Understanding pensions on divorce

Understanding pensions on divorceI have just read a single joint expert witness report prepared to answer the question “How should the pension funds be split between a couple, on divorce, to provide equality of income?”

The report presented an outcome where the wife would receive 56% of the cash equivalent value of one of her ex-husband’s pension schemes.

Subsequently the husband has asked that the share be amended because his pension scheme (a SIPP) has risen in value since the report was prepared.

He feels that his ex-wife should get a smaller percentage (54%) of the now larger cash equivalent.

The wife asked my opinion.

I explained that it could take a number of months before the share was implemented and it was perfectly possible that the cash equivalent value could be lower than the number used in the report.

So by accepting a reduced percentage it seems that she would be taking all the risk.

If the value continued to rise, whilst she would receive a higher monetary value, it would not produce the equality of income tested in the report (his income would be potentially higher)

If, on the other hand the value fell her 54% would represent a smaller monetary amount than otherwise would have been the case.

It seems only fair to me that both parties should share the risk of a value falling and indeed share in the upside of any growth achieved.

What was disappointing was that the lady in question advised me that her Solicitor had said to her “I don’t really understand pensions!”

It seems to me that she needs a Solicitor who will challenge things like this and take expert advice where needed.

For a copy of our booklet A Guide to Your Pension Sharing Order on Divorce visit the link below or call us on 01483 274566 to request a copy:

The Informed Choice Pensions & Divorce Guide 2013-14

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Regulatory reporting

Regulatory reportingWhen you’re working with a financial adviser, you will want to be confident they are a financially robust firm.

All authorised and regulated financial adviser firms in the UK are required to be solvent and hold a minimum level of ‘capital adequacy’.

Our regulator, the Financial Conduct Authority (FCA) monitors this capital adequacy in a number of ways, including a twice yearly set of regulatory reporting.

This morning I have completed our Retail Mediation Activities Return (RMAR).

As a firm, we have to report twice a year; following our company year end on 31st July and an interim report at the end of January.

This regulatory reporting covers a range of questions, mostly focusing on the financial aspects of our business.

The deadlines involved mean our accountant has to quickly prepare a final set of accounts, as the figures we report to the FCA need to match precisely those provided to Companies House, despite having much longer to make accounting adjustments for the latter.

We also report details of our Professional Indemnity insurance, any client complaints we have received during the period (thankfully a nil return) and our typical charging structure.

This is all data which, I’m sure, the FCA runs through their systems and uses to identify any potential problems, hopefully acting before there is a risk of consumer detriment.

In addition to this regulatory reporting to check capital adequacy and PI insurance is in place, consumers are protected when dealing with their financial adviser by the presence of the Financial Services Compensation Scheme (FSCS).

This compensation scheme is funded by the financial services sector, with firms such as ours paying a substantial levy (tens of thousands of pounds each year) into a central fund to compensate the victims of failed firms.

We often express our dissatisfaction with the unfair nature of FSCS funding, despite its importance for consumer protection, because it means the polluter doesn’t (usually) pay for its misdemeanors.

It was particularly upsetting to see today, as I was submitting our regulatory return and reporting figures on which they calculate our regulatory fees for next year, that the FSCS is embarking on a £3.3m consumer awareness campaign.

This national advertising campaign features five celebrities, including Fearne Cotton.

Of course it’s easy to spend money when it belongs to other people, so no doubt this £3.3m will simply be tacked onto our regulatory fees next year, along with paying for the failure of advisers who should have maintained capital adequacy and had valid PI insurance in place.

Regulatory reporting acts as an important check and measure for regulated firms.

It unfortunately exists within a regulatory system where the combination of capital adequacy and Professional Indemnity insurance is not doing enough to hold back the tide of claims against the celebrity-endorsed Financial Services Compensation Scheme.

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Advice vs Guidance

Nick Bamford Chartered Financial PlannerIn announcing the Freedom and choices in pensions changes the Government has introduced the concept of the Guidance Guarantee.

Put simply everyone aged over 55 with a pension pot (a defined contribution pension plan) that they are considering converting into benefits will be entitled to “free and impartial guidance at retirement, to help them make confident and informed decisions.”

It is our contention that not only will “guidance” be confused with “advice” but that the provision of the Guidance Guarantee will be at best clunky and simply, in most cases, replicate what happens when a consumer takes authorised and regulated advice.

But it will leave the consumer hanging in the air no better equipped to make an informed choice.

It is claimed that the user of the Guidance Guarantee will be “signposted” towards the advisory community but frankly for up to 85% of guidance users will simply find the price of independent, impartial professional advice beyond their budget if they are seeking value for money.

Those people who need or want advice will already be seeking that service.



Will I receive specific advice and recommendations about what I should do?

No. Guidance is not Advice. It can help you to “think” about what you might do but it cannot replace specific advice and recommendations as to what you “should” do.

Yes. Your adviser will provide specific advice and recommendations and tell you exactly what you should do

Will I be told about the advantages and disadvantages of any course of action?

Yes. There are advantages and disadvantages to any course of action with your pension plan and the guidance service should highlight these.

Yes. Your adviser will describe the advantages and disadvantages of any course of action that they recommend and will place equal emphasis on them.

Will the guidance provider or adviser obtain detailed information about my existing pension arrangements for me?

No. The guidance provider will ask you a lot of questions to help you think about your choices and options but you will have to provide them with details about your existing retirement plans provided by your plan provider.

Yes. Your adviser will ask you to provide a letter(s) of authority and will then do this work for you. They will obtain detailed information about your existing retirement plans from each of your plan providers.

Will the guidance service provider or the adviser be covered by Professional Indemnity Insurance and be subject to the Financial Ombudsman Service (FOS) rulings if a complaint is made and also protected by the Financial Services Compensation Scheme (FSCS)?

No. Remember this is not authorised and regulated advice and the guidance service provider not therefore required to offer these protections.

Yes. Your adviser will provide authorised and regulated advice and will therefore be required to offer these important protections

Will the guidance service provider or adviser provide me with a written report detailing the actions I need to take?

Yes. The guidance service provider will confirm back to you the sorts of things that you need to think about before you make any decisions.

Yes. Your adviser will confirm their advice and recommendations in writing before you proceed. This will typically be in the form of a detailed report or a suitability letter. Your adviser will discuss this report/letter with you so that you have the chance to ask and have answered any questions that arise.

Will I receive specific, personalised illustrations of the pensions product solutions being recommended?

No. You will not receive a specific recommendations and will not therefore present you with specific personalised illustrations.

Yes. Your adviser will present to you personalised and specific illustrations of any plan recommendations that they make. They will describe costs and charges and risk associated with their recommendations.



Will I be told which product provider I should use to provide my retirement benefits?

No. Remember it is guidance and not advice

Yes. Your adviser will research the whole of market and select plans that they believe based on their professional judgement are best for you.

If I decide to proceed with the guidance or advice will the service provider or adviser help me to complete any application form?

No. Remember it is guidance not advice

Yes. Your adviser will work with you to complete any application form(s) that are needed as well as any transfer forms required by your current pension plan provider. They will submit these forms to the recommended provider and ensure that your benefits are paid in a timely fashion.

Will I have to pay anything to the guidance service provider or adviser?

No. the cost of the guidance will be borne by a levy on the financial services industry including the adviser community

Yes. Your adviser will charge you for their professional services. Their charge will be disclosed to you in advance of any work commencing.

What is “signposting” and what value does it provide to me?

Your pension provider will signpost you (point you to) the guidance service from The Money Advice Service (MAS) or The Pensions Advisory Service (TPAS) of MAS or TPAS believe you should seek advice they will signpost  (point you to) you to advisors- you probably thought about doing that anyway!

Advisers don’t “sign post” they give specific advice and recommendations- this is much more valuable than signposting

Will the guidance service provider or adviser remove the “stress”

Not really, no

Yes. Your adviser will de-stress the at retirement making decisions

A far better solution is to compel pension plan providers to issue a guidance package as described in the FCA Consultation Paper CP14/11: Retirement reforms and the Guidance Guarantee and for a very strong wealth warning to be provided;

WARNING: Not shopping around before buying your pension benefits will make you worse off in retirement.

Do not fall into the trap being set, guidance is inferior to advice in just about every respect.

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European TREC Championships in Italy

European TREC Championships in ItalyThe Great Britain TREC Senior and Junior rider teams will be competing at the European Trec Championships in Scandiano, Northern Italy.

This event starts today and finishes on 8th September.

Here at Informed Choice, we are pleased to be sponsoring TREC Team GB and have funded their saddle cloths for the competition (pictured).

TREC Team GB includes the current European League champion and have a realistic chance of both a team and individual honours at the Championships.

They are entirely self funded but are very grateful to Informed Choice, the financial planning specialists from Surrey, for the supply of GB team saddle cloths, and Toggi for the GB team clothing.

All team members are fully committed to furthering the sport of TREC within the UK and on the international stage and are building a strong social media presence as well as publicity generated through national equestrian publications and support of the various regional TREC groups, including one of the largest, South East Trec.

Regular updates and photos will be posted online during and after the competition.

You can find the latest news on their Facebook page at www.facebook.com/pages/BHS-TREC-Team-GBR.

Best of luck to Team GB from everyone here at Informed Choice.

Read more about our sponsorship of TREC here

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Iron Man (& other superhero Financial Planners)

Iron Man (& other super hero Financial Planners)If Marvel made Financial Planners, their base of operations would be the Informed Choice head office in Cranleigh, Surrey.

In the past couple of weeks, two Informed Choice directors have signed up for superhero challenges in 2015.

Our financial planning director Andrew Neligan is tackling Ironman UK next year.

This iron distance triathlon takes place in Bolton on 19th July 2015, encompassing a 2.4 mile swim in Pennington Flash, 112 mile bike ride and then a marathon (26.2 mile) run to finish things off.

Andrew has completed a half ironman distance triathlon before, and also the notorious Helvellyn Triathlon with its run to the top of England’s third highest peak, but this will be his first attempt at the full Ironman distance.

Meanwhile, our managing director Martin Bamford has signed up to complete a 100 mile ultra marathon.

The Petzl South Downs Way 100 is a 100 mile point-to-point ultra marathon along the South Downs Way from Winchester to Eastbourne, taking place on the South Downs Way National Trail on 13th June 2015.

Only 300 lucky entrants will get the chance to run, walk and hobble the 100 mile trail race (with 12,700 feet of elevation gain) within a 30 hour time limit, which will see runners out on the South Downs through the night.

We breed them tough, determined and inspirational here at Informed Choice.

How do you like your Financial Planner?

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Europe is still in crisis

Europe is still in crisisThought the financial picture across Europe was improving?

We have often said that, rather than resolving the European sovereign debt crisis, all political leaders there have done is to defer it until a later date.

Today we have seen the European Central Bank (ECB) cut the deposit rate a further 10 basis points to -0.20%.

Yes, that’s right, a negative interest rates on deposits; you must now pay your bank to look after your savings.

This is in response to the latest set of weak economic data and a fall in long term inflation expectations.

In short, the ECB are fighting a major battle against the scary prospect of deflation.

Commenting on this announcement, Fidelity’s Trevor Greetham, their Director of Asset Allocation, shared some interesting thoughts:

“There is no further room to cut rates so the focus is now squarely on the liquidity injections and asset purchase programmes already announced.

“President Draghi kept the door open to sovereign bond purchases and he continued to talk the euro down by drawing attention to other central banks heading towards tightening.

“Most interesting, he repeated his call for a more growth-friendly fiscal stance.

“As he put it, ‘each of us has to do our own jobs’ in order to get inflation back to its 2% target.

“What Europe really needs is a much easier fiscal stance in countries like Germany but that isn’t likely.

“All told, today’s policy changes aren’t enough to cause growth to come surging back in the euro area but things are looking brighter in the US where business confidence is strong and consumers are buying cars and houses once more.”

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Slower growth, higher stock markets

Slower growth, higher stock marketsAs an investor, it is important to realise there is often a disconnect between the economy and stock market.

The CBI has warned this week that British economic growth is likely to slow down during the second half of this year.

This predicted slowdown is the result of easing business confidence and consumer spending.

They are forecasting quarterly growth will slow to 0.7% in the third quarter and 0.6% in the fourth quarter, following two consecutive quarters of 0.8% growth.

The CBI did however say they think the economic recovery is “on solid ground”.

Economic growth over the past year comfortably beat other G7 nations.

Despite this expected economic slowdown, corporate results and stock market valuations are looking pretty good right now.

The FTSE 100 index of leading UK company shares is having a nice time of it right now.

It is brushing the 6,900 level and setting a new 52-week high, requiring only a tiny nudge to reach its all time high of 6,930, reached previously on the eve of the Millennium.

If the FTSE does go above 6,900 and even above 7,000 points before the end of this year, with the economy slowing at the same time, it should act as a timely reminder that investors should not link the two too closely.

Markets can rise when economies are tanking, and vice-versa.

The two can act reasonably independently of each other, so don’t wait for positive economic news before investing; it will often be too late by this stage.

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20 Reasons Why You Will Spend Retirement Worrying About Money (and 13 things you can do about it)

20 Reasons Why You Will Spend Retirement Worrying About MoneyYou will worry about money in retirement because:

1)    You will not invest enough on a regular basis.

2)    You will not take the appropriate amount of investment risk at the right time.

3)    You keep putting off looking at your finances.

4)    You don’t trust investment professionals to advise and manage your money on your behalf leading to costly mistakes.

5)    You have no plan for your wealth so don’t know how long it will last.

6)    You haven’t given enough consideration of what retirement will look like for you.

7)    You don’t discuss money with your partner and so have different objectives.

8)    You don’t use tax breaks that are (legally) available to you.

9)    You feel obliged to support your children even though they flew the nest long ago.

10)    You will purchase an annuity from your incumbent pension provider rather than considering your options.

11)    You will rush to take money out of your pension come April 2015 without consideration for the real costs.

12)    You blindly follow the financial press’ share/fund tips without consideration for whether they are appropriate for you.

13)    You see property as the investment panacea and ignore all other asset types.

14)    You were burnt once by a stock market crash and so now avoid investing in them at all costs.

15)    You get hooked into marketing hype about an investment that gives high returns with no risk but it turns out to be the opposite.

16)    You don’t review existing investments so don’t know they are poorly performing and/or expensive.

17)    You don’t review your spending and are paying for things you don’t need or value without knowing it.

18)    You believe “cash is king” but ignore the effect of inflation on your wealth.

19)    You will follow the herd and “buy high and sell low” when investing.

20)    You will choose a financial adviser whose sole motivation is making money from you rather than for you.

And what you can do about it:

1)    Start planning early enough (at least ten years ahead of your intended retirement date)

2)    Take time to think about what you want to get from retirement and when you want it to be.

3)    Talk to your partner to understand their motivations and wishes.

4)    Review your current financial position and what you expect it to be in the future (income versus expenditure and assets versus liabilities).

5)    Forecast how long you expect your money to last based upon your current position and expectations for the future.

6)    Consider how much risk you are willing to take with your money and what impact this will have on your long term wealth.

7)    Regularly save as much as you can (this may mean you have to prioritise long term financial security for short term luxury items).

8)    Use tax allowances that are available to you (pensions and ISAs being the main ones).

9)    Invest in a broad range of assets according to the risk you are comfortable taking.

10)    Make sure you don’t over pay for the cost of investing (total costs  of over 1.5% pa would be expensive).

11)    Be clear on all of your options, especially at the point of retirement, so you don’t make irrevocable decisions.

12)    Review your position against your objectives on an annual basis.

13)    Engage the services of a financial planner who you are comfortable with and who focuses on you and your retirement objectives.

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5 reasons to fire your financial adviser

5 reasons to fire your financial adviserThere can be many reasons for firing your financial adviser.

Here are 5 reasons to fire your financial adviser we believe should act as a good catalyst for changing to another firm or individual.

1 – They don’t communicate

How often do you hear from your financial adviser? A good adviser should be in touch on a regular basis, using a variety of methods including email, telephone and face-to-face contact.

If you don’t hear from your financial adviser on at least an annual basis (at a personal level, such as a scheduled phone call or a face-to-face meeting), this might indicate it is time for a change.

During the 2007/08 global financial crisis, we started working with a number of new clients who had fired their existing financial adviser because they no longer heard from them.

When equity markets started falling and there was a general sense of nervousness about financial matters, some financial advisers pulled the curtains shut and unplugged their telephones.

If you discover your financial adviser only wants to talk when the markets are rising, this might indicate they are uncomfortable having important conversations when you need their services the most.

Fire them and find a better adviser.

2 – They don’t take their professional development seriously

Since 31st December 2012, all financial advisers in the UK have needed to hold a professional financial planning qualification at QCF Level 4.

This was the new minimum requirement after years where the educational requirement for financial advisers was equivalent to a GCSE.

Of course the new minimum standard is only a minimum, and most investors will want their financial adviser to be qualified to a higher professional standard.

If your financial adviser just scraped through the new Diploma requirements, or has shown no intentions of progressing to more testing professional qualifications such as Chartered Financial Planner or Certified Financial Planner, it might be time to say goodbye and replace them with a more suitably qualified adviser.

3 – They don’t have a clear succession plan

The average age of a financial adviser in the UK is somewhere in the mid to late 50s.

Who is going to look after your financial affairs when they retire, either by choice or through poor health?

If you’ve not already asked your financial adviser about their succession plan, now is a good time to pose the question.

If your financial adviser does not have a clear succession plan, now might be a good time to replace them with a younger adviser or an adviser who has the next generation of financial advisers already in place within their firm.

And if your financial adviser has a succession plan which involves ‘selling’ you as a client to another firm, make a swift dash towards the exit before this takes place and find a new financial adviser who values your ongoing relationship.

4 – They are constantly trying to sell you products

If your financial adviser views you as a sales opportunity, it’s time to fire them and find another.

Financial advice has come a long way over the past decade, with Financial Planning and charging fees for advice, rather than receiving a commission for selling products, now standard practice.

Some financial advisers remain trapped in an old sales environment, where the replacement of commission with ‘adviser charging’ at the end of 2012 has done little to deter their product flogging ways.

If a new product gets mentioned each time you meet with your financial adviser, fire them and find a new adviser who understands that Financial Planning is about much more the product solutions.

5 – They make questionable investment recommendations

Was your financial adviser in the minority who sold unsuitable, high risk, unregulated investments to retail customers?

Some of those financial advisers who sold the likes of Arch cru, Keydata and other questionable investment schemes are still in business, having moved to new firms and dumping their previous liabilities on the industry compensation scheme, the FSCS.

If your financial adviser has made highly questionable investment recommendations in the past, fire them and replace them with a more competent adviser who is capable of carrying out due diligence and protecting you from dangerous investments.


These are five of the most common reasons we come across for people firing their financial adviser and finding a replacement.

What other reasons are there for firing your financial adviser? Use the comments section below to add your thoughts.

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Cranleigh Food Festival 2014

Cranleigh Food Festival 2014We are very pleased to be sponsoring the Cranleigh Food Festival 2014 as it returns to the village for a second year.

The Cranleigh Food Festival 2014 is the food and drink festival put on by Cranleigh Arts Centre in association with Splendid Occasions.

It takes place at the Cranleigh Arts Centre on Saturday 4th October 2014 from 10am to 4.30pm and it was exciting to hear today about some of the local food suppliers who have already signed up.

The following exhibitors have already confirmed they will be there, with a number of others due to confirm in the next couple of days:

Hebridean Liqueurs
Riverford Home Delivery
Cocoa Antics
Pure Chocolate Truffles
Chalk Hills Bakery
ollo Foods
My Secret Kitchen
Pinch Seasoning
Garlic Wood Farm
Spotty Cat Crafts
Doddle Rocks
Delicious CupCakes

There are still a couple of stalls available, so please email info@splendidoccasions.co.uk if you would like to reserve a pitch.

Entry to the Cranleigh Food Festival is only £1 and over 700 people visited last year, so we expect this year to be even busier with a wider range of stallholders.

We look forward to seeing you there.

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