Adviser numbers fell 12% in RDR build-up

The number of retail investment advisers working in the UK plummeted almost 12 per cent in the build-up to the RDR deadline, FSA research reveals.

According to the regulator, there were 35,899 retail investment advisers in Summer 2012 – a fall of 11.5 per cent on the previous year. IFAs were the largest group, representing 58 per cent of all RIAs, followed by advisers in banks or building societies at 19 per cent.”http://www.moneymarketing.co.uk/regulation/fsa-adviser-numbers-fell-12-in-rdr-build-up/1066056.article

Some 89 per cent of the 1,436 advisers surveyed said they are definitely or likely to remain an RIA, while 6 per cent are planning to leave the industry.

The remaining 5 per cent will either retire as planned, have not yet decided what they will do or are unsure of their prospects.

The FSA says it will publish a full report detailing the findings of the survey shortly.

This follows separate research published by the FSA in November which suggested around 12 per cent of IFAs are likely to switch to offering restricted advice post-RDR.

This means that there are a lot more people looking for Financial Advice with a lot less of advisers there to give them advice, it is my opinion that the FSA have alienated a lot of consumers from getting the basic advice they need as the majority of Financial Advisers will want a fee for the less well off clients.

I am happy to do a full financial review free of charge on the first consultation, so please feel free to contact me.

The FSA needs to find a better way to oversee advisers

So, here we are safely in the RDR era. But how does the landscape look? Is the terrain as widely different as predicted by a few media naysayers?

I think not as I believe the financial advisory world is now a better place to be in and its reputation with the public will continue to improve. covering professional standards, charging, description of services and independence and restricted offerings. This will be done in three cycles beginning later this month. It will publish its findings after each cycle.

If advisory firms are not on track after the third cycle, action will be taken thereby filling the regulators purse and forcing RDR improvements to be undertaken by the firm.

All findings will be used to form a post-implementation review of the RDR. To me, this exercise sounds like a great deal of time intensive work to be undertaken by the Financial Services Authority.

Where will the time come from as it morphs itself into the Financial Conduct Authority, costing millions of pounds to change the name of the regulator across literature, business cards, advertisements and other expensively produced items?

My last IFA inspection visit took three bright young people employed by the then regulator more than three days to inspect my IFA business. We were a small firm with two RIs. Thankfully we were found to be satisfactory. This is one reason why I now help firms with regulatory issues.

It takes millions of pounds to thoroughly inspect advisory firms. Would it not be better for clients to feed back on their experience with financial advisers on a website similar to Trip Advisor from which the FSA can then follow up? For after all, some of the most experienced financial advisers, especially IFAs receive only circa 1 per cent of all FOS complaints. The FSA may be wasting its time inspecting many quality firms or will need to ‘nick pick’ to justify the huge cost of visiting firms.

The independent versus restricted debate continues but at last the banks have disclosed their charging structures.

HSBC is charging £950 upfront for those with assets of less than £75,000 which will cover the majority of the investing public. As HSBC is offering a restricted product range people may better be served seeing an IFA who will offer a more personal service, whole of market advice and will charge a similar upfront fee with the first meeting free. It is so much more conducive to receive financial advice at your work place, home, or in a social environment than making an appointment at a bank branch which can result in waiting in a banking hall full of people.

The bank advice could then be geared towards product sales as HSBC pay a bonus to high performing financial advisers.

Description of service is fairly straightforward with most of the information already on websites which will be checked out by clients before making an appointment. This is where clever market positioning is needed by those who offer the services to ensure the benefits of tax, inheritance and trust planning is understood.

The nirvana of being financially secure and debt free in both in sickness and health is, and always will be, about financial planning – not product sales. I wish the RDR was more about focused on highlighting the benefits of financial planning.

http://www.moneymarketing.co.uk/adviser-news/kim-north-the-fsa-needs-to-find-a-better-way-to-oversee-advisers/1064226.article

Money Advice Service healthcheck set for overhaul

The Money Advice Service has admitted its £2m online healthcheck tool “needs improvement” and has revealed plans for an overhaul.

In March, Money Marketing revealed MAS research showed of 1,000 healthcheck users, 300 did not remember doing it and an additional 371 failed to do anything differently.

MAS is currently the subject of a Treasury sub-committee inquiry. In June, MoneySavingExpert.com founder Martin Lewis branded its tools “crap” and “embarrassing”.

In a letter to Treasury sub-committee chair and Labour MP George Mudie, published today, MAS chairman Gerard Lemos highlights Money Marketing’s coverage and adds: “It is clear that overall the results of research done so far have pointed to the need for us to improve the health check.

“Building on this consumer insight, we will build a ‘mark II’ healthcheck which we expect to be far more impactful.”

A MAS spokesman refuses to disclose how much the redesign will cost, but insists it has already been factored into the 2012/13 budget.

Clayden Associates director Daniel Clayden says: “It is concerning as there was a large amount of money spent so the healthcheck tool should have been thoroughly tested. Hopefully it will learn from its mistakes.”

In the letter, Lemos reminded Mudie that the MAS began withdrawing previous remuneration arrangements for new staff on January 1. Existing staff began transferring to the new arrangements on June 1 but will be compensated for any lost income unless they leave or move position within the organisation. All directors are in the process of moving.

http://www.moneymarketing.co.uk/regulation/money-advice-service-healthcheck-set-for-overhaul/1057736.article

The new arrangements will be based around MAS’ reward strategy, developed in 2011, focusing on delivery of its objectives, the ability to recuit high calibre staff and affordability and value for money. It includes the withdrawal of flexible benefits package and non-contributory pension scheme.

Lemos says management recognised that staff transferred from the FSA were on unsuitable and unsustainable wages for a smaller, “more commercially-orientated” organisation.

This week MAS launched a six-week marketing campaign across television, in print and online with the tagline, “What does Ma think?”.

G7 to hold emergency eurozone talks

TORONTO/BERLIN – Finance chiefs of the Group of Seven leading industrialised powers will hold emergency talks on the eurozone debt crisis on Tuesday in a sign of heightened global alarm about strains in the 17-nation European currency area.   With Greece, Ireland and Portugal all under international bailout programmes, financial markets are anxious about the risks from a seething Spanish banking crisis and a June 17 Greek election that may lead to Athens leaving the eurozone. High quality global journalism requires investment.

“Markets remain sceptical that the measures taken thus far are sufficient to secure the recovery in Europe and remove the risk that the crisis will deepen. So we obviously believe that more steps need to be taken,” White House press secretary Jay Carney told reporters.   Canadian finance minister Jim Flaherty said ministers and central bankers of the US, Canada, Japan, Britain, Germany, France and Italy would hold a special conference call, raising pressure on the Europeans to act.   “The real concern right now is Europe of course – the weakness in some of the banks in Europe, the fact they’re undercapitalised, the fact the other European countries in the eurozone have not taken sufficient action yet to address those issues of undercapitalisation of banks and building an adequate firewall,” Mr Flaherty told reporters.   The disclosure of the normally confidential teleconference came as EU paymaster Germany said it was up to Spain, the latest eurozone country in the markets’ line of fire, to decide if it needed financial assistance, after media reports that Berlin was pressing Madrid to request aid.   Angela Merkel, German Chancellor, and leaders of her centre-right coalition said in a statement: “All the instruments are available to guarantee the safety of banks in the eurozone.”   They effectively ruled out Spanish calls to allow eurozone rescue funds to lend money directly to recapitalise Spanish banks, which are weighed down with bad property debts, without the government having to take a bailout programme.   Berlin is pressing reluctant eurozone partners, including close ally France, to agree to give up more fiscal sovereignty as part of a closer European fiscal union.

source ” http://www.ft.com/cms/s/0/d3a243cc-aed3-11e1-a8a7-00144feabdc0.html#ixzz1wu7bH6um

Inflation increases to 3.5% in March

Inflation in the UK increased to 3.5% during March, as upward pressures on inflation came from food, clothing and the recreation and culture sectors. The CPI (consumer price index) rate increased from 3.4% in February , while the RPI (retail price index) rate shrank to 3.6% from 3.7% in February.

Prices in the food and non-alcoholic beverages sector fell by 0.5% between February and March, a lower rate than recorded during the prior year period, while increased fruit, meat and bread and cereals prices impacted the sector. In the clothing and footwear sector overall prices rose by 2.2% between February and March, while a slower rate of decline in the recreation and culture sector also helped push inflation upwards.

The biggest downward pressures on inflation came from the housing and household services sector where prices fell by 0.2% overall and the transport sector.

 

source “http://www.fundweb.co.uk/1049808.article?cmpid=14002&email=true ”

 

Markets regain majority of losses despite Italy concerns

European markets have recovered most of their early losses despite concerns that Italy may be the latest country to fall victim to the eurozone crisis.

At close, the FTSE 100 stood at 5510.82, a fall of 0.3 per cent from its opening price, while the French Cac 40 and the German Dax were both down 0.6 per cent.

Markets across Europe fell by around 2 per cent in early trades as concerns were raised over political uncertianty in Italy. The yield on Italian 10-year bonds rose from 6.37 per cent to a high of 6.64 per cent, before falling back slightly. Prime Minister Silvio Berlusconi is set to face a vote on public finance tomorrow.

Meanwhile, Greek prime minister George Papandreou has stepped down to make way for a unity government of all political parties, despite winning a vote of confidence late last week. A new prime minister will be named to head the coalition government, with fresh elections forecast for early next year.

source http://www.moneymarketing.co.uk/investments/markets-regain-majority-of-losses-despite-italy-concerns/1041028.article

Auto Enrolement or Nest (Do you know what it is?)

More than 100 employers around the UK have agreed to enrol some of their staff in the new national top-up pension scheme known as Nest – the National Employment Savings Trust.

Employers will not be formally obliged to begin the phased enrolment of their staff in Nest until October 2012.

If they already run a decent pension scheme, then all staff can be automatically enrolled in that instead.

But in a “soft launch” that began in July this year, a variety of small, medium-sized and large employers have volunteered to start the Nest process.

This will gradually ramp up activity, so that the Nest system will be absolutely ready come October next year.

So, how is it going?

“It’s going pretty well,” said Tim Jones, the chief executive of Nest.

“What is happening here is probably the single biggest implementation of behavioural economics, certainly in the financial sector, that’s been done yet.”

The basic facts

Automatic enrolment, either into Nest or an existing company scheme, begins in October 2012 and will apply to workers who:

are at least 22 years old but below their state pension age
earn more than £7,475 a year
Minimum contributions will be paid on their earnings between £5,035 and £33,540.

Employers will start paying a minimum of 1% of qualifying earnings, rising to a minimum of 3% by 2017.

Employees will start paying a minimum of 1% of their qualifying earnings, rising to a minimum of 5% by 2017.

The process of employers joining Nest and automatically enrolling their staff to it – or to their own pension scheme – will start with big and medium-sized employers between 1 October 2012 and July 2014.

Small and micro employers will have to join in the process between August 2014 and February 2016.

sourc “http://www.bbc.co.uk/news/business-15270701

 

 

Labour to target higher-rate pension tax relief

Labour has set its sights on higher-rate pension tax relief, declaring that too much Government money is being spent on the pensions of higher earners.

Speaking at a fringe event at the Labour conference in Liverpool this week, Shadow pensions minister Rachel Reeves said the Government should look at redistributing some of the £20bn a year it spends on pension tax relief.

She said: “We spend £20bn a year on tax relief for pensions and two-thirds of that goes to higher-rate taxpayers. Half the population get just 10 per cent of that £20bn. So I would like the Government to look at ways to make pension tax relief more efficient, more effective and better value for the taxpayer in incentivising the people who most need to save.”

National Association of Pension Funds chief executive Joanne Segars said: “We need to remember we are talking about tax relief here. There are a large number of people who get higher-rate tax relief on their contributions but they also pay tax at a higher rate when they retire and we should not lose sight of that.”

In 2009, Labour proposed a reform of higher-rate pension tax relief which would have seen relief cut for people earning over £130,000.

The complex measures were scrapped by the coalition Government which instead implemented a £50,000 annual allowance while continuing to allow individuals to receive relief at their marginal rate. It also announced a cut to the lifetime allowance from £1.8m to £1.5m from April 2012.

Scrapping higher-rate relief was a LibDem policy before the election and was promoted by current pensions minister Steve Webb.

Hargreaves Lansdown head of pensions research Tom McPhail says: “If Labour are going to raise the issue of tax relief, it is essential they look at the broader pensions tax landscape rather than simply looking at higher-rate relief in isolation. Making it

fairer will be harder to deliver than it is to speculate on and I am not convinced now is the right time with automatic enrolment starting next year.”

ould look at redistributing some of the £20bn a year it spends on pension tax relief.

 

Worst-hit funds fell by a quarter amid volatility

Standard Life’s £40m UK equity recovery fund has been the worst-performing fund across the IMA sectors over the last three months, according to data from Morningstar.

Recent volatility in the markets has affected the short-term performance of a number of funds. Financials have been badly affected through the equity sell-off of the past few weeks, as investors become increasingly risk-averse in response to global events.

.Standard Life’s UK equity recovery fund fell by 25.5 per cent between May 24 and August 24. JP Morgan’s £117.7m global financials fund is the second-worst performer, falling by 24.3 per cent over the same period.

Third on the list is the £19.6m CF Richmond core fund, which fell by 23.92 per cent, followed by the £52.5m CF junior oils trust which took a 23.7 per cent hit.

Sector Investment Managers chief executive Angelos Damaskos, who manages the junior oils trust, says: “Medium to smaller-sized companies have suffered the worst during the sell-off because of the risk aversion of investors. The mandate of the fund constrains us to these types of stocks.”

Damaskos says he has sold down the fund’s 30 per cent holding in cash and bonds to 14 per cent over the last few months in favour of cheap equities. He expects the stocks will re-rate when markets stabilise.

Standard Life’s £436.5m UK equity unconstrained fund is the fifth-worst performer, down by 23.4 per cent. Manager Ed Legget says global growth expectation has fallen as a result of sovereign risk in Europe and policy issues in the US.

He says: “I have been overweight industrials, which has hurt particularly in the last few weeks. Industrials have de-rated by 25 to 30 per cent over a four-week time period.”

In terms of industrials, he remains committed to the sector. He says: “Corporate capex and emerging markets is a better place to be than developed market consumer over the next two to three years.”

Legget has added 2 per cent to UK banks to make up a 5.5 per cent position over the last couple of months.

He says: “It is riskier not to own banking stocks. They have got the potential to go up a long way if people get a little bit more confident about life.”

Legget says the Standard Life UK equity recovery fund’s focus on recovery stocks and its high exposure to financials has hurt performance over the last four to six weeks. He says: “Recovery stocks are not as popular in times of uncertainty, where people are less optimistic about the prospect of recovery.”

The sixth-worst performer is the Cavendish European fund, followed by the Digital Stars Europe ex UK fund, Jupiter China, JPM Europe smaller companies and the Ignis European growth fund in 10th spot.

A spokeswoman for Cavendish Asset Management says: “Cavendish takes a stock picking approach looking for value in our investments and, as such, the European fund has had some exposure to underperforming markets. We have recently re-aligned our position to reflect these volatile times selling a number of stocks and re-defining our exposure to the emerging economies of Europe.  We continue to believe that there is value in Europe and are confident that the portfolio contains  attractively priced stocks which offer the prospect of outperformance moving forward.”

Premier Wealth Management managing director Adrian Shandley says: “Global financials have underperformed because of the banks but the managers of the other funds must have been taking speculative smaller companies positions.”

Source “http://www.moneymarketing.co.uk/investments/worst-hit-funds-fell-by-a-quarter-amid-volatility/1037041.article “