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Insights - General

by Graham Bond 29 Jun, 2017
Here's an update on Personal Finance Portal. From the 4th July our client portal will have a new look and feel about it. 
The software provider we work in conjuction with have revised the format to make it easier to use for our financial planning clients.

The Personal Finance Portal is a quick and secure way to obtain up to date valuations on your pensions and investments. It also offers you a way to communicate safely with us as the service is encrypted. The same cannot be said about email, which is not secure. 

The aim is to make the navigation easier to use and to provide more information to you on your finances. 

The video below shows some of the improvements that will be made. We hope you find it useful and informative. 

To access our portal please click this link

If you would like to find out more about the Personal Finance Portal please feel free to contact  us on 01454 321511. Consilium Asset Management offer Independent Financial Advice to private and business owners in the Bristol area. 
by Graham Bond 10 May, 2017

A report has just been published about UK Debt. The typical person in Briton can expect to become free of debt at the age of 69. This is 12 years later than they hope to. The report by the Centre of Economics and Business Research showed the extent of the debt crisis in the UK.

People typically hope to clear their debts by the time they reach 57, but the truth is that they are more likely to still have debt at the age of 65, the age most people would like to consider retiring.

The reality is that they are likely to have hit their 69th birthday before they have paid off all their loans. This research confirms the data obtained by the Office for National Statistics (ONS) data on uk debt.

The UK adult population are now having to wait later in life to become “debt-free” Someone aged between 16 and 24 years old now could be aged 74 by the time they can celebrate becoming debt-free, the report found. Rising property prices lead to bigger mortgage debts.

Throughout the UK there are regional variations, for example a home owner in the North East could become debt free aged 57, whereas households in London will not celebrate their debt-free birthday until around 20 years later - at the age of 77.

The report confirms that householder tend to be over optimistic about the time it takes to repay the debts they have. Consumer research suggests that most people feel they could be debt free by the age of 50. In reality for most people this is very optimistic

The report concluded that most people are in fact aged 64 before non-mortgage debts are cleared.

UK Debt. Is it out of Control?

For the younger age group 18 to 24 year olds, the report paints a dim future. This group are the most optimistic about paying off debt early, have the highest amount of debt per person on average and will not pay off non mortgage uk debt till the age of 66.

When mortgages are taken into account, households containing people aged 35 to 44 years old tend to be the most indebted, the report found, owing £87,800 typically, as the average age of a first time buyer is 31 and most households have mortgages and other financial commitments at this age.

How to help yourself

Whilst it shows a big problem there are ways to improve the situation from a personal perspective. Having a structured   financial plan   to repay debt and consistently reviewing income and expenditure on an ongoing basis is the key to reducing debt. A review of expenses such as Gas, Electricity, Water and other regular bills can help.

Long term cash flow planning can really help you to focus on the future and how to plan in the short, medium and long term.

Obtain impartial advice from an independent financial planner that will help you focus on what is important not just now, but in the future. An alternative is to contact the   Citizens Advice Bureau

If you want to find out more about cash flow planning, please contact us.

by Graham Bond 26 Apr, 2017
This weeks video is by Dr Robert Waldinger of Harvard University. He is the current director of the longest running study about human happiness. Hope you enjoy it
by Graham Bond 25 Apr, 2017

Although the terms are familiar, there is a big difference between the types of service your Financial Planner will provide, compared to the work a financial adviser will carry out for you.

Financial Advice

Financial Advice relates to the specific task that your planner or advisor will carry out for you. Types of tasks might include providing Investment Advice , arranging an Individual Savings Account or your pension. It addresses the specific needs you have now, not looking into the future. This type of advice can be provided by an independent financial adviser, or a restricted adviser. Restricted advisers can recommend one or a limited number of product providers.   Banks and Building Societies usually offer restricted advice.

Financial Planning

Financial Planning addresses your long term objectives, dreams hopes and desires for the future, and how you can achieve this. A good financial planner will help you develop a long term financial plan that is continually reviewed and adjusted according to your change in circumstances. The plan should show you what you need to do, to make sure your dreams and wishes come true.
Any long term  financial plan  should also include an analysis of your income and expenditure (not just now but in the future), your assets and liabilities, your thoughts and feeling about investing as well as your short medium and long term objectives.

A good financial planner should show you how to reduce risk. Whether to yourself, your family, your assets (for example investments, pensions, business and property.
A planner that offers a comprehensive service will work closely with their clients to help them live the life they want not just now, but in the future.
Addressing issues such as never running out of money and maintaining your standard of living in retirement. A cautious and prudent approach to managing your money is at the heart of any good financial plan.

Less than ten years to retirement

For some clients the service advisers carry out will be sufficient. However the closer you get to retirement, arguably you should have plans in place to ensure you finances are mapped out. If you feel that you need a financial plan, always contact your financial planner or adviser. They should be able to help, if not then find one that can help you.

We have developed our Lifestyle financial planning service over the last five years. It is specifically designed to help clients that are within ten years of retirement. If you would like to find out more about our service please contact us.


by Graham Bond 07 Apr, 2017

Over the last few months a lot of articles about the future of financial planning . The rise of so called Robo-Advisers seems to be in the Sunday press more and more. A Robo-Adviser is an automated system that has asks clients questions about risk in addition to information about their pensions and investments. The software or system then comes up with an informed recommendation to help the client.

Robo-Advisers aim to  offer a low cost solution to Financial Advice. Whilst this is great, I do have concerns that this solution may seem too simplistic and could lead to clients making the wrong financial decisions.

The advice will only be as good as the software and programming behind it. I don't believe its possible to build a Robo-Adviser service that will be able to take into account every aspect of a clients own personal circumstances.

If a client is looking purely for simple advice on their finances then Robo-Advice might be appropriate. However what about more complex aspects of true  " Financial Planning", such as cash flow modelling, tax planning or  generating retirement income? The combination of an adviser that is using the latest technology to help project forward the clients financial plan would in my opinions be a better option.

Many people over the age of 45 generally prefer to deal with someone they know and trust.   A good financial planner  will be able to help a client identify and prioritise aspects of  their finances that are most important to them.   This ability is developed over a long period of time and can be quite nuanced. Asking the right questions at the right time is one of the most important skills an advisor should possess. You simply can't get the same result from a software driven application.  A recent article by  Fina Metrica  covered the concerns about Robo-Advisers.

The best option

I'm a great fan of technology.  I believe the outlook for clients and Financial Planning in the UK  is promising. Independent Financial Advisors need to use technology to their clients advantage.  This  can make a huge difference to the clients personal circumstances and their life.

by Graham Bond 07 Apr, 2017

The new tax year has commenced and whilst many people are aware of the tax breaks available to them, its worth pointing our a few areas of  change for this  tax year.  There are major changes to the ways dividends are to be taxed. Changes to the rates of Capital gains tax will also come into effect from the 6th April 2016.  Here's a brief outline:

ISA Allowance 2017/18

The ISA allowance for this tax year has increased to £20,000, it is still important to use your allowance if possible. Unfortunately, the interest on cash Isa is at an all-time low. However, for many long term investors a low risk stock and shares Isa might be an alternative option.

New Personal Savings Allowance

The Chancellor has introduced a new personal savings allowance from 6th April 2016. The first £1,000 of savings interest will be tax-free if you are a basic rate taxpayer, whilst the first £500 will be tax-free if you are a higher rate taxpayer.

Changes to Dividend Tax

From the 6th April there will still be the £5,000 tax-free dividend allowance for investors. If you hold investments that are not in tax efficient, such as Individual Savings Accounts or pension savings and are subject to the new dividend tax then it is important that you seek financial advice . We would recommend investors should review the impact of the dividend tax changes might have on them.

Capital Gains Tax Rates

The rates of Capital Gains Tax – which is a tax on the profits made from the sale of assets – will be reduced for some people from 6th April 2016. The CGT rate will be reduced to 10% for basic rate taxpayers, while the rate for higher rate taxpayers will fall from 28% to 18%.

However, the capital gains tax rates due on disposal of residential property will remain 18% for basic rate taxpayers and 28% for higher rate taxpayers. The Annual CGT tax-free allowance will remain unchanged at £11,100.

Investors with assets subject to CGT, for example large share portfolios it might be worth reviewing these based on the new CGT rates and the impact of the dividend tax changes.

Pension contributions

Making a contribution into a pension is still one of the most tax efficient investments you can make. As well as growing in a tax efficient way, pension contributions can be used to reduce your current income tax liability. If you own and run a limited company, then your company could make an employer contribution to reduce its corporation tax bill.

At retirement you will be entitled to up to 25% as a tax free lump sum and the remaining   funds are used to generate a taxable income. The rules relating to pensions and retirement planning can be complicated and not suitable for everyone. We recommend you seek advice on this subject.

These are just a few of the financial advice tips for 2017/18. If you want to talk in more depth please feel free to contact us.


by Graham Bond 13 Sep, 2017

August is traditionally a quiet month as people go on holiday, factories close and parliament takes a break. Sadly, this year was dominated by terrorist atrocities in Barcelona, and by an increasingly combative rhetoric from North Korea that culminated in the firing of a missile over Japan. This brought about a heightened demand for perceived “safe-haven” assets, whilst the price of gold surged to an eleven-month high and reached its highest level since President Trump’s election in November 2016.

Weather has dominated the headlines, with Tropical Storm Harvey hammering Texas and the US Gulf Coast. This was followed by Hurricane Irma, bringing devastation to the Caribbean, Florida and beyond. Jose and Katia are the latest to bring havoc of what is still the beginning of the tropical season.

UK

The FTSE 100 Index rose by 0.8% during August. The only real change we may see to the pound over the coming months, is the removal of the old circular coin in mid-October! it continues to struggle again the EURO and USD.

UK equity markets rose over July, although the overall performance of large companies was eclipsed by that of mid-caps. While the blue-chip FTSE 100 Index rose by 0.8%, the FTSE 250 Index rebounded from a poor June to end July 2.3% higher.

Royal Bank of Scotland (RBS) reached an agreement with the US Federal Housing Finance Agency over the mis-selling in the US of high-risk mortgage products before the financial crisis. RBS will pay US$4.75 billion to settle the case. Elsewhere, payment processor and fellow FTSE 100 constituent Worldpay confirmed that it was to be taken over by US payment processor Vantiv.

The UK economy posted quarterly growth of 0.3% for the second quarter of the year, compared with first-quarter growth of 0.2%. Growth in the services sector was boosted by a strong contribution from the UK retailing and film industries. The International Monetary Fund (IMF) downgraded its forecast for UK economic growth in 2017 from 2% to 1.7%, citing “weaker-than-expected activity” in the first quarter.

Having fallen by 1.2% in May, retail sales volumes rebounded in June, rising at a monthly rate of 0.6%. Sports retailer Sports Direct revealed a drop of almost 59% in full-year profits, which were weighed down by a period of bad publicity and the effects of the pound’s weakness. Sterling rallied to its highest level against the US dollar since September 2016 during July.

Supermarket retailers Sainsbury’s reported a stronger-than-expected sales increase during its first quarter, but sounded a warning note over the impact of mounting inflationary pressures. The UK’s annualised rate of consumer price inflation eased unexpectedly in June, falling from 2.9% in May – its highest level since June 2013 – to 2.6%, and posting its first drop since October 2016. The decline was primarily caused by a fall in motor fuel prices, and the news went some way towards alleviating pressure on the Bank of England (BoE) to consider tightening monetary policy.

The rate of unemployment in the UK fell to its lowest level since 1975 in the three months to May, declining to 4.5%. However, wage growth continued to lag inflation: average earnings (excluding bonuses) rose at an annualised rate of 2%. Moreover, once inflation was stripped out, real weekly wages fell at an annualised rate of 0.5%, stoking concerns about the possible impact on economic growth.

UK equity indices generally rose during July, although medium-sized companies generally performed better than their larger counterparts. Over the month, the FTSE 250 Index rose by 2.3%, while the blue-chip FTSE 100 Index climbed by 0.8%. Meanwhile, the FTSE 250 Index’s yield fell from 2.71% to 2.65% during July, and the yield on the FTSE 100 Index eased from 3.84% to 3.80%. In comparison, the yield on the ten-year gilt edged down from 1.33% to 1.29% over the month.

Support services and construction firm Carillion issued a profit warning and announced the suspension of its dividend pay-out. Elsewhere, HSBC Holdings announced a new share buyback of up to US$2 billion, taking its buyback total to US$5.5 billion. According to HSBC’s CEO, Stuart Gulliver, the company has paid “more in dividends than any other European or American bank” over the past 12 months.

UK Investment dividend pay-outs hit a new second-quarter record in 2017, according to Capita Asset Services’ quarterly UK Dividend Monitor, reaching a total of £33.3 billion. Dividends were boosted by a strong contribution from companies in a “resurgent” mining sector, where second-quarter pay-outs rose at an annualised rate of 73%. During July, miner Anglo American revealed stronger-than-expected half-year results and a sharp decline in debt, and announced the early reinstatement of its dividend pay-out. Its dividend policy will target a pay-out of 40% of underlying earnings. Anglo American announced the cancellation of its dividend pay-out in December 2015 as part of a restructuring programme designed to address a downturn in commodity prices.

Total underlying dividend payments of £28.6 billion were augmented in the second quarter by special dividends totalling £4.6 billion. Sterling’s weakness continued to flatter pay-outs from UK companies: underlying growth in the second quarter was 12.6%; however, when the currency effects were stripped out, underlying growth was a slightly more modest 7.8%. Looking ahead, although the second half of the year is expected to be quieter than the first half in terms of dividends, Capita still expects 2017 to be a record year.

EUROPE

Uncertainties surrounding Brexit continue. The UK will "soon regret" leaving the EU, European Commission President Jean-Claude Juncker has said. Inflation hit 2.9%, ahead of the Bank of England’s target of 2%....ongoing concerns of a rise in interest rates continue.

The euro rose to its highest level against the US dollar since January 2015 during August, driven up by concerns over the impact of Tropical Storm Harvey in the US, and by the strengthening European economy. The eurozone’s economy expanded at an annualised rate of 2.2% during the second quarter.

 The euro’s appreciation generated some apprehension about the impact on corporate earnings in the region. Over August, the Dax Index fell by 0.5%, while the CAC 40 Index edged 0.2% lower.

European Central Bank (ECB) President Mario Draghi played down speculation that the central bank intends to start winding down its programme of economic stimulus measures soon. Mr Draghi said: “The last thing that the Governing Council may want is actually an unwanted tightening of the financing conditions that either slows down this process or may even jeopardise it”. Mr Draghi hailed the measures as successful, citing “all the economic sentiment indicators (and) survey indicators (which) are either at all-time highs or close to that”. The euro rose to its highest level against the US dollar since the beginning of 2015; meanwhile, the Dax Index fell by 1.7% and the CAC 40 Index dropped by 0.5% over the month.

Mr Draghi issued a cautionary note, however, warning that underlying inflation remains subdued and has not yet demonstrated “convincing signs of a pick-up”. The annualised rate of inflation in the euro area remained unchanged at 1.3% during June, remaining below the ECB’s 2% target. A survey undertaken by the ECB found that expectations for inflation in the euro area have deteriorated, highlighting the problems faced by the central bank. The survey found that the rate of inflation expected to remain below target in 2017, 2018 and 2019.

Economic sentiment in the eurozone rose in July to its highest level for ten years. Sentiment was boosted by stronger confidence in the services sector. The eurozone’s rate of unemployment fell to 9.1% during June, reaching its lowest level since February 2009. The International Monetary Fund (IMF) expects economic expansion in the eurozone to be stronger than previously predicted, and upgraded its forecast for 2017 from 1.7% to 1.9%, citing better-than-expected momentum in domestic demand. The IMF also upgraded its economic forecasts for several major European countries, including Spain – which is expected to expand this year by 3.1% - and Italy, which is forecast to grow by 1.3%.

Following a surge in demand for European equity funds in April and May, investors ’ appetite for funds in the Europe excluding UK sector declined during June, according to the Investment Association (IA). Nevertheless, in absolute terms, demand remained relatively robust and the sector experienced net inflows of £188 million during the month. Similarly, although demand for funds in the European Smaller Companies sector waned in June, net retail sales remained in positive territory.

USA

The US economy expanded at an annualised rate of 3% during the second quarter of 2017, compared with an earlier growth estimate of 2.6%. The Dow Jones Industrial Average Index edged 0.3% higher over August.

The hurricane season is still playing havoc with the production of oil, refining activity, demand and distribution. Prices rocketed in August, early September and it is very unstable.

Credit ratings agency Moody’s reported that, of the US$1.84 billion cash pile held by US non-financial companies, 87% of the pile is held by investment-grade companies, and the top-five cash hoarders can all be found in the technology sector, led by Apple.

Despite a backdrop of persistently low inflation, speculation over the likelihood of tighter monetary policy continued to put pressure on global bond and currency markets during July. The US Federal Reserve is expected to begin cutting back its balance sheet soon; meanwhile, the European Central Bank is trying to curb speculation that it intends to wind down its programme of economic stimulus measures.

EMERGING MARKETS

China’s economy posted annualised growth of 6.9% during the second quarter of 2017, having alsoexpanded by 6.9% during the first three months of the year. This growth exceeded the Chinese government’s official annual economic growth target of around 6.5%. Although the news was generally well received, it did not manage to allay broader concerns over the impact of China’s mounting debt burden, excess capacity in the manufacturing sector, and worries over a bubble in the property sector. The Shanghai Composite Index rose by 2.6% during July.

The International Monetary Fund (IMF) upgraded its forecast for China’s economic growth in 2017 from 6.6% to 6.7%, and in 2018 from 6.2% to 6.4%, citing the country’s “policy easing and supply-side reforms”. China’s industrial output rebounded in June, rising at an annualised rate of 7.6%; meanwhile, imports grew at an annualised rate of 18.9% during June, while exports rose by 8.5%. Elsewhere, retail sales increased to their highest level for more than a year during June, rising at an annualised rate of 11%. During July, China’s authorities launched a new programme – Bond Connect – which is designed to open the country’s bond market and make it easier for foreign investors to buy and sell Chinese bonds.

In India, pressure on central bank policymakers continued to intensify amid calls to cut interest rates. The Reserve Bank of India’s (RBI’s) key interest rate currently stands at 6.25%. Disappointing inflation figures were compounded by lacklustre industrial production data in July. Annualised consumer price inflation fell from 2.18% in May to 1.54% during June, while the rate of wholesale price inflation dropped from 2.17% to 0.9%. The CNX Nifty Index rose by 5.8% during July.

Brazil’s economic growth is likely to remain weak for a prolonged period, according to a report by the World Trade Organisation (WTO), although the WTO expects the country to begin a gradual recovery over 2017. The WTO believes that, although Brazil’s fundamentals are generally solid, the economy remains vulnerable to fresh political uncertainties and delays in tackling fiscal imbalances and structural reforms. Meanwhile, the International Monetary Fund (IMF) believes that Brazil’s economy is reaching a “turning point”; nevertheless, like the WTO, the IMF remains concerned about the impact of political instability. Over July, the benchmark Bovespa Index posted a rise of 4.8%.


A PDF version of the commentary is available here

by Graham Bond 05 Jul, 2017

Time and time again forecaster try to predict what will happen in the future to Stock Markets. In reality, nobody knows what Markets will do next.

The Wall Street Journal in the US recently published an article about the performance of Global Stocks and Shares. The article was called, “ Global Stocks Post Strongest First Half in Years, Worrying Investors .”

“The question for stocks and shares investors is whether the strong first six months of 2017 heralds a choppier second half or the start of a multiyear upswing. The data on global rallies offers a mixed record.”

In plain English, this means:

 “It’s impossible to predict whether markets will go up or down for the latter half of the year. Markets could go up or down or even trade sideways.”

The newspaper article also reported that: “Most of the major stock Market Indexes, 26 in total have risen in value so far in 2017. The last time this happened was in 2009.

by Graham Bond 29 Jun, 2017
Here's an update on Personal Finance Portal. From the 4th July our client portal will have a new look and feel about it. 
The software provider we work in conjuction with have revised the format to make it easier to use for our financial planning clients.

The Personal Finance Portal is a quick and secure way to obtain up to date valuations on your pensions and investments. It also offers you a way to communicate safely with us as the service is encrypted. The same cannot be said about email, which is not secure. 

The aim is to make the navigation easier to use and to provide more information to you on your finances. 

The video below shows some of the improvements that will be made. We hope you find it useful and informative. 

To access our portal please click this link

If you would like to find out more about the Personal Finance Portal please feel free to contact  us on 01454 321511. Consilium Asset Management offer Independent Financial Advice to private and business owners in the Bristol area. 
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