Despite fears interest rate rises seem ruled out for 2014

Owing to the sharp falls in inflation UK inflation fell to from 1.9 per cent in June to 1.6 per cent in July, economists  across the board seem to be ruling out an increase in interest rates for the rest of the year.  Enable of Bishop Stortford can help you think about how to manage your savings, investments, pensions and mortgage in the light of the current financial climate.  Financial decisions can always benefit from regular reviews to make sure you keep abreast of changes and developments that are beyond any of our control.

HSBC economist Liz Martins talked to the Daily Telegraph early in the summer saying: “The data support the case for rates to go up later rather than sooner. Given that the [Bank of England’s] expectation was for CPI to stay at 1.9pc, this downside surprise is significant, and Economists argue low inflation, together with downside risks from the Eurozone, mean rate rises this year are “no longer in play”. EY Item Club senior economic adviser Martin Beck said the “only fly in the ointment” was a potential bubble in the housing market, but added this pressure seemed to be easing off.

He said: “Against such a benign inflation backdrop, and with encouraging signs the housing market is coming back under control, there appears to be little pressure on the bank to raise rates.”

Whatever happens with interest rates Enable’s IFA’s of Bishop's Stortford can help you review the impact of changes on your personal finances and looks at possible alternatives with you to try and help improve your spending or you saving.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Bonds vs equities a common question

At Enable of Bishop's Stortford our experienced independent financial advisors are often asked this question, how do bonds compare to equities. Asking simple questions often provides a good way of drawing attention to how perceptions can differ from reality when talking about financial markets.

 It is also a question Juan Nevado a fund manager from the M&G multi asset team has recently been addressing asking “Over the past 30 years, would it have been better to be an equity investor or a bond investor? Considering the massive tailwinds bonds have experienced, it probably would not surprise many people that bond investors in most developed markets have just experienced a 30-year bull market. However, it is interesting to note that in many regions, since the late 1980s, equities have delivered real returns in line with – or even higher than – bonds. It is interesting because the only benefit of holding bonds over equity over the period as a whole has been much lower volatility. It is also notable that since 2008, cash, the ultimate perceived haven, has lost value while both bond and equity investors have made money.”

Many have suggested that investors could have expected bonds to deliver much more than equities. The shock of the 2008 financial crisis of course ignited a prolonged period of broad-based risk aversion which investors may still not have fully shaken off, this most definitely will have had some impact on equities.  Alongside this there has of course been the business of central banks engineering a bond rally by stimulating massive demand through extraordinary levels of quantitative easing.  In the light of this most investors would probably still feel much lower volatility for comparable returns is the obvious choice. To talk over your investment choices Enables IFA’s are happy to share their experience.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

£10k annual allowance for pensions

Since the pension changes were announced in March, there have been worries they could lead to tax-planning opportunities. They enable National Insurance contributions to be avoided where salary is sacrificed to a pension or cash to be 'recycled', by putting it into a pension that attracts tax relief and taking up to 25 per cent of it tax-free, but the Government has recently made its response clear. It intends to introduce a new £10,000 annual allowance for those who draw more than their tax-free cash from a defined contribution scheme of more than £10,000 from April 2015.

The reduced annual allowance makes sense to Axa Wealth head of technical consultancy Andy Zanelli. He says: "If you don't control the input and you say that people over 55 have the same annual allowance as pre-55, you open up opportunities, with potential ways for people to recycle the cash so they flip the money and make a return." Lorica Wealth Management chief executive Rhys Francis highlights a problem in having a £10,000 annual allowance running alongside the full allowance. He says: "A lower annual allowance for people who have commenced drawing their pension may reduce the amount sacrificed by the over-55s. It would also require employers and providers to administer two different limits for two groups."

Standard Life head of workplace strategy Jamie Jenkins believes the £10,000 annual allowance is a practical move by the Government. He says: "The £10,000 annual contribution limit is significantly higher than most people who are automatically enrolled will pay. Few people will be impacted." The experienced IFA’s at Enable of Bishop’s Stortford can help you with your pension enquiries.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Risk assessment

Before taking on any wealth management scheme it important to assess risk with clients and evaluate the capacity for any loss. And the Financial industries regulator the FCA's is concerned to make sure risk profiling is conducted properly and thoroughly.

One of the things that they are particularly concerned about is that there are many tools out in the market and how some advisors are using them,  they are particularly worried with respect to the weightings applied, the questions asked of the client and an over-reliance on the tool as a replacement for the adviser's view of the client's attitude to risk and capacity for financial loss.  In other words, some firms are not assessing the appropriateness of the tools and are relying on these tools to deliver a one-size-fits-all solution.

The FCA is clear that advisers must ensure the product is suitable for the client given the client's "real" attitude to risk and capacity for financial loss and ask: Does the automated tool allow for flexibility in responses? Is the tool too formulaic? Do you understand how the tool is constructed?

Are the questions within the tool contradictory? Do the advisers gather all relevant client information? What happens when the results of the tool do not accord with what the client is telling the adviser?What are your complaints telling you about the manner in which risk is assessed?

At Enable our experienced IFA’s make sure any assessment of a client's attitude to risk and capacity for investment loss is not solely determined by a risk-profiling tool but also depends on a richer understanding of any client’s needs and interests.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

The Mortgage Market Review - what is it?

Enable’s experienced IFA’s in Bishop’s Stortford note with interest that a recent TSB survey of 1,982 UK adults indicated that only 51 per cent know about the MMR and 31 per cent of those had heard about the rules but didn’t know any of the details.

Interestingly enough despite the significant  lack of awareness, 41 per cent of those aware of  MMR believe it will ensure they only borrow what they can afford to repay  so see the changes as a good thing.  And aspiring buyers seem to be better as preparing themselves before submitting mortgage applications with 49 per cent saying they will check their credit report before applying for a mortgage. Additionally, 29 per cent will try to pay off outstanding debts before applying for a mortgage to meet the increased affordability requirements under the MMR.

TSB mortgages director Ian Ramsden said: "Although the MMR is usually recognised as a positive change by people who understand it, many still have worries as it remains shrouded in mystery."

Perception Finance managing director David Sheppard says: "It is surprising to hear so many people are still unaware of the MMR given the level of press exposure it has had. I wouldn't expect consumers to understand all regulatory changes but because this one has been so hard-hitting, it is worrying."  If you are looking to take out a new mortgage or want to review your current mortgage Enable IFA’s can help explain the implications of MMR to you and talk you through your options.

Your home could be at risk if you do not keep up your mortgage repayments.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Using Trusts to control your assets

Enable of Bishop’s Stortford’s independent financial advisors can see that with people living longer, and with many more having more complex family structures, as people often divorce, remarry  and sometimes have second families at older and older points in their lives, there is a place for Trusts in wealth management that is not all about tax avoidance.

The ONS figures for England and Wales in 2012 showed the biggest increase in the number of marriages was for men and women aged 65 - 69, rising 25 per cent and 21 per cent, respectively.

Trusts can be a vital tool for modern families, in helping to cope with children from different relationships, step-children and age-gap relationships and for making sure the right people receive money at the right point in their lives.

HMRC's own Research Report 25 says that tax is usually a secondary consideration in using a trust:

"The main motivation for setting up a trust appears to be related to control of assets, rather than tax planning as found in both the in-depth interviews and the survey of trustees.  While tax planning is important for some, it is usually cited second."

But HMRC's proposed extension of the Disclosure of Tax Avoidance Schemes (Dotas) rules could impact mainstream family situations. This new regime requires 'scheme promoters' to notify HMRC of a new scheme, which is then allocated a scheme reference number (SRN) which needs to be declared in their tax return. This information-gathering exercise is intended to be an alert system to HMRC, so any perceived abuse of the tax rules can be reviewed and action taken if required.

The consultation closes on 23 October. It's possible new rules could be in force for April 2015, but the timescale isn't clear yet. The gap between perception and reality can be large when trusts are viewed as a "tax avoidance scheme" lens, rather than as an everyday reality for further advice Enable’s IFA’s in Bishop’s Stortford are here to help.





Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE