www.IFAbonus.co.uk Newsletter - the ULTIMATE information site for all financial advisers! Middle Britain sold down the river and other less controversial views! 28th November 2008
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1) RDR - bought and paid for by the banks? FSA Proposals with link to full document Am I right? Click Here to take survey please! The FSA have once again sold you and the middle market out to the Brigands, the least customer centered and moral part of the FS sector. Are you going to be part of the silent majority who just sit there and let it happen? Or will you write to you MP, encourage your colleagues to do so too, and point out that (with the Capital Adequacy requirements - apparently the average additional capital per IFA needed will be a "modest" £33,000) the FSA have now split the personal financial planning sector into top level fee only firms working for the rich, and the rest, which will be dominated by the biggest Brigands out, the banks. And the new educational requirements, laudable as they are, will see around 25% of the sector forced into early retirement. (And we all know exams prove nothing - they are just a cop out as the FSA are incapable of telling good advice from bad and wishing to continue to lead from the rear.) Who will benefit? Pure sales organisations, trainers and brigands - high level IFA's won't benefit, but their number will swell with IFA's who will no longer be able to afford to help NORMAL people! The main losers - the public who will have Brigands to deal with (once again) rather than slightly less than perfect IFA's. Which would the public benefit more from? Tens of thousands of Brigands motivated by the Brigand philosophy (you are as good as your last months sales figures and if next months are as bad, you are FIRED), or tens of thousands of IFA's who fail to be entirely fee based and may not actually research 100% of the products all of the time, but do a bang up job to 99% efficiency, and actually CARE and personally look after clients? (I have no problem with DSF's as long as it is clear that is what they are!! But I do have a problem with banks whose only motivation is profit. Integrity - not in that sector!) Find out who your MP is HERE and write care of House of Commons, London, SW1A 0AA today!! Am I right? Click Here to take survey please! and just to rub salt in the wounds HERE is the note on the new CP attempting to drive IFA's out of business by increasing Capital Adequacy dramatically. I am not sure how that is supposed to benefit clients - perhaps someone at the FSA could enlighten me? 2) Which irresponsible journalist? We all like a good headline, and the Which? one (see below) is a great one which seems to scream cash your w/p policy NOW which is not quite the tenor of the rest of the article, so we must let the journalist off the hook, and string up the editor and Andrew Fisher of Towry Law (not that he had anything to do with the article - he just needs stringing up for disservices to Financial Services.) It is also interesting to note from their site that they seem to be 100% commission based - not an hourly rate or flat fee in sight - 1% p.a. on everything is a lot of money even if it does only bias them against working for a living as they get paid the same whether they provide a Rolls Royce service or none at all (I am sure they DO work very hard though!) - rather than fee only, which is rather a laugh considering their negative PR on commission and their claim to be fee based!) In fact, I think I will set up a new Award - the Disservice to Financial Services Award - please let me have your nominations - Mr Fisher has plenty of competitors! 3) The Human Fac% of Banks HBOS to repossess own staff - wonderful stuff (audio) about 28 minutes in. They would have done so too, had the BBC not intervened. Brigands is the right word, and any action by the FSA to increase their market share in FS must be madness. Tell your MP and the FSA! Do listen to it, as it clearly demonstrates the integrity of banks (and refer your MP to it!) Best wishes Steve @ IFAbonus.co.uk 0845 129 8858 Index. PS Just to prove their insanity, the FSA say the RDR is not needed in the mortgage market. Why make life simple for consumers - anyone would think the FSA was supposed to help them - perish the thought. Confuse them all, say the FSA - "our mission is to destroy anything in UK Financial Services which is less than 100% perfect!" FSA Regulation Roundup November 2008 Contents of this newsletter: Index 4: Nightingale Asleep on the watch 6: From The Press & Bee Lines - always worth a look!7: IFAP's surprising view of the RDR 8: Graham Hills' acclaimed CAR column Training and Seminars - please see the site Forums and post up any you know about. Build a pension for 20p a day! Just hand out our form to everyone you meet to remind them who you are and introduce us. Potential income from probate & beneficiaries and a reminder of who the deceased's, adviser was (just when they have a large inheritance to discover!) Economical, local, probate, trust administration and deeds of variation (England & Wales). Follow the money and create an extra source of income whist saving money for your clients with New business enquiries 0800 838270 and tell them Steve Pett sent you! All you need is the right family contact and permission for the SWW Trust Corporation to ring and offer help. (Make sure you are recorded as the introducer.) 1: The Week in Numbers 19% more women own their homes, despite earning 25% less than men. A recent Fairinvestment.co.uk survey of more than 2,000 Brits has found that 44% of women questioned are homeowners paying a mortgage, compared with just 37% of men. The survey also found that there are 14% more men renting their homes than women. Over half of Britons rate financial problems as the most pressing social issue facing the nation. An AXA survey found twelve months ago Britons felt the most pressing issues facing the nation were immigration and terrorism with a 23% of Britons ranking terrorism as the greatest problem facing the nation in 2007. In the intervening period this has fallen to just 3%. 53% now feel financial problems are the single greatest issue facing the nation, up by a quarter (from 21%) in just 12 months. TN36 (Winchelsea, East Sussex) is the postcode where car owners are most likely to claim for theft from their car or theft of the actual vehicle. According to data from moneysupermarket.com more claims come from Winchelsea than urban city centres like Manchester, Hackney in London, and Liverpool which also make the top 20 areas for motorists claiming on their insurance for car theft. Half of all pensioners are cutting back on essentials because of the rising cost of living. According to recent research by Age Concern 2.1 million pensioners are living in poverty and with the real rate of inflation for the oldest and poorest pensioners at around 9%, the charity is urging the Government to introduce fiscal measures that will ease the financial burden for the millions already struggling to afford the cost of living. One in ten parents in their early thirties claims to provide their children with allowances of up to £300 a month. Research by NatWest reveals that instead of tightening purse strings, over two thirds (63%) of parents have boosted their brood's spending power, and switched from the traditional means of giving youngsters ‘pocket money' (smaller amounts of money to spend as they like) towards the system of giving an increased allowance, to encourage children to learn money management skills. 1.5 million Loan rejection rates have soared to 1.55 million in the last six months. A uSwitch.com investigation has revealed that as an alternative attempt to consolidate debts people are increasingly using credit card cheques. Over 423,000 cash strapped consumers use these to transfer cash into their current account. A further 300,000 people have resorted to using credit card cheques to pay utility bills. Almost three quarters of respondents to a Which? survey think that special offers are good value and more than half often buy things they aren't intending to because they are on offer. However three in ten said that buy-one-get-one-free (Bogof) offers cause them to throw away food. The UK wastes 6.7m tonnes of food a year - roughly a third of everything bought. Families with children in the UK waste an average of £610 a year on food that ends up being thrown away. 8 million people drive without any form of breakdown cover. The AA reports that two million of these have broken down in the last year and many drivers are forking out more than three times the price of basic cover when they have to arrange emergency one-off garage assistance. On average five days before payday current accounts run dry. According to a new report from Abbey 64% of Brits regularly have to make sacrifices in the days preceding their pay packet because they've run out of money. 43% of people first give up going out when they lack funds. 17% are likely to stop buying new clothes, followed by cosmetics (6%) and 3% of people are prepared to go hungry at the end of the month, rather than sacrifice anything else. Over 7.4 million basic banks accounts exist in the UK. The BBA says since Universal Banking began in April 2003, 3.2 million post office accessible accounts have been opened (half for customers with no previous banking relationship.) 400,000 have been upgraded to other accounts. Basic accounts are accessible for people who might not meet the banks' criteria for opening a standard current account or who want to ensure that they cannot overdraw their account.Financial Express provide the price feed on the home page of the IFA section of IFAbonus - check it out! MARKETS/ RESEARCH PRICES 3: Delegate feedback shows “Excellence as Standard” as living up to its name This year’s IFP annual conference “Excellence as Standard” was held at Celtic Manor Resort at the end of September. With 400 delegates attending it was the biggest and most successful IFP event ever held, and is testament to the growth in the Financial Planning profession that so many delegates attended. After the conference, all delegates were sent a detailed questionnaire to gauge feedback, and from this IFP judged that the event was a huge success. Over 60% of delegates provided their feedback. It revealed that the main reasons for attending the event in the first place were Professional Development (59%), the programme (57%) and networking opportunities (39%) – all of which IFP events are well known for delivering. The exhibition was a particularly strong feature this year with over 94% of delegates rating it “good” or better. As for the event overall, 89% judged it to be good value for money and an overwhelming 98% would recommend the conference to others based on their experience. The programme came in for much praise, and delegates reported added value was high from the majority of the sessions. While it is hard to pick out particular successes, there were five speakers where more than 70% of attendees rated their sessions as “very good”. This was the highest category possible and achieving such high proportions is quite a feat by any standard. Michelle Mone scored the highest, with 91% rating her “very good”. Dr Graeme Codrington came close with over 85%, while Dr Chris Shambrook (73%) Prof.Thorsten Hens (71%) and Andrew Milligan (70.5%). This year’s conference website was judged a success, with over 95% of respondents rating it as “good” or better. The 5* luxury of the venue was also appreciated, with over 98% agreeing it was “good” or better. The paraplanning track was a real hit with paraplanners and others new to Financial Planning. As ever, the sharing of ideas and experiences were evident, which given the turmoil in global markets was even more useful than usual. If you weren’t able to attend this year, then do make a point of looking at it for next year. It’s something you’ll be glad you did – and so will your clients!Make money and raise awareness with your website (download the form and look at the name of the introducer - change the link and your name and email address could appear as a link from your site - a 5 minute job!) by Roger Nightingale, Global Economist Incumbent politicians are scared. They should be Why did Prime Ministers and Presidents gather in the States last weekend? To discuss the plight of the world economy, or to provide photo-opportunities for the media? Almost certainly, the latter. Recent elections had indicated an anti-incumbency bias. There was thought to be an urgent need to refocus images. They have much for which to answer In part, the ploy worked. Though the news relating to the economy continued to worsen and though the securities markets steepened their decline, the poll ratings of incumbent governments rose a little. How curious! What a triumph of hope over experience! They were asleep on their watch Was it so easily forgotten that the politicians seen milling around on White House lawns were those who, when the warning bells were ringing, housing finance imploding, business sentiment collapsing, had expressed confidence in their delinquent central bankers! Was there no memory of these politicians approving The alternates, though, are not well liked Love may be blind but political allegiance isn’t. Voters aren’t fooled. They’re as cynical as ever. They know that their leaders didn’t spot the dangers in the past and can’t reasonably be expected to cope with them in the future. But the alternates are not obviously better. Indeed their shenanigans in the recent Early days: the crisis has hardly yet impacted the real economy More importantly, the crisis hitherto has been largely financial. It seems not yet to have affected the general community. The slide in stock prices is perceived to have hurt only City Slickers (no bad thing, therefore); the slippage in house prices, though more concerning, to have impacted the Buy-to-Rent brigade The crunch comes next year Will that change shortly? Yes. All the indications are that job losses will be climbing by 75 thousands a month early in the new year, 125 thousands a month towards the end. Housing, meanwhile, will be a bloodbath: turnover slumping, new starts collapsing, and negative equity soaring. The result will be a For politicians and bankers alike Next year, therefore, incumbent politicians will become profoundly unpopular again. They’ll seek to divert the blame, of course; they’ll look for scapegoats. Who’ll be picked? Bankers are the obvious choice. Though treated with kid gloves up till now, they’re likely to be thrown to the wolves next year. The City’s dislike of the second . . . And who will play the part of the wolves? Investors, of course. The City is furious. Bankers are held in contempt for their manifest business incompetence, but what is much worse is their perceived betrayal of shareholders’ rights! . . . is even greater than that of the first What does Lloyds’ board think it’s doing in going ahead with the takeover of a (probably worthless) Scottish bank? Cui bono? Not Lloyds’ shareholders! So why do it? To appease the Scots in No. 10 and No. 11. Does the board regard itself as answerable to them? Does it suppose it’s operating a French bank? Shareholders being the mere suppliers of variable coupon capital? Boards will be disciplined And what of Barclays? How can its attempt to raise extortionately expensive capital from the Middle East be justified? Did it seek the approval of its owners? Does it understand the distinction between agent and principal? Does it suppose that, in the master-servant relationship, it is the master? Principles re-established There has to be a reckoning. With or without the support of government, it’s going to be necessary to cleanse the stables. The river needs to be diverted to wash away accumulated financial debris on the one hand, intellectual debility on the other. Pre-emption re-affirmed Ironically, the painful process will begin to resolve the financial crisis. Stock markets are already very good value and will rise as soon as it looks as if the abuse is at an end. Initially, government bonds will Pity, though, the poor DC retiree! The problem is that those pensioners retiring on a DC scheme in the near future will have been irreparably impoverished. They’ll seek retribution. Justifiably so. It’s unlikely the miscreants, wherever they hide, will sleep easily for quite a while. Contact us…Visit our website www.sippsolutions.com for further information on our SIPP products and services. Alternatively, contact Roger Nightingale direct on rnightingale@sippsolutions.com or please call 01858 419300. 5: Overview of the FSA's Feedback statement The latest stage in the FSA's Retail Distribution Review (RDR) was announced yesterday. We recognise the importance of this review and are aware of the potential impact it could have on the distribution of financial services products. The feedback statement brings to an end nearly two and a half years of open discussion, and marks the beginning of formal consultation on hard proposals which represent the FSA's preferred implementation options. The proposed regulatory landscape distinguishes between investment advice that is independent and sales services. Sales will include a spectrum of services ranging from advice that is not independent, through simplified advised and non-advised guided sales processes, to execution-only business. The FSA intend to conduct consumer research to explore options for improving the way in which services are described and presented to consumers. Robert Kerr, Head of Distribution Development at Scottish Widows, has written a summary of the report setting out the key headlines. In it he highlights the FSA proposals to redefine the distribution landscape, revise the definition of independence, introduce Adviser Charging and increase capital adequacy requirements. Download a copy of the summary 6: From the Press (see site too) + Bee Lines FSSC T&C standards and Good Practice Steer clear of with-profits says Which? - you should read this and the associated articles too - you clients will! Struggles with Gabriel leave FSA unperturbed Article about the FOS in house legal team. RDR - AND THE CARPETBAGGERS! says Mansell
Bee lines One for the statisticians and trivia buffs..... National Insurance Tax... The Pensions Bill makes it to the Statute Book. Part III in the exciting series! A few pension bits from the Pre-Budget Report.
IFAS LOOK WELL PLACED TO MEET THE CHALLENGE THROWN DOWN BY THE RETAIL DISTRIBUTION REVIEW
Such is the self motivated increase in professionalism being undertaken by IFAs that consumers using Unbiased.co.uk are already extremely likely to be able to find a registered individual close to their home with an incremental qualification. “This is timely – given that 35% of all enquirers using Unbiased.co.uk to find a local IFA are now selecting an IFA based on the incremental qualification held.”
I am a little concerned that David thinks this sort of political issue is within IFAPs purview, and I suspect the majority of his members would consider this comment a betrayal - but I could be wrong! This will be seen as an endorsement of the RDR as a whole, which is a piece of lunacy! Steve 9: AIFA: Prudential Requirements Lack Justification The Association of Independent Financial Advisers (AIFA) today expressed disappointment at the Financial Services Authority’s (FSA) feedback statement on Prudential Requirements. Andrew Strange, Director of Policy, AIFA, said: “While we fully understand the need to review the requirements, in the current economic climate, we are at a loss as to why and how FSA has decided to increase the minimum capital requirement to £20,000. This requirement will be a real burden for IFA businesses and poses a serious risk to firms that are already facing difficulty in a tough financial climate. For example, the requirements could potentially see a firm of 20 advisers with £1.6million costs being forced to increase its regulatory capital from £10,000 to in excess of £300,000. “Over the last ten years the IFA community has thrived, with increased levels of professionalism and higher standards of advice. AIFA strongly supports the development of our profession but during this difficult time additional capital requirements for the sector are simply inappropriate. It is not our members who have damaged the economy through under capitalisation. “AIFA aims to work constructively with the regulator to achieve good outcomes for firms and consumers. However, FSA has not provided any justification for this phenomenal increase in capital and question what they are trying to achieve. We are also considering FSA’s proposed capital resources definition. “We believe that ‘Expenditure Based Requirements’ could be counter-productive and penalise good firms with extensive compliance support. To reduce capital requirements firms will consider ways to reduce their fixed costs, which could encourage advisers to become self-employed. The impact of the requirements could ultimately lead to some firms reconsidering their authorisations with the FSA and actually result in less overall capital in the industry. This is not good for firms, or consumers. “AIFA urges FSA to look at regulatory dividends to reward those businesses which are well run and well capitalised. Risk based regulation is entirely appropriate, and positive risk factors should be considered. We urge FSA to reconsider their stance on this and we shall be engaging with them over the proposals announced today and work closely with them to ensure that the correct outcomes are reached.”
Steve's other interests, most of which are designed to help you: www.HomeProtectionPlan.co.uk www.PilotTrust.co.uk www.LegalPlanning.co.uk and www.Inheritance-Tax-Secrets.co.uk - ebooks which established introducers can use as a free promotional tool www.FindaPro.co.uk - a fantastic site listing a growing range of professions - top locations have given local professionals over 4,000 showings. Be there or miss out, and don't forget to tell fellow professionals to keep checking in to see when they can list - one good turn deserves another! www.SWWtrust.co.uk - trust management, probate work throughout England and Wales with over 60 local executives. Fee share. www.APWW.co.uk - Will Writing the modern way - a top rate service with fee share. www.WillCustodian.co.uk - a great service to keep your clients legal planning secure and up to date !leave Copyright © 2008, Stephen Pett, IFAbonus. All rights reserved. 2 Hankham St Pevensey BN24 5BG
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