Spring is offically here, as at 11.43 UT (GMT) 20th March 2009 the Sun passed from the southern to the northern hemisphere or passed through the Plane of the Ecliptic, an imaginary line you get when you extend the plane of the equator into outer space. No shortgage of rituals associated with this event. Easter is the Sunday following the first full moon after this event and Nowruz, the Iranian (Persian) New Year starts a 13 day period of celebration then for its followers of Zorastrianism whose followers are probably better known as Parsees, not to mention our own Druids at Stonehenge. If you want some dates for your diary or horoscope see: http://www.nmm.ac.uk/explore/astronomy-and-time/time-facts/equinoxes-and-solstices#equinox

The year continues with an interestingly new angle from the regulators. From September the http://www.financial-ombudsman.org.uk/ will be publishing large firms’ and banks’ names in their complaints statistics with the likelehood of smaller firms and individual advisers after that. As the FOS put it, ‘Financial businesses would be encouraged to deal with complaints properly in-house in the first place,’ discounting claims that some firms might be tempted to pay compensation quickly to avoid their name appearing in the statistics.

One pleasure of growing old(er) can be when one’s children become fully fledged musicians decades after their nervous first music lessons. A rather sad Mothering Sunday evening saw the Barnet Symphony Orchestra http://www.barnetsymphony.org.uk/ back in St John’s Church in Friern Barnet with five pieces.  Favourite for me was Oblivion by Piazzola which any tango dancer will know while most memorable part perhaps was the little girl in the row in front putting down her colouring book in the Modéré in Scaramouche, and doing some conducting of her own, crayon in each hand. But the excitement with her mother playing flute in the front row of the orchestra is all too much and she curls up and nods off shortly after the interval, sleeping soundly even through the rousing bits of Sibelius’s Karelia Suite. Hannah Riches, the alto saxaphone soloist, does an excellent job taking a break from her usual group http://www.lunarsax.co.uk/index.html Next concert is Sunday 28th June 2009 and if you know any talented musicians, they are looking for a regular trombonist and trumpeter, plus violinists.

Friday morning meeting www.brxbondstreet.co.uk featuring a 10 minute presentation by www.chinaonecall.com shows the value of corporate videos to get your message across as well as explaining why number 8 is lucky in Chinese – Bah! is 8 while the similar sounding Fah! is wealthy. In spite of having heard the 60 second message many times about their real time interpretation service, it was only after seeing their 3 minute video of a typical case, that made the penny drop.

A question arises from my own 60 second presentation, how does one check if one has paid enough National Insurance Contributions? Answer: a form BR19, which is now available on-line http://www.thepensionservice.gov.uk/resourcecentre/e-services/home.asp Cost of buying up missing years with the Class 3 Voluntary Contributions goes up from £420 to over £600 after 5th April 2009. But after 5th April 2010, the number of years contributions required drops to 30 years for men and women. Point here is that paying too many years NI contributions i.e. > 30, will not gain any extra State Pension payment – the excess will be completely wasted.

Back in the world of mortgages, client and mortgage adviser are tearing their hair out over a simple case originally submitted in December for a well-off client. Lender C&G have quietly admitted that they fired too many people in the most recent cost cutting round with the inevitable drop in service. Information requested sits in a queue for 8 days before it is looked at and then after a couple of days, more information is requested. This eats up weeks as all communication is via a call centre, wheareas the underwriting information could all be sorted out in a 10 minute conversation with an underwriter. Another clever decision made by C&G was to chuck their USP out of the window a couple of years ago when their branch managers had real authority to lend. This gave them a real edge and enabled some mortgage offers to be produced in days – the record being four from application to written offer. This was abandoned in favour of a centralised system with a call centre making everything take many times longer than before and putting them back in the pack with everyone else. Apparently, some supermarket chains insist on their directors spending one week a year back at a real store, so they do not lose touch with real customers – something which banks would do well to copy and which might have avoided the credit crunch scenario.

Years ago on my overland travels to Thailand, one of my companions was fond of quoting gems from his education over here like “It’s not whether you win or lose, it’s how you play the game”. A philosophy which helps build character but is a little outmoded in today’s competitive and often very highly paid sporting environment. It is also a bit tiresome to see one’s country thrashed again and again in sports that were largely invented here. One sport which has very much grabbed the bull by the horns here is cycling, and for an insight into how our cycling sports machine works see: http://www.sport-magazine.co.uk/More…/Special-report-Cycle-of-success.html

It’s that time of year again and thanks to a colleague for suggesting a simple way of getting some investment losses back and boost your pension. Equity funds or shares which have lost much of their value can be used to make an in specie pension contribution. In plain English, rather than selling the units/shares, getting the cash and making a pension contribution, the original units/shares themselves are used as the pension contribution e.g. 1,000 units in XYZ fund are your pension contribution. In specie here basically means as they are and you are avoiding selling and buying costs. As this is a disposal for CGT purposes, a tax calculation has to be done but if you have made a loss, you are not likely to get CGT bill. The cherry on the cake is that your pension contribution is allowable for Income Tax purposes, so you could be entitled to tax relief at your highest Income Tax rate and any future increase in value of the investment is free of CGT. Couple of points to bear in mind: Income Tax relief is only available against earned income (not dividends) and once the contribution is inside the pension scheme, you can only get 25% out as tax-free cash and buy an annuity with the balance, after age 55 – tax relief like everything, has its price.

Other people’s reading on the underground can be an interesting barometer of life and Barack Obama’s Dreams from my Father seems a common choice still. This and a nudge from coach Sayeda www.makelifehappen.com remind me that it is about time I finished it, having stopped after the headless chicken episode in Indonesia  http://www.georgeemsden.co.uk/2009/01/a-bolt-from-the-blue-barack-obama/ Barack only met his father once when he was 10 years old but finally meeting his sister Auma changes his view of him significantly, hence the title. The middle of the book covering political struggles in the south side of Chicago is not the easiest part but the story soon gets going again, when some progress is made. Harshness of life in Kenya and the way other black people treat him, remind me of some pretty hard choices that have arrived here.

Views of old age are invariably made with the assumption that health will never be an issue (it will never happen to me) and that lost years of investing for retirement can always be made up somehow. The latter might apply if we lived in extended families as in Kenya or even Southern Europe but this is disappearing slowly but surely. Keeping one’s mental health is also taken for granted here and in a rare move forward from this Government, the forms for Lasting Powers of Attorney (LPA) have been simplified after public consultation and the fee reduced to £120. LPAs are used where people wish to appoint someone to manage their affairs in the event of say, mental illness, coma or total incapacity. Doing it now means you keep control of your life, rather than relatives having to apply to the Court of Protection after the event which will be much more expensive. More info here: http://www.direct.gov.uk/en/Over50s/HomeAndCommunity/Carers/DG_10026855

Headline FSA sets it sights on Excessive Pensions almost makes me spill some coffee although it is a predictable reaction to the Fred Goodwin pension affair  http://www.citywire.co.uk/adviser/-/news/pensions/content.aspx?ID=333582 As usual nothing about MPs own pensions or High Court Judges who are exempt from the Lifetime Allowance limit which will be £1,750,000 after 6th April 2009. From an excellent Clerical Medical pension seminar earlier in the week, it seems there are still people out there with pension funds in the £millions who have not heard of the post A day rules (6th April 2006) where the standard tax charge on having too much pension is 55 per cent. These can still be protected before 6th April 2009.

But as a fillip here let me quote Warren Buffett who is not called the Sage of Omaha for nothing “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” But keep in mind another of his quotes “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”. And someone big is buying shares…..http://www.spectator.co.uk/the-magazine/business/2206371/time-to-bet-against-excessive-pessimism.thtml Putting it another way, there is still a risk in not investing.

For a change, I am invited to a company bash at Watford Football Club where they played Sheffield Wednesday in a match postponed from the early snowy weeks in February. With brain cells missing where footie is concerned, it is quite an eye opener since the last match I saw in my school days. Good passes, saves and of course goals, are well appreciated by the nearly full stadium only balanced by occasional heated comments about the parentage of the linesmen and referee.

The networking at the meal beforehand is great fun. There is talk of prepacks (prepackaged company liquidations) where the idea seems to be restructure the business and lose the debt – sometimes called phoenixing*. A banker expresses a mild interest in prepacks prompting me to point out, surely it is you who are going to be worse off here? On second thoughts, may be not if their debt is secured. This is certainly not a new thing. Some years ago a pension review meeting with a  client in the wholesale food business was spoiled by this. Company let’s call it Associated British Chops Ltd stops trading Friday.  Monday morning it reopens as ABC Food Ltd with a brand new  shop sign in the same premises and all the same staff (except the previous owner) owing my client and quite a few others, over £100,000. In a similar vein, some firms offer handsome commissions for introductions to clients who have pre-2004 credit agreements which can be set aside in some cases or maybe renegotiated at 30p in the £ or whatever. Professional firms so proud of their wonderful new offices a couple of years ago, are finding that these premises have become the proverbial albatross about their necks as much corporate business has disappeared, and are desperate to cut costs. Whoever said recessions were no fun?

IFAs who have retired or who can remember previous recessions, point out that people will spend money on protection in a recession but for IFAs relying primarily on on investment business, someone has turned off the tap and this one seems to be no exception.

Talking of protection, I am asked to set up critical illness protection for a client who may wish to live back in Thailand in a few years. Selected insurer NU (or is it Aviva now?) say this is fine provided the premiums are paid from a UK bank account. But in the event of a claim, they might have to return to the UK to be seen by a UK doctor, a journey which might kill them if they have had a heart-attack, for example. Back to the drawing board??

And finishing on the usual upbeat, a 10 member business that wanted me to do a 60 minute presentation for a group pension scheme has asked if it can be kept down to half that, as they are so busy.

* from the legendary Arabian or Egyptian bird which burned itself to death every 500 years, only to be reborn and rise from the ashes.

Recent doubts about my favourite networking group www.3Cscommunity.com after visiting others, are blown away after last week’s meeting at the British Library in Euston Road. The Dragons’ Den format but with a positive atmosphere from the audience always make it enjoyable.

Neil Infield of our hosts, the Business & IP Centre http://www.bl.uk/bipc/devbusiness.html points out that the market research data available free has a value of £6 million and during the day, is full of people finding the relevant data for their business plans etc. ID and proof of address (not > 3 months old) are needed to get a Readers’ Pass and normally takes 20 minutes but as this is the busiest time of year, takes a bit longer currently.

James Setchell of Trade Mark Associates brings us up to date on Trade Marks and business names. Recent changes mean that the registration authorities are no longer the policemen for registrations and it is worth getting a Clear search before submitting an application, which will alert everybody. Rules on domain squatting have also changed, so a Michael Rosoft (sic) in Canada has apparently had his domain taken away for reasons which should be too difficult to work out, but only after payment of a large mount of money (by a large software company) and maybe proves that some people are just born lucky.*

At least 28 businesses have got funding via 3Cs and it is good to have Charlie Lass back from http://www.viapost.com/ whose business is now up and running after speaking at 3Cs one year ago. He gives an unexpected confirmation of Colin Spiller’s 2 and half rule i.e. it took twice as long and cost twice as much as planned, but did not suffer from half the predicted revenue bit. Hybrid printing means that instead of typing, printing and then posting a letter from an office, the letter is printed at the nearest local (secure) printer with a cost of 27p. Having had 17 printers at one time, they have gone back to the 5 which are the most reliable. Final delivery is by Royal Mail which delivers 20 billion items a year and to everyone’s surprise, is praised for its efficiency! Delivery will probably not be next day, but the carbon footprint saving is 80 per cent and doing your office mail this way can mean that you are basically getting the printing free. Last but not least, ViaPost were not the first people to do hybrid printing….

Hospital patients injuring themselves trying to get the last bit out of a tube, provides the inspiration for next speaker Sue Bell of www.butterfly-technology.com and like most good ideas, is beautifully simple. What is basically a flexible insert that acts like a piston, allows all of the contents of a tube to be removed easily on the one hand but also makes it easier for disabled people or sufferers from arthritis to do so. A patent attorney was so impressed that he apparently offered to do all the registration work in return for a piece of the equity, and in a perfect example of how 3Cs works, someone points out the huge potential market in hazardous products. A tube of stuff may cost £3 to buy but if it is hazardous, might cost £20 to dispose of. If all the contents can be removed, then the empty container can be disposed of normally.

Final pitch is for http://www.gymfu.com/ which turns your iPhone mobile into a fitness monitor for which 15,000 have been sold already. But it is now 8pm and all of this talk of hard exercise has us out of the door and into a nearby pub to continue talking business. In this case, the pub is http://www.somerstowncoffeehouse.co.uk/ and worth visiting again. Students of local history might recall that the now respectable Somerstown was once one of the most dangerous areas in London and a “no go” area for policemen, at least on their own. Next 3Cs meeting 20th May 2009 at Simmons & Simmons near Moorgate.

The saga of Sir Fred Goodwin ex-CEO of RBS and his £693,000 a year pension rumbles on. On a pension fund amount of £16 million, the implied annuity rate is 4.3 per cent suggesting that the pension quoted is index-linked. The furore here contrasts with the curious silence about the public sector pension costs, now in the £trillions. As usual, none of the civil servants who should have spotted all this last year will have to sacrifice any of their pensions and for an excellent summary see  http://business.scotsman.com/business/Sir-Fred-Goodwin39s-millions.5026455.jp

Quantative easing which was never mentioned in any economic textbooks I read is explained here where we are informed that it had limited success in Japan  http://news.bbc.co.uk/1/hi/business/7925620.stm but it is not printing money. We really are in uncharted territory here with one person pointing out that this sort of policy caused the hyperinflation of the 1930s in Germany, and the Bank of England Governor saying “it will work eventually”. Must remember to use that in client meetings.

Saddest news on pensions is the Heyday case meaning that employers can now force employees to retire at 65 and spoiling plans for one of my City clients who had things pretty well worked out  http://www.independent.co.uk/news/uk/home-news/employers-ucanu-force-staff-to-retire-at-65-1638514.html The most common issue with pension advice is that very few people appreciate how much they need to save in order to retire comfortably or even reasonably, so very many people need to continue working. Just to make it worse, a lower Bank Rate means lower annuity rates = lower pensions.

To finish on the usual positive note, the story of SOE Officer Lieutenant-Col Tom Carew  http://www.telegraph.co.uk/news/obituaries/4928761/Lieutenant-Colonel-Tom-Carew.html makes interesting reading, fitting neatly into the category they don’t make them like that any more. In this case, it was being parachuted into Burma with a 55 year old guidebook and a kilo of opium to encourage to the locals to fight the Japanese which they did to good effect. After leaving the Army, he pioneered employee outplacement (i.e. let’s help you find another job) which happens to be one of the busier sections of the economy at the moment.

* if you haven’t got it yet, think: Michael Rosoft > Mike Rosoft > Microsoft

Spring is in the air so here are a few items to think about with the new fiscal year which starts 6th April. The Annual Allowance and Lifetime Allowance for pension contributions increase to £245,000 and £1,750,000 respectively; a pension contribution of £2,880 net (£3,600 gross) can be made to a pension scheme for a child, civil partner or spouse without the donor having to prove any earnings. With enough time or for a child perhaps, this could prove to be investment of a lifetime although they will not be able to access it till they are 55. If you do not wish to wait that long and want the benefit for yourself, then consider investing in a stock & share ISA (limit £7,200) and forget about it for a while. Try and avoid the ISAs from the Big Banks as their charges tend to be higher than average and performance similarly lower.

The current Capital Gains Tax allowance of £9,600 (£4,800 for trusts) needs to be used before 6th April as it cannot be carried forward while the £3,000 Annual Gift Allowance under Inheritance Tax needs to be used too, although the previous year’s allowance can be carried forward here.

Non-domiciled individuals who have lived in the UK for 7 years need to contact their tax advisor about whether they wish to continue to be taxed on a remittance basis.

Leaving the most obvious till last, where one partner pays Higher Rate Income Tax at 40 per cent and the other pays Basic Rate Income Tax at 20 per cent, changing investments to the partner with unused allowances can be quite effective. And just to cheer everyone up, it’s Mothering Sunday on 22nd March so better book that restaurant table or those tickets, order those handmade chocolates or whatever you have in mind for that day.

My seminar at SmartWisdom mentioned in  http://www.georgeemsden.co.uk/2009/01/a-bolt-from-the-blue-barack-obama/ turns out to be about non-linear notetaking which will save me time when I have done the follow up exercises. At the same seminar, I meet Mark Forster whose time management blog http://www.markforster.net/autofocus-system/ looks like the right thing at the right time.

Returning to the title, the current financial malaise we are in turns out to have come from something perfectly laudable – a search for yield. Going back a few years, one could say that there were highly-rated (safe) bonds with a low yield and lower-rated (less safe) bonds which provided a higher yield. Bond is one of those emotive words which make almost any investment sound safe. Tell a client or maybe a trustee that you intend to invest in equities and watch the usual nervous reaction – mention the word bond in the same context and it all sounds much safer. But back to the original point – imagine a meeting a few years ago, at an investment bank (merchant bank in the UK) and some bright spark asks the perfectly reasonable question, how can we get a better yield without taking a higher risk? Answer: a repackaging job where you put some of the higher-yielding (riskier) stuff with the lower-yielding (safer) stuff and put a safe AAA label on it.

This would have been fine if elementary lending practice had been followed and the investment banks had actually looked at some of the orginal mortgage files. The skeletons were easily visible, but this basic request was angrily rebuffed. 80 per cent of the mortgage files which contained the assets used to justify the high rating, appear to be have been fraudulent or suspect. Full version here  http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

A recent meeting with a company doctor Roy Holland to discuss various funding deals produces an interesting bonus. Among the parties in the hotel lobby chatting over laptops and notebooks is a party of three, where a Japanese gentleman takes out and unfolds a neat pocket computer about the size of a cigarette case. Unlike some PDAs or small computers, the keyboard actually looks usable for my clumsy fingers so being my usual shy & retiring self, I politely ask him if he could e-mail me details of this machine. It is called a Pomera http://www.kingjim.co.jp/pomera/ but being a word processor rather than a PDA means I probably will not get one, but thank you Mr Kurose.

Occasionally I am asked how long this recession will last and for once I will stick my neck out. With hindsight, the feel good bubble seems to have burst after the 2008 Olympics. There was plenty of bad news then but since the Olympics, hardly any good news. My own feeling is that nothing much will change until the London 2012 Olympics when people might start feeling a bit better again. Let me be the first to say that my guess is no better than anyone else’s, and the wonderful things about markets etc (that’s really us folks) is that they have the wonderful habit of proving the pundits spectacularly wrong occasionally. At the Bank of England Inflation Report meeting in November 2008 for example, their sophisticated economic models had suggested that there was only a 1 per cent probability of interest rates reaching the levels at that time!

While we can blame the Government for much of the economic mess, having government-funded healthcare is a blessing, although it has resulted in the NHS being the largest employer in Europe with 3 million employees. Having got off relatively lightly with throat cancer in 2007 – previous blogs here http://www.georgeemsden.co.uk/category/cancer/ my nasendoscopies which look right into my voicebox, are now every two months. But now it is my turn to help my wife through her journey through the cancer jungle. The chemotherapy administered every 3 weeks is working well and the support excellent, but after one of many doctors meetings, I ask about the cost of the drugs concerned. Several thousand pounds for each cycle I am told and there will be 6 – 8 of them depending on how things go and of course, this does not take into account the cost of doctors time etc.

But to leave you on a positive note, a taxi journey to a colleague’s leaving do at The Waldorf (we do like to do things in style at in2) shows the hidden talents of one of our black cab drivers – Boxing Tuition? A former amateur boxer, Alex Wilkey 07956 907 380 now offers Personal Training – with a difference. See you in the gym?