connected A Tenet Group Publication issue 29 / autumn 2008 business Help to grow your grow and develop Support to help you u d we’ll even help yo your business – an e’s right! sell up when the tim – to be in your shoes We wouldn’t want ould! well, actually, we w hits the road to show My Future Finance ork for you and help you how we can w business build value in your Autumn makeover s Member Extranet ha The award winning u SPECIAL FEATURES designed to give yo been rebuilt and re Cooking for a cause even more Connected brings you three recipe dishes taken from the ‘By George... OTHER FEATURES It's Scrummy’ Cookbook Confused consumers Creating the right image need you! Does your identity do you justice? Find out what’s on consumers’ minds and how you can make sure they get the real facts Losing out to cash? With consumer confidence low, many are sticking to cash – but there are alternatives Have you seen the new and improved Elite? New Providers, new rates – and its now Whole of Market! Building on strong foundations We make sure you have the right support in place to move your business forward issue 29 autumn 2008 welcome - 03 Contents Foreword 6 Resilience will win through from editor Simon Hudson is optimistic about the future 7 The ‘wear your shoes UK’ tour 06 When writing my editorial for Connected, I am always Find out how we can work looking for a tenuous link – a theme that I can focus on that for you encompasses the general content of the issue, which has previously compared the makeover undergone by Connected to that of one David Beckham, through to the change in 10 Develop and grow your business Academy’s, recruitment weather and changing needs of advisers and consumers alike – support and succession planning I did say tenuous! Well, this time its no different, as I try to shoehorn everything under the all encompassing header of Evolution… 29 Extranet gets a face-lift Rebuilt and redesigned for The member Extranet has for some time been the ideal optimum delivery platform from which to delivery support, after all, its one, all encompassing platform, that can serve several thousand people 10 and over the years it has evolved (anyone spot that coming?) what’s in to meet the changing needs of its audience but to also allow us to position new initiatives as they become available. The latest evolution saw the launch of a completely new site earlier this his issue... month, which I hope you are finding beneficial, full details of which can be found on page 29. The most obvious one to put under the tag of evolution is that of an IFA, evolving to meet the changing needs of consumers and the industry within which we operate, you only have to look at RDR and TCF to name but 2 recent t developments. To counter this, we have a special feature on page 10 which looks at how we can support your development Special through our academy, growth through our recruitment service and now, right the way to the end, with a new succession Features planning service. Beyond this, you will find (I hope) some interesting facts on just what is going through the minds of today’s consumer and 12 Cooking for a cause... Connected brings you three 12 recipe dishes taken from the indeed what you can do to take advantage of this on page 8. ‘By George... It's Scrummy’ Finally, as part of our internal evolution (OK, last one – I Cookbook promise), we are taking one of our own functions on a bit of a tour, find out just what we’re planning with our in house adviser service on page 7. 20 Investment Special Solutions for today’s Right, that’s me done for this issue, I wonder what I could investment market use for the year end edition, that comes out at the end of the year… 30 Creating the right image Does your identity do you justice? Richard Ardron Head of Group Marketing 30 contacts Editor Richard Ardron Published quarterly by Connected Magazine is for internal purposes only and is not Tenet Group Limited intended as an advertisement. As a result this should not be issued Assistant Editor Caroline Taylor Network House, in any form to clients. Not all the products in this feature are the Lister Hill, responsibility of the Tenet Group Limited. Production Open Door Design 0113 270 1600 Horsforth, Terms and Conditions. Although every effort has been made to ensure the accuracy of the Leeds, information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage LS18 5AZ of any material, solicited or unsolicited. No reproduction of any part of this publication, in any Connected - a Tenet Group publication Tel 0113 239 0011 form or by any means, without prior written consent from The Tenet Group. The views expressed in this publication do not necessarily reflect those of the advertisers or the Fax 0113 258 6959 publishers. issue 29 autumn 2008 welcome - 05 Contents cont... Welcome 8 Confused consumers What’s on their mind and In the last edition of Connected I talked about a number how can you help? of initiatives that were under way and it is pleasing to see positive progress in many key areas. Following Mark Decker’s restructuring announcement 15 Come and join us Details of some key events 08 within the Compliance and T&C departments new coming your way coaching courses were made available for those advisers wishing to develop new skill sets or simply refresh existing ones. The courses are proving to be very popular. 16 Regulation matters An update on TCF progress and requirements and Plans have been approved for the next upgrade of Office- changes at Tenet Net which means that the key development priorities outlined by the Focus Group will be embedded in the next release. This includes the new document storage facilities for which piloting will begin later this year’. 19 E-identity Electronic identification service to save you time The new style PDMs have proved to be very popular, in particular the round table sessions. The next round takes a 15 further departure from the norm with the introduction of what’s in Networking PDMs providing a fast- moving and extremely interactive forum dominated by the round table discussions. this issue... The recruitment team had another excellent quarter with many Members benefiting from their FREE service…. remember to contact your SDM if you require details of their service. Richard Ardron’s team have been working hard to upgrade and refresh the Extranet and they have certainly delivered real improvements in layout, content and navigation. Sinfonia has been launched and already a number of 32 Non-investment Special A look at recent developments, Member firms have embraced the significant benefits including the re-launch of Elite provided by this unique proposition. Alongside the launch of Sinfonia we have taken the opportunity to clarify the overall CLEAR investment proposition and to explain 35 New team, new promises 19 What can you expect from where we think Sinfonia could fit in. Apart from the new commissions and the new reward scheme and nil commission retention the Business Support team? proposition also brings with it a free version of the Dynamic Planner investment planning tool! Clearly we are operating in challenging market conditions 38 Retirement Special Pension specialists highlight but it is at times like this that clients need clear guidance opportunities in the - and - from professional advisers and our job is to ensure we retirement market provide the professional support and innovation necessary to ensure your success. As always your feedback is welcomed….enjoy this edition 38 of Connected. Steve Jones Membership Director Want to contribute? If you would like to be featured in a forthcoming edition of Connected, please give me a call on 0113 2390011 or email me at: Caroline.firstname.lastname@example.org 06 - industry landscape issue 29 autumn 2008 Resilience will win through I n my last article I wrote enough to invest in what is often a very cheap market are doing so about the resilience of in a very conservative manner leading to much smaller case sizes. advisers and I have to As a consequence the average case size across the Group has say, without blowing our come down 30%. I can hear my first Sales Manager telling me own trumpet, Tenet Group is a pretty that’s no problem; you just have to work 30% harder! Is it ever that resilient beast as well and in times like simple?! this, when pressure comes to bear on So we have set out to try and provide you with a range of business in general, you begin to products which are considerably less likely to concern a appreciate that the plans we as a conservative investor. You will find these on the front pages of our Group steadfastly followed over the extranets entitled ‘Losing Out To Cash?’ last few years to ensure we have both Also last month I commented on lenders who appear to be financial strength but more importantly strength of human turning their backs on distribution. It does now seem that our resilience and management are paying dividends. Being in this efforts, coupled with the rest of the industry, have had the desired position is enabling us to continue to recruit new members across effect with a number of lenders now producing products which are all the Group’s brands at an increasing rate and where many advantageous to the broker. We are also seeing a levelling out of competitors are shrinking alarmingly, we are doing the opposite. business volumes suggesting the downward slide has bottomed out. However, the real test is between you and your clients. Your job So overall, we are by no means out of the mire, but green shoots is clearly to give them the best possible advice and sometimes the are beginning to appear. overwhelming media sentiment is sufficiently at odds with investment logic to leave clients frozen in the headlights. The net Simon Hudson result is apparently clear inactivity even those who are brave Group Chief Executive ces Improvements in all the right pla I am pleased to say that we are Office-Net Member system, which will include running a pilot continuing to see improvements in our for enhanced electronic document storage, and streamlining the service delivery with service related processes for waiving commission retentions and claiming complaints reducing further to an Syndicate points when investing in Sinfonia via 3rd party insignificant level and positive platforms. In addition, our work with the Providers will enable us feedback on the services being to provide enhanced application tracking facilities to help you received from Members. monitor the progress of applications during the underwriting Our focus has been on improving process. and developing those processes that By the time you receive this copy of Connected you will have traditionally given you, the hopefully have completed the online annual Member survey of member, the most heartache. For the Network services, as your feedback is vital for us to track our example, we have been ensuring that the commission suspense customer satisfaction and identify those areas where you feel we process is much more effective and also visible to you via new ‘real have made improvements and those where we need to do some time’ suspense reporting on the Office-Net Member system. We more work. have also introduced more proactive chasing of Providers who send us commission payments without the necessary backing statements for us to identify who the commission is due to. Mike McGaughrin Later this year we hope to be able to release an upgrade to the Group Services Director issue 29 autumn 2008 special feature - 07 The ‘wear your shoes UK’ tour One man – one tour… coming to a town near you My Future Finance has gone through a considerable number Individual firms to get a better understanding of how of changes over the last 12 months in a single minded aim at MFF works attempting to provide a superior service to the network members • What types of business areas do we operate in? and associate members alike. • What types of business do we not do? The services provided by My Future Finance are still not • Future proposals widely understood and not wholeheartedly perceived to be of • Can we handle volumes? value. We at MFF believe that we can provide a service that will • Commissions, fees and charges benefit each and every associated firm within the group, and to • Bespoke service that end propose to get in front of as many of you as possible, • Key accounts whether it be on a group basis or by visiting each individual • Dedicated service business unit. • Technical help desk In the knowledge that we haven’t always got it quite right, and in order to create a better understanding and delivery of everything on offer from the “in house” team, we will be Understanding the Enable system as an introduction spending more time focussing on ways of developing all of our platform businesses and not just that of My Future Finance. • Does it work for you? • Do you understand it? “Wear Your Shoes” • Suggested improvements “Wear your shoes” is a campaign aimed at developing • Products relationships, and providing a better understanding for all. • Services It involves getting back to basics, putting ourselves in each • Commission others shoes, and developing a service based on individual requirements, however unique that might be. My Future Finance – The benefits Experience tells us that an introduction service to a • Access to a fully compliant service without the risk “specialist” needs to be an operation with both parties working • Access to highly qualified individuals who have already closely together towards a common goal. obtained the necessary qualifications / authorisations and are Although that goal will ultimately be about generating up to speed with current legislation: so if you only write additional income, it does encompass providing the best possible complex advice on a limited basis, we can save you the hassle advice to our customers, in a professional manner, including • Full administrative services to save our clients time and reliability, a service to be reckoned with, whilst also keeping a additional costs, MFF handle the entire information focus on TCF. gathering, complete the research and produce a The demand for such specialist services is very much on the recommendation report to your client. We will then process increase as firms recognise the benefits of having somewhere to the application through to commission generation and pay place complex advice cases that they themselves don’t deal with your share of the proceeds into your designated account. on a day to day basis. • We retain Full Compliance responsibility for each case As for treating customers fairly; member firms having access to • We retain Full PI Liability which could potentially reduce specialist advice units demonstrates active risk management your PI premiums ensuring that the best possible advice is offered to their clients. • Our Introducers retain full ownership of their customer, we simply become your business partner for that transaction MFF to get a better understanding of how each • No cross selling • Beneficial commission terms individual business works • By referring complex cases to MFF it releases you time to • What types of business areas do you operate in? concentrate on your core business areas, saving you resource • What types of business are you not involved in? and money • In an ideal world how would you like an introduction service • No additional qualifications are required by you to work for you? 1 way? Both ways? Timescales? Costs? • Can you handle more business? If you are interested in hearing more and wish to become one of • Can we help you to identify more business and product our early visits please contact us directly: opportunities? • Commissions, fees and charges • Sharing Ideas • Marketing Brian Braithwaite • Business development / Partnership development Head of Business Development & Technical Email: email@example.com Tel: 0113 239 5334 or Mob: 0782 4465590 08- marketing issue 29 autumn 2008 What are consumers thinking? About 12 months ago, the term ‘credit crunch’ entered the Search IFA public domain and since then, a day rarely goes by without Search IFA is an online profiling someone uttering those now infamous words! directory of IFAs helping advisers …but what is the real impact - what’s going through the minds maintain a strong Internet presence, of today’s consumer? using web specialists to ensure the maximum web hits. Where are people getting advice/information? Research conducted by Scottish Widows on where people How would a website benefit your business? get advice on financial matters from makes for some interesting • Websites work for you whilst you rest – customers reading… and prospects can browse, gather information • Providing free information – adding a valuable service Source • Generate enquiries – and qualified leads Newspaper 28% Magazine 8% • Update clients – with news, views and offers Internet 50% Branch/BS 29% • Increase your productivity – by offering answers to IFA 20% Friends/Family 25% frequently asked questions, freeing your time TV 14% Nowhere 17% • Save money – charges in print cost, but not so with a website So, what can we draw from this? • Put you on a level playing field – with competitors From an IFA’s perspective, there are some key messages here: who do have a site • Enhance your professional image – as a forward- 1. YOU NEED A WEBSITE looking firm With 50% of the population using the internet to find • Open up a national/global marketplace – for your information, the argument for having a website has never been services stronger. The amount of time spent online and searches for insurances and financial advice are amongst the highest requests. 2. YOU NEED TO MAKE SURE YOUR Choose a Website to enhance your business image MESSAGE IS SEEN Through our Marketing Toolkit you can have a website built People still value face to face advice, so sending timely for free - in minutes, with running costs from as little as £30pcm communications to them may be the difference between them Below are examples of the website offering you can find within coming to you or going into the nearest bank! our marketing toolkit At the heart of our toolkit we have numerous pre-approved letters that can be downloaded and issued immediately, with Promoting Your Website minimum effort and cost (you only pay the post!). Within our toolkit we also help with promoting your website. If you want a more informative and professional approach, you There is no point in producing the best website if no-one ever could use one of our featured newsletters, available in both hard sees it! That’s where website promotion comes in and we have copy and email format, offering a great way to keep in touch with dedicated a whole area within the toolkit to help you by existing clients and equally to introduce your business and compiling a list of promotional tips and negotiating special deals services to prospective clients. with sites to help drive more traffic to your own website… For the first time ever, email has overtaken direct mail as the We have teamed up with a number of companies who will help most popular method of communication and our email marketing promote your Services, including: service means you can join the trend with a personalised, professional email. LocalLife With 28% reading the press to see what’s going on, the above LocalLife search directories receive 100 has even more relevance – make sure you get your message in million visitors a year and is the fastest front of them so they understand the facts and what you can growing search directory in the UK. We offer them. have negotiated a 45% discount for you to With a high percentage of people reading newspapers, it link from LocalLife to your own site. becomes advantageous to advertise your business to create issue 29 autumn 2008 marketing - 09 awareness and to persuade prospects to contact you. crunch (29%) and worryingly, more than a third (36%) don’t We have created a series of pre-designed advertisements believe it will affect them. suitable for printing as leaflets, inserts or adverts in newspapers and magazines. This completely free service located within our Full details of all the research referred to above can be Marketing Zone, enables you to simply select the relevant advert, accessed within the campaign zone, under ‘other’. highlighting the product you wish to promote, personalise and use! Support to address this… We have enlisted the support of some of the industry’s key providers who have provided a number of supporting documents to help you tackle some of the issues raised here. Access the campaign zone of the Extranet now where you will find an array of support, in particular… Educate your clients about pensions ‘Pensions Folklore & Fact’ is a series of technical guides and presentations from Clerical Medical that help you to address client misconceptions about pensions. AEGON Scottish Equitable have designed a range of Tenet’s Advert Generator System located within the Marketing material to help you show your clients why building their Toolkit. Under Adverts, simply click on the enter icon. retirement savings is a good idea and can help you overcome This will then open up a separate window, where you then objections. need to select ‘Promotional Material Generator. The system is built upon the same platform as Tenetsite, so if you have a site Educate your clients about investing with us, your details will automatically be uploaded to the ads, To help you overcome client concerns, AEGON Scottish but if not, simply select ‘I do not have a Tenetsite.’ Equitable have developed a pack of investment materials that Now you have access to our adverts. covers all kinds of scenarios and will apply to a huge cross-section of your clients What’s on consumers’ minds? Clerical Medical has created a suite of information guides Research conducted by Scottish Widows during June set out to help put recent market uncertainty into perspective for your to find out just what the hot topics were amongst today’s clients. consumers and there were little surprises as the ‘Credit crunch Standard Life have a number of technical guides and and economic downturn’ dominated, with particular emphasis on: dedicated support functions to help you show clients ways you • A slowdown or a recession and how long will it last? can add value by reducing the tax they would otherwise pay by • Huge increases in cost of living using offshore investments. • Mortgage/remortgage rates high, plus difficulties finding good mortgage deals Let's Talk Protection • Falling property values, yet still too expensive for first time In addition to those above, you will also find sales aids to help buyers to enter market educate your clients about the need to protect their most • Disposable income much reduced valuable assets – their home and their income! Find support form • Increased threat of job insecurity and potential redundancies Bright Grey, Zurich, Royal Liver, L&G Friends Provident • Huge gap between official inflation figures and personal and Norwich Union. experience Visit the Campaign zone now to access the support you need Of particular interest for IFAs though, was the following… Pensions • Consumers want to retire early, but all realise they don’t have Toolkit additions sufficient funds • All named ‘a good pension’ as most important for retirement – Presenting the right image but say it’s too complicated and thus many ignore Logo Facility • Many simply not aware of tax advantages As an additional service for our clients we are now introducing Logo facility as part of our Marketing toolkit package. Savings Well designed logos can provide instant recognition and • 39% of the population are not saving anything for the future encapsulate the values of a business. The benefits of having a • There is a real lack of understanding of the risk and reward unique icon that represents your company can build a powerful relationship in savings and investments brand identity. If your are thinking of refreshing your logo or • 39% of parents with adult children are using their savings to building a new one please view the Extranet to see further help them details on the service providers. Additional research conducted by Zurich suggests that Visit the Marketing Zone of the Extranet to access a despite the testing market conditions, less than a third of wealth of support including ready-made letters, consumers have reviewed their finances in light of the credit newsletters and email templates. 10 - business development issue 29 autumn 2008 Develop and grow your business …and then retire! Succession Planning Not only are Tenet offering this but now you can take on The profile of the membership throws up a number of trainee advisers, mould them to suit your business model and interesting scenarios in relation to mergers and acquisitions. have all training and supervision taken care of externally. During the last 12 months we have been involved in helping If you would like to discuss any part of the recruitment process a number of members merge with or acquire fellow network or to discuss taking on an IFA/Mortgage Adviser call Mark Ford practices. on 01132 395 312. Clearly this is set to become a more prominent feature of network membership as principals of businesses look to retire The Tenet Academy or sell and the newer entrants look to enhance their book of We are delighted to be able to business. inform you about a new Tenet We are currently in the process of creating a new support area Academy for investment adviser within the network offering which will be designed to identify trainees. For over a year now those firms looking at exit/succession planning and marry them we have been working with The National Skills Academy (NSA) up with firms on the acquisition trail. to establish a programme for Tenet members to recruit The support will include clear guidance throughout the whole inexperienced people to become mortgage advisers. process and will be designed to make the transactions as seamless The NSA is a government body set up to develop and robust as possible. apprenticeships for Financial Services. The scheme receives Further information will be available in the next few weeks. government funding designed to reduce the skills gap in the work environment. Trainees of all ages will be able to access the Recruitment Update: Don’t Believe the Hype!! apprenticeship scheme and receive training funded by the Over the last 18 Months Tenet has successfully trialled and government. The programme will revolutionise the recruitment launched its free recruitment service to members and during process of new blood into the company enabling you to recruit that time we have saved the membership over £500,000 in new people and not having to supervise them yourself. recruitment fees, with this rising month by month! The full scheme runs for 18 months and successful candidates With the unfortunate issues surrounding the mortgage market, will be awarded a national qualification in investment advice. many firms have seen a drastic downturn in mortgage enquires, Government funding allows us to appoint external assessors to with the BBC reporting in early September, that at the same ensure training is transferred to the workplace. Delegates require point last year, 113,000 mortgages were sold compared to only no experience or qualifications to join the scheme at outset. 23,000 for this year! Because of this we are finding many highly For the initial 6 months, delegates will be trained to complete a experienced mortgage advisers looking to find a new position recognised investment qualification through day release at nationwide. regional colleges. Once achieved, Key Points: delegates will attend formal training at Can You Help? 1. A new Academy that Tenet’s training centre in Leeds before Some firms are now reporting an increase in mortgage will enable you to being authorised to advise clients. enquiries, with others not being as severely affected in their recruit non-experienced We have teamed up with Babington recruits without the mortgage business as the press are reporting. Are you one of these Business School who will ensure that need for you to firms and would you like to speak with these experienced and all initial client visits are observed and supervise directly. well qualified mortgage advisers looking for new positions? 2. Government funding assessed. Delegates who already have Don’t forget the free recruitment service offered to members which will enable you to achieved a recognised qualification may includes: grow your business. also take part in the scheme joining at • Localised recruitment specialists, helping you develop an month 6 rather than outset. attractive recruitment proposition The major benefit of the programme to you is being able to • Bespoke recruitment website to promote your vacancy recruit non-experienced people and not having to act as their • National press and online advertising supervisor. • Dedicated headhunting resource The scheme will be formally launched in September. If you • Candidate vetting, including professional first stage would like to register for the scheme please contact Meena Verma interviews and the arranging of final interviews with the (New Business Team Leader) on 0113 2395347. member firm Delegates who have already benefited from education funding • Completion of all forms when accepting an applicant such as graduates will not have access to the programme. Initially • NO COST!! the Academy will only be open to firms based in England. issue 29 autumn 2008 business development - 11 Committed to financial advisers to be more successful in examinations. In addition to our online materials we will offer virtual training making it easier support through podcast and webcast presentations and also give for you to achieve you the opportunity to dial in to our regular ‘virtual classroom’ conference calls. diploma status Advisers may also wish to attend one of our CII approved classroom Revision Workshops. These sessions are being held The Norwich Union Financial Adviser Academy has around the UK and will most benefit advisers who have been developed in association with the Chartered Insurance progressed through their self-study. These free revision sessions Institute (CII) to help make it easier for financial advisers are open to registered members of the Norwich Union Financial to attain the CII Diploma in Financial Planning. Adviser Academy only and are subject to terms and conditions. On 31 March we launched our blended package of learning To find out more, visit www.nu-academy.co.uk today! support to help give you the best possible chance of exam • Access to our recommended package of CII learning success. materials at a competitive price • Tools and guidance to make it easier to start and get the most out of your study time We have arranged a competitive cost for our recommended package of CII learning materials: this contains your exam entry, We realise that beginning your course of study towards a Course Book with 12-month update and ed.learn, the CII's Diploma might seem like a daunting task, but our self-study online learning centre - see www.ed.cii.co.uk for information. planning tools and study techniques could help to make it easier Our package can be purchased direct from the CII after to start and to keep going. We will also help you to apply your completing registration and joining the Norwich Union Financial technical knowledge and understand the business context, Adviser Academy. through online case studies and self-study questions. In line with our proposals to promote the financial advice • Support from Norwich Union’s team of specialist profession, membership of a professional body is a prerequisite of trainers and consultants joining the Norwich Union Financial Adviser Academy. If you have any queries please contact your Norwich Union Our training team has many years of experience in helping consultant or email us at firstname.lastname@example.org. ….and we are developing to support you too! Tenet Management Development Programme We have had a very generous contribution to the programme In July we began a long-term from AEGON Scottish investment in the development Equitable. David Flory, the partnerships director from the of our first line managers. This Development Division, attended on the second day of the launch will have a big impact on the and listened to topics such as: ‘Having a vision for your team’, future success of the company, ‘Emotional intelligence’ and ‘Effective decision making’. David especially in the current was eager to meet with the first group of individuals who will be economic climate. The training will not only serve to equip them going through this programme and he is keen to see the progress for the future but also build a management team who will be they make. there to help and support each other. We will be delivering an 18-month programme which consists The whole programme is being run in of 5 modules: conjunction with Park Lane College in 1. Providing inspirational leadership and communication Leeds. Craig Busby (Head of the Business 2. Building high performance teams School) and Michael Leach (Programme 3. Making it happen every day Manager), both from Park Lane College, led the sessions on 16 4. Adapting for the future and 17 July, while Krystyna Gadd, our Tenet Employee 5. Providing excellent customer service Development Officer, has played a key role in the design and development of the whole programme. She attended the sessions There will be assignments and assessments, which will lead to and facilitated the overall smooth running of the two days. an accredited management qualification through the Chartered The next session of the programme focuses upon ’Coaching Management Institute. skills for managers‘ with plenty of opportunity to apply new The programme kicked off with team leaders and supervisors skills learned into the workplace and in January 2009, the first on 16 July, where Simon Hudson, the group’s chief executive line managers will attend the launch of the second run of the echoed his thoughts about it being the ‘best idea we have had in programme. Following that, later in 2009, we hope to open up years’. Linda Schofield, the regional director from the National the programme to our members plus any new managers we have Skills Academy for Yorkshire and Humber, also attended the at that point. It will also be open to any individuals, who, as welcome session. Linda is keen to promote development of skills part of our succession planning, are likely to become managers within the financial services sector. within Tenet. 12 - special feature issue 29 autumn 2008 Cooking for a cause... s this year's summer is fading and the A condition caused by the lymph system's inability to drain fluid A nights are drawing in, Connected brings you three recipes to cook by yourself or with your children's help - all guaranteed to warm you up this Autumn! away from the body's tissues, lymphoedema sufferers experience painful, swollen limbs and an increased risk of infection. It's a cause close to the author's heart - Katie's youngest son George suffers with this debilitating condition. "Currently, there's no cure for lymphoedema" says Katie. "With this book, I am hoping to raise awareness and funds for advancing research into this These mouthwatering dishes come from By George... It's incurable condition". Scrummy by Katie Taylor, a cookbook that not only gives you simple, wholesome and delicious recipes; the proceeds from each By George...It's Scrummy features 100+ mouthwatering recipes copy sold also enable Leeds Teaching Hospitals to help children arranged by season, you can find out how to buy your copy by suffering with lymphoedema. visiting www.bygeorgeitsscrummy.co.uk or www.odd.co.uk issue 29 autumn 2008 special feature - 13 By George... It’s Scrummy Autumn Recipe Selection Autumn Soup Ingredients Serves 4-6 800g parsnips Peel and chop into chunks the sweet potatoes, parsnips, onion and carrots. 400g onion Place in a large saucepan with a little olive oil and lightly coat the vegetables 800g carrots over a low heat. 1 large orange Zest the orange and add to the pan, with the juice. olive oil Mix the stock cubes with the hot water and pour into the pan with a good 2 vegetable stock cubes pinch of salt and pepper. Turn up the heat and bring to the boil. Turn the 2 litres hot water heat down slightly and simmer for approx 35 minutes until the vegetables salt and pepper are tender. fresh coriander With a hand blender, or in a food processor, whiz down the vegetables to a smooth soup. Taste and add any more seasoning if required. Add some chopped coriander just before serving. Scrummy Tips Soups are so easy and you can play around with all sorts of wonderful vegetables. Try leeks and potatoes together or a variety of mushrooms. For a tasty simple tomato soup, roast the tomatoes in the oven with some onion and fresh thyme. Add to the boiling stock, season and whiz down Honeyed Sausages in a Box Ingredients Method 12 chipolata sausages Pre-heat the oven to 190°C (gas mark 5) 4 tablespoons runny honey Cut the sausages into two and roast in an oven dish along with the other 2 teaspoons sesame seeds ingredients for 25 minutes, until brown. 1 teaspoon olive oil Cut off the lid and scoop out the centre of the loaf of bread, keeping the 1 granary loaf, unsliced inside for future breadcrumbs. Line with greaseproof paper. The sausages can go straight inside the bread box, ready to hand out for any occasion. Scrummy Tips Mix together some mayonnaise and grainy mustard to give a gorgeous simple dip to compliment the sausages. Gingerbread Families Ingredients Method 300g self-raising flour Pre-heat the oven to 160°C (gas mark 3) 100g golden caster sugar Grease a baking tray. 50g butter or margarine Place the flour, salt and ginger in a bowl. In a saucepan, melt the sugar, fat 3 tablespoons golden syrup and golden syrup then add the syrup to the dry ingredients. Mix well, adding 3 teaspoons ground ginger the milk and then kneading the gingerbread carefully with your hands. 4 tablespoons milk pinch of salt Roll the gingerbread out with a rolling pin and use cutters to form your families. Place on the baking tray, adding any currants or cherries for eyes, buttons and mouths. Bake for 10-15 minutes and then cool on a baking rack. Decorate with coloured icing... if you can catch them! Scrummy Tips The same mixture can be cut into stars and Christmas shapes (making a small hole to thread a ribbon through later), with a little milk brushed over before baking. These make interesting decorations. issue 29 autumn 2008 business development - 15 Key events coming your way… Over the last year we have introduced various improvements events…..please exploit this facility when planning your own to the events service in order to keep it both fresh and development diaries. innovative. The feedback from our advisers has justified these refinements and we now have an all-inclusive service sufficiently Virtual Events agile to meet the needs and preferences of ALL our advisers. We have invested considerable energy in our programme of virtual events. The next KEY DATE for your DIARY is 19 Networking Professional Development Meetings NOVEMBER. This will be Tenet’s second Virtual PDM and (NPDMs ) promises to be an exciting and highly relevant business forum. We have just commenced the above which are a creative The programme includes all markets with particular emphasis on variation to our orthodox PDMs. The spirit of the NPDMs is industry issues and how these may impact on adviser business about the provision of a professionally structured environment models. The substance will embrace thoughts from Tenet as well where advisers can meet with providers to discuss and debate as many of the leading providers. Another KEY DATE is 11 contemporary business issues. This approach will obviously DECEMBER where we will have our final Virtual Investment touch on learning as well as marketing ideas against the current Forum for the year. It goes without saying that this is absolutely challenging trading climate. Our orthodox PDMs have been essential viewing for all advisers particularly when placed in the incremented with Round Tables this year allowing advisers to context of ongoing global market turbulence. The event will offer feedback to the presenting providers. This format has feature fund managers from many of the main investment houses. elicited fantastic feedback and we have basically extended this principle for the NPDMs. Whilst the NPDMs are to an extent National Conference – 26–28 November – Jersey an experiment, we are confident advisers will find the collection We are now well down the road of preparation for the above. of expertise and knowledge from the participating providers of The event will be a thoughtful blend of business and recreation immense value. Clearly the feedback from our advisers will on the relaxing island of Jersey. We are really looking forward to directly navigate the direction of our Events programme for 2009. welcoming our guests and are determined to provide a lively few days away from day-to-day business issues. Our conferences have Workshops been very well received over the last few years and this year we Once again we have revamped our workshops with the have aimed to supply something fresh and new……….thus aspiration of providing an enhanced service. We now have a really avoiding predictability! We are confident that all guests will enjoy well-balanced model able to cater for all areas of professional a memorable few days and derive both business and personal development. Many of our workshops are now built onto the benefit from this high impact experience. PDMs thus reducing the travel costs and time in supporting the forums. We have also designed multi-provider workshops giving advisers exposure to the often contrasting views of different Training and Development Needs Analysis (TDNA) experts. Once again it is time to consult all our advisers to get ideas and The key highlights for the remainder of 2008 include: suggestions for our development programme. Our TDNA is - Post retirement unrivalled in the industry and allows us to remain sensitive to the - Offshore investments needs of our advisers. The results will inform the nature of our - Investment sales plans for 2009 and feed into both the PDMs and also the - WRAP & Platform workshops. Please take a few moments of your time to complete For further details please refer to the Events section of the the questionnaires when they arrive in November. Extranet. For further details on any of the above please don’t NEW Event Centre hesitate to contact the Events team on 0113 239 0011 or Our Extranet site offers a living library of all our email email@example.com 16 - industry landscape issue 29 autumn 2008 Regulatory update ell, that’s summer from information gleaned during the visits by T&C Supervisors W been and gone! What a damp squib that was! Despite the gloomy summer we have just experienced, there are some or Field Compliance Officers since the start of this year. The message from this article is that it is still not too late to put together a coherent action plan and embed it into your businesses and the aim of these meetings is to assist you to get to that point in very short order, if we might still find that insufficient action positives that we must grab hold of, and the necessary evidence is in place. Obviously, we hope that even in the current economic climate. this will not be the case and many firms have embraced the Although it has been said many times whole concept of the TCF initiative with absolutely before, and therefore it does sound commendable commitment and we add, finding the process like a cliché, it is also very true that helpful in their business planning models. TCF is a positive way it is at these times IFAs really earn the trust and respect of their of re-evaluating what direction you wish your businesses to follow, clients by being ’visible‘ and in regular contact with their clients. which is why our TCF ’toolkit‘ issued at the very start of this year As you know, this is very much a fundamental part of TCF i.e. begins with Mission Statements and Visions etc.. providing an ongoing service and doing exactly what you say you Continuing with the subject of TCF, the most fundamental will do in your initial meetings. I guess you all knew it wouldn’t aspect of the whole TCF initiative is of course to ensure that be long before those three letters appeared in this article! clients get the most suitable advice at all times, applicable to We are now in the final straight for embedding TCF into our their means, circumstances and needs. One of the key areas for business as the 31 December deadline approaches very quickly many of our member firms is involvement in switching pension now. Please allow me to signpost the All Member Memo that funds or lump sum investment providers i.e. bonds or collectives was issued on 29/7 titled ’TCF Update Summer 2008‘ which is for clients. As you know from the mass of guidance we have now on the Extranet under the Information Hub section for issued on this subject over the last couple of years, this is an area Bulletins and Memos. This included amongst other things, a very that can be quite complex and it is important that our guidance comprehensive checklist to help you work through some of the is followed very closely and precisely. In particular, all activities that almost certainly could still be applicable in your recommendations to switch pension providers must be clearly business. Whilst the focus of the checklist was aimed at helping documented including a strict ’like for like‘ comparison on you in the event of your firm being chosen by the FSA to be projections and where performance is used as the main subject to an onsite visit, the checklist is a consolidation of all justification for such switches, that this is backed up by the suggestions and ideas we have put forward over the last two supporting evidence. Where clients are recommended to switch and a half years as practical examples of things you can do in into a more expensive product to meet their performance your business. requirements, this must be clearly pointed out to them and By now, some of you will have received a letter from Jeremy replayed in the Suitability Report with a clear justification as to Smith, my Field Competence and Monitoring Manager, why it is still recommended as a course of action. The most explaining that you will be contacted by a Field Compliance recent guidance was issued as part of the June 2008 Regulatory Officer with a view to coming and discussing your progress with and Compliance Update (Issue 11) now on the Extranet under the TCF initiative. This is again an attempt to assist members Compliance Publications in which a checklist with guidance notes who are perhaps still struggling to meet the standards expected on replacement business was issued. I urge you to ensure that in terms of actions and also evidence of actions linked to you and all your advisers (where applicable) are following this. improving service to your clients. Yes, I know the tone of this The Business Assessment Team will be concentrating on letter is quite ’heavy‘ but there is no time now for a ’head in the monitoring a bigger percentage of replacement business over the sand‘ approach and unfortunately, we have had to take action next few months and we will be aiming to ensure that the against a couple of firms who have been unwilling to progress the standards embodied in this type of business are as high as they TCF initiative in their firms. We hope this will not apply to any can possibly be. others but I must impress upon you now, that we will be looking By now, many of you will have been seen by your T&C to see progress made for those firms that we have identified as Supervisor to discuss these standards and I hope that these being higher risk in relation to a TCF assessment. This risk sessions have been useful. assessment is based on your self-assessment questionnaires and On a much more positive note, we have launched our new issue 29 autumn 2008 industry landscape - 17 Development Supervisor Team reporting in to my Training and certain criteria which I will not go into detail on here but it would Development Manager, Neil Price, and have had a very positive obviate the need for firms wishing to bring on trainees becoming response from firms wishing to avail themselves of this additional member firm supervisors. Some firms have already taken coaching and development service. For firms who may not have advantage of this and although it is early days, it seems to be seen it, it was issued on the 12/8 and is entitled ‘New Training proving a very successful initiative. Your recruitment team can and Development Programmes’ again in the Information Hub provide an initial view as to whether we can assist in this with section of the Extranet. We have only allocated a relatively any prospective new trainees. small?? something missing here?? of resource to this work at I look forward to seeing many of you in the forthcoming PDMs this stage but obviously if we find that it is fruitful for you and us and at the Annual Conference in a couple of months’ time. together, we hope we may be able to expand the team in due Good luck in your endeavours to provide your clients with the course. best possible ongoing service as I am sure we will all see the long- Finally, again on a positive note, this is just to remind you that term benefits from this ethos. for firms who are thinking of bringing new trainees into your firms and the industry, we do have an external third-party firm we are working closely with, who can provide ongoing supervision Mark Decker in the early months i.e. field observations etc. This is subject to Director of Network Compliance RDR update and further support The next stage of the RDR was for their service under the principles of customer agreed due to be published in October but remuneration (CAR) - Sales Advisers act as an agent for one or due to a reshuffle at the FSA and the more product providers and are usually remunerated by appointment of Jon Pain as managing commission. director of retail markets, the Qualifications - there is wide acceptance across the industry of feedback statement has been moved the need to raise the current qualification level to QCA 4 and the back to November to enable him to CII’s Diploma in Financial Planning is considered to be the most "fully engage with the process" before delivering the next stages. popular route to achieve this. Although recommendations have Although the FSA have more pressing issues to occupy their been made to consider a dividend for experienced IFAs, exams time at present, the RDR remains one of the most significant like J05 enhance an advisers service proposition when reviewing projects in the retail agenda and the intention is that it will bring retirement needs and as such we strongly encourage everyone to about lasting improvements for consumers and firms in the retail start the journey sooner rather than later. Our training investment market. The regulator has recently stated that they department are available to offer guidance and support and we anticipate no slowing down of the overall programme of work and will shortly be adding further support to our Professional expect to meet the revised timetable. Development Programme. Please also refer to recent The position for IFAs generally remains positive with the ‘back communications regarding the support offered by Norwich Union to basics’ approach to create a clear distinction between and Scottish Widows. Independent advice and Sales advice. Feedback suggests however, As soon as the feedback statement is issued we will update you that it is unrealistic to expect consumers to understand when accordingly. advice does not involve sales or when a sale does not include advice. We welcome the recognition that IFAs are at the top of Keith Richards the advice chain and act as an agent of the client charging a fee Group Distribution & Development Director issue 29 autumn 2008 industry landscape - 19 Electronic authentication in the fight against financial crime The new Money Laundering Regulations 2007 have been recognised as it must be checked and verified. This is becoming harder as the an important tool in the fight against financial crime. However, compliance number of fakes and forgeries increases. There are numerous with this directive threatens to slow down the customer acquisition process. websites that sell fake documents under the guise of ‘novelty James Blake, Data Authentication expert at Experian, says that items’. The challenge doesn’t stop there though as many genuine organisations should use electronic authentication to confirm an individual’s documents are also being used for fraudulent purposes. The identity and perform anti-money laundering checks. Identity and Passport Service (IPS) had 16,500 fraudulent Last year, identity management came under the spotlight with applications for passports during the 12 month period to the introduction of the new Money Laundering Regulations 2007. September 2006, 10,000 of which went undetected. The regulations require that all accountants and firms practising ‘accountancy services’ reassess their customer authentication A modern approach procedures. This is a directive that has been supported by Electronic authentication is helping organisations to combat industry bodies such as the Institute of Financial Accountants, identity fraud and money laundering in a way that works for who recognise it as ‘added security to the public and a form of their business. Electronic identity checks verify and validate in regulation to the accountancy profession’. seconds that the customer is who they say they are. When it comes to establishing identity there are two different So how does it work? An individual’s biographical data, such as methods. As set out in the regulations, you must undertake name, address, previous address, date of birth, etc is compared ’customer due diligence‘ before entering into a business against databases that contain financial/transactional data. It looks relationship with an individual. This means verifying the identity at the number of electronic records the individual can be of customers using documents or data/information obtained from matched against, how far back in time they go and the processes a reliable and independent source. We refer to these processes that were in place when the records were created. The data is respectively as paper-based or electronic authentication. It is then analysed to identify potential fraudsters or high risk important to establish identity at this point so that the necessary individuals. A yes/no/refer score is then returned that indicates Anti-Money Laundering (AML) checks can be performed with how confident you can be that the person is who they say they the knowledge that the person you are dealing with is who they are. In terms of compliance, organisations are able to provide the say they are. regulator with an electronic audit trail that shows how the decision was made. Problems with the paper-based approach An added feature is that information is also screened against Traditionally, paper-based authentication, via documents such sanctions data to check that the individual is not a politically as a utility bill, passport or driving licence, was the only way that exposed person or has a known history of money laundering. you could prove that the individual is who they say they are. As a result there is no need for two separate business processes While this approach does achieve the tick in the compliance box, to confirm identity and screen for money laundering. there is evidence to suggest that electronic authentication is safer, cheaper and more customer-friendly. Time for change Experian commissioned research into identity management Whilst national and international regulation is forcing processes in autumn 2007. Fifteen hundred consumers were organisations to review their authentication procedures, the more interviewed and 68% said that providing paper documents, such savvy organisations have put themselves in the shoes of their as passports and driving licences, to prove identity was either customers and have realised that it’s not just about compliance. inconvenient or very inconvenient. It is rare that each individual Tackling fraud and financial crime opens up opportunities for will have all the necessary documents to hand, so either you ask businesses to strengthen their fraud prevention systems and at them to return with the documents or send them via the post. the same time streamline their customer acquisition processes. A large proportion of financial services organisations still do the The key is to achieve a seamless process for your customer latter, putting their customers’ data at risk. Should the ensuring they get what they want quickly while also peace of mind documents go missing in the post and fall into the wrong hands for your organisation that the interaction took place securely. then they are a prime target for identity fraud. For more information on electronic authentication please Even when the relevant documentation has been obtained, e-mail firstname.lastname@example.org or visit www.qas.co.uk/verify 20 - investment special issue 29 autumn 2008 SPECIAL INVESTMENTTHE CURRENT MARKET INVESTMENT STRATEGIES FOR The decline in the FT-SE and other world stock markets has investments over a period of time by initially investing the dealt a major blow to investor confidence, with many IFAs and majority of their money in cash-based assets and transferring product providers reporting significant reductions in investment the balance in to say equity- linked assets over a period of time. volumes over the last twelve months. Tenet Group offers a range of cash funds where regular Difficult market conditions provide a challenge to professional transfers can be easily arranged. The transfer can be made into investment advisers at exactly the time when their clients most funds selected by the IFA, using Tenet model portfolios or the need advice. Sinfonia fund range. Simply click on the following links to see Client reaction to a short term decline in market performance further details. is often to run to cash – human nature but obviously taking the risk of missing opportunities to buy into the market at what in Bold investor: the long-term will hopefully be very attractive prices. The perfect investment involves buying at the bottom of the One of the key challenges for the professional adviser is market and selling at the top – excellent advice in theory but as whether to follow the client’s natural instincts and provide a they say…’it’s all about timing’. range of cash options rather than lose clients to banks and Many investors understand and like the theory, but are too building societies. The reality is that this may be exactly the right risk averse to take action. For others, the attractions of higher approach for some clients, but there is a genuine client need to potential returns enable them to consider this as a real challenge the natural instinct and consider a range of investment opportunity that they wish to try to take advantage of. strategies to take full advantage of the long-term opportunities. Tenet provides a wide range of support and offers to IFAs The Tenet Group provides a range of solutions linked to the advising such clients, with a range of investment styles that can four main strategies that are appropriate to current market be linked to a wide range of client’s attitude to risk. Click on the conditions. following link for further details. The research team provides a wide range of recommended Run to cash: funds which can be selected on an individual basis or as part of While other options should be considered, this may well be the Tenet model portfolios. In addition, Tenet has recently the best option for the more risk averse investor – especially if launched its own investment proposition – Sinfonia Asset nearing the realisation of their original investment objective. Management. Sinfonia combines expertise and technology to provide a range of investment funds that are selected and Capital protection: managed against client’s specific attitude to risk. In addition, A relative newcomer to the options available, we are seeing an it provides flexible pricing and special benefits to IFAs that can increasing number of providers offering ‘structured products’ be taken into account when agreeing the right fee for the service where the capital invested is protected from any losses – with provided. Click on the following link for further details. potential growth achieved by linking the investment to track the performance of equity-type investments. In summary In effect, the investor is often only risking the interest they Challenging market conditions provide even greater need for would otherwise have achieved from the investment for a professional investment advice – and the best advice often potential share in the growth of equity linked investments. involves challenging pre-conceived ideas to establish the best long-term investment strategy. Spreading the risk: No one solution is ever right for every client and in recognising Some investors might see the potential associated with buying this, Tenet Group provides a wide range of investment options when prices are relatively lower – but might not want to take a within the four principle investment approaches that can be view on the best time to invest. Adopting a ‘pound cost adopted in current market conditions. averaging’ approach enables these clients to spread their Log on to the Extranet to see solutions available for each category. issue 29 autumn 2008 investment special - 21 Striking a balance through absolute returns When constructing balanced portfolios for clients, IFAs want to offer a cost-effective, quick and practical way of switching deliver investment rewards without taking too much risk. between asset classes, avoiding the high costs involved with Traditionally, the way to do this is to diversify investments across dealing in conventional assets. a range of asset classes, including equities, bonds and property. A practical example of where we use derivatives is in isolating However, funds investing in these asset classes only reward stock selection. The European equity market may fall 5% over a investors when markets go up and penalise them when they fall. given time period, but our European equity fund manager’s In volatile conditions, as we have seen in the last year, this can portfolio only loses 2% due to their stock selection skills. In this lead to short-term losses. case, we can convert the 3% outperformance into a positive As a result, absolute return funds are increasing in popularity. return by investing in the fund manager’s portfolio alongside This type of fund has provided institutional investors with a short index future that protects against the market fall. consistent returns for some time but is only recently accessible Therefore, what sets GARS apart is our ability to utilise to retail investors. There is now a range of absolute return funds investment strategies across a range of asset classes. Some available, with a wide variety of objectives, investment strategies, absolute return funds have a narrow focus, investing in just one asset allocations and performance. asset class, e.g. equities or bonds, or one specific area. However, At Standard Life Investments, we recently launched our we can scour the globe, leaving no stone unturned in finding Global Absolute Return Strategies Fund (GARS), which aims those strategies that will deliver the required performance. to deliver consistent, positive returns in a variety of market In addition, by using derivatives skillfully and methodically, conditions. Using cash as a benchmark, we seek to deliver a target we can generate positive returns even when markets are falling. return of LIBOR +5% p.a. (gross of charges) over rolling three- The key to doing this consistently over time is a robust and year periods. repeatable investment process, which allows proven and talented In doing so, we apply a dynamic multi-asset approach using a fund managers the freedom to invest in their best ideas with diverse array of return-focused investments. This includes: conviction, and without the constraint of staying close to a benchmark. • Market returns from traditional asset classes, such as equities, Our institutional GARS Fund has delivered a 7.3% annualised bonds and property return.* We have achieved this within our anticipated volatility • Opportunistic investment strategies: market opportunities and in particularly challenging market conditions, at a time when which we anticipate will deliver positive returns on a three- many other assets have suffered significant losses. This was down year view, such as credit spreads, inflation and duration to the skill and expertise of our multi-asset team, which contains • Relative value opportunities between or within markets over 20 talented individuals from across the investment industry. • Stock selection, generating performance through the proven Their achievements were recognised when we were named stock selection expertise of our asset class managers. Multi-Asset Manager of the Year at the UK Pensions Awards 2008. We also routinely use derivatives to implement these strategies Overall, the competitive and diversified returns on offer also in a cost-effective and timely manner. make GARS an ideal basis for a portfolio. IFAs can then employ The merest mention of derivatives can often be enough to put a core and satellite approach, with GARS at the core while adding off advisers, who associate them with hedge funds and deem value for clients by selecting satellite funds in individual asset them as too risky. However, this need not be the case. classes. Alternatively, GARS can help to diversify a client’s Used carefully, derivatives offer an effective means of existing portfolio, adding an absolute return element to sit implementing market views and managing risk. alongside traditional investments. For GARS, we generate returns by investing in those strategies * Source: Standard Life Investments – institutional pension fund, from inception to offering the best return prospects at any given time. Derivatives 31/07/08. 22 - investment special issue 29 autumn 2008 Platforms and wrappers Platforms ~ A collective phrase covering wraps and need to make sure that it does not simply increase complexity fund supermarkets. Fund supermarkets tend to offer a wide and costs to your clients without giving them new services they range of unit trusts and OEICs, whereas wraps replicate value in return.’ this, and also offer access to a number of other products too. Wraps also often offer support to IFAs wanting to agree Why wraps will never be the whole solution their own remuneration with clients rather than take a Platforms in the UK market will be finite, with constraints commission. coming from both provider and IFA perspectives. It’s strategically important for platform providers to be Are wraps the future? supporting IFA distribution in their migration to platforms. Platforms have long been heralded as the revolution in the This is because profits from the provision of platforms are UK financial services market. High levels of usage in the US directly related to scale, and IFA distribution is currently the and Australian markets are often sited to give substance to this main route to winning market share and building scale. But this prediction. Yet in the UK, although momentum is building, could change. One issue is that the UK market is oversupplied. uptake is significantly slower, and penetration is less widespread Consolidation is talked about, and maybe necessary to reap the than pundits predicted. In short the revolution hasn’t happened returns on investment that platform providers seek. yet. The question is will it ever? It will allow the financially strongest providers to buy market shares in the future. Additionally, platforms are not cheap to Holistically, what are the barriers to change? create, and should providers fail to achieve expected returns on The UK financial services market place is the oldest and most significant investments made into this marketplace, there is a established in the world. As a result, it is oversupplied, real risk of dis-investment. fragmented and has more pronounced behaviours than many other geographic markets. For example, many markets have an For the IFA there is a set of different issues. independent distribution sector, but in the UK this is not only The biggest benefits to IFA platform users of efficiency, time the dominant distribution channel, it’s also predominantly made and costs can be reaped from the adoption of a single up of fiercely independent firms and individuals. This brings wrap/platform solution, which meets the majority of the IFAs’ potential benefits to clients in terms of delivery of genuine clients’ needs. The problem is that IFAs have not built client independent advice. Conversely, it also limits the ability to drive banks over the years with this in mind – most IFAs have a wide behavioural change at industry level. range of client types. In addition there is also a reluctance to commit to a single platform provider as it is perceived to threaten Specifically, why are wraps being more slowly IFAs’ independence, evoking fears of being owned by platform adopted? providers or being too dependent on one manufacturer. These No one is denying the obvious benefits that wraps and factors combined mean that a large number of IFAs often use platforms can bring to advisers - reduced costs and increased more than one platform, which brings some efficiency but will efficiency gained from slicker administration, and the increased not optimise their gains. This is impacting on the benefits IFAs access to information and updates via online portals, all of which are seeing from the adoption of platforms in the early years, and combine and translate into a potentially enhanced service to the potentially will impact on the levels of business held on platforms end client. in the future. The issue here is not whether platforms are a good concept An additional consideration is the level of training and support or not, it’s about appropriateness – and that means appropriate required by IFAs in order to adopt a technology-driven solution. to the IFA’s business model and the needs of the end client. The level of complexity and completeness of platform propositions is increasing all the time, and this correlates directly As the FSA’s Platforms fact sheet puts it: with the level of IT skills required to operate and exploit the ’Using platforms could improve your administration and, functionality of the technology to the full. With mobile phones, through this, the services you can offer your clients. But you most users utilise a fraction of the functions provided and issue 29 autumn 2008 investment special - 23 therefore never really see the benefits of the full range of both fee-earning potential of the client to the IFA and client features. Wraps are no different. Providers like AXA are offering involvement, which can best be described as the amount of time an 11-week training course for IFAs wishing to adopt their new they have available to be involved and their level of interest in wrap platform. IFAs need to be completely convinced of the their investments. benefits the wrap can deliver to their business and clients given For many lower-value clients, represented by the two left-hand- the amount of time, and potential income, that needs to be side quadrants, investments solutions are relatively simple and sacrificed in order to become a competent user. For many this will straightforward. It is questionable whether they will benefit from be a barrier to adoption. the additional functionality that a wrap offers in terms of Let’s not forget that while platforms make life easier to investment choice and tax wrapper available. This creates a manage, they don’t take away all the pain. Key to this is the issue dilemma for the IFA. Where relatively low trail fees are paid in of setting up and managing model portfolios. While the provision relation to the value of the funds under management, regulation of online planning tools and a trading platform make and client demands can require a level of service that the fee set up and management much simpler, the wrap does not negate does not cover. The IFA either needs to agree a revised the need to create the paper trail that sits alongside such model remuneration package, or provide an alternative service. portfolios i.e. research, gaining client agreement to deals, Equally for those in the bottom two quadrants, who typically transacting deals online etc. Nor does a platform update the have low levels of time to spend managing their investments, investments portfolio any more often than the adviser can afford and/or have low levels of interest, the construction of model the time to sit down and review it. So what are the genuine portfolios may be an overly complex and involved solution to their benefits that platforms offer clients and who should they really financial needs. These clients will often seek financial advice as be aimed at? much for the removal of the ‘hassle’, as for the specialist advice they receive. For the higher net worth clients in this bracket, Who are wraps right for? there could still be reasons to select a platform proposition as In its simplest form a platform is an internet-based service opposed to a product-based approach in order to benefit from used by IFAs to view and administer investments. Attached to having all investments viewed and managed from one place. this basic functionality are usually a range of tools which allow Clearly the strongest synergies with the solution provided by a the adviser to view and analyse the client’s overall portfolio and platform sit with the higher net worth group, who also have high to choose tax wrappers and investment options for them. Often levels of time and interest in their investments. Here the wrap the client can be given access to all or some of these functions. truly supports the need for a wider range of investment options Lets start by looking at the benefits to clients. Clients can and tax wrappers, and easy access to information. In addition to see all their holdings in one place – regardless of what product this, the IFA is highly likely to be able to agree appropriate wrappers have been selected. This means that understanding of remuneration with this type of client. the holistic picture is easier from a client perspective, and can be particularly useful in terms of preparing for tax returns. In So if not platform, then what? addition to this, active management of portfolios within certain This approach leaves a number of clients for whom the benefits tax wrappers can be done more effectively than before, without when weighed up with the costs and complexity of a wrap are not creating potential tax charges. Additionally, a single investment justified. Other investment solutions such as a risk-rated fund of strategy can easily be applied over a range of investment funds portfolios are often an appropriate proposition to meet products. From a practical perspective, it can make the trading these clients’ needs, who either have simplistic needs or require associated with managing a model portfolio less time consuming a hassle-free, yet actively managed and diversified solution. for the adviser, and allows him to offer this service to a wider Sinfonia Asset Management lead the way in providing a number of his clients than he might have done before. Lets not comprehensive fund of fund-based proposition, targeted at forget, what it does not do is eradicate the burden of paperwork exactly these groups of clients. for either the IFA or the client. So given this, what are the benefits to clients, who will really What is Sinfonia? value the increased services a platform can offer? First of all – it’s not just another fund of funds offering. Sinfonia has designed an end-to-end investment process that can be used to satisfy investment growth and income needs, and is available as an OEIC, ISA and SIPP. Using an intelligent Client time investment needs analysis tool it directly links the client to one available/interest level in or more of the IFSL Sinfonia sub-funds in order to meet their investments defined needs. The sub-funds are actively managed on a fund of funds basis – meaning that the fund structures and underlying fund investments are constantly realigned to ensure that investment objectives are achieved. Fee earning potential What makes Sinfonia unique is the pulling together of the of client to IFA component parts of the proposition that support every stage of the advice process – from needs analysis through to conducting Consider this simple matrix approach, which divides clients by regular reviews with the client. 24 - investment special issue 29 autumn 2008 Traditional propositions in the marketplace have focused Use appropriate experts at more on supporting and rewarding the IFA at point of sale – each stage of the investment Sinfonia seeks to provide sustainable support and reward to the process and knowledge that their IFA throughout the lifetime of a client relationship. investment is actively managed on an Sinfonia offers a range of benefits to the IFA, including an ongoing basis. It also provides value for enhanced investment process supported by the relevant experts money – a competitively priced product, at every stage, reduced exposure to regulatory risk through the clearly showing product pricing and IFA costs. provision of an ongoing end-to-end process and the ability to automate annual reviews. Will the wrap revolution ever happen? On top of this, it allows the IFA greater flexibility in agreeing One size does not fit all, and it is unlikely that the right level of service and fee with individual clients, and puts platforms will ever be adopted in the UK to the scale a greater share of the value chain on the table for consideration they have been in the US, for example. in this decision. This is initially through the waiving of Tenet We should expect a further increase in use of platforms – retention fees and in the longer term through acquiring a share where it’s appropriate to clients’ needs, particularly for higher in the value of the business they place with Sinfonia. net worth clients who have high levels of involvement with their investments. For clients, Sinfonia enhances an IFA’s offer through the But, also expect to see increased usage of solutions like provision of a truly end-to-end investment process. Sinfonia. Providing you with a Clear Advantage Current economic circumstances and key decisions around several hundred advisers. If you missed this, you can still view the initiatives such as RDR mean that we are at a pivotal point in event at: http://www.asset.tv/portal/?1143 where you can the development of independent financial advice. watch some or all of the following: Successful IFA businesses are likely to be those that can differentiate themselves from other advice or distribution routes • Climate Change - A New Opportunity for Enhanced through their higher knowledge and greater quality of service. Performance? - Virgin Money There are certain sectors of advice that particularly lend • UK Equities - The Current Landscape, Invesco Perpetual themselves to this opportunity and we believe that one of those • Money Markets - The Future - New Star is investment. Greater volatility and investor uncertainty along • Fear and Opportunity: Where is the smart money going? - with the ever growing range of investment vehicles and options Sinfonia increase the need for advice. Those advisers who have the • Why have Market Volatility when you can have Absolute necessary skills and knowledge will therefore be ideally Returns? - Clerical Medical Insight positioned to take advantage of this position. • Investing for Income - Schroders Clear is designed to assist you with specific investment solutions including the Sinfonia range of funds and the OBSR- Our next scheduled event is 11 December, where we will driven model portfolios. feature more top speakers from the likes of Investec, Henderson, However, it is also a source of education which is why we have Threadneedle, Martin Currie, M&G, Schroders and New Star, secured the support of a number of leading fund managers, who so watch out for further communications nearer the time. are a part of our programme of Virtual Investment Forums this As we all know, knowledge is power, and what more efficient year, where Richard Romer-Lee, the founding director of OBSR way to improve your knowledge than interaction with the leading and the manager of the Tenet Clear investment portfolios, experts in fund management without the need to leave your interviews a panel of expert fund managers. own office. Our last event was screened on 15 July and was watched by issue 29 autumn 2008 investment special - 25 Building for the future What a difference a year makes! Eighteen months ago, retail The bear necessities investors were investing heavily in commercial property funds, With the UK market having recently fallen more than 20% attracted by their relatively high and stable incomes, capital below last October’s peak, some commentators have suggested growth potential and diversification benefits. However, the that we are now officially in a bear market. onset of the credit crunch in August last year saw UK commercial So is this true and if so how long will it last? Without a crystal property experience its most significant falls in capital values ball it is hard to say for sure, but some are predicting depressed since the early 1990s. prices for the next couple of years. The change in sentiment towards real estate has been There is a silver lining to this cloud, however. Compared with dramatic, leading to a sharp increase in redemptions from the last bear market at the beginning of the decade, retail property funds. Financial markets remain volatile and capital investors now have far more options to help them ride out a values are likely to remain under pressure for the rest of this falling market. year. So investors should avoid them like the plague, right? Until recently, retail investors were largely restricted to four Not according to ING Real Estate Investment Management, asset classes: equities, fixed interest, property and cash. However, part of the world’s largest property investment group and new regulations allow investment managers to hold a wider range manager of the Skandia Property Fund. It believes that the key of assets as well as using derivatives to create ‘short’ positions in attractions of property funds remain firmly in place. assets that they think will fall in value. Rental income traditionally makes up around 50% of the Skandia offers three exciting solutions that can work well in returns from property and tends to become even more important current market conditions. Importantly, unlike some ‘bear market’ during periods of low or falling returns. The underlying nature solutions, all have the potential to produce attractive returns over of UK leases (typically with long duration and upwards only rent a full market cycle. reviews) has enabled income returns to remain remarkably stable. The Spectrum range of six risk-rated funds, available Indeed, income growth has remained positive even during exclusively through the Skandia platforms, includes several economic recessions, such as in the early 1990s. managers investing in cash as a strategic asset class. It also invests IPD (Investment Property Databank) figures show that the in the Fulcrum Alternative Beta Plus Fund, designed to provide average initial yield on UK commercial property rose to 5.48% the benefits of hedge fund investing without the usual drawbacks in April 2008 from a low of 4.57% last summer. At this level, such as cost and opacity. property yields are beginning to look attractive, particularly when The Alternative Investments Fund offers access to ten compared with equities and Gilts. This is stimulating renewed ‘alternative’ investment strategies and asset classes, while its demand, particularly from overseas and institutional investors, exposure to equities is approximately halved through a ‘short’ who have been active since the start of 2008. position on the component parts of the MSCI World Index. There will not be a return to the exceptional performance of The UK Strategic Best Ideas Fund, launched last September, recent years. is an equity fund that invests in the best ‘long’ and ‘short’ ideas Instead, following the current price correction, the manager of of ten outstanding managers. Each has the freedom to range the Skandia Property Fund anticipates that property will shortly between ‘100% long’ in a raging bull market and ‘market neutral’ revert to its traditional role of providing relatively stable returns (i.e. 50% long/50% short) in extreme bear market conditions. and diversification benefits to a client’s investment portfolio. For full details, please ask your Skandia sales consultant. For full details ask your Skandia sales consultant. 26 - investment special issue 29 autumn 2008 TAKING A HOLISTIC VIEW The effect of cash on the overall ISA risk/return This scenario may be something that many would be measures uncomfortable advising on. However, the transfer regulation From 6 April 2008, new ISA regulations allowed cash ISAs to changes have enabled a more moderate alternative – reducing be transferred to stocks and shares ISAs. There was great the proportion held in cash while taking on a slightly higher expectation that given the potential benefits, significant amounts proportion of equities. would move across into stocks and shares ISAs; however, five months later investors still appear to be holding back. As Meeting expectations transferring cash to stocks and shares is a one-way process, Taking a holistic view regarding the split between cash and caution arising from the recent market downturn is likely to be stocks and shares ISA holdings, may reveal that a client’s overall a major factor. investments do not match their risk appetite and are failing to Of course, individual circumstances affect any transfer decision, reach their full potential. but it is vitally important to assess the balance of cash in the It is important to review clients’ portfolios to ensure that funds context of the ISA portfolio as a whole – and to ensure the are performing as expected and remain within their risk portfolio continues to adhere to the client’s expectations. expectations. Skandia’s online investment tools allow you to do this at the touch of a button. Reducing volatility *Risk 5 portfolio assumes £4,000 invested annually, Selestia Risk 5 asset Low volatility asset classes can have a dramatic effect on the allocation model (48% UK fixed Interest, 18% UK Equity, 9% North overall portfolio volatility. Cash and fixed interest enjoy much American, 9% Europe, 5% Japan, 3% Far East ex Japan, 3% Emerging lower volatility than most equities, and when included in a Markets, 5% Global Specialist). Performance is based on the IMA sector portfolio alongside equities can reduce overall volatility significantly. performance on a bid-bid gross total return basis from 1 January 2000 - Figure 1 shows how the overall risk level decreases as the level 1 June 2008. Cash returns assume £3,000 invested annually and of cash increases. With just 8% overall held in cash, the Skandia performance in line with Bank of England end month average interest rates, Risk level drops from five to four. It then drops to Risk level 3 cash ISA account – Building Societies' (IUMWSIS). with 25% cash overall, and to Risk level 2 when cash reaches Figure 1 – assumes Risk 5 mid-range volatility, 10.29%. Cash volatility 46% of the portfolio. data is provided by Watson Wyatt. Risk adjustment 12% Taking a holistic view of a client’s assets can have a dramatic Risk 6 effect. Take for example a Skandia Risk level 5 client investing Risk 5 into ISAs. If since the advent of ISAs they had fully utilised their 10% annual ISA allowances, their stocks and shares component would Risk 4 have grown to approximately £45,000, while cash would have 8% grown to over £33,000* ignoring the impact of wrapper and Risk 3 dealing charges. 6% Cash represents 42% of this combined ISA portfolio, which Risk 2 produces overall volatility very close to the bottom end of Skandia 4% Risk level 3. This could result in underperformance compared to the potential returns associated with Risk level 5. To have 2% Risk 1 achieved overall performance in line with their accepted risk level, the equity investment risk would have to increase to 0% Skandia Risk level 10 in order to counterbalance the low volatility of cash. % Held in Cash issue 29 autumn 2008 investment special - 27 What if you could offer your clients both security and growth potential? What if you could offer your clients both security and growth growth in the FTSE 100 Index over five-and-a-half years or 30% potential? Zurich logo gross interest if the FTSE 100 grows by 30% or more at the end The current economic situation, with high levels of volatility, of the first three years. profit downgrades and concerns over future market growth, is What’s more, if your clients are concerned the FTSE 100 Index causing individuals to re-evaluate their appetite for risk. With may fall, this account guarantees they’ll still get back all of the this as a backdrop, clients can either see this as an opportunity money they invested. or a threat. They can also receive some of their interest tax-free by using For those customers seeing this as an opportunity and prepared their Cash ISA allowance for the 2008/09 tax year and/or transfer to accept the risks, Zurich offers a wide selection of funds within in existing Cash ISA money. its Pension and Investment tax wrappers to choose from. For customers seeing this as a threat, and therefore, unwilling This is a limited offer! to take any risk, Zurich offers the Guaranteed Capital Account 20 GCA20 is only available until 23 October 2008. Dunbar Bank (GCA20). must receive your client’s application form by this date. For more information, please call your Zurich Intermediary Group Security and Growth consultant on 0500 546 546. GCA20 is a deposit account that gives your clients 120% of any Green Guaranteed Account 2 open for business Energy has been a hot topic recently and no wonder. What’s more, the GGA2 also offers From escalating costs of traditional fuels to the impact of customers peace of mind and security with our global warming, it’s becoming increasingly important for the 100% money-back guarantee. And they can also receive world to find alternatives. And there are some innovative some of their interest tax-free by using their Cash ISA companies doing just that. They’re often called ‘green allowance for the 2008/09 tax year and/or transfer in existing businesses’. Cash ISA money. The GGA2 is a five-year deposit account. The account gives customers two options of any growth in the ‘RBS Key dates and an Early Bird Bonus! Green Index’. The ‘RBS Green Index’ brings together 30 of Make sure you contact your clients as soon as possible as the largest companies operating in green business sectors we are offering an Early Bird Bonus of 0.33% on applications globally. These companies operate in a variety of exciting received before 29 September 2008. This can be paid either and challenging new ways; including biotechnology, biomass, into your client’s account or an equivalent contribution hydroelectricity, solar energy, wind energy, energy made to a carbon offset fund on their behalf. management services and materials for energy-use reduction. This is a limited offer! GGA2 is only available until 28 October 2008. Dunbar A choice of savings options: Bank must receive your client’s application form by Option 1 – will give customers the higher of a guaranteed this date. minimum return of 15% or 60% of any growth in the Index Option 2 – has no guaranteed minimum return but gives For more information, please call your Zurich Intermediary customers 100% of any growth in the Index. Group consultant on 0500 546 546. issue 29 autumn 2008 business development - 29 The all new Member Extranet As covered in the last edition of Connected, we have been During the re-build, we have also undertaken a cleansing undertaking a project over the last couple of months to process, which in essence involved the removal of old and ‘dead’ completely rebuild the group’s Extranets and I am pleased to material and links, ensuring you only have the most up-to-date say that this has now been completed! information at your disposal. On top of this, you will also notice from the moment you log on, that we have added a number of sub- divisions to the home page, which will allow you to access the support you need as quickly as possible – with the addition of a few little extras to help make life that little bit easier. So – what’s new? Well, the most obvious thing is a new look and feel! We have taken this opportunity to give the site a fresh new look, which is not only more aesthetically pleasing, providing a consistent look throughout the site, but enables us to reposition some of the key messages. While adding regular content to the site is a good thing, it can The new site is built on a new high-tech Content Management often mean that visitors are not sure what is new or indeed what System (CMS) which means that each department within Tenet is of importance. So the new home page provides a good platform can now update their own area, providing you with an even from which to highlight the latest initiatives. quicker and more robust service. All of this should mean you can find what you want more easily and to make sure this is the case, a new site map and search engine have also been added. Work is already underway to look at the next phase of development, designed to make the sites more dynamic and interactive, something which we have kicked off with our first ever Online Member Forum. The forum is designed to offer members an informal way of swapping ideas, sharing experiences and asking each other questions. To access the forum visit www.tenetforums.co.uk 30 - special feature issue 29 autumn 2008 Creating the right image e? Does your identity do you justic n an ever changing and challenging We often hear about enormous sums of money spent on simply I market place correct positioning of your business is essential but how do you get passed the ‘smoke and mirrors’ world of corporate identity and brand marketing? ‘a logo’ – if only life was that easy! Exhaustive research and development as well as literally 1000’s of deliverable items go into a major brand and projection and guidance for at least 5 years into the future is the norm. On a more relevant scale we all know that products and services evolve and adapt continually as does human nature so how come Connected asked Leeds based agency so many advisors within the financial industry don’t reflect this in Open Door Design for their observations and their corporate identity or marketing material and are still using the basics that sufficed many years ago? views and gained a few tips along the way. The answer is quite simple – they have not really had to worry about Working within the financial sector for over 16 years now – we it too much until recently! have seen massive changes in brand positioning, product offerings and routes to market. However one thing experience has taught us We believe independent it that if you stay true to your instincts, core values and personal professional services such as beliefs you stand a good chance of success! lawyers, accountants and financial Corporate identity and good positioning strategy are in our advisors were very late into the opinion simply an accurate reflection of your business ethos mixed marketing arena and once the major in with product offering and a bit of personal opinion! It becomes players promoted brand values, more complicated when we consider outside influences such as competition increased, the public competition, regulation and market trends but the basic foundation became more aware and the gloves Dean Evans of a good identity still remains at the heart of all marketing activity. really came off!! Chairman of Open Door Design Top Tips for Creating a Better Brand 1. Identify your existing and potential target audience – those with a proven track record – does not necessarily all this leads to a focused brief have to come from within the industry we can learn from 2. Document your unique sales potential and most profitable other successful businesses products/services – reduces the ‘fishing’ exercise and saves 5. Involve your team – this needs to be a joint effort but don’t time and money design by committee – it’s expensive and takes too long!! 3. Analyse your resources for marketing activity (both 6. Give examples of things you like – this is where the personal financial and human) then develop a plan – little point element comes in spending money in areas you either do not require or 7. Be creative in your thinking and keep an open mind – some of cannot materialise the best ideas need looking at once or twice and may not be 4. Seek input and advice wherever possible, preferably from the ones you expected to get back! issue 29 autumn 2008 special feature - 31 Key Elements/ Health Check There is a logical order to brand creation and development and the creative process should be transparent. A suitable time scale and budget should be agreed prior to commencement. This process does not have to be expensive and as painful as is often the belief and if undertaken correctly (by both parties) the end result will pay dividends. “ We believe independent professional services such as lawyers, accountants and financial advisors were very late into the marketing arena and once the major players promoted brand values, competition increased, the public became more aware and the gloves really came off! ” Logo/Brand Identity Added Benefits Does your current logo correctly portray and reflect your The main benefit and fundamental objective of this whole business? Do all the elements work together, do you have a process (if correctly organised) is to consolidate existing business positioning strap line if necessary and are all the fonts used clear, and generate growth in new business. The added benefits are coherent and work across all platforms? substantial for any size of company including areas such as clear Have you access to your identity whenever required – An agency definition of goals, improved team spirit and staff motivation. provides a useful ‘hub’ for your activity or can simply provide Support from suppliers and partners alike will improve and also, your Brand to you in many formats. as a consequence, you will experience increased pride and enthusiasm throughout the business. Marketing Tools Do you have sufficient tools to do the job? Visual proof of your efforts is a nice tangible reward but finally Stationery, sales literature, newsletters, promotional items, it’s a great reason to contact all your existing and potential clients advertisements. Recent developments in print technology – bringing them up to speed with your current offering. now provides a lot more for your money (and lower quantities if required) Web/On-line Activity Undoubtedly one of the most powerful brand awareness tools To find our more about brand and positioning or available but unfortunately over time we can lose sight of the simply explore some ideas contact Richard Ardron target audience and our objectives. A good website is an Head of Group Marketing on 0113 239 0011 or extension of your identity and the end user should always come Dean Evans on 0113 270 1600. away feeling valued and with a good impression. Lots of news, products and services and the facility for plenty of input and interaction throughout the site will help differentiate you from your competitors. To find our what’s new at Open Door Design visit www.odd.co.uk 32 - non-investment special issue 29 autumn 2008 Guardian are currently presenting at the LIME roadshows pecial on-investment s which are now underway. Also supporting the roadshows is N Chris Cummings, Director of the Association of Mortgage Intermediaries (AMI). Chris’s session has been particularly well The latest from LIME received and is very topical in this current climate. This session further highlights the many benefits of being a member of AMI, some of which are n an economic downturn, with rising inflation and I living costs, consumers are being forced to tighten • Regular industry updates their belts. It comes as no surprise that some people • Newsletters are finding it difficult to manage their budgets and • Fact sheets the need for support/guidance continues to rise. • Member website This could be as simple as a review of income and • Helpdesk expenditure, to worst case scenario where they are simply unable to meet their current commitments and need to take action. Please don’t forget that as a LIME member you automatically receive free membership to AMI and details of how you can With this in mind we have added an additional service and register can be found on the LIME Extranet. network guidance on how you can offer your clients help in this It is our objective at LIME to be forward thinking and ensure our area. You may want to offer assistance to your clients as to how service offerings develop in line with industry changes and they can help themselves or utilise the services of a Debt consumer needs, keeping you fully informed. More in-depth Management Company who are experts in the field. LIME have information can be found in our quarterly publication appointed to panel Guardian, an established Debt Management LIMELIGHT, on our member Extranet and through regular email Specialist, through which you can refer your clients. updates should this be of interest to you. have a concept of Whole of Market, its equivalent status is Fair Elite - Whole of Market Protection Panel Market Analysis – which is the basis for the new Elite Panel.) The current 6 Providers are AEGON Scottish Equitable, AXA, Friends Provident, L&G, Norwich Union and Zurich. These have been carefully selected using the following criteria: In response to feedback from the membership we were delighted to announce the relaunch of the Elite Protection Panel 1. Financial Strength as a ’Whole of Market‘ proposition on 5 August 2008. 2. Service The new Elite Protection Panel offers members the best of both worlds thereby receiving the benefits of enhanced 3. Product Comparison (Qualitative and Pricing) commission rates for protection, yet maintaining the Whole of 4. Deal Flow Market ethos. 5. Final Assessment and Placing Best Providers and Products Best Process The Elite Protection Panel has been constructed by our highly By having the ‘foundation research’ carried out in identifying regarded independent research team to comprise some of the the Elite Panel, there are fewer providers to deal with, saving best protection providers in the marketplace, offering the very time on process, compliance justification, research and best in protection solutions, with competitive pricing structures underwriting, with all parties agreeing a faster underwriting and through Fair Market Analysis. (Whilst Pure Protection does not application process, along with increased tracking accuracy. Superior Remuneration The comparison table below provides a real indication of the typical increases in commission provided by Elite: NON-ELITE ELITE Typical Gross Earnings Earnings Commission Uplift Elite Provider Lautro API Period Lautro API Period Percentage AEGON Scottish Equitable 165% 184% 4 year 170% 190% 4 year 3.03% AXA 169% 189% 4 year 180% 201% 4 year 6.51% Friends Provident 158% 186% 4 year 170% 201% 4 year 7.59% Legal & General 155% 173% 4 year 165% 185% 4 year 6.45% Norwich Union 160% 189% 4 year 170% 201% 4 year 6.25% Zurich 165% 195% 4 year 170% 201% 4 year 3.03% For further details on how to apply for Elite, please contact your Support & Development Manager or visit the Elite section on the Extranet. issue 29 autumn 2008 non-investment special - 33 Protection Adviser Toolkit Norwich Union has improved the support we provide for Business Protection and have now launched a new Business Don’t leave Protection Adviser Toolkit to provide advisers with the tools to identify the Business Protection needs of their clients. your clients’ The toolkit includes: • Online Business Protection Toolkit • A Business Protection Adviser Guide critical illness • A Business Protection Client Guide Online Business Protection Toolkit cover to chance Visit www.nubusinessprotection.com or the Business Protection area on the Norwich Union Adviser Sales Centre for access to all of the tools and advice you will need to grow your business and help your If one of your clients is unfortunate enough to be clients protect theirs. Our online toolkit includes: diagnosed with a critical illness, the last thing they’d • Advice on how to profile your existing client base want is to find that their condition isn’t covered. • Help in identifying your clients’ needs That’s why we’ve improved our critical illness • Prospecting letters proposition. • Information on overcoming objections and conversation starters • Case studies • Access to the Norwich Union Business Protection We now cover 36 conditions, including five new document library illnesses: • The information you will need when your client needs to make • rheumatoid arthritis a claim • Contact numbers for the Norwich Union Business • encephalitis Protection specialists. • open-heart surgery • primary pulmonary hypertension Business Protection Adviser Guide • systemic lupus erythematosus This guide aims to deal with any concerns that you may have around the complexity of Business Protection. Inside you’ll find: But it’s important to remember that the best critical • Descriptions of the different types of Business Protection illness policy isn’t simply the one that covers most • How life insurance can be used as a solution in protecting your illnesses. That’s why we’ve also enhanced three of our clients’ business • Information about taxation existing definitions to ABI+, giving us four ABI+ • Help in identifying potential leads from your existing definitions in total. client base • Case studies • Useful information about the Norwich Union underwriting We’ve also: and claims process. • launched a support helpline for policyholders through Care First Business Protection Client Guide • reintroduced guaranteed rates for stand- A client-facing guide intended to assist you in your discussions around the need for Business Protection with your clients. alone critical illness protection Alternatively, leave this behind when you are arranging follow-up • removed three standard policy exclusions appointments. The guide covers: • introduced new claims criteria for overseas • Why Business Protection is important claims • Information to help clients appreciate the need for • increased our maximum term from Business Protection 25 to 40 years • Case studies • The service your clients can expect from Norwich Union. Our changes mean that more people will potentially Business Protection from Norwich Union be covered – and our definitions will be clearer. So it’s Norwich Union offer three types of Business Protection cover easier for your clients to understand exactly what • Key Person Protection they’re covered for. • Share Protection • Loan Protection For more information about our improvements, The products available are Level or Decreasing Term Assurance speak to your usual AEGON Scottish Equitable sales with and without Critical Illness cover. You can access the Norwich consultant or visit aegonse.co.uk/adviser Union Business Protection Adviser Toolkit by visiting www.nubusinessprotection.com or the Business Protection area of This communication is for professional financial the Norwich Union Adviser Sales Centre. Supplies of the Business Protection Adviser Guide and Client Guide can be requested through advisers only. It isn’t for private customers and your usual Norwich Union literature ordering contact. shouldn’t be given out to, or relied on by, them. 34 - non-investment special issue 29 autumn 2008 Norwich Union and Engaging The Business Trigold join forces Protection Market to offer Simplified Mark Jones - Head of Protection Proposition at Friends Provident If your main income stream is protection sold off the back of a mortgage, Life Insurance the falling numbers of new buyers and reduced appetite for lending could be cause for concern. However, it’s easy to forget that there is a world out Trigold are the UK’s leading mortgage-sourcing company. They have there beyond house buyers! So while it may be an initial shock to the over 26,000 subscribers to their ’Prospector AAA‘ mortgage-sourcing system, now is a good time to look at other potential sources of income. software - equivalent to 7-in-10 of the mortgage adviser market. They have Why not look at other products that are less reliant on the mortgage market now added Simplified Life Insurance into their software, making it easier such as business protection? With an estimated 4.5 million businesses in the than ever for mortgage advisers to sell protection. UK, the Business Protection market could provide you with huge opportunities to generate additional income. A specific version of Simplified Life Insurance has been created for use with Trigold. Advantages include: If you are unsure how to start to tap into this lucrative market, there are a number of steps you can take to identify and engage effectively with • An indicative life insurance quote will be automatically produced potential clients for Business Protection. when searching for a mortgage. There is no need to enter extra details to show the illustrative cost. You should start by taking a look at your existing client bank. Many of your mortgage clients and corporate or High Net Worth clients may also • This will show the affordability of life insurance and will help you require this type of cover. You may have already encountered many discuss protection needs earlier in the sales process. businesses when addressing Inheritance Tax (IHT) cover. • It helps overcome the client objections that either (a) ‘I can’t afford You will need to be able to identify as early as possible who is the key life insurance’; or (b) ’I don’t want to spend more time filling out decision maker in the business so that your effort is focused in the right forms to get a quote.’ direction. We have all heard of stories of hours and days of effort wasted because the adviser had not been dealing with the appropriate person in the • Simplified Life Insurance has been adapted for offline use – you can business empowered to make the final decision. The decision maker could quote, apply and even get instant acceptance offline. be, for example, the major shareholder, the MD, or the Finance Director. • The full quote and application will be pre-populated with data from the client mortgage search. Use and improve your professional connections. Work closely with • We have retained the speed and simplicity of Simplified Life solicitors and accountants, the latter are nearly always the trusted adviser Insurance. The application is on the shortened question set and, that you have to get onside to progress Business Protection. for joint life cases, the questions are displayed side by side making it even faster. Join and work through your local Chamber of Commerce (www.britishchambers.org.uk). There is an extensive national network with • Advisers will receive their full commission payments for business a comprehensive programme of events that provides a great opportunity to submitted, based on their Agency agreement with Norwich Union. network and promote your services. Read up on Trade Associations • Sometimes we may need to collect answers to some additional (www.taforum.org) and use the Business Link Centre questions before a case can be submitted (e.g. about a disclosure). (www.businesslink.gov.uk). There is a choice in how to do this – either by online self-service or by passing the case to a Norwich Union telephone service. Before seeing a client you could obtain their company accounts from Companies House (www.companieshouse.co.uk), giving you a better Please note: understanding of their needs. Some providers offer a pre-application service giving you the opportunity to discuss any issues such as medical 1. This will not affect the existing version of Simplified Life on the disclosure, underwriting limits and tax implications before you have even Adviser Sales Centre and industry portals which remain open for met your client. business. 2. This is not a single tie agreement. We are giving users a quick and See your everyday business suppliers, like printers, caterers and easy way to start writing more Protection business; we are not tying recruitment agencies as potential customers. Or check out local newspapers, them to using only Norwich Union. It will not affect any existing Yellow Pages (www.yell.co.uk) and Thomson’s Local directories arrangements with providers. (www.thomsonlocal.com) and hold seminars for local business owners, perhaps arranged with the local Chamber of Commerce. For further information please contact your Norwich Union Consultant or visit www.trigold.co.uk for a detailed user guide or for further These are just a few of the simple steps you can take to develop your information on Prospector AAA. client relationships and start to tap into this market. Helping to increase your conversion rates You can use the questionnaire to gather detailed information from your clients before you call our underwriting helpline. That means you’ll get How many times have you quoted ordinary rates for a client, only to a more accurate pre-sale underwriting decision, helping you manage later find out that they have an unusual occupation or hobby? Or they your clients’ expectations – and helping you get more business on your suddenly tell you about a previously undisclosed medical condition? books faster. Then when their premium inevitably increases, they change their You can download a copy of our questionnaire at aegonse.co.uk/adviser. mind losing you potential business? We know how frustrating and disappointing this can be – never mind a waste of time for you. So we’ve To speak to an experienced underwriter for advice on any designed a new pre-sale underwriting questionnaire that could be just protection query, call 0845 783 5473 or email the solution. email@example.com issue 29 autumn 2008 tenet community - 35 New Team and New Promises Introducing the team formerly known as Administration… Improvements from The New Business Support Team Commissions The Commissions team have implemented a number of improvements in the last 12 months to streamline and enhance the services we offer. Provider cash receipts are matched and processed more quickly since the introduction of a dedicated resource to the chasing of provider statements in the appropriate timescales. The average turnaround time for queries raised by our members has reduced considerably with 95% now being completed within 24 hours. The level of complaints received from members is at an all- time low with 99% being resolved within 3 days and we now (Names Left to Right) Melissa Bastow, Debbie Inman, regularly receive positive feedback on the level of service Sue Thornton, David Harris, Julie Spencer, Jenni Corrigan, Tracey Griffin. provided by the Commissions team. Additional reporting via the Member System has allowed I am pleased to introduce the newly named New Business members to access information on suspense items at a time Support Team, formerly known as the Administration Department. convenient to their own business schedules and reduced the With over 45 years service between us, we have a wealth of associated downloads from the Extranet and daily email traffic. experience and knowledge. The decommissioning of the BIA system (BAS) in May Our role within Tenet is to ensure your New Business is 2008 has brought the full integration of BIA into processed quickly and accurately and to assist in the speedy Interdependence Ltd to a close. This final step facilitates the completion of policies. We will carry out random quality checks on processing of all commission receipts for all our members via your new business submissions and process all Group Scheme OfficeNet both now and into the future. business on your behalf. The conversion of the provider statements from paper Each member of the team has their own panel of Product Providers who they deal with on a day-to-day basis, ensuring that format to electronic files (via our third-party association with any correspondence received is issued to you within 24 hours and IFA Dataflow) has been a great success. This process allows us keeping policy records in Office-Net updated with any changes. to provide client and policy details on every transaction Our dedicated Help Desk is here to help you with any queries wherever this information is available from the provider in a you may have, and in particular to assist you with using Office-Net time-efficient manner. to obtain quotes, new business submissions, reporting etc. In We are constantly working to make further improvements addition, we will also deal with requests for Administrator access, and with this in mind, we would welcome any feedback on applications for the Exchange and general help in finding your way the services we provide now or could provide going forward. around the Extranet. Benna Brady Debbie Inman Group Commissions Manager New Business Support Supervisor After 4 months of training, the 1 October marks the start of a 1085-mile unaided IT’S GOING journey from John O’Groats to Lands End. Only 90 miles a day should mean we get this done in just 12 days. Over a couple of beers, a good friend agreed to join me on this journey in aid of a TO HURT !.. good cause, cancer research. This is no small task for me and I just hope that we can raise enough funds to make it all worthwhile. Donating through Justgiving is quick, easy and totally secure. It’s also the most efficient way to sponsor me: Cancer Research UK gets your money faster and, if you’re a UK taxpayer, Justgiving makes sure 25% in Gift Aid, plus a 3% supplement, are added to your donation. Tenet’s own Head of Sales, We all know someone who has suffered from this disease, so please sponsor me. Neil Burroughs, gets on his To sponsor Neil, please visit bike for charity www.justgiving.com/neilburroughs 36 - equity release issue 29 autumn 2008 BUILDING SUCCESS IN THE EQUITY RELEASE MARKET Thinking about your business plan and how to maximise new opportunities? Equity release could present you with a new and profitable income stream. Using equity release to support retirement plans is becoming Secondly, new customers. As we have seen, the demand from more popular. In 2007 total equity release lending for the year consumers is growing. Therefore equity release can be a hook to reached £1.4bn.* With falling pension provision, increasing life attract new customers to your business. Make sure your website expectancy and now the effects of the credit crunch more and promotes equity release and use other marketing initiatives to let more being felt by people at or in retirement, it’s easy to see why. prospective clients know you can advise them on equity release. Also, update your IFAP entry if you have one. Advisers are engaging with this market, increasingly seeing equity release as a solution to helping their clients meet their Then there are other business contacts – not only solicitors and retirement lifestyle expectations. So, what does it take to be accountants but also in fact anybody in your local area, who deals successful in the equity release market? with people approaching or in retirement, with whom you could form mutually beneficial business arrangements. Understanding your clients Knowing how those clients who use equity release think, feel and Help for developing equity release business act is a key to unlocking business potential amongst your clients. Depending on the size and structure of your business, you are Typically, equity release clients will be in one of the following likely to have different plans in terms of how much business you groups: want to write. But the critical fact is – you must have a plan and a clear set of actions to support achieving your goals. 1. Average – getting by, but need to generate extra cash or income to meet the rising cost of living For help, visit the Just Retirement online equity release resource area located in their Adviser Centre at 2. Aspirational – their income is more than sufficient to meet www.justretirement.com. There you will find a range of useful their needs, but they want to be able to access cash to tips and advice on running marketing campaigns, plus a wealth enhance their lifestyle and perhaps make home improvements of information and insight on the market. 3. Astute – wealthier customers who are maximising the use of With increasing interest in equity release, make a commitment all their assets and may often consider gifts to help other to service your clients’ needs, because if you don’t – there is family members like children or grandchildren. always somebody else who will! Where to generate interest and enquiries: Start with your own client base. Most advisers find their For more information, please contact Just existing client base is predominantly people aged 50+. They are Retirement IFA support on 0845 302 2287 likely to be planning for their retirement and many will have or email: firstname.lastname@example.org substantial property assets. In other words, perfect prospects for equity release. *Source: Key Retirement Solutions Equity Release Market Monitor, January 2008. issue 29 autumn 2008 tax planning - 37 Loan trusts – your flexible friend Brian Murphy Senior Financial Planning Manager AXA Sun Life With effect from 9 October 2007, the ability to estate, but one very important feature of this type of planning is that all use on death any unused portion of a deceased the growth under the plan will be outside the estate for IHT purposes. spouse’s nil rate band was introduced. This along with remarks made by the Conservatives about An example makes this clearer:- dramatically increasing the nil rate band or even • Assume your client purchases a bond for £100,000. abolishing inheritance tax (IHT) altogether have • No withdrawals are taken and a gross 6% growth rate is achieved. caused some people to think again about the need • After 10 years, the bond would be worth £160,000. If they were to die for IHT planning. Of course, this thinking is basically at that time, the IHT liability on the bond would be £64,000. flawed as the transferable nil rate band on death has not given individuals • However, if the bond had been written subject to a loan trust then, on any more than they could have achieved previously by using a discretionary their death, only the amount of the outstanding loan (£100,000) would will trust on the first death. And, despite the current opinion polls, it is by be added back into the estate on which the IHT liability would be only no means certain that the Conservatives will win the next election or even £40,000 – a £24,000 saving. carry out these proposed IHT reforms if they do. So we at AXA believe that IHT planning should continue to be very It may be that your client would want to take withdrawals from your important in the future. There are many different types of plan available to bond each year. suit your clients’ personal circumstances. We know that there are a • If 5% withdrawals were taken, the value of the bond after 10 years significant number of people, often entrepreneurs who have sold their would be £96,900. businesses or perhaps people who have inherited money from deceased • The IHT liability, assuming the bond withdrawals were spent, would parents and are sitting with large amounts of cash in their bank accounts. be £38,760. Whilst they recognise that they need an IHT mitigation strategy, they are • If you were to pursue the same strategy under a loan trust, and 5% not comfortable with losing all access to capital. If your client falls into that withdrawals were taken each year as part repayments of the loan, then, category, the answer could well be to consider a loan trust. should your client die after 10 years the outstanding loan would be £50,000 on which IHT of £20,000 would be due, giving a saving of These plans work as follows:- £18,760. • Establish a trust, appointing your client and other persons as trustees. • Then make an interest-free loan, repayable on demand, to the trustees Of course, as your client gets older and circumstances change, they may of this trust. well feel that they can afford to make gifts. If this is the case, they can • The trustees use the loan to purchase a single premium bond. execute a deed to waive part or all of their entitlement to the loan • The trustees then take withdrawals from the bond which they pass repayments. This course of action would involve making a gift for back to the client as part repayments of the loan. inheritance tax purposes and they would need to survive seven years before the gift falls out of account for IHT purposes. From an IHT viewpoint, the granting of an interest-free loan, which is Loan trusts have been around for a long time – but as you can see from repayable on demand is not a gift and therefore there are no IHT the above, they can still have an important role if your client wishes to take implications. Depending on the type of trust your client decides to use, income from their investments but still have access to capital. Or simply there may be an IHT charge on the tenth anniversary of the creation of the where they wish to take some action to mitigate IHT but are not certain of trust and when capital is taken out, but with the correct advice these their future income and capital needs. charges can be avoided. For more information on IHT planning speak to your usual AXA On your client’s death, any outstanding loan will form part of their representative or visit www.axa.co.uk/advisers Using Whole of Life guaranteed and reviewable whole of life plans. Guaranteed plans will pay out a set sum designed to meet an expected future tax to mitigate IHT liability, and premiums are fixed from the outset. A plan such as Zurich’s, which offers no surrender value, falls into the ICOB As a nation – and despite the current recession – we have been regime. Reviewable plans run the risk that premiums could becoming wealthier. increase if certain assumptions fail to materialise, such as We often hear of the ever-growing number of millionaires in our anticipated investment returns (being lower) or actual mortality midst. Many have worked hard for what they have, and will have results being worse than expected. Thus, despite our plan having plans to leave a legacy to children and grandchildren. They are no surrender value, it still feels like a more complicated product unlikely to have anticipated the potential tax liability on their which is why it’s covered under the COB regime. estates or the various planning options to avoid this. Zurich has created a powerful tool helping advisers through the IHT mitigation is most certainly a growth area within financial fact-find process, assessing customer needs and providing an services. And there is even greater potential, given the relatively advice audit trail. If you would like to know more about this few intermediaries who are involved. market – or simply save yourself time and money – call your local A simple life assurance solution may be appropriate, in which Zurich Intermediary Group consultant or ring 0500 546 546 for case there are two life products that can help in this area – more information. 38 - retirement special issue 29 autumn 2008 Retirement Special The ‘3rd Way’ Retirement Revolution The ‘3rd Way’ is the latest catchphrase in the Retirement rules), and represents a solution that provides a high level of Solutions arena, with many industry publications currently flexibility. debating this topic. However, is there truly a need for a ‘3rd Way’, However, Income Drawdown does have a downside - client and do consumers fully understand what is currently on offer in exposure to risk. In order for the remaining fund to experience the marketplace? potential growth, it is necessary for the fund to remain invested in At retirement the consumer wants an income. We know that a the market. For many individuals approaching retirement, this may large proportion of the population have underestimated their needs be considered a risk too far. at retirement and are therefore ill-prepared. This may be the This uncertainty has paved the way for the introduction of reason why, when selecting an annuity (the 1st Way), many Guaranteed Income, or the ‘3rd Way’, which has become hugely individuals choose a level annuity – providing them with the popular in the United States and Japan. For those consumers who highest available income at the outset. require flexibility and freedom in their retirement but with the Annuities remain the solution that a large proportion of the UK added bonus of security, Guaranteed Income would appear to be population use to provide an income in retirement. Annuities have the ‘Way’ forward. traditionally offered good value; but in a time of rising inflation The future of Retirement Solutions surely includes the ‘3rd Way’ that particularly affects those in retirement, an ageing population as an option; an option to assist you when planning retirement and the need for retirement income to be more flexible, are income, an option that offers consumers and advisers the best of annuities alone still the best solution? both worlds, and an option that could ultimately prove to be the We then come to Income Drawdown (the 2nd Way). Historically bedrock of your client retirement portfolios. considered to be the solution for the wealthier consumer, an Standard Life are currently developing a guaranteed income Unsecured Pension enables clients to take a lump sum, increase option, available via the SL SIPP. More information on this new and decrease regular income levels (in accordance with GAD feature will be released later in the year. Standard Life's SIPP is evolving Standard Life’s SIPP is evolving, offering you and your clients under Government legislation changes. more options and support than ever before. Here are some of the enhancements available now, or being added over the coming months: Retirement Manager The new holistic planning tool from Standard Life, helping Increased investment choice you to manage your clients' finances both leading up to, and in, FundZone, Standard Life’s mutual fund supermarket, is now retirement. available through its retail and group SIPP, offering an increase in investment choice for both advisers and customers while offering Safer Haven Investment Solutions an innovative pricing approach. This continues Standard Life’s A range of less volatile solutions available to both new and development of its market-leading SIPP proposition, having already existing customers. announced that protected rights can be invested from the 1 October in the SIPP. SIPPZone You can quote, submit new business, track progress, and trade Benefits include: funds at the click of a button on SIPPZone: • Access to over 1,000 funds from Standard Life Investments and http://www.adviserzone.com/sippzone other leading fund managers at attractive rates • All funds available at Net Asset Value (no initial charge) Coming soon - Guaranteed Income Plus meaning advisers can agree transparent remuneration levels There is a new way of taking an income from pension funds with their clients which aims to give the client the best of both worlds from • Innovative pricing approach with large fund discounts and a annuities and drawdown. Guaranteed Income Plus is being discount on the yearly administration charge based on the developed as a new feature on the Standard Life SIPP, and will combined value of insured funds and mutual funds on FundZone offer clients more opportunity to invest and take their income, • Online fund trading to ensure accurate and timely execution with confidence. Further details on the enhancements to our SIPP can be Protected Rights found in the latest edition of Pensions News: Your clients will be able to transfer and invest their existing http://www.adviserzone.com/ezines/pensions/issue13/index.php protected rights pension pots into Standard Life's range of SIPP If you have any questions or require anything further products from 1 October 2008 - the first date this will be allowed please contact your local Account Manager issue 29 autumn 2008 retirement special - 39 Once the investment growth is protected, and the guaranteed Delivering on income stepped up, that income can never go down. a Promise A clear benefit Some commentators have queried whether these products can The UK’s Baby Boomers and their financial advisers are faced deliver on their promises. Central to this argument is cost and its with a unique set of retirement challenges - longer life expectancy, impact on the potential for step-ups. greater market volatility and rising inflation. But a typical Hartford Platinum with GRIP policyholder is Since their introduction to the UK, there’s been much debate charged at approximately 2.5% p.a. and not the 4% that some have over ‘Living Benefits’ products. Some questioned who these quoted. We’ve also analysed historical scenarios to examine how products are suitable for and whether they can deliver on their many times an investor would benefit from a guaranteed income promises. step-up, and can demonstrate a very real benefit. A growing concern Dispelling the myths Until recently, the only way to guarantee an income in We back-tested a number of 10, 15 and 20-year scenarios to retirement was through an annuity. Whilst this guarantees your examine how many times an investor would benefit from a client’s income for life, income may not keep pace with inflation. guaranteed income step-up. Using a 50/50 equity/bond split we Income drawdown doesn’t guarantee your clients income for life, found that investors could have benefited from a guaranteed but does provide greater potential to outpace inflation. But, income step-up, on average, approximately one year out of every because markets can fall as well as rise, your clients may risk two.* This is quite an impressive statistic running out of money. What does the future hold? Improved choice ‘Living Benefits’ products are set to radically change the way we A key point from the introduction of ‘Living Benefits’ products is think about retirement planning. As Cazalet Consulting reports: consumer choice. Annuities should remain popular, due to the “Unit-linked life funds – with flexible, transparently-priced and limited size of many pension pots. Equally, income drawdown relatively low-cost ‘Living Benefits’ attached – could transform remains attractive to those with very large investments. existing product structures and enhance advisers’ financial planning However, there’s a large section for whom a pension with a capabilities in areas such as retirement income planning.” ** ‘Living Benefit’ guarantee would provide the flexibility and To have the opportunity to guarantee a minimum income for life, security they’re looking for. with the potential to increase this income over time and lock this in to help outpace inflation, is a significant product innovation. An innovative solution For more information about Hartford Platinum with the These products typically work in the same way as existing Guaranteed Retirement Income Plan, please contact the Hartford income drawdown plans, except that clients can add the optional on 0800 028 6767 or visit www.thehartford.co.uk/tenet ‘Living Benefit’ guarantee. With Hartford Platinum and the Guaranteed Retirement Income Plan (GRIP), a 60-year-old can withdraw a guaranteed income of 5% per year based on their initial fund value. At the end of each year, the Hartford calculates whether the * Limitations: Step-ups do not stop at age 75; income is a flat 5% and higher or fund value has increased above its previous highest level. If it has, lower rates have not been considered; GAD limits and rates and the resetting of we lock in up to the first 10% of the investment growth to increase income at GAD review dates have not been considered; although data has been guaranteed income. compiled for a number of time series they are not entirely independent due to If the investment growth is more than 10%, the fund value will overlapping time series. increase by the full amount. It’s just the guaranteed income and death benefit that lock in up to the first 10%. ** Cazalet Consulting. ‘Living Benefits – The Investment Holy Grail’, 2007 40 - retirement special issue 29 autumn 2008 Flexible adviser remuneration Free transfer service AEGON Scottish Equitable’s transfer team will: from AEGON Scottish • chase up funds from ceding providers, and any outstanding requirements Equitable – paying you for • make sure annuities are paid as quickly as possible • with your permission, contact your clients direct to obtain any the work you do age or relationship evidence required For more information on AEGON Scottish Equitable annuities, products and services or to get a quote, email them at Flexible adviser remuneration means you can now be paid for email@example.com annuity business by commission or on a fee basis. You can: • receive up to 3% of the annuity purchase amount, or • give up the standard commission rate to increase your client’s AEGON research reveals the annuity and they can pay you a fee changing face of retirement What does it mean for my clients? This new flexibility means your clients: AEGON research,* released on 13 August 2008, reveals a • get the full advice they need significant shift in the way 50 to 65-year-olds are viewing • could receive higher annuity payments for life, thanks to your retirement, showing how role models such as Harrison Ford and advice Madonna are turning the ‘baby boomers’ into a generation of • can pay for the advice they receive in the way they want ‘grandad-olescents’. Making annuities simple • 87% want some form of guaranteed income in retirement AEGON Scottish Equitable have plenty of ways to make your • 61% expect to either carry on working in some capacity after annuities business quicker and easier too. they reach retirement age or pursue further education or charity work Online applications • 42% have no clear idea what income they will have in You can already complete a quote with them online – now you retirement can turn that quote into an online application and submit it straight • 22% fear running out of money in retirement to their annuities team. All you need to do is print a copy, get your client’s signature and post it to them. AEGON surveyed over 2,000 people between the ages of 50 and This gives you the benefits of less admin, greater accuracy within 65 to gauge their attitudes towards retirement and to see what sort the form and less time spent going over information in meetings. of financial provision they have in place. The study shows retirement is becoming a second adolescence, and is more likely to Online tracking include flexible working or a new career, than a carriage clock and a They’re offering you access to a new online tracking system so pair of slippers. you can keep a close eye on any business you have with us from Interestingly, 33% are relying on their pension alone, with no quote to completion. other savings or investments. While these figures wouldn’t seem to You’ll have access to four different types of reports: indicate a comfortable retirement, 86% say they would at least “’get • quotes submitted by‘ financially if they were to stop working at retirement age with • applications submitted (including details of any additional only 14% saying they would struggle to cope financially. This may be information we’re waiting for) because 47% of respondents don’t expect to have a mortgage or • final quotes other outstanding debts at retirement. • completed cases Perhaps understandably in these times of rising prices and This means you can spend less time chasing information, answer falling stockmarkets, securing a guaranteed income during your clients’ questions quickly and manage your own cash flow retirement is at the top of the wish list, with 87% of more efficiently. respondents saying this is most important to them. issue 29 autumn 2008 retirement special - 41 Income in retirement • A choice over where to invest their pension fund During these times of rising prices and falling stock markets, it is • The opportunity to see their guaranteed income rise if understandable that securing a guaranteed income during investment returns are good retirement is at the top of the wish list. Income for Life offers a third way for taking an income in retirement, by providing an Guaranteed solutions unsecured pension plan with a guaranteed income. The fund can Income for Life is just part of AEGON’s range of innovative rise with the stockmarket but the level of income doesn’t fall. And guaranteed solutions, to find out more, visit the story doesn’t end there. Even if the value of a pension fund falls www.aegon.co.uk/guarantees. You can also watch our video webcast to zero, we’ll still guarantee an income for life. of Rachel Vahey, Head of Pensions Development, talking about why guarantees are so important in the current climate. What can Income for Life offer your clients? Alternatively, contact your local AEGON Scottish Equitable • A guaranteed income for life consultant or phone access on 0845 61 000 61. • The opportunity to leave an inheritance from their pension fund when they die *To get details of the full report, visit www.aegon.co.uk/media A toast to income withdrawal Your clients can avoid getting their fingers burnt by the where there is no requirement to take any income. Additionally, inflexible annuities market through focusing on pension on death, family members could benefit from the remaining pension income withdrawal. fund (less tax). In the current market, annuities are on the slippery slope to becoming less popular. Recent years have seen a decline in the Measured risks acceptance of the requirement to buy an annuity with pension Retaining control over investment strategy and risk management funds, dropping from 57% in 2001 to 30% in 2007*. is a key element of income withdrawal. Overall performance is This trend shows a growing demand for flexibility, and there affected by the amount of income and frequency with which it is are a number of products designed to meet this. However, the taken, but the principal risk of income withdrawal is that the fund’s value of existing income withdrawal schemes should continue total value will fluctuate depending on the value of the client’s to be considered. investments. With a wide range of options, advisers need to pick and choose the best fit for their clients. Critical to the advice and decision- There is the potential for gains, but also for losses and your client making process is the client’s retirement plan. A final retirement will need to accept some level of investment risk. It is vital that the strategy should do more than just look at pension wrappers; other investment is closely monitored over time to ensure it continues to assets such as ISAs should be considered, along with possible tax meet the investor’s requirements. Once in withdrawal, the client’s benefits. attitude to risk may change with the performance of their funds. Risk-matched funds can also be a way to manage a client’s Accumulation and decumulation investment. Portfolio construction is increasingly focusing on A pension has two broad phases in its lifecycle, accumulation and understanding a client’s attitude to investment risk. Advisers need decumulation. During the accumulation phase, clients and advisers to know how much of a loss their clients can tolerate and ensure need to regularly consider the retirement strategy of the client. this is reflected in asset allocation. Factors such as residency, taxation and whether to continue funding a pension should be continuously examined in order to ensure tax Income withdrawal is not necessarily going to be appropriate for optimisation. everyone, but it is important to consider as an option so clients don’t miss out. As part of the flexibility and control offered by The decumulation phase is the time to start enjoying the rewards income withdrawal, it is possible to take the pension commencement of all that effort. In the past that meant compulsory purchase of an lump sum and no income. This may be useful for those clients who annuity, providing a guaranteed annual income for the rest of the have other sources of income and either wish to manage their person’s life. Clients who decide not to purchase an annuity need to income tax liability or only require the lump sum payment. allocate assets accordingly, taking into account how they will decumulate and over what time frame. This doesn’t mean that annuities will disappear entirely. It is all about client choice, suitability and meeting the client’s needs; with Income withdrawal allows the pension fund to remain invested so many options available there is a clear opportunity for advisers to and income to be withdrawn from it. Unlike an annuity the investor add value. The ‘at retirement’ market continues to become even can retain control over the investment, tailoring it to suit their more sophisticated and complex, and Skandia believes it has quickly circumstances and requirements. become a highly specialist area. The need for permissions, qualifications, or alternatively, the potential to outsource advice to a Income withdrawal offers flexibility and choice – income can be specialist will become increasingly critical. Decisions made at varied monthly and an annuity can still be purchased at any time, if retirement can have a dramatic effect on financial security in later so desired. Furthermore, tremendous flexibility exists regarding the years, so the need for advice is paramount. level of income that can be selected, particularly prior to age 75, *Retirement Planning Monitor 2007, Marketing Sciences ltd. 42 - retirement special issue 29 autumn 2008 Assuming too Cash equivalent Trustees can adjust the initial cash equivalent value to take into much? account options which would reduce it (e.g. commutation). Adjustments must consider the proportion of members likely to Updating you on the basis of exercise such options. For final salary schemes, the initial cash calculation of transfer values from equivalent must be calculated on the guarantee date. Currently in final salary pension schemes. certain circumstances, trustees can extend the period for providing the cash equivalent to three months. From October this will be A ‘scheme-specific’ approach is to be adopted for the calculation extended to six months. of transfer values from final salary schemes. The new approach, which will apply from 1 October 2008, is based on the expected cost For members of defined contribution schemes who leave after at of providing the member’s accrued rights, had they remained in the least three months, with less than two years’ pensionable service, final salary scheme. Trustees will determine the calculation regulations currently require cash transfer sums to be calculated assumptions on a ‘best estimate’ basis. They will be responsible for when the member retires. The initial cash equivalent can now be calculating and verifying transfer values and could pay a higher cash adjusted to allow for investment performance from termination of equivalent than the minimum (with employer consent). pensionable service to the date of transfer. The regulations do not define the term ‘best estimate’, with Summary trustees and advisers left to determine what is suitable to the Transfer values should remain broadly as they would have been circumstances of the scheme. For example, in choosing a discount under an unamended GN11. However, a wider range of transfer rate a scheme should take account of the membership investment values may be quoted by salary-related schemes, depending on the strategy. Therefore if a scheme will back the payments of members’ variation in assumptions used by trustees. At this early stage, it is pensions by investment in gilts or bonds, that should be reflected difficult to judge the impact on the transfer market. in the post-retirement discount rates. Cash interest rates on SIPPs Ian Naismith, Head of Pensions Market Development, Scottish Widows One side-effect of the information Typically, positive cash balances in SIPPs will attract interest of revolution in the UK is that we have about 1% below bank base rate, although in some cases the interest become a nation of switchers. It is now added is considerably lower than this. However, by shopping very easy to compare different providers around it is possible to obtain interest as high as base rate on of services ranging from utilities to positive cash balances. mortgages to internet access and to move This can be significant. With a SIPP fund of £500,000 of which our custom if we believe we can get a 10% is held in cash, a 1% change to the interest rate can make a better deal elsewhere. For many (though difference of £500 a year, which either increases the investor’s fund by no means all) of the population finding . or adds to the effective charges for the SIPP This could be more a better rate has become more important than the total of other charges that are explicitly disclosed. than customer loyalty or service quality. However, any money held in our Retirement Account’s unique control account will receive a positive balance adjustment This switching mentality has, of course, extended to bank equivalent to the Bank of England base rate. That means that right accounts as well. Many people gain significantly better interest rates now your client will receive 5%. by moving, often to online banking facilities. Most of us have little But don’t just take our word for it. Our decision to pay base rate or no personal relationship with our bank manager these days, so it on any cash holding in our Retirement Account was highlighted in makes sense to maximise the interest we can earn. the July 2008 issue of Investment Life & Pensions Moneyfacts, as comparing favourably across each of the investment levels. Surprisingly, the search for the best available interest rate often appears a lower priority for those investing in self-invested personal The FSA expects SIPP operators to consider whether prospective pensions, where the rates available on funds left in cash can vary members are likely to be interested in the level of charges on considerably. There will frequently be large amounts held on interest-bearing accounts, and if so would expect them to be deposit waiting for more active investment, but it is not uncommon transparent. It is difficult to see how investors could fail to be for as much as 10% of the total to be held in cash long-term. interested if they are concerned about cost, and so it is important This percentage can increase substantially during income drawdown that the treatment of cash balanced is appropriately highlighted by (unsecured pension) when it is common practice to hold income for providers and advisers. It may not be the main factor in choosing the following year, or even two years, in cash to guard against the one product above another, but it should certainly be an important risk of a market crash. consideration. issue 29 autumn 2008 retirement special - 43 Wha t 2010 means to your clients From 6 April 2010, the minimum age at which pension Maximising the opportunity scheme members will be able access their pension • Identify those clients born between 6 April 1955 and benefits will jump from 50 to 55. 5 April 1960. • Next review the finances and personal circumstances of this This raises significant planning issues for those clients currently group to find out whether any of them will need to access their between the ages of 48 and 53, as this group will have the option to pension in the near future. access their pensions restricted if they don’t act before 6 April 2010. • And finally ensure that they are in a pension vehicle that allows Of course not everyone in this group will need to access their them to receive the benefits required – this may require them pension immediately and some may be able to defer taking benefits to transfer to a new pension plan before 6 April 2010. for up to 5 years. But what about those clients who do have a genuine short-term need to access their pension, whether for a lump sum or a regular income? How will they feel if they find out Find out more about Income Release: they could have accessed their pension benefits if only they’d acted If you'd like more information about Income Release and how it before 6 April 2010? can help your clients plan for their retirement, please contact your usual Scottish Life representative or call us on: Scottish Life's solution - Income Release Income Release is a fully integrated drawdown facility available through our Pension Portfolio product (personal pension/SIPP) that allows your clients to access their pension benefits at a time and in 0845 60 40 800 or go to our website www.scottishlife.co.uk/incomerelease a way that suits them from age 50 onwards. Features of Income Release include: • Available on plans worth £20,000 (excluding any self-invested assets) plus • Base AMC from just 0.7%, which is reduced by a rebate of 0.25% on funds above £21,600. • Wide range of investments – both insured funds and self investments. • Pension Commencement Lump Sum (PCLS) and income from both Non-Protected Rights and Protected Rights funds. • PCLS and income usually paid within 5 working days. • Up to 7.5% up-front commission on transfers plus 1% FBRC based on total fund. • PCLS, income and commission paid on completion of each transfer payment.
Pages to are hidden for
"Building on strong foundations (PDF)"Please download to view full document