Money Management articles from August 2002

Money Management archives from August 2002

The lowdown; Peter Hall, director of financial services at Elements Group, looks at attitudes to recruitment in financial services and reminds managers who their greatest asset is.
August 1, 2002... Financial services is many things. It is awash with mis-selling commission hungry financial advisers according to some commentators. It is a passion to those who truly believe in what they are doing. It is a business, an industry and a...

My first job; Name: Scott White Age: 34 Company name: Aegon UK Position/title: Group public affairs manager.
August 1, 2002... What was your first ever job? A cream boy. How much were you paid? It was commission based about 4p a tub. Front end. In fact some people at the end of my round would undoubtedly suggest that this was my first exposure to...

The Pickering report; The Pickering report has left major decisions about tax regimes for pensions and the number of products on the market to an Inland Revenue review later in the year. Will Hadfield reports on the fudge at the heart of the simplification review.
August 1, 2002... The Pickering report of occupational and individual pension provision threatens to add another layer of complexity to the already baffling system of regulations in the UK. Instead of simplifying the system, as Pickering set out to do, the...

Kicking Sandler in your face; Everyone apart from the banks is wincing at the proposals put forward by Ron Sandler in his long awaited review of the retail savings industry. Jess Hinings looks at what it will mean.
August 1, 2002... Everyone knew that Sandlers review of the savings industry would upset things. Sandler does not pull his punches and has proposed some radical reforms. But his enormous report contains one or two carrots as well as sticks. For IFAs, the...

Living on the hedge; While markets worldwide take a beating, hedge funds continue to post positive returns. So are they as risky as their reputation suggests? Nicole Pedersen-McKinnon investigates.
August 1, 2002... The pursuit of decent investment returns amid persistent market falls and low inflation has become the modern day equivalent of the Holy Grail. And attention is increasingly focusing on hedge funds as the alternative investment that can deliver...

Show me the way to go OMO; Jon Cudby looks at the impact that the FSAs new guidelines on promoting the availability of the open market option will have on the annuity market and an apathetic public and asks if the recommendations go far enough.
August 1, 2002... Anybody who is approaching retirement is able to take their pension fund away from the firm that has run the pension plan to buy the most appropriate annuity from another provider if they wish. But very few ever take advantage of this. ...

Taking stock; Investors need to study the fixed interest market again, says former investment banker Russell Taylor.
August 1, 2002... So far this year share markets have fallen in value, despite signs everywhere of economic recovery. This is not meant to happen, according to the wisdom of the last 20 years. But investors are learning the hard way that, while analysts can...

Unforseen circumstances; Nobody expects the worst but what if it happens? John Hancock asks how can you still protect the mortgage and the home it is buying should disaster strike?
August 1, 2002... Payment protection insurance (PPI) and mortgage payment protection insurance (MPPI), sometimes known as accident, sickness and unemployment (ASU) cover, is currently being hyped up as the next mis selling scandal but, as with earlier such...

Please send us a dream; Mr Sandler, send us a dream, make our smoothed products more honest and clean, says John Chapman.
August 1, 2002... The above plea was written before the publication of the Sandler report, which proposes a new model meeting several of the criticisms of with profits. But will the new model be attractive to providers and to policyholders? Should a further step...

Separating ways; A year and a half since new rules allowed pension sharing on divorce, hardly anyone is doing it. Is a major asset being undervalued, and what can IFAs do about it? Jess Hinings investigates.
August 1, 2002... When marrying couples say at their wedding ceremony, "All that I have, I share with you," they do not necessarily mean it literally. Especially not when it all goes wrong. But the courts do not allow people to walk out of a marriage...

Stock pickers top 100; Despite over two years of falling global stock markets, there are some unit trusts that have made money. But, as our survey reveals, this has been at considerable risk to capital as all the winners were mostly highly specialised. David Burrows reports.
August 1, 2002... This has been a year where tracker funds have, to many, had all the appeal of a cold kebab; where there has been mass poaching of fund managers and where the true stock pickers have come to the fore. Few themes have emerged either, with Korea...

How to get 112% tax relief; If you thought that the maximum amount of tax relief you could get on pension contributions was 40%, think again! It is possible to get over 300%, says Chris Brum of Clerical Medical, provided there are different sources of income and careful timing.
August 1, 2002... It is widely believed that relief on pension contributions is given at 22% and at 40% this is no longer the case. The rate of tax relief enjoyed now depends on the amount and timing of the pension contribution as well as the make-up of the...

Winding road to 1% world.
August 1, 2002... Legal & General is the latest of the large pensions providers to move part of its legacy business on to single charged stakeholder friendly terms. The giant proprietary insurer has reduced the annual management charge (AMC) on its trustee...

EISs move into film industry.
August 1, 2002... Despite Gordon Browns much publicised crack down on tax shelters for films, for those able to invest now the availability of schemes for investing in feature length cinema releases is buoyant. Although there are an estimated 14 film...

Hunting impaireds.
August 1, 2002... Norwich Union has added to its range of annuities, launching an impaired life product. The enhanced annuity has a minimum purchase price of GBP50,000 and is available to anyone between the ages of 50 and 75 years old, although there is no...

Orchard spreading.
August 1, 2002... IFA firm Key Retirement Solutions (KRS) has found the necessary funding to make its Orchard equity release scheme available to other IFAs. The product will be almost identical to its current, exclusive, version. It is a reversionary scheme...

Performance related pay.
August 1, 2002... First State Investments has linked performance to charges on its Global Opportunities fund. It has established a scale of fees that will make the fund free if its performance is poor. The fund will charge 1% pa for first quartile...

Bricks and mortar plan.
August 1, 2002... NDF Administration has launched a structured product linked to the Halifax House Price index. The five and a half year House Price Secure Growth Plan will pay 100% of the growth in the index and return 100% of capital (assuming that Abbey...

Basket case.
August 1, 2002... Inora Life has launched another structured product that promises to return at least the initial investment. The five year fund aims to give an income of 9% gross pa or 2.5% per quarter, or growth of 49%. The return is linked to the...

Letter of the month: Star performers.
August 1, 2002... Mr Jamieson is heartily sick of prima donna managers flitting from company to company, (letters, July issue) and recalls that Jupiter Incomes performance remained satisfactory despite the departure of the star fund manager. I fear that...

Money for old rope.
August 1, 2002... Bravo on the comparative news item on professional regulatory fees! (April issue) Does the defensiveness of the regulator, alluded to by Jon Cudby, indicate that drawing attention to the disparity of such figures has touched a raw nerve amongst...

Splitting cares.
August 1, 2002... I am certainly not a financial adviser, but subscribe to Money Management for my private purposes, and also as background to work as a trustee of several charities deriving a substantial part of their income from invested capital. ...

Easy credit that widens the savings gap.
August 1, 2002... The two sides of savings are: credit and savings. Many of us are aware that the banks and building societies offer credit cards very easily. They may, initially, impose a credit limit of say GBP1,000. This limit, however, is soon extended...

Facing the facts of with profits.
August 1, 2002... Following a decade of decline in reversionary bonus rates and the more recent downturn in terminal bonus levels it is heartening to see that someone in the financial press has finally had the courage to get to grips with the with profits issue,...

Financial Adviser Expo 2002.
August 1, 2002... Make a date in your diary for this world class two-day exhibition, which is specifically tailored to help advisers make the most of opportunities in the market. The event is free to all financial services professionals and will take place at...

JP Morgan Fleming takes MM football crown.
August 1, 2002... JP Morgan Fleming claimed the inaugural Finance Fives football title, sponsored by Money Management, after coming from two goals behind to beat Credit Suisse 6-3 in a dramatic final. JP Morgan was propelled to victory by striker Ben...

Snow forecast for MM awards.
August 1, 2002... Preparations are in full swing for the Money Management Financial Planner of the Year Awards, to be held at the Dorchester Hotel in London on the evening of Thursday 10 October. We are pleased to announce that we have Channel 4 News...

Train online.
August 1, 2002... The Financial Services Training College is to launch an online service to test knowledge of the financial planning certificate (FPC), the qualification essential to practising as an IFA. FSTC Ensure, which will launch in early August, will...

Announcing the Complete guide to individual pensions.
August 1, 2002... In October Money Management will be launching a brand new complete guide to individual pensions, covering stakeholder and personal pension plans. It will be a separate, 80 page guide, incorporating our award winning comprehensive survey of...

Corrections.
August 1, 2002... CIS reported its acquisition expenses ratio in our July new business trends survey as just 11.4%, a figure we queried at the time as being too low. The office attributed the change to a shift in its business mix, but it has now come back to us...

Beginning of the end for PPP review.
August 1, 2002... Only 34,000 out of 1.7m cases of personal pension misselling have still to be resolved, following the passing of the deadline for the FSA organised review on 30 June 2002. 98% of all cases were completed as the deadline expired. 30,000 of...

Actuaries not stressed.
August 1, 2002... Good news for life offices buffeted by recent market troubles. The FSA has again changed its resilience test. The more flexible test should prevent offices from being forced to sell into depressed markets, driving prices down further. The...

News in brief.
August 1, 2002... Government gets it wrong The Government has admitted to underestimating the scale of annual contributions into personal pension schemes by as much as GBP30bn. Doubts were raised when the Conservatives spotted that the declared figure of...

Rare good news for fund sales.
August 1, 2002... Total sales of retail funds were 8% higher in May than they were during the same month last year. Gross sales of all retail funds were GBP2.8bn compared with GBP2.6bn in the previous year, according to sales figures from the IMA. Gross ISA...

Defibrillators come out for CI.
August 1, 2002... Insurers are being sent back to the drawing board by the withdrawal of one of the main critical illness (CI) underwriters from guarantees. Swiss Re has stopped underwriting guarantees of longer than five years in the clearest indication yet...

Market valueless reduction.
August 1, 2002... Junes market downturn has taken its toll. Equitables MVR is now a whopping 20% even though its fund is only 15% invested in equities. Maturing with profits policies are being docked by 10% except where this takes the value below the guaranteed...

Ombudsman investigations up nearly 40%.
August 1, 2002... Customers seem to be getting the idea about the function of the financial ombudsman. Complaints are now almost twice as likely to lead to investigation. The watchdogs annual report has revealed that 11% of complaints were referred to case...

ETF trickle turns into downpour.
August 1, 2002... If the Sandler review is to be believed, active fund managers underperform the market by an average of 2.5% each year due to a combination of high charges and poor decision making. Even though many will fiercely dispute the reviews conclusions,...

Scottish Widows second guesses Sandler.
August 1, 2002... Scottish Widows has gone some way towards pre-empting Sandler with the launch of two new with profits funds that almost coincided with his report. "Basically we can put a tick in all the [reviews] boxes. It looks like we just have to...

Comment: Take your Pickering.
August 1, 2002... As successive governments have come to power, they have each tried to stamp their personal mark on pensions, with the inevitable consequence that the system has become overburdened with legislation, complications, obfuscations. We desperately...

Rates, as well as sizes, matter; The vast majority of annuitants have opted for a level annuity, despite the fact that many of them require a more flexible income stream. Will Hadfield looks at the different ways of taking income in retirement.
August 1, 2002... Why do the majority of those approaching retirement opt for a level income rather than one that increases with inflation? A level annuity provides a greater amount of income in the early years of retirement. Unfortunately many of those who...

Greater income at a price; Annuitants can beat the income provided by conventional products by choosing an annuity that invests in with profits or open ended funds. But, says Will Hadfield improved income is only attainable with greater risk.
August 1, 2002... When the flood of responses to the consultation paper on annuity reform were finally analysed by the Government, one of the main complaints about the current system was the low rate of return from annuities. Best rates for single life...

Income drawdown results; Since the introduction of income drawdown in 1995 the FTSE All Share has experienced negative growth for two consecutive years. Will Hadfield discovers that those approaching their second triennial review can expect big reductions in their purchasing powe.
August 1, 2002... Income drawdown does not work without good investment advice. With the average sum in drawdown from a typical provider hovering around a quarter of a million pounds, investment planning decisions will make a big difference to the future...

When to stop drawdown and buy an annuity; Being forced to buy an annuity by age 75 is not a bad deal. Peter Carter, retirement income marketing manager at Canada Life, explains why it pays to buy an annuity regardless of whether the pension fund used to buy it is big or small.
August 1, 2002... Much has been said of the need for fundamental reform of the retirement income market. Voices, mainly from the investment industry, insist that the compulsory requirement to buy an annuity is unduly restrictive and that the only answer is...

Time for education; Anyone expecting a clear direction in the annuities market as a result of the recent Government consultation paper is going to be disappointed. Angie Kirkwood, marketing manager, retirement income, at Scottish Widows, argues that we are now entering a dec.
August 1, 2002... The debate over the compulsory purchase of annuities at age 75 is an example of divided thinking. The government is adamant that it must stay. A number of life companies want to see it go. The Government is the final arbiter and the age 75 rule...

Why enhanced annuities work; Many of the criticisms of compulsory annuity purchase at age 75 centre around perceived poor rates of return. Britannic Retirement Solutions corporate development director, Bob Bullivant, shows that enhanced rates can redress much of the criticism of poo.
August 1, 2002... Retirement income reformers have been campaigning for an end to annuities. They think annuities are like dodos and should be consigned to history. If the annuity is not prepared to die of natural causes they will seek to drive them to...