Monday, 18 December 2017 12:20

Pack Up Your Troubles

Modern life provides us with so much news, information and punditry, which focuses on the here-and-now, that it is easy to be overwhelmed with the feeling of doom and gloom.  The list of things to concern us is long and worrisome; Donald Trump leading the free world, a nuclear-armed North Korea; an increasingly fractious Brexit process and looming cliff-edge, to name a few. 

The natural extension of this is to worry about what the impact of all this uncertainty will have on your investments and in turn, on your future wealth and goals.  The first mistake is to believe that the world is falling apart around our ears.  It most certainly is not.  The second mistake is to think that your investments need to be repositioned to mitigate these events.

There are four key reasons why portfolio tinkering is unlikely to be a sensible course of action.

1: Today’s ‘unprecedented’ turmoil is no different to how it’s always been

Today’s worries dominate our thinking; but can you remember what you were worrying about a year ago, or two years ago?  Probably not.  It has ever been thus.  The overwhelming evidence demonstrates the relentless upward trajectory of purchasing power for those patient enough, and disciplined enough, to stay the course.

2: Bad news sells – so don’t ignore the underreported good news

We are all aware that bad news sells.  For example, the Office for Budget Responsibility (OBR) delivered a ‘gloomy’ forecast for growth of ‘only’ 1.4% for 2018.  Yet, the UK economy is still growing; remember too that this slow down comes after a period of growth that has outstripped much of the developed world for the past few years.  It is not all bad news.

3: The futility of futurology

Futurology is the financial markets’ version of astrology.  There is a huge industry out there from the IMF and the UK’s Office for Budget Responsibility (OBR) to investment banks, academics and BBC reporters all peddling their own view of the future.  These futurologists have one thing in common; they are nearly always wrong in their predictions, and are rarely held to account for their poor forecasts. Take forecasts with a pinch of salt.

4: The news is already in market prices

It is normal to be worried about the potential impact of what is going on in the world and how this will affect markets.  The reality is that you are not alone; in fact, all active investors have some view on how Trump, Brexit, Merkel’s problems in Germany, or the Federal Reserve in the US will impact bond and equity prices.  These global, diversified view-points are already reflected in the equilibrium price of securities, agreed freely between buyers and sellers. 

Well-structured investment portfolios seek to ensure that any market conditions can be weathered in the future, whatever drives these storms.  A highly diversified portfolio, balancing global equity assets with high-quality shorter-dated bonds, is well positioned to do so.  Try not to worry.  Start by watching the news less.

For more information contact Ian Campbell, Chartered Financial Planner (This email address is being protected from spambots. You need JavaScript enabled to view it.">ian@This email address is being protected from spambots. You need JavaScript enabled to view it.) or your usual AAB Wealth contact.


Wednesday, 29 November 2017 10:18

Take stock of rules for investment

Last month I wrote about the stock market. For many of us, there comes a time when we need to decide whether to get involved or not. (The fact is, if you have a work pension, you are probably already investing without even realising it!)

Investing in the market is a long term pursuit. However, it shouldn’t be time-consuming. We’re not talking Wolf of Wall Street here.

At AAB Wealth we have three simple rules when it comes to investing:

1. Diversify

2. Keep your costs low

3. remain disciplined

If you can stick to these (which can be harder than it appears) then we believe that markets will work for you, over the long run.


This is the investment-speak way of saying “don’t put all your eggs in one basket”. At AAB Wealth we give our clients exposure to thousands of different companies and sectors; that way they benefit from the good performance of some without being overly weighed-down by poor performance of others.

Low Costs

Investing in the stock market involves layers of costs. You may pay a broker to buy and sell shares on your behalf. You may pay stamp duty on shares you buy. You may pay an annual fee to a fund manager to pick and choose investments for you. You may pay tax on any profits made. You will certainly pay an online platform to administer your account for you. All these costs add up, especially where you buy and sell on a regular basis. This can have a substantial impact on the actual profit you stand to make. Don’t do it; pick something and stick with it!


This is probably the hardest rule of all to stick to. In theory, we know that markets go up and down. But what about when you invest your hard-earned money and then the bottom falls out? Not quite so easy to sit on your hands then. Perhaps the most common and costly mistake is to buy into something at a high point and then sell it at a low point. This is easier to do than you’d realise. Google “behavioural finance” and you’ll see quite how well-founded the theory is!

Overall it’s important to have a long-term mind-set. When you invest money, try to lock it away in your mind and earmark it for some future event: for example, your retirement. This is a hard concept to imagine for us in our 20s and 30s! But thinking about your investments and checking on them every day will make it 100 times harder to stick to rules 1, 2, and 3. The more often you check them, the more often you’re likely to see a negative number, and the more often you will be tempted to fiddle.

For more information please do not hesitate to contact Jenny Ryan (This email address is being protected from spambots. You need JavaScript enabled to view it.) or your usual AAB Wealth contact.


Wednesday, 29 November 2017 10:10

Slow and steady still best in investment race

Aesop’s fable about the tortoise beating the hare provides a good analogy for investing.  The trouble with investing is market noise.  Most investors generally know that with time they are likely to pick up a premium for owning equities relative to holding cash or bonds.  Most investors know that time helps to turn bad short-term market outcomes into positive long-term outcomes.  Most investors know that it is costly to buy and sell investments, incurring tax and transaction costs. 

Yet for all this evidence-based insight, investors still get spooked by the noise and uncertainty that they face in the markets.  Brexit, Trump and North Korea to name a few.  There is no shortage of negative headlines in the news.  Many investors try to move their portfolios around because of short-term noise.  It seems baffling why, but the answer lies in the way in which our brains are wired.  We suffer a range of behavioral biases (immediacy, anchoring, loss aversion, overconfidence to name a few) that lead us towards being hares, rather than tortoises.  These can be extremely costly.   A recent piece of work in 2015 reveals that fund investors give up around 2% per year through trying to time when to be in and out of markets and funds. 

There has been much discussion in the news this year about new nominal highs in well-known stock indices in the US and Europe.  Which leads on to one of the most asked questions by clients - when markets hit new highs, is that an indication that it’s time for investors to cash out?  History tells us that a market index being at an all-time high generally does not provide actionable information for investors.

By themselves, new all-time highs in equity markets have historically not been useful predictors of future returns.  While positive realised returns are never guaranteed, equity investments have positive expected returns regardless of index levels or prior short-term market returns.  Historically speaking, over longer time horizons, the odds of realised stock returns being positive have increased.  This is one reason why investors should consider investing a long-term commitment: staying invested and not making changes based on short-term predictions increases your likelihood of success.

Which brings us back to Aesop’s fable.  Holding firm is likely to deliver a successful investment outcome for the tortoise, without the activity and ultimate disappointment suffered by the hare.  Tips to help you win the race include avoiding looking at your portfolio too often, ignoring the news, and recognising that in the world of investing, activity is nearly always in surplus.  And remember ‘You may deride my awkward pace, but slow and steady wins the race’.

For more information please do not hesitate to contact Ian Campbell (This email address is being protected from spambots. You need JavaScript enabled to view it.) or your usual AAB Wealth contact.

The Rolling Stones have a song that has the line “you can’talways get what you want”. There are many versions of the song as many artists have covered it. When I hear it I think of investing – probably not what Mick etal were aiming at when they penned the lyrics – but when you think about it when it comes to investing what most people want is freely available.

This holds true so long as they are willing to follow some simple steps. How would we describe what our clients want? They want a successful investing experience with a realistic chance of building enough value in their assets to allow them and their family to live comfortably throughout the rest of their lives, with a little bit leftover to give away.

There is a growing body of evidence to suggest that by focusing on the things you can control – such as creating a plan that fits your acceptance of risk, being broadly diversified, controlling your emotions and behaviours, minimising your taxes and keeping costs – you can enjoy a successful investment experience.

What can you control? The plan and its shape, time frame and budget. What can’t you control? The markets, governments or the media. Once in place, you can build a lifetime model to spend capital on the things that really make you happy, creating memories of something that is dear to you. For some people, this will be a new car every couple of years. For others, it could be the chance to eat at Michelin-starred restaurants, donate regularly to a favourite charity or retire at a certain age. It is important for everyone to remember and revisit the event or ambition that makes them happy, and to build a plan to make it happen. I have never met a client who has leapt out of their chair celebrating an annual report showing their money has gone up 5%, but I have had a picture of a retired client sitting on the beach and writing to thank me for helping him get there.

That is why you should invest in your dreams and ambitions and not to just to see your money grow – this way, you will get a lot more satisfaction from your savings. Although you can’t always get what you want, there is some truth in the next line of the song – “if you try sometimes, you get what you need”. Why don’t you start by thinking about what it is that you need – you might find your plan ends up getting you what you want after all.


Monday, 30 October 2017 13:31

Playing FTSE With Your Future

The stock market. Something most of us have heard of, but few of us know what it really is. Or does. Truth be told when we hear the word we probably have a feeling of panic, or boredom, or a mix of both. We hear about it and maybe read about it, and vaguely think it’s something we should probably be paying attention to and be involved in. But we don’t get taught this stuff in school. At a certain age we begin to wonder whether a cash ISA is going to cut it anymore. You’re more grown up now, you should have more sophisticated savings and be able to discuss the performance of the FTSE 100 at dinner parties, right? Trust me, if you don’t then you are not alone. The amount of (wealthy) 50-year-olds I have met who have never bought a single stock or share is high!

At the end of the day, though, what does investing your money really give you that cash savings don’t? There must be a reason why anyone bothers. It comes down to this: risk versus reward. As customers, or investors, we expect more reward for taking more risk. This is a fundamental economic principle and an entire industry is built around its premise. Investing in cash means taking very little risk. Your money isn’t going anywhere (unless maybe your bank commits fraud or goes under). Because the risk is low, the amount of return (ie, interest) you receive is small. Invest your money in the stock market, and you are taking on multiple risks – choosing the wrong company, the wrong country, the wrong time, a market crash and the list goes on. But the potential for profit can be limitless. The reality is, in your 20s and 30s, quite often a cash ISA does the job. During those years, we’re probably paying for a car, a house, a wedding. All these things require cash, and plenty of it! If what you need is certainty that your savings will be there when you need them, then investing in the stock market is not a good plan.

Stock market values go up and down pretty much every day of the year. If you’re saving for a house deposit, then not knowing how much your pot will be worth in six months’ time when you need it is frankly worse than useless. It’s in the longer term that investing in stocks and shares makes real sense. I’ll pick this topic up in more detail next time. When all’s said and done, you shouldn’t buy something that you don’t understand ... but you can always learn!

Something to have, to hold and to give back. The perfect description of a grandchild - ask any grandparent!

Having grandchildren is wonderful. Knowing you can enjoy the experience and at the end of the day, hand them back, priceless. I make a point of winding them up just before I leave to drive off to a quiet, tidy place where the Ribena looks suspiciously like Malbec. Consumer spending research highlights a move towards experiences and away from owning things. Out goes bling, in comes adventure holidays, Glastonbury and exotic hobbies. Consumers have gone from owning to renting things. Remember Blockbuster videos? Now it is about access. Think Netflix or Spotify. No videos or CD’s cluttering up the place, just access to the song, film or event. Just the experience. How does that compare with wealth management? Surprisingly well.

We often refer to the “client experience” and follow the pattern of being more than the sum of the component parts. There is an emotional dividend or experiential bonus for those engaged in a collaborative wealth management relationship. One recent client letter captured it best. It described the difference we made to their situation, one they had never faced before. When they could not see a way ahead, we took time to listen and guide them through it. Investment growth, new tax and trust planning measures we had undertaken were all secondary. Peace of mind and reassurance were what they valued most. We all strive for that client experience. Limiting wealth management to simply making more money is a damaging distortion. It is fundamentally about people, not money.

To quote one of our advisers recently “I’ve never had a client jump in celebration of a rise in their portfolios, but I’ve received a photograph of a client relaxing on a beach saying thanks for helping me get here”.

“At the end of the day people won’t remember what you said or did, they will remember how you made them feel.” (Maya Angelou)

Not everyone has a good financial experience. We know the effect of stress on individuals and businesses experiencing financial pressure. We introduced a “financial wellbeing” course for our own staff to educate and help them make good financial decisions. Equipping people to make smart decisions from the start is easier than rescuing them further down the line.

If this initiative could help you or your business, please do not hesitate to contact Frank Morton (This email address is being protected from spambots. You need JavaScript enabled to view it.).

Thursday, 05 October 2017 15:13

Why Use 500 Words? 8500 Will Do

As a junior market analyst in a Glasgow stockbroking firm, my boss challenged my market reports, asking why they looked like a random mishmash of long words and Latin. I said: “I thought that is how they were meant to look.” P45 followed soon after. Who said Glaswegians had a sense of humour. “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” – Alan Greenspan. Oh, how we laughed.

Building trust needs clarity; now, there’s a challenge. Providing clear easily digested relevant information should be our priority when dealing with clients. For some, reading our reports or root canal treatment without anaesthesia is a close choice. It’s like those radio adverts where the voiceover artist inhales helium in an attempt to get all the disclaimers in. Does this really help build trust or confidence?

Why use 500 words when 8500 will definitely cover everything, especially our posterior?

I looked at a client report we had recently completed for a complex case. There were 8,500 words – thankfully some pictures too – over 63 pages. Why? The words capturing the essence of our recommendations numbered around 500. Therefore 8,000 of the word count is down to regulatory and compliance wording. Do clients read any of it? I suspect not.

Abraham Lincoln’s Gettysburg address lasted two minutes and had 272 words. He set out the case for the Civil War, the abolition of slavery and hinted at what would become the USA. Not a bad use of words. (For the curious amongst us, War and Peace has 587,287!)

Our mission: Let us keep it simple, take clients on the journey with us, and save a few trees.


For more information please contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Thursday, 05 October 2017 15:01

Gambling With Your Future

Come on admit it, everyone has gambled at some point?

Whether it’s the office sweepstakes for the Grand National, a coupon on football matches or a game of roulette at the casino, most people have some experience of gambling.  We have all bought a lottery ticket or scratch card in the hope of winning the jackpot, usually when the prize fund is at its highest and the chances of winning are the lowest. It’s almost impossible to watch  a game of football on TV these days without Ray Winstone popping up on your screen to give you the latest live odds.  Smart phones and tablets allow you to gamble 24/7 in a matter of seconds and you can bet on anything from a tennis match in Australia to an ice hockey game in Canada.  Normally, it’s all a bit of fun, for a relatively small stake that won’t be missed.  A few lucky ones will enjoy the euphoria of winning but most end up disappointed with nothing to show for their troubles. 

But what if you are gambling with your own financial future?  What if you are taking unnecessary risks and stacking the odds against yourself? When I first started as a financial advisor, the first question many of my family and friends would ask was about share tips and where they should invest their hard-earned money. Similar to studying the form guide ahead of the 3.30 at Newmarket, they wanted to pick the next winner and hit the jackpot.  Of course, sometimes you will back the right horse but that will be mainly down to luck rather than skill. 

It’s the same idea with investing.  Trying to beat the market, through market timing or stock picking, is a tough game, with very few winners.  As the old saying goes investing is simple but not easy.  It is simple enough to pick a few shares of well-known global companies to hold in an online account.  It is also simple to avoid this task by engaging a fund manager to manage your money for you.  Yet it is not easy to know whether the portfolio you build is sensible, the manager you have chosen is worth his or her salt, or that your investments will be able to meet the goals that you are aiming to achieve.

A far better approach is too hedge your bets by building a well-structured portfolio taking sensible risks and diversifying into different assets, across global markets and sectors.  Diversifying the number of shares or bonds you own reduces the risk of any one firm performing poorly.  When it comes to your finances, don’t gamble with your future.


For more information contact Ian Campbell, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 01 September 2017 08:22

Voluntary Taxes

As the saying goes ‘Nothing is certain but death and taxes’…

Really?  Death I get, there’s no-one I know who doesn’t expect to die at least once, but in terms of taxes I’d beg to differ.

Now of course we all pay some tax, so the saying holds true in that sense, but I’d like to argue the case that the amount of tax you have to pay is definitely not certain.

According to the Adam Smith Institute, Tax Freedom Day this year was 12th June.  That means that as a county we spent the first 160 days of the year just paying tax, equivalent to 44%.  This includes all taxes, like income and capital gains tax, but also VAT, tax that companies pay and the tax you pay when buying a house.

How, then, can you make your tax freedom day come sooner?  Easy, by paying less tax.  So let me give you some ideas on how to do that.

The key is to use all the allowances and exemptions that the tax man offers you.  Some of these happen automatically.  Your first £11,500 of income, first £1,000 of interest and first £5,000 of dividends you receive are all tax free.  But after that you have to start planning to pay less tax.  An easy step is to shelter savings and investments from tax by using as ISA (Individual Savings Account).  If you are married then you might find that your spouse as some tax free ‘space’ that you could use.

Making pension contributions is a very efficient way of paying less tax both now and in the future, especially if you are a higher earner who might lose out on Child Benefit (income between £50,000 and £60,000) or might lose their Personal Allowance (income between £100,000 and £123,000).

If you own shares or investment funds and can’t get them all into ISAs (which have a limit of £20,000 per person this tax year), then careful planning of selling and buying investments can save a lot of tax in the long run.  When you sell investments for a profit you are tested for Capital Gains Tax.  The first £11,300 of Gain this year is tax free.  So, if your investments go up be £11,300 and you sell them, and then reinvest the money (in something different) you will pay no tax.  However if you wait until next year and you’ve made another £11,300, when you come to sell you only get one year’s worth of exemption, so you’ve lost out on that extra tax free money.  That would cost a higher rate tax payer £4,520 in avoidable tax.

So, don’t be a voluntary tax payer if you can.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.


Friday, 01 September 2017 08:12

Protection – safety net or waste of money?

Paying for insurance goes against our nature when it comes to parting with our hard earned cash. In the end, we all hope that the money we pay for insurance will be a total waste.

After all none of us want to die early, or suffer some awful disease and have to stop working.

But how important is insurance really?

There is an old Financial Planner’s adage regarding the order of spending:

P – protection (i.e. insurance)

I – income protection (i.e. more insurance!)

P - pensions

S – savings

I – investments

Whilst this isn’t scripture, it gives you an idea of just how important insurance is to consider.

Note that’s consider, not necessary buy. I’ve heard people from all walks of life talk about insurance as being for people who are “scared to leave the house in the morning”. I disagree, but the point is that it’s down to personal choice.

Whether you take out insurance is entirely up to you. What’s most important is that you are making an informed decision.

Talk about low priority: 80% of us view a mobile phone as essential, yet only 28% think the same about life insurance. 

Whilst it’s not an easy topic, and it can be tempting to ignore what might happen when you’re no longer around, when pushed most of us would want to ensure our loved ones wouldn’t be left destitute.

Let's say you or your partner were unable to work because you had a stroke (over 1 in 6 of us will) – would you be able to cover the bills on a single income?

Over a third of us couldn’t. What happens then?

Easy, we use our savings…. But with 20% having less than £1,000 put aside, and 30% having no savings whatsoever, that could be easier said than done.

How long wold you be able to pay your rent (not to mention council tax, food, water rates, electricity, etc.)  out of your savings before you were forced out? 

Some may be lucky enough to have an employer that pays insurance for us. Life insurance and private medical cover are relatively common benefits for larger companies.

Check what you’ve got to see if it’s enough to cover you. 

There are myriad different types of insurance available for all kinds of eventualities; which unfortunately means it can be tempting to give up before you even begin.

It’s worth persevering. A simple place to start is the usual comparison search engines, or try Which?.

Educate yourself about what’s out there and the risks you might want to protect against, before deciding whether it’s a price worth paying.

For more information, contact Jenny Ryan, Paraplanner, This email address is being protected from spambots. You need JavaScript enabled to view it. 

Tuesday, 08 August 2017 13:24

Defaulting on the bank of Mum and Dad

Apparently the bank of mum and dad is now among the top 10 mortgage lenders in the UK.  

We’re borrowing more from our parents than we are from most of the major high street banks.

It can be easy for us to accept help from our parent’s generation. We feel as though they’ve had it quite easy. They’re advanced in their careers and earning bucketloads, they have massive pensions to prop them up, they’ve probably got no mortgage or debts.

So it won’t hurt them to help us out, surely?

But how much to we actually know about our parent’s finances? Are we just assuming they are comfortable because they are further along the road than us?

Not to mention what if you are one of several children in your family who all need financial help?

Understandably, our parents want to help us. In some cases even if that might mean they are overstretching themselves.

The rapidly rising cost of long term care is a real worry for our parents’ generation – nobody wants to be seen as a burden on their family. 

But what happens if you default on the bank of mum and dad?

Securing the mortgage in the first place is only the start of the battle. Those pesky monthly repayments will keep coming, sure as anything, each and every month. And what if your fixed deal ends and the interest rate goes up? Your monthly repayment increases immediately.

If your parents have acted as your guarantor, or used their savings as collateral, and you can’t meet your monthly payment, guess what… They have to stump up. Or lose their savings. They end up living with you rather than in the care home they can no longer afford.

At the end of the day it’s unfair of us to expect the best of both worlds; credit on tap when we need it, without any formal terms, agreements or repayments.

If we want mum and dad to keep lending like a bank, we need to start treating them like one.

Buying a house is exciting but serious business. It’s probably the biggest financial commitment you’ll ever make.

Be sure you can afford what you are getting yourself into. Understand that interest rates can change. You’re probably going to be paying your mortgage for the next 30 years, so get used to it.

If you do need to borrow some funds from your parents, consider writing up a loan agreement. Some sort of promise to them that, by hook or by crook, you will pay them back. 

Of all the lenders, the bank of mum and dad is the one who does business based on a few pleases and thank yous, and a little bit of gratitude.

For more information, contact Jenny Ryan, Paraplanner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 04 August 2017 13:20

A definition of investment

Diverting money you could spend today into markets; expecting growth at least in line with inflation ideally better, for tomorrow.

Good financial planning creates a portfolio solution you can live with emotionally and financially, confident of the expected outcome.

Investment is tantamount to gambling, apparently. We disagree. They say, “The only way you make money in a casino is by owning the casino”. A sensible investment strategy takes the broad view. Not quite buying the casino, but close. We do not mean a UK casino either, it only accounts for 7% of global markets. Think bigger.

We believe markets are efficient, rewarding and hard to beat consistently, particularly after the costs of trying. We are sceptical of those active managers who think they can spot undervalued stocks. Academic research tells us very few managers consistently beat the index after charges.

Higher returns mean taking on more risk. The only way to manage this relationship is through diversification – own the global casino, not just 13 red or black.

You need aggressive and defensive assets in a portfolio. It is a blending process, matching your return expectation with acceptable, bearable risk. The longer you hold an investment, the more likely it is to grow in line with expectations.

Stay disciplined. Overtrading, or chasing shiny new funds hurts returns.

Looking at your portfolio too much tempts you to make changes. Don’t.  

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”  Mark Twain,

Price matters. Use cheaper funds. Your portfolio return is simply performance less costs. Keeping pressure on costs increases returns. Long-term academic research demonstrates cheaper funds perform better than expensive ones.

No more bets please, red or black.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Doing the best with what we have. An oversimplification, but stewardship gets a bad press, it’s boring, sacrificial, official residence of the word no.

You are offered a banana or chocolate. You know the banana is better for you, but you want the chocolate. Instant gratification versus long term benefit. Chocolate every time.

Let us start with financial responsibility or stewardship of money, and making smart, long-term decisions.

Successive governments have deliberately shifted responsibility for financial provision in later life, from the state to the individual. No longer will the state provide it is all down to us. Fair enough, but what does that mean in practice?

To have what we want in the future means choosing not to spend money when we want to, i.e. now, and putting some aside to grow, hopefully more than inflation, ideally a bit more. Imagine what you could build in pension or new Isa funds by diverting the £60-80 per month Sky costs you or eating out once a month rather than a couple of times a week, even both, and investing the difference.

Therein lies the problem. We see the short term pain clearly, no Sky Sports, movies cooking or dishes, but find it really difficult to visualise the financial payoff in later life.

It means generating enough income in retirement, and that means having enough money invested in the right places, in the right way, and not missing out on all the available tax allowances. How confident are you about doing all that?

Doing the best with what we have is a reasonable place to start, but it means making smart, sometimes painful, sacrificial choices. Luxury holiday now or decent holidays in retirement?

Losing weight takes sacrifice. We know smoking is bad and expensive, we know within a couple of weeks of quitting, people feel better. Everything tastes better; people are fitter, all very quickly. It takes discipline to say no to things we like but when we can clearly see the results, we are prepared to pay the price.

Perhaps it’s the fact that planning for financial security in old age is such a long process, we can’t really see the outcome, so it’s easier to say, tomorrow will be a slower day, I’ll get to things then. The biggest lie ever told!

We all know it makes sense, yet all but the most disciplined and determined tend not to be too successful at it. Having a plan, written out, clearly setting goals and timescales, with built-in reflection points is a proven winner when it comes to making smart, long term wins.

Now take that chocolate away, where did I put that banana?

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.


Wednesday, 26 July 2017 13:16

How to get more by doing less

Warren Buffett had an interesting take on active trading. “Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”

We know that investing is a long-term game. We call the short-term game something else. Gambling, speculating, guessing, take your pick. You would think that investing your money in a wide range of shares across all the major world markets, and boom, job done. Sit back and watch the markets rise over time. Do not jump about, take your position, retire to a comfortable chair and forget about it. Actually, the academic research supports this. So why does it go wrong for so many?

It is the investment itch. The irrational distraction created by market speculation, and media noise. Nonsense such as highlighting the “Top Funds over the last 12 months”. A complete irrelevance by the way. It’s like assuming Leicester would win the league again and again because  they were top last season. The problem is people read this and, get itchy. You know you should leave it alone, but you can’t help it.

The investment “scratching statistics” are uncomfortable but illuminating. According to a recent Dalbar report, returns for the twenty years ending 12/31/2015, the S&P 500 Index averaged 9.85% a year. A great result, yet the average equity fund investor earned a return of only 5.19%. Ouch! That is an expensive itch.

Repeatedly, research shows that when the stock markets go up, investors put more money in. What happens when markets fall? Correct. Investors get itchy and sell.

This knee jerk, impulsive behaviour costs real money, causing investor returns to be substantially less than markets delivered. I saw a cartoon the other day with the tag line “what stands between an investor and a bad decision? An adviser”.

There’s a lot of commentary highlighting the fact that the UK and US markets are at historic highs, and people should be selling. Really. What comes after a historic high? The next one.

Try this at home. Get a chart showing the FTSE All Share Index over the longest period you can. Look at the start of the chart, the bottom left hand corner. Is it lower or higher that the end?

Next look at all the highest peaks along the chart in the 80’s, 90’s up to today. At one point they were all historic highs. Do markets only rise? Of course not, but this notion of an all time historic high is a huge smoke screen, look through it and keep applying the cream.

Don’t scratch you’ll only make it worse. Your mother was right.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.


When is the right time to buy an investment and when is the right time to sell? Simon Glazier, Chartered Financial Planner at AAB Wealth, gives us some advice.

For most people, the obvious answer to the question of investment timing is to buy when the price is low and sell when it is high.

But research suggests the opposite happens. People buy high and sell when prices fall which creates three problems. Firstly, when has the high been reached? Just because a share, fund or market index has reached a new high does not mean that it can’t go any higher.

A quick look at the FTSE 100 Index over the past 30 years shows it has reached all-time highs more than 40 times at least and arguably a lot more.

Many highs are followed by new, even higher highs. When share prices do fall, then how fast, how much and how long will the falls be?

A fall for a day or a week and a quick recovery might happen too fast to be acted on, depending on how the money is invested.

Investment funds can take up to a week to buy or sell, and this is one of the arguments put forward by some fund managers and advisers for putting money into daily traded invest-ments.

And what do investors do with the money between when they sell and when they buy back shares? Leaving it in cash will often mean losing value against inflation but putting it into a “safe haven” such as gold means it will be subject to the volatility and uncertainty of its price.

Moving into lower risk investment such as gilts and bonds will reduce risk but does not guarantee there will be no fall in value.

The chances of you making the perfect call on these three factors every time is infinitely small and the chances of you making a good call every time verges on zero–just ask any mathematician.

Add to this the fact that every buy and every sell incurs a cost. You have to beat this cost just to break even.

How then should investors decide when to buy and when to sell?

Over the past 20 years, the FTSE 100 has made re-turns of more than 200%, including dividends. Glob-ally, stock markets have made in excess of 300%.

Being in the market and ideally not just a single one but spread across all world markets is the best way of making money in the long term.

The best time to buy an investment is, therefore, when you have money to invest and the best time to sell is when you need the money to spend.

Anything else is speculation and a very expensive exercise in trying to predict the future.


Wednesday, 28 June 2017 09:05

Give each pound a purpose

How do you value your life?  Do you do it in terms of pounds and pence?

I earn £40,000 a year, so is that how much I’m worth? My house is worth £200,000, so maybe that’s how much. My pension fund is even bigger than that … Wow, I’m worth a lot today and I feel great! No. Most people value their lives in terms of the impact they make and the relationships they are in, not the size of their bank balance.

Why, then, do we spend so much time focussing on the money?  Money for some is a scorecard, a way of comparing your ‘success’ to that of your friends, your colleagues, your neighbours.  What if we valued our money a different way?

If I earn the national average wage, about £26,500, then after tax and a bit of pension contributions I might take home £380 per week.  I’ve had to work 37.5 hours to generate that income, so that’s about £10 per hour. 

Because higher earners pay more in tax, if you double the income you don’t double the take home pay.  Earning twice the national average salary brings your take home pay to just over £18 per hour. Let’s imagine that just half of this money goes on the essentials like food, clothing, paying the rent or mortgage.  You now only get to keep half of the money to spend on yourself, just £9 per hour.  So, see that nice sofa you were thinking of buying? It costs £900.  Are you prepared to work 100 hours to buy it?  That’s almost three weeks of your life to buy a new sofa.  On that basis you might decide to tackle your bucket list and work for two whole months to afford a holiday costing you £3,000, or more than a year for a new car! Now some of these expenses you’ll consider good value.  A sofa might last you 10 years and the memories from a holiday can last a lifetime. 

But next time, why not consider how many hours (or days) of your life you are prepared to work to cover the cost of that ‘must have’ gadget or experience.

When you start to think this way you begin to be more deliberate with your money, you become more purposeful.  Giving each pound a purpose can help you to prioritise what you really want to spend your money on.  This can lead to financial freedom, rather than the daily grind of working harder, to earn the money, to pay for the things, that don’t do a very good job, of compensating for all that hard work you’re doing.

Why not look a bit more closely at your bucket list and try being more purposeful with your money today?

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.


Financial planners and advisers have made significant progress in terms of professionalism and quality of client care, so our clients tell us, which is good. The shift from transactional to ongoing relationships is paying dividends for clients as well as adviser businesses.

Our business is less about building wealth, more about building trust, less about money and more about people. It requires establishing trust and winning consent while providing a forest load of paperwork by way of proof, responding to investigations undertaken by the FCA to check advisers are doing exactly what they describe in their proposition.

My question here is what is our motivation? Compliance? Is it to keep the regulator at bay, or to retain our clients? More paper work, more proof.

Our industry generates more paperwork than you can shake a stick at.

Here’s the funny bit. No one trusts you because it says so in your terms and conditions. People judge your actions. As Seth Godin says, “people watch you with the sound off”. People decide long, long before we get to the paperwork if they trust you or not. If they do, they will consent to working with you.

Guilty secret time. I listen to radio 4. Recently I found myself absorbed in a discussion on consent. Here are the highlights.

Government is by consent, through voting. If you do not vote, you tacitly consent.

Consent is a contract. It comes with expectations such as government providing our health, employment, and safety needs. Failure to do so creates disillusionment, alienation, opposition and ultimately rebellion.

That got me thinking. Client consent is a much bigger issue than I previously considered. A client is, in effect saying, I believe you. Here are my assets, my family’s future can I trust you to do what you said?

You can always find someone who can do it quicker, cheaper and sometimes better, so there has to be more to it. Client trust is deeply personal, hard earned, not bought.

Disappointing clients risks fatally damaging trust, losing their consent and their business. Failure to deliver has consequences not just in lost revenue, but also tarnished reputation.

Social media provides clients with a weapon of mass destruction capable of destroying reputations in a matter of minutes, and they are not afraid to use it. Warren Buffett’s famous quote “It takes 20 years to build a reputation and five minutes to ruin it, if you think about that, you’ll do things differently”.

Clients retain us, not the other way round. We retain clients by keeping our promises. It shouldn’t be a response to regulation. It should be our mission.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Not the best quote for BA passengers over a Bank Holiday weekend. Technology is best when it works and worst when it plays the stroppy kid and refuses to do what it’s told.

Technology was supposed to make things easier, quicker, giving us back some precious time for the really important stuff ... like queuing!

According to a recent survey commissioned by Samsung of 3000 Brits, we spend seven months of our lives in queues. Hard to believe until you hear we spend a year in pubs. Put the two together and tah dah there we have it. Actually queuing I get, after all, we are British, it’s our national sport.

We spend more time sleeping than working, no surprise there then. I can hear my Dad’s old joke. “How many people work in your office?.. about half!”

So where do we spend the big meaty chunks of our time?

Connected. Browsing when out with our significant others avoiding any semblance of meaningful conversation, watching funny videos of talking animals, pictures of hot food and hot waiters. We spend more than three years of our life on social media, and over eight years watching TV, some of that will be while our other halfs are texting their mates while we wait at the bar, in a queue for the drinks!

James E Faust said, “Some of our important choices have a time line. If we delay a decision, the opportunity is gone forever. Sometimes our doubts keep us from making a choice that involves change. Thus an opportunity may be missed”.

What are you missing? Suppose you had the opportunity to do something significant with all that wasted time, when would you start?

Define significant.

Making sure those you care about and care about you don’t miss out on life’s opportunities because of money pressures? It makes sense, ok it’s not exciting, but come on its good old common sense, isn’t it?

And its not expensive, couple less beers a week, and think about it this way, less queuing. See what I did there.

Some turn this provision thing into an art form. Life assurance, ISAs for their kids, pensions for when they want to work less. It all takes time to plan.

Let me leave you with this.

You’ve just watched Comic Relief. You’d love to give serious money, but don’t have it. Then create it. Why not use life cover as a gift to others, your chosen sport, charity, cat and dog home whatever.

Ideally, you look after the family first, but not everyone has that option.

Thanks for your time.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

It might be gorgeous, if you add value by enriching the client offering, enhancing your relationship, but change is tricky. Improvement and cost cutting often get confused depending on your perspective. If your motive is to improve things, then add do not refine. We all know refine is a reworking of cheaper. Trust me clients will notice.

In a recent blog article, which challenged my thinking, Seth Godin talks about this particularly thin wedge using the following illustration. Cut back on a few beans in the chilli, no one will notice. Develop this a bit. Imagine a car manufacturer swapped highly machined bolts for mass-market generic versions, even though they will not last as long. Just like the chilli, most people will not notice. All these savings could add up especially with high volume client numbers, but how would you feel? Clever or compromised?

Eventually, the problem will surface. Some chilli guru will analyse the portions and social media will do the rest. Remember Cadbury’s crème eggs and the denial they had shrunk. They bet every egg would be eaten, so no smoking gun, except there is always one enthusiast who keeps a collection and hey presto, social media storm. Red faces.

Worse still, what if a new shiny but less robust bolt sheers off and there is an accident. Behind every accident there is an enquiry, and guess what happens after the truth comes out. Correct.

Compromise reduces the integrity of the original. It may be commercially creative but is the short-term spark worth the heat of inspection in the long term.

Ever had a client say, why invest a small monthly amount in a pension, what difference can that make? Small incremental investments can make a huge difference over time. The option to make small regular business investments exists, and you might find the improved outcome dwarfs the cost to the business.

In a competitive environment, the key question is what could happen if we did a little better, rather than holding back. Even though it is tempting to cut a corner here and there the real cost is huge. No one will say anything, no one will put up a fuss, until one day, they are gone.

In the book Funky Business, Jonas Ridderstrale shares an interesting observation; he states, “Over the past 40 years the consumer has gone from 'squeaking mouse’ to 'roaring lion’. From nice, stupid and humble; to mean, smart and demanding”.

Clients can access almost anything from almost anywhere. Why should they do business with you?

The real asset you are building is trust.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Most business success comes from people. Whether they are principals, associates, nurses or receptionists, identifying and retaining good people is critical to competing well in your chosen field.

Here is a recent industry report card that highlights the importance of identifying and growing the next generation of practice principals.

Dental practice owners are, on average male, fifty years of age, have owned their practice for sixteen years and are likely to have less than three dentists.

Twenty percent of practices are fully private, less than seven percent serving only NHS patients.

No real surprise therefore, when principals tell us that “future-proofing” their practices, attracting good associates and exit or succession planning keeps them awake at night.

Have you identified the next generation of owners for your practice?

What plans are in place to make this happen?

Have you established a financial exit strategy that works for both parties?

What does “life after work” look like for you?

Putting pen to paper on this may provide nights that are more restful.

At AAB, our business is planning. We help business people start-up, scale up and ultimately sell up. We help people in business understand their options around profit extraction, acquisition, and planning for succession or sale. We understand the value of efficient exit strategies for those leaving and those taking over.

AAB Wealth specialise in planning now for what happens next. We use cash flow modelling as part of our conversations, helping people see and plan their futures with confidence.

When asked, “With hindsight, what would you have done differently?” most principals will say, “Start planning my exit much earlier and take more time to do things properly.”

Perhaps it’s time for a check-up?

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Thursday, 25 May 2017 08:34

Should I save or borrow?

Be honest, when was the last time you said “I can’t afford that”, but went ahead and bought it anyway? The world is a tempting place, who doesn't give in to temptation once in a while – why wait, instant gratification - we deserve it don't we?

Want a holiday? There’s a loan for that. New car? How about a PCP plan.

Easy credit, payday loans, whatever, it’s still debt and comes at a price.

Using “instant finance” for everyday items has become the norm. Bad idea. Borrowing a few pounds here and there can quickly grow into the nightmare keeping us awake at night.

Borrowing money we don’t have is a privilege, not a right. It doesn’t come cheap. Debt multiplies quickly when you add up the interest and fees paid.

Do we actually know the price we’re paying?

Percentages shmercentages. Meaningless, right?

This means borrowing £1,000 today, and paying back £12,000.

Extreme example. But demonstrates the point.

Interest rates vary; they’re totally outside our control. What if they skyrocket? My parents still break into a cold sweat thinking about the mortgage rates they paid back in the day. We need to plan not just for rates NOW, but what they COULD be. Let’s face it they can only go up from here.

Of course, there are times when a loan is a suitable, or only, solution to a need. Need being the key word. Think mortgages or student loans.

On the flip side, low inflation and interest rates mean little return on our savings. So why bother? Peace of mind! Your savings are money you have control over. Even if rewards aren’t great right now, you’ll never pay for the privilege of spending your own money.

Knowing you have worked hard and saved for what you've bought, and being able to sleep at night without debt pressure is priceless.

Of course sometimes we do need to borrow, even if it is more sensible to save.  Often (not always) it's the difference between I want and I need.  Common sense will usually tell us which it is. If in doubt, speak to a neutral party. A financial planner perhaps. Or if you can’t pay for one of those, it never hurts to ask your mum....!

For more information, contact Jenny Ryan, Paraplanner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Financial planning, preserve of the mega rich.

Really? It amazes me how many people come to us saying ‘I never thought I would ever have enough to have a financial planner, I’m not wealthy’.

The opposite is true. If you’ve got some but not lots, you need to grow what you’ve got, so you need to be clever with it. It could be the difference between going on that holiday, buying that flat, retiring at 60 or still working hard in your 70s!

So is it all about investment, stocks and shares, that sort of thing?

No. Definitely not. In fact, financial planning is less about the financial and more about the planning.

A study of Harvard MBA students found that those with clear, written goals and a plan of how to achieve them ended up earning 10 times more than those students who didn’t, 10 years later.

So, planning works, if you stick with it!

Can we, do we, apply this to our own lives?

Everyone knows the story, us generation Y-ers got the short end of the stick ... uni debt, no jobs, low pay, no pensions, high rent, the list goes on ...

It’s likely most of us spend more energy planning next summer’s holiday than thinking about retirement, even though one lasts two weeks and the other possibly 40 years!

Easier said than done perhaps; but make a start, pick up a pen and paper, give it some thought.

Write down the things we really want to achieve out of life.

  • To pay for my wedding
  • To buy a flat in five years
  • To be uni-debt free by age 30
  • To go to Australia in three years’ time

There is some art and science in a financial plan, though everyone can do it.

Naturally, there will be those who prefer to pay for someone else to do it for them ... enter a financial planner!

Financial planning is a process, not a one-off event.

Rules and regulations have weaved a delicate web of

interconnected allowances and limits that are quite easy to get on the wrong side of without realising. Trust me, it’s a full-time job just keeping up!

Over the coming months we want to help you out with a few pointers, hints and tips to help you start on the road to your rosy financial future! Watch this space...

For more information, contact Jenny Ryan, Paraplanner, This email address is being protected from spambots. You need JavaScript enabled to view it.

One day, the Pensions family were looking at the family album, how things have changed.

Early photos of the twins showed very different siblings. Desmond Benjamin Pension (DB Pension for short) and his sister Darling Cinders (DC Pension).

Their ambition growing up was to provide enough for their family to live happily ever after. However, they approached things very differently.

DBs’ allowance paid for everything. Forget growth, that was someone else’s problem. He kept the money, only providing an income. All he did was pay the promised income at the promised time. When someone died, he got to keep more of the pot, by only paying out half the original income, sometimes he kept it all.

DC had a harder time. She had to grow her money to generate as much income as possible. She said it felt liked dancing, two steps forward and one back. She worried she would never deliver her promise. Everything was so uncertain. She often looked at DB and thought, easy life.

One day DB’s sponsor realised how much money he was spending. Watching DC he thought, “She works hard and could save me money. I’m going to start supporting DC”.

DB was not happy. While this was going on, there was a new game in town called printing money, this made it even more expensive for DB’s sponsor. For the first time DB realised that promising a guaranteed income for life was hugely expensive.

Now DC was getting all the attention. She got a shiny new Freedom clothing range and looked good. All the rules holding her back changed, she could provide money earlier than her brother could and people could choose to use it as they wanted, even give it away.

People wanted more from DB, but he could not do everything. DC, despite looking better than ever before, found there were things she could not do. Choosing between the two siblings was difficult for most people, but especially for their parents who decided to bring the twins together and show them what they had in common and how they could work together to provide.

They said help was on the way, the new member of the family would help too. Her name is LISA.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Tuesday, 11 April 2017 08:21

Just over two years ago...

5th April 2015. George Osbourne, fires the starting pistol on “pension freedom”. Pensions stumbled into the spotlight and people started paying attention, exploring what they could do with their newfound riches.

So what has happened since the smoke cleared?

  • Customers have withdrawn over £9.2bn from their pension funds.
  • The government has enjoyed a tax windfall
  • Annuities are on life support after a 70% fall in sales

Pension freedoms worked for many but not all. The confusion around the tax consequences of cashing in your pot took the shine off. HMRC rejoiced. Lamborghini sales disappointed. Retirees may be in the driving seat now, but not an Italian one.

Pensions became the “new black” Now you could invest, get tax relief on top and not have to wait until you were too old to enjoy it, to enjoy it. For those who do not live long enough, you can pass your money on.

  • 55% of eligible customers used their new flexible income options
  • 14.1% of the UK population, (5.5m) are now saving more via pensions
  • 15.3% recognise they need to plan for life after work

Some, but not all succumbed to temptation and opened Pandora’s Box

  • 28% used their cash for home improvements
  • 26% withdrew funds and put it into savings accounts!
  • 19% invested it elsewhere
  • 19% went on holiday with it, but did not bring it back!
  • 12% paid off mortgages and other debts
  • 13% bought a new car, but not Italian supercars

Opening up of options for 13m in Defined Benefit schemes was another major result. Annuities were out of favour due to market rates. This actually enhanced individual members fund transfer equivalents, leaving employers signing bigger cheques.

As a result, many have explored their options, such as income, tax and inheritance planning, enhancing the attractions of pensions. Have you?

Monday, 10 April 2017 14:17

Pandora’s Box - Pension Freedoms

Remember when retirement “happened” at 65?

Your pension was never a fund. That was something locked away out of sight and mind.

Your pension was the income you got when you retired.

Pension freedom was a game changer, it made people think differently.

It put a Pandora’s Pension Box on the mantelpiece, next to a shiny key and a note saying “go on, you know you want to”. Understandably most over 55’s rushed for a quick peek, and the rest as they say is history. Savers have withdrawn £5.9bn since pension freedom reforms, according to the Association of British Insurers. Was every decision wrong? No, but many were.

For some, it was mental torment having money in a box that could be in their pocket. Now where did I put that holiday, car, conservatory, brochure?

We are conditioned to wanting it “now”, regardless of damage done to our future.

The Pandora’s Box legend is well known. Thirst for revenge, a beautiful woman, a mysterious gift, an impulsive act which changes the world. Cue Hope the saviour, cue music and closing titles.

Cue Hope. How do we stop making poor decisions?

Cue adviser.

Cue conversation.

Cue informed decision.

It’s been said that what stands between a client and a poor decision is an adviser. The potential contrasting fortunes between those who leave money invested, and those who withdraw it is significant.

Consider -

  • If I do this now, what can’t I do later?
  • What about taxes and cost?
  • Could I really do better somewhere else?
  • Do I need the money?

Planning is difficult. There are so many choices and consequences.

Leave the box alone. Take time. Explore all the options.

There are always two ways to do something. The easy way, and the right way.

Monday, 10 April 2017 14:12

Main assets - what are yours?

Ask people what they consider their main assets to be, they’ll say their property and their pension.

Previous generations simply lived in their home. For many their mortgage would buy you a Starbucks latte and a skinny blueberry muffin today. Just.

They looked after it, DIY, gardening, re-decorated, but never considered it anything more than home. They moved when they needed to, when the family grew, or when the memories or upkeep became too much when Mum or Dad passed on.

Now, it’s an asset. We invest in our property to increase its value, new kitchen, bathroom, conservatory, carpets, wood flooring, plus fresh paintjobs.

Do all of these things add value?

Creating more living area, an extra bedroom or bathroom perhaps, but a replacement kitchen or bathroom is unlikely to turn a profit short term. Let’s be honest, there is something very satisfying about having more space, better furnishings, a bigger kitchen or a new shower big enough for a 5 a side football team. We know it costs money, but we’ll get it back… in time.

Does anyone remember getting tax relief on home improvement loans?

What about pensions? I know, a bit 50’s semi with the mock stone fireplace and avocado bathroom. If only you could give them a bit of a facelift.

What about an extreme makeover? What about this -

  • Gone is the “do not open until age 65” label, opaque charges, outdated product features
  • Gone is the need to buy an annuity and dying in retirement means losing your fund
  • Gone is the huge cut in pension income to the surviving partner
  • Gone is the need to take your pension when you “retire”
  • Now we have freedom of access from age 55
  • Now we have income drawdown, control and access through investment platforms
  • Now we can tailor our income, taking income when it suits us
  • Now we can see the charges and fees
  • Now we can see our fund performance and know the value of everything
  • Now you can retain your fund and pass it to the next generation
  • Plus, you get tax relief on your investment. Immediate profit.

Meanwhile, back at the ranch, so to speak, you imagine your perfect house, you speak to an architect. You’d expect him or her, to sit you down, discuss your plans and ideas, and talk you through the options. Then come back with blueprints and budgets for you to think through and approve, before pulling out your chequebook.

Guess what?

That’s what todays financial planners do. Okay they don’t drive SAABs, wear tweed jackets or use German rapidographs, but they start with a plan, designed around your needs, build in options that underpin value, and manage the project long term, within your agreed budget. And not a dust sheet in sight, (be careful how you say that).

Maybe property and pensions are closer than you think. They both start with a plan and need regular maintenance if you want to get the best value for your money.

We annually rebalance portfolios to keep them in shape, however this year we are going further. As part of our Investment Committee’s due diligence process, we reviewed our investment selection, resulting in some changes to our core portfolio structures.

However, it is worth noting that:

Our investment philosophy of building robust, well-diversified global portfolios using low cost, institutional high quality funds remains unchanged.

The changes we are making are minor in terms of portfolio structure and aimed at simplifying client portfolios, whilst delivering similar characteristics.

In terms of cost management, we remain committed to maintaining pressure on fund charges.

As regards the portfolio asset class and fund changes, these include:

Removing the slight home bias to the UK market arising from the small allocation to the L&G UK Index Trust, switching this plus the allocation to Vanguard FTSE Developed World ex-UK Index holding to the Dimensional Global Core Equity Fund holding.

We will be adding an allocation to global commercial property (shopping malls, office blocks and industrial buildings all held for rental income, not development) to capture the long-term diversification benefits available. We will use the Blackrock Global Property Securities Equity Tracker fund to access this asset class.

Within our defensive assets allocation, we have decided to replace the Vanguard Global Bond Fund, with a very similar fund, the Vanguard Global Short-term Bond Index fund. This has the effect of adopting a more defensive posture avoiding price volatility from the prospect of rising interest rates. Returns will be smoother, an appealing characteristic within the defensive portion of our client portfolios.

This year’s RBC Wealth Transfer Report makes scary reading. Here’s the highlights, or lowlights depending on your perspectives.

There is a direct correlation between preparedness and confidence in wealth preservation. Simple, common sense you would think, but do we talk to our kids about money?

Fasten your seatbelts - of the 3,105 respondents from the US, UK and Canada, 1 in 3 admit they have done nothing in terms of inheritance preparation. Only 1 in 2 has a will in place, just 1 in 4 has a strategy.

Talking about money with your children is just “not done”. The intention is there but rarely is it turned into action.

Family engagement and financial education is vital to avoid repeating the mistakes of the past. The legacy statistics make truly shocking reading. Consider the value of assets we are talking about here...

70% of wealth is lost by the first generation of inheritors

90% of wealth is lost by the second.

In response to this, we have designed a service which can help. We create the environment and opportunity for families to discuss, and agree how they will tackle inheritances, preparing those who will be in receipt of future monies with enough understanding that they can make the same smart decisions about money that their parents did. Perhaps even avoiding some of the mistakes too.

Monday, 10 April 2017 09:00

Buckle up, we're in for a bumpy ride

How many times have you “listened” to an aircraft safety demonstration?

Be honest, have you ever read the safety card, or checked where the emergency exits are? Thought so. Me too.

I tend to pay attention out of courtesy rather than a sudden rush of self-preservation. I have been on thousands of flights over 40 years, with no accidents or incident.

Imagine the following announcement, “Ladies and gentlemen, welcome on board Rose-tinted Airways flight of fancy. Forget all the usual safety malarkey. For the last 1500 flights, we have had no problems with turbulence, pestilence or plague, pilot error or bird strike, so there is no point concerning you with what is very unlikely to happen based on past experience”.

How would you react to that?

Excellent, glass of white wine and some of those Thai street food nuts please.

We are well acquainted with the wording “past performance is no guide to the future”, but performance remains seductive. So what do we do when client reviews show huge gains over recent periods? Tell them “expect more of the same”?

Do we take them through the “safety drill” so they know what to expect when markets experience turbulence, freefall and have some clients reach for the sick bags.

It is tempting to avoid spoiling the party and leave the tricky conversations on the “too difficult” pile.

We have a duty to prepare clients for these sorts of events. Negative years are not small print on the bottom of a report. They will happen. When they do, they hurt more. Emotionally we feel the pain of loss four times more than the pleasure of gain.

I recall the spoof warnings of 2000-2003 where we replaced “markets can fall as well as rise” with “markets can fall as well as plummet”.

By the end of March in 2003, many investors were ready to throw in the towel having seen losses in 2000, more pain in 2001 and hit hard again in 2002. 2008 was a year most would like to forget. It is not easy to “keep the faith”, but whoever said this job was easy. Advisers who coach and prepare clients into holding their nerve have seen them richly rewarded.

Clients need to see the value in market discipline, not make rash decisions. Openness, honesty, good coaching and regular contact delivers better outcomes for clients.

Most clients should expect to see a negative year every 5 years. So how do you prepare clients for this kind of situation?

Do the drill; do not skip the safety briefing. Build an expectation that at some point the possibility of a bad year will become reality. Do not be distracted, take the long view!

Knowing what financial advice is and is not is key to making sure you get the best outcome

First, let’s define what advice is and what it is not.

Providing information? No, Google does that.

Advice is not “pick one of five descriptions you recognise as being you”, click ... whirr, here’s the plan for you. Advice results from an engaging conversation where people exchange thoughts, ideas, ambitions and plans – eventually coming up with an agreed course of action and committing to seeing it through together.

People need help making good decisions about money, yet I’ve heard advisers say they simply provide clients with information and let them decide. Again, that’s what Google does.

The problem is, people can believe Google more than advisers. Technology is fantastic at providing information but access to information doesn’t create good decisions. Information is simple scaffolding used to construct advice, built around an individual often unsure of what they are trying to achieve. They need to be able to recognise their values and beliefs in the finished project. This time, it is personal.

Sticking someone in front of a keyboard and flat screen doesn’t answer questions, it generates more. There is more online self-help than you can shake a stick at. You can YouTube anything you need to know. So why are people still underachieving when it comes to financial planning?

Even targeted access is not the answer. Technology is an incredible facilitator; remember when it used to be fun arguing about how many goals Dennis Law scored for Scotland, or what colour Oor Wullie’s bucket was? Now, people just pick up their phones and – voila.

Technology is fabulous but look how we use it. We befriend, like or dislike people by clicking a mouse, get a date by swiping right and enjoy an intimate dinner checking Facebook and texts, photographing dinner plates, or buying things we can’t afford and don’t really need. Sound familiar?

Imagine just before you hit the buy/send button someone says: “Is that a good idea, let’s think this through.” It might not change the outcome but might just validate the decision, shining a light on possible consequences.

The personal touch is critical in helping people make better choices. It builds relationship, accountability and commitment, and good qualities in delivering better outcomes. At AAB Wealth, Chartered Financial Planners, we are a people-shaped business. All our clients are people. All of our staff are people. We help people think about and make smarter, more confident decisions about money through conversation, answering their concerns face-to-face for as long as they need us to.

Old fashioned? Perhaps, but we prefer it and our clients like us – and not just in the Facebook sense.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Hands up, who likes Porsche 911’s. I don’t own one, I just dream outside showroom windows.

Launched in 1963 it looks spookily like the current model in terms of basic shape. However, look under the bonnet and the technological impact becomes obvious.

Here’s a thought. Ask clients about change in our business, and many will struggle. Our client interaction has changed little.

The change has been behind the scenes, under the bonnet and mostly invisible. However, our technological capability to plan and deliver long term has never been better.

Just as technology revolutionised engine performance and efficiency, it has delivered capacity and scalability for adviser businesses.

On the 29th of June 2007 Steve Jobs announced the iPhone had arrived. Why did it prove such a game changer? A phone, diary, music library, photo and video album, a family archive, a lifetime of memories, genius. A place for everything and everything in its place, as Benjamin Franklin remarked.

Technology has taken us to where, as Steve Jobs said at the iPhone launch, you can now “touch” your music. Well as we see the use of cash-flow modelling grow, clients can touch as well as see their money.

The power of financial modelling lets clients see the impact of change before committing to them. Add to that evolving platform access, digital banking for their assets if you like and you have potentially a place for everything, and everything in one place.

It’s a huge responsibility looking after clients, their wealth, future and family security. We now have the tools to deliver better reporting and visibility, helping clients grow their understanding of what we do for them today, and in the future.

A blue 911convertible please Santa.

For more information contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Pension freedoms have opened up a Pandora’s Box, says Frank Morton, director of wealth services at AAB Wealth.

Remember when retirement “happened” at 65?

Your pension was never a fund. That was something locked away out of sight and mind.

Your pension was the income you got when you retired.

Pension freedom was a game changer, it made people think differently.

It put a Pandora’s Pension Box on the mantelpiece, next to a shiny key and a note saying “go on, you know you want to”. Understandably most over 55’s rushed for a quick peek, and the rest as they say is history. Savers have withdrawn £5.9bn since pension freedom reforms, according to the Association of British Insurers. Was every decision wrong? No, but many were.

For some, it was mental torment having money in a box that could be in their pocket. Now where did I put that holiday, car, conservatory, brochure?

We are conditioned to wanting it “now”, regardless of damage done to our future.

The Pandora’s Box legend is well known. Thirst for revenge, a beautiful woman, a mysterious gift, an impulsive act which changes the world. Cue Hope the saviour, cue music and closing titles.

Cue Hope. How do we stop making poor decisions?

Cue adviser.

Cue conversation.

Cue informed decision.

It’s been said that what stands between a client and a poor decision is an adviser. The potential contrasting fortunes between those who leave money invested, and those who withdraw it is significant.


  • If I do this now, what can’t I do later?
  • What about taxes and cost?
  • Could I really do better somewhere else?
  • Do I need the money?

Planning is difficult. There are so many choices and consequences.

Leave the box alone. Take time. Explore all the options.

There are always two ways to do something. The easy way, and the right way.

For more information contact Frank Morton, This email address is being protected from spambots. You need JavaScript enabled to view it.

Be honest... what image pops into your mind when you hear the word expert? Geek, nerdy, professor type, all tweed jacket and leather patches, corduroys and glasses. Perhaps sharp suited legal eagles, all buzzwords and technobabble.

Clients expect expertise, but what clients value more is someone they can trust, commit to working with, someone prepared to have the difficult conversation, rather than letting things go unsaid.

Financial planning is way more than fact finding, designing investment solutions, income portfolios, or multi-level tax strategies. That’s the sexy bit where everyone’s focussed on portfolio performance metrics and more pie charts than you can shake a stick at.

The real job of a planner or adviser is the unseen element, the crisis management, the plan B, C and D. Clients are rightly immersed in an information gathering fest, attitude to risk reports, aims and objectives, even compiling bucket lists. Getting to grips with a client’s ambitions is vital.

The real job of a planner is to have those tough conversations such as; “what happens if you don’t make it to retirement?” whatever that means now. “What if you or your partner’s longterm health or marriage break down? What if business plans don’t go the way you anticipate?” We may think we can control market risk, but we can’t control life risk.

These events have serious financial planning implications. These are difficult conversations, especially for those with no experience of failure, family loss or health issues. Just because something’s difficult doesn’t mean it shouldn’t happen. Any client who has been through these experiences will tell you that having someone in their corner who took them through plans B, C and D even when they didn’t want to hear it, were worth their weight in gold, let alone annual fees.

The Government announced a reduction in Capital Gains Tax (CGT) rates in the April Budget. Basic Rate dropped from 18% to 10% and Higher/Additional rate dropped from 28% to 20%. Typically CGT is now being charged at half the rate of Income Tax.

Most people use their Income Tax Personal Allowance every year, but many don’t use their CGT Exemption, which is £11,100 this year, per person.

For a couple therefore there is up to £22,200 of tax free gain available each year and up to £85,570 taxed at Basic Rate (twice the Personal Allowance plus Basic Rate threshold). The CGT on this £107,770 would be £8,557, an effective rate of just under 8%. As income, that same amount would trigger tax of £21,594, an effective rate of just over 20%.

When investing, therefore, achieving growth that is taxed as a Capital Gain rather than income is generally preferable. Our portfolios are heavily weighted towards Capital Gains and not income, so that you get to keep more of the growth that you generate. And year on year that extra growth leads to a considerable compounding effect.

Should you have any questions please contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Wednesday, 28 September 2016 15:29

Outrageous Planning…


1a : exceeding the limits of what is usual

1b : not conventional or matter-of-fact

Robert Burns famously wrote “the best laid schemes of mice and men gang aft a-gley” in his poem to a mouse. For those in need of a translation, “no matter how meticulous a plan may be, it sometimes ends in disappointment”.

Planning is tricky, complicated. It takes time.

We should know, it’s what we do.

Outrageous planning is when you think the unthinkable, put it in writing, argue, agonise over it then agree it. You may need more than just plan A.

Plan A might be an underachiever.

Can we measure the effect of committing a plan to print, rather than mere thought?

Can it really prove to be outrageously beneficial?

Let me take you to Harvard, and their MBA intake of 1979. The following simple question was asked of arguably, some of the brightest, talented people in the world.

“Have you set clear, written goals for your future, and made plans to accomplish them?”

  • 84% said they had no specific goals
  • 13% said they had goals, but not written down
  • 3% said they had clear written goals and plans to achieve them.

Fast forward to 1989. The MBA Alumni were re-interviewed.

Here are the results.

  • The 13% with goals were earning twice the 84% with none
  • The 3% with clear written goals and plans were, on average earning ten times the remaining 97% put together*

There is a clear benefit to planning. Putting it in print adds conviction, but the commitment to review and act is powerful and pays significant dividends.

We should know. It’s what we do.

Everything is created three times. In the mind, on paper and in time. Proper planning, releases the outrageous.

*(Source: What they don’t teach you in Harvard Business School by Mark MCormack)

Should you have any questions please contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Wednesday, 28 September 2016 15:28

Brexit – A year in a day

The experts thought it would never happen. It did. Then they thought the market would crash. It didn’t.

The FTSE 100 fell by 6% and then got it all back in the fortnight leading up to Referendum day. Within a week of the vote it had fallen again by 6% and then recovered it all back. And since then it has risen by almost a further 10%, reaching a high of nearly 7,000 by the middle of August. Many investors decided to avoid this volatility and uncertainty by getting out of the stock market before the vote. Having done so they could have missed out on between 6% and 16% growth in the FTSE 100 depending on how quickly they got back in.

Over the past ten years the FTSE has delivered Total Returns (Dividends and Growth) of 69%. That’s a compound annual growth rate of 5.4%. Being out of the market after Brexit was like missing a whole year’s growth in one day.

So how did our investment strategy cope with Brexit? Evidence shows that long term investing will outperform short term speculation…in the long run. And so we sat it out. Our strategy didn’t change because of Brexit, because Brexit didn’t change the fundamental way the markets work. And as our portfolios are Globally diversified, as the Pound fell in value the value of the non-UK investments rose. Our portfolios are now up to 27% higher than then were this time last year.

Lessons to learn – Stay in the market, diversify and ignore the noise.

Should you have any questions please contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

I grew up a carpenter’s son, which sounds like the first line of a country song, but for me was a fascinating experience. I watched Dad hang doors, lay floors with a hapless apprentice, (you guessed) handing him the wrong tools, at the wrong time.

An ill-judged DIY venture painfully reminded me of Dad’s well-worn phrase when something didn’t quite go to plan. “as one door opens, another jams your fingers”

As mentioned in a previous article, the unexpected closure of the property funds has a specific impact on the fingers of multi-asset income clients.

Multi-asset managed funds are a fantastic vehicle for growth or income. Consisting of a broad spread of assets, a “financial crumple zone” of diversification protecting clients from the worst impact of market crashes.

Focussing on income for a moment, income is simply the natural flow of dividends from shares, interest from gilts, bonds and cash, and rental income from properties.

This “Natural” income varies, but keeps your portfolio intact. No selling units, you collect whatever income it generates.

A fixed income requirement simply means selling sufficient units to meet needs, and there’s where the pressure point lies. If you are locked out of property, you can’t encash units. You will need to cancel more from the other parts of the portfolio, twisting its composition out of its original shape.

Not recommended.

What could this do to future income sustainability if closures continue for an extended period?

Producing attractive, sustainable income levels in today’s market is not easy. Interest rates, yields and dividends are all under pressure.

Having one hand stuck in the door is not just painful, it restricts your movement, just when you need it most.

P.S. Door is now hung…and my stitches come out today.

To discuss in more detail contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

With Scottish schoolchildren now back at their desks after the holidays, how many of you recognise this scenario?

The car is packed and the kids are strapped in their safety regulation car seats, iPads aglow and already half-way through a bag of Tangfastics. Your other half looks at you and asks: “Did you lock the front door?”

For property fund investors, the answer is, unfortunately, “yes”.

News that many of the largest property funds, managed by the likes of Standard Life, Aviva, M&G Henderson and others, halted trading in the wake of the Brexit vote unsettled many investors.

It’s never comfortable being told you can’t get your own money back, well for now anyway. Aberdeen Asset Management and L&G Property continued to allow investors to withdraw their cash, at a price.

International investors have made significant investment in UK property and the outcome of the referendum has unsettled many.

Inward investment has all but dried up and valuations are suffering as a result. No buyers and plenty of sellers only pushes prices in one direction.

Most of us at some point have bought or sold a house. We know it depends on the prevailing market and can take weeks, even months to complete. Now think about buying or selling a large commercial property. It takes time and money – lots of it.

Funds need liquidity to meet normal levels of redemptions and income payments. Managers don’t want to dilute potential returns by holding too much cash and right now it earns very little, compared to rental yields. So it makes sense to hold just enough for that rainy day.

However, come rainy season and people are queuing for their money. Cash balances are quickly reducing to the point where managers are potentially forced to sell assets.

There is no quick fix here so to try and protect their funds and those still invested, funds can move prices down and effectively lock the front door until the umbrellas go down.

Does all this make property investing a bad thing? No. Property can add diversity to a portfolio and generate a good income but, as happened in 2008 when the market comes under pressure, fund managers can shut up shop to protect the integrity of their portfolios, ride out the storm and try to return to a better balance of inflows and outflows.

How long will this take? A piece of string and a tape measure please. Always look long term and only commit funds to investments that provide the risk, return and access that you need.


To discuss in more detail contact Frank Morton, Director of Wealth Services, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 12 August 2016 08:08

Questions to ask a financial planner

Choosing a financial planner or adviser is a decision that should not be taken lightly as it will almost certainly affect your financial future. It is important to ask a series of questions to ensure you find the most competent, trustworthy and qualified professional (and their wider team) best suited to your needs. It’s also important to be clear on exactly what service you are looking for them to provide for you.

Financial planning is a detailed, comprehensive process – the list below covers some of the key questions you should consider asking when you meet with a prospective financial planner/ adviser to ensure you will be dealing with someone with the credentials best suited to your needs.

  • What are your qualifications?
  • What experience do you have?
  • What services do you offer?
  • What is your approach to financial planning?
  • Will you be the only person working
  • with me?
  • How will I pay for your services?
  • How much do you typically charge?
  • How are you regulated?
  • How often do you review my situation?
  • Can I have it in writing?
Friday, 12 August 2016 08:07

Value added financial planning

How do financial planners add value, after you’ve paid them?

1 Diversification - Spreading money into 10,000+ different companies achieves higher returns for the equivalent risk.

2 Rebalancing - Maintaining risk levels means getting the highest returns appropriate for you, not missing market rises, or panicking when they fall.

3 Implementation - Lower cost funds let you keep more of the return. Not ‘cheap’ funds, but those designed to capture returns without costing the earth.

4 Behaviour - A long term view and discipline help you avoid investment mistakes like buying when the market’s rising and selling as it falls. A Wealth Plan means you don’t need to worry about what the market’s doing.

5 Tax Saving - Using tax allowances and tax efficient/incentivised investments keeps money in your pocket and not the tax man’s.

6 Spending Strategy - Again, using tax allowances, limits and exemptions can significantly save the amount of tax you pay on what you’ve made.

7 Income Strategy - Planning what you need for the rest of your life, and using Capital and Income to provide this reduces the risk you need to take and the tax you pay.

Now that’s worth paying for.


Friday, 12 August 2016 08:05

Top 10 Investment Guidelines

You can increase your chances of a successful investment experience if you keep these 10 guidelines in mind:

1 Let the market work for you. Prices represent the collective judgment of millions of investors based on current information. Instead of second guessing the market, work with it.

2 Investment is not speculation. Speculation is making short-term and concentrated bets, picking stocks and shares, timing the market, trying to predict the future. Few people succeed this way, particularly after taking fees into account.

3 Take a long-term view. Over time, capital markets provide a positive return, but not every day, month or year.

4 Consider the drivers of returns. Differences in returns are explained by pervasive, persistent and robust dimensions identified by academic research. So build portfolios around these.

5 Practice smart diversification. A sound portfolio doesn’t just capture returns, it reduces unnecessary risks like holding too few stocks and shares. Diversification helps to overcome that.

6 Avoid market timing. You never know which markets will be the best performers from year to year.

7 Manage your emotions. Otherwise you can end up buying at the top when greed is dominant and selling at the bottom when fear takes over.

8 Look beyond the headlines. The media is, by necessity, focused on the short term. Keep up with the news by all means, but you don’t have to act on it.

9 Keep costs low. Day to day moves in the market are temporary, but costs are permanent.

10 Focus on what you can control. You have no control over the markets, but in consultation with AAB Wealth you can have a low-cost, diversified portfolio which matches the risk you are willing, able and need to take.

Contact Simon Glazier This email address is being protected from spambots. You need JavaScript enabled to view it. or Andrew Dines This email address is being protected from spambots. You need JavaScript enabled to view it. for more information

Friday, 12 August 2016 08:04

Investing and Patience

We would suggest patience is always a key message for investors. Global markets provide investors a rough ride from time to time and while falling markets can be worrisome, maintaining a long-term perspective makes the volatility easier to handle.

A typical response to unsettling markets is an emotional one, resulting in higher-risk assets, such as shares, being sold when prices are down and bought when there is more "certainty". There is very little evidence that forecast-based timing decisions work with any consistency and even if you manage to luck your way out of the market at the right time, you still have to decide when to get back in! Furthermore, even if you happen to be the world’s best economist and can accurately assess an economy’s growth, this doesn’t mean the markets will react as you assume.

Investors need to reflect on how markets price risk. Over the long term, we know markets thrive because they succeed and there is a return on our capital however returns are rarely delivered in an even pattern. Furthermore, there are periods when markets fall swiftly and others when they rise relentlessly. What happens next is what we don’t know, so it’s important to diversify and spread the risk to match your own appetite for risk, investment expectations, desired lifestyle and goals. Spreading risk means diversifying within equities across different sectors, industries and countries. The only way of getting the "average" return is to go with the flow.

In the short-term, the greatest contribution you can make to your long-term wealth is exercising patience. That’s where working with a AAB Wealth comes in.

Contact Simon Glazier This email address is being protected from spambots. You need JavaScript enabled to view it. or Andrew Dines This email address is being protected from spambots. You need JavaScript enabled to view it. for more information

Friday, 12 August 2016 08:03

Should you access your pension early?

Pensions are designed to provide for your retirement, giving you an income to support you when you finish working. But what if your employment has finished earlier than anticipated, or what if you are experiencing a gap in employment? Can your pension be part of the solution?

Under ‘Flexi-Access Pension’ rules, if you are over 55 you can access either the lump sum and/or the income element of a Money Purchase pension (i.e. not a Final Salary scheme) as and when you like. This means that you can take out tax free income or lump sums up to 25% of the value of your pension and leave the rest invested. You can also take income or lump sums from the other 75%, but this will be subject to income tax.

If you have little or no other income in the tax year then the first £10,600 of taxable pension money could fall into your Personal Allowance and still be tax free. Pensions should be the last place you go to access money from a tax perspective, but they might be the right place to go when the unexpected happens.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it. 

Friday, 12 August 2016 08:02

Weathering the storm

I remember days hill walking in the Scottish mountains when the weather was perfect, sunshine and beautiful blue skies, crisp snow on the tops and a view to die for. But the days I remember most vividly are those when the weather changed suddenly. Within a matter of minutes, I’ve become lost and disorientated, caught in a whiteout or in thick grey fog, soaked to the skin and blown off my feet.

On my first outings I made sure I was accompanying someone more experienced than me, who could keep their head and knew what to do when things turned bad. As time progressed and I felt I could look after myself whatever was thrown at me, I also knew that even if the weather was glorious at the bottom of a mountain I had to be prepared for anything at the top.

The lesson is clear: if you are going to venture into that environment, you need to be properly prepared, and if you don’t know what you’re doing, you need to be guided by someone who does.

There’s a parallel in financial planning - one worth highlighting as volatility continues into 2016. The role of an adviser is to prepare their clients in advance for bad market conditions and show them how, with their knowledge, skill and experience, they are able to guide you back down the mountain.

Looking back over ten, twenty or even fifty years of financial markets shows that what we are experiencing now is neither unprecedented nor unexpected. Markets go up, and then they come down, before recovering again.

Remember "there’s no such thing as bad weather, only inappropriate clothing".

Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 12 August 2016 07:58

The Investment Mantra

If the property mantra is ‘Location, location, location’ then that of the investor should be ‘Diversification, diversification, diversification’.

To diversify your investments is to spread them about, as widely as possible, and reduce the risk that any one poorly performing asset affects you too much. When you have a wide spread of investments there is more chance that when one is going down another is going up.

This doesn’t mean investing with lots of difference investment managers but always investing in their UK Managed Fund, for example. In this scenario you might find that all the managers are buying shares in the same companies. Even worse, you could find them buying shares off each other. You would effectively be paying people to move your money around without actually making you any more.

Risk doesn’t lie at the level of the fund manager but at the level of the individual investments. If your fund is invested in 100 different companies, then this is how diverse your portfolio is. Having 5 managers all investing in the same 100 shares doesn’t increase diversification and doesn’t decrease risk, but it can increase administration and cost.

A better approach is to find the one manager who invests in the type of asset you want (UK shares, US shares, Corporate Bonds etc.) with the highest number of underlying investments, with the lowest cost. Then pick one fund manager for each different ‘asset class’ and spread your money that way. Each fund is targeting a different set of investments, you are not overlapping.

Of course there are all sorts of different types of funds out there, all with different objectives and all claiming different advantages. But for most investors the answer is usually a low cost tracker fund. A UK Index Fund might invest in 600 different shares, a Global Index Fund in over 5,000.

Now that’s diversification.

Friday, 12 August 2016 07:57

Remedy your pension shortfall soon

Too many people seem to be in the dark about their pensions, savers need to act now to avoid disappointment.

Have you any idea how much your retirement is going to cost you? How much income will you want in retirement and how long will you need that income to last?

Research carried out recently by fund management company Seven Investment Management (7IM) showed that, on average, people believe a comfortable retirement income is around £23,400.

Alarmingly, that is not far off the national average wage of about £26,500, meaning many workers are looking to maintain their level of income once retired – but often without a realistic idea of how much they need to have saved up in order to do so.

The new flat rate (single tier) state pension could provide up to £8,000 a year of income for someone with a full national insurance contribution history, but it is anticipated that less than half of retirees in 2016 will actually qualify for the full amount.

Periods out of work or periods of membership in a “contracted out” pension scheme will reduce state pension entitlement. If you are in the process of planning for your retirement, then it would be well worth getting a state pension projection from the website so you have a clear idea of how much it will actually provide you with.

Let’s assume, however, that the amount of state pension actually received is £6,000 a year. At this level, people would have to save enough to generate another £17,400 a year in retirement to hit the average target income. At a conservative estimate that would mean a lump sum of about £348,000 needed at the point of retirement. And for those who are anticipating using their pension tax-free cash to repay debt or fund some hoped-for expenditure, the total pension fund would need to be worth more than £460,000 to provide the required income.

In the same 7IM survey, people typically guessed they would need to save about £170,000 to achieve their target income – leaving them with a terrible surprise when the time comes. The further away retirement is, the longer you have to remedy this shortfall. Putting aside more for your retirement now leads to one of two outcomes – either you can retire with a higher income or you can retire earlier than would otherwise have been the case.

If you are not sure how much you need to save to reach your retirement targets, then try checking out your pension provider’s website as many of them have tools to help project the future value of your pension. Or, of course, you could speak to your friendly financial planner, who will be able to help you target the right amount of money at the right time to give you a less disappointing retirement.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 12 August 2016 07:54

Is 85 the new 65?

If you’re a member of a Final Salary pension you may be aware that the maximum benefits available are 2/3rds of your pre-retirement income, and this represents the Government’s ‘Gold Standard’ of pension provision.

For the rest of us, this level of income also represents the Gold Standard, but research by pension provider Royal London suggests it could be unachievable for many solely dependent upon Auto Enrolment pension contributions.

Former pensions minister Steve Webb has warned that savers could face ‘the death of retirement’ as a result of low private pension contribution rates. Many more employees now have access to pensions through Auto Enrolment, but minimum contribution levels are currently set at just 2% of salary, rising to 5% and then 8% in April 2018 and 2019 respectively.

According to Royal London, someone with double the average wage, contributing these minimum amounts, couldn’t retire until age 85 to achieve a Gold Standard pension which kept up with inflation and could be passed to their spouse. Targeting just 50% of pre-retirement income means they could retire at 80, and if that pension had no inflation protection or spouses benefit then they could retire at 75.

One suggestion to remedy this is ‘autoescalation’ of pension contributions. The idea is that, once enrolled in the pension, members will increase their contribution level by 1% every year up to retirement. The discipline of pension planning is to save regularly, and the easiest way is to do this is to put money into your pension before you receive it, that way you’ll never miss it. In years when you experience a pay rise, why not ask your employer to increase your pension contribution instead, and you won’t even notice it going... you might then have the chance of retiring before age 85!

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

A man walks up to an independent financial adviser (IFA) and asks ‘Can you make me a small fortune?’ ‘Yes’, says the IFA, ‘but first you must give me a large fortune!’

There seem to be no end of ways to lose money when investing. Bank deposit rates remain stubbornly low and the FTSE 100 has crashed (again!). So are there other places to invest your money and get a better return?

In recent months, clients have been asking about alternative investments such as Peer to Peer (P2P) lending, which offers better than bank account returns for less than stock market risk, especially as they can be held within an ISA from next tax year and thus generate returns tax free.

Firstly, what is P2P? Traditionally you deposit money with a bank and get paid some interest. The bank then lends that money out (as mortgages, car loans, personal loans, credit cards and overdrafts) and charges a higher rate of interest. The difference between those interest rates is the bank’s return. P2P lending removes the bank from the equation. The lender gets a better (higher) interest rate and the borrower gets a better (lower) interest rate. Why is your return higher? Because you are taking more risk.

You might lend your money to a few tens or hundreds of people through a P2P service like Zopa, Funding Circle of Ratesetter, and the chances of one or more of them failing to repay their loan will be higher than the bank failing to give you your money back. There are costs incurred in P2P lending which must be paid irrespective of how much money you make, and your money will be less accessible and possibly not available to you when you want it.

The question then is whether the increased return is sufficient to compensate you for the increased risk you are taking? I’m not saying that you shouldn’t invest in P2P, but I would suggest that you don’t make it the core part of your financial planning strategy. That should be a well diversified portfolio of investments and debt, including maybe 10,000 or more individual investments, with low costs, quick access, and at the right level of risk for you.

Treat Peer to Peer, and other alternative investments, as they really are, i.e. speculative punts, gambles, something you can afford to lose … then cross your fingers and hope.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 14 August 2015 07:54

The role of financial life planning


Helping you develop and maintain a successful investment strategy is an important element of any planner's service, but there are other personal financial matters which your planner can assist you with.

Throughout your life, you will have different financial needs and the strategies that are right at one stage in your life may not be suitable at another. You should think of your planner as your financial coach – someone who can help guide your investment strategy to ensure that you achieve your life goals and aspirations.

Your planner can help you develop a financial roadmap to prepare for important life events and to identify how best to build your wealth to help achieve your goals. This map will consider many different issues – some of a 'positive' nature, some not. It may be necessary for example to prepare strategies to help meet the costs of educating a child, fund a business plan or mitigate any potential inheritance tax liabilities that you may incur. And having established a blueprint for you, your planner will want to review it regularly, simply because your goals, circumstances and financial resources will alter over time.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Friday, 07 August 2015 07:43

Costs matter

Costs Matter

Never underestimate the importance of investment costs. Simply stated, these eat into your returns. By keeping costs to a minimum, you improve your potential returns. Costs typically include an Annual Management Charge (AMC) – this covers the fund manager's costs of running a fund.

Your financial planner understands the nature of investment costs and can be instrumental in ensuring that your portfolio is as cost effective as possible. It is important to note that cost is not the only factor.

For more information contact Simon Glazier, Chartered Financial Planner, This email address is being protected from spambots. You need JavaScript enabled to view it.

Page 1 of 2

Twitter Feed