Investment guru Brian Tora, writing in a July edition of Money Marketing, notes that the independent finance advice (IFA) community will be looking at passive investment funds following the retail distribution review (RDR). IFAs have preferred commission from active funds but there will be RDR changes on adviser remuneration.
Tora reveals that at a recent presentation of investment trusts Aberdeen extolled the merits of its Edinburgh US Investment Trust. This passive fund has a tracking error of just 0.1 per cent. To declare an interest my son has a few shares in this trust.
Some 75 pct of funds fail to beat the index.
Wednesday 16 September 2009
Friday 11 September 2009
FSA chief Lord Adair Turner likes a nice hotel.
Money Marketing made a freedom of information request to ascertain that Lord Adair Turner, chairman of British financial regulator FSA, claimed £812 for two nights in a hotel during last February. Nice work if you can get it while FSA CEO Hector Sants
has a full time driver.
There is the perception amongst some independent financial advisers is that they get a hard time from the FSA while the regulator leaves the big banks well-alone. One IFA has recently called the banks giant selling machines.
has a full time driver.
There is the perception amongst some independent financial advisers is that they get a hard time from the FSA while the regulator leaves the big banks well-alone. One IFA has recently called the banks giant selling machines.
Monday 7 September 2009
A July issue of Investors Chronicle looks at RDR.
I should have commented on this article earlier but I did'nt. Sorry about that!!
A July issue of the Investors Chronicle got Martin Bamford and Jonathan Fry, well-known independent financial advisers (IFAs), to comment on the proposals of the Financial Services Authority (FSA)
with its retail distribution review (RDR).
Bamford is a chartered financial planner from Informed Choice while Fry runs his own
firm Jonathan Fry & Co. Fry was against the review proposals while Bamford was for.
As a consumer of financial advice I kind of side with Fry that paying directly for financial advice would not help low-income groups. The fee payments would come from taxed income and might be considerable. However, I have sympathy with Bamford's assertion that the commission bias of independent financial advice has led to the slew of recent investment scandals (with-profits anyone?). There is also a tendency for investment bonds to be recommended by IFAs, which is not very impartial.
Fry also notes that the British financial regulator FSA lives in an utopian world
He considers that more disclosure of costs would help
consumers.
Anyway with the Conservatives proposing to scrap the FSA, if it wins the next general election, then it will be interesting what will happen to the RDR.
I had to do some pension transfers recently and it was saddening to realise that I was paying three sets of costs with the money. First, the independent financial adviser (IFA),
second the Royal London unit Scottish Life and third the various investment fund managers. However, in
the IFA's defence there has had to be quite a bit chasing up in terms of the pension funds making the transfers. One source of delay is anti money-laundering legislation
and I wonder if the checks could be speeded up. Nobody would want to send their passport to a pension fund manager by post and then hope to get it back by the same postal system. An email could have sufficed with my passport number.
However, the chunks taken out by the various parties (the IFA, the pension fund platform and the investment fund managers) will mean that investment returns will have to be spot-on to get anywhere.
A July issue of the Investors Chronicle got Martin Bamford and Jonathan Fry, well-known independent financial advisers (IFAs), to comment on the proposals of the Financial Services Authority (FSA)
with its retail distribution review (RDR).
Bamford is a chartered financial planner from Informed Choice while Fry runs his own
firm Jonathan Fry & Co. Fry was against the review proposals while Bamford was for.
As a consumer of financial advice I kind of side with Fry that paying directly for financial advice would not help low-income groups. The fee payments would come from taxed income and might be considerable. However, I have sympathy with Bamford's assertion that the commission bias of independent financial advice has led to the slew of recent investment scandals (with-profits anyone?). There is also a tendency for investment bonds to be recommended by IFAs, which is not very impartial.
Fry also notes that the British financial regulator FSA lives in an utopian world
He considers that more disclosure of costs would help
consumers.
Anyway with the Conservatives proposing to scrap the FSA, if it wins the next general election, then it will be interesting what will happen to the RDR.
I had to do some pension transfers recently and it was saddening to realise that I was paying three sets of costs with the money. First, the independent financial adviser (IFA),
second the Royal London unit Scottish Life and third the various investment fund managers. However, in
the IFA's defence there has had to be quite a bit chasing up in terms of the pension funds making the transfers. One source of delay is anti money-laundering legislation
and I wonder if the checks could be speeded up. Nobody would want to send their passport to a pension fund manager by post and then hope to get it back by the same postal system. An email could have sufficed with my passport number.
However, the chunks taken out by the various parties (the IFA, the pension fund platform and the investment fund managers) will mean that investment returns will have to be spot-on to get anywhere.
Thursday 3 September 2009
Friends in need are friends indeed!!
Sorry for the corny title but I thought it was a good idea to get into the troubled affair of Friends Provident, which has recently unloaded investment manager Foreign and Colonial at a loss. The bid by Resolution for the British insurance company originally founded by Quakers seems just to be a bonanza for city firms. It seems an expensive way of getting Clive Cowdery et al on the Friends Provident board. I ploughed my way through the initial Friends Provident documentation as my wife has a few shares and an endowment policy with the company. Selling out for around 79 pence does not make much sense since the shareholding is a minimum from the original flotation so I suppose we will hang on and see what the Resolution deal brings. This could mean reduced service levels to endowment holders and poor prospects (to say the least) for
workers.
Money Marketing quotes a spokesman from the stockbrokers Charles Stanley, who said that "What we suspect has happened is that two groups of investors have put pressure on the Friends' board to do a deal, the first group being investors who wanted an exit from the stock and the other group being investors who have a stake in Resolution and realise that if Resolution is going to be successful in its consolidation project, then Friends had to be the first step." This quote is in the edition of August 20th.
Quite a few commentators say that it will be tricky for Resolution in terms of execution risk but I think there are a lot of insurance companies in the UK market place, which could be snapped up and make for easy cost-cutting.
workers.
Money Marketing quotes a spokesman from the stockbrokers Charles Stanley, who said that "What we suspect has happened is that two groups of investors have put pressure on the Friends' board to do a deal, the first group being investors who wanted an exit from the stock and the other group being investors who have a stake in Resolution and realise that if Resolution is going to be successful in its consolidation project, then Friends had to be the first step." This quote is in the edition of August 20th.
Quite a few commentators say that it will be tricky for Resolution in terms of execution risk but I think there are a lot of insurance companies in the UK market place, which could be snapped up and make for easy cost-cutting.
Wednesday 2 September 2009
With all the regulation in the world it looks bad for Keydata investors!!
On the front page of the Money Marketing edition for August 20th, one story highlights the plight of Keydata investors. I thought these kinds of disasters would not happen considering how much money the British quango (is it a quango?) the Financial Services Authority (FSA) absorbs every
year.
Dan Schwarzmann, a partner of PricewaterhouseCoopers (PWC) and joint administrator of Keydata, predicts that it is unlikely that creditors will receive much money back.
PWC has not yet found missing SLS Capital policies, where about 5,500 investors have investments.
Keydata was a structured investment provider put into administration by the FSA initially for the non-compliance of ISA retail investment plans.
This case is additional to the Lehman Brothers mess and at least the FSA cannot expect ordinary UK retail investors to evaluate counter-party
risk.
The following week's edition of Money Marketing has Paul Farrow quoting one angered Keydata investor, who said "The question of how £103m of investors' money could disappear from an FSA-regulated company is an utter scandal as is how non-compliant ISAs could be marketed for five years.
Paul Farrow wonders what was the role of HMRC in the checking of the ISAs?
year.
Dan Schwarzmann, a partner of PricewaterhouseCoopers (PWC) and joint administrator of Keydata, predicts that it is unlikely that creditors will receive much money back.
PWC has not yet found missing SLS Capital policies, where about 5,500 investors have investments.
Keydata was a structured investment provider put into administration by the FSA initially for the non-compliance of ISA retail investment plans.
This case is additional to the Lehman Brothers mess and at least the FSA cannot expect ordinary UK retail investors to evaluate counter-party
risk.
The following week's edition of Money Marketing has Paul Farrow quoting one angered Keydata investor, who said "The question of how £103m of investors' money could disappear from an FSA-regulated company is an utter scandal as is how non-compliant ISAs could be marketed for five years.
Paul Farrow wonders what was the role of HMRC in the checking of the ISAs?
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