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F i n a n c i a l s o l u t i o n s

November/December 2013 www.thepfs.org /financialsolutions

The magazine of The personal finance socieTy

Dying in a Digital ageA look At how to preserve your virtuAl Assets And digitAl soul

PFS awarDS anD ConFerenCe review 2013A round-up of the news, views And AwArd winners from this yeAr’s AnnuAl conference

EX-Financial Ombudsman bOss nataliE cEEnEy rEvEals why thE british arE nO lOngEr aFraid tO makE a cOmplaint

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November/December 2013 FINANCIAL SOLUTIONSwww.thepfs.org

CONTENTSNovember/December 2013

24Trusts

REGULARS 04 President’s letterDavid Ingram relives some of the highlights of the PFS conference and looks ahead to what we can expect in 2014…

06 CEO’s letterKeith Richards looks back on a year of seismic change

08-13 NewsThe latest national and regional news from the PFS

14 Letters

34 PFS regional profile – KentChairman of the Kent PFS region, Trevor Graham, speaks to FS about his region

40 Discover FortunesThe CII has announced a tie-up with a new product that marries gaming with financial education

42-43 Q1 2014 regional conferences and structured CPD sessions

47 Roll of honourPFS members that have

attained designations in recent months

FEATURES 16-17 The interview Natalie Ceeney talks to Liz Booth about staff, training and the need for more women at the top of major organisations

18-21 PFS conference overviewMichelle Worvell introduces our coverage of another hugely successful event

22-23 Awards reviewThis year’s Chartered Awards were announced at a glittering gala dinner as part of the PFS Annual Conference.

24-29 TrustsThe second instalment of the two-part article, John Woolley looks at some of the more popular trusts

30-31 Skills Survey 2013The results from the latest PFS Skills Survey are in – and they are largely positive

36-37 Trust campaignMore and more members are demonstrating pride in their profession by backing the PFS’s Consumer Confidence Campaign

38-39 Affinity benefitsThe PFS’s new affinity benefits scheme is sure to hit the spot. Mark Hutchinson reveals more…

STUDY ROOM 32 Regulatory radarThis issue’s regulatory focus looks at the latest developments surrounding the Care Bill, plus much more…

44-45 Study room: Digital estatesCarol Cummins looks at how to preserve your virtual assets and digital soul

49 Study room: Q&ATest your knowledge with our Q&A

50 Womack’s blogFS welcomes a new blogger this issue former Mail on Sunday financial journalist Stephen WomackC

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Regulatory radar

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PFS Annual Conference overview

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The Personal Finance Society20 Aldermanbury, London, EC2V 7HYTel: (020) 8530 0852www.thepfs.org

President: David IngramPast President: Garry HaleVice Presidents: David Thomas andBrendan O’CiobhainDirectors: Edward Grant, Nick Turner,Sharon Sutton, Sandy Scott,David Thomson, Darren GarnerLay Director: Teresa PerchardCo-opted Adviser: Scott GoodsirChief Executive: Keith RichardsHead of Marketing: Mark Hutchinson

Event booking line: 0845 1668415

Editor: Michelle Worvell020 7417 4763 [email protected]

For advertising opportunitiesplease contact:Jacob Quagliozzi on020 7417 4793 [email protected]

Financial Solutions is the magazineof the Personal Finance Society (PFS).Members receive a copy as part of theirmembership. The cost to non-membersis £7 per copy. Members can purchaseadditional copies at £7 per copy.

Design: Redactive Media Group17 Britton StreetLondon, EC1M 5TPTel: (020) 7880 6200

Views expressed by contributorsor advertisers are not necessarilythose of the PFS. The PFS willaccept no responsibility for any lossoccasioned to any person actingor refraining from action as result of the material included in this publication.

ISSN 1754-8055© Personal Finance Society.Average total net circulation: 34,000

Reading issues of Financial Solutions over the year can be included as part of your CPD requirement (35 hours) should you consider it relevant to your professional development.

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Every year I come back from the Personal Finance Society (PFS) Annual conference wondering how on earth next year’s can possibly be as good, let alone better. And every year the great team at the PFS manages to rise to the challenge and produce something even better.

We had some outstanding presentations as well as excellent entertainment (thank you Hugh Dennis) and tremendous networking opportunities. We discovered who the winners of our closely contested chartered Awards were and I would like to congratulate robin melley, FPFS; verus Financial Planning; Warren bentham DipPFS; Alex rich DipPFS; Tom evans APFS; and brian Harris DipPFS. my personal highlight of the conference was being able to present the John ellis Award to rosalind and Tom Warwick, widow and son of one of the giants of our profession, the hugely missed Len Warwick, cbe ALIA (Dip).

It is a great shame that the conference format meant that only 900 of our members could be present but hopefully the plans for the 2014 conference should permit many more to attend next year.

Exciting newsThe conference was an ideal place to make some significant announcements recognising the professionalism of PFS members. The most significant of these is that the Financial conduct Authority (FcA) will soon be attending our regional continuing professional development events. one of the PFS board’s key ambitions for the current year has been to work more closely with the FcA and this development represents tremendous progress. It means PFS members will have an unprecedented level of contact with their regulator and is welcome confirmation of the growing strength of our relationship with the FcA.

We also heard about further recognition of chartered firms’ professional standards, with the introduction of a discounted professional indemnity insurance arrangement with Howden Windsor.

The feeling of optimism exhibited by everyone I spoke to at the conference is well placed; the professionalism of PFS members is fully recognised and we are beginning to see rewards from that. The consumer confidence campaign is also gaining traction and, combined with the growing recognition of professionalism, will be a terrific foundation from which to leverage the undoubted trust individual clients have in individual advisers into a wider trust between consumers and our profession as a whole.

Greater trust in the profession from consumers must lead to more of them seeking assistance and that will be a major step towards starting to close the advice gap, which is a serious issue. There are consumers who need, or at the very least would benefit from, financial advice but are not seeking it.

In part, this may be a question of trust but it would seem that the cost of advice might also be an issue. This may be addressed by simplified advice, which the regulator is looking at again, and it is pleasing to note that the PFS is now represented on an industry working party that includes both the FcA and the Financial ombudsman Service. Perhaps it will soon be possible to agree on a level of regulation for simplified advice, which will make it a practical solution for firms.

The coming year could be a particularly good one for our profession.

COMMENT

Much to look forward to

“The feeling of optimism exhibited by everyone I spoke to at the conference is well placed...”

ONLINE ///

► For more information on PFS events go to: www.pfs.org/events

DaviD ingram

PRESIDENT’S LETTER

Fresh from another successful PFS Annual Conference, David Ingram relives some of the highlights and looks ahead to what we can expect from the wider profession in 2014…

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F irst of all I would like to personally thank everyone who attended and contributed to the success of this year’s Annual conference at the Icc in birmingham. Feedback has been overwhelmingly positive and we now look to put plans in place to build on the success for 2014.

No news is good newsIn many ways, 2013 will be remembered for being a ‘non-event’ year. Pre-retail distribution review predictions that consumers would walk away in great numbers having been presented with more transparent charging structures, resulting in adviser numbers being decimated and haemorrhaging throughout the year, failed to materialise.

The achievement of so many in obtaining higher levels of professional standing and implementing new regulatory rules is a major milestone – and testament to the quality of the people who remain in the financial planning sector. It has also been the year of consumer endorsement, where the predicted mass exodus did not occur, showing just how much existing clients value and trust their relationship with their financial adviser.

Regulatory shiftThe introduction of the new regulatory framework, separating powers between the bank of england, Prudential regulation Authority and Financial conduct Authority (FcA), has also been a change of significance and one where we are already seeing more positive.

The FcA, in particular, is making a great effort to engage more

constructively. In our direct dealings with the new regulator, it continues to be open, balanced and pragmatic in its approach. We are naturally delighted to announce the FcA’s direct involvement in next year’s regional programme, where members will have the opportunity to interact directly with our regulator.

In addition to building our broader support for members, we will continue our public interest focus. To that end, we have formed a new consumer panel to help us better understand how to deliver a more balanced message to the public regarding the benefits of professional financial advice. With an ageing population, the need for a professional financial review will become more apparent to thousands as they near and reach retirement. It is incumbent upon all of us to provide educational information that will better inform the public and help them make the right decisions.

Building trustThe consumer confidence campaign initiated earlier this year continues to receive overwhelming support and is helping to lay the foundations for building higher levels of confidence and trust in the financial planning profession in general. We also intend to work collaboratively with other organisations, trade bodies and professional bodies to collectively deliver the benefits that only a united profession can truly achieve.

It just remains for me, on behalf of all of us at the PFS, to wish you and your families a very happy christmas and a prosperous New Year.

Keith Richards is chief executive officer of the Personal Finance Society

COMMENT

Still standing

COMMENT

CEO’S LETTER

Looking back on a year of seismic change, Keith Richards highlights the significance of one thing that stood firm – the existence of financial planning as an industry

KEITH RICHARDS

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“The Consumer Confidence Campaign initiated earlier this year continuesto receive overwhelming support...”

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FOR THE RECORDNEWS

PFS LinkedIn groupsPFS President’s Thinktank:

● What do clients want from their adviser?

● 86% of consumers find chartered to be attractive

● How well-meaning financial advisers could be seriously failing their clients

PFS Chartered financial planners:

● offshore bonds

● Purchasing client banks – a good or bad idea?

● Auto-enrolment providers

From the PFS Twitterati…@pfspresident

@pfspresident (from 7 October)Friday’s graduation ceremony was a success. It was a pleasure to congratulate so many graduates.

@adviceNorm@pfspresident good to meet you there pres. David – I’ll be in touch!

@dontdelay@pfspresident good luck in your new role David. Thanks for all your support and encouragement @garryhale as I worked towards chartered

@VouchedFor17SepFuture for IFAs never looked brighter? Great article @IFALeicester @_moneymarketing bit.ly/166X2QI

Remember to follow us or have your say by joining our LinkedIn groups or following us on Twitter.

PFS president’s Thinktank: 2,868 members PFS Chartered financial planners: 1,127 members@pfsconf: 1,986 followers@pfspresident: 1,351 followers

PFS President’s Thinktank @linkedinPFS Chartered Financial Planners @linkedintwitter.com/@pfspresidenttwitter.com/@pfsconf

PFS celebrates record number of graduatesThe PFS has seen a record number of members qualifying to graduate at Associate, Fellowship and chartered level this year, resulting in the need to run two graduation ceremonies in one year, the second of which took place recently.

Any member who qualified as an Associate or Fellow of the PFS, or achieved chartered status, from January 2013 through to June 2013, was invited to attend graduation ceremonies in April 2013 or october 2013.

In total, there were 1,570 qualifying members in 2013, compared with 747 qualifying members last year. A like-for-like comparison of 2011 and 2012 data shows a 47% increase in members

achieving a designation. of the 1,570 qualifying members

there was also a gender spilt of 333 female (21%) and 1,237 (79%) male. eleven per cent qualified at Associate level, 33% qualified at Fellowship level and 56% were awarded chartered financial planning status.

overall, PFS membership has seen a 26% increase in Fellows during the year to 30 September 2013 (up 70% in two years) and an 18% increase in chartered financial planners in the same time period.

PFS president David Ingram AcII, certPFS, commented: “each year the PFS congratulates graduates who come from a variety of positions across our sector, but never more

so than this year, which has seen a greater number of members qualifying than ever before.

“It is a privilege to congratulate each and every graduate for voluntarily going further than the minimum qualifications required.”

Keith richards, chief executive of the PFS, added: “This has been an

outstanding year for PFS members and the financial planning profession as a whole. The sheer volume of graduates in 2013 is evidence that an increasing number of individuals in the financial planning sector are seeing the benefits of further study and striving towards greater levels of professionalism.”

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FOR THE RECORDNEWS

2013 Chartered award winners revealed The winners of this year’s PFS chartered Awards were revealed at a glittering gala dinner at the Icc in birmingham, hosted by popular british actor and comedian, Hugh Dennis.

In the coveted Chartered award categories, the winners for 2013 were:

chartered Financial Planner of the Year (individual), sponsored by Investec: robin melley, FPFS, chartered financial planner at matrix capital;

chartered Financial Planners of the Year (firm), sponsored by Prudential: verus Financial Planning, based in Dundee.

This year, the PFS president, David Ingram presented the John ellis Award posthumously to an individual who has made a significant contribution to the development of professionalism within the financial services sector:

John ellis Award 2013: (posthumous) Len Warwick cbe ALIA(Dip), FLIA(Dip), chartered FcSI, AIFP.

Now in its second year, the Paraplanner of the Year category was introduced in recognition of paraplanners’ commitment to high professional standards and the importance of this role as part of a holistic, professional financial planning process. The winner was:

Paraplanner of the Year, sponsored by Aviva: Warren bentham DipPFS, of 75point3.

Awards were also presented to the highest achievers in professional qualifications. The

recipients needed to be PFS members and to have achieved distinctions in the exam subjects they had taken on their way to achieving the Diploma or Advanced Diploma in Financial Planning. This year’s winners were:

Highest Achiever in the Diploma in Financial Planning, sponsored by canaccord Genuity: Alex rich DipPFS, cert cII (Life & Pensions), of brewin Dolphin;

Highest Achiever in the Advanced Diploma in Financial Planning, sponsored by Suffolk Life: Tom evans APFS, of Thompson and richardson.

The volunteer of the Year category recognises those members who have given up their time, energy and expertise during the past year and who have made a significant positive impact within their region, local community and beyond. This year’s winner was:

volunteer of the year 2013, sponsored by metLife: brian Harris DipPFS, of HLS Financial Planning.

Keith richards, chief executive of the PFS, said: “The Society’s awards recognise excellence in examinations as well as our highest accolade – chartered Financial Planner of the Year. With the PFS membership standing at more than 34,000 and chartered financial planning firms exceeding 500, the winners have excelled in an incredibly competitive environment. I would also like to take this opportunity to applaud the finalists and, indeed, anyone who took a qualification this year.”

*See p22-23 for more details on the winnersIm

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Planning to become Chartered?The CII and PFS offer a comprehensive suite of Advanced Diploma study support. Visit us online to find out more.

thepfs.org/becoming-chartered

CHARTERED

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West midlands small to medium-sized enterprises (Smes) met recently at the new birmingham Library to learn how to ensure their businesses not only survive but grow in the current challenging economic times.

The event – organised in partnership by the PFS, Aston business School, chartered Institute of management Accountants, Library of birmingham, robert Half, chartered Institute of Personnel and Development, Science capital and Punk Zebra – saw attendees learning about the past, present and future of how small businesses can thrive.

The speakers at the event included Stephen Jones FPFS, chartered champion for the PFS

birmingham region and vice-president of Professional Institute Network West midlands, who talked about the transformational changes in the financial services sector during the past 20 years, in particular the years since the 2007/2008 financial crisis.

Dr chris Upton, reader in public history at Newman University birmingham, spoke about bimingham’s industrial and economic history to highlight what modern business can learn from the past.

Simon beckett, managing director of becketts Farms (winner of 2013 midlands family business of the year), spoke about the transformational

West midlands SmEs learn about transforming businesses

changes that have been made in his own business. Finally, Dr michael butler, director of the centre

for innovation, change and renewal at Aston business School and founding director of www.thetransformationproject.co.uk, gave a speech entitled: Transformation for growth – securing our future, with ambition.

Dr butler discussed the current context of growth, the seven characteristics of successful Smes and how the Transformation for Growth Project is helping Smes to thrive. The Transformation for Growth Project is a two-year partnership with birmingham city council, part-financed by the West midlands european regional Development Fund Programme 2007-2013. The total project value is £479,276.

Dr butler is keen to hear from Smes with high potential for growth that would like to become beneficiaries of the project. email him on: [email protected]

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FOR THE RECORDNEWS

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Failure to submit CPD recordsThe following qualified members or former members failed to provide continuing professional development (CPD) records as required by the Chartered Insurance Institute (CII) CPD scheme. all had received numerous requests and a final notification that their Chartered title and/or designation would be removed in the event of remaining in default. all of these people were members at the time disciplinary action was taken:

Wheeler, Frank ACIIWillis (home based), Oxon, Oxfordshire Ward, Christopher ACIIabbey Legal Protection, minories House, 2/5 minories, London eC3N 1BJEkebuike, Kins ACIINigeria Reinsurance Corporation, Lagos, Nigeria / London e15Rosevear, Nicholas Cert CIISt austell, CornwallSomers, Elizabeth ACIIHunsingore, Wetherby, West YorkshireWebb, Michele Cert CIIZurich Insurance Co, The Zurich Centre, 3000c Parkway, Whiteley, Fareham, Hampshire PO15 7JZMeresa, Asamnew Dip CIIethiopian Insurance Corporation, development and manpower plan department, PO Box 1088, addis ababa, ethiopiaStrutt, Jeremy Cert CIIeaga Insurance Services, Lawrence House, Bowden Bus Village, Harborough Road, market Harborough, Leicestershire Le16 7SaOesterreicher, Rainer FCIISankt augustin, Bonn, germanyCarroll, Allan Cert CIIZurich, Bothwell Street, glasgow g2 7eDDrysdale, Robert Dip CIIFaber, 30 Fenchurch Street, London eC3m 5aD

Breach of examination and/or assessment regulationsKateryna Oplachko Cert CII, marsh, Tower Place east, Lower Thames Street, London, UK

The continuous assessment candidate was found to have plagiarised the assignments of another continuous assessment candidate. The CII case examiner invited the respondent to approve and sign a consensual order under rule 9.1 of the CII disciplinary procedure rules 2013, to which the respondent agreed and which came into effect on 23 October 2013. The sanctions imposed were that: a) the respondent was reprimanded; b) her continuous assessment assignments were disallowed; c) she was excluded from CII examinations for 18 months and would have to take the CII online ethics course before taking any CII exams. The case examiner reduced the sanction that would otherwise have been applied in respect of offence c) from two years, in light of the respondent’s early admission of the charge.

Unascribed caseThe continuous assessment candidate was found to have given his completed assignments to another continuous assessment candidate, which was in breach of the continuous assessment guidelines. The CII case examiner invited the respondent to approve and sign a consensual order under rule 9.1 of the CII disciplinary procedure rules 2013, to which the respondent agreed and which came into effect on 22 October 2013. The sanction imposed was that the respondent was reprimanded. The case examiner decided not to publish the respondent’s name due to the relatively recent introduction and publication of warnings not to provide assignments to other candidates.

D I S C I P L I N A R Y M A T T E R S

The CII wishes to make clear that, unless the case reported indicates otherwise, allegations and findings against members do not implicate those members’ employers in any way.

Where the Disciplinary Panel has decided to publish details of a disciplinary case ascribed (i.e. where an individual has been named), every care has been taken to identify members correctly. Please contact the CII if there is any doubt about the identity of a member who may have been the subject of disciplinary proceedings and in relation to whom a report has been published.

David Hertzell, law commissioner for commercial and common law, is to become the new independent chair of the chartered Insurance Institute’s (cII) Professional Standards board (PSb) in 2014.

He succeeds David mcIntosh Qc (Hon), who will complete his tenure at the end of this year. The PSb’s role is to advise the cII board on the setting of standards for achievement of excellence, offer guidance on cII group member governance standards (including members of the PFS), and also maintain the cII’s internal governance standards.

mr Hertzell was appointed a law commissioner in 2007. before joining the Law commission, he was managing partner at Davies Arnold cooper Solicitors. mr Hertzell specialised in professional indemnity, reinsurance, captive insurance and regulatory issues. He is also vice-president of the british Insurance Law Association among a number of other appointments.

Dr Sandy Scott, chief executive

Question marks over future of advice profession

FCa joins the PFS’s regional regional events programme

Serious questions about where the next generation of financial advisers will come from have been raised by the PFS’s latest Skills Survey. Nearly two thirds (63%) of respondents do not believe the UK education system adequately serves the needs of the advice profession. This concern comes despite a significant drop in reported technical skills shortages.

The PFS’s seventh annual survey, conducted among 1,498 members of the organisation, has revealed only 37% of employers have skills shortages; the lowest level since the Skills Survey began in 2007 and a 26% drop on last year.

Worryingly, however, the survey also highlighted a potential problem around attracting new talent to the sector. Historically, providers were often the source for new entrants into the advice sector but, as the provider model evolves, this supply is not reliable and financial planners will need to work together to develop new and varied talent pipelines.

The problem is exacerbated by nearly two thirds (63%) of survey respondents believing the UK education system – the obvious next place to look for new talent – does not adequately serve the needs of the advice profession. With a growing number of employers realising the need to secure talent from a potentially smaller pool, the financial planning sector needs to actively work together to try and secure its share. This is a particular issue for small and micro employers, which includes many financial advice firms.

David Hertzell to head Professional Standards Board

continuing professional development (cPD) sessions delivered by the Financial conduct Authority (FcA) have been scheduled by the PFS as part of its revised regional conference programme, starting in early 2014.

With an established and comprehensive national framework to deliver cPD up and down the country, the FcA’s involvement in the Society’s regional conference programme is designed to deliver a meaningful contribution to advisers’ professional development. These sessions will allow delegates to hear directly from the regulator

on what they see as best practice across the market, providing tools and insight that should give advisers the confidence to meet their regulatory and client commitments accordingly.

Keith richards, PFS chief executive, said: “There has been much discussion about the new and more pragmatic approach taken by the FcA compared with its predecessor, and there is growing evidence to support its pledge to engage with the profession in a more balanced and meaningful way.

“our regular meetings with the FcA

have been open, balanced and focused on creating a better environment to improve outcomes in general. The FcA’s involvement in our professional development programme is further evidence of its commitment and desire to support better consumer outcomes, which should reduce risk and, therefore, lead to less intrusive regulation.”

The PFS has stated that it will equally make the content available to other organisations, networks and support groups to aid cPD and regulatory guidance across the market.

Daniel Pedley, PFS public affairs manager, said: “The broad assessment from this year’s PFS Skills Survey is that, for the moment at least, the skills situation in the financial advice profession is relatively healthy. Yet, with almost two thirds of respondents lacking faith in the UK education system, the results also serve as a warning to the profession that it needs to work hard to ensure it attracts the right talent with the right skills.

“As a profession, we need to collaborate to create fresh and varied talent channels. Future advisers might be waiting for us in schools, colleges, universities or elsewhere in the labour market. collective action can help advisers access talent pools that have been relatively untouched in the past. If we can show what an attractive prospect financial planning can be, then more and more of the top talent from education and high quality career changers will consider a career in advice.”

David Ingram, president of the PFS, added: “The results of this year’s Skills Survey are very positive but there is also a timely reminder that the financial advice profession needs to work to ensure its future strength.

“clearly it is harder for smaller businesses, which most advisory firms are, to be proactive in the race for attracting talent. That is why it is crucial that our profession works collaboratively to help create future talent pipelines.”

For more details on the survey, see: http://bit.ly/1arwXa9

of the cII, said: “The cII has had a PSb in place for more than 10 years and David mcIntosh Qc (Hon), who has been chair of the board for the past seven years, deserves particular recognition and gratitude for presiding over a more robust, rigorous and independent process than at any other equivalent professional body.”

During mr mcIntosh’s tenure, the cII has revised its code, strengthened its independent disciplinary structure to become the largest Financial conduct Authority-approved accredited

body for regulated advisers, provided support for the implementation of the Aldermanbury Declaration for general insurance, seen an increase in individual chartered members, and also launched the chartered firm concept.

Dr Scott continued: “I would also like to welcome David Hertzell as the new chair of the cII’s PSb from 2014. Under his leadership, the cII group will continue to strive for market-leading professional standards for the benefit of our members and the public alike.”

mr Hertzell said: “The past few years have seen professional standards in financial services under greater scrutiny than ever before, demonstrating how fundamentally important it is to have a robust oversight and disciplinary process, maintain vigilance, and anticipate and address public interest issues.

“It is an honour to be appointed as the new chair of the cII Professional Standards board and I look forward to building on the strong foundations David mcIntosh has put firmly in place.”

Exam entries for 2014 now openmembers working towards the Advanced Diploma in Financial Planning can now secure their 2014 exam spaces. April and october exams can be booked online at www.cii.co.uk/becoming-chartered or by calling customer service on 020 8989 8464. online exam places for certificate and Diploma units, which are offered up to three months in advance, can also be booked for January 2014 sittings.

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Shropshire and Mid Wales members learn Chartered benefitsIn early october, the Insurance Institute of Shropshire and mid Wales hosted a lunchtime event highlighting the growing importance of chartered status within the financial planning professions.

Attended by more than 25 PFS and chartered Insurance Institute (cII) members from across the region, the session featured presentations from Sam roberts, area marketing manager, cII and robin melley, a PFS chartered champion. The presentations outlined the practicalities of becoming chartered at an individual and corporate level, in addition to the benefits the status can bring to a business in terms of increased consumer confidence and a competitive advantage in the marketplace.

mr melley also spoke about his personal journey to become a

chartered financial planner, how he had been assisted through the application process and the tangible advantages it had offered him on a professional level.

Speaking at the event, mr roberts commented: “Achieving chartered status is a clear indicator that an individual or firm is committed to delivering the highest standards of service and customer care. With nearly 700 chartered firms and more than 21,000 chartered members across the UK, it is evident that the profession has recognised this as ‘the gold standard’ that everyone should be aiming for.”

Bristol PFS members’ achievements recognisedThe Insurance Institute of bristol’s recent annual awards ceremony saw more than 70 members, guests and supporters come together to celebrate the successes of the city’s chartered Insurance Institute and PFS members.

Hosted by the institute’s president, richard Smith, the evening is now firmly established as one of the highlights of the year and brings together the top performing students across a number of different papers. This year’s ceremony saw the following members receive awards for their academic efforts:

FOR THE RECORDCHaRtERED NEWS

FOR THE RECORDREGIONaL NEWS

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ONLINE ///

► For full details of the awards and pictures from the ceremony, visit: www.cii.co.uk/bristol

ONLINE ///

► More information can be found on the qualifying criteria and research into the benefits of Chartered status at: www.cii.co.uk/chartered

Best paper awardsrebecca Harris rachel WellsLuke Hayne Amarie Smith Gary Kent Neil Thomas Tim Fennell Nick Gazzard emily King Kerry Hawker Kathryn rodd Katie Jamieson Kelly-Ann Daisley Philippa mason Ian Jones Louise osborne michael mcbrinn Helen Lewismark Williams Peter Wheeler

William Hewitt Simon Walshe

Best completionsroyce rossiter James cannard Stephen Horton Tom Shorland chris Howard Simon WalsheTegan mcKernon Sue Shrimptonemma cavePaul cardinal James eckersley William Pomphrey

National prizeschris morris Andrina Smith

commenting on the awards, mr Smith said: “It is truly inspiring to see so many PFS members here this evening to receive their awards. I am also delighted that we can offer thanks to so many friends, family and colleagues as well, for their support of our winners. Taking exams and achieving qualifications is never easy but tonight’s awards are a great way to highlight personal and professional achievements across the insurance and financial services profession.”

Sponsored walk raises £750chartered Insurance Institute (cII) and PFS members of the Insurance Institute of blackburn & burnley recently took part in a sponsored walk to raise money for The Insurance charities and the local Pendleside Hospice.

An enthusiastic group of eight council members and their partners set off from clapham early on a bright Saturday morning to tackle the nine-mile trek up Ingleborough Hill. being one of Yorkshire’s famous three peaks

close to the Lancashire border, the team knew it would be a demanding walk but it was not expecting the wet conditions that set in as they passed Trow Gill.

Despite a testing environment, the group successfully made it to the top in a respectable time. Unfortunately, the planned reward of a picnic lunch was not possible due to worsening weather, which meant they could barely see 20 metres in front of them. Thanks to a modified route down, the intrepid walkers eventually made it back to civilisation with a well-earned pint at The New Inn.

Andy mcGuire FcII FPFS, president of The Insurance Institute of blackburn & burnley, commented; “even though the weather was somewhat trying, we thoroughly enjoyed the day and are delighted to have raised money for such important causes. We hope to organise a similar event next year and encourage more PFS and cII members to join in.”

The institute is currently working with its respective PFS region to organise more events for its PFS members. To find out more, please visit: www.cii.co.uk/blackburn

International Festival for Business comes to LiverpoolDescribed as the olympics for business, the International Festival for business (IFb) will be taking place in Liverpool in 2014, with its main hub at mann Island between Liverpool’s Three Graces and the world famous Albert Dock.

The Insurance Institute of Liverpool and its associated group Financial Liverpool are extremely excited to be involved in the event, which will attract a worldwide audience. There will be more than 100 events in the city throughout June and July next year, with an estimated 250,000 attendees creating £100m of direct investment into the UK.

The Insurance Institute of Liverpool is currently working on organising events for the

insurance and financial services sector during the week beginning 30 June 2014, which is designated as Knowledge, Professional and Financial Services Week. Prime minister David cameron recently spoke in support of IFb2014, saying: “This is going to be an event on an unprecedented scale and a shop window like no other. make sure you’re there to make the most of it.”

If you would like to know more about IFb2014 please visit www.ifb2014.com and if you would like to be involved in events, please contact marie mcAnaulty, president of The Insurance Institute of Liverpool, by emailing: [email protected]

a Thomas annearNickolas arbin

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Congratulations to the following PFS members who became Chartered

Financial Planners23 August 2013 to 24 October 2013

F Christopher Frielg adam gazeley

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H David HearneJames Higgins

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LeTTerS ANd COmmeNT

Editor's inboxMICHELLE WORVELL

The PFS President’s Thinktank LinkedIn group has more than 2,800 members. This month, we examine the thread that asks: “Can we start a campaign? Transfers from old, expensive, inflexible contracts.” If you want to get involved in the conversation, simply go to LinkedIn and type ‘PFS President’s Thinktank’ into the search box at the top right of the page.

We have seen news recently about people stuck in old, expensive pensions but they can transfer to a more modern contract. Same with ISAs but what about investment bonds? Some clients are stuck in old contracts with limited fund options and maybe high charges. maybe like Friends Life the trail has been turned off but the saving not passed onto them. Why is it not possible for them to transfer to a new provider in exactly the same way as a pension or ISA without creating a chargeable event? Surely we owe it to our clients to push for a change. Is there anyone out there willing to support a call for this?

Would be very useful. Particularly relevant in trust cases, where money languishes in old contracts. Cannot see HMRC rushing towards this one though.

I agree, if we wait for Hmrc it will not happen. However, maybe we need something a bit positive to focus on and a (hopefully national) campaign taken up by the trade and examination bodies pushing for our clients to be treated fairly would be really helpful. Would make me feel better being involved in something where the adviser community come together to promote the interest of our clients. Note to PFS – part of the consumer confidence campaign? Want something to unite the adviser community?

Does the Financial Services Authority Assessing Suitability guidance – www.fsa.gov.uk/pubs/guidance/fg11_05.pdf – not deliver the framework to do exactly what you are asking for?

of course we can switch away from old expensive contracts. on a pension that’s fine, on an ISA that’s fine, with a general

investment account you can reregister onto another platform. All this can be done – like for like – with no tax implications. but, if the client has an investment bond they are locked in and can only get out by surrendering the plan, suffering the tax consequences, maybe affecting the level of tax deferred withdrawals and then reinvesting into a new investment bond. The alternative is to be in a contract that may have high charges, limited fund options and poor functionality with limited access to valuations etc. I just do not see why (as with any other tax wrapper) they cannot simply be allowed to change provider. Transfer could be provider to provider (as with a pension plan) and the history would also transfer (as with any other tax wrapper). Hmrc has even given an rDr concession to change of share class. For some reason, investment bonds have this restriction and I think we owe it to our clients to try to get this changed. I really cannot think of any objection that has not been dealt with under pension or ISA transfer rules.

Definitely agree and I also think it comes under the Treating Customers Fairly legislation. Insurers are turning off trail, keeping the charge the same and then we have to charge them a fee to act for them.

one point though to be careful about, a re-registration of a general investment account triggers a capital gain.

It’s the insurance company that owns the assets in the bond, not the client. Be careful what you wish for as you may find HMRC agrees to amend the terms of existing bonds but also includes the ‘good’ ones. If the reason for making the changes does not justify the cost, it’s not a sufficiently good reason. That includes the tax aspects, since most bonds are tax deferred rather than tax saved.

Having a simple en masse solution sounds on one hand appealing. However, the individual circumstances should always dictate. It is this planning and potential complexity that drives the need for well qualified financial planners and a commensurate fee to be charged to the client for sorting it out. Using a different analogy, my old house has poor insulation and needs changing to a more modern

solution – I fully expect to have to pay for the design and installation if I want to change. In the meantime, it’s my choice whether to carry on paying more in fuel costs to heat the house. I don’t see why financial services should be any different.

Imagine you have a cash ISA. As often happens the rate falls in year two to a very low rate. You look to take advantage of a more competitive ISA but your only option is to withdraw the money and then use this years ISA allowance to reinvest. Fair? Of course not. So with an ISA you can transfer between ISA providers, as you can with pension funds. Why not exactly the same with an investment bond which, after all, is only a tax wrapper like ISA and pension plans? I suspect (but don’t know 100%) that its the pension provider who owns the assets within a pension plan (not SIPP), but they can still be transferred between providers. In many ways the tax position is neutral. The client stays within an investment bond environment either way. Its just they stay in a bad one (like last year’s cash ISA) or a good one. How does HMRC benefit from keeping people in a bad investment bond? I know there are lots of technical points, just as there are with ISAs and pensions. The transfer position was resolved for those. I don’t understand why it cannot be for investment bonds. Seems to me George Osbourne is not complying with outcome 6 of TCF.

There can also be issues with transferring cash ISAs, normally due to timing constraints and on some in-house transfers where the provider hopes to attract new customers. It is arguably more unfair that cash ISAs can be converted to equity ISAs but not back to cash. Investment bonds are closer to oeIcs and unit trusts, which cannot be transferred to a different manager or fund without a potential tax liability. Why should investment bonds be offered an advantage over them. They already offer tax deferment and the ability to switch funds or transfer ownership without tax. rarely are people locked in expensive products. If the charges are truly expensive, there will be justification to exit and, they should be prepared to pay the cost if the reason is sufficiently compelling.

L E T T E R S

17

November/

December 2013

16


The INTervIew | Natalie CeeNey BOLd | XXXXX

If you ever have the fortune to meet Natalie ceeney, there is no way you would forget her. brimming full of positive energy, it is hard to be in a room with her and not feel immediately energised by her presence.

ms ceeney first came to the ombudsman in 2010 from the National Archives, where she became a chief executive at the age of just 34. The road has not always been smooth, despite her achievements, and she was surprised to encounter some negative attitudes towards women in senior positions in the financial services industry. Despite some negative comments, ms ceeney has been able to retain her sense of humour.

Speaking at a recent event on women and diversity in the workplace, she said: “Despite a wealth of women out there with the capability to lead large organisations, too often I find myself one of the only women at key industry events who isn’t serving drinks.”

Her career has been diverse, from the NHS, a stint as a strategy consultant, and director of operations at The british Library. For the past few years she has led the FoS, which was set up by parliament to handle complaints (for free for customers) about all kinds of money matters – from insurance and mortgages to savings and credit. Last year alone, it answered more than two million enquiries.

After such a varied career prior to joining the FoS, and with no previous background in financial services, what was it about the ombudsman that attracted her to her current role?

“There are a couple of themes in my career but my primary skillset is that I run things pretty well,” she says. “I have worked across many sectors but, as far as I am concerned,

PHOtOGRaPH: SAm peACh

In her last interview as chief executive of the Financial Ombudsman Service, Natalie Ceeney talks to Liz Booth about staff, training, meeting a growing tide of PPI claims and the need for more women at the top of large organisations

the principles of running something well are the principles of running something well.

“You need a clear strategy, you need to have the right people in the right jobs and you need to hit your numbers and manage stakeholders well. I have always been attracted to jobs where you really can make a difference, and I can inspire our staff by the difference we make.”

Maintaining standardsHaving the right staff in place is clearly a priority for ms ceeney but, with 1,000 new appointments planned for the next 12 months, it is quite a challenge for the FoS to maintain standards across its workforce.

many of those appointments have related to general insurance – specifically, handling a flood of complaints about payment protection insurance – however ms ceeney says every other area of the body’s workload has increased by about 20%, so it needed to have new staff in place for those areas too.

The good news for IFAs is that complaints are not as high as elsewhere. “In our latest annual review (2012/2013) we reported that around 1% of the total complaints received in that year (508,881) were against IFAs. This means that we saw 4,139 cases against IFAs; a tiny proportion of our workload,” says ms ceeney. “The good news from this is the majority of IFAs will probably never have a complaint brought to the FoS against them.

“This trend is reinforced by our six-monthly complaints data, released in September 2013, which showed the big banks remain the most complained about businesses in areas such as investments, where we would expect to see the most complaints against IFAs. And only five adviser networks featured out of

more than 190 businesses.”of those relatively few complaints received,

she explains, the problems varied from mortgages to investments and pensions. “one of the common causes of complaints is around the suitability of advice given to the consumer when they were purchasing a financial product or making an investment. This is a problem that can sometimes only come to light years after the initial advice is given – when the consumer realises, for example, the pension they were told would be right for them 15 years ago is, in fact, not suitable.”

She adds: “occasionally, with some of the larger firms, we also see complaints from consumers about the poor service they have received. Traditionally, this is where a consumer has told us that they believed, based on their adviser’s comments, that their investment would be ‘monitored’ and their assets safeguarded at all times. The consumer then becomes concerned when they have no further contact from their adviser. With these cases, we would expect the adviser to have made it clear what level of ongoing service they would be providing – and roughly what level of contact this would involve.”

Understandably, says ms ceeney, complaints against IFAs are particularly personal, due to the nature of the relationship many have with their clients. “This can mean that complaints are harder fought and take longer to resolve. To help tackle these issues as early as possible, we offer a helpline service for businesses that have received a complaint but aren’t sure how best to resolve it. You can speak to our technical advice teams,” she advises.

each case that comes to the ombudsman is looked at individually and a decision is

1991-1998 began working in the NHS as graduate trainee. rose to managing medical services at Great ormond Street Hospital.1998-2001 Strategy consultant, mcKinsey.2001-2005 Director of operations and services, british Library.2005-2010 chief executive of The National Archives, and keeper of public records.december 2009 Awarded a cbe in the New Year Honours list 2010.march 2010-present chief executive and chief ombudsman of the Financial ombudsman Service.

Natalie’s biog

OmbudswOmanMeet the made on the particular circumstances of each case and

the evidence provided by both parties. In its last annual review, the ombudsman reported finding in the consumers favour in 42% of cases brought against IFAs – this was 12% lower than the previous year.

ms ceeney cautions, however: “While it’s encouraging to see this drop it’s worth noting that uphold rates do fluctuate from year to year and have, in the past, been inflated by complaints against several high profile funds that were found to be either mis-sold or unsuitable for the investors.”

Looking aheadLooking to the future, ms ceeney says: “The ombudsman has always expected advisers to make it clear to consumers what they are paying for – and the retail distribution review (rDr) has reinforced this. Generally, we see very few complaints about the fees charged by an adviser – as we make it clear we cannot consider the amount or what a reasonable fee is. We can, however, consider how clear that fee was made to the consumer – and it remains to be seen whether or not rDr has changed this.

“That being said, with the economic situation as it is, consumers are more aware than ever of what they are spending their money on. rDr has drawn advisers’ fees to consumers’ attention and recent complaints data suggests that people are now more willing than ever to challenge paying for something if they don’t feel it is value for money.”

Trust is key, particularly in consumer-IFA relationships. As ms ceeney says: “In some of the cases we see, the adviser will have been a long-term acquaintance, I’d even go as far as to say a friend, of the consumer. often problems with the advice given will only emerge years after it was given and meanwhile a strong relationship can build between the two. It can bring a unique dynamic to a complaint.

“We often hear consumers say they placed a lot of trust in their IFA; particularly where the products concerned are extremely complex, like a pension plan – or where the value of the investment is very high. We would always encourage consumers to contact a professional adviser if they were unsure about a complex financial product – and we would expect to see the advice they’re given to be clear and suitable for their needs.

“more generally, it’s fair to say that the recent mis-selling scandals and other issues afflicting the industry – such as Libor – have diminished consumers’ trust across all of the financial services businesses. It is the responsibility of the whole industry to help put that right.”

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18


PFS CONFERENCE 2013 | overview PFS CONFERENCE 2013 | overview

2 0 1 3 P F S c o n F e r e n c e i n n u m b e r S▼

There were just under 1,000 attendees61 stands in the business exchangeDay one: 43 sessionsDay two: 45 sessionsTotal CPD sessions: 88The amount of oranges used by the juice bar during the two days of the conference: 3,000+600 guests attended the Chartered Awards dinner and another 60 attended the networking dinnerAwards guests raised £7,000 for the Anthony Nolan TrustNumber of delegates who pre-booked for 2014’s new one-day conference at the event: 100+

T he PFS Annual Conference was back at the ICC in Birmingham for 2013, with a packed programme of continuing professional development (CPD) sessions for members.

The first day kicked off with an opening by conference chairman Stuart Podmore of JP Morgan, who was followed by PFS president David Ingram and PFS chief executive Keith Richards onto the stage.

Spread across two days, the conference included practical sessions such as essential cashflow modelling for retirement and protection planning; practical tax issues with adviser charging; and helping clients through volatile investment markets. Keynote speakers were Dr Robert Holden, BJ Cunningham and the FT’s undercover economist, Tim Hertford

More than 600 members also attended the PFS awards ceremony on the Thursday night, with the actor Hugh Dennis overseeing proceedings.

A special conference and awards ceremony review across the next few pages will showcase just some of what you missed if you were unable to attend. We hope to see you next year at the new one-day event!

no Standing on ceremony

The opening keynote speaker was the FT’s Undercover economist, Tim Hertford

P F S c o n F e r e n c e 2 0 1 3 - o v e r v i e w

This year’s PFS Annual Conference and Awards Ceremony were packed to the rafters. Michelle Worvell introduces our coverage of another hugely successful event…

A rapt audience listens to the key note speakersA great way to network

Attendees had the chance to visit over 60 stands across the two days of the exhibition

registration time!

David Ingram, president, Personal Finance Society addresses members

Packed session across two days allowed attendees

to gain cPD hours

Stuart Podmore, PFS conference chairman opens proceedings

Keith richards, ceo, Personal Finance Society

2121

NOVEMBER/DECEMBER 2013 FINANCIAL SOLUTIONSwww.thepfs.org

20


PFS ANNUAL CONFereNCe 2013 | News rouNd-up

The doom-mongers who predicted the demise of the financial advice sector after the retail distribution review (RDR) have been proved wrong, delegates at the 2013 PFS Annual Conference at the ICC in Birmingham heard.

The switch to a post-RDR world has been no bad thing, according to the speakers. Conference chairman Stuart Podmore, of JP Morgan, also suggested raised standards and increased professionalism will help advisers achieve better consumer outcomes – and, ultimately,

provide job satisfaction. Examining the conference’s

theme, the ‘Pursuit of Happiness’, Mr Podmore suggested that, while consumers may not be able to demand happiness from their financial services practitioners, they do have a right to expect financial advisers and planners to strive on their behalf for the best outcomes.

He pointed out that, post-RDR, advisers have the knowledge but the key to success lies in using it in the best way, by making it relevant to clients.

Personal Finance Society president David Ingram outlined some of the major milestones ticked off in the past year at the 2013 PFS Annual Conference at the ICC in Birmingham.

Among the headline events, he noted the retail distribution review (RDR), the change from the Financial Services Authority to the Financial Conduct Authority (FCA) and the appointment of a new chief executive for the PFS.

Predictions for the year had been pessimistic to say the least. “Nostradamus predicted the world would end in 2012, the Mayan calendar said the same thing and, in our world, product manufacturers and industry consultants were saying there would be 30% fewer advisers after implementation of the RDR.”

Instead, Mr Ingram said, “PFS membership numbers are up 2.5% to 34,256. Chartered individual members have grown 18% year-on-year to 3,779 and Chartered firms are up 24% to 558.

“In the wider market, figures released by the Financial Conduct Authority say 32,690 retail investment advisers are working in the UK – 1,500 more than in December 2012, despite the predictions.”

Mr Ingram said the rising numbers may be attributable to advisers re-entering the market from last year but, he added, the number of statements of professional standing (SPS) issued by the Chartered Insurance Institute has remained encouragingly stable. By the end of October, 21,645 live SPS had been issued.

In all, he concluded, the sector has

Armageddon avoided

“lived up to last year’s conference theme of Great Expectations”. Mr Ingram admitted, however, that the RDR is not perfect and there are still some issues to be addressed around platform usage, trail commission of B2B business, how to prove independence, descriptions and service offerings.

One major concern for the sector is the growing advice gap. According to Mr Ingram, “The regulator appears to be leaving it to the industry to work out how to bridge the advice gap.” He suggested some form of simplified advice structure would probably be the start of this process but the sector will need to work with the FCA and the Financial Ombudsman Service to gain their support before solutions can gain traction.

Equally important, he added: “We must ensure we have trust of the public. They will not seek advice if they don’t trust the sector. This is not a question of individual clients trusting individual advisers – we must leverage individual relationships to ensure clients trust the profession as a whole.”

@pfsconf @markloydall#pfsconf Also reminds me to say thank you to the organisers – an excellent job once again. Look forward to next year.

@dgh1978#pfsconf BJ Cunningham best keynote speaker of the past two days and one of the most engaging I’ve seen in a while: “Be who you really are”

@garryhaleMany thanks to everyone at #pfsconf for donating an amazing £7,420 for @AnthonyNolan @pfsconf

@Investec_SP_UKJust left successful 2 days @pfsconf and great to catch up with so many old friends. Highlight for me was keynote from @timhertford #pfsconf

@psconf#pfsconf PFS 2013 Skills Survet: 37% of employers said they have skills shortages – lowest level since survey began in 2007

@SusanJordan66@pfsconf Looking forward to the PFS Conference tomorrow and Friday. Looks like it’s going to be a packed 2 days!

@LewisEFM@pfsconf Last minutes of work. Looking forward to the annual conference Thursday. 3rd year running, always a pleasure #Birminghambound

@_moneymarketingRead all the latest news from this year’s PFS conference in Birmingham: moneymarketing.co.uk/home/pfs-conference-2013 … @pfsconf #pfsconf @TessaNormanMM

PFS CONFERENCE TWEETS 2013

Keeping consumers happy

News rouNd-up | PFS ANNUAL CONFereNCe 2013

Making clients’ money work for themUnderstanding cashflow modelling can help advisers offer clients a compelling service proposition, according to Paul Armson, founder of Inspiring Advisors.

Speaking in a session at the PFS Annual Conference, Mr Armson argued cashflow modelling offers a more personal approach, helping clients to plan their lives. It is about “making ‘one day’ today,” he said.

Clients expect their advisers to be well qualified, trustworthy and know their profession. “Cashflow modelling is about lifestyle financial planning,” Mr Armson stressed. The key, he said, was to ask what clients would like to achieve in the immediate future and to understand their journey.

Mr Armson suggested using the ‘bucket concept’ to illustrate all types of assets available from a client’s perspective. “Money in the bucket – spendable. But the house and pension are also in it – inaccessible. Income is also coming in to the bucket but there is a

tap draining money from the bucket to fuel lifestyle.” The trick is to show clients what will happen to their buckets.

“Plan with prudence and assume the worst when it comes to inflation. Be reasonable, but assume prudence on investment returns,” he advised.

Mr Armson also recommended advisers invest in the right software, learn how to communicate financial modelling, understand the importance of expenditure and engage with the client. Finally, he warned: “Don’t include unreasonable or overly optimistic assumptions.”

The beginning, not the endGaining the trust of the public is a key goal for new PFS chief executive officer Keith Richards. Speaking at the PFS Annual Conference, he said: “This is your profession and the Personal Finance Society is your professional body. This is a profession built on standards, professionalism and trust.”

Mr Richards said he hopes that in the future, the public will recognise the Personal Finance Society as the lead body in financial planning and associated support roles. He encouraged members to use the logo to help raise awareness and demonstrate their commitment to the standards and values of the PFS.

“Moving from an industry to a profession is simply the beginning and not the end,” he stressed.

Mr Richards was happy to prove the doubters wrong about the retail distribution review (RDR) and its likely impact. He was also confident about working with the new regulator, which, he said, was more open, balanced and pragmatic than its predecessor. However, he also warned: “Where it finds failings, it may give even stronger messages than its predecessor.”

Other initiatives from

the PFS include a Consumer Confidence Campaign to establish and gain recognition. “But first, we must take a step back and present a united front and a professional image. We have an opportunity to move this profession forward; our duty is to promote what we can to the public,” Mr Richards said.

The PFS is about to launch a new consumer focus panel, which will provide insight on how the profession can work with consumer groups to increase trust. The challenge, Mr Richards said, is to engage consumers who need advice, but have never received the benefit. In the coming year, there will be some new benefits for members. For example, there will be a genuine PI discount for Chartered firms in recognition of promoting higher professional standards. There will also be a new benefit scheme for members, across a range of high street brands, theatres, cinemas and much more.

Mr Richards said the PFS has received a significant amount of feedback on what people expect in the future and is starting to build a programme of business-relevant

continuing professional development. This will include online solutions and the PFS will shortly be launching a more active consumer information website. The regulator has attended a regional event to provide professional guidance and insight. Mr Richards added that this should provide confidence for advisers to meet the challenges ahead.

It is time to stop making bets and, instead, invest sensibly, according to Tim Hertford, the Undercover Economist at the Financial Times.

Mr Hertford explained that, during World War One, noted economist John Maynard Keynes was working for the British Treasury, negotiating the UK’s debt and borrowing American money in the most advantageous way. In turn, he was lending to European allies and obtaining obscure currencies. At the time, he was the most important and well connected currency dealer in the UK and, possibly, the world. However, he was not formally certified and was making very large bets that initially paid off.

Mr Hertford continued: “He bet the German and French currencies would collapse – correct. He toured post-war France and picked up Picasso, Matisse and Cezanne paintings. But then markets turned against him and he lost everything.”

After returning to London, he continued to boom and bust frequently. Mr Hertford questioned whether he was, indeed, a successful investor and suggested more recent research shows he would have made more money if he had simply traded momentum.

“His error,” said Mr Hertford, “was something we are all subject to – he believed he could see into the future. We are constantly making and listening to forecasts and taking them seriously.” But, he added: “The world is full of failed predictions.”

Mr Hertford discussed the science of making predictions and revealed how often well qualified people will simply get the answers wrong. Overall, he suggested: “We should stop making bets and relying on forecasts – instead, we should examine our own mistakes and fallibilities and then invest with humility.”

P F S C O N F E R E N C E

David Ingram, PFS President

Keith Richards

Tim Hertford

Gamblers anonymous

ONLINE ///

► You can watch the recordings from this year’s event at: www.thepfs.org/conference

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22


PFS CONFERENCE | Chartered aWardS 2013

P F S C h a r t e r e d a w a r d S 2 0 1 3 t h e w i n n e r S w e r e . . .

Pushing up standards through increased professionalism is a passion that drives Paul Lothian, director at Verus, winner of this year’s PFS Chartered Financial Planner of the Year (Firm) award.

So it is no wonder the award will be taking pride of place in the Dundee-based firm’s boardroom. Since forming the company back in 2005, Mr Lothian has been driving standards up and encouraging his team to improve their qualifications. In fact, he now boasts his team is among the best qualified in the country. But it is not all about qualifications, as Mr Lothian is keen to stress.

Potent partnershipThe firm was established in partnership with MMG Archbold, a firm of Dundee-based Chartered accountants. Mr Lothian explains that, when the Financial Services Markets Act came into force, MMG Archbold had taken the decision not to offer regulated advice itself but to refer clients to financial planning experts. However, the firm became concerned that clients were not receiving good financial advice and any service they were receiving was costing a lot of money because of the commission arrangements. It therefore made the decision to seek out financial planning experts to partner with in a joint venture.

Having approached Mr Lothian and his colleague Jonathan Gibson, they joined forces to launch Verus, with the aim of offering the high standards of service previously missing. Mr Lothian and Mr Gibson are now co-directors of the business, and they work with other clients as well as those who use MMG Archbold. Mr Lothian says about 40% of Verus’ business is derived from the accountants.

He says they are very much left to run their own business and adds that the model has worked so well they have launched a similar operation in Aberdeen, again working in partnership with a local accountancy firm.

true ProFeSSionalSThis year’s PFS Chartered Awards were announced at a glittering gala dinner as part of the PFS Annual Conference. Liz Booth spoke to the director of the winning Chartered Financial Planners of the Year (Firm)

“When we launched Verus, we had already positioned ourselves to work on a fee basis rather than on commission,” says Mr Lothian. It was something that also appealed to the accountants and that forward-thinking approach has fuelled much of the firm’s development.

Verus is Latin for true, real, proper and right and Mr Lothian says those words represent the firm’s approach to financial planning and advice.

The company offers wealth management, investment consulting and comprehensive financial planning, with focused financial planning as an additional service. On its website, the firm makes six promises to clients:

1. Listening to you is our pleasure2. Knowing what is important about money to

you is our passion3. Defining your lifestyle and financial dreams

is our priority4. Keeping you well informed is our promise5. Exceeding your expectations is our plan6. Helping you to achieve and maintain your

desired lifestyle is our purpose.

For Mr Lothian, these six core values sum up the relationship between firm and client and also represent the professional approach he holds so dear. Mr Lothian himself became Chartered in the first wave of qualification in 2005 and the whole firm followed as soon as possible. “I am really passionate about professionalism,” he says. “It inspired me to join the PFS and drove me to apply to become a board member, following the inaugural ceremony for Chartered financial planners.

“It felt so wonderful to be in a room with my peers and discover I was among like-minded people who all believed as passionately as I did about the profession and improving standards.”

Mr Lothian remained on the board from 2006 until 2011, including a stint as president in 2009. He has gone on to become the Chartered Champion for northern Scotland – promoting the Chartered ideal among other

The winners for 2013 were as follows: Chartered Financial Planner of the Year (individual), sponsored by Investec: Robin Melley, FPFS, Chartered financial planner at Matrix Capital.

Chartered Financial Planners of the Year (Firm), sponsored by Prudential: Verus Financial Planning, based in Dundee.

This year, the PFS board presented the John Ellis Award posthumously to an individual who has made a significant contribution to the development of professionalism within the financial services sector. John Ellis Award 2013: (posthumous) Len Warwick CBE ALIA(Dip), FLIA(Dip), Chartered FCSI, AIFP.

Now in its second year, the Paraplanner of the Year category was introduced in recognition of paraplanners’ commitment to high professional standards and the importance of this role as part of a holistic professional financial planning process. Paraplanner of the Year, sponsored by Aviva: Warren Bentham DipPFS, of 75point3.

Awards were also presented to the highest

achievers in their qualifications. The recipients needed to be PFS members and to have achieved distinctions in the exam subjects they had taken on their way to achieving the Diploma or Advanced Diploma in Financial Planning. This year’s winners were:

Highest Achiever in the Diploma in Financial Planning, sponsored by Canaccord Genuity: Alex Rich DipPFS, Cert CII (Life & Pensions), of Brewin Dolphin;

Highest Achiever in the Advanced Diploma in Financial Planning, sponsored by Suffolk Life: Tom Evans APFS, of Thompson and Richardson.

The Volunteer of the Year category recognises those members who have given up their time, energy and expertise during the past year and who have made a significant positive impact within their region, local community and beyond. Volunteer of the Year 2013, sponsored by MetLife: Brian Harris DipPFS, of HLS Financial Planning.

The host of the PFS Chartered Awards was the well-known British actor and comedian, Hugh Dennis.

Chartered professionals comes naturally because of the way it reflects his own business model with Verus.

Badge of honourVerus itself has been changing too. Becoming a Chartered firm in 2007 gave a legitimacy, says Mr Lothian, to what it was already doing in practice. He says the support from the PFS is of enormous value, particularly in terms of resources and access to programmes such as the ethical self-monitoring kit.

“For the firm, having Chartered status is a badge of honour and not a flag of convenience,” says Mr Lothian. Verus has grown to a team of five and Mr Lothian adds:

PFS CONFERENCE | Chartered aWardS 2013

4. Highest Achiever in the Diploma in Financial Planning: Alex rich DipPFS, cert cII (Life & Pensions), of brewin Dolphin5. Paraplanner of the Year: Warren bentham DipPFS, of 75point3

Chartered Financial Planners of the Year: (Firm) - verus Financial Planning

“We are a small firm to win such a big award but, as one of the judges said to me on presenting the award, this is not about physical size, it is all about walking the walk and having the right values.”

Since collecting the PFS award, Mr Lothian says the company has emailed all its clients to spread the news. It has also written letters to everyone as well, using the new award-winning logo on the envelopes as well as the letterheads.

Meanwhile, a new flier is being produced, the local newspaper is running the story and Mr Lothian says the Verus team will be explaining the significance to their clients individually as they see them. “This is an award for the whole firm but it is also an award for our clients. They have trusted us and this is for all of us.”

Mr Lothian stresses: “It may not sound like it but we are quite humble about our success. PFS members who have not put themselves forward for an award may not fully understand what a tough process it is. Some other awards are fairly woolly but the PFS has a very robust approach to choosing its winners. We had to go up in front of a tough panel of judges. That makes us value the award even more and it really will be taking pride of place within the organisation.”

1. Volunteer of the Year 2013: brian HarrisDipPFS, of HLS Financial Planning 2. Chartered Financial Planner of the Year(individual): robin melley, FPFS, chartered financial planner, matrix capital 3. Highest Achiever in the Advanced Diploma in Financial Planning, Tom evans APFS, of Thompson and richardson

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John Ellis Award 2013: (posthumous) Len Warwick cbe received by his widow rosalind Warwick and son Tom Warwick

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The £100 rule can also apply to IIP trusts where the settlor is the parent of a minor beneficiary entitled to income (see earlier).

Also, if we are looking at a flexible IIP trust, where the trustees have power to appoint benefits to others, one has to consider the settlor-interested trust rules. This means that if the settlor or, more likely, the settlor’s spouse, is a potential beneficiary under the trust, all of the trust income will be taxed on the settlor. In these circumstances, the beneficiaries entitled to the income will not suffer any tax.

3. Discretionary trust The income tax position that applies to discretionary trusts is somewhat complicated and, what follows, is therefore something of a simplification of the position. basically, income tax will be a two-stage process – firstly, when income is received by the trustees of the discretionary trust; and, secondly, if income is then distributed by the trustees to the beneficiaries under the trust.

(a) Stage one When income is received by the trustees it will suffer tax at the appropriate rate. The first £1,000 of gross income is taxed at the standard (10%/20%) rate and, therefore, if this income is received net of tax at source, there will be no further tax charge.

There is an anti-fragmentation rule, which reduces the standard rate band of £1,000 by dividing it by the number of trusts created by the same settlor. However, irrespective of the number of trusts created, the standard rate band will never be less than £200 for each trust.

Any income that exceeds the standard rate band will be taxed at the trust rate, which is 37.5% on dividend income and 45% on all other income.

Having paid the tax on the income they receive, if the trustees then decide to accumulate that income there will be no further income tax at that time. by accumulation we mean the trustees retain the income in the trust and effectively capitalise it. However, if the trustees decide to distribute this income to a beneficiary then we have to look at the stage two income tax position.

(b) Stage two If the trustees decide to distribute income, that payment will be taxed as trust income in the beneficiary’s hands – as opposed to

being taxed as the dividend or savings interest that the trustees originally received.

The rules state that in making a payment of trust income the trustees must have paid 45% income tax on that amount and give the beneficiary a tax credit for this tax deduction. In many cases, the trustees will have paid the 45% income tax on the income when it is received and, therefore, they are simply giving the beneficiary a credit for the tax they have already suffered.

However, special rules apply where the distribution is made out of dividend income. In these cases, in determining whether the trustees have paid 45% tax on the dividend income, they cannot take account of the tax credit on the dividend. This, coupled with the fact the trustees will have to pay an additional 27.5% on the gross dividend, will mean that the trustees will have to pay additional income tax to Hm revenue & customs (Hmrc) when they distribute the income to the beneficiary and the beneficiary accordingly suffers a higher marginal rate of tax.

This prevents a non-taxpaying beneficiary under a discretionary trust recovering the tax credit on a dividend paid to the trustees. It also means that 40% taxpaying beneficiaries suffer a high effective rate on distributions made out of dividends.

The settlor-interested trust rules apply in the same way to a discretionary trust as to a flexible IIP trust. This means that if the settlor or, more likely, the settlor’s spouse, can benefit under the trust then all of the trust income will be taxed on the settlor. Despite this position, the trustees still have to pay upfront tax – the settlor then gets a credit for this. If, as is probably likely, the settlor pays a lower marginal rate of tax than the trustees, a recovery of tax can be made but the settlor must pay this back to the trustees.

As will be seen, where income arises in a discretionary trust the tax position can be quite complicated. This is one of the reasons why single premium bonds are so attractive as trustee investments. In simple terms, because they are non-income producing there is no income to cause the activation of these complicated rules. Instead, the trustees can use the 5% tax-deferred withdrawals and segment assignments to finance tax-efficient payments to beneficiaries.

B. CGT In looking at how cGT applies to trusts we need to consider the position when assets are gifted into the trust and when assets are realised inside the trust.

Why trusts are key to good financial planning

TECHNICAL CONNECTION | TRUSTS AND THE FINANCIAL ADVISER (PART 2) TECHNICAL CONNECTION | TRUSTS AND THE FINANCIAL ADVISER (PART 2)

In the second instalment of a two-part article, John Woolley looks at some of the more popular trusts used in financial services, and how they are taxed

ILLUSTRATION BrETT ryDEr

In the first part of this article, I looked at the four main types of trust, the basic structure of a trust and the main legal rules that apply to trusts. In this second part, I will look at the taxation of trusts and examine some of the popular trusts

that are used in this industry. Please note that this is not designed to be

an in-depth technical article.

Taxation of trustsAs I mentioned earlier, the tax treatment of a trust will depend on the type of trust created, whether it is a bare trust, an interest in possession trust (IIP) or a discretionary trust. It is necessary to consider the income tax, capital gains tax (cGT) and inheritance tax (IHT) position of each of these trusts. I will look at each of these taxes in turn.

It should be noted that single premium bonds are subject to their own special “chargeable events” tax code and I deal with this separately later.

A. INCOmE TAx 1. Bare (absolute) trustIt is a golden rule of trust taxation that any income is taxed on the beneficiary who is entitled to it. Therefore, with a bare trust, because there is a beneficiary entitled to income as it arises, that beneficiary should be taxed. If the beneficiary is a non-taxpayer and the trust income is dividend income, it will not be possible to recover the 10% tax credit payable with the dividend.

of course, many bare trusts are established for minor beneficiaries and where that minor beneficiary is a child of the settlor, special tax rules apply – most notably the £100 rule. The £100 rule means that if a parent makes a gift to a minor child (who is unmarried and not in a civil partnership) and the income on that gift (and any other gifts between them) exceeds £100 gross in a tax year, then all of the income is taxed on the parent who is the settlor. This may not give a bad result if the settlor is only a basic rate taxpayer.

The £100 rule does not apply where the settlor is somebody other than the parent of a minor beneficiary, say a grandparent.

2. IIP trust As with the bare trust, income of an IIP trust will be taxed on the beneficiary who is entitled to it. However, the difference between an IIP trust and a bare trust is that the trustees must first have paid basic rate tax on the income. Frequently, this will be the case as they will be receiving interest and dividends net of actual or deemed basic rate tax.

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and they encash a single premium bond to finance that payment. one way in which this may be alleviated or reduced is to consider the process of segment assignment. What happens here is that, having made an appointment of benefits to a beneficiary, rather than encashing the bond to fund the payment, the trustees assign sufficient segments in the bond to a beneficiary. This does not give rise to a chargeable event at that time. The beneficiary then encashes the bond and will pay income tax according to their circumstances. So, for example, if the beneficiary is a basic rate taxpayer after the addition of any top-sliced gain, there will be no further tax to pay in respect of a UK investment bond.

In cases where the beneficiary is a minor and it is not possible to assign segments to them, it may be appropriate for the trustees

to use the 5% tax-deferred facility and use these to advance capital to

the beneficiary until such time as they attain age 18.

D. IHTThe IHT treatment of trusts underwent a seismic change in the 2006 budget and subsequent Finance Act. Prior to that, virtually all trusts

were subject to the potentially exempt

transfer (PeT) regime. This included bare trusts,

IIP trusts and accumulation and maintenance trusts. The only type of

trust that was subject to the relevant property regime was the discretionary trust.

A great number of trusts established after 21 march 2006 are now subject to the “relevant property rules”. This means that: an immediate IHT liability can apply on gifts to the trust; the trustees could be subject

to a 10-yearly trust IHT charge (called the “periodic charge”); and the trustees could pay IHT on property paid out of the trust (called the “exit charge”).

1. Trusts not subject to the relevant property regime Whether or not a trust is subject to the relevant property regime will, in the first instance, depend on whether the trust was created during the settlor’s lifetime or on death.

Lifetime trusts, which are still subject to

the PeT regime, include bare trusts and trusts for the disabled. As far as trusts on death are concerned, if the trust is an immediate post-death interest (IPDI) trust or a trust for bereaved minors, then these trusts will not be subject to the relevant property rules.

(a) IPDI trust An IPDI trust is one that arises on the death of an individual, normally under that person’s Will. If that Will trust gives a life interest to another person – typically the deceased’s spouse – then the trust will not be treated as relevant property. Instead, the old rules will continue to apply and the value of the trust fund will be treated as forming part of the estate of the person who has the life interest. When that person is the spouse of the deceased, it means the spouse exemption will apply to the transfer of property when the trust is established.

of course, on the second death the value of the trust fund will be added to the surviving spouse’s taxable estate for the purposes of calculating IHT. The surviving spouse may well have a transferable nil rate band from her deceased spouse to set against the value of the estate at that time.

(b) Trusts for bereaved minors This is a special trust where the Will of a deceased parent establishes a trust for a child who benefits at age 18. Such trusts will not be treated as relevant property.

because many people thought age 18 was too young for a child to benefit absolutely, the government gave into pressure and increased this entitlement to age 25. However, if the benefits are paid out between 18 and 25 there could then be a limited exit charge on such trusts.

2. IHT and lifetime trusts To all intents and purposes, the IHT treatment of lifetime gifts into trust will now depend on whether the trust is a bare trust or not.

In the case of a bare trust, any gift to the trust will be a PeT and therefore there will be no immediate IHT liability irrespective of the size of the gift. If the donor survives seven years, no IHT will arise at all. The value of the trust property will be treated as forming part of the beneficiary’s estate for IHT purposes.

other than gifts to disabled trusts, in general other lifetime gifts to trusts will be treated as chargeable lifetime transfers and once the property is in the trust, it will be subject to the relevant property regime.

With these trusts, as far as IHT is concerned it is necessary to consider the position: when property goes into the trust; when property is in the trust; and when property comes out of the trust.

(a) Transfers to the trust In order to determine any IHT when a gift is made to the trust, it is necessary to take account of all chargeable transfers made by the settlor in the immediately preceding seven years. These need to be added to the gift being made to the trust and if after the deduction of any annual exemptions the transfer causes the settlor’s nil rate band to be exceeded, then there will be a tax charge of 20% on the excess. For these purposes, any PeTs made in the previous seven years can be excluded. The nil rate band in 2013/2014 is £325,000 and it will remain at this level until 2017/2018.

It is generally advisable for the settlor to not exceed their nil rate band when they make a gift into a trust, as this will involve an upfront IHT liability.

(b) IHT while property is in trust Under the relevant property regime, the value of property in the trust can be subject to IHT at every 10-year anniversary of the trust – this is known as a periodic charge. In effect, the trustees will be treated as making a lifetime transfer of the value of the trust property at that 10-year anniversary.

In calculating the deemed chargeable transfer that occurs at the end of the 10-year period it is necessary to take account of the following:

the value of the trust property at the 10-year anniversary;

the chargeable transfers made by the settlor in the seven years before they established the trust;

the value of any related settlements when made (for these purposes a related settlement is one made by the same settlor and on the same day as the discretionary trust in question); and

the amount of any capital distributions from the trust in the previous 10 years. Any tax charge will be at 30% of the lifetime

rate (20%), so the maximum rate will be 6%. However, the trustees will be entitled to a nil rate band so, where the settlor made no gifts in the seven years before the trust was created and no previous distributions have been made from the trust, provided the value of the trust property does not exceed the then nil rate band, there will be no tax charge at that time.


1. Gifts to the trust When assets are transferred to a trust, this will be a disposal for cGT purposes and could give rise to a liability. obviously, the settlor should use their annual exemption available at that time. However, there is a useful relief where the gift is to a discretionary trust. because this is a chargeable lifetime transfer for IHT purposes, this will mean that cGT hold-over relief can be claimed – even if the gift falls within the settlor’s IHT nil rate band.

Hold-over relief is a mechanism by which the date of payment of tax can be deferred. In effect, the trustees will take over the base cost of the original investments in the settlor’s hands and, on a subsequent disposal of those investments, pay cGT on the whole capital gain.

For hold-over relief to be available, neither the settlor, nor the settlor’s spouse, nor a minor child of the settlor, can be a beneficiary under the trust. Also, because hold-over relief is a deferment of cGT, it is important that it is only used in appropriate circumstances.

For instance, if the settlor is elderly or in ill health it would probably not be appropriate to make a lifetime gift and claim hold-over relief. This is because settlor would have to live seven years for the gift to be fully tax effective. If they died within seven years this would compromise the IHT efficiency and also mean that the assets gifted could no longer be rebased for cGT purposes on the settlor’s death.

2. Taxation of gains in the trust Where the trustees encash investments that are held in the trust the tax position will depend on the type of trust involved:

(a) Bare (absolute) trustIn the case of a bare trust, any capital gains will be taxed on the beneficiary. This applies irrespective of the beneficiary’s age and the relationship between the beneficiary and the settlor. This means that the beneficiary can offset their annual cGT exemption of £10,900 against those gains for 2013/2014. Any excess gains will be taxed at 18% or 28% as appropriate, according to the level of the beneficiary’s other taxable income.

(b) Discretionary (or flexible IIP) trust Where the trustees of a discretionary trust or flexible IIP trust encash investments, any capital gains will be taxed on those trustees. For these purposes, the trustees have an annual exemption of half the individual exemption – this is £5,450 in tax year 2013/2014. There is an anti-fragmentation rule,

which will restrict the annual cGT exemption according to the number of trusts created by the same settlor. However, the annual cGT exemption will never be less than 10% of the individual exemption (£1,090 in 2013/2014). Any capital gains that exceed the annual exemption will be taxed at 28%.

If a cGT liability would arise on the trustees encashing investments and the intention is to pay the proceeds of the encashment to a beneficiary, it may be better for the trustees to transfer the investments to the beneficiary (having made an appropriate appointment of benefits in favour of that beneficiary) and claim cGT hold-over relief. In these circumstances, the beneficiary will then receive the investments and the accrued capital gain on those investments. However, that beneficiary will then have their full annual cGT exemption available to set against any subsequent capital gains that arise on disposal, assuming the exemption had not already been used elsewhere. When cGT hold-over relief is claimed, on the transfer of investments out of the trust there are no restrictions on who the trust beneficiaries can be at that time. Note that hold-over relief can only be used in this way where the distribution is a lifetime chargeable transfer for IHT purposes (although, again, it is not necessary for a charge to actually arise).

Payments out of the trust to beneficiaries As will be appreciated from what is said above, it is may be more tax efficient these days for trustees to invest for capital growth and draw on that capital by making payments to beneficiaries rather than invest for income and make income payments to beneficiaries.

Where regular payments of capital are made to a beneficiary, this brings into focus the question of whether those capital payments can be subject to income tax. back in the 1980s, Hmrc took the view that if capital payments were made out of the trust to a beneficiary and used by that beneficiary for an “income purpose”, then those payments could be subject to income tax. However, in a landmark decision in Stevenson v Wishart in 1987, the court of Appeal found that payments of capital would only be subject to income tax if they were paid under a power in the trust document to supplement a beneficiary’s income entitlement. Therefore, in the case of a discretionary trust, provided capital payments are documented as being made for a capital purpose and are not paid under a power to supplement trust income, there should be no income tax liability on them.

C. SINGLE PrEmIUm BONDS HELD IN TrUST As mentioned earlier, single premium bonds, as life assurance policies, are subject to their own special set of chargeable event rules in the tax legislation. The general rules are as follows:

1. Bare (absolute) trustWhere a bond is held subject to a bare trust and a chargeable event gain arises, it will be taxed on the beneficiary. However, this is subject to the £100 rule in a case where a parent is the settlor of a trust for the benefit of their minor child. In those cases, if chargeable event gains exceed £100 in a tax year they will all be taxed back on the parent.

2. Discretionary/flexible trust Where a bond is held in a discretionary or flexible trust and is encashed, the rule is that chargeable event gains will be taxed on the settlor if the settlor is UK resident and alive in the tax year in which the

encashment occurs. The settlor will get a basic rate tax credit if the bond is a UK bond and they will also be entitled to top-slicing relief, if appropriate.

In cases where the settlor is non-UK tax resident or died in a previous tax year, the chargeable event gains will be taxed on UK resident trustees at the trust rate of 45% to the extent they exceed the trustee’s standard rate band. The trustees will get a basic rate tax credit if the encashment is of a bond with a UK insurer but, of course, no top-slicing relief will apply.

In cases where the settlor is no longer alive or is non-UK tax resident and the trust is an offshore trust, special rules apply that are beyond the scope of this article.

A tax liability may therefore arise when trustees are considering making a payment out of a trust

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(c) IHT on property distributed from the trustAn IHT charge can also arise on property paid out of the trust by the trustees. This is known as an exit charge.

In essence, the exit charge will be based on: the value of the property transferred out of the trust; the number of quarters (three-month periods) that have elapsed since the trust was created or, if the exit occurs after 10 years, since the last 10-year anniversary; and the rate of tax that was paid at the last 10-year anniversary or, if the exit is in the first 10 years, when the trust was established. For distributions between the 10-yearly

cycles, if no tax was paid at the last 10-year anniversary, there will be no tax on a subsequent exit. For distributions in the first 10 years, if no tax was paid when the trust was established (or no tax would have been paid if the trust had been established at the time of the exit) then no tax will apply on an exit from the trust. See example of bob.

(d) General IHT planning with discretionary trustsIn most cases, provided the settlor has not made substantial previous chargeable lifetime transfers, any IHT on the discretionary trust should not be too onerous. Indeed, under the current rules, provided the settlor did not make any chargeable transfers in the seven years immediately before creating the trust, no IHT charge will arise provided the value of the trust does not exceed the nil rate band that applies at the 10-year anniversary and nothing has previously been distributed.

If the property increases substantially in value and the trustees are facing the prospect of an IHT charge on the first 10-year anniversary, it may be worth considering transferring all of the property out of the trust to a beneficiary. This will trigger an exit charge but if no IHT was paid at the previous 10-year anniversary or when the property was placed in trust (if the exit is in the first 10 years) no IHT charge will then apply – irrespective of the amount paid out. However, to achieve this result, all of the property must be transferred out to a beneficiary and this must therefore be acceptable to all the parties.

If an individual is considering making a PeT at the same time as a discretionary trust, another important planning point arises. In this situation, the PeT should always be made after the chargeable transfer into the trust. This will avoid any failed PeT being taken into account in calculating IHT on the

bob created a discretionary trust for £325,000 in February 2013 to fully use his nil rate band. He had not made any gifts in the previous seven years.

In February 2023, when the first 10-year periodic charge arises, the trust fund is worth £450,000 and the nil rate band is £400,000. No distributions have been made out of the trust.

The IHT on the discretionary trust will therefore be:£400,000 @ 0%£50,000 @ 6% = £3,000.

This tax charge equates to an effective IHT charge rate of 0.66% when expressed as a percentage of the value of the whole trust fund of £450,000.

Had bob made a chargeable transfer of, say, £50,000 in 2010, then this would have had to be taken into account in working out the periodic charge and it would have reduced the available nil rate band to £350,000. This would mean that

£100,000 would be taxed at 6% giving a tax charge of £6,000.

Let us assume that £50,000 is transferred out of the trust to bob’s son, Jasper, after six years – in 2019.

Any IHT charge will then be based on the rate of IHT paid when the property was placed into the trust (or if, lower, the rate that would have been paid if the property had been placed in the trust at the date of the exit in 2019).

clearly, as no IHT was paid when bob set up the trust there will be no IHT on the £50,000 that is paid out in 2019.

Had the payment been made to Jasper after 16 years (in 2029), the IHT charge would have been based on the tax rate paid at the last 10-year anniversary – 0.66%. So, if £50,000 was paid out and given that 24 quarters had passed through the 10-year cycle, the IHT charge would be: £50,000 x 0.66 x 24/40 = £198

ExamplE – BoB

with a nominal value in it should cause the dilution of the nil rate band available to another trust?

We shall have to wait and see what happens as a result of the consultation process but it seems inevitable that some change will take place.

(e) Gifts with reservation of benefitThe general rule is that if an individual makes a gift to a trust and remains a beneficiary under the trust then that will be a gift with reservation of benefit (GWr). This means that, while the trust has been legally created, for tax purposes the trust property is treated as remaining in the settlor’s taxable estate. Therefore, there is no IHT advantage. even if this problem can be overcome, if the settlor retains a benefit the pre-owned assets tax (PoAT) provisions may mean that an income tax charge arises.

Fortunately, most of the trusts used in financial services under which the settlor can benefit do legitimately avoid the GWr and PoAT provisions and Hmrc has confirmed this is the case.

3. IHT treatment of trusts of life assurance policies Life assurance policies will frequently be

subject to one of two main types of trust: a bare/absolute trust; or a discretionary/flexible trust.

(i) Bare (absolute) trust Here, premium payments will be

PeTs, which means no IHT will arise at all provided the settlor survives the payment of each premium by seven years. In the event of the settlor’s death within seven years, the premium

becomes chargeable but the annual and/or normal expenditure out of income

exemptions may then apply. To the extent those chargeable

transfers, after any exemptions, cause the settlor’s nil rate band to be exceeded, an IHT charge may arise.

The market value of the trust property (normally the surrender value of policy)

will be treated as forming part of the estate of the beneficiary to whom any policy proceeds will eventually be paid.

(ii) Discretionary/flexible trust Here, premium payments will be chargeable lifetime transfers. If, after the deduction of any annual and/or normal expenditure out of income exemption, the transfer causes the settlor’s nil rate band to be exceeded, a charge at 20% will apply to the excess.

As far as the trust fund is concerned, there could be a 10-year periodic charge or an exit charge.

The 10-year charge is based on the value of the trust property. If this is a term assurance it will only have a value if the life assured is in serious ill health or dead and the proceeds have been retained in the trust. This is unlikely so, in most cases, there will not be a periodic charge at the 10-year anniversary or an exit charge on later transfers of the proceeds out of the trust to a beneficiary.

There is a difference in the case of a whole-of-life policy where the value of the trust fund is based on the greater of the market value of the policy (normally the surrender value) and the premiums paid. even so, unless very substantial premiums are paid, this should not present a problem.

Therefore, where a protection life assurance policy is held in a discretionary trust, while IHT charges are possible, they are unlikely.

Such policies therefore offer a facility for an individual to make tax-efficient financial provision for their dependants or to provide tax-efficient cash for their beneficiaries to help them meet any IHT liability that might arise on their death.

Trusts used with financial productsI have already looked at bare trusts and discretionary trusts. There is also a whole range of other trusts that are used with financial products in financial planning. Here is an outline of some of these.

1. Split trust While an individual may wish to give death benefits under a policy to their next of kin, they may wish to keep entitlement to health benefits. The split trust is a trust whereby the health benefits under a protection policy (serious/critical illness, income protection) are held for the benefit of the settlor but death benefits are held in a discretionary trust for the settlor’s family. Provided certain issues are properly dealt with, this trust can be established without a gift with reservation problem.

2. Business protection trustThe untimely death of one of the owners of a small business can have a devastating impact on that business. When used with a protection policy, the business protection trust enables two or more business partners/shareholders to channel cash to their fellow partners/shareholders on their death (or serious/critical illness). Their fellow partners/shareholders can use this cash to buy out the deceased’s business interest. This means that the surviving partners/shareholders keep control of the business interest; and the deceased’s dependants receive cash compensation for the sale of the business interest.

For this arrangement to be effective, the business partners/shareholders must also draw up an appropriate Will and double-option agreement.

3. Discounted gift trustA number of people would like to make a lifetime gift for IHT purposes but need to retain some regular payments from the assets to be gifted. How can this be achieved without a GWr?

This type of trust, which is frequently used with a single premium investment bond, enables an individual to retain the right to a stream of tax-efficient income (in the shape

of the 5% annual withdrawals) yet give away the remaining value of the trust fund on their death. While the arrangement involves a gift for IHT purposes, the value of that gift is less than the initial amount invested and drops out of account on the investor’s survival for seven years. because the plan uses a special trust, it avoids falling foul of the IHT gift with reservation and pre-owned assets tax rules.

4. Loan trustThis trust, again frequently used with a single premium investment bond, enables an individual to make a loan to a trust. A loan is not a gift, so there are no IHT consequences at outset.

Then, in the future, loan repayments can be made by the trustees to the settlor using the 5% tax-deferred withdrawal facility and, if they spend those loan repayments (i.e. to augment their income), their taxable estate will reduce. In the meantime, any investment growth accrues outside of their taxable estate for the benefit of the trust beneficiaries. because of the nature of the trust, all of this can be achieved without any gift with reservation problems.

5. Bypass trustPeople who have valuable pension funds will be reassured to know that, provided they are aged under 75 and the pension benefits are not crystallised, death benefits can be paid out free of IHT if paid, broadly, within two years of their death.

The problem is that if all of the cash is paid to a surviving spouse, on that spouse’s subsequent death it may be fully exposed to IHT. It may also be more vulnerable to being dissipated, with less remaining on the spouse’s death for the next generation. To protect against these two possible problems, the pension scheme member can make arrangements for the pension cash to go to a bypass trust on their death, which will protect the trust fund from IHT on the spouse’s death; but mean that funds can, from time to time, be made available for the deceased’s beneficiaries.

There are a number of other trusts that can be used in financial planning with financial products. I am unable to cover them all here but I would encourage advisers to explore these areas to maximise the planning opportunities available for their clients.

Please note that this article was produced before the government’s Autumn Statement on 5 December 2013.

discretionary trust in the future. As will be appreciated, the IHT rules on

discretionary trusts can be quite complex. In order to simplify the rules, Hmrc has issued a consultative document that suggests some amendments to the current treatment/regime.

one simplification is that neither the cumulative total of the settlor nor the initial value of any related settlement is taken into account when calculating the periodic charge; and that the tax rate is a flat 6% on any value above the available nil rate band. However, in turn, Hmrc suggests that an anti-fragmentation rule should apply to discretionary trusts so that the nil rate band available to a trust is equal to the current nil rate band divided by the number of trusts created by the same settlor. So, if the settlor had created 10 settlements, the nil rate band available to each trust could be £32,500. This proposal would neutralise the so called rysaffe planning, which currently enables an individual to set up a number of discretionary trusts on different days with the intention that each will get a full nil rate band because they are not “related settlements”.

However, the proposal is not without its problems. For example, is it fair that a discretionary trust that only has property

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PFS | SKILLS SURVEY 2013 PFS | SKILLS SURVEY 2013

during the next 12 months. Almost half (46%) expect to do so, against only 6% who feel they will need to cut numbers.

A difficult business environment, coupled with the pressures brought on by the need for RDR compliance meant that many firms had paused recruitment plans. Indeed, most employers believe the recruitment mix has changed little during the past five years. This is likely to change as we are now seeing business confidence begin to rise and employers looking to grow again.

The majority of firms have or are looking to

implement a skills development programme. Dig a little deeper and we find that Chartered firms are significantly more likely to have a plan in place than non-Chartered ones. This is another sign of how engaged members are with the issue. The question is – how long term is the planning?

Finding future talentIt is all well and good recruiting, but do firms have access to the right talent with the right skills? Today, this appears to be less of an issue as economic conditions, through redundancies and reduced demands, have ensured a pool of available individuals. But what about the future? Where are the advisers of tomorrow?

In the past, providers have offered a ready supply of new entrants – but this situation is changing as the provider model evolves. Although the preferred method of recruitment was word of mouth, this will not be sufficient in the long term.

This skills survey offers an ‘amber warning’ in relation to the future of the profession i.e. the need to identify future talent and to ensure pipelines that can deliver. As a profession, we need to work to develop new and varied talent channels. Future advisers might be waiting for us in schools, colleges, universities or elsewhere in the labour market. Collective action can help advisers access talent pools that have been relatively untouched in the past. If we can show what an attractive prospect financial planning can be, then more and more of the top talent from education and high quality career changers will consider a career in advice. Hopefully the increased status of advice as an embryonic profession will add luster.

The obvious place to start looking for the next generation of advisers is the education system. There are, however, issues here as an increasing number of employers, almost two thirds, believe UK education does not adequately serve the needs of the advice profession. Put bluntly, many members want recruits with better literacy and numeracy skills, and not to have to ‘top up’ these basics.

This less than favourable view is not limited to the advice community. Look at any survey of businesses and they all say pretty much the same thing. Therefore, with more and more employers realising the need to secure talent from a potentially smaller pool, as the labour market tightens, we as a profession have to be active in trying to secure our share. We cannot expect it to come to us.

It is often difficult for employers to do this on their own – especially if they are a small enterprise. That is why it is important for the profession to work together to help create future talent pipelines. It is in everyone’s interest to do so.

From the survey results, it appears that advocacy is not a problem. Nearly three quarters of advisers would recommend a career in financial advice. The positives highlighted were the number of opportunities available and the rewards on offer, on a personal level as well as a financial one. One way of channelling this enthusiasm is

by supporting local schools and colleges in their provision of careers information. This is not as intimidating as it first sounds.

Discover Fortunes, the PFS’s initiative to promote advice careers in schools and universities, is one way to engage with potential new recruits. Getting involved could not be simpler (contact [email protected]), the time commitment is minimal and the rewards are potentially great. Developing a link with a local school could help provide candidates in the future.

Offering work experience or internship opportunities is another good way of exposing potential recruits to the profession. Students often have misconceptions about what a certain career might involve, so offering the opportunity to gain first-hand experience is one way of promoting our profession. We have produced a guide to help those firms who would like to offer an opportunity but are unsure of where to begin (see link below).

Apprenticeships are another way of bringing in fresh faces and tapping into talent pools that might have been missed in the past. Awareness of technical apprenticeships (i.e. ones containing professional qualifications) is on the rise, up 14% on last year to 56%, but there is a significant percentage of employers who would not consider developing an apprentice. In some cases it does not fit with the business model, which is understandable, whereas others are put off by worries of red tape and bureaucracy, or by a lack of information.

Apprenticeships need not be daunting, however, and support is available from the PFS. A step-by-step guide has been written to help employers of all sizes get started and we can help you find training providers with experience of dealing with financial services apprenticeships (see link below). Small firms are now much better catered for in the apprenticeship space and extra funding is available for those that employ an apprentice.

Whereas our previous skills surveys have provided clear messages around investing in skills to provide a springboard for when the economy enters a recovery, this year it is a different story. As a profession, we appear to be relatively well placed today, with low skills shortages – the issue is when we look to the future. Where will new advisers come from? If we work together, we can answer that conundrum.

Daniel Pedley is public affairs manager at the CII

gone tomorrow?Here today,

The results from the latest PFS Skills Survey are in – and they are largely positive. However, Daniel Pedley digs a little deeper and finds areas that still need attention…

T he first post-retail distribution review (RDR) Personal Finance Society (PFS) skills survey has thrown up challenges as well as interesting opportunities for the profession to consider.

1,500 members replied to the seventh running of the survey, which provides a comprehensive picture of the skills landscape across financial advice as well as insight into employers’ view of the UK education system. Once again, the excellent response from our members highlights the importance of this issue.

The broad assessment from this year’s results is that, for the moment at least, the skills situation in the advice profession is relatively healthy. Indeed, the number of employers reporting skills shortages has dropped to its lowest level (37%). Yet despite this, there are serious questions that relate to the future of the profession – where will the next generation of advisers come from and how can we attract top talent?

Do you believe there is a shortage of technical skills in key areas of your business?

2009 2010 2011 2012 2013

Agree 64% 66% 71% 63% 37%

Recruitment driveThe post-RDR position looks more positive than many commentators expected. Also the UK economy is beginning to show signs of meaningful recovery. Both happenings have led to cautious optimism which is reflected in the number of advisers looking to increase their headcount

34%

46%

2%4%2%

12%

No changeIncrease by more than 5%Increase by less than 5%Don’t knowDecrease by more than 5%Decrease by less than 5%

What do you expect to happen to the headcount in your organisation over the next 12 months?

42%

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11%

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Retained more experienced talent for longerNo changeConcentrated on developing existing talentBrought in more new talentBrought in more experienced talent

Employer recruitment mix has during the past five years

Very wellQuite wellPoorlyVery poorlyNo opinion

How is our education system serving the next generation of advisers?

ONLINE ///

► Apprenticeships: A guide to getting started: http://bit.ly/19OWR8L► Internships: A good practice guide: http://bit.ly//ZdUPgk

IFAs’ opinions on how well UK education serves their needs

2011 2012 2013

Well 34% 35% 22%Poor 56% 60% 63%

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thepfs.org/becoming-chartered

Planning to become

Chartered?You can now find the latest Advanced Diploma learning materials, study support services, member-only resources and useful candidate information, all in one place, on the PFS website.

Supporting your route to Chartered.

C13J_8341 Supporting route to chartered V2.indd 1 03/09/2013 09:33

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T he world of regulation and legislation is ever changing and to help keep you up-to-date with developments, our regulatory radar covers the latest news from regulators and legislators,

both in the UK and europe.

Legislation: The care bill has completed its passage through the House of Lords and has moved to the commons. The bill seeks to introduce a cap on the cost of social care, and give carers the legal right to support from their local council. The bill has been amended so that local authorities will have to identify those individuals who would benefit from financial advice and to consider how they might access ‘independent’ financial advice. In this context, independent means independent of the local authority. There had been calls from a number of Lords, including Lord Lipsey (president of the Society of Later Life Advisers), to have local authorities facilitate access to ‘regulated’ advice. The government resisted putting this on the face of the bill but agreed that the issue of regulated advice would be covered in subsequent statutory guidance (which will be issued to local authorities).

FCA guidance consultation on changing customers to post-RDR unit classes: The

transfer of investors in authorised funds from pre-retail distribution review (rDr) unit classes to post-rDr (clean) unit classes is the subject of proposed guidance from the Financial conduct Authority (FcA). The guidance covers a number of issues, including whether conversions can happen in bulk instead of individually, whether advice is needed and the role of advisers in the conversion process. The guidance is being consulted on and will be finalised in 2014.

Martin Wheatley’s Mansion House speech: martin Wheatley, chief executive of the FcA, has given a speech at mansion House on the concept of fairness in financial services and cultural change across the industry. He set out how the FcA will work to prevent a future crisis, with ‘forward-looking’ being the regulator’s new mantra. on ethical practice, mr Wheatley said that, rather than be prescriptive, the FcA will place greater emphasis on good judgment, not narrow compliance.

FCA defers advisers’ capital adequacy rules: The FcA has announced it is to defer its capital adequacy requirements on personal investment firms by two years. The rules were to take effect at the end of this year. The regulator has said it will use the time to review

its entire approach to firms’ capital rules.

Mortgage Market Review – readiness tracking survey findings – phase 1: The FcA has made public the findings of its first mortgage market review (mmr) readiness survey. results show that two thirds are on track to meet the new requirements, with one third not. The second and final readiness survey will be sent to firms in December.

REGULATORY RADAR | Update

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This issue’s regulatory focus looks at the latest developments surrounding the Care Bill, clean share classes and capital adequacy requirements, plus much more…

Please be sure to view our policy and research online content. briefings, updates, research papers and much more are available for download. To find out more visit: http://bit.ly/18cCfYt

Latest publications include:PFS Skills report 2013 – providing a picture of the skills situation across the advice profession: http://bit.ly/1arwXa9 consumer credit update – covering the latest developments in this area: http://bit.ly/1ep7QfJ Latest public affairs update – including the latest from the FcA: http://bit.ly/1dgX9rH

PFS online Policy content

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R E G I O N f a c t b O x :▼

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Chairman of the Kent PFS region, Trevor Graham, explains to FS how he and his colleagues aim to keep everything smelling of roses in the garden of England

PFs ReGIon: KentmaIn cItIes/towns coveRed: maidstone, Ashford, Tonbridge Wells, canterbury chaIRman: Trevor GrahamnumbeR oF PFs membeRs: 1,021 members of which 95 are chartered financial plannersnumbeR oF membeRs on the commIttee: Four

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► If you would like to be the next region to take part in our regular regional profile, please contact the editor Michelle Worvell at [email protected]

What do you think are the characteristics of a good PFS region?It is all about providing a well run and well communicated suite of training and information services. There is room for improvement but we are working hard to engage with old and new members alike and offer them something that is commercially valuable to their business.

What has been your best initiative?During the summer, we set up two study groups – one in maidstone and another in canterbury. These have proved very popular and are helping members to direct their learning at the topics that are most needed. certainly, it is a lot easier for members to study together and learn from each other, rather than trying to go home at the end of a long day and then get the books out.

Are there any soft skills events you are planning for 2014?There is definitely room to develop what is offered on the soft skills front after so much attention has been paid to technical training in recent years. once I have ascertained what budget might be available, we will look to organise events that would suit the local membership. It may even be that we incorporate a small soft skills element into technical events.

What Chartered financial planner events are planned for your region?Last year, there were a number of events held with local law firms and accountancy practices and I think this is a great way to raise the reputation of the PFS and promote the work that it does. Although these events do not add value for non-chartered members, I think they encourage them to become chartered and also provide something extra for those that have already achieved this standard.

How do you encourage members to interact with your local insurance region?This is something we are working on and, to date, interaction has been very poor. We are looking to market events on the PFS side to members of the local insurance institute and vice-versa in a bid to get people working more closely together. my own firm recently established a commercial relationship with a general insurance broker and we had to do it for ourselves through the open market. If we had been able to find someone through events held with the local insurance institute, I am sure it would have been much faster and easier.

Do you send committee representatives to local institute dinners?

We do not and, historically, this sort of collaboration has been noticeably lacking. I am keen to address this issue and to move past the ‘them and us’ atmosphere that sometimes prevails. If we can move past this, there is no doubt in my mind that there are valuable commercial relationships to be made, and that members of both the PFS and chartered Insurance Institute can benefit from closer collaboration. It is difficult when people are focused on managing their own businesses, but where firms can take the time to explore new opportunities and new ways of working, I think there are substantial benefits to be won.

Explain the positive ways in which the PFS central office and your region work togethermy business has looked at taking on an apprentice recently and the PFS offers an apprentice scheme where it will actually assist with this. I would like to remind members that there are a lot of young people out there looking for a career and they have a lot to offer. I think this is a good way of getting people into the profession and helping members get the best out of them in return. I also believe that the better the PFS central office can communicate and actively support individual regions with finance and administrative resource, the easier it will be to develop bespoke programmes of additional events to suit the members in each region.

cii.co.uk/chartered

Achieving Chartered status means we stand out from the crowd and gives us more confidence in our relationships with other professionals. That, in turn, has helped us to win new clients and generate more profitable business.

Joel Adams, FPFS Chartered Financial PlannerLIFT-Financial Ltd

Michael I HoldenJoint CEOLIFT-Financial Ltd

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Professionalism | TRUST CAMPAIGN Professionalism | TRUST CAMPAIGN

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► For more information about the campaign and to add your formal support, please visit the campaign webpage at: www.thepfs.org/confidence

More and more members are demonstrating pride in their profession by backing the PFS’s Consumer Confidence Campaign. Keith Richards explains...

boostT he results of our recent annual

member research revealed that 97% of Personal Finance Society members support the objectives of the consumer confidence campaign (ccc). only 3%

are unconvinced that there is a fundamental issue with consumer trust in the profession on the whole, so it was heartening to see the vast majority of members are keen to support action to improve perceptions and trust. This especially includes engaging with consumers that have never sought professional financial advice to extol its benefits.

We always intended that this brand-neutral campaign would receive the support of all sides of the market to ensure that a united profession is represented. The PFS is delighted that this is happening, with the likes of New model business Academy, Panacea Adviser and the Institute of Financial Planning, as well as a plethora of national and local advisory firms, adding their support to our early supporters.

Greater professionalismDerek bradley, chief executive of the

online adviser community Panacea Adviser commented: “This campaign absolutely merits our involvement. I know advisers can be very contrary and often scathing about the advice their peers in other firms may give, especially when they may have no knowledge at all of what led to a particular advice situation – a little like the joke about a tourist in Ireland who asks one of the locals for directions to Dublin. The Irishman replies: ‘Well sir, if I were you, I wouldn’t start from here.’ but we believe that knocking the advice of others, something we are seeing more and more of lately, is damaging to the ongoing health of the advice profession.

“our objective is to work with our adviser community and this initiative to foster greater professionalism and, in turn, help secure better financial outcomes for the public.”

Also commenting, Lee Travis, chief executive officer at New model business Academy, said: “The significant achievements and positive changes made by the advisory community as a consequence of the rDr have opened up a real wave of opportunity to create awareness, improve consumer perceptions and continue

of trust that needs addressing together. And the time is now. I feel this can only be achieved as a collective, united in the cause for just recognition – not as a fragmented sector that can be critically vocal of one another in the public domain.

“Therefore, the ccc is an initiative we support because we believe in its intentions and see it realising great outcomes. We can help spread the message and, if the ccc achieves its objectives, we can say that we made a positive contribution to a worthwhile change that we all will enjoy. The key to the strength of the ccc will be in its number of supporters. So the NmbA will be supporting this campaign through our community to raise awareness and encourage all to register to get behind the initiative.”

Consumer behavioursA key part of the PFS’s role is raising

The seven principles that underpin the Pride in Our Profession declaration:

1 refrain from openly criticising or deriding our peers and their processes*

2 respect that differing business models are not necessarily bad or wrong*

3 Do not anonymously join public debates that may in turn bring the profession into

disrepute. If we have a view it will always bear our name

4 be balanced and constructive about our profession to maintain a united voice

5 remind others that the majority of advisers within our profession operate to the same

ethical standards*

6 Inform clients about our commitment to professionalism by our continual updating

of knowledge and skills through continuing professional development

7 Demonstrate to our peers that we are committed to working together as a

profession by displaying the campaign logo and, even when in disagreement, conduct ourselves in a way that is consistent with professional standards and respect others’ views

* Should we believe there is cause for concern we will follow the appropriate channels.

campaign objectives

Confidence

join the campaign supportersNumerous advisers and advisory firms have already formally added their support to the campaign, including:PanaceaNmbAIFPTowergate FinancialInformed choiceHelm GodfreyKillik & coemery Littlecapelin Financial managementAberdeen Wealth

managementFriends Liferutherford WilkinsonAPFAThreesixtySbGrSm TenonSimplybizInParnershipThe lighthouse GroupSense

We would like to take this opportunity to thank to all of the campaign supporters – unfortunately we do not have space to acknowledge the hundreds of firms and advisers signed up to date.

awareness of the improvements and transparency introduced as a result of implementation of the retail distribution review and we have been actively engaging with individuals and groups that have an influential role in consumer behaviours. This work includes frequent and constructive discussions with the regulator, consumer groups and national personal finance journalists, as well as the various committees and working groups the PFS already contributes to in an effort to publicise the invaluable role of professional financial planning.

Keith Richards is chief executive of the PFS

“The CCC is an initiative we support because we believe in its intentions and see it realising great outcomes”

to build trust in our profession. Unfortunately, consumer research indicates that we are still viewed with a degree of suspicion and a lack

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MeMberShIp | Affinity Benefits scheme MeMberShIp | Affinity Benefits scheme

And we think the timing is perfect. In the current economic climate, every penny really does count, so anything that can ease the strain on personal finances has to be welcomed.

With Perks, you will enjoy a wide range of discounts. Whether it is a meal out with friends, your annual holiday or your monthly office stationery order, Perks has a deal that could save you money.

And with christmas soon upon us (remember what we said about timing?), Perks gives you the opportunity to secure a discount on many of your seasonal purchases.

The complete range of benefits on offer is too extensive to list here, but include:

LIFeSTyLe cinema tickets, restaurants, magazine subscriptions and top UK attractions;

retail cashback at major retailers including boots, b&Q, Debenhams, currys Pc World, m&S, ASDA and Sainsbury’s;

Discounted health club membership, including LA Fitness, Fitness First, Nuffield Health, David Lloyd and virgin Active;

Savings on Apple products, including 2-5% off selected iPads; 100% impartial energy price comparison, including british Gas, edf, e.on, npower and Scottish Power (includes every tariff available on the switching market).

TrAveL – package holidays including virgin, Thomson and First choice, hotel accommodation, currency exchange, short breaks and car hire.

bUSINeSS – venue hire, accounting software, office supplies, utilities and IT training.

AdvICe – conveyancing, tax returns and self-employed accounting services.

Enjoy thE nEw pErks of mEmbErshipWith the recession still biting for many and the festive season almost upon us, the PFS’s new affinity benefits scheme is sure to hit the spot. Mark Hutchinson reveals more…

services from a broad range of blue-chip suppliers and retailers.Perks sees the PFS introduction of a comprehensive programme of

discounted products and services to meet the needs of our UK-based members, at no additional cost.

Unfortunately Perks is only available to members in the UK.

Supporting membersThe benefits available under Perks are designed to support members both personally and professionally, so there should be something for everyone.

T his month sees the launch of ‘Perks’, a new member benefit for UK-based Personal Finance Society’s members.

We’ve been listeningThe introduction of this scheme is the result of feedback from members survey. You told us you wanted the PFS

to use its large membership to source a range of affinity benefits, discounted products and services.

So that is what we have done. We have leveraged the size and social profile of our membership to secure substantial discounts on goods and

Online access and supportYou can calculate the level of savings you will make by using the straightforward online savings calculator. This highlights the services on offer, enables you to enter current levels of expenditure on any given item or service and then calculates the typical levels of saving you will make.

This puts the information at your fingertips and demonstrates the real value of the benefits on offer.

Price promisesHave you ever suffered from best price anxiety? It strikes when you are shopping around for something and you find what looks like a good price for it – but can you be sure it is the best? Do you worry that there might be a better deal out there somewhere?

‘competitive’ deals and offers abound on the internet, but with the collective buying power of such a large membership, the cII has been able to negotiate best-in-class discounts for members.

As an indication of the fantastic savings and discounts available, the majority of benefits on offer via Perks will bear one of two price promise stamps:

National price promise: the best rates in the UK for any given product or service.

Provider price promise: the best rates given by that particular provider to any group.

Future proofTo ensure that they remain competitive, the benefits on offer to members will be regularly reviewed. New and seasonal discounts will be introduced and communicated to members to ensure that they can take advantage of the savings as early as possible.

We are also on the lookout for new products and services, so you can expect more to be added in the coming months and years.

If you identify a product line or area of service where Perks could make a big difference to the lives of PFS members, please get in touch and let us know. We want Perks to be an active, organic scheme run precisely for the benefit of members, so member interaction is key to its long-term success.

Accessing PerksAccessing Perks could not be easier. Simply log in to my PFS via www.thepfs.org/perks. From there you can explore the full range of benefits available and find out more information on how to access the range of discounts on offer. Terms and conditions apply to all benefits. See Perks website for details. offers subject to change without notice.

Mark Hutchinson, head of marketing, Personal Finance Society

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Chartered Awards ’13

CHARTERED

Congratulations

Sponsors

Chartered Financial Planner of the Year Winner: Robin Melley FPFS, Chartered Financial Planner

Finalist: Mathew Clark FPFS, Chartered Financial Planner

Finalist: Robin Keyte APFS, Chartered Financial Planner

Chartered Financial Planners of the Year Winner: Verus Financial Planning Limited

Finalist: Carbon Financial Partners Limited

Finalist: Saunderson House Limited

Finalist: Nsure Financial Services Limited

Paraplanner of the YearWinner: Warren Bentham DipPFS

Finalist: Helen Parker FPFS

Finalist: Caroline Morris-Iliffe APFS

The John Ellis AwardWinner: Len Warwick CBE (Posthumous)

Volunteer of the YearWinner: Brian Harris DipPFS

Highest Achiever, Advanced Diploma

Winner: Tom Evans APFS

Highest Achiever, Diploma Winner: Alex Rich DipPFS

C13J_8507 PFS Mag Nov - Conference Winners Ad V2.indd 1 19/11/2013 13:28

The chartered Insurance Institute (cII) has announced a new tie-up that will help more students build their understanding of finance and give members another way to ‘do their bit’ and upskill learners.

bamzonia is a company that specialises in education through gaming at primary and secondary schools in the UK. Its activities link to nearly 50 maths and citizenship lessons in the national curriculum, and it is well placed to enjoy further relevance when the curriculum changes to include more finance-related content from September 2014.

Teachers can use the bamzonia package as

part of their teaching activity, and students can also engage with the package outside study hours to build up their knowledge and gaming credits.

Engaging pupilscaspar bartington, the cII’s relationship manager for education, explains the key benefits of the tie-up: “I have been a fan of gaming as a way to build knowledge formally and informally. many people think the same, and our own Discover Fortunes event, launched in 2012, has been a thoroughly useful and enjoyable way of seeing this in action. more than 80% of the students who have

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The CII has announced has announced a tie-up with a new product that marries gaming with financial education. FS Magazine finds out more and explains how you can get involved

ONLINE ///

► To find out more about supporting your local primary or secondary school, please email [email protected] referencing this Financial Solutions article.

played this event are now more interested in our sector, having understood more about some of the key financial products they will encounter later in life. What’s more, the support given by PFS members has added tremendously to the student (and teacher) experience.

“I suspect that many teachers will breathe a sigh of relief that bamzonia exists, since it is a very engaging way for their pupils to build knowledge of a critical area, as well as demonstrate some of the key employability skills of teamwork and problem solving. The online tutorial for teachers will no doubt be welcome too.”

“I see great potential for our members to build or extend their links with local schools, in a sustainable way that doesn’t demand large amounts of time.”

Highly effectiveLouise barker, director at bamzonia, explains more about the activities offered by the package, and the benefits.

“Learning through gaming has been proven to be highly effective for student engagement and knowledge retention. In the game, students are challenged to rebuild the failing economy of the island, bamzonia. To do this, they need credits earned in interactive lessons and quizzes. more than half of our students voluntarily log on to bamzonia at home to build on what they have covered in class.”

bamzonia will be available on mobile platforms next year. Site licenses cost £375 plus vAT for primary schools, and £945 plus vAT for secondary schools. cII and PFS members can bring this down to £50 plus vAT per school.

capabilityFinancial

Q1 pfs Regional confeRences and sTRUcTURed cpd sessions

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► Visit www.thepfs.org/events to find your local regional conference, view the full programme and reserve your free place now!

Each quarter,Personal Finance Society members are invited to a free, local, continuing professional development (CPD) conference. To thousands of members, these events are

an invaluable part of their commitment to ongoing learning as they qualify for up to six hours of structured CPD. Be sure to put the date of your local conference in your diary and register online at: www.thepfs.org/events. And remember – you can bring a colleague to give them a taster too.

In 2014, we will be covering more essential topics, all with practical business development ideas clearly identified. There will be opportunities to understand best practice from a regulatory perspective as well as share best practice experiences with your peers.

In quarter one, a global outlook will question the durability of the economic recovery before drilling down to look at the opportunities created by rising bond yields and consider whether equity markets are ahead of fundamentals. We will also look at the differences between risk-managed and risk-rated funds, overview the main passive strategies and unveil the dangers of some ‘active’ strategies operating as ‘quasi trackers’. The focus will then switch to how your clients can realise their accumulated investments effectively in retirement and the role of secured pensions. In the final morning session, delegates will get the opportunity to consider using protection to minimise

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Isle of Man Tuesday 14 January A Claremont Hotel, 18-22 Loch Promenade, Douglas, Isle of Man, IM1 2LX

Surrey Thursday 16 January B H.G. Wells Conference & Events Centre, Church Street East, Woking, Surrey, GU21 6HJ

Sussex Tuesday 21 January D Crowne Plaza London Gatwick, Langley Drive, Crawley, West Sussex, RH11 7SX

Kent Wednesday 22 January A Tudor Park Marriott, Ashford Road, Bearsted, Maidstone, Kent, ME14 7NQ

Stamford Thursday 23 January B The Peterborough Marriott, Peterborough Business Park, Lynch Wood, Peterborough, PE2 6GB

Northern Ireland Tuesday 28 January C Hilton Templepatrick Hotel & Country Club, Castle Upton Estate, Templepatrick, BT39 0DD

Manchester Wednesday 29 January B Mere Golf & Country Club, Chester Road, Mere, Knutsford, Cheshire, WA16 6LJ

Norfolk Tuesday 4 February C Dunston Hall, Ipswich Road, Norwich, Norfolk, NR14 8PQ

Haydock Wednesday 12 February C The Holiday Inn, Lodge Lane, Newton Le Willows, Haydock, WA12 0JG

London Thursday 13 February C CII, The Great Hall, 20 Aldermanbury, London, EC2V 7HY

Exeter and North Devon Tuesday 25 February D Holiday Inn Taunton, Deane Gate Avenue, Taunton, Somerset, TA1 2UA

Herts and Middlesex Wednesday 26 February A Hilton Watford, Elton Way, Watford, WD25 8HA

Plymouth and Cornwall Thursday 27 February B Lanhydrock Golf Club, Lostwithiel Road, Bodmin, Cornwall, PL30 5AQ

Bristol and Cheltenham Tuesday 4 March C Tortworth Court Four Pillars, Tortworth, Wotton-under-Edge, GL12 8HH

South Wales Thursday 6 March B The Vale Resort, Hensol Park, Hensol, Vale of Glamorgan, CF72 8JY

North Scotland Tuesday 11 March A Hilton Aberdeen Treetops, 161 Springfield Road, Aberdeen, AB15 7AQ

Central Scotland Wednesday 12 March B Edinburgh Capital Hotel, 187 Chermiston Road, Edinburgh, EH12 6UG

Hants and Dorset Thursday 13 March A AFC Bournemouth, (Cherry Venue), The Fitness First Stadium, Dean Court, Bournemouth, BH7 7AF

Jersey Friday 14 March N/A Pomme D'Or, Liberation Square St Helier, Jersey JE1 3UF

Birmingham Tuesday 18 March A Ramada Birmingham Sutton Coldfield, Penns Lane, Sutton Coldfield, B76 1LH

Thames Valley Wednesday 19 March D Phyllis Court Club Marlow Road, Henley-on-Thames, Oxon, RG9 2HT

East Midlands Thursday 20 March C Hilton East Midlands Airport, M1 Derby Road, Castle Donington, Derbyshire, DE74 2YW

Staffordshire and Shropshire Tuesday 25 March D Patshull Park Hotel, Golf & Country Club, Pattingham, Shropshire, WV6 7HR

Tyne-Tees Wednesday 26 March D Ramside Hall Hotel and Country Club, Carrville, Durham, DH1 1TD

Yorkshire Thursday 27 March A Cedar Court Hotel, Denby Dale Road, Calder Grove, Wakefield, WF4 3QZ

Each region will have a different afternoon CPD topic to its neighbour so members are invited to attend the regional conference that enables them to meet their specific CPD needs. The four CPD topics being delivered this quarter are detailed below. Each afternoon CPD session attended can be added as 105 minutes (1hr 45 mins) to your CPD record. Check your regional agenda to see what CPD topic is being delivered.

Q1 2014 Regional ConFeRenCe dates, venues and CPd toPiCs

A Human resources and people management

With the regulator taking an interest in firms’ remuneration structures and practices as well as training and competence (T&C), demonstrating appropriate people management practices is a key area for focus and improvement for many small advisory firms.● Recruit legally and effectively –

preparing job descriptions and person specifications and using robust interviewing and selection criteria;

● Construct appropriate and compliant remuneration structures, levels and policies;

● Set T&C goals for the organisation, business teams and individuals.

B Finding the right new clientsClient segmentation is an essential

component of a profitable business model post-retail distribution review, so firms need to work harder to refine their marketing messages and deliver them only to those that fit their target client profiles. ● Decide on your target market –

recruiting the sorts of clients you want;● Analyse and summarise your business

proposition – making an elevator pitch, expanding on your elevator pitch;

● Establish your personal branding;● Go where the clients are – making

social and business connections.

C Advising on trusts Trust planning is crucial for

most clients, especially high net

worth individuals. It is essential that advisers can explain to clients the main constituents of trusts and how they affect the vital interests of settlors, trustees and beneficiaries. ● Explain the duties and responsibilities

of trustees with regard to beneficiaries, settlors and the trust investments;

● Apply the key trust law in relation to the dilemmas, pitfalls and problems posed by trusts, including managing possible conflicts of interest;

● Analyse the main trust structures – understand and explain their main uses and limitations.

D Pensions accumulationOne of the crucial functions of

financial planning is to determine how

much a client should be investing in pensions and other retirement provision. Pension accumulation also raises particular investment issues with regard to risk profiling and asset allocation. ● Determine a client’s pensions needs

– using cashflow analysis and gap identification;

● Advise on the tax rules on pensions inputs – the annual and lifetime allowances and the operation of pension input periods;

● Recommend accumulation strategies for retirement in the light of possible changes to tax and pensions legislation;

● Analyse investment issues – timescale and investment risk capacity as well as risk tolerance.

T H E s P O N s O R s

FS Magazine looks ahead to the Q1 events and outlines what attendees can expect

2014 PERSONAL FINANCE SOCIETY REGIONAL CONFERENCES | Quarter One

CPd toPiCsdownside investment risk to help clients reduce some of the financial consequences of investment shortfalls and losses by the strategic employment of life and health protection products.

The case study will consider small group pensions and the important opportunities presented by auto-enrolment. After lunch, the variable sessions will cover one of four topics, including trusts, pension accumulation, finding the right new clients or people management. For those on the journey to Chartered status,

the afternoon session will also provide an opportunity to get tips and advice from other Chartered financial planners to help you make the right choices or understand the best approach to exam preparation.

We are pleased to be working with our trusted partners from Invesco Perpetual, Partnership, Jupiter and Zurich for this round of conferences.

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STUdy rOOm | DIGITAL ESTATES STUdy rOOm | DIGITAL ESTATES

Dying in a Digital age

Ima

ge

: C

or

bIS

“The value of the nation’s online assets wasestimated in 2011 at £2.3bn, a figure that mustbe increasing each year.”

assets and the conservation, or otherwise, of your digital legacy. These issues equally apply where capacity is lost and the assets need to be dealt with by attorneys or deputies.

Online accounts and virtual assetsone of the duties of the personal representatives (Prs) of a deceased person’s estate is to collect the assets in the estate, and probably the most time-consuming part of this process is identifying exactly what is owned at the time of death. In the case of some assets, the change in their method of ownership should not cause too many problems. A house is a difficult asset to miss and, in many ways, checking ownership at the Land registry is potentially a far easier process than tracking down a bundle of lost deeds.

However, the move towards online bank accounts, the proliferation of financial institutions during recent years and the fact that some people switch their cash savings frequently in order to gain the best rates, may make it very problematic for Prs to establish exactly which assets of this kind are owned. As a result, accounts could be missed. Details of these assets may be stored on a laptop but this is of little help to a Pr who does not know the password to the laptop and cannot access the accounts anyway.

Possible solutionsAs with everything else, digital tools are available to help with this problem. online companies such as Legacy Locker and Asset Lock enable account holders’ account details and passwords to be stored in a secure, encrypted way with a procedure in place for the fact of your death to be verified by persons trusted by you before the relevant information

is released to your nominated beneficiary.Some might regard the drawback of this

solution as being the fact that it requires the account holder to put his faith in a company previously unknown to him and to deposit valuable information with a third party when there is no guarantee that the third party might still be trading at the time the information is required.

Perhaps the solution to this digital problem in fact lies in an old-fashioned manuscript, which many people use to dispose of their entire estate. Your Will could, if you wished, appoint separate executors to deal with your digital estate and could provide the key to online assets, perhaps by referring to a separate memorandum to be kept with your Will in similar secure storage, giving details of the assets and relevant access information. As a Will becomes a public document once admitted to probate, the use of a memorandum ensures that these details are kept private. The clause (and therefore your Will) defining the digital estate will need to be frequently updated in order to keep pace with technology.

It would be important to keep such memorandum up-to-date and a useful back-up tool might be the printing and retention of hard copy statements so that an easily accessible record is available of the accounts’ existence. once the executors are aware of the accounts, the usual probate procedures can then take place to realise them.

Succession to virtual propertyThe value of the nation’s online assets was estimated in 2011 at £2.3bn, a figure that must be increasing each year. For example, many people’s music collection is now on iTunes and their library may be increasingly held on Kindle or similar e-readers.

If your Will leaves all your property to a specified beneficiary, does that include these assets? It depends, is the answer, as whether ownership can be passed on death is determined by the individual terms and conditions of the asset in question.

For example, both iTunes and Kindle provide that the licence to use the contents is personal to the account holder and not capable of transmission to another person.

by comparison, the Nectar points scheme provides that points can be transferred on death “if adequate evidence of the legal division of the points” is given; presumably sight of a Grant of Probate and Will would be considered as adequate evidence, although this raises the question of what evidence could be provided if there is no Will. Would a Grant of Letters of

Administration be acceptable without further evidence of the intestate beneficiaries?

The position is complicated by the fact these assets may be governed by the law of jurisdictions outside of the UK. If, say, a court order is required in another jurisdiction, the cost of transferring the asset might exceed its value.

It might also be good planning to transfer some assets while still possible to more easily accessible accounts. For example, the balance on a Paypal account would be easier to deal with if it were kept to a minimum with regular transfers to a UK-based account.

Our digital soulFinally, what about all those emails, tweets and status updates? Few of us are likely to be in the position of the poet Wendy cope, whose 40,000 emails were acquired by the british Library for £32,000, but passing on email account details could be crucial as this may be the key to other accounts. This may be especially important for small business owners, where details of key customers, contacts and suppliers might be stored in a contact address book.

While copyright in these items lies with the writer, the problem is again one of access. email providers differ in their policies, with Google seeming to lead the way in this area with the introduction earlier this year of Inactive Account manager. This enables users to decide either that all their data should be deleted after a certain period of inactivity, or that notification of inactivity should be given to a person nominated by the user, who will be able to download all data authorised by the user. This appears a clear policy, which hopefully others might follow in the future. In the interim, regular backup of any such data that you wish to keep would be advisable, together with the deletion of any data trails that you do not wish to leave behind.

Carol Cummins is senior associate (tax and advisory), at Clarke Willmott

Carol Cummins looks at how to preserve

your virtual assets and digital soul

Even 20 years ago, the extent to which our lives, both social and financial, would be played out on the internet today would have come as a surprise to many of us. There can be very few people under the age of 50 who do not conduct at least part of their lives online through the use of business tools

such as email and LinkedIn; socially, through social networking sites and entertainment media such as iTunes and YouTube; and financially, through online banking and the ownership of virtual assets such as loyalty card points.

but how many of us, in the midst of our busy, digitally-enabled, days give much thought as to how these assets are dealt with when we are no longer here? How will our loved ones be able to access our virtual assets and online accounts? And what about the legacy we leave by way of our digital archive, our emails, Facebook updates, photos stored on Flickr or similar sites and our tweets? What happens to what the head of social software and services at Nokia has termed our ‘digital soul’?

Here we look at these issues and consider what action can be taken to ensure the preservation of your and your clients’ online

Give some thought to your digital estate; Keep records (possibly with your Will); make sure that records are up to date; Use available tools such as Google’s Inactive Account manager; remember that after you have gone, your online life will live on.

The lesson for clienTs is clear

47


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Naomi KewellPaulina Krause-Niwinska

L Mark LoftingNeil Loton

M David MacKenzieDavid McCalligTim McMillan

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49


STUdy rOOm | Q&A

Author EdwArd mUrrAy

This seT of quesTions, courTesy of online cii Training package financial assess, will TesT your knowledge of key financial Topics. The answers are aT The BoTToM…

The Big TenS T U D Y Z O N E

Question 1: A client has £60,000 to invest. Which of the following would be the first area to discuss with the client?A The spread of underlying assets needed

to achieve a diversified portfolio □B The amount of investment risk the client

is prepared to take □c The tax wrappers that will be used for

the investment □D The choice of funds for each asset sector □

Question 2: A priority for clients with disposable surplus assets should be to reduce:A High cost borrowing □B Long-term borrowing □c Low cost borrowing □D Short-term borrowing □

Question 3: If a firm discovers one of its advisers has been forging customer signatures on documents, what action must it take?A Issue a written warning to the adviser

and contact affected customers □B Take appropriate action against the

adviser and inform the Financial conduct Authority immediately □

c record the breach on the adviser’s file and inform the compliance officer □

D Suspend all selling activities and ensure re-training takes place □

Question 4: A period of falling inflation is known as...A Deflation □B Disinflation □c Inflation □D Stagflation □

1b. before making any recommendation regarding asset and fund selection and tax wrappers, a financial planner must ascertain a client’s appetite for risk and capacity for loss

2a. Such clients should give priority consideration to use these resources to reduce their high cost borrowings

3b. Falsifying documents is a breach of APer: Statement of Principle 1

4b. Disinflation is where prices are still rising but the rate of increase is slowing

5c. capital gains made on a reIT are subject to capital gains tax in the usual way for investors

6b. Income of more than £100 derived from a gift from a parent is taxed as that parent’s income if the child is under 18 and unmarried

7c. The cost of private medical insurance will

increase much faster than general medical inflation as they get older

8a. members have the right to continue working beyond a scheme’s normal retirement age

9a. In some cases, the benefit may later be paid to the employee

10b. morbidity is the likelihood of ill health

Question 5: A capital gain on a real estate investment trust (REIT) in the hands of a private investor would be:A exempt from tax □B Subject to income tax □c Subject to capital gains tax □D Subject to advanced corporation tax □

Question 6: In which circumstances will the income from a parent’s gift to a child be taxed as that parent’s income?A Where the income is more than £250

and the child is under 18 and unmarried □B Where the income is more than £100

and the child is under 18 and unmarried □c Where the income is more than £100

and the child is under 16 □D Where the income is more than £250

and the child is under 16 □

Question 7: Bob and Sue are retiring at age 65. Which one of the following expenses can they reasonably expect to increase in retirement?A National Insurance contributions □B Their life cover payments □c Their private medical insurance payments □D Their level of savings □

Question 8: A defined benefit scheme will have a normal retirement age. Which of the following is NOT correct regarding this age?A It is the age that an employee cannot

work beyond □B It is usually the age up to which the

employer will pay contributions □c It is usually the age at which employees

will retire □D It is usually age 65 □

Question 9: On a group income protection policy, who is the benefit usually payable to when a claim arises?A The employer □B The employee □c benefits are paid into a company trust □D The employee’s family □

Question 10: A letter from a client’s previous adviser refers to his morbidity. With what is the word ‘morbidity’ associated with?A Death □B Illness □c mental health □D Weight □

1–3 POOR 6–9 VERY GOOD3–6 GOOD 9-10 EXCELLENT

YOUR ―>SCORE

Q&A

A N S W E R S

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income options • 70% commission rates payable on all business• Over half the adviser team earn over £100,000 p.a.

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50


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FS welcomes a new blogger this issue – and he comes from an unconventional source. Former Mail on Sunday financial journalist Stephen Womack discusses his unlikely journey from the media to financial planning…

The paTh less Travelled The journey to becoming a qualified

financial adviser has taken me to some unusual places around the midlands during the past 12 months.

They include an agricultural college in the grounds of Peterborough cathedral, a Polish language centre in Nottingham and Leicester’s masonic Halls.

What connects all these locations? They are among the six different chartered Insurance Institute (cII) exam centres I have visited in the past year in my bid to rapidly progress to the regulated Diploma and beyond.

I am not the conventional recruit to the world of advice. I spent almost 20 years as a journalist writing about business and money, latterly as a personal finance columnist at the Mail on Sunday.

but, a couple of years ago, I decided the stars had aligned for a change of career. The combination of family life in Leicestershire and work life in central London was becoming less appealing with each dark winter of long

trying to rearrange and update information I had haphazardly acquired during many years. my mental library needed to be reshuffled into the right order to prove to the cII’s examiners that I genuinely do know my stuff.

everyone has their own method of study. I have always found that writing things down helps me to remember. I have filled a stack of A5 black notebooks with the key highlights – and cheesy mnemonics translating bullet point lists into a catchphrase or word comprising the first letter of each point. Learn the catchphrase and hopefully you can remember the list that sits behind it.

Having passed r01 last December, my mission was to be ready to tackle r06 in April 2013. I was taking an exam every three to four weeks, studying three days and six evenings a week. Not everyone will have the luxury of such a sustained burst of study, but it definitely helped me to get into a multiple choice mindset. And while the three-hour r06 paper was a shock to the system (and my first written exam since university in 1990!), I think the study momentum helped carry me through.

exam passes alone do not make a good adviser. I am acutely conscious that there is a huge amount to learn from my new colleagues at David Williams in Northampton, the chartered firm of financial planners I joined this summer. Translating book knowledge into advice is a whole new story.

And proud though I am to be able to put the letters Dip FPS after my name, I realise it is only a start. I am keen to move onwards and upwards towards the Advanced Diploma – and have already made a start. I will share more of my trials and tribulations with the AF papers in a future blog.

“As a journalist, I enjoyed guiding and helping readers with specific financial problems; a clear parallel with financial advising, I thought”

PFS | Blog

Womack'sBlog

distance commuting and rising train fares. As a journalist, I enjoyed guiding and helping readers with specific financial problems; a clear parallel with financial advising, I thought. And the retail distribution review push towards a better qualified and higher skilled community of advisers charging fees for their time left me optimistic that advice was becoming a true profession.

After 12 months of hard saving to help support this leap of faith, I gave notice last year and left the Mail on Sunday in February of this year. my strategy, for better or worse, was to get qualified on my own terms and prove I was serious about advising before then seeking work.

Mental libraryHow have I fared on the path to financial services enlightenment? While some parts of the Diploma in regulated Financial Planning course were new to me, a lot of my study involved

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