IFA36 Lores

Japan and The Fourth Arrow

Cheap Oil - What s Your Conspiracy Story?

QE, Here We Come

Chartered Versus Certified

EUROPE FINALLY CRACKS

JANUARY 2015 ISSUE 36

For today s discerning financial and investment professional

Cover.indd 1 27/01/2015 14:01

C O N T E N T S

CONTR I BU TORS

Brian Tora an Associate with investment managers JM Finn & Co.

Steve Bee founder of Jargon FreePensions, and of Jargon FreeBenefits.

Lee Werrell a senior compliance consultant and industry adviser.

Richard Harvey a distinguished independent PR and media consultant.

Nick Sudbury known for his columns in many leading financial magazines.

Abbie Tanner a leading marketing consultant for financial services companies.

Neil Martin has been covering the global financial markets for over 20 years.

6 News All the big stories that affect what we say, do and think

14Oil - Collateral Damage

Wheres the downward pressure coming from, asks Michael Wilson? And how long is it going to last?

21 Good IntentionsNew Years resolutions. Management guru Abbie Tanner would like to have a quiet word with you

27From the Ground Up

Heartwoods Mark Rockliffe says we sometimes need to rethink our model to get ahead

30 Chartered or Certified? 3lanners are upgrading their qualifications, says Neil Martin. But which route to choose?

35Local Hero

We talk to IFA Colin Lambert about the importance of looking after clients on your home turf

38 Luxury Funds at Poundsaver Prices Our funds feature returns with Nick Sudbury looking at a sector thats been moving into bargain territory

42Europe: A Bumpy Year Ahead

QE isnt going to be the answer to everything, says Brian Tora. Theres a lot still to be thrashed out

44 Dumping the Pensions Albatross Whoopee, says pensions expert Steve Bee, were heading back toward sanity

Editorial advisory board: Richard Butler, Michael Holder, Ian McIver and Mark Pullinger

01/1

5

Editor: Michael [email protected]

Art Director: Tony [email protected]

Publishing Director: Alex [email protected]

THE FRONTLINE: The euro falls, the Germans turn grumpy, the Mediterranean sniffs fresh air.

WHEN BRIAN RETIRED AS SALES DIRECTOR HE NEVER EXPECTED TO GO BACK.

Your clients risk going back to work in retirement unless you make sure theyve got enough to cover the basics. Things like food, utility bills and running a car.

An enhanced annuity could still be the cheapest* way to secure their basic income needs and dont forget, this is guaranteed for life. And with our Target Income Calculator you can give them an indication of how much of their pension fund they will need to set aside to cover the essential living costs, as well as the income they could receive from a Partnership annuity.

That way, once youve got their money working, you can rest assured your clients will never have to.

For more details call 0845 108 0443 or visit partnership.co.uk

*Source: Partnership data 2014, Compared to a standard annuity and depends upon individual circumstances. Telephone calls may be recorded for training and monitoring purposes. Local call rates will apply. Partnership is a trading style of the Partnership group of Companies, which includes; Partnership Life Assurance Company Limited (registered in England and Wales No. 05465261). Partnership Life Assurance Company Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The registered office is 5th Floor, 110 Bishopsgate, London, EC2N 4AY.

For authorised financial advisers only not for retail clients

PART0068_Golf_Ad_210x297_FAW_AW.indd 1 14/10/2014 16:05Cover.indd 2 27/01/2015 14:01

C O N T E N T S

IFAmagazine.com 3

January 2015

46 Pssst! Anyone for Risk? Sanlams Head of Marketing Giles Cross says its no good letting pensioners play it for 100% safety

50Wanted A Fourth Arrow?

Our panel of senior analysts tells IFA Magazine that it isnt looking clear enough yet for Japan

55 Complaints Handling Procedures Dont look now, says Lee Werrell, but the FCA is about to get heavy with you. Yes, you

58FCA Publications and IFA Calendar

In the news, in print and in court. Our monthly listing of whats new in FCA-land

65Thinkers: Gunnar MyrdalA Keynesian before Keynes? Thats what he reckoned. Decide for yourself

66The Other Side

They dont make childhoods like they used to, says Richard Harvey. Thank goodness

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Contents.indd 3 27/01/2015 12:28

This advertisement is for Investment Professionals only, and should not be relied upon by private investors. Defined contribution assets of 19.8 billion are as at 31 October 2014 (Source: Fidelity). Issued by Financial AdministrationServices Limited, (a FidelityWorldwide Investment company), authorised and regulated by the Financial Conduct Authority. Fidelity, FidelityWorldwide Investment, FundsNetwork, their logos and F symbol are trademarks of FIL Limited. CSO6958/0615

We have been supporting professionals with

retirement planning for some 45 years. Whats

more, we currently manage over 19.8 billion

of defined contribution assets for some of the

worlds leading companies.

So to get your clients closer to the retirement

they want, head our way.

Find out more atfidelity.co.uk/retirementsolutionsOr call 0800 41 41 81

Look no further than Fidelity to help you help your

clients achieve the retirement they want.

We, like you, understand investing this can

make all the difference for clients, whether

theyre saving for, or are in, retirement

We have an extensive range of products and

funds, to support your conversations ISA,

pension, drawdown, income and growth funds

We provide a comprehensive level of

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Well help you bringthem closer together.

Job No: 49604-2 Publication: IFA Magazine Size: 297x210 Ins Date: 01.02.15 Proof no: 1 Tel: 020 7291 4700Ed's Welcome.indd 4 27/01/2015 12:29

Europe Cracks

But then, the Germans have a historical reason for remembering what happens when you ood an undeserving situation

with large amounts of liquidity. As a student

in Berlin, my

consumer spending at home. Just look at Americas experience over the last six years if you doubt the logic of that.

The odd thing, in fact, was that it took the non-EU Swiss to force the ECBs hand. After months of shilly-shallying from the ECB, Zurich had simply decided to make QE a self-fulfilling prophecy by abruptly abandoning its 40-month-old currency peg against the euro. It had no choice, it said. The two great tectonic plates, the Swiss franc and the euro, had been under such underground tension recently that something had to give.

And suddenly, in the space of an hour or two, it did. With an almighty crack that resounded round the world. The fact that the Swiss euro soared by 30% in an hour before settling back to a mere 15% one-day gain told us everything we needed to know about how unsustainable the euros situation had become. If the Swiss hadnt done what they did, it might have been the global economy that got shaken apart, not just Germanys pride.

Mike Wilson, Editor

It had to come eventually, of course. QE, I mean.

Anyone could see that happening. Well, anyone

except the Germans, that is

elderly neighbour still bore the forty-year-old scars of watching her entire family fortune wiped out by a loose credit situation that had turned into uncontrollable hyperination. And the poor, demented old dear still had paranoid fantasies about the ghostly figures who walked straight through the walls of her apartment

and helped themselves silently to her money. Trauma runs deep.

But surely not so deep as to last 80 years? Alas, it seems so. The German protesters who are still trying to get Germanys participation in Europes forthcoming 60 billion per month QE programme

declared unconstitutional have sincere worries. They

fret that feckless Greeks will grab the ECBs money

and then default on their bond obligations anyway. And even though the ECB has told them that its the recipient governments that will bear the weight of any default, and not the Eurozones national taxpayers, the resentment is still bubbling Maybe it always will.

Theres no doubting that QE will hurt. Its already devaluing the euro, just as its done for the yen during the last year. On the other hand, the financial markets love it because it will drive up export volumes and encourage

This advertisement is for Investment Professionals only, and should not be relied upon by private investors. Defined contribution assets of 19.8 billion are as at 31 October 2014 (Source: Fidelity). Issued by Financial AdministrationServices Limited, (a FidelityWorldwide Investment company), authorised and regulated by the Financial Conduct Authority. Fidelity, FidelityWorldwide Investment, FundsNetwork, their logos and F symbol are trademarks of FIL Limited. CSO6958/0615

We have been supporting professionals with

retirement planning for some 45 years. Whats

more, we currently manage over 19.8 billion

of defined contribution assets for some of the

worlds leading companies.

So to get your clients closer to the retirement

they want, head our way.

Find out more atfidelity.co.uk/retirementsolutionsOr call 0800 41 41 81

Look no further than Fidelity to help you help your

clients achieve the retirement they want.

We, like you, understand investing this can

make all the difference for clients, whether

theyre saving for, or are in, retirement

We have an extensive range of products and

funds, to support your conversations ISA,

pension, drawdown, income and growth funds

We provide a comprehensive level of

support an experienced retirement phone

team and platform tools, plus regular

insight and opinion

Well help you bringthem closer together.

Job No: 49604-2 Publication: IFA Magazine Size: 297x210 Ins Date: 01.02.15 Proof no: 1 Tel: 020 7291 4700

If the Swiss hadnt

done what they did,

it might have been

the global economy

that got shaken apart

IFAmagazine.com

January 2015

5

W O R D S O F W I L S O N

Ed's Welcome.indd 5 27/01/2015 12:29

No Stopping Us Now

In theory, the Santa Claus rally should have ended a couple

of weeks ago as the December rush of position-squaring

tailed off and the world faced up to the grim realities of 2015

A failing Eurozone economy, a Chinese slowdown, and a global slump in oil prices that ought to have kaiboshed the oil-heavy FTSE 100 index. And the very real prospect of a hung parliament after the May elections. There wasnt a lot of good news to be found there, was there?

But what actually happened just goes to show how much you can depend on theory.

The perilous third week of January saw the Footsie finding its way back into positive territory for the year; and the stricken FTSE (urofirst 00 put on a da]]ling 10 in the space of a fortnight.

All thanks, it seems, to the growing realisation that the European Central Bank had finally strong-armed Germany into letting it launch a round of quantitative easing. Yes, the same QE that had

given America such a tremendous boost during the last six years. But not before the Swiss central bank

N E W S

had delivered a swift kick in the underbelly by cancelling the Swiss francs three-year fix against the euro thus boosting the SWF by 0 in the space of an hour while knocking the European central currency into the relegation zone.

And Internationally?

There wasnt much doubt that the euro and QE questions were the driving force behind the equity markets change of heart in Europe. Not least, because both Wall Street and Tokyo both staggered and struggled in more or less time-honoured January fashion.

The S3 500 entered the third week of January at a sluggish 2,020, having at one point retraced all of the improvement since last October an odd thing, you might think, since America had just announced a stunning fourth-quarter GDP growth and was otherwise full of bright shiny optimism. But then, without a busted-but-rescued economy like the euro to give it a lift, where were the optimistic voices to come from? The dollar continues to do just fine, thank you.

IFAmagazine.com6

The European

Central Bank has

finally strong-

armed Germany

into letting it

launch a round

of quantitative

easing

News.indd 6 27/01/2015 12:32

IFAmagazine.com 7

News.indd 7 27/01/2015 12:32

SwissCheeseYes, the boot up the ECBs

fiscal backside, which we

mentioned in the previous

article, had been

delivered in a not

very timely fashion on

15 January by the Swiss

Central Bank, which had

cancelled its forty-month peg

against the euro at no notice

at all. The continental shelf

between the two currencies had

simply become too stressed,

it reasoned, and the tectonic

fault line had been bound

to give way sooner or later

Indeed, that was probably what drove the ECB, seven days later, to announce an entirely expected 18-month experiment in quantitative easing starting in March 2015 with monthly bond purchases of 60bn per month, and ending in September 2016. Or, as ECB president Mario Draghi put it, until

we see a sustained adjustment in the path of ination.

The ECB, of course, has pledged to maintain consumer inflation at around to 2 - a step which it believes is essential because theres a very real chance of deflation taking hold in the euro zone. Technically, indeed, there had been deflation in December

201, when year-on-year prices fell by 0.2 - worse than the 0.1 forecast decline, but almost certainly accountable to the freefall in the price of oil rather than any actual decline in consumption.

Quantitative Squealing

Nevertheless, the road to QE had been fraught with difficulty and a

fair bit of name-calling. Germany in particular had lambasted the idea of flooding the market with freshly printed money not a particularly hard thing to understand, considering the German folk-memory of 10s inflation, but something that was still felt by the Mediterranean states

N E W S

IFAmagazine.com8

Mario Draghi

finally lived up

to the billing to

do whatever

it takes to

save the euro

News.indd 8 27/01/2015 12:32

to be a deliberate denial of their own need for economic support.

Angela Merkel, the German chancellor, had already declared to a receptive German public that she thought the QE programme would not in fact work, and had argued that it could burden taxpayers in many countries with heavy potential losses. In the event, however, Mr Draghi obtained a grudging acceptance by agreeing that the ultimate responsibility for bond-buying would be divided among the 19 eurozone national central banks, not by the governments themselves.

Not that everyone was won over by Draghis sweetener. As we went to press,

several German groups had appealed to Germanys Constitutional Court to stop the countrys participation in the

ECBs folly. Given that the same courts had already cleared it some weeks earlier, the chances of success seemed slim.

What it will mean for the euro is a decline in its value against the dollar, the pound and oh yes, the Swiss franc. But it ought to improve the export prospects for Eurozone manufacturers.

There have, inevitably, been some casualties. A couple of FX brokers went promptly to the wall, having been caught with their over-extended trousers down: shares in the US forex trading group FXCM had been suspended in New

Awareness: A Long Way Still to Go

Only half of DC pot holders say they understand what an annuity is. And one in ten believes that the best way to minimise their tax liabilities after April will be to withdraw everything from their pension pots in a single lump sum.

These are just three of the frankly shocking findings to emerge from a survey conducted by the International Longevity Centre think tank and published on 1 -anuary. The

N E W S

new research paper, Making the System Fit for Purpose finds that consumers approaching retirement are ill-equipped for new pension freedoms. And that contingency plans are needed to prevent consumer harm arising from the new pension freedoms.

The research, supported by a consortium of industry partners and guided by pensions and retirement expert Ros Altmann, was conducted among 5,000 people aged

With April

now galloping

over the horizon,

only one in five

of the 55-70 age

group say that

they understand

the term marginal

tax rate

55-0 who had yet to retire or to draw on their private pension wealth. The survey found the following:

5 of people with DC pots aged over 55 said that they would prefer a pension that will deliver a guaranteed income for life, rather than a plan whose value depended on the fluctuations of the financial markets. Half said that they wanted their guaranteed income to be protected against inflation. But

IFAmagazine.com10

Sweet as a Nut

The first issue of pensioner

bonds got off to a flying start

on 16 January, with the NS&I

phone lines and website both

swamped by enquiries. The

NS&I 65+ Guaranteed Growth

Bonds, which are available only

to the over-65s, pay 2.8% for

one year or 4% for three years.

N E W S I N B R I E F

Global Warming

Global stock markets perked

up in the last weeks of January,

as perceptions grew that the

introduction of quantitative

easing, coinciding with a

healthy US economy, would

usher in a period of greater

calm and reduced volatility.

The euro weakened by 6%

against the pound during the

three weeks to 22 January, and

by 10% against the dollar.

Getting Sentimental

UK house price sentiment cooled

again in January, according to

a Markit Economics survey which

found that although consumers

perceived a small rise in that

month, their expectations for future

price growth had fallen back and

were well below last Mays record

high. All regions had seen a sharp

moderation of sentiment since

then, Markit said, with London

and the South West experiencing

the greatest slowdown.

News.indd 10 27/01/2015 12:32

disappointingly, only two in every five in this group have yet to make any retirement plan.

Those closer to retirement were more likely to have made a plan, ILC says, but even among those who were less than one year from retirement, more than in 10 had still not made one.

Reassuringly, perhaps, only of those interviewed said that that paying for big ticket items such as holidays or a car was the most important thing on their agendas, but another 5 said that paying off debt was the biggest priority.

There was more confirmation of the risk-averse trend when the interviewees were asked what proportion

of their pension fund they could afford to lose. The most commonly given response among DC pot holders was none at all 5. Only thought that they could afford to lose 20 or more of their fund.

The misunderstandings continued. Only 20 of those with DC pots understood what an enhanced annuity was, and only 5 said that they understood what income drawdown was. Women were consistently found to be less financially aware than men and therefore most at risk of confusion from the new pension freedoms

Governments Business Champion for older workers, Dr Ros Altmann said:

It is clear from the research that there is an urgent need to help people understand more about how pensions work, and what their options are when deciding how to make best use of their pension funds. Even after decades of pension saving, many people have no understanding of the most important aspects of the pension system, which leaves them at risk of making poor decisions.

The opportunity of more freedom and choice in future has the potential to deliver better value from retirement savings, but much work still needs to be done to help savers understand their options.

IFAmagazine.com 11


A Little Off the Mark

Britains consumer inflation level dropped to just 0.5% in December, a very long way below the Bank of Englands 2% target. Governor Mark Carney was obliged to explain to the Treasury for the shortfall, which is thought to be at least partly due to low fuel prices. Everyone was feeling twitchy about deflation, which had already been indicated in the eurozone.

News.indd 11 27/01/2015 12:32

Advice? Guidance At Last

N E W S

At last, some Finalised Guidance

from the FCA on what we mean by

advice. Or is it advice as to what we

mean by guidance? Or guidance

as to when were giving guidance?

Or not, as the case may be?

IFAmagazine.com12

Just in case you were ever in any doubt as to what you were doing and when you were doing it, FG 15/1 Retail Investment Advice: Clarifying the Boundaries and Exploring the Barriers to Market Development kicks the new year off in fine style. In a snappy pages, it confirms pretty much what it was saying last year about the occasions where terms such as simplified advice are used. Sounds simple. But the clarification is welcome anyway.

Having spent the last six months in pursuit of responses to Guidance Consultation GC1/ between -uly and October 201, the FCA says it now has a

clearer picture of where confusion has been lying when it comes to the boundaries of what constitutes advice. And with FG 15/1 it confirms how firms should interpret the boundaries of advice, and gives a summary of the feedback the regulator received.

We are, of course, being unnecessarily

The FCA

has restated its

definitions of

personal

recommendation,

regulated advice

and generic

advice

flippant here, because the underlying issue is serious enough. The many firms who complained to the FCA that they were uncertain as to which sorts of activities constituted advice (model portfolios? using decision trees" have a valid point. And the growing development of semi-guided investment routes, which can often blur the line between execution-only and advised services, is an area which we can expect to grow significantly in the coming years.

Playing By the European Rules

Theres also the fact that the MiFID rules define advice in ways that may not necessarily be

The Wholesale and Nothing But The Sale

British energy companies

competed to slice an average

of 4.75% off their consumer

prices for natural gas, reflecting

what they said was a fall in

market prices. Consumer

groups, however, pointed

out that wholesale gas prices

had actually halved by 50%

in the last nine months.


Slow Boat to China

Chinas economy grew by just

7.4% in 2014, the slowest pace

since 1990, new figures showed.

New government policies

have been aimed at reducing

the countrys dependence

on consumer credit, but the

news still came as a shock

to the financial markets.

The Shanghai Composite

dropped by almost 9%

on 19 January as the

announcement appeared,

although that still left it

handsomely ahead on the last

six months.

News.indd 12 27/01/2015 12:32

IFAmagazine.com 13

congruent with UK practice. Accordingly, the FCA says, it has taken the opportunity to restate its definitions of personal recommendation, regulated advice and generic advice. Broadly, it says, MiFID requires regulated advice to be of a personal nature, relating to one or more specific investments, whereas the Regulated Activities Order does not. Otherwise it is classified as generic advice.

Social Media

Another reason why theres been uncertainty is that the channels of information being used by advisers are changing. How does a comment on Facebook or Twitter or LinkedIn

stand when it comes to deciding whether or not its advice? And if so, is it specific or generic? Broadly, the FCA finds in this Finalised Guidance that information that doesnt relate to any specific investments, and which is sent out to existing customers or indeed the world in general though newsletters, blogs and so forth, will generally not be considered as regulated advice.

(ither way, FG 15/1 provides more clarity than youll probably expect. In particular, one of the annexes sets out a simplified five-stage flow-chart which ought to leave no real doubt as to what the FCA means. You can find it at http://tinyurl.com/kxfvy2y


3 for O2 and EE to BT

O2, the mobile communications provider formerly owned by BT, came under offer from Hutcheson Wahmpoas Li Ka-Shing, who bid $15.4 billion for Telefonicas control of the company. Meanwhile, BT was in talks to buy EE. But the O2 bid was expected to come under close scrutiny from the European competition commissioners

News.indd 13 27/01/2015 12:33

Bitcoins at $175

But the real tears were coming from the long-term holders who had bought at $1,147 in early December 2013. The Financial Times ran an interview on 9 January with Gavin Andresen, the chief scientist of the Bitcoin Foundation and the CEO of the bitcoin culture, warning that bitcoins were dangerous like the early internet and that people should avoid them unless they were technically proficient enough to keep [their] computers secure.

If that sounds a little unexpected, Mr Andresen went on to say that the internet

had eventually settled down and become respectable, and so would the bitcoin culture. What he didnt bother to say was that confidence had just been whacked once again by the revelation that Bitstamp, Europes busiest USD bitcoin exchange, had just suspended its services because, as it said, it had reason to believe that one of its Bitstamps operational wallets had been compromised a week earlier. And that deposits to those addresses cannot be honoured

The trouble seemed to be that Bitstamp didnt know which accounts were unsafe. Not exactly the

N E W S

stamp of confidence that its anonymous users were hoping for. But then, thats anonymity for you.

No, thats not a misprint - we did

say $175 . The wild fluctuations

of the worlds first crypto-currency

culminated in a catastrophic

low on 14 January, having

dropped 58% from the

$418 being paid in mid-

November - and from just

$300 only a week earlier

IFAmagazine.com14

Gavin Andresen

[below], of

the Bitcoin

Foundation,

warned that

bitcoins were

dangerous

like the early

internet

Household Chore

UK households are an average

of 489 a year worse off

because of government

changes to taxes and benefits,

according to the Institute for

Fiscal Studies. Changes such

as VAT rate increases, rises in

National Insurance Contributions

and significant cuts to benefits

had meant that the poorest

households had lost around 4%

of their incomes, compared

with around 3.5% for the next

poorest decile and 2.5% for the

richest sectors, it said. But the

middle-income sector had lost

much less, and pensioners had

been relatively unaffected

because of indexation.


Copper Bottomed

Doctor Copper suffered

an unpleasant relapse as

the price of copper, which

is commonly regarded as a

bellwether for economic health,

slumped by 12%. Poor markets

in China were blamed.

News.indd 14 27/01/2015 12:33

News.indd 15 27/01/2015 12:33

S O A P B OX

Colla teral Damage

The death of King

Abdullah [right] has

caught Saudi Arabia

at a bad moment,

as it grapples with

damagingly low oil

prices. How will the

new King Salman

respond? And how

will it impact on

the international

oil industry?

January 2015

IFAmagazine.com16

Ed's Soapbox.indd 16 27/01/2015 12:36

Colla teral DamagePrepare to rethink your assumptions about the

global oil scenario, says Michael Wilson

that its taken 30p off a litre of petrol and chopped Britains inflation rate to the point where the Bank of England Governor had to apologise to the Chancellor for not letting prices rise fast enough.

Thats weird. But not as weird as what its doing in America, where every company you meet is currently cock-a-hoop about its falling energy bills, apart from the oil industry itself, obviously. And even then its not so bad for the oil majors, who are still sitting on enough crude oil and gas to let them wait it out until sanity eventually returns and the oil price heads back upwards again.

But its a different story for all the tiny exploration and development companies that have been staking their claims in this 21st century gold rush. All those yee-haw oil tech companies, leveraged to the hilt and committed to a lot more than just a few picks and shovels.

All those tax-incentivised Master Limited Partnerships that were flogged to the oil-unwary just six months ago, some of them with market capitalisations of below $100 million. All of them desperately hoping that West Texas Intermediate will be heading back up toward the $70-80 per barrel that they need to get their operations back up to break-even.

Choose Your Conspiracy Theory

And what are the chances of that? Well, it depends which conspiracy theory you believe in. For some, Saudi Arabia opened up a massive gulf last autumn

Please excuse me if I seem a bit more disgruntled than usual this month. Its been a tough few weeks, and an expensive learning curve for me.

You see, I thought Id got shot of my ailing oil shares portfolio in the nick of time well, by last December anyway and I was really quite looking forward to the prospect of watching the energy markets drift lower for another six months, before leaping in with one of my usual spectacularly well-timed contrarian buys. But I got more than I bargained for.

In the last month Ive watched my BHP Billiton mining shares getting pummelled by the self-same bear rush thats been trashing the oil majors. I mean, for goodness sake, what vulnerability does an Australian coal-and-gold-and-uranium-and-base-metals specialist have to the hydrocarbons industry? Yes, I know that the world fell off the commodities supercycle a couple of years ago, but how could crude oil at $49 be doing this much damage to a company that makes its money by flogging non-oil raw materials to the Chinese?

Memo to Self: Keep Up At The Back

That was where I had my come-uppance waiting for me. This very morning, I read that BHP Billiton has chopped its drilling rigs in the North American onshore shale

gas market by 40%, from 26 rigs to just 16. And that most of its rivals are doing the same. And that BHP was axing 20% of its international oil exploration budget during 2015, and that it was due to make impairments of $200m-$250m to its underlying profits because it had sold some of its assets in Louisiana and the Permian basin. And that its shares had now lost in the first two weeks of January, bringing the damage since last July to 30%?

Slap forehead and say a very bad word. This old fool has been in this company too long, and Ive let the grass grow under my feet. How else could I have missed the fact that a conventional, old-fashioned mining company might have decided to chance so much of its arm on smashing up the tectonic plates of the New World? An activity which it was eminently well suited to doing, considering its expertise in every other earth-smashing endeavour?

But there it was, and there it is. Anyone who hasnt been keeping up with the energy markets over the last three years has been risking getting hung out to dry, because the global situation has been shifting in ways that would hardly have been believable five years ago.

For Instance?

First, the halving of the oil price in the last six months has got the economists in a twist. The last time it happened, in 2008, it turned out to be a portent of stock market and financial disasters that were to shake the world. Whereas this time all the papers have noticed is

IFAmagazine.com

January 2015

17

Ed's Soapbox.indd 17 27/01/2015 12:36

(if youll pardon the expression), when it announced that it had no intention of reining back its own massive oil exports even though the world market prices for crude had crashed.

For the more primitive shotgun-toting cynics in Texas, this was tantamount to open betrayal by an ungrateful Saudi royal family which America had pledged to defend militarily, but which had now set out to destroy Americas shale gas producers by pricing them into submission. A mighty act of domination by the global giant which had all the best cards in its hand.

Up to a point, thats true. Saudi Arabia has the worlds biggest oil reserves, and whats more, theyre very high in quality and reputedly cheap to extract. So how does it look to Riyadh that America is widely touted to steal its crown within perhaps 20 years, thanks to its considerable stocks of much more expensive oil?

Now consider that Saudi Arabia normally acts as swing producer to the OPEC group generously cutting back its production when prices are low (to create a supply squeeze) and raising it when oil gets expensive enough to permit a little profit-taking. Riyadh is effectively working like a central banker to the OPEC community. Except that now, it isnt. Saudi Arabias refusal to cut production in the face of falling prices is looking very damaging indeed not least to some of its OPEC partners.

The Real Cost of Production

A recent study in the Wall Street Journal (http://graphics.wsj.com/oil-producers-break-even-prices/) reckoned that OPEC members Iran and Algeria require $130 per barrel for their economies to break even; that Nigeria needs $123, Venezuela needs $117, Iraq $101, the UAE $77, Qatar $60 - and non-OPEC Norway just $40 a barrel. Poor old Russia struggles below $98, it said.

But the big surprise comes from Saudi Arabia itself, which

S O A P B OX

the researchers said needs $106 per barrel to make ends meet. Not because getting it out of the ground is expensive (it isnt), but because the Saudi government spends its oil revenues so freely that everything would quickly crash without that sort of a world market price.

If thats correct and we have no reason to suppose that it isnt then the real reason why Saudi Arabia has opted not to cut production is not what we think it is. Rather than simply trying to face down the Texans in a poker game where Riyadh has a bigger pile of chips, Riyadh is looking real disaster in the face and has no real choice but to go for whatever money it can get. If it were a farmer, according to this argument, it might eventually be in danger of having to eat next years seed corn. Its alternatives would be few and far between.

That, of course, is a ludicrous extrapolation. Saudi Arabia could leverage its future oil production any time it felt like it. And anyway, a former government adviser called Mohammad al-Sabban told the BBC in mid-January that the country could easily withstand eight years or more of low oil prices, thanks to a fairly substantial set of government spending cuts and a cash pile of 3tn Saudi riyals (527bn). Thats around 28,000 of cushion for every Saudi national in the country, by the way. Not bad.

The Saudi Succession

Still other conspiracy theorists point to a period of possible instability within the Saudi administration itself. King Abdullahs death from pneumonia has now set the Saudi succession onto a new course and sooner or later theres going to be trouble in the ruling family. Trouble, not least, because all the remaining heirs to the throne are elderly, and factionalism and rivalry between them is rife.

Unlike most monarchies, where the crown passes to the eldest son, the Saudi kingdom

passes from the eldest of the original King Abdulazizs sons to the next eldest. And, since Abdulaziz died in 1953, you can figure the rest out for yourself. Most of the current contenders are in their seventies.

Yes, we know that it was the eldest son, Salman (79), who got the top job this time, pretty much as family protocol dictated. But next time round itll get messy. In a break with tradition, the late King Abdullah had

As for America,

I find it hard to see

how the present

price problem will

do much more than

take out some of the

biggest and most

over-leveraged

gamblers

January 2015

IFAmagazine.com18

Ed's Soapbox.indd 18 27/01/2015 12:36

That matters, because Salman is considered to be a particularly conservative character, which does not bode well for the countrys budding democracy movement. Saudi Arabia has other tensions with America partly over the Arab Spring (which it took care to suppress on its own soil) and partly over Syria, where its heavily Sunni, anti-Assad and anti-Iran positions took it into supporting the armed resistance against Assad - part of which has unfortunately morphed into Islamic State. Very embarrassing.

Unsurprisingly, that particular alignment is effectively lapsing these days, and not before time probably but now that IS has started talking about attacking its former sympathiser, the relationship between Riyadh, Washington and Assad has moved into John Le Carr territory. Some tinhats, indeed, are claiming that Barack Obama is secretly in league with the Saudis, and that everything else is just a cover story. For all the good that would do for both of them.

Rolling Out the Risk Scenario

And so the conspiracy theories roll on. It seems almost pointless to dwell on them when the thing that really stands out is how the collateral damage to the worlds oil markets is stacking up.

Weve already seen that the worst damage is happening in single-industry states like Venezuela, Nigeria and Russia all of which rely horrendously on oil and gas revenues. Nigeria alone gets 98% of its export earnings and more than 80% of its government revenues from oil and gas - which might explain a lot about the governments present mess. Russias President Vladimir Putin hasnt dared to try and extort political concessions from the West because he cant risk losing the only thing thats keeping his peoples larders stocked with food.

And here in Britain, with North Sea oil contributing so much to the economy of a certain northern country, this years 50% cutback in exploration, drilling and support activity is going to make life exceptionally difficult for Nicola Sturgeon with oil towns like Aberdeen feeling the initial pinch, but with the central government coffers taking the strain as the year progresses.

As for America, I find it hard to see how the present price problem will do much more than take out some of the biggest and most over-leveraged gamblers. Unlike virtually every other country weve mentioned so far, the United States has a truly diversified economy with a mobile, solvent financial system that can lay off most of the future risk in one way or another.

But what if the low crude price sticks for another three years, as BPs boss Bob Dudley forecast only the other week? Thats a prospect that will overturn many of our assumptions about the robust nature of the oil industrys finances.

And beyond that? Can the alternative energy suppliers survive unscathed, with oil at $50 a barrel chopping away at their already weak state of price-competitiveness? What if a slowing world economy (down to 3.5% growth in 2015/16, says the IMF) should decide that it simply has other priorities right now than spending trillions on new energy sources?

We are in a new situation, and it would be a reckless commentator who pretended that we can expect a rapid return to business as normal. The convergence of economic, geopolitical and scientific factors is set to test everyones mettle, and the old assumption that the laws of energy supply and demand will resume their normal functioning deserves to be at least examined closely, and very probably challenged.

Russias President

Vladimir Putin hasnt

dared to try and extort

political concessions

from the West because

he cant risk losing the

only thing thats keeping

his peoples larders

stocked with food

personally appointed his very youngest brother, Prince Muqrin, aged only 69, as deputy heir (after Salman) - thus leap-frogging a whole clutch of older brothers, all of whom who can expected to feel a bit upset. Rows are already rumoured over which concubines sons should take precedence over which others - and although we can expect the royal family to stay outwardly solid, you can bet that it will be boiling within.

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Ed's Soapbox.indd 19 27/01/2015 12:36

Ed's Soapbox.indd 20 27/01/2015 12:36

Good Intentions

G U E S T F E AT U R E

place. According to my research, you are setting yourself up for failure if you:

n Set unrealistic or unattainable goals. Often people set lofty, unreasonable or downright impossible resolutions. Then, when they dont achieve the results they are after they berate themselves or - and possibly worse - they continue down the path theyve always travelled and their life remains unchanged.

n Have vague aspirations rather than focused goals. A resolution like I want to get fit and healthy is too vague. For each goal you need a specific target, which is to be achieved within a certain timeframe and ideally linked to a new habit. For example To get fit, I will run 4 days per week for a minimum of 20 minutes.

n Try to achieve too many goals. Focus is incredibly difficult when you attempt to achieve too many goals at once. A friend of mine rattled off ten resolutions when we caught up last January. Come December she had achieved just one. Rather than a reflection of her personality or lack of commitment (she is both incredibly motivated and successful), I fear she simply tried to achieve too much over the course of the year on top of her usual commitments.

n Dont commit 100%. Achieving any goal takes time, energy and willpower. Often we pay lip-service to resolutions by jumping on the bandwagon with everyone else without truly committing to the end goal.

Here comes February. Whatever happened to those

New Years resolutions, asks Abbie Tanner?

I recently read a staggering statistic. Despite being created just one month ago, around 92% of all New Years resolutions have already failed. I find this shocking. So it got me thinking - where do people go wrong? And what makes a successful New Years resolution?

Apparently, around half of the UK population set resolutions for the coming year> But, as shown by the stats, very few are successful. So how about you and your business? Now that the festive glow has worn off, youre back at work and the cold weather has set in, are you struggling to commit to your New Years resolutions? What can you do to buck the trend and make 2015 your best year yet?

How to Set Yourself Up to Fail

Firstly, lets look at why resolutions fail in the first

IFAmagazine.com

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21

Guest Feature - Goal Setting.indd 21 27/01/2015 13:02

Welcome to London Capital ClubYour space in the heart of the City for

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We look forward to welcoming you to London Capital Club

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n Are too rigid. Not allowing any flexibility and creating a win or lose sum game will set you up for failure. Life can - and will - get in the way at times. A rigid mind set makes it easier to give up rather than focus on getting back on track.

n Procrastinate. Tomorrow I will start... or when I have more time Ill or when the weather gets warmer I will... . Sound familiar? These are all excuses that rob you of the time you could be committing to achieving your goals. Start today, even if it means just taking the first initial step.

n Doing it for someone else. Self-motivation is key. You need to own your resolutions and want to achieve them for you, nobody else. No matter how much the person you are doing it for means to you.

n Have no accountability. If you havent written your goals down or told anyone - friends, family or colleagues - you are

2. Be realistic. Make sure your resolutions are SMART Specific, Measurable, Achievable, Realistic and Timely) and remember that change doesnt happen overnight. You need focus. Set small, realistic and achievable goals then rinse and repeat. If youre an app junky check out Goal tracker: SmartGoals Pro, an app designed to keep you on track irrespective of the goal(s) youre seeking to achieve.

3. Create habits. I think this quote from Aristotle says it all: We are what we repeatedly do. Excellence, then, is not an act, but a habit. Once you have defined your goals, set about creating real change by establishing habits. For example, rather than I will get healthy, create a habit of substituting your daily morning pastry with a piece of fruit. If your goals are linked to new habits, you are 50% more likely to succeed. James Clear is a great resource for techniques to transform your habits.

not accountable for the outcome and therefore more likely to fail. Keep your resolutions visible throughout the year. Having them hidden away in your bottom draw will only surprise and remind you the next time you spring clean.

How to Set Yourself Up for Success in 2015

What can you do differently to give yourself the best chance of achieving your goals this year? Here are my seven steps to success (along with a few resources you can use):

1. Adopt an innovative mind set. Rather than taking your present situation as a given look for one (or more) ways to take a step back and see what you could do differently. The book Agile Innovation: The Revolutionary Approach to Accelerate Success, Inspire Engagement and Ignite Creativity encourages readers to create change by challenging conventional ways of thinking and looking for imaginative solutions.

G U E S T F E AT U R EJanuary 2015

IFAmagazine.com22


Welcome to London Capital ClubYour space in the heart of the City for

meeting, dining and networking

We look forward to welcoming you to London Capital Club

A Space for MeetingLondon Capital Club is the perfect location formeeting with clients over an informal coffee, a spot of lunch, or in one of our sumptuous privatemeeting spaces.

Restaurant Fine Dining

Events & NetworkingWe host a range of networking events, as well as keynote speaker events. We have spaces for members events and can accommodate up to 150 delegates in a variety of room set-ups.

London and Beyond

T: 0207 717 0088E: [email protected]: 15 Abchurch Lane, London EC4N 7BWW: www.londoncapitalclub.com

Enjoy the brasserie-style ambience in our public bar and restaurant, @15, formal dining in our members restaurant The Walbrook Grill, or hold a private function in one of our historic rooms for an outstanding fine dining experience.

Club members receive the same exceptional service in over 250 clubs worldwide, which make up the IAC network, as well as access to further benefits, such as discounts at some of the countrys best golf courses and hotels.

Follow us @LondonCapClub

Find Us: Bank Cannon Street Monument


4. Hone your focus. Professors at Stanford University have shown that setting too many goals can lead to cognitive overload. Pick just one or two goals that are most important to you, and psychologically you will be more likely to succeed. For inspiration check out the ITV social media campaign #ChangeOneThing and then do just that.

5. Show commitment. People who write down their goals are 42% more likely to achieve them. Grab a pen (or electronic device) and write your goal(s) down. Share this information with those to whom you will be held accountable. A great app for creating lists and sharing them is Wunderlist.

6. Reward success. Set monthly, quarterly, semi-annual and annual targets. But dont beat yourself up if you miss a target. Instead focus on rewarding success. Research shows that positive feedback and rewards increase your chance of success.

7. Show resilience. Dont quit before you reach the finish line like the 2 who have already abandoned their resolutions before the start of February. If things get in your way, remember it shouldnt be about the time it takes to reach your goal but about achieving the goal itself.

What Ill Be Doing This Year

This year my resolution (note its a resolution and not resolutions - Im taking my own advice and focusing on just one) is to foster happiness in my life - or, more specifically, to take measurable steps to improve my overall happiness and foster it in those around me. Ive come to the realisation that happiness is something that you have to work at, so thats what Ill be doing.

Often in the daily grind, we forget to stop and smell the roses. Rather than big gestures, its the little things that can bring joy and colour to our day which, when played out over a year and compounded, will lead to a happier life.

My very own happiness project has started with the

G U E S T F E AT U R E

support of a very good friend who will be on the journey with me, so we can hold each other accountable. Every two months we are creating a list of 11 Small Things we will both achieve independently, and then share on social media and via Wunderlist (this app has allowed us to share the list and timeframes allocated).

The 11 Small Things are not designed to be too challenging, but to push us outside of our comfort zone. For example our first list includes: #2 Visit an art gallery or museum alone, #6 Smile and say good morning to a barista, and #8 Read a novel recommended by the other person.

You can follow our happiness project on social media using #11SmallThings.

Changing your life requires that you first change your mind set. I hope the above points have encouraged you to think about things a little differently and to get back on track with your resolutions - setting 2015 up to be an awesome year. Best of luck!

January 2015

IFAmagazine.com24


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You might say that footballs loss has been Heartwoods gain. Mark Rockliffe, Head of Intermediary Sales at Heartwood, freely admits that being a footballer was his first career choice - closely followed by bank manager.

The football dream died quite early, though, when compared to a certain celebrity chef who had the same ambitions. I like to think Im

slightly better than he is, says Rockliffe, And I can kick with both feet too - I dont have to turn around in a circle!

Its a typical Rockliffe tongue-in-cheek comment, to which he quickly adds: I realised very quickly that either I wasnt actually dedicated enough to it, or not good enough, or probably a combination of both. And I basically thought you know what Im going to do? Im going to join a bank.

As it turned out, he didnt join a bank. But, even though Rockliffe might have been frustrated in his two first career choices, he appears to be comfortable scoring goals for Heartwood.

Full Circle

The company has a track record that now stretches back over 25 years, and it currently has over 2bn funds under management. It has grown,

G U E S T I N S I G H T

From The Boots Up

Mark Rockliffe, Head of Intermediary

Sales at Heartwood, tells Neil Martin

that rethinking strategy from scratch

is the key to a successful team

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Guest Insight - Hartwood Investment.indd 27 27/01/2015 13:04

G U E S T I N S I G H T

it says, largely on the back of word-of-mouth referrals and personal attention to its clients needs. Heartwood is particularly proud of the fact that many of its clients are City professionals themselves - including bosses of investment banks and multinational companies, and partners of private-equity firms and hedge funds. In 2013, it became a wholly-owned subsidiary of Handelsbanken.

Rockliffe, who joined Heartwood in 2011, now spends his day working with IFAs and advisers across the sector. His main brief, he says, is to develop a tailored investment management proposition for independent financial planning firms. His focus is on building and managing intermediary distribution channels.

Having worked with IFAs since the age of 19, he says its good to see that, in many ways, the IFA industry has come full circle. Many of the core skills talked about today around the role of advice and the importance of advice were in evidence among the really good advisors I was talking to when I was in my early 20s.

A Different Perspective

Rockliffe agrees that his career path was perhaps a little untypical. Unlike most people who cross the divide from insurance into the asset management business, Rockliffe came straight into asset management as a sales director, following x years as an IFA.

That gave him a unique perspective on the business. Describing the asset management industry as quite insular, Rockliffe believes too much value is placed on the product. Controversially, perhaps, Rockliffe considers that the value of asset managers can be overstated, although he recognises their strong intellectual capital. Rather than product pushing to IFAs, Rockliffe believes there is a different approach, one that he has been developing at Heartwood.

Focus on the Business Model

Heartwoods approach is very simple: IFAs need to focus on advice in their business model. According to Rockliffe,

Thats how IFAs will win and succeed. If you look at all the consumer research, it says that in terms of engagement with this industry as a total, it needs and values advice and planning support.

Underpinning this approach is the need for robust institutional management. And thats why I joined Heartwood, says Rockliffe.

On joining three years ago, Rockliffe faced a number of challenges. A major hurdle was that the Heartwood brand was unknown in the IFA market. Its client-base was made up of highly sophisticated, knowledgeable and discerning private clients. Looking in from the outside, Rockliffe found that

he could take a very credible investment proposition that had been built for a discerning investor, and could now deliver that proposition for any investor.

Taking Care of the Client

He believes that Heartwood can offer smaller clients the same service as enjoyed by their larger clients:

Okay, the fee structure needs to differ. But if IFAs are going to outsource, they have got a number of fiduciary responsibilities they have to retain.

One of those responsibilities is to make sure that the customer gets the journey that they have signed up for. Rockliffe says,

Just because the adviser outsources to an investment manager, a Discretionary Fund Manager (DFM) for example, it doesnt mean the adviser is relieved from their

Just because

the adviser

outsources to

an investment

manager, a

Discretionary Fund

Manager (DFM)

for example, it

doesnt mean

the adviser is

relieved from their

responsibilities,

either from

a regulatory

perspective or a

business model

perspective.

January 2015

IFAmagazine.com28


responsibilities, either from a regulatory perspective or a business model perspective.

DFMs Encroaching

The big advantage for Heartwood, says Rockliffe, is that it arrived late to the Retail Distribution Review (RDR) party. We had a huge advantage in the IFA arena, he says, we could start with a blank piece of paper.

everything, crossing over into the area of providing advice.

The Opportunity

From Rockcliffes perspective, Heartwood was fortuitously placed in building a business in a post-RDR world.

Thats what Im really passionate about. Can you genuinely find firms that win and compete on the quality of their advice? If you can find those firms, and if they are well organised and well capitalized, then they are the likely winners.

Rockcliffe believes these are the acquiring firms of the future. Heartwood acts as their silent partner in managing money, which Rockcliffe estimates is about 30 to 40% of their total assets.

Heartwoods strategy has been to target quality IFA firms

and ones with which they can build relationships.

Rockliffe hates the word strategic partnership and likes to describe it

as having skin in each others game, a form of

co-dependence that works between Heartwood and the IFA.

Rockcliffe agrees that a lot of the discretionary market has been very successful and describes some of them as brilliant businesses. However, he believes many of them have effectively undermined the IFA business model:

Not by design, Im absolutely sure of that. However, they have said well take your client on board for you, and then they have ended up doing

Finally, Rockliffe admits that its been a long journey for him personally, from what he himself describes as a not particularly nice suburb of Brighton, to sales positions within a number of leading companies and now helping to formulate Heartwoods approach to the IFA community. Perhaps he would have been wasted on the football pitch, or sitting behind that bank managers desk?

Pre-RDR, there was pressure on IFAs to outsource quickly to investment managers. Rockliffes approach was different:

We went to a number of firms, and said, look, we think your business model needs a certain core component for the future, and we dont think that IFAs are big enough, or well-resourced enough, to deliver their own investment management.

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I N S I D E T R A C K

Trading UpThe choice between Chartered and Certified status is down to an advisers

specific needs, says Neil Martin. But either will bring significant benefits

Education, education, education. Tony Blairs old mantra might have gathered a bit of dust over the years, along with his slightly battered reputation, but its one legacy of his premiership thats still being heard loud and clear throughout the financial sector.

One of the key pillars of RDR, of course, was to improve professional standards within the industry meaning, among other things, that advisors are encouraged to not only reach a certain level of expertise that is recognised by a professional body, but

also to continue their own personal career development.

For many advisors, that means beefing up their planning credentials. Essentially, advisers wanting to offer a better service have a choice between achieving Chartered or Certified status. Chartered Financial Planner

January 2015

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Inside Track - CII.indd 30 27/01/2015 13:05

I think the role of

financial advisors will

become more and more

important in the future

as people take greater

responsibility for their

own financial affairs

Steve

Jen

kins

Status is conferred solely by the Chartered Institute of Insurance CII, whereas Certified status is governed by the Institute of Financial Planning.

Steve Jenkins, Director (Financial Services and Insurance Markets) of the CII, is clear about the need. I think the role of financial advisors will become more and more important in the future as people take greater responsibility for their own financial affairs, he told us. And in that context, people need to be confident that they are dealing with someone who knows what they are talking about, and who acts at all times in the customers interests

Outperform Your Benchmark

What we found subsequent to the RDR, and what were encouraging as many people as possible, is to really to go above and beyond the regulatory requirements, in terms of their own professional development and developing their own expertise. And its in that context that weve seen a big upswing in the momentum in financial advisers, both IFAs and non IFAs, moving onto chartered status.

Chartered Status

There are around 4,400 Chartered financial planners in the UK, although not all are financial advisors. Its currently reckoned that 15% have now reached Chartered standard, and that this proportion is set

to increase over the years.

The Chartered status includes three key components:

The qualification itself - an advanced diploma in financial planning, equivalent to degree standard;

A strict code of ethics, which is underpinned by disciplinary processes;

A formal programme of continuing professional development, which will be tailored to the individual advisors needs.

As Jenkins says, these crucial components reflect the standards set by the more mature professions, such as law, accountancy and medicine. The point, he stresses, is that individual advisors want to be seen by customers and by their own staff as working in a peer group thats equivalent to these professions.

But then again, advisers will find that Chartered status can help to further their own personal career development, and it can also attract referrals from the established professions. Firms and the big institutions appear to value the Chartered status, he says, because it helps develop career paths for their staff and helps them hold onto talent.

Jenkins agrees that clients and potential clients increasingly expect their IFAs to have reached a certain professional standard. If

you look at the Saturday and Sunday papers, especially the finance sections, youll notice that where the quoted experts are describing themselves, it will now be Joe Bloggs, xyz, Chartered financial planner.

Certified Status

Sue Whitbread, Communications Director at the Institute of Financial Planning (IFP), agrees with Jenkins comments - adding that, by investing the time to gain advanced professional qualifications, advisers and planners can not only to maintain and build their own competence, but also demonstrate to clients and potential clients their commitment to the highest professional standards. She also believes that it can have sound business benefits.

Certified Financial 3lanner certification is different to many professional qualifications, she explains, in that it primarily tests candidates application - their Financial Planning skills and not just their knowledge.

To succeed, advisers and planners need to have very strong technical knowledge. But, most importantly, they have to be able to demonstrate that they can apply it appropriately within a complex financial planning situation - the kind of situation that they can typically come across in practice.

Whitbread says that she regularly gets CPFCM professionals coming back to the IFP with the discovery that learning the six step financial planning process to become a CFPCM professional has turned out to be a light bulb moment that has changed the way theyve worked ever since.

Much of this, she says, is down to the process that candidates have to go through a process which helps them to discover a practical approach to enhancing their client proposition which will put their clients goals right at the heart of the process.

It means, she says, that

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31


Certified Financial Planner

certification is different

to many professional

qualifications, in that it

primarily tests candidates

application and not

just their knowledge

Sue

Wh

itbre

ad

Up to a point, an advisors decision to go for Chartered or Certified status depends on a number of factors - some professional and some personal. But overally, it can only be to the industrys advantage and betterment that such training and career development opportunities now exist within the industry.

programmes specifically to encourage momentum towards chartered status: firms like St Jamess Place, Towry and Ashcourt Rowan, as well as some of the banks. Its in their interest to kind of create a space which people are attracted to, because what that will do is create an environment where people can study with their peers, and they can do that in a supportive way.

clients see value in the process right from the outset. The IFP believes that they buy into the reassurance, and that they are prepared to pay ongoing adviser fees to ensure that they keep on track to achieve what they want in life their goals.

The IFP believes that in the post RDR environment, this clarity and purpose makes a lot of business sense because of the way it helps the planner to build long term client relationships based on trust.

And the Future?

Both our guests agreed that the future for advanced education within the advisor environment is excellent, and that the current trend toward a recognised status will continue to increase. Not only that, but there are more and more firms who are introducing programmes, says -enkins.

Indeed, some of the larger firms are implementing their own professional development

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The About Us page is the second most important page on your website only behind the home page. This is your one chance to talk about yourself, and not about your customers. This is the opportunity they give you to impress them. Your About Us is your audition - Seems self-evident to make it quality, right?

1 Make your Branding Message

Who are you? What do you do? Clients want to have a deeper understanding of the people who they will be dealing with if they select your company. And remember, its also a chance for you to talk about areas of speciality and identify who your ideal client is this can be a good way of weeding out the unsuitable clients at an early stage.

2 For Potential Employees

When people hear about your companys job openings, they will almost assuredly visit your website and check out your About Us page. Having a video that prospective applicants can watch is a great idea. They can get a feel for who you are and who you serve. They should also gain a greater understanding of your values and your mission. Its also a great idea to include your staff in the video so that the job seekers get a feel for your companys diversity and the attitude and demographics of the people working there.

Prospective clients and job seekers should also learn the history of the company. Through all of this subtle information, the applicant finds out whether they might be a good fit for your company and whether your company is a good fit for them. Todays employers realize the value of recruiting someone who feels at home and will stay. The About Us video is another tool for engaging prospects and helping to reduce the wasted time of interviewing someone who really wouldnt be a good fit and doesnt realize it until they show up at your office.

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3 For Current Employees

Having an About Us page isnt just about new employees. Its to help focus and align your current ones as well. A good About Us page gives your employees identity and a sense of proudness to be working for this company. Itll also help your employees explain who they work for and what they do.

For more information on how we can help with a home page video, or any other aspect of video marketing, please get in touch: phone: 01453 810914 email: [email protected]

You can also view examples of our work at: www.halofilms.co.uk

Peter Georgi of Halo Films talks about why IFAs need an About Us Video

With thanks to Kirstie of WarroomInc.com


Exciting Times Are Ahead Exciting times are ahead

for The Wealth Care

Partnership (TWCP) as

they plan significant

growth of their business,

building on their already

impressive credentials

TWCP is a successful practice specialising in holistic financial advice to mainly the pre and post retirement market, including people in later life, covering Long Term Care, investment, tax planning and Equity Release.

With a focus on providing high quality financial and tax planning to people with property and savings and who value their personal service, their marketing activities attract high levels of new enquiries to the firm. Investing in the development of their brand, TWCP are working in conjunction with their branding and marketing company

ambitious expansion plans as well as developing other strategic opportunities on offer to support the planned growth of the business.

The company was established in 2007 to provide specialist advice to older people and their families, and the advisers are recognised as leaders in the field of later life advice.

The Founding Directors, Karen Rayner and Tim Anstee, are both members of Society of Later Life Advisers (SOLLA) and Tim is SOLLA Regional Co-ordinator for Hampshire and SOLLA Joint Regional Co-ordinator for Dorset.

SOLLA is committed to raising the standards of practice of those engaged in advising older people by promoting the highest levels of professionalism in financial advice.

TWCP has recently won the The Best Long-Term Care Intermediary award at the Health Insurance Awards for the third time in four years and has been shortlisted every year for the last seven years.

on a number of initiatives including the launch of a new website and the publication of new client literature which draws on their deep understanding and experience in the later life market.

Building on the success and expertise of their existing advisers, they want to expand their adviser and client base whilst preserving the very things that set TWCP apart from other financial advisers.

Two recent hires are helping to put the building blocks in place for the growth of the business. Richard Knowles has joined as Client Relationship Manager, and will be the first point of contact for all enquiries to the firm. With Richards experience as a Bank Manager for many years, he is well positioned to support both the advisers and the clients to ensure the process from enquiry to business is a smooth and positive experience for all parties.

Lucy Fenwick has joined from JP Morgan, as Strategic Growth Manager and she will be working closely with the whole team to implement the

A D V E R TO R I A L

S E E PA G E 6 4 F O R

O P P O R T U N I T I E S

IFA View - CTL Wealth Management.indd 34 27/01/2015 13:19

It took Colin Lambert a fair few seconds to think of a good answer to my first question of the interview. As an IFA, what was his main resolution for the new year? His answer, which Ill reveal at the end of this piece, said much about the fundamentally down-to-earth approach that Mr Lambert brings to so much of his business. No matter what youre doing, its essential to be enjoying it.

CTL Wealth Management, which launched in late 2005, has spent the last ten years developing a practice which includes the Greater Manchester areas of Bury, Rochdale and Oldham. And thats the way Mr Lambert likes it. Rather than pitching aggressively for high-fliers in the big city, his firm sees itself as a local business which has grown mainly through word-of-mouth-recommendation, and through a network of accountants and solicitors who recommend his services.

Thats not to say that Lamberts ambitions arent high, of course but hes clear that he has no problem with the local tag, and that his client list has grown to include a select number of business owners and professionals who are keeping him more than busy.

In fact, he told us, Im one of the few who seem recently to have gone from the office in my house to a separate office.

I FA V I E W

Local HeroNeil Martin talks to Colin Lambert, of CTL Wealth Management,

about the joys of focusing on your home turf

IFAmagazine.com

January 2015

35


I FA V I E W

focus for most of his clients. He helps his clients recognise the value in their businesses and how they can plan for the future. Thats a holistic matter that takes in all aspects of family life as well as business activity. Its no point working those extra years just to qualify for the heart attack, you know.

Auto-Enrolment

But in case you think CTLs priorities are all about the local networking scene, the firm can show some of its contemporaries a thing or two about using the web. Lambert is currently working hard to develop a new side of the business that focuses on the growing potential within the auto-enrolment sector: its dedicated auto-enrolment site at http://www.auto-enrolment-rochdale.co.uk is a natural extension of the firms close links with local communities, but it just might bring in business from further afield.

The idea, Lambert says, is to provide a sound interpretation of the auto-enrolment legislation for companies, including consultancy and advice; existing pensions review; pensions design; initial data analysis and cost modelling; and, member communications and advice.

Regulation and the FCA

And so to the familiar territory of regulation and the emerging environment post-RDR. Lambert isnt the only UK adviser who feels that IFAs are over-regulated, and that the box-ticking exercises which currently

I reckon politicians

feel they have to

say something over

Christmas, without

thinking through all

the implications

Many IFAs of my size have been going the other way, from the office back to home.

For some indefinable reason or other, CTLs office does have a certain welcoming air. A former pub in the pleasant Manchester suburb of Heywood, Lambert says it became available at just the right moment for the firm and now, renamed as Heritage House, it dispenses sound advice about money instead of merely accounting for its inevitable destination on a Saturday night.

As weve said, Lambert stresses that his growth model is not to aggressively seek new clients, but to make sure that the expansion of his client list keeps pace with his ability to provide that all-important personal service. Right now, he says, his primary objective is to achieve a good return for

his small team, and for the network of advisers who between them can offer all the skill sets required for advising clients.

Asked how his territory has fared during the economic crisis, and how its doing now, Lambert is upbeat. For anyone who has had a regular job, or a mortgage, the past few years havent been exactly bad, he says. Money has been very cheap in fact, its been a good time for many out there.

Network, Network

Being local means that networking is crucial for Lambert. That means, among other things, chatting with business owners and other potential clients every second Wednesday of the month at a local curry restaurant. (Hmmm, were beginning to really take to this chap - Ed.) Its this level of involvement in the local business community, Lambert says, that allows him to keep in touch with whats going on around him.

It also gives him a head start when clients ask for the lifestyle planning that is the

January 2015

IFAmagazine.com36


take up so much time work neither for the adviser nor for the client. But on the whole, he says, things are looking good.

Indeed, Lambert says he always saw RDR as a kind of vindication of the principles hed been sticking to through most of his professional career. For him, he says, its always been about building long term relationships with clients and advising them with considered solutions. This model, he says, has always been supported by fees and retainers, so the banning of commissions hasnt changed anything.

Forward Into 2015

Whats going to be the big issue for 2015? Pensions, of course, he says. How could it be anything different? The April rule changes will radically change the way people plan their retirement. But the Governments latest pronouncements about allowing people to sell their annuities has all the hallmarks of election policy-making on the hoof, he says. Im still not sure what they are trying to achieve with it. I reckon politicians feel they have to say something over Christmas, without thinking through all the implications.

On a personal level, Lambert is working hard towards Chartered Status and has taken part in a mentoring programme

to enhance his business skills. But oh yes, we were going to give you his answer as to his new years resolution?

Golf, he says. Well, maybe not exactly. Keeping my finances sufficiently in the black to spend more time on the green! He sponsors the occasional match and has found that being on the fairway is still one the best ways to meet new contacts and chat with existing clients.

It was a good answer. Get the balance between business and personal life to the right point, and youve cracked the secret of satisfaction. Not a bad resolution for all of us to adopt for 2015.

For anyone

who has had a

regular job, or a

mortgage, the

past few years

havent been

exactly bad

Co

lin La

mb

ert

IFAmagazine.com

January 2015

37


Julius Baer Luxury Brands Fund Type: SICAV under

Luxembourg law

Sector: Equity Other Specialist

Fund Size: 262m

Launch: July 2011

Yield: n/a

TER: 2.06%

Manager: Swiss & Global Asset Management

jbfundnet.com

Bling Funds At Poundsaver Prices

P R O D U C T S

2014 was a year to forget for the

luxury goods sector, says Nick

Sudbury. But could the sell-off

represent a buying opportunity?

Burberry leading the way by allowing clients to personalise their items so that they can be handcrafted to order. The other is the growth in top-end menswear, with brands like Gucci and Prada opening more men-only stores.

Julius Baer Luxury Brands is heavily weighted towards jewellery and watch makers, which is one of the fastest growing areas of the sector. In fact its top holdings include both Tiffany and the Swatch Group with fashion,

After a strong 2012 and 2013 the Julius Baer Luxury Brands fund from Swiss & Global has found it a lot tougher going, with a 2% shrinkage in the last calendar year. The fund aims to achieve long-term capital growth by investing in leading luxury companies with excellent brands, high quality products and continuous innovation.

The sterling accumulation units have risen by around 20% since they were launched in July 2011, but the fund has struggled to make much headway since August 2013 as the sector has slowed. The managers use bottom-up stock selection based on the underlying fundamentals, and they have constructed a highly concentrated portfolio with the top 5 holdings accounting for almost 29% of the assets.

Scilla Huang Sun, who co manages the fund with Andrea Gerst, believes that there are two main trends influencing the sector. The first of these, she says, is the increasing importance of e-commerce with companies like

accessories and jewels making up over 50% of the portfolio. Swatch and Nike, another of the largest weightings, also fall into the category of affordable luxury goods that appeal to the Chinese market that is experiencing its own version of austerity.

BMW is the only car maker in the portfolio, but it makes it into the top 5 holdings with a weighting of 5.6% of the fund. It has been chosen on the back of its sound balance sheet and attractive valuation and also benefits from the fact that these sorts of premium cars are still selling particularly well.

Company results have been mixed, which is perhaps not that surprising given the patchy economic backdrop. The funds largest holding, Tiffany, recently reported strong double digit growth in the US, while the Italian leather goods specialist Ferragamo was upbeat in its outlook. There was less positive news from the American fashion designer Michael Kors, where the figures were negatively affected by the competitive promotional environment in the US.

Uphill Struggle

January 2015

IFAmagazine.com38

Products - Luxury Funds.indd 38 27/01/2015 13:22

will have a beneficial impact on the bottom line.

It is interesting to note that the fund has a remarkably high beta of 1.21 - which implies that investors are exposed to a greater than normal element of market risk. Unfortunately, when the active returns are measured against the MSCI World index, they produce a negative Information Ratio. This suggests that the manager has not been able to add value - although it may be largely due to the fact that about 40% of the fund is driven by sales in emerging markets, an area that has been struggling.

Despite the disappointing performance, Reyl remains optimistic and believes that premium brand companies have strong fundamentals and are well placed to grow their profits. In all probability, a lot will depend on the strength of the global economy and whether it can shrug off the socio-economic problems that we have seen in 2014.

to invest in smaller brands with high growth potential.

The result is a highly concentrated portfolio of 37 holdings, with the top 10 accounting for 47% of the fund. These include the likes of Nike, Macys, LOreal, Burberry and Christian Dior. The biggest sector weighting is Apparel/Luxury at 43.7%, followed by Travel and Tourism at 13.2% and Vehicles at 10.8%.

Reyl has recently increased her holding in fashion retailer Burberry, because she says its impressive digital offering should allow it to gain market share. She has also upped her stake in Hugo Boss, where she thinks the shift to womens wear and retail distribution

Its hard to think of an industry more exposed to the worlds socio-economic hotspots than the luxury goods makers. In 2014 many of their main markets suffered a succession of problems - with the first and potentially most serious being the slowdown in China. Since then the terrible conict in 6yria and collapse of the oil price have hit the big ticket spenders in the Middle East, while the most recent casualties have been the high rollers in Russia.

Not that its all been bad news its just that the rate of

There are also structural challenges from within the sector. The latest evidence suggests that there is a shift in emphasis away from the more conspicuous, globally recognised symbols of wealth, in favour of originality and niche top-end brands. And at the same time, consumers are buying online. If thes

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