GL Integrity Financial Planning Ltd

10/12/2023

31/01/2023

What’s the next step? Lifestyle < Plan < Portfolio.

I was asked this question recently in a forum by someone age 25, self employed. They listed out their current situation and had £1,200 per month to invest. Here’s my answer:

1. The very next step is to define your goal. What would you like in net spendable income in todays terms for you to be financially independent and to remain financially independent? And by when would you like that money coming in?

2. Calculate how much money would you need by your target date in order to generate that level of income.

3. Calculate what you’d need to invest to get that value by your target date on top of what you have.

4. Does the £1,200 pm cover that?

5. Make adjustments to your income, spending, priorities, what you charge customers, your goal amount/ deadline as is necessary from that exercise.

6. Decide on tax wrappers and funds etc

Blindly investing random amounts is better than nothing but it’s like being in an unmoored boat in the middle of the ocean without oars, a motor or a sail.

You need to anchor your investing to a coherent plan to give it direction.

Investing is better when in service to a plan which is in turn in service to lifestyle.

That’s also a great way to manage investment behaviour: you can then act on your plan instead of reacting to news and noise.

06/05/2022

Inflation.

I was chatting to someone about to turn 30 who remembers as a child buying Freddo chocolate bars for about 10p. The price of these has doubled and tripled since that time (I was amazed to find that a study had already been done - see below!)

Think of Freddo The Frog as a proxy for all the stuff you need to buy. The problem of retirement is not a capital "how much have a I got in my pot" problem; it is an income problem. We need to create a rising income that sits on top of rising prices over a three decade or more retirement period.

Investing in The Good Companies Of The World via a beautifully diversified portfolio of global equity funds is the best hedge against long term affects of the erosion of purchasing power ever devised by a human mind.

In his letter to the Chancellor on 31/3/22, the BofE governor wrote that on the whole, CPI is expected to be 6.25% for 2022.
In their long term capital report, JP Morgan write that the median forecast from a herd of economists is about 2.7%-ish by end of 2023.

BoE reckon on being close to 2% target in medium term which accords with JP Morgan forecasts for annualised inflation over next 10-15 years.

For historic perspective, over 5,10,15,20 and 30 year periods the RPI annualised has been 2.5%, 2.6%, 2.8%, 2.7% and 2.8%.
Longer term - beyond 2023/ 24, I think we can expect CPI inflation to be around the 2% - 3% mark. Unless some exogenous variable comes in.

2% is the BoE target, no more or less.

25/04/2022

Choosing a financial planner - checklist.

Here’s a checklist when looking to hire a financial planner if this is the route you want to take at some point.

Financial Planning is a different kettle of fish than arranging investments. It might include it, but it’s comprehensive and and probably based on fixed fees.

You may consider % where investments are involved if you want to recognise the additional returns that your planner helps you keep *temperamentally* in down times and up? Again, I think it's nice to have the option of fixed fees or %. Again, this is separate from the planning.

If I were in your shoes, here's what I would do, knowing what I know, just to whittle it down a bit:
If screening by Phone:-
A. Ask for a 10 minutes now or a phone appointment to determine whether or not you should meet for a longer exploratory meeting by Zoom.
B. Ask, "What do you need to know from me to determine if I am a possible match for your services?" (Trusted advisers will have standards, or specialise in helping similar types of people. If you closely match their ideal client profile and their philosophy, continue. If not, politely end the conversation and try someone else. If they say, "That's not really important. Tell me about yourself ..." or can't answer the question, you're talking to a salesperson, not a trusted adviser).
C. Ask, "What do you require from us in a first meeting?" Really good advisers would expect you to provide documents relevant to that stage and bring your partner.
D. Say, "My next question is about your process. What would be the steps we'd take in our first meeting?" (If you're happy with the answer, continue. If they won't or can't answer, or it's vague, you're dealing with a sales person, not a trusted adviser).
Some further pointers:
1. Choose a Certified Financial Planner Professional with the CFP designation. Not only is this a Level 7, Masters qualification, you'll get the right mindset (but subject to 2, below)
2. Choose a CFP who also *practices* comprehensive financial planning every day, as part of their process: it's what they do in the real world.
3. Choose a CFP who is also authorised to advise on regulated investment products by the FCA as an Independent Financial Adviser (IFA), not one tied to a panel of companies or area ("Restricted Advice).
4. In relation to investments, is their philosophy evidence based, low cost? Yes? Pass Go.
5. Do you get the sense that they see YOU as the client, not just your money? Yes? That's what you want. If you want your own platform, they don't mind.
6. Do they charge in a way that works for you - will they offer a flat fee for a financial plan for example?
7. Do they use the first meeting to talk about themselves or are they keen to make sure you get value from it whether or not you become a client: they listen to you and your issues?
8. Do you get the sense that they would genuinely value your business, but not need it? They are more interested in fit and will have no problem directing you elsewhere if necessary for your benefit.
9. Do they have a structured process for creating a comprehensive financial plan and can tell you what it is?
10. Do they ask you to provide documents to be accurate (but not show until you're happy)?
11. Do they inspire you in a positive way?
12. They won't be talked into just selling you a product - even if you insist.
13. They're candid, yet polite. They will tell you the truth no matter what.
14. They will talk to you about what you have a right to expect from them and what they have a right to expect from you. They will tell you if they cannot meet your expectations or if they are unrealistic, seek modification upfront or direct you to someone who might meet them. They will check in to ask if expectations are being met or missed.
Hope that helps.

09/06/2021

*Pension transfers – update*

The following companies no longer accept an ‘insistent’ transfer:

A J Bell, Aviva, Canada Life, Vitality, Embark, Standard Life, Prudential, LV=, Old Mutual Wealth and Transact.

I assume this is because they do not to be part of a future potential problem. They will of course accept a transfer which is a positive recommendation to transfer by a Pension Transfer Specialist (PTS).

The Financial Conduct Authority (FCA) documentation says the new rules banning contingent charging would lead to an increase in this type of transfer. Contingent charging was where you paid the adviser only if the transfer took place. In short, this is because the FCA ‘default’ position is that a DB transfer is unlikely to be in most client’s best interest. It could be argued that the presence of a certain proportion of insistent client transfers is actually a sign that a good standard of advice is being provided, whilst clients are treated fairly in being given the option to potentially proceed with a transfer on an insistent basis, in spite of a PTS recommendation not to do so.

It is also worth noting that in their most recent publication, Finalised Guidance – FG21-3 – Advising on Pension Transfers, the FCA specifically make the point that if a firm offers an insistent client option, good practice would be to disclose this at outset when disclosing our charging structure.

Given this, perhaps pension companies have made a knee jerk reaction in response to FCA questions about processes, without really understanding the intricacies of DB transfer advice. Perhaps the adoption of a sensible ‘risk based’ monitoring approach would be preferable allowing certain approved transfer specialists to still transfer insistent clients in limited numbers.

Individual PTS’s may join these providers and take the view that they do not want to take the risk of facilitating what they feel would be ‘financial suicide’ either i.e. if they diagnose and prescribe keeping the DB, they may not wish to facilitate a transaction against their advice. So you should check this before you get in too deep.

Assuming you’re working with a PTS who is prepared to facilitate action against their advice, you may which to weigh the consequences if you have a preferred provider on this list, should the PTS recommend you do not transfer. The choice of provider post-recommendation, the Transfer Value Comparator (TVC) and illustrations will have to be re-run and the PTS will have to re-assess the Appropriate Pension Transfer Analysis (APTA), leading to many hours of additional work and unnecessary delays and cost for you, because all these reports must relate to the destination provider and portfolio.

Hope that helps if you’re contemplating the very serious – and irreversible – decision to giving up your guaranteed income streams, for whatever reason.

04/06/2021

Here’s a perspective on purpose: “The real truth about money is that life is not a rehearsal!”

What a result - clients are *delighted* to be shown that they fund extra travel, eating out and family occasions in Tap 2 to the tune of £578 per month extra (today’s terms)... without touching pensions and property ... and when I go from the flip chart to the technology back and forth it’s the best way: the clients are using the terminology “my bucket” themselves. They’ve been going without the treats and holidays they could have had for years. Not any more. They were smiling like Cheshire Cats. [note: personal details not visible and details changed ]

What would your ideal financial independence look like? What would you do, be and have!?

Let yourself go. It’s surprising what’s possible.