An Interesting Week for the Financial G.P.

* Insurance company completes underwriting for client but for reduced sum-assured. This is the second time that this has happened in the last 10 days. It makes you wonder if underwriting criteria are being tightened??

* I have a second meeting with two directors and secretary that want to sell their business, and an agent that sells them. Interestingly, the agent says he may want me to help with the research and writing of the Investor Memorandum which will be new territory for me. Now we have to see which of people the owners have talked to, will get the mandate.

* I talk to an American chum who disappeared in April – none of his e-mails reached me it seems. He has just returned from a 4 week trip to China which was very successful. As a result of this, he will not need my help in raising the initial £20 million he wanted. He has found this money locally plus the really big money (US$ Billions) that will be needed afterwards. He mentioned that during his trip, he had the feeling that he was being followed and that the people doing this were were female.
There seem to be a lot of British expats in Shanghai and he meets a lot of local females who are beautiful, educated, clever and very manipulative – the local name for these lovelies apparently is Shanghai Babes – you have been warned!

* Friday morning starts off early as usual at my weekly networking group which meets at The Arts Club in Dover Street just off Piccadilly http://www.brebondstreet.co.uk/script/site/default.asp
One of the visitors is from a firm that does promotional items http://www.re-southbank.co.uk/home
Standard fare for this sort of thing would be mugs and tea shirts but they seem to have a popular line in printed condoms as well…. Organisers of stag and hen nights buy this stuff as you might expect, but universities are actually bigger customers here – they are presents for freshers! Something for the weekend, Sir?

A quiet week in the financial G.P’s surgery – wilting in the heat maybe?

* The 516 page long Finance Bill (No 2) which arose from the Chancellor’s Budget speech on 22nd March, received its Royal Assent on 19th July and became the Finance Act 2006 with no last minute changes apparently from the last set of guide notes from a few weeks ago.

* Home Condition Reports are axed from Home Information Packs. I pity the poor souls who invested £8,000 in training for the wretched things. It reminds me of the fiasco over residential property in SIPPS (see my earlier blog http://www.georgeemsden.co.uk/?p=6) where some pension holders lost huge amounts of money preparing for something the Government said was fine, and then had a change of heart.

* I attend an interesting investment seminar which extols the virtues of a multi-manager strategy where 60 per cent of their fund stable appears to have above average performance in each of the three years February 2003 to February 2006.
This is followed by a presentation of a structured product which has a 6 year life and a return related to the performance of the portfolio of 5 managed funds in each of the 24 quarters in the 6 year period. This does nothing to change my dislike of this things – the word protected or guaranteed in any fund or product gets my antennae rising straight away.

One speaker points out an interesting facet of human nature where investing is concerned, mentioned by Warren Buffett

“When hamburgers go down in price, we sing the “Hallelujah Chorus” in the Buffett household. When hamburgers go up, we weep. For most people, it is the same way with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”

Putting it another way, the current war in the Middle East is a buying signal where investment is concerned. Buy on the sound of gunfire, as the old saying goes.

The speaker for the Inheritance Tax part of the seminar points out that Partnership or Shareholder protection arrangements may be caught by Pre-owned Assets Tax. These are commercial arrangements designed for reasons of business continuity and to avoid disputes where a partner or shareholder dies, but in spite of lobbying by the ABI to HMRC they could still be caught. A classic example of the Law of Unintended Effect.

* Have a lovely lunch at the RAF Club in Piccadilly with a solicitor who gives me a guided tour of the place afterwards. There is an 18th century style pub in the basement too.

Another interesting week in the financial surgery

* One of my daughter’s friends phones me about his Standard Life share allocation. I point out that we only advise on collective investments not individual shares, so cannot give advice here. Point out that they are still a major insurance company with a good reputation. If I had the shares, I would be inclined to hang on to them – especially if they came at to me no cost and I did not need the money. The friend seems happy after talking to me and says he will come back to me to get advice on other financial issues.

* See a young lady at my office to sign forms for the inter vivos insurance we have previously discussed by telephone and e-mail. Since she will be paying the premiums, the easiest way to structure the protection is for her to be the applicant and the mother who made the gift to be the life-assured. This also avoids having a separate trust form.

* My thoughts on HIPs (Home Information Packs) are not unique it seems. See my blog http://www.georgeemsden.co.uk/?p=42 The Conservative Party officially wants them scrapped and 125 MPs think so too.

* We all know the the phrase “I’m talking telephone numbers……” well, our asset management industry is doing just that and now looks after more than £3 Trillion – that is £3 million million assets of which 20 per cent is managed on behalf of overseas clients http://www.investmentuk.org/press/2006/20060704.asp

* I talk to a mother who wants Critical Illness insurance to cover her £150,000 mortgage. Arrange to see her at her office next week to complete the paperwork. Will need a split trust arrangement so that in the event of a claim, the Critical Illness Benefit is paid directly to the client but any death benefit is paid to trustees appointed by her.

* Next day, I meet new contact referred by a friend in one of my networking groups. The discussion gets round to protection and I am asked to quote for sums-assured of £500,000 and £1 million for life and for Critical Illness cover. I e-mail quotes on 25 year term and whole-of-life bases.

However, we uncover a potential IHT liability as a relative has made a gift to him recently. Explain how inter vivos insurance works. Interesting how I have not done one of these for years and then two cases come up in one week!

* Sign up Family Income Benefit plan for a senior executive with a growing family. This will pay over £4,000 per month benefit escalating at RPI, if he dies during the next 20 years. Meet him at his office at 8.30 a.m. – he starts his day at 7 a.m.
Insuring the income here is significantly cheaper than insuring the capital sum required to produce that income at 5 per cent p.a. This would require an insurance policy with a sum-assured of over £1 million.

* Exhaust myself on Sunday afternoon dancing tango at Hammersmith – I hardly sat down at all and am still tired on Monday. Ought to pace myself but with so many lovely ladies to dance with, I seem to forget…….

An Interesting Week in the financial surgery

* Good meeting with a wrap provider. Wraps are a service tool which make it possible for practically all a client’s portfolio to be put in one platform which makes getting valuations for example, more easy. Categories that can be put in are: Bond investments, PEP/ISAs, unit trusts and OEICs and SIPPS. They can even be set up so that a client can have a LOGIN arrangement and they can do this themselves.
Presenter was honest enough to say they were not head of the pack at present but pointed out that they had far superior financial strength to one market leader and that the market for these was developing quickly.

We will be avoiding dealing with one huge wrap provider as they will not allow transfers out in specie to another wrap provider. The only way then for a client to switch to another wrap provider is to cash in their investment. This of course means that the client will have to pay another set of initial charges when these funds are reinvested.

* Attended one of my favourite networking groups 3Cs which is part of a larger group called soflow – http://3cs.soflow.com/NewEvent/11334a781b31. The format is a bit like Dragon’s Den on TV where people are looking for development capital. The audience comes from a very wide range of disciplines and the feedback is generally positive rather than trying to tear someone’s business idea to shreds. There are typically 4 presentations of about 10 minutes each with a few minutes for questions.
One of the presentations is for a new Bolshoi Museum starting in London but which could tour world wide – they are looking for £5 million commercial sponsorship which is much larger than the usual £100,000 – £500,000 that pitchers ask for for. Turns out that the Bolshoi was founded by an Englishman – Michael Maddox in 1776.

Meeting was at the new British Library and we adjourned to The Euston Flyer afterwards. Had a beer there with a physicist who has a product which will measure skin porosity in any environment and who is looking for £250,000 capital.

* My hobby of teaching teaching swimming to nervous children and adults has finished for this term, so I will be able to have a lie in on Sunday mornings until September. Classes are at the ULU Pool in Malet Street in central London. http://www.streetmap.co.uk/newmap.srf?x=529765&y=182006&z=1&sv=malet+street&st=1&tl=Malet+Street,+WC1&searchp=newsearch.srf&mapp=newmap.srf Bookings via Dolphin Swimming Club (020) 8349 1844. It is nice when parents say they want you to teach their children next term or are pleased with their progress.