It’s hard to believe that it’s the beginning of September already and I dare say before too long, we’ll start to see the Christmas cards arriving in the shops!
The first 8 months of this year, perhaps with the exception of July, have proven to be very challenging in investment markets and it is likely that we will see this continue through the month of September.
Even though it may not feel like it, when you consider the news headlines and the continuing negativity, it is my view that the worst is probably behind us and as we know, the hour before the dawn tends to be the darkest!
Whilst history shows that September can be a difficult month in the investment world, some commentators are suggesting that with market reductions during the preceding month of August, this may well help to minimise further reductions during September and perhaps we will see an evolution towards a stronger last quarter of the year – only time will tell of course.
Move of Office
Turning now to something I can be certain about, with the restructuring of the business, we are now approaching the closure of the small office we have in Goudhurst and in fact, our last day there will be September 9th. Thereafter, all of the business activities will be focussed from the office in Forest Row, with various members of the team either working remotely or dividing their time between the office and home.
As our main means of communication tends to be via email, the closure of the office will have no impact on this and this could be a good opportunity to update your contact details to our new email address, which for all members of the team are in the format of their first name and last name without email@example.com. For example, my email address is firstname.lastname@example.org
I can confirm however that we will be maintaining and monitoring the old ra-fp.com email addresses for the foreseeable future, and therefore if you happen to write to us at an old email address, don’t worry, we’ll still receive your communication.
If you do find that you need to send anything to us by mail, the postal address is:
Unit 9/10 Riverview Business Park
If you need to make contact by phone, the main switchboard number is 020 3167 0880.
If you need to reach a specific individual in the firm, everybody will have their direct dial phone numbers, and these will be published on their email signatures.
Whilst overall there should be no interruption to business services due to the office move, there may be a short period of time on 9th September when computers are closed down to be moved etc, when we will be out of communication. We will however, revert to you as quickly as possible and I would like to thank you for your patience and understanding in this regard.
Regulation and Compliance – A Runaway Train!
As you know, the financial advisory world is a heavily regulated one already and it seems that we live in an age of consistent change. Whilst there are many updates on a regular basis, the last big overhaul in the UK was implemented at the beginning of 2013, with the completion of the Retail Distribution Review (RDR) by the Regulator.
This broadly moved the UK Adviser market away from a commission based structure to a professional fee based structure only. This brought huge changes in the industry for many, but I’m pleased to say, we had worked on a fee-based structure for many years prior to the implementation of RDR and so whilst there was less impact on our business at the time, we still had to embrace the new disciplines.
We now face a similar situation with the completion of the latest regulatory review, which falls under the heading of Consumer Duty.
This is a whole new raft of legislation that will affect every person working in the financial services industry and businesses of all sizes, both large and small.
There are four main areas or as the Regulators calls them, Outcomes, that they are focussing on, which are as follows.
Ful implementation of this is planned with effect from the end of July 2023, but all firms need to have a plan of action in place by the end of October 2022. I have to say, as we start to consider the implications of this and new disciplines we may need to adopt, it really does feel as though the regulatory burden is a runaway train heading towards us down the tracks, but it is something that is unavoidable and therefore, we will face up to the challenge!
In putting together our implementation plan, we will be going through a ‘gap analysis’ and as we start to look at this, I can see that we are already fulfilling many of the requirements in the way that we conduct our business, which is reassuring. One thing that we will have to change though, is how we record some of these things because evidencing the way that we conduct our business is something the Regulator is going to be looking at going forward in a rather more detailed way. (Oh the joy!)
Once again, this should not have any direct impact on our clients, other than one might hope to see some progressive improvements going forward. As always, I will keep you apprised as we progress through this and will inform you of any changes that we may need to make.
Words of Warning
Even though interest rates are increasing slowly, and whilst this might have an impact on people with mortgages and other loans, it is having little impact in terms of investment returns for people and therefore, the quest for higher returns becomes more prevalent in people’s minds and without doubt, this is an area where caution is needed.
It is worth remembering the old saying that ‘if something looks too good to be true, it probably is too good to be true’ and we tend to see this with certain types of investment products that purport to guarantee levels of return way above what the market is able to support at present.
These are often referred to as structured products and may well have a fixed term of say 5 or 6 years, with a ‘guaranteed return’ of 5% or more over that period. It is important though to “lift the bonnet” and have a look underneath to see what’s really on offer.
The word guarantee tends to suggest certainty, whereas in the context of this type of product, you would be guaranteed a rate of return, subject to a number of circumstances being fulfilled, which are by no means guaranteed. This could be the underlying performance of an index or some other tracked financial data and even where the income or rate of return is guaranteed, you will probably find that the capital is at risk and therefore, you may not get back all of your money and possibly, you could face a total loss.
We saw many of these products come unstuck during the Banking crisis of 2008 and notably, Lehman Brothers were party to many structured products that failed at that time and many investors lost out significantly.
My suggestion would be, if you are tempted by an advertisement or an investment that looks particularly attractive, do run it past ourselves or another professional, who understands the small print and can guide you accordingly.
In a not dissimilar vein, we have people asking on occasions about Crypto currency and in particular, Bitcoin, which in the past, has shown spectacular performance, but this has been as spectacular downwards as it has been upwards on occasions. This is a high-risk rollercoaster investment and is not either for the fainthearted or for the majority of your capital.
Beware the Pension Scammers
In a similar vein, one of our clients, drew my attention to an article that appeared in the Times newspaper back in July under the heading ‘The Ex-Pat Pensions that Vanished’.
Although the UK Regulator has done much over recent years to protect people with accumulated pension funds from the scammers who are trying to persuade people to transfer their pensions, there are still huge areas of vulnerability, particularly for ex-pat British nationals, who are living overseas. The same regulatory rules and disciplines do not apply to salespeople in the financial services world globally as are applied in the UK and as should be applied throughout the EU, but that’s not always the case either!
As we know, financial advice relationships rely on trust between the parties, and it is this trust that is misplaced when scammers are involved. Unfortunately, it’s a trait of human nature that we take comfort in familiarity and when Company names that we’re familiar with are being proposed, the assumption is that these are safe investments. The article refers to a number of Companies, including RL360, Friends Provident International and Royal Skandia Life Assurance, all of whom have been used by scammers, which does to my mind, raise a question of culpability. The Companies I have named are not the only ones involved, but they all take the view that they are providing products and investment vehicles and that they are not providing the investment advice. Personally, I would have thought they need to be more rigorous in their due diligence with regard to who they accept business from, but of course, it’s a commercial world and these organisations are often driven by hunger for market share.
Having said that, with each of the Company’s named, we have used these for clients and continue to use today, (Royal Skandia has now become Utmost, having gone through various name changes of Old Mutual and Quilter).
I would just like to add that there is no risk for our clients with whom we have these solutions in place, because the investment recommendations that we have made are sound.
Unfortunately, the numbers involved with pension scams are eye wateringly huge and one class action that’s quoted in the Times article, refers to 800 British ex-pats who between them, have lost between £145 million and £200 million – that is just astonishing!
The message here though, is if you are approached directly though telesales or any other means, looking to ‘help’ you with your accumulated pensions – be very careful and at the very least, take third party independent advice before committing to anything.
As always, we’re happy to receive any questions from you, but in the interim, do stay safe and we will keep in touch.
Best wishes from all at Alexander Bates Campbell