"Don't you smile at a crocodile; Don't be taken in by his welcome grin; He's just thinking how well you'll fit within...."
Sunday 30 May 2010
This headline was a readers response to an article in the Daily Mail entitled “Barclays' hard-sell tactics: You're a 'conquest' not a customer! By James Salmon
James Salmon says "The confidential document shows clearly how staff are incentivised to sell riskier investments, or more expensive, profitable products such as loans and private banking services.
The document shows that persuading a customer to gamble their savings in the stock market is 100 times more lucrative for salesmen than advising them to tuck their money away in a savings account.
A salesman will earn just 18p for each £1,000 saved by customers into a cash Isa, but will pocket £18.20 for each £1,000 invested in the stock market.
Those who manage to persuade a customer to sign up to Barclays Private Banking investment service earn £49.
The whistleblower adds: 'Some of the things we sell - such as structured products - are rubbish. These are one of the most popular investments. It's an easy sell as they offer elements of protection. But we are now being discouraged from selling so much because we want to be seen to be giving proper advice."
There are so many issues and discussion points on how to stop bad practices...but fundementally the problem is asking for advice from someone that is rewarded for selling products. Its always going to be a train wreck waiting to happen.
posted by Murray Round Wealth Management @ 10:37,
Videos that tell us what we think we already know, or do we?
Thursday 27 May 2010
I must admit I am visual. Clients know all too well of my drawings to explain complex financial issues. So below are a series of adverts made in Australia that I for one think really get back to basics. Whilst the statistics are Australian, the principles are world wide. Its a pity that someone can't remake these in the UK with UK statistics. Enjoy
Cash v Shares
Retirement contributions
Property v Shares
Why long term investing works
posted by Murray Round Wealth Management @ 14:13,
Stock market falls and the impact on your wealth.
Friday 21 May 2010
It is Friday 21 May and the FTSE 100 is 4986.
There have been heavy falls in the UK stock market.
What can investors do?
We suggest that investors that have portfolios with private banks or stockbrokers to establish what action their fund managers have taken to avoid the fall in asset values. In truth, if fund managers are actively managing your money, they should be taking action to help avoid or minimise any falls in your portfolio value.
As such, it is important to challenge your fund managers, stockbrokers or advisers regarding performance.
Here are some questions you may want to put to your fund managers:
What action have you taken in recent weeks to minimise the fall in the value of my portfolio?
What action do you propose to take now, if any and why?
Our experience shows that often the answers you receive will be complicated. At similar times in the past, the reasons given, at first sight seem plausible, but on analysis show confusion, sometimes panic, with no real clarity of action and some even saying, ‘steady as you go’ and ‘not to worry’. Whilst ‘steady as you go’ and ‘not to worry’ help calm emotions in volatile periods, such statements hold no substance if your stockbrokers, fund managers or advisers are actively managing funds.
Action is required.
In truth, if ‘steady as you go’ and ‘not to worry’ answers are given, you could well be paying for activity but not receiving it!
Unfortunately it is the investor that loses; so if you are serious about your money, we hope you will start to ask questions as soon as practicable.
We are passionate about delivering the truth about investments and investors need the tools to discover the truth. The tools are questions and answers. We hope you will ask the right questions at the right time to help you make good decisions.
We wish you good luck.
posted by Murray Round Wealth Management @ 14:24,
Ditch the manager and pick up a tracker fund
Thursday 13 May 2010
So said Charlotte Beugge of the Daily Mail.
Millions of investors would be better off ditching expensively managed funds and opting for cheap stock market trackers.
Many of Britain's biggest funds are simply closet trackers, but their high charges mean investors get smaller returns.
Active fund managers are supposed to aim to beat the stock market by clever stock picking. Yet few UK funds outperform the FTSE index, whether it is rising or falling. The story is similar with overseas funds.
'All the evidence shows it is difficult for a manager to outperform an index consistently,' says Nic Round, of independent financial adviser Murray Round. 'Costs make it nigh on impossible, so why should investors bother to speculate on the skills of an active fund manager when a passive, index tracker takes away that risk?'
posted by Murray Round Wealth Management @ 11:06,
Burton Malkiel: How to Invest
Monday 10 May 2010
The interviews are topical due to the launch of his new book with Charles Ellis. If you have not read either of these authors, and you have capital invested, you are missing out.
...and you are wondering who is Burton Malkiel
Burton Gordon Malkiel (born August 28, 1932) is an American economist and writer, most famous for his classic finance book A Random Walk Down Wall Street. He is a leading proponent of the efficient market hypothesis, which contends that prices of publicly traded assets reflect all publicly available information, although he has also pointed out that some markets are evidently inefficient, exhibiting signs of non-random walk.
posted by Murray Round Wealth Management @ 14:40,
Burton Malkiel on efficient markets and China
Burton Malkiel, professor of economics at Princeton University and author of A Random Walk Down Wall St on how data continues to show markets to be efficient, even though many have disputed his theory.
Passive approaches, therefore, will almost always be a better choice than active management. For best returns, investors should choose a broad based global index that is slightly overweight on China.
Take a look at Burton Malkiel at the FT being interviewed.
We cannot embed this video,so click on the link to visit the FT interview.
One simple but lovely point in the interview. He states that over 5 years 2/3rds of actively managed funds (oh by the way, so many investors still do not really appreciate what this means even though they are investing this way) and 1/3 win. That means investors should seek out the 1/3rd. That would seem common sense. But the 1/3 that win in one period don’t win in the second period! So how on earth can you choose a fund or manager that will win year after year after year….
Of course, let me know if you find one, because I have not found any yet!!
posted by Murray Round Wealth Management @ 14:39,
CGT rise expected – Sit tight or Sell now!
George Osbourne, the Chancellor, declared that he will deliver an Emergency Budget on the 22nd June and he has hinted that tax rates may have to increase.
The Conservative-Liberal Democrat Coalition has confirmed they are looking to restore the link between Capital Gains Tax (CGT) and Income Tax. This was confirmed in the Government's coalition document issued by the Cabinet Office entitled ‘The Coalition: Our Programme for Government’.
With a Capital Gains Tax rise on the cards as one of the many measures aimed at tackling the economic deficit many investors are expected to start selling shares and second homes ahead of the much anticipated tax rise signalled by the new government. This was reported in the Financial Times on the 14th May.
We’ve already seen a high profile impact of the potential tax rise as the CEO of Rolls Royce, John Rose, sold nearly half of his personal holding in the company.
From an economic perspective, Helen Alexander, the president of the biggest business group, has urged the new Chancellor to concentrate on ‘sorting’ the economic deficit, stressing that he should be ‘bold’.
So where do these ‘bold’ decisions leave you as an individual investor?
If you are likely be affected by the potential Capital Gains Tax rise and you want a different perspective on how best to tackle your concerns then please feel free to contact us.
posted by Murray Round Wealth Management @ 14:38,
Active Managers' Market-Beating Claims Debunked
New, more precise mutual fund style analysis shows active management still underperforms over time.
Wherever I look, the evidence keeps mounting up. For our clients, the evidence shows right you are to invest using passive funds through asset allocation strategies.
If you are not a client, and still believe your stockbroker will make money for you…
Have a look at this article from Richard A. Ferri, CFA, is the founder of Portfolio Solutions, LLC, a low-cost investment adviser firm in Troy, Mich. He has written numerous books on subjects ranging from asset allocation to index funds and ETFs.
He concludes… “When active managers as a group make the headlines because they "beat the market," it is not a triumph of skill, it is an error in measurement. New methods that properly adjust for style bias show that, as a group, active management is still underperforming passive management in all categories and over nearly all time periods”. Told you so ;)
posted by Murray Round Wealth Management @ 14:37,
US pension funds play safe with passive
We do not have billionaires as clients. But hopefully you would expect billionaires or those with billions under management to have carried out due diligence on how to invest. I was interested in this article in the FT. It discusses the passive investment debate…with examples.
“ the Ohio Bureau of Workers’ Compensation, which handed State Street Global Advisors $1.3bn (£857m, €974m) in passive mandates, as well as the San Jose (Calif.) Police and Fire Department Retirement Plan, which moved more than $250m of active large-cap equities into passive products.
And other large state funds are looking to add more passive to their mix, including the $100bn Florida State Board of Administration and the $5bn New Hampshire Retirement System.
Florida, for its part, is considering adding to its already passive-heavy US equity portfolio by taking from traditional active managers as well as its enhanced equity portfolio. The fund, which is also looking at doing the same for its non-US equity allocation, already has a US equity portfolio that allocates over 80 per cent to passive investments”
So the question that investors should ask is why? Why does it make sense for these institutions to invest in this way? Do they know something you don’t? Perhaps they do, especially if they are backing their judgement with billions.
So if you have £100,000 or £1,000,000 or £10m, perhaps taking seriously the long term benefits of using passive funds with a risk adjusted asset allocation strategy actually works.
posted by Murray Round Wealth Management @ 14:37,
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.
Welcome to our Blog
Our Blog focuses on the three Ts...truth, transparency and trust. The world of investment management is fraught with self interested parties keen to sell investment products but wrapped up as 'advice'. Only with totally transparency, can investors make informed and successful decisions. We have included various categories for simpler navigation, alternatively search our Blog using key words you think are relevant. We hope you find something of interest to you.
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