worldwide' the financial planning magazine autumn 2012

Worldwide Autumn 2012 1

WorldwideThe Worldwide Financial Planning Magazine Autumn 2012

Worldwide in the Community

Commercial Financetaking you through a typical case study

Auto-Enrolmentwhat’s it all about?

InvestmentsWorldwide’s unique investment process

General Insurance from the specialistsworking with other professional service companies

RDR reviewing the changes!

A Day in the Life...behind the scenes of the mortgage team

2 Worldwide Autumn 2012

We are now into Autumn of 2012 and the fi nancial services industry is undergoing a number of major and radical transformations. This effects both fi nancial advisers, IFA fi rms and all clients.We will try and address some of the changes in this the Autumn edition of ‘Worldwide’. Already you may have seen on national TV news about topics such as work based pensions, Auto-Enrolment and RDR. The question is do you really understand what they mean and how the changes in the industry will affect you?The fi rst step would be for you to have a read through our articles and then contact your adviser to discuss any areas you are unsure about.Also in this issue we will introduce you to some of our other services and business partnerships that have been set up to add more value to the services we already offer our clients.We would also like to share with you some of our community and charity activities.Have a great Autumn!

Welcome


04 RDR reviewing the changesWe discuss the changes that are happening to the fi nancial sector and how that affects you...

06 InvestmentsWhat is so unique about our investment process and how does it benefi t you?

07 General insuranceWe have partnered with specialist independent insurance broker Lorica to be able to meet client needs in this area...

08 Auto-Enrolment and work based pensionsWith all the press and media coverage we ask what’s it all about and do you need to be doing something now?

10 A day in the life...Ronan Marrion, independent mortgage broker at Worldwide Financial Planning - what happens behind the scenes.

12 Commercial fi nance lending case studyWe take you through a typical case study clearing up a few common misconceptions about the commercial lending market.

14 Worldwide in the community15 Q&A

Features


Things are changing within fi nancial services. The Financial Services Authority (FSA) wants to make sure you get a better service. Its aim is to create a ‘level playing fi eld’ and to make much clearer the differences between those professionals who offer advice and fi nancial planning, and those who primarily sell products.Here’s how the FSA plan to do it – with the Retail Distribution Review (RDR) due to come into force at the end of 2012. It’s a thorough review of the entire retail fi nancial industry with three major outcomes.The FSA will require advisory fi rms to explicitly disclose and separately charge clients for their services; to clearly describe their services as either independent or restricted; and for individual advisers to adhere to consistent professional standards, including a code of ethics.So from 31st December 2012, everyone who receives fi nancial advice, whether currently or in the future, will:

1. Know exactly how much the advice will costEven if you’ve previously received ‘free’ advice, it’s never really been free of charge. If you haven’t paid a fee then it’s likely that you will have paid by way of commission - for example, the provider of your investment product may have paid your fi nancial adviser a percentage of the sum you invested. What will be changing with the RDR is that with any new investments, your adviser must tell you clearly how much your advice will cost and you will agree together how you’re going to pay for it. Ultimately, the aim is to make all costs and charges completely transparent, so you will know exactly how much you are paying and be sure that your adviser is not being infl uenced by how much they can earn from a particular investment when they advise you. 2. Know exactly what you are paying forWhen it comes to investing money, there are a huge number of choices available, along with a wide variety

RDR Reviewing the Changes


of products. What your adviser must do is tell you exactly what they can advise you on and whether there are any restrictions to the advice they can give you. If your adviser can advise you on every product and provider in the marketplace, they will be known as ‘independent’. If they are limited to only certain products and providers, they will be known as ‘restricted’. 3. Be sure of improved professional standardsProfessionally speaking, the bar is being raised for fi nancial advisers. The minimum level of qualifi cation a person needs to be authorised to give fi nancial advice is increasing. Your adviser will have to ensure their knowledge is up to date so they can provide you with the best possible service. All advisers must also sign an agreement to treat you fairly. The FSA will monitor fi nancial advice fi rms to make sure that these standards are being met.

At Worldwide, we’re proud to be truly independent with professional advisers and customer service that we consider is second to none. If you have any questions about the RDR or would like to know more about the advice service we offer, call us free on 0800 0112825 or email us [email protected]. We will be very happy to hear from you.You can also fi nd out more about RDR and how we’ve prepared for it on our website: Worldwide get ready for RDR.

• Increased confi dence and trust in the advice you receive.

• You will know exactly what you are paying for from the outset.

• The new professional standards mean you will receive a higher level of technical exper-tise.

Is there anything I should be doing?• No. Financial advisers will have to make

these changes by the end of 2012. • Your adviser should be able to tell you what

their plans are ahead of time, and some may introduce the changes sooner.

Why is this important to you?


Standing above the rest

It’s quite a claim to make, but our unique investment process is one of the very best. We don’t often blow our own trumpet, but we’re rather proud of this and we’d like to tell you more about it. Why? Because there is only one reason why we’ve developed it to be as good as it is - you. Our process has three distinct stages which make for a thorough and robust process. And we put our money where our mouths are: our advisers invest their own money in the same funds they recommend to their clients. As Andrew Stallard, who is one of our independent fi nancial advisers and a member of our investment committee, says, ‘I have every confi dence in our investment process and I’m happy to demonstrate this by showing my clients that I invest in the same funds I recommend to them.’How do we decide which funds to recommend? In short, we use a process which fi lters investments - Portfolio Planning for Value (PPV). Our process starts with independent research that we purchase which gives us a number of recommended funds. The fi rst part of this research is a qualitative process: it involves meeting with the fund managers themselves; we want to know who will be looking after our clients’ money. From this, a list of preferred funds is produced.The second part reduces the list using a quantitative process. It’s a careful investigation of funds’ performances, checking and measuring and ranking them. What we look for is consistency in a fund’s performance and a record of a good balance between risk and return - we want to be sure that a fund is not taking an excess of risk for its returns. We also like funds to have a track record of at least fi ve years: it’s rare that we recommend a fund that is brand new and if we do, it is because it is very similar to an existing fund or we have confi dence in the fund manager. The third part of our process involves our investment

committee - the committee is composed of a team of our most experienced advisers who take a strategic view of the funds available and the wider investment process. As of August 2012, there are close to 2,400 reporting funds available in the UK. (1) From this number, we pick a very select pool of around 100. What do we look for in a fund? As well as consistency and establishment, we look for funds that take the least amount of risk to produce the best returns. We choose a variety of funds, taking the best from each sector. We prefer funds and managers with expertise in specifi c areas as opposed to insurance company managed funds. You can also be confi dent that our investment process is built on the strong foundations of Worldwide’s independent status. Our independence is something else we’re really proud of because it puts you at the heart of what we do. Because we are independent and fee-based, all our investment advice is purely objective and not based on any incentives. We base our advice on what will be best for you, our client. Before we recommend any investments to you, we will also carry out a thorough profi le of your attitude to risk and what you want to achieve with your investments, making sure that what you invest in is suited to you. If we think an investment is unsuitable, we won’t recommend it. It’s as simple as that. Your confi dence in us is important: if you have any questions about our investment process, get in touch with us and we’ll be happy to answer you.You can phone us free on 0800 0112825 or you can email us on [email protected]

The value of shares and investments can go down as well as up

Source:1. Investment Management Association

Worldwide’s unique investment process


General InsuranceThe insurance may be general, but the service is far from it. We’re delighted to be able to offer all our clients a new service - general insurance with a guaranteed specialist service. When you’re looking for general insurance, it can seem that there is a bewildering range of products on offer. Products can range from insurance for motor fl eets to international property insurance and insurance for commercial properties. Knowing what is the best insurance for you and your circumstances requires a specialist knowledge of the market. As independent specialists, we’re able to offer you a general insurance service that is as individual as you. Our general insurance service is offered to you in partnership with Cornwall-based Lorica General Insurance. Working with Lorica as our preferred partner means we have the fl exibility to offer you a truly bespoke service. What that means is that we will put together a complete general insurance package for you, taking into account all your fi nancial circumstances and needs. Because we have a team of specialist independent fi nancial advisers, we can assist with any fi nancial queries you have around your general insurance needs. We have expert advisers to assist you with pensions,

mortgages, investments and protection. A client who runs her own business came to us recently looking for insurance for her commercial property. Ultimately, we were able to help her in a number of ways. By considering the entire fi nancial structure of her company - including her employee benefi ts packages, pensions, investments and commercial loans - we were able to fi nd in-house solutions for several areas of her business. Our client’s tailored fi nancial solution with products selected from the entire UK marketplace, meant she was able to be even more confi dent that her business was running as tax effi ciently as possible. To fi nd out more, call us free on 0800 011 2825 or email [email protected] and we will be happy to arrange your free consultation.

Pictured are from L to R David Easdon (Lorica), Neil Chamberlain (Worldwide Financial Planning), Ian White (Lorica).


The 1st of October 2012 sees a signifi cant change taking place in the world of workplace pensions.It’s not something that has been shouted about particularly loudly, but then, pensions aren’t usually something people feel the need to shout about.We’d like to change that.Auto-Enrolment is a big deal in the pension world; and it’s likely to be a big deal for you, even if you’ve never had much to do with a pension before.Here’s what’s happening.From the 1st October 2012, your employer will have to enrol you automatically into a pension scheme and inform you about it. By 2016, every employer will have to provide a pension scheme for employees. As an employee, you have the choice to opt out of the scheme, of course, but the default position will be that you will

be enrolled. Your employer is also going to be obliged to contribute to your pension if you decide to stay in the scheme. What’s the reason for all this? The change has been introduced by the Government to try and address the potential pensions ‘time bomb’ that the country is facing.Essentially, the numbers don’t currently add up. At present, 750,000 employers have no workplace retirement scheme in place, and it’s also estimated that 7,000,000 people (yes, that’s 7 million) in the working population are not making suffi cient savings for the future. Perhaps most worrying is the estimate that most people earning between £5,000 and £25,000 make no pension contribution whatsoever. Auto-Enrolment is an attempt to reverse this and help people make more

Auto-EnrolmentWhat’s it all about and how does it affect me?

provision for their retirement. So what can you do? Firstly, ask questions. We’ve anticipated some of the questions most likely to be asked here, and tried to answer them, but if you’d like to know more, then we would love to hear from you. Our specialist pension team - Andrew Stallard, Nick McBreen and Chris Rowe - will be happy to answer any queries you have about Auto-Enrolment and pensions in general. Call them free on 0800 0112825 and pose your pension questions. If you’re an employee, you shouldn’t have to take any further actions. Your employer may already have a pension scheme in place that you belong to, in which case, there are unlikely to be any changes for you. If your employer doesn’t have a pension scheme set up, they will be required to put this in place over the coming months, depending

on the size of the organisation you work for. As an employer, there may well be several actions you need to take. If you don’t have a pension scheme in place, don’t panic. There are a couple of options open to you: you can either use a government built scheme - the National Employment Savings Trust (NEST) or you can put in place your own pension scheme. By choosing your own pension scheme, you give yourself the advantage of being able to customise the scheme to suit both your business and your employees. It might be possible for you to connect your workplace pension scheme with any employee benefi ts you offer your employees. Want to fi nd out more? We’re offering all businesses in the South West access to our free Auto-Enrolment helpline on 0800 0112825 and you are also welcome to

use our enquiry form or our email address [email protected] You can also read more about the implications Auto-Enrolment will have on employers here on our website: http://www.wwfp.net/auto-enrolment.html


• Auto-Enrolment for companies with more than 120,000 employees will start in October 2012. Start dates are phased in gradually dependent on the number of employees.

• Companies with fewer than 250 staff will need to have set up an Auto-Enrolment pension scheme by April 1st 2014 at the latest.

• For small fi rms with fewer than 50 employees, phasing dates are depend-ent upon PAYE reference codes. Starting dates for these companies fall between August 2014 and February 2016.

Key Dates


A Day in the Life...Ronan Marrion, independent mortgage broker at Worldwide Financial Planning

The mortgage department at Worldwide, one of our very busiest, is based in our Wadebridge offi ce. Ronan Marrion runs the department, capably assisted by Jane Frost and with support from Rebecca Bendle over in our Truro offi ce. Over the last few years, the team have worked with lenders, solicitors, valuers and accountants across the UK, handled thousands of enquiries and successfully arranged mortgages for hundreds of clients. We’ve been allowed a sneak peek at the inner workings of Worldwide’s mortgage department, and have found out some of their secrets, including just how important caffeine is in keeping the wheels of the department running…“There probably really isn’t a typical day,” says Ronan. “Certain things need to be done every day, but it’s also a case of reacting to whatever might come our way.”That said, the day always starts with one vital ingredient - coffee! You can face almost anything once you’ve had a cup of the Wadebridge coffee, the team claim, and all visitors are welcomed with a cup of coffee, or tea. Once the caffeine is taken care of, then it’s checking emails and answering those that are most urgent, checking for any messages left out of hours and opening the post. Jane deals with most of the mail that the offi ce receives, with Ronan taking charge of any new applications that have arrived. When these are completed, they are sent off so the mortgage application process can start. When those tasks are out of the way, the team discuss what the day’s events are. Ronan may have several meetings booked in - either with clients or fellow professionals - and he also likes to allow time to be available for enquiries and chasing up any outstanding business.

“A lot of the time, we’re reacting to what happens,” says Ronan. “You can only plan so much, the rest of the day is dictated by the phone ringing, by emails or by any walk-ins we get.”The Wadebridge offi ce is on the main street through the town and people often drop in, whether it’s to make a new enquiry, have a chat about a current application or to ask for advice. Many clients have done more than one mortgage transaction with the team and a lot of business comes from recommendations from clients past and present, which, as Ronan says, is the very best kind of recommendation. The notice board and the desks in the Wadebridge offi ce have plenty of evidence of satisfi ed clients, in the form of an array of ‘thank you’ cards. As well as client recommendations, many new enquiries now come from the website. With any new enquiry, the key is to act quickly and make contact with a potential new client as soon as possible. Ronan always tries to take each call about a new mortgage application that comes into the offi ce, regardless of what he’s in the middle of, or if it’s not possible to stop what he’s doing, to call back the moment he is able to. “How much the phone rings varies on a day to day basis,” says Ronan. “Some days we might have only a few calls, other days, it feels like I’ve not put the phone down at all.” Keeping him going throughout the day are more cups of tea and coffee, the making of which can provoke the occasional argument, and a game of ‘rock, paper, scissors’ to decide whose turn it is to make a brew. Ronan has been known to make the occasional cuppa, colleague Chris Rowe almost never, meaning it usually falls to either Jane or Rosamund to keep thirst at bay. But, on a more serious note, colleagues are useful for more than just putting the kettle on. Sometimes clients

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are in need of further fi nancial advice in other areas, such as pensions or investments which is when being part of a team of independent specialists is a huge benefi t. Having the expertise of the Worldwide team on hand is something that Ronan reckons sets the company apart and adds real value for clients. “We can deal with pretty much everything in-house,” he says. “Which our clients appreciate as it can potentially save them a lot of time and money. Plus, they already have a relationship with us, making it easier to fi nd the most appropriate solution for them.”There really is no ‘standard’ mortgage application. Clients have a variety of enquiries and ambitions. “Some cases may be a fairly straightforward mortgage application,” says Ronan, “but a lot of cases are complex and need a lot of research. It’s always really satisfying to complete a case when it’s involved perhaps a large mortgage or the client has had a complicated income stream. In that kind of case, I’ll often speak to one of the private banks we deal with if we haven’t been able to fi nd a solution with one of the high street lenders.”The move towards online applications by most lenders has both saved time and created work. The occasional curse word may slip from Ronan after a particularly complex online application ends up crashing. There’s not much more frustrating than having spent ages fi lling in a form only to have the information disappear in seconds. But computers are not the only cause of frustration. Sometimes lenders, solicitors or valuers can be either diffi cult to track down, or not forthcoming with information.“A lot of time can be taken up chasing various parties,” Ronan says. “ It’s really frustrating sometimes trying to get an answer from people. Jane is really good at

phoning people and getting the information we need from them.”More than once, it’s seemed like a case is on the verge of collapse, but the team have been able to pull it back from the brink. What they fi nd often in these cases is that having a good established relationships with a lender or a solicitor is a bonus. It makes getting the right person on the phone much easier. It’s also another occasion when being able to call on colleagues for their specialist knowledge is useful; bouncing ideas and possible solutions around can often be the key to a successful application. Offi cially, the working day ends at 5pm in Wadebridge, but it’s not often that the team actually fi nish work then. Quite often, a client will want a later appointment, there are last minute phone calls to make, or Ronan will fi nish up work at home. There are then things to plan for the next day, whether in Wadebridge or in Truro, diaries to be fi lled and all the other usual offi ce stuff to do. One of Ronan’s most important rules is to leave the day so you can start the next one fresh. A new day is always a new start and, of course, a fresh pot of coffee.Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.


With the UK offi cially in recession, many businesses are fi nding it diffi cult to borrow and lenders are fi nding it diffi cult to lend. It’s even more important that you and your business research the best lender for your purpose and get your approach right, fi rst time, when you want to borrow money.With that in mind, we’re going to take you through a fairly typical commercial fi nance case study, clearing up a few common misconceptions along the way.Our clients wanted to buy a hotel which had slowly been reducing its trading as the current owners wanted to retire. This was a fi rst time venture into the industry for our clients, but they were confi dent about their application, particularly because they had security for the borrowing. Which leads us to probably one of the most widespread misconceptions about commercial fi nance; that all you need to take out a commercial loan is the right amount of security. That’s not the case. Lenders will also prefer you to have previous industry sector skills, or at least transferable skills and good credentials. All lenders will also want to make sure your business can pay back what you borrow.In this case, we knew that lenders would also expect the business to have trading fi gures for at least the

last 2 to 3 years showing enough profi t to cover the borrowing.Because this business had effectively been treading water, the profi ts didn’t support the borrowing required and our clients needed to prepare projections demonstrating how they would improve trade to a level that could support their borrowing. In their favour, the amount our clients wanted to borrow - 60% of the purchase price - was within most lenders’ Loan to Value range. If you’re not familiar with the term ‘Loan to Value’ (LTV), it means the amount of the loan compared to the value of the property it’s being secured against. Every lender has slightly different requirements when it comes to commercial fi nance applications. Unlike most residential mortgage applications, commercial fi nance applications are considered by an underwriter - an actual person, not just a computer algorithm - who looks at each case individually, rather than going by a set criteria. Where a commercial fi nance adviser can help you particularly is with the knowledge they have of each lender and the sort of information they want to see with an application. After considering our clients’ proposal, we had a few lenders in mind to submit the case to. Our next task was to gather the

information which would best support our clients’ application - an extensive exercise which required input from our clients’ accountant and solicitor. We always work closely with any other professionals involved with your business to make sure your fi nance application goes smoothly. We’ll liaise with everyone involved and when necessary, chase things up if there is a delay with anything. Once we had all the relevant information from our clients, we prepared an overview document that explained their proposition to the lender and requested formally that the lender consider the proposition in the light of the information provided. After checking through all the information and satisfying themselves that everything was in place, the lender submitted the application to their credit team.The credit team gave the go-ahead and the lender provided our clients with the terms and conditions of the borrowing. In this case, the lender wanted a valuation of any assets the business had to ensure they were suffi cient to act as security for the borrowing. Sometimes it’s a requirement to have life cover for the key people in the business, as an extra measure of security, and proof of deposit is also usual.The lender then instructed their legal team to issue the formal offer

What makes us different from other fi nancial planners?

Commercial Case Study

Commercial Fin


anceletter and shortly afterwards, the money for the purchase arrived in our clients’ account. They bought the hotel and their business has gone from strength to strength. Case closed and the best possible ending to the story.

Worldwide in the Community


A tidal wave of fun at the Living Seas Ball!Worldwide were delighted and proud to be one of the sponsors of Cornwall Wildlife Trust’s fi rst ever fundraiser Ball, held at St Michael’s Hotel and Spa in Falmouth. The event went off with a bang, with guests, including Worldwide’s Donna Hansen, Lynne Williams and Matt Higham treated to an evening of marine-themed fun and fundraising. The spectacular event was organised as part of the Trust’s 50th Anniversary programme, to celebrate and raise awareness for Cornwall’s amazing marine wildlife. Serena Pettigrew-Jolly, Deputy Marketing and Fundraising Manager for Cornwall Wildlife Trust says, “We are so pleased that the event sold out and that we raised over £2500, both very fantastic achievements for an event in its fi rst year! From basking sharks to puffi ns and from sunfi sh to seals, Cornwall’s marine environment is awe-inspiring, and this event was a great platform to celebrate our county’s incredible nature. Nick Baker was hugely entertaining, with his exciting tales of wildlife encounters in Cornwall. We were delighted to have been joined by many guests from the world of business, conservation, academia and our own membership.”

WoW boat trip raises almost £400The second charity event in a year long campaign organised by a group of independent fi nancial advisers has raised nearly £400. The Women of Worldwide (WoW) team was set up by Worldwide Financial Planning’s Donna Hansen, Rebecca Bendle, Lynne Williams, Deborah Hale and Rosamund Derry.

Running alongside the fi nancial year, April this year to March 2013, the team is hosting a series of events to raise money for Cornwall Hospice Care (CHC).In the latest event local business people and Worldwide clients joined the WoW team for a boat trip from Truro to St Mawes. During the evening the team raised an impressive £388 from a raffl e with prizes including a luxury fruit hamper from Westcountry Fruit Sales; a driving lesson from Steve Richardson; a Costa Coffee voucher from Moorview Maintenance; and a surf lesson from Newquay Activity Centre. Tesco in Redruth also donated a £20 voucher.The group was set up to raise money for a different local charity each year with its fi rst good cause being CHC. “We’ve got lots

more ideas lined up for future events and hopefully the next one will see us enjoying a chocolate and wine tasting evening!” says Donna.

Q&A


Is it still possible to get an interest only mortgage?Interest only mortgages have been gaining a lot of media attention recently as several lenders, including Nationwide building society, have announced they will not offer them anymore. What that means is that it’s not impossible to get an interest only mortgage, but that it is more diffi cult to do so. Lenders who still offer interest only mortgages have made their criteria much stricter.

What kind of deposit will I need to apply for an interest only mortgage?Basically, the bigger the deposit you can raise, the better. In the last few months (the 3rd quarter of 2012) it’s become increasingly diffi cult to take out an interest only mortgage. Various lenders have stopped them altogether and those that are still offering them, are doing so on a limited basis with much tighter lending conditions. If you can fi nd a 50% deposit or greater, then you stand a better chance of fi nding an interest only mortgage. Most lenders will also want you to have a repayment ‘vehicle’ in place, such as an ISA, that has been in place for at least 12 months, that you will repay the amount borrowed back with at the end of the mortgage term.Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.


Worldwide Financial Planning has developed a team of fi nancial specialists who can design professional, informed and bespoke solutions to meet the needs of our clients.Worldwide was launched in 1998 and has 17 advisers and a team that works on personal fi nancial planning, employee benefi ts, commercial lending and residential lending. We are a whole of market independent fi nancial adviser with experience and the level of approved qualifi cations to help you on all aspects of your fi nancial planning, including commercial fi nance, mortgages, Inheritance tax, investment, equity release, long term care, pensions and employee benefi ts.When you call, we’ll appoint you your own personal independent fi nancial adviser so no matter what your requirements or circumstances are, your independent fi nancial adviser will listen to you in confi dence and in detail. Your adviser will then research every option in the marketplace to fi nd the very best solution for you. As an independent fi nancial adviser fi rm, we have unrivalled access to products and providers, meaning we can match you with the best one for your needs.We look forward to hearing from you.

Call us free today on 0800 0112825www.wwfp.net

Information given is for general guidance only,and specifi c advice should be taken before acting on any suggestions made. The value of shares and investments can go down as well as up. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. Information given is for general guidance only, and specifi c advice should be taken before acting on any suggestions made

Worldwide Financial Planning Ltd are authorised and regulated by the Financial Services Authority. Worldwide is entered on the FSA register under reference 440668

Registered offi ce; The Old Carriage Works, Moresk Road, Truro, Cornwall, TR1 1DG.

Registered in England and Wales No. 3533548.

© 2012 Worldwide Financial Planning

worldwide' the financial planning magazine autumn 2012

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