In our last post I showed you the figures on how much money we can save an aged 40′s couple with a reasonable household income and some existing financial planning. to prove fee based financial advice works across the board I want you to consider a different position.

This time it is a single person aged 50 who is looking to retire in 15 years. they have £100k in a commission based pension fund which will return a fund value in 15 years time of £242k assuming a constant return of 7% per annum.

They also have a commission based investment bond worth £100k which is set to return a fund of £212k in 15 years time assuming a constant return of 6% per annum.

Now lets switch them on to our Gold Service at a cost of £85 per month and the figures begin to follow a similar trend as our last post. The commission free pension fund estimate rises to £262k and the commission free investment bond estimate increase to £233k.

over 15 years the client has funds which are now £41k higher but has paid advice fees of £15,300 leaving them a massive profit of £25,700. And that’s just based on cost and doesn’t take into account the potential further benefit they would receive from ourselves as their financial advisers.

Do your financial circumstances look like this? If so, perhaps you should be speaking to us about arranging a financial review for you.

There are many reasons to start a pension scheme for all or some of your members of staff.

  • Your duty as a caring employer to assist in the longer term care of your staff.
  • To help attract quality individuals to work in your business.
  • To help retain quality individuals who already work for you.
  • The Income Tax and National Insurance benefits on contributions you make.

However, there is none more so than you legal obligation to provide a pension scheme if you have 5 or more employees in your business. Currently there is no legal obligation for the company to contribute but that is changing.

Personal Accounts are expected to appear in 2012 with the likely contribution basis to be set as follows:

Employer 4%

Member of Staff 3%

Government 1%

This creates an opportunity for you, the employer, to begin to start contributing now and been seen as a good employer, rather than wait until 2012 when your staff will believe your only doing it because you have to.

Careful advice is required when implementing a new scheme and you should consider the future change in legislation, how you announce the scheme, how you administer the scheme and so on. Simpson Financial Services are experts in guiding you through all the relevant aspects of setting up a new pension scheme.

If you wish to arrange an informal discussion please contact us here.

Whenever we see a new client in need of financial advice, or revisit the existing financial plan for an existing client, we need to gain a thorough understanding of the current financial circumstances. This helps us to satisfy the Financial Services Authority guideline to financial advisers regarding “Know Your Client”.

If you are wanting us to operate on a fee basis then you may want to collate this information yourself so here is a copy of the form for you to download and print. Then we won’t have to charge you for us doing it. It can be posted or emailed back to us before your first visit to our Coventry office.

personal fact find

corporate fact find

One of our areas of financial specialism is providing advice to owner managed businesses and we suggest that both documents are completed by potential clients in this situation.

However, we do require very exact detail about some of your pension, investments, insurances and other benefits so we may still have to write to some of your current product providers directly to obtain this. The small print in some of those older pension contracts can be quite valuable to you with the passage of time.

Whenever we take on a new client for personal financial planning services the first item on the agenda is a full review of their existing financial circumstances. This is where we probe deeply into your employment status and benefits, insurance policies, pension funds, savings, life policies and so on.

As independent financial advisers (IFA) we are authorised to advise on all your existing plans and policies and make further recommendations from the whole of the market place.

What often surprises me is that clients often are paying for insurance that they are unable to claim on. For instance, Client x took out a mortgage when they were employed and is now self employed.

But what about the redundancy insurance which came with the mortgage? They had been paying the £34 per month premium for the last 3 1/2 years but would never have been able to claim.

Often we find that new clients are overpaying for their insurance cover. Client y need a commercial loan for her business and felt obliged (or pressured) to take out key person life cover in case she died. A good idea but the bank could only sell it’s own insurance which was very expensive.

As part of our advisory service, we were able to provide identical cover with a different insurer giving her a saving of £62 per month.

Do you want to see if you can reduce your monthly expenditure, or even maximise the potential of your current budget. Call us now to arrange a free initial consultation.

Wealth managers, Simpson Financial Services, are proud to announce a new service to our existing clients who hold a broad range of investments. Whether in pension funds, bonds, trust etc. The system has taken 10 months to develop and clients are now able to obtain a real time portfolio valuation via the client log in section shown on every page of our website and there is no limit to the number of valuations you can do.

Consider a common situation where various investments have been made, assets accumulated and insurances bought. The ability for you to report on your asset allocation, investment performance and benefits can become difficult for you. This tool is provided to remove that problem.

Not only does this online reporting allow you to produce Portfolio Reports on your invested assets, you can now use the tool to notify us of any changes to your personal financial circumstance.

Our position of being responsible for the management of your financial planning has also been improved in line with our principles of Treating our Customers Fairly (TCF).

This new service is available to all Platinum and Gold clients so please contact us to make the new service live.

If you are considering appointing us as your financial adviser please contact us for an initial discussion on 02476 251100.

According to the Cambridge Dictionary, “Professionalism” is the combination of all the qualities that are connected with trained and skilled people. So raising examination levels must be part of the answer.

Treating Customers Fairly (TCF) has also been part of the answer in that it has actually required IFA firms to look at how they do business and then make any changes to improve the customer experience. I felt that my own 1 on 1 with the FSA in September 2008 was quality business advice.

I felt I had had an improved customer experience with them! I’m almost thinking that a 3 yearly 1 on 1 with the FSA for small firms would be another part of the answer to becoming more professional assuming that the cost is kept at 2008 prices, £0.

If we want the kudos of being associated with other professions then IFAs have got to walk the walk. If that means taking exams, doing quality Continual Professional Development (CPD), developing inter personal skills, running a compliant business, being a great adviser, treating your clients like royalty and so on then so be it.

The end goal for IFAs surely has to be dealing with clients who have sufficient income, assets or liabilities such that they need a more sophisticated level of advice and those clients will be willing to see the value of paying for it. I think that would reduce my own client bank from 780 clients to 156.

That leaves what we might call “bread and butter” business which might well be best served by “Money Guidance”, although Money Guidance should have restrictions on types and limits advice it can provide, thus creating an effective advice type filter for members of the public.

My guess here is that the FSA might do well to listen hard to the likes of the Citizens Advice Bureau (CAB), Which and Martin Lewis on this subject in order that they create something where there is an actual public need. Even consider making Money Guidance a Charity like CAB.

Aged 38, owner managed IFA business of 1 adviser and 1 para planner/admin, currently reading AF3 pension planning (page 7 of 66 after two weeks!!) and quietly confident about the future of small IFA firms (or what ever we’ll be called then).

During the current economic conditions we are seeing and reading an awful lot of information regarding job losses and business failures. Certainly, times are becoming more financially difficult so here are a few key points to help business owners prepare a little better.

1. Maintain a Cash Flow Forecast

List down all the cash inflows and outflows for you business and try to look forward 3 months. If you can forsee a period where cash flow maybe tight then speak to your bank about it now. The bank will be more sympathetic now rather than when the situation becomes desperate.

Also keep on top of the people or companies who owe you money (debtors). Do not assume that all you are owed will be paid. Try to plan for any debtor who is unable to pay.

2. Reconciling Your Bank Account

Don’t just look at your balance. Make sure that the cheques you have written historically have been presented and cleared your account. Don’t be taken by surprise when that cheque you wrote 2 months ago is suddenly hitting you current account balance.

3. Reviewing You Own Salary

Can the business continue to manage the level of salary or drawings you take from your business or can the world cruise be put off for a year or two. Leaving a little extra cash in the business will allow you to mitigate risks like debtors not paying (see point 2). Assuming the risk passes in the future, you can still draw the money then take that cruise. I’m sure you’ll have earned it.

4. Review Your Overheads

Consider the effectiveness of every overhead (staff, premise, service providers etc) you have and see if the overhead can be squeezed a little more in terms of its efficiency. If it can be made more efficient, can it be provided cheaper. Even consider if it can be provided by someone else.

Simpson Financial Services is a privately owned business like yours. In that, we have experience in these matters. Where we think your circumstances would be even better served by other professionals we will make you aware of that.

Contact us and arrange a meeting today to discuss these aspects of business planning in more detail.

If you are thinking of buying a property for the first time, moving home or remortgaging your property then you will need to appoint a solicitor to act for you. Solicitors normally refer to this service they give to you as conveyancing.

Every firm of solicitors has a different charge for this service. In our experience, the actual service you get can very dramatically. They all get you there in the end, it’s just that some are more efficient than others.

We have an excellent tool on our site so that you can obtain a comparative quote from over 300 solicitor firms throughout the UK for their conveyancing service. Not only does it give you the fee it also shows you the feedback that the particular firms has been given by other people like yourself.

I personally used the service last time I remortgaged in April 2008. I used a firm who were over 300 miles away and they were excellent in terms of price and service. I saved about £300 against quotes I received from local firms in Coventry.

So, see if you can save yourself a few pounds and try the system out. If you like the price you can instruct the firm online as well!

So you are reaching your intended retirement age and you are beginning to receive your maturity options from your various pension providers. What do you do now? How do you decide on which style of annuity is best for you. Level in payment or increasing? A spouses pension or single life? Take the tax free cash or not? Or even is buying an annuity the best way for you to provide income in retirement?

For the purpose of this article, lets assume that a single life, escalating annuity is best for you. The next part of our advice process now involves finding which Pension Provider is going to offer you the highest income for your fund. This ability to shop around for the best annuity rate is called The Open Market Option.

The Pension Providers base their annuity rates on their own experiences of average life expectancy. Don’t be fooled by there warm brochures covered with pictures of a happy pensioners. They want you to die prematurely so they don’t have to pay your annuity out for long. In fact, a number of Pension Companies will now offer enhanced annuity rates for smokers and retirees who have serious medical conditions such as high blood pressure, historical heart attacks, diabetics etc.

We don’t advocate you start smoking just before you retire but if you do, or you take medication, then contact us to see how much extra pension income you might get.

You only get one chance to buy your annuity so make sure you contact us to get the correct advice on both style of annuity and the Pension Provider offering the highest rate.

Then all you have to do is live a long and happy retirement!

Women aged 53 to 60 will soon be able to pay a further six years worth of national insurance (NI) contributions to boost their state pensions.

It raises to 12 the number of extra years of contributions that can be topped up, going back to 1975.

The government’s decision is included in an amendment to the Pensions Bill currently going through Parliament.

The change is aimed at helping some women who left the workforce to raise families or care for other relatives.
The extra six years of contributions will generate extra pension of about £18 a week from 2010.

In 2010 the number of years of NI contributions needed to qualify for a full basic state pension will come down to 30 for both men and women.

Currently the number of years needed are 39 for women and 44 for men.

New weekly credits will also come in to help people caring for children or disabled people build up their contribution records in the same way as if they had been working.

People who want to take advantage of the ability to buy six extra year’s worth of contributions will have to have paid for a minimum of 20 years already.

The cost of buying those extra contributions will also go up, from the current rate of £8.10 per week.

But is it a good thing to do. Well, compared to what it would cost to buy that level of income from a private annuity, it represents some good value. But one factor you will never know is how long your going to live for.

If you die soon after retiring, any annuity represents poor value for money. But, live until your 100 and they are the best investment you are likely to make.

Still confused? A good starting point to asses you own situation is to request a free State Pension Forecast online.

I am sure that all people who have been looking at taking a new mortgage or remortgaging recently have noticed how expensive the lenders arrangement fees are.

Mortgage Arrangement Fees are charged by the lender and are usually added onto the loan but can be paid by the applicant upfront. They used to be from £250 to £500 but now you are going to be lucky to find anything below £700. Cheltenham & Gloucester (part of Lloyds TSB) have fees of about £2500. Ok, their rates are good BUT £2500. Wow!!

As a general rule of thumb, once you have gather together all the mortgage products which fit your personal borrowing requirement you can then begin to work out which product is most cost effective for your size of mortgage eg. 3 year fixed rates with no extended tie in period.

Obviously, that’s where I want you to get a little stuck so you give my business a call and arrange a meeting with me to do it all for you.

As a client of ours (hello Neil) said today,

“It’s a little like the baker charging you to make the bread and then, when its made, make you pay for it.”

Please note that for mortgage advice, we receive a commission from the lender or charge you a fee (in case you think we will be biased towards the lender who pays us the highest commission)

It was only a matter of time before the return of the dreaded Market Value Adjustment (sometimes known as Market Value Reductions, MVAs or MVRs) to with profit investments. Today. Norwich Union announced the re introduction of these temporary encashment and surrender penalties.

The MVRs will take effect from today and apply to policyholders who wish to makes a partial or total withdrawal from the CGNU, CULAC and NULAP funds.

They are a mechanism to ensure policyholders leaving a fund do not take more than their fair share of the fund at the expense of remaining shareholders.

NU has not imposed MVRs on its funds since July 1 last year when they were in place for policies taken out in 1999 and 2000.

Commenting on the decision, John Lister, chief actuary at NU, says: “Since the beginning of the year we have seen equity markets, commercial property and corporate bonds fall significantly in value.

“As a result we have reviewed the situation and have decided to introduce MVRs for policyholders who have unitised with-profits policies and who wish to make a partial or total withdrawal from the CULAC and NULAP funds. These are on average between 13% and 22% across different years of business.

“The decision has been made in consultation with the majority independent With-Profits Committee, ensuring that the interests of all policyholders are represented.”

Three special bonus payments announced in February for eligible customers in CGNU and CULAC funds will continue to be paid on top of today’s announcement.

The average MVR rate for the year units were purchased is:

2001 13%
2008 13%
2002 15%
1996-9, 2004-6 16%
1995 17%
1988,2007 18%
1990, 1994, 2003 19%
1989, 2000 20%
1991, 1993 21%
1992 22%

 

So what really are the benefits of offering this scheme to your staff? Well, if they are already paying for it themselves (and they haven’t had a string of claims) they will jump at the chance to let you, the Employer, pay the premiums for them.

But it must be more than that. From the Employer’s point of view it does help with absence management. Rather than having the member of staff off work whilst undergoing sporadic treatment from the NHS they are treated, probably by the same consultant, but in a matter of days rather than weeks or months. This should lead to the speedy return to work of a fit, well and motivated employee.

It also increases time management. I’m sure we’ve all waited in the NHS waiting room for hours on end. Even those of us who have arrived early in the hope of a quick consultation and then back to the office. It doesn’t happen! Private Medical Insurance allows the patient to dictate the time of the treatment to fit in with their busy work schedule.

And of course the member of staff. In the event of an illness or injury which needs treatment, the sooner that the treatment starts the quicker the potential recovery. They in turn should feel gratitude to their employer who has gone that extra yard to care for it’s employees.

There are many different types of Private Medical Insurance Schemes to cater for all different business types and sizes. Indeed, there are many different providers of the insurance such as BUPA, Norwich Union Healthcare, AXA PPP Healthcare etc. As professional advisers, Simpson Financial Services works with you to ensure that you get the most appropriate scheme for your business.

Call us now to discuss your requirements.

So your thinking about a health check on your finances and wondering where to go for advice and what it involves. For all new enquiries about our service we provide a free initial consultation at our offices in Coventry.

The free consultation allows you the opportunity to see who we are and where we carry out our business with you. It also gives us the opportunity to see what we can do for you. You can do some preliminary checks on our firm on the Financial Services Authority register. Our reference number is 472031.

You might be interested in an income an expenditure analysis, claiming back tax paid, planning for you future or protecting what assets you have already accumulated. Indeed, most of our clients ask us to advise on all these areas for them.

You will need to bring with you some idea of you current financial circumstances such as 12 months bank statements and details of your current investments, pensions, savings and insurances. Don’t worry if you don’t have all the specifics at this time.

We look forward to meeting with you.

Never catch a falling knife.

Well, its a pretty self explanatory piece of advice and often used in investment circles. However, The Government has begun nationalising HBOS and the Royal Bank of Scotland, pumping £37 billion of taxpayers’ money into the struggling firms.

RBS has said that it will receive £20 billion of capital from the Government – meaning taxpayers will hold a 60 per cent stake in the company. Its chief executive, Sir Fred Goodwin, is to resign.

A further £17 billion is to be pumped into the merged HBOS-Lloyds TSB, meaning 40 per cent of the new “superbank” will be held by the Government on behalf of the public.

Lloyds TSB has also confirmed that while its takeover of HBOS is to go ahead, it will be at a far lower price than had previously been expected, meaning bad news for shareholders of HBOS.

The revised terms will see HBOS shareholders receive 0.6 Lloyds TSB shares for every HBOS share – down from an original level of 0.8.

Meanwhile, Barclays has insisted that it will raise £6.5 billion itself and does not need the Government’s help. As well as a cash call to the market, the bank will not pay a £2 billion dividend to its shareholders.

If its plan succeeds, Barclays will become the only major British-owned High Street bank to be fully independent. The only big bank that does not need cash is the foreign-owned HSBC.

The Government has also announced that it will create an entirely new body to oversee its shareholdings in the banks at “arm’s length” and reduce them over time.

“[The Government's] intention, over time, is to dispose of all the investments it is making as part of this scheme in an orderly way,” the Treasury said in a statement.

The move to take such significant holdings in banks, which was ordered by Gordon Brown after he found they were in a more vulnerable state than had been thought, fundamentally changes the nature of British banking.

Banks will effectively be state-run, with Government-appointed board members put in place to ensure it once again begins lending to businesses and individual customers.

Together with Northern Rock and Bradford & Bingley, the move will mean the Government effectively has four of the country’s biggest lenders under its control.