Murray Round in the News on 19th March 2010
Thursday 25 March 2010
We do not like structured products. Essentially they are sold to investors who like the idea of security but want an extra return over cash. With deposit rates so low, it is understandable why structured product providers are looking to turn up the heat on the sale of these products.
We have yet to see how they benefit anyone other than the provider.
In the Daily Mail, Charlotte Beugge writes INVESTMENT EXTRA: A high price to pay for structure?
“Banks and financial advisers are selling millions of pounds of structured products. But how many customers fully understand what they're buying?
The basic idea of structured products is that your return is linked to an index, usually the FTSE 100.
In addition, most of those sold through banks also promise that whatever happens to the index, you will get your original capital investment back. Currently, Barclays, Santander, Legal & General and Aviva all have structured products for sale.
But there's a cost to having your cake and eating it. Firstly, you won't get all the return you could make from the market and, secondly, your money will be tied up often for more than three years, so if you want to get out early you might well lose cash”
Fortunately Charlotte asked our view….
Nic Round of advisers Murray Round summarises it: 'In my view there is never a reason for a client to buy a structured product. There's always a better way than investing in one of these plans.'
Think before you buy! In fact, don’t buy!
posted by Murray Round Wealth Management @ 14:43,
This is a phoney Budget. Bring on the real one
I liked the headline. Irrespective of your political views, the budget will not help anyone. Take a look at the article and you’ll see why. I listened to Clegg, Liberal, earlier and his description before Darling took to the floor that it would be a “Fag end” budget. Both statements are true.
posted by Murray Round Wealth Management @ 14:40,
How to add profits as an insurer in one easy lesson...take it from loyal customers!
In the FT yesterday, the report discussed the increase in L&G profits.
“The big question for analysts is whether this kind of performance is repeatable. The company said it expected to generate £600m of cash in 2010. Much of that will come from "monetising" its existing business, or taking more cash out of older maturing policies than it invests in backing new policies.
One analyst said: "The problem with that is you can only monetise in-force business once. You've got to keep filling the bath up."
So I read this as: long term loyal existing customers with L&G are being penalised for short term profits! That poses a number of questions. How do long term policyholders trust L&G?, should they surrender now if management is happy to take more cash out in future years? Each year policyholders should obtain a surrender value to understand how the real value changes over the years. Then they can make decisions on the value of their investments.
posted by Murray Round Wealth Management @ 09:20,
Which? fails 90% of banks on advice
According to Moneymarketing “Almost 90 per cent of banks and building societies gave inappropriate financial advice on how to invest a lump sum to mystery shoppers from Which?, in an undercover investigation.
Which? researchers found just four of 37 branches gave good advice, while the remaining 33, or 89 per cent, recommended “inappropriate products without properly explaining the risks”, or failed to get even the “basics of good advice” right.
Which? says Lloyds TSB and Halifax performed no better than the rest, despite being bailed out with taxpayers’ money.
The investigation shows 21 of the 37 advisers recommended that the researchers put some of their money into capital-guaranteed products, with eight touting these plans as “no risk”.
I am remindeed of the film Network. The classic scene dubbed, “I'm Mad as Hell”. See it here on You Tube below. The Banks will continue to be targeted by this government and successive ones until we eventually have something workable we can all trust. In the meantime, perhaps investors need to tell the banks that they are fed up with “inappropriate financial advice” and being wholly self interested. Moreover, take their business elsewhere.
posted by Murray Round Wealth Management @ 09:16,
Lighthouse expects £3.18m worth of complaints
Wednesday 24 March 2010
Often the local or national press do not publish headline news items such as the above. It is news issued in the financial services press. In this case from moneymarketing.
What’s my point? Whilst Lighthouse say the claims will be met apart from £247,000 as the companies contribution, nevertheless, that is a lot of complaints and a lot of money. I hope the claimants get their money back.
But what about their existing and possible new customers? Would you really want to take advice from a firm that has such complaints?
I know the FSA want to name and shame earlier, and whilst such powers can be deemed a little one sided, if the adviser ( in this case Lighthouse) acts in the best interest of their clients then complaints should not exist.
Perhaps investors need to do their due diligence to ensure the firm they want to represent them , meets their expectations.
posted by Murray Round Wealth Management @ 16:53,
How to avoid the 50 per cent rate
Thursday 11 March 2010
I was interested in the FT article on how to avoid the onset of 50% from next April for incomes over £150,000.
At first read, much of the ideas can be applicable but what is clear there is no magic bullet. It is the same old ideas. Pay into a pension… invest into an ISA, consider VCTs and offshore bonds. The latter two have issues that many investors fail to recognise but that's a story for another day. The best answer was leave the country. Now that will save tax…depending on where you go!
Then I got to thinking. The answer is a more strategy decision by looking how various solutions, with their respective advantages and disadvantages; how they compliment each other…and then measure the relative tax benefits. This is when it gets interesting. Take the VCT for example. The article says don’t let the tax tail wag the investment dog. But that’s exactly what VCTs do. An investor with say 30% tax saving will think that 2%, 3% or 4% charges each and every year matters little when compared to the 30% tax saving. Yet it is the charges that are the problem, not the tax.
When a VCT is sold the risks and explicit charges will be disclosed for regulatory purposes but the emphasis is on the tax saving... not on the charges.
The focus of the VCT provider is to sell the product. The client wants the tax saving but in truth the answer is how to optimise your wealth rather than minimise on your tax; it may sound the same but the perspective is entirely different.
It is that perspective that means you, as the investor, end up being a winner. In too many cases investors buy what they think are tax efficient schemes and sacrifice personal optimisation of their wealth.
Just because you may do exercise all week, and eat the right calories with a balanced nutrition intake, does not mean your overall health and fitness will change. It needs long term changes. The same is true for your personal wealth. We are in financial terms your long term personal fitness trainer and health nutritionist.
posted by Murray Round Wealth Management @ 09:49,
Understanding more about ETFs
Tuesday 9 March 2010
Here is a video set in Arzak restaurant Spain...of course its about ETFs.
Enjoy
posted by Murray Round Wealth Management @ 20:24,
Clear investment beliefs are crucial
Monday 1 March 2010
What a great article.
The discussion by Pauline Skypala of the FT is based on a study by Kees Koediijk of Tilburg University and Alfred Slager, chief investment officer of Stork Pension Funds. They found the publication of investment beliefs is concentrated in Canada, the US, the Netherlands, Australia, Denmark and Sweden, and among public pension funds…but little in the UK.
What does this mean to you as an investor?
If you are employing an adviser and fund manager to look after you assets, how can you take decisions without making your terms of reference explicit? For example, most investors tend by default to actively manage funds. Rather than invest by default, the adviser and fund manager should explain why they believe it is in your interest to do so. They need to be clear about how underlying assets are included or excluded from a portfolio. If the fund manager believes in stock picking, then that should be stated so the investor knows how the manager is making decisions on their behalf. Unless you know the terms of reference, how do you really know if you have been successful in your investment experience?
A prospective client told us they were delighted that their funds had increased by over £150,000. Great news. But in reality the return should have been over £250,000. If you know the terms of reference you can judge success.
As investors you need to ask for the investment policy statement or details of investment beliefs...and if they are not forthcoming, how can you realistically judge performance and risk over time?
posted by Murray Round Wealth Management @ 15:30,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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