Strange how Spring is traditionally the time of new life and renewal, but more than the average number of people seem to have passed on recently. “Gathering Time” as a lodge friend’s relative used to call it. But this out of sync blog is about Cancer, as there have again been more than the average number of enquiries about it and my handle of CancerIFA is getting better known.

Starting with the most recent, a 42 year old man with no pension, no life insurance, a mortgage, very worried wife and 2 children under 10, has 18 months to live. Nothing in the way of financial advice that the IFA who contacted me or yours truly can do, but some of the non-financial or health-related ones might help.

Original query was “Can this guy get life insurance?” Answer, YES but look at the conditions http://www.sunlifedirect.co.uk/life-cover/guaranteed-over-50-plan?gclid=CKLHwLyHk6ACFRk_lAodGRSVdA as death within two years will result in a payout of the premiums + 50% – not the sum-assured. Please note this is a direct sale. No one is giving any advice.

If you have any pension and have less than 2 years to live, the pension can be paid out in cash as per my blog http://www.georgeemsden.co.uk/2009/05/financial-planning-for-people-with-cancer/ which is also available as a podcast.

Think you might have a pension but can’t remember where it is? then there is the Pension Tracing Service run by TPAS http://www.pensionsadvisoryservice.org.uk/helpful-organisations/pension-tracing-service

That’s more or less it as far as financial stuff is concerned, but there are some health avenues to explore.

http://community.macmillan.org.uk/home.aspx which has a section dealing with practical issues and a huge discussion forum.

http://www.cancerresearchuk.org has a huge database about different types of cancer.

If conventional medicine can’t help (you can always ask for a second opinion though) then it is time to look at the complementary side of medicine. One of the best known is http://www.pennybrohncancercare.org/ formerly known as the Bristol Cancer Help Centre. They helped my father have an extra 16 years of rewarding life plus I can recommend their book Loving Medicine http://www.antiqbook.co.uk/boox/bookl/158081.shtml where his experiences with alternative medicine helped him – his is one of 5 cases listed in the book.

There are my own experiences http://www.georgeemsden.co.uk/category/cancer/ on my blog site (there are a lot of articles here)

Lastly, I could not finish without mentioning my friend Dilys who was diagnosed with cancer and given 4 months to live – over 10 years ago. Her story is really inspiring http://www.colonichydrotherapyuk.com/ She now practises the treament which saved her.

The above are all anyone can do, as the main thing is to look for help. If you don’t, it will not find you and you will be surprised how many people are in the same boat. On Twitter for example, there are loads of groups with cancer in the name.

As far as trying the above remedies is concerned, many of the referrals I get seem to be from people with little or nothing to lose. And it would be great to hear from people where any of the above remedies help.

Many of us would like to see into the future, but this may not always be comfortable viewing. The London meeting of MDRT (Million Dollar Round Table) http://www.mdrt.org provided this or an educated guess as good as any. Economically the UK is in a similar situation to the years after WW2 when there was a long period of austerity with a dullness and greyness that persisted through the 1950s. There is not going to be any bounce out of recession and we are in for the “lean & mean teens” after the naughty noughties. Economies will dip in and out of recession rather like a non-swimmer just being able to stay afloat. Over the next 20 years or so there will be a transfer of about US$30 trillion from the old West to the growing East where there is no talk of recession. The East is increasingly able to do without the old West (that’s us in Europe and the USA) and was classically illustrated at the recent Copenhagen Climate Conference where the Chinese representative didn’t bother to turn up sometimes. They are purchasing energy and materials from Africa for example, 40 years forward in some cases as they clearly see an increase in raw material and energy prices.

Back to the old West again and the run-off of Lehman hedge fund transactions continues where one US$200 million deal has three parties claiming to be the beneficiaries – a variation perhaps on the old military saying that “Victory has 100 fathers while Defeat is an orphan”. Worldwide hedge fund transactions total between US$60 trillion (that word again) and US$600 trillion which is US$600,000,000,000,000. This is more than halfway to my very first quadrillion (1,000 trillion) which would be written 1,000,000,000,000,000. Glad I taught my kids Monopoly. When these wonderful deals work out, the punters make loadsamoney but one wonders how much tax they will pay? If things go pear shaped, then everyone else (that’s us again) eventually pick up the tab as this level of business can just overwhelm banks’ capital. The lunatics really have been running the asylum.

Tax guru Danby Bloch’s http://www.taxbriefs.co.uk/ngen_public/article.asp?aid=89 presentation reminds us that counting days when you are in the UK is not enough if you really want to make yourself non-resident for UK tax purposes as stated in the recent case of Robert Gaines-Cooper http://www.accountancyage.com/accountancyage/news/2258003/gaines-cooper-loses-court where the HMRC Commissioners, High Court and now the Court of Appeal have said that living in the Seychelles since the 1970s and not spending more time in the UK than the tax rules allow, is still not enough to free him from UK tax. Reasons for the judgement are that he is still very much involved with the UK and include, big house here, children at school here and going to Ascot! Life can be really unfair sometimes. Wonderful quote here from a learned judge years ago ”If the intention of a taxpayer is to play cat & mouse with the Inland Revenue,  then there is no intention on the part of the Revenue (now HMRC) to play the part of the mouse!”

From Tax or Money Management to Time Management, with two different approaches. One from Mark Forster http://www.markforster.net/ author of three books on time management and the other from Penny Power founder of the ecademy social network www.ecademy.com . Penny has no “to-do lists” and many of her tasks are e-mail-related. As she puts it, if they are worth doing, they are “worth an appointment”. These used to get done on every other Friday and allocated into half hour slots, but the model has now developed. Now these tasks get slotted into gaps on different days when waiting for trains or between appointments. Result, no backlog.

Strange how things go round in circles, with a nice surprise at a family dinner where I am presented with a copy of eldest daughter’s first book. Ready for ILETS by Sarah Emsden-Bonfanti, MacMillan Exams new English language workbook for foreign students (ISBN 978-0-2304-0102-0).  Illustrating how international publishing has become, MacMillan Exams is based in Oxford while the books themselves were printed and bound in Thailand. All developed from exam reviewing work for Cambridge ESOL who now manage the Cambridge English Language Proficiency exams studied by many people who come to learn, study and work in the UK. The Cambridge examination empire also includes Cambridge University Press (CUP) of which, more later.

One has to admire ladies these days. Penny Power is the mother of three while Sarah’s book was completed over 18 months during which time she produced my second grandson. CUP was my first venture into paid employment, via a paper round – the start of many a schoolboy’s ambition. A ten minute cycle ride and then a short cut through the railway yards where most wagons were overfull with coal, got me to W H Smith’s on the main platform. My load of about 50 papers all had to be delivered before school, and delivered here meant put in the letter box rather than thrown onto the doorstep or the drive. Most deliveries were to lovely detached mansions in Brooklands Avenue and included CUP. Schoolboy logic being what it is, I could never quite get my head round delivering newspapers to a printing press – surely they were capable of printing their own? CUP’s reading was The Times and The Financial Times where in those pre-Murdoch days, the former didn’t have anything vulgar like news on its front page.

Nearby were local Government offices where a few of my schools chums ended up and who have probably taken early retirement now on gold-plated pensions. Father also worked there in pre-BT days in Post Office Telecommunications when telephone exchanges were mechanical, demand for exchanges and telephone lines was consistently underestimated, often resulting in waiting lists for a telephone line. Most memorable were the grand Christmas parties with gloriously politically-incorrect Punch & Judy shows where the script included throwing the baby out of the window http://www.punchandjudy.com/cvdcscript2/page9.html conjurers who relied on mechanical skill rather than technology and Father Christmases who did not have drink on their breath.

Perhaps life was more fun then?

One of the basic laws of investing is apparently that you can’t beat the risk-free rate of return – without taking some risk. However, sales of structured products in the UK in 2009 rose by a staggering 48%, with investors evidently attracted by the allure of low risk, or even no risk (more of that later – as there’s always some risk) and knowing your returns in advance. When the economic backdrop has never been more difficult to predict, i.e. are we seeing ‘green shoots of recovery’ or are we staring into the abyss of ‘a double-dip’, removing unnecessary investment risk is very attractive – but are structured products actually good investments? And, if so, for whom? The answer should be investors.

A structured product is typically a fixed term investment, of say 5-6 years, with a pre-defined level of capital protection and returns that are usually linked to the performance of a stockmarket index, e.g. the FT-SE 100, or maybe an asset class, such as commodities, etc. Understanding them is critical – and this means work for advisers, likely to cause furrowed brows, particularly if genuine ‘due diligence’ is competently performed. That’s what advisers are there for – and good ones should be looking for good investment solutions for clients.

From a provider’s point of view, one of the attractions of structured products can be that having a pretty brochure or advertisement in a newspaper with the word ‘guaranteed’ in the headline makes them sell – for obvious reasons. But when it comes to structured products, a guarantee is only as good as the institution giving it – usually known as the counterparty. Products which had this provided by Lehman Brothers for example, are unlikely to be worth much now. An update if you like on the Shakespeare’s Merchant of Venice “All that glisters is not gold”.

Let’s get back to basics. Generally, people invest because they want to beat the returns available from risk-free assets, i.e. cash deposits. This is always the benchmark, as no-one takes risk for the sake of it – and everyone would stay in cash if returns were always decent. But just now, the problem is that returns are pretty poor, derisory even – and to make matters worse, tax on any interest earned is about to rise. So for many investors, a small amount of extra risk will seem worthwhile, if they feel the return justifies it.

Now the simple truth. There really is no such thing as “no risk”, even in respect of strutured investments, so a closer look at the advantages and disadvantages of various investment categories is worthwhile here. And for simplicity let’s leave out investing in property.

Starting with the least risky, let’s look at depositing funds in a bank. Until the Northern Rock debacle in 2007, the credit risk – will the interest be paid and will the principal be repaid – or idea of a bank going bust was unthinkable. But, the scenes of deposit holders in ‘the Rock’, queuing to get their cash out, known as “a run on the bank” should be etched in our memories for some time to come. There is also market risk with deposits, as interest rates fluctuate. – sometimes dramatically, for instance most recently when the Government/Bank of England slashed rates aggressively to support the economy.

Deposits with Northern Rock are currently 100% guaranteed by the Government  http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7021216.ece but this is set to end soon.

Moving up the risk scale, we come to Fixed Interest investments which include Government gilt-edged securities and those issued by companies, sometimes called Corporate Bonds. Here again there is the credit risk – will the interest be paid and will the principal be repaid?

With fixed interest/bonds, the interest rate ‘coupon’ or rate of return is basically fixed when the bond is issued – or when you buy the bond or government security. The risk of the coupon rate going up and down, as with a deposit account, doesn’t exist – but there is still market risk. With Fixed Interest investments, this works in a different (and opposite) way – i.e. if interest rates go up, the capital value will go down, and vice versa. This effect is much stronger with long-term fixed interest investments. Shorter-term gilts/bonds are much less affected by interest rate movements.

Lastly for now, let’s look at the apparently riskiest investment option of  all, the Stock Market. We all know share prices and dividends can go up and down, i.e. market risk. Beating the Stock Market in the long-term is to put it mildly difficult, but if you can simply match an index in the long-term, you can do well. At this point, advisers often get tied up in arguments about which style of investment is best – active fund management, i.e. picking stocks, or passive fund management, i.e. following an index, see  http://www.georgeemsden.co.uk/2009/07/how-long-is-a-piece-of-string/

Now, think about something many advisers will discuss with investing clients – how to manage, or even control, exposure to risk, particularly Stock Market risk?

Firstly, ‘time’. The longer the term you are going to invest, the more likely that shares are going to rise, and beat deposit or interest-based investments. So ‘time’ – typically of 5 years plus – is often prescribed by advisers as a sensible horizon for investors over which to invest. Trouble is, that the last 10 years or so has seen two 5 year periods when even mainstream markets, such as the UK, US, etc, have delivered negative returns – and risk-free deposits have beaten risky shares. So, does time alone cut the mustard when it comes to controlling risk? Answer, nobody really knows. in advance. But based on past evidence, ‘time’ alone certainly does not remove or genuinely control risk.

Secondly, ‘diversification’. Basically, the portfolio concept is that if you buy enough different investments (different markets, asset classes, managers, styles, etc) the logic is that when some are doing well others may be doing badly, and vice versa. But again, the look back at recent history seems to pour scorn on this as a method of ‘controlling’ risk. For instance, during recent global markets stress something called correlation increased. This meant everything went down at the same time, so no amount of diversification really helped.

But with structured products, investors have the opportunity to avoid all this stuff, by passing on the investment risks to someone else – usually a major bank backing (or structuring) it. Nothing for nothing here, though, so if you want to have protection for the downside, you have to understand that this generally means less on the upside, when things go well. There are always exceptions, and some structured products really have decreased market risk and increased market returns.

Now George has to put his hand up here and admit that structured products have been something of a bête noire - something to be avoided and many other advisers still feel the same way. This is because there are plenty of poor value, complicated products around, offering poor investment returns and features that are not understood by the advisers selling them or the mugs that buy them. Mugs is a deliberate choice here as if you invest in a product/scheme/company or bond that you don’t understand, you really are a mug – albeit not as big a mug as a so-called adviser who sells them. It does also concern me that many structured products are sold by inexperienced advisors in high street banks, where the client relies on the big name of the high street bank concerned and never bothers to read all the conditions. It’s that “G” word again – guaranteed. Because actually these high street branded products are usually the worst value products in the market – and a far cry from the more specialist propositions that independent advisors can access.

But as Chris Taylor, Chief Executive of multi-award winning structured specialist Blue Sky Asset Management http://www.bluesky-am.com pointed out recently, tarring all structured products with the same brush is hardly sensible. As with anything in life, there are good and bad ones out there – even if the good ones are in the minority. A good analogy here is gold mining. If you have a mine with a gold seam where the yield is 1 ounce of gold for 1 ton of rock or dirt, that is pretty good, as gold mines go. And so it is with structured products.

The keys to getting a decent one are: avoid the ‘duff stuff’ your bank tries to sell you when you walk in to pay in a cheque, and use specialist providers through independent advisers. There is also a saying that the smartest people in a gold rush are usually those selling the shovels, but I digress. More detail in a future blog.

* http://montanakids.com/history_and_prehistory/Frontier_Life/early.htm

Things must be looking up with two healthy business lunches in one week. First is with Butterfield Private Bank http://www.uk.butterfieldgroup.com/ in Gresham Street where the fare is low fat Bento. New business for them and other more traditional private banks, is good. Private bank customers where they are owned by very large banking groups, seem to be more and more unhappy with the service they getting and with over 50 private banks in London now, there is plenty of competition. In these larger banking groups, relationship managers seem to rotate regularly and every time they phone up, try to sell their clients a new product. If ever there was a business which depended on long-term personal relationships, it is private banking. Some of these customers have enough money to self insure anyway and for an old fashioned ACIB like me, it seems some banks have lost the plot. Other dislikes are huge bonuses paid to the directors of some of the institutions when their policies and management have caused £billions of losses, and which are now partly nationalised. HNW clients and especially UHNW clients are not always happy in having their affairs handled by a nationalised bank.

Particularly sad to hear that my first proper employer Coutts & Co, has a reputation for poaching clients of for example, IFAs when they introduce clients to them. Several times in my career as an IFA, I have been able to help clients find new advisors or in this case bankers, where they have outgrown their original ones, or the exsiting ones are no longer up to scratch. Three times in my IFA career, I have had to suggest finding a new accountant as the client has been giving tax saving ideas to the accountant rather than the other way round. In all these cases, the accountant’s retirement was approaching. Additionally, Coutts & Co has managed to acquire an Action Group over its investment advice http://www.couttsaigactiongroup.org/

Second guest is an accountant who questions my scepticism on the recent announcement that the UK is now out of recession and that in the quarter concerned, the UK economy grew by 0.1 per cent. My point was that such a small amount is well within the statistical margin of error. Such joy at so small an amount of growth or in this case, the end of six quarters of decline in GDP, is premature. My fellow guest disagrees saying that growth statistics are often updated and usually upwards. For him, the end of the recession was before the fourth quarter of 2009 and is based in the business health of his clients.

To a certain extent we are comparing apples with pears, as one is the national average whereas the other is in the South East of the UK. Away from London and South East, the public sector accounts for the majority of economic activity in the regions, in some cases at levels similar to some old members of the Warsaw Pact. Post election time could be painful there.

End of week lunch introduces me to Brazil’s national dish feijoada a black bean and pork stew http://www.cookbrazil.com/feijoada.htm One guest is a young Brazilian lawyer who takes time off from sorting out the title issues in a huge property deal and brings his cute little dachshund with him. Have never really been a dog person but remember a daughter telling me many years ago that for a guy, a dog really can be a woman magnet. When our food arrives, one pretty lady at the restaurant even offers to take the dog for a walk. This particular dachshund is the more fashionable “sausage dog” shape – quite a long way from the original dachshund (Badger Dog) which was shorter of body and with longer legs  http://hubpages.com/hub/dachshund-info-and-facts From the attention received, a shy guy could have a whale of time here, not to mention being able to dispense with a dating agency. Forgot to mention that a friend told me ages ago never to marry a woman with a pet dog – as you will always be second…..

Chance encounter on the Northern Line leads me to Mark Shaw who used to be the mortgage broker at BRX Bond Street www.brxbondstreet.co.uk who has a new career helping business people with Twitter www.markshaw.biz

But let me finish where I started in Gresham Street named after Sir Thomas Gresham and inventor of Gresham’s Law “Bad Money drives out Good”. In plain language, inflation, printing money in whatever forms means that money loses its purchasing power or value and the poorest suffer the most – as always. Tempting to wonder how he would have helped these days as he worked wonders for the monarchs he served – Edward VI and his half-sister Queen Elizabeth I. http://en.wikipedia.org/wiki/Thomas_Gresham Much of his working life was spent in Antwerp, the financial capital of Northern Europe at the time. One reason he was able to achieve great things was that English monarchs generally paid their debts unlike other monarchs in Europe who thought they were above such boring details. Fine while you get away with it, but a hindrance when you need money say to fight a war to defend your nation.

Like Dick Whittington, he was a member of the Worshipful Company of Mercers http://www.georgeemsden.co.uk/2009/11/curveballs-dick-whittington/ Curiously, he is the only financier I have heard of who was also a jailer – to Lady Mary Grey, sister of the unfortunate Lady Jane Grey who reigned for nine days in July 1553.

Who do you believe? When someone says an investment is low risk should we take what is said at face value? Members of the public can, but advisers are expected to check. Putting money on deposit ought to be as safe as any investment – as long as the bank is still there tomorrow – quite likely, as a huge chunk of the UK banking system is now nationalised. Putting it under the mattress isn’t 100% safe either, as you might get burgled, kidnapped or your home might burn down. And putting it into a fund managed by a large or respected institution ought to be considered safe too – especially if that fund is stated to be low risk. Seems our competitive human nature encourages stupidity regularly among a few fund managers, and here are some examples:

Few years ago, zero-coupon bonds and funds were sold like this and were ideal for investors who did not like risk and did not need income during the term of the investment. They were basically very simple.  If you bought one at say, 75p with a maturity in 5 years time of 100p, then you knew exactly what your total and annual returns would be – in this case, 25% total return or about 5.9% p.a. compound.

Trouble was, the fund managers decided to be clever and gear up, meaning they borrowed (using the investments as security) and then used this money to buy more contracts, rather like betting heavily on your own race horse. If your horse wins, you get the prize money and the profit you have made on your bets. If it doesn’t win or things do not go as planned, you end up out of pocket which is what happened. Clients lost money on an investment which was very simple and if left alone, low-risk.

Last month, Standard Life earned themselves a £2.45 million fine when it misled investors on what was supposed to be a simple cash fund for pension money http://www.whatinvestment.co.uk/making-money/investment-funds/investment-funds-in-depth/1110918/standard-life-says-sorry-to-98000-investors.thtml

And proving the old saying that hubris is followed by nemesis (pride comes before a fall) this video talking about a “low-risk” Arch Cru fund that invested a huge chunk of its money in a shipping venture http://www.citywire.co.uk/adviser/-/news/collective-investments/content.aspx?ID=378824&re=8277&ea=234851 using shell companies in the Channel Islands, really takes the biscuit.  http://www.citywire.co.uk/adviser/-/video/other/content.aspx?ID=379032&re=8278&ea=234851 Financial Advisers have their own grapevine and while there was plenty of warning that this particular fund was not what it said on the tin, some decided to ignore it.

Wednesday finds me at a seminar hosted by www.consultationinstitute.org for local Government officers that deal with elderly people. Since this is relevant to long-term care, seems worth a visit. Main event is an interesting talk given by Michael Foster MP for Hastings & Rye. Without any effort on my part, his answer to someone else’s question includes the three blindingly obvious remedies to someone who has not got a big enough pension – contribute more, manage on a lower income than you planned, or work longer. His comment that Pension Credit will help those still short of pension didn’t mention its complexity which puts a lot of people off applying. Interesting comment too that in 1908 when the first (means-tested) State Pension was introduced, the average length of time people received it for was 2 years. Someone at State Pension Age now can expect to receive it for between 10 and 20 years and longevity has recently been increasing 2 years every decade.

Main subject of his talk is the Equality Bill http://www.equalities.gov.uk/equality_bill.aspx currently going through Parliament and there is still time to put your point of view.  Alas, didn’t get a chance to ask a cheeky question – with an election coming, will this Bill actually reach the Statute Book? as some of the questions were ramblings rather than actually asking anything. At the end of any Parliamentary session, there will inevitably be legislation at varies stages of progress. Negotiation or if you like, horse-trading between the various political parties will mean that some will be allowed to go through while others get chopped. Will have to see if this bill makes it.

Another situation I would have liked to ask about occurred in one of my pension surgeries recently. Lady wants to take her pension benefits from her employer’s scheme and my advice is mainly about the type of annuity she should take – level or escalating? However, being fit and healthy and with no dependents to worry about, she wants to carry on working. As one or two other employees have done this, she asks me if she can do this? Only HR can answer but her situation raises some interesting issues. Working after the Scheme Retirement Age will provide useful extra income but she will not have the same benefits as someone younger than the Scheme Retirement Age, like Death-in-Service Benefit, Private Medical Insurance and so on. She will be at an obvious disadvantage compared to her colleagues – just the sort of issue you would expect the Equalities Bill to address? Looks like another wait & see.

Following speaker is from National Audit Commission showing the huge regional disparities in proportions of elderly people – almost 2/3rds in Dorset while cities & conurbations have a much lower proportion. Some authorities are very well prepared for this while about 30 per cent haven’t got any plans or policy in place. Interesting to see what works with different local authorities. An electric scooter or shopping buggy scheme in one authority where a fleet of 20 is available for people, has very positive feedback – with one user saying, that they feel they have a life again. Something that might have helped people here  http://www.georgeemsden.co.uk/2009/12/james-bond-is-in-a-wheelchair/

Another scheme designed to prevent elderly people falling costs £158,000 a year and is managed by a Falls Prevention Officer (sic). Have heard of Teenage Pregnancy Advisers in some local authorities, but not this latest one. Savings are huge apparently as hip replacements cost £20,000 a pop and if 15 falls are prevented each year (their figure) then the savings to the nation (but not the local authority) are £3 million. Wonder if these will survive the election?