New ideas for making money for clients are welcome especially if there is a guarantee or underpin. One of my mantras is that people’s brain cells seem to switch off when they see the “G” word. With all the current regulations and much more predicted later, there is almost a case for advisers or certainly providers getting a licence before using it. A guarantee or underpin is only as good as the (counter)party giving it and products guaranteed by Lehman Brothers for example, aren’t worth much. In the UK, there is the Financial Services Compensation Scheme with the prospect of a pan-European one at some future point raising the interesting issue, “Do we want to pay higher costs for bailing out foreign financial planners where the rules are less strict?” Litigation is always an option but someone has used their brain cells and designed a fund that promises high returns (currently) 11% p.a. and has few charges PLUS there is an underpin in the form of insurance – details not provided in the e-mail. So why not put all my clients into this one? The fund provides short-term financing to “law firms for cases where Prescribed Breaches of the Consumer Credit Act 1974 have been identified” i.e. ”where consumers have been missold Financial Products (credit cards/loans/PPI cover)”.

Here is where I have a problem. Perhaps it is my original banker training where I worked hard for my diploma, but the whole thing seems like “dog eat dog” and for some reason, am a bit squeamish – something that doesn’t happen to George very often. Even more curious, I am not a huge fan of ethical/green funds, but have some clients who do want this sort of fund and accommodating this is not a problem – main effect is a smaller choice of funds to invest in.

Au contraire one could always take the view that the fund helps people get compensation for being missold, seems to provide a pretty healthy return and there is insurance on the risk as well. So why I am uncomfortable with this scheme? Views from my professional connections would be welcome here. Would they be happy to invest clients’ trust money for example, in something like this?

This subject (product misselling) is likely to feature in Financial Mail Women’s Forum  http://www.fmwf.com/media-type/news/2010/04/ask-gaynor/  where questions from readers are answered by a panel of IFAs – which now include yours truly.

More healthily, fellow IFA Dennis Hall is starting his 800 mile LEJOG cycle ride next week which will be written up here http://www.lejog4.com/ 

A meeting with a former colleague over coffee is interesting as her partner is setting up on his own after taking redundancy. The planned pension review is not necessary as everything is tabulated, and a quick glance at the joint balance sheet shows no shortfalls apart perhaps from protection, but in your 50s this ain’t cheap. More useful I hope is my suggestion to get him to talk to an accountant (sole-trader or limited company?) before he starts trading and outsource the marketing. No point in being damn good if no one knows about you, and if pressing the flesh is not your thing, then training so you can do it yourself or outsourcing is the way to go.

An equity release enquiry has a retired couple wanting to raise the last bit of equity available on their home in order to pursue a claim in respect of a loan taken out with a time share – they did one lot of equity release 5 years ago. The amount available (subject to survey etc) will give them just enough to pay the projected legal costs with little idea if it will succeed or not. Suggesting that they think it over, I send them a summary of their situation and they call back two days later having decided to go ahead. In cases like this where a couple own a property, the main parameters are the age of the youngest owner and the property value.

Another enquiry asks, “can I do equity release on a property in France?” Answer: yes, (a few) French banks do it and brokers here too.

But it’s Friday so let me finish with some humour. The back of a recent paperback mentions a crime novel The Dawn Patrol by Don Winslow set in California. Hero is an ex-Cop (what else?) a private investigator (ditto) and there is a murder. Much less gore than other detective novels by Karen Slaughter for example, that ladies have lent me but a fascinating journey through the surf scene on the Pacific Coast. Unexpected bonus is reading about George Freeth who more or less invented surf culture as we know it http://www.surfmuseum.org/html/george_freeth.html and a beautiful description of the artery for surfing in the West, Pacific Coast Highway or United States Highway 101.

Style is brief, at times almost reading like a screenplay rather than a novel and there are few chapters as we know them – sections is a better label here as some have only 10 lines. Best so far is Section 41 – a description of one of the villains – a cosmetic surgeon, who has earned the soubriquet Teddy D Cup. Inevitably, he steals another villain’s girlfriend as he has had his own share of surgery himself (a good example of  guys sticking together) and he is loaded. The now ex-boyfriend takes this very badly and when the hero catches up with him, has been on a 4 day bender and gives the reader a classic case of schadenfreude* with the lament “She traded me in for a new pair of ti**!” Wonder if it will end up on screen?

* http://www.georgeemsden.co.uk/2008/05/schadenfruede-dna/

Nice to do something new, and my first workplace pension presentation to the support staff at a north London school goes well. As one of 143 IFA volunteers for TPAS http://www.pensionsadvisoryservice.org.uk/ I deliver the PowerPoint presentation and take questions afterwards. Feedback forms show an increased understanding of pensions but several express dissatisfaction with their own pension situation. Workplace seminars are available free to employers (contact Paul Hays) and are delivered either by TPAS staff or IFAs. Starting over 20 years ago as a charity TPAS is now a QuaNGO funded by the Pension Protection Levy http://www.pensionprotectionfund.org.uk/levy/Pages/PensionProtectionLevy.aspx

For the uninitiated, Quasi Non-Governmental Organisations are funded by governments but act independently and there are a lot of them in the UK http://www.guardian.co.uk/news/datablog/2009/jul/07/public-finance-regulators

Staying with pension & investment protection, I get a phone call from a lady who invested in Arch Cru and whose Google search turns up my previous blog http://www.georgeemsden.co.uk/2010/02/because-it-does-what-it-says-on-the-tin/ Her IFA has retired, the firm is apparently no longer in business and she wants to make a claim. What did my colleagues and other IFAs hear about Arch Cru to make them avoid putting their clients’ money there? Am unable to help here and can only point out that all professions have their grapevines and if someone is behaving strangely, word tends to get around. Her discussions with the Financial Ombudsman Service http://www.financial-ombudsman.org.uk/ get nowhere, so if the claim is not covered by the respective firm’s PI insurance, then it will end up at Financial Services Compensation Scheme about which I have written more than once http://www.georgeemsden.co.uk/2009/11/interesting-times-how-to-spend-14bn-in-a-weekend/ One thing my contacts do tell me is that the worst news on Arch Cru is yet to come.

A talk to a wholly fee-based IFA brings an amusing story. Submitting the latest FSA return detailing volumes and types of business results in a phone call from the regulator asking “Why so few products?” No life insurance, ISAs or pensions have been sold, only 7 life insurance bonds? Answer: being fee-based, they are not really interested in products, just in getting paid for their time giving advice. The bonds concerned with their unique tax advantages are the best thing for a few of their clients in a few of the situations. To be fair, the clients here are quite well off and can self-insure where protection might otherwise be appropriate, but the regulator is happy.

On my birthday, a kind wife gets me back on two wheels with a new racing bike and the chance to get fit but not before being initially defeated by the gear change mechanism. This is now incorporated in the brake levers on the drop style handle bars. Saddle is awfully narrow but using the gears to change down on hills to keep the same cadence makes things easier and my technique reemerges from my brain and aching limbs. Cycling in London is not for faint-hearted as one appears to be invisible to many car drivers, even when wearing a bright yellow crash helmet.

A friend recommends The Art of Possibility by Rosamund & Benjamin Zander http://www.amazon.co.uk/Art-Possibility-Practices-Leadership-Relationship/dp/0142001104 which gives a fresh approach compared to other coaching and motivational books. Some of the musical anecdotes are over my head, but the bit on mission statements is funny “We want to be the preeminent supplier of the most innovative technology in in office design in America” but small voice is saying, “What about me? Why? or What for?” Worth a read.

New habits die hard and my seventh Foreign Legion book March or Bust by A R Cooper http://www.amazon.co.uk/March-Bust-Adventures-Foreign-Legion/dp/0709131658/ref=sr_1_1?ie=UTF8&s=books&qid=1272110710&sr=8-1 is hard to put down. Joining at 15 1/2 (interesting how men and women lie about their age for different reasons) he gets his Croix de Guerre in the Dardanelles in WW1 before his 16th birthday. Much of his spare time is spent in the archives where he turns up mot de Cambron (sic) http://www.napoleon-series.org/research/miscellaneous/c_cambronne.html from Gen Cambronne’s allegedly one word reply Merde! to a surrender offer at Waterloo. This link suggests differently but can take its place with other one word replies to similar offers. Most recent is “Nuts!” http://en.wikipedia.org/wiki/Anthony_McAuliffe by Gen. McAuliffe in the Battle of the Bulge in WW2 and even shorter, the Spartans answer to a letter from Phillip II, Alexander the Great’s father, “If” when he was about to invade their homeland of Laconia http://en.wikipedia.org/wiki/Sparta

Training is fairly simple compared to later books and after being shown how to pack his kit and load a rifle, off they go. Daily rations include a good supply of red wine. His paquetage or haversack is too much for his young frame at first so his comrades carry it for him in turns. The recoil of the first rifle shot sends him sprawling. Short time later he is captured by Berbers and hands and feet are tied. Torturing prisoners is left to the females and usually involves eyes being gouged out, stomach being cut open and filled with stones, not to mention genitals being cut off and shoved in the mouth. Only way to escape is if they think you are mad, as they believe that doing their usual to a demented person will affect them. Fortunately, Cooper knows a few words of Arabic and they start to wonder as he puts on a demented show. Eventually his hands and feet are released to allow him to pray, which he does loudly in contrast to his captors and after more antics, he is able to escape.

Like all the authors so far, Cooper spends some time in prison. After deserting and getting recaptured, he is sent to French Guiana at that time a feared penal posting although nowadays, legionnaires’ duties are guarding the French Space Centre  http://www.esa.int/esaMI/Launchers_Europe_s_Spaceport/index.html Tattooing is common there and transgressions mean that the sentence sometimes has to be started again. The misfits include an astronomer who can’t help looking at the stars on night marches resulting in more trouble.

Common sight for Cooper is tobacco pouches made from human skin – usually male but occasionally female. The freshly cut pouch to be used, is covered in salt and left to dry in the sun resulting eventually in a fine leather! Final touch is to have the supposed name of the donor tattooed on. The penal camp has a sadistic sergeant by the name of Himerstein who likes using a whip. Years later, after delivering a talk on the French Foreign Legion to the Special Forces Club in London, an RAF Wing Commander asks if Cooper knew the name? Turns out the guy was a SS guard in Buchenwald.

Lighter evenings remind me that it’s ages since I treated myself to a guided walk, so finally settle on the Old Chelsea Pub walk  http://www.walks.com/London_Walks_Home/Sundays_Walks/default.aspx#12928  Along with Hampstead, Chelsea still retains its village atmosphere and the itinerary includes two pubs as well as finishing at one, so not too strenuous and one is not likely to go thirsty. Starting in Sloane Square at the start of Kings Road, this really used to be a King’s Road running down to Hampton Court. The thoroughfare is much more memorable now for fashions, most famously perhaps as a result of Mary Quant opening her boutique in 1955 http://www.vam.ac.uk/collections/fashion/features/1960s/exhibition/quant/index.html  but the site now hosts a Cornish Pasty shop.

First stop where the name gives a clue to how life used to be, is the tiny, charming and quiet (no music) Fox & Hounds http://www.tipped.co.uk/listings/2376/the-fox-hound  Strangely, a long time obstacle to building or development in Chelsea was Belgravia. Very smart now,  but until early 19th century it was marshland and had a terrible reputation. One of the catalysts for developing it was the construction of a new palace for George IV on the site of the old Buckingham House, so you can probably guess the name of the grander building we all know  http://www.davidson-hall.co.uk/belgravia.asp

The Chelsea Physic Garden http://www.chelseaphysicgarden.co.uk/ is closed when we pass it, but its inspired gift of a few cotton seeds in the 1600s to the then new colony of Georgia in the Americas, had a huge effect on American history. Round the corner is Tite Street where Oscar Wilde lived and author of the play at heading. His one liners still echo like “work is the curse of the drinking classes” & “I can resist everything except temptation”. Not so well known is his famous deathbed quote when he was offered champagne “I’m dying beyond my means!” A sentence of two years hard labour from 1895 – 1897 broke his health and he never returned to the UK. Highly acclaimed film of his life here http://www.imdb.com/title/tt0120514/ 

The Royal Chelsea Hospital http://www.chelsea-pensioners.co.uk/ could hardly be left out of a Chelsea walk and two lady pensioners now join the better known “Chelsea pensioners” in their distinctive scarlet coats. Some of them live to grand old age and when one 96 year old was asked for his secret in living so long and looking so well replied, “pint of beer every day at 11am, another pint before I go to bed and a bath every Monday – whether I need it or not!” Part of the grounds host the annual Chelsea Flower Show which lasts 5 days this year 25-29th May http://www.rhs.org.uk/Shows-Events/RHS-Chelsea-Flower-Show/2010

Royal Avenue is the location of James Bond’s London flat although Ian Fleming never names it and round the corner is the second pub The Phoenix  http://www.viewlondon.co.uk/pubsandbars/the-phoenix-info-12758.html for 20 minutes. Turning towards the river is the most exclusive part of Chelsea – Cheyne  (pr. chay nee) Walk where Rolling Stone Keith Richards used to live, Mick Jagger and Julie Andrews were neighbours and Paul Getty had his mansion. By this time we are in the oldest part of Chelsea village where the streets are narrower and finally finish up at the delightfully-named Pig’s Ear http://www.thepigsear.info/ named after Cockney rhyming slang for beer. The beer by that name is sadly no longer delivered there but as with all the pubs visited, there are plenty of other good ones to choose from. Later in the year where you probably will be able to taste it is http://www.whatsonwhen.com/sisp/index.htm?fx=event&event_id=44972  And for a final boozy note, just remembered a use for an overlooked book token http://www.amazon.co.uk/300-Beers-Try-Before-You/dp/1852492139

Talks to other IFAs are always interesting and Dennis Hall of  http://www.yellowtail.co.uk/ is doing what cyclists call the “end to end” or LEJOG Lands End to John O’Groats next month in aid of Help for Heroes charity. If you want to join me in helping him achieve his £25,000 target, go to http://www.justgiving.com/Dennis-Hall

Having started on a slightly frivolous note, let me finish on a serious one http://www.ft.com/cms/s/0/8c516ec8-48ee-11df-8af4-00144feab49a.html?catid=43&SID=google China and the EU are concerned about an iron ore monopoly? Higher prices for this essential commodity will eventually affect us all. Wonder if these two great powers have thought of tackling this jointly? If they got their act together any monopoly would not last long.

Your financial adviser is much busied currently with a concept from the regulator having the label Retail Distribution Review  http://www.thepfs.org/pages/memberservices/RDR.aspx where the aim is to raise the bar on qualifications and give a firm kick in the direction of fees for payment for advice, and move away from commission. Effective date for this sea change is 2012 but until then commissions are OK and will probably remain so for protection business. A colleague who joined wanting to work on a pure fee-based model, had to accept that for protection business commission was the only viable option. A professional introducer also reminded me sometime ago, “people just hate getting their cheque books out!”

Another initiative from the regulator is Treating Customers Fairly, but that can wait for another blog  http://www.fsa.gov.uk/pages/doing/regulated/tcf/

Trail commission rules are much stricter now and if a client is not getting any on-going advice, you cannot keep the trail commission which does have two advantages – it is simple and fair. Average commission for pension or investment business is 0.5% p.a. (50 basis points) and varies with performance. Anyone can understand this calculation and if the fund value goes up, advisers earn more and vice versa which is pretty fair. This is also the adviser’s pension as if he sells his practice or client bank, the amount of assets under management &/or the trail commission is a major factor. Clarity is a guiding theme in the RDR as advisers call it.

For other professional practices, the figure obtained when an accountant/solicitor sells up or retires is related to annual fee income. Accountants for example, tend to have recurring income when people come back year after year for their audit, bookkeeping or tax returns. Solicitors’ income can be more sporadic as people tend not to buy a house, get divorced, make a will or die every year.

Surprising then at a local meeting of http://www.financialplanning.org.uk/ where structured products are the agenda http://www.georgeemsden.co.uk/2010/02/theres-gold-in-them-thar-hills/ and questions afterwards are interesting to say the least. Average commission for lump-sum investment business is around 3% with maybe 0.5% p.a. trail, but some providers offer up 8% initial commission and for niche funds typically overseas-registered property funds, this can be as high as 12%  or in one case 16%! Such high commissions tend to be for high risk funds often for speculative overseas property developments. They will be unregulated i.e. not covered by the Financial Services Compensation Scheme about which I have written before  http://www.georgeemsden.co.uk/2009/11/interesting-times-how-to-spend-14bn-in-a-weekend/ Going back to my opening point, one has to wonder occasionally if we do all breathe the same air. If claims are involved, other IFAs will of course pick up the tab – like any insurance scheme – but if commissions are eventually banned, don’t expect fees to be cheap.

Another cancer enquiry from Twitter http://twitter.com/cancerIFA where I am known as cancerIFA is from a young persons’ charity where the question is, “Can I get life insurance, if I have been clear of cancer for a while?” Answer here, “It depends” but a little light here. Having had throat cancer myself in 2007 and now with 6 monthly post-treatment check-ups, I still have to say that one is never really clear of cancer – all one can do is perhaps be a bit more careful afterwards? Forgoing the pleasure of a cigar at my daughter’s wedding and the arrival of two cute grandsons was not a huge sacrifice.

Getting back to the original question, I arranged critical illness insurance for a client who had had cancer twenty years previously. Took time to do and eventually got the cover at standard rates but with a specific exclusion for cancer. In other words, the policy would pay out for: heart-attack, stroke, multiple sclerosis, loss of limbs &c. and in his case, total permanent disability for his own occupation but not any cancer illness. If any of your existing policies have total permanent disability, you might wish to check what type of occupation is covered here and if you don’t understand the terminology, contact the guy who sold it to you.

Regarding the enquiry today, cover can be arranged by going to several insurers at the same time, only needing to fill in one form which an IFA can arrange. Only one medical is likely to be needed as insurers will share medical information. Worst thing is to do it yourself and go from one insurer after another, wasting your time and theirs. With any insurance proposal, telling porkies is not a good idea and for a claim which was not paid (my very first one) see  http://www.georgeemsden.co.uk/2008/06/uberrimae-fidei-bo-diddley/

Another day, another cold fax. Not about the usual better offers for mobile phones, cheap cars or office supplies, but water. Former supplier of the cooled bottled stuff http://www.powwowwater.co.uk/ is now in administration with Deloittes. When we first had their water coolers, it was nice to keep hydrated as much tiredness is apparently related to dehydration. Deliveries were OK at first but got erratic and on one memorable occasion, we were told we could not have our delivery as “the driver had not turned for work!”

Last straw appears to have been cashflow proving the old saying: turnover is vanity, profit is sanity but cash is reality. Related to this is cost, as people offering to save you money are probably quite busy currently. It seems though, that few of these measures like cutting back on office cleaning survive for long, as you need to look at the demand as well as the supply side of things http://www.georgeemsden.co.uk/2009/07/rita-hayworth-and-the-shawshank-redemption/

What stopped us from having water from powwow was something very minor but had a large unwelcome effect on business. For some reason powwow changed the design or maybe the supplier of their bottles. Wouldn’t be surprised if cost was behind this, but someone didn’t do some elementary testing. The new plastic caps on the water bottles are not watertight and result in soggy carpets at the office. Not the sort of impression one wants to give to clients but four telephone calls over 3 weeks to come and fix this, go unheeded. Officer manager finally loses patience and tells them to come and take the damn water cooler away today or it will be left in the street. Come 4pm, a harassed engineer turns up who tells us that he has been running around for weeks doing just this as offices don’t like soggy carpets, and he takes the cooler and empties away. A Google search even turns up a heading Powwow complaints and this website http://www.ht2.org/ben/?p=17 Last word here, an unhappy customer will apparently tell an average of 19 people about a bad service or product.

On a more cheerful note, time has flown and the film Green Zone mentioned in  http://www.georgeemsden.co.uk/2008/04/itchy-wings-sticky-susan/ is now on general release with good reviews. United Grand Lodge in Great Queen Street is of course, the location for Thames House in the BBC Spooks series. Perhaps forgotten now, is the chess scene in From Russia with Love starring Sean Connery which was also filmed there.

In another case of tempus fugit, the former school playing fields near in2′s offices near Old Street,  mentioned in http://www.georgeemsden.co.uk/2008/03/tango-and-bohemian-rhapsody/ are now on the market  with available apartments from £325,000 to £725,000  http://www.bezierlondon.com/availability.php Contact me if you need a mortgage.

Let me conclude with a business that has grown, survived the dot.com bubble and looked after its customers – on-line bookseller Amazon. My searches and reviews on their site on Foreign Legion books prompt an e-mail about a book I have not looked at:  http://www.amazon.co.uk/gp/product/0297852132/ref=pe_3421_19342491_snp_dp Never mind that it’s out of stock. It’s just nice to know they care, although the process is of course automated.