What is an IFA? Do I need one?
What is an Independent Financial Advisor (IFA)?
Broadly speaking there are two types of financial advisors, Independent and Restricted. A common misconception is that ‘Independence’ in this context means that IFAs work alone, however it actually refers to the fact that they are not tied to any particular product provider. IFAs are regulated by the Financial Conduct Authority to advise across all regulated investment and saving products in the UK and as such their advice is impartial. Many IFAs also provide mortgage, annuity, insurance and protection advice.
Why choose an Independent Financial Advisor?
Here’s what I believe a good IFA offers -
· The ongoing support of a person you trust
· A one-stop solution for financial advice across all areas
· A full financial plan - how much must you save, invest, earn and borrow over your life to achieve your goals?
· “Whole of market” advice – hunting out the very best investments and products for you, from the thousands available
· Fee-based advice - Advisers are paid by their clients and not by commission, eliminating any hidden incentives and biases
· Full qualifications and FCA Authorisation – so you can be confident in the quality of advice you receive
· under the Financial Services Compensation Scheme, just in case you are mis-advised
Why not go to your Bank?
Financial advice was available from many Banks and Life & Pension firms, however following the Retail Distribution Review which outlawed commission payments many have closed down their advice offering. Those that retain their advice arm should have rigorous processes in place to ensure any advice is “suitable” for the client, and generally do a good job of highlighting to their customers where they might have products with better returns available.
However, bank advisors are normally Restricted, so “tied” to particular product providers, and are rewarded based on which products they sell. So, there is often a conflict of interest between you and them.
Moreover, there is significant variance in the quality of advisor and their suitability for you, and you have limited ability to “pick and choose”.
Why not manage my financial affairs myself online?
There are several reputable online brokerage sites where you can invest your money yourself, giving access to thousands of different investment instruments. They are generally only suitable for very knowledgeable investors. However, even these investors often turn to their IFA because they don’t find the time to regularly research and manage their investments.
Not optimising your investment portfolio, through limited knowledge or time, can often be more expensive (in terms of returns) than paying the cost of advice.
There are also several comparison sites that allow you to find the best deals available across Savings, Mortgages, Insurance and other product areas.
These product areas are less complex than investments, so it might be more viable to self-manage these affairs. But, it is still best to consult your IFA first, as you may overlook costly issues or fruitful opportunities which your IFA could quickly point out.
Why not use a large Wealth Manager or Private Bank?
Large Wealth Managers (aka Private Banks) tend to serve “High Net Worth Individuals”, with a minimum investment portfolio size anywhere from £500k to £5m.
Depending on the firm, you may receive the support of a wider team (e.g., a specialist Investment Research team), access to more “institutional-like” products (some Wealth Managers are side-arms of Investment Banks) and be advised by individuals with degree-level investment qualifications. You may also feel more confident with the support of a large brand.
On the down side, Wealth Managers often suffer the same drawbacks as Banks (above) – they can be tied to particular products, have hidden incentives and have varying quality and suitability of advisor.
In short, go local and find a good IFA.
Stress - a Monster or a Mouse
Stress is a word that comes up a lot in all walks of life, but particularly in business. It has been found to be one of the major causes of poor productivity, illness and absenteeism.
Relaxation is heard less often and when it is spoken, maybe it is with a wistful tone or with a glass of wine in hand! Nothing wrong with the wine, (in moderation, it is a suppressant not a relaxant), but when was the last time you felt properly relaxed and what does that term mean to you?
To be a bit technical for a mo - sorry it comes from being a Biologist in a "previous life".
Strictly speaking being truly relaxed means switching into one of two nervous systems - the Parasympathetic. This is the house keeping mode as it were. All systems are in repair, rejuvenate, revive and relax mode. There is no sense of alarm. The muscles are neutral, the mind calm and one is filled with an ''Inner smile" ( See William Bloom "The Endorphin Effect"). Think of antelope peacefully grazing in the Savannah.
The other nervous system is the Sympathetic, though it is sympathetic only to your survival. Return to the antelope a moment. All peace and quiet, then one of them hears stealthy footsteps in the long grass nearby. "LION!" Instantly, adrenaline courses through the blood stream, heads go up, heart rates increase, blood pressure goes up to bring a quick supply to active muscles, backs and legs tense… and in a springing bound the whole herd has gone.
Generally, you don't meet too many lions in your day to day life, but many situations make you feel as if one may be around the corner. The trigger varies from person to person, but something rings alarm bells, in an instant adrenaline is released and all of the above physiological changes, and many more, take place. True, you think more clearly, work more quickly, but you can't run away or turn and fight (well not usually if you want to keep your job/client/customer), neither do the stressors go away, if anything they can increase in number. So all these "stress hormones" keep circulating all day, especially if one deadline piles up on another.
OK. So you need some adrenaline to perform well, even to get out of bed in the morning. However, if you have a lot of it all day, day after day, without ever turning it off or releasing it through vigorous activity (a brisk walk, run or a visit to the gym) and also feel you have no control over the stressors, no choice to do something else... bingo! Stress!
I won't get even more technical at this point, suffice to say, that this state, though helpful in the short term, if it goes on over a period of time has a damaging effect on just about every system in your body and your health and well-being suffer. Stress becomes a "monster".
As a Reflexologist, I know that my treatment can have a beneficial effect on elevated stress levels. One client who was experiencing a particularly stressful period of time in his business, reflected that it had been the regular treatments that had helped him get through it effectively. Other clients have remarked, with a sigh, "I haven't felt so relaxed for ages" or "I don't think I knew what relaxation was until now". This may be that the gentle treatment of Reflexology encourages the body to switch over into the Parasympathetic system. The body and the mind can become truly relaxed.
In this state, there is less sense of urgency; that pile of "things to do now" looks smaller; you can think more creatively about a particular problem; you feel more patient. As another client said, " I can live my life better". You can breathe. Stress has become a "mouse".
Things to make you go "Hmmm?!"
Follow your dreams
I have recently had to make the very difficult decision to close down Kit & Caboodle Boutique in Lydney, due to incurring debts to level that were becoming uncomfortable. During a discussion last week a friend said "Kit & Caboodle had been a failure". I was shocked by this statement as I didn't feel that way at all.
On so many levels both professionally and personally Kit & Caboodle (K & C) had worked for me. I had learnt many, many valuable lessons, developed new skills, identified my strengths and weaknesses and have met so many new friends and acquaintances, who otherwise wouldn't have come into my life. I have regained my confidence and self esteem after what had been a very difficult period in my life.
Most importantly opening K & C has made me realise that I want to run my own business and I have so much more knowledge now about what works and what doesn't work. So I have brushed myself off and am in the process of building another new enterprise 'Louisa's Funky Vintage & Craft Fairs'.
I would say to anyone thinking of opening a new business go for it. After all what is there in life if you don't follow your dreams?
Author - Eric Witheridge
Traditional Telephone Switchboard (PBX) Sales Slide Further
We've known that PBX sales worldwide have been falling for some time and a recent set of figures from analyst firm *MZA have confirmed this.
*Far from any sort of recovery PBX extensions and licences have fallen by 9% year on year. There has been an 11% decline in the enterprise market. (Solutions with greater than 100 extensions/licences).
This could of course be a natural shift driven by a global decline associated with the recession however, there is also a massive increase in the amount of Internet based telephony.
So what does this mean for anyone making the decision to repair/replace a telephone switchboard?
Simply this, question your telephone provider about the longevity of their solution? Should you really be investing in expensive hardware which may become redundant? Should you really tie yourself to a multi year contract?
On premises equipment offering internet telephony is not the way to go unless you have massively quick broadband dedicated to telephony only. Also, this tends to be expensive and could lock you into the sort of handsets that are delivered with the system.
Our advice is to try a solution to make sure it fits the business. We're happy to provide a free trial of our systems to help you make this decision.
The wonderful thing is that we will not tie you into a lengthy contract and the handsets may be used with most IP or hosted telephone systems.
* Figures courtesy of Channel Telecom magazine http://commsbusiness.co.uk/
Entrepreneur and mother succeeds thanks to business networking
Astute new entrepreneur, and mother, Sharifah Rahman, launched fashion startup business - Camellia McQueen this year in response to a family crisis. Now, thanks to a lively and very active local business network, she now spends her days creating stylish accessories from her home in the heart of the Forest of Dean.
Sharifah talks candidly over coffee about life as a new business owner, a mother and her experience of relocating from Malaysia to the UK, revealing that she is an eternal student. “I am learning something new every day.” says Sharifah. She’s quiet and thoughtful, whilst being incredibly charming.
Bend: don’t break!
The family settled in England after her husband had to leave his high powered job overseas due to a sudden illness. So, Sharifah decided to take on the role of bread winner. However, the Forest of Dean isn’t renowned for its job opportunities, so she had to forge her own. Starting a business was the most logical response. Anyone can appreciate what a courageous step and huge achievement this is, especially after having been a full time mum for the past seven years.
Eureka moment: let’s make fashion fun for boys
Sharifah originally studied fashion design, and that’s where her passion lies. She had her eureka moment when she spotted a gap in the market. Women are spoilt for choice when it comes to dressing up, but men are sadly bereft in the accessory department. Sharifah wanted to inject some style and lots of fun in to her son’s wardrobe, but how?
Her very first product was born - the bowtie. “The bowties in the UK are too safe and boring. I wanted something funkier for my son.” She started experimenting with patterns, colour and fabrics to create her own original, high-end range. Her friends were quick to compliment her skills. So, she registered her business and started hatching her master plan.
Sharifah decided upon a methodical approach based on sound advice when launching Camellia McQueen. After spotting a local entrepreneur’s taster course, she embarked upon a steep learning curve and took the Forest of Dean Entrepreneurs Plus course. “This gave me the idea to expand my range to include men’s bowties, business card holders and purses.” It armed her with the necessary tools.
A supportive business network and mentoring = success
The course also convinced her of the power of quality business networking. Ideal for Sharifah, since it offered the opportunity for support from established local businesses as well as other new start-ups. By chance CAP Business Clubs founder, Paul James, was looking for an apprentice member following a suggestion from CAP member and photographer, Alison Ball, owner of Lemon Photographic. The two, inspired by the National Apprenticeships scheme, and supported by the other members offered “apprenticeship networking member” free to a new business for 6 months. A real cash saving and access to experience and knowledge for any new business can only be a good thing.
Paul James is passionate about the power of networking and seeing local business succeed. Indeed this is one of the main reasons he started the CAP Business Clubs in the stylish business ready offices suite above Coleford Library. “It’s just nice to help people and it makes me feel good,” says Paul. “Membership also gives Sharifah access to people within the group who are trustworthy and reliable, either as clients or suppliers.”
So pleased with the outcome of the scheme are all involved that Sharifah has no hesitation in joining as a full member after her apprenticeship ended and CAP Business Clubs are now looking for more new candidates.
Next stop, Etsy, NotontheHighstreet.com and beyond
Sharifah knows the power of good quality images in professional marketing online and Alison Ball of Lemon Photographic was already on hand to help her out with her product shots. She will now be looking at selling her products on the likes of Etsy and Not on the Highstreet.com as well as her Facebook page at www.facebook.com/camellia.mcqueen and her own website which will be launched. Online retailers can’t afford to have poor quality images and Sharifah needed to spend wisely to launch her business with limited finance. The support of other members and her own budgetary skills show her incredible ingenuity.
Camellia McQueen: the story behind the name
Camellia McQueen is an intriguing name, so how did she come up with this? Well, her favourite flower is the Camellia and she is inspired by fashion designer, Alexander McQueen. Her brand is stylish and fashion orientated. She made a conscious decision to avoid the ‘arts and crafts’ niche and pigeonholing her herself early on. Her ultimate goal is to design and make clothes for children, women and, perhaps, men.
Balancing business and family life
You’ll often hear business owners talk about their early starts. In fact, Sharifah has found this to be the key to success. “I am more creative and productive in the morning.” It is also a great way to balance work and family life. Juggling the two was difficult at first, but with help from her husband, she has established a solid routine.
Sharifah had always dreamed of running her own business and the support from CAP Business Clubs members has helped her achieve her goals. She advises anyone who’s considering launching their own startup to throw themselves wholeheartedly into networking. “It’s not as scary as you think.” says Sharifah. Her success speaks volumes for CAP’s own development of the Apprenticeship Scheme and, in turn, they have gained a valuable member.
For more information on CAP Business Clubs or to contact Paul James about apprentice members opportunities visit www.capbusinessclubs.co.uk
Key questions for Auto Enrolment
Auto enrolment cannot be ignored; legislation clearly puts the responsibility firmly on the shoulders of employers to operate a Qualifying Scheme correctly for their employees. Failure to comply will result in a series of penalties and fines. So, as an employer (whether a company employing thousands or a sole trader with a single employee), while the resulting actions may be different, the key questions are the same:
· When do I need to have a Qualifying Scheme in place?
· Who do I need to enrol?
· How much will this cost?
· What choices do I have in selecting a Qualifying Scheme and,
· Is there anything that can be done to reduce the cost?
When do I need to have a Qualifying Scheme in place?
The ‘staging date,’ is the date by which you must have established your Qualifying Scheme, it varies between October 2012 and April 2017 depending on the number of employees on your payroll as at 1 April 2012. There is an interactive tool available from The Pension Regulator at www.tpr.gov.uk/automatic-enrolment which enables you to find out your staging date.
Who do I need to enrol?
All employees, whether part-time, full-time or contractors age 22 and State Pension Age who earn over the ‘earnings trigger’ in a pay reference period (£192.00 if employees are paid weekly, £833.00 monthly and £10,000 annually for 2014/15) must be auto enrolled. Employees outside these parameters simply need to receive a communication about their rights to join the scheme.
How much will this cost?
The statutory minimum contribution into the scheme will be 8% of an employee’s ‘qualifying earnings’, made up of an employer’s contribution of at least 3%, member’s contribution of 4% and 1% from the Government in the form of tax relief. The ‘qualifying earnings’ will be total earnings falling within an earnings band of £5,772 to £41,865 in 2014/15.
What choices do I have in selecting a Qualifying Scheme?
There are a variety of different pension schemes that can be used for auto enrolment, from defined benefits schemes to personal pension plans. Your ultimate strategy for auto enrolment could be a multi-scheme solution with your workforce segmented into different schemes.
Your solutions will depend on the answers to the following questions:
· Do you have an existing scheme(s) in place for all your employees? If so, you can continue with this scheme as long as it meets the conditions for auto enrolment
· Do you only offer pension benefits to some employees, eg senior management? If this is the case you can continue with the scheme for these existing members (as long as it meets the conditions for auto enrolment) however you will need to set up a new scheme for all other employees
It is unlikely that you would want to start a new defined benefit scheme to satisfy your auto enrolment requirements.
Where, on average, contribution levels are likely to exceed £100 per month per employee and you employ more than ten employees, you may want to consider setting up a group personal pension scheme. Alternatively, the offerings from NEST, The People’s Pension or NOW: Pensions may be an appropriate solution. Further information on these solutions is available on request.
Is there anything that can be done to reduce the cost?
While contributions themselves can be based on ‘qualifying earnings’ or ‘pensionable earnings’ (where different minimum contributions may apply), in addition to the level of contributions it will be advisable to consider ease of administration, as this will also be a contributor to cost. The scheme with the lowest contribution levels may substantially increase the administrative burden. Beyond this you could look at salary sacrifice. This is a method of using National Insurance savings to help fund part of the overall contribution for both you and your employees.
Pension reform is coming and, even if auto enrolment may still be some time off for you, for many employers there is much to think about and plan for. The sooner you engage in this process the easier the process and cost will be to bear.
The levels and bases of taxation and reliefs from taxation can change at any time.
The value of any tax relief depends on individual circumstances.
The levels and bases of taxation and reliefs from taxation can change at any time.
The value of any tax relief depends on individual circumstances.
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