Slightly encouraged today. Met some fund managers who realise that charging people for poor performance is no longer acceptable. Of course, their performance is good so they can afford to say thst, but at least the principle is becoming established!
Have a good day!
Thursday, 1 July 2010
Tuesday, 29 June 2010
Are Fund Managers moving with the times?
I'm currently in Monte Carlo (tough, I know) at the Fund Forum International conference.
Basically, it's a get-together of most of the european banks and fund managers, at CEO level, to discuss the design and distribution of investment products going forward. I am talking part in two expert panel sesssions, covering the retail distribution review (a.k.a. RDR) in the UK and, tomorrow, the prospects for the UK going forward.
So, what have I learnt so far? Basically, that many fund managers are still of the opinion that they can continue to charge high fees for mediocre (at best) performance. I am spending most of my time here talking to the others, as they are the future.
Sadly, there also seems to be little going on to help consumers to understand financial products better. There's plenty of talk about it, but little action so far, as there seems to be an argument over who should do it!
More feedback tomorrow!
Basically, it's a get-together of most of the european banks and fund managers, at CEO level, to discuss the design and distribution of investment products going forward. I am talking part in two expert panel sesssions, covering the retail distribution review (a.k.a. RDR) in the UK and, tomorrow, the prospects for the UK going forward.
So, what have I learnt so far? Basically, that many fund managers are still of the opinion that they can continue to charge high fees for mediocre (at best) performance. I am spending most of my time here talking to the others, as they are the future.
Sadly, there also seems to be little going on to help consumers to understand financial products better. There's plenty of talk about it, but little action so far, as there seems to be an argument over who should do it!
More feedback tomorrow!
Friday, 28 May 2010
Time for a little light relief!
Yes, it's Eurovision Song Contest weekend. Love it or hate it (and I swing each way several times during the evening) it is, as per it's own hype, a televisual feast!
This year's UK entry, Josh Dubovie is singing a Pete Waterman song, 'That sounds good to me', which must surely win the prize - "Most Inappropriately Titled UK Entry of All Time". On this evidence, Mr Waterman is well past his best. I thinks he needs help from his old friends, Mr Stock and Mr Aiken. As I write, the bookmakers have Josh at 200-1 - so that's another prize - "Longest Ever Odds Against a UK Eurovision Entry"
At times like this I'm glad that I'm Irish - Niamh Kavanagh's (she won in 1993) entry (It's for you) is at least well-written and melodic.
Win, lose or draw (and who really cares), it promises to be an entertaining evening and the debate in the Laird houselhold will be what makes it such fun. It's just a pity Sir Terry has retired - Graham Norton is good but it's a hard act to follow.
Whatever you do this weekend - have a good one!
This year's UK entry, Josh Dubovie is singing a Pete Waterman song, 'That sounds good to me', which must surely win the prize - "Most Inappropriately Titled UK Entry of All Time". On this evidence, Mr Waterman is well past his best. I thinks he needs help from his old friends, Mr Stock and Mr Aiken. As I write, the bookmakers have Josh at 200-1 - so that's another prize - "Longest Ever Odds Against a UK Eurovision Entry"
At times like this I'm glad that I'm Irish - Niamh Kavanagh's (she won in 1993) entry (It's for you) is at least well-written and melodic.
Win, lose or draw (and who really cares), it promises to be an entertaining evening and the debate in the Laird houselhold will be what makes it such fun. It's just a pity Sir Terry has retired - Graham Norton is good but it's a hard act to follow.
Whatever you do this weekend - have a good one!
Tuesday, 18 May 2010
Inflation rears its ugly head again. Be Prepared!
The latest UK inflation figure has just been announced - it's 3.7%. This is way in excess of the Bank of England target of 2.5%. I'm only aware of one UK deposit account which will give a return in excess of this inflation figure after basic rate tax and it's offered by Coventry Building Society. They will pay you 5% gross (4% after basic rate tax) but you have to tie your money up for 5 years (any money you take out in the meantime will have a penalty of six months' loss of interest applied to it).
So why is inflation so high when we are still in recession? (the technical definition of a recession may well suggest that we aren't still in one but I don't think that any of us is fooled by that)
Well, the weakness of the pound against virtually every currency other than the euro hasn't helped - making imports considerably more expensive recently. For example, my wine club has just increased its prices generally by @ £1-£1.50 per bottle (15-20%) to allow for the drop in the value of sterling. This situation is unlikely to change soon as the Bank of England is likely to keep interest rates low (at a time when they would normally be putting them up to fight inflation) because the economy is so weak. This makes it unatractive for other countries to buy sterling as they'll get a very low rate of interest on sterling deposits, which in turn puts pressure on the pound.
I have never seen, in 17 years of experience, so many 'Catch 22' situations all at the same time! Sadly, as more people are beginning to understand, the only way in which many countries will be able to afford their debt is for it to be 'inflated away', suggesting that inflation will continue to rise in the medium term. This is, as we've seen above, really bad news for savers. The answer is to divide your funds up into chunks - money that you may need immediately or in the very short term (and therefore can't afford to take any risk with), more medium term money (low risk)and then the long term stuff. You can afford more risk with the long term stuff (and therefore protect it better from inflation) if you know you won't need to touch it and can therefore ride out any short-term market volatility.
Review your investments and do it regularly!
So why is inflation so high when we are still in recession? (the technical definition of a recession may well suggest that we aren't still in one but I don't think that any of us is fooled by that)
Well, the weakness of the pound against virtually every currency other than the euro hasn't helped - making imports considerably more expensive recently. For example, my wine club has just increased its prices generally by @ £1-£1.50 per bottle (15-20%) to allow for the drop in the value of sterling. This situation is unlikely to change soon as the Bank of England is likely to keep interest rates low (at a time when they would normally be putting them up to fight inflation) because the economy is so weak. This makes it unatractive for other countries to buy sterling as they'll get a very low rate of interest on sterling deposits, which in turn puts pressure on the pound.
I have never seen, in 17 years of experience, so many 'Catch 22' situations all at the same time! Sadly, as more people are beginning to understand, the only way in which many countries will be able to afford their debt is for it to be 'inflated away', suggesting that inflation will continue to rise in the medium term. This is, as we've seen above, really bad news for savers. The answer is to divide your funds up into chunks - money that you may need immediately or in the very short term (and therefore can't afford to take any risk with), more medium term money (low risk)and then the long term stuff. You can afford more risk with the long term stuff (and therefore protect it better from inflation) if you know you won't need to touch it and can therefore ride out any short-term market volatility.
Review your investments and do it regularly!
Friday, 14 May 2010
Hope springs eternal!
The early signs of the new UK government are encouraging.
The need for consensus has resulted in some of the more controversial manifesto promises of each party being abandoned. Inheritance Tax planning, for example, is now definitely back in fashion!
The good news, so far at least, is that the two parties seem determined to make it work. Time will tell. At least the drastic cuts need to balance the UK's books within a reasonable period of time will be (slightly) more palatable when backed by two parties instead of one.
Tax will rise and so, ultimately, will inflation so now is a really good time to review your investments and get them in shape for this Brave New World we're living in.
The need for consensus has resulted in some of the more controversial manifesto promises of each party being abandoned. Inheritance Tax planning, for example, is now definitely back in fashion!
The good news, so far at least, is that the two parties seem determined to make it work. Time will tell. At least the drastic cuts need to balance the UK's books within a reasonable period of time will be (slightly) more palatable when backed by two parties instead of one.
Tax will rise and so, ultimately, will inflation so now is a really good time to review your investments and get them in shape for this Brave New World we're living in.
Thursday, 25 March 2010
The First (and by no means the last) Budget of 2010
So, even based on Darling's (by consensus wildly optimistic) growth assumption for next year and beyond the government's (hence our) debt will be £1.4 trillion by 2014/15. That's a lot of money - my calculator can't cope with that many noughts. Add to that the Towers Watson £1.2 trillion estimate of the unfunded liabilty for public sector pensions and you have a total debt of @ £90,000 for every income tax payer in the land.
Such staggering incompetence will no doubt be rewarded by a peerage in due course. The rest of us would have appeciated a little more honesty, such as that shown by the Irish Government. Without it, the pain may be a little less but it's likely to last a lot longer.
If Blair, Brown and Darling are worried about their place in history being remembered they should have no fear. The sad thing is that, despite their socialist pretensions, they are all far too rich to feel any pain at all - that's our job, apparently.
So, I would urge you to take whatever (legal) steps you can to reduce your own tax liability. I can help - it's now my favourite type of work!
Such staggering incompetence will no doubt be rewarded by a peerage in due course. The rest of us would have appeciated a little more honesty, such as that shown by the Irish Government. Without it, the pain may be a little less but it's likely to last a lot longer.
If Blair, Brown and Darling are worried about their place in history being remembered they should have no fear. The sad thing is that, despite their socialist pretensions, they are all far too rich to feel any pain at all - that's our job, apparently.
So, I would urge you to take whatever (legal) steps you can to reduce your own tax liability. I can help - it's now my favourite type of work!
Monday, 1 March 2010
Election Madness
If the latest polls are to believed, then we are heading for a hung parliament, or perhaps even a Labour majority, at the forthcoming election.
It's important that people realise just what an absolute disaster this would be. Even the prospect of this happening has been very bad for our financial state - since last Wednesday the pound has already fallen by 3% against the euro (which is itself a basket-case currency just now) and by 2.5% against the dollar.
The Tories are wrong about plenty of things but they are right about the need to cut our country's debt urgently. If not, other countries will expect a higher rate of interest when lending us money, the pound will continue to fall, inflation will rise sharply (take a look at the price rises we've already had for cars and wine - e.g. the cheapest Ford Focus now retails at just under £18,000)! This will put interest rates up and more people will default on their mortgages as a result so property prices will fall futher and people will have less money to spend on non-essentials, resulting in more unemployment, which results in less tax coming in to the government and more going out in state benefits, requiring more debt, which will become more expensive, even if it can be found!
Mark my words, we are a LONG way from getting out of this mess and we need to take some pain soon, or the pain will be much greater later on and for far longer.
Labour's 'great idea' of spending yet more money we haven't got adding to the largest debts we've ever had (now expected to be at least £23,000 for every man, woman and child in the UK by 2014) is sheer madness.
If the voters don't realise this in time for the next election then it will be like turkeys voting to remove all holidays except Christmas and Easter.
It's important that people realise just what an absolute disaster this would be. Even the prospect of this happening has been very bad for our financial state - since last Wednesday the pound has already fallen by 3% against the euro (which is itself a basket-case currency just now) and by 2.5% against the dollar.
The Tories are wrong about plenty of things but they are right about the need to cut our country's debt urgently. If not, other countries will expect a higher rate of interest when lending us money, the pound will continue to fall, inflation will rise sharply (take a look at the price rises we've already had for cars and wine - e.g. the cheapest Ford Focus now retails at just under £18,000)! This will put interest rates up and more people will default on their mortgages as a result so property prices will fall futher and people will have less money to spend on non-essentials, resulting in more unemployment, which results in less tax coming in to the government and more going out in state benefits, requiring more debt, which will become more expensive, even if it can be found!
Mark my words, we are a LONG way from getting out of this mess and we need to take some pain soon, or the pain will be much greater later on and for far longer.
Labour's 'great idea' of spending yet more money we haven't got adding to the largest debts we've ever had (now expected to be at least £23,000 for every man, woman and child in the UK by 2014) is sheer madness.
If the voters don't realise this in time for the next election then it will be like turkeys voting to remove all holidays except Christmas and Easter.
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