11th June 2021
As we move into summer and a welcome period of warmer weather, I thought it would be a good time to reflect on the last year from a ‘markets’ perspective.
The stock market’s response to Covid-19 was breath-taking in its speed. On 17 January 2020, the FTSE 100 closed at 7,674. We did not know it then, but that was to be its high point for the entire year. By 23 March 2020, it closed at 4,993. And while we did not know it then, that was to be its low point for the entire year. Investors should give serious thought to the speed at which the markets reacted, declining at high speed, and going from peak to trough in a matter of weeks. Compare this to the events of the financial crisis which saw stock markets go from their highs in June 2007 to its lowest point in March 2009, a period of almost 20 months. Now while the two events are of course completely different, the financial crash of 2007-2008 now seems to have been almost pedestrian in its reaction when compared to a global pandemic.
As you know, we are firm believers in how ‘markets’ work; investing is for the long term and most importantly we believe that ‘no one size fits all’ and that you should have your own personal investment strategy that meets your individual goals, needs and risk profile. To support this belief, I have used a chart produced by Columbia Threadneedle Investments.
By staying the course and not being tempted to time your investments, the benefits are clear. What is surprising is the level of lost growth by missing the best 10 days in the last 23 years!
As you know, I like to introduce a few relevant articles which may have caught your eye in the past week:
Sausage fight: is the UK heading for a trade war with the EU?
The EU is said to be threatening a “sausage trade war” with the UK if it fails to comply with the “international law obligations” set out in the Brexit agreement 17 months ago. I know we should not smile or even laugh but you cannot help it can you?
G7’s ‘seismic’ tax deal: what will it mean for the world’s biggest companies?
The G7 group of wealthy nations struck a deal at the weekend that would create a global minimum corporate tax rate of at least 15% and make the world’s largest multinational companies pay more tax in each country they operate in.
Finance ministers met in London to discuss the tax reforms and the UK’s Chancellor of the Exchequer Rishi Sunak hailed the agreement as “seismic” and “truly historic”.
The deal announced between the US, UK, France, Germany, Canada, Italy, Japan and the EU could see “billions of dollars flow to governments to pay off debts incurred during the Covid crisis”, the BBC reports. And according to estimates from the Organisation for Economic Co-operation and Development (OECD) as much as $81bn (£57bn) in additional tax revenues each year would be raised under the reforms.
“A process has begun, a precedent has been set,” says the BBC’s economic editor Faisal Islam. “It may or may not end up being transformative, but this moment is historic.” I agree and I think probably about time!
… to finish – who remembers Bernie Madoff?
Bernie Madoff, “mastermind of the largest Ponzi scheme in history”, died 14th April 2021, said Ben Hoyle in The Times. Madoff, 82, was serving a 150-year sentence for swindling thousands of well-heeled clients out of some $65bn in investments – having beguiled them with fictitious annual returns of 10% or more. A former chairman of the Nasdaq, he exuded authority. Among those ensnared were actors John Malkovich and Zsa Zsa Gabor, director Steven Spielberg and the Nobel Prize-winning Holocaust survivor Elie Wiesel, whose foundation lost $15m. “We thought he was God. We trusted everything in his hands,” Wiesel remarked. But Madoff fooled even the pros. Fund manager Nicola Horlick – the so-called City “superwoman” – invested £20m with Madoff, telling the FT just before his exposure in 2008: “he is very, very good at calling the US equity market”.
In reality, Madoff was simply funnelling money from new clients into the accounts of earlier investors and passing it off as “stunning returns”, said Laurence Arnold on Bloomberg. But unlike the infamous Charles Ponzi, whose 1920 scheme “soared and fell in the course of one year”, Madoff “kept his ruse going for at least 15 years, even under the gaze of regulators who visited his office to inspect his records”. The fraud eventually collapsed when plunging stock markets following the Lehman Brothers collapse prompted panicking clients to seek withdrawals. More than a decade on, efforts to recover Madoff’s “ill-gotten funds” continue on behalf of ruined victims, said The Wall Street Journal. “Legal efforts are expected to play out for years.”
I do think of Bernie’s Ponzi scheme when I see the constant news around Bitcoin, so don’t be tempted – “if something is too good to be true, it usually is”!!!
Enjoy the sun.
“It’s an unforeseen problem,”…
“It came out of nowhere”.
These were the words President Trump used to describe the new coronavirus. The market crash that accompanied the crisis was a similar surprise.
It has been described as the Black Swan of 2020, a Black Swan is the term used to describe an event that comes as a complete surprise and has potentially severe consequences. It comes from the observation that European explorers, when in Australia, saw black swans for the first time. They had only ever seen white swans.
In his book, “Black Swan” published in 2007 Nassim Nicholas Taleb popularised the term, just before all hell broke loose on the financial markets. Black Swans can only be seen with hindsight, and therefore they are often used as a convenient excuse. “We didn’t see that coming” is often said by politicians or fund managers when admitting their failure to spot any warning signs.
“Expect the unexpected.” “Be prepared” “contingency planning.” These are all phrases that we are familiar with. We all take out insurance for events that we hope will never happen.
So I don’t buy the Black Swan argument. If we are looking for a metaphor, I love the idea of the grey rhino. Michelle Wucker writes in her book, “The Gray Rhino”, that a grey rhino is a highly probable, high impact, yet neglected event. Grey rhinos are not random surprises, but occur after a series of warning signs and visible evidence.
I love rhinos. They are my favourite animal. The reasons for that are probably worthy of another article. I have a picture of a rhino on the wall of my office, amongst other items that remind me of this incredible creature.
Before a rhino charges it stomps around a bit, snorting and getting angrier. It is giving you plenty of opportunity to act, take action and get out of the way. Believe me, you want to get out of the way. Once this two-tonne beauty gets going, it is very difficult to stop and the damage could be irreparable.
So why am I talking about this? What has this got to do with you or your finances?
Throughout our lives, we are constantly faced with grey rhinos. There will be another global pandemic in the future. How can you prepare yourself for it? Could this be by ensuring you have enough savings to fall back on to get you through the difficult times? Is your investment portfolio aligned with your goals and your appetite for risk? Can you still do all the things that you want to in life if markets tumble? What have you done to ensure that your family will be protected in the event of death or illness?
This list is not exhaustive but just some of the questions that a financial planner can help you answer.
So my advice is to pay attention to the grey Rhino. Look to head off the things that we can see in front of us. The alternative is to spend our time, looking back for black swans.
If I was to come face to face with a rhino. I’d want a plan.
If you want to get ready and build that plan, please get in touch.
Do you remember the Mastercard ‘priceless’ campaign of the late 1990s?
These iconic adverts reminded the viewer, usually in a funny or thought-provoking way, that there are some things that money can’t buy.
These Priceless adverts came to mind when I reflected recently on the value of financial planning.
You see, a lot of what we do for our clients has a tangible value attached. But many other elements of our service can only be described as ‘priceless’.
Recent studies by the have found that those who used financial advice were better off than similar individuals who did not take advice.
A study originating in the United States concluded that the services provided by an excellent financial adviser have the potential to add around 3% each year to your investment returns. So we know that working with a financial adviser can make you wealthier.
The ‘Adviser Alpha’ study from investment provider Vanguard quantified the potential value added to an investor from services including rebalancing investment portfolios to manage risk, selecting low-cost investments and behavioural coaching.
When compared to the cost of ongoing advice, this added return through the provision of financial advice is excellent value.
But what takes financial advice from something valuable to something priceless? In my mind, it’s the less tangible benefits of what we do that make our services invaluable.
For example, we ensure things get done.
All too often, it’s easy to set financial goals (especially at this time of the year, when Resolutions abound), but fail to follow through and execute these goals as planned. By working with a financial adviser, we help life work by holding you to account and making sure these ambitions are realised.
There are some unquantifiable aspects of our role, which are undoubtedly priceless. We help our clients avoid the biases which arise a result of merely being human. These are biases which can derail even the most experienced and sensible investors.
One of the most important benefits our clients tell us we provide is delivering peace of mind. The ability to sleep well at night, safe in the knowledge that you have a plan for the future, is priceless.
Peace of mind ties in closely with the reassurance that you are making the right decisions, for you and your family.
One of the results of a financial plan includes being able to spend your time doing the things you enjoy, safe in the knowledge you won’t run out of money in the future, and your investments are in an appropriate place.
When the clients we work with can confidently provide financial assistance to adult children or other family members, they tell us this is priceless too.
If we believe everything we read in the press, working with a financial adviser is all about picking the best investment funds and being sold products to fill gaps. I hope this article shows you that, in addition to the tangible benefits of working with a financial adviser, it’s something that results in a priceless outcome too.
Last month, we took part in the Wells Dementia Alliance Walk, raising money for those in the Wells community living with dementia, as well as their carers.
Despite the wet weather over 60 people turned out along with lots of dogs!
Len Sweales the Wells Town Crier gave us a great welcome and the Rt Rev Peter Hancock Diocese of Bath & Wells started the walk. We were lucky to have Mayor John Osman and Tessa Munt join us as well!
A total of £750 has been raised to date.
It’s worth remembering that dementia is not a normal part of the ageing process. But with more of us living longer lives, the diseases of the brain which cause dementia are becoming more widespread.
There are 850,000 people with dementia in the UK, with numbers set to rise to over 1 million by 2025. This is forecast to soar to 2 million by 2051.
Team members from our Bristol and Wells offices came together in June to complete the South to North Dartmoor Challenge 2019.
Ten members of the team walked 30 miles over rough terrain and undulating ground, including bogs (nobody fell in, fortunately).
On day one, we walked from Ivybridge to Princetown, staying overnight in a bunk house – thankfully it was next door to a pub!
Before setting out the next morning, we enjoyed a cracking fry-up breakfast, courtesy of Andy Weston and Neil Pinney.
On day two, we completed the challenge, walking from Princetown to Meldon.
In addition to the long distance covered, the hot weather added another challenge to the event, trying to avoid sunburn.
The team raised more than £1,000 which has been donated to St Margaret’s Hospice and Children’s Hospice South West.
Earlier in the summer, we wished Arnold and Julie Wills a fond farewell from Pilgrim Financial Planning with an evening celebration in Wells.
They officially finished with the business on 30th June and, while we were sad to see them go, it was a fantastic opportunity to wish them well, along with other local professionals from the Wells community.
Arnold has been a local financial adviser for 36 years, commenting that he will be “looking forward to having more family time and time to enjoy his hobbies, particularly his music interests and travelling.”
All who know Arnold knows that he won’t be putting his feet up in retirement! He will continue to be active in the local community.
Julie is also looking forward to having more free time to develop her hobbies, now their four children have finished their schooling.
The evening was enjoyed with wine tasting at Vicars Hall, where we were also able to raise £1,000 to donate to the YMCA in Wells.
Michelle Payne, marketing manager for YMCA Mendip and South Somerset, mentioned in her thanks, “Our services are not just about providing safe accommodation for the vulnerable homeless; but also provide support, guidance, encouragement and opportunities that are so vitally important. Donations like yours mean we can carry on providing the important services we do.”
The evening was a fitting farewell and acknowledgement of Arnold and Julie’s excellent work, building Pilgrim Financial Planning over the past 24 years, as well as their commitment to the local community.
Arnold has always been passionate about providing impartial advice. He said, “I’m confident in the future of Pilgrim and that the directors and teams will continue to provide a caring and professional service.”
The reasons for arranging a meeting with a Financial Planner are many and varied.
Historically, we would talk about the ‘Four D’s’ as the biggest drivers of financial advice; these big four are death, debt, disease and divorce.
As morbid and miserable as these drivers were, they often gave individuals and families a reason to seek out professional advice, usually at a difficult time in life.
Thankfully, the drivers of advice seem to have moved on to encompass a much more extensive range of reasons, many of them happy and positive!
One recent example involved a client initially wanting to explore some questions about a trust investment and her pensions. Our conversation developed into a broader conversation about what they wanted to get out of life, and culminated in the creation of a comprehensive financial plan.
She told me that there was a light-bulb moment when all of the parts of her financial plan came together; a sentiment we often hear from clients when presented with a financial plan for the first time.
An important part of the financial planning process is the creation of a lifetime cash flow forecast, which allows clients to see how different decisions or life events might influence their wealth in all stages of life. We create these forecasts using reasonable assumptions about the future, and keep them under regular review as external factors including investment returns and price inflation change over time.
When we create a financial plan for someone who needs to make important choices about their life, such as whether to give up a particular job so they can retire, or downsizing to a smaller property, the plan offers a high degree of comfort that decisions are sound.
I particularly love when the financial planning process opens eyes to the fact that clients can afford to do the things they want today. All too often, we’re scared to make big decisions because of the absence of certainty around our finances. The financial planning process introduces that certainty.
It’s especially satisfying when that certainty is originally triggered by a conversation about a small part of the financial planning world, such as a trust investment or an old pension plan.
What are some of the big current or upcoming events in your life that could prompt you to call one of our Financial Planners?
We all know people who aren’t sure whether they need a financial planner, don’t need a financial planner, or don’t know what a financial planner is. Two years ago, I was discussing some ‘rules of thumb’ with a friend whose son had recently left university and, for the first time, had become financially independent. My friend passed the tips on to her son and recently told me that they’ve helped him to feel financially on track.
Passing on some common sense when it comes to personal finance can be seriously powerful and occasionally life changing. With that in mind, if you know anyone who needs help with their finances, here are a few basic tips you can pass on to them to offer a little help:
These four habits require effort, practice and they are only the beginning of a true financial plan (let us not forget inflation!) but they can really build a solid foundation for a financially secure future and we all want that for the people we care about.
Finally (and this will probably be the most uncomfortable part of the conversation), tell them to plan for the worst, insure any loans that they take out (mortgages for example), find a couple of people they trust and set up Lasting Powers of Attorney and remind them that it’s only polite to your family and friends to speak to a solicitor and leave a Will.
I hope this does help someone in your life as much as it has helped those in mine, but at the very least, I hope it answers the question of whether your friends and family need a financial planner or not, or even just gives them an idea of what a financial planner is!
A Sporting Bunch
There have been a lot of sporting achievements and upcoming physical challenges within the team recently and we thought that it would be nice to share these in Navigator.
After last years successful Brecon Beacon Challenge (in which the team raised over £1,000 for the Alzheimer’s Society), next month half of us will be climbing up Scafell Pike to raise money for Children’s Hospice South West.
Our very own Steve Brady has been selected to represent England in the over 50’s Hockey team (and went on to win every game in their first tournament) and we have recently sponsored the exciting young Bath Rugby player Josh Bayliss.
On the 7th of July a team of 9 will be heading to the lakes in the very early hours of Saturday morning to climb and conquer Scafell Pike. After a long day of walking we will then nip up the Old Man of Coniston and back on the Sunday morning, before the long drive home. We are taking on this challenge to raise funds for the Children’s Hospice South West, an amazing local charity which we have had a close connection with over many years.
Many of us have visited the hospice at Charlton Farm in Wraxall and have seen first-hand the incredible work that they do. If you would like to sponsor us we would be very grateful for any donations, big or small – just click the link below to donate via our just giving page;
We will be sure to let you know how we get on and thank you in advance for your support.
Further information about Children’s Hospice South West and their work can be found at the bottom of this article.
Steve’s Playing for England!
We’d like to congratulate Steve Brady, a director of the firm, on being selected to represent the England over 50’s Hockey team. This is a fantastic achievement for Steve who has now had the opportunity to represent England on the world stage. Steve has now played his first International Hockey tournament, representing England at the Home Nations competition in London. England managed to win every game without conceding a single goal.
I asked Steve if there was anything he’d like mentioned in this article and his response was ‘feel free to use words like heroic’.
A glass to Steve… Heroic!
Sponsoring a Future Rugby Legend
We’re delighted to announce that we are sponsoring the exciting young Bath rugby player – Josh Bayliss.
A local lad, Josh is a former pupil at Millfield School in Glastonbury. He was a member of the England under 20’s squad that went on to achieve a Six Nations Grand Slam and a place in the 2017 World Rugby under 20’s Championship. He made his first team debut for Bath in 2016 and has been hailed one of the most exciting back row players in the country.
A little more about Children’s Hospice South West
Children’s Hospice South West provide care for children with life-threatening conditions by providing hospice care and profession family support services. They are dedicated to making the most of short and previous lives through the provision of the best possible hospice care for children and your people with life-limiting conditions. The care offered is not just about medical and nursing support for sick children but is also about enriching the lives of the children and their whole family. They provide specialist palliative care, respite for the whole family, a sibling service for brothers and sisters, emergency support, end of life care and a bereavement service for as a long as it is needed.
We’ve always been proud of the individuals at Brunel and Pilgrim and their academic achievements (whether that is achieving Chartered Status, Financial Planning and Paraplanning Diplomas or learning Spanish) but we’re now proud to announce that as a collective, we’re TWO of the few firms in the country to achieve Chartered Status. That’s both Brunel and Pilgrim.
In this section we look a little further at what this means, discuss our recent Cyberplus Accreditation (and how this safeguards you) and our Managing Director Damien talks about his new role on the Personal Finance Society’s Financial Planning Expert Practitioner Panel, as a leading expert to help improve the Financial Planning Industry.
Chartered status is an exclusive title only awarded to firms which meet rigorous criteria relating to professionalism and capability. The award is granted by the Chartered Insurance Institute the professional body for insurance and financial planning. To achieve this status we were required to demonstrate a commitment to developing knowledge, enhancing capability and maintaining ethical standards. This provides all our clients with the reassurance that we are operate in an ethical manner, put our clients interest first and provide high quality advice based solely on our clients’ researched needs.
To date, fewer than 700 firms have achieved Chartered status which indicates that this is a highly coveted award reserved for the leading firms within the financial advice market.
We will be working hard to maintain these standards and providing a commitment to customer service and professionalism.
As a firm we have also recently achieved Cyber Essentials accreditation. Cyber Essentials aims to help organisations implement good levels of protection against cyber-attacks. In addition we have undertaken further assessment with IASME to demonstrate that we have taken into account the requirements of the General Data protection regulation (GDPR).
The IASME Governance standard, based on international best practice, is risk-based and includes aspects such as physical security, staff awareness, and data backup. The IASME standard was recently recognised as the best cyber security standard for small companies by the UK Government.
IASME is one of just five companies appointed as Accreditation Bodies for assessing and certifying against the Government’s Cyber Essentials Scheme. The Scheme focuses on the five most important technical security controls. These controls were identified by the government as those that, if they had been in place, would have stopped the majority of the successful cyber attacks over the last few years.
We take our client’s cyber security seriously and would urge you to look for this accreditation with other organisations you may deal with online!
Damien’s New Role on the Financial Planning Expert Practitioner Panel
As an organisation we are always looking for new challenges, especially in areas where we can make a difference. One of my new responsibilities, and something I’m hugely excited about, will be to sit on the Personal Finance Society’s (PFS) Financial Planning Expert Practitioner Panel. I was delighted and honoured to be chosen as one of the inaugural members of this new panel of financial planners.
The timing couldn’t be better. There is a real buzz about the financial planning profession, and a quiet revolution of planning excellence is gathering pace.
The Vital Role of the Personal Finance Society
I’ll come on to the panel shortly but first a quick look at the PFS and why they’re so vital. They are the professional body for financial advisors in the UK and they exist to promote high standards across the financial advice community. In climates like this, where the public can be suspicious of financial institutions, we need bodies like the PFS to help strengthen confidence in our profession.
The PFS is well qualified to do it. They have a long and commendable history of championing professionalism, promoting technical knowledge and establishing high levels of client service and ethical practice.
The PFS has recently announced its new President will be Sharon Sutton. Sharon is Managing Director of Thornton Associates Ltd, Chartered Financial Planners, based on the Isle of Man, where she was the island’s first Chartered Financial Planner. Sharon’s biography on the PFS website says she “believes in educating people to take control of their lives through financial planning so they can seek to achieve their dreams and don’t run out of money”. I know Sharon personally, and I also know that we’re going to get on very well as that fits exactly with the philosophy of Brunel and Pilgrim.
My Role on the Financial Planning Expert Practitioner Panel
One of the ways the PFS will achieve this is through the new Financial Planning Expert Practitioner Panel. The panel has been established to guide the PFS as it broadens its Continuing Professional Development (CPD) programme to incorporate inspirational financial planning good practice. The first meeting took place earlier this month. As well as myself, the panel comprises another 11 members from the financial planning industry. Without wanting to sound immodest, Sharon Sutton commented that it brings together “a distinguished and passionate group of individuals who are willing to share what they have learned for the benefit of the wider profession.”
The PFS has established the panel to provide financial planning insight and guidance to the wider profession as part of a continued focus on consumer outcomes and business sustainability. This is great news for clients as it seeks to ensure they receive the best service from advisers who are themselves benefitting from guidance on best practice across the industry. We on the panel will meet regularly to develop guidelines and amass insight on good practice to distribute and make available for PFS members. We’ll also be seeking to arrange a series of specialist events and we’re working on a good practice guide resource for advisers.
A Foundation of Trust and Confidence
Helping people to take control of their finances, gain financial freedom and make their dreams a reality are the principles that Brunel and Pilgrim are built on. But before we can help people achieve this, we need to build a foundation of trust and confidence in the professionalism and ethical standards of financial planning. It’s a responsibility that falls to us all, as financial advisers, and extends right across our profession. As a member of the new Financial Planning Expert Practitioner Panel I’m hugely looking forward to taking on this responsibility in the new term ahead.
If you know someone that would like some guidance on their financial planning, please do drop me a line or call me on 0117 214 0870.