Well, we have had a good few weeks now (whilst there’s a wobble today – a traditional profit-taking time perhaps) and our strategies have been picking-up significantly with a number of excellent individual positions bouncing which had been so oversold. As I shared previously however, it is not helpful trying to make rational judgements only to find that a stock doubles or more in a matter of days through some relative ‘non-event’ but thank goodness we preserved patience to hang-on. Indeed, as at Monday, remarkably not a single one of the 500 stocks in the US’ S&P 500 was down in the last ten days – no mean feat that. Stocks in some sectors have enjoyed a real bounce, from property trusts and companies for example but still remarkably cheap – for those taking a sanguine view on the return of a semblance of ‘normality’ later. However, take a good, old-fashioned printing company like De La Rue Plc which jumped almost three-fold at one point and not an unusual occurrence – how ridiculous. Remember, market makers aren’t holding big banks of stocks at the moment so any change of sentiment on the upside can have significant consequences for prices as you have to find sellers!
Mark Barnett’s old trust at Invesco from which he was deposed, Perpetual Income and Growth, has impressed everyone by increasing its dividend for yet another successive year, keeping investors happy on that front anyway. It is one we started adding quite recently as the discount to the underlying assets was so wide and we intend to increase our exposure if it remains so high (though we have enjoyed a great bounce so far and there could be a merger afoot, all helping). This means the running income is 7%pa based on the present share price though the managers doubt they will/can increase it again next year.
We have been guiding ex-Organic clients on how to access their compensation and have now seen the biggest cheque yet at £52,094. If he had gone to a claims’ chasing company it will have taken as much as £25,005 of that for doing very little as we have done all the hard work ‘for everybody’ already.
What else have we found from this awful can of worms (and sadly are continuing to find and often with the taint of ‘The Resort Group Plc’ and investments in Cape Verde Islands’ hotel schemes)? Well… this week we discovered that one of the financial advisers recommended that a client transferred his original final salary pension (£140,000) to ‘Organic’ and the principle to transfer may have been ‘fine’ (I have yet to see the evidence to check it). I expect the adviser took £4-5,000 from the pot for doing that (we would have charged £2,800 for the complicated work and liability). Then, when Organic’s permissions were cancelled, swiftly he recommended the client transferred off somewhere else and the client suffered another £4,071 bill. Then, mere months later, when ostensibly the client wanted to access some money (his circumstances hadn’t changed), he recommended he shuffle across to another type of plan with the same company and took yet another £1,999 from him for the ‘advice’ and all along taking 0.5%pa on the whole pot for the administrative and management oversight of his investments (which should include such advice like access to his money!) I even bet the adviser didn’t say he didn’t need to take the tax free cash at all ‘just because he was fifty-five’ as it could have stayed in savings’ accounts there in the pension (that’s all the client has done with it) if he had wanted, safe in the knowledge he could have taken what he may have needed at any time. A complaint will go to the FSCS as that advisory company is in liquidation… but that adviser, whilst no longer regulated, is still working for another firm to which the agency had been transferred without the client’s apparent knowledge… no wonder people are suspicious of some financial advisers – it is disgraceful. The FCA has been informed.
Then another of the sellers of The Resort Group Plc’s ‘investments’, ostensibly through a pensions’ advisory company, then shuffled over to a claims’ chasing company at the same address and lo! A little while later now having popped-up working as a financial adviser for St James’s Place.
Sadly investors who bought these unregulated things promising great returns from secure property investments are about to find out that of the £46million they subscribed, the administrators may be able to retrieve £5million from selling the speculative property projects secured by the bonds. Of course, the selling agents may have taken as much as 25% commission at the start and that won’t have helped and there are now stories that one of these ‘reps’ pretended to be giving vulnerable people ‘financial advice’ to subscribe both to LCF in default but this shower too. Please DON’T invest in such things and don’t subscribe to ‘Peer-to-peer’ schemes either unless there is full regulatory backing but even then, if yours goes bad, it doesn’t matter what security there is as you try to sell a part-constructed property with planning and building control issues and costs ratcheting-up by the day – it doesn’t really appeal to buyers. If you really want ‘loans’ with high income and with secured underlying assets, there are many such big funds on the stock market and these spread your money very widely (but can also be as speculative as you want or as safe as you want too). They are regulated. Indeed, we buy some of these as parts of very diversified portfolios too; maybe that would really be your best option after all. If investors think that means ‘advice and fees’ – surely paying for advice and a small management fee every year for the privilege and advice is cheaper than losing all your money on a scam…?
We are trying our hardest to help the investors who have lost money with the Organic collapse and mostly at our cost – but that was our choice. Our staff are doing a fantastic job and with compassion too. We have also just taken on the investment funds of another small manager which has gone into liquidation and whilst only a few clients this time, we have introduced ourselves with a complimentary offer to have a look at what they have and to check to ensure they are well-positioned and that the underlying investment suit their circumstances, as we must demonstrate.
It was humbling last week when I received a reply from one of these new contacts (similar age to me) and one who had been miss-sold but fortunately not to cause a great deal of loss but still claimable. So I had a look at the information she provided to me and she replied and noted:-
Again thank you for your help – to be honest you are the only person over the last few years who has given me the information that I can understand.
We try but why is it that in business (of myriad types) do so many out there simply try to exploit people for their own personal gain and not with the best requirements of their customer in mind? We are not perfect and mistakes can happen but we try our best and indeed, can do very well out of the best endeavours for our clients too without having to cheat and defraud them.
Indeed, for one of these ladies last week I had the unenviable task of encouraging her to consider bankruptcy – not a course I suggest lightly to anyone but the situation in which her ex-partner left her really, in my view, leaves her little or no choice. However, again this advice point only arose because we ‘inherited her’ through one of those pensions with the new firm and we are doing our initial free check of circumstances and complimentary guidance – no-one else had advised her.
Thank you to another of the investors who has lost money over the Organic scams wrote (after we sent a circular around noting some had been abusive to us despite our help) in his words:-
“I have read the recent letter and I am disgusted to hear that some people are getting at your good selves with bad attitude and blaming your company for this problem. As far as I am concerned Philip J Milton have done an excellent job especially as you did not have to take this on, I am so glad that you did as I would be up a certain creek without a paddle, your help has been fantastic those people who think otherwise need a swift kick up the derriere (I offer my services, got a nice big pair of work boots) SO, A BIG THANK YOU TO YOURSELF AND EVERY ONE AT Philip J Milton”
This is the tax which larger estates pay on death. We have now written hundreds, nay into the thousands of Wills and been acting for estates for over twenty years now and have handled many Probate cases and Trusts but after the sad death of a client, we are soon to pay what is our biggest ever cheque to HM Revenue and Customs.
We had guided the individual but he was single and didn’t feel the pressing need to take actions to mitigate what tax was applicable for the benefit of more distant beneficiaries (one family whose lives will be transformed as a consequence of his generosity, with a seven figure inheritance and she’ll have to learn to know how to manage a considerable financial pot). Ideally, the investments we managed can simply be reregistered in the beneficiary’s name with no costs of sales and repurchase, etc (which can be worth up to 10%) and we can manage the values for IHT should they vary favourably over the year from death and if selling any for less, then an IHT rebate can be claimed, so effectively you can cherry-pick and keep the ones which have risen!
Still, we did introduce several qualifying business assets (shares in quoted companies which were pretty good for him anyway) and that £108,000’s worth is saving £43,200 of tax and he only needed to have owned these two years to qualify. (Do you own any? We run such portfolios and effectively, you can save 40% of all the investment and it is still yours, in your name). We also guide on philanthropy and charity legacies which save IHT (such legacies exempt from tax and also giving IHT savings on the rest of the estate too). We are likely to encourage the beneficiary to complete a ‘Deed of variation’ too to pass some of her legacy away from her own estate to reduce her own subsequent problems! It’s all part of the service.
What else is news? It is noted that over 1million people will hit the magical age of fifty-five this year and this will be the case for several successive years now! Sadly lots of people will be scammed as they think it’s best to access the cash regardless of need but for the prudent, it means that you can access it but if you don’t desperately need to do so, DON’T! Don’t be encouraged to take the tax free cash to reinvest either – you don’t have to do so and if you do, you change negatively the structure of what you have left and restrict what you can invest in pensions going forwards. Instead, just realise that the pension is an accessible plan for you but make sure you subscribe as much as you can to pensions every year as there is now no waiting time to access part or all of it and the taxman will give you a bonus (up to your highest rate of Income Tax) whether you are even working!
ST JAMES’S PLACE
This firm is in the news again. One of the SJP ‘partners’ (salesmen) used his status, SJP letterhead, email sign-off, office, etc to promote an unregulated ‘green’ investment connected to his friend. £1.35million has disappeared as it collapsed. SJP is saying it has nothing to do with it but really, it regulates its sales staff and thus needs to be monitoring what they do and how they represent their Company. This is not the first time it has happened and the investors are not to know at the end of the day – how could they? Is it saying that its regulation of its salesforce is inadequate as this sort of thing should not have happened. Regardless, should it simply pay-up as the small cost to it could be much less than the reputational damage of not paying the losses – after all, what green light does this give to other reps to push other stuff? If they won’t pay willingly, I hope those complainants go to the Ombudsman and that a judgement somewhat different to what SJP has said is the outcome. After all, is it really the investors’ obligation to verify everything that is being sold to them by a representative of a regulated firm? No. Then there is honour… what would we do if such an unacceptable thing happened with one of our regulated advisers? We’d pay-up and pursue the adviser for personal responsibility. However, it wouldn’t happen because we regulate our advisers very carefully in the first place and with stringent accounting practices and audit trails!
These are the loans available to businesses without questions asked and backed by HM Government. They are brilliant – no fees and interest free for one year – apply before November and you can take up to £50,000 (25% of 2019 turnover). There are no repayments for one year and then over the next six. There are worries that up to half may default leaving the Government with the liability as it is guaranteeing them. May I remind borrowers that at the end of the day, they still owe the money and if they don’t repay, sure enough, your bank can go to the guarantor but you will still have a bad credit record and rightly the Government will be pursuing you for what you owe. So this story is scaremongering and the situation won’t arise though of course some will go under. If you don’t need to borrow though, think what could you do to make an economic boost for your business to improve your business if you did borrow – not in the spirit perhaps but having those funds could allow you to consider some pension contributions too perhaps with a nice tax boost? There could be some cheap business properties and businesses around through the other side too sadly.
Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.
To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!
If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website www.miltonpj.net. We celebrate our 35th anniversary in 2020 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.
Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers