My name is Nick & I’m a Baby Boomer

My name is Nick & I'm a Baby BoomerI was born in 1955. Apparently that puts me slap bang in the middle of the Baby Boomer generation (one definition of which is people born between 1946 and 1964).

It means that I am one of a ‘golden generation’ who have been able to benefit from a combination of decent pensions provision, availability of cheap credit and access to a housing market that has helped to make me wealthy whilst I slept at night.

Combine all that with the fact that health care and longevity have improved beyond recognition and it is easy to conclude that my generation has had it good.

That is not to say though that everything in the Baby Boomer garden is rosy.

We have to contend with being part of the sandwich generation with demands on our resources from our children (and grandchildren) and having to deal with the potential erosion of inheritance as our parents spend their financial resources on later life care fees.

So I was particularly pleased to learn that my son (and Managing Director of Informed Choice) Martin had produced a documentary film just for me!

Boom! Demographics Are Destiny was written, filmed, designed and produced by Martin over the last twelve months and has its premiere screening at the Cranleigh Arts Centre at 8.00pm on Thursday 27th November.

I know I will be there busily making notes about the actions I will need to take and I hope that you can come along as well.

Get in touch with Martin to reserve your complimentary tickets. Space is limited so please contact him quickly.

If you want a taster as to the content and quality of this movie, you can view the trailer at

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Dinosaur financial advisers & smoking Beagles

Dinosaur financial advisers & smoking BeaglesAre independent financial advisers ‘out of date’, dinosaurs even?

A very clever marketing campaign from new kid on the block online life insurance company Beagle Street thinks so.

They have taken over the Lyme Regis Dinosaur Museum to host an exhibition which includes an IFA as an exhibit alongside dinosaurs.

This campaign was launched following a survey of 5,000 people which found 63% of UK adults do not trust Independent Financial Advisers and 84% believe that the ‘middlemen’ are an unnecessary point in the financial services process.

You can watch their YouTube advert below or by clicking here. It’s rather good; we especially like the attempt at a David Attenborough style voice over.

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Making a good point

When it comes to buying life insurance, Beagle Street make a good point about the extinction of IFAs.

The Internet makes buying some financial products very easy without the use of middlemen. If you are using the services of an IFA simply to get the best deal, you’re probably just as capable of knocking down prices by going online.

There are still good reasons however for using an IFA if you’re buying life insurance.

A cursory glance at the Beagle Street online application process reveals no mention of placing the policy in trust; this is very important to consider when buying life cover and something a competent IFA would ensure happens.

They also appear to allow the option to select ‘no to all’ on their questionnaire, creating a significant risk of ‘non-disclosure’ which could invalidate your life cover at the point of making a claim.

Shaking up financial services

We love the Internet and believe it has the potential to shake up the retail financial services sector for the better.

We agree with Beagle Street that the traditional role of an IFA as independent product broker is quickly becoming extinct, thanks in part to online product comparison services.

What Beagle Street fail to recognise in this clever marketing campaign is that our profession has moved on.

We might continue to use the strap line Independent Financial Advice in our logo – although not for much longer, changes are coming at Informed Choice – but what we do for our clients is Financial Planning, not broking products.

Our clients continue to want the most suitable (not necessarily the cheapest) products when these are needed to meet financial goals; this ‘one-stop shop’ service is something our clients tell us is very important.

But everything starts with Financial Planning.

What do you want out of life? What are your goals? What is your Financial Plan to achieve this?

Beagle Street present an accurate portrayal of an old-school IFA we and our clients would struggle to recognise in the modern Financial Planning profession.

Our video response

We had a bit of fun in the office this afternoon putting together this video response:

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Smoking Beagles

As an aside, and because I mentioned it in the title of this article, when I think of Beagles and life insurance, I think of “The smoking Beagles”.

Back in 1975, before I was born, The People newspaper in Manchester ran one of the most memorable newspaper front pages in the history of popular journalism.

One of their journalists had gone undercover and taken photographs of dogs being forced to smoke cigarettes. The Beagles were being used to test an apparently ‘safe’ new cigarette.

As life insurance is undoubtedly a big consideration for chain smokers, perhaps Beagle Street could feature some smoking Beagles in their next campaign?

It’s not quite comparing Meerkats, but it would have shock value.


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What’s going on with the investment markets?

What's going on with the investment markets?What’s going on with the investment markets at the moment?

The FTSE 100 index of leading UK company shares was on the slide again today, closing down 71.52 points or 2.83% lower at 6,321.16.

This was the biggest one-day drop in the value of UK companies in 16 months, so represents a fairly major event in investment markets.

The index is now at its lowest level since mid-2013. It has fallen by nearly 10% since 4th September when it stood at a more impressive 6,878 points.

Shares around the world have fallen in value as a result of concerns about weak economic growth.

This is also being reflected in a fall in the price of oil; Brent crude slipped below $85 a barrel today and US light crude has dropped below $81 a barrel. The price of Brent crude has fallen by 20% since the summer and these lower prices are already being reflected in prices at the petrol pump.

Economic weakness in China and Germany in particular is weighing heavily on the mind of investors.

In addition to economic concerns, there are also issues worrying investor in specific sectors.

Travel and transport companies have been hit by fears over the potential impact of the Ebola virus. If the virus became establised outside of Guinea, Sierra Leone and Libera, world travel would quickly become curtailed and the share price of airlines or other transport companies would naturally plummet.

Geopolitical tension is also hurting investor confidence.

Protests in Hong Kong, tensions in Ukraine, the rise of the Islamic State in Syria and Iraq – investors have a lot to be nervous about right now.

Of course it’s not all bad news.

A fall in the value of the FTSE 100 means the yield from these companies has risen, to around 4%. This comfortably exceeds the yield available from cash or fixed income securities, which could appeal to income investors.

It has also resulted in a more attractive price-to-earnings ratio, with the FTSE 100 now trading on a p/e ratio of 12.5 compared to a historical average of closer to 14. Suddenly the market is not looking so expensive for long-term investors.

Our clients all have well diversified portfolios which will not fully reflect this close to 10% fall in the value of the FTSE 100. Diverse portfolios combined with long-term Financial Plans mean investors who have taken advice can avoid making knee-jerk decisions about their investments.

As one of my colleagues remarked this afternoon; “I love it when the investment markets hold an end of season sale”.

Other asset classes have had a better time of it over the past three months.

The average return for the IMA UK Gilts sector is 5.12%. It is 0.06% for IMA Property (although much better for UK commercial property, as this sector contains a lot of global property company shares) and 3.2% for the IMA Sterling Corporate Bond sector.

Global Bonds have returned an average of 2.68% over the past three months, and the IMA Asia ex Japan Equity sector is up by an average of 1.44%, demonstrating that it’s not all bad news for equities right now.

What we always encourage investors to do at times like this is tune out the sensationalist headlines, focus on the long-term plan and remember the value of diversification.

That said, if you have any concerns whatsoever, your Financial Planner at Informed Choice is only a phone call or an email away. Call us if you want to chat.

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Will you have to pay inheritance tax?

Will you have to pay inheritance tax?The prime minister David Cameron has brought inheritance tax back into the spotlight with his promise that only the “very wealthy” would pay inheritance tax in the future.

Speaking yesterday at the Age UK headquarters in London, Cameron voiced his support for raising the threshold at which inheritance tax is paid.

He wants to ease the burden of inheritance tax on individuals with estates which currently suffer the tax on death but who do not consider themselves “in any way the mega-rich”. I’m sure quite a few of us can identify with that.

The Tories originally revealed plans to raise the inheritance tax nil rate band to £1m, or £2m for married couples and civil partners, all the way back in 2007 at their party conference.

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Since April 2009, the nil rate band has remained frozen at £325,000, or £650,000 for couples, which results in many estates being subject to some inheritance tax once property values and other assets are taken into account.

The pledge to raise the threshold to £1m was dropped ahead of the 2010 general election because it was seen as inappropriate during times of austerity.

It could be argued that it remains inappropriate to raise the threshold when the public sector face pay caps and many state benefits are frozen.

In the GU6 postcode area, the average property price over the last three months has been approximately £314,862. Once other investment assets are taken into account, it is easy to see how the nil rate band can be exceeded and beneficiaries are charged inheritance tax.

The full transcript of what David Cameron said about inheritance tax aspirations, as reported in the Guardian, is as follows:

“To me inheritance tax is a tax that should be paid by the very wealthy. I think you should be able to pass a family home on to your children rather than leave it to the taxman.

“I would like to see that go further because I think even at £650,000, particularly in some parts of the country, you see someone who has worked hard, they have put money into their house, they have done it up to improve it and they want to leave it to their children and they don’t feel that they are in any way the mega-rich, and they feel: ‘I should be able to do that without having 40% of it knocked off’.

“So I do still have ambitions to do that, but even though I’m the first lord of the Treasury, there is somebody called the second lord of the Treasury – that’s the Chancellor of the Exchequer, so I have got to try and shoehorn these things into his budget.

“He is a pretty co-operative chap, but I’ve got my work cut out on this one. But he is keen on it too.”

We look forward to the Autumn Statement on 3rd December 2014 for any hint of changes to inheritance tax thresholds in the future.

In the meantime, it is still important to consider your inheritance tax planning, particularly if you have strong views on how much you will be leaving to your children and how much they will be paying to HM Treasury when you die.

Download our free guide to estate planning here

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How to avoid investment fraud

How to avoid investment fraudThe Financial Conduct Authority (FCA) has launched a national campaign to educate consumers on how to avoid investment fraud.

They have set up the Scamsmart website, funded using the proceeds of crime, to help investors avoid investment fraud.

Suggestions on website include rejecting cold calls offering investment opportunities.

According to the FCA, the average victim loses around £20,000. The regulator receives nearly 5,000 calls a year from investors about suspected cases of investment fraud.

Here are some ways in which you can avoid investment fraud:

Beware of returns which are too good to be true

A classic warning sign of investment fraud is the offer of astronomical returns on your money.

It’s quite simple; there is an unbreakable link between investment risk and potential returns. If sky-high returns are on offer, the risks must also be sky-high.

Also watch out for straight line returns

Another classic attribute of fraudulent investments is past investment returns which appear to run in a straight line, with little or no volatility.

Cash is the only investment asset class which comes with no volatility, but the returns from cash are also very low.

If an investment opportunity offers a consistent return of say 4-5% per month, it’s probably fraudulent. Just saying.

Do your due diligence

Investment fraudsters tend to operate outside of the regulated UK financial service environment.

To give investment advice to retail investors in the UK, an adviser needs to be authorised and regulated by the Financial Conduct Authority (FCA). Check they appear on the Financial Services Register here.

They also need to hold a valid Statement of Professional Standing (SPS) from a designated professional body, such as the Chartered Insurance Institute (CII) or Institute of Financial Planning (IFP).

Ask to see a copy of their SPS and double-check it is real by calling the professional body named on the certificate.

Avoid esoteric assets

If you stick with cash, fixed interest securities, equities and commercial property, your chances of falling victim to investment fraud are greatly reduced.

Invest in Brazilian teak forests, Mexican golf resorts or gold dust schemes, and you are probably going to join the ranks of investment fraud victims.

It’s a pretty simple choice.

Stay local

If you’re a UK investor, there are very few reasons for ever buying an investment scheme from outside of the UK.

Fraudulent investments schemes are often promoted and operated from overseas locations including Spain, the Caribbean or the Middle East.

Stay local when dealing with investment advisers; you can meet them face-to-face, ensure their office actually exists and benefit from the protection of the Financial Services Compensation Scheme (FSCS) in the event something goes wrong.

Get a second opinion

There is never any harm in getting a second opinion from a professional adviser.

Speak to another Financial Planner, your solicitor or accountant, before parting with your cash, and make sure they think the proposed scheme is legitimate.

Hang up on cold callers

Never, ever invest in a scheme introduced to you by a cold caller.

There is a good chance you are receiving a call from a boiler room operation, designed to get their hands on your money.

If you receive a cold call about an investment scheme, regardless of how convincing it seems, just say no and hang up.

Look out for elderly relatives

Older people are often more vulnerable to investment fraud, so talk to them about the risks and look out for their best interests.

We often hear about elderly people who are bombarded with cold calls or post promoting fraudulent investment schemes.

Spending time with elderly relatives and taking an interest in any approaches from salespeople is a good way to help keep them safe.

Once bitten, twice shy

Victims of investment fraud are targeted on multiple occasions, often because they appear on a ‘sucker list’ which is sold by the first fraudster to other fraudsters, identifying you as an easy target.

If you have ever fallen victim to investment fraud in the past, be especially cautious about it happening to you again in the future.

Consider taking additional steps to protect your identity, such as changing phone numbers (and making these numbers ex-directory).

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Using your pension like a bank account

Using your pension like a bank accountToday’s announcement that the government are giving additional rights to savers to “dip in” to their pension funds, just like a bank account, is really nothing new.

Professional advisers already know about something called phased drawdown and use it where this can be advantageous to their clients.

Taking some pension benefit as tax free cash and some as taxable income (phased drawdown) has simply morphed into taking some tax free cash and some taxable capital.

For some pension plan owners this will indeed be the option of choice at retirement.

There has been some debate about this new freedom and choice in pensions but we are broadly in favour of the changes.

However we have one concern; in our experience many people significantly underestimate their life expectancy.

This presents the risk that they will completely erode their pension fund long before they die and have to resort to using other financial resources or potentially a much reduced standard of living.

I have posted on Twitter about this a couple of times today. The first tweet made the statement:

Good Financial Planning is going to be needed to ensure that their pension funds are not eroded too quickly. My second tweet posed the tongue in cheek comment:

The answer of course will be “no”

If you take capital out of your pension fund please do use it wisely.

Better still, seek professional advice and withdraw pension funds based on a carefully considered Financial Plan which makes reasonable assumptions about the future.

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Challenges for Baby Boomers

Challenges for Baby BoomersNick shared an article with me this morning which highlighted some interesting challenges for Baby Boomers.

The article contained a summary of a survey by Fidelity Investments which looked at the mixed savings habits of 20- and 30-somethings, a generation commonly known as millennials.

Why does this matter for the Baby Boomer generation (those born between 1946 and 1964) and what challenges does it create?

Find out more about our feature-length documentary about Baby Boomers in retirement

Well, the survey also found that 60% of respondents view their parents as good financial role models.

This is a particularly high vote of confidence because millennials typically don’t trust others when it comes to financial advice.

In fact, 23% of millennials claim to trust no one when it comes to their finances.

14% trust their parents when it comes to money matters,11% trust their mother specifically and 8% trust their father specifically – a total of 33% of millennials trusting their parents or a parent most on money matters.

Just 13% trust a financial professional most on personal finances.

This vote of confidence in the financial skills of parents, and the relative lack of trust in financial professionals to deliver financial advice, poses challenges for Baby Boomer parents as they consider the transfer of wealth across generations.

We are increasingly seeing parents in the Baby Boomer generation wanting to transfer wealth to children and grandchildren during lifetimes, rather than waiting until death for this ‘inheritance’ to cascade down the generations.

Gifting during life or using wealth to get adult children onto the property ladder can be a very efficient form of estate planning and also very satisfying for parents.

It does however need to be managed very carefully to ensure wealth is not squandered.

If millennials are generally reluctant to seek professional financial advice when needed, parents will need their own plans and advice to keep family wealth secure and transfer it to the next generation in the most efficient way.

Find out more about our feature-length documentary about Baby Boomers in retirement

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UK inflation falls to 1.2%

UK inflation falls to 1.2%The latest price inflation figures from the Office for National Statistics (ONS) show UK inflation has fallen to 1.2%.

The Consumer Prices Index (CPI) measure of UK price inflation fell to 1.2% for the year to September, from 1.5% the previous month.

This is the lowest rate of UK inflation in five years.

The Retail Prices Index (RPI) measure of UK price inflation also fell in the year to September, from 2.4% to 2.3%.

The ONS say lower energy and food prices contributed to this fall in price inflation, as well as cheaper transport costs.

What the lower price inflation figures mean is interest rates are less likely to rise now until well into 2015. The pound fell in value as a result.

Price inflation figures published in October for the year to September used to be closely scrutinised as they were previously used as the basis for a wide range of state benefits.

However, most benefits are now subject to a 1% capped annual rise, which was introduced in April 2013. If the Conservatives win the next election in May, these same benefits will be frozen for a further two years.

State pension benefits are subject to the ‘triple lock’ of the higher of inflation, earnings growth or 2.5%. With inflation and earnings both lower than 2.5%, this figure will be used instead.

Only disability benefits will rise in line with CPI inflation, so will be uprated by 1.2% next year assuming the government approves this increase.

When constructing and reviewing your Financial Plan, it is very important to make realistic assumptions about future price inflation.

Inflation can drive the long-term outcomes of your Financial Plan and is often underestimated, resulting in a gap between earnings power and needs later in life.

Care fees in particular often rise in cost at a faster pace than the official UK inflation figures published each month by the ONS, so a higher inflation figure should be assumed when considering the cost of care in later life.

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Obese doctors & bankrupt Financial Planners

Obese doctors & bankrupt Financial PlannersOne memory I have of my first holiday to South Africa was being introduced to a family doctor at a braai we attended on the first day we arrived.

This chap was clearly a well respected member of the community, held in high regard by all in attendance.

But throughout the BBQ he was smoking like a chimney and drinking enough white wine to sedate one of the Hippos we would see on safari later that week.

For a health professional to engage in such self-destructive behaviour – particularly in the company of a large number of his patients – was something I considered at the time (and continue to consider) a little ‘odd’.

Following my blog earlier this week about the keynote presentation by Dr James Rouse at the IFP annual conference, I commented on a related trade press article questioning how effective Financial Planners might be in ‘stewarding the very good life’ if they were themselves overweight, inactive and focused solely on money.

It’s was a controversial statement and provoked a response from a couple of people I respect on Twitter.

Others were more supportive of my view.

Now I wasn’t claiming for a second that overweight individuals cannot deliver good financial advice. Of course they can.

What I was arguing is that our roles as Financial Planners are becoming more holistic; the sole focus on the financial aspect of life has expanded to include achieving lifetime goals.

To do the very best we can with each of our clients, Financial Planners should practice what they preach.

There’s a commonly used expression in our profession; “A poor Financial Planner is a poor Financial Planner”.

Assuming you would never seek financial advice from a bankrupt, other than perhaps to learn from their experience and avoid making the same mistakes, it seems remiss to work with a Financial Planner who is not personally living a fulfilled and meaningful life.

I would not take advice from an obese, alcoholic GP who was also a smoker, regardless of their professional expertise.

It’s similar to what author and public speaker David Maister refers to as ‘the Fat Smoker syndrome’; how individuals can overcome the temptations of the short-term and actually do what they already know is good for them.

Obese doctors and bankrupt Financial Planners occupy a similar space in my head; probably capable of fulfilling their professional obligations but unlikely to be inspiring what they preach and not a natural choice as advisers.

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How long are your telomeres?

How long are your telomeres?On Tuesday morning I made my way downstairs from my hotel room at the Celtic Manor Resort and attended a keynote presentation by Dr James Rouse.

I’ve written about James before; he was speaking at the Institute of Financial Planning annual conference and, in anticipation of hearing his presentation, I recently read his new book, Think Eat Move Thrive.

At this point, you might be wondering why a room full of Financial Planners would be listening to an enthusiastic American talking about nutrition, exercise and living high-performance lives.

The simple answer is this; Financial Planning is about so much more than just money.

James explained during his presentation that self-care is a form of social activism. He sees our role as Financial Planners as stewarding the very good life.

Which begs the question, how long are your telomeres?

For the uninitiated, a telomere is a region of repetitive nucleotide sequences at each end of a chromatid, which protects the end of the chromosome from deterioration or from fusion with neighbouring chromosomes (thank you, Wikipedia).

They are a bit like the plastic caps on the end of shoelaces, and, in our bodies, prevent chromosome ends from fraying and sticking to each other.

Over time, due to each cell division, the telomere ends become shorter.

If we can encourage our telomere ends to become longer, we can slow the aging process and even protect against cancer.

One way to boost this anti-aging secret is through strength training. In fact, loss of lean muscle mass is the number one marker for unhealthy aging.

James explained that by working out three times a week with resistance exercises, we can maintain long and strong telomeres, resulting in a longer and healthier life.

This was a bit of a wake-up call for me. My own exercise regime is focused on endurance; mostly running ridiculously long distances and swimming moderately long distances, with the occasional bit of cycling.

Despite owning a set of dumbbells and a kettlebell, they rarely get much use.

My goal for the rest of this year is to form the habit of weight training at least three times a week, whether using these weights or my own bodyweight.

It’s never too late to add some lean muscle, increase telomere length and increase the prospects of healthier aging.

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