There is an inexorable trend towards holding data about people’s savings and investments online. Indeed, many of the best buy savings accounts are internet based. While providing undoubted benefits to consumers in terms of managing their accounts, holding this type of information on the web does come at a price. This is because we have to record and recall an ever-growing number of user names, dealing names, passwords, pin numbers, personal codes and memorable words. A typical investment account may require up to five of the above. And this is just one account. When internet banking and other savings or investment accounts are added, the names and number that need to be held begin to resemble a spy’s cipher book.
And we can’t always opt out of this brave new world and contact the provider in the good old way - over the telephone. Not only will this bring its own password scrutiny, but telephone enquiries may no longer be accepted. The poor punter is then reduced to writing in (with appropriate client details) to give his or her instructions.
Just like a spy’s notebook, all this account information is very valuable and could be very damaging if it fell into the wrong hands. So, the poor investor not only has the problem of inputting an ever-growing amount of his or her own client information, they also have the worry of keeping this information accessible but safe.
This situation has arisen because each provider has gone through the same process of screening client access. While it makes sense to do this on an individual account basis, collectively it is just storing up problems later on.
Surely, there must be a better way of handling this situation, but until one is found, it’s either the memory training course or the larger notebook.
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Recent monthly sales figures from the Investment Management Association (IMA) showed that balanced and money market funds had been the main beneficiaries of record retail outflows in November 2007. This is the biggest sign yet that investors and IFAs of a nervous disposition are hell-bent on fleeing the perceived risk of equities and property investment for the safety of more cautious options. It would seem that the run on a certain bank last year allied with the current market uncertainty has created something of a trend for mass withdrawal of client funds from potentially sticky situations. No longer the famed British ‘grin and bear it’ approach. The theme that would seem to be missing from the ‘stick or twist’ debate is that most investments should be for the long-term. A glance at past performance charts for equity and property investments over the past century should serve as a timely reminder of the ability for markets to experience occasional reversals in fortune without having a long-term effect. Reference to past performance over the long-term would at least provide investors with a level of comfort in uncertain times. (more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Why is it that when fuel or food prices go up, the media is quick to react with cries of profiteering or worse? On the other hand, rising house prices are greeted with enthusiasm by just about everyone who isn’t trying to buy a house.House prices are unique in that they defy the normal rules of supply and demand. For every other product in daily life, when prices rise, demand falls. Not with houses. When prices rise, demand increases, all other things remaining equal. The reason for this is that people fear that unless they can get on the property ladder as quickly as possible, prices will continue rising and they will be excluded from owning a home, possibly for ever.
While potential buyers struggle to get into the market, homeowners are the beneficiaries of rising house prices. As prices rise, so they believe does their wealth. This encourages them to borrow and spend more, not only giving work directly to an army of loan and mortgage providers, but when this money spills over into the wider economy, it becomes an important component in the level of consumer spending that has kept the economy buoyant for the past decade.
But at what a cost!
(more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
‘But those behind cried “forward!” and those before cried “Back!”‘ Thus wavered the mighty Etruscans in Macaulay’s Keeping of the Bridge, as they stood before the Tiber, savouring the sacking of Rome but dreading the sword of Horatius.Twas ever thus: human beings are driven by fear and greed. Wavering indices are testament to this. We may be tempted to stand back but market turmoil can be a great opportunity for investment advisers.
We read often of surveys suggesting that performance is not the key driver of client satisfaction. Actually, clients want to know that someone is looking after their interests. They also want a Simon Cowell approach to communication: straight talking when things go wrong.
It is when your best ideas have fallen and your investment portfolios are languishing below cost value that it is prime time to pick up the phone and communicate with clients; an opportunity to remind them of their longer term aims and your intentions in achieving them.
Ideally, you would not want to be invested at this time. Clients will know this but will forgive a valiant investment effort far more than they will their being uninvested should markets rise. Change represents opportunity so market turmoil should be used to probe for investment anomalies.
So like the mighty Etruscans, if your clients should waver, stand your ground, re-iterate your strategy, and lead them through it.
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Amid the doom and gloom of economic predictions for the year ahead some providers of innovative guaranteed products in the pensions and investment markets may have more reason to be cheerful than the rest of us.
Having witnessed the success of such products in the US and Japan, providers have decided that the time was right to launch products in the UK. The products are aimed at providing guaranteed capital or income returns and are primarily designed for those seeking to take advantage of these guarantees as part of their retirement planning.
The guaranteed income products have been labelled “the third way” and are seen as bridging the gap between annuities and income drawdown, but variants have been launched which can accept both pension and non-pension monies.
After a quiet start to life in the UK arena a period of uncertain investment markets could herald an associated growth in the use of these guaranteed products as investors seek to bring some certainty to their portfolio. (more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
- New report identifies problems and solutions -
In its latest report, “Unit Linked Bonds in the UK 2007″ (1), Defaqto examines the pressures that are undermining these saving instruments and how they will affect their appeal to investors.
The report examines the likely impact of the proposed introduction of the 18% flat rate of Capital Gains tax, the implications of the Retail Distribution Review, the growing importance of fund supermarkets and how life companies are likely to react to the growing influence of multi-manager propositions in the consumer investment field.
While all these influences are likely to cause serious challenges to the life companies, the report is far from pessimistic about unit linked bonds. For instance, as a result of CGT changes, IFAs are predicting a drop in business, (2) with 71% seeing a fall of up to 25%, but it is far from terminal. The press coverage proclaiming the death of unit linked bonds seems greatly exaggerated as only 11.5% expect a drop in business of more than 75%.
| Estimated %age drop-off in business placed in Bonds should CGT changes go through |
| No Drop |
32.0%
|
| Up to 25% Drop |
39.0%
|
| 25% to 50% Drop |
16.0%
|
| 50% to 75% Drop |
1.5%
|
| More than 75% Drop |
11.5%
|
Source: Unit Linked Bonds in the UK - December 2007, Defaqto Ltd
(more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
- Call comes following ABI’s qualified support for Personal Accounts -
In a recent press release (1), the ABI gave its support for Personal Accounts but only on the basis that they add to savings rather than undermine existing pension provision. This position is supported by consumer research (2) carried out for Defaqto’s Retirement Savings & Income report 2007 (3).
This revealed that 71% of those surveyed will be relying on the State Pension to provide them with income in retirement while 49% stated that they will rely on their employer’s pension scheme, 24% will rely on bank or building society savings and 22% said they would be relying on personal pension savings.
Matt Ward, Defaqto’s Principal Consultant for Pensions & Wealth Management and lead author of the report, stated that: “These findings underline the pressure on the Government to better encourage private pension savings and to deliver a successful Personal Account proposition, thereby alleviating future strains on the State system. They also confirm that employers will have a huge role to play in future pension provision in the UK.”
(more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Just as the FSA is raising doubts about the ability of some advisers to justify multi-manager selection (1), and with the industry in a state of flux, an independent updated guide designed to help financial advisers improve their understanding of multi-manager fund management has just been produced. Called “Blending Talents: A guide to multi-manager investing in the UK”, Defaqto’s latest guide not only contains highly relevant information about the structure, benefits and information on the investment process itself, it also provides a methodology and is crammed with fund statistics to identify likely funds for further investigation.
The guide also comes at a time when the level of fund manager moves in this section of the industry is unprecedented as many fund management companies are positioning, or repositioning themselves in anticipation of further growth in what is becoming the managed solution of choice.
(more…)
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Defaqto has marked the first anniversary of its QuantRater fund rating service by launching an email messaging service to customers of its Aequos Engage product selection tool.
QuantRater ranks funds on a scale of one to five, with funds rated three and over showing above average efficiency in their use of risk and consistency of performance.
The quarterly service will send the 4,500 customers of Aequos Engage an updated listing of all funds with the top ratings of 4 and 5. At the same time, IFAs are being supplied with specialist training materials to show how to utilise QuantRater to maximum effect in the product search process.
In the investment product selection process within the bonds and pensions markets, the number of fund links available alongside products increases on an almost daily basis. Indeed the current average number of funds available alongside personal pension plans stands at 1,011. For those IFAs seeking to pick their own funds when creating a client’s investment portfolio the initial selection process and ongoing performance monitoring requires a great deal of resource, making time-saving tools such as Defaqto’s QuantRater particularly valuable.
Commenting on the situation, Fraser Donaldson, Principal Consultant - Investments at Defaqto said, “As investment houses jockey for position on bond and pension product fund panels, the quantitative ratings produced by Defaqto’s QuantRater will help them prove the capability of their funds.”
-Ends-
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
Defaqto’s recently published ‘Retirement Savings & Income Report 2007 - A review of the individual retail pensions market in the UK’ (1) - shows that many consumers still trust themselves and their family and friends for advice on retirement planning.
Defaqto’s research (2) surveyed 1,000 consumers of which 27% stated that they trust their own judgement when it comes to advice on planning for their retirement, 23% trusted their friends and family and 12% trusted their spouse/partner.
In terms of professional advice, the research showed that overall 28% of consumers trust a financial adviser for retirement planning advice and 24% would trust their employers.
Lead author of the report Matt Ward, Defaqto’s Principal Consultant for Pensions and Wealth Management, stated that “The industry needs to find ways to build trust with the public and this will pay rich dividends in terms of both the amount of business generated as well as ensuring that people get the best advice in this vital area of their personal finances.”
Defaqto’s report also includes financial background information on key product providers 3 as well as data on the intermediaries’ preferred pension products, the evaluation of what is important to intermediaries in terms of product delivery and their assessment of the quality of service received by the principal providers.
Bookmark this article:
These icons link to social bookmarking sites where readers can share and discover new web pages.
