Adrian Garside

OK, disclaimer first – This blog isn’t about advising you, it’s more a little insight into how an IFA gathers his information – from obvious places, fund manager presentations and the press, but also, disinterested 3rd party information. By disinterested (rather than uninterested) I mean people who have something to say that may affect my thoughts, but that they have no interest in how my thoughts end up.

A Fund Manager for instance will want to boost my knowledge of his fund with the aspiration that I will recommend it to my clients.

Here we have Hans Rosling, one of the worlds leading statisticians, and this sounds like a contradiction, but also he has an engaging presentation style. He is talking about India (this presentation is held in India) and China.

I am interested in what he has to say because there’s alot of talk in the IFA world about investing in what are expected to be large emerging economies – China and India being the obvious with Brazil and Russia not far behind.

There are 2 schools of thought – actually, I have thought of another so there are 3 (at least).

School of thought number 1 is that they’ve grown well, but if you’re not in already  you’ve missed the boat.

School of thought number 2 is that there is still alot of growth remaining and you should have a portion of your investments there.

School of thought number 3 says: The markets in China and India are not transparent and companies based there can be quite secretive and so investing there is quite high risk. However, they use alot of basic materials (Oil, Steel etc) and have huge infrastructure projects going on – China is building 40,000 miles of motorway right now, and 150 airports – so maybe invest in well regulated European companies that will benefit from those operations. As an example, Volvo build trucks, trucks will be used in the road building, so Volvo could do well.

I guess all 3 schools are right in a way, but lets take a view that it would a huge coincidence if the UK were always the best place in the world to invest – we are just more comfortable about it, because we are here – so, if we are going to invest in other countries, it’s worth considering all the options.

If you’re an IFA I would say this counts as 15 minutes for your professional development log. If you aren’t an IFA, it is still very interesting!

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By the way  this doesn’t mean ‘pile in with your life savings’ – but if we are looking at investments together and your risk profile is appropriate, then it’s worth considering as part of an overall investment strategy. Remember stock market based investments can go up as well as down.

Think about this for a second, because it will help explain what I am on about.

You know with life insurance, if you smoke, or you suffer ill health, or like me you have eaten too many cakes and people say ‘You’re looking well’, the insurance companies make your insurance more expensive – well that’s because they reckon you will die earlier than the health freaks (ie, you may be “looking well”, but you may not last long), and so they stand a greater risk of paying out a claim.

Pensions are the opposite of Life Insurance. With Life Insurance they collect money while you are alive and pay out when you die.

With pensions they are paying out cash while you are alive, so will reward you if you are likely to die early.

So, if you smoke, or you are a bit portly, or you have health issues – any health issue, there is a decent that an “Enhanced Pension” may be available to you.

Now most people, when they get to retirement take the 1st pension they are offered, thinking they have no choice. The  pensions companies know this, so rarely offer a good pension, let alone an enhanced pension. Why should they?

Now, bearing in mind, the pension decision is your last ever pay negotiation, you can see how important it is to get it right – especially if you can qualify for an enhanced pension.

Most people could do better by shopping around anyway.

40% of people could qualify for an enhanced pension.

An enhanced pension could produce a pension income a third higher for the rest of your life. That’s a 33% payrise.

So please, when the time comes to take your pension, see an IFA. Preferably me, but if not me, any IFA will do.

OK, that may be a little on the confident side, but I am armed with the official statistics from…the Office for National Statistics. Oh yes, the nights fly by in the Garside household.

If you want to join in the excitement, here they are.  My blog stats will show how many people click on this link – my bet is very few!  I’ll tell you what, I will give you a bit of detail now and you could come back to the link afterwards.

So, there is a list of life expectancies for kids born now and 18 year olds now. Further down the page is the life expectancy for people aged 65 now, and this is the interesting bit for me.

So, if you are a chap turning 65 now, you have  decent chance of living another 18 – 20 years… Girls, will last about 3 years longer than chaps.

If  I had been writing this blog in 1950, I’d have been saying 65 year old boys will last another 12 years, girls 14.4 years.

So, on average we’re living longer and that’s nice.

And, it’s the reason planning for an income in retirement is so important.

There are lots of ways of planning for an income in retirement – notice please that I don’t say ‘paying into a pension’.

Retirement for people of my age will have to be planned differently, just paying into a pension won’t cut the mustard any more, the advice needs to be much more holistic and will include 2 things – paying for life as you live it, and a plan for if you end up requiring long term care.

The income side of things may include:

Old age pension,Second state pension, pension tax credits, heating allowance, free TV licences and bus travel, but also making a bit of cash from your hobbies, taking in a lodger, being a helpful man at B & Q, ebay/Carboot trading, self sufficiency ideas like keeping chickens or bees, shrewd use of your savings, actively reducing your bills etc.

And, it will include pension planning, but planning your whole retirement based on a pension now will be too big an ask, it has to be a more imaginative approach these days.

It will be different for people retiring in the future than it is now, but different doesn’t necessarily mean bad.

The long term care thing may be trickier, but since only 1 in 5 go into long term care, it needs a less ‘urgent’ plan, paying a monthly payment is often not worth the struggle, but it’s worth knowing the costs and knowing the various mechanisms for paying for those costs.

What you need is an imaginative Financial Adviser who knows all this stuff…

Oh, and if you want, now go back and click on that link

OK, I know lots of ways of saving money – here is one that is quite specific and should save you a significant amount of money. It won’t grab everyone, but if you are organised and a bit geeky about money, it can be a direct reward for being so.

1. You need to shop at Sainsbury’s, or at least be able to.

2. From there, you need a Nectar Card.

3. You need to be a customer of the Utility Warehouse and use their cashback card (it’s a prepayment card, not a credit card, you load it with money and use it like a normal debit card).

Here’s how it works for me.

I was with EDF for gas and electric, Talk Talk for telephony and Plusnet for broadband. So, you see, I had already moved away from mainstream providers to save money.

I transferred all to the Utility Warehouse saving myself around £60pm on my monthly bills. (£240 down to £180)

I spend around £300pm at Sainsbury’s + £200 at Sainsbury’s petrol station.

I now load my UW Cashback card with £500pm and buy my food and petrol on it.  5% of everything I spend gets creditted back to my monthly UW bill – so an extra £25 off my bill.

I use my Nectar card too and also take advantage of the 5p per litre discount off petrol when I spend £50 at Sainsbury’s.

These companies make a lot of profit from the carefree customers.They make much less from me!

I save a total of 10% off my petrol and 5% off my food shopping and I’m not even that organised!

If you’re thinking – “if he can do it, I can” – then call me and I’ll check to see if you could make a saving on your utilities and set it all up for you.

We all know that there are money saving websites out there, indeed, I have not only used them myself, I used to be a moderator for one of largest ones, so, broadly, I am a fan and I think they are generally a force for good.

However, they are useful to a point – they shouldn’t be followed blindly, nor taken as a replacement for professional advice.

So, for instance – last week I saw a couple who were looking for a fixed rate mortgage and they asked me to advise them on the best product of that type. Before I advise someone, I take a fairly detailed overview of their circumstances and in this case, the overview revealed they had substantial savings attracting 0.1% interest. I advised the clients to take an offset mortgage – a particular kind of mortgage that uses savings to offset interest on the mortgage – they can save people a great deal of interest on their mortgage.

2 points here -

1.  They’ll save in excess of £1000 a year, every year,  as a consequence of my advice

2. No comparison website would have revealed this.

The next point, a telecoms company called Swiftcall have decided to pull out of the UK residential market. That’s fine, and their website makes this clear, they are not accepting new applications for their products and will cease providing their products from 30/11/09. They have done everything right.

So, it’s odd that they still feature on one of the major price comparison sites.

So, moneycomparison sites – broadly good, but are no substitute for advise on big ticket items and shouldn’t be relied upon as accurate.

I note that more and more providers, including some that I recommend, are now advertising as a virtue the fact that they are not listed on comparison sites.

It’s an interesting development.

It is fascinating to see statistics (OK, I admit this may be just me!)  that have no bias, emotion or manipulation attached – most statistics have one or more of those things, that’s what statistics are for after all. The money world can often provide these statistics, simply because what we are looking at is a dry list of numbers that have to be evidenced. Also, money doesn’t have to be politically correct.

The list in question is not controversial – Scottish Providents List of claims paid out on their Critical Illness policy between 1/1/09 and 30/06/09. Their only agenda is to show how much they pay out.

Scottish Provident are very proud of their payouts and I guess if you are going to pay out £43m in 6 months, I can’t blame them for wanting to tell everyone.

Clearly, I’m not going to report the whole brochure, here are some things that caught my eye. Oh, actually, before I do that, they told me about a case that really did amaze me.

She never paid a premium!

It concerned a lady who applied for Critical Illness Cover and during the application process discovered that she had breast cancer. Now, this was before Scots Prov had written to her to say ‘Yes, we are happy to insure you’, so way before she had said ‘Yes, I’ll start the policy’ and way way before she had even made a premium payment.

Scots Provident paid the claim.  They do that – while an application is in progress they provide free cover. I have asked for the rules on this, but I am impressed.

So, back to the stuff in the brochure. Firstly, we are all interested in whether these policies ‘do’ pay out.

They paid out on 591 claims.

They declined 46 claims. 38 of which were becuase the claim didn’t meet the definition. 8 becuase the client had forgotten to mention crucial things in the application form.

The 38 – is that important? Well, no, not really – I have seen clients who are ill and told them to “send in a claim, you never know…” – I daresay most advisers will. Sometimes it works and sometimes it doesn’t.

The 8 – in some ways I am sympathetic and some ways I’m not. As an adviser I have had clients tell me they don’t smoke, while they have a packet of Marlboro Lights showing in their top pocket. Or, memorably, the very young daughter saying “Yes, you do mummy!!!”  when her mum was denying smoking.  There are other cases where it is an innocent mistake and for those people I am sympathetic.

And just for some detail, of the 591 claims 62% were paid out on cancer.

Cancer Stats!

The immediate thing you see on the cancer stats is the top line of the claims breakdown which it turns out is a slightly macabre ‘cancer’ league table.

Out of 368 claims, 127 were for breast cancer. The next one down is Malignant Melanoma with 27, Testicular 22, Bowel 21, Prostate 21, Lung 13 and since there are another 30 or 40 lines I’m going to stop there.

The other thing that I was curious about was the split of claims men v women – well, it’s 49% men, 51% women, despite the extraordinary Breast Cancer stats.

The average age for cancer claims is 46, actually, that looks like the average claim for all adult illnesses – taking out children.

Children? I get a lump in my throat as usual at the prospects of children suffering, but they do become ill and have accidents (and before I dwell on it, they often cope better than adults) and most companies do provide cover for the children of policyholder.

There were 25 claims for children (in total, not only cancer) …average age 9 in the 6 month period.

Crumbs…

The thing is – I recommend Scottish Provident quite alot. It is good to see stats like this. The interesting thing about Scottish Provident is that I will often turn to them when cheaper companies have said No, or have raised the premium too high, or excluded important things. So, they have a good payout track record, but also, they aren’t just cherry picking the best clients, indeed, almost the reverse.

Some of you know I do a bit of mountain biking, so the subject of bike insurance is something I have considered at length.

Most standard buildings and contents insurances cover bikes…usually with a standard limit of £200 – £250. This is fine, it covers your average bike.

But many people who are enthusiastic about cycling will have a dearer bike than £250, simply because dearer bikes have componants that last longer, lighter stronger frames and are just nicer to ride – there is a very noticeable difference – it’s not just being flash.

So, what about insurance…well, most insurance companies will rise the insured value of the bike up to £1000 or £1500 is asked, without too much of a quibble and that covers probably more than 95% of cyclists – you can buy a pretty awesome bike for £1500!

And then, for the other 5% Marks and Spencer insurance has an automatic limit of £4000 per bike.

So, that covers the value of the bike, but then you must check the limits of the cover. Many companies just don’t know about mountain bikes – so won’t cover damage while the bike is off road. Or maybe they would only cover theft if it’s stolen from your home. Or, and I’ve had this myself when I was shopping around – they wouldn’t cover the bike while it was locked to a wall anchor in my locked garage that was attached to my house. They suggested I keep it in my living room. Genuinely. Oh, and they were also happy to insure it if I kept it locked to the lamppost at the bottom of the drive. Incredible.

I ended up with Marks and Spencer – I decided thay were OK by phoning their claims line and having a chat to an underwriter about what was reasonable and what was not.

I suggest you adopt this technique if you use non specialist bike insurance.

If you are really looking for top notch cover for your bike – consider a specialist bike insurer – I’m sure there are many and google will help you out here – these people have come to my attention so get a mention – www.eta.co.uk/insurance/cycle – and I see they cover you for pretty much every eventuality, but for a price.

So, insuring your bike – take care if it’s your pride and joy – it would be easy to rely on common sense and often that is not the same rule of thumb that the insurers use. I don’t advise in this area of insurance.

Over the years I have had top notch frying pans – my favourite being a Woll

But the thing is, even the Woll lost it’s non stickiness after a while – dissatisfaction set in after about 6 years – I think my main crime was dishwashing it! Metal utensils were fine.

I also have a Berndez, that has also served me well, but again, it’s been abused and is reaching the end of it’s non stick life (although it will live on as it has many uses).

Both these are high end pans in the £50+ range, and in fairness both multitask, being being casseroles and general cooking pans as well.

I am starting to think that having good pans is a great idea, but if I’m after non stckiness I should invest in cheap pans that i can renew guilt free when they become sticky

So – opinions are invited about whether an expensive 5 year pan is better than a cheap 1 year pan.

Comments/opinions are invited on brands

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Lime.

There are two varieties to consider – I’ll update this if I find number 3.

Crusha Lime milkshake – Tesco stock this, or at least, mine does. Make ice cold and actaully adding ice cream is good too.

If you eat at TGI Friday and ask them for a Lime Milkshake you’ll get something made of icecream, crushed ice and lime juice, it’s stunning.

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