Twitter produces another enquiry from an IFA who wants to get the best annuity rate for his client who has leukaemia – Can I help? A 20 minute chat shows that the tax-free cash is needed to pay off expensive unsecured debt. Chemo-therapy has just started so client is still working 12 hour days 6 days a week which really worries me.

Fatigue seems to be a factor in all cancer treatments which are basically controlled poison regimes. Strategy is that the radio therapy or chemo- will knock out the cancer cells including some healthy ones, but the healthy cells will recover while the cancer ones won’t. Cancer is basically a cell growth problem where the growth renewal cycle goes awry. During treatment, your body is a battle ground so you can feel pretty awful, with the main symptom being tiredness. Good if you have some moral or practical support, as it is easy to give up. You can also get a second opinion if you are not happy with the  diagnosis.

With this client there are two main issues. Using the appropriate underwriting form will enable an IFA to shop around various insurers to get the best annuity rate plus advise on the type of annuity to buy, as there are lots of options. Trying to do this without advice is idiotic, but still people out there who think they know better. Client life expectancy here is 5-6 years so the option of taking all the fund in cash is not available. The client is concerned about losing his job and is near retirement age anyway.  But for me the 6 day weeks with long days seems the biggest health risk.   Summary here of some financial and non-financial options http://www.georgeemsden.co.uk/2010/02/gathering-time/

Looking on the bright side, the client at least doesn’t have to worry about the cost of treatment which for chemo is huge. Chemo has the advantage that it gets all around the body and can be pretty good at cleaning cancer cells out, but a small box a doctor showed me recently for a well known cancer drug cost £6,000 and the minimum is usually 6 cycles. More surprising was that using this drug prolongs the patients life by an average of 4 months. This produced a rather bemused reaction from the dinner guests when asked how many of them would spend that much to extend their lives by that period?

The NHS which employs 1.4 million people has a resource problem which could produce a number of cold hard choices i) this year’s budget finished (we can’t afford it – use you own money) ii) reduce expectation (unlikely) or maybe iii) hope that some kind of quantum improvement or automation/mass production approach will reduce the cost. (Let’s pray)

It really seems like Malthus all over again. Malthus, an ordained Church of England priest, was famous for his prediction that there will always be starvation and poor people as population increases geometrically while food for example, only increases arithmetically. As time goes on a food resource gap emerges and poorer people die sooner. http://homepage.newschool.edu/het//profiles/malthus.htm

With cancer treatment, we have unlimited expectation and limited resouces even with governments printing more money, so soon there will be a Health Gap.

Returning to the subject of computers, these were large expensive main frame beasts at the start of my working life being housed in air-conditioned rooms guarded by what seemed like high priests you sometimes dared not approach. Bill Gates vision of making them available to everybody was dismissed by the best computer brains at the time. And this was years after IBM Head Thomas Watson’s 1943 quote when he famously said that the world market for computers was about 5 machines http://ifaq.wap.org/computers/famousquotes.html

But there is a problem with any new cancer treatment. New IT software or hardware doesn’t need to be tested like new drugs and treatments. Currently,  around 2,000 drugs are being tested in the UK about 90 per cent of which won’t make it to market. Reasons for this high fall out rate include: side effects (remember Thalidomide?) http://www.enotes.com/1960-medicine-health-american-decades/thalidomide-global-tragedy ineffectiveness (they don’t work as well when tested more thoroughly) and of course, cost.

My anti-virus software gives me an interesting idea here. A report shows the spyware/malware and other nasty stuff removed in the previous week. Why not the same for us with some embedded micro bio-chip? Terminator 4 perhaps? Our immune system deals with cancer cells for example, all the time. How about a weekly look at what our white cells did over the past week? Might encourage some of us to change our lifestyle? Sadly, the doctor points out that this is still science fiction, but hopefully not for too long.

P.S. If you want to follow me on Twitter, I am cancerIFA.

The Big C is in the news again http://news.bbc.co.uk/1/hi/health/8246829.stm with the news that depression affects survival rates and one doesn’t have to guess which way. What else did they expect? If you visit someone say in a nursing home or hospital i.e. showing that you care about them, is this going to harm their health or make them feel better? The effect of this was shown a few years ago visiting one of my relatives in a nursing home. Walking in the through the lounge where the TV was on and several inmates stuck in their wheelchairs, some of their faces would light up as you walked in only to drop again as you carried on to spend a little time with your relative.

Friday at the RAF Club with BRX Bond Street and resident jeweller Lewis of www.joseph-sterling.com informs us he is doing the New York marathon again with his nominated charity being  http://www.meirpanimuk.org/about which looks after Holocaust survivors in Israel. In the saddest case of YCMIU, these only get a pension in Israel if they arrived from Germany or UK. Got to Israel from the Ukraine for example, sorry no pension. If you would like to support him, go to http://www.justgiving.com/lewismalka/ Have previously mentioned that in my glorious school holidays in Germany, my German grandparents had noticeably better pensions than their English counterparts, making you wonder even in my pre-teen years, Who won the War? And just to cap this story, this means that Holocaust survivors best pensions are in Germany.

Still on the subject of pensions, a new word for my next Scrabble game perhaps is senescence mentioned by Royal London pensions guru Steve Bee, who you can follow on Twitter http://twitter.com/PensionsGuru

“We all seem to think that modern humans live a lot longer than people used to, but that is not really the case. Mortality improvements from the medical and social advances of the last few hundred years have not really extended our natural lifespan by more than two or three years, but have allowed more people to achieve it. A word was made up to explain this – ‘senescence’. It was defined as ‘the lifespan that can be achieved under optimal conditions’. An 1841 actuarial table showed UK senescent deaths at around 40% of total deaths. So four in ten people dying in 1841 had made it to their seventies. By 1962, UK senescent deaths were recorded at around 75% of total deaths, another massive improvement. And things go on. We will now see further advances in medicine and social policy that may push the percentage of senescent deaths ever higher and at the same time increase the peak age we can expect to reach as well. The society we live in will itself age further as a result.”

Colleague points out that previous good news http://www.georgeemsden.co.uk/2009/09/afghanistan-bananastand/ regarding Friends Provident withdrawal of MVR penalties is a lot more complicated than at first appears, only serving to make me avoid this minefield of investment history.

Haven’t counted shopping days to Christmas yet but one Christmas present for yours truly will be:  300 Beers to Try before you Die by Roger Protz http://beer-pages.com/stories/300-beers.htm and if you really want to know how many days are left, here is a shopping day counter:  http://www.allcapecod.com/shoptillchristmas.cfm Thank heaven for the internet, where you can do your shopping on-line, including gift-wrapping and delivery.

Talking of prizes and presents, the Premium Bond notional interest rate increases to 1.5% from 1st October 2009. Have always mentioned them to clients as they can leaven the rather heavy subject of financial planning, but at that rate not much fun even though the winnings are tax-free.

Living many years in north London and passing what used to be The Settle Inn near Archway, curiosity gets the better of me as Charlotte Despard http://www.spartacus.schoolnet.co.uk/Wdespard.htm now has a pub as well as a road named after her, and was quite a feisty lady it seems.

End of week is at the Berkeley Square offices of Frontier Capital Management whose evidence-based investing approach makes a lot of sense. Reiterating that you can’t beat the market in the long run like previous blog http://www.georgeemsden.co.uk/2009/07/how-long-is-a-piece-of-string/ and pointing out that different asset classes have different embedded rates of return, leads to the sobering thought, Do you really need an investment manager? (See heading) And with 40 per cent of global money invested in Index-tracking funds/products, a lot of other people think so too. A word of warning here, no one approach is head of the pack all the time. Investing has its fashions and if your logical, well-researched approach isn’t flavour of the month, there are going to be times when other people’s approaches appear to defy gravity and streak ahead of you.

Putting it another way, let’s divide investment fund performance into four quartiles. The average is obviously the top of the third quartile or if you prefer, bottom of the second quartile. BUT all funds have costs, and take these off the fund values and the long-term average will be near the top of the third quartile i.e. just below the median/average. Not the sort of thing that would win an Olympic medal, but practically impossible to escape and no reason to stop investing.

But let me finish with some amusement. Keith Floyd’s obituary http://www.telegraph.co.uk/news/obituaries/celebrity-obituaries/6192702/Keith-Floyd.html unsurprisingly reveals a wicked sense of humour where he once fried a breaded beermat for an ungrateful customer who ate it, but complained about something else!

First meeting with a new introduction from an accountant brings up the subject of Stakeholder Pensions. These were this Government’s answer “the pensions problem” where people were (and still are) not saving enough for their old age, all the fault of the wicked insurance companies that provided them who were considered too greedy in terms of charges. If charges could be reduced, low earners would rush to save for their retirement.

While a pension is just a savings scheme with some tax-breaks, a Stakeholder Pension is the “fleet model” of pensions with limited fund choices and for the first few years, a cap of 1 per cent on charges. This led to the ludricrous situation where pension providers lost money providing these contracts for several years and the low-income earners they were aimed at, did not want them. In a classic example of the law of opposite unintended effect, they did generate some jolly wheezes for saving IHT for example, for grandparents with loadsamoney.

Minimum contribution was £20 per month but that is not going to provide a pension you can live on even if you start in your 20s. As an answer to the pension question, they were little better than the equivalent of the answer to “Life, the Universe & Everything” which Hitch Hiker’s Guide to the Galaxy devotees http://www.bbc.co.uk/cult/hitchhikers/ will know is……..42! After years of pressure from the insurers, Government finally relented and allowed a maximum charge of 1.5 per cent for the first 10 years – perhaps remembering that insurance companies that lose money might go out of business and aren’t going to pay much in Corporation Tax.

8th October 2001, new rule for for employers with > 4 employees who must have a Designated Stakeholder Pension Scheme. They do not have to give any advice nor do they have to contribute, just have a Designated Scheme i.e. a particular scheme with a particular insurance/pension company which will then issue a certificate to let the employer off the hook. Given the huge interest that pensions generate, this was one of those laws “more honoured in the breach, than in the observance” as Hamlet’s Polonius diplomatically put it. But then regulator OPRA now part of The Pensions Regulator http://www.thepensionsregulator.gov.uk/aboutUs/index.aspx had the sanction to fine errant employers up to £20,000, and in March 2004 they dished out their first fine of £10,000 against a 300 employee company Foodflow Ltd. One of their employees felt he was prevented from joining a designated scheme and complained to the regulator. To their credit, they did not wade in and issue the fine immediately but the employer apparently ignored their requests and was fined, losing their appeal http://www.accessmylibrary.com/coms2/summary_0286-20799889_ITM

The maximum fine for this transgression was recently increased to £50,000 so any concerned employers reading this might wish to look at  http://www.thepensionsregulator.gov.uk/pdf/faq2007.pdf

Long-term readers of my blog will remember my previous swimming teaching experiences, and previous blogs on this subject can be found in the Swimming category on RH side of the browser. My forté was nervous people in general and usually nervous children in particular. The nervousness was often more with the parents than their offspring, but it was very rewarding emotionally to help them overcome their demons. Children generally learn more quickly while adults have much stronger motivation – decades of “I’ll do it sometime” finally get swept away with the grit to face it and book those lessons. In one memorable case and after two terms, we had reached the stage where it was time to jump in at the deep end from the side of the pool. Had forewarned the adult pupil the previous week, but he looked really nervous so I asked if I should hold his hand? Yes, he said quietly and in we jumped. Did it all himself next time and at the end of the lesson told me “I never thought I would be able to do that”.

So what’s prompted all this? Fellow blogger and tango dancer Tim Ferris whom I have mentioned before has found a new way to swim and apparently very efficiently http://www.fourhourworkweek.com/blog/2008/08/13/total-immersion-how-i-learned-to-swim-effortlessly-in-10-days-and-you-can-too/ Have yet to read his book The Four Hour Work Week http://www.amazon.com/4-Hour-Workweek-Escape-Live-Anywhere/dp/0307353133/ref=pd_bbs_1?ie=UTF8&s=books&qid=1203371924&sr=8-1 but suspect it’s basically, stick to what you are good at and delegate everything else.

Another person whose thinking seems against the flow is novellist and apparently ex-Feminist, Fay Weldon. In the week when the UK’s population reaches 61 million she suggests women have chidren first and career later ergo more teenage pregnacies http://www.telegraph.co.uk/culture/books/authorinterviews/6089253/Fay-Weldon-Its-easier-to-pick-up-your-husbands-socks-and-clean-the-loo.html Having done my own procreation relatively early in life – getting married at 23 and now with 3 lovely grown up daughters to show for it, she has a point but the thing about having children is you sometimes have to let them find their own way – and not just in swimming.

For a change, let George finish on a serious note. Had interesting meeting with the Chairman of children’s cancer charity www.campquality.org.uk who want me to help them in the UK. Their parent is a very large Australian cancer charity and while details not worked out yet, watch this space.

“When a man is tired of London, he is tired of life, for there is in London all that life can afford”  Samuel Johnson famously said and reassuring to find it still, 250 years later and from an unexpected direction.

Think personal injuries claims and clichés like ambulance chasing spring to mind with lawyers taking 50 per cent of the claim and so on. Recent business failures of firms who got their business via TV advertising and where clients had their arms twisted to take out expensive insurance, have not helped. A meeting at Kidd Rapinet in Craven Street restores my faith here in > one way.

There are three main ways of making a personal injury claim. Simplest is to have a straight forward fee agreement. This may be on an hourly basis or perhaps a fixed fee. Win or lose, you pay the fee. Next is a Conditional Fee Agreement where nothing is paid upfront and the solicitor will get his fees paid by the other side – usually the insurer – if he wins. But since this is on a “no win, no fee” basis, there is a risk that he will lose. As result, his fees will probably be double the amount of a straight forward fee agreement. Third way is a Contingency Fee Agreement where nothing is paid upfront but a percentage of the award is taken and is most common in the USA.

Insurance is recommended but in a Conditional Fee Agreement, the solicitor takes this out on behalf of the client. Insurance premiums and reasonable legal costs are recoverable so if you win the case, the costs should be covered and if you lose, the premium is waived. Compare this to some personal injury firms (the more aggressive ones perhaps) where they make the client pay for the insurance upfront.

Costs are decided by the Court and if not considered fair, are not awarded. The insurance taken out by a client in the above example will be much more expensive than in the other one where the solicitor takes it out on behalf of the client. The extra is of course, a commission and is not recoverable. Recent tightening of the rules here forced many personal injury firms out of business. Terms of Business may state that you cover any “insurance” shortfall if the Court decides on its own figure and may explain for example, where a client is awarded £10,000 damages, but only receives £9,000.

Simon only does the first two of the above methods and will not take a percentage. All being well, the client will receive all their compensation and his fees will be paid by the other side if a Conditional Fee Agreement is made – he expects to be paid for his time and only that – as he puts it, ‘only eat what I kill.

Interesting case? Lady phones up between Christmas and New Year after an accident 3 years before. She and husband are in a London taxi when they are hit from behind. Taxi driver has his own arrangements and gets his money. Husband not really injured so does not claim. Wife takes 6 weeks off work but neck is still painful. Previously, she was very much in the “fast track” for partnership in her firm within the next year. The pain stops her from attending evening social events and employers tell her that she seems to have “lost her edge”. Approaching one of the TV firms, she is told to accept an offer of £5,000 but decides to phone Simon only days from the 3 year deadline. Partners in some accountancy firms earn > £500,000 but she is not going to be made partner this year - next year, maybe. Papers are issued, no decent offer made so preparations made ready for trial. Days before this, offer is increased to £250,000 which is accepted. Had case gone to trial, claim would have been for several £million but with higher risk. Defending tactics would have included, “Is she really that good?” with other risks like has client has told you everything? Lady concerned is now employed elsewhere and while not in line for the previous level of earnings, is happy on her salary which is still in six figures.

Contact Simon Robeson 020 7024 8074 srobeson@kiddrapinet.co.uk or www.kiddrapinet.co.uk  Last word here – if you do get a large lump as compensation, best advice might be to keep quiet. Once you have got used to the money in the bank, you will then have an idea where you might wish to invest it or make it last. Majority of National Lottery winners apparently have little or nothing to show for their good fortune, two years later.

My American readers among others will find Craven Street an interesting location as it houses www.benjaminfranklinhouse.org and Herman Melville’s (think Moby Dick) former home further down towards the river.

Nice to have some feedback on previous blog about living with cancer from a tax advisor. Apart from the cruelty of having one’s life cut short, people will have limited options for conventional Inheritance Tax planning meaning that when they die, they pay more tax than necessary. Where estates are > £1 million, schemes are available to mitigate this and do not have the usual 7 year or 2 year wait for them to be effective. Contact me for details.

Summer hols not started yet when I hear of a Spanish one which might be my next at http://www.vaughantown.com/EnglishNew/indexenglish.asp where you help Spanish students improve their English in a remote village. Master coach www.georgemetcalfe.com did this earlier this year and thoroughly enjoyed it – applications all done on line.

Curiosity takes me back to The Eagle in Cambridge  http://www.georgeemsden.co.uk/2008/05/schadenfruede-dna/ to find the plaque marking the spot where Messrs. Watson & Crick got their brainwave about the structure of DNA earning them a  Nobel Prize later. The pub is busy on a Saturday afternoon with its mixture of tourists and students who wife says, look like nerds – probably what I looked like at that age. Said plaque (in brass) is above table 12, food is OK but not great – the chef overdid the mint on the lamb shank.

Drive back to London takes us past The Tickell Arms in Whittlesford which now has a 12 course taster menu on Friday evenings - http://www.thetickell.co.uk/seasonal/index.html but that will have a wait.

Into my third “cancer year” and worm sessions with the nasendoscope are now every 3 months as treatment finished June 2007. Readers who have missed my fascination with this intriguing bit of kit, see  http://www.georgeemsden.co.uk/2007/09/the-positive-side-of-cancer-part-9-which-nostril-sir/ but today it’s the right nostril for a change and no (local) anaesthetic. Session is quite short and gentle, the long worm is slowly extracted, put in a tray for cleaning, so it can do its duty again inside someone else’s head. While the new doctor is writing up the notes, I mention my magnum opus http://www.georgeemsden.co.uk/2009/05/financial-planning-for-people-with-cancer/ which colleagues of his have appreciated. Explaining that the idea of this blog is to enable terminally ill people make the most of what time they have, he replies that they deal in averages and that treatment is basically aimed at the 50 per cent who are likely to live > the 12 months example I mentioned. He thens adds that life expectancy can sometimes be like, How long is a piece of string? often, you never really know…..and some people cope better with this issue than others.

The classically-minded here might recall The Three Fates from the Greek Myths who respectively, spun (Clotho) measured (Lachesis) and finally, cut (Atropos) the thread of life for all of us – including the Gods apparently  http://july.fixedreference.org/en/20040724/wikipedia/Moirae

Winning is a subject that generates hundreds of books each year, 72,998 entries in a quick look on  www.Amazon.com but staying ahead of the pack year after year in the Stock Market is very rarely achieved – making life very interesting for IFAs, for example. Easy way to start a bun fight among IFAs or fund managers, is to talk about active and passive investing. Active management can be called stock picking (and selling) with its top down (sector driven) or bottom up (attractive individual shares in any sector) approaches. Passive management is about buying and holding shares to keep to the market/sector average and if the managers do that, they pat themselves on the back – as it is quite diffcult in the long term. Fraudster Bernard Madoff’s apparent consistent positive returns in his hedge funds when everyone else was losing money, were the final giveaway that something was wrong.

One of the few managers who has done this and been a winner or at least stayed in the very first few, is Anthony Bolton former manager of Fidelity Special Situations Fund. Anthony retired a couple of years ago and the fund was split into two. His successor for the half that carries on the same name name has some interesting views on what shares to invest in http://www.citywire.co.uk/adviser/fund-and-fund-manager-performance/-/unit-trusts/uk-all-companies/fund-factsheet.aspx?FundID=7016&CitywireClassSchemeID=1&CitywireClassID=9

Successful funds can be the victim of their own success. Better performance means more money flows in. If you are following a particular active strategy e.g. UK Smaller Companies then there is a limit to the number of buying opportunities – only a limited number of shares will meet your criteria and be attractively priced. There are also limits (say, 5% of the issued shares) of how much a fund can hold of any one company. With more and more money coming in which you have to invest sometime, you can end up buying a bit of nearly everything meaning the fund has some good stocks, some average and some duds, resulting in average or bland performance. So if you end up with bland performance after all this effort, why bother choosing individual stocks in the first place?? explaining perhaps why passive investing is becoming more popular.

Investing in a collective fund is less risky than buying individual shares (unless maybe you have £250,000 +) but is not without risk and the above fund’s objectives are stated in the bottom RH corner of the above-mentioned web page. To clarify, this isn’t a widows and orphans investment. It is an equity-based fund that takes a punt (albeit an educated one) with undervalued i.e. they have been through a bad patch shares but if you have high hopes, are happy with the risk, don’t want to risk paying Capital Gains Tax if you make a big profit when you sell out, it can be bought via a Stock & Share ISA. Here the annual allowance is currently £7,200 but from 6 October 2009, it is £10,200 IF you were born before 6th April 1960. A few bravehearts tried to get the Government to simplify this nonsense and just have a straight increase, but no joy. Partly explains why the UK now has > 10,000 pages of tax legislation while the supposedly regulation-mad Germans survive with under one fifth as many pages.

Market research by insurance and investment companies is usually interesting and gives an opportunity to find out how other IFAs are doing. Meetings are held in a room with a one-way mirror at one end, everything is taped, albeit within strict market research guidelines and top brass from the client company sometimes attend – hiding behind said mirror. Six of us are asked about our views on a whole range of things, mainly due to rebranding resulting from one company being taken over. Seems incongruous to have one good insurance company name for investment bonds and another for pensions when all part of the same group, but sad to lose a perfectly good name. Can we see any “green shoots” of recovery? No, though we are all busy.

Two final points of consensus – firstly, we hope the well-known insurer keeps up its service standards. These are often sacrificed to save costs meaning the cost of sorting out mistakes is basically passed onto the broker – partly explaining why more of us are asking for fees these days for routine work. Secondly, the Government’s continual change, change, change in pensions – where Pension Simplification has become an oxymoron, makes people even more disillusioned about pensions and saving for retirement.

Finally, and perhaps to prove you can’t believe everything you hear, this week  I meet two very busy estate agents. One is busy with lettings and sales while the other mentioned last week, has recruited two people for his landscaping work.

A self imposed goal of one blog per week, creates a continuous demand for interesting content meaning one meets some very interesting people, complementing the more mainstream stories from several news feeds like www.mycompanypension.co.uk First is a catch up meeting with Michael Harrison, one of the founders of www.3Cscommunity.org where we meet at the Royal Institution http://www.rigb.org/registrationControl?action=home in Albemarle Street off Piccadilly. The museum in the basement is one of London’s hidden gems and features much of the equipment used by Faraday in his electricity, magnetism and chemistry discoveries. All done in the nineteenth century on the same premises, but you will probably remember him best from his image on the Twenty Pound note. Mental note – Good place to take my grandson when he’s bigger.

After training as a lawyer, Michael set up a desk top publishing company before starting the current digitisation company scanning priceless public and private documents – some of which can be seen in the museum. The business has changed in the two years since we met and there are two main solutions to taking things forward. But helped perhaps by a superb 3 course set lunch, the simplest solution turns out to be with people he worked with many years before and knows well – much less risky than signing up with people you don’t know.

My blog on financial Planning for People with Cancer http://www.georgeemsden.co.uk/2009/05/financial-planning-for-people-with-cancer/ leads to a trip to South Wimbledon to see Chantal Cooke’s digital and on-line radio station www.passionfortheplanet.com Covering Essex, London, Peterborough, Bristol and Devon it has a firm niche in environmental issues not to mention a mission to introduce non-mainstream music which works well too – no celebrity gossip either. Having always wanted her own radio station, first step was the BBC then setting up another commercial station in Canterbury. Catalyst, or perhaps the I don’t want to do this any more moment came after 4 years when rumours of band Oasis splitting up saw a newsroom of 60 journalists running round like the proverbial headless chickens – they really do this see  http://www.georgeemsden.co.uk/2009/01/a-bolt-from-the-blue-barack-obama/

But what is the point of creating another radio station just like the others? Answer: do the opposite and if it is something you are passionate about, you have a chance. With Chantal doing the journalism bit and Kenny whom she met in Canterbury doing the music, their own plus backers money got the station on the air 7 years ago. Listeners are now 120,000 on digital radio – plus a few on-line listeners, accounting for < 2 per cent of radio listeners nationally. My own item on financial advice for people with cancer is scheduled for transmission 29th June 2009.

Walking back finds me in Merton Abbey Mills with its Alternative Market and London’s only working water wheel – another place to take the family perhaps http://www.mertonabbeymills.org.uk/index.php Can also recommend the creamy penne alla gregoriana at the Mama Rosa Ristorante.

Pension surgeries lead to signing up an employee who has been with the company for 10 years entitling him to a nice employer contribution. Now full-time, he can afford to join but has sadly missed out on 10 years of his own, his employer’s contributions, tax relief and growth. Another member wants her pension paid to a different bank account which the pension provider can do over the phone but after getting lost in a call centre, she tells me she will bring the papers and new bank details next month, so I can make the call for her while she is with me. Some people just find the whole subject of pensions intimidating.

Snippets appear on my newsfeeds: AEGON Scottish Equitable reduces some of its rates by 44 per cent for joint-life second death policies – useful for people who want to have a policy in place that will enable their beneficaries to pay Inheritance Tax (IHT) due. IHT is essentially the children’s problem where their parents are married as it only becomes payable on second death but IHT has to be paid before Grant of Probate. Until the executors or administrators get this, they cannot do much. While the parents are the insured here, these policies can be taken out and paid for by the children/beneficiaries so it will not affect the parent’s standard of living.

At the ABI conference, Shadow Chancellor George Oborne announces that the Tories will abolish the rule which forces people to buy an annuity before age 75 if they can prove that they have enough to live on and will not need to claim State Benefits – small glimmer of hope but will believe it when I see it. Interesting situation as the well off can get a reasonable rate of return on their money and keep their capital – which can of course, be passed on to the next generation although may be subject to IHT. The less well off will get a slightly better rate of return at current rates but lose their capital and pass nothing of their pension funds on to their children. Bill Gates probably never thought any of his quotes would be applied to British pensions, but his quote “Life isn’t fair, get used to it” may apply here. Annuities are Theft from another IFA might be another.

In the mortgage market which shows some signs of recovery, the Council of Mortgage Lenders announce that 69% of borrowers opted for Fixed Rates in April at an average rate of 4.83%. Meanwhile in the market for funding for entrepreneurs the http://www.meetup.com/opencoffee/ networking group has a lively e-mail community dealing with issues like: patents, NDAs (non-disclosure ageements) business plans & due diligence. Off-line (face-to-face) meetings are every Thursday 10 – 12 in the UCH Roberts Building in Malet Street. And if the words of a serial entrepreneur are of interest, see  http://www.ft.com/comment/columnists/mikesouthon

But to finish on an amusing note, coffee break chuckles from a colleague lead me to Hitler and the Expenses Scandal on YouTube  http://www.youtube.com/watch?v=gHbNPlDAUwE where there is now a whole family of Adolf Hitler videos subtitled onto a chunk of the film Downfall N.B. Strong language but very funny.

Client texts me and asks what tax rate applies to trusts? Tax partner of West End accounting firm is at same meeting so we talk in coffee break. Answer: 40 per cent now but going up to 50 per cent in April 2010. Trusts still work for Inheritance Tax planning where the assets concerned are out of one’s estate after 7 years but as far as holding assets is concerned in your own lifetime (their orginal purpose) the new 50 per cent Income Tax rate is a killer. If you pay 40 per cent Income Tax, why pay 50 per cent if those assets are held inside a trust? Only seems to make sense where income is given away which will carry a 50 per cent tax credit – so if money is paid to a child for example, they can claim the tax back. A few MPs might be unhappy here: http://www.telegraph.co.uk/news/newstopics/politics/labour/4981114/Lord-Mandelson-facing-questions-over-blind-trust-investments.html

Property investment is also on the agenda and yields of commercial property coming up for auction are 5 – 8 per cent p.a. However, the banks are greedy wanting 3 per cent Arrangement Fees and margins of 3 per cent or more over Bank Rate which is not going to stay in the trough at one half per cent for ever. Borrowing looks silly on these terms and the only people who can afford to risk this sort of purchase are those with their own money – quite an achievement for a Labour government. These deals are only going to work when property prices fall further &/or the banks relax a bit.

Simpler way of raising money and without involving the banks, might be to have a bullion party where fellow www.brxbondstreet.co.uk member Lewis Malka of http://www.joseph-sterling.com is looking for new hosts. Previous party had people walking away with between £200 & £8,500 where the latter case was lady who must have been popular but decided to get rid of the cr** jewellery she had been given over the years, and get something she wanted. Best hosts tend to be ladies with big houses who like entertaining – and don’t forget old dental crowns either – it’s all gold even if it doesn’t glitter anymore. All driven of course by the high gold price (US$ 965.70 an ounce as I write) reminding me of one of our Prime Minister’s less prudent decisions (as Chancellor) when gold was US$ 275 an ounce http://www.georgeemsden.co.uk/2008/03/one-for-sorrow-two-for-joy/

It’s that time of year again and Richard Houldsworth http://splattprint.com/ another BRX member, has been talking to a large hotel group about their Christmas brochure.

As there plainly will not be any official 70th D-Day Anniversary celebrations, a BBC 4 programme commemorating the 65th Anniversary seems worth watching. Besides the pictures of amphibious tanks, landing craft and concrete bunkers, an old film shows troop-carrying gliders landing next to King George V & Queen Elizabeth while the credits include the Museum of Army Flying http://www.flying-museum.org.uk/the_collection.htm a place that has been on my must visit list for some time. Admission is £7 for Adults but it is impressive to be asked to fill in a Gift Aid form on entry so that the museum a registered charity, can claim the Basic Rate Income Tax on the entry cost resulting in an income of £8.75 per ticket. The two main parts of the museum are devoted to the above-mentioned gliders used by the Allies initially in 1942, and the Air Observation/Liaison part which goes back to the nineteenth century with balloons and man-carrying kites. Plenty there to keep little boys (and of course their Dads) amused for many hours including three simulators – a multi-function helicopter/training plane one, a bi-plane one and an anti-tank one – all £1 a go.

But a story springs to mind from my early glider training. Having seen troop-carrying gliders used effectively by the Germans, Sir Winston Churchill decides we should have them too and a demonstration is organised for him along the lines of the one when the King & Queen visited. Gliders are launched in advance and they release from the planes towing them at the agreed height, but thermals are popping and the pilots decide to do a little local soaring. Meanwhile the Great Man has arrived and sits down waiting for the planned demo. Conditions are really good and the soaring goes on. Eventually, the gliders spot-land as intended in front of Sir Winston, but by now he is furious. Apart from the disciplinary action that followed, rumour has it that later military gliders had two feet lopped each wing, rendering them still glideable – but no longer capable of soaring. (Usual bottle of plonk for the reader who can clarify this). Empty, these troop-carrying gliders could be looped as well, as a picture at the museum shows. And if you like this sort of flying story see: http://www.amazon.co.uk/Think-Like-Bird-Pilots-Story/dp/1904744052

Staying with WW2, a contact at a recent networking meeting mentioned that his home in Balham was near Du Cane Court which would have been Adolf Hitler’s private residence had Operation Sealion (invasion of the UK) succeeded.  Then on Saturday BBC Radio 4 broadcasts Punt P I with a special on this intriguing story http://www.bbc.co.uk/iplayer/episode/b00krgd4/Punt_PI_Series_2_Episode_1/ Scheduled invasion date had been 21st September 1940 but the Battle of Britain stopped it. Sadly this story appears to be urban myth with no documentary evidence, but with lost musical pieces turning up after 200 years, who knows???

To conclude and perhaps show that pensions are not always boring, Pensions Minister Rosie Winterton claimed for soundproofing her bedroom in a new twist to the on-going MPs expenses saga http://www.professionalpensions.com/859637 YCMIU. Thanks again to Mike Jones at http://www.mycompanypension.co.uk/ for highlighting this item – a rare amusing one among other pension stories which tend to be much more serious. The lady concerned is still in the Cabinet but now with the portfolio of Minister of State (Regional Economic Development and Co-ordination) Department for Business, Innovation and Skills.

Friday night, all’s quiet after a full week. Wife wakes up early Saturday morning with severe difficulty in breathing. Ambulance called and straight to local A&E. Oxygen produces immediate improvement and we are handed over to a new shift. Lots of health questions about allergies etc where the info is already in the hospital files, but A&E does not have access to this. It is quiet apart from a mad woman shouting and after 4 hours we are moved to an intermediate area where it will be decided whether she goes home or stays as an in-patient. Young lady doctor we met at the start of wife’s chemo-therapy in January questions us for > 20 minutes, and we are left on our own. Popping out half an hour later finds her looking at two computer screens and on the phone to a doctor who has written a medical paper which may or may not be relevant to her case (this is Saturday afternoon).

Things have quietened down so there is time to look at e-mails via my mobile. A client who moved to the US four years ago has cancer. She is pleased it has been caught early before it reached the lymph system, but part of the remedy is a single mastectomy. In 2002 she insisted that her husband had Critical Illness Cover at a cost of £100 per month but for reasons of affordability, did not insure herself.

Next e-mail is from my sister-in-law in Germany. My very fit brother (he’s a sports teacher) is in hospital. On Wednesday he feels unwell. Same on Thursday but he has promised to give some material to a colleague & does not want to let her down and prepares to go to work. Wife suggests he stays at home and fortuitously, the colleague calls round and collects the material she needs – there is now no need for him to go to work and to cap it all, he now has difficulty in walking back into the house. Family doctor is called and she is round in 3 minutes with an ambulance called shortly after. Day is spent in ICU and explanation given. A minor abdominal operation a few weeks previously has caused a thrombosis in the leg causing a lung embolism. Had this happened on a long airline flight a few weeks previously to visit family in Latin America or had he gone to work that day, he would have died.

Reminds me of one of Benjamin Franklin’s famous sayings. His best known one is perhaps, In this life nothing is certain save death & taxes but the appropriate one here might be, He that would thrive, should listen to his wife – (sorry guys).

For a change, let me step into the area of non-pension politics where the furore over MPs expenses seems to have turned into political gangrene, with the Prime Minister reluctantly giving our disgraced Speaker the elbow. But a peerage (Lord Gorbals?) plus keeping his £1.3 million pension pot may be the poison left over which will kill off the government. An earlier Prime Ministerial purge in July 1962, gave rise to the famous quip from Jeremy Thorpe (former leader of the Liberal Party) Greater love hath no man than than this, that he give up his friends for his life. http://www.independent.co.uk/opinion/night-of-the-long-knives-a-nasty-purge-which-shocked-even-the-dog-1434493.html For the more secular or those of you who don’t quite get it, the root of this quip is here in the New Testament http://scripturetext.com/john/15-13.htm

One Thursday am finally able to attend Open Coffee http://www.meetup.com/opencoffee/?a=wm1_gn at UCL. First contact Steve tells me about Agile Computing where he & other IT specialists team up on ad hoc basis in a fairly loose network. His experience of the waste he encounters regularly in large organisations prompts me to offload my feelings about the cumbersome CRM system I am familiar with used by half the IFAs in the UK, prompting an interesting comment: The Broken gets fixed, The Bad lasts forever! Second contact is a very bright Chinese lady busy here in the UK as a managment consultant. Nearly as much time is spent travelling round the world as is spent here and we trade backgrounds. She has had two previous business ventures which have failed she says, something few Brits would be brave enough to admit two minutes after meeting someone. Here a business failure is seen as a personal failure whereas in the US for example, the response is likley to be, Tell me about your next one. Most recent was a desktop publishing venture where modern technology could reprint that book you like, have lost or want to give someone as a present, in two minutes. Music from someone’s laptop behind me leads me to a third contact who can produce attractive corporate videos/animations very economically. He is a bit reluctant to go out for funding due to economic condidtions but I am able to point out that shortgage of money is not the main issue with start-ups. He has no business cards, does not contact me so am unable to help.

The Achilles Heel of many new businesses seems to be the business plan. Most innovators or entrepreneurs don’t have one or know how to write one. This is not a criticism, it’s just a different skillset. Business Link http://www.businesslink.gov.uk/bdotg/action/home?domain=www.businesslink.gov.uk&target=http://www.businesslink.gov.uk/&tc=000KW021413519 runs courses on writing them while other people will charge £5-10k for one. If you really are just an ideas person, Micro Funding http://www.microfunding.co.uk/ will happily do all this for you (if they like the idea) but apparently at the cost of 70 per cent of your business.

Back in the mainstream, a client wants to take his pension benefits and the pension figures are very interesting. Client requests figures for 5 and 10 year guarantee periods as the nightmare scenario is to take your pension and die say, one month afterwards resulting in a windfall profit for the insurance company. Fortunately guaranteeing a pension payment in an annuity is cheap and the difference between having a 5 year payment guarantee period and a 10 year one here is only £18 a year.

Based on £100,000 annuity purchase guaranteed for 10 years with a 50 per cent spouse’s pension, annual income available looks like: £5,620 level (no escalation) starting at £2,780 if increasing at RPI, starting at £3,400 if escalating at 3% p.a. and starting at £2,390 with a 5% p.a. escalating income. The latter might look poor value, but the increasing payments catch up the level payments after 15 years whereas the 3% escalating payments only catch up the level payments after 21 years. Small legal point here, the estate of someone who dies during an annuity guarantee period cannot be wound up until the guarantee period has run off.

To hear this blog as a podcast, please click on the player. [audio:http://www.green-shoot.com/podcast/georgeemsdenspodcast_financecancer.mp3]

By way of a change, a few thoughts for people who are caught…

You’ve got cancer? 20 years ago people wouldn’t even say the word – it was the BIG C. These days, you can hardly open the newspaper without reading that someone famous has got it. Now it catches more than a quarter of the population, some of your friends, colleagues or family may have had it. And now you are in that group??

Researching this topic, I found lots of non-financial information, support and advice out there but very little financial material for people with cancer or other serious illnesses. This blog will try to plug that gap and involves asking yourself some big questions. First step is to do an audit or rather draw up your own balance sheet or set of accounts.

Any piece of paper will do for now but divide it into four sections.

First two are assets and liabilities – what you’ve got and what you owe.

Second two are income and expenditure – how much you earn and how much you spend

If you have avoided doing this for ages and don’t have a clue, get the information from your bank statements, but do it. This isn’t rocket science. If you take it slowly, step by step it is really quite easy and it helps you know where you stand financially. To be quite frank, if you cannot face doing this I doubt if this article is going to be of much benefit to you. As a last resort, get a friend or family member to help if you cannot face this exercise alone, but it is really important.

Next make a list of places you have worked and note which ones might have offered you a pension – possible if you worked there for > 2 years. Then make a list of insurance, savings or any other life policies you may have had. There are £billons of unclaimed policies out there which are sometimes called Orphan Assets. To make it even more silly, insurance companies are taxed on these. If the insurance or pension company has changed its name or been taken over, the ABI Association of British Insurers http://www.abi.org.uk/Search/default.asp will tell you the latest name or new owner.

If you have shares, make a list. You can get the prices from a newspaper or the internet.

As soon as you can, write to the companies concerned or broker if applicable and get the current value. With pensions, ask who the Nominated Beneficiaries are – the people who will get that pension benefit if you die before taking them. This may need updating especially if you have married or now have children, for example.

For most people in this country, their biggest asset is their home, their biggest debt is their mortgage while the largest pool of money with their name on it is their pension.

Now the biggest question…..How long have you been given or what are your chances?? Will you be able to continue working? Will you be able to travel or drive a car? Will you need care? Who might be able to help you?

If you have > two years, then you might as well carry on as normal for as long as possible. I really do love stories where people confound the medics and carry on for years after they were told they would be dead, but attitude here plays a large part. Having always had an interest in aviation, I have never forgotten the stories of an early aviation pioneer who took up flying in the early twentieth century, as his doctors told him he had < a year to live. He was still going strong years later.

Another interesting story is that of Dilys Gannon who was given 4 months to live at one point   http://www.colonichydrotherapyuk.com/dylis-story.htm  Her reaction upon her diagnosis was to buy a plane ticket! And > 10 years on she is alive, healthy and with a thriving practice of the treatment that helped her.

You can even buy life insurance for yourself on-line which will pay out provided you live for two years.

People with < average life expectancy can get higher annuity rates for their pension so don’t buy any annuities without checking this. A broker can really help you here.

But if you have < two years to live, it is time to think. There is nothing sadder than dying thinking If only  …………..but strangely, a short life expectancy may enable you to achieve one or two of your goals, that you might not have bothered about otherwise.

Take another piece of paper, and write some headings: People, Things, Places. You might want to adapt this with headings like: Family, Colleagues, Hobbies, Sports.

Now the fun part, and yes I mean you ought to be able to get some enjoyment out of this. What have you always wanted to do? Learn to swim properly? Who or where have you always wanted to visit? Do the tango in Argentina? What bands or entertainers do you like but have never seen live? Pretend you have won the Lottery and let your mind run free here and don’t bother about the practicalities. Keep the list handy and a notepad and pencil with you so you can write things down as they pop into your mind.

It does not matter how long the list is or how many items are on it. Once you have done the above exercises you will have:

* A financial picture of you. How Much?

* Your doctors have told how long you have got and what quality of life you can expect for that time. How Long?

* A list of everything you wanted to achieve. What, who or maybe How Many?

Now it is a simple process of rationalising it and seeing what is achievable within your financial resources. Again this is not rocket science. Put the list on the fridge door or carry a copy with you. The human mind is quite capable of rationalising a long list like this and the things that you can do will make themselves known.

Wish I could say the above was my own invention, but my friend and time management guru Mark Forster beat me to it with his AutoFocus System http://www.markforster.net/autofocus-system/ N.B. I had to watch this video three times over a number of days before the penny really dropped.

However, achieving some of the goals will need money, but you may have > you think, which is the real point behind this exercise. The cherries on the cake here can be pensions & life policies.

Critical Illness Benefit is king of the hill here and the lump-sum will be paid after the claim paperwork has been done and checked. The case mentioned in my 30 January 2009 blog http://www.georgeemsden.co.uk/2009/01/a-bolt-from-the-blue-barack-obama/paid out this week i.e. after 3 months

Many life insurance policies have Terminal Illness Benefit. This means that if your life expectancy is < 12 months, they will pay out while you are alive. N.B. This will depend on what answers your GP gives to the insurance company.

Policies which have Waiver of Premium Benefit will be kept in force by the insurance company if you are ill for > 6 months.

You may be able to sell the (life) policy to a specialist broker who will give you a discounted part of the amount insured – something that is common in America.

Pensions can be paid out in cash tax-free where life expectancy is a year or less which can seriously improve the quality of life for the short time left. Whether this happens or not, again will depend on the answers given by your doctor. See previous blog http://www.georgeemsden.co.uk/2009/02/home-is-where-the-heart-is/

The cash can help pay for travel, adapting your home, paying for extra care if you need it, that balloon flight you have always wondered about, visiting family in Australia or far away, see that old school friend or whatever you have wanted to do but somehow were too busy….

Important point here is that the above exercise can make you feel that you are back in control of your life again, at least for while and make your last days more fulfilling and happier than they might have been.

Acknowledgements: Phil Calvert for the original idea http://www.ecademy.com/account.php?id=53930 Mike Southon for helping me develop it http://www.beermat.biz/ Rhidian Jones for adapting the text to podcast style  http://r2m.agi-emerald.co.uk/page/Management_Team and soundman Johnny Mindlin for recording and editing it  http://www.green-shoot.co.uk/

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?