16/01/2012 by Arthur Childs.

This is my précis of the economic outlook which was expounded by Stephanie Flanders, the BBC’s Economic Editor, at the New Model Adviser Conference and Awards which took place in the Lancaster London Hotel on 12th and 13th January. The photo was taken during Stephanie Flanders’ address to the Conference.

Stephanie Flanders

Stephanie became the BBC’s economics editor in spring 2008. Prior to that she was the ecomomics editor for the BBC2’s Newsnight programme from 2002. She has won numerous awards, including the 2010 Harold Wincott Award for online journalism.

Stephanie has been a reporter at the New York Times (2001); a speech writer and senior advisor to the US Treasury Secretary (1997-2001), where she was involved in the management of emerging market crises in Asia, Russia and Latin America, and the reform of global economic development policy; a Financial Times leader-writer and columnist (1993-7); and an economist at the Institute for Fiscal Studies and London Business School.

Her father was Michael Flanders, of the 1950s and ’60s musical comedy duo, Flanders and Swann.

Is there anything to feel good about?

Stephanie said that this has been an unusual recession:

• We have not seen the level of corporate failures as in past recessions.

• Employment remained higher than expected even though unemployment is going up now.

• The housing market has not crashed because of low interest rates.

• Corporate cash surplus has remained high although investment of that cash is low.

• Growth in 2010 was strong at 2.1% (the ONS revised figure).

• If you remove oil and gas our growth in the last quarter was a healthy 1% rather than the 0.6% including them.

Where do things stand now?

• Employment is 109,000 lower than in November 2010.

• Household section is in recession as a result of falling household incomes.

• The Office for Budget Responsibility (OBR) thinks the prize for two years of austerity is two more years of austerity.

• All of the monetary tightening totalling £49billion has only reduced the structural deficit by £10billion.

• There has been more permanent damage to our economy than that caused by either the Great Depression or World War 2.

What to watch out for in 2012

• The Olympics – economists are as yet undecided as to whether holding the Olympics is going to be good or bad for the UK economy. For example, there could be a big cost to business in having so many routes in London closed off for so long.

• Inflation – how fast is inflation going to fall?.

• Consumer need – do consumers need to feel good to increase their spending or simply to stop feeling worse? The absolute position may not be as important as its position relative to the immediate past.

What is happening to the Euro?

Stephanie said that the crisis could have been predicted. In fact it was! But the European Governments refused to listen to the economists who wanted to create a common fiscal pot before it happened. Both sceptics and federalists were right – the endpoint of a single currency has to be fiscal union.

The European Central Bank (ECB) is no quick fix as it cannot do something that the individual European member states are not willing to do.

According to the current insurance rates built into the ‘default spreads’ for various countries there is a 100% chance that Greece will default on its debt. There is then expected to be a domino effect. For example, there is a 60% chance that Portugal will default on its debt if Greece does. There is a 60% chance that Ireland will default on its debt if both Greece and Portugal do. There is an 85% chance that Italy will default on its debt if Greece, Portugal and Ireland do. We have to get to France before the default rate is less than 50%, that is, there is a 45% chance that France will default on its debt if Greece, Portugal, Ireland and Italy do.

The big issues for global economies

Stephanie said that there are three big risks to Eurozone economies that would have global implications:

1. A European Lehmans
2. A sovereign ‘explosion’
3. Plain old de-leveraging and recession

Although (1) is the most dangerous to the global economy, the good news is that the risk of this is now reducing. (2) and (3) are definitely possible.

The US is politically crippled. The US labour market has taken a battering and only 63% of men of working age are actually in work. On the plus side the US is demographically strong and has an increasing potential labour force. The message was that we should not bet against the US as it is ‘still the only game in town’. With the difficulties in Europe the US has the potential to experience an economic recovery.

China has had a good crisis. Its command and control style has a while to run but the long term challenges are enormous.

The UK also has the potential to see an economic recovery. We need to ask whether we are being realistic in our pessimism, or is our pessimism simply self-fulfilling. Japan’s ‘lost decade’ now looks better than ours! However, we should not discount our long term strengths. The Chinese, for example, are envious of our democracy. Eventually the economic forecasts for the UK will start to turn optimistic.

made the shortlist

At the New Model Adviser Conference and Awards we were delighted to find that we had been shortlisted again for the New Model Adviser of the Year South East. Although we did not win the award we were one of only five independent financial adviser companies on the shortlist for the South East region, no mean achievement given the level of competition.

Please note that this information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances.

If you would like to review your investment portfolio or your financial planning generally please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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30/12/2011 by Arthur Childs.

Please forgive me for starting the New Year talking about divorce. It is something which affects so many of us these days, whether directly because we are involved, or indirectly as family members or friends are involved. According to the Office for National Statistics there were 119,589 divorces in England and Wales in 2010, an increase of 4.9 per cent over the previous year.

Whilst divorce must be very difficult for those involved, especially if there are children to consider, it does offer the prospect of a new start in life. In that sense the subject fits in with our thoughts at the start of a new year with all the possibilities that 12 months of, as yet, unwritten stories of our lives holds out for us.

Why Pensions?

Next to the family home, the single largest asset that needs to be considered when a marriage breaks down is often the pension benefits. The Matrimonial Causes Act 1973 gave the courts of England and Wales the power to take the value of a couple’s pension rights into account when dealing with a divorce settlement. The Act established the right of the ex-spouse to claim against the member’s pension rights. However, it was not until the Pensions Act 1995 that it was made compulsory for pension rights to be taken into account. We have produced a new Guide: Pensions and Divorce which you will find on our website at www.arch-fp.co.uk/pensions_and_divorce.php.

You may wish to bring this to the attention of anyone you know who is going to have to deal with this subject during 2012. If you are going to read the Guide online, perhaps on a tablet computer, then you will find the 17 page version easier to follow. However, if you are going to print the Guide you will save on toner if you use the alternative 6 page version. The text is virtually the same in both versions.

It just remains for me, on behalf of the directors, advisers and support team at Arch to hope that you and yours will be happy and prosper in the year ahead.

If you would like to receive advice on pensions and divorce, or your pension planning generally, please ask your usual Arch adviser or telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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15/12/2011 by Arthur Childs.

Peppa Pig does so loves muddy puddles. If you have some idea of what I am taking about then you either have young children or you, like me, delight to be a grandparent of young children. I often think that if Peppa Pig could be employed by the Financial Services Authority to teach children the basics of savings and financial planning, then it would help people avoid a lot of fundamental financial mistakes later in life.

The New Junior ISA

My excuse for introducing this particular Arch blog with Peppa Pig is the new Junior ISA which became available from 1 November 2011. The Junior ISA is a worthy replacement for the Child Trust Fund (CTF) which signally failed to catch the imagination of parents. One in four parents who received the CTF voucher of £250 (that is nearly 350,000 people) failed to invest it within the twelve month deadline! Although, as one fund management company was quoted at the time “leaving the £250 in cash would barely buy a round of drinks on the child’s 18th birthday”.

The Junior ISA is quite different – for a start there is no gimmicky voucher. It is very similar to the ‘adult’ ISA in that parents, grandparents, or indeed anyone else with an interest in the child’s welfare, can invest up to a total of £3,600 each tax year (index linked from April 2013). With an 18 year investment period for a new baby and using conservative estimates then there could be getting on for £100,000 in an ISA account by the time the child reaches his or her maturity. This is then rolled over into an ‘adult’ ISA to which normal ISA rules apply.

For parents and grandparents who use ISAs for their own wealth creation, the ability to start investing in a tax efficient manner much earlier than the current age 16 or 18 will be very attractive. Of course, it will also help to reduce their own inheritance tax liability especially those with a good number of children and grandchildren.

We have produced a new Guide: Junior ISAs which you can download or print from our website at www.arch-fp.co.uk/junior_isas.php.

If you would like to discuss investment planning for your children/grandchildren please ask your usual Arch adviser or telephone 01483 204600 or email enquiries@arch-fp.co.uk.

Christmas Greetings

May I take this opportunity on behalf of the directors, advisers and support team to wish all of our clients and blog followers a Very Happy Christmas and a Peaceful and Prosperous New Year.

Our offices will be closed from 1.00pm on Friday 23rd December and will fully open again on Tuesday 3rd January, although there will be a small number of staff in the office on 29th and 30th December.

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22/11/2011 by Arthur Childs.

It has been said that we are each separated from any other person on earth on average by six steps (referred to as ‘six degrees of separation’). This has recently been challenged by Adam Gordon of Gordon BDM Ltd, a business development and marketing specialist based in Scotland, who maintains that with the advent of social media we are all much closer than ever before.

I realised the truth of this yesterday when Elizabeth Emanuel, fashion designer and co-designer of Princess Diana’s wedding dress, started following my tweets (my Twitter account is archmoneyguide). Last evening I was having dinner with ten or so fellow IFAs and Bill McQuaker, Deputy Head of Equities and Head of Multi-Manager at Henderson Global Investors. Bill told us that he had recently had dinner with a dozen or so, mainly UK, fund managers and Angela Merkel, Chancellor of Germany was their special guest. Dr Merkel (she was awarded a doctorate for her thesis on quantum chemistry) is currently the longest serving leader of a G8 country and arguably the most powerful person in Europe and I was only two degrees of separation from her!

Bill McQuaker’s meeting with Angela Merkel clearly left an impression on him as she had addressed the small lunch gathering via an interpreter for well over an hour. Whilst it was not his place to share with us the content of that meeting I think it is fair to say that he is expecting markets to continue having a rough time of it well into 2012. On the other hand he is positioning his portfolios so that they can react quickly to any unexpected good news.

2011 so far

Bill McQuaker talked to us about global market returns for the year to 15 November 2011. To no one’s surprise the big losers had been equities with Europe ex UK leading the way at -15.3%. However, it was perhaps surprising to note that Emerging Markets were -14.5%, Japan -14.1% and Pacific ex Japan -10.9% so simply avoiding European equities was not a solution. Whilst the UK was -4.4% the other surprise was that North America was -0.6% and easily the best equity market to have been in this year. Sadly, so many investors have written off the US and moved their money elsewhere.

The surprise winners this year have been bonds which, in theory, do badly in times of rising inflation. Long term gilts (over 15 years) returned an amazing 24.3%, index-linked gilts returned 15.4% and all gilts on average returned 14.2%. Corporate bonds which are normally riskier than gilts (although some would say that Tesco is now less likely to default than some sovereign states) returned 7.1%.  Of course, the big story of the year has been gold returning 25.3% and more worrying for the recovery of businesses, oil returning 21%.

The danger for investors is to see those returns from gold and gilts and think that these offer a safe haven in troubled times. With both returning around 25% this year to date prudent investors will remember that it is not good practice to purchase anything when its cost has risen out of proportion to other items.

Can the debt crisis be sorted?

It is, of course, difficult to give a definitive answer to this one. Dr Merkel is clearly struggling to find a solution. One point that Bill McQuaker was keen to make is that whilst Europe has a lot of debt it would be wrong to assume that it was going bust. Europe is one of the richest areas of the world. Apparently it would only take around 4% of Europe’s wealth to completely remove all of its indebtedness, it is just that no one wants to take the loss.

Bill McQuaker suggested that the solution was there for us all to see in history. After the First World War the victorious nations decided to punish Germany and the result of the enforced austerity was a generation prepared to be led by Hitler. After the Second World War the US in the form of the Marshall Plan (officially the European Recovery Program) decided that things were in such a mess in Europe that they would have to help Germany in particular to recover for the sake of the whole of Europe. At present the stronger European economies are tending to punish those like Greece and Italy who appear to have lost the plot. Instead, slashing the indebtedness of those countries most in trouble and then increasing trade with them would share the pain around but would, in the end, build a stronger, more united European economic community.

Inflation is the real problem

The Consumer Prices Index (CPI) is currently 5.0%, more than twice the Government’s target of 2.0%, whilst the Retail Prices Index (RPI) is 5.4%. MetLife has recently given the example of a 60 year old taking a £6,180 annual income from a £100,000 pension fund. Assuming inflation of just 3.45% pa over the next five years will see the real value of that pension fall to £5,216 in 2016 and £3,716 by 2026 when the person reaches age 75 – a drop of 40% in real terms.

The CPI fell from 5.2% the previous month and most commentators expect further falls between now and the end of the first quarter of 2012. However, given the amount of ‘quantative easing’ with the possibility of more to come, Jupiter income manager, Tony Nutt, has stated that UK inflation could reach 7% to 8% over the next four years. Whilst other commentators such as Henderson chief economist Simon Ward believe that to be a bold statement, he has also acknowledged that 8.0% inflation over that period is not unrealistic.

Is there any good news?

The important thing to remind ourselves about global stock markets is that they have already priced in a great deal of the mess that is happening in Europe and the slowing growth in other parts of the world. Of, course, if Greece actually defaults then the initial shock will still push markets down for a period. But much of the bad news that will no doubt keep coming for a while is expected. In such an environment any truly good news will see markets take off.

Whilst the short term is expected to be a rough one for investors we all need to be in this for the long term. In which case it is good to see that equity valuations remain supportive. The average price/earnings (P/E) valuation of the global market over the last 10 years has been 14.3 times earnings. At present the average P/E valuation is 9.9 times earnings and not much above 8.0% for UK stocks.

So whilst equities are unloved they are also undervalued. European equities at the end of September were producing an average dividend yield of 3.8%, whilst German 10 year bonds were producing a yield of just 2.1%. Taking a 5 year plus view the higher income from equities and the very much greater potential upside makes a compelling argument to stay fully invested.  Comments made by Prime Minister, David Cameron, yesterday in Parliament do not rule out a short, sharp injection of cash to try and get the UK economy moving again. Any such move would probably have the blessing of markets as cutting back on debt alone is not working.

If you must fear

If you must fear, don’t fear the stock markets, as these will provide the long term real growth that your pension funds and investments need - fear inflation. However, it is far better to live without fear. Most of us cannot remember what was worrying us six months ago as we have long since replaced it with something else. Money is a strange substance and tends to gravitate towards those who feel that they live in abundance (however little of the stuff they might actually have) rather than in an attitude of scarcity.

If you would like to discuss your investment planning please ask your usual Arch adviser or telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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27/09/2011 by Arthur Childs.

I was looking at my diary yesterday and I could not believe how much time I have spent on holiday this year! I thought you might like to see a picture of Mary and I waiting to go in for dinner at the recent Paradigm Partners conference in Marbella! However, I have come to the conclusion that this has been a good year to get away from all the market ‘noise’ which can so easily make us fearful when we should be bold.

Technically, ‘market noise’ is the seemingly mindless back and forth movement of stocks and shares over small time frames but commentators often now include in the description the information overload that tends to stop fund managers and individual investors from seeing the big picture.

My 2011 holiday diary

January: Eastbourne (4 days) and London (2 days); February: Nothing (tough going!); March: Cornwall (8 days thanks to a good client); April: Durdle Dor (5 days with family); May: At sea (4 day PIMS conference cruising to Guernsey); June: Sidmouth (6 days holiday for coach party of friends arranged by us); July: Central Asia (14 days with daughter and son-in-law who are working out there); August: Nothing (as we had a joint birthday party to organise for 85 relations and friends); September: Marbella (2 day conference plus 4 days holiday); October: Norway (12 day cruise leaving shortly!). Thankfully we have a daughter, her husband and a grandchild staying with us for three months from the beginning of November so we will be at home for a while.

Arch Audit

One of my priorities over the last few weeks has been to prepare for last week’s bi-annual compliance audit of our company. In the event it went smoothly. Audits of this kind tend to disrupt normal business but they are vital for the good health of any financial services company. This is because audits inevitably show some areas where improvements need to be made but more than that they allow me to take a view from on high as it were of the way the company is working.

Holidays have the same effect

I find that holidays produce much the same benefits. They are different to audits for me in that my wife does all the hard work of planning and preparation. However, as a result of having time to see a bigger world far away from my office, to meet new people, have new experiences, to relax, read and think I usually return to the office with at least one or two ideas to improve aspects of the business or my management of it.

This year has been one of the most successful for our business that we have had. I am sure the fact that I have had more holidays than usual has something to do with it! Of course, it is essential to have a really good team running the office while I am away and we now undisputedly have the strongest team of advisers and support staff that we have ever had in our 21 year history, not forgetting my co-director, Sarah Bond, who kindly arranges her holidays around mine!

Get away from the market ‘noise’

I am not unaware that there is a crisis of confidence in the financial markets but I have been around long enough now to know that that will pass. Life and financial markets are very cyclical and the key to successful investment (as opposed to day trading) is not timing (a lesson that is hard to learn) but patience (even harder to learn). Investors should ideally think of themselves as farmers, sowing, reaping and harvesting a crop. Just as a farmer is prepared to ‘invest’ his seed and wait for the elements and the seasons to bring his investment to a plentiful harvest, so successful investors learn to tune out the ‘noise’ with which the media bombards us every day and concentrate on the big picture.

What is the big picture?

We are all different but for me the big picture is created by asking myself a series of questions. Will there be less people wanting to move into the cities and experience the ‘good life’ in China, India, Brazil, Africa, Kazakhstan etc in 10 years’ time? Will human beings need more manufactured goods and commodities in 10 years’ time or less? Which companies are best placed to provide these efficiently? Are those companies all situated in the UK, and if not, where are they situated? What will eight holidays a year cost in 10 years’ time and where will the money come from once I have retired? Have I factored the financial needs of my grandchildren into my retirement planning? Will I achieve the growth I need on my capital by leaving it on deposit? How will inflation of over 4% pa affect my investments? If risk and reward have been shown to be directly related, should I be taking more risk with my investments to achieve a greater reward? Can I afford to waste part of my investment returns in unnecessary tax?

Most of us don’t have the time, expertise or the inclination to answer all of these questions and more. But you don’t need to. We can work with you because we are partnering with an internationally recognised investment research company and professional investment managers. Together we can help you avoid the ‘noise’ and keep you on track towards your financial goals.

Just one other thing

Apart from being on holiday one of the most important things I have been doing this summer is investing. It is unlikely that we will see such a good opportunity to invest as this within a generation. As Warren Buffet, who knows a thing or two about investing, has famously said “Be fearful when others are greedy and be greedy when others are fearful.” It is the latter part of that statement which we need to heed right now. As I have not seen such fear in investors for a long time I reckon that this must be as good a time as any to follow Mr Buffet’s advice.

If you would like to discuss your own investment planning please ask your usual Arch adviser (they are not all on holiday!) or telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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21/07/2011 by Arthur Childs.

Ah salam oo alekum, mienung atum Aristan, which in English is Hello, my name is Lion (the closest the Kazakhs have for Arthur!). I have just returned from a two-week visit to Kazakhstan with some family members who are working in the exciting Kazakh city of Almaty. It’s my third such visit and very enjoyable it was too.

The outlook from the UK

The latest Nationwide Consumer Confidence Index at 51 points is 11 points lower than at the same time last year, and 28 points below its long-run average. The Index measures a representative sample of 1,000 UK adults about their view of the current general economic situation, employment conditions and future prospects of the UK. Following on from this I suppose it is natural that the view of the average UK investor is determined by the same UK factors and increasingly the negative information each time that Europe is mentioned. But step outside of the UK for long enough and you might get a somewhat more upbeat view of our prospects.

The outlook from Kazakhstan

When I first flew with the Kazakh national airline - Air Astana - in 2008, it had just been admitted to the register of the IATA Operational Safety Audit (IOSA). I remember the flight well because they gave me a large glass of neat gin to drink although I am happy to report that they now include tonic upon request. From just three planes in their fleet in 2001, Air Astana now operates a fleet of 24 western aircraft and this is projected to grow to 34 by 2014 following the addition of the new Airbus 320 family aircraft, and then on to 63 by 2022.

The UK and the US are places that might as well be on Mars as far as the average Kazakh is concerned. Our little island is so stuffed full of the technology, experience, know-how and financial resources that places such as Kazakhstan will increasingly need, that it is impossible not to see the tremendous potential that there is for our economy for decades to come. Kazakhstan is five times the size of France and shares its longest borders with Russia (4,251 miles) and China (951 miles) - yet it’s population is just 16.5m (April 2011), which is only 25% more than the population of the London Metropolitan area. Since gaining independence in 1991, Kazakhstan has emerged as a leader in Central Asia with an excellent macro-economic reform record and abundant natural resources – it’s potential oil reserves are on a par with Kuwait. Kazakhstan’s national objectives are to achieve economic growth based on the continued development of a market economy augmented by high levels of foreign investment in health, education, the well-being of its citizens, power engineering, energy and mineral resources, financial services, and infrastructure, with emphasis on transportation and communications. These are all areas where the UK excels.

We should worry less and grasp the opportunity

As a result of my family involvement Kazakhstan has an important and growing place in my consciousness. However, there are many countries in the world which are just as needy of what we so easily take for granted in the UK. If we would but see the vast potential that we have in these small islands in which we live, we might worry less about our job security or whether interest rates might go up but a few percent. If, as investors, we could get a better grip of what is happening in places like Kazakhstan and the way that the needs and desires of peoples like the Kazakhs will drive the world’s economy, we would stop leaving quite so much money in deposit accounts where it is of little use to anyone. Instead we would invest in companies both here and abroad which can take advantage of the great global advancement in places which, until now, we might have found difficulty in finding them easily on a map.

What we have

At just after 1.00pm yesterday I ordered four new Dell flatscreens for our business via a Buy it now offer on eBay from a Dell reseller in Essex. The price was very competitive and the postage free. I paid securely via PayPal and got a healthy cash back via Quidco. The four screens were delivered to our office in perfect condition by the courier at 10.30am this morning. The people of Kazakhstan would dearly love to enjoy such luxury. They cannot use eBay as no one will post items to Kazakhstan as the postal service there is so awful, with a large percentage of items simply never arriving at their proper destination. Those that do arrive can be weeks or months late.

By investing our money in real businesses both in the UK and around the world, we not only have a better chance of receiving a real return (in excess of inflation) but we provide those companies with the capital they require to employ more people and make their goods and services available to a wider customer base.

Rahmiet, sowbolinguz (Thank you, and goodbye for now)

LV=Little Book of Protection

This is a well produced and interesting booklet which is hot off the press. It is full of helpful information and interesting facts such as between the ages of 1 and 4, a child costs their parents an average of around £53,586 ( Source: LV= Cost of a Child Report 2011). You can download your pdf copy of the Little Book of Protection from the front page of our website www.arch-fp.co.uk.

If you would like to discuss your own investment planning please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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28/06/2011 by Arthur Childs.

We live in a 1930s house. The kitchen is not original but it was there when we moved in 16 years ago and although we updated it a bit at that time it is overdue for a major overhaul. The basic design is from an earlier age and as we have added various items of equipment over the years this has not enhanced the look of it.

Kitchen renovation can be stressful

After looking at a lot of brochures, visiting a number of showrooms and sitting with a kitchen planner for about three hours while he painfully slowly put together our new kitchen on his computer, we were not much further forward and were experiencing a level of stress about something which should have been a pleasure.

I am sure that many people feel the same way about their pensions. They started off with their first pension plan, possibly via their employer, and they may have added other plans since, either from other periods of employment or one or more which they took out themselves, possibly during a period of self-employment. We regularly meet people who have upwards of three or four private pension plans as well as one or two memberships of previous employers’ schemes. Of course, by this stage the original design behind their pension has been lost and it is difficult for them to know whether their pension planning is still fit for purpose.

Kitchens underpin family life

That may sound like an exaggeration but in my experience the kitchen is the hub of most homes. It is where my sisters and I were drawn as children when Mum was cooking a meal or Dad was baking cheese straws or some delicious smelling cakes. Even now the first place our friends visit when they come for dinner is our kitchen. It’s just a friendly, homely place to be and whilst an Englishman’s home may no longer be his castle, there is a sense of security to be found in your own kitchen surrounded by cooking smells and a glass of red wine in your hand!

Advisers spend less time in clients’ homes these days as it is more efficient for all concerned to meet in an adviser’s office. However, on the few occasions when I do visit clients in their homes it is often to join them around their kitchen table with their financial papers spread out before them.

Good pension planning has the same effect of underpinning our lives once we stop working full time. Whatever the size of our eventual pension income, the fact that it is going to be paid to us for the rest of our lives, come what may, provides a level of security at the centre of our financial lives that money in a bank or in various investments simply cannot match.

Kitchens come in all shapes and sizes

Some people really fall on the their feet with their kitchen and move into a house with oak kitchen units and granite work-surfaces already in place so that nothing really needs changing and it just seems to look better as it ages. In pension terms these are the clients who find themselves in final salary occupational pension schemes. There really is nothing to do except take the inflation-linked pension and cash lump sum at the end of your working life and be for ever grateful that you decided to be a nurse, teacher, policeman, fireman, soldier or civil servant rather than a financial planner!

When we first moved into our present house we used the services of a company to replace all of the doors on the kitchen units and that really made a big improvement. I know that many people have done this and for some no other changes will ever be required. It is the pension equivalent of having a stakeholder pension. It does the job and is low cost. However, stakeholder pensions have their limitations and, to keep to the kitchen analogy, replacing the doors is fine if the underlying design is good and works efficiently for your needs, but these can change over time and often a more radical restructuring is eventually required. For many of our clients, as their pension pot has started to grow larger, the investment aspect takes on more importance than simply keeping the cost down.

Enter the stress reliever

We are pretty sure that we have found the solution to a less stressful way forward for our own kitchen requirements. We have been introduced to someone who runs a small but busy carpentry business. He not only fits kitchens, which he buys at trade price, but he has a good understanding of current regulations which affect the design of our kitchen and he has shown an innate sense of what will and won’t work for our particular needs. He is able to use his extensive carpenter’s knowledge to help us choose the right quality of units and surfaces so that our kitchen will still look good in years to come. Most importantly for us, his company is able to control all the other aspects of the job such as the flooring, wall tiles, electrics and plumbing. We have no desire to be involved in these things as it is not within our skills.

That’s a fair description of what we constantly seek to offer clients in terms of their pension planning. We seek to review clients’ existing pension plans with a view to creating something which is workmanlike and is designed to do a good job. Where we can transfer existing funds to a more modern pension plan we will, so that everything fits together and clients understand what they have and what they can expect in terms of eventual pension benefits. The tool we most often use to achieve the necessary consolidation is called a SIPP.

Excellent design

We were originally disappointed with the so-called design services for our kitchen as we seemed to be pushed into a standard mould that had little to do with our personal wishes and the only ideas seemed to be provided by us. That has now changed and we are being given ideas that we had not thought of which will enhance the use of the space we have available.

A Self Invested Personal Pension Plan (SIPP) is a pension designer’s dream. A SIPP is a modern, very flexible, type of personal pension plan. As with any new design, these were originally expensive when compared to the more basic type of pension. This has now begun to change and we, in particular, have sought to overcome the cost issue by using a SIPP which is part of our preferred online investment platform, the Nucleus Wrap.

Where we can transfer existing personal pension plans to the Nucleus SIPP this provides a lot of benefits in terms of cost, access and control for our clients. In some cases we cannot transfer pension funds because the existing product provider would impose a large termination penalty or there would be a loss of benefits such as a guaranteed annuity rate, but these are in the minority of cases.

Not only can we consolidate a number of pension pots into the Nucleus SIPP but once there we can make use of one of a range of risk-rated, professionally managed portfolios to provide an excellent investment medium for the client’s pension fund to grow over the years ahead. This is more important than ever now that many clients are delaying the purchase of an annuity with their pension funds and instead using pension drawdown to produce an income which still enables the owner to benefit from any investment growth in the pension fund.

We see such consolidation as an important part of our clients’ pension planning and so we have just revised the background information which we provide on SIPPs which you will find in our Guide: SIPPs (Self Invested Personal Pensions). You can obtain a copy of our Guide from our website by following this link www.arch-fp.co.uk/sipps.php and either read it there or download it to your computer.

If you would like to discuss your own pension planning please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

VouchedFor

We were frustrated with our initial search for a good kitchen design company and even when we thought we had found one we began to lose confidence in the process. It is certainly no easier when looking for a good financial planner. Or at least it wasn’t until recently. There is a new website designed to give clients a forum to share their experience of their Independent Financial Advisers (IFAs).

The website has only just started so client comments are as yet few but it’s a place to start if you are looking for an IFA.

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25/05/2011 by Arthur Childs.

You may have invested in one or more life assurance bonds (also referred to as Investment Bonds, Capital Investment Bonds, Distribution Bonds, Property Bonds, With Profit Bonds etc) either through us or another adviser. This particular entry on the Arch Blog is designed to encourage you to let us review these for you.

Until a few years ago we often recommended the use of life assurance bonds as these provided a number of tax and other benefits to a broad range of clients. Whilst we will still recommend these to certain clients the number of situations in which we do so has narrowed considerably. In many cases we will now recommend moving your money to another type of investment and we simply charge an administrative fee for arranging this for you.

A change of tack

Reviews are essential in many aspects of our lives and none more so than our financial planning. Changes to our personal and financial circumstances and to tax legislation can act as strong winds to blow us off course. To continue the nautical metaphor we sometimes need to change tack to continue to follow a route that will help us reach our destination.  Forgive the nautical expressions but I have just returned from the PIMS Forum which is a conference for the principals of 190 of the top independent financial adviser firms in the country. Unusually the conference is held aboard the P&O Cruise Ship Aurora and we sailed from Southampton and lay at anchor off Guernsey for three days. It’s just work, work, work being a financial adviser!

In fact, I not only had five seminars to attend every morning but I had a solid series of 30 minute one-to-one meetings with senior executives of product providers from lunchtime until early evening. The photo is of me meeting with Fay Goddard, CEO of the Personal Finance Society. The seminar programme not only included discussion groups led by fellow IFAs but a varied group of excellent speakers from other walks of life. These included Dr Donald Sull of the London School of Economics, a global authority on how companies compete effectively in turbulent markets; Michael Tipper who came second in the World Memory Championships and showed us how to improve our memories; Austrian orchestral conductor, Christian Gansch, who through practical demonstrations of his art showed us when to lead and when to follow; and Californian psychologist, Dr Maria Nemeth who taught us about mirror neurons; and for light relief, England cricketer and TV personality Phil Tufnell.

Review your life assurance bonds

We have produced a new Guide which looks at a number of reasons why yesterday’s advice to invest in a life assurance bond should now be reviewed. For the present we are happy to review your bond(s) and, if appropriate, surrender them and reinvest the proceeds in a risk-rated portfolio, which will be professionally managed and rebalanced quarterly on the Nucleus Wrap. This service is currently available for a fixed administrative fee whether you are an existing client or not.  It is particularly important that we carry out a review if you have a With Profits Bond as this year represents one of the best opportunities for large numbers of people to exit such bonds without a termination penalty.

You can obtain a copy of our Guide: Review Your Life Assurance Bonds from our website at www.arch-fp.co.uk/review_your_life_assurance_bonds.php and either read it there or download it to your computer.

If you would like to receive advice on your existing life assurance bond(s) or discuss any issue that has been raised by our new Guide please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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07/04/2011 by Arthur Childs.

Even if you personally do not have a mortgage you may have family or friends who are considering remortgaging or taking the plunge to put their first foot on the property ladder. So please pass this on to anyone you think may be interested. Over previous years, we have received many enquiries from clients asking for advice on remortgaging or purchasing. In many cases, due to the low bank rate, the best advice for remortgages was to stay on the existing lender’s Standard Variable Rate.

But things are beginning to change on the mortgage front:

With the prospect of interest rates increasing sooner rather than later (three of the nine members of the Bank of England Monetary Policy Committee have voted for a rate rise), lenders are already increasing rates, even on short term mortgage rates (2 and 3 year schemes). We may only have another few months to wait before rates start rising in earnest. It will be difficult to know when is the right moment to move from a variable rate to a fixed rate – we will only know the answer with hindsight! We anticipate quite a number of clients wishing to review their mortgages. 

We currently have two mortgage advisers – Deirdre Trussler and Alison Radford. If you think a discussion on your options would be helpful, please contact us now.

Our Advisers

Both Deirdre and Alison have been mortgage advisers for a number of years with extensive experience. They are also fully experienced Independent Financial Advisers, so are able to look at the “bigger picture” with regard to clients’ overall financial affairs. They both deal with all types of mortgages, as well as giving advice on life and health protection, wills, tax planning, general insurance in connection with properties, as well as any investment or savings advice that may be required. Deirdre specialises in buy-to-let advice and Alison specialises in equity release schemes.

Arch Financial Planning Limited is able to offer clients an excellent service in advising on the choice of lender (or advice on choice of scheme with an existing lender) using up to date sourcing software, and help with navigating through the paperwork and legal work involved with mortgages. 

What to do next

Please get in touch with our offices for a review. For new clients an initial meeting at our expense is usually necessary to establish your requirements and we will discuss our fee structure for ongoing work. Existing clients can update their financial information with us, with or without a meeting, as appropriate and can also discuss our fees before any work is carried out.

If you would like to discuss any issue that has been raised by MortgageTalk please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

Your home may be repossessed if you do not keep up monthly repayments on your mortgage.

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29/03/2011 by Arthur Childs.

The Chancellor’s Budget proposals have been well publicised in various forms since he gave his Budget speech. However, based on past experience we have found that our clients and others have welcomed our summary of the proposals that will have a particular impact on financial planning.

Where appropriate we have included comments on the budget proposals which we hope you will find helpful. You can obtain a pdf copy of our Budget Guide from www.arch-fp.co.uk.

Nucleus IFA Advisory Board

Many readers will be aware that the Nucleus Wrap is foundational to our investment proposition for clients. The Nucleus Wrap is controlled by 75 or so IFA firms, many very much larger than us, which like Arch have each been required to take a small shareholding in Nucleus. The number of IFA firms involved with Nucleus continues to increase and the interests of these firms, and therefore their clients, is represented by the Nucleus IFA Advisory Board (IFAAB) which consists of nine member firms. The IFAAB in turn is represented by three seats on the Nucleus Financial Group Board.

We are delighted that Arch Financial Planning Limited has recently been elected to serve as a member of the IFAAB. Being a member of the IFAAB keeps Arch at the heart of the Nucleus community and either I or my co-director, Sarah Bond, now attend the IFAAB meetings. As I also Chair the Nucleus Practice Development Team, one of the sub-committees of the IFAAB, it means that clients can be assured that we are keeping our fingers on the pulse of one of the biggest developments in modern day financial planning for their benefit.

If you would like to discuss any issue that has been raised by our Budget Guide please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.

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