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In my opinion, those who have spare money to invest at the moment are presented with a tremendous and potentially unprecedented opportunity.

Equity markets (despite a recent recovery over the last week or so, followed by yet another dip) still look extremely attractive in the medium to long term, corporate bonds currently look good in the short term and while we may not have seen the worst in commercial property markets yet, it still offers some relatively good long term value when compared to prices a couple of years ago.

I’m not saying that we’ve reached the bottom of the market for any of the above asset classes but relatively speaking they all look attractively priced as medium to long term investments.

When we bear in mind that for many investors, their main aim is to achieve a long term return better than might be reasonable expected from leaving funds on deposit, then that is where the benefit of a diversified investment comes in.

Why? Because it can help reduce the risk of getting it wrong by not having all of your eggs in one basket.

However it should be noted that diversification does not provide the investor with immunity from the risk that their investment may fall as well as rise, as was most certainly the case for many investors last year, where generally the only asset classes posting positive returns were gilts, global bonds and cash.

Obviously we all know what’s happened to cash returns over the last six months as the Bank of England has slashed base rates (and the resulting effect this has had on deposit rates), but in my opinion this has just restored balance to the investment universe.

In October last year Warren Buffet said: “Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

Well, I think those people that Buffet referred to, are maybe not feeling quite so comfortable now and those who have sheltered savings in deposit accounts over the last year will have to start looking at investing once more in order to achieve their longer term goals.

Dan Clayden is a director at Clayden Associates

Insight Investment has launched a new equity income fund which primarily invests in UK equity and equity related securities.

KEY FACTS:

* The Insight UK Equity Income Booster aims to provide an enhanced level of income with a potential for capital growth.

* It invests in UK equity and equity related securities combined with a systematic call option overwriting programme to boost income and reduce volatility. Read More »

Blue Sky Asset Management, the specialist structured investment boutique, has launched an income plan that provides annual income potential of 6 per cent over five years.

KEY FACTS:

* The product offers a capital protection and fixed income activation feature, which Blue Sky argued could remove any market risk to capital or income during the investment term.

* The Smart Income Plan offers 6 per cent fixed income in year one, with no link to the underlying index the FTSE 100, 6 per cent income potential from year two, paid at each anniversary if the index is at or more than 50 per cent of its starting level, plus contingent capital protection at maturity that cannot be breached during the investment term if the index is not less than 50 per cent of its starting level at maturity. Read More »

If you are reading this as an aspiring young adviser, then congratulations – arguably your timing in choosing to pursue a career in financial advice could not be better.

From a career point of view, the intermediary sector has continued to grow in professional stature, accompanied by the need and demand for quality advice. The pool of appropriately qualified advisers however is in decline – the average age of an adviser is 54 years – and quality ‘new blood’ into the industry is urgently required.

The FSA’s Retail Distribution Review has resulted in a number of important proposals, including setting higher professional standards, higher capital adequacy requirements for firms and changing remuneration structures.

Read More »

“It’s not the despair. I can take the despair. It’s the hope I can’t stand.”

Why is it that so often the mere mention of open market option (OMO) brings these words to mind?

Movie buffs will recognise them from the 1986 John Cleese film ‘Clockwise’ about a perfectionist headmaster who suffers repeated delay and humiliation as he travels to address an important school conference. Just as he shrugs off the last disaster and starts to hope he might actually make it, fate deals another cruel card.

The quotation popped into my head again after learning of the 2008 OMO figures from the Association of British Insurers. Our expectations of market growth were met, with a 4.4 per cent rise in annuity sales to 452,000.

But what about our high hopes that all the activity promoting the need to shop around for an annuity was at last making a positive difference?

Actually things have got worse – the numbers exercising their OMO fell to 169,000 – 1,000 fewer than in 2007.

Dramatic events in 2008 may have played a role. But we also know from Moneyfacts that the gap between the best and worst annuity rates widened last year, making it even more important for those retiring to do their homework and not take the ‘default’ option offered by their own pension provider.

Criticism that providers should do more to ensure retirees get better value for money provoked a robust defence from the ABI, highlighting its work encouraging pension companies to improve client literature and speeding up transfer times, along with the suggestion: “This was never going to change things overnight.”

It has been seven years since pension providers became obliged to tell retirees they may go elsewhere to seek a better deal on an annuity. Despite all the reviews, initiatives and promises stretching back to the launch of OMO three decades ago, take up remains very poor.

Research compiled last July by the Personal Accounts Delivery Authority (Pada) found most retired respondents had taken the default annuity option offered by their pension scheme and were no better informed about annuities than those yet to retire. The report noted: “They often had no recollection of making any decisions at retirement.”

Perhaps it is time for us to start thinking the unthinkable – is OMO the problem rather than the solution? Is it limiting choice?

Perhaps it will only be when every retiree gets to see the full menu, rather than just the chef’s specials, that they will start to appreciate the opportunities and identify the best value.

Nearly 1,800 retirement annuity contracts were bought every working day last year on average, often by people who can’t afford to miss out on the extra cash.

How dare the ABI tell us not to expect change to happen overnight? This isn’t a scandal waiting to happen – it’s been going on for years.

Financial advisers, product providers, trade bodies, software developers and those responsible for legislation must unite to ensure we present the growing range of retirement income options available to advisers and their clients.

Let’s all ensure we take personal responsibility for executing the changes within our control to ensure OMO becomes known as the shortcut for a more progressive and positive descriptor, “offer more options” rather than the current passive version.

Dave Harris is managing director of sales and marketing at Living Time

As mortgage brokers seem to be dropping off the radar one-by-one, this now surely calls for an urgent assessment at how this once flourishing sector now needs a life line.

The demise of the such brokers have been seen in the wake of the administration of Chase de Vere Mortgage Management and Cobalt Capital, who both called in the administrators this month as a result of the severe slump.

Around 100 staff members face losing their jobs across the two firms as the latest brokers shut up shop. Read More »

Barclays Wealth has added an enhanced safety feature to the latest issue of its Target Growth plan.

The latest issue of Barclays Wealth’s Target Growth plan will pay a return of 50 per cent plus full repayment of capital as long as the FTSE 100 has not fallen by more than 50 per cent at maturity.

In a change from the preceding series, Barclays Wealth has moved to further mitigate the risk of capital loss by creating a structure in which the capital at risk barrier is only observed at maturity, rather than throughout the life of the plan. Read More »

The death of Jade Goody has prompted a significant increase in the number of women going for cervical smear tests.

As pages of news coverage are dedicated to this terrible condition and the need for women to be tested, it is quite disappointing that the demise of this very modern celebrity has not had been used to highlight just how important critical illness cover can be.

Jade Goody was able to sell her wedding pictures and make sure her children could be raised in the way that she wanted them to be even though she would not be there to see it.

At least she didn’t have to worry about whether her children would endure the same terrible education she did – one where she thought East Angular was abroad – in her final moments as she knew she had secured funding for a private education.

But what about those of us who are unable to call on the likes of OK magazine at the last minute to make sure our children do not have to fear for their own future as they face the death of a parent?

Not too long ago there was a bit of a drama surrounding the NatWest MoneySense television adverts.

The advertising campaign implied that it would help solve all your money problems through its impartial, free, in-branch advice service.

However, an investigation launched by The Times newspaper in February claimed that some of this advice was actually not as impartial as advertised and that the bank was instead using the time to sell or bring attention to its own products.

Now it seems that adviser community website Cherry has taken up adviser complaints about the advertising campaign with Clearcast, the organisation responsible for approving ads for transmission on the main TV channels.

It has also asked NatWest to respond to advisers’ complaints and back this up with evidence. And Cherry has warned that, if it is unsatisfied with the response, it plans to refer the complaints to the Advertising Standards Authority.

Natwest were unable to comment by the time of publication.

I have to agree that advisers have a point here. As when I first saw the adverts warning bells went off in my head, because to the everyday man and woman sitting on their sofa watching the advert in between soaps, the free advice service would likely seem like a good idea, compared to potentially paying for financial advice.

But this is not the first time advisers have come up against banks and other financial services providers – and I’m sure it won’t be the last.

At the start of this nasty recession, advisers were extremely angry about dual-pricing within the mortgage market, which they felt was an attempt to cut them out of the market.

Then last month, as the recession kicked in further, there were a few cases where adviser’s clients were targeted – or should I say contacted – by providers trying to sell them their products directly.

And of course there is also one other area where advisers feel they are being targeted and driven out of the industry, and that is through the RDR.

Many advisers feel the RDR simply favours banks. As one adviser recently put it: “The RDR is designed for bankers by bankers.”

The RDR may still be going ahead, but with advisers making their voice heard about the NatWest advertising campaign, is this one fight the adviser community can win?

Stellar Asset Management has launched the First Stellar Forestry fund.

KEY FACTS:

* The fund offers investors exposure to the UK forestry market by investing in existing woodlands between 12 and 20-years-old.

* The fund has a 10-year life and no borrowings. It is designed to outperform the Investment Property Databank Forestry Index, which has grown by more than 5 per cent a year since its launch in 1992.

Read More »

Without a doubt, the proudest moment of my career so far was being awarded an OBE. I never dreamed I’d ever be honoured in such a way and every time I see the letters after my name I get a kick out of it all over again.

To get such an honour is not only a huge privilege but also a great responsibility too – for me this means keeping on battling away for what is right in this industry and our ultimate employer, the consumer.

The purpose of the awards is to recognise consistently high standards of service and behaviour, and the higher up the gong scale you go, the greater is supposed to be the input from the individual.

I therefore assumed that anyone receiving a knighthood, entitling recipients to be called Sir, (or Dame for a woman) would be even more conscious of the need to uphold this hierarchy and not bring it into disrepute. Read More »

I was initially drawn to selling life assurance at the age of 22 by the promise of one day becoming a respected member of the community.

26 years on, our industry is very nearly there. TCF and RDR have provided the perfect platform to press on and finally achieve the objective that has proved so elusive – to be recognised as a true ‘profession’.

This is a critical point and it is essential that we provide the next generation – our young advisers – with ‘schooling’ that both looks to the future and recognises our past mistakes. This is our best, and maybe last, opportunity to make a real difference.

We see six key elements to achieving this goal:

1. Young advisers who are enthusiastic, diligent, honest and reasonably intelligent,
2. IFAs who are planning to retire and are looking for a young adviser to service and nurture valued client banks,
3. IFA firms that are capable of schooling and mentoring the young adviser in the key skills required of a modern professional,
4. The integrity of the IFA’s training and competence scheme,
5. The National Skills Academy for Financial Services and other training providers,
6. Funding.

Chester Partnership’s experience has been really positive: we recently brought all six elements together in signing on our latest young adviser, Joanne.

Jo fully appreciates all that TCF and RDR are about; Sesame provided the support with training and competence, and Skills Solutions provided professional trainers to help with CII qualifications.

Funding is obviously key. For Jo this barrier was overcome by her initial employment in the back office administration team.

At first, working elsewhere might be necessary to finance the early ‘apprenticeship’ stage. But in the medium to long term, network firms like Sesame may need to contribute funds to the challenge of training up young advisers.

For their part, young advisers should choose their partners carefully, checking out the strategy of the firms they are considering and quizzing them on what TCF and RDR mean to them.

The fundamental question is: how can the IFA firm help a budding young adviser become a respected member of the community?

Steve Riddiough, director, Chester Partnership

At last we can all rest easy in our beds. The coming months will see us shepherded into a new era of fierce and fulsome regulation and woe betide the banks and financial firms that fail to live up to this new regime.

And just who is it that is riding to our rescue, proclaiming a new age for the UK’s financial markets? None other than Hector Sants, the latest boss of the Financial Services Authority, that’s who.

Is he joking? Since the FSA came into being it has never stopped talking about cracking the whip, clamping down, rooting out malpractice and protecting customers.
Read More »

QUESTION: I am considering joining a network as a way of dealing with some of the changes proposed in the Retail Distribution Review, but have been warned that maybe this isn’t really the answer to all my problems. What should I do?

ANSWER ONE: The network model suits many, but I think the major objection that would be raised by non believers (and correctly) relates to client ownership.

Otherwise, if you get your compliance sorted by them, get mind numbing issues like TCF dealt with by them, and get paid on time, it works well, and you just need to make sure they don’t abscond with your money.

- Glyn Jones, Vale Financial Services

ANSWER TWO: The network is the authorised firm, this means it is responsible for the advice provided, the training of the introducing agent and all other regulatory hoops. Ask the FSA.

Unfortunately I haven’t seen much ‘training’ going on and when client compensation is required all of the above is conveniently forgotten.

As such, I can only really answer this with more questions:
- We don’t know what the final outcome, if any, will be, so why make a decision now?
- Are networks any more viable than a small firm?
- What protection will a network afford?
- Why accept what the FSA proposes as being inevitable?

- Evan Owen, IFA Defence Union

Leeds Building Society has launched a new range of fixed rate bonds for one, two and three years with guaranteed returns of up to 3.50 per cent gross p.a./AER

KEY FACTS:

* The new range of fixed rate bonds for one, two and three years combine a return of up to 3.50 per cent gross p.a./AER with the flexibility of instant access to 25 per cent of the balance, without notice or penalty at any time.

* For investments between £100 and £49,999, the one, two and three year bonds offer annual interests of 2.50 per cent, 2.75 per cent, and 3.00 per cent respectively.
Read More »

Arc Capital & Income

Arc Capital & Income (ACI) has launched the Arc Emerging Markets Plan Series 1 – Russian Linked, a 5-year defensive auto-callable offering a growth payment of 20 per cent for each year the Plan runs.

KEY FACTS:

* The plan has a five year and three week term. and is based upon the RDX USD Index which comprises of 14 Russian companies trading on the London Stock Exchange.

* The plan will mature in year one if the Index is 90 per cent or more of its Initial Level giving a 20 per cent return.

Read More »

The Turner Review, the long-awaited analysis by Lord Turner of the current economic mess we are in and how best to resolve it, is like the curate’s egg, good in parts.

However, many of its underlying consensual assumptions do not necessarily measure up to the reality on the ground. Read More »

Abbey for Intermediaries has launched a new range of flexible offset mortgages for both remortgages and home purchases.

KEY POINTS:

* The two mortgages allow full flexible options to overpay or underpay.

* They begin at the Bank of England base rate (currently 0.5 per cent) plus 3.25 per cent for a term of 25 years.

Read More »

QUESTION: Should advisers forewarn clients about the possibility of a fund being suspended as standard practice, or is this warning only necessary in troubled times like these?

ANSWER: If an IFA has clients with investments in a fund that is being suspended, then yes, they should advise relevant clients as standard practice.

In the current environment, I think that IFAs should be upping-the-pace on their client communications. A quarterly newsletter is simply not frequent enough in this day and age given the amount of financial information that is available in the press and online.

Even long term investment clients want reassurance that their IFA is on the ball, and more regular communications will be welcomed – even if it is potential bad news.

If IFAs don’t communicate with their clients – someone else will and that means risking losing clients.

Also, it is interesting that this question should be asked, because we have a thread running on IFA Life about how often IFAs should communicate with clients.

I also had a personal friend tell me today that their IFA had not told them about a fund which was suspending withdrawals, switches etc for six months.

Philip Calvert, IFA Life

Any discussion in recent months about the future banking and regulatory landscape post-financial crisis has centred on the point that we need BETTER regulation, not MORE regulation.

Which is why it may come as a surprise to some that the Turner Review, published today, suggests the FSA looks at the possibility of regulating mortgage products.

Lord Turner, chairman of the FSA, conducted the review of the banking industry on behalf of the chancellor Alistair Darling to establish deficiencies in the banking system, problems that led to the financial crisis and recommendations on how this could be rectified.

Read More »

Yorkshire Building Society has re-entered the tracker mortgage market with two and three year products available up to 75 per cent loan to value.

KEY FACTS

• The two-year mortgages are priced at 3.39 per cent, which is BoE base rate + 2.89 per cent.

• The three-year mortgages are 3.59 per cent, which is BoE + 3.09 per cent.

Read More »

Another day goes by and yet another concern is added to the financial services industry’s list of worries.

Yesterday we saw the week kick-started with the suspension of several of Arch Cru’s funds, because of liquidity problems linked to redemptions.

“Liquidity problems”, has become an all too familiar phrase which, when used, comes as no surprise to advisers and investors in the current economic climate, but is now proving to be a bit of a nuisance.

Read More »

It could be said that a career in financial advising is to a graduate what the chameleon is to its predators: very hard to find unless you know what you’re looking for.

How can firms hope to secure the best talent available, if the best talent isn’t aware that they’re wanted?

With so many professions seeking to secure the newly qualified graduates, this complacent approach ensures the number of good graduates who join the industry are kept to a minimum.

Read More »

Should Gordon Brown apologise? Edward Bonham Carter, chief executive of Jupiter Asset Management, thinks he should.

“It always makes people bigger if they’ve got the courage and the confidence to apologise if they’re wrong,” Mr Bonham Carter says.

To be fair, he adds that he himself is more than willing to apologise to any investors who have lost money in absolute terms by investing in Jupiter’s funds.

“I’m an investor in our funds and I can sympathise and empathise because I’m in the same position.”

What’s in an apology, though? Read More »

RBS Intermediary Partners has launched a series of new exclusive mortgage deals with a number of corporate partners.

KEY FACTS:

* Sesame/Personal Touch: First Active two-year fixed rate for remortgages, offered at 3.79 per cent with a with maximum loan-to-value (LTV) of 75 per cent. The product has a £999 arrangement fee until 30 June 2011.

* Openwork: First Active five-year fixed rate for remortgages, offered at 4.79 per cent with a maximum LTV of 75 per cent. The product has a £999 arrangement fee until 30 June 2014.

Read More »