Why the headlines aren’t always as bad as they seem
There are plenty of scary headlines doing the rounds about pensions and markets at the moment. And it’s led to a lot of nervous questions from worried investors.
The mini budget at the end of September didn’t help. It sent markets – and the pound – into a tailspin.
And even though there’s been a partial recovery since then (and a new Prime Minister to boot), there’s still a general air of depression about the state of the economy and people’s finances.
So, what should be done?
It may be tempting to keep checking your portfolio, even though the day-to-day movements don’t reflect how it will fare in the long term.
It might also be tempting to drastically change strategy – or even switch your investments to cash – even though history tells us that those who are willing to go the distance through tough times will generally do better in the long run.
It’s really at times like these that the value of good financial advice comes into its own. We’re here to explain what really lies behind the headlines – and to make sure you don’t make any costly mistakes because of them.
Putting one fear to rest
There’s one recent question that has come up a lot from clients, reacting to the recent headlines, where we’ve been able to give instant reassurance:
“Is my pension safe?”
The answer, even though there are some tricky times ahead, is yes.
We’ve seen a lot of news stories focusing on a potential ‘crisis’ in pension funds. That’s because a dramatic rise in the yields of UK government bonds (known as gilts) put pressure on final-salary schemes due to concerns over liquidity.
But it’s important to note that’s only one part of the pensions market. Although there’s still around £2 trillion invested in defined benefit (DB) schemes (ones that pay a fixed amount based on your final salary as an employee), they are a declining part of the pensions landscape. For those paying into defined contribution (DC) schemes, the rise in gilt yields has been less of an issue.
And even if you’re in a DB scheme, it’s still unlikely your individual pension fund is at risk. And the Pensions Regulator has also sought to reassure scheme members that DB funds are “not at risk of collapse”.
Focus on goals – not markets
Another common worry clients ask us about is the state of the financial markets, which have been volatile throughout the year. Many clients have asked us:
When will things recover?
Should I make changes to my portfolio?
There are two important things to remember here:
The first is that uncertainty and even sizeable falls in the market are already ‘baked in’ to your portfolio from the very beginning.
Imagine a skyscraper that’s built in an area prone to natural earthquakes or hurricanes.
The foundations are designed with that environment in mind – invisible to all but the architects that designed them.
And even if the ‘big one’ never comes, the building’s tenants can have peace of mind that their four walls are resilient to whatever comes along.
In the same way, we know that when the markets fall, our portfolios are ready. We can say that the current falls in share prices are within expected parameters. The situation may be uncomfortable for a time, but it’s not unusual.
The second thing to remember is, our focus is on goals.
With a robust strategy in place, you can focus on your end goal – whether that’s relaxing in retirement, moving abroad, or leaving a legacy for family members – not on which way the market is going.
During times of market turbulence, our advisers can talk you through updated cashflow models to show that even when investment values are down significantly, we keep you on track to meet your end objectives.
The value of good financial advice
So, our main message to clients is … talk to us.
If nerves start to set in, or you feel anxious about whether your investments are performing as they should, pick up the phone, or send us an email.
We’ll be there – and we promise not to shy away from the tough questions. And if someone you know has an adviser who isn’t getting in touch, or as open about discussing these issues, send them our details – often a second opinion really helps.
It’s not always easy to tell the difference between good and bad advice until hard times are upon us. But that’s exactly the time when our role is most important.
If you are unsure about the state of your pension or of the financial markets and would like more information about our cashflow models, please get in touch with Alastair Moore or your usual AAB Wealth contact.
Investing is uncertain. But markets never stay down for long
Experienced investors are always at pains to point out they don’t have a crystal ball.
And maybe that’s a good thing.
Why? Let’s think back 25 years ago. Mid-1997 and, in the UK at least, the economy was looking relatively healthy; Britain had just won the Eurovision Song Contest and the country had just elected a new government on the back of the optimistic campaign slogan: “Things can only get better”.
But imagine you’re an investor back then and you get a glimpse of what’s to come. You might not think the picture too rosy: in just a few months’ time, economic problems in Asia would spark fear of worldwide economic collapse – this would pale in comparison to the Global Financial Crisis (GFC) a decade later.
Along the way there are a list of events that will leave the market reeling – the dotcom bubble bursting, the September 11 terrorist attacks, a decade of ‘stagnation’ in Europe followed by Brexit, the Covid pandemic and, most recently, Russia’s invasion of Ukraine.
Knowing all of that, would you invest?
For every negative, there’s a positive around the corner
Of course, back to the present day, and we know now how things have panned out.
Even with all that uncertainty, markets have continued to climb to new highs. Those who invested wisely and willing to go the distance are likely to have seen their savings grow.
Take a look at a big financial index like the MSCI All Countries World Index (ACWI). Here, big European companies such as Nestle rub shoulders with US corporations such as Apple and emerging market giants like Taiwan Semiconductor. According to a research tool from investment app Curvo, investing the MSCI ACWI would see your investment grow more than four times between July 1997 and July 2022.
And we can see elsewhere that this is no accident.
The FTSE All Share, made up of large and medium-sized UK-listed companies, has also had notable dips in performance around large global events such as the GFC and Covid-19. But it too has continued to rise – it’s doubled since the early 2000s. And looking back at the annual returns for the world’s oldest stock index, the Dow Jones, since the turn of the last century, returns have only been in the red for about a third of the time.
For every negative ‘surprise’ experienced by the market, there are usually positives to follow that spur it on to greater heights.
Annual returns of the Dow Jones since 1900
Keep looking long term
So, what does all this tell us?
If anything, it’s a reminder that even though we’re in a period of what seems like extreme uncertainty, many of these events are only damaging in the short term. While we still have to pay close attention to challenges from the Russia/Ukraine conflict, rising energy costs and the threat of global recession, they’re not a reason to lose focus on our investments.
The key is investing wisely. Making sure you’re diversified across markets, with a balance between companies in developed and emerging economies; not overly focused on one specific sector; and considering important external such as environmental, social and governance factors.
We can’t tell precisely what happens next, but investing isn’t about trying to predict the future. What we do know from previous experience is that markets don’t stay down forever. Even with the myriad of risks currently on the horizon, we can be confident that a recovery will happen.
 Past performance does not guarantee future returns. Calculation from Curvo based on Lyxor MSCI All Country World UCITS ETF Acc (USD) over a simulation period July 1997 to July 2022 and does not include transaction fees or management fees. The information is for illustration only and should not be considered as financial advice or recommendation.
An Upside-down view of currencies and interest rates
Whatever your politics, one has to feel a bit of sympathy (maybe) for the new Chancellor. It has been a very tough first week in a new job; lambasted by the media, accused by the Labour leader of ‘crashing’ the pound and causing higher inflation and interest rates; and a bad report from the IMF. It is certainly true that Sterling has been falling, and inflation and interest rates rising; yet to suggest that this is solely down to recent Government incompetence is to take a very narrow view. Putting hyperbole, politics and the minute-by-minute gyrations of the market aside for a moment, let’s take a step back and look at what has been going on.
Sterling’s woes or Dollar strength?
Sterling has been falling against the US dollar for some time, but turning this upside down, the dollar has been strengthening against Sterling. In fact, due to its status as a ‘safe-haven’ currency, and the Fed’s more aggressive rate raising strategy, which has resulted in more attractive shorter-term yields, the US dollar has strengthened against most major currencies over the past year, attracting global capital. It is also a major energy exporter, which adds extra support. The DXY index that tracks the dollar against six major currencies stands today at a 20-year high. As the chart below illustrates, Sterling is largely unchanged against the Euro and the Japanese Yen over the past year.
Figure 1: Dollar strength is the key driver of currency ‘weakness’ – 1 year to 27-Sep-2022
A consequence of the weak Pound is importing inflation, as around one third of household consumption is made up of imports, which are now more costly.
Narratives that suggest that Sterling is turning into an emerging market currency and that this could lead to a currency crisis are headline grabbing but flawed. The UK has a flexible exchange rate (it is not pegged to any other currency); its financial markets are highly established and liquid; the Bank of England operates independently of the Government; and unlike emerging economies, almost the entirety of its debt is denominated in Sterling.
From an investor’s perspective, a rising US dollar provides a positive contribution to Sterling-based returns, as US assets are worth more – over 20% more – in the past year. This has helped to shore up portfolio returns for many. The UK equity market is down only around 3% in the past year, supported by large holdings to sectors such as energy and low holdings to technology, combined with the fact that a majority of earnings are from overseas, benefitting to some degree from these exchange rate movements. No-one really knows where Sterling will go from here and over what timeframe. Hedging fixed income assets remains sensible as this reduces their volatility and remaining unhedged (i.e. exposed to currency movements) in equity assets continues to make good sense and will support portfolio values if Sterling falls further.
Inflation and interest rate rises
Again, reading the news one might get the impression that rising inflation and interest rates in the UK is a pain inflicted on the population entirely by its Government. Yet to turn this inward looking view outward, rising interest rates are a global phenomenon as the countries grapple with high inflation caused by a rapid growth in the money supply (quantitative easing), supply side issues caused by Covid, and the price pressures on energy and food created by Russia’s war in Ukraine. The fact that the UK Government needs to borrow more, as a consequence of the energy cost support packages and its unfunded tax cuts, is also contributing to rising yields. But take a look at inflation, central bank interest rates, and bond yields in a number of major economies in the chart below.
Figure 2: Inflation and interest rates on 27 September 2022
Data source: Countries’ central banks (note inflation for Germany and Italy is the Eurozone inflation rate).
It is evident that inflation is universally high. Five-year bond yields are at or near 4% in all but one of these economies, and all have risen materially in the past six months. Whilst that is bad news for mortgage and other borrowers, who have benefited from an extremely low cost of borrowing for many years, it is better news for those holding cash or investing in bonds. Despite bond price falls as a consequence of yield rises, long-term investors will be better off, over time, from yields at 4% than at near 0%, which we saw 18 months ago. In the UK real (after inflation) yields on index linked gilts are now in positive territory for the first time since 2010. That is good news for investors. As a consequence, investors’ future liabilities are likely to be more easily funded by their assets.
A few commentators have even begun to question whether the UK will be able to service its debts in the future, grabbing headlines. Yet, the UK still remains a major global economy and while the debt service burden will be increasingly heavy, it issues bonds in its own currency, can print money to pay its debts (in-extremis) and has a maturity profile with around half of its bonds maturing beyond 2030 – far longer than most major economies – reducing the short-term refinancing risks that often accompany defaults. Insurance against UK government debt default over five years implies the risk of default is negligible at less than 0.5%.
There is a school of thought, including that of the Chancellor, that the recent support for the supply side of the economy (i.e. increasing productivity and output) by incenting companies and entrepreneurs through tax reductions, may lead to higher rates of sustainable growth in the future, which will, in turn, help to reduce inflation and allow the Government to bring down debt. Obviously, this would take time. The markets currently seem unconvinced. In essence, no-one knows how this all plays out exactly. There is no doubt that there will be uncertainty ahead, but investors who own globally diversified portfolios of equities and higher-quality shorter-dated bonds are well-positioned to weather any possible storms.
The view from a bat’s perch, as we have seen, can provide useful perspective in a world full of politicians, central banks, economists, pundits and active investors all bumping around in the dark.
‘This too shall pass!’, as the late, great John C. Bogle used to constantly remind investors.
This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
 Based on Vanguard FTSE U.K. All Share Index Unit Trust GBP Acc (GB00B3X7QG63:GBP) – for illustration purposes only. This is not a recommendation.
 Related to the duration of their bond holdings.
 Note that this was recently explained in a note entitled ‘Thinking sensibly about bonds’.
 5-year credit default swap rates – from http://www.worldgovernmentbonds.com/country/united-kingdom/
How much is enough?
Professional golf is a sport awash with money.
The top stars earn millions. Tiger Woods, surely the world’s most famous golfer, has earned more than US$120 million from his PGA tour career alone. Most of the big hitters can expect to be millionaires when they retire.
But this year, a rival tournament, the Saudi Arabia-backed LIV Golf League, has thrown the sport into chaos. The megabucks on offer have tempted in some of golf’s biggest names, including major winner Phil Mickelson.
With already incredibly rich players now chasing even bigger pots of cash (even when it means they’re barred form prestigious events like the Ryder Cup), it raises the question, ‘How much is enough?’
Do I have enough?
Your average saver will often ask themselves a question very similar to this, albeit with a slightly different slant – for them it’s ‘Will I have enough?’
– When will I have enough money to finally get off the treadmill?
– Will I have enough to comfortably stop working or do I need to worry about my funds running out further down the line?
– If I sell my business now, will I have enough to enjoy retirement?
People find it incredibly hard to give up work.
They might not be chasing a multi-million-dollar payday like the LIV golfers. But whatever they’re planning – retiring to Spain, or leaving a legacy for children or grandchildren – there’s often that nagging doubt that what they’ve put aside won’t be enough to pay for it all.
The trouble is that without knowing ‘how much is enough’ many people run the risk of working for longer than they need to – and missing out on the chance to enjoy their freedom sooner.
That’s where we come in – our main role as financial planners is helping people see what they really want from life and then helping them to achieve this financially. Often, we’re able to show them they have more money than they think. If they don’t, then we can pinpoint when and by how much they’ll experience the shortfall and create a strategy to help them counter it.
Cashflow modelling – financial planning in practice
Here’s a great example of how we do it. One of the first conversations we have with our clients is around cash flow modelling. It’s a great basis for discussion and helps show the areas you need to focus on in your financial planning.
It tends to look something like the two charts below:
The first shows actual cash flow for someone moving from ‘pre-retirement’ to finishing work for good. The blue line shows what they’re expected to spend on the essentials (such as utilities and groceries), while the black line is total expenditure (including holidays and the other things you want to enjoy in retirement), all rising with inflation.
The second chart focuses on the total value of assets. Purple represents the value of their home (which keeps rising in value), while the green is a defined-contribution pension.
Naturally, the pension scheme gradually tapers out, and this coincides with the area in red on the first chart. For this client, we can see there’s going to be a shortfall in later years, so that’s the area we’d focus on when talking about the next steps.
It’s going to be ok
Cashflow modelling is just one of the tools we use to discuss retirement planning, but we also know that sometimes, even with all the facts, we all need that extra reassurance. After all, retirement is probably the biggest life event you’re every likely to go through – even more stressful and life changing than getting married, having children or buying a house.
Making the transition is a big shift in mindset. It means changing you daily routine, spending habits and – if you’ve had a job you really enjoyed – even redefining your ‘purpose’. The adjustment can take months (or even years). Checking in with your adviser makes that adjustment much less arduous.
As Dave, one of our clients explains here, our modelling projections helped get him and his wife Suzanne where they needed to be. He wanted to avoid “the horror stories of people cashing in their pensions and running out of money.” Coming to us for advice gave them reassurance they could retire with confidence.
So, lets’ think back to that initial question, how much is enough? The answer will be different for each of us and that’s really the point. In order to make investing meaningful, it really needs to relate to your own personal goals.
In other words, you have to think about what you want the money for, before thinking about the money itself. Otherwise you risk staying on that treadmill, working longer than you need to, not knowing when it will ever be enough – and perhaps missing out on enjoying everything you’ve worked so hard to achieve.
Money for money’s sake might suit some professional sports people, but to what end?
Our job as financial planners is to help you define your retirement goals, describe what you really want to achieve from life, and create a financial strategy to get you there. Whether that’s coming to a full stop and putting your feet up or winding down gradually – or even spending it on the golf course.
From ‘client of’ to Chartered Financial Planner at AAB Wealth
At 17, I left school and joined the local TSB bank. At the time a monthly wage was more appealing than four years at university, and upon reflection I believe it was the best choice for me. The invaluable experience gained by working alongside more senior staff gave me a great grounding and no doubt helped my career progression, with many lessons and skills learned along the way! The real team spirit in the bank at that time also made my first venture into the working world very enjoyable, and at a time when banks had branches in every town ensured those working in the bank became part of the community.
I worked in the banking industry for 31 years before deciding to move. My career started from the humble beginnings of a Bank Teller, then onto Bank Manager and finally into Financial Planning, which I have done since 1997. Since 2007, Financial Planning sat in the Private Banking sector, dealing with high-net-worth individuals, which I continued to do until joining AAB Wealth in 2018.
I was aware of AAB Wealth through professional connections and working with some of the existing wealth team at various times throughout my banking career. Although, my route to joining the firm was a little different than most. Before joining the team, I was actually a client first, when I sought advice on my Bank pension. I really liked their approach to advice and the offering they had, so when an opportunity arose to join the firm, I jumped at it. Having seen it from the client perspective helped massively, in addition to knowing some of the wealth team already.
I wouldn’t say I’d always wanted to become a Chartered Financial Planner, in fact I kind of fell into it by accident. I went on a secondment to a bank compliance team reviewing financial advice and thought, this isn’t scary, I can do this and be a planner! After the secondment, I began doing my exams and moved from Bank Manager to Financial Planner within months.
Financial planning for my clients, means helping them achieve not only their own aims and goals, but those of their family and future generations too. The Lifetime cashflow modelling helps by creating a very visual picture of my client’s financial future, for example one client initially approached me with a desire to set up his own business incorporating his own hobbies and interests outside of work. Up to that point, he had worked with the same company for over 35 years. I began by gathering all the important factual information from the client, including his aims and objectives, but most importantly listening to and understanding what his priorities in life were.
Using a combination of his current financial affairs, aims, objectives and goals, and then prioritising these, I was able to build a Lifetime cashflow model, thus reassuring the client that financial planning would give him confidence to make the changes he had always dreamt of. He has since made the life changing decision to leave the job he no longer enjoyed and to follow his dream of owning his own business, doing something that he has a real interest and passion for. If anyone is considering seeking financial advice, I would say go for it. The resources and tools available to your Financial Planner are so good these days, let them worry about the planning so you can focus on enjoying life.
I became a Chartered Financial Planner in 2020, once I had completed the last of my advanced diploma exams, and was later promoted to Director of AAB Wealth in 2022. In my eyes being a Chartered Financial Planner demonstrates that I have achieved a high standard in my chosen industry, where I can become a trusted planner for my clients. A favourite aspect of my role is the satisfaction of seeing a client achieve their goals because of the financial planning advice I have given, which in some cases can truly be life changing.
So, what next? Just as I started out my working life learning from more experienced colleagues, well I am now that senior colleague, and hopefully I can support, guide and inspire the next generation working in AAB Wealth to pursue a lifelong career in Financial Planning.
Working towards client goals & personal goals
I grew up on the Orkney Isles, located north of the Scotland mainland. The small host of islands allowed for a very safe and enjoyable upbringing. I now live permanently in Aberdeen but do still travel home for special occasions and the festive period to enjoy time with my family and to take part in the traditional Ba’ game.
Despite, growing up on a remote island, I was no stranger to the “big cities”. I spent most weekends throughout my teenage years playing rugby on the mainland representing the county team in the National League and the Caledonian region in the pathway selection squads throughout the U16 & U18 age groups.
Building a wealth of knowledge, skills and experience
I studied both undergraduate and post-graduate degrees at university for the past 5 years with my most prominent years falling within the pandemic in 2020/21. Completing my dissertation during lockdown had its challenges – interviewing participants over Teams, meant it was slightly more difficult to connect and get the most out of the interviews. Although, it meant participants did not have to travel to interviews some were perhaps more were willing and available to be interviewed given the restrictions on all of our lives at the time. The communication skills I learnt in this process prepared me for aspects of role at AAB Wealth, some clients are unable to meet in person and using technology we are able to provide them with a more flexible service suited to their own schedules.
I recently graduated from Aberdeen University as a Master of Science in Finance and Investment Management with Distinction, preceding my bachelor’s degree in Management from Robert Gordon University. While at university, I completed a year-long placement with Schlumberger as a Sourcing Intern. Although quite a different industry, my role at Schlumberger shared various similarities, being very finance orientated and client focused. I conducted tenders and managed projects across Europe for the Drilling & Measurements product line, whilst also monitoring the relationship and management of our local suppliers and clients. These transferable skills gave me valuable experience of working with different people and strengthened both my confidence and professional ability, all of which I can bring forward in my role to provide our clients with the awesome service AAB Wealth is known for.
The value of a supportive team
After leaving university, I wasn’t in a rush to find a job straight away, I took my time and did my research. AAB Wealth stood out to me because some of my university friends had completed placements and internships at the group. All of them were enthused by their approach to investing in each individual’s personal development through training programmes along with the support received by fellow team members. As a recent graduate keen to kick start my career in Wealth Management, this is what initially attracted me to the firm so when an opportunity to join the firm became available, I jumped at it.
Just as I had interviewed participants for my dissertation, my interviews for AAB Wealth were all online, the only difference being that I was the interviewee. Usually in person interviews give you a chance to see what the culture and office is like, but I was still able to get a good impression of what it would be like to work at the firm and was pleased that it fit my expectations. I was also invited into the office to meet the team and see where I would be working which made integrating into the team much easier.
What makes the team at AAB Wealth different is the togetherness and spirit surrounding them. The lively and efficient atmosphere allows us to easily deliver what is expected. I have thoroughly enjoyed the social aspect of being in the office most days getting to know my colleagues and feel I have learnt a lot from being in the office around the others in the team.
The hybrid approach to working has also helped me manage personal commitments around my working hours when needed. Agile hours also mean that I can take an occasional half day to keep up with hobbies and make up the time when it suits me.
Helping clients reach their financial goals whilst working towards my own goals
A key aspect of my role in Client Service Support (CSS) is to support and contribute to helping clients meet their financial goals. In order to do this, I believe effective communication and attention to detail is essential. Although the overall success of the team and the service we provide comes down to two fundamental aspects: transparency and trust. From a client perspective, we build the trust so that they feel comfortable to be transparent with their finances so that we can give them to more accurate advice on how to achieve their goals. From an internal perspective, transparency between team members is essential when dealing with tight deadlines or asking for support with workload whilst studying.
The most satisfying part of my role is seeing how our service has helped long-standing clients’, from initial engagement to smashing their goals. Working as a team to help clients reach their financial goals brings a great sense of achievement and the feedback we get from clients brings this to life. Hearing how our advice has changed their own and their families’ lives is hugely rewarding and motivating. I am excited for what the future holds and to be part of a group which is constantly growing and evolving and I look forward to strengthening relationships with clients as well as connecting with new clients.
My goal is to develop a more in depth understanding of the business and the services that we provide before continuing my studies working towards my Diploma in Financial Planning in the near future. I am looking forward to meeting and supporting even more AAB Wealth clients in the months and years ahead.
Protect your pension – how to stay ahead of the scammers
Summary: Pensions are a growing target for fraudsters. With scams becoming increasingly sophisticated, we’re always trying to find new ways to stay ahead.
Earlier this year, the former Newsnight presenter Emily Maitlis revealed on Twitter how close she’d come to being tricked by a scammer into giving out her bank details.
The phone call – from someone claiming to be from the fraud detection squad – seemed convincing and plausible (even down to using the phrase “this call will be recorded for training purposes.”) Only a call to the real agency confirmed it was all a con.
Fraud costs the UK up to £190 billion a year and scams like these are becoming increasingly common.
Pensions are a particular target. According to the FCA, in the first half of last year alone scammers conned victims out of more than £2 million from their pensions. The Pension Scams Industry Group (PSIG) estimates that, since 2015, 40,000 people have lost around £10 billion between them to fraudsters.
Spotting a scammer is getting harder
Sometimes the fact it’s a scam stands out; it could be a dodgy looking email with a tell-tale spelling error. But they’re becoming harder to spot. Scammers are increasingly sophisticated.
And the depressing fact is that once taken in by a pensions scam, it’s often incredibly hard to get your money back. Unlike something like travel insurance, where it’s relatively straightforward to claim compensation for missing luggage or a cancelled flight (something that a lot of holidaymakers have had experience of recently), if you’ve fallen for a scam, there’s sometimes very little that can be done after the fact.
The warning signs
Here are some of the major red flags to be aware of to try and stay ahead of the scammers:
Scammers will often use high-pressure sales tactics (such as saying an offer is only available for a certain time). The opportunities are also likely to be higher risk, unregulated, and from unusual sources.
They might also try to lure you in with offers of a ‘free pension review’ or promising to help you release your pension before you turn 55.
Now, taken on their own these aren’t necessarily scams (for example, at AAB Wealth, we offer our prospective clients an initial consultation for free). However, tempting deals should be a reminder to check what you’re getting involved in.
You should always take advice from someone you trust. That means a recognised company, one that’s regulated by the FCA.
A good place to start if you’re unsure is the FCA’s new ScamSmart website which gives advice on avoiding investment and pension scams, helps you check the FCA’s warning list and report scams and unauthorised firms.
Even if you trust the firm, you still need to take care
Taking you in with a tempting deal isn’t the only route scammers use. Another common tactic is attempting to intercept client money. For example, fraudsters might try to amend your bank details, or capture identification info during transactions.
How they do this can include impersonating a reputable firm, or like the Emily Maitlis example, finding other means to intercept your personal details, even pretending that they represent authorities trying to stop fraud.
At AAB Wealth, we want clients to know they’re protected. We’ve got several processes in place to ensure your data – and your money – remain safe.
- A secure online portal. We use this for all messaging and transferring your documents and information securely.
- Robust operational processes that have stood the test of time. We have a strong focus on internal IT security keeping your data safe from cyber security threats and potential data breaches.
- A bank account verification process that ensures money cannot leave portfolios to anywhere except the client’s account.
- Reputable and secure investment platforms to hold client money
- Internal and external compliance resources to scrutinise and monitor processes
- We only use regulated investments for clients – we won’t come to you with opportunities involving high-risk, unusual investments.
And importantly, even though we take pride in being a tech-enabled firm, we are always here to meet our clients in person. There is always a door to bang in the unlikely event that something goes wrong!
Beware the wolf in sheep’s clothing
Above all, it’s important to keep vigilant.
Think of a scammer like a wolf in sheep’s clothing – trying to tempt you in with a good-looking deal. It’s always a good idea to double check – even pausing before giving any important information. You can even put the phone down to verify any details independently and call back later. Remember, a trustworthy firm won’t mind if you want to get your facts straight first.
Whenever you see an offer that could affect your pension, it’s a good idea to ask yourself these questions:
- Is the email or approach unexpected? You should be wary if something comes out of the blue, it could come from a firm that’s unauthorised or unregulated.
- Do you trust the firm who’s approached you? If in any doubt, check the FCA’s warning list.
- Have you been asked to download something new – or are you being directed away from your usual banking or investment platform? Beware of accidentally clicking a fraudulent link.
- Are you under pressure to invest or make a decision? Is the offer time limited, or are the sales tactics heavy handed or even threatening?
- Does the offer sound too good to be true? Or is it downplaying the level of risk involved?
Sliding Doors: what type of investor do you want to be?
If you’ve looked at your investments recently, you may be feeling alarmed.
The financial markets remain volatile due to inflation, the conflict in Ukraine, post-pandemic changes, and the rising cost of living.
But as we explained in last month’s blog post, how to deal with volatility in the stock market, the best thing you can do is stay calm and not panic.
At times like this, it’s a good idea to consider what type of investor you want to be.
Do you want to let your portfolio control you and spend your whole life thinking about money? Or do you want to control your portfolio (as best you can) and spend your time doing what you love?
Let’s take a look at two ‘Sliding Doors’-style scenarios to see how your life could look if you take everything in your stride, rather than let stress get the best of you.
You check your investment account a few times a week and follow the markets religiously, even though you don’t fully understand them.
Whenever the market dips, it feels as though your whole life is flashing before your eyes.
You’ve heard horror stories of people losing everything in the stock market and worry it’ll happen to you.
You ask your financial planner what you should do. Should you sell everything and invest in other sectors? Cryptocurrency? NFTs?
Your financial planner tells you to do nothing. You have a strategy in place and you’re on track to achieve your goals, they say. But you don’t listen.
You sell all your stocks and move the money into a savings account offering 1.5% interest. You know this won’t beat inflation, but you’re relieved to have everything in cash. Now you can protect yourself and your family from financial ruin. Or at least that’s what you tell yourself. You try not to think about the thousands you lost by selling your investments earlier than planned.
It’s a couple of years until you feel confident investing again. The stocks you buy are way more expensive than they were during the downturn, but the market is looking good and you’re confident it’ll continue to rise. And it does! You buy more and more. Your portfolio is performing better than ever before, and you start to wonder whether you’ll retire early. But after a few years, the market falls again. You panic, sell, and put the money into savings once more.
You keep repeating this process and the stress only gets worse the nearer you get to your planned retirement date. You decide to postpone retirement and keep working. You don’t have anywhere near enough set aside for the lifestyle you want, even though it feels like you’ve spent your whole life saving and investing for the future. You’ve sacrificed nice clothes and holidays. Money is all you’ve thought about.
Now, let’s consider how different your finances could be if you were to take a different approach to your investments.
When the market takes a tumble and the value of your portfolio drops, you see it as an opportunity rather than a disaster. You have money in a cash ISA for both emergencies and short-term goals, so you don’t need to sell your investments any time soon.
The way you see it, now’s not the time to sell. It’s the time to buy. You increase the amount you invest, as guided by your financial adviser, but don’t go too far. The last thing you want to do is spend the money you’ve set aside for next year’s holiday or your 17-year-old’s university fund.
You delete the investing apps from your phone and vow to only log into your accounts once every couple of months. You get on with your life and have the occasional meeting with your financial planner to discuss any changes to your financial situation.
5, 10 and 20 years pass by, and your portfolio’s grown consistently without you really having to think about it. You’re amazed at the power of compound returns interest and grateful you listened to your adviser every time they told you to hang tight.
You retire by the age set out in your financial plan and have the money you need to achieve all your goals. You haven’t spent the last few decades worrying about money. Quite the opposite, in fact. You automated your savings and investments years ago, meaning you can spend money on treats, meals in nice restaurants, and holidays without having to track every penny.
Now, which of these scenarios would you prefer?
Do you want to spend a lifetime worrying about money, or do you want to get on with your life and let someone else do the thinking?
Your portfolio could be growing while you sip cocktails on the beach, but this will only happen if you trust both your financial planner and the process.
Constantly dipping in and out of the market won’t get you very far. You might avoid the market’s worst days. But you might also miss out on its best days – and this could cost you dearly.
According to JP Morgan’s annual retirement guide, a $10,000 investment over 20 years (based on the S&P 500 index) would be worth more than $60,000 if fully invested. But, if an investor, selling out of the market temporarily, missed the 10 best days, that amount would be cut in half. If they missed the 20 best days, that amount would shrink to a third of the potential value.
People want to know the secret to successful investing but it’s simple really: only by buying and holding for the long term can you build wealth and achieve financial freedom.
We can help you to be the right kind of investor. Get in touch to find out more.
Returning to AAB Wealth – from Aberdeen to Belfast
In January 2021, Alastair shared an update on how things had changed in his career after achieving his advanced diploma in financial planning. Since then, Alastair has been busy, in fact he left AAB Wealth in November last year to return home to Belfast and just last month re-joined the team following the firm’s growth into Northern Ireland.
We are delighted to welcome him back to AAB Wealth and have caught up with him to find out about his experiences over the past few months and what he’s looking forward to most about being part of the team again.
During lockdown I spent a significant amount of time in my home city of Belfast and, like a lot of people, I started to reconsider certain things. I eventually decided that I wanted to live in Belfast on a permanent basis. Unfortunately, at that time, AAB didn’t have a presence here and as much as I enjoyed working with my clients and the AAB team, I made the decision to leave and move to a Financial Planning firm here in Belfast.
I kept in touch with Andy Dines and he reached out during the Group’s negotiations with FPM to chat me through the opportunity of returning to AAB Wealth within Northern Ireland. I thoroughly enjoyed my time at AAB and the only reason I left was to move home, so when the landscape changed and there was the potential of AAB having office locations throughout Northern Ireland, it made sense to explore the opportunity.
That being said, I am a firm believer in continually learning and picking up new skills and one of the benefits of working elsewhere was the ability to learn from other people in how they approach and deal with complex situations to provide clarity and value for clients. I was very fortunate to start my financial planning career at AAB, a supportive and growing firm, where I was continually learning from new talent joining the business. Having the time away working in the Northern Ireland market in a new team has given me great experience in the different ways teams can work together, and I’m excited to bring some new perspective to the AAB Wealth team.
Fundamentally my role as Chartered Financial Planner within AAB Wealth will remain the same, but I will primarily be based in FPM’s Belfast office, with a presence in their Newry, Mallusk and Dungannon offices as well. Prior to their merger with AAB, FPM did not have an integrated financial planning proposition, meaning a large part of my role as the first member of the AAB Wealth team to be based in Northern Ireland, will be to establish that within the business and provide clients with further expertise, synergy and value, giving them the best possible financial planning experience.
As I had only been away for 6 months and had kept in contact with a lot of the team, it was easy to settle right back in, it was clear that AAB and AAB Wealth have continued to grow over that time and it’s great to see the new branding reflect this growth. Fundamentally, however, what has not changed is positive client outcomes being at the heart of the firm. This is reflected in the team’s continued commitment to provide clients with the best possible experience.
There are so many things I’m looking forward to about being back at AAB – catching up with all my AAB colleagues, getting to know my new FPM colleagues and having the opportunity to grow AAB Wealth here in Northern Ireland and within FPM, by providing an integrated financial planning proposition which adds real value to clients’ lives.
AAB Wealth Expands into Northern Ireland with Key Appointment
Earlier this year AAB Group announced a merger with a leading all-Ireland independent accountancy and business advisory firm, FPM. FPM have a team of over 120 people across 5 locations in Belfast, Dublin, Dungannon, Mallusk and Newry.
The merger has created the opportunity for financial planning practice, AAB Wealth to expand their service offering to cover Northern Ireland and as a result, they will welcome Alastair Moore, who currently resides in Saintfield, back to the AAB Wealth team in Northern Ireland as a Chartered Financial Planner.
Andrew Dines, Director & Chartered Financial Planner at AAB Wealth said: “We are delighted to be welcoming Alastair back to our team. We are well-established in Scotland and look forward to developing our client base across Northern Ireland with Alastair back on-board.”
Paddy Harty, Private Client Partner at FPM said: “We are thrilled to welcome Alastair in-house, bringing with him the vast skills and strength of AAB Wealth to the people of Northern Ireland. Alastair will be a invaluable asset to both our clients and local business owners, entrepreneurs and professionals in Northern Ireland, who have experienced a boost in personal wealth, estimated at £11bn, as a direct result of personal savings during the pandemic.”
Featured left to right: Andrew Dines, Paddy Harty, Ian Campbell and Alastair Moore.
Financial planning is a process that helps individuals make sensible decisions about money to achieve the best from life. It covers all aspects of personal finance, everything from pension planning to savings, retirement planning to investments. Put simply, it protects the wealth our clients have worked so hard to achieve. The team at AAB Wealth have developed skill, insight and understanding to financially maximise a client’s business into a legacy for future generations, while simultaneously structuring investments to boost return and keeping tax to a minimum.
A full list of services we offer are available here.