Give me just 1 hour of your time and I will share with you the industries biggest secret. The problem is so endemic that the Regulator (The Financial Conduct Authority) has introduced yet more regulation in 2018 to force the Industry to respond. I will explain how Financial Advisors and Wealth Management companies legally take a huge chunk of your hard earned cash… without you even being aware of it and the effect this is having on your future wealth and therefore your future lifestyle.
Discover how to stop this from happening to you…
Join me for breakfast or afternoon tea at Williams Conference Centre in Grove and I will share powerful, practical, but little known concepts, tactics and strategies that you can apply to your money. My one hour Master Class uncovers the financial service industry’s best kept secret and we will end the Master Class with a private tour of the Grand Prix Collection.
The information I reveal may shock you… you may even find it disturbing, but if you recognise the importance of the information I share and relate it to your current financial situation, then I promises you will be in a position to create additional wealth for your long term future lifestyle. I have been in the financial services industry for 30 years and many consider me an investment visionary. I focus on providing consumer awareness seminars, helping investors with Pension, ISA and Investment portfolios to protect their savings from the wealth management companies, who are targeted to get funds under management and use your money to compensate their services, rather than provide you the investor, with the maximum market returns.
This year my book ‘Retire Faster’ was published and reached the top three on Amazon’s best seller list. I also reached the finals for ‘Entrepreneur of the Year’ judged by Sir John Madejski and my practice; Goldsmith Invest won the 2017 NatWest Venus Award for “Best Small Business in the Thames Valley Region”.
To fast-track your place, click the link: https://thebestkeptsecret-masterclass.eventbrite.co.uk
If you can’t attend this date, but would like to be kept informed of similar events in 2018 and stay in touch please let me know. We are here to help.
Thank you for considering my offer…
Hannah
This is a case study I have taken from my book ‘Retire Faster’ for Company Directors available on Amazon.
As a business owner I would imagine that controlling costs are very important to you. Especially costs spent by those you employ. You probably have budgets that restrict their spend, but when it comes to managing your pension or investment portfolio’s, how much budgetary control do you have. Very little I would imagine. More to the point, how much is this lack of financial control costing you and what affect is it having on your long term financial wealth.
This case study is not unusual … in fact I would go as far as saying its standard practice. Read the case study and decide as a business owner what would you do?
CASE STUDY 1 – MR K.
Mr. K is a Business Owner with a Small Self-Administered Pension Scheme (SSAS) valued at £660,000. Mr. K asked us to carry out a wealth efficiency review on his pension arrangements as they had not been reviewed for a number of years. We found Mr. K was paying 4 levels of charges per year:
The Administrator of the SSAS who charged £650 + VAT
The Discretionary Fund Manager (DFM) who charged 0.65% + VAT + additional dealing fees
Annual Management Charges (AMC) of the funds purchased, in the region of 0.57%
The Financial Adviser who charged 0.5%
Although these charges initially appeared competitive, the actual charges appeared to be excessive. After further investigation we found that the DFM routinely sold parts of the funds held in the SSAS and bought similar stocks just to justify increasing the dealing charges.
We found that instead of selling just one fund (perhaps due to poor performance) and re buying another, partial sales of all the stocks took place (even though some had performed to expectations). We felt this practice was unusual because there was a £100,000 cash balance in the fund. These additional dealing fees added an extra £1,822 to the annual charges and we could find no justification (even re-balancing… adjusting the risk of the portfolio) as to why these transactions were made.
Therefore in monetary terms Mr. K was paying in the region of:
£780 to the SSAS Administrator
£5,148 to the DFM (adviser annual management charges)
£1,822 to the DFM (additional dealing fees)
£3,296 in fund annual management charges (AMC)
£3,300 to the IFA (who had not made contact for over two years)
Total charges for the fund management were in the region of £14,346 per year, equivalent to a reduction of 2.17% off Mr. K’s portfolio growth rate. This is about average for the industry.
We highlighted to Mr. K that using new technology he could reduce his fees to:
£780 to the same SSAS Administrator
£1,122 in fund annual management charges (AMC)
£3,300 to the IFA (if he chose to keep his current advisor)
Total charges £5,202 per year, equivalent to a reduction of 0.78% off his portfolio growth rate. That is a saving of £9,144 per year.
The best way of seeing the effects of high charges on Mr. K’s portfolio is to project the future value of his fund at a growth rate of 5% per year, over a period of 25 years. We can then apply the different charging structures of 2.17% on his original portfolio and the 0.78% on the proposed portfolio and note the difference in projected fund values. It is important to note, that we are not stating that the new portfolio will perform any better or any worse than the existing portfolio, but we are purely looking at the effects of charges.
The cash flow analysis showed a positive difference of £586,000 by using the proposed proposition, which also gave Mr. K access to a low risk globally balanced portfolio holding over 5,375 stocks.
What would you do with an extra £586,000 in your pension fund or investment portfolio?
More to the point, Mr K employed these discretionary fund managers to do a job for him. Not content with their quoted fees, additional fees were taken (which as discretionary advisers they are entitled to do under their terms of contract) but their actions were equivalent to them dipping their hands into Mr K’s till at a rate of £64 per day over and above what we would term necessary.
As a business owner what would you do if this was happening to you… are you sure its not happening to you? … is it worth a conversation?
Ironically Mr K runs a security company… sometimes you just have to smile….
Now is a very important time in history, where individuals need to take notice of what is happening around them in the financial world, should they wish to acquire additional wealth and have the option to retire faster. Government lending is at an all-time high, the Banks have been given a crutch by the Government, the Bank of England (BOE) has reduced interest rates to an all-time low, Quantitative Easing and austerity cuts look as though they may be here for many years to come, pension schemes remain underfunded and we are now all living longer. On top of all this we now have Brexit and I have to ask the question ‘what have you and your financial adviser done to hedge your pension and investment portfolio against the UK’s exit from Europe’?
It’s frightening to think about what the future holds, with economies, cultures and technology changing at the rate it has over the last decade, it seems almost impossible to imagine what the world will look like as we arrive at the later stages of our life. But we can give ourselves a helping hand if we act quickly enough and reclaim our personal power from the financial services institutions.
Creating sufficient wealth over our working lifetime will enable us to have choices in later life. Being dependent on others in the future, I do not believe, will be a happy place. The question is “how do we create additional wealth without putting additional pressure on our current expenditure?” With low interest rates and mediocre investment returns, creating additional wealth is becoming more difficult. However, suppose I could show you how to create additional wealth from the money you have already accumulated to date. No additional expenditure required, but a very favourable outcome.
Many investors concentrate their portfolio in their home stock market and in some cases they only hold a small group of stocks. This is often a common occurrence when people have bought shares because of Utility or Bank offers or inherited a share portfolio from their parents or a relative and feel obliged not to cash them in and take the proceeds. Many company directors working for larger organisations also have large shareholdings, often in share incentive schemes and due to a sense of loyalty, find it difficult to sell the stock when it’s a good financial decision to do so. There is often an emotion attachment which is difficult to shift.
Limiting one’s investment universe to a handful of stocks, or even one stock market, is a concentrated strategy with possible risk and return implications. Consider the analogy of the roulette wheel. If you want to gamble for the highest odds you place your chips on a single number and if you are successful you win big. Likewise you could spread your chips around single numbers on the table (not to dissimilar to the retail unit trust fund managers or buying individual stocks and shares) and hope that the odds on the numbers that win are more substantial than the losses that did not.
Alternatively you could gamble by spreading the risk in your supposed favour by betting on red or black and get offered even returns by the house (or by using in-house managed funds). But it’s not the 50:50 odds you would expect. The wheel is always in favour of the house therefore by betting on red or black you will have an 18/38 chance of winning 47.37%, with the house winning 52.63%. This is again similar to active fund managers, even if they do outperform the benchmark, the additional charges incurred will most likely, over the longer term, reduce the return to below the benchmark. The question is, does investing with active management make a substantial difference to your return or is it just gambling with your money? It is worth remembering that while a betting system may sound like a good idea, over time, they have been proven beyond any shadow of a doubt to be losing plays.
The media is full of experts predicting which markets are going to perform best over the forthcoming months and years, so investors by listening to this noise, quite often form a biased opinion of what’s going to happen next. If they decide to follow up this prediction with action and buy or sell stock to put themselves in a financial position to take advantage of this prediction, they are gambling not investing. The financial professional may make a prediction because they want to appear on some form of media commentary, or to advertise their company or make some noise with their prediction because they would like some personal acknowledgement. However, if it all goes wrong, which it does, the consequences have to be faced. I believe making predictions is foolhardy, because any amendment to political, global currency fluctuation or investor sentiment will see all bets fall out of the window and who can control such changes.
If I am ever asked ‘which financial sectors should I buy next, to get the best return on my investments?’, I often in the nicest possible way, have to refer to my lack of crystal ball reading skills and point out that no one knows with any degree of certainty. Even if a commentator calls the markets correctly, you still have to ask was it skill or just random luck. Even the most powerful professionals in the world of finance make these predictions and call it wrong big time, with huge global consequences.
So, why try and predict outcomes not under your control. Ask yourself “why would you pay somebody, who said that they can predict what is going to happen next?” and perhaps worse, why would you believe them if they said they could. According to Google, there are 1.2 million fortune tellers (or people suggesting that they can predict your future) appearing on their site, and without checking them all, I would expect a financial fee to be passed across their palms before they tell you about your long healthy lifespan and future search for love. Perhaps some may say we should add fund managers to this list.
A good question to ask yourself is: “would you pay a fortune teller to predict your financial future?” If not why are you paying your fund manager?
The financial services world is not always as it seems. Wealth that belongs to you, is systematically being taken from your pension and investment accounts unnecessarily, transferring your wealth from you, to the financial services industry in the name of active management (I call this guessing or gambling). I believe now is the time to stand up to the industry and take back power and have control of your money.
My book ‘Retire Faster’ available on Amazon will guide you through the investment jungle, where currently, the investor is the prey. I will show you how to become the hunter and demonstrate to you, that there is another way to create wealth. A way that allows investors the opportunity to achieve greater financial efficiency, greater independence and a more profitable return, whilst enjoying a much more transparent and consistent investment experience.
The question is, do you want to continue to gamble with your retirement fund, or invest it efficiently?
A Charity Golf Day worth remembering
On a day of mixed English weather, Goldsmith Invest held a golf day in aid of the charity the Altzheimers Association.
Watch the short video below and you’ll see why a fantastic day was had by everyone (even the losers).
It’s no surprise that with the help of professionals like Jeramy Dale and Guvnor Media, Goldsmith’s managed to raise close to £1000, for a very important charity.
The two winners of the day will join Hannah Goldsmith and her ProAm team at the Oxfordshire, in August.
Ever wondered what an ISA is or what it can do for you?
Here is another of the simple Did U Know Guides to help you understand.
Thank you to everyone who asked for the UK Pensions eBook in advance.
If you didn’t get around to contacting us about a copyof the UK Pensions eBook, you can now read the eBook just by scrolling down the page – it’s all there.
Once again glad Goldsmith’s could help, and please email me if you have any more questions.
Fear and uncertainty caused panic and ‘Brexit fears’ in the markets last Friday after the vote. The Media (bless them) lined up industry experts to tell us how the markets are going to crash and Armageddon will again rule the UK.
According to Media and press, DIY Investors who use a well-known direct investment website complained extensively using social media, that they were unable to sell stocks due to the high demand of use on the web site. They were all selling at the same time.
All I can say is ….why?
At what point did the DIY investors wake up in the morning to see the Brexit result and then think ‘I need to sell my shares today, that’s not what I expected’.
Really?
At what point did the DIY investors think that if markets are on free fall, that some broker somewhere is going to buy the shares. Shares are bought, only if there is a purchaser the other side. They will buy, when the stock price stabilises not when it’s in freefall, you cannot choose your price.
The Brexit result, either way had been built into the share price. Markets have traded pretty flat for the last 2 years and the FTSE 100 index was higher at the end of Brexit Friday than back in February, when Mr Cameron declared the date of the Brexit vote.
So why are there Brexit Fears?
With 60 million trades a day around the globe, why did the DIY investor have to sell in mid turmoil? Did they think they knew more about the global market situation then all the other trader’s in the World or are they easily led by the media who are trying to create programmes and newspaper articles to keep their readers or viewers engrossed in their coverage of events? Brexit fears sell!
Who’s to know, but what we do know is that these DIY investors do not have a strategy they can fall back on in times of turmoil. Trying to panic sell on the day markets are predicted to fall, I admit is by definition a plan, but not a plan I would suggest is very good for your health or a plan that creates wealth over the longer term.
Playing ‘beat the market’ is no difference to playing poker, playing the roulette wheel or betting at the bookies. Can you imagine betting on a horse and its winning down the back straight and you think ‘I am making big bucks today’ only to see it slow up and begin to be overtaken by the chasing gallop down the home straight. If you ran back to the bookie and said ‘can you buy my bet back off me please, I am going to lose money’ and then the rest of the losing punters crowded up behind you asked the same question, what do you think the outcome might be?
Putting your money on any specific stock is gambling and gambling is geared towards the house winning and you losing. You may be the winner on occasions (and perhaps a big winner at times) but the house wins more than you do.
The investment houses are the same, you buy their product and the price goes up you win or down you lose. In the meantime you lose anyway because the house is taking large charges from your investment each year, so why are they worried. They just need to keep you as a customer.
If you enjoy the ride and the stress and enjoy moaning when you can’t sell your stock on the day its falling and you don’t mind paying a fee to the investment house for the privilege of being a member, then you must continue to burn your wealth. It’s your right to do so, but please don’t moan in the media, the wise investor does not feel sorry for you.
Why not consider another way to invest. A way whereby the investor has a strategy for the longer term, a strategy that says if the markets in one part of the world are negative then this creates a positive market somewhere else in the world that I will be able to take advantage of. Instead of playing ‘beat the market’ why not consider having an investment strategy that ‘buys the global markets at the lowest cost,’ then sit back watch all the those who think they know ‘panic’ knowing your investment strategy over the longer term will create the wealth you seek.
No panic, no stress no Brexit fears, no ulcers. That’s just the way my clients and I like it.
UK Pension schemes are a tax efficient savings plan. They allow individuals to save money during their working life, sufficient to provide a comfortably income stream to live on after they have retired.
State Pensions may not produce the same level of income that you will have been accustomed to whilst working. It’s therefore important to start thinking early about how best to build up an additional retirement fund. You’re never too young to start a pension, but the longer you delay the decision, the more you will have to pay in, to build up a decent fund in later life.
There are many different UK Pension Schemes that individuals can use to save for retirement and the taxation and investment elements of pensions can appear unnecessarily complicated. Given the complexity and choice all individuals now have, it is important to seek independent financial advice before making any decisions.
The simple Did U Know – A Simple Guide to Pensions ebook will explain the most common sources of pension funds available.
As in life, an illness can sometimes go unseen for many years without making itself obvious, and others have very serious warning signs.
When you visit someone in the health profession they will immediately pick up on these symptoms and provide you with advice on how to tackle the situation. They also highly recommend that those individuals without obvious warning signs get regular health checks especially as they progress to their middle and later stages of life. The health profession recognise the importance of regular health checks and the occasional tonic boost.
In my profession I too can immediately pick up on symptoms if your financial portfolio is sick. The only difference being is that when I talk to people their investment portfolio’s symptoms have gone undetected for many years and would have continued to go undetected with serious consequences until it was too late to take any reasonable actions to remedy the situation.
High fees and unbalanced asset allocations from portfolios created by the traditional financial services Industry have a very serious impact on your future wealth. If these symptoms are not addressed now, they will not be able to recover and by the time they are diagnosed it will be too late.
Like us, in order to function at our best, it is important to have a regular portfolio check, because like an illness, if it goes undetected for many years it could have serious consequences leading to drastic circumstances.
Get your portfolio checked now, you may need to rely on it in your later years of life and you are going to expect it to be fit and healthy in order to support you as best it can. Don’t leave it to chance, as it may disappoint and then there is no going back.
Ask about our confidential second opinion service. We will give your portfolio an examination and we may be able to offer you some ideas on how to give your portfolio a tonic boost. If we find any symptoms we feel need addressing we can write you out a prescription on how to remedy it.
Remember you live the rest of your life in the future…. Why not make sure the future is going to be what you expect, take action soon.
During my career the question I asked myself most often was, am I best servicing the interests of my clients, by attempting to predict the future, or what if there was another way, a way that investors could understand and manage their expectations, a way that told the truth.
After all, what we do know is that capital markets work. Investing is not a game where one investor must lose so another can win. Any investor has the chance to capture the same capital market rates of return. Over the long run, markets reward investors with positive returns for taking risk and providing capital. If they did not, the capitalist system would have collapsed long ago.
I needed to explore if there was an approach that did not take predictions into account, but used principles grounded in academic finance? If there was, I and my clients could therefore avoid the risk of speculation, and benefit from the intelligence and stability of an approach based on solid theory and empirical evidence, and reward ourselves with an investment solution that earns and delivers the capital market rate of return.
[box] Adjective: empirical :based on, concerned with, or verifiable by observation or experience rather than theory or pure logic. “They provided considerable empirical evidence to support their argument” Synonyms: observed, seen, factual, actual, real, verifiable, first-hand[/box]
When I began my research, I found that the City’s prevailing definition of investment advice (everyone promising that they can all outperform the market) is not the only one. A different definition had been developed within the academic world, based on decades of empirical research. The new approach is the culmination of the work of the academics; Eugene F. Fama, widely regarded as the ‘father of modern finance’ and Kenneth R. French, who is an expert on the behaviour of security prices and investment strategies.
Together, Fama and French have provided two anchor points for a new definition of investment advice; market efficiency and the risk dimensions of shares and bonds. In 2013 Professor Fama received the Nobel Prize in Economics for this work. Their views were that the financial markets actually work. Prices reflect the knowledge and expectations of all investors.
Although prices are not always correct, markets are so competitive that it is unlikely any single investor can routinely profit at the expense of all other investors. The conclusion therefore was like a lightbulb moment to me. If the markets are efficient instead of trying to beat the markets at any price…why not just buy the markets being offered at a much lower cost…..simples.
As an Independent Financial Adviser I am often asked “where do you think the Global stock markets are going”, or “a friend has been promised a 15% per annum return on their investment, what do you think?”
I believe these types of questions are asked, because for decades the mass marketing campaigns in the financial press have been supported by the large Investment and Life Assurance Companies. The financial press has received large advertising revenue from these campaigns and therefore a financial industry has grown from it. These campaigns all focus on giving the next ‘must have product’ or the next ‘must have fund’. Retail investors have subsequently clamoured for these products, chasing the promises being offered. Many are then disappointed and become disillusioned with the investment markets over time, leading to them purchasing more publications to see if they can correct the situation. Thus increasing revenue for the financial press.
The real problem is that finance publications earn revenue from predicting the next best or worst shares or financial sectors for the coming year, and the retail public lap it up. The plain truth is, giving investment advice boils down to making a forecast. The publications are making a forecast, but they have no more knowledge than anyone else. Who would buy a publication that says, “We have no idea what’s going to happen” but “buy our next issue and we will repeat the same message”. Investors have therefore grown up with the expectation that an adviser, or the press can look into a crystal ball and predict the future…..well we can’t.
As an Independent Financial Adviser with many years of experience I am often asked to exercise my psychic abilities. I’m asked to answer questions like “Where do you think the Global stock markets are going?”, or “a friend has been promised a 15% per annum return on their investment, what do you think?”
I believe these types of questions are asked, because for decades large Investment and Life Assurance Companies have supported mass marketing campaigns in the financial press. The financial press has therefore received enormous advertising revenues from these campaigns which in turn has seen the inevitable growth of the financial industry itself.
However, all these campaigns focus on one common premise which is finding the next ‘must have product’ or the next ‘must have fund’.
This has created an investment market where by retail investors’ clamour for financial promises without too much investigation. Some even being ignoring the old maxim, “If it looks too good to be true, then it probably is”.
With all the broken promises and financial returns, that fall a long way short of the advertising, it’s not a surprise that potential investors are both disappointed and disillusioned with the investment markets. Quite often I have seen people scouring publications and the Internet, to see if they actually bought the ‘prime investment’ they (mistakenly) thought they already had.
For the financial press it makes sense to support these “sales campaigns” from the major investment houses, as it generates more advertising revenue. However, does it make sense for the investor?
The real problem is that finance publications earn revenue from predicting, the next best or worst shares, or financial sectors for the coming year. The retail public lap this up but can they afford the consequences if the financial publications get it wrong?
The plain truth is, giving investment advice boils down to making an almost psychic forecast. The publications are making a forecast, but have no more knowledge of the future than anyone else – you or I included. But how many publications would you sell boast a title like: “We have no idea what’s going to happen with your investment” or “buy our next issue and we offer you the same investments as last month”.
Investors have therefore grown up with the expectation that advisers like myself, (or the financial press) can look into a crystal ball and predict the future…..well we can’t. As the small print says “Investments can go down as well as up”. No one can accurately predict the future. What you do get from us is honest and informed advice, BUT there are no guarantees.
The author of this book explains that most financial advisers and institutions do not operate in the best interests of the clients, but to maximise their own profits through exorbitant fees. The actual percentage charged may appear relatively low but compounded can knock tens of thousands off your final pension fund.
Along the way you are likely to be taking unnecessary risks through the lack of diversification of your portfolio. Fund managers in their efforts to meet market indexes and targets end up adding more costs to their clients through regular transaction charges.
The book provides a number of practical illustrations of the effects of fees, transaction charges and risks on investors. Definitely a read for all investors not just company Directors.
Get your portfolio checked now, you may need to rely on it in your later years of life and you are going to expect it to be fit and healthy in order to support you as best it can. Don’t leave it to chance, as it may disappoint and then there is no going back.
For the financial press it makes sense to support these “sales campaigns” from the major investment houses, as it generates more advertising revenue. However, does it make sense for the investor?