It’s much more complicated than that

It’s much more complicated than that

Despite last minute attempts by Germany to woo a UK ‘stay vote’ with some very tempting offers such as:

1.    We’ll acknowledge the Wembley goal

2.    We’ll stop making jokes about Prince Charles’s ears

3.    We’ll stop using sun cream on the beach out of solidarity with your sunburn

4.    We’ll reserve a place with our towels for you on the hotel sun-lounger

5.    We’ll introduce tea breaks

6.    We’ll turn our clocks back an hour to be in synch with you

7.    We’ll do without a goalie in penalty shoot-outs with you to make it a bit more exciting

8.    We’ll introduce an EU regulation banning a frothy head on beer

9.    We’ll all come along to the Queen’s 100th birthday

10. We’ll willingly provide the villain in every Bond film 

we have voted to leave.

Al Murray explains how economics worked very well in 2015. As he says. it is much more complicated than that.

However you voted yesterday this might bring some cheer to your day if you are still feeling a little down.

On a more serious note, the markets are looking at doing their job of making money with fresh vigour as Brexit presents an opportunity as well as a threat. The day started with the pound taking a hit against the dollar but more interestingly the euro has collapsed against the dollar, suffering its worst fall ever in the wake of the UK’s vote to leave the EU.

By lunchtime today , as I write, the markets have recovered half their losses already showng a loss of 4.23% on the day.

Winston Churchill said A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”.

A ‘Brexit’ negotiated via “article 50” will take at least two years. David Cameron was right to announce his resignation, as he would have been in an impossible position in negotiations for leaving. Do not forget there are general elections in Germany and France in 2017 and those we would start to negotiate with, in particular Merkel and Holland, may no longer be in office by then.

And, very importantly, the US Presidential elections in November.

There will be some turbulence and there will be money to be made. Markets will bounce back. The vision must be positive and this Bento is an overview of informed comments about the impact of leave.

What is the point of fines on corporate bodies

What is the point of fines on corporate bodies

Some time for some focus and an application of common sense and fair play?

“Second World War veteran Major James Fyfe, who signed up aged 17 and fought at Dunkirk, fell of a trolley at Royal Berkshire Hospital and broke his neck in March 2011”.

The ‘learnings’ or ‘outcomes’ (yes those regu-words again that are always used when things corporate or governmental go wrong) in this very tragic state of 2011 affairs is that Graham Sims, the boss of Royal Berkshire Hospital NHS Foundation Trust admitted a charge of “breach of an employer of general duty, other than to an employee, relating to the failure to properly secure the hospital bed.”

This is yet another example of a fine meaning nothing at all. Just like banking fines. As Billy Bennett’s song goes It’s the rich what gets the pleasure”!

What is the point of fines on corporate bodies? They mean nothing at all. And even worse, the victims of their blunders see it means nothing.

James Ageros, the NHS trust’s QC said: ‘at the heart of this there is a human tragedy and the Trust apologises and sends its condolences where there was the death of their father in unfit circumstances”.

In this case the trolley that was ‘blamed’ for the sorry mess was “corroded in places and key mechanisms, including a spring inside the side bars, were missing”.

Nobody is held responsible on a meaningful personal level anymore for the errors that cause death, distress, or in the case of banks, financial loss. So that’s all right then?

A £200k fine? Extraordinarily time to pay was asked for by a man whose salary is most likely heading toward £300k- over 4 years was granted. Let’s move on, get over yourselves?

But somebody was responsible for this terrible outcome, ultimately it was the ‘Trust’ but the real blame lies much further down the chain of command. This equipment was in use all day, every day. Was it maintenance, very possibly? Was it the hospital staff that put him on the trolley, surely they must have noticed that the sidebars would not lock?

What is for sure is that it must be someone.

If this were a small business, let’s just say a small IFA business, rather than a corporate body a very different ‘outcome’ would have been seen. Somebody would be rightly identified as individually responsible, substantial compensation, not a fine, paid to the victim or their family by way of the business owners, possibly by their public liability or business insurance and without doubt the business owner would have been prosecuted, maybe even jailed and the business even closed down.

Why is it that corporate responsibility seems to override individual responsibility? Fines should go toward redress for the victims of failure and under no circumstances should HM Treasury treat them as a windfall tax as is currently the case with banking fines.

Perhaps there has come a time that workers in large corporate bodies, banks for example, are equally financially liable in cases like this.


Just a thought?

Longstop matters, dual standards and South Thanet

Longstop matters, dual standards and South Thanet

The campaign to see that longstop protection should be re-instated for financial advisers seems to have been kicked into the long grass once again, this time by way of the actions and resolve of the FAMR and the FCA.

Had longstop protection been restored, IFAs would have seen any claim against them becoming unenforceable after 15 years had elapsed. This protection was enshrined for all within the Limitations Act 1980 and was removed for financial advisers by the government under FSMA 2000 legislation statutory instruments.

The big supporting ‘remove’ argument for consumers was, and still is, that it could take very many years to realise that financial advice received could be inappropriate, for instance mortgage or pension advice.

What follows regarding dual standards will make advisers very cross indeed.

We hear that Tory party officials tried to block Kent police’s enquiry into general election party overspending (election fraud?) by engaging the services of one very expensive QC, James Laddie at Matrix Chambers.

The argument put forward by Mr. Laddie was that the time limit for any overspend prosecutions had expired. That limit, in this electoral case, is just 12 months. He failed to mention to the court the delay in providing information to Kent police by the party contributed to that delay.

Luckily, the judge was wise. Upon being told of Conservative party attempts to block Kent Police from extending their probe, Judge Justin Barron said in granting the extension ‘The combination of circumstances before me is wholly exceptional and goes far beyond the usual circumstances that would exist in a typical case where election expenses are being investigated.’

General election campaigns allow a spend between £10,000 and £16,000 per candidate, depending on the size of their constituency population.

General elections set an elected government on course for a fixed term of 5 years. The balance of power in the 2015 election was determined, in particular, within marginal constituency seats such as South Thanet. Those very marginals delivered a Tory majority of just 12 seats.

In May, seven police forces launched investigations into Tory MPs for possible election fraud, acting on evidence revealed by Channel 4 News that showed almost £200,000 had been spent in supporting Tory candidates that should have been declared at a local level.

The outcome, had it been declared in each constituency, would have blasted those candidates way beyond their local expense limit, in fact it could have doubled that amount.

Police are also investigating:

  • Amanda Milling, for Cannock Chase
  • Michael Ellis for Northampton North
  • Stuart Andrew for Pudsey, Horsforth & Aireborough
  • David Nuttall for Bury North
  • North Cornwall for Scott Mann
  • George Eustace for Cambourne and Redruth
  • Kevin Foster for Torbay
  • Oliver Colville for Plymouth Sutton and Devenport;
  • Graham Evans for Weaver Vale.

Gloucestershire Police have not yet not confirmed whether they will be looking at Cheltenham MP Alex Chalk or Stroud MP Neil Carmichael.

It would be fair to say that there have never been circumstances such as this where an investigation into potential electoral crime was so large or so complex that it created the need to apply for an extension of the one-year time limit.

If the ‘boys in blue’ do decide to look at all these constituencies and the outcome is that the Tory party was found guilty of electoral crime on such an industrial scale, the balance of power could shift by way of a re-run of the elections in those constituencies’.

Indeed, in the event of a series of successful prosecutions, the country could have been governed by an illegal entity.

For Nigel Farage, the massive resource thrown at South Thanet probably destroyed his election prospects, the desired Tory outcome. He came second with 27% swing toward UKIP, only 2,812 votes behind the Tory winner

So, to summarise:

  • the Tories are claiming a longstop defence of 12 months.
  • IFA longstop aspirations were 15 years
  • If the constituency overspends results being investigated went against the Tory party, we may have had a hung parliament or an ‘Ed’ led Labour government.

This ‘Orwellian Animal Farm’ application of legal process shows there truly is something rotten in UK politics.

The financial adviser community may wish to consider again the ‘longstop remain’ argument put forward over many years by successive governments, and the most recent FAMR view on the matter as noted above and then apply it to this shameful political attempt to scupper a police investigation into electoral shenanigans.

We could surmise, from applying FCA and FAMR logic, that it could take very many years for an electorate to realise that government policy and law making could be based upon the outcome of electoral fraud.

And worse, the country could have decided to ‘Brexin’ or ‘Brexout’ all because of a referendum called by an illegitimate parliament.

And who would compensate for the very long-term ‘electoral detriment’ that overspend caused?

Just a thought.

Retainers and income stream you control

Retainers – an income stream that you control

If you have clients who use your services on a regular basis then retainers can establish real and lasting value for your business and create ongoing customer loyalty.

Whilst retainers are common place in many service professions, their adoption has been slow in financial services.

A well-planned retainer with a client allows you to not only plan your work in advance, but also gives you the freedom to make time for new clients when you’re ready.

However, the most powerful attraction of a retainer programme for any business has to be that it gives you stability, as you control the income which comes into your business.

So what is a retainer?

A retainer is a fee paid for professional services. You and your client agree a yearly fee in advance for an agreed level of service.

A retainer agreement is signed and the client normally pays each month for these services usually by direct debit or standing order. Though in some cases a yearly upfront payment is made.

It really is up to you and the client.

At the end of the year you can review the work done and compare the income to the work completed.

If you believe there is a shortfall you can renegotiate an increased retainer in year 2 and so on.

What could a retainer programme look like?

As you may have guessed you need to be careful when putting a retainer program together. Having a poorly planned and more importantly poorly communicated retainer agreement can and has resulted in businesses being taken advantage of.

At the beginning your clear goal has to be simplicity.

The first stage in a retainer programme is to decide what you will offer your clients. The best way to find this out is to ask them and the answer is usually they want you.

You then have to decide what access to you they will receive and through which mediums.

A simple starting point for a retainer offering which can be built on over time could look like this:

  • Consulting on life planning or business strategy
  • Dealing with routine matters that the client can’t complete themselves
  • Being on call for emergency issues, but please define what these would be and the contact mechanism they can use to reach you.
  • Offering agreed turnaround times for agreed routine tasks as part of the agreement
  • Dealing with regular events such as tax returns and liaising with their other financial professionals.

The most important part of any retainer program is explaining in fine detail just what you will do, when you will do it and how much you will commit to. You also have to explain what you won’t be doing as part of the agreement.

Additionally, you’ll want to keep tabs on a new agreement as time goes on. One of the best ways to make sure your retainer is working out for you as well as your clients is to closely keep track of your time.

Selling the concept of Retainers

Positioning your retainer proposition is vital. It is important to develop both a verbal and written pitch that correctly sells the benefits to the client of a retainer arrangement with you. The clients to target first are those that you do most work for, who are probably a smaller segment of your overall client bank.

There are five key elements to every successful retainer pitch:

  1. Promote all the work you have done for them and others in the past and what you can do for them in the future. Do not be afraid to promote your track record of delivery.
  2. Show in plain English what each element of your retainer proposition costs. Ensure there are no hidden charges or extras. If there are any extras make sure they are for the client.
  3. Some clients might prefer a shorter commitment to see if the arrangement works. This might be a way to encourage them to sign up. Remember retainers don’t have to be sold as a single one size fits all proposal.
  4. Offer ready-made reports to highlight the work done and the benefits provided for the client. It will put clients, especially corporate business owners, at ease to know that they can access this data and that you are taking a proactive interest in their success.
    1. Have an exit clause for both parties in case things don’t work out.

If this sounds good and you’re ready to start making moves on getting clients on retainer, let me offer one final word of warning—you must get certain things down in writing or you’ll end up in trouble.

It’s not rocket science either, just a few basic, iron-clad parameters that will keep you safe. Any understanding client will see the need for it and won’t offer you resistance. These are:

  • The amount you’re to receive each month
  • The date you’re to be payed by
  • Any invoicing procedures they are expected to follow
  • Exactly how much work and what type of work you expect to do
  • When your client needs to let you know about the month’s work by
  • What notification you need before the retainer relationship can be ended
  • Anything else that is relevant for ensuring that work is completed in a timely fashion.

I will leave you with this, there are several benefits to reselling to previous customers versus acquiring new ones. First and foremost, it usually costs less. That alone is reason enough to spend more time focusing on your current customers, however, there are additional benefits as well.

According to research, customer profitability rates tends to increase over the life of a retained customer and a two percent increase in customer retention has the same effect on profits as cutting costs by ten percent.

Finally, the more times a customer purchases from you, the stronger your relationship becomes. It’s these strong relationships that cause customers to champion your products and services, effectively creating powerful referrals and word-of-mouth marketing that will help drive new customers and profitability.

John Joe McGinley

Glassagh Consulting May 2016

Follow mw on twitter @glassaghconsult

The chiefs remain in Edinburgh and London but the people are gone

 The chiefs remain in Edinburgh and London but the people are gone

Please forgive me for seeing similarities between the latest ‘post A day’ adviser number fallout and the ‘Highland Clearances’.

For those who do not have a knowledge of the clearances, they were forced displacements of the population of the Scottish Highlands during the 18th and 19th centuries that led to mass emigration to the Scottish Lowlands, coast and the North American colonies.

The clearances were part of a process of agricultural change throughout the UK but were particularly notorious due to the late timing, the lack of legal protection for year-by-year tenants under Scottish law, and the abruptness of the change from the traditional clan system and the brutality of many evictions.

The reality of the highland clearances can still be seen today in the remains of burned out, blackened houses, frequently comprising of whole villages and settlements standing as a testament to the greed of the few in hurting the many.

It is worth remembering, too, that while the rest of Scotland was permitting the expulsion of it’s Highland people, it’s ruling classes were forming the romantic attachment to kilt and tartan that scarcely compensates for the disappearance of a Highland race to whom such things were once a commonplace reality.

The chiefs remained in Edinburgh and London, but the people had gone.

We now have confirmed that as at the 11th February 2016 the number of level 4 qualified advisers in the UK is 29,144.

In January 2006 FT Adviser also notes from an FOI request that adviser numbers stood at 105,710

Some 75% of experienced financial advisers who could have helped provide valuable advice capacity have simply disappeared from the register since 2006.

With all this in mind, it was with some interest that I re-read an article from 23 November 2010 reporting that (according to the now knighted ‘Sir’ Hector Sants) “losing up to 20 per cent of IFAs was an acceptable cost in order to deliver the specific improvements brought in by the RDR, according to the FSA”.

In giving evidence to the Treasury select committee, the yet to be knighted Hector Sants said, “If the reduction in advisers was not acceptable the reforms would not be going ahead”.

To top this, it was reported that Lord Turner reckoned that a “reduction could be good news for consumers who may see a reduction in administrative costs”.

He said: “Some exit of “capacity” from the industry which is therefore an exit of administrative cost may be in the interest of consumers, it a cost which is being absorbed.”

What he actually meant was job losses, certainly not FSA or FCA job losses or cost reductions.

And along with the loss of livelihood for advisory firm staff, provider staff and paraplanners, we are now seeing the results of the ‘survival segmentation’ manifesting itself in consumer disenfranchisement- the unintended but sadly expected outcome of RDR.

The ‘new-speak’ use of words like “capacity” is a nicer, less disturbing way to describe casualties of the unintended or perhaps intended consequences of poorly thought out regulation? ‘Capacity’ is an FCA use of language, equivalent to ‘friendly fire’ or blue on blue’ instead of saying ‘shot by your own side’ or ‘rendition’ instead of state sponsored kidnap.

Those advisers who have survived RDR have built, grown and now transitioned some great businesses. This has taken many challenging years of serving their clients very well to achieve.

But will Andrew Bailey give this very simple thought some consideration,?

Fewer firms having to pay ever more in regulatory fees and levies (despite the logic that fewer firms to regulate should cost less) will see the those surviving financial advisory firms driven out of business as the regulatory cost to run them becomes prohibitive to all…… except the banks.

Rather like those Highland Clearances is’nt it?