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Financial Planner CHOICE OF THE PROFESSIONAL PRACTITIONER The official magazine of the Institute of Financial Planning

May 2010 | ÂŁ4.95

Sipps Bounce Back Throwing off the shackles | page10

Be Excellent How to boost your business by winning the Norton Award page 22 On The Spot Award-winning planner Alan Smith page 13

Practice makes perfect Practice management views from Tim Page CFPCM page 20


Letter From The Editor WELCOME to the May edition of Financial Planner with a fresh, new spring look. We hope you like it. You’ll find all your favourite features in the usual place but with some new colours and designs. We’ve aimed to make navigation simpler and easier. If you have any comments on the new look or any suggestions for the magazine I’d be pleased to hear from you. Just send an email to me. The address is below. In this issue our cover feature is on Sipps, a sector which despite recent problems and challenges, remains a core area of opportunity for most Financial Planners and reassuringly that’s likely to be the case for many years to come. As our Sipps Survey on p10-12 reports, their open-architecture, flexibility, investment choice and most recently lower costs make them an ideal partner for Financial Planners looking to give clients maximum choice. Sipps are emerging as not just a niche product or wrapper, but as a central part of the retirement planning process for many affluent and high net worth clients. As our survey reports, despite suggestions that many clients would go direct and try and run their own Sipps, the reverse seems to be true. Only 1 per cent of Sipps are now non-advised. It seems that when it comes to Sipps and retirement planning clients are turning to the professionals, and that’s welcome news for Financial Planners whose trusted, long-term, mostly fee-based approach is perfectly suited to Sipps. There’s a growing view that Sipps are a pension idea whose time has come and Financial Planners are best suited to make the most of the opportunities they offer, both for themselves in terms of admin efficiency and for the long term benefit of clients. WIN A £50 M&S VOUCHER: Take part in our Reader Survey and you will be helping us give you an even better service. You could also win one of two £50 M&S vouchers. See p30 for details of how to take part. Kevin O’Donnell Publisher and Group Editor of Portfolio Publishing, publishers of Financial Planner kevin.odonnell@portfoliopublishing.co.uk

Contact & Publishing Details: Subscriptions: 01895 678629 Full contact details p34

Contents M AY 2 0 1 0

NEWS & COMMENT FINANCIAL PLANNING NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6, 7 LETTER FROM WHITEFRIARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 IFP chief executive Nick Cann looks at why the FSA is sharpening its axe. LETTERS TO THE EDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9 BRANCH MATTERS: Duncan Hannay Robertson CFPCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Duncan Hannay Robertson, chairman of the East Anglian branch of the IFP. INSIGHT AND ANALYSIS COVER FEATURE: Sipps Shine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-12 There are still strong reasons for Financial Planners to be cheerful when it comes to self invested pension plans. Rachel Gordon explains. ON THE SPOT: Alan Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14 Alan Smith, managing director of Capital Asset Management, talks to Financial Planner about winning the David Norton Building Excellence award. CASE STUDY: Pre-Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-18 Two Financial Planners advise a bank trader how he should be planning his investments and retirement. FEATURES MY PRACTICE WEEK: Robin Stamp CFPCM . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Robin Stamp, of Alpha Financial Consultants, Taunton in Somerset shows how it is possible to balance advising a broad spread of clients while running a busy family life – and doing DIY. PLATFORM: Tim Page CFPCM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Tim Page, Certified Financial Planner professional at PageRussell, outlines some basics for doing better business through more effective business processes FEATURE: David Norton “Business Excellence” Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-23 Sue Whitbread, IFP communications director, looks at the benefits of winning this prestigious IFP award and how you can enter. WORK-LIFE BALANCE: Caroline Hawkesley CFPCM . . . . . . . . . . . . . . . 24 Caroline Hawkesley, a director of Evolve Financial Planning, is a busy Financial Planner who balances looking after two young daughters, one just 6 months old, and advising clients. TECHNICAL UPDATE: Outcomes-driven investment/Protection . . 25,26 Stuart Fowler, founder of No Monkey Business, discusses one means by which Financial Planners can raise their own value in the eyes of clients and George Seatter, managing director of Green Park Insurance Services, discusses the value to planners of protecting clients. IFP MEMBER NEWS IFP NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-31 SPONSOR NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 This month IFP sponsors Henderson and Zurich explain why they are backing the IFP and Financial Planning. CAREERS & RECRUITMENT CAREERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Talking Training by IFP education director, Lucy Courtenay, plus Promtions & Appointments and the latest successful CFP certificants DIARY /CONTACT DETAILS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 A sporty fell to the Diary this issue with charity walking and ski-ing in mind but bad news for the Bank of Mum and Dad - there’s a crisis afoot The official magazine of the Institute of Financial Planning Financial Planner is the official journal of the Institute of Financial Planning. Founded in 1986, the IFP is the exclusive licensee of the CFPCM mark. Financial Planner welcomes articles and correspondence from both members and non-members of the IFP but cannot be held responsible for lost manuscripts. It is recommended that contact be made with Financial Planner’s editorial team before submitting manuscripts. Views, opinions or claims in this magazine are not necessarily subscribed to by the Institute of Financial Planning or Portfolio Publishing and regulatory due diligence is not performed on authors. The IFP and Portfolio Publishing can accept no responsibility for loss occasioned to any person on taking or refraining from action as a result of the material contained herein. Institute of Financial Planning, Whitefriars Centre, Lewins Mead, Bristol BS1 2NT 0117 945 2470 Fax: 0117 929 2214 enquiries@financialplanning.org.uk © Portfolio Publishing 2010

Financial Planner | May 2010 | 3


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Financial Planning News

IFP’s Cann calls for “level playing field” on FSA professional standards plans The IFP has given a cautious welcome to proposals to raise professional standards as outlined in the FSA’s consultation paper CP09/31 “Delivering the Retail Distribution Review.” Under the proposals, advisers will need to demonstrate greater knowledge and skills and meet enhanced standards in dealing with

FSA: keen to see higher professional standards

clients. The IFP supports moves to raise professional standards with the objective that the consumer will ultimately be better served although, according to Nick Cann, chief executive of the IFP, there are still issues to be sorted out when it comes to membership of professional bodies. He said: “The IFP remains concerned about a level playing field. Many individuals have already invested in their professional development and have benefited from doing so. “European Law prevents the FSA making membership of a professional body compulsory and so it is important that those that have joined see some genuine benefit. “It is equally important that those who decide, for whatever reason, not to join a professional body do not receive an easy ride. “The IFP is very happy to step up to the challenge of offering genuine value and benefit to its

membership. CFPCM certification and an excellent CPD programme are the icing on the cake for many as they take advantages of the proposals set out in the RDR. “However there is much still to do to help members understand exactly what is necessary to meet the requirements and clarification about the future relationship between the FSA and the IFP.” • In its response to FSA policy statement PS10/6, the Institute said that it believes that this latest update from the FSA on the RDR process, and the findings therein, are helpful. Mr Cann, IFP chief executive, said there were, however, a few areas that the IFP will look to add some further suggestions in oral disclosures. He said: “The update on the VAT situation is not very helpful and more work needs to be done by both the FSA and HMRC in terms of guidance. There is generally some fine tuning required to the proposals.”

Commission seeks “Fairtrade-style” finance for all Financial products must meet a “comprehensibility test” for at least 50 per cent of customers, says a new report. Pensions, Isas, mortgages and other financial products should meet a “comprehensibility threshold” before they can be sold and carry Fairtrade-style labelling so the public can see where savings are invested, a Commission of Inquiry suggests. The call for labelling and comprehensibility tests will make financial products and services

more transparent so that people can make informed choices about which products they choose, says the Commission into the Future of Civil Society, funded by the Carnegie UK Trust, launching its report, Making Good Society,  in Edinburgh recently. Comprehensibility tests will see an independent panel of “ordinary” consumers asked whether financial products were clear to understand and had helpful information. If not, they should be prevented from being sold to the public, says the

Commission in its report Making Good Society.  The new system would also include those selling products being required to provide information on where money was invested so people would know if their money was buying shares in companies with good social and environmental track records or was invested in social enterprise.   Inquiry chairman Geoff Mulgan, said: “Financial products must be easily understood by the man and woman in the street.”

FPSB to develop global framework for financial plans The Financial Planning Standards Board, owner of the CFPCM mark outside the United States, has held a two-day meeting attended by Financial Planning experts from all over the world to develop a global framework for financial plans. The meeting covered written protocols, guidance documents and templates to help educators train the next generation of Financial Planners and certifying Sipps Survey - see 10-12

bodies to assess potential Financial Planners’ competency to deliver viable financial plans to clients. 

 The 10-member panel included representatives from Australia, Canada, Germany, Ireland, New Zealand, South Africa, the US and UK. Lucy Courtenay, IFP education director, attended on behalf of the UK. Wessel Oosthuizen, CFPCM, panel chairman and director of the

Centre for Financial Planning Law at the University of the Free State in South Africa said: “The FPSB’s framework identified the ability to develop a written financial plan as one of the requirements for assessing a person’s competency to be recognised as a Financial Planning professional.” The
FPSB hopes to approve final documents at its global meeting in Seoul, Korea, in October.

FSA calls for proactive consumer protection Hector Sants, chief executive of the Financial Services Authority, has outlined the FSA’s new consumer protection strategy. Speaking at Oxford University, he said the regulator’s new approach will involve early detection and intervention through intensive supervision. It signals the end of ‘reactive regulation’.

Draft US legislation would create Financial Planner Board A draft amendment to financial services reform legislation in the US would, for the first time, make Financial Planners subject to regulation. The Financial Planners Act of 2010, proposed by Senator Herb Kohl (Wisconsin) would create a Financial Planner Oversight Board that would report to the Securities and Exchange Commission. The proposal is supported by the US Financial Planning Coalition.

Variable annuity sales top £1 bn in 2009 The value of variable annuity sales fell 9 per cent to £1.05 billion in 2009 compared with 2008 while the number of policies rose marginally, according to research by consultants Towers Watson. The value of variable annuity sales in the fourth quarter of 2009 was £188.4 million, up 32 per cent from third quarter sales of £143.1 million.

Pada responds on charging for NEST Responding to recent announcements by the DWP on the charging structure for the low-cost workplace pension NEST, Tim Jones, PADA chief executive, said he expected the charging structure to include a 0.3 per cent annual management charge, plus a charge on contributions of around 2 per cent. Financial Planner | May 2010 | 5


David Norton “Building Excellence” Award 2010 goes live

Financial Planning Summit on future of planning to take place in Taipei

The Institute of Financial Planning has announced that entries are now being taken for the prestigious Building Excellence Award, which was established in memory of David Norton, one of the founding fathers of the Financial Planning profession in the UK and a former President of IFP. See pages 13, 14, 22, 23 and 32.

The Financial Planning Standards Board, the international standardssetting organisation for Financial Planning and owner of the CFPCM, Certified Financial Planner and CFP logo marks outside the US, will host a World Financial Planning Summit on 21 April in Taipei.  Nick Cann, IFP chief executive, Barry Horner, President of the IFP, and Jane Wheeler, Past President of the IFP and an FPSB board member are due to attend along with delegates from over 20 countries. They will comment on the event in a future issue. The summit will see global leaders in Financial Planning and invited guests discuss how best to establish Financial Planning as a professional practice worldwide and provide to consumers the

The jury still out on inflation forecasts Both inflation and deflation are likely to be an issue for investors in the next year, leading fund managers warned at a recent event hosted by Fidelity FundsNetwork.

68% of advisers want Conservatives to win 1ST - The Exchange, provider of e-commerce services to over 28,000 advisers, says its research shows that over two thirds of advisers (68 per cent) believe the Conservative party would do the most to help the economy recover and “best understand the requirements of our profession” post RDR.

FSA mortgage data shows small rise The Financial Services Authority says the total value of outstanding loans was £1,207bn in Q4 2009, an increase of 1 per cent compared to a year earlier. New advances totalled £41bn, an increase of 2 per cent on Q3, but 8 per cent lower than Q4 2008.

Public sector pension liabilities now £1.2 trn Unfunded pension promises to past and present UK public sector workers now amount to almost £1.2 trillion, says Towers Watson. Including these liabilities would double the new estimate of national debt. 6 | May 2010 | Financial Planner

benefit of working with qualified and competent Financial Planners. Corinna Dieters, FPSB’s 2010 board of directors’ chairwoman and World Financial Planning Summit speaker, said: “FPSB’s vision to establish Financial Planning as a global profession requires us to listen to and learn from the ideas and plans of global Financial Planning leaders and other stakeholders.” She added: “FPSB’s World Financial Planning Summit is designed to add the perspectives of regulators, large financial services firms, educators and the voices of clients of Financial Planners to the global Financial Planning community’s debate about what’s needed to establish Financial Planning as a bona fide profession that puts clients first.”

Taipei: venue for world summit

Noel Maye, FPSB chief executive, said: “We will invite ‘big-picture’ thinking but we also seek concrete recommendations about how FPSB can best engage stakeholders in supporting our mission and putting in place the building blocks of a vibrant global profession.” More details at WorldFPSummit.org. 

FSA publishes rules on ending commission bias The Financial Services Authority has published new rules that will remove commission bias from the sale of retail investment products, helping to restore, it says, consumer confidence in this market. The Retail Distribution Review aims to put the customer in charge by providing them with information about the cost and nature of the advice they are receiving. From the end of 2012, firms will have to be upfront about how much they charge for their services, and no longer hide the cost of their

advice behind the cost of a product. In addition, firms will not be able to accept commission in return for recommending specific products. Consumers will know what they are buying upfront, how much it will cost them and also have the peace of mind that it was recommended to suit their needs. The changes also mean firms offering independent advice will have to demonstrate that their recommendations are based on a comprehensive and unbiased analysis of the market, and that any product selection is made in their

clients’ best interests. However, if a firm chooses to limit their product range to certain investments or strategies, then the services they offer are restricted, and this should be clearly set out for customers. The FSA says that the fundamental point is that consumers will be able to see how much is charged for advice. Sheila Nicoll, FSA director, conduct policy, said: “The rules explode the myth that investment advice is free. It is vital consumers know not only the cost of financial advice, but also its value.”

Prestwood’s Armson leaves to set up planner panel Lifestyle Financial Planning specialist Paul Armson, previously a consultant at Prestwood Software, has launched Alternative – a nationwide panel of lifestyle Financial Planners. Mr Armson, chief executive and founder of Alternative, said: “The FSA Retail Distribution Review will change the face of financial services in the UK. The days are numbered for advisers who do not raise their game. We intend to promote real Financial Planning that focuses on clients, not their money.” Alternative will provide training,

marketing and lead generation plus “RDR-friendly” support services. Mr Armson has established a team of founder members, mainly Chartered or Certified Financial Planners. One of the first to join is Lancashire-based Sylvia Bentham of 1st Chartered Financial Planning who said: “This is definitely one of the most exciting developments in financial services.” More info is available at: www. alternativefinancialadvisers.co.uk Paul Etheridge FIFP, CFPCM, former President of the Institute

of Financial Planning and founder and chairman of lifestyle Financial Planning specialist Prestwood Software, said that Paul Armson, former head of marketing and catalyst for the launch of Truth Software, had stepped down to pursue other business interests. Prestwood Software, creator of Truth and Prestwood Professional software, said it was an amicable decision. Mr Etheridge said: “Paul has been an excellent ambassador for lifestyle Financial Planning and for the past three years has helped grow business volume.” New CFP certificants - see 32


Financial Planning News

Banks failing on advice, says Which?
 Banks and building societies are failing customers when it comes to providing good advice about how to invest their money, according to new research from consumer champion Which? In an undercover probe, Which? researchers found just four of 37 branches of banks and building societies visited gave good advice about investing a lump sum. The banks bailed out with taxpayers’ money, Lloyds TSB and Halifax, were no better than the rest. The remaining 33 failed to pass Which? tests, often by

recommending inappropriate products without properly explaining the risks, or by getting the basics of good advice wrong. Some 21 of the 37 advisers recommended that the Which? researchers put some of their money into products referred to as capital-guaranteed, with eight wrongly touting these plans as ‘no risk’.  Six advisers suggested an investment bond, failing to adequately explain the risks. Which? chief executive Peter Vicary-Smith said: “It’s disappointing to see evidence that

the way many banks treat their customers hasn’t improved since our taxes were used to bail them out. ”

Adviser and client simply need to know the costs. They do not need to know who gets what. Nick Cann, chief executive of the IFP, does however see some areas of concern with the nonadvised route and competitive disadvantage to the adviser community.

HM Support Ad_F Planner Half Page:Layout 1 01/04/2010 12:06 Page 1

IFP Branch Reports - see 27

Standard Life has bought threesixty, the intermediary support services business, from its former partners. Threesixty has 575 adviser client firms employing 5,160 advisers.

Ethical investment to rise as Isas go green

IFP welcomes FSA proposals on platforms and RDR The Institute of Financial Planning has welcomed a number of the initiatives raised in the FSA’s paper on platforms and the RDR. It has supported in particular: Confirmation that a platform should be a service, not a product Transparency of charging. Compulsory re-registration

Standard Life buys support firm threesixty

He said: “This market could become more attractive to the likes of existing players like Hargreaves Lansdown and perhaps new entrants like Tesco. “There are other areas that might also be looked at in some more detail in this area like rebates direct to the consumer.”

New research from The Cooperative Investments has revealed that 13 per cent of investors were likely to go green with their Isa allowance by selecting ethical investments.

FPSB convenes international panel The Financial Planning Standards Board is developing new guidance on evaluating the work experience of candidates for Financial Planner certification worldwide.

Financial Planner | May 2010 | 7


Letter from Whitefriars Nick Cann Chief Executive, Institute of Financial Planning These are challenging times for us all and not made any easier it seems by the FSA’s desire to sharpen the regulatory axe in a number of different areas. The IFP is fundamentally supportive of improving the quality of advice and professional standards. There is a strong belief that the RDR is good policy and will help in achieving these objectives, but also that much more needs to be done for the FSA to properly understand the nature of a Financial Planning business and the service that this business is likely to provide. There are also issues around how to achieve a genuine partnership with the FSA as proposed post the RDR. While it has been frequently highlighted, the FSA still finds difficulty in honing a genuine focus on the client needs and suitability of advice unless a product sale is involved. This has become particularly evident through the various consultation papers and the thematic work that has been undertaken on platforms. The IFP has campaigned throughout the RDR period for recognition of Financial Planning and, more latterly, the benefit of considering the Financial Planning firm. The whole market can’t be treated the same and recognition needs to be given to the positive qualities and consistency that Financial Planning firms are able to deliver. All CEOs and senior managers within Financial Planning and advisory firms constantly face the challenge of ensuring that their processes and systems meet the test and rigour of the FSA. I imagine that following the recent sanctions imposed on individuals and larger firms that there will be a number of individuals conducting internal reviews and looking for possible exits. As a result there will be opportunities over the next few years to build profitable, valuable Financial Planning businesses Finally, thank you to all CFPCM professionals who undertook the detailed questionnaire as part of our important Job Analysis Questionnaire. It is appreciated that there were a lot of repetitive questions that went on forever. The outcome, which will be reported in a future issue of Financial Planner, will help shape a bright future for Financial Planners joining our profession in the coming years.

“More needs to be done to help the FSA understand planners’ businesses.”

8 | May 2010 | Financial Planner

Letters

Financial Planner’s Letters to the Editor section is the place to have your say. Keep your letter to a maximum of 300 words. Include your full name, company name, IFP designation if appropriate, daytime telephone number and email address. You can email your letters to: FPMLetters@portfoliopublishing.co.uk. Names may be witheld from publicaton on request.

Letter Of The Month How the IFP’s training and coursework opened my eyes Sir, I came across the IFP’s CFPCM certification last year. I had previously limited my professional studies to CII Diploma and Advanced Diploma modules and was looking for more practical development of my skills rather than just another technical exam. Having been involved in training for the last 10 years, practical, hands-on Financial Planning was exactly what I needed. I attended two days of training in Bristol which covered the principles of Financial Planning and preparation of the assignment for CFP certification. The training was delivered by CFP professionals and the learning experience was excellent. Having not given financial advice for 10 years the training was vital – I learned how to use a financial calculator properly using compound interest to work out future pension needs and school fees funding. The second training day gave a great insight into the high standards required to pass the assessment. I liked the approach taken by the IFP – although there are a number of mandatory standards

Lifetime cashflow analysis means hedging all relevant risks Sir, A quirk of the modern adviser business is the move away from insurance. We have a split between benefit consultants whose building blocks are insurance-based – final salary and DC pensions, annuities and risk products on the one hand and new model advisers or wealth managers who tend to avoid life companies (not all, of course). This is not good advice. A function of Financial Planning is hedging risk - longevity, disability or investment based. The greatest risk for most, apart from living too long, is disability. Some 2.7m people are claiming incapacity benefit. It is not a risk to be ignored. There are many reasons for not ensuring clients are protected: the state will provide; it won’t happen to me; I don’t trust insurers, and so on. These objections are not for professional planners. The good news is that most top advisers are using lifetime cashflow analysis. The cost of hedging investment

that must be achieved they do not prescribe a standard process. This means anyone taking the qualification can incorporate the standards into their own sales process making the assessment very practical and worthwhile. The most important learning outcome for me however, was to discover how to sell a high quality planning service to clients, rather than just products. CFPCM certification provides a framework for advisers to move to a fee-based Financial Planning model in readiness for 2013 and I would recommend the qualification to all advisers. Having completed the Chartered qualification with the CII, I can now see the importance of the practical application of skills gained from the CFPCM certification that generate the best use of technical knowledge. I am now looking forward to running training for advisers of the Tenet Group to help them become CFPCM professionals too. Neil Price CFPCM Group Training & Development Manager The Tenet Group, Leeds

risk is greater than that of hedging disability risk. Yet the impact of loss of income is far greater than typical variations in investment returns over time between cautious and medium risk-based asset allocations. We put huge effort into trying to achieve a little upside and often ignore the colossal downside. Good advisers won’t let their clients take that risk. Clive Waller Managing Director CWC Research Petersfield, Hants

NEST egg will struggle to combat nations’ pension woes Sir, The impetus for the launch of the National Employment Savings Trust is that the over 65s will have doubled in number by 2055, and based on current projections around seven million of them aren’t saving enough to have a pension that meets their demands. This is surely not a great surprise. It has been well known for a long time that we have an ageing population and that


Opinions

Win £50 Voucher WIN A £50 training voucher from the IFP to be used against any IFP training courses in the next year. To enter simply send your letter (350 words or less) to Financial Planner Magazine. The Editor’s decision is final.

people are not saving enough money for their retirement. However, successive Governments have failed to adequately address this problem, putting short term political motives ahead of a long-term strategic solution. NEST is the latest in a long list of individual initiatives designed to put the UK pension provision back on track. In recent years we have seen pension simplification, stakeholder pensions and increases in the state retirement age. However, each initiative happens in isolation rather than being part of a co-ordinated plan. While NEST can be seen as a positive step as it will encourage people to save for their old age, it is likely to be just another initiative that tinkers around the edges of the UK pension problems. Office for National Statistics figures show that total civil servants’ pension liabilities are around 770 billion. This is equivalent to approximately £26,680 for every worker in the UK. How are we going to address the huge debt burden which is building up to pay public pensions? The current system is not sustainable and we need a thorough review of UK pension policy from top to bottom to ensure that all workers, and not just civil servants, have the prospect of a decent pension in retirement. Param Basi Technical Director AWD Chase de Vere London

Calling Norwich and Norfolk Financial Planners Sir, Do you live or work in the Norwich or Norfolk area? If so, I’d like to hear from you. IFP branch meetings are a great way of keeping up to date and also to share ideas with others in the profession. If you have recently travelled to Cambridge, Peterborough or Colchester to attend IFP regional meetings then you’ll appreciate how the time we spend traveling can be rather a disincentive. As a result, I am trying to discover the level of interest from current IFP members in Norfolk to establishing a more local branch. Our main problem at the present time would appear to be the limited number of members in the area. However, this is a great opportunity for us to come together and enjoy the benefits of regular branch meeting locally so if you have any interest in this please can you make an initial contact with me on: 01603 880222

/ ianr@arwgroup.co.uk I will endeavour to facilitate  a get  together to see whether we can get something up and running. I look forward to hearing from you in the hope that we can make this work. Ian Roberts   Director ARW Wealth Managers Ltd. Honingham, Norwich, Norfolk

Welcoming new talent to the Financial Planning family Sir, I was contacted by a retired IFP member last week who had worked as a Financial Planner for many years. His son is now in his early twenties and since leaving school has had several jobs and been travelling. He wants to follow in his father’s footsteps and aspires to be a Financial Planner. They had found out about the apprenticeship schemes and were trying to find a Financial Planning firm which was recruiting apprentices and offering training. It is so difficult to find information that he had come to the IFP. His son had spoken to one training organisation but they were unable to give the young man any relevant information. For years, we have been bemoaning the fact that there is no new young talent coming into the profession and here we have someone who is keen and enthusiastic but cannot get started. Time and money has gone into developing apprenticeship schemes and much of the training is government-funded but there is still little interest. In other professions, there is not such reluctance – for example, on the Apprenticeship website there are 24 vacancies advertised for the Accountancy apprenticeships, four for financial services, over 400 for Customer Service and none for Financial Advice. I would encourage readers to look at taking on an apprentice if they are considering recruiting. This will persuade training providers to run the courses which in turn will attract students. If you want to find out more, look at the Apprenticeship website or contact the National Skills Academy for Financial Services. If you would be interested in employing a trainee adviser or Paraplanner, please contact me at the IFP. Lucy Courtenay IFP education director Bristol

Branch Matters

Duncan Hannay Robertson CFPCM Joint chairman of the East Anglian branch Our job is to help clients to get from where they are today to where they want to be in the future, in the most efficient way possible. Often, as Financial Planners, we tend to over-engineer the whole process. Why do we do this when we know it’s going to confuse the client? Are we trying to please the FSA, our compliance officer, our conscience, meet the requirements for CFPCM certification or justify our fees? Is it an art one acquires over the years through age, experience and wisdom? I think I already have the answer, courtesy of FP Advance’s Brett Davidson, and there’s no short cut. Malcolm Gladwell, explains in his book ‘Outliers’, it is simply part of the 10,000 hours you have to put in to become an expert. What are you waiting for? At a recent IFP training session, someone quoted “The thicker the financial plan, the thicker the planner”. Later on, someone cited a comprehensive client report that was over 20 pages long, versus the succeeding Financial Planners three-page report that actually got implemented. I have heard of some firms engaging the services of the Plain English Campaign with the aim of enabling anyone to understand the report. There is a useful guide to download from their website. I recently saw a 37 page report (not by a Financial Planner), which seemed to shoehorn the client into a product rather than a strategy. By merely breaking the clients’ situation down into a balance sheet, three pages of cashflow spreadsheet (to show the calculations), an income and expenditure graph, plus a capital graph was sufficient to illustrate the best strategy for the client. It turned out that no “new” product was required in the end. My challenge now, is to convert the graphs into a plain English report. It is easier given there is a sensible strategy that matches the client requirements, with no product involved. Too often the plan is undervalued, and many clients want to go straight for the solution. How do we get back to first principles, simplifying the process, and encouraging more advisers to take up the “art” of Financial Planning and become Picassos? Maybe it’s the 10,000 hours required to become an expert that’s putting them off!

Duncan Hannay Robertson CFPCM Taylor Vinters Cambridge

Financial Planner | May 2010 | 9


High end clients are increasingly seeking advice on Sipps

Sipps shine There are strong reasons for Financial Planners to be positive about the future of the Sipp sector as it shows resilience and potential. Rachel Gordon explains.

B

ecause of the closure of most final salary schemes to new entrants, more high end clients are seeking alternatives for their retirement planning and Sipps offer an increasingly attractive mix of tax efficiency, choice and lower costs than in the past. With an election fast approaching, it is impossible to predict what is going to happen in terms of future pensions legislation, however, as far as Sipps are concerned, there was bad news with the 2009 budget and despite the growing use of Sipps and growing realisation of their benefits there are undeniably challenges ahead. Notably, from 6 April 2011, tax relief on pension contributions for those earning £150,000 or more will be restricted, and will decline progressively from 50 per cent until it is 20 per cent. Tax relief will vanish where income is £180,000 and above. Last year also saw further gloom descend on the Sipps market when the FSA conducted thematic work, finding 10 | May 2010 | Financial Planner

a number of concerns. Problems were uncovered in transfers with some clients being transferred to Sipps and subsequently having to pay for unused benefits. Further, in 2008 AWD Chase de Vere was fined £1.12 million for mis-selling over expensive pensions – including Sipps. And in a follow-up to its investigation into pensions switching advice in September 2009 the FSA published its findings from a review of 60 small Sipp operators, finding some were not adhering to Treating Customer Fairly and regulatory standards. Then last October, the Freedom Sipp was wound up by HMRC for non-payment of tax and there has also been the case of MW Pensions where arrests were made for the alleged £2.5m fraudulent reclamation of income tax relief on pension contributions into its Sipp. Despite all this, more providers are entering the Sipps arena, the Retail Distribution Review and its changes

Rachel Gordon: financial writer

Key Points:

1

With closure of final salary schemes and more clients seeking alternatives for retirement planning Sipps offer tax efficiency, choice and costs have come down Although a buoyant market consolidation is likely because of the large number of players While it is expected the Retail Distribution Review will improve transparency, a more streamlined Sipp charging structure has yet to be introduced

2 3

planned from 2010 favour Sipps and fee-charging generally and the flexibility and sophistication of Sipps continues to grow. With Sipps seen as the flexible pensions wrapper of the future it’s no surprise that business has been surprisingly resilient and the prospects look promising. Matt Ward, principal consultant for analyst Defaqto, says in spite of the issues they have faced, Sipps remain buoyant although he predicts that consolidation is likely because of the large number of players, now in excess of 80. Although the regulator has found some issues, he points out there has been no massive mis-selling scandal, unlike some other financial sectors, and this remains an innovative sector. He said: “Defaqto has seen a surge in Sipp product development, due to providers realising success is based on both the delivery of a competitive wrapper and a compelling online and personal service proposition.” Recently the Sipps market has seen growth in specialised areas like family and group Sipps. However, there is no getting away from the fact that the core target market remains, as analyst Mintel says: “male, middle-aged and professional.” Mintel further pins these down as 55 to 64 year olds, and that two fifths of those with at least £50,000 to invest are so-called third-agers, active, older professionals. They are also likely to have a wide range of assets and so a Sipp acts as the ideal consolidation vehicle for these well off empty-nesters. Even so, Sipp business development expert Jeff Steedman, of systems and third party administrator Xafinity, said Financial Planners do not have to focus solely on the wealthy, nearly-retired client. “There are many SMEs and new start-ups who could benefit from a Sipp and which are not being widely supported by the high street banks.” He continued: “Where a company owns its premises, a Sipp can enable a client to buy this, giving the business a cash injection to the Sipp. Part purchases are also permitted by some of the more flexible providers and funds can also be borrowed to support the purchase. We are also seeing more interest in unlisted company share investments via Sipps.” While there is potential, no one can pretend the Sipp sector will have the market for upmarket pensions all to itself. Mintel says after five years of strong growth, the value of new regular and single Sipp premiums declined by 12 per cent and 20 per cent over the past year. Mr Steedman said that life offices had seen the worst of the falling sales but otherwise business was steady. Continued on page 12


Feature: Sipps Survey

Sipp Providers Provider @sipp A J Bell AEGON Scottish Equitable Alico Wealth Management Alliance Trust Savings Ltd Ascentric Aviva Life & Pensions UK Limited Barclays Stockbrokers Barnett Waddingham Bespoke Pension Management Carey Pensions UK Central Tax and Trustee Planning Charles Stanley & Co Ltd City Trustees Ltd Cofunds Cooper Parry Curtis Banks D A Phillips Dentons Pension Management Limited E*TRADE Securities Ltd EBS Management Plc European Pensions Management Ltd FundsNetwork Greyfriars Asset Management Guinness Mahon Trust Corporation Limited Hargreaves Lansdown Harsant Services Ltd Hornbuckle Mitchell Trustees Ltd HSBC Actuaries & Consultants Integrated Financial Arrangements Plc InvestAcc Limited IPM Pension Trustees Ltd IPS Partnership Plc James Hay Pension Trustees Jupiter UT Mgrs KILLIK & Co Legal & General Liberty Pensions London & Colonial LV= Mattioli Woods Merchant Investors MetLife Montpelier MW Pensions Ltd MYSIPP Organon Group Origen Peter Neal Pensions Pilling & Co Stockbrokers Pointon York Ltd Premier Pension Services Prudential Rathbones Redswan Ltd. Rowanmoor Pensions Scottish Life (Royal London) Scottish Widows Sippcentre Sippchoice Limited Sippdealxtra Skandia Standard Life Suffolk Life Talbot & Muir Taylor Patterson TD Waterhouse The Lifetime SIPP Company Ltd Wealthtime Limited Westerby Trustee Services Ltd Winterthur Life Xafinity Zurich Assurance Ltd Source: Defaqto/Financial Planner

Product @sipp Plan - Full SIPP Platinum Self Invested Personal Pension Retirement Control - The Flexible Retirement SIPP PP Self Investment Opt The Select SIPP The Ascentric Pension Account Aviva SIPP The PensionMaster SIPP BWSIPP The Bespoke Pension Management SIPP The Carey Self-Invested Personal Pension Self Invested Personal Pension Alpha SIPP City Private Pension Portfolio Plus SIPP The Cooper Parry SIPP The Curtis Banks SIPP The Premier Trust SIPP Dentons Self Invested Personal Pension The E*TRADE SIPP The EBS SIPP EPM Bespoke SIPP FundsNetwork SIPP Greyfriars Preferred Retirement Account GM Self-Invested Pension Scheme The Vantage SIPP One Investment SIPP The Private Pension The Self Invested Personal Pension Transact SIPP Minerva SIPP Self Invested Personal Pension Self Invested Personal Pension Select SIPP The Jupiter Self Invested Personal Pension KILLIK & Co Self Invested Personal Pension Portfolio Plus SIPP Liberty SIPP London & Colonial Open Pension Flexible Transitions Account The Mattioli Woods SIPP OneSIPP The MetLife Retirement Portfolio SIPP Element Montpelier Investor SIPP Acorn SIPP MYSIPP The Organon SIPP The Self Invested Pension The ProsperSIPP & PropertyPurchaseSIPP The Pilling Self Invested Personal Pension The PY SIPP Premier SIPP Flexible Retirement Plan - Full SIPP The Rathbone Full SIPP Redswan SIPP Self-Invested Personal Pension Pension Portfolio The Retirement Account Self Invested Personal Pension The Sippchoice Bespoke SIPP Sippdealxtra Self Invested Personal Pension Self Invested Personal Pension active money SIPP - Retail The Suffolk Life MasterSIPP Elite Retirement Account Self Invested Personal Pension - Investor TD Waterhouse SIPP The Complete Lifetime SIPP Self Invested Personal Pension Westerby Solo SIPP The One From Winterthur The Xafinity SIPP Self Invested Personal Pension

UK Stocks & Shares yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes

Unit Trust / OEICs yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes no yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes

IT yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes

Commercial Property yes yes yes yes no no yes no yes yes yes yes no yes yes yes yes yes yes no yes yes yes yes yes no no yes yes no yes yes yes yes yes no yes yes yes yes yes yes yes yes no yes yes yes yes no yes yes yes yes yes yes yes yes yes yes no yes yes yes yes no no yes no no yes yes yes

Set Up Fee ÂŁ 500 425 0 to 340 226 to 446 0 150 0 0 480 295 350 205 0 275 0 or 295 520 200 300 495 125 0 150 302 600 550 0 250 295 600 0 0 0 495 0.00% 0 0 0 or 295 425 or 525 295 0 850 350 415 300 0 0 250 300 295 200 470 0 300 300 245 325 0 0 0 to 120 250 0 150 0 or 313 300 295 300 0 or 80 0 or 425 250 200 0 0 0 or 303.30

Annual Admin Fee ÂŁ 595 480 0 to 560 306 to 514 75 150 0.35% to 0.55% 0 or 200 535 to 679 395 500 495 250 350 or 500 0 to 375 675 245 or 345 400 512 0 or 205.56 550 350 416 1000 625 0.5% to 200 350 490 800 80 400 540 395 0.75% 250 25 0 to 375 350 or 425 395 0.55% to 1.00% 495 450 or 0.25% 504 420 250 to 600 0.50% to 0.60% 395 500 395 200 630 280 or 355 425 500 395 475 320 or 585 0.10% to 0.70% 100 to 300 475 or 575 80 to 160 160 to 360 0 to 431 490 395 450 80 to 200 500 350 or 500 250 300 or 395 155 to 505 0 or 404.40

Financial Planner | May 2010 | 11


Feature: Sipps Survey Continued from page 11

He said: “During these tough financial times, and increasing government action on available tax relief, there will undoubtedly be a reduction in the amount of new money being invested into pensions. The Sipp market will however continue to grow on the back of pension consolidation, the transfer of protected rights (allowed from October 2008) and the desire of clients to invest in their own businesses and alternative investments.” Meanwhile, Robert Graves, head of technical services for provider Rowanmoor Pensions, said that the outlook was good - although confidence could do with a boost. He wants to see the government abandon the proposed legislation to restrict pension contribution tax relief and instead adopt the pensions industry’s preferred solution of a reduced annual allowance. Beyond this, he believes the rise in low costs Sipps is a positive move. He said: “They mean investment choice and the more affordable cost has put them in competition with the traditional life company personal pension products.” Even so, he said: “Today’s personal pension products have a more extensive range of investments, so there is little to distinguish between some personal pensions and low cost Sipps. This has potential for confusion as these two product types offer more or less the same thing and yet are regulated differently. “Furthermore, the Sipp title applies across the whole range of Sipps on the market, from the low cost variety through to the bespoke versions. It is therefore important to understand what a particular Sipp product will let clients invest in and gauge whether it will meet current and future needs. “A low cost Sipp may appear to be a good option initially, but not if the investment scope becomes too limiting, which may require what could be a costly transfer to another Sipp arrangement to gain access to additional investment types.” Mr Graves added that low cost Sipps may only operate through a specific investment or wrap platform which has helped keep costs low, as much of the processing can be automated. “However, such automation does rely on having and keeping to a set processing model so asking for anything outside of the norm could be problematic. “And, some low cost Sipps are promoted as being free, but in reality they are not. There is a cost to administering a Sipp, but the cost of operating the Sipp is paid from the underlying investments and platform charges.” High charges linked to Sipps 12 | May 2010 | Financial Planner

“This is one sector set to remain a stronghold for Financial Planners.”

are nothing new and Mintel says that a number of Sipp providers have been criticised for charging excessive fees to individuals who wish to use nonaffiliated products and services when managing their Sipps. Mintel adds that choosing to invest in a Sipp can become expensive when, on top of fund management charges, some firms may charge admin fees of 1 per cent a year. While it is expected the Retail Distribution Review will improve transparency, a more streamlined charging structure has yet to be introduced. Mintel said: “With the Sipp market being fully regulated by the FSA since 2007 many expect greater guidance and enforcement in this area. “Although it has not been popular with providers it has been suggested that they produce some form of illustration of their fees under various scenarios. This way fees and returns could be clearly defined. It is has been suggested that charges should appear more like a traditional annual management charge.” It also criticises additional fees levied for commercial property transactions and exit fees of up to £1250. Even so, costs are now lower as a result of competition - and the growing array of plans creates a need for guidance. Malcolm Cuthbert, partner with Financial Planners Killik, said there was confusion about Sipps among many potential clients - and that some continue to be reluctant to pay for advice, even when they can afford it. “You find that those who do come and see a Financial Planner may well have done nothing to date. Pensions have never been as complicated and there are still fears around security - Equitable Life has not been forgotten.” He continued: “You need to take time to evaluate a client’s circumstances and talk them through what a Sipp can offer - there is a lot of choice - as well as being clear on charges. If you do this well, then you can simplify their options - wrapping things up into complexity results in pensions being seen as a dark art.”

Mike Gough, executive director with financial advisers Jelf Private Clients, said: “We’re seeing an increase in demand for Sipps although we need to be careful to define what we mean by a Sipp. Not so long ago, a Sipp was a particularly bespoke arrangement with an independent trustee. Now the term Sipp generally refers to pension contracts offered by insurance companies that have a much wider choice of funds.” For Financial Planners, Sipps’ presence on the client and planner radar is likely to grow as choice and flexibility expand. The RDR is set to promote fee charging, which suits Sipps, and there is a wealth of resources available for those who want to boost their Sipps knowledge, from a new ABI guide to information on SippTalk TV from provider AJ Bell. Technology has also brought costs down and boosted service. Rowanmoor, for example, recently launched an online demonstration system for SippView, its web-based service, which allows clients and advisers to view asset holdings, valuations and fees. While there may be some blurring as to what constitutes a true Sipp, there is more choice than ever before, including for those who could be viewed as mass affluent. Competition has made providers listen to what planners want. Denise Gravatt, head of Sipp administration for Ascentric, said: “We recently launched a low cost Sipp that allows advisers’ clients to consolidate holdings into a single product with the ability to view and monitor performance online. This was as a direct result of requests - we also have some 20 Sipps already available on our wrap platform.” Sipps have failed to take off in the direct market - Mintel says only 1 per cent are sold in this way. And, so as an advised sale, providing there are no further problems that attract the regulator‘s attention, this is one sector set to become a growing stronghold for Financial Planners. Rachel Gordon is a freelance financial journalist

Sipp market share, by value of in-force business, September 2009

James Hay Standard Life Aegon/Scottish Equitable AJ Bell Suffolk Life Hargreaves Lansdown IPS Partnership Hornbuckle Mitchell AXA Scottish Widows Total market Source: Money Management/Mintel

Value of in-force business

Share of total value recorded

Average SIPP value

£ billion

%

£

10.0 8.8 7.5 5.3 3.2 2.4 2.3 2 1.6 1.0 52.62

19 17 14 10 6 5 4 3.8 (estimate) 3 2

344,000 125,000 51,175 146,505 238,812 43,600 260,000 250,000 71,076 90,927


On The Spot: Alan Smith

Award-winning Financial Planner Alan Smith

Professional Development plan and the firm’s Business Plan. We also had to submit a copy of our audited accounts confirming that we are able to deliver a high quality, fee based service to our clients while remaining profitable. Eventually we were advised that we had made the final shortlist and were invited to a panel interview with the judges, IFP President Barry Horner, the IFP’s chief operations officer Steve Gazzard and FP Advance’s Brett Davidson. Unfortunately the date for the interview was the day after I was due to depart for a two week a family holiday. I therefore asked my colleagues Charles Riches and Graham McCulley to attend on behalf of the firm. This meant that winning the award was truly a team effort which was particularly pleasing.

FP: What did it mean to you to win the award?

Alan Smith on Building Excellence Alan Smith, chief executive at Capital Asset Management in London, talks to Stephanie Spicer about winning the IFP’s David Norton Building Excellence Award Financial Planner: What prompted you to enter the David Norton Building Excellence Award?

FP: What did the entry process for the Award involve, can you describe how onerous or useful it was?

Alan Smith: We had enjoyed some success earlier by winning the Gold Standard Award for Independent Financial Advice and also Smaller Company IFA of The Year 2009/10. We wanted to go on and really test ourselves in what I consider to be the most challenging and respected of all the industry awards for Financial Planning firms - the IFP’s David Norton Building Excellence Award.

AS: The process was extremely challenging starting from our initial written submission, through to the next stage where we had to submit numerous documents and case studies. We provided details of the recent client survey we had undertaken, samples of real life client advice reports and testimonials and feedback from our client base. We had to submit full details of our Treating Customers Fairly process, Continuous

Key Points:

1

CAM is a “boutique” wealth management and Financial Planning consultancy. The process of entering the David Norton award is challenging, says Mr Smith, starting from an initial written submission, through to the next stage of submitting numerous documents and case studies. For Mr Smith winning the award was truly a team effort.

2

3

AS: When we started our business, one of our aims was to eventually be considered as one of the very best financial advice firms in the country. As I said, I really consider this award to be the most prestigious one within our profession and to win it and therefore be considered by our Institute as being one of the best Financial Planning firms in the UK is truly a fantastic achievement and makes me immensely proud. As well as the obvious satisfaction within the team working at CAM, I believe that winning the award will help us in terms of attracting new clients and developing relationships with strategic partners such as lawyers and accountants. It is quite difficult to differentiate service based advisory businesses as from the outside most look very similar. I think by winning the award we are able to demonstrate that we are different, that we represent business excellence and that we are considered by our peers to be one of the very best firms around. This can also help in terms of attracting new staff and in discussions we may have with those advisers looking to retire or sell their business and looking for a firm to partner with. Finally I think that winning this award is helpful to our existing clients as it is reassuring during these challenging times to know that the Financial Planning firm they have chosen to work with is considered so highly and it can help to cement the relationship further.

FP: What does ‘Building Excellence’ mean to you and how has it been applied to your own business practice? Continued on page 14 Financial Planner | May 2010 | 13


On The Spot: Alan Smith Continued from page 13

AS: I believe that whatever you choose to do in life you should aim to be the very best you can. In a very competitive market with client demands and expectations increasing all the time, being mediocre is no longer good enough - if it ever was. Therefore we should all strive to achieve excellence and in doing so will become better at what we do, deliver improved services to clients and consequently become more successful and profitable. In addition a business which is committed to continually ‘building excellence’ is a great place to work, share ideas with colleagues and serve clients with whom we can all enjoy the experience of working together. Things have changed a lot in our profession over the last few years and I suspect that the speed of change is only going to accelerate. As we look forward to the future, a commitment to excellence and delivering a truly outstanding service to clients is the only way any advisory business can be assured of their survival and growth.

FP: Things are difficult for clients and arguably Financial Planners at this time in terms of the economic and investment climate. How are you steering both your clients and your business through this? AS: The volume of newsflow and media comment through TV, radio and the internet is at unprecedented levels now and most of it is by its very nature sensationalist and usually negative in content. We must remember that newspapers exist to sell news and not to provide balanced commentary to their readers. I think that it is important therefore to focus more on the ‘bigger picture’ in relation to the clients’ Financial Planning requirements as opposed to short term issues and market movements. We have developed a unique process which we call ‘FutureMap’ to assist our clients in terms of their strategic planning requirements. We start by having several detailed discussions around their priorities, objectives and aspirations over the short, medium and longer term. Often clients have not spent a great deal of time considering these important issues and we will therefore work with them to develop the blueprint rather like an architect would if you were building your dream home.

FP: What aspects of your business are getting the most focus at the moment and why? 14 | May 2010 | Financial Planner

AS: We have spent a great deal of time putting the building blocks of a modern, client focussed Financial Planning practice in place. We now offer a highly professional consultative service which focuses on helping our clients achieve their objectives through a proven, multi-award winning process. Our advisory staff are among the best qualified in the industry and include experienced CFPCM professionals and Chartered Financial Planners using cutting edge research and analysis to support the proposition. Having achieved all this, our main focus now is to attract more of the right type of clients who wish to engage our services. My belief is that each Financial Planner should look after no more than 60-80 clients as the level of service that our clients expect and that we aim to deliver would make it difficult to manage more than this. Our analysis of our existing client base and the segmentation exercise we undertook has established that we now have capacity to take on a limited number of new client relationships. Our ideal client profile is someone with at least £250,000 of liquid assets, serious about securing their financial future and keen to delegate to a trusted professional adviser. Our focus this year therefore is on marketing our services to attract prospective new clients. This will include some direct marketing, referral strategies and working with professional introducers such as solicitors and accounting firms.

FP: Much is made of the work/life balance of Financial Planners and indeed their clients – do you find clients have this as a goal when they come to you for advice on their Financial Planning needs? As their adviser what can you do to help and steer their thoughts and plans? AS: For many clients this is an area to which they may not have given a great deal of conscious thought. Therefore it is a thoroughly rewarding and enlightening process to go through. We have meaningful conversations with clients to really find out what it is that they are truly passionate about and how they would spend their time once they had achieved financial independence. It seems to me that the current generation of so-called ‘baby boomers who are at, or are approaching their retirement years, are the first ones ever to have so many choices, enjoy good health with a life expectancy of 30 or 40 years in retirement. Many will have unrealised ambitions

to travel, learn new skills or languages, take up a sport, volunteer or spend more time with family. They may also wish to continue to work or start a business – but on their own terms knowing that they have the financial security in place and a trusted ally in ourselves, proactively keeping a watchful eye and overseeing their affairs Work/life balance is an essential aim for most of our clients and whether we like it or not, there are financial implications in getting this right. That is where the detailed lifestyle planning, cashflow modelling, investment and tax consulting work we do comes in – this can provide our clients with clarity and confidence to allow them to pursue their optimum balance.

FP: And how do you view the work/ life balance – in such a market is it all work – or is it more important in times such as this to keep the balance maintained? If so how do you do it?!

Biography Alan Smith Alan’s first job was as a graduate trainee with a boutique firm of investment managers in the City of London. After a successful spell learning the ropes, he left to join one of the largest financial services groups in Europe where he spent almost 15 years and progressed to a senior account manager role based in London. When the opportunity arose to join a small, ambitious advisory practice, Alan decided to move on and become a founding director of Capital Asset Management. He heads the team of Financial Planning consultants and provides specialist advice to mainly high net worth private clients. Alan lives in London and enjoys travelling and most sports including rugby, tennis, football and playing golf – badly!

AS: I think that it’s very important to walk the talk and embrace in our own lives the concepts that we encourage our clients to adopt. I therefore, for example, aim to work only 4 days a week in the office with each Wednesday spent working from home. This allows me to spend more time with my family and breaks the week up. I don’t think that it makes sense to work ridiculous hours as very few great ideas are born when we are in the middle of doing ‘stuff ’ at work. Some of the most creative times are on an early morning run, a drive in the countryside or simply sitting in a deckchair in the garden. Therefore it’s essential to continually recharge the batteries and as Stephen Covey puts it ‘Sharpen the Saw’. I aim to take regular holidays and encourage my colleagues to do the same to re-energise and maintain focus on our ambitious plans.

FP: What are your plans for your business over the next year or two – what will your business and work life look like then? AS: CAM is a “boutique” wealth management and Financial Planning consultancy. This means that our firm intention is to remain modest in size and that we have no aspirations to become a large and impersonal organisation like so many we all  seem to  encounter these days. We will therefore evolve and improve and remain truly focussed on delivering an outstanding service to our clients and their families.


Y oU r

M o nE Y

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We pride ourselves on the quality of our administration. We offer one to one relationships with our dedicated consultants, who, supported by our experienced administrative assistants provide a bespoke service to our clients and introducers. We have achieved a 2* - outstanding award from an independent accreditation company – Investor in Customers, thus confirming that service is one of our key strengths. Denton’s flexible approach will consider all Revenue permitted investments, with the exception of individual unquoted equities for overseas trading companies. our transparent charging structure and product facilities mean we can offer a tailored and reliable cost efficient service. For further details please call

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Dentons Pension Management Limited Actuarial & Pension Consultants Linden House, Woodside Park, Catteshall Lane, Godalming, Surrey GU7 1LG Tel: 01483 521521 • Fax: 01483 521515 Email: enquiries@dentonspensions.co.uk Dentons Pension Management Limited (Reg No 2352951) is Authorised and Regulated by the Financial Services Authority

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In a recent survey of Sippcentre registered financial advisers, 96% of them rated our service as “good to excellent�. With feedback like that, it should not surprise you that Sippcentre is a multi award winning SIPP. However, we are not resting on our laurels, Sippcentre is constantly evolving and innovating. We offer an extensive range of investments and easy to use technology. All of this within one of the lowest cost SIPPs in the market. If you would like to join one of the 96%, why not get in touch today?

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To find out more: visit: www.sippcentre.co.uk call: 0845 83 99 060 Sippcentre is a division of A J Bell Management Limited, part of A J Bell. A J Bell Management Limited is authorised and regulated by the Financial Services Authority. 16 | Month 200? | Financial Planner


Case Study: Investing for retirement

Banking on a good future A bank trader has, by his own admission, been somewhat lax in putting his savings and investments on an organised footing. He wants to do so now but is not too keen on doing much of the job himself. We asked two experienced Financial Planners how he should arrange his investments to fund a possible early retirement. Case Study: Investing for retirement

Case: Justin is 32 and works as a bank trader. For the last five years he has taken home between £150,000-£200,000 per annum. His salary for 2009/10 will be £180,000 and he anticipates a bonus of £60,000. For the last four years he has been investing in a group personal pension putting away between £15,000 and £30,000 per annum. His employer pays 5 per cent of his salary into his pension. He has a mortgage-free flat in London worth about £800,000. He owns another flat in the same block on which he has a mortgage of £200,000. He has £50,000 in a high interest account with his bank and another £50,000 in a building society savings account earning 2.49 per cent gross. Justin wants to maximize his savings and investment from a tax point of view. He hasn’t thought too much about retirement. Perhaps he could retire at age 50? But that will depend on what savings he has to put aside now to achieve a good standard of living in retirement. Justin has no Isas or any other investments but he does want to diversify away from property as his main form of investment. He has no life insurance. How can a Financial Planner help him to save and invest in the most tax efficient way possible? Fictitious case study.

Nero Patel CFPCM Killik & Co London

Justin is in a very good position given his age. He has a high level of income but so far has not managed to make any significant savings. He has time to make up for this. He will be caught by the new 50 per cent rate of income tax and this consideration needs to be taken into account before any recommendations. We need to determine his outgoings by way of a cashflow analysis. It would seem he has plenty of surplus income to save. This should be projected forward by reasonable and achievable growth rates to age 40 and 50. This would give an idea of how much he could have if he stops working at 40 or retires at 50. It is sensible to invest regularly for capital growth in a portfolio of investments, to avoid having to pay 32.5 per cent (soon 42.5 per cent) income tax on dividends. By investing for capital growth, Justin is able to utilise his annual CGT allowance of £10,100 each year and in the worst case only pay 18 per cent tax on any realised gains under current rates. It would also be a good idea to save regularly into a maximum investment plan which would provide a more disciplined savings option that must be continued for 10 years. This would provide a tax-free lump sum on maturity but with the underlying fund growth taxed at only 20 per cent. This investment should also be projected forward to provide Justin with an idea of how much income or capital it may later provide. With regards to the £100,000 he has on deposit and his requirement to invest this for long term capital growth, the use of an offshore bond could be appropriate. This way Justin would avoid the 50 per cent income tax rate soon to be applied on his savings interest and effectively receive returns largely without any tax via his bond. It is normally sensible to leave aside some monies on deposit for emergency purposes although in Justin’s case his Continued on page 18 Financial Planner | May 2010 | 17


Case Study: Investing for retirement Continued from page 17

income and bonuses could replace this capital fairly quickly. The bond would allow investment in a wide range of asset classes but with all returns being paid largely gross of tax. It would allow him to defer all taxes until the surrender of the bond at which time he may be a 20 per cent or 40 per cent taxpayer. If he marries, the bond could be assigned to a lower tax paying spouse for surrender. Meanwhile he has access to 5 per cent of the capital each year without any immediate tax. Justin should take advantage of the current pensions rules and maximise contributions within the available limits for maximising tax relief. He is able

Antony Pearse CFPCM Clay Rogers and Partners, Birmingham

In view of Justin’s relative inexperience with personal retail investment, it is imperative that a comprehensive financial plan is implemented. This is so that he does not spend all his money and to determine whether he can retire at 50. Meeting his requirements will involve him completely changing his spending habits, as he will need to build up significant sums in savings. Justin will need to understand the relationship between investment risk and returns, in conjunction with the time horizon of the investment. Discussions should therefore lead to establishing Justin’s attitude to investment risk, which will underpin the Financial Planning. The completion of a fact find will identify Justin’s areas of expenditure and the net disposable income that can be redirected into savings. Using the monthly amount available for saving, we can forecast the potential lump sum this will return at 50 and the potential level of income this will then deliver. The establishment of an agreed target lump sum should engage Justin’s interest in entering into the discipline of regular saving. In the normal course of events, 18 | May 2010 | Financial Planner

to pay £21,000 gross into a pension (assuming he has averaged £30,000 per annum in the last three years) in the current tax year and receive the 40 per cent tax relief. In the new tax year he can pay a further £21,000 and receive 50 per cent tax relief. This would boost his pension pot and again the new values can be projected forward together with his employer contributions although the pension cannot be drawn until age 55. If Justin pays any further contributions in excess of the above he is liable for a tax charge. It would seem sensible to wait and see how the rules surrounding pensions may change in the near future and review contributions at the time. It seems Justin does not have the time to manage his investments. A

an emergency fund of between 50 per cent to 100 per cent of annual salary may be sufficient. Given that he has no dependents and that he has paid off the mortgage on his flat, I would recommend that he retains £30,000 on deposit and looks to re-invest £70,000. I would also recommend implementing a package of protection benefits. To this end, in the first instance we need to determine what protection benefits are available from his employer. I would question whether life assurance is appropriate, given that Justin does not have any dependants, coupled with the fact that he retains substantial equity in his two properties. However, in relation to job security, I would certainly recommend that he looks to implement relevant policies, to insure against loss of earnings (due to illness or diagnosis of a critical illness) and he may in addition wish to consider redundancy cover. It is also sensible for Justin to think of formulating a will. From 6 April, the pension age from which benefits may be drawn is being raised to 55. Consequently, Justin will need to look to funding alternative investment arrangements, in order to accumulate substantial capital amounts that will deliver the necessary income to support the lifestyle he aspires to in retirement. In considering the level of income required at 50, the capital sum needed to support this can be calculated; and Justin must come to a decision as to whether this is achievable from the amount he is prepared to save. Current anti-forestalling laws and pending pension legislation (due in April 2011) will severely reduce the previously attractive tax-efficiency of pension contributions. The level of personal pension contributions previously paid should therefore be established, in order to maximise Justin’s personal contributions for the current and next

Key Points:

1

It would seem sensible to invest regularly for capital growth in a portfolio of investments With regards to the £100,000 he has on deposit and his requirement to invest this for long term capital growth the use of an offshore bond could be appropriate Given that Justin has an appetite for investment risk and falls into the 50 per cent tax bracket he might consider a VCT

2 3

Key Points:

1

Justin will need to understand the relationship between investment risk and returns, in conjunction with the time horizon of the investment Limitations on the tax efficiency of pension contributions indicate the importance of funding alternative investments It is crucial Justin commits to an ongoing review process to maintain his enthusiasm for the financial plan and the discipline of regular saving

2 3

discretionary investment service would meet his needs as this would delegate the day to day investment decisions to a professional who would report to him twice a year. Given Justin has an appetite for investment risk and falls into the 50 per cent tax bracket he may consider investing some money into a VCT. This would provide him with tax relief at 30 per cent and reduce his overall tax position. He should definitely make use of his Isa allowances both immediately and in subsequent tax years and every year thereafter. If his employer doesn’t offer benefits such as life cover, critical illness or income protection these should be considered and he should also make a will if he’s not done so already.

tax years. A projection of future pension benefits at 55 will indicate the potential level of retirement income. Limitations on the tax efficiency of pension contributions indicate the importance of funding alternative investments. In view of Justin’s relative lack of previous retail experience, a simplified, cost effective and flexible investment strategy needs to be implemented, incorporating a variety of ‘on’ and ‘offshore’ investment vehicles (Isas, collective investments and offshore savings vehicles). In the early stages a wrap platform would be well suited for accumulating funds, considering the accessibility to a wide range of investment tax wrappers; this would allow Justin’s portfolio to benefit from various tax allowances and exemptions. With the basic structure in place, it is necessary to implement a suitable investment strategy which, when accessed via a wrap platform, can be kept consistent across all arrangements. Managed funds or passive tracker funds – selected according to Justin’s attitude to investment risk – could be initially considered. In the early stages it is important to put in place the building blocks of the financial plan, using a cost effective investment strategy, so as not to reduce the impact of any investment growth. Finally, it is crucial Justin commits to a continuing review process to maintain his enthusiasm for the financial plan and the discipline of regular saving. Reviews will permit alterations to the financial plan when and if required, due to legislative amendments or because of changes in Justin’s personal situation. Furthermore, as already suggested, when the portfolio starts to increase in value different, more sophisticated investment strategies can be offered. For this, wraps or alternatively discretionary fund management could be considered.


My Practice Week: Robin Stamp

Spiritual financial guidance Robin Stamp CFPCM of Alpha Financial Consultants of Taunton in Somerset shows how it is possible to balance advising a broad spread of clients while running a busy family life – and doing DIY Monday I wake up to the sound of the cat playing on the landing indicating he’s hungry! Its 6.30 am. Cup of tea delivered to Helen and breakfast organised, the kids leave for school and I have a quick shower and read the “Encounter with God” daily bible reading and am in the office for around 8.30 am. I run through the emails and mail and deal with the issues that hit the desk too late on Friday to get sorted. I phone a solicitor to get further details on a referral for an IHT planning matter for a young, recently-divorced woman with a significant estate. Phone and chat and make an appointment for two weeks’ time when she returns from holiday. Then I update the IHT planning pages on our website, following very positive feedback from another solicitor referral on Thursday. I get a call from a lady needing help with debt problem, creditors threatening court action, health and marriage on the edge, so change hats and talk through situation and agree to see her soon. A friend, Simon arrives to stay for the night around 5.30 pm so I finish work and enjoy a good family meal and bottle of wine. Not the earliest night! Tuesday Up 6.45 this morning, I make up the kids’ breakfasts and then ours. Leisurely morning, I check on post and emails and then off for a walk on the Quantock Hills with Helen and Simon before he leaves after a quick bite for lunch. I meet with clients in Minehead for a general review covering increased (tax efficient) gifts to the children and higher income for themselves. General changes within Isa portfolio and switch of cash Isas to equity to draw higher income plus minor changes to Sipp and draw on final

non-crystallized pensions. Back to office and update Joe with planned changes for him to write up report. Finish at around 5.30pm after last minute call from client wanting us to advise on VCT and EIS portfolio. Dinner and out to house group for the evening, back home around 10 pm and bed.

Wednesday Standard morning routine, in the office for around 9 am, IT engineer’s update of part of our back office system to automate provider data feeds knocks a good couple of hours out of the morning. Travel to Barnstaple for lunch with partner of accountancy practice we work with. Back to the office for discussions with clients who are deputies for their elderly mother who is in care, assisting with appeal against continuing care funding judgment and possible use of impaired life annuities. Reviewing recommendations prepared by Joe. Joe drives us to Bristol for a Society of Trust and Estate Practitioners’ meeting on Living Power of Attorney and Statutory Wills, back home for 8.45 pm. Thursday Up at 7 am, usual routine and in the office for around 9 am, prepare for two meetings, drive to Minehead and meet with new client referral from his father. Review sons situation, tax advice around gift aid and pensions plus Isa portfolio to transfer from cash Isas plus top ups and suggested pension. Next a meeting with the father, general review and Isa top up then they offer lunch and thus chat generally. Meeting not too economical but client is serial introducer of new clients and thus well worth the delay. End of month, staff PAYE and wage payment finish 5.15pm. At 6.30pm I take the kids to church

Robin Stamp CFP: balancing demands from a wide variety of clients

Biography Robin Stamp CFPCM Robin is both a CFPCM professional and chartered Financial Planner and is the principal adviser and director of his West Country Financial Planning business Alpha Financial Consultants (Somerset) Ltd and is supported by co-director and wife Helen, plus Paraplanner Joe Savage. His clients are principally private and mainly retired and thus the focus of the business is on investment planning (including pensions), inheritance tax and long term care. Robin and Helen have two teenage children and are committed Christians with an active involvement in their local Vineyard Church where Robin is a trustee and they lead a CAP (Christians Against Poverty) Money ministry and house group.

youth meeting and meet with two ladies who have done budgeting courses and need some further assistance. Really encouraging as one of them has now paid off her debts and is saving £200 per month. Other lady is getting straight and helping others with similar problems.

Friday Normal morning routine and then catch up with four days of missed “daily” “Encounter with God” readings. Fridays are currently put aside for writing a guide to tax efficient charitable giving and also a series of studies on financial foundations from a Christian prospective with the hope of turning this into a book further down the line. I do however need to discuss and agree with our Paraplanner Joe Savage what we need for two client meetings in Poole on Monday, and need to deal with a few calls and emails, also a 4 pm phone meeting/training with a provider. 5 pm finish and then relax with no meetings, a G&T, good meal and bottle of wine… plus a little time spent on father-son encouragement on homework versus computer/game balance, resulting in computer ban (for the son, not me, although he does his best to point out my own similar issues!). Saturday and Sunday We have a relaxed late Saturday morning, a full fry up and then DIY laying a small patio in the garden and out for a meal celebrating daughter Alice’s 14th birthday. On Sunday, no church today as daughter rehearsing for dance show in Minehead, and son needs to do a picture for an art project, so I perform the taxi service then engage in more DIY adding a soakaway. I relax in front of the TV for an evening of Antiques Roadshow and Larkrise. Financial Planner | May 2010 | 19


Effective business processes

Tim Page CFPCM of PageRussell shares his views on strategies for improving practice efficiency through a more effective use of business processes Each month we ask an industry expert to raise an issue of importance for the whole financial services sector

H

ere’s a scary thought: Your clients do not care that you spend two or more hours behind the scenes for every hour you spend with them. Actually, it’s worse than that. If you told them the truth, they would think you were making excuses to bill more fees, or

worry they’ve hired an inefficient Financial Planner. Clients care about the time you spend with them. To increase that precious contact time you can reduce complexity, delegate tasks to colleagues and outsource – all require effective business processes to work.

At PageRussell we have five employees, all of whom have to complete a wide range of detailed tasks each day. We need a simple and consistent way of doing those tasks so it is easy to remember, or find out, how to do each task. Also, because we work as a team, other team members are reliant on us to complete tasks in a consistent way. You cannot do this without defining, mapping out and documenting those tasks. Even if you are a one-man-band with no plans to expand your business, effective processes help enormously. Processes save you having to reinvent how to do all of the boring day-to-day tasks and give you more time for your clients. Many consultants make the mistake of holding up McDonalds as an example of effective business processes. But I don’t want my clients to have a bland, “junk food” Financial Planning experience. I want my clients to have a consistent experience equivalent to fine dining at Claridge’s. When you know Claridge’s has a Gordon Ramsay restaurant - possibly the most efficient and systemised fine dining business there is you realise how consistently great service also depends on effective processes. I am not a business process or process

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Platform: Tim Page mapping expert. I made all kinds of mistakes while learning how to put business processes in place. Fortunately, PageRussell won the inaugural David Norton Award in October 2008. In 2009 we had 10 days of consultancy time from Brett Davidson and his team at FP Advance. Two of these days were outsourced to Michelle Hoskins of Adviser Partnership. Brett and Michelle helped us master the skills necessary to define and then improve our processes. You can start with simple check-lists. Check-lists are easy to understand; great for ensuring every step in a task is completed and they require no special software. A lot of CRM software is set up to track cases using check-lists. The problem with check lists is the flow of actions is not immediately visible, especially if there are different routes to follow. Before long most people end up drawing a diagram – typically a flow chart. It you’re not careful you can spend a fortune on process mapping consultants and software. If you already have Visio then great, but we only use PowerPoint (which is normally bundled with MS Office at no extra cost) and is easy to learn. Don’t get hooked into all the false technicalities (like I did at first). There

process manual to give an overview only. Detailed step-by-step instructions are in checklist format in a separate section for less confident staff members to refer to. (Most of your staff will know how to scan a document, but a trainee may not). As you map out a process all the waste and inconsistencies will jump out from the page. It is tempting to change the map then present the “improved” process map as the finished article. However, your team may be happy with the current system and do not know why you are making life difficult by changing things. First define and map the process. Then meet with the team who perform the task to check the map shows what happens now, rather than what should happen. That meeting will automatically turn into a discussion about how the process can be improved. When you’ve agreed the improvements, go back and write up the manual for the improved process. Don’t forget to check with the team before implementing the changes. When do you start? Now! Continual improvement is better than delayed perfection. Start with new employees and simple tasks (scanning post, meeting and greeting clients). By the time they’ve finished writing the manual for a process they’ll know it inside out.

Biography Tim Page : effective process is key is no “right” way to map a process. Just concentrate on creating your own conventions and stick to them. I tried to get everything onto PowerPoint and use each slide like a web page, but managing all the hyperlinks was impossible. Visio is better at this, but can get out of hand. What, to the creator, is a work of art, can look like a confusing mess to a new employee. Also, if a task is computer-based you don’t want the process instructions taking up most of the screen. We’ve gone back to paper-based manuals, stored centrally. The process flow charts are used at the start of each

Tim Page CFPCM Tim Page is a CFP professional and chartered Financial Planner at Page Russell in Bury St Edmunds. He is a qualified Financial Planner with a firm commitment to holistic planning. Tim is chairman of the East Anglian branch of the Institute of Financial Planning. He joined PageRussell in 1999 and has been a director since 2000. As part of the latest generation of a family firm, Tim has over 40 years of ‘inherited’ experience to draw on. He is married to Annie and has recently become the proud father of their daughter Rosie.

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Alan Smith, MD of Capital Asset Management, being presented with his firm’s award at the 2009 IFP conference by IFP President Barry Horner

Be a winner with the David Norton Excellence Award The IFP continues its search for the Financial Planning firms of the future with the start of the 2010 Norton Award initiative. Sue Whitbread outlines the process.

W

ith competition likely to increase across the Financial Planning profession as a result of changes proposed under the RDR, now is the time for all Financial Planning businesses to take a long hard look at their own business proposition to ensure that it is fit for the future.

22 | May 2010 | Financial Planner

In 2008, the IFP launched the David Norton “Building Excellence” Award in remembrance of the significant contribution made by David Norton, a former chairman and President of the IFP, to the development of the Financial Planning profession in the UK. The winner of the 2010 award will be the Financial Planning firm which

Sue Whitbread, IFP communications director

the judges believe offers the most outstanding potential for the future. It seeks to uncover good Financial Planning businesses which have the potential to become great ones. As well as the trophy and the kudos of winning, they will benefit from 10 days mentoring with Brett Davidson of FP Advance, an Investor in Customers consultation and survey, a profile piece in New Model Adviser magazine and coverage in Financial Planner magazine, as well as other PR opportunities. The winner will be announced at the IFP annual conference at the Celtic Manor Resort in September. Nick Cann, chief executive of the IFP, said: “They, along with some of the entrants, will set the standards that other firms will aspire to in the future. The additional mentoring and business coaching that the winner will receive from Brett Davidson will enable them to move up to the next level.” So how do firms apply? The first step is to complete the online application form via the IFP website www. financialplanning.org.uk. The winner will not be the ‘perfect practice’ but a good one, which has unique features, shows commitment to comprehensive Financial Planning, and yet is still in need of help and mentoring in certain key areas of business development, for example recruitment, client segmentation, defining their service, marketing and so on. Shortlisted candidates will also benefit from undergoing the FP Advance Business Fitness Report which will be undertaken as part of the application process. Three judges will assess entries. Steve Gazzard, IFP director of operations, Brett Davidson, chief executive FP Advance and Barry Horner CFPCM, President of the IFP. Together they make a formidable panel. They have seen the quality of the entries increasing year on year. Mr Horner said: “It is particularly good to see how much time and effort is now being devoted to the award application process itself. I am sure that David would have been delighted to see the move towards genuine clientcentric businesses that are embracing the six step Financial Planning process evidenced by the firms applying for this prestigious award.” There is a three stage assessment. By the end of May, candidates will be notified whether or not they have made it through. Successful firms will be asked to supply further information by early July. These firms will then be reduced to two or three finalists, who will attend a face to face interview with all three judges in September, which decides the eventual winner.


Feature: David Norton Award As Mr Gazzard explained: “The application process itself has been of considerable help to many firms. I believe the application process we now follow after two years of learning, not only provides a very clear assessment of a business truly on its way to excellence, but also gives the business clear and helpful feedback on areas for improvement. This year that will be even better as we work closely with the providers of the prizes, FP Advance and Investors in Customers, to improve the results and benefits for all applicants – not just the winners”. Broadway Financial Planning was a finalist in 2008. Director Keri Carter CFPCM was surprised by what the firm took away from the application process. “Back in 2008, we initially discounted the thought of entering for the award,” she said. “We felt we had already established many of the approaches adopted by David within our business, as a result of his influence within the IFP and thought our entry was unlikely to be successful. However, we were encouraged to do so and were extremely pleased we did. The process, while substantive, was extremely useful for making us check whether we were as good as we thought we were! Needless to say, there were many areas within our business that were picked up by the judges where improvement could be made and some really useful direction provided in the feedback.” Mr Horner has been particularly encouraged by the feedback from previous applicants in terms of their appreciation of the rigour of the assessment process including the final interviews and role plays. He said: “While some have found the process to be challenging they are nevertheless pleased that they have put themselves forward. Every applicant that I have ever met has said that the discipline of having to evaluate their business in a very honest way has led to improvements that have led to greater business efficiency and better client service.” So what about the two firms who have so far won the award? How has it helped them? PageRussell was the inaugural winner in 2008. According to director Tim Page CFPCM: “The application process wasn’t easy and needed considerable thought and preparation but it was time well spent and as a result we were implementing changes even before we knew we’d won. The immediate impact for us was the recognition it brought to the business, both with clients and within the profession.  Now we are now reaping the practical rewards from the outstanding mentoring programme: improved client engagement rates, more efficient and better documented

Stephen Page, Tim Page and Barry Horner being presented with their award in 2008

Key Points:

1

The winner of the 2010 award will be the Financial Planning firm which the judges believe offers the most outstanding potential for the future. The application process not only provides a very clear assessment of a business truly on its way to excellence, but also gives the business clear and helpful feedback on areas for improvement. The opportunity for the winners to work with Brett Davidson of FP Advance for 12 months as well as having an IiC consultation and survey should not be overlooked. These are extremely valuable prizes.

2 3

Financial Planning processes, and an improved client review process.  All this is having a measurable impact on the bottom line of our business”. Capital Asset Management was the winner in 2009. Director Alan Smith is featured in the “On The Spot” interview this month on pages 13 and 14, and he encourages all Financial Planning firms who are serious about developing their practice to enter this award. “I read a lot of forthright views from advisers who seem very confident about their own firm’s position and this is a great opportunity to ‘put your money where your mouth is’!” he said. He added: “Just because we have won this award doesn’t mean we can rest on our laurels now. On the contrary, we must use it as a platform to further develop and improve all key aspects of our business and client service proposition. We’ll be working closely with Brett during 2010 to ensure we’re accountable to take actions once agreed to actually implement new ideas, system and strategies to keep us fresh and on top of our game. It is very common for lots of talk and discussions of great ideas to take place which are never acted upon due to other more pressing issues.” According to Mr Gazzard, an area that was a differentiator for Capital Asset Management, was the effort that had gone into gaining timely, meaningful and structured client feedback via formal surveys, and they also scored highly on the use of management information. “Most entrants had a reasonable idea of where the business was going, but unless you understand and measure the key performance indicators in your business, how can you ever know where you are, or manage risks effectively?” When it comes to the prizes, Mr Horner is clear. “The opportunity to work with Brett Davidson of FP Advance for twelve months as well as having an IIC consultation and survey should not be overlooked. These are extremely

valuable prizes which all can benefit from if they win but they can only get a chance to benefit if they enter. ” Mr Davidson not only gets to see all entries from start to final judging, but he actually gets to spend a year working with the winners. “That is hugely rewarding,” he said “As businesses that are already good strive to become great businesses. I have huge expectations for PageRussell and Capital Asset Management as they embody all the virtues we were looking for in firms on the cusp of becoming really outstanding Financial Planning businesses.” IIC’s focus is to help firms understand how they can build customer service excellence – and recognise those that achieve the required standards. Both winners achieved outstanding results from their IIC client surveys. Mr Smith said “My team were buzzing about the IIC award; it’s been great for them to see their efforts recognised in this way by the people who really matter, our clients.  It’s been a great experience.” Mr Page found it useful too. “The results fed straight through into the work we did with FP Advance.” When asked if they had any tips for those planning on entering in 2010, there was useful advice.“Give yourself plenty of time and meet the deadlines – said Mr Page. “Also, I’d recommend that you are honest about the state of your business.  The judges are looking for good businesses to help become great businesses.  If you pretend that everything in your business is already great, you simply won’t win - be specific about the areas where you need help too.  Finally, attend the IFP conference and if you win, promote the award.” “Everything you say in your entry should be concise and cut straight to the heart of any questions asked” suggested Mr Davidson. “If you can’t be concise there is every chance you haven’t addressed the issue successfully in your business which is already providing you with feedback and areas to work on. Also, don’t over or under sell yourself. Honesty in answering questions will prove more valuable for you in the long run and the judges are experienced enough to see through any fluff.” “While there are always some very talented planners who apply, we are looking for an excellence in Financial Planning combined with real business management expertise” concluded Mr Gazzard. “I hope that this year we again get to see not only excellent Planners but excellent business people.” The deadline for entries is May 7. Good luck! Sue Whitbread is communications director at the Institute of Financial Planning Financial Planner | May 2010 | 23


Work/Life Balance: Caroline Hawkesley

The evolving Financial Planner Caroline Hawkesley CFPCM, a director of Evolve Financial Planning, is also a mum to two daughters, Isabella, 5 and Ruby, just 6 months old. She juggles advising clients and looking after the operations side of the business

I

joined Evolve at the start of 2006 and I was fortunate enough to have the opportunity at that time to join as one of the directors as well as a practicing Certified Financial Planner professional. I have three co-directors, Antony Williams CFPCM, who is the managing director, plus Jason Witcombe CFPCM and James Norton CFPCM. The business has gone from strength to strength since 2006. Initially it was the four of us doing everything, from making the tea to dealing with multi-millionaire clients. However we now have a Client Service Team based at our Croydon office as well as two further Financial Planners. As well as acting as the lead Financial Planner to a number of clients, my role at Evolve is to look after the operations side of the business. I have worked in financial services for almost 15 years. I started in telesales, and moved onto administration and Paraplanning before ending up as a planner six years ago. There never seem to be enough hours in my day to fit everything in, however, I would not have it any other way. Fortunately, Evolve has been structured in such a way that we all have flexibility over how and where we work. We are totally paperless meaning that we do not need large premises to hold hundreds of filing cabinets and this also gives an element of freedom. This is because everything is scanned to our database. The database is held via a Citrix server which is available to us via the web, meaning that we can access anything we want at the click of a mouse, regardless of our physical location. It also means that the data is secure and always backed up. Being a director of a busy and successful business is a challenge and certainly not your average 9-5 role. I am very lucky that I have the support of my 24 | May 2010 | Financial Planner

parents and my in-laws which takes away the pressure of childcare issues. Our clients receive a first class service which in itself is hard work to maintain. They come first and we will always be flexible, so if a client needs a very early breakfast meeting or an after hours meeting then, within reason, we would always try to accommodate this. Having said that I do have a family who are my main priority in life and so if I ever came across a client who insisted on meeting at awkward times without any respect for my circumstances, I would question whether I would want to work with them as our service is founded on the notion of mutual respect. Fortunately this has never been the case and I have some really wonderful clients, making my job as a planner really enjoyable. Evolve operates very much on a team based approach. Among the four directors we class the clients as Evolve clients rather than each of us viewing the clients as our own. This means that we all help out where necessary without any unhealthy competition. For instance, with the recent changes to pension legislation for high income individuals, we need to consider the impact of these changes for all clients. We took the view that it was silly for the

Caroline takes a quick break for coffee

A balancing act: Caroline Hawkesley enjoys professional and family life

Biography Caroline Hawkesley CFPCM Caroline Hawkesley is one of just under 1000 Certified Financial Planner licensees in the UK. She also holds a number of the Advanced Financial Planning papers making her a member of the Personal Finance Society. With almost 15 years’ experience, Caroline first started working in financial services for a large insurance company. From there she moved on to help run a small but very successful IFA. She then decided to progress her career by joining a well known firm of investment advisers & stockbrokers, working in their financial planning division and reporting directly to the head of Financial Planning. It was there that she gained CFPCM certification. She is a directors at Evolve Financial Planning.

four of us all to spend time becoming the expert in this area and therefore one of us was tasked with the job and we can call upon the expert when needed. Another example of how the teambased approach works is when I had my daughter Ruby. I had a small amount of time away from the office but I felt happy that my clients would be looked after by my co-directors, particularly as most clients had met at least one other member of the team. I knew that they would all receive the same level of advice, care and attention which was brilliant and meant I really could enjoy time off with my new baby. My days are rarely the same, however the day will always start the same, me getting up at 6 am which gives me 2 ½ hours to get us all ready and out of the door in time for the school bell at 8.50 am. Two and a half hours may sound like lots of time but trying to rush a 5 year old in the morning can often be more challenging than running a business. Therefore, I rarely start work before 9 am (I remember mornings where I could be at my desk for 7 am with a nice cup of tea but at present that’s a distant memory). The working day at Evolve is always different which I love. We are a really great team and I honestly love working with everyone. If I am out at one of our offices I try to get home by 7 pm so that I can join in with bathtime and story time. I then quite often work once the girls are in bed and the house is peaceful. I am planning to take more exams as my colleagues love to remind me that they are much better qualified than me! However, at present I honestly do not know how I would manage to find time to study. I think this is one area where I have to accept defeat – it is a work in progress! I am so pleased that I attained my Certified Financial Planner certification pre children!


Technical Update This issue: Outcomes driven investment/Protection

How Financial Planners can boost their value to clients

I

n the Technical Update pages this month Stuart Fowler, founder of No Monkey Business, explains outcomesdriven investment and George Seatter, managing director of Green Park Insurance Services, talks about protection. Mr Fowler highlights the challenge for Financial Planners trying to raise their own value in the eyes of clients so that they can increase their share of the

value chain at the expense of a powerful but inefficient and overpriced investment industry. He admits meeting this challenge is never going to be easy as long as clients can see that goals requiring funding by a portfolio of financial assets have no clear and intuitive link to personal welfare. Then Mr Seatter asks planners how confident they are that their client is protected adequately in terms of cover for their financial

assets. He also asks how vulnerable planners are to competitors in a highly competitive protection insurance market? Without knowledge of how clients place their personal insurances, somebody else might try to control where they place their investments or other financial services, he warns. The Technical Update sector welcomes your submissions or suggested topics. Email your ideas to the editor (see p 34 for details).

May 2010 Contents: 25 Introduction 25 Outcomes driven investment Stuart Fowler, founder of No Monkey Business, discusses how Financial Planners can raise their own value in the eyes of clients 26 Protection George Seatter, managing director of Green Park Insurance Services, discusses adequately protecting clients.

Utilising outcomes-driven investment goals to raise planners’ worth The challenge for Financial Planners, even without RDR, is to raise their own value in the eyes of clients so that they can increase their share of the value chain at the expense of a powerful but inefficient and over-priced investment industry. Meeting this challenge is never going to be easy as long as clients can see that goals requiring funding by a portfolio of financial assets have no clear and intuitive link to personal welfare. Clients know that financial goals are person-specific but they see that recommended investment solutions are overwhelmingly standardised. Very little in the language or arithmetic connects the two. This is not only a handicap for planning businesses. It also leads to unsatisfactory experience of the funding journey and suboptimal financial outcomes for their clients. In the past the same generic investment solution has been recommended, whether the source of the advice was a life insurance sales person, an IFA or a bank employee: a balanced or managed portfolio, diversified across several asset classes. It is essentially the same whether packaged as a single product or as an assembly of individual asset class funds, whether advisory or discretionary.

The only concession to risk preferences has been the degree to which equity and property assets are ‘balanced’ by fixed-income investments, which for most of the last few decades has meant gilts but now includes corporate bonds. It is sensible to view this as a ‘factory’ model, because it sacrifices the customisation required by personal welfare, target outcomes and time horizons on the altar of economies of scale that standardisation brings. But planning does not need to be captive to these economics and the technology is available to link up clients’ planning goals with highly customised portfolio solutions. In the factory model, the management of the high-level asset mix, whether performed by the adviser or delegated to a provider, has almost universally adopted (consciously or otherwise) the diversified portfolio optimisation technique that has dominated institutional fund management since the 1980s. The inputs to this approach are either fairly constant ‘normal’ long-term nominal returns or relatively short-term nominal return forecasts, together with a rear-view measure of shortperiod standard deviations and correlations. Using common inputs has naturally encouraged

investment allocations to converge but this tendency has been reinforced by applying ‘real-world’ constraints to the optimisation process, aimed at avoiding large bets compared with other managers or advisers and at giving clients the comfort of familiarity. So great has the commonality become that advisers barely need any investment knowledge to construct portfolios themselves. It has diminished value. The fatal flaw in the factory model is that it addresses a completely different set of objectives from the outcomes clients need or want. If the outcome is defined, for instance, as a future stream of cash flows that is very vulnerable to inflation over a long time frame, as is clearly the case for the retirement spending goal, then short-period, risk-adjusted returns in money terms are not the right measure for determining the suitability of the asset solution. The inflation risk is every bit as important as the investment risk. Probable real returns over long holding periods, whatever the inflation rate, are the right measure. If the portfolio was optimised on these inputs, bonds would not even earn a place. Though property might, advisers will want to take into account the fact that most of their clients have large exposure to property already,

usually undiversified and often leveraged. The idea that equity exposure might be a better way to match clients’ funding needs follows logically from thinking about the nature of the outcomes and about how the portfolio sits within the context of a lifetime balance sheet dominated (usually) by much larger actual and notional assets and liabilities, like lifetime earnings and spending. Other logical but counterintuitive conclusions would follow from planning goals whose outcomes are defined differently, such as saving for a house purchase, whose target outcome is clearly linked to house prices, which is in turn quite different from saving for mortgage repayment, which is a nominal not real liability. The uncertain household dynamics that shape a lifetime balance sheet fill many Planners with alarm, not just because of their complexity but because they feel the uncertainty is so great as to make planning pointless. This also diminishes their value. What they may anyway be missing is that by trying to deal jointly with the asset and liability side of the household balance sheet they reduce the problems of risk and uncertainty to manageable and Continued on page 26 Financial Planner | May 2010 | 25


Continued from page 25

more intuitive pieces. But it does call for more adviser skill, both in analysing how ‘welfare’, or the benefits delivered by the money, is to be defined in each case and in deciding how to invest to maximise welfare as defined. Advisers should pay close attention to the development of Liability Driven Investment in the institutional market, noting in particular how this fullycustomised approach to risk management has drained assets from conventional balanced managers in defined benefit pension plans and shifted power and revenues from asset managers to pension advisers. The factor y model relies counter-factually on diversification to control risk. In LDI or outcomes driven investment, risk is controlled by dilution of an optimal set of risky assets by a risk free asset. It has to be risk free in the same terms as the goal outcomes, as in ‘hedging a liability’. For example, if outcomes were defined as real spending power at a particular time in the future, only one asset hedges this

perfectly: an index linked gilt with the same duration as the outcome. Managing the mix of risk free hedges and risky positions controls the range of probable outcomes. Clients themselves determine this range, as their own personal risk budget, because they can relate to it and think about its consequences. It then becomes the driver for dynamic asset allocation over the life of a goal-based portfolio. As an institutional money manager, I was early, in the 1980s, to champion asset allocation, use quantitative techniques for portfolio construction and adopt low-cost index funds. In the late 1990s I took another innovative turn, building (with my associate Chris Drew) a realreturn asset model where returns and risks were uniquely specific to actual, not normalised, market conditions and to explicit time horizons. Our intention was to construct portfolios that were continuously optimal in terms of outcomes, such as 10 or 20year real wealth levels, either counting down to known dates when money was required or rolling forward (so setting realistic

constraints on risk taking). Where a portfolio had to generate regular income for consumption, as in a pension, life interest trust or charity, we needed to optimise investments so as to maximise withdrawals subject to particular constraints, such as sustaining real spending through market cycles, not depleting the capital too soon or not reducing the real value of the capital at all. That was in 1999. Ten years later the ‘Lambda’ model has acquitted itself well in two market cycles and has provided the necessary linkage between goal plans and portfolios at No Monkey Business since it was formed five years ago. Talking to members of the

London Branch of the IFP in September, we struck several chords. I would like to think they were impressed by the technology but I know that what really hit home was the quality of our clients, how much we earn as fees per client (while actually cutting clients’ total costs) and how we have transformed the language between adviser and client. Next month I will show how we apply outcomes-driven investment to one of the most complex of tasks that is really badly served by the factory model: pension income drawdown.

Stuart Fowler is founder of No Monkey Business

Factory Model vs Outcomes-Driven approaches Scope of financial decisions Suitability assessment Risk management Idiosyncratic risk diversified Risk budgeting Return and risk inputs Constrained for inflation Constrained for consumption Re-projections Customised benchmarking Supports firm track record Source: No Monkey Business

Factory Model Assets only Mapping to independent profiling Dependent on risky asset correlations

Outcomes Driven Assets and liabilities Response to calculated outcomes Dilution by risk free assets

Short-term nominal volatility Constant across time

Long-term real outcome ranges Horizon specific

How to use general insurance to build your Financial Planning practice Protection has always had an important role to play in providing a complete Financial Planning service, but advisers often restrict their advice to the life insurance market, leaving many of their clients to arrange cover on a direct basis with regards to their household, motor and travel insurance requirements. The increased regulation in the general insurance industry from January 2005 had made this an area where specialist knowledge was required, and many Financial Planners decided that this was not an area of advice to be included within their practice. High quality Financial Planners achieve trusted adviser status with their clients. They also recognise that the protection of a client’s assets should also extend to their property assets. You should consider whether it is possible to outsource this area of advice to a private client insurance broker. Such firms will have the expertise required to ensure that your clients have adequate protection in place, act as an additional area of expertise for you to offer the 26 | May 2010 | Financial Planner

client, and help create the fortress for your company, which keeps competition from your client. Furthermore, the majority of wealthy, time compressed individuals, tend to neglect looking after their insurances effectively – many different policies, different renewal dates, poorly rated and out of date for sums insured and so on. With a specialist insurance broker’s involvement, a single portfolio policy could be arranged, which will provide a common renewal date for all their insurance requirements. This can often provide a significant premium saving in addition to the greater convenience of having an individual point of contact. Barry Horner CFPCM, chief executive of Paradigm Norton certainly agrees. His firm were quick to spot the possible benefits that the effective provision of general insurance would have for current and future clients. He said: “We had been aware for a while that our client proposition did not include any provision for general insurance.  This had been a conscious decision on our part

as we had been unable to find a process, which we felt would provide any significant value for our clients.  We did not want to provide them with an off the shelf policy, and also felt uncomfortable in offering advice in an area where we had no specialist knowledge.  We were introduced to a leading private client insurance broker though the IFP and I had a good personal experience of their service before we introduced them to any of our clients. “The ability to be able to offer our clients a comprehensive insurance review without any cost or obligation on their part and to then be able to provide a single portfolio policy covering all their insurance needs has been invaluable.  “It has saved them time and money in equal measure and as such it has become a core part of our annual review with clients.  For our existing clients I believe that this process provides them with the peace of mind that they have adequate protection in place, and I am sure that this will act as a further reason in encouraging new clients to Paradigm Norton.”

A formal agreement with a private client insurance broker also opens up other opportunities that should be considered. For example, most insurance brokers will be happy to pay an introducer fee on an annual basis, up to 20 per cent of the commission they receive from insurers. This could be used to generate an additional passive income stream into your practice, or to offset against annual fees for Financial Planners that have already made the transition away from a commission-based model Other companies have decided that this commission should be given back to the clients as an additional discount from their annual insurance premiums, generating further goodwill that often leads to a referral to another potential client. In addition to this, a strategic relationship may well open up the possibility of introductions being made to any relevant clients of the insurance broker for their Financial Planning requirements.

George Seatter is managing director of Green Park Insurance Services


IFP Member News: News & President

IFP News

From The President

5 pages of News for IFP members: President 27; Branch Reports 28; IFP News 28; Events and Courses 29; Branch News 30; Sponsor News 31

Barry Horner CFP President of the IFP

Financial Planners need soft skills Financial Planners and advisers are increasingly recognising the importance of developing “soft” skills, in order to deliver the standard of service that clients expect. With an abundance of quality training opportunities available within technical areas, this is typically not the case when it comes to personal development. Successful Financial Planning practices regularly identify strong communication skills among key success factors for their planners. The most technically competent and qualified individuals still need to be able to communicate effectively with clients, helping them to identify goals and objectives as well as to explain potential complex solutions in an

understandable way. IFP branch meetings, conferences and events regularly feature sessions on developing soft skills so remember to check them out. The North branch takes a look at body language and nonverbal communication at its May meeting, Northern Ireland looks at communication and rapport in sales and London branch gets a practical demonstration of his EVOKER model from George Kinder in early May. Check the branch programme for details. Taking it a step further, the IFP Art and Science Workshop on 18/19 May is a great opportunity for experienced planners to work on soft skills and Life Planning. see p29

The organisations with the highest number of CFPCM professionals among their staff are shown below, as of March 2010. Hargreaves Lansdown 47 Grant Thornton 47 Towry Law 39 BDO 33 Bluefin Group 26

New IFP branch is unveiled for Chester and North Wales members Are you an IFP member and living or working in the Chester or North Wales area? If so, you’ll be pleased to hear that following a recent pilot scheme and strong demand from members, the IFP plans to introduce branch meetings in the region in addition to those taking place in Manchester. John Fachiri CFPCM has been appointed as branch chairman elect and he will set up further meetings this year to maintain the momentum. Provided that the meetings continue to be well supported, the IFP will officially appoint Mr Fachiri as the first branch chairman for Chester & North Wales in September. If you would like to receive information and meeting

invitations for this Branch (you can be linked to up to three Branches), please email the IFP’s Rachel Weihs at rachel@financialplanning.org.uk.

John Fachiri CFPCM : branch chairman elect

Many UK Financial Planners forget that we’re part of an international global community, with over 126,000 CFPCM professionals globally and a growing movement towards Financial Planning across Europe including Germany, France, Spain, Austria, the Netherlands, Ireland and Italy. Financial Planning in the United States and Australia is far more widely recognised as an established profession but we are rapidly catching up. IFP chief executive Nick Cann and I meet representatives of 23 countries twice a year as a part of our affiliate membership of the Financial Planning Standards Board (FPSB) to discuss global Financial Planning standards and cross border best practice. You truly get a sense of the emerging profession when debating many of the issues we face with delegates from countries as far away as Chinese Taipei, Singapore, Brazil and South Africa. For all of them CFPCM status is an essential part of their professional identity. When I became a partner of an Atlanta-based Financial Planning firm in 1999, my US partners were all CFP professionals and the CFP mark was seen as the validation of their Financial Planning expertise. In the UK too, the CFPCM mark is gaining recognition as the only true globally recognised mark of objective, expert and trusted Financial Planning advice. Consumers increasingly recognise that the best Financial Planning results come from working with a CFP professional. As part of your commitment to excellence in client service, the Art and Science workshop (18/19 May) is a real must - focusing on best practice for experienced planners. Also, if you have not previously attended either the US or Australian Financial Planning Associations’ conferences might I encourage you to do so? Many of the fascinating topics that feature within our Art and Science Workshop get debated on the international stage. There is an international stream running throughout the conferences to help international delegates avoid seminars that only cover US tax law, for example. Giving and Philanthropy planning is a widely accepted tool in the planner’s armoury and the concept of giving linked with retirement planning and estate planning is the norm. As planners it’s vital that we keep striving to improve and develop our service. With all the opportunities we have, there’s really no excuse not to!

“It’s vital as planners that we keep striving to improve our service”

Financial Planner | May 2010 | 27


IFP Member News: Branch Reports

Ethics and Practice Update The IFP Ethics and Practice Standards Committee – An Update The IFP encourages high standards of business behaviour by its members based on sound ethical values, focused on providing the best outcomes for clients. The role of the IFP Ethics and Practice Standards Committee is to assist the IFP in the development, implementation and embedding of effective and relevant ethics policies and procedures. The role is a crucial one for the IFP as a professional body. This committee is made up of a group of experienced individuals drawn from different backgrounds to represent as wide a range of interests and expertise as possible in this area. In recent years, other than the constant review of the IFP Code of Ethics ( the Code), its alignment with any regulatory requirements and FPSB requirements under its affiliation agreement with the IFP, there has been little else for the committee to consider. Complaints made against IFP members have been very few in number and CFPCM professionals take the renewal of their annual certification very seriously. Recent developments have meant that there is now much for the committee to consider. The Code has been reviewed and judged as remaining fit for purpose. It continues to meet the minimum standards required elsewhere. The IFP procedures for dealing with issues have also been recently reviewed. An example of this is where a high profile figure like Peter Sprung, formerly CEO of Park Row, is personally fined by the FSA for regulatory failings within the company where he had management responsibility. It is important to the IFP that the case is reviewed but it is equally important that due process is also shown to ensure fairness to the individual concerned. In this case for example, the IFP is consulting an independent source (duly qualified) to establish whether the individual has a case to answer before considering any potential disciplinary action. The independent source has to consider whether the individual has brought the IFP or the profession into disrepute or failed any other area of the Code before establishing a hearing to listen to the two sides. Regulatory sanction on its own does not necessarily constitute unethical behaviour. Other work identified by the committee is the need to support the Continuing Professional Development (CPD) requirements of members in the area of Ethics and to increase understanding of what activities are likely to be involved. Within the IFP CPD scheme members are now required to undertake CPD activities specifically in the area of ethics, and many will need help and guidance as to what this constitutes. The IFP will provide events and support in this area. 28 | May 2010 | Financial Planner

Kent & Sussex region defies snow to focus on investment strategies The Kent and Sussex Branch had to cancel its January meeting due to snow and adverse weather again threatened the February’s meeting. However, speakers Nick Holmes and Pam Beith of Brooks Macdonald  Asset Management braved the snow. Preceding the formal meeting was the first of six study group sessions assisting members towards CFPCM certification. The branch agreed to test this new concept with training provided by Axa’s Financial Planning Support Division, and the response to this first session was really positive. Nick Holmes then gave a

lightning tour of global markets highlighting those areas that look both over and undervalued. Pam Beith, a specialist in Far Eastern markets chipped in with pithy comments as opportunities arose. The main conclusion was that markets will remain volatile with 2010 proving a difficult year.   There are many potential issues that could derail stock markets including the withdrawal of quantitative easing, the General Election, concerns about inflation and possible rising interest rates, and whether corporate earnings meet market expectations. Should we be wary about the improving

economic statistics being released, or are we really out of the woods? Using this overview as a starting point, branch chairman Mike Macleod CFPCM acted as referee for a lively debate focusing on wide ranging topics, including how RDR will impact planners’ approach to investments, risk profiling and passive versus active investment strategy. He said: “Financial Planners are concerned as to how their businesses will be affected and our particularly animated debate highlighted this. The debate was very useful and discussions continued in the bar after the meeting was brought to a close.”

Campbell returns to address Cambridge Branch In March Campbell Edgar FIFP, CFPCM and a former President of the IFP, returned to present at the Cambridge branch meeting. Branch chairman Chris Adams CFPCM said: “Campbell is a highly entertaining speaker and this doesn’t take anything away from the clarity of his message which is so relevant to both new and experienced planners.” In the past, both Mr Edgar and Duncan Hannay Robertson (branch co-chairman) had worked for Acuma and both held their adherence to process and planning in high regard. In this session he showed that while the core principles of Financial Planning haven’t changed substantially, the implementation of them has. Mr Edgar reminded delegates (via

the “six steps” process) to take an organised approach to every aspect of client and investment management without being overly reliant upon processes. Delegates then discussed how processes had developed in terms of using both wrap platforms and Financial Planning software, and concluded with a useful discussion on what aspects had and hadn’t worked for delegates. Mr Adams commented: “East Anglia branch meetings typically attract up to a dozen attendees so it’s an informal affair. I’ve noticed that a common theme among our meetings is the willingness of our members to share both their successes and failures for the benefit of each other. For me (as a rather junior planner and

branch co-chairman) this is really important and makes organising the meetings so worthwhile for all of us. Next month, it is tax strategies from Black Star.”

Campbell Edgar: entertaining speaker

Outstanding feedback for Manchester Conference focused on marketing for Financial Planners Finding effective ways to reach the right new clients is a clear challenge for many planners. At its conference “Build your brand and your Financial Planning business” on 14 March in Manchester, delegates enjoyed a full day of stimulating marketing ideas, discussion and thought provoking content all designed to help get the right message to the right people in the right way. The feedback was outstanding.

Experienced planners Steve Martin CFPCM and Andrew Brook Dobson CFPCM highlighted a number of important ideas that planners can use to improve the effectiveness of their marketing and prospecting initiatives, showing that proactivity really does pay. Brook Dobson’s insight into prospecting within a clear target market was particularly useful and thought provoking. Steve Martin said: “While all

the sessions were relevant and interesting, I must highlight the outstanding “Brave New World” session from Dean Van Leeuwen. It wasn’t just the original content (a rare thing in my view), it was also his fascinating insight into what business might look like and how they might work in the future - it made me feel like I had been lifted into a different world. Why more IFP members don’t come along to these events beats me!”


IFP Member News: Events

Take time out to discover the Art & Science of Financial Planning After a year’s break, this two day high level workshop makes a welcome return. Taking place on 18 and 19 May at the Hilton St Anne’s Manor in Wokingham, it is designed for experienced and highly qualified Financial Planners. Along with the high calibre content, best practice forums, ideas and debate that you’d expect from such an event, there will also be a focus on life planning techniques. Dr Maria Nemeth Ph.D, a licensed clinical psychologist, Master Certified Coach, author,

and international speaker, is a keynote speaker guaranteed to get you thinking. In her session ‘Coaching your clients about money: would it be alright if your job got easier?’, Maria will explore why it is so difficult for clients to talk about money and how you can use coaching skills to help them; why many financial plans never get implemented and some remedies, and how to help clients discover what is truly important to them. This and other sessions are structured to maximise practical

Dr Maria Nemeth: keynote speaker

help with interaction and debate. This is a “don’t miss” event for serious Financial Planners.

IFP Events Calendar 2010 IFP Annual Conference & Exhibition 2010 – ‘Driving the Profession Forward’ 20 to 22 September 2010 Celtic Manor Resort, Newport, S Wales www.ifpconference.org.uk

Financial Planning Week 2010 November 2010

IFP one day conferences & other events Adding wealth management to a Financial Planning business A one day conference Thurs 29 Apr [The Brewery, London] Art & Science of Financial Planning workshop A two day workshop aimed at experienced Financial Planners. 18 & 19 May [Hilton St Anne’s Manor, Wokingham] Financial Planning in Practice A one day conference Tues 30 Jun [Midlands] Scottish Conference & Dinner Mon 15 Nov Welcome Dinner Tues 16 Nov Conference [Edinburgh] A client centric proposition that pays A one day conference Thurs 02 Dec [Bristol]

Exclusive workshops & events A Masterclass for CFPCM Professionals Aimed at more recently qualified CFP professionals or those who could use some expert help, the Masterclass will help you to integrate Financial Planning principles, processes and techniques into your business in a practical way. Thurs 22 Apr [Bristol] Thurs 08 Jul [Manchester] Mon 15 Nov [Edinburgh] CFPCM Professional Focus Days Topical focus days exclusive to CFPCM professionals. Thurs 04 Nov Technology [London] Fellows’ Day & Dinner Exclusive events for Fellows of the IFP to meet and share information at the highest level whilst discussing how best to apply new ideas. Thurs, 24 June [TBC]

IFP training courses ‘Focused Assessment Programme’ (FAP) – visit www. financialplanning.org.uk for more details A route to becoming a CFPCM professional – a three stage programme combining structured workshops ad private study. Book stages individually or as a discounted package. Stage 1: Principles & Practice of Financial Planning Tues 11 May [London] Tues 08 Jun [Bristol] Tues 06 Jul [Bristol] Tues 03 Aug [Bristol] Tues 07 Sep [London] Tues 19 Oct [Bristol] Tues 16 Nov [Bristol] Tues 07 Dec [Bristol] Stage 2: Assessment Preparation Day Weds 19 May [Bristol] Weds 16 Jun [London] Weds 14 Jul [Bristol] Weds 11 Aug [Bristol] Weds 15 Sep [Bristol] Weds 27 Oct [Bristol] Weds 24 Nov [Bristol] Weds 15 Dec [Bristol] Stage 3: Assessment Session The following all take place in Bristol. 12 & 13 May 22 & 23 Jun 20 & 21 Jul 17 & 18 Aug 28 & 29 Sep 20 & 21 Oct 09 & 10 Nov 08 & 09 Dec IFP Paraplanner Skills Workshops 2009 ...................................Day 1....................................... Day 2 Bristol ........................Tues 18 May............................ Tues 15 Jun London ......................Weds 07 Jul............................ Weds 04 Aug Bristol ........................Weds 08 Sep........................... Tues 12 Oct London ......................Weds 17 Nov........................... Weds 01 Dec

NB: IFP reserves the right to amend or cancel any event or event times and dates. This includes changes to speakers, content and programme.

Events in Brief Adding wealth management to a Financial Planning business NEW DATE: 29 April, The Brewery, London Have you considered adding wealth management to your business and are you unsure about your options and could use some expert help? Is it just a question of terminology and marketing? If so, this one’s for you.  Not only will you find out whether it’s right for you and, if so, what steps you need to consider and do to make it happen, but also gain insight from experienced firms on what has worked (or not!) for them and why, when it comes to building sophisticated financial solutions for HNW clients. One of the real challenges for Financial Planners is to present their proposition to the target audience. Another is to focus on where genuine expertise exists and to buy in or outsource other key aspects of the whole process. Financial Planning in practice 30 June, Midlands Some of the most popular sessions at IFP events focus on Financial Planning fundamentals. Within an increasingly competitive market getting the basics right is becoming all the more important. Starting with the six step Financial Planning process, the programme gets right to the core by taking you through what “real” Financial Planning is, how it’s done and how to differentiate it. You will pick up valuable tips for developing your client proposition as well as practical advice on how you can help clients achieve their goals by building relationships that last. Ideal if you’re new to Financial Planning but also a useful review for experienced planners and Paraplanners. IFP Conference 2010 20 to 22 September 2010, Celtic Manor Resort, Newport This year’s annual IFP conference will be ‘driving the profession forward’ and you can be sure of a great programme, great networking and a great experience at this, the Financial Planning event of the year. This year’s keynote speakers are confirmed as Mark C. Tibergien, CEO of Pershing Advisory Solutions LLC, Dr Graeme Codrington of TomorrowToday and Karren Brady, the ‘first lady of football’. You may recognise the names but all three will have fresh ideas to really make you think. Book by 24 May and online to receive 10 percent off; a sell out year is anticipated so book soon to guarantee your room in the five star Celtic Manor Resort Hotel. Visit the IFP website for further details, www.financialplanning.org.uk, or contact the IFP on 0117 9452470. Financial Planner | May 2010 | 29


IFP Member News: Branch News

Branch News

Tell us what you think about the IFP What could the IFP be doing to support you better? The IFP is keen to receive feedback from members to make sure that you get what you need from your professional body. Whether it’s about IFP events, CFPCM certification - or any other subject, we’d love to hear from you. Email IFP comms director Sue Whitbread sue@ financialplanning.org.uk.

CPD Online: Are you getting most from it? From now, not only can you use CPD Online to record your personal CPD activities, you can also automatically add IFP branch meetings to your diary and CPD schedule. Access it via www.financialplanning.org.uk.

Relaunch and outstanding new venue for Thames Valley Branch members Those members meetings in its modern within reasonable conference suite. distance of Reading Prudential’s markets will be interested to development manager, hear the good news Nick Hunt said: “We’re from the Thames Valley delighted to assist Mark branch. Under the new and the branch as part chairmanship of Mark of our commitment to Cherrill, the branch New branch venue the IFP.” now benefits from the Mr Cherrill said: superb facilities at the Prudential “We’re very fortunate to have IBIS club (its sports and social use of this superb new venue as club)  at Tilehurst,  Reading which part of our re-launch. Even if will act as the venue for IFP branch you aren’t tempted by the gym, I

hope the convenient location, free parking and relevant sessions will encourage you to join us – you’ll be assured of a great welcome!” The next meetings are scheduled for 6pm on 12 May and 9 June. Topics such as an Academic Approach to  Asset Allocation, Behavioural Finance (what is it and how to exploit it), All You Need To Know About ETFs and a review of the Budget 2010 will feature.  For details, e-mail Mark at markc@ incisivews.com.

Why clients are irrational and what they really think In its first branch meeting of 2010, South Wales welcomed Kate Hudson and Nick French from Russell Investments. Based on “The 7 Habits of a Highly Ineffective Adviser,” this session generated a packed house. Delegates got actively involved

in Kate’s presentation which challenged many commonly held views about how many advisers/ planners approach their businesses. There was heated debate over many topics, not least around how do you define a fee, whether we’re an industry or a profession and why

this is the first time Kate’s been to Cardiff when the Australian rugby team hasn’t just lost to Wales! Branch chairman Gareth Tregidon CFPCM ssaid: “Feedback was excellent and Russell Investments’ “Helping Advisers” website is well worth a look.”

Financial Planner CHOICE OF THE PROFESSIONAL PRACTITIONER

Win one of 2 £50 M&S Vouchers! Take part in our Financial Planner Reader Survey and you could win a valuable £50 M&S voucher plus you’ll be helping us to bring you an even better magazine. To take part in our Spring 2010 Reader Survey simply enter the following web address:

http://www.surveymonkey.com/s/MN6Y26V into your browser and follow the instructions. The survey will take about 10-15 minutes to complete and is open to all planners, financial advisers and wealth managers who read Financial Planner. Terms apply (see online). Closing Date: 30 April 2010. Thanks for your feedback and good luck in the prize draw.

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30 | May 2010 | Financial Planner


IFP Member News: Sponsors

Zurich offers seamless fit for planners Zurich is delighted to support the Institute of Financial Planning in the great work it undertakes in providing practical support for Financial Planners and advisers, while also promoting the value of professional Financial Planning advice amongst consumers. We believe that the need for sound Financial Planning and advice in today’s challenging economic environment has never been greater and Zurich has never been better placed to support you and your clients. Zurich is the fifth largest insurance company in the world by market capitalisation (at April 2009) employing over 60,000 people in more than 170 countries, and has held a position of strength in our industry for more than 135 years. Zurich is built on a foundation of discipline and execution, bound tight by a culture of sophisticated risk-taking. From underwriting to investment management, we manage risks on both sides of the balance sheet in an integrated way.

Our Financial Strength is your asset. So, what can Zurich do for you? We provide you with responsive, personalised points of contact to help you make the most of all that Zurich has to offer. Our platform has been created

to fit seamlessly into the way you do business and our award winning adviser tools can help you support your existing clients and win new ones. Our Zurich Professional Development team are here to help your business thrive in a post RDR world. ZPD offers bespoke solutions from skills training to business development and

qualification support. We offer an extensive range of competitive protection propositions together with the support to help you grow your business in family, IHT and business protection. Over many years, our large case underwriting team have built an industry leading reputation and they are directly available to you to help with complex medical and financial underwriting. Our new “future proof” retirement solutions and award winning investment range offer carefully selected funds including the popular Protected Profits Fund. We have a rigorous and embedded approach to TCF giving you total confidence that we will always act in your clients’ best interests. To find out more about how Zurich can help you build your business either contact your local consultant on 0500 546546 or go online to www. makingbusinesseasier.co.uk

Henderson focuses on global investment solutions Henderson Global Investors began its formal association with the IFP in the summer of 2009 and we are delighted to continue our sponsorship through this year. The 6 April 2010 marked the date for the re-brand for our global business and was also one of the final steps in our successful integration of the Henderson and New Star fund ranges. We believe this new brand identity provides the best representation of a business that is focussed on delivering global investment management solutions. With a heritage that stretches back for more than 75 years, Henderson Global Investors is a leading independent global asset management firm. Assets under management exceed £58.1 billion (at  31.12.09) and we employ approximately 930 people worldwide. Our re-brand has obvious implications within the UK retail market and the interim “Henderson New Star” brand has

now been replaced by “Henderson Global Investors” across all communications material. All the funds we manage with a “New Star” prefix became “Henderson” funds from 6 April. On the same date we consolidated the administration of the fund range onto a single platform. These

changes have been implemented to improve efficiency and provide a higher level of service for advisers and investors. Further information can be found in the fund integration section of our adviser website at: www.henderson.com/ sites/henderson/uk_pa. As a business we continue to retain strong presence across equities, fixed income, multimanager, commercial property and sustainable and responsible investment. We offer a compelling

combination of fund management expertise, global resources and corporate stability, with a diverse range of funds managed by some of the most talented fund managers in the industry. These managers are given the flexibility and freedom to set their own investment philosophies and processes, allowing them to realise their full potential within a strong risk framework. Henderson Global Investors recognises the importance of independent investment advice and the valuable role played by the IFP in championing professional standards within the Financial Planning profession. Through our continued sponsorship we intend to strengthen our relationships with IFP members and work together to ensure our products meet and exceed the needs of investors and their advisers. Contact: Garry Whitefield, head of partnership marketing, 020 7818 3661, garry.whitefield@ henderson.com

IFP Sponsors Below is a complete list of IFP sponsors. Please support them where possible and appropriate. Ascentric www.ascentric.co.uk AXA Distribution Services www.elevateplatform.co.uk BNP PARIBAS www.bnpparibas.co.uk Braemar Group plc www.braemar-group.co.uk Curtis Banks Plc www.curtisbanks.co.uk Dimensional Fund Advisors www.dfauk.com EEA Funds Management Ltd www.eeafm.com E-volve Consulting www.e-volveconsulting.co.uk F&C Investments www.fandc.com Fidelity Investments www.fidelity.co.uk Frontier Capital www.frontiercm.com Grant Management www.grantmanagement.co.uk Greyfriars Asset Management www.greyfriars.co.uk Henderson Global Investors www.henderson.com iShares www.iShares.net JP Morgan www.jpmorgan.com Laserfiche www.laserfiche.com LionTrust www.liontrust.co.uk Lyxor www.lyxor.com Macquarie Bank www.macquarie.com Man Investments www.maninvestments.com Managing Partners www.managing-partners.com Margetts www.margetts.com Morningstar www.morningstar.co.uk NS & I www.nsandi.com Nucleus www.nucleusfinancial.com Octopus Investments www.octopusinvestments.com Pictet www.pictetfunds.com Premier Asset Management www.premierfunds.co.uk Pershing www.pershing.co.uk Prestwood Software www.prestwood-group.co.uk Prudential www.pruadviser.co.uk Russell Investments www.russell.com Sarasin www.sarasinsolutions.co.uk Scottish Widows www.scottishwidows.co.uk Seven Investment Management www.7im.co.uk SWIP www.swippartnership.co.uk Societe General www.sgcib.com Sparinvest www.sparinvest.co.uk Standard Life www.standardlife.co.uk Suffolk Life www.suffolklife.co.uk Talbot & Muir www.talbotmuir.co.uk ThreeSixty www.threesixtyservices.com Transact www.transact-online.co.uk Vanguard www.vanguard.co.uk Zurich www.zurichintermediary.co.uk

Financial Planner | May 2010 | 31


Moving up: Careers & Recruitment

Advertise your vacancy to thousands of Financial Planners and wealth managers every month. Contact: Louise Glover on 01895 672771 or louise.glover@portfoliopublishing.co.uk for info.

ifs welcomes final standards for Level 4 qualifications for advisers The ifs School of Finance has welcomed the Financial Services Skills Council’s clarification of the final standards for RDR compliant Ofqual Level 4 qualifications. Most members of the IFP will already be at Level 4 or above but many IFAs and other financial advisers have yet to reach the standard which will become obligatory for all advisers under the Retail Distribution Review. The ifs has been involved in the development of the new industry standards for professional qualifications through its engagement with the FSSC and FSA.

Anne Kiem, vice principal at the ifs School of Finance, said: 
“We welcome the publication of these new standards and look forward to building upon the success of our DipFA Level 4 qualification for financial advisers with this news. She added: “In designing the DipFA the ifs understood from the start that this exercise was not just about accumulating knowledge which most experienced advisers already have, but about behaviour and application. “Appropriate behaviour is a core requirement of professionalism. The aim of the whole exercise has been to raise professional standards

Studying hard: Level 4 will be a minimum

and to do this a qualification has to relate closely to the everyday activity of the adviser.” The ifs School of Finance is a registered educational charity incorporated by Royal Charter.

Norton “Building Excellence” Award 2010 now open Professional recognition is one of the best ways of building a practice and a career and there’s no better way of doing this than by winning the IFP’s Building Excellence Award 2010 which is now open to entries. Applications are being taken for the prestigious award, which was established in memory of David Norton, one of the founding fathers of the Financial Planning profession in the UK and a former

President of IFP. The competition is open to all Financial Planning firms across the UK, not just to those of IFP members. Firms initially need to complete the online application form on the IFP website by 7 May. The prizes are outstanding, with a total value exceeding £15,000 including 10 days professional business mentoring from Brett Davidson at FP Advance, Investor in Customers assessment and client survey as well

as significant PR opportunities.  Nick Cann, chief executive of the IFP, is delighted at how this award has established itself as the “one to win” in such a short space of time. He said: “This award provides the true recognition of Financial Planning businesses on the road to business excellence. The winners, and in many cases the entrants, will set the standards others aspire to.” Capital Asset Management won in 2009 (see p13 and 14).

Institute Honours List It’s a major accomplishment to complete the rigorous education requirement to become a Certified Financial Planner professional. Here is a list of those who passed the globally-recognised qualification recently. Well done to all of them. John McArdle Johnston Financial Lisa Chantrey Barry Fleming & Partners Ltd

Andrew Brown Kim Bendall Anderson Brown & Gollogly Financial Services Ltd Lonsdale Financial Consulting Louise Wade John Rook Lloyds Banking Group Kench & Co Financial Services Ltd

Talking Training As part of the RDR process, the FSA aims to improve the professional standards of financial advice in the UK to better support consumers – a laudable aim which IFP fully supports. While I think that requiring practitioners to be qualified to QCF level 4 is certainly a step in the right direction, it’s important to remember that there is more to being qualified than just passing exams – particularly when it comes to the development of skills. We all know that you can be the most technically competent adviser in the country, but if you can’t communicate effectively with clients or you are not helping them achieve their goals in life, then your role as a long term trusted adviser will be in jeopardy. Now is the time to recognise this, and to address any shortcomings, by undertaking appropriate training and development activities. This can be achieved via CPD in a range of different ways, and is best achieved as part of your Personal Development Plan. Members regularly report to me that undergoing the CFPCM certification process is a very positive one for their professional development - it is more than just a qualification. It helps planners develop the skills to provide a framework for clients which clearly focuses on achieving their goals and objectives – surely the most important thing. IFP branch meetings are also well worth checking out as they regularly have excellent sessions on developing skills. For the experienced planner, the programme for this year’s Art and Science Workshop in May is outstanding, and I know it will be a fantastic experience for those who attend. Whatever you choose to do, the important thing is to consider your own training needs and to put an effective plan in place to ensure that you achieve them. Lucy Courtenay IFP education director lucy@financialplanning.org.uk

Promotions & Appointments Ascentric, the independent wrap platform, has appointed Julia Dobell as a business development manager in the North. The appointment reflects growing demand for the Ascentric proposition in this area, says Ascentric.

it was pleased to engage his skills following a long Professor Paul Croney, Dean of Newcastle Business those who have more than £10m available to be spell at Baker Tilly F S and Towry Law. School, Northumbria University. invested.

The Deans of two of the largest business schools (at post-1992 universities) have been elected to the top roles at the Association of Business Schools (ABS). Francis Phillips has joined Sundridge Consulting Professor Huw Morris, Dean of Manchester as a director. After considering various Metropolitan University Business School, has been opportunities from national firms, Sundridge said elected chair of the association and vice-chair is

Coutts Private Office has announced the appointment of Rupert Allison as Senior Client Partner. Based in London and reporting to Duncan MacIntyre, Rupert will look after the financial affairs of ultra-high-net-worth clients, whose assets will typically exceed £30m net, or

Intrinsic Financial Services has appointed Richard Freeman as chief executive officer. Mr Freeman, 55, has been with Intrinsic since the business was formed in 2006, initially as sales director before becoming managing director of distribution last year.

SEND US YOUR PROMOTIONS & APPOINTMENT NEWS: Send your promotions and appointments’ news releases to newsdesk@portfoliopublishing.co.uk. Please include full job title, name and contact details. No guarantee of inclusion can be made. 32 | May 2010 | Financial Planner


A safe haven in stormy conditions

9.07% per annum Share Class GBP Institutional

Start Date 31/07/2005

NAV 147.341

1 Month 0.79%

12 Months Since Launch 9.07% 47.34%

(All figures net of all charges) – Managing Partners Limited 1st Mar 2010

The Traded Policies Fund invests in Traded Life Policies (TLPs), an asset class which has delivered smooth, predictable investment returns independent of interest rates, equities and commodities.

Traded Policies Fund: GBP Institutional Performance

Not surprising then that interest in TLP funds has continued to grow despite recent market turbulence.

100

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160

TPF

140

DAX 500

120

FTSE 100 S&P 500

80 60 40 20 0

1/2/06

1/2/07

1/2/08

1/2/09

1/2/10

Source: Bloomberg Feb 2010

Disclaimer This information is issued by Managing Partners Capital Limited to institutional and professional investors only. Nothing in this communication is directed to, nor should be relied upon by, retail customers. Managing Partners Capital Limited (FRN 471151) is an Appointed Representative of Sturgeon Ventures LLP which is authorised and regulated by the Financial Services Authority. Traded Policies Fund is a Cayman Islands-based unregulated collective investment scheme which is not regulated by the FSA. The fund is managed by Managing Partners Limited, a Cayman Islands registered Company which is regulated by the Cayman Islands Monetary Authority (number 14505) but is not regulated or authorised by the UK FSA. The fund is not available for direct sale to members of the public. This communication does not constitute an invitation to invest in the fund. The information contained does not constitute investment advice or investment advisory services. Potential investors should note that investments can involve significant risks. The value of an investment may go down as well as up and investing in the fund may result in the loss of all or part of the original investment. Any past performance information presented is not indicative of future performance. Some of the information herein may contain projections or other forward looking statements regarding future events of future financial performance of countries, asserts, markets or companies. These statements are only predictions and actual events or results may differ materially. Whilst all reasonable care has been taken in preparing this advert, no warranty whatsoever is given and no responsibility or liability is accepted for any loss directly arising directly or indirectly in connection with or as a result of any person acting on any information, opinion or statement expressed in the same. Potential investors should read the relevant offering documents carefully for further details including the risk factors before any investment decision is made. Prospective investors should consult their own professional advisers and take independent financial advice before making an investment.

Making the right choice


Contact Details & Diary

Financial Planner Investment Coach’s Cornish marathon for charity Financial Planner is the official journal of the Institute of Financial Planning and is published by Portfolio Publishing, London. Founded in 1986, the IFP is the exclusive licensee of the CFPcm mark. Whitefriars Centre, Lewins Mead, Bristol BS1 2NT 0117 945 2470 www.financialplanning.org.uk Editorial Publisher & Group Editor: Kevin O’Donnell 01895 678629 kevin.odonnell@portfoliopublishing.co.uk Deputy Editor: Stephanie Spicer 01234 772078 stephanie.spicer@portfoliopublishing.co.uk Art & Production Director: Jason Taylor jason.taylor@portfoliopublishing.co.uk Email address for news releases: newsdesk@portfoliopublishing.co.uk 01252 655873 IFP Editorial Team: Nick Cann, Sue Whitbread, Katherine Mackey Advertising Advertising Enquiries: Louise Glover 01895 672771 louise.glover@portfoliopublishing.co.uk Publishing Published by: Portfolio Publishing, Panstar House , 13/15 Swakeleys Road, Ickenham, London UB10 8DF. 01895 678629 www.portfoliopublishing.co.uk General Enquiries: Louise Glover 01895 672771 louise.glover@portfoliopublishing.co.uk Subscriber Enquiries: 01895 672771 Printers: Stones of Banbury, Oxfordshire Financial Planner is published monthly. Financial Planner magazine is distributed to registered members of the IFP and to other qualifying readers. Applications for subscription for non-IFP members should be made to Portfolio Publishing (Subs) at the address above. The 12 month subscription to Financial Planner magazine is £92.00. © Portfolio Publishing Limited 2009. All rights are reserved and no part of this publication may be reproduced in any form without the advance written permission of the publishers. For copyright or syndication enquiries please contact the publishers. Portfolio Publishing Registered Office: 25 Glover Road, Pinner, Middlesex HA5 1LQ. Company Registration No. 5542523. Financial Planner welcomes contributions from both members and non-members but contact must be made with the editorial team before submitting manuscripts. This magazine is intended entirely for professional use by qualified professional advisers and is not intended for consumer use or distribution. Views, opinions or claims are not necessarily subscribed to by the Institute of Financial Planning or Portfolio Publishing and neither the IFP nor Portfolio perform regulatory due diligence on authors or submissions and can accept no responsibility for loss occasioned to any person on taking or refraining from action as a result of the material contained herein.

As you read this fellow Financial Planner Andrew Reeves, CFPCM and director of the Investment Coach and his pal David Mann will be well on their way around the rugged Cornish Coast in their challenge to walk 302 miles of it in two weeks. While you may not be joining Andrew and David on their walk you can put your money where their feet are and sponsor them in their

endeavours. The chaps are raising money for Diabetes UK and the Prostate Cancer Society and would welcome any donations at http://www.justgiving.com/swcpdiabetes. The guys started walking from Plymouth on 7 May and aim to reach Hartland Quay on 21 May. When they get there they will have climbed 18,000 metres, crossed eight rivers and covered 21.5 miles per day.

“Its normally reckoned to take 3-4 weeks to complete the walk,” saids Mr Reeves, “But we’re planning to do it in a fortnight. Because the B&Bs once near the coastal path have crumbled into the sea, leaving and re-entering the path will to our distance. And those 18,000 metres mean climbing twice the height of Mount Everest’s paltry 8,952 metres.”

Cavendish sponsors City ski event Cavendish Ware was this year sponsor to the City Ski Championships in recognition of the Championship’s commitment to inject ‘fundraising into fun on the slopes’. The event took place in Courmayeur, Italy, between 18 and 21 March attracting skiers from many of the leading city institutions pitted against each other. The standard of ski-ing was high, with members of the British Ski team, as well as Graham Bell and Konrad Bartelski, three

times Olympic skier, as previous participants. To celebrate its 10th anniversary the Championships also now incorporates fundraising into the event and it selected Halow -which supports young people with learning disabilities - as its first ever chosen charity. Former F1 Champion Damon Hill was one of the celebrity participants and is a patron of Halow. Adrian Ware, managing director of Cavendish Ware, said: “We are one of the

longest standing participants in the Championships and the introduction of charitable fundraising into the event was the deciding factor for us to become a sponsor.”

Mum and Dad bank in trouble It seems the Bank of Mum and Dad has gone the way of banks generally with roles reversed and children providing £54m in ‘short term finance’ to parents in 2009. Some 31 per cent of parents borrowed money from their kids at least once during 2009 according to money.co.uk. On average, piggy-bank raiding parents borrowed £15 at a time, which equates to just under £54m loaned to the Bank of Mum and

Dad over the course of the year. In most cases, parents borrowed from their children because they were caught short for cash, though around 4 per cent (400,000) admitted that the ‘loan’ was to help pay for ‘something I wanted’. The Bank of Mum and Dad has already paid back much of its bail-out money, with 92 per cent (or £50m) finding its way back into the nation’s piggy banks. However, 7.6 per cent of parents admit their familial borrowing

remains outstanding, which equates to a total debt of around £4m. According to the ONS 75 per cent of children save some pocket money each week, but only 28% is in savings accounts.

NEXT ISSUE Serving Your Clients Better - tips and advice from the experts Platforms - how you can use them better Plus: Financial Planning News, IFP News, Letters, Case Study, Technical Update, comment and analysis and much more

Out 15 May 34 | May 2010 | Financial Planner

www.portfoliopublishing.co.uk


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1/10


flexible This fund is so

you’re less likely to find yourself in the wrong place.

Investment grade corporate bonds rallied sharply in 2009 which was

After last year’s dramatic recovery in fixed income markets, returns are

great news for fixed income investors. With government debt and new gilt

likely to be harder to come by during 2010. In this environment we believe

issuance at record levels, however, we believe the potential knock-on risk to

that the extra flexibility and fund management expertise offered by the

investment grade corporate bonds is significant. Industry sales seem to

Henderson Strategic Bond Fund continue to make it an attractive core

reflect this view as investors have started to move away from the IMA

holding for long-term investors.

Corporate Bond sector towards funds with more flexible mandates. The Henderson Strategic Bond Fund is one such fund. Fund managers John Pattullo and Jenna Barnard use the wider remit of the IMA Strategic Bond sector to target opportunities across the full spectrum of the fixed income market. This flexibility, combined with the

Henderson Strategic Bond Fund

Quartile ranking†

1yr

2yrs

3yrs

4yrs

5yrs

1

1

1

1

1

fund’s UCITS III powers, allows for active management of the fund’s duration and credit risk. A fund’s duration measures its sensitivity to changes in interest rates and is currently a risk which, we believe, many investors are in danger of underestimating. The fund’s duration is currently 1.8 years* with a current distribution yield and underlying yield of 6.4% and 4.6% respectively**.

ifasales@henderson.com

www.hendersonnewstar.com

0800 856 5759

For professional advisers only. Past performance is not a guide to future performance. Yields may vary and are not guaranteed. Income and capital values are not guaranteed and may fall as well as rise. High yield bonds carry a greater risk of capital loss through potential default compared to investment grade bonds. Henderson New Star is the name under which Henderson Global Investors Limited (reg no. 906355), Henderson Fund Management plc (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg no. 1795354), New Star Asset Management Limited (reg no. 3984658) and New Star Investment Funds Limited (reg no. 4033107) (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the Financial Services Authority) provide UK retail investment products and services. Telephone calls may be recorded and monitored. †Source: Morningstar at 31 December 2009, based on cumulative performance, nav-nav, net income reinvested, GBP. *Source: Cafit and desk clarifications at 31 December 2009. **Source: Yields taken from BNP Paribas, at 31 December 2009. The Distribution Yield reflects the amounts that may be expected to be distributed over the next 12 months as a percentage of the mid-market share price of the fund at the date shown. The Underlying Yield reflects the annualised income net of expenses of the fund (calculated in accordance with relevant accounting standards) as a percentage of the mid-market share price of the fund at the date shown. The Distribution and Underlying Yields are based on a snapshot of the portfolio on that day. HGI41808/0310


Financial Planner May 10