ifa magazine november 2012

N E W S R E V I E W C O M M E N TC O M M E N T A N A LY S I S

For today’s discerning financial and investment professional

NO

VEMBER 2012 ■

ISSUE 16

THAT’S THE EASY PART OVER BUT HOLD THE TICKERTAPE PARADE

BARACK IS

BACKPASSIVE FUNDSTHINKING OUTSIDE THE BOX

FILM INVESTMENTLIGHTS! CAMERA! INVEST!

A GAME OF TWO HALVES

MERKEL’S DOMESTIC DILEMMA

This communication is for financial advisers only. The stated returns are paid if there is any increase in the FTSE 100 at the end of the Plan. If, at the end of the Plan, the level of the FTSE 100 is equal to the level at the start of the Plan clients will only receive back their initial investment. Investec Structured Products is a trading name of Investec Bank plc, registered address 2 Gresham Street, London EC2V 7QP. Investec Bank plc is authorised and regulated by the Financial Services Authority.

Best Structured Products Provider 2010 & 2011

C31320.010_SP_Geared Returns_IFA mag_Nov12_297x420_v1.indd 1 25/10/2012 13:28

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C31320.010_SP_Geared Returns_IFA mag_Nov12_297x420_v1.indd 2 25/10/2012 13:28Contents.indd 3 14/11/2012 11:49

regula

rsreg

ulars

features

features

features

features

58

17

34

NewsAll the big stories that affect

what we say, do and think

Financial PlanningThere’s no time like the present to beef up

your department, says Sue Whitbread

Pick of the FundsNick Sudbury’s pick of

a promising crop

FSA PublicationsOur monthly listing of FSA publications,

consultations, deadlines and updates

Editor’s SoapboxBritain’s relationships with Brussels aren’t getting any better, says Michael Wilson.

Lessons From HistoryDid we learn anything from the crash of 1987, asks Brian Tora? You bet we did

55The IFA CentreA tangle of defi nitions will result from RDR, says Gill Cardy

44

50

48PI Insurance After RDRStephen Spurdon investigates the strange disappearance of affordable cover

The Future, From 2016Steve Bee emerges from his time

capsule to explain all

CO

NTR

IBU

TOR

S

This month’s contributors

Editor: Michael [email protected]

Art Director: Tony [email protected]

Publishing Director: Alex [email protected]

THE FRONTLINE: Don’t let the grins fool you. The defi cit is a life and death issue that demands respect and compromise from both sides 11

.12

32

8

60RecruitmentThere’s nothing like an uncertain period to focus the mind, says John Anderson of Recruit UK

Nick Sudbury is a fi nancial journalist and investor who has also worked as a fund manager.

Kam Patela former deputy editor at Hemscott. He is a qualifi ed investment adviser.

Monica Woodleyis a senior editor at the Economist Intelligence Unit.

Lee Werrell is the Managing Director of leading UK consultancy, CEI Compliance.

Brian Toraa Communications Associate with investment managers JM Finn & Co.

Richard Harvey a distinguished independent PR and media consultant.

Gillian Cardy managing director of The IFA Centre.

Editorial advisory board:Richard Butler, Michael Holder, Ian McIver and Mark Pullinger

65Thinkers: Sir John Templeton

The emerging markets pioneer was so much more than just a fund manager66

The Other SideWhoever thought of RDR had a warped sense of humour, says Richard Harvey. And here’s why

N E W S R E V I E W C O M M E N TC O M M E N T A N A LY S I S

magazine... for today ’s discerning financial and investment professional

N E W SContents.indd 4 14/11/2012 11:50

features

features

features

features

Germany: A Game of Two HalvesAngela Merkel is struggling to be both a good Chancellor and a good European, says Monica Woodley. Next year’s going to be tougher

Barack Is BackBut hold the fanfares, folks, we

still have a few little problems to sort out. Michael Wilson reports

Segmenting Your Client Propositions Don’t be embarrassed about offering different services to different types of clients, says Aviva’s Dave Robson. It’s the secret of success and effi ciency after RDR

Passive FundsLegal & General’s Simon Ellis

explains why there are so many ways to run a passive fund – and

where his own preferences lie

Film Reels Film fi nance has been getting a bad press this year, as HMRC has launched a crackdown on evaders and abusers. But a new generation of EIS-approved schemes are on the way. Kam Patel reports

22

COVER STORY 28

30 INSIDE TRACK

As I was walking up

the stair, I saw a cliff that

wasn’t there. It wasn’t there again today.

I wish that debt would go away...

IFA Magazine is published by The Wow Factory Publications Ltd., 45 High Street, Charing, Kent TN27 0HU. Tel: +44 (0) 1233 713852. ©2012. All rights reserved. ‘IFA Magazine’ is a trademark of The Wow Factory Publications Ltd. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

GUEST INSIGHT 36

40

CO

NTE

NTS

Fees, And How To Charge Them

It’s all in the mind, says Peter Welsh of Touchstone. Know what you’re offering,

and know your own value fi rst

46

IFA Magazine is for professional advisers only. Full subscription details and eligibility criteria are available at: www.ifamagazine.com

A N A LY S I SN E W S R E V I E W C O M M E N TC O M M E N T A N A LY S I SContents.indd 5 14/11/2012 11:50

Ed's Welcome.indd 6 14/11/2012 12:23

CHINESE WHISPERSW

OR

DS

OF

WILS

ON

Well, they’d better have, because he was the only name on the ballot. Not much is known about Mr Xi, except that he’s made some pro-business comments in the past, but so far the fi nancial markets seem to think the transition will be just fi ne. The FTSE China 25 is already back to its level in April, when serious jitters fi rst emerged about slowing economic growth. Industrial confi dence is now improving after seven straight quarters of shrinkage, and infl ation is steadying at a manageable 1.9% - down from 4.5% as recently as February.

The government is anxious to capitalise on the good news while it lasts. In the last week of October alone, the central bank pumped a record $61 billion into the country’s money markets, so as to set up the fi nancial basis for yet another massive government programme of infrastructural investment.

But Mr Xi knows well enough that all is not yet well. If it hadn’t been for the government’s boost to public spending, slow consumer demand and a strong renminbi might have doomed the economy to a period of slower domestic growth. Rising urban wages in China have not just failed to produce better sales of big-ticket purchases – sales of cars, for instance, are fl agging. They have also annoyed the rural populations who still live in earth-bound poverty. Unless the manufacturing economy can get its mojo back soon, the risks of social dissent may become politically dangerous.

Ah yes, you might be saying, but even that so-called slower growth rate is still nudging 8%, which is better than any developed country has had for decades. How can that possibly be bad for investors?

Answer: Because China’s equity scene is already pricing in its assumptions of a still-higher rate of growth, and anything less may be exponentially badly received.

For the last forty months at least, Shanghai’s fl atlining stock market has failed to match national economic growth in any way. As investors, then, we have missed out on the boom. The question is, has the fl at spot been just a temporary correction, or are we looking at a longer-term imbalance?

So far, stronger state spending is now substituting for free-market growth as a driver of GDP. But the stock market might not be so easily fooled.

Write to Michael [email protected]

BY THE TIME YOU READ THIS, THE WORLD’S MOST POPULOUS COUNTRY WILL BE UNDER NEW MANAGEMENT. BARRING ANY DRAMATIC UPSETS, THE COMMUNIST PARTY CONGRESS WILL HAVE ELECTED XI JINPING, A PARTY INSIDER, AS PRESIDENT HU JINTAO’S SUCCESSOR

Michael Wilson, EditorIFA magazine

Mike

www.IFAmagazine.com November 2012 7

Ed's Welcome.indd 7 14/11/2012 12:23

sho

rtsMonths of wrangling

over the future shape of Europe’s banking system came to an apparent end on 19th October, as France and Germany fi nally hammered out a compromise deal that will allow the

transition of the European banking system toward direct supervision by the European

Central Bank. January 2013 will

see the creation of the legislative framework,

and the new supervisory system should be in action some time next year.

Well, that’s the theory. The October deal is important not

so much because of what it is, but rather because of

what it will now allow to happen. And let’s stress, by the way, that this is a Eurozone matter that doesn’t impact immediately on the Bank of England or

the UK banking system at all. (But see also below...)

What It’s All AboutSo, where shall

we start? Well,

if you cast your mind all the way back to July, you might remember that the euro zone’s leaders hammered out a new bank stabilisation pact, the so-called European Stability Mechanism, that would allow the EU to issue unlimited quantities of so-called euro bonds, backed by the ECB, which could be offered to struggling banks in Spain, in Greece and perhaps in Italy, on the strict condition that their governments grovelled before Brussels and formally requested assistance.

The trouble was that, at that time, there was no way that the ECB could issue any bonds because it didn’t have any proper supervisory authority over its member countries’ banks. France’s new president, the socialist François Hollande, wanted a quick ‘solidarity’ resolution that would encompass all of the Eurozone banks, but Germany’s Angela Merkel was holding out for a tighter solution that applied only to the biggest ones. To tell you the truth, they still haven’t go that issue sorted, but everyone is aware that time is pressing and that the market’s enthusiasm for the rescue is waning fast. So Frau Merkel agreed, vaguely, that “banks

US investigations into Libor rigging allegations were signifi cantly from seven to 16 institutions, as the Lloyds group, Bank of America, Bank of Tokyo, Mitsubishi UFJ, Credit Suisse, Rabobank, Royal Bank of Canada, Société Générale, Norinchukin and West LB joined Barclays, Bank of Scotland, HSBC and others under the spotlight.

BANKING......is it fi nally getting somewhere? It seems it’s

never too late to give up hope after all.

Jose Manuel Barroso and Angela Merkel don’t quite see eye to eye

N E W S R E V I E W C O M M E N T A N A LY S I SN E W S

magazine

News.indd 8 14/11/2012 12:43

NE

WSItaly’s markets breathed a sigh

of relief as it became clear that ex-premier Silvio Berlusconi had little chance of staging a personal comeback attempt in next year’s elections. Berlusconi had been sentenced by a Milan court to four years in prison for tax fraud. Mr Berlusconi says he will appeal the verdict, and has intimated that he will still try to organise a campaign for one of his associates.

Independentplatform Cofunds announced that its assets under administration had reached has £45 billion – a 25% increase on January’s £36 billion. The company said that sales had been strong right across its three core propositions - Investor, Wealth and Enterprise.

BANKING...

For more comment and related articles visit...

www.IFAmagazine.com

must be supervised in a differentiated way. That means that some will be direct, at the ECB level, and others indirectly, via the national authorities.” Whatever that means.

Did the European stock markets signal their approval of the deal? Hardly. The FTSE Eurofi rst 300 index greeted the news with an exhausted grunt that left the index back at its August levels. Then again, perhaps they were feeling upset by the troubling state of the US economy, which is marching toward a ‘fi scal cliff’ as George W Bush’s tax cuts expire at the end of this year. Or maybe it was the dawning realisation that €60 billion of aid to Spain and maybe twice that to an indignant Greece might

not be the end of the matter. Italy is still tottering, and even France itself can’t feel

properly secure as it pitches into a €30 billion austerity programme

that may plunge the country into a long winter of discontent.

Britain Getting Bounced?But the question for Britain, as a non-eurozone member, is slightly different. Yes, it’s perfectly true that the decision to give the ECB direct supervisory powers

won’t touch the UK in any direct way. Only the 17 eurozone

members will be affected by the coming change. And it’s also true that Britain’s banks are already much more heavily capitalised than most of their continental

counterparts, so that we’d really have very little to fear from the Frankfurt whiplash.

What will really be troubling the Chancellor, and his boss David Cameron, is the likelihood that Britain will fi nd itself squeezed further and further toward the policy margins by a European fi nancial system that thinks in terms of the Eurozone and not the European Union. There are a thousand different ways in which the Commission could decide EU policy on the basis of Eurozone expediency, and it wouldn’t be so surprising if core decisions – for instance, those involving the MiFid II provisions (see pages 17-20)– were to be shaped by Eurozone thinking.

Mr Cameron is already short of friends in Brussels, having alienated rather a lot of his counterparts with last December’s veto on the revised European Treaty. And his latest threat, to veto the EU’s Budget unless it chops both its staff and its six-fi gure salary levels, is hardly likely to endear him to his fellows – although, to be fair, Brussels is well used to having its annual budgets thrown out by a stroppy European Parliament, so the reputational damage might not be as severe as expected.

But it doesn’t bode well for a peaceful political ride in the next twelve months. The Prime Minister’s best hope is that the bank harmonisation scheme will fall apart of its own accord, just as last year’s Lisbon Treaty reforms did. Whether that will be a good thing for Spain or not is another matter.


www.IFAmagazine.com

A N A LY S I SN E W S R E V I E W C O M M E N T A N A LY S I S

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News.indd 9 14/11/2012 12:43

NE

WS

Only one in fi ve

And of those small fi rms that have studied it, the vast majority describe the rules as ‘complex’ (55%) or ‘very complex’ (23%). Only 28% of the 541 smaller fi rms studied by ACA said that they have already budgeted for the cost of auto-enrolment. And of that rather small number, the average expectation is that employee opt-out rates will range between 11% and 35%, with the highest opt-out rates in the very smallest fi rms.

Of those fi rms that are currently operating a pension scheme (about 25%), the ACA says that half say that they are simply likely to auto-enrol all their employees into an existing scheme. But the proportion who say that they are unsure what they will do has tripled to 27%, from 9% two years ago. About 10% say they are considering auto-enrolling their employees into a new workplace scheme, and a similar

number say they plan to place

the balance of employees into NEST.

Only 4% of the companies with pension plans said that they intended to close their existing schemes and place all their employees in NEST. But of the remainder that don’t operate schemes, 38% say they expect to auto-enrol all their employees into NEST, with 19% looking to enrol into an employer’s scheme instead.

The ACA isn’t disputing that the new regime is sound in principle. “It is right that pension provision should be available to employees in even the smallest fi rms,” says chairman Andrew Vaughan. “But we do question

whether the auto-enrolment rules are overly complex for businesses of this size.”

Might there be scope for a voluntary regime for ultra-small fi rms with up to four employees each, say? The question is still open. The ACA 2012 Smaller Firms’ Pensions Survey report is

available at: http://tinyurl.com/99tqbxy


www.IFAmagazine.com

...of Britain’s smaller fi rms with payrolls of 250 or less feel that they properly understand the provisions of the auto-enrolment rules that will apply to them between 2014 and 2017, according to a recent survey by the Association of Consulting Actuaries.

Equity fund fl ows in Europe are on the move again, according to new data from Morningstar. Flows were positive in September to the tune of €1.91 billionn in September, for the fi rst time since February. European large-cap funds saw fresh infl ows of €506m, Morningstar said, and the ex-UK large-cap equity category experienced the largest infl ux in four years, at €320m.

The cost of renting a home in England and Wales rose by 1.1% in September to reach a new record high, according to the group that owns Your Move. Hefty increases in London and the South East meant that the average rent was now £741 a month – 1.1% up on August and 3.2% higher than September 2011.

N E W S R E V I E W C O M M E N T A N A LY S I SNews.indd 10 14/11/2012 12:43

NE

WS Public sector net borrowing

was down to just £12.8 billion in September, from £13.5 billion a year earlier, according to new fi gures from the Offi ce for National Statistics. That was quite a bit better than the markets had been expecting. And just to add to the mood, the August fi gure was also revised downward from £14.4 billion to £12.8 billion.

More good news on the GDP front, as the offi cial numbers for total economic activity in the third quarter came in at an unexpected growth of 1% - thus putting a formal end to a recession that had lasted for three successive quarters. The improvement, attributed partly to the Olympics, implied that the UK economy had regained about half of the 6.4% decline in production that had been observed between January 2008 and the middle of 2009.

Financial Planning Week

Sure enough, the fi fth Financial Planning Week (26th November to 2nd December) promises to be another multimedia extravaganza encompassing print, online and the broadcast media networks. The IFP’s website at www.fi nancialplanning.org.uk will be publishing a daily series of consumer polls on various aspects of personal planning, together with expert responses drawn

from its own members, from professional advisers and from supporters of every kind.

The Institute is particularly keen to get the message across that fi nancial planning differs in certain important ways from the transaction-orientated fi nancial advice that conventional IFAs have traditionally offered. The growing number of advisers who have beefed up their own planning and paraplanning operations during the last 18 months is proof positive that the message is now getting through about how an enhanced willingness to work with clients’ personal needs, rather than focusing on solution-based advice. And that this is likely to bring loyalty rewards once the commission axe has fallen on independent operators and it’s all down to fee-based relationships.

The Institute will also be making a series of real-life case studies exclusively available to journalists, all drawn from the clientele of its IFP

Accredited Financial Planning Firms. And an online ‘Ask A Planner’ facility will be available for queries. Email fpweek@fi nancialplanning.org.uk for more details, or to

get involved.

It’s that time of year again when the Institute of Financial Planning launches its annual campaign to get Britain’s households thinking more effectively about their fi nancial fi tness.


www.IFAmagazine.com

Planning Week

N E W S R E V I E W C O M M E N T A N A LY S I SN E W SN E W SN E W SN E W SNews.indd 12 14/11/2012 12:43

NE

WSUBS announced plans to axe up to

10,000 back-offi ce jobs in its latest attempt to reduce its costs after a $2.3 billion loss – the result, apparently, of a trading scandal involving an alleged rogue trader. The cuts, which will represent about one job in six, will be accompanied by a spinning-off of a large part of its fi xed income trading business into a non-core unit.

Don’t Panic! CBI Director-General John Cridland declared that small businesses are desperate for a return to old-fashioned relationship banking. Demanding a return to ‘Captain Mainwaring banking’, Cridland insisted that a one-stop shop and a proper manager relationship would do the country a power of good.

Preposterously Piratical Institutions


www.IFAmagazine.com

Of these, 62% were about the alleged mis-selling of PPI (payment protection insurance) products.

It would have been a comfort to know that the expansion was mainly due to the activities of professional claims agencies, many of whom have been cold-calling UK telephone subscribers with promises of rewards that have often resulted in specious or fraudulent claims. But the fi gures speak differently.

UK banks paid out £2.9 billion in compensation on insurance products during the fi rst six months, and the total redress on PPI products was £3.2billion. The FSA confi rms that fully two thirds of the PPI claims so far this year have been upheld. And Barclays has famously upped its provisions for PPI claims by £770 million.

Apart from PPI, however, it’s all been (relatively) quiet. Complaints about banking products such as loans and credit cards rose by a mere 5% in the fi rst half, to ‘only’ 828,040 of the year. But protests about current accounts actually fell by 13%.

The Cap Didn’t FitThat will have been only a small comfort to Bank of Scotland, now part of the Lloyds Banking Group, which was fi ned £4.2 million in October for failing to keep adequate records of the mortgage payments from 250,000 customers between 2004 and 2011.

Many of the bank’s customers had missed out on a planned concession involving the interest rate cap, because of anomalies in its record-keeping, with the result that around 160,000 were initially excluded from benefi ts worth some £162 million. Indeed, the FSA said, the problem might never have surfaced at all if it hadn’t been for customer complaints.

Another bad month for UK banks, as the FSA announced that complaints about the sector had risen by 59% during the fi rst half of the year, reaching a horrifi c 3.58 million.

A N A LY S I SN E W S R E V I E W C O M M E N T A N A LY S I SN E W SN E W SN E W SN E W S R E V I E WR E V I E WR E V I E WR E V I E W C O M M E N TC O M M E N TC O M M E N TC O M M E N T A N A LY S I SA N A LY S I SA N A LY S I SA N A LY S I SNews.indd 13 14/11/2012 12:43

NE

WS The Hong Kong dollar

surged as international investors started to explore Asian prospects again, following some statistical news from China that wasn’t as bad as some had feared. The Hong Kong central bank was forced to intervene four times in the space of a week to quieten the rise of the currency against the dollar.

BP agreed to sell its partial stake in the Russian arctic oil prospecting group TNK-BP for $12.3 billion in cash, plus a 19.75% stake in the acquiring company Rosneft. The deal, wich altogether encompassed some $55 billion of equity and cash, is the oil industry’s biggest deal since Mobil went to Exxon in 1999.

Shock News – The Crackdown Is Working Well, it’s progress of a sort anyway.


www.IFAmagazine.com

New fi gures from the Treasury show that the so-called ‘tax gap’ – the amount that HMRC reckons is underpaid because of tax evasion or simple errors – shrank to just £32 billion in 2010/11. A fi ne achievement. So shall we pop the champagne now or later?

The good news is that the uncollected tax – which is the difference between the taxman’s calculations and the amount actually received – was equivalent to just 6.7% cent of all taxes due in 2010/11, compared to 7.1 per cent in 2009/10 and 8.2% in 2004/05. The bad news is that that’s equivalent to more than £1,000 per employee, which is still quite a lot.

Exchequer Secretary David Gauke MP put a brave face on the fi ndings. “These tax gap fi gures show that the vast majority of people and businesses pay the tax they owe on time,” he said. “Last year £468.9 billion was collected,

“THE VAST MAJORITY PAY THE TAX THEY OWE” David Gauke puts a brave face onthe fi ndings

including £13.9 billion that was brought in through HMRC’s work policing the rules.”

Statistics, Damned StatisticsThe BBC noted that the government’s 2010 Spending Review had handed HMRC £917 million in new funding to tackle the tax gap, with the objective of raising an extra £7 billion a year by 2014-15. So how’s it working out in practice?

A quick back-of-envelope calculation at IFA Magazine HQ suggests that the 0.4% of additional tax take that’s been raised last year would have been worth around £2 billion to the

Treasury in real money. That sounds reasonably on course, then.

But £2 billion would also seem to be pretty feeble compared with the impressive £4 billion improvement which was logged between 2008/2009 and 2009/2010.

A time, let’s remember, when the extra investigative capacity at

HMRC wasn’t even available. Hmmmm, are we getting value for money?

For investment professionals only. Not to be viewed by or used with retail clients. The value of an investment can go down as well as up. Investors may not get back the original amount invested. *Calls may be recorded for training and monitoring purposes. Aviva Investors is a business name of Aviva Investors UK Fund Services Limited. Registered in England No. 1973412. Authorised and regulated by the Financial Services Authority. FSA Registered No. 119310. Registered address: No. 1 Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.co.uk MC2614-V002-248607-CI062303 10/2012

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avivainvestors.co.uk/maffund&[email protected] 0800 015 4773*


For investment professionals only. Not to be viewed by or used with retail clients. The value of an investment can go down as well as up. Investors may not get back the original amount invested. *Calls may be recorded for training and monitoring purposes. Aviva Investors is a business name of Aviva Investors UK Fund Services Limited. Registered in England No. 1973412. Authorised and regulated by the Financial Services Authority. FSA Registered No. 119310. Registered address: No. 1 Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.co.uk MC2614-V002-248607-CI062303 10/2012

AVIVA INVESTORS MULTI-ASSET FUNDS

5 RISK-TARGETED FUNDS FOR EVERYONE FROM LAID BACKTO ADRENALINE JUNKIE.Whatever your clients’ appetite for investment risk, fi nding a mix of funds and assets that match their needs – and checking the funds regularly – is not easy. By offering your clients our Multi-asset Funds, you’re leaving the monitoring of the funds to us, freeing a substantial part of your working day. Each fund is actively managed to aim to stay within a risk range whilst maximising returns over the medium to long-term through unconstrained asset management. So fi nding an investment solution that keeps pace with both regulation and your clients’ expectations is now easier. Harnessing investment intelligence for the outcome you need.

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27654_sippcentre_210x297.indd 1 20/1/12 13:01:42News.indd 16 14/11/2012 12:44

What LiesBeneath?IF YOU FELT A BIT SHORT-CHANGED BY THE THIN MEDIA COVERAGE OF THE RECENT MEETING BETWEEN DAVID CAMERON AND GERMANY’S ANGELA MERKEL, YOU CAN BE SURE IT WAS STILL TOO MUCH FOR THE PROTAGONISTS THEMSELVES,SAYS MICHAEL WILSON

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For what must have seemed an eternity of fl ashbulb diplomacy, the two leaders

stood stiffl y on the press platform, smiling benignly and fl atly contradicting each other – with Cameron threatening a UK veto over the EU Budget and Merkel saying not a chance, sunshine, take it or leave it. And when the two went their separate ways at the end of the day, like ships passing in the night, there was no sense at all that either had done anything more than register the other’s existence.

But then, if there was ever much doubt as to where Her Majesty’s government stands on its relationship with Europe, the last couple of months ought to have consigned it to the ‘sorted’ fi le. Whether it’s failed aerospace link-ups that we’re talking about, or the euro mess, or the plan to enforce control from Frankfurt over all the Eurozone banks, or simply the implementation of the Markets in Financial Instruments Directive - popularly known as MiFID II – you won’t go short of pointers as to how far adrift of mainstream European sentiment the government is currently becoming.

Not that that’s necessarily a bad thing, of course. There’s much to worry about in the current line being taken by Brussels – not least, the fact that the fi nancial markets themselves aren’t taking the least bit of notice of all the optimistic guff that seems to be pouring out on the euro issue.

On the one hand, Chancellor George Osborne’s spat with the German government over the aborted link-up between the aerospace giant BAe Systems and Europe’s EADS – the Airbus manufacturer – cast a stark light on the cultural differences between Britain’s free-market approach to defence procurement and that of France or Germany - both of whose governments hold what amount to golden shares in EADS. The sharp snap-back which Mr Osborne got from Germany’s Chancellor Angela Merkel – and the terse way that the German Chancellor vetoed the wishes of her French counterpart, François Hollande of France in trashing the deal over this fl ightless bird – tell us a lot about how brittle the general state of European co-operation has become. And how thin those summit smiles are getting.

The Devil and the Deep Blue SeaMeanwhile, in the background, the clock is quietly ticking on Europe’s gigantic attempt to harmonise the European consumer fi nancial market. On 26th September the revised text of MiFID II was unanimously passed by the relevant committee of the European parliament.

And by the end of October, the parliament had given its blessing to a Europe-wide ban on commissions for independent fi nancial advisers – but had ducked out of banning commissions for restricted fi rms as well, as both Britain and the European Commission had wanted.

And to think, we hardly even noticed… Now, this magazine has not been slow in

the past to chide Mr Osborne for his outspoken and sometimes clumsy tendency to infl ame European tendencies. But remember, it wasn’t just the Tory old guard that grunted its approval back in October when Prime Minister David Cameron chose the closing moments of the Conservative Party conference to drop a heavy hint about the prospect of a referendum on Europe at some time in the fairly far-distant future. There’s fairly clear evidence on the street that many ordinary Britons have genuinely had enough of Brussels. Although whether they’ve really given enough thought to the possible consequences of euro-isolation is a valid question that still begs to be answered.

Thunder and LightningLooking back on the BAe/EADS affair, it’s hard to deny that things would have become very complicated if the deal had gone through. There was never much doubt that the Chancellor’s resentment at continental Europe’s political muscle within the company would have created ructions as soon as Paris or Berlin objected to some US military supply contract or other, on the grounds that their own military agendas on Iran or Israel or Turkey didn’t tally exactly with those of the White House.

And you can also see where George’s objections to the proposed European banking reforms come from, because Europe has made little secret of its envy at the predominance of London’s institutions – to the point where France had openly attempted, last December, to get a pan-European trading levy implemented that would have levelled the playing fi eld to Britain’s disadvantage.

Cameron, if you recall, didn’t so much nip that one in the bud as stick an axe into it, as he vetoed a quite different decision on European political collaboration under the Lisbon treaty. Ever since then, his face has been a necessary but largely unwelcome feature of the EU summit circus. Continental newspapers are now talking quite openly about how it’s only a matter of time until Britain makes its departure from the European Union and stumbles off into an uncertain future in America’s embrace. (In the meantime, by the way, a small group of countries has just voted to go ahead with the proposed trading levy on a unilateral basis.)

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The Kraken WakesAnyway, Cameron’s Lisbon veto was last winter, and this is the current one. Brussels’s political elite has hardly covered itself in glory over the euro rescue plan, having produced a succession of big plans that have hardly set the markets alight. Three times since the summer (or is it four?), we’ve seen the stock markets of continental Europe catching brief fi re on the news of some debt-purchasing scheme or other - only to subside within a week or ten days as it becomes clear how much work still remains to be done, and how little the investing public still trusts the political movers and shakers.

But the Lisbon veto issue came back to haunt us yet again in mid-October, this time wearing a different disguise. Against all the odds, the Euro-summiteers managed to pull off what seems to have been a partial victory in their attempts to beef up the European banking system in a way that might – just might – be robust enough to rescue the southern European economies. The snag, for Mr Osborne, was that their success in agreeing on a unifi ed bank supervision system may also have given them the power to steamroller the UK on contentious fi nancial issues in the future.

But whoa, we’re probably going too fast there. Let’s slow down and take it one step at a time:

Firstly, as we’ve said, this autumn’s bank rescue scheme will effectively require every euro-zone bank (though not, of course, those of the non-euro members) to be regulated by the European Central Bank, with effect perhaps from 2015. For the fi rst time ever, that will give the ECB the muscle that it needs to issue so-called euro bonds on its own authority, and

it will be able to use those bonds for buying up ‘unlimited’ quantities of awkward sovereign bonds that are currently stuck in the bank vaults of Lisbon, Madrid and probably Milan and Paris.

So far, so good. But the smiles at the October 19th summit betrayed a seething confl ict which isn’t over yet. France’s Hollande had been demanding a ‘solidarity’ resolution that would encompass every single one of the Eurozone banks; but Germany’s Angela Merkel had been stubbornly insistent that only to the biggest ones should be regulated. By agreeing to a compromise wording that simply said that the banks “must be supervised in a differentiated way” – or, as she added, “some of them directly, at the ECB level, and others indirectly, via the national authorities,” she had found the weasel wording she wanted.

For better or worse, the legislative structures for the ECBs new supervisory powers should be in place by January, and there are hopes that the 17 eurozone members might be getting seriously into empowering the ECB by mid-2013.

Fat chance. There is a mountain of national enabling legislation to be pushed through before that can happen – and also a major PR campaign to be waged before bank shareholders’ fears about a loss of operational sovereignty can be assuaged. If all this can be achieved by 2015, that’ll be a miracle. Will it be soon enough to rescue the Spanish banks? It isn’t at all clear.

But the real worry for the Chancellor is that the 17-member euro-deal will pave the way for a fi scal unity push that will end up marginalising the ten euro-outsiders – Britain included. The Treaty of Europe itself proclaimed as far back as

“The smiles at the October summit betrayed a seething confl ict which isn’t over yet”


Eds Soapbox.indd 19 14/11/2012 13:22

1957 that the continent should be moving toward a unitary fi nancial system - and last

December’s vetoed agreement still left 23 EU members voluntarily offering to have their national budgets scrutinised and even policed by Brussels. (The other refuseniks, besides Britain, were Hungary, Czech Republic and Sweden.)

So, if at some later date the group of 17 euro-insiders decides to push its combined agenda onto some other fi scal policy topic that extends beyond its normal reach, who’s to stop them? Certainly, Britain will have the formal power to refuse such a measure – but the likelihood of fi nding ourselves squeezed further and further toward the policy margins by a European fi nancial system that thinks in terms of the Eurozone, and not the European Union, is considerable.

There Be Dragons At present it’s fair to say that all hands in Europe are working furiously at the pumps to douse the fl ames that are still arising from the Mediterranean banking system. And that there’s very little real enthusiasm for tackling other important policy issues. But all the while, down in the stone cold basement, Professor Frankenfurt’s great MiFID monster has been twitching into life with every new jolt of power that the mad scientists of Brussels have dared to send through its ugly, ravaged, stitched-together frame...

That’s going much too far, of course. It would be ridiculous for anyone to suppose that Europe doesn’t need at least some sort of a harmonised regulatory system with which to make its single fi nancial market work. Never mind the single currency, we already have a fl otilla of mutual-recognition treaties that mean that a Ucits sold in Malta is worth just as much as Ucits in London. The passport system sees to that principle, and it’s a good one too.

So it follows that we need some sort of a minimum standard of conduct when it comes to investing our clients’ money across European borders. And not just for shares and funds, either. If you’re going to be issuing Euro bonds in a few years, and if any bank that’s

registered in Cyprus, say, is to be allowed parity of opportunity with one in Frankfurt, then the better those investor protection systems are co-ordinated, the better for everyone.

So the MiFID II monster is fated to rise from the bench and stagger determinedly toward its eventual realisation. And, as we’ve said, the key stage has now been reached, because the European Parliament has now cleared the text, after much heated discussion on issues that have ranged from high frequency trading to “dark pools” of in-house liquidity. From commissions for non-independent traders to the creation of a new category of trading venues for OTC products.

But you’d be wrong. Yes, the MiFID II text has been offi cially approved, and it now goes forward to the next stage toward enactment. Unfortunately, the next stage is

yet another round of high-level talks, the so-called “trialogue”. which brings together the European Commission, the Parliament and the Council of the European Union. And that’s where the claws and the fangs will be out.

You see, the European Commission absolutely hates the Parliament’s decision to allow commissions for non-independent advisers, and it’s pretty peeved that the Parliament has overturned its proposal for a ban. It hates the Parliament’s stipulation that high frequency traders should be forced to let trade orders to rest for a minimum of half a second, so as to stabilise the situation in volatile moments. (I’m over-simplifying, but bear with me.)

For the next three months, at the very least, the sparks will be fl ying and the blood will probably fl ow. And Mr Osborne, safe in the knowledge that Britain does have some national leeway to interpret the MiFID II rules in its own way, will be cackling with a strange mixture of glee and trepidation.

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Do you have a good reason for the Editor to jump back onto his soapbox? Not that he needs any encouragement, please send your requests to [email protected] and stand well back!

“Osborne, safe in the knowledge that Britain does have some leeway to interpret the MiFID II rules in its own way, will be cackling with a strange

mixture of glee and trepidation”



Eds Soapbox.indd 20 14/11/2012 13:22

The evolving role of the DFM and the Intermediary Business

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Eds Soapbox.indd 21 14/11/2012 13:22

CAN ANGELA AVOID AN OWN GOAL? MONICA WOODLEY ASKS THE QUESTION

A GAME OFmagazine... for today ’s discerning financial and investment professional


Germany.indd 22 14/11/2012 13:29

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CAN ANGELA AVOID AN OWN GOAL? MONICA WOODLEY ASKS THE QUESTION

Angela Merkel must feel like she can’t do anything right. When she made a visit to Athens in mid-October, to bolster Greece’s fragile coalition government and its fiscal reform programme – her first visit to the country since 2007 - her support was seen by the Greek public as a provocation to a suffering people. And the media happily played along with it

Indeed, the Greek television pundits even pointed the finger at her ‘insensitive’ choice of clothing: apparently she was wearing the same outfit that she’d worn to watch Greece’s defeat by Germany’s national

soccer squad back in June in Euro

2012. That’s a lot of political significance to be attaching to a simple fashion choice.

Merkel, for her part, has tried to tread a fine line – showing sympathy with the Greek public for the sacrifices required of them by their government’s austerity measures, while also remaining firm with the government on maintaining a schedule for fiscal and structural reforms. But her tough stance on the timetable for reform is seen by the Greeks as unrealistic.

Finance minister Yannis Stournaras has said that there is now ‘an assumption’ that Europe’s deadline for reforming the fiscal balance will be extended by two years to 2016, as his government has requested – albeit with the fiscal measures heavily front-loaded. But Merkel has not budged at all on the original deadline of 2014.

What the German Chancellor has offered, in place of timing concessions, is the prospect of further bilateral and multilateral support for

the Greek economy. She has pointed to the recently-boosted resources of the European Investment Bank - and also to the fact that the European Commission’s Task Force, led by a German, is pushing hard for the release of development aid to Greece. Merkel has even suggested that a state-owned German investment

bank, KfW, could get involved in joint ventures that are being developed by Greek and German businesses.

There’s no question that more efforts to support the Greek economy are needed. By the end of 2012, it will have contracted by a fifth from its peak in 2008. And clearly, the fear is that the strain of this severe contraction will – no matter what support is given – result in a so-called ‘Grexit’. The Economist Intelligence Unit puts the odds of Greece leaving the Eurozone in the next two years at 40%.

A Hard Sell At HomeThe German people don’t seem very fussed about preventing a Grexit. A Financial Times/Harris poll conducted in October found that only a quarter of Germans currently think Greece should stay in the eurozone or even get more help from other countries in the currency union. Mind you, their attitudes won’t have

been helped by images of Greek protesters greeting Merkel’s October visit by burning flags emblazoned with the Nazi swastika – or that some were dressed in Nazi-style uniforms.

But the thing that Merkel grasps, which her public obviously doesn’t, is that

Germans weren’t very impressed by images of Greek protesters burning nazi flags during Merkel’s visit in October


Germany.indd 23 14/11/2012 13:29

Germany’s economic fate is inextricably

tied to that of Greece. A Grexit would in fact hit Germany’s economy hard – but, because the uncertainty over Greece’s future is currently having only a mildly negative impact, with occasionally mixed or even positive signs, the German public simply doesn’t grasp the severity of the situation.

So what exactly are the leading indicators telling us about Germany’s prospects?

Mixed MessagesThe resilience of the German economy over the past few years has been impressive, but in recent months the erosion of sentiment has been gathering pace - a reminder that, despite being the EU’s strongest economy, Germany still remains at serious risk from the continuing Eurozone crisis. Recent business surveys suggest that a period of weaker economic activity is coming,

and there’s even the possibility of a return to recession.

The good news is that the ZEW index - an indicator compiled by the Centre for European Economic Research based on fi nancial investors’ view of German economic activity over a six-month horizon - rose in October for a second month. But the ZEW indicator still remains in negative territory, having fallen for the four consecutive months until September. So, although the picture has improved slightly, the majority of investors still expect conditions to deteriorate over the next six months.

So much for the investors, but the news from ‘closer to the ground’ looks a bit less reassuring. The Ifo Institute’s business climate index, based on a poll of 7,000 companies across key sectors, fell for the fi fth consecutive month in September to its lowest level since February 2010. The Ifo index is widely considered to give a more realistic view of

the country’s true economic situation than the ZEW survey.

German companies that rely on exports have particular cause for concern. True, exports rose by 2.4% month-on-month in August, and by 5.5% year-on-year. But that seems to be a blip in a year of steady decline. Back in July, export growth had been just 0.4%, following on from a growth of 1.6% in the second quarter and 2.3% in the fi rst quarter.

Exports to the rest of the Eurozone, which account for around 40% of German exports, were – unsurprisingly

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Germany.indd 24 14/11/2012 13:29

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Y– weak. Year-on-year sales were down by 3.1% in August, a sharper pace of decline than had been recorded in previous months. Things were a little better when it came to exports to non-Eurozone EU member states, which represent just under 20% of German exports: total sales were up 6.8%. But the strongest growth of all was in exports to non- EU countries, which rose by 13% year-on-year in August. The question is, what impact will subdued global demand have on this one segment that is solely supporting Germany’s export growth?

Shaky Domestic Scene Industrial production contracted in August, driven by decline in manufacturing output and especially by a drop in construction activity. Overall industrial output has been volatile this year, with one monthly rise being repeatedly followed by a decline in the next month. But recent data on new orders data suggests that the trend is down. Generally, activity looks set to weaken to the point of stagnation in the near term, or even a modest contraction.

The source of this deteriorating trend is the home market, where orders were particularly weak in August, falling by 3% during the month. The early signs of weakness had already been present in the second quarter, but they have now become much more pronounced.

What do households think? Well, overall consumer sentiment in Germany was 3.3 points lower in September than a year earlier - but that still leaves it fairly close to its long-term average.

The thing that Merkel grasps, which her public obviously doesn’t, is that Germany’s economic fate is inextricably tied to that of Greece

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And when you ask them about their future

fi nancial situations the picture is still generally positive - above the long-term average, apparently, and only slightly weaker than a year earlier. But the past few months have brought a slight weakening of sentiment on future prospects.

That slight decline is probably linked to unemployment, which has been rising modestly since the second quarter of 2012. The Economist Intelligence Unit forecasts a gradual rise in unemployment over the remainder of 2012 and into 2013, from an average of 5.5% this year to 5.7% in 2013.

Election Focuses The Mind So what are exactly are the indicators pointing to? The Economist Intelligence Unit predicts real GDP growth of 0.8% for 2012 and for 2013 as well. But this stagnation is based on a gradual stabilisation of the Eurozone crisis and the restoration of investor confi dence. If the situation in the Eurozone does not improve,

there is a danger that Germany could fall into a recession.

Sensing this danger, Merkel has held out the prospect of government action to stimulate domestic demand, including possible tax cuts. She recognises her country’s role “to do something for the stimulation of the economy in Europe”. If Germany could deliver higher domestic consumption, she says, “that would have the advantage that we would naturally be able to buy imports from other countries in the European Union”.

Germany also faces an upcoming leadership contest in 2013, in the form of a general election. The main opposition Social Democratic Party (SPD) has nominated Peer Steinbrück, a former minister of fi nance, as its candidate to challenge Merkel for the chancellorship; and although Merkel is still the favourite to win the election, a more splintered party system could make building a coalition more diffi cult in the interim – thus increasing the prospect of the SPD gaining offi ce in 2013, and

creating more work for Merkel to maintain the support she needs for her Eurozone efforts.

With resolving the Eurozone crisis and protecting her own country’s economic growth already on her plate, Merkel doesn’t need any more distractions right now. Germany remains the strongest economy in the Eurozone, but its fate is too tied to that of its other members for it leader to be complacent. While she has been able to rely on Germany’s economic strength and focus on the problems of the Eurozone, she now needs to split her attention and consider steps to improve growth at home as well.

Fortunately, Merkel knows that the key to a strong Eurozone is not just keeping Greece in but also keeping Germany strong at its core. She may not remember what she wore to a football match, but she’s not taking her eye off the economic ball.


IFAmagazine.com

This document is aimed at Investment Professionals only. All content is intended as general information only and does not constitute advice, recommendation or investmentresearch. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Ltd, an appointed representative of TrustnetLtd which is authorised and regulated by the Financial Services Authority. For our full disclaimer please visit www.financialexpress.net/uk/disclaimer.

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FE_MM_AW1.qxd:FPM 26/9/12 16:40 Page 2

The SDP’s Peer Steinbrück is set

to challenge Merkel for the

chancellorship; and although Merkel

is still the favourite to win, a more

splintered party system could make building a coalition

more diffi cult



Germany.indd 26 14/11/2012 13:29

This document is aimed at Investment Professionals only. All content is intended as general information only and does not constitute advice, recommendation or investmentresearch. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Ltd, an appointed representative of TrustnetLtd which is authorised and regulated by the Financial Services Authority. For our full disclaimer please visit www.financialexpress.net/uk/disclaimer.

FE Research has everything you need. You’ll be able to providea complete, client focused investment service with high quality,cost effective research and institutional quality analysis thatdelivers all the expertise of a market leading in-houseinvestment team.

For more information go to www.feresearch.netor call 020 7534 7623

SEARCHNO MORE...Looking to outsource your fund research and analysis?

FE_MM_AW1.qxd:FPM 26/9/12 16:40 Page 2

Germany.indd 27 14/11/2012 13:29

BARACK IS BACK!BU

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It was a nail-biter at the end, but the incumbent came through with a late surge. Yes, we’re all agreed that Barack Obama’s stiff, rather un-empathetic manner ought to have made him an easy knock-down for any presidential opponent who had had any genuine warmth to show the electorate.

And that’s what might have happened if only Romney hadn’t flashed his gleaming teeth, slicked back his hair and played evasive about his aggressive business dealings as if he’d never heard of Wall Street the movie. Whereas Obama had looked for most of the time like he was too exhausted from his workload to be able to argue back convincingly. Obama always looked like the more honest operator.

A Social Divide...The reason that so few wavering Democrat swing voters could bring themselves to trust Mr Romney on polling day had commendably little to do with the challenger’s Mormon faith - even though the distinct possibility of Mormon church elders claiming the right to priority consultation in the White House was certainly a little alarming. (As a state governor, Romney had been forced to concede to their political intrusion several times.) Nor was it even the abortion debate, which divided the religious American electorate in ways that we can hardly imagine in Britain.

No, it was probably Romney’s willingness to write off 47% of the American electorate as welfare-loving, tax-dodging losers (and therefore hopelessly Democrat voters) that convinced half the population that the Republican leader had no judgement. That and his numerous geopolitical goofs - such as the hilarious claim that Iran was backing Syria because Damascus was Tehran’s only land route to the sea. All of which brought back unwelcome memories of Sarah Palin, who didn’t know that Africa wasn’t a country. How would you ever trust these people with the Big Red Button? It was a serious question.

It was this sense of Romney’s fundamental ignorance about the great world outside the US that troubled Europe, where a solid 75% of voters favoured Obama over the Republican candidate. And indeed, the European preference for the Democrat candidate was notable in itself, since Mr Obama has shown very little active interest so far in a continent that he sees

as tangled up in its own little civil war over its own little currency and its great big debts.

An Economic Chasm...Admittedly, the markets were more than glad that a newly-elected President Romney hadn’t been given the chance to declare China a currency manipulator on his first day in office – a move that would have brought automatic sanctions and the start of a global trade war. (Fact, though: prominent Democrats such as Senator Chuck Schumer have been demanding the self-same market-rigging sanctions against China for most of the last decade, so let’s have no stone-throwing in the glasshouse please.)

But what shook the markets, and still continues to do so, is the fact that although Mr Romney never stopped talking about how he was going to slash the budget deficit, he never got around to telling us exactly how he proposed to do it. Would he impose higher taxes on the wealthy, or on corporations, or would he cut subsidies for poorer claimants? Would he increase the puny levels of sales tax on gasoline, or would he launch a campaign to prevent tax evasion?

The question was asked many times, and each time the silence from the Romney camp was deafening. It wasn’t too surprising that a challenger who’d been quizzed about his own tax-payment record wasn’t very keen to annoy the public with talk of more taxes. But now is Mitt’s big chance to tackle the issue. Will he dare? And what will happen if he doesn’t?

...And No ParachuteIn case you’ve been slumbering in a cave for the last 15 months, you’ll know that the end of this year marks the beginning of a double whammy that will, in its worst-case scenario, knock about 4% off next year’s Gross Domestic Product and send the country into economic freefall. In fact, even its milder form it still looks ghastly.

Whammy Part 1 is the imminent expiry of George W Bush’s tax cuts, part of a $787 billion stimulus package, which were reluctantly extended for another two years by Barack Obama in 2010. The loss of the tax breaks in December will knock perhaps a hundred billion dollars off the disposable incomes of a middle class population that hasn’t seen a real rise in income in a decade. I think we’re starting to understand why nobody wanted to talk about it before the election…

THAT’S THE EASY PART OVER, THEN, SAYS MICHAEL WILSON. NOW WE FACE THE FISCAL CLIFF



US Election.indd 28 14/11/2012 13:32

Whammy Part 2 will be heralded by the sound of an axe coming down on every part of the federal budget – the result of a cross-party deal that was struck in August 2011 as Congress failed yet again to get to grips with the ballooning $16 trillion federal debt. Unless the politicians can pull a very convincing rabbit out of the hat between now and then, automatic cuts will slash both welfare and defence spending – thus hurting both Democrats and Republicans respectively.

The total effect of the increased taxes and the cuts is popularly estimated at $607 billion, which would be disastrous. In theory, the defi cit reduction deal needs to be signed by about February; in practice, however, it won’t get broached until the President Obama has been formally installed on 21st January. So is the pressure concentrating anybody’s mind?

Not that you’d notice. At the time of writing, the low-tax, low-welfare Republicans were still refusing to countenance any tax increases, and the welfare-minded Democrats were sitting tight on their budgets. It’s still not looking good.

Bernanke and the Banana SkinIs there anything hopeful out there? Yes, the fact that Federal Reserve Governor Ben Bernanke will still be in his post in the new year. Mitt Romney had made no secret of his dislike for Mr Bernanke’s loose-market policies, which have included three rounds of quantitative easing – two of which have really worked quite well for both corporate profi ts and the stock market. Although,

to be fair, you can’t print money without creating an infl ationary risk if the economy itself isn’t growing fast enough to absorb it all.

What’s also slightly odd about Romney’s dislike for Bernanke is that the Fed chairman was an old friend of Republican ex-President George W Bush, whose own contribution to economic growth was substantially infl ationary. But that just underlines the signifi cant change that the Republicans have undergone during the last four years.

On the one hand, the infl uence of the right-wing Tea Party has been felt in an increased demand for small government, and in a return to conservative values that align strongly with religious principles on social issues like welfare and medicare. On the other, as we’ve seen, the party itself has become crystallised down to an obstructive refusal to compromise. Which is a large part of the reason why so many of Obama’s policies have foundered in the face of Republican opposition during the two years since the Democrats lost their working majority in Congress.

Either way, the day after election day was a humdinger. The triumph of the election lasted right up until the opening bell on Wall Street, when the S&P 500 lost a quarter of its year’s earnings and the Footsie lost a third. Now, who was it who said you should buy on the rumour, sell on the fact?

BARACK IS BACK!THAT’S THE EASY PART OVER, THEN, SAYS MICHAEL WILSON. NOW WE FACE THE FISCAL CLIFF

SELL O

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www.IFAmagazine.com


US Election.indd 29 14/11/2012 13:32

SEGMENT & CONQUER

DAVE ROBSON, IFA INVESTMENT MANAGER AT AVIVA INVESTORS, EXPLAINS WHY ADVISERS WILL NEED TO TAILOR THEIR PROPOSITIONS CAREFULLY TO EACH CLIENT IN THE POST-RDR WORLDThe concept of fee-based advice is hardly new. For the last 20 years or more, advisers have been debating charging fees - and thereby putting their services on the same professional footing as those of lawyers and accountants. But now, with the fee-based RDR regime almost upon us, the focus is sharpening on client segmentation.

In the post-RDR world, the advisers most likely to thrive will be those who can segment their client base according to profi tability, while still providing an individually-tailored service that grows to meet each client’s changing needs.

Distilling your Proposition As any fee-charging professional will agree, the most important fi rst step is to agree your proposition. Namely, the service you plan to provide, who it will be offered to, and how much you intend to charge for it. To do this, you’ll need to segment your client base - or risk extending too extensive a service to those clients whose business doesn’t warrant it.

Start by separating your clients from your customers. You will have a relationship with the former, but you deal with the latter on a more transactional basis.



Inside Track - Aviva.indd 30 14/11/2012 13:41

Next, focus on identifying those clients who are (or may one day be) the most profi table. You’ll quickly fi nd that the most profi table ones aren’t

always those who generate the most revenue. There are numerous criteria you might employ, but we often recommend that advisers sort their larger clients into three categories: pragmatists, activists and theorists. This can help you to get a better feel for their likely time needs - and whether they’ll be willing to pay a fee for the experience.

Communicating your Offering Once you’ve segmented your clients, you can start to defi ne the level of service that each tier should receive. Keep in mind here that clients could well move between tiers as their lifestyle needs change. So you’ll need to be very clear about how you communicate the services on offer to each separate tier.

An important point, when differentiating between tiers, is to avoid thinking along the lines of “luxury”, “business” and “economy”. This can be serious snub to those outside of the highest service bracket. Instead, try thinking in terms of “Sandringham”, “Balmoral” and “Windsor”.

The key questions here are what services are most appropriate for each tier of your client base; whether you need to extend your services; and how you intend to market them to new prospects. It might also help to consider the events that will trigger a review for clients in each tier.

Next, you need to consider how these services are delivered from face-to-face meetings and telephone calls to web-based solutions, email, client seminars and newsletters or via Skype or social media.

Managing Expectations The most important consideration is deciding exactly how you intend to charge for your services to each client. It’s crucial to provide transparent guidance about the service level that each client can expect. That way, they can appreciate the added value in the service they receive. But remember, if your proposition looks too price-driven it risks becoming ‘commoditised’ - which might encourage clients to shop around.

At this stage you should start to get a feel for how well your likely income covers your running costs. You’ll need to assess the costs of the analysis, research, report writing, implementation and reviews required for each tier.

If you fi nd that there’s a signifi cant income shortfall, you probably need to be more ruthless with your segmentation. It’s also a sign that you should look to outsource the expensive overheads that come with the new requirement to demonstrate “comprehensive and fair analysis” of “all retail products which are capable of meeting the investment needs of the client”.

Choosing an Investment Partner For larger, more sophisticated clients, managed investment funds can provide an attractive core portfolio holding, which an adviser may want to augment by recommending suitable satellite investments that the client can hold alongside them. But these managed funds can also provide a highly cost-effective total solution for smaller clients, because of the way they allow advisers to outsource the research, analysis, due diligence and reporting involved in portfolio management.

At Aviva Investors we’ve spent several years developing our post-RDR proposition so that we can partner with advisers and clients of all sizes.

INSID

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We’ve been managing multi-asset investments for major institutions for almost 30 years

and today hold over £70 billion in such portfolios.Their two main offerings are our risk-

targeting Multi-Asset Funds (MAF) and our alpha-seeking Funds of Funds range. Both draw on our extensive asset allocation expertise and global investment capabilities but they will appeal to different types of end investor.

The Benefi ts of Targeting Risks, Not Returns The Aviva Investors range of Multi-asset Funds (MAF) is divided into fi ve distinct risk bands, which allows us to deliver suitable investment solutions for clients from right across the risk spectrum. They offer investors peace of mind in the knowledge that their managers are focused on getting the best investment return per unit of risk, free of the arbitrary asset allocation limits imposed on other multi-asset fund managers. To ensure our MAF team is never restricted in this way our risk-targeting funds are registered in the IMA Specialist sector.

Because the majority of performance returns in these portfolios derives from asset allocation, not stock selection, they also offer the opportunity to reduce costs by reducing the reliance on expensive active asset management in different asset classes.

For the investor, this means the potential for smoother risk-adjusted returns and the security of knowing that a ‘cautious’ approach will remain exactly that. With fi ve well-defi ned client risk bands in place, moving between funds also offers a cost-effective way to adjust client risk levels as their needs change.

When Only Alpha Will Do As a matter of principle, Aviva Investors three funds of funds – Cautious, Balanced and Growth – invest only in the funds of external managers. The three funds offer a ‘one-stop’ multi-disciplinary approach that combines strategists, economists and portfolio managers with some of the UK’s leading experts in manager selection. This allows Aviva to construct genuinely diversifi ed portfolios that we feel are capable of delivering strong, sustainable risk-adjusted performance.

The Aviva Investors Funds of Funds team focuses on fi nding the creativity in each manager’s approach, understanding the investment philosophy they follow and the risk controls they have in place. It selects only the very best active managers, but it will also opt for

passive strategies in areas where active managers have failed to demonstrate additional value.

Because the three Aviva Investors Funds of Funds target investment alpha, they will appeal to clients who recognise the value of active asset allocation and the benefi ts of investing in only ‘best of breed’ fund managers.

For each of these portfolios, Aviva Investors aims to create an optimal blend of funds that complement one another in terms of style, philosophy, process, positioning and outlook. Blending different potential alpha sources in this way can help to ensure that alpha can be generated in a range of different market conditions.

Untying Your Hands In the new RDR world, both approaches offer self-contained investment solutions that diversify across all major asset classes and global markets with robust due diligence and suitability all built in. To help advisers of all sizes, we aim to provide a full suite of clear and transparent reporting and documentation to simplify the client review process, as well as fi elding any RFPs and due diligence questionnaires the adviser may have.

In the new RDR era, we believe advisers will need both hands free if they are to deliver real value for the fees they charge.


www.IFAmagazine.comImportant legal information: The information in this document is given for information purposes only and does not qualify as investment advice. Julius Baer Multistock Luxury Brands Fund is a sub-fund of Julius Baer Multistock (SICAV according to Luxembourg law) and it is admitted for public offering and distribution in the UK. Copies of the respective prospectus and financial statements can be obtained in English from Swiss & Global Asset Management (Luxembourg) S.A., UK Branch, UK Establishment No. BR014702, 12 St James’s Place, London, SW1A 1NX, as a distributor of the aforementioned fund (authorised and regulated by the Financial Services Authority) or by the Facilities Agent: GAM Sterling Management Limited, 12 St. James’s Place, London, SW1A 1NX, United Kingdom. Swiss & Global Asset Management is not a member of the Julius Baer Group.

Sparkling investments || JULIUS BAER LUXURY BRANDS FUND

Swiss & Global Asset Management (Luxembourg) S.A. UK Branch 12 St James’s Place, LondonT +44 (0) 20 7166 [email protected]

The exclusive manager of Julius Baer Funds.A member of the GAM group.




Important legal information: The information in this document is given for information purposes only and does not qualify as investment advice. Julius Baer Multistock Luxury Brands Fund is a sub-fund of Julius Baer Multistock (SICAV according to Luxembourg law) and it is admitted for public offering and distribution in the UK. Copies of the respective prospectus and financial statements can be obtained in English from Swiss & Global Asset Management (Luxembourg) S.A., UK Branch, UK Establishment No. BR014702, 12 St James’s Place, London, SW1A 1NX, as a distributor of the aforementioned fund (authorised and regulated by the Financial Services Authority) or by the Facilities Agent: GAM Sterling Management Limited, 12 St. James’s Place, London, SW1A 1NX, United Kingdom. Swiss & Global Asset Management is not a member of the Julius Baer Group.

Sparkling investments || JULIUS BAER LUXURY BRANDS FUND

Swiss & Global Asset Management (Luxembourg) S.A. UK Branch 12 St James’s Place, LondonT +44 (0) 20 7166 [email protected]

The exclusive manager of Julius Baer Funds.A member of the GAM group.


THE GREAT STORMHIS

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It was twenty fi ve years ago that stock markets around the world reverberated to a fi nancial shock that made even the events of the autumn of 2008 feel almost calm by comparison.

A bear market was condensed into a few short trading days. Even hardened hands who, like me, had experienced the market rout that followed the Yom Kippur war of 1973, walked around the trading fl oors of the City in a daze. Those were testing times indeed.

The Great Crash of ’87 was different to other market crises, in that there was no apparent trigger. The situation in London had been exacerbated by the closure of the London Stock Exchange on the Friday before Black Monday on October 19th. Two terrible days on Wall Street needed to be dealt with by a London market where participants were still clearing up after the hurricane that tore through south east England during the previous Thursday night. The result was a 25% fall in the value of shares in London in a single day.

A Complex CorrectionUnderstanding what makes markets behave in the way they do is a skill not easily gained and will not necessarily help in every situation. The real insight comes by looking back, with the benefi t of knowing what fi nally transpired.

In 1974 it was the coincidence of a number of adverse factors that drove markets down – with the UK falling more than most. The quadrupling of the price of oil was the dominant factor on the world stage. Here at home, a banking crisis, industrial strife and political uncertainty added to the toxic mix. And yes, for a while the very future of capitalism looked in doubt.

Doing It Better in 2008You could feel the same fear in 2008, when the collapse of Lehman Brothers appeared to undermine the whole banking system. Once again, asset classes tumbled across the board. And once again, fear drove the markets. But this time, a less complex and professionally dominated market, together with slower communications, meant that the fall in shares took place at a more leisurely rate than in 1987 - although eventually the value attrition was even greater, top to bottom.

In 2008 the lessons had been learned from the debacle a couple of decades earlier, so circuit breakers slowed the decline. It still felt uncomfortable, though.

What is common between all these bear markets – and others less dramatic – is that we got through it all in the end. Capitalism survived and shares recovered. Remember, markets always over-react – in both directions. Spotting the point at which the rise has become unsustainable or when the fall throws up extreme value is what every investment manager hopes to do, but seldom accomplishes.

So I look back at those testing times a quarter of a century ago and it gives me hope for the future. Unfortunately we are not looking at a bear market ripe for turning. Rather, we have a sideways moving market that many fear could break out in either direction. Whatever happens in the future – and we really cannot know for certain – I am confi dent we will survive, somehow.

THE 1987 PRICE PANIC IS STILL ETCHED INTO OUR COLLECTIVE MEMORIES, SAYS BRIAN TORA. FORTUNATELY WE LEARNED SOMETHING USEFUL FROM THE EXPERIENCE


www.IFAmagazine.com



JM Finn.indd 34 14/11/2012 14:06

THE GREAT STORM

This advertisement is directed at investment professionals in the UK only and should not be distributed to retail investors. The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions. Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Services Authority. © 2012 Vanguard Asset Management, Limited. All rights reserved. VAM-2012-10-05-0177

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As well as building your knowledge, you can earn CPD credits too. Visit the address below to test your ETF know-how.

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JM Finn.indd 35 14/11/2012 14:06

THINK OUTSIDE THE BOXEVER WONDERED JUST HOW THAT TRACKER WORKS? SIMON ELLIS, MANAGING DIRECTOR AT LEGAL & GENERAL INVESTMENTS, OPENS THE LID OF THE BLACK BOX AND SHOWS US AROUND



Guest Insight - L&G.indd 36 14/11/2012 14:19

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Tracking the performance of a specifi c benchmark index might sound like a simple task. But in practice it can often be a lot more complex than you might think. For a start, the indices themselves don’t account for the transaction and management costs associated with running a fund, so that’s one signifi cant cost hurdle that managers have to overcome from the start if they’re really going to accurately replicate an index.

Costs are just one of the ‘hidden’ issues that you wouldn’t normally even think about when considering a tracker, but they rank among the most important. Either way, advisers are now faced with a wide choice of passively-managed products, many of which are using different strategies that need to be understood before making a selection.

There are, broadly speaking, four major ways in which a fund can track an index and each has its own issues and specifi c needs in order to be as effi cient as possible.

Full Replication Some managers aim to fully replicate the index, which means holding every stock in the same percentage as it is represented in the index. When the index rebalances, so too will the fund – this ensures the accuracy of portfolio holdings, but it can also limit fl exibility.

Full replication is perhaps the purest method of index-tracking, and it should produce a low tracking error. But it can also be expensive, since the transaction costs tend to be high for illiquid stocks. Fund size is therefore crucial, because larger funds are able to benefi t from the economies of scale that minimise the impact of individual transactions and make this methodology viable.

Stratifi ed SamplingRather than attempt to hold all of the stocks in an index at the exact weighting, some passive providers

hold representative stocks, or a sample of the market - a strategy known as ‘stratifi ed sampling’. Shares are selected by dividing the index into sub-groups (say, by industry sectors for equities, or by maturity bands for bonds), and representatives are taken from each. The objective here is to create a portfolio that mirrors the characteristics of each sub-group – and which, collectively, will also represent the whole market and thus track the index. This can be achieved using computer-based models, but, compared to other methodologies it tends to have greater human interaction in the selection of the representative stocks.

Adopting a sampling technique also has an effect on tracking accuracy, because of course the fund is not holding all of the stocks, and accordingly it may develop a sector or market cap bias. For example, a manager might choose to represent the retail stocks within an index by holding just the largest companies in that space.

So, if smaller companies did better than large cap, the fund would suffer a hit to its relative performance. The upside, however, is that this method can be cheaper to manage than full replication - thereby reducing the negative impact of transaction costs on tracking error.

Optimisation Optimisation is often described as the ‘black-box’ technique of passive strategies, because computer or statistical models are used to make buying and selling decisions. In this form of sampling, mathematical models, based on historical data, are used to construct a portfolio that aims to track the chosen index.

This approach is not easily adaptable to a changing investment environment and it will always play catch-up with the market. It is, however, the cheapest of the passive strategies to operate.



Synthetic Replication Rather than buying physical securities, funds can use derivatives to

obtain synthetic exposure to an index. This is common in the Exchange Traded Product (ETP) market. Synthetic ETPs generally involve holding a basket of securities, often with no reference to the index; the return from this basket of stocks is then translated into the index return via a derivative ‘swap’.

EThis method is therefore more complex than other methods, and it raises a number of questions surrounding counterparty risk. At present, it is the subject of some regulatory scrutiny.

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Optimisation is often

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www.IFAmagazine.com

Legal & General is one of the biggest providers of index-tracking investments in the UK, managing £227 billion in passive assets under management (as at 30 June 2012). As a responsible index-tracking provider, we believe that we have two equally important objectives: close tracking and maximising returns. Our portfolio construction involves using the most appropriate tracking technique for the fund concerned, depending on the asset class, structure of the index and the size of the fund.

L&G favours a commonsense approach to managing index-tracking funds that it calls ‘pragmatic replication’. We aim to hold all constituents of the index in line with their index weights, but we refrain from trading if natural sources of liquidity cannot be found. In such circumstances, a measure of sampling will be temporarily used until liquidity improves and the full positions can be built up. Moreover, we allow individual weightings to fl uctuate within a narrow band (and consistent with the target tracking error), to reduce unnecessary rebalancing and hence transaction costs.

For some funds, we may use a more traditional stratifi ed sampling technique - but this decision is taken based on the size of the fund and the structure of the index it is designed to track. In practice, stratifi ed sampling is used mainly for funds tracking corporate bond indices, although it may also be used in emerging market equity funds due to the relative poor liquidity in some of the underlying stocks. It is, however, important to note that any deviation from the benchmark is subject to strict risk parameters.

Enhancing returns is an integral part of L&G’s index fund management process, and one of the primary sources of added value is through the implementation of index changes. The

aim here is always to minimise price impact and hence not to destroy value. We conduct the execution where and when we fi nd natural sources of liquidity, and we try to avoid times when prices are artifi cially squeezed. This often leads us to adopt a phasing strategy around the index rebalancing date, based on the liquidity of the security and the prevailing market conditions.

We also tend to participate in new issues, placings and other capital raising exercises by companies or governments which we expect to result in a change to the index composition: each issue is analysed on a case by case basis and appropriate actions taken. Moreover, we do not confi ne ourselves to trading only within the local market of the security concerned. The search for natural sources of liquidity can, at times, take us instead to other appropriate regulated exchanges.

Stock lending is another important topic to consider in this context. Legal & General does not participate in stock lending with securities held within our index unit trusts. There are many reasons why we have this policy - one of which is that the associated risks are not readily apparent to retail clients.

We also take an active approach to corporate governance issues, and we highly value the voting rights that come with being a shareholder (Legal & General holds around 4% of all shares listed on the UK market, largely due to the size of our index-tracking business). Lending stock means forfeiting voting rights – we see this as too great a price to pay because exercising these rights can quite often add value by contributing to an environment of strong corporate governance in the market.

L&G’s goal is to have carefully planned trading strategies that enable us to track indices tightly while adding value where possible.

The Legal & General Approach

The Xafinity SIPP is a “full” SIPP product aimed at more sophisticated investors who

wish to maximise investment choice through all acceptable investment types.

This includes commercial property (where we specialise, with over 900 in

our SSAS and SIPP portfolio), unlisted shares and other investment types.

n £0 SIPP Set up fee

n Annual fee of 0.24% of SIPP assets held. Minimum annual fee of £162pa, maximum fee of £530pa

n Additional fees apply for establishment and administration of new investments eg commercial property

n No additional fees for VAT administration & borrowing administration on property/land

n Flexible & Capped Drawdown fees at £120 for set up and £11 per regular payment

n Exit fee applies only if member transfers all assets out of the Xafinity SIPP prior to benefit settlement.

Xafinity SIPP fee summary

Xafinity SIPP product features

n Unlimited number of investment types/products can be held

n Investments in Funds – choose from the whole of market – Platforms,

WRAPs, Fund Supermarkets, managed funds (including investment

trusts, unit trusts and OEICs)

n Commercial property & land investments

n Unlisted company share purchases – up to 70% of your client’s SIPP

could be invested

n UCIS investments accepted, subject to technical review

n Joint / Family SIPPs available with shared fees for jointly owned assets

n Comprehensive retirement options available including

Flexible and Capped Drawdown

n On-line valuations available to members and IFAs

n Flexible IFA remuneration, paid monthly

Factsheet

Further information can be found at:

www.xafinitysipp.comXafinity SIPP Services Ltd is authorised and regulated by the Financial Services Authority, Scotia House, Castle Business Park, Stirling FK9 4TZ. Registered No SC69096. 932XSP(02/12)

For professional advisers only

200_Sipp_ad.indd 1 27/2/12 11:06:41




The Xafinity SIPP is a “full” SIPP product aimed at more sophisticated investors who

wish to maximise investment choice through all acceptable investment types.

This includes commercial property (where we specialise, with over 900 in

our SSAS and SIPP portfolio), unlisted shares and other investment types.

n £0 SIPP Set up fee

n Annual fee of 0.24% of SIPP assets held. Minimum annual fee of £162pa, maximum fee of £530pa

n Additional fees apply for establishment and administration of new investments eg commercial property

n No additional fees for VAT administration & borrowing administration on property/land

n Flexible & Capped Drawdown fees at £120 for set up and £11 per regular payment

n Exit fee applies only if member transfers all assets out of the Xafinity SIPP prior to benefit settlement.

Xafinity SIPP fee summary

Xafinity SIPP product features

n Unlimited number of investment types/products can be held

n Investments in Funds – choose from the whole of market – Platforms,

WRAPs, Fund Supermarkets, managed funds (including investment

trusts, unit trusts and OEICs)

n Commercial property & land investments

n Unlisted company share purchases – up to 70% of your client’s SIPP

could be invested

n UCIS investments accepted, subject to technical review

n Joint / Family SIPPs available with shared fees for jointly owned assets

n Comprehensive retirement options available including

Flexible and Capped Drawdown

n On-line valuations available to members and IFAs

n Flexible IFA remuneration, paid monthly

Factsheet

Further information can be found at:

www.xafinitysipp.comXafinity SIPP Services Ltd is authorised and regulated by the Financial Services Authority, Scotia House, Castle Business Park, Stirling FK9 4TZ. Registered No SC69096. 932XSP(02/12)

For professional advisers only

200_Sipp_ad.indd 1 27/2/12 11:06:41Guest Insight - L&G.indd 39 14/11/2012 14:20

ROGUE OPERATORS HAVE HURT THE FILM EIS SECTOR’S IMAGE THIS YEAR, SAYS KAM PATEL. BUT THE INDUSTRY IS COMING BACK WITH SOME NEW IDEAS

It’s been a

year of the good, the bad

and occasionally the downright ugly

where the UK’s film industry funding has been

concerned. We can’t deny it, the newspapers have been full of unwelcome reports about an ongoing HMRC campaign against suspected tax dodgers – and, although the news has certainly made for lurid headlines, it’s also left the other fund managers in something of a quandary.

TAKE2



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HMRC’s well-publicised

attentions have been focused on

a handful of sharp operators who appear

to have been abusing the generous tax breaks attached

to the Enterprise Investment Scheme (EIS). And indeed, several funds have been struck down this year for doing exactly that. But a new determination is now taking hold among fund managers to reel in the renegades and put the industry’s standing back where it properly belongs.

Lights! The good news is that the EIS, a government-backed vehicle designed to encourage investment in deserving enterprises, has been getting more attractive in the last six months. In April the special allowances - which can be in any industry, remember, not just in fi lm – were increased so that the income tax relief for investors rose from 20% to 30% - always providing, of course, that the underlying investments are held for at least three years.

At the same time, the individual EIS investment limit has been raised from £500,000 to £1 million per tax year. Other key EIS benefi ts include capital gains tax deferral; 100% inheritance tax relief (provided

that funds remain invested at the time of death); and up to 50% loss relief on any holding that falls in value. Taken together, these incentives at both ends of the investment would effectively leave a higher rate taxpayer more than 90% protected against a loss. What’s not to like about that?

Meanwhile what has really changed the territory is that the annual investment limit for qualifying companies under EIS has been raised from £2 million to £5 million, a move that is likely to attract bigger players with bigger projects.

With the new EIS rules having secured EU State Aid approval during the summer, as well as having been made even more enticing for investors and won considerable praise from the UK fi lm industry, one might have imagined a blossoming outlook for the sector. But there has been trouble riding over the horizon, in the shape of a posse of sustained attacks on ‘outlaw’ UK fi lm investment schemes that have shaken investor confi dence and tarnished the image.

Camera!The fl ow of bad news for the fi lm sector began in earnest in April 2012, with HM Revenue & Customs winning a landmark case against a fi lm fi nancing scheme called Eclipse 35. HMRC

accused the scheme of being essentially a tax avoidance vehicle instead of a genuinely trading concern. In the same week that David Cameron had accused some aggressive tax avoidance scheme as “morally wrong”, a tax tribunal agreed with HMRC’s fi nding - leaving Eclipse unable to claim an estimated £117 million in tax relief.

What had the fund done that was so wrong? Well, Eclipse 35’s 289 investors had put £50 million of their own money into the scheme, then borrowed another £790 million from Barclays Bank, and then fi nally bought two fi lms from Disney for £500 million. Disney had agreed to lease back the fi lms from the investor for the sum of £1 billion, which was to be repaid over a 20 year period. But Eclipse’s plan was to claim back the £117 million in tax relief right away, even though the interest on the loans would actually be paid out during the forthcoming 20 year period. That was what rankled with the HMRC inspectors. Well, that and the fact that the investors could perhaps have exited the scheme well before the burdensome taxable payments came through. It would have been a smash and grab followed by a quick getaway.

The tribunal’s thumbs-down meant that it had all gone horribly wrong for Eclipse’s well-heeled investors, who were reported to have included several football stars, a couple of city chief executives and a sprinkling of major celebrities. These lucky individuals will now be paying tax over the next 20 years on the license income that they receive from Disney. And their tax bills may well end up being far greater than the tax that they originally tried to avoid.

Predictably, Eclipse’s investors are furious about this turn of events, and some have turned their wrath on their own fi nancial advisers. And equally predictably, the organiser behind Eclipse

Eclipse 35 investors will be paying tax for the next 20 years on the license income they receive from Disney



35 is standing its ground. Future Capital

Partners has insisted that it stands “absolutely behind the investments” – adding, slightly peevishly: “We now have a situation where because of the current economic environment HMRC, and latterly the government, are challenging what are both legally structured and commercial investments.”

Action! The question of what divides the “technically legal” from the “morally indefensible” is one for m’learned friends to sort out, and in this instance the extended ramifi cations look set to continue. Yet there is no doubt that the Eclipse 35 saga proved to be a watershed moment for UK fi lm fi nancing in general - and that a wholesale clean-up seems to have come out of it.

HMRC, having successfully nailed Eclipse, has been looking closely into many other fi lm schemes. As many as 600 of them, according to some press reports. But the fl urry of bad publicity has focused the industry’s mind on rectifying the situation. New products and new approaches have been accompanied by a concerted PR campaign that’s being aimed as much at the international community as at the domestic one.

In early July, Amanda Nevill, the chief executive of the British Film Institute, led the charge in a letter to The Times that was intended to reassure international producers over the UK tax regime for celluloid projects and protect inward investment into the industry. “It is vital,” she said, “that we distinguish between government-approved tax reliefs, such as the Film Tax Credit and the EIS on the one hand, and tax schemes which have nothing to do with those statutory reliefs and just happen to use fi lm as vehicle for minimising the tax contributions of individuals, on the other.”

Hear hear, said Adrian Wotton, the chief executive of Film London and the British Film Commission, who echoed Nevill’s plea for a clear line to be drawn between schemes that fall outside any specifi c legislative framework and government-backed schemes such as the EIS.

Quiet On The Set! It’s a differentiation that is strongly stressed by industry executives too. Michael Cowan, the joint chief executive of Brighton-based Stealth Media, an international sales, fi nance and executive production company, says: “The bad press is not over EIS but over other aggressive investments in fi lm and TV using other aggressive structures as the mechanism of the write off. They are not regulated EIS’s which have to be pre-approved and run as proper commercial companies reporting to shareholders.”

Cowan, who has produced over 60 fi lms from budgets ranging from $1 million to $55 million including 2004’s Bafta nominated Merchant of Venice starring Al Pacino, and who has worked with all the major US studios and European majors, adds that the government’s greater encouragement of EIS and accompanying compliance will enable it to limit the cap on tax exposure more effectively. By contrast, he says, “billions were being lost via sole trader vehicles since there was no limit as to what investors could put in based on what they wanted to claw back.”

“Most of the investors in the UK who have invested in aggressive tax schemes have done so to get back as much tax as they could,” says Cowan. “They have not looked at the schemes for commerciality, and that has been the biggest problem. Combine this with ignorance and everyone wanting to make money from selling the product, and you get a licence for disaster.

“What is needed is more information for investors, more education for them, on

risk and reward in our industry, how fi nancing, recoupment, and distribution works, and how they can be protected in a good commercial deal.”

Stealth Media itself is in the process of setting up EIS qualifying companies in which investors can hold direct shares. The companies will focus on fi lm and TV production, and Stealth is looking to raise around £20 million initially.

For Cowan, who has structured and brought to market a number of media funds, raising in excess of $500 million over the years in the process, “the great thing” about an EIS investment is that investors know from the outset what the worst case risk will be to their investment at the end of three years. On an income tax only basis, he says, the loss is limited to 36p in the pound; on an income tax and capital gain basis it works out to a 22p loss in the pound, he says.

“With the fi lm and TV production products Stealth Media have in mind, the worst case loss we are looking for at the end of the three years if the fi lm does not work is around 4p. We are aiming at returns of around 150% end of year three. We are passionate about fi lm and TV, and we believe we have a good investment product for those interested in fi lm and TV investments that makes money, look to protect the investor from the downside as much as possible, and are not about tax reclaims.”

That’s A Wrap! Predictably, the skirmishes between the HMRC and fi lm industry fi nanciers have not gone unnoticed at the FSA. The Authority indicated recently that EISs and allied Venture

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Capital Trusts may well fall under its upcoming guidance on unregulated collective investments schemes (UCIS) and ‘UCIS-like’ products.

The proposals, which were mooted by the FSA consultation paper published in August (CP 19/12), may eventually lead to VCT and EIS sales being restricted to “sophisticated” or high net worth investors only - thus effectively banning their promotion to investors with less than £250,000 in their investment portfolios or £100,000 a year in income. This would not be such a surprise, since EIS and VCT investments are most attractive to higher rate taxpayers anyway. But, if the FSA does go ahead with its planned UCIS guidance, IFAs will need to be on their toes in recommending EISs and VCTs, especially in areas such as suitability of risk.

It is not yet a foregone conclusion that the Authority will in fact include EISs and

VCTs in its UCIS guidance. But it leaves us in no doubt about how the recent spate of fi nancial scandals involving personal vehicles has sharpened the general awareness of the need to keep everything scrupulously compliant.

This advertisement is directed at investment professionals in the UK only and should not be distributed to retail investors. The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions. Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Services Authority. © 2012 Vanguard Asset Management, Limited. All rights reserved. VAM-2012-10-05-0177

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When a Venetian merchant defaults on a large loan, the moneylender demands a gruesome payment


QUANTUM LEAPSTEVE BEE BOLDLY COMMUTES ACROSS THE SPACE-TIME CONTINUUM, TO VERY PROFITABLE EFFECT. SO TELL US, WHO WON THE 2013 GRAND NATIONAL, STEVE?

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QUANTUM QUANTUM magazine... for today ’s discerning financial and investment professional

EFFECT. SO TELL US, WHO WON THE 2013 GRAND NATIONAL, STEVE?

I’ve been living in 2016 for the last seven years or so now. I fi rst went there for a few days back in 2004, and I quite liked it. After that I spent a couple of weeks there in the summer of 2005, and I decided I liked it so much that later that year I moved to 2016 permanently. And I’ve lived there ever since. Obviously, these days I have to come back to 2012 every day to go to work, but by the end of the day I just can’t wait to get back home.

Clearly, for those readers still living full-time in 2012 - which means most people in the UK - it’ll be hard to appreciate why I prefer to live in the future. But in these pre-RDR days, when the pension reforms and HMRC Real-Time Information haven’t yet become a reality, I can see why it’s hard to fully appreciate the world I have chosen to live in.

It’s odd for me too, because some of the people I encounter back here in 2012 don’t actually live in 2012 either. Just like me, in fact, except that they go home at night to 2003, where they live, while I go off to 2016 where I live. I fi nd I don’t have a lot in common with them; the stuff we watch on TV every night, for instance, is completely different.

Back To The Day JobWhile I’m at work here back in 2012, I’m keeping myself busy writing articles for magazines and building my J&rgonFree range of products that go down so well with IFAs and their employer clients in 2016. So well, in fact that I’m quite famous back home in the future. People there think I had great insight when designing


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Steve Bee, a well-known campaigning pensions activist, is the managing pensions partner at Paradigm and the co-founder ofwww.jargonfree pensions.co.uk


new service-based HR products that allowed IFAs to remodel their post-RDR businesses and develop a new role providing valuable and valued middleware services to employers.

I’m happy to accept their adulation, by the way - even though I fi nd it amusing that they’ve never been aware that I’ve been living among them for over half a decade now, and that all I’ve really done is observed what their world is like and simply built the products that I already know they’ll go for in my day job back in their past. I’m a bit of a fraud in that way, I guess.

Still, I won’t dwell on that. And I’m sure when you yourselves get to 2016 you’ll see exactly what

I mean, as it’s written about everywhere. Although

not actually in magazines -

something I really can’t bring myself to tell the editor about!

One More Small Step… But by the time you get to 2016, I doubt I’ll still be there. Just recently, I’ve been spending more and more of my time in 2021. You won’t know it yet, but that’s when pensions and ISAs effectively become the same thing, and it’s also when the whole post-auto-enrolment workplace savings world gets truly revolutionised.

I’m pretty energised by some of the stuff that’s going on there, and I’m seriously considering moving there full-time any day soon. I dare say I’ll pop back to 2016 from time to time though, so keep an eye out for me when you get there.

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Steve Bee.indd 45 14/11/2012 14:32

HOW DOES THAT MAKE YOU FEEL?

We’re now into the fi nal two months of preparation for the arrival of RDR, and even the fi rms that aren’t yet RDR-ready ought to have a plan in place to ensure that they’ll make it by the 31st December. For those working in such fi rms, it may feel like the run-up to a house move, with lots of tasks to be completed and a hard deadline to work to.

Except that, for many, the emotions surrounding this ‘house move’ are rather different. They like where they live, thank you very much, and they resent having to ‘up sticks’ because their ‘home’ is subject to a ’Compulsory Purchase Order’!

For those feeling a little resentful, there are basically three choices. You can chain yourself to the front door, in the hope that the bulldozers will halt in their tracks and the ‘Council’ will revoke the order. You can make the move

obediently, whilst muttering under your breath and generally being unhappy with life. Or - in my opinion the best option – you can accept the situation, be optimistic, and make the best of the new opportunity.

Know Your Own WorthOne of the areas causing the most resistance to change is Adviser Charging - and this is often a values confl ict. I suspect that, when you boil this down, it’s due to a couple of fundamental reasons.

Firstly, the new way of charging involves a change to the implicit ‘emotional contract’ that an adviser believes he has with his clients. In many cases the depth of trust and relationship goes back years, and the

Adviser is seen as a family friend. That contract runs somewhere along the lines of “I’ll look after

your fi nancial wellbeing, the product providers

will pay me, and I won’t have to spoil

our relationship by haggling with you over what I earn”.

BE CONFIDENT ABOUT THE ADVISER FEES YOU CHARGE, AND YOUR CLIENTS WILL FEEL CONFIDENT IN YOU. PETER WELCH OF EQUIFAX’S TOUCHSTONE FINANCIAL ANALYTICS GIVES US A PSYCHOLOGICAL PEP-TALK



Fees.indd 46 14/11/2012 14:37

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HOW DOES THAT MAKE YOU FEEL?Secondly, discussing

explicit fees with a client raises a personal existential question for Advisers: “What am ’I’ worth?” And my hunch is that this is the area on which Advisers would benefi t from focussing.

It’s important for any Adviser moving to a fee model to be very comfortable with his or her own worth, and to truly believe that the level of fee being charged is fair value for the clients. Any wavering doubt will be unconsciously picked up by the clients, and it may lead, at best, to an uncomfortable justifi cation of the fee charged, and at worst, a lost client.

We human beings communicate our emotions non-verbally via the limbic part of our brain - a mostly unconscious process that we don’t even notice is happening. So, if you follow

the received wisdom that consumers

base their purchasing

decisions on emotions, not on logic, then any doubts in an Adviser’s head about his or her own worth, or about the level of fee charged needs to be eliminated. If not, clients will defi nitely pick up on that emotional insecurity, and a client may get ‘spooked’.

So here are some tips to help eliminate any nagging doubts in the back of Advisers’ minds about charging:

Know What the Client Gets For His MoneyThere has been much talk of ‘value propositions’ in the run-up to RDR. For me, all this needs to be is a simple list of things the clients get for their fees - many of which they’ll never see or would not ordinarily talk about.

A great exercise I’d encourage all Advisers to do, either alone or even better with those they work with, is to brainstorm as long a list as possible of such things. Everyone I’ve suggested this exercise to has found it valuable, because we all take for granted some of the things we do so much that we don’t value them highly enough. Reminding ourselves of what we’re worth helps to embed in our subconscious that, like the woman in the L’Oreal advert, ‘we’re worth it’.

Benchmark PricingGet an idea from peers you’re networked with about the level of fees charged and the model used. This will provide reassurance on the ‘market rate’ for a particular level of service. Additionally, it’s worth seeking out objective data on Adviser charging. That can be done free via the IFA database www.mytouchstone.co.uk

Have an “Elevator Speech” This concept might sound a bit too ‘transatlantic’ for

some, but trust me, being able to concisely and eloquently articulate exactly what you do and why it’s a benefi t to your clients in 30 seconds is a powerful confi dence booster.

Invest time in practising your speech, taking feedback from trusted colleagues or friends until it trips off the tongue. (It’ll be harder than you think to get it right!) It’s a real confi dence booster, and again it re-programmes the subconscious.

Walk in Your Clients’ ShoesSpend time thinking through the situation from the client’s point of view. There’s another psychological phenomenon called ‘cognitive fl uency’, which is the human tendency to prefer to stick with things that are familiar and easy to deal with. Like a trusted Adviser, for example!

Equally, for many clients the fi rst conversation with an Adviser about fees will be familiar to them if they’ve ever engaged with an accountant, lawyer, architect, surveyor of any other professional service in the past. It might feel like a big deal to us in this industry, but most clients who are talked to professionally and confi dently will take the move to fees in their stride, because they’re used to it with other professional services.

So my advice for anyone yet to make the transition to fees is pay attention to your own emotions about the subject. Because, just like the saying “If Mum’s happy, everybody’s happy”, if you are, your clients will be too.


IFAmagazine.com


Fees.indd 47 14/11/2012 14:37

RUN FOR COVERWas this summer’s demise of Honister following its failure to obtain professional indemnity insurance (PII) cover the low point in the business cycle of PII, or an indication of things to come? That’s the question that’s plaguing the minds of IFAs, underwriters and regulators as the fi nal steps are taken toward the implementation of RDR.

What is beyond doubt is that PII cover is currently more diffi cult to obtain, more expensive when it is provided - and usually with more stringent terms and conditions attached than in the recent past.

David Parry, managing consultant at market research consultancy Finaccord, certainly thinks so. “While we don’t see a structural problem for PI cover for UK IFAs,” he says, “there’s an unfortunate coincidence regarding RDR and problems relating to PI coming together at the same time. There is the possibility of past claims [resulting from RDR] weighing on the records of advisers, and of underwriters taking a dim view of it.”

A Shrinking FieldIn 2010, he says, the AIFA Directory of Services included four organisations that provided PI cover for IFAs, but now there are only two of them listed there. The departure of PYV (whose PII team transferred to Lloyd’s broker Howden in May 2011) and PI Financial have radically reduced the competitive pressure.

Jamie Newell of Lloyd’s broker IFA Solutions agrees. “I would estimate that capacity has reduced by some 30%-40% in the last 12 months,” he says. “This has primarily been due to matters such as Keydata and the subsequent action being undertaken by the FSCS/Herbert Smith against advisers who sold Keydata products. And then there’s Arch Cru, of course, and more recently the collapse of Connaught.” Alas, things seem set to get stickier in the new year. “The FSA’s proposal to ban the sale of UCIS to retail investors [Consultation Paper 12/19] and the review of [UCIS] sales made to date will possibly lead to more insurers withdrawing from providing PII to IFAs in 2013.”

Proprietary SolutionsApart from just paying up to get cover where possible, the industry has reacted with a torn toward self-insurance and the occasional use of captive insurers – usually the sole preserve of larger networks or those with well-capitalised backers – and affi nity groups.

BIBA has offered such a scheme to its own members for some time, but in October, the Institute of Financial Planning (IFP) also launched an affi nity scheme for Accredited Members brokered by IFA Solutions, a division of Lloyd’s broker The Underwriting Exchange.

IFA Solutions’ Jamie Newell was commendably forthcoming on the subject. When asked about how the terms and conditions provided in the IFP scheme compare with the general market, he highlighted the claims notifi cation clause, which says that claims must be logged “as soon as practicable”. Whereas some other insurers insist that notifi cation must be “immediate” or “within 14 days”. Little things can mean a lot.

Risk Profi lingAnd when I asked him whether, in sectioning off a favoured group of advisers, the terms and conditions for those outside the circle might become even more

draconian in the future, Newell was clear. “No,”

he says, “the concept of insurance will always remain. Those fi rms that deploy robust business models, that are prepared to spend time, energy and resources in

de-risking their

DON’T BLAME YOUR INSURER FOR SOARING PI COSTS, SAYS STEPHEN SPURDON. IT’S FEELING JUST AS UNCOMFORTABLE AS YOU



PII.indd 48 14/11/2012 14:39

businesses, and in employing risk management procedures - such as Accredited fi rms - will enable insurers to identify risk more readily. That will make it easier for them to risk-profi le and rate the business accordingly against other businesses.”

This enhanced risk profi ling of business practice is also refl ected in the fact that businesses making claims involving risk-rated multi-asset funds by the Tenet network can qualify for sharply reduced excesses. Tenet provides cover through Paragon Insurance, its Guernsey-based captive insurer.

Network EnvyAmongst the networks, however, there is still no single response to the PII situation - which is hardly surprising, as not everyone agrees on the exact nature of that situation. At one end of the scale is Positive Solution chief executive offi cer Richard Pearson’s phlegmatic reasoning that he has been in the business for 28 years and witnessed many cycles in PII cover; at the other is SBG’s George Higginson, who presents a more apocalyptic vision.

Pearson says that the backing of Aegon and strong risk controls provides some insulation for his network - but that “even so, we too have seen costs rise.” And Higginson says that Hanover, SBG’s PII underwriter, pulled right out of cover for IFAs in February 2012 forcing the group to secure alterative cover through a combination of a Lloyd’s syndicate deal and self-insurance.

Pearson says that he is bemused at the attitude of the

FSA towards PII insurers, as revealed in the letter sent to them by Clive Adamson, director of supervision of the regulator’s conduct business unit, regarding cover for fi rms which sold Arch Cru funds. He claims that this letter “indicated that [the FSA] had been taken by surprise by the insurers’ reaction in not wanting to underwrite this type of business. But it is up to underwriters to make that call.”

A Hole in My BusinessHigginson agrees about the troubled state of the current market. “Where cover is provided, it is not unusual to fi nd that the premium has doubled, terms have tightened, and there is a rise in excesses. To take one example, an adviser looking to join us came to us and said that his premium had risen to £100,000 a year with a £50,000 excess on every claim.”

And that’s enough to blow a hole in the basic economics of the situation. “There do not have to be a lot of claims for a large amount to become due,” he says. “We have done some work on this and we found that for a £1 million investment we make circa £10,000 and the adviser £40,000 (=£50,000 in total) - which is very small when you compare that to the potential liability and the associated costs, such as PII cover.”

Higginson explains the logic of the situation: “Imagine if SBG was not here – and we are circa 25% of the market, after all. This would mean that the FSCS would have to pick up the bill. What would happen to all the remaining advisers in the market if we were not here? It would mean that they would have to pick up the bill instead.”

The situation regarding PII refl ects a form of fi scal drag operating within fi nancial services precisely because of the chosen method of obtaining money to compensate consumers for miss-selling, fraud and the risk of fi nal salary pension schemes going under. In the latter case, there is the pension protection fund which imposes fi nancial strains on well-run schemes by imposing a levy on them to pay for badly-run ones.

Similarly, the FSCS demands a levy from existing, presumably well-run IFAs to pay compensation for the actions of defunct, badly run ones. Of course, these same fi rms bear the brunt of understandable reluctance amongst underwriters to accept their PI business on anything except punitive terms.

Sympathy For The Devil?But if you’re thinking that the insurance industry is a villain of the piece, perhaps we should remember that underwriters too can hardly be blamed for avoiding a sector which may still contain claims relating to toxic ‘assets’ whose nature has yet to become apparent?

That fi scal drag may ultimately result in whole-of-market independent advice becoming the sole preserve of the top 10% or so. Leaving highly restricted advice or direct sales for the bulk of the population, and the Citizens Advice Bureaux to mop up the difference elsewhere.

PII

RUN FOR COVER


IFAmagazine.com


PII.indd 49 14/11/2012 14:39

SPECIALIST HEALTHCARE AND BIOTECH FUNDS CAN PROVIDE A MUCH-NEEDED BOOST TO PORTFOLIO PERFORMANCE. NICK SUDBURY DONS HIS WHITE COAT TO INVESTIGATE

The US economic recovery and the healthcare policy in the wake of the election will have a big infl uence on future returns

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AXA Framlington Health Fund Large healthcare companies are typically seen as a defensive option on account of their solid balance sheets and reliable cash generation. And the good thing is, many are now trading at attractive valuations - which suggests that they are ideally placed to outperform while the rest of the market is being held back by the slow economic growth.

The big unknown, of course, is what will happen to the US healthcare reform plan in the wake of the presidential election. This has already been written into law, but it is not actually due to be implemented until 2014 – which means

that any signifi cant changes between now and then are likely to affect hospitals, manager healthcare facilities and associated areas such as medical supply companies. And all the while, of course, the ongoing saga of the Eurozone crisis is likely to put pressure on healthcare programmes all across the continent.

AXA Framlington Health is one of the most consistent performers in

Rugged Good Health

the sector, and it has followed its MSCI World Health Care benchmark fairly closely with an impressive 5 year gain of 49.7%. As you would expect, the bulk (77%) of the £270 million portfolio is invested in the US, which is home to most of the world’s largest drugs companies.

The scope to diversify really kicks in at the sub-sector level, where the manager, Gemma Game, has a wide enough remit to take advantage of the best opportunities wherever she fi nds them. This allows her to invest in pharmaceutical companies, biotech fi rms, medical device and instrument manufacturers, distributors of healthcare products and care providers.

At the end of September the largest weighting was in Healthcare Services, which made up a third of the fund. This was followed by Medical Devices at 22%, Biotech Products at 17% and Pharmaceuticals at 12.4% - with a further 11% being held in Speciality Pharma.

There are a total of 90 holdings in the fund, with the top ten accounting for only 24.3% of the fund. These include household names like Pfi zer and Merck, as well as less well known companies such as Express Scripts and Celgene. The eclectic mix is a refl ection of the manager’s bottom-up approach, based on the underlying fundamentals.

The strength of the US economic recovery and the healthcare policy in the wake of the election will have a big infl uence on future returns, as will the manager’s ability to identify the best companies. If she gets it right, she has every chance of outperforming the wider market until the economy really starts to pick up.

FUND FACTSName: AXA Framlington Health Fund

Type: Unit Trust

Sector: Specialist

Fund Size: £270.3m

Launch: Feb 1987

Portfolio Yeild: 0%

Charges: Initial: 5.5%, Annual: 1.5%

Manager: AXA Investment Managers

Website: axa-im.co.uk

A SHOT IN THE ARMmagazine...


Product Reviews.indd 50 14/11/2012 14:44

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This is a concentrated portfolio, with its £410 million of net assets allocated among just 56 individual holdings

Worldwide Healthcare Trust plc To successfully run a healthcare fund requires a lot of specialist knowledge - and it’s hard to imagine a fi rm better equipped to do this than OrbiMed Capital. The US-based investment manager is owned by seven principals who all have extensive experience of valuing these types of companies. They are supported by a team of science and business analysts who carry out detailed research into the various drugs programmes and regularly visit the companies concerned.

Samuel Islay, the principal in charge of the Worldwide Healthcare Trust plc, has an astonishing track record. Over the 5 years to the end of August, the fund has achieved a total return of 85.1%, whereas the benchmark is up just 68.4%. Islay says that he’s currently extremely bullish, and that he believes that they can carry on generating annual returns of 15%.

The fund invests in pharmaceutical and biotech companies, as well as in related securities in the healthcare sector. There is the scope to use gearing of up to 20% of net assets to boost the returns, although at present the fi gure is a modest 6%. The manager can also invest up to 5% in derivatives and a further 8% in equity swaps.

This is a concentrated portfolio, with its £410 million of net assets allocated among just 56 individual holdings. Around two-thirds of the money is invested in large caps, with the balance concentrated mainly in the small-cap discovery end of the sector. The latter are a regular takeover target for drugs giants like Glaxo or Pfi zer, which are then able to

market their discoveries worldwide.The fund is unusual in that

its US weighting is much lower than you’d normally expect. Just 59.1% of its holdings are in America, with another 20.9% invested in European stocks – of which only a very few are in the troubled South. The remaining 20% is spread across Asia and the Emerging Markets.

The top ten holdings make up 42.1% of the fund, with the largest being an 8.8% weighting in the Swiss drugs giant Roche. This is followed by a 5.4% exposure to Merck, 4.6% in Pfi zer and 4.2% in Sanofi .

At time of writing, Worldwide Healthcare Trust was trading at a 6.2% discount to NAV. This is the level at which the Board can intervene to buyback the company’s shares. Unusually for the sector, it is paying a 2.1% yield too – but obviously, it’s the potential for further capital growth that is the main attraction.

Your Life in Their Hands

FUND FACTSName: Worldwide Healthcare Trust plc (WWH)

Type: Investment Co.

Sector: Biotechnology & Healthcare

Market Cap: £378.3m

Launch: April 1995

Portfolio Yeild: 2.1%

Ongoing Charges (inc perf fee): 1.34%

Manager: Frostrow Capital LLP

Website: worldwidewh.com



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Historical returns suggest that PJP can deliver outperformance at the same low cost as a normal index tracker

Cutting Edge Approach

The top performing ETF in the sector is the US-listed PowerShares Dynamic Pharmaceuticals Portfolio that trades under the ticker PJP. This is one of the new breed of ‘smart beta’ products that track a theme or characteristic that has been shown to produce higher historical returns than the comparable cap weighted index. It certainly seems to have worked, because over the last fi ve years it has risen in value by almost 90%.

The index universe consists of 29 US pharmaceutical companies engaged in the research, development, manufacture, sale or distribution of various drugs and treatments. These are weighted in an unusual way, using criteria such as price momentum, earnings momentum, quality, management action and value. The holdings are rebalanced every quarter.

At time of writing, the fund’s largest exposure was in Eli Lilly at 5.79%. This was followed by Gilead Sciences, Abbott Laboratories, Merck, Pfi zer and Amgen - all at above 5%. Between them the large caps make up 54% of the fund, with the mid caps a further 16% and the balance invested at the smaller end of the spectrum. The result is a concentrated portfolio with an average PE ratio of 13.66 and an attractive Return on Equity of 19.71%.

A smart beta ETF is an interesting concept, as it suggests that by using objective, quantifi able and repeatable factors it is possible to outperform an equivalent cap-weighted benchmark. This has

certainly been the case with PJP, which has beaten the S&P Pharmaceuticals index that comprises the same 29 stocks hands down.

But don’t expect any miracles. The fund had a shaky start, with the 2006 and 2007 calendar years showing an underperformance of several hundred basis points. It wasn’t until 2008 that things improved, with the ETF falling by only 9.81%, compared with an index decline of 17.92%! But 2010 brought a welcome growth of 28.62%, nearly 15 times the 2% increase in the underlying benchmark. It has also added a huge amount of value in the year to date.

The historical returns suggest that PJP can deliver outperformance at the same low cost as a normal index tracker. If correct, then this would clearly be a win-win scenario for clients. But it is not an easy idea to sell, and it demands a fair degree of faith that the innovative weighting scheme will continue to deliver.

PowerShares Dynamic Pharmaceuticals Portfolio

FUND FACTSName: PowerShares Dynamic Pharmaceuticals Portfolio (PJP)

Type: ETF listed in the US

Sector: Pharma, Health and Biotech

Fund Size: $335.9m

Launch: June 2005


Manager: Invesco PowerShares

Website: invescopowershares.com




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It’s certainly an interesting portfolio, with a high P/E ratio of 31.15 and a low beta of 0.48 when measured against the S&P 500

Gene Genie

As we’ve said, the more volatile and potentially lucrative returns are to be found in the biotech sector. These mostly small but innovative companies are faster on their feet than the pharmaceutical giants, and they concentrate their activities on pioneering new drugs and treatments. This makes the returns a lot less predictable than you’d fi nd among the drug majors – but, by investing in a diversifi ed fund, it may be possible to achieve superior long-term performance.

A good example is the US-listed ETF, iShares Nasdaq Biotechnology Index, which is up by an impressive 67.2% over the last fi ve years. The fund’s benchmark consists of companies which meet three essential criteria: that they are primarily engaged in Biotech (although some are classifi ed as Pharma);

that they are listed on the Nasdaq Stock Exchange with a

market cap of at least $200 million; and

that they have an daily average trading volume of at least 100,000 shares.

Almost three quarters of the fund is described as in Biotech, with the balance in Pharma, and there are 117 separate holdings, with the ten largest accounting for 56.6% of the $2.4 billion portfolio. These include Alexion Pharmaceuticals, Regeneron Pharmaceuticals and Amgen, each of which represents around 8% of the portfolio.

It’s certainly an interesting portfolio, with a high P/E ratio of 31.15 and a low beta of 0.48 when measured against the S&P 500. This is due to the fact that so much of the return from these sorts of holdings is driven by the stock specifi cs – and, in particular, the success or failure of their clinical trials and any associated M&A activity.

The rate of innovation in this part of the market is absolutely staggering - with more new products under development than ever before. Many of the pharmaceutical giants are desperate to increase their drugs pipelines - and in many cases the easiest way to do it is to snap up a successful biotech company, even if it means paying a large premium.

This helps to explain why over the last 5 years the iShares ETF is up 67% whereas the S&P 500 is back to where it started. But it has not all been plain sailing, with sharp corrections in excess of 20% in both 2008 and 2011. Normally this type of stock specifi c area would warrant an actively managed fund, but the passive mandate has worked so well that it clearly offers a viable alternative.

FUND FACTSName: iShares Nasdaq Biotechnology Index Fund (IBB)

Type: ETF listed in the US

Sector: Pharma, Health and Biotech

Fund Size: $2.4bn

Launch: Feb 2001


TER: 0.48%

Manager: BlackRock

Website: us.ishares.com

iShares Nasdaq Biotechnology Index Fund



.community spirit

www.ifalife.com

Join thousands of IFAs and Financial Planners who use IFA Life

to network, share best practice, debate industry issues, access

business resources and to provide help and support to one another.

Telephone: +44 (0)1483 548 666

Mobile and SMS/Text: +44 (0)7773 359 619


Twitter Direct Message: IFALife

Banking.indd 33 28/09/2011 11:44

.community spirit

www.ifalife.com




Telephone: +44 (0)1483 548 666




Banking.indd 33 28/09/2011 11:44IFA Centre.indd 54 14/11/2012 14:54

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As I write, there are 61 more shopping days until Christmas and 68 days to the implementation of the now infamous Retail Distribution Review. Adviser fi rms are busy fi ne-tuning their advice and client service propositions, clarifying how they will work with their clients on New Year’s Eve and beyond – and, most importantly, whether they will offer Independent or Restricted advice, or perhaps both, depending on the client’s circumstances or wealth.

The changes have led various adviser search engines, some of them previously 100% IFA, to change their parameters so as now to include fi rms and individuals who will offer Restricted advice. A retrograde step in my view!

So, the question of how consumers will be able to source Independence fi nancial advice in the future has been taxing me lately.

The problem is that there is not going to be any mechanism by which a consumer will be able to fi nd out from an impartial source, such as the FSA register of fi rms or individuals, whether the fi rm they are consulting - or the advisers who work for it - are indeed offering Independent or Restricted advice. Certainly, fi rms must report to the FSA how much of their company’s income is derived from Independent or Restricted advice - but this does not then translate into a public disclosure of a fi rm’s regulatory status on an accessible register.

Firms which ‘hold themselves out’ as Independent must only offer Independent advice. So a fi rm describing itself as an IFA or Independent will obviously fi t the bill for a client looking for Independent advice. But a fi rm which makes no claim to its Independence in the company name could offer Independent advice, or Restricted advice, or both.

Individual advisers won’t declare themselves as Independent or Restricted for regulatory purposes - not least, because if they work for a fi rm that offers both advice options, the same adviser could provide Independent advice to a wealthy client on one day of the week, and Restricted advice to a client of more modest means on another day.

So, if a client approaches a fi rm which clearly states in its company name that it is an IFA or Independent, then at least that client will know what to expect from that fi rm. But in any other circumstance the client is going to have to make some quite detailed enquiries about whether they can expect Independent or Restricted advice.

Clients will need to be able to get to grips with disclosure documentation. This does not have to be set out in any sort of prescribed format, which will make the information even harder to dig out. And where fi rms offer both types of advice, clients will need to be clear as to what circumstances would lead to being given different types of advice. Is it, for instance, dependent on how much clients are prepared to pay, or on their income, or on assets under advice for example?

If Independence is important to advisers and to clients, then organisations and publications totally focused on supporting Independence would do well to make sure that they are the resource of choice for consumers who want to fi nd Independent advice.

CONFUSION OVER WHO’S REALLY INDEPENDENT WILL LAND THE BURDEN OF RESEARCH ON THE CONSUMER, SAYS GILLIAN CARDY. WORSE LUCK


www.IFAmagazine.com

.community spirit

www.ifalife.com




Telephone: +44 (0)1483 548 666




Banking.indd 33 28/09/2011 11:44


IFA Centre.indd 55 14/11/2012 14:54

FSA PublicationsOUR MONTHLY SUMMARY OF THE LATEST OFFICIAL PUBLICATIONS BY THE FSA These listings exclude the FSA’s routine monthly handbook updates.

Mortgage Market Review – Feedback on CP11/31 and Final RulesPolicy Statement Ref: PS 12/1625th October 2012 312 pages

The Statement summarises the responses received in relation to Consultation Paper CP11/31 (‘Mortgage Market Review: Proposed package of reforms’), and provides fi nal guidance. The majority of the MMR changes will come into effect on 26th April 2014. Key features include:

• The removal of the requirement on intermediaries to assess affordability.

• Most interactive sales (e.g. face to face or telephone) to be advised.

• An ‘execution only’ sales process for non-interactive sales (internet and postal).

• Every seller to be required to hold a relevant mortgage qualifi cation.

• Lenders to be fully responsible for assessing whether the customer can afford the loan.

• Interest-only loans to be permissibly only where there is a credible strategy for repaying the capital.

• Cancellation of the obligation to provide customers with an Initial Disclosure Document. Instead, certain key messages about a

fi rm’s service must be given to customers.

• The Key Facts Illustration (KFI) will be required only where a fi rm recommends a product or products, where the customer asks for a KFI, or where the customer has indicated what product they want in an execution-only sale.

The FSA now proposes to initiate a series of conversations with fi rms to help them understand the MMR reforms, to address any resulting systems changes, and to keep them informed of the next steps in the implementation strategy. A review of the impact from these proposals is scheduled in not more than fi ve years after implementation.

SIPP Thematic Review Findings and GuidanceGuidance Consultation Ref: GC 12/1223rd October 2012 12 pages

Of interest to SIPP operators, fi rms, trade bodies and consumer representatives.

The publication follows on from the last SIPP review, which investigated concerns about how far SIPP operators had adapted their processes and procedures to reduce risks following the 2009 report. The FSA had also considered the level of compliance among SIPP operators with our Client Money and Assets rules (CASS).

The FSA says that its survey showed up poor fi rm compliance with regulatory requirements, particularly in

the area of risk planning and mitigation, which it said had signifi cantly increased the risk posed by SIPP operators. And the majority of SIPP operators had been unable to articulate accurately the application of CASS to their business structure.

The paper therefore calls for improvements in:

• The level of understanding among fi rms’ senior management of regulatory requirements.

• The effectiveness of senior management oversight.

• The application of CASS to the fi rm’s business model and the effectiveness of systems and controls to comply with the rules.

Consultation period ends 20th November 2012

Quarterly Consultation Paper No.34Consultation Paper Ref: CP 12/275th October 2012 174 pages

Key proposals include:

• Changing the Conduct of Business sourcebook (COBS) and Glossary in relation to the exemption from the Retail Distribution Review (RDR) rules for certain Holloway policies.

• Amending the Senior Management Systems and Controls sourcebook (SYSC) to bring the rules on voiding and recovery into line with policy on remuneration principles proportionality.

• Amending the Retail Distribution Review (RDR) adviser charging and remuneration rules regarding referrals to discretionary investment managers.

• Making changes to the Enforcement Guide (EG) and Decision Procedure and Penalties manual (DEPP) to include investigation and enforcement powers for fi nancial and non-fi nancial counterparties under the European Market Infrastructure Regulation (EMIR) and the EMIR statutory instrument (EMIR SI).

Regulatory Reform: The PRA and FCA Regimes for Approved PersonsConsultation Paper Ref: CP 12/263rd October 2012 183 pages

The 2012 Finance Bill created a new UK regulatory architecture, including the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The Bill also proposed changes to the Financial Services and Markets Act 2000 and a number of other Acts of Parliament.

Substantial changes to the existing FSA Handbook are required to align the new rulebooks with the future objectives and functions of the PRA and FCA. This paper consults on those changes.

Consultation period ends 7th December 2012

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Smagazine... for today ’s discerning financial and investment professional


FSA Publications + IFA Cal.indd 56 14/11/2012 14:55

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Enhancing the effectiveness of the Listing Regime and Feedback on CP12/2Consultation Paper Ref: CP 12/252nd October 2012 252 pages

The Paper discusses responses to CP12/2, which set out proposals for changes to the Listing Rules, Prospectus Rules and Disclosure Rules and Transparency Rules.

The second part of the publication contains a consultation on proposed amendments to the Listing Rules to enhance the effectiveness of the Listing Regime, and draft rules. At the same time, the FSA is consulting on proposed amendments to the Listing Rules relating to the implementation of the Alternative Investment Fund Managers Directive (AIFMD).

Consultation period ends 2nd January 2013

‘General Guidance on Proportionality’ for RemunerationFinalised Guidance Ref: FG 12/1925th September 2012 20 pages

The Paper sets out the FSA’s proportionate approach to implementing the Remuneration Code and the Pillar 3 remuneration disclosure rules.It also clarifi es how fi rms may comply with the Code and disclosure rules in a manner that takes account of their size, internal organisation and the nature, scope and complexity of their activities.

The new framework replaces the original four-tier structure (based on capital resources) with three new ‘levels’ (based on total assets).

Financial Services Compensation SchemePolicy Statement Ref: PS 12/1528th September 2012 49 pages

Of interest to fi rms, consumers, consumer representative bodies and advice agencies.

The statement summarises the feedback to CP12/7 Financial Services Compensation Scheme (“Changes to the Compensation Sourcebook), and presents fi nal rules.

The original proposal entailed amendments to the rules in the Compensation sourcebook relating to the operation of the Financial Services Compensation Scheme (FSCS). One of the subsequent changes relates to the eligibility of directors of a failed fi rm and persons who, in the opinion of the FSCS, are responsible for, or have contributed to, a fi rm’s default. Some limited fl exibility will now be allowed in these circumstances.

The FSA has also clarifi ed the manner in which deposit takers are required to alert depositors about FSCS compensation arrangements, and under what circumstances they should contact the FSCS.

Regulatory Reform: PRA and FCA Regimes Relating to Aspects of Authorisation and SupervisionConsultation Paper Ref: CP 12/2412th September 2012 302 pages

The paper, compiled in consultation with the Bank of England, sets out the proposals for changes to existing regulatory rules and guidance, in the context of the Financial Services Bill in January 2012.

Dates foryour diaryNOVEMBER 201226-1 Financial Planning Week

(Institute of Financial Planning)

22 Financial Advisor Service Awardswinners announced

30 Consultation period ends on Consultation Paper CP 12/22 (Client Assets Regime: EMIR, Multiple Pools and the Wider Review)

30 Consultation period ends on Guidance Consultation GC 12/20 (Review of the Client Money Rules for Insurance Intermediaries)

DECEMBER 20122-4 Private Wealth

Management SummitLas Vegas, USA

7 Consultation period ends on Consultation Paper CP 12/26 (Regulatory Reform: The PRA and FCA Regimes for Approved Persons)

11 Consultation period ends on Consultation Paper CP 12/23 (Addressing the Implications of Non-EEA National Depositor Preference Regimes)

12 Consultation period ends on Consultation Paper CP 12/23 (Addressing the Implications of Non-EEA National Depositor Preference Regimes)

21 EC Directive on the ending of gender-based insurance premium differences comes into force

31 Retail Distribution Review operational from midnight



IFA

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DECEMBER 201231 New rules on SIPP disclosure

come into force from midnight

31 New EU Regulation on OTC derivatives, central counterparties and trade repositories comes into force from midnight

31 FSA and fi nancial fi rms to apply COREP common European reporting standards from midnight

JANUARY 20131 Ireland assumes the EU

Presidency until 30th June

2 Consultation period ends on Consultation Paper CP 12/25 (Restrictions on the Retail Distribution of Unregulated Collective Investment Schemes and Close Substitutes)

15-17 World Future Energy Summit Abu Dhabi, United Arab Emirates

21 Inauguration of the President of the United StatesWashington DC, USA

23-27 World Economic Forum Annual MeetingDavos, Switzerland

31 Deadline for self-assessment tax returns 2010/2011 (online only)

FEBRUARY 201310 Chinese Year of the Snake

commences

12 European Union-China Summit Beijing, China

25-26 Global Tax Summit 2013 Monte Carlo, Monaco

HAVE WE FORGOTTEN ANYTHING? Let us know about any forthcoming events you think ought to be in our listings. (Sorry, press and offi cial events only.)

Email us at [email protected] we’ll do the rest.

The Bill provided for the creation

of the new UK regulatory architecture, including the creation of the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). It also proposes changes to the Financial Services and Markets Act 2000 and various other Acts of Parliament.

The FSA says that the creation of the new PRA and FCA rulebooks will involve substantive changes to the existing FSA Handbook, so that the new rulebooks can be aligned with the future objectives and functions of the PRA and FCA.


Addressing the Implications of Non-EEA National Depositor Preference RegimesConsultation Paper Ref: CP 12/2311th September 2012 41 pages

The FSA is anxious to address a problem which occurs in certain non-EEA countries, whereby domestic depositors take precedence over non-domestic depositors if a fi rm should become insolvent.

The agency is therefore calling on fi rms from non-EEA countries that operate these national depositor preference regimes to take appropriate steps to address the subordination of UK branch depositors (specifi cally) compared to those of home country depositors

Of interest to fi rms from non-EEA countries which operate deposit-taking branches in the UK and which are subject to national depositor preference regimes in their home countries.


Risks to Customers from Financial IncentivesGuidance Consultation Ref: GC 12/115th September 2012 32 pages

Of interest to all fi rms in retail fi nancial services with staff who are part of an incentive scheme and who deal directly with retail customer transactions.

The FSA has fl agged up its concern about incentive schemes with high risk features and the potential for sales staff to earn signifi cant bonuses were common across the fi rms we assessed. Most fi rms did not have effective systems and controls in place to adequately manage the increased risks of mis-selling arising from their incentive schemes.

The agency’s guidance aims to help fi rms identify and manage the risks from incentive schemes, in accordance with the relevant requirements set out in the FSA Handbook.

It says it expects fi rms to:

• Properly consider if their incentive schemes increase the risk of mis-selling and, if so, how;

• Review whether their governance and controls are adequate;

• Take action to address any inadequacies – this might involve changing their governance and/or controls, and/or changing their schemes;

• Where risks cannot be mitigated, take action to change their schemes; and

• Where a recurring problem is identifi ed, investigate, take action and pay redress where consumers have suffered detriment.

Consultation period ends 31st October

magazine...



Exciting Times AheadBACKGROUNDNLP Financial Management Limited (NLPFM) was founded in 2005 by Lee Pittal and Adam Katten. Having previously been instrumental in establishing and growing a successful wealth management business within accountancy fi rm BDO Stoy Hayward, Lee and Adam recognised that there was signifi cant demand for a niche fi nancial planning business, where client service would truly be at the core.

CLIENT SERVICEAdam and Lee expect a very high standard of client service, which is ably delivered with the support of a highly qualifi ed team. They regard their clients as partners and treat them as they would wish to be treated themselves – swiftly, fairly and professionally.

The team at NLPFM are constantly reviewing and considering their clients’ circumstances and this is refl ected in the advice proposition. The company provides an ongoing service with regular meetings; by default bi-annually. Clients receive a detailed pack analysing the performance of their portfolios since the last meeting. The regular reviews are an essential part of the service to ensure that changing client circumstances are refl ected in advice provided and investment decisions made.

INVESTMENT MANAGEMENTPrior to the end of the tax year, where appropriate, portfolios are reviewed with a view to taking advantage of tax year end opportunities. This will include consideration of pension contributions, use of capital gains tax allowances, investments in ISAs and other tax effi cient investments. These will depend on the risk profi le of the client and their particular circumstances.

NLPFM has a robust client proposition for its 300 plus high net worth clients. Of the approximately £310 million invested through the company, around £160m is held within its Discretionary Management Service with the residue dealt with on an advisory basis.

NLPFM believes in “investment advice in a safe pair of hands” as many of its clients who typically have £750,000 to £1 million of funds, do not want to risk the high volatility typically associated with direct stock market investment.

The Discretionary Management Service offered by NLPFM is designed with these clients in mind. Its Investment Panel consists of both Adam and Lee as well as an in-house researcher and Michael Ezra, a Chartered Accountant, who during the past twenty years, has focused on fi nancial investments. Michael has a solid pedigree,

having been an adviser to funds with assets exceeding $1.4bn. Michael oversees the asset allocation strategy and assists with the management of investments for the company’s clients.

As NLPFM has discretionary permissions, it constantly studies returns, both in terms of volatility as well as performance, with the aim of producing the optimal mix of both. Weekly meetings take place and reviews of fund performance over various durations are undertaken. Face to face or remote meetings with all the investment fund managers or one of their team are undertaken regularly to ensure that the outlook and remit of the chosen funds are aligned with the aims and objectives of the NLPFM Investment Panel. All of this data is assimilated by the Committee and used to assess the suitability of funds for clients, taking into consideration their individual attitude to risk.

ACCOUNTANCY TIESNLPFM has grown steadily over the years by developing strong ties with other professional fi rms, especially Nyman Libson Paul Chartered Accountants. As Adam and Lee are also Chartered Accountants, they are able to understand the requirements of their colleagues in the profession and are able to mould their offering accordingly. This has stood them in good stead in developing such relationships.

NLPFM also provides a wealth management service to the clients of Landau Morley Chartered Accountants, under the label “Lanmor Wealth Management”.

EXPANSION PLANSAs part of its ongoing, but controlled expansion, the company is actively seeking similar relationships with other fi rms of chartered accountants and solicitors, who want to provide their clients with an independent, high quality, fi nancial planning and fund management service.The company is also actively seeking highly qualifi ed advisers with a loyal client following who recognise that their respective fi rms are not yet in a position to meet the demands of the Retail Distribution Review (RDR). The expansion plans include the possible acquisition of client banks or entire trading entities. This will be a steady process as the company will continue to put client care at the forefront of all its dealings.

If you would be interested in joining NLPFM as an employed IFA or interested in in the NLP acquiring your business please in the fi rst instance drop an e-mail through to [email protected] to arrange a confi dential discussion.


TO RECRUIT OR NOT TO RECRUIT?THAT IS THE QUESTION, SAYS RECRUIT UK’S JOHN ANDERSONIt looks like being another tough year for IFAs. With the onset of RDR, and with the IMF downgrading the UK growth forecast for 2012/2013, one could be forgiven for perpetually viewing the glass as half empty. And no wonder.

RDR has led to the evaluation of working practices across the whole industry. No matter how big or small a company. Each one has been asked to fi nd a solution to the conundrum of how much time advisers give advice in front of clients versus regulatory and performance monitoring - not to mention new systems and edicts to be implemented and adhered to. Indeed, I’ll wager that each company will have a different strategy for managing until the RDR landscape becomes clearer.

In addition, clients need to be seen just as normal, and their cases reviewed at timely intervals, or at particular life changing milestones. Except that, this time, the clients must also be educated into accepting a new way of paying for their expert fi nancial advice.

Getting To There, From Here But this is now. Let’s try imagining the picture twelve months hence.

RDR is here, and it‘s all understood. IFA practices can manage the regulatory

requirements, having devised robust processes which encourage advisers to be with clients. With a positive atmosphere permeating through to the fi nancial directors, the purse strings are loosened and growth is now back on the agenda as clients demand more and more of your time.

So how do we get to this utopia? After all, at the moment most fi nancial practices are caught between somewhere rocky and hard. The need to grow is balanced with the need to recruit, and how to recruit the right person.

How can you help yourself? (And save some money?)

Work Out Who You NeedFirstly, devise your ideal candidate and fi gure out the value that he or she can bring to your business. Try and put some fi gures around the whole benefi t that a new incumbent can bring.

Think about offi ce dynamics, and about the hard and soft skills that a new person would require. Would your business be best served by an IFA to manage some of your clients? Do you want to increase the assets held by your company? Or maybe you require a paraplanner to free up your time, or your advisers time, to see clients?

Know what you’re looking for before you go hunting. Then, once you know what or who you’re looking for, you need a strategy.

Utilise your network. Identify people who fi t your business culture, and set some time aside to call them.

Employ An ExpertInvest in a recruitment consultancy, which will come to see you, and which will dedicate its time to understanding your business culture. A consultancy that already has a proven track record in fi nding similar candidates for organisations in your market. An company and individual that will help create your recruitment strategy, and one that can help you reduce your hiring time and your recruitment cost.

Cost, did we say? Would that be the size of the recruiter’s fee, or the amount that you’ll save by appointing a dedicated expert who’ll create a recruitment strategy and leave you free to do what you’re best at? They’re not the same thing. Remember, the recruiter is billing for his expertise in exactly the same way as you’ll be doing after RDR.

So, the real proof of the pudding is the quality of the service itself. That, and the knowledge that you’re doing the very best thing for your fi rm. It can be an expensive mistake to get it wrong.


IFAmagazine.com



Recruitment.indd 60 14/11/2012 15:25

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“The need to grow is

balanced with the need to

recruit, and how to recruit the right person”


Recruitment.indd 61 14/11/2012 15:25

Financial ServicesRecruitment Specialists

Paraplanner Opportunities

Birmingham, London, Nottingham, Manchester, Stoke

Circa £35k

Our client is the UK’s largest independent private client investment management companies, who have a very large client base, signifi cant assets and plenty of opportunities due to growth and expansion

Currently our client is seeking a self motivated and ambitious Paraplanner to provide the appropriate support for the fi nancial planning managers. You will facilitate the smooth processing of new and existing business and create and maintain affective working relationships with a range of clients and colleagues. You will monitor the compliance standards across the fi nancial planning department and prepare business generating documentation for the fi nancial planning managers including report writing, whilst ensuring that standards and deadlines are met.

Due to the way our client is evolving, technology is being implemented which places less emphasis on the need for administration, so they are seeking an individual who has strong technical capability that will compliment the fi nancial planner.

To be considered for this role, our client requires the following criteria;

■ Full level 4 diploma in fi nancial planning with evidence of studying towards chartered status.

■ Preferably educated to degree level

■ Minimum of 4 years experience in a paraplanning role.

■ Experience in Tax and trusts

■ Experience in systems such as O&M Pension profi ler/ATEB/First software

■ Attention to detail is essential.

■ An articulate manner and ability to communicate effectively in verbal and written form with HNW clients.

■ Highly organised, methodical, analytical and disciplined with good administrative skills.

In return, my client offers a competitive salary up to £35k with great benefi ts and the opportunity to develop and progress with a well-established and prestigious company.

Investment Manager

Newcastle

Up to £40k+ with Profi t share

A leading Private Wealth Company, is looking to expand their team with a high calibre Investment manager. The ideal individual will be chartered or very close to obtaining with experience in providing Investment advice within an UHNW market. Preferably you will have signifi cant AUM to bring with you, however this is not essential. The offi ce has over £1.5 billion AUM, and the successful individual will be joining a team under the offi ce umbrella that could be responsible for up to £300 million AUM.

Recruit UK DPS Nov 12.indd 62 14/11/2012 15:45

Investment Manager

Chester

Up to £40k+ with Profi t share

Our client, a leading Private Wealth Company, is looking to expand their team with a high calibre Investment manager. The ideal individual will be chartered or very close to obtaining with experience in providing Investment advice within an UHNW market. Preferably you will have signifi cant AUM to bring with you, however this is not essential. The offi ce has over £1.5 billion AUM, and the successful individual will be joining a team under the offi ce umbrella that could be responsible for up to £300 million AUM

IFASelf Employed

Central London

My client is a Top 100 independent fi nancial management fi rm based in the City of London who can offer one of the best self-employed IFA options in the market. Aiming to provide the highest standard of impartial and informative advice to High net worth clients, they require an experienced and level 4 qualifi ed fi nancial professional who has strong relationship management skills and a team player attitude.

My client has an excellent retention rate with a vibrant, fun sharing environment that offers motivational leagues, presentations and awards and they seek an outgoing and intelligent entrepreneur to fi t their culture.

You will be a strong business developer as although leads are provided, they are not constant so the ability to generate your own business will be a key factor to success in this role.

In return, my client offers;

■ A spacious, vibrant and professional offi ce to work from that is situated in a great City location

■ Support in helping you increase business performance with a 70% conversion rate in leads (Average business written per year is a minimum of £200k)

■ Internal compliance and administration team

■ In-house para-planner (provided for a small fee)

■ In house Mortgage advisor (commission provided for leads)

Employed IFA

Bristol

£40k basic + Bonus

Based in the heart of the fi nancial district of Bristol our client, a highly regarded fi nancial services company is seeking an experienced IFA to join their established team

With over twenty years of experience, our client has continued to fl ourish through the many changes in the market. With a solid reputation with clients in the commercial and private sector they are on plan and require an experienced Financial Planner with a solid track record as an IFA to help fuel growth.

The ideal candidate will have effective communication and negotiation skills. A client bank to bring is not essential, our client has a signifi cant level of business through their strong relationships they have in place through introducers

In return our client offers a salary up to £40k for the right candidate. You will receive quality support in and the backing and support of a reputable company.

Contact us to discuss our latest opportunities:

T 0844 371 4031 E [email protected]

Recruit UK DPS Nov 12.indd 63 14/11/2012 15:45

Thinkers.indd 64 16/11/2012 09:21

vative products.

Whilst the industry undergoes necessary changes, we

Manager relationships through its product proposition,

Call: +44 (0) 1276 857500 or Email: [email protected]

www.ipponline.co.uk

to leave the regulated industry and explore other opportunities to your

the change you need!

Nurturing you during

THIN

KE

RS

Emerging markets pioneer Unquestionably the boldest proponent of emerging market investment, Templeton’s biggest success in the 196os was in turning a suspicious mainstream America into an enthusiastic backer of emerging equities. Templeton’s own Growth Fund, started in 1954, was the fi rst to take an emerging post-war Japan seriously, and he rode the Tokyo market until the late 1980s, when he sold out in the nick of time.

Before long Templeton had branched out into other Asian markets, also with phenomenal success. It’s been calculated that $10,000 invested in the Templeton fund in 1954 would have grown to $5.5 million by 1999, assuming that all distributions were reinvested. In 1992, meanwhile, he had sold the Templeton to the Franklin Group for a reputed $440 million.

And the secret?50% Ben Graham and 50% something else, you might say. Like Graham, Templeton looked for solid value plays which he would always aim to run for at least fi ve years at a time. Unlike Graham, however, Templeton attached fi erce importance to fundamental analysis, and he possessed a profound sense of cyclical patterns which enabled him to ride every upward escalator until shortly before it stopped. He had little but contempt for technical analysis.

A fi ghter from the start Well, he had to be. Templeton had hardly started his studies at Yale Business School when his father’s heavy business losses almost forced him to quit his studies and earn a living. But the young student survived by scraping together a number of bursaries, while also starting a college newspaper to fund his education. He left Yale as top scholar.

A master of timing The arrival of war in 1939 prompted an instinct that the impending confl ict might kick America out of the 1930s manufacturing depression. Deciding

to buy $100 worth of every US stock priced at less than $1 a share, including all the bankrupt ones, he quadrupled his money in four years. He later went on to found his own famous series of funds.

Religious convictionTempleton once said that he thought of his investments activities as a “ministry”, and that he saw the workings of the money market as part of God’s plan. But his Presbyterian convictions were only the launch-pad for his religious endeavours.

Templeton became convinced that most religious institutions were stuck in a theoretical rut, and in 1973 he founded a Templeton Prize for Progress in Religion, which was intended to stimulate a sort of scientifi c inquiry among religious theorists – a sort of Nobel Prize for thinkers. The subsequent winners included Buddhists, Muslims, Jews and Hindus.

And so to the beach...In 1963, aged only 51, Templeton moved to Nassau, where he acquired British citizenship and continued to run his funds until 1992 – after which he settled down to devote the remainder of his life to philanthropic works. The John Templeton Foundation, originally created in 1987, is now worth some $1.5 billion and disburses around $70 million in grants every year.

Too late the prophetBut his opinion still mattered. By the late 1990s Templeton was warning volubly about the dotcom crash that he saw coming in 2000. And in 2005 he wrote despairingly about the reckless property market surge which he said would soon send America into a recession that would last many years.

His words were timely, but sadly they remained unread until it was too late. Written in a private letter to family and friends, they remained tragically undiscovered until after his death. By which time Lehman was gone and the whole sorry mess was upon us.

“The four most dangerous words in investing are ‘This time it’s different.’”

GOD’S WORKSir John Marks Templeton Born November 1912 in Winchester, Tennessee. Died July 2008 in Nassau, Bahamas


Thinkers.indd 65 14/11/2012 15:48

THE

OTH

ER

SID

E...

DIDN’T ANYBODY SPOT THE CIRCULARITY OF THE RDR PROPOSITION, ASKS RICHARD HARVEY? TOO LATE, ANYWAY, HERE IT COMESI’ve been doing some research into the shares of manufacturers of aspirin, ibuprofen and paracetamol. Given the collective headache that IFAs and their clients are currently suffering, it seems a sure-fire investment. Depending on who you listen to...• ThousandsofBritain’sIFAsarecontemplating

spendingmoretimetendingthegardeninsteadofadvisingclients,becausetheycan’tfacetakingalltheRDRexams.(AsentimentsharedbythoseunfortunatesprogsforcedtosittheirEnglishGCSEsagain);

• Clientsfacedwithaverage£150-an-hourfeesforadvicewillbidafondfarewelltotheirIFAs,andwillinsteadmanagetheirownfunds.(“Darling,doyouthinkweshouldinvestinNigeriancocoafutures?”)

Thusensuringthat...• HiringanIFAwillbecomethepreserveofthe

wealthy.Whichisthepolaroppositeoftheregulator’sintentionofensuringthateveryonecanreceiveadvicefromahighlyqualifiedadvisorwhoseperfumedpalmsareuntaintedbycommissionpayments.

AsJeffPrestridge,personalfinanceeditoroftheMail on Sunday,putit:“Itseemsblindinglyobviousthattheregulator’sdeterminationtoprofessionalisethefinancialadviceindustryisgoingtobackfirespectacularly.”

Inordertokeeptheirclients,IFAswhosurvivethenuclearblastofill-thought-throughregulationmayhavetolowertheirfees,particularlythosewhoworkinthelessaffluentprovinces.

The Wages of Good Old SinMeanwhile,withChristmasontheway,theScroogesintheEuropeancourtshaveshovedSantaaside,decreeingthatsexequalitylegislationmeansthatthealreadyderisoryannuityratesformenwillnosediveevenfurtherafter20thDecember.

Allthesechangesaresufficienttopersuadeseniorsaverstotakeupthefagsagain,raisetheirbloodpressureandbringonaheartattack.Atleasttheymightgetanannuityenhancement.

It’sanillwind...

Cost AnalysisAninterestingcalculationmadebyan IFAchum...

CostofpassingfourRDRexams– 200hoursofstudyat£150anhour,plus£298 forstudymanuals,plus£342entryfees=£30,640.

Addtothat£4,000inFSAandFinancialServicesCompensationSchemecharges.Agrandtotalof£34,640.

DotheinitialsRDRstandfor ‘RegulationsDestroyRevenue’?

LOOK OUT

magazine...


The Other Side.indd 66 14/11/2012 15:51

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The magazine all the top IFAs are talking about... To get your free subscription simply fi ll out the form online at:www.ifamagazine.com/ content/subscribe

magazine

N E W S R E V I E W C O M M E N T A N A LY S I S

Excellent. Thank you. production with some good thought provoking articles Excellent. Thank you. production with some good thought provoking articles Excellent. Thank you.



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SIGNSTHE

ARE STILL LOOKING

GOOD DOWN UNDER

MA

Y 2

012

■

ISSUE

11

THE SIPPS DEBATEOUR READERS FIGHT BACK

ALAN GREENSPANWHERE DID IT ALL GO WRONG?

INTO BARGAIN TERRITORY

EMERGING MARKETS

N E W SN E W SN E W S REV I EW

REV I EWREV I EW

For today’s discerning financial

and investment professional

FR

OM

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LAN

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OW

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■ ISSU

E 1

1

Schroder Small Cap Discovery Fund0800 718 777*

www.schroders.co.uk/discovery

For professional advisers only. This material is not suitable for retail clients. Sources: 1 Micropal, Morningstar universe: UK Registered Investment Funds, Asia Pacifi c ex Japan, Equity, bid to bid in

GBP, as at 31 March 2012. Source for AA ratings: Citywire and OBSR, as at 31 March 2012. Past performance is not a guide to future performance and may not be repeated. The value of investments and

the income from them may go down as well as up and investors may not get back the amounts originally invested. Emerging equity markets may be more volatile than markets of well established economies.

Foreign currencies entail exchange risks. Schroders has expressed its own views and these may change. *Please note that phone calls may be recorded. Issued in May 2012 by Schroder Investments Limited,

31 Gresham Street, London EC2V 7QA. Registered No: 2015527 England. Authorised and regulated by the Financial Services Authority. UK02893

PortfoliooomphIf your clients are looking for potentially stronger

performance in their portfolio, weigh up the new

Schroder Small Cap Discovery Fund. Here’s why:

• Packing a real punch for their size. Smaller

companies in Asia (ex. Japan) and emerging

markets have outperformed large companies

over the last decade.• Heavyweight fund manager. Matthew Dobbs is

AA rated by Citywire and by OBSR. He has proven

his strength with the Schroder Asian Alpha Plus

Fund, which has 1st quartile performance over six

months, one and three years and since launch.1

• Powerful opportunities. Smaller companies

are less heavily researched, providing rich,

alpha-generating opportunities.

Schroders has had a local presence in Asia since

1969, with nine offi ces throughout the region. Find

out more at www.schroders.co.uk/discovery

Weigh up the new Schroder Small Cap Discovery Fund now.

Download the free Aurasma Lite App, then point your

smartphone at the statue to access special, extra content.

IFA11_Cover_Spread.indd 1

04/05/2012 10:22

date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.good articles, relevant to my work. date info useable, very good and easily read.






content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many publications are very male driven and focused. content, appealing to the female reader as many

Thank you. A quality magazine for publications are very male driven and focused. Thank you. A quality magazine for publications are very male driven and focused.

rather than usual newspaper. Very good layout and informative.

rather than usual newspaper. Very good layout and informative.

rather than usual newspaper.



SIGNSSIGNS

Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for with good content which is plain talking. Thank you. A quality magazine for

layout and easy to read. with good content which is plain talking. layout and easy to read. with good content which is plain talking.

N E W S R E V I E W

TAXIFOR OBAMA?THE BUCK ALWAYS STOPS WITH THE PRESIDENT

JUN

E 2

012

■ IS

SU

E 1

2

STRATEGIC METALSRARE, PRECIOUS AND PROFITABLE

EUROPEBUY COMPANIES, NOT COUNTRIES

STAY SHARPSMARTERTHAN AVERAGE BEAR MARKET STRATEGIES


STA

RT S

PR

EA

DIN

’ THE

NE

WS

JUN

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■ IS

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2

Schroder Managed Monthly High Income Fund0800 718 777**www.schroders.co.uk/highincomeFor professional advisers only. This material is not suitable for retail clients. *The expected yield of 5.5% per annum is not a reliable indicator of future performance. The income and return of your

clients’ original investment is not guaranteed. As the annual management charge is deducted from capital, this may be eroded. Past performance is not a guide to future performance and may not be repeated.

Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go down if interest rates rise and vice versa. The fund will not hedge its

market risk in a down cycle. The value of the fund will move similarly to the markets. A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the

credit rating of those securities. Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market, credit and default risk. The fund invests in

other funds and its liquidity depends upon the liquidity of those underlying funds. If underlying funds suspend or defer the payment of redemption proceeds, the fund’s ability to meet redemption requests may

also be affected. Schroders has expressed its own views and these may change. **Please note that phone calls may be recorded. Issued in May 2012 by Schroder Investments Limited, 31 Gresham Street,

London EC2V 7QA. Registered No: 2015527 England. Authorised and regulated by the Financial Services Authority. UK03009

Monthly income, beautifully balancedBroaden your clients’ income horizons with the new Schroder Managed Monthly High Income Fund:

– Catch some air. With an income aim of 5.5%* p.a.

or around 0.5% paid each month. – Keep your balance. With four well diversifi ed

income sources, bond coupons, dividends from

shares, property income and Schroders’ proven

Maximiser income enhancement strategy.– Stay on top. With multiple investment strategies

run by highly rated Schroders’ fund managers

including Thomas See, Gareth Isaac, Nick Kirrage,

Kevin Murphy and Richard Sennitt, with a single

fund management fee. Make your income seeking clients smile. Be the fi rst to get on board.


30/05/2012 00:45

useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format






what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community.

tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison

useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format rather than usual newspaper. useful articles nice to see it in “magazine” style format

layout and easy to read. for IFA market. Really good.layout and easy to read. for IFA market. Really good.layout and easy to read.



with good content which is plain talking. layout and easy to read. with good content which is plain talking. layout and easy to read. with good content which is plain talking.

SUNRISEDELAYED

IS THIS JAPAN’S MOMENT?

AU

GU

ST 20

12 ■

ISSUE 13

PLATFORM RE-REGISTRATIONWHY IT WILL WORK DESPITE EVERYTHING

MORTGAGE ADVISERSTHE MODEL ISN’T DEAD - IT’S JUST EVOLVING

OIL MARKETSSLIPPERY STUFF

N E W SN E W S R E V I E W


HO

US

E O

F TH

E R

ISIN

G S

UN

AU

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■ IS

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3

Schroder Managed Monthly High Income Fund0800 718 777**www.schroders.co.uk/highincome

For professional advisers only. This material is not suitable for retail clients. *The expected yield of 5.5% per annum is not a reliable indicator of future performance. The income and return of your

clients’ original investment is not guaranteed. As the annual management charge is deducted from capital, this may be eroded. Past performance is not a guide to future performance and may not be repeated.

Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go down if interest rates rise and vice versa. The fund will not hedge its

market risk in a down cycle. The value of the fund will move similarly to the markets. A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the

credit rating of those securities. Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market, credit and default risk. The fund invests in

other funds and its liquidity depends upon the liquidity of those underlying funds. If underlying funds suspend or defer the payment of redemption proceeds, the fund’s ability to meet redemption requests may

also be affected. Schroders has expressed its own views and these may change. **Please note that phone calls may be recorded. Issued in May 2012 by Schroder Investments Limited, 31 Gresham Street,

London EC2V 7QA. Registered No: 2015527 England. Authorised and regulated by the Financial Services Authority. UK03009

Monthly income, beautifully balancedBroaden your clients’ income horizons with the new Schroder Managed Monthly High Income Fund:

– Catch some air. With an income aim of 5.5%* p.a. or around 0.5% paid each month. – Keep your balance. With four well diversifi ed income sources, bond coupons, dividends from shares, property income and Schroders’ proven Maximiser income enhancement strategy.– Stay on top. With multiple investment strategies run by highly rated Schroders’ fund managers including Thomas See, Gareth Isaac, Nick Kirrage, Kevin Murphy and Richard Sennitt, with a single fund management fee.

Make your income seeking clients smile. Be the fi rst to get on board.


publications are very male driven and focused. ’s.

publications are very male driven and focused. ’s.

publications are very male driven and focused. Good paper

publications are very male driven and focused. Good paper

publications are very male driven and focused.

with good content which is plain talking. Good paper

with good content which is plain talking. Good paper





SUNRISE

tables. Punchy contemporary style.. More of the tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the same in the months to come please. A very readable tables. Punchy contemporary style.. More of the



read that I would be happy to have delivered It looks like an interesting and enjoyable


to the offi ce - not something I could say about read that I would be happy to have delivered to the offi ce - not something I could say about read that I would be happy to have delivered to the offi ce - not something I could say about The magazine to the offi ce - not something I could say about

what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community.

tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison tables. Punchy contemporary style.. More of the fantastic. Not cluttered by endless comparison

N E W S R E V I E W

SEPTEMBER 2012 ■

ISSUE 14

CROWD FUNDINGRISE OF THE ARMCHAIR DRAGONS

PUTIN RUINS A PROMISING OPPORTUNITY

REDREDCARD

GUIDED SALESA HYBRID SOLUTION FOR ADVISERS?



PU

T I N I T A

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012

■ I S

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4

Important legal information: The information in this document constitutes neither an offer nor investment advice. It is given for information purposes only. Julius Baer Multistock - Luxury Brands Fund is a sub-fund of Julius

Baer Multistock (SICAV according to Luxembourg law) and it is admitted for public offering and distribution in the UK. Copies of the respective prospectus and financial statements can be obtained in English from Swiss &

Global Asset Management (Luxembourg) S.A., UK Branch, UK Establishment No. BR014702, 12 St James’s Place, London, SW1A 1NX, as a distributor of the aforementioned fund (authorised and regulated by the Financial

Services Authority) or by the Facilities Agent: GAM Sterling Management Limited, 12 St. James’s Place, London, SW1A 1NX, United Kingdom. Swiss & Global Asset Management is not a member of the Julius Baer Group.

Sparkling investments || JULIUS BAER LUXURY

BRANDS FUND

Swiss & Global Asset Management (Luxembourg) S.A.

UK Branch 12 St James’s Place, London

T +44 (0) 20 7166 8176

[email protected]

www.swissglobal-am.com

The exclusive manager of Julius Baer Funds.

A member of the GAM group.


05/09/2012 11:33

Worth reading. Interesting Very professional and upmarket, exactly


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Absolutely






to the offi ce - not something I could say about read that I would be happy to have delivered to the offi ce - not something I could say about read that I would be happy to have delivered

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Very impressive Looked and felt like

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a proper magazine rather than other cheaper Breath of fresh air and topical


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fantastic. Not cluttered by endless comparison what is needed in the ifa community. fantastic. Not cluttered by endless comparison what is needed in the ifa community.






to the offi ce - not something I could say about read that I would be happy to have delivered to the offi ce - not something I could say about read that I would be happy to have delivered PUTIN RUINS A PROMISING OPPORTUNITY

CARD

N E W S R E V I E W C O M M E N T A N A LY S I S

OC

TOBER

2012

■ ISSU

E 15

WILL RAJOY MAKE THE

RIGHT MOVES?

THE PAIN IN

SPAIN

ST JAMES’S PLACEWHAT’S THE

ATTRACTION?

BANKS AFTER VICKERSBUNGLES AND DISASTERS

SPOIL THE IMAGE



BLU

E S

PAN

I SH

EY

ES

OC

TOB

ER

20

12 ■

I SS

UE

15

Important legal information: The information in this document is given for information purposes only and does not qualify as investment advice. Julius Baer Multistock Luxury Brands Fund is a sub-fund of Julius Baer

Multistock (SICAV according to Luxembourg law) and it is admitted for public offering and distribution in the UK. Copies of the respective prospectus and financial statements can be obtained in English from Swiss &

Global Asset Management (Luxembourg) S.A., UK Branch, UK Establishment No. BR014702, 12 St James’s Place, London, SW1A 1NX, as a distributor of the aforementioned fund (authorised and regulated by the Financial

Services Authority) or by the Facilities Agent: GAM Sterling Management Limited, 12 St. James’s Place, London, SW1A 1NX, United Kingdom. Swiss & Global Asset Management is not a member of the Julius Baer Group.

Sparkling investments || JULIUS BAER LUXURY

BRANDS FUND

Swiss & Global Asset Management (Luxembourg) S.A.

UK Branch

12 St James’s Place, London

T +44 (0) 20 7166 8176

[email protected]

www.swissglobal-am.com

The exclusive manager of Julius Baer Funds.

A member of the GAM group.


07/10/2012 17:00

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Documents

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