Money Talks Archives | Page 8 of 11 | Oliver Asset Management

But My Clients Value Me, Right?

June 8, 2012

Amongst other stories of questionable advice heard this week, my favourite was (and I’m certain this is what was said) that investing in Ethiopian water funds would be a good basis for long term pension planning. Clearly there is still a huge gap in existence between good and bad quality IFA firms and this lead to some thought on the process by which clients “select” their financial adviser of choice.

Can they recognise whether the business they might engage with has a high quality service that they will value?

What is available within that business that helps give potential clients the information to make a reasoned judgement?

Or is it simply the winning smile of the adviser?

Recommendation and personal knowledge of the individual concerned might figure highly in the criteria used (amongst a whole range of other things before you start calling)

Whatever it is that gets you there, once a relationship is established, does the client value the individual giving the advice or the advice itself going forward?

Or even a bit of both.

I’ve heard this week that well worn phrase “my clients value me over any fancy-dan report/
service/investment strategy. I could, but don’t, give them” and in context of RDR Adviser charging this needs a little further investigation I believe.

And as one who has indeed uttered the above phrase in the past but has since had successful treatment to stop doing it, I felt qualified to comment.

Many years ago, I opened my first personal bank account with the Clydesdale Bank because the local manager had set up a help desk in the Office in which I worked.

At the time I thought it would be handy to know the local “man.”

Through time I switched to The Royal Bank of Scotland and have been with them for 25 years.

I used to value greatly the staff at the branch in Sauchiehall Street in Glasgow who knew who I was and sorted any problems I had quickly and efficiently. They also put more staff on at lunchtime.

Contrast this with a recent visit to the local Mussleburgh branch where I watched the manager look at the ever growing lunchtime queue, put her coat on and get the hell out of Dodge!

I suspect if I were to create a list of criteria to select a bank today, it would differ greatly to my original drivers.

Number and handiness of ATM’s, online service capability and reasonableness of charges might hold more sway over how nice or helpful the staff were.

So, do I value the service or the people?

In this case, clearly the service has more interest to me than the staff, but imagine how delighted I’d be if I got both.

Do I sense that the bank has more interest in increasing shareholder value? Or do they want me to value their fabulous services? The latter would, in the long term, lead to a more robust version of the former than any quick tricks.

I will never deny the right of any business to make a profit but if you lead with this as your defining criteria, the customer will suffer in poor overall service (and, as I’ve said before, it takes more than a fancy ad campaign to convince me otherwise).

So back to my point (at last, some may say).

How do you create a list of criteria for selecting your financial adviser?

Trustworthiness, honesty, experience, qualifications, recommendations, process etc etc.

You may well also value them as individuals but this need to be backed up by a defined range of services, actions and documents that helps support the warm fuzzy glow.

In the world of adviser charging, it’s not enough to assume that your clients will be happy to pay for this emotion. In fact, it never has been enough.

Detailing why existing and potential clients might need and value your service, how it is delivered and what the clients can expect from you, is a basic building block of today’s advice process and if your not already able to do this (and document it) you’re dead in the water.

Clients may indeed value you more than any fancy-dan report/service/investment strategy but it certainly wouldn’t do any harm to provide this too. And I’m pretty sure clients want the information in the correct format to back up the words.

This approach doesn’t need to make things more complicated. It can be a complex process but conveyed in the right terms.

Empathy, reassurance and practical help. It’s all us clients ever ask for.

Big and small business, take note.

Roland Oliver
June 2012

Discipline as Europe Decides

May 16, 2012

As markets fall once again on the back of indecision on the Greece problem, one might be forgiven for starting to get a little exasperated. The commonly accepted outcome of the French and Greek elections is a rejection of the austerity that has been imposed on the eurozone. One might say the same about our recent council elections.

From personal observation it would seem that whilst austerity makes sense, the way that governments are set up makes it impossible to carry out. It is quite apparent a term of 5 years is nowhere near long enough to complete the task, and that is the longest any government is going to last while attempting to carry it out. Undoubtedly one of the failures of democracy is that the intentions of long term government must be inherently fickle.

Aside from political musings, however, we must decide what to do with our money.

This exasperation that will no doubt be emerging as we head back to the recent doldrums of August 2011 could well cause many to lose faith in equities full stop. Maybe it is time to quit equities and choose some slow and steady fixed income investments until the tide turns?

On paper, market timing offers a seductive prospect: By predicting market direction ahead of time, a trader might capture only the best-performing days and avoid the worst.

The depiction below tells the other side of that story. Large gains may come in quick, unpredictable surges. A trader who misinterprets events may leave the market at the wrong time. Missing only a small fraction of days—especially the best days—can defeat a timer’s strategy.

As we can see, over a twenty-five-year period (1986-2010), missing the best twenty-five trading days would have cut FTSE All-Share Index annualised compound return from 10.18% to 4.75%.

Trying to forecast which days or weeks will yield good or bad returns is a guessing game that can prove costly for investors.

We don’t chase the markets, we are proponents of long term discipline for these very reasons. We would be more than happy to discuss what we can do for you.

Malcolm Stewart

EU Gender Directive

May 11, 2012

On 1 March 2011, the Court of Justice of the European Union (ECJ) published its ruling on the legality of Article 5(2) of the Gender Directive 2004. The ECJ has reached a decision that, with effect from 21 December 2012, the use of gender as a factor must not result in differences to individuals’ premiums and benefits for insurance and related financial services contracts.

Simply put the changes taking effect at the end of this year means that women are likely to have to pay more when taking out new life cover and critical illness cover. It could cost around 15%* more for your life cover if you wait to buy it after 21 December 2012 so why would you want to pay more when you can act now?

If you are even thinking twice about why you might need cover here’s a few questions to ask yourself:

• What financial support do you have in place if you had to stop working due to critical illness? What if you were unable to return to work?

• How would you cope if a partner or someone you depend on financially were to die suddenly or get a critical illness? How would they cope financially if anything happened to you?

• Could your family continue in the lifestyle they’re accustomed to without you and your income?

If you’re a stay at home mum, don’t underestimate your value either, recent statistics from Bright Grey show that the cost of paying someone to carry out the many tasks us mums do could be more than £30,000 per annum.

Consider then how your family would copy financially if you were to die or become too ill to keep things running, how much would be required for childcare if your partner had to manage on their own?

Having the right protection in place can provide peace of mind when it’s needed most and if we girls are going to have to pay more in future then there is no better time like the present to get the cover in place.

Here’s an example of the potential impact of a rise in premiums to come:

Female aged 39 – £90,000 of Decreasing Life and Critical Illness Cover over a period of 21 years **

No one likes having to pay for insurance so why pay more than necessary – act now and get in touch to find out how we can help you get the right cover at the right price.

Even if you already have cover now is the time to review it and ensure if you need to increase your sum assured or add more to your plan you can do it without paying more than required.

More next week on the changing face of life and critical illness cover and some new options we are now looking at.

Dr Claire Armstrong

*HM Treasury Consultation Document, December 2011

**Premiums are correct as of 29/03/12, supplied by Legal & General and are for illustrative purposes only. 15% increase has been assumed based on current pricing in relation to the changes to the EU Gender Directive with effect from 21/12/12. Your actual premium will depend on your individual circumstance and could be higher or lower than 15%

The FSA/FCA & Post RDR Advice

May 4, 2012

A few thoughts following conversations with two other advisers about RDR now coming into sharp focus and how already businesses are thinking about what the post-RDR world might be like.

The FSA continues it’s death throes and appears to lash-out in a number of directions, none of which are particularly helpful and endearing.

Let’s face it, any regulator is going to be a pretty easy target. I hear from friends and clients in other industries about there respective oversight bodies and the names are interchangeable but the problems remain common.

I will return to this in a moment.

One of the very positive outcome of RDR thus far for me, is the genuine co-operation amongst forward thinking businesses and the willingness and desire to help each other.

Certainly a big change from the clashing ego-fests of Network and other bun-fights of the past. (that doesn’t mean that there aren’t IFA’s out there that I’d rather saw my leg off than spend 2 seconds in their Bond-addled company – But I digress…)

During our conversation, one noted that the FSA had stated that they were concerned that IFA’s were “shoe-horning” clients into an advice process…

Once I’d placed the tablet under my tongue and my vision had returned to normal, I was able to think about this statement.

I thought that the whole (or some) of the point of RDR was to focus on the advice process, have a defined and streamlined investment strategy and a clearly laid out structure for delivery along with transparent details on costs.

Naturally, in the course of considering how this might work in individual businesses you might also define exactly what type of clients you can work with and how you can best provide value to them.

If that means some prospects are headed off at the pass in favour of clients who “fit” and will be best served, is that wrong?

As regulators (in any industry) create rules and regs, then it’s natural for the participants to assimilate and adapt. This doesn’t mean that you can throw the head up when you get a result you don’t like.

Next week; “common sense – a forgotten art.”

Roland Oliver
May 2012

Which Country? All of them

April 25, 2012

Dear readers,

We are proud to see our blog back online after a period of downtime. Some misbehaving servers over with our web providers seem to finally have been tamed. Apologies if you came by and were greeted with Internal Error 500, hopefully we won’t see it again.

So back to your planning…

Interestingly the topic of exactly which countries to invest in has come up a few times recently, and as usual with investment, there is a myriad of ideas and more than a little ‘market noise.’ As followers of this blog will know, we do not buy into ‘hot tips’ or speculation, and firmly believe diversification and long term planning is the only justifiable approach.

Some actually quite artisitic diagrams will now follow to help explain why.

The first, World Market Capitilisation, is a cartogram depicting the world by the size of each country’s stock market relative to the world’s total market value (free-float adjusted). Please click to enlarge.

Diagram 1

The cartogram brings into sharp relief the investible opportunity of each country relative to the world. It avoids distortions that may be created or implied by attention to economic or fundamental statistics, such as population, consumption, trade balances or GDP.

By focusing on an investment metric rather than on economic reports, the chart further reinforces the need for a disciplined, strategic approach to global asset allocation. Of course, the investment world is in motion, and these proportions will change over time as capital flows to markets offering the most attractive returns.

Viewing the world map by relative market capitalisation illustrates the importance of building a globally diversified portfolio and avoiding a home market bias.

The second and third diagrams below serve to make the point further.

This table in diagram 2 ranks annual stock market performance in US dollar terms for eighteen different global markets (from highest to lowest) over the last twenty-five years. The colours correspond to the countries featured on the next slide, and the patchwork dispersion of colours shows no predictable pattern.

Diagram 2

Investors who follow a structured, diversified strategy are more likely to capture the returns wherever they happen to occur. Investing in securities markets outside the UK helps build more extensive diversification into a portfolio.

The chart in diagram 3 shows annual performance in US dollar terms of eighteen developed-country stock markets for the last twenty-five years, highlighting the top performer in each calendar year. Over this period, the UK market was only the top performer once.

Diagram 3

Although many investors prefer to keep their capital close to home, they may pay a high price in terms of lower diversification and missed opportunity.

Next time you hear geographically related speculation, try to imagine predicting the the next line of colours in diagram 2…

Malcolm Stewart

Wealth Modelling – Income Protection

March 20, 2012

What would happen to you and your family if you became ill and were unable to work for some time?

We are able to tell you how this scenario might play out with our wealth modelling capabilities.

In the example below I will demonstrate how the Example family’s cash flow and liquid assets are affected. This particular Mr Example is the sole breadwinner for a family with three children. There are a multitude of different scenarios but this one allows me to illustrate the simulation effectively.

The details:

Mr and Mrs are 41 with three kids at primary age. Mr has a salary of £80,000, they have cash savings of £40,000, investments of £50,000, he has a pension fund of £50,000. They have a house worth £400,000 with a mortgage of £300,000. Annual expenses are £53,000 including extensive mortgage repayment. Various events such as university fees and expected wedding payments are scheduled into the plan.

The scenario:

Four years down the line Mr falls meaning he cannot work for two years.

From the cash flow chart we can see the savings and investments are called into action and dry up before the second year is out.

From the liquid assets chart we can see again the savings and investments drying up (orange) leaving the pension (brown) left and this cannot be touched. Note also the implication on retirement: liquid assets are £300,000 less than they are in the top chart at retirement age, and the ultimate effect at mortality is considerable.

Income protection cover typically pays up to 75% of your income in situations like this. Please consider your own situation and how your planning might be affected in the event you couldn’t work for a period of time.

This is one of the many scenarios we consider when producing a client’s wealth management plan. If you feel your planning would be seriously affected by an unexpected illness, then please contact us.

Malcolm Stewart

ISA Allowance – Use it or lose it!

March 2, 2012

With the end of the tax year less than 5 weeks away it’s no surprise there will be an avalanche of ISA applications arriving with Banks and Providers throughout March.

Despite the best of intentions much of the money invested into ISA’s doesn’t happen through the year with good advance planning it tends to go in tax year end.

Whether you complete your allowance early in the year or right up to the wire the key thing is that you make use of the allowance and more importantly that families make use of the full amount they have at their disposal to shelter as much savings and investments as possible from tax.

Are you aware the average family could shelter just over £58,000* from tax immediately if making full use of the back to back ISA allowance for this and the next tax year?

If you’ve already built up some cash in the form of an emergency fund then the next logical step is to invest in your ISA allowance. You should shop around, make sure you look at the best rates, understand the small print and do your homework before choosing what will work best for you.

ISA season is a great time to take stock of your finances and see how you are placed to make tax efficient savings, it’s also a good time to review your money in general and speak to someone about how you want to plan for the future.

There is no time like the present for starting good savings and investment discipline and wouldn’t it be great this time next year when everyone is rushing to do their ISA or wishing they’d looked at it earlier if you could relax and rest assured its already been taken care off as part of your financial planning in the year.

If you’ve always thought investing in an ISA makes sense but never get round to it then make 2012 the year you use that allowance not lose it.

It’s not too late to put something in place and we would be delighted to hear from you if you want to make the most of a great opportunity before the 6^th April 2012.

Dr Claire Armstrong

Client Relationship Manager

Join Me – Embracing New Technology

March 1, 2012

The financial planning industry in the past must have decimated several forests a day. Reams of paperwork piled up on desks, filing cabinets, and for some, or so I have heard, the floor.

These days are long gone (for most) and at Oliver Asset Management we embrace the opportunities new technology provides to keep our process fresh, efficient and effective.

One particular innovation we have been using lately is a simple and helpful website called join.me. Using this we are able to display our screen on the computer of the client, wherever they may be. In combination with a phone call or Skype, this allows us to talk them through their plan as though they were sitting in our office.

This means that there is no need for any extra travel arrangements, or waiting until they are next in Edinburgh, for clients further afield.

The second innovation that is very quickly gaining ground in every dimension is the cloud, allowing us to not only back up certain important documents but also to share and edit documents collaboratively with clients on one of the best services cloud computing has to offer: Dropbox. Although the ability to send attachments via e-mail is relatively new in the grand scheme of things, this is already comparatively cumbersome and inefficient compared to this secure and straightforward service.

Unfortunately one area where excessive paper use cannot be avoided is signatures, which must be presented physically no matter the requirement.

Maybe Echosign will eventually be the answer to this? If the online signature service ever became fully trusted and compliant it would certainly bring efficiency in this industry to an unprecedented dimension. With the increase in tablet usage it is not out of the question.

While some in the industry may be resistant to change this is not part of our culture. This can also be seen by our readiness for the Retail Distribution Review. We will always be happy to embrace the best of the new, and you can trust in our service to be as efficient as it can be.

Malcolm Stewart

Keeping You Informed

February 27, 2012

I am very pleased to announce two brand new features of our service that have been launched today:

Our first Monthly E-mail Bulletin rolled out today at 1pm.

Our first Quarterly Newsletter which you can find a link to at the top of the page.

This marks our commitment to bring things to our clients that we feel will be of interest and of use, be it information on current legislation, tax changes that may affect them or something personal to their individual circumstances.

We feel it is right that we try and improve the service, information and general all-round experience that our clients have when dealing with us.

I was talking to a number of advisers yesterday and a surprisingly common topic was the agreement that far too many IFA’s were using the Retail Distribution Review as an excuse to move existing clients on to a platform and charge 1% pa fund based commission going forward and forget about them.

The key point is that there was no change in administration service, no added value services and no change in advice offered but typically a big increase in cost.

I don’t think people are that stupid and many are very wary (& weary) of having the same service dressed up in a bow and played back to them as an enhanced and more expensive version of the same thing.

There is nothing better than having a client tell you that they value what you do and that they think your service is great value for money.

I hope to develop the Monthly E-mail, the Quarterly Newsletter and this blog to enforce our position as experts and provide the reader with something that they can turn to for information on all aspects of their plan on an ongoing basis.

If you haven’t already, please enjoy the Newsletter and don’t forget to check back on this blog for more on Wednesday.

Roland Oliver

27th February 2012

Resistance is Futile!

February 24, 2012

Those in the industry would have to have been living under a rock to be unaware of the coming Retail Distribution Review (RDR) and its impact on all firms in the industry post December 2012.

This period of transition throws up three main areas for consideration which are qualifications, service propositions and charging structures. It also involves considerable planning around the systems, processes and controls we need to have in place to implement and support these considerations.

I could blog on each in its own right (and may well do so) but for now I’d like to focus on the qualifications aspect, how this affects everyone in the business and feeds into the quality of service we can offer now and going forward into the brave new post RDR world.

I’ve been in the industry now going on for 10 years and it’s fair to say the last time I sat an exam wasn’t exactly yesterday. I thought my studying days were a dim and distant memory so it has been unnerving and also quite refreshing to find myself delving back into the study books and revisiting old and new topics.

As my husband said at the beginning of this cycle of studying “resistance is futile, just get on with it” and you know he was right. There was nothing for it but to just get in with it and now I find myself enjoying the work, yes, I actually said enjoying!

It has taken a few months but I am now of the mindset that these exam are not a necessary evil but in fact are a means to refresh my knowledge, a way to better myself and ultimately will equip me with the experience required to do my job to the best of my ability. The knock on effect of this will of course benefit not only the team I work with but every client I help look after.

I’m not alone in pursuit of improved knowledge, my colleague Malcolm is working on the same qualification and Roland is working towards Chartered financial status.

It strikes me that in this current climate that clients are looking to firms who are knowledgeable, capable and professional and that means we have a responsibility to understand the rules and regulations within our industry and the legislation around the services and products we offer.

We pride ourselves in being proactive and not reactive and we can only do this with a sense of confidence if our knowledge is up to date. We need to be constantly striving to better ourselves so we can say at any given time that the service and advice we offer to our clients is the best it can be.

The first issue for 2012 of The Personal Finance Society magazine is headed up with the CEO (Fay Goddard’s) letter to members which is titled “Helping you be the best you can” and I think this should be the mantra going forward into 2012.

I believe anyone involved in the industry at present should view the need for extra qualifications as a way to help them be the best they can be which will ultimately benefit the firm and the client.

If you’re currently reviewing the service you receive from your Adviser and looking at whether the proposition provides value for money you might also want to consider how well that firm is embracing the need to refresh and improve on their qualifications.

Is everyone involved in managing your finances striving to be the best they can be?

Dr Claire Armstrong

Client Relationship Manager

24^th February 2012