So, what next?

In February last year I met with an IFA to discuss my financial situation. I had a lump sum I wanted to invest and wanted some professional advice. During the course of his visit he stated:

1) That he expected the FTSE to close the year at 7,200 pts.
2) That property was still showing significant signs of growth with no real evidence that it was about to drop.

Now luckily, through sheer inertia I didn't take up any of his advice and stuck the lot across two high interest savings accounts while I figured out what next?

What next was I sat down 13 months later - last night to be precise - to decide what to do with the money that's now languishing accruing 4 pts less interest than when I opened the accounts a year ago. My wife and I spent 2 hours discussing our next move - we decided agaist an IFA - we decided against taking advice from my brother-in-law (a wealth manager) - we decided against buying property, because who knows.

We ended up deciding to go to the Caribbean at Christmas, frankly there appear to be so few options out there at the moment you might as well spend it, it's devaluing anyway. Any better options will be considered and probably disregarded.

Crispin Heath
Head of Digital

How will we fund our retirement now?

The EU has announced today that compulsory retirement at 65 is NOT unlawful. This could turn into a UK law that is both short sighted and out of touch. Given that people’s pensions are insufficient (or even non-existent), the cost of living keeps on rising, and we’re living longer, why should those that are healthy and happy to work beyond the age of 65 not be able to do so? The Government’s continued and sensible policy of self-funding our retirement is fine. But it’s far too late for people in their 60s to make a significant difference to the return on their investments and secure themselves a prosperous retirement.

Either people are given the guarantee of a financially secure retirement (not going to happen any time soon), or they are allowed to continue to earn a wage if they choose to do so. Please don’t completely lose sight of the short term picture, and please help people to help themselves.

Montse Tojeiro

Who will eat the banks’ lunch?

Interesting to read this week that Tesco Personal Finance reported a near doubling of the amount of money deposited with them during the past six months. Tesco Personal Finance said more accounts were opened with them during December alone than in the whole of 2007, boosting their saver numbers up to around 500,000.They credited the strong flow of funds during the month to a particular savings account which was offered for a limited time and attracted "tens of thousands of savers". Tesco already offers savings products, loans and insurance and have plans to offer a full banking service, including current accounts and mortgages. Surveys had previously shown that consumers trusted supermarkets more than they trusted banks, even before the current financial crisis. 500,000 accounts may seem small fry, but with the chance to offer a retail experience very different to the banks and a brand synonymous with value for money, watch this space!

Jo Parker

In the shoes of income seekers

Having just spent a weekend looking at income options with my retired Mum who hasn’t a pension to fall back on – I have realised that the search for income when you are in your 70s is very stressful indeed. Firstly if, like my Mum, you don’t have a pc you have to go round to different banks and building societies by foot – and then be ‘sold to’ at each visit. You are probably not being given the best or latest deals either – so you really are e-excluded.

You are often given contradictory information – one person told her that annuity rates were the best they have been for ages – yet in the papers there has been wide coverage about how annuity rates are low.

She was told that although interest rates were the lowest they had been well since records began, that she should guard savings against inflation coming back in 3 years.

She doesn’t understand that some advisers are qualified to tell her about some products and not all (such as Lifetime Mortgages).

She was also told about a capital guaranteed product linked to the FTSE 100 available from a building society – but then told that if the asset manager who was offering it went under, she would loose any money over the £50,000 compensation amount. So it feels like no guarantee at all from where she is sitting.

And when you are in your mid 70s you want security. You don’t want to have to review your money every 6 months and trek around finding the best deal (she thinks she can’t afford an IFA by the way). In fact she feels that when things should be getting simpler and easier, her financial situation and the options available to her have never been more complex. And she is right. It is a minefield and I can tell you I am not looking forward to having to do this when I am retired - and I know a thing or two about this stuff!

Mortgages

So, after many an internal battle, I have decided that the current housing market presents such an opportunity that I would be a fool to consider travelling over buying a house. (A dilemma faced by many of my peers).

Whether the market recovers to the fully (over?) inflated price it stood at last September (+10% on today’s figures) or whether there it will rise to a level that is more realistic isn’t too much of an issue at present. The real point to making the decision is that the market continues to fall to a level where I (along with my current housemate) might be able to enter in to joint ownership of a house that is comfortable both in terms of size and repayments. With tracker rates out there beginning at 3.88% we would be fools not to… But, (and as you an see that is a “but” with a capital “B”!) where on earth are we going to find the 40% deposit that is necessary to secure this rate? With both of us being only 18 months out of university, and despite both being in well paid employment, there is no way we will be able to find the £79,200 (based on average house price of £198,000) to take advantage of this. Unfortunately, it seems that those who would truly benefit and are willing to take advantage of the current market simply don’t have the finances to get started. Indeed, I doubt any first-time-buyer does. And as long as that trend continues, I’ll be keeping my passport valid and my eye on airline costs.

Diane Gracie
Project Manager

40 years to retirement

As a young man, I like to think that the fact I have been making a contribution to my pension from the moment I was able is a savvy move. When I started I ticked the “high-risk” box for my investments, which, considering I have at least 40 years ahead of me before I can retire, was a savvy move. This was, however, in March 2008… and I cant help but wonder where my pension might be now (I am waiting for my latest password to come through so that I can evaluate the performance). While waiting for access, I cant help but wonder, just how “high-risk” my pot is…. I imagine now, in light of all that has happened it is actually relatively low-risk (as everything is). But for someone with at least 40 years of investment ahead of them, should I be taking my pot into my own hands and begin to look at heavier equity investment? After all, equities are bound to recover in the next 40 years… which means I have plenty of time to switch my investments to safer options at a later date.

The question is, while an opportunity it may be, is such a volatile economic climate the appropriate stage for my first foray into investment management? I will keep you posted (so be sure to check back when I retire!)

Nick Tuckwood
Project Manager

McFall shows his true colours

After inflicting his derision on an undeserving Governor of the Bank of England we waited with baited breath for John McFall’s outpouring of pure venom on the leaders of the UK Banking community.

Instead we saw his most gentle and self effacing treatment of these unqualified, overpromoted destroyers of a once proud financial industry. McFall failed, once again, to identify the difference between a Bank and a Banker.

Within a day or so he and the "select" committee were to confront, the Prime Minister, and this time we witnessed sycophantic verbal backslapping all witnessed by an apparently unbelieving Chancellor of our Exchequer.

In all of these encounters no-one reflected even casually on the fact that our Banking Industry was and still is in the hands of people who have no qualifications such as Finance of Foreign Trade, Practice of Banking, Monetary Theory and Practice, Law Relating to Banking or Accountancy.

Media, press, radio and television commentators have all fallen into the same trap, led by Robert Peston and Jeremy Paxman. They've all jumped onto the bandwagon and have done as much damage as possible to a Banking Industry that was once led by truly qualified professional people and was the envy of the commercial world.

John Maxey
(Ex Bank Manager, Nat West)

Interesting recession initiatives are food for thought

Have you seen that Barclaycard has cut interest rates for those struggling with finances and will not contact late payers for up to two months, as long as they are actively working to sort out their financial difficulties? And TUI has announced that Thomson and First Choice will offer redundancy cover on holidays and flights? TalkTalk has also launched the Emergency Plan which waives the £6.49 monthly charge for Internet and phone access.

The question is that when it comes to insurance or savings or pensions are we doing enough to help customers manage and keep covered? Simple stripped down products, premium holidays at no charge so people can keep covered or saving could be really useful and be seen as truly Treating Customers Fairly. Come on, let’s think like retailers!

Jo Parker
Chief Executive

It’s time to move away from relying on consumer PR surveys

It wasn’t long ago that financial services companies weren’t using consumer research to get their brands talked about in the news sections of national newspapers. Now there isn’t a day gone by, where there isn’t another survey or index covering a variety of topics - from telling us how confident we are about saving (or not), to how many of us are travelling abroad this year (or not). I am not saying that there isn’t a place for this, but in these difficult times, where trust in our sector is at an all time low, we need to find bigger platforms, create adult debates which will give longevity to a brands point of view, rather than the poppy, one-hit wonders these surveys can be. It’s about bringing public affairs skills to play with a keen sense of what consumers are interested in. In my view that’s the model of good PR in these times.

Jo Parker
Chief Executive

Stopping recession becoming a depression

At an MGGB dinner on Wednesday night Lord Mandelson talked about stopping ‘the recession moving to a depression’ and how confidence and tone are critical.

Well, clearly major structural issues are affecting our economy (such as the lack of credit insurance, or support for our knowledge and creative industries and the split between private taxation and public spending – I could go on but won’t rant) and these fundamental issues must be addressed.

However, I do think that from a communications point of view, tone is critical in the current volatile times. 2008 was a record breaking year for London theatre with 14 million people going to visit a play or musical, resulting in £480m of ticket sales. Hollywood blossomed in the Great Depression. So let’s not forget consumers need positive, confident communications that entertain, not to hear a replay the issues and difficulties they are facing. Do we need to really tell them they need to save more for their retirement or that they could spend as long in retirement as they did in work? Rather let’s focus on practical and positive solutions!

Jo Parker
Chief Executive

Cheap money

Pete

Now would it be too cynical to question does Barclays really need the £4.5bn it is about to raise or is it just taking advantage of the current climate?

It's quiet in here

Pete

I often make a real song and dance about the amount of advertising carried by the adviser facing sites i.e there's too much on every page.

However a quick trip to Mortgage Strategy today was akin to walking through a wild west town with the tumbleweeds blowing down the middle.

Once we see the advertising return we'll know things are OK again. Then I can start complaining again.