18 Years a Slave

Free at Last – Fees at Last

This month H.J.Scott & Co. proudly celebrates 10 years of freedom. Freedom for us as a business and freedom for our clients. The 1st June 2005 was D-Day. Like all things the UK financial regulator does, it was “bigged up”. D-Day stood for Depolarisation Day. It wasn’t a great idea and the execution didn’t deliver on the promises. But it made us think and we decided to draw a line in the sand.

We went fee only as a business. We turned our back on commission. Never again would we accept payment for the advice we give to our clients, from the insurance companies that provided the products. We assumed many businesses would do the same. They didn’t. They preferred to remain in the murky, back-hand world that kept them alive. They were commission junkies, needing their monthly fix from the insurance company pushers.

We were told we would go under and be forced back to the nasty old ways within months. The IFA who offered that prophesy ceased to trade 5 years later.

A Brave New World

There were no insurance companies who offered the option to cancel commissions in a simple way. Instead commissions were rebated back into products and clients received a higher allocation of units. Could we see this in practice. No. We were told to trust them. Seriously do I look like I was born yesterday.

With no help from traditional providers of products, new holders of savings were sought and we entered the brave new world of self-invested personal pensions, fund supermarkets and finally wrap platforms. Products with transparency. Where charges could be calculated and checked to ensure clients weren’t getting a raw deal. It all seems old hat today, but ten years ago there was no proof it would work.

Goodbye, Goodbye

Now fees weren’t for everyone. We had 1400 policyholders at that stage, we told the vast majority that if they wanted to know our fees going forward we would tell them if they asked. Very few did. We had secured our top 34 clients and had promised them the Earth. One by one we saw the rest of the policyholders where we knew paying fees would be better than being charged commission and gradually client numbers built up to around 100. We were looking after clients which collectively held £10,000,000 with us.

Everybody’s doin’ it

The Retail Distribution Review hit on 1st January 2013. Commission is now banned. Commission junkies are out of business, life companies are either reinventing themselves, dead or dying. The industry is becoming a profession slowly. We had an 8 year start on them.

Our bravery has paid off. Today we only look after 187 clients, but we manage over £53,000,000. That’s £53,000,000 more than we should have, if Insurance Companies had put their clients needs before their shareholders demands.

Raise a glass to the next 10 years. I don’t believe there will ever be much more than £50,000,000 that we manage. 200 clients is enough. My job now is to give my clients the confidence to spend and enjoy their life-savings.

Financial Planning 2015

We would like to wish you a Happy & Prosperous New Year.

Where will 2015 take you?

If you have hesitated to map out 2015, to make some plans or to set some goals, then you’ve just gone ahead and mapped out this year anyway.

If you don’t already know how 2015 will be different from 2014, 2015 will be exactly like 2014. Undistinguishable when you look back on it in the future.

Last year we helped clients fulfil not only some 2014 goals, but in some cases we helped clients realise some life-long goals. Sometimes just having a planner confirm you are never going to run out of money, allows you to make the bigger decisions in life.

Go on, dare to dream. Tell us what you want to do. We will be honest if we think you can’t do it just yet, but we will tell you when we believe you should be able to manage it.

My Retirement

I’m in the futures business

All of our futures. Every day I help clients plan for a better future for themselves and for their families. For some that is looking to a time when they can stop working. For the already retired, to ensure their post working period is a time when they and their life savings continue to thrive.

Now that job carries a lot of responsibility and a requirement to continue to work myself. As I reach 53, more and more clients are asking me just what my plans are.

Rest assured, I won’t be retiring anytime in the near future. Maybe I will never retire at all.

I’ve shown you mine – now show me yours!

I ask clients to tell me their plans every day. Well here are mine. After almost 28 years in the retirement business it would be wrong to say I haven’t considered a life after work. When I set out at Abbey Life, my personal pension had a nominated retirement age of 50. Before I had reached my own half century, the earliest benefits could be taken from a pension leapt to 55. As we speak the current pension freedoms bill is passing through Parliament with the suggestion that the earliest benefits can be withdrawn moves to 10 years prior to state retirement age. For me that is 67 and so no pension withdrawals prior to 57! A further 4 years to go before I can access my pension life savings!

As many of you know Lesley and I have two daughters who are both at university. The cost is not inconsiderable, which we continue to fund from income. The earliest that expenditure will finish, allowing for a follow on year to see them established in their careers, would also take me to 57.

However all of the above may be arbitrary. Does anybody work for 40 years and then suddenly retire anymore? May be I never need to formally retire?

How would the perfect retirement look to me?

I have blogged about working away from the office before, but if I still want to be working when I am 70, I know I won’t be coming into the office everyday.

In October Lesley and I went on a journey from Athens to Mumbai. I was away from the office for 18 working days. Apart from the 5 hour flight to Athens and the 8 hour return flight from Mumbai, I was connected by 4G or wifi everyday the markets were open. I answered client emails within the usual 24 hours, I gave Melissa & Lucas directions at the office and I kept up to date with world affairs.

We handled the overdue stock-market correction, buying low with the cash we had been hoarding since 6850 points had been reached at the end of February. Now to some I know, that wouldn’t sound like a holiday if I had to attend to work every weekday. But;

Choose a job you love, and you will never have to work a day in your life. – Confucius

and I do love what I do.

Perfect retirement for me would be about 50% of the time in the office to see clients and 50% of the time out of the office. A client of mine, Ken, told me one of his goals was to go “around the world in 80 years”. He wanted to join together all of the cruises he had done with new cruises, so he could then claim to have been on a world cruise by the time he was 80. Absolutely brilliant! I have stolen his idea. So here is my work/life balance for the next 12 months. Maybe for the rest of my life.

Office > Florida > Office > Panama Canal Cruise > Office > Atlantic Crossing > Office

By the time I reach 55, Lesley and I will be able to say we have cruised from Alaska to India. I make that about half of the world covered. (The easier half I admit).

When we set out to build a technologically advanced, well-connected business, we had no idea that it would allow us to control that business from anywhere in the world. We are in the futures business and hopefully will remain in it forever. Retirement couldn’t be any better than the life we lead now.

A peaceful nights sleep

We can all be kept awake at night when we feel we don’t have enough money. We do worry. But how much money do we really need? This question becomes especially important;

  • When we are planning to retire.
  • When we are looking to spend some capital in retirement.
  • When we are planning the kids education or helping with their first house purchase.

Will my savings last me the rest of my life?

To decide whether we have reached happy ever after we need to make some assumptions.

  • At what level is inflation likely to be in the future?
  • What can we expect the long term return to be on our life savings?
  • How much are our essential base living costs?
  • Most importantly – What do we want to achieve with the rest of our lives; What do we still dream of doing?
  • And impossible to answer I know; How long will we be around?

Fortunately Financial Planners help their clients answer these questions everyday.  We use cash-flow modelling software to help our clients to glimpse the future.

That sounds complicated, will I understand the software?

We think so. We have tried several models over the years. We even tried to build our own model that we thought better suited our clients circumstances. We found many off the shelf packages seemed too complex to be believed, but we have found one we like and more importantly one our clients like too. It’s called Moneyscope and we believe it will change the way you view your future.

We only have so many trips left around the sun. We need to ensure we do the things we want to do, see the places we want to see and treat the people we want to treat. If you are ready to start your life plan now, click here.

Sleep tight because it’s now time to dream

An Apple a day keeps the virus at bay – by Lucas

Hello all. Howard has asked me to join him in the blogosphere and start writing some technology related blogs.

I’ll kick off by addressing something you may or may not have seen in the news recently.

The National Crime Agency (NCA) announced that it was giving the UK public a two-week window of opportunity to rid and safeguard themselves from a new global online threat.
This warning came as the FBI and NCA, in partnership with authorities in several countries around the world, shut down a network of criminally operated computers that were stealing important information from victims’ machines.

We must stress, the warning is NOT “if you don’t follow their advice, your computer will automatically become infected in two weeks.”

Two weeks is just the amount of time the NCA estimates it will take for the network of criminally-controlled computers to be fully operational again. That’s why they are advising people to use this relatively quiet two-week period to make sure their anti-virus software is up to date.

Now, this warning has the potential to sound rather scary, but the reality is that you are very unlikely to be affected by this if you adhere to the usual computer safety advice. In a nut shell, you should make sure your antivirus software, firewall, and everything else designed to protect you is up to date, perform regular virus scans, and take care when opening emails from sources you aren’t 100% sure are safe.

What We Did

We took this announcement very seriously and immediately questioned how it could impact our business and the safety of our clients’ holdings. Short answer…It Can’t!!

The NCA revealed that this threat relates to computers running any version of the Windows operating system. This means that, as we took the decision in October 2012 to swap all our computers for Apple Macs, the threat can’t affect us. Hurrah!

That doesn’t mean that we are going to rest on our laurels. We want to ensure that our clients (and anybody else who reads this blog), protect themselves and their home computers.

What To Do Next

If you’re using an Apple machine like us, nothing. Welcome to our boat, smooth sailing from here, tea and scones served at midday, enjoy the evening entertainment. This threat can’t affect you. Congratulations on owning (in our opinion….the correct opinion) a superior machine. This doesn’t, however, mean that you shouldn’t also take care when opening unfamiliar emails, and keep any anti-virus software you have up to date, just that this particular threat can’t affect you.

If you have a computer which runs Windows, this threat could affect you and the following links could, and probably should, be be of interest to you:

  • The BBC has an article explaining the threat quite simply here
  • The NCA have set up a web page explaining the threat in more detail and gives ways to avoid it here

If you are on a Windows machine and you’ve had a conversation with Howard about computers at any point in the last 2 years, you probably know what our advice would be:

  • If you need a machine with lots of processing power because you design and create things, get yourself a Mac.
  • Otherwise, if you mainly use your computer to browse the internet and manage your emails, get yourself an iPad.

There is the danger of this becoming an advert for Apple, but from our personal experience, we couldn’t recommend them highly enough.

In Summary

This blog was not intended to make you panic, merely to bring the NCA’s warning to your attention.

It is unlikely that your computer has been infected, but as this warning has come from the NCA, FBI and various other law enforcement bodies around the world, you should take it seriously.

If any of our clients still have questions about the threat or how they can protect themselves, myself or Howard would be more than happy to answer them.

Also, get yourself an Apple machine, seriously, we love them.