N A LY S I S

a proper magazine rather than other cheaper A N A LY S I S



OC

T 2

011

■

I S S U

E

5

CREDIT

RATING

AGENCIES

THOSE HALOS ARE

FINALLY SLIPPING

FINANCIAL

PLANNING

WEEKARE YOU

READY?

ETHICAL

INVESTMENT

CHANGING TIMES,

CHANGING OBJECTIVES

THE

VICKERS

BANKING

REPORTBUT IT

COULD

HAVE

BEEN SO

MUCH

WORSE

JOKEJOKEJOKETHE

IS ON ALL OF US

EUROPE BURNS WHILE

POLITICIANS FIDDLE

Important legal information: The information in this document is given for information purposes only and does not qualify as investment advice. Julius Baer Multistock Luxury Brands Fund is a sub-fund of Julius Baer Multistock (SICAV according to Luxembourg law) and it is admitted for public offering and distribution in the UK. Copies of the respective prospectus and financial statements can be obtained in English from Swiss & Global Asset Management (Luxembourg) S.A., UK Branch, UK Establishment No. BR014702, 12 St James’s Place, London, SW1A 1NX, as a distributor of the aforementioned fund (authorised and regulated by the Financial Services Authority) or by the Facilities Agent: GAM Sterling Management Limited, 12 St. James’s Place, London, SW1A 1NX, United Kingdom. Swiss & Global Asset Management is not a member of the Julius Baer Group.

Sparkling investments || JULIUS BAER LUXURY BRANDS FUND

Swiss & Global Asset Management (Luxembourg) S.A. UK Branch 12 St James’s Place, LondonT +44 (0) 20 7166 [email protected]

The exclusive manager of Julius Baer Funds.A member of the GAM group.

Documents

IFA Magazine October 2012