Tag Archives: financial adviser

The Markets and What’s Next?

21 May

The markets have seen a sell-off in the recent past and I expect this to continue untill some stability returns to the market and this is unlikely until the Greek Elections in June and a government is formed, at the earliest assuming no additional market controvecies.

It is clear that the problems in the Eurozone will keep a chokehold on financial markets in the weeks ahead. Investors and the markets are currently assessing Greece’s commitment to the austerity measures and the Eurozone as a whole – we await other headlines on the debt crisis.

G8 Meeting over the Weekend


G8 strongly supported keeping Greece in the Eurozone. No decisive decisions were made but confirmed they would do what was necessary to battle financial turmoil while revitalizing their economies. They stressed the need for strategies to encourage growth.

Greece’s failure to form a ruling coalition after its May 6 election has now led it to a second election in June. Polls show the radical left party is in the lead, and that party rejects austerity measures agreed to as part of the Greek bailout.


Reports This Week

  • Monday & Tuesday – Atlanta Fed President Dennis Lockhart speaks in Tokyo on monetary policy
  • Tuesday – US Treasury auctions $32 billion in 2-year notes
  • Wednesday – US Treasury auctions $32 billion in 5-year notes
  • Thursday – New York Fed President William Dudley at Council on Foreign Relations & US Treasury auctions $29 billion in 7-year notes
  • Friday – Consumer Sentiment Report

My contact details are :- tel 029 2020 1241, email welshmoneywiz@virginmedia.com, twitter welshmoneywiz, linkedin Darren Nathan

SIFA Slams St James’s Place

6 Apr

St James’s Place (SJP) is a well respected Insurance and Investment Company who still work solely through a self-employed sales force. The down side is they are not independent but have many proficient sales people who will offer the best of the product range they can sell.

The outrage is from the Solicitor IFA trade body Sifa, who have accused St James’s Place of making “distinctly misleading” claims and it raises concerns where an institution who gives financial advice sees it to be acceptable to allow dishonest business practices. SJP has written out to financial advisers in an attempt top attract them to join St James’s Place, while suggesting that they can continue to receive professional introductions through solicitors.

This is not the case as solicitors are governed by a strict code of practice to refer only suitably qualified independent financial advisers and this can’t be a sales person from SJP. SJP’s sales people are called Partners and Senior Partners depending their success and longevity in selling their products.

SIFA has reported SJP (St James’s Place) to the Solicitors Regulation Authority.

The SRA’s code of conduct states solicitors can only refer clients who need investment advice to “independent intermediaries”. It defines an independent intermediary as an IFA who can advise on investment products from across the whole of the market and offers a fee option.

Structured Products – Why Are The Results Not Published?

30 Mar

Structured Product Providers have been called to publish the maturity values of products and make the data more widely accessible. This information of performance and investment returns are NOT published in any accessible way. I have asked time and again, Why is this the case? I believe Structured Products’ maturity values should be published and be available. If it were ETFs, Investment Trusts, Collectives, Interest Rates on Savings Accounts or pretty much any other investment – results are available.

I can only question the performance and the results achieved. I can’t believe if the results were good that these details would not be shouted from the roof-tops by the product provider. I personally have grave doubts, especially when you factor in the use of financial instruments, such as, derivatives; counter-party risks and the varying terms offered by each product provider on an ongoing basis.

Maybe I’m just a bit cynical and these product providers are not hiding poor results but rather just don’t published their returns. Possibly this is to avoid the ability or need for either professional advisors (such as myself) or investors to better compare their past results and so create an opinion of the possible returns in the future. 

Possibly, the view of these product providers is that an adviser, if not a direct and typically employed, sales force, will not sell the product after suffering the initial results, so it’s academic what that product returned – but I am now just speculating. I suspect that the details I require are not readily available because they are market-driven products – they are sold and my approach of professional reviews, assessments, advise and guidance, is not their market place.

The investment return is not the whole story with Structured Products, we must also consider the guarantee (if exists) and/or the level of protection. But, how much are investors paying for that guarantee?

The lack of product clarity means the costs are hidden in the returns, where past performance and results are not readily available. Although, I would say I am not anti structured products if these questions were answered. I am anti products where there is insufficient data to assess if they are effective, well structured and there is a realistic expectation for profit. What I need is much greater openness about what they deliver can, have and could deliver in terms of results.

The IMA released a study in 2011, which found almost all the tracker funds outperformed the structured products. It found the main reason the trackers did better was they reinvested their dividends, whereas the structured products did not.


Is The IMA Study Contentious?

The IMA study did not take into consideration of the risk profiles of the two investments.


There is a Need for Progress

There is a need for better dissemination of data on structured products. The lack visibility on maturity means that the results are almost product provider’s best kept secret. I cannot comment on why this is but uintil this data is available one must question the reasons for this secrecy.

I believe a central repository for values of maturing structured products would help transparency and enhance this investment class.

This could lead this investment product out of the gutter of sales pushed product into advice related planning.

Any questions, email me at welshmoneywiz@virginmedia.com

Seeking Advice

18 Mar

I have been asked by many, the best way to contact me if you are seeking advice?

The easiest is by the blog email :- welshmoneywiz@virginmedia.com, or my business email :- dnathan.jpl@ntlworld.com or darren@jpltd.co.uk

Or call my office :- 029 2020 1241

Or my mobile :- 07931 388651

Or to follow me  –

On twitter :- Welshmoneywiz

On Linkedin :- Darren Nathan

All the best


Private Sector Pension Holders Could Double Their Annual Payouts

14 Mar

In recent years, low-interest rates coupled with improving life expectancy have forced pension providers to slash annual payouts. These seem to be typically around the 5.5% per year of a total pension fund. If you have a policy issued before 1988, then you may have a Guaranteed Annuity Rate within the policy and these were commonly between 10% and 12% per year. It seems, in my experience, pension providers have been less than forthcoming with this information.

So should you have a pension fund of £100,000, with a guaranteed annuity rate set in the Eighties, this could get an annual income of between £10,000 & £12,000 each year rather than, say £5,500 currently offered (through an annuity purchase).

Private sector pension holders could double their annual payouts through a legal entitlement through some policy’s small print. You should examine the terms of the policy documents before agreeing rates for your annuity.

Buying your income through your pension fund, I expect is the most important pension related decision you will make. If you are purchasing an annuity, remember it’s for life. Once you have bought a pension income through an annuity, the terms can’t be changed. If you fail to spot the set rate and accept a lower offer, you will not be able to change it afterwards.

These policies including Guaranteed Annuity Rates, where pensions providers including Phoenix, Aviva (through Norwich Union, Commercial Union and General Accident), Scottish Widows, Prudential and Scottish Life.

When purchasing an income through your pension fund, take professional advice through a suitably qualified Independent Financial Adviser to make sure you get the best deal.

Any questions contact me – welshmoneywiz@virginmedia.com

Thinking of Switching From Cash to Investments

13 Mar

If your money is languishing in cash accounts paying low rates of interest, investing could offer a better option. After 3 years of the Bank of England’s Rate of Interest still held at 0.5% per annum and all likelihood that this status quo to remain then maybe an income portfolio would be a better approach?

An income portfolio with a diversified portfolio, typically with distributions around 4.5% per annum (net of basic rate tax) and with the potential of capital growth. Remember, this is an investment rather than cash, so values can go down as well as up but with an investment focus of income. Historically, I have seen my client’s income grow over time and yes, the capital value has fluctuations but then the risk profile of the portfolio can control volatility within a range.

The markets have been hugely volatile, with big swings up and down since the turn of the century.

There are several choices to make: the type of investment, how you invest, how it’s managed, how long you want to invest for, the level of volatility and investment risk you are prepared to take with your money.



There is a wealth of information about funds to be found on the internet. Many websites provide free guides and factsheets with details about funds and how they work. These factsheets list the aims of a fund, its risk and performance history. They also tell you some of the companies your money is invested in, and where in the world they are.

To buy into an investment fund, you can go through a broker, fund supermarket, a financial adviser or to the company directly.



There is always a fee for investing and it is, in the main, deducted from your investment. If you get independent advice then you will have to pay for this, too.

Funds normally charge a one-off fee, typically around 5%, for your initial investment, and then an annual charge of between 0.3% – 2.5%, depending on the fund type. However, you may avoid some or all the initial charge, or get a discount on the annual cost if you go through an independent financial adviser, broker or fund supermarket.



You can deposit a lump sum or/and pay a regular contribution into your portfolio over time. There are pros and cons whichever you decide, but neither comes with any guarantees. A lump sum deposit has the benefit of immediate exposure to the chosen investment strategy, funds and asset allocation.



Do you want to receive some income from your investment or for the potential value of your capital to grow or a combination of the two? This will have an essential effect on the structure of the portfolio, possibly type of fund, asset allocation, etc. because your focus and requirements will need to be prioritized.

A portfolio with a heavy weighting in favour of dividend-generating attributes could provide you with a regular source of income. This helped many investors to profit last year, after dividend payouts soared by more than 19% compared to 2010. Investors will have different goals, so best to have the portfolio designed to align with your goals, within your risk profile and time horizon.


Take appropriate independent financial advice from a professional who specialises in investing and wealth management.

Any questions – welshmoneywiz@virginmedia.com

Lloyds Banking Group Revamping its Financial Advice Arm

23 Feb

Lloyds Banking Group has announced it’s planning to revamp its direct financial advice arm. This is in relation to RDR .

What is the Retail Distribution Review (RDR) – this is a key part of the consumer protection strategy being introduced by the start of 2013. It is establishing a resilient and effective retail investment market, where consumers can have confidence in the advice and help they receive through financial advice on retirement and investment planning. 

In preparation for the RDR, Lloyds Banking Group is the latest bank to change its’ offering. They have stated they plan to split the offering between basic protection advice and a “financial planning” service. They have not confirmed if this will be provided by sales people or if they plan to offer an advice service (other than in name).

Lloyds currently operates an advice/sales team offering investment and protection products across its branch network, which includes Lloyds TSB, Halifax and Bank of Scotland.

 Lloyds refused to disclose details of the current size of its branch staff network dedicated to financial product sales but under the new structure the number of staff dedicated to this area of their business is expected to grow.

They have published, no decisions have yet been taken over how to charge customers for its financial planning service. Although, Ernst & Young suggested banks would have to charge clients at least £200 an hour just to cover costs after the RDR. (Assessment and report was in 2011.) Personally, assuming Ernst & Young’s figures are correct, this raises a concern how much will banks’ charge to offer financial services products to their customers.

A Lloyds spokesman says: “Customers require advice and support to understand and make decisions about their financial future and we are very well placed to take advantage….”

“As the IFA sector moves up market, there will be significant opportunities for bancassurers….through their high-street branch network.”

Last year Barclays closed its advice arm while HSBC cut 460 “financial planning managers” due to the RDR.

^Vix Indicator of S&P Market Fear

16 Feb

Over recent years, when the Volatility Index (^VIX) hits a range of 15 to 18, it seems that the market sells (S&P 500).

The strategy is to be data orientated and unemotional. Based on market and index charts, the expectation is for a market sell-off. This may be minor or extreme but only time will tell. My approach is to keep 50% fully invested in defensive equities focused on strong cashflows and business models; while taking an alternate approach with the remaining funds. These funds have purchased assets with varying degrees of negative correlation to help protect the portfolio from volatility. The strategy being to structure the portfolio with assets that are expected to produce positive returns in most market conditions over a specified time period. So, the investment horizon is over the medium to longer term but with the plan to try to produce positive returns each and every year.



-Chicago Options     19.04      13 Feb 21:14
Chart forVOLATILITY S&P 500 (^VIX)

If the markets race higher than expected, we are prudent and take action to reduce market exposure. When there is a higher chance of loss than gain. If the opposite happens and we see a major market correction, depending on the driving forces this may lead to a buying opportunity.

By taking this approach we are able to buy some of the assets potentially at a cheaper price; while if the converse happens we are holding sufficient defensives to soften any significant declines. It is fair to accept that the strategy is generally defence with strong prudent overtones.

What we strive to achieve are positive return in all market conditions and over time this strategy has been successful.

My current thoughts on the markets for 2012 can be summed up in a single word, “volatile”. If sentiment remains positive  (as current) then the year will see growth. Although, I believe it is equally plausible for the market sentiment to turn negative very quickly. There are many negatives that could cause a significant decline, if issues work out worse than hoped plus many unexpected scenarios are very possible.

It is unrealistic to make a forecast stating only one likely outcome especially with such contrived and vulnerable data. The variables are diverse and potentially dire or possibly, better than we hoped. Only time will tell which way the market will trend.

Something else to consider, on many previous index declines into 15-18 pricing range, the VIX produced a market sell-off leading to a market bounce. The market typically doesn’t reach its top from anywhere between three weeks and three months later. History creates general flows and trends but don’t expect it to repeat in the form or shape.

It is fair to say, I’m focused on the point that the 15-18 VIX area produces a market selloff – especially with 20th March looming and the Eurozone Debt Crisis expected to become a major focus, yet again. In addition there are escalating issues in the MIddle East, Asia and many others.

Good luck with your planning. Remember – plan, review and plan again.

This is an exciting time for the markets, both good and bad opportunitiies loom in the future.

Tax Planning Before The End of the Tax Year – 5th April 2012

16 Feb

5 April 2012 Tax Planning

With the end of the UK tax year approaching, review your business and personal finances to ensure they are as tax-efficient as possible.

Consider reducing taxable income, creating Reliefs to off-set tax bills, and/or deferring distributions to take advantage of year end dates, for example: 

  • by making pension contributions
  • claiming tax relief through investing in Enterprise Investment Schemes (EIS) & Venture Capital Trusts (VCT)
  • converting investments in non-tax assessable investments for the future – ISAs
  • donating to charity
  • transferring income producing assets to a spouse or civil partner
  • delaying bonus or dividend payments


1. Pension Contributions and Retirement Planning

Make pension contributions allows you to enjoy tax breaks on your pension savings. There are tax reliefs as you invest and a tax-free regime for your savings. Your employer may also be able to contribute and obtain tax relief.

The Basics :-

  • For the 2011/12 tax year individuals can contribute up to £50,000 into their pension.
  • Those who have not contributed the full £50,000 in any of the previous three years may be able to pay increased amounts prior to 5 April 2012.
  • Individuals with no earnings can contribute up to £2,880 into pension funds, and the government will gross this annual up to £ 3,600. This can be effective for children and spouses.
  • The lifetime allowance is being reduced to £1.5 million from £1.8 million from 6 April 2012. Individuals should review if any actions need to be taken before 5 April 2012
  • For pension contributions to be applied against 2011/12 income they must be paid by 5 April 2012.
  • Tax relief is available on annual contributions limited to the greater of £3,600 (gross) or the amount of the UK relevant earnings, but subject also to the annual allowance. Pension contributions can be made at up to 100% of relevant earnings, subject to the annual allowance of £50,000.
  • Unused allowances (up to £50,000 per year) may be carried forward for up to three years. Unused allowances from 2008/09 will be lost unless used by 5 April 2012.
  • From October 2012, employers will have to enrol all eligible workers into a qualifying pension scheme. Auto-enrolment is being phased in, on a staged basis. In the 2011 Autumn Statement, the starting deadline for employers with fewer than 50 workers was deferred until the start of the next Parliament.

2.  Investments with Tax Shelters

This typically involves Enterprise Investment Schemes (EIS) or Venture Capital Trusts (VCT). Both are Government-sponsored arrangements designed to reward investors who risk capital in qualifying companies. Investment can be direct, managed portfolios and restricted mandate portfolios. These investments are higher risk by nature, so this risk can be diversified by investing across a range of qualifying schemes (managed portfolio) and/or with a defined mandate (possibly further diversifying risk by defining the strategy)

2.1  The Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.

This document provides a very broad overview for potential investors. It does not cover all the detailed rules, so investors should not proceed solely on the basis of this information, and should seek professional advice.

The information relates only to shares issued on or after 6 April 2009.

It does not cover the legislation relating to shares issued before that date. Also readers must bear in mind that the Reliefs and legislation relating to them may change in the future.

The current Tax Reliefs available for qualifying investors are:

  • 30% Income Tax Relief – on equity investments up to £500,000 per tax year (£1 million from 6 April 2012) in eligible companies. The relief can also be carried back one year. To retain the Tax Relief, the shares must be held for at least three years
  • Capital Gains Tax Exemption – if it is held for at least three years from the date of purchase (same qualification as for the Income Tax Relief), any gain is free from Capital Gains Tax.
  • Capital Gains Tax Deferral Relief – it is available to individuals and trustees of certain trusts. The payment of tax on a capital gain can be deferred where the gain is invested in shares of an EIS qualifying company. (The gain can be from the disposal of any kind of asset, but the investment must be made within the period one year before or three years after the gain arose.)
  • Loss Relief – if the shares are disposed of at a loss, you can elect the amount of the loss, less any Income Tax relief given, can be set against income of the year in which they were disposed (or any income of the previous year), instead of being set off against any capital gains.
  • Inheritance Tax Relief – by investing in companies that also qualify for Business Property Relief, investments can be exempt from Inheritance Tax after two years (from the point at which the investment into the underlying company is made). In order to qualify, the investments must be held at the time of death.


2.2  Venture Capital Trusts (VCTs) 

Venture Capital Trusts (VCTs) were introduced by the government in 1995 to encourage individuals to invest in small UK companies. They are supported by a number of tax incentives which reflect the fact that investment in smaller and unquoted companies is likely to involve a higher degree of risk.

The current Tax Reliefs available for qualifying investors are :-

  • 30% Income Tax Relief – on amount subscribed for shares issued in the tax year and up to £200,000 per tax year. The shares must be new ordinary shares and must not carry any preferential rights or rights of redemption at any time in the period of five years beginning with their date of issue. You can get this Relief for the tax year in which these ‘eligible shares’ were issued, provided that you subscribed for the shares on your own behalf, the shares were issued to you, and you hold them for at least five years.
  • Tax Free Dividends – exempt from Income Tax on dividends from ordinary shares in VCTs
  • Capital Gains Tax Relief – you may not have to pay Capital Gains Tax on any gain you make when you dispose of your VCT shares.

3.  Tax Efficient Savings and Investments

ISAs: You have until 5 April 2012 to make your 2011/12 ISA investment of up to a maximum of £10,680 (up to £5,340 can be invested in cash). 16-18 year olds can invest up to £5,340 only in a cash ISA.

The new Junior ISA, for those aged under 18 who do not have a Child Trust Fund account, allows investment of up to £3,600 in 2011/12.

4.  Don’t waste Personal Allowances 

4.1  The ‘income tax-free’ personal allowance for 2011/12 is £7,475. Take steps now to ensure you fully use it.

If your spouse or partner has little or no income, transfer income to them to ensure that personal allowances are being utilised. Similarly, it is costly for one spouse or civil partner to be paying tax at 40% or even 50% while the other pays tax at only 20%. Equalising income where possible ensures that you both pay tax at the lowest possible rate, thereby reducing the overall combined tax bill.

The personal allowance is gradually withdrawn where adjusted net income exceeds £100,000 (being reduced by £1 for every £2 of income over £100,000) and is lost completely once income reaches £114,950.

4.2  Capital Gains Tax

All individuals have an annual gains exemption up to £10,600. Married couples should therefore consider transferring assets between spouses prior to sale in order to potentially take advantage of two exemptions i.e. £10,600 each.

4.3  Inheritance Tax

Utilise your Inheritance Tax (IHT) Exemptions. Inheritance Tax is currently payable at 40% on total assets exceeding £325,000 at death. This threshold is per person and has been frozen until 2015. Early planning is therefore essential in order to minimise your liability to Inheritance Tax.

Transfers to a spouse or civil partner remain exempt (Inter-Spousal Exemption). A reduced Inheritance Tax rate of 36% will apply from 6 April 2012 to death estates, where 10% or more of the net estate is left to charity.

£3,000 annual exemption for gifts remains available to all individuals and can be carried forward one year if not utilised. There is also an unlimited small gifts exemption of £250 per beneficiary each year, gifts to registered charities, gifts out of net income, amongst others.

The exemption for regular gifts out of income is one which should be usefully reviewed at the end of each tax year. Payments into life policies for the benefit of others can be a useful way of utilising this exemption. Where pure cash gifts are involved, evidence should be kept of the intention of the donor to maintain a regular pattern of gifts and also to confirm that the amounts given are within the individual’s excess income for the relevant year.

Your Inheritance Tax Planning strategies may also include maximising Reliefs, utilising both exempt, potentially exempt and lifetime chargeable transfers, and making the most of trusts.

5.  Business Allowances

5.1  Capital Expenditure – The majority of businesses are able to claim 100% Annual Investment Allowance (AIA) on the first £100,000 of expenditure on most types of plant and machinery (except cars) 

Changes to Capital Allowances :-

From April 2012 the amount of expenditure on plant and machinery qualifying for a 100% year one write-off (via the AIA), reduces from £100,000 to just £25,000.

For businesses with years straddling 31 March/5 April, there will be a transitional AIA and writing down allowance.


5.2  Enterprise Zones

Announced in the Autumn Statement, the Enterprise Zones in assisted areas will qualify for enhanced capital allowances. These allowances will be available from 1 April 2012 to 31 March 2018.


5.3  The Family Unit

Family businesses should consider paying all members who are involved in the business an income so they can use their personal allowances but optimises income for State Pension purposes.

Where there is a partnership or the spouse is a shareholder in the family company, there is more scope to spread the tax burden between the couple.

At an income level where one spouse is already receiving income in excess of £150,000, there will be a tax saving by transferring outright (or perhaps into joint names) investments to the other spouse whose income is below that level.

More interesting are shares in family trading companies. Provided an individual holds at least 5% of the shares in such a company and is an employee, a married couple can potentially double up on Entrepreneur’s Relief for Capital Gains Tax purposes.

Children also have their own personal allowances and, where there are family discretionary trusts, consideration should be given to distributions to utilise personal allowances and lower bands of tax.




Emerging Market Allocation Hits Dangerous Level, says survey (Article by Adam Lewis in fundweb on 15.02.2012)

15 Feb

Asset allocators have almost doubled the size of their overweight position to emerging markets, reaching a level which has historically coincided with short-term underperformance, according to the Bank of America Merrill Lynch (BofA ML) fund manager survey for February.

As risk appetite returned to more normal levels in February, global managers upped their weightings to emerging markets from a net 20% overweight in January to a net 44% overweight, according to the survey. This represents the second biggest jump in the region in the past 12 years, following an improvement in sentiment towards the prospects for the global economy in the coming year.

In February, a net 11% of global managers predicted the global economy will strengthen in the coming 12 months, up from the net 27% who predicted a worsening economy in December.

Gary Baker, the head of European equities strategy at BofA ML global research, says historically such a large shift in sentiment towards emerging markets can be seen as a contrarian trade, with the argument the sector has got too far ahead of itself.

With cash balances falling and allocations to equities rising, Baker describes February’s survey as managers taking off the ’risk off’ trade, although not yet to a level that can be described as ’risk on’.

 “The strongest indication of risk appetite is investors’ definitive move into cyclicals from defensive stocks and the closing of underweight positions in banks, especially in Europe,” he says.

In the European survey, banks saw a 38 percentage point swing in their weighting in February, which is the third biggest shift since the survey started. Meanwhile the autos sector hit its biggest overweight, with a net 20% of investors overweight, up from 18% last month.

The large bellwether defensives meanwhile fell out of favour, says Baker, with healthcare fell by 30 percentage points to a net 18% underweight, its third largest ever one month fall.

Globally, technology remains the most favoured sector, hitting a level, like emerging markets, which Baker describes as dangerous