Press Release – Money Guidance 31 December 2013

Published on: December 31, 2013
CategoriesDIY Investment

 FOR IMMEDIATE RELEASE                      

Manchester: Tuesday, 31 December 2013



Community Interest Company launches a financial planning website service -

where profits and assets are used for the benefit of UK financial consumers

The FCA-authorised Money Guidance has been granted Community Interest Company status – a first for a financial planning business of this type – with the aim of confronting consumer concerns over trust within the financial services sector.  Further, having already gained national coverage for providing risk assessment and cash flow planning tools free to the public has considerably extended its website offering.

There are now two distinct elements to the Money Guidance website:

(A)  The Free element continues to give access both to FinaMetrica`s risk-profiling and MoneyVista`s cash flow planning tools, along with detailed guidance on investment direction.  Helpful links are also provided to the True and Fair Calculator, Money Advice Service, Age Concern, Which? and APCIMS, with the aim of improving financial decision-making among consumers.

(B)  The new Premium Content is available for a flat annual fee of £50 and provides:

  • Unlimited transactional capability, using the acclaimed service from Royal London`s Investment Funds Direct Limited (IFDL), which accommodates lump sum or regular contributions into a wide range of investment wrappers – including ISAs and SIPPs.
  • Annual portfolio re-balancing prompts.

All additional Premium Content services, with the exception of the IFDL trading facility, will be made available free for a 3 month trial period to site visitors who register their interest.

The low annual fee will contribute to the future quality and scope of the Money Guidance community website.  For instance, the introduction of web-based advice from Chartered Financial Planners (at a heavily-discounted £60 hourly fee rate) is under active development.

The Money Guidance team brings with it more than 100 years` combined experience in this sector and includes two Chartered Financial Planners – Philip Dodd and Alan Cheetham

Dodd commented: “Hardly a week goes by without another DIY execution-only website appearing. Most are product-focused and do not equip people with the necessary planning framework for their personal finances. Traditional investment initiatives have come to be regarded with suspicion, and so a financial services business involving publicly-earmarked profits and assets should go a long way towards restoring trust.  Our website provides investors with essential financial guidance combined with low-cost execution services.”

For more information see





  • Money Guidance CIC levies a flat annual fee of £50; IFDL charges between 0.30% and 0.10% per annum on the value of assets held, subject to a minimum of £30 p.a. (with no further transaction costs for standard investment funds).
  • Money Guidance CIC offers Free access to FinaMetrica and other valuable support tools/links, plus Premium services.  This is a social enterprise which will use profits and assets for the furtherance of consumer financial planning knowledge.
  • The recurring theme of the Money Guidance website is the need for investors to focus on driving down costs. This includes avoiding the practice of buying last year`s winners, in favour of a disciplined, longer term strategy – centred on index-trackers.
  • For further information, please contact Philip Dodd (Managing Director) on 07976 689840 or email:



Money Guidance CIC, Bradley House, Prestbury, Cheshire SK10 4HF


Money Guidance CIC is an Appointed Representative of Alan Cheetham (Asset Management) Limited, a company which is authorised and regulated by the Financial Conduct Authority.

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From Vacuity To Acuity (In No Easy Steps)

Published on: November 10, 2013
CategoriesDIY Investment

“Those who are too smart to engage in politics are punished by being governed by those who are dumber”.  Although much of my brief flirtation with Ancient Greek in the 1970s has long since become a hazy memory, some may wish to parallel these words from Plato with the current behaviour of many consumers with financial services.

Perceptions take a long time to change.  From within the advisory camp, I have witnessed a gradual transformation of the attitude towards financial consumers – from the 1970s/1980s “prospects and  “punters”, through to “customers” and finally arriving at the present day “clients”.  That there has been a growth in professionalism in the financial planning sector over the last thirty years is indisputable.  And I am not talking merely about pieces of paper, when qualifications have become a sine qua non for continuing to offer advice. The metaphor of hunters seeking one-off kills of their prey has slowly been replaced with one of farmers who cannot afford to neglect their livestock (or indeed livelihoods).

Which makes it all the more ironic that consumers of financial services have been moving in precisely the opposite direction over the same forty year period.  From a time when financial advisers were generally regarded as adding some value (irrespective of the truth of this) to the prevailing attitude that they represent a costly level of intermediation which is not worth the candle, we have regressed into an era of dangerously polarised stereotypes.

Of course, this can be seen as part of a broader societal malaise.  It has almost become a mark of cleverness to profess generalised disdain for what was previously accepted. All politicians are liars. All journalists are weasels. All financial advisers are parasites. The difference between a hedgehog and a lawyer lying in the road is that there are skid marks near the hedgehog. You get the picture.

The problem with this convenient, compartmentalised philosophy is that the resulting cynicism produces far worse outcomes than any cautious engagement might have done.

At a time when (according to Axa Wealth) 56% of consumers said it was hard to understand investment jargon without the use of an expert, the numbers of those previously regarded as experts have fallen over the thirteen months to December 2012 from over 40,000 to little more than 30,000.  Some would maintain that this is the fault of investment jargon and that the industry should do something about it.  Possibly – but how simple can a complex subject become? Should we write off all professions as largely superfluous? You can, if you prefer, call a pension a, “pot to help you out when you stop working”, but this won`t dispense with 57 years of relevant legislation. You would not start from here, but unfortunately we are where we are.

One of the benefits of having a couple of years out of the front line of financial services has been the luxury of a dispassionate view about what has been happening in the interim.  If I had thought that client relationships had been degenerating a few years ago, this was nothing compared to what is happening now. Cynicism has bred mutual cynicism. The allegation is often that financial advisers can`t be trusted. It turns out that many clients cannot either, undermining any possibility of a productive relationship.

On a regular basis, wholly unexpected (and invariably unmerited) complaints are being received by competent financial planners  - often originating from Claims Management Companies. The latest I heard of yesterday was from an 82 year old gentleman who believed that he should have purchased an index-linked annuity some 17 years earlier instead of a level annuity. It took several hours of unnecessary research to demonstrate that the client had received £136,000 to date – against the £95,000 he might have received from an index-linked variant – and, notwithstanding his heart condition and net present values, the Queen`s telegram would need to have arrived on his doormat before the original advice could be seen as anything like questionable. Complaints, once an exceptional event, have now become a regular, debilitating occurrence. This development is sad and destructive, but hopefully reversible.

Two years ago, I thought I would save some  hard-earned cash by reading several books on Search Engine Optimisation and Digital Marketing. The result was mixed. On the one hand, there was an opportunity cost to my time and I might have earned more by “sticking to my knitting”. On the other hand, I managed to learn a lot about a subject which had previously been a mystery to me – which, in turn, allowed me to engage with and question those who held themselves out as experts on the subject. It would have been easier to be a cynic, but was ultimately more rewarding to become involved.

As financial advisers have had to “up their game”, it similarly behoves the recipients of such services to learn a bit more and become involved in what is an essential subject for their own future welfare. For example, they can document their own income, expenditure, assets and liabilities; they can get more in touch with their own attitudes to, and capacity for, risk; they can read some of the quality financial newspapers and journals.

The option, of course, is to use ignorance as a strategy and then blame someone else later – putting up the cost of delivering financial services still more. A trite and toe-curling expression it might be, but we really are all in this together.



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Trading Places

Published on: October 9, 2013
CategoriesDIY Investment

There is a sense that we have reached a seminal moment for the UK fund management industry.  I know that the lupine cry has been heard more than a few times, but this time it`s serious.  The land of milk and honey is becoming increasingly sweet and sour.

Let`s take a look at some of the research and data which have been buffeting the good ship Active over the last month or two.

First, we learnt (courtesy of SCM Private) that many active fund managers have been so intent on accumulating assets that they have defaulted to closet indexing mode. Herding instincts feel safe, but not particularly rewarding for investors if they pay for astute decision-making and end up £1.86bn down on the deal.  A “systematic abuse of the public” – opines Gina Miller of SCM.  It is hard to disagree.

Second, rationalisation is gathering pace.  This week JP Morgan announced it is, “to merge away more than 40 of its funds across Europe as part of a larger worldwide cull” (New Model Adviser).  Worldwide, JPM is planning to cut 100 of its 650 funds (“With hindsight…. some of our strategies and product launches have not been done in a thoughtful way” … George Gatch, fund chief).  Drill down a bit further into the story and we learn that the company is accentuating passives more.  JPM is far from alone in this respect and should be applauded for recognising what lies ahead.  Business Schools have a module specifically designed for this type of situation: “Managing Declining Profits”.

Next comes the news that index-trackers have managed to get a bit of a toehold and are moving towards 10% of funds under management in this country.  Now, in itself, that doesn`t appear particularly noteworthy, until we consider the trend which has been affecting our transatlantic friends.  In the last decade, American holdings of passives and ETFs rose from 18% to 34%; during the same period their annual charges fell from 0.93% to 0.64%.  Get my drift?  We may inhabit an island, but we are not going to insulate ourselves from this particular wave of pricing pressure.

There are still too many in the financial services industry who are using experiences of the last twenty five years to inform their current business model, without taking into account current external forces.  Advisers have an affinity for figures, so here are a few to think about. The average real annual return for world equities since 1990 was 4.15% and leading academics Dimson, Marsh and Staunton believe that the prospective real return going forward will be 3% to 3.5% per annum. Once the total cost of financial advice plus active fund management charges (including portfolio turnover and ancillary charges) has been calculated, this real return will have been eradicated. Anyone out there who still believes that the status quo will prevail on the future take-up of actives/passives? Think again.

This is really not another, “four legs good: two legs bad” argument.  I do think that active fund management can play a part – only not anything like as big a part as it does currently.  I would go so far as to say that the 90:10 split at present favouring actives is inversely proportional to what it should be for the mass affluent investors of the UK.

Do most investors need their fund managers to turn over an average of 80% of their portfolios each year (at a cost of an extra 1% per annum) in search of the Holy Grail? Should the cost of more than 60% of the assets managed in Europe be more than 1% per annum.  Well, on the basis that 95% of the compound long term return of the S&P came from from dividends in the 81 years to 2007, I would suggest that that the best interests of most investors would be served by putting their money in a low-cost portfolio, re-balancing it from time to time and stop meddling.

Yes, I hear the counter-arguments – such as, “What about the ability to take evasive action in a market dive?” Sorry, it does not happen.  In the last five years, 61% of Balanced funds and 67% of US Equity funds failed even to match the index.  Human intervention doesn`t work.  As John Authers wrote, quoting Freud in the “Financial Times” earlier this year: “most human decisions are made to seek pleasure or avoid pain” (as a result, most fund managers err on the side of caution and remain under-invested – missing the opportunity for pleasure).  Granted, it`s more profitable to delude ourselves, but it`s time to stop.

Our sister site, is full of such examples. Any remaining sceptics should take a look at two recent instances relating to the virtues of investing in Brazil and betting against Sterling:

And, finally, the prize for the most irresponsible piece of financial journalism of the week goes to Ali Hussain of The Sunday Times, who implored his readers to emulate one Mr Santosh Tiwari from Reading – “Follow my trades and earn 200%”. A notable contribution to the savings gap debate.

I`m going for a lie-down.



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Another Informative and Entertaining Short Video From Sensible

Published on: September 13, 2013
CategoriesDIY Investment, Financial Advice

Some good investing facts, well presented, to be seen at:

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Milking The Herd

Published on: September 10, 2013
CategoriesDIY Investment, Financial Advice

Driving to my first appointment yesterday, I tuned in to Radio 4 and heard Chris Huhne berating the press for corroding public trust, whilst acknowledging that he had played his “own part in giving MPs a bad name”. This got me thinking.

Trust, or the lack of it, permeates most of our judgement and decisions.  As the CFA`s recent report, “Investor Trust” revealed, only one third of British investors had faith in the financial services industry and, more worryingly, just 7% believed investment firms, “do the right thing”. Against this backdrop. can the sector really be surprised about this year`s reported rises in DIY investing?

It would be easy to blame this growing trend of unhealthy public skepticism on the heinous 24 hour news media, but that would be a simplistic dismissal.  While the media may report and amplify actions, it is the participants themselves who provide the material.

Politicians, financial advisers, journalists and others may resent the way they are perceived, but little will change by merely protesting too much.  It is one thing spending hours doing an Ethics Test (as I did recently), but it is quite another to translate this into actions which form the centrepiece of  an enduring business proposition.

There is no doubt that the financial landscape is changing. I always used to find it slightly amusing when attending Institute of Financial Planners` meetings to hear that appropriate fee levels should be arrived at by first projecting how much you wanted to earn and then calculating how many hours a week you wished to work – before dividing one by the other and politely informing clients how much they had to pay.  Mr Market may not have been too much in evidence then, but he is certainly here with a vengeance now.

Anyone still doubting the ephemerality of their chosen roles might have missed “Peston Goes Shopping” on BBC 2 yesterday evening. The 750,000 employed in British manufacturing in 1978  fell to less than 90,000 within thirty years.  With corresponding falls already experienced in the financial services sector, further outflows can only be stemmed by changes to outlook and proposition. In other words, giving customers what they want, while engendering trust.

Incidentally, in the same programme, Peston also examined the success of Tesco.  Beginning with Jack Cohen, with the mantle then being taken by MacLaurin and Leahy, the company`s competitive advantage was built almost entirely on responsiveness to customer needs.  Interesting to note, though, was the “Marmite factor” of Tesco: most customers may have been happy, but this level of satisfaction was not shared by dairy farmers, anti-Sunday traders and those against out of town developments.

All of which brings me back to the title of this piece.  As this particular supermarket was upsetting its suppliers in a “race to the bottom”, investment management companies will probably not appreciate being leant on by certain fund supermarkets at the moment.  Of course, the difference here is that Tesco really had just the one club in the bag – i.e. price – whereas consumers should ideally be taking more into consideration when planning their finances.  Whether the resulting “preferred funds” are regarded as the equivalent of Tesco Value or a Swindler`s List will be a matter for individual opinion, but these views are likely to change again once full pricing transparency is introduced early next year.

Only when the herd becomes more trusting and engaged in a financial planning process will some of the cynicism be left behind.  Although statements like, “buy the market, keep your costs down, and don`t get too fancy” (Bernstein) will not sell many newspapers, it will serve the audience far better than a perpetuation of the myth that market-timers can beat the indices in the long term.  And why keep studies about stock tips under wraps? – the fact that Schadler and Eakins found in 2001 that Merrill Lynch`s “focus” picks produced abnormal same-day returns, plus abnormal returns in the two days in advance of the announcement, doesn`t contribute a lot to the cause of consumer trust.

Only this morning, the old hobbyhorse about teaser investor rates from banks and building societies came up again – reinforcing the stereotype that investors are again being “ripped off”.  The sooner certain industry elements shift away from seeing financial consumers as geese from whom feathers can be plucked with as little hissing as possible, the sooner the serious business of building trust can start.

Kevin O`Donnell recently stated in the Financial Adviser that, “abbreviated, simpler, low-cost advice is far better than no advice at all”.  I agree.  Service propositions have to be adapted, through technology, to educate consumers and encourage their greater participation.  Perhaps conventional profit-making organisations are not the answer for those who have irretrievably lost trust, and social enterprises should be at the forefront of any new initiative?   Watch this space.


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Money Guidance CIC is an Appointed Representative of Alan Cheetham (Asset Management) Limited, a company which is authorised and regulated by the Financial Conduct Authority.

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