Tory plans for pensions (with impressive opinions for boss/pub/partner)


impress boss/mates/partner with this DIY assemblage

Replace the current State Pension ‘Triple Lock’ with a new ‘Double Lock’ by 2020 – ensuring rises are in line with earnings or inflation. The ‘Triple Lock’ will be maintained until then.

Frankly , most people didn’t expect triple-lock to survive to 2020; we’re all sorry to see it go as it helped poor people most. Not a vote-winner and shows how strong May feels about her chances (or that she’s an honest politician?)

Continue to support the successful expansion of auto-enrolment to smaller employers and make it available to the self-employed.

Great – making auto-enrolment available to the self-employed begs some important questions, not least about how the national insurance system works. There is no way to put the genuinely self-employed on payroll – another collection system needs to be found. Step forward DWP?

Give The Pensions Regulator (TPR) increased powers to scrutinise and fine arrangements that threaten the solvency of company pension schemes.

Frank Field firing up Theresa (as he has with the self-employed and auto-enrolment). Intervention may be needed – it is good to see tPR being recognised as potential policemen; under Lesley Titcomb tPR could be a force to be reckoned with.

Consider a new criminal offence for company directors who recklessly put at risk the ability of a pension scheme to meet its obligations.

Wrong priority, the priority is to put the likes of Steven Ward and the serial pension scammers behind bars. The manifesto is silent on increasing enforcement against them.

Introduction of means testing for Winter Fuel Payments for pensioners.

The right policy, tricky and expensive to set the means-test but it’s got to be done – despite the howls.

Warning**** Warning****Warning****Warning*****

Cut out and keep in top-pocket; use in executive briefings or to make yourself sound authoritative down the pub.

Don’t expose to too much scrutiny – most of this is half-baked at the moment!

half baked

please no jokes about what this reminds you of

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“Look after yourselves” – tough plans for the ageing-affluent.


The nice bits



Ditching Dilnot’s cap

Ditching Andrew Dilnot’s proposed cap on the amount we pay for our long-term later life care is the biggest attack on wealth I can remember. Protecting personal assets at £100,000 is scant comfort when the average residential home costs more than £50,000 pa and the wealth of most elderly couples (including housing) is several times £100,000. The proposals for long-term care costs will be seen as a living inheritance tax,

Whatever my politics (and I am thoroughly confused what they are called), my instinct is for social justice. My instinct tells me that the alternative to “pay for yourself ” – social insurance – is not the answer. Those who have the means to pay – should pay for themselves.

My instinct tells me that not only have the wealthy, the greatest means to pay, but they have the greatest need for the really expensive care – residential and home-based. Put simply, they die slower.

Social insurance is a tax that spreads the cost across all of society. If implemented for later-life care, those who used social care most and had most means to pay for it, would be subsidised by those who have less use of it and have less means to pay. THAT IS NOT FAIR.

The generational knock-on

One of the unspoken aspects of many baby-boomer’s financial planning is the expectation of inheritance. We laugh uneasily at jokes about Charles awaiting his crown because his wait mirrors our wait for our inheritance, our share of our parent’s estate. Over the years, a windfall can become a “right”. There are many people of my age who have not just anticipated but virtually spent the money coming their way when their parents pass on the estate.

This expectation has been fuelled by successive Governments (especially Conservative) who have clung to the mantra of wealth cascading down the generations. These same politicians have been kicking the cost of healthcare down the road. It’s 10 years since the Dilnot report, the subsequent reports have been read and filed, but until the Conservative Manifesto, no politician has been brave enough to face up to the very real issues of a weakening – if not dementing – older population.

I applaud the Conservatives for confronting the issue head on. It is what the serious commentators such as Paul Lewis and Ros Altmann have been calling for and it is what we now have.

Why now?

I suspect that the answer is part political and part idealistic.

Pragmatically, there has never been an election in recent times that gives the Conservatives such headroom for bad news. The votes lost by declaring this bad news are votes that can afford by Conservative Central Office.

Idealistically, Theresa May has shown a consistency since taking office of standing up for the less well off. This cannot be done simply by pleasing everyone, it requires the comfortable to pay more. She has appointed people to advise her in number ten who have social equality like “Blackpool” in the little stick of Blackpool rock.

From what I can see – this is uncompassionate conservatism – neither patronising nor ingratiating. But it seems right. The alternative – the Cameron/Osborne version of Conservatism, happily ducked this issue – as it did the issue of pension taxation, as a vote-loser which could be the next Government’s problem.

That kind of opportunistic politics belongs to Malcolm Tucker but not to a strong Government acting with integrity. We waved goodbye to Cameron/Osborne because they were weak in integrity though long on smarm.

We cannot have it both ways.

Those of us who are better off cannot have it both ways. We cannot have the privileges of better pensions , our own houses and more health and social care at the expense of other generations and even those within our generation who are unlikely to have such property rights or such claims on the NHS and Local Government.

The promise that no-one has to sell their house to meet their long-term care costs is a good promise. I assume it will mean that debts accumulating from home-based and residential care can become a charge on a property, to be met- like inheritance tax- at the point of death

This system creates a much greater certainty in the planning of public finances and it has the right social consequence. It ensures that surviving partners can continue to live in their home and it enables the next generation to plan for the bib bill coming.

Taking on your parent’s debt

There is a generation of people in this country who are coming into cash as never before, they are those in their forties to sixties who have accumulated wealth coming from pensions and properties which have risen in value inexorably over the past 20 years. To this portfolio of wealth, they have anticipated the arrival of inheritances unencumbered by debt.

The Tory Manifesto is a wake-up call to this lucky generation. The care of their parents is not another nanny-state hand-out , as our university educations were. It comes at a price, and now we are going to have to think what that price is.

Not before time.

long term care

The immediate reality

Further reading

For a broad overview of the issues,  this OECD report is  a good start: .

You can see all the OECD publications on long term care here:

For the UK perspective, the best report to read is the now 5-year old Dilnot Commission: (Fairer Care Funding)


The Local Government Association 2016 State of the Nation report on social care funding:


The King’s Fund is a highly (probably the most) credible think-tank commentator on the issue:  – for their publications see: . The King’s Fund have a ‘reading list’ facility on their website us a very useful and up to date resource on the future of funding social care, here it is:


The PSSRU is the leading academic consortium that investigates social care and has produced some excellent research:

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FAB Index provides voice of reason

voice of reason


FAB Index provides voice of reason amid wild speculation on future life expectancy

First Actuarial’s Best estimate (FAB) Index remained relatively stable in April, showing a month-end surplus of £287bn across the 6,000 UK defined benefit schemes.

The FAB Index figures use a life expectancy model produced by the Continuous Mortality Investigation (CMI) – specifically the 2015 version. Each year the CMI updates its model to reflect the latest mortality statistics. The 2016 version, released in March 2017, predicts shorter life expectancies than the 2015 version.

This has led to some industry commentators claiming that as much as £310bn (or 15% of their estimated total liability of £2tn) could be wiped off the UK’s defined benefit pension liabilities if current mortality trends continue. This has caused a backlash from other industry commentators warning that: “…it is potentially misleading to refer to liability reductions of 15% without placing such estimates in a proper context.”

To provide that context, First Actuarial has estimated the impact on the FAB Index if the 2016 CMI tables were adopted, alongside the impact of making no allowance at all for life expectancy improvements – which some commentators have called: “…a relatively extreme outcome”. The impact of greater long term improvements in life expectancy has also been estimated, to highlight the potential effect if the recent experience is merely a “blip”.

  FAB life expectancy assumption Using 2016 CMI tables Removing all long term improvements Using greater long term improvements
Life expectancy for a male aged 55 (years) 88 87 84 89
Life expectancy for a female aged 55 (years) 90 89 86 91
FAB surplus £287bn £298bn £426bn £272bn
Impact on FAB surplus +£11bn +£139bn -£15bn
As a % of FAB liabilities 1% 11% 1%

First Actuarial Partner, Rob Hammond says:

“Context is crucial here. Whether the latest analysis coming out of the CMI is a trend or a blip, and whether this experience is also true for individuals in defined benefit pension schemes, will become clearer over the coming years. But it is important that Trustees and employers are given the full story.

“Our FAB Index aims to provide one side of that story (with the buyout position of schemes providing the other). It is also an attempt to move us away from an obsession with sensationalist reporting – be this of the scaremongering variety that we have become used to seeing, or what we have seen here with talk of a 15% reduction in liabilities, which appears to be an overly optimistic extrapolation of a recent observation of life expectancy.

“Over the month of April 2017, the FAB Index remained relatively stable (as in previous months). Whilst it might not grab the headlines, the FAB Index provides the voice of reason in demonstrating that the best estimate position of the UK’s defined benefit schemes is in good health, with a gradual upward trend as a result of Trustees and employers funding schemes in a sensible and prudent manner.”

The technical bit…

Over the month to 30 April 2017, the FAB Index remained relatively stable with the surplus in the UK’s 6,000 defined benefit (DB) pension schemes falling slightly from £294bn to £287bn.

The deficit on the PPF 7800 index also worsened slightly over March from £226.5bn to £245.6bn.

These are the underlying numbers used to calculate the FAB Index.

FAB Index over the last 3 months Assets Liabilities Surplus Funding Ratio ‘Breakeven’ (real) investment return
30 Apr 2017 £1,514bn £1,227bn £287bn 123% -0.8% pa
31 Mar 2017 £1,519bn £1,225bn £294bn 124% -0.7% pa
28 Feb 2017 £1,511bn £1,223bn £288bn 124% -0.8% pa

The overall investment return required for the UK’s 6,000 DB pension schemes to be 100% funded on a best-estimate basis – the so called ‘breakeven’ (real) investment return – has remained at around minus 0.8% pa. That is, a nominal rate of just 2.9% pa.

The assumptions underlying the FAB Index are shown below:

Assumptions Expected future inflation (RPI) Expected future inflation (CPI) Weighted-average investment return Mortality projections
30 Apr 2017 3.7% pa 2.7% pa 4.1% pa CMI 2015 [1.25%]
31 Mar 2017 3.6% pa 2.6% pa 4.0% pa CMI 2015 [1.25%]
28 Feb 2017 3.7% pa 2.7% pa 4.1% pa CMI 2015 [1.25%]



Notes to editors

The FAB Index is calculated using publicly available data underlying the PPF 7800 Index which aggregates the funding position of 5,794 UK DB pension schemes on a section 179 basis, together with data taken from The Purple Book, jointly published by the PPF and the Pensions Regulator.

The FAB Index will be updated on a monthly basis, providing a comparator measure of the financial position of UK DB pension schemes.

Fab May

Rob Hammond is available for interview. Please contact:

Rob Hammond on 0161 348 7440 or, or Jane Douglas on 0161 348 7463 or



About First Actuarial

First Actuarial is a consultancy providing pension scheme administration, actuarial, investment and consultancy services to a wide range of clients across the UK.

We advise a mixture of open and closed defined benefit schemes with our clients concentrated in the small to medium end of the pension scheme market. Our clients range across a number of sectors including manufacturing, financial services, not for profit organisations and those providing services previously in the public sector.

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Tory Theresa gets tough on pensioners.

THERESA May will end the triple lock on pensions and use the money saved to help younger workers instead.

It will be one of the most controversial parts of the Tory election manifesto being unveiled by the PM.

She will scrap a system that has seen OAPs’ cash shoot up for seven years.

Under it, the state pension rises by the rate of inflation, average earnings or 2.5 per cent a year – whichever is the highest.

The move – introduced by former Tory PM David Cameron in 2010 – has increased payments by £1,100 annually, while working age Brits’ pay has flat-lined since the financial crash in 2008.

Theresa May,  is set for a large majority according to the polls

Now that pensioners are more comfortable, Mrs May will insist it is time the nation tackles the growing gap in wealth between the generations.

She is expected to argue that pensioners’ income is now on average £20 a week higher than working age Brits.

But as both Labour and the Lib Dems have already committed to keeping the Triple Lock, the PM’s bold move will ignite a furious row.

A senior Tory source said: “Scrapping the Triple Lock will cause us some pain, but it is the right thing to do for the country.

“Theresa is confident that she can persuade people about that, and most people agree we need to rebalance between the generations.”

In another controversial move, Mrs May will also scrap the Tories’ tax lock.

Introduced two years ago by her predecessor Mr Cameron, the law forbids the government from raising income tax, VAT or national insurance contributions.

But the PM has already ruled out hiking VAT and will again today recommit to the Tories income tax cuts promises from the 2015 election.

That leaves Chancellor Philip Hammond free to raise NICs, and make another attempt to hike the hated tax on self-employed – the tax raid on White Van Man he was forced to abandon after the Budget in March.

But Mrs May will carry on with the party’s promise to raise the basic rate income tax free personal allowance to £12,500 and the higher-rate to £50,000 by 2020.

Planned Corporation Tax cuts will also stay, moving from today’s 19% rate down to 17% in 2020.

The Tories manifesto will also:

See also ;

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The purpose of pensions- served by Transparency.

Yesterday’s Transparency Symposium, organised by Family Agethangelou , delivered a series of insights on the Purpose of Pensions. The DWP were in attendance, I guess the political message was simple, we want pensions to meet people’s expectations of later life. That means a clear view of liabilities and a clear run for asset growth.

The day helped my understanding of both – thanks to this man


Andy Agethangelou


A Clear view of liabilities

Managing those expectations is critical to fulfilling the purpose of pensions. So far we have painted retirement as a Shangri-La with Rob Bryden round every corner. The truth can be tougher.

Today we will see the Conservative Manifesto which will focus on the big ticket items;- who pays to keep pensioners warm, in health and who provides them with care if they are unable to look after themselves. I will deal with these morbid subjects in another blog, it was the elephant in the Pension Insurance room (thanks PIC and thanks Agethangelous)

A future conference should focus on the liabilities we will hear more about in the next three weeks.

A clear run for asset growth

There are two things that can drive transparency, Government intervention and competition. We will wait till the Summer to hear how the FCA will drive competition in asset management.

Much to my relief we have finally seen some competition to the hegemony of the fund and platform industry. It has come from an American fund management group – Vanguard

I had started the day writing this letter.

Vanguard’s D2C platform, a game changer for transparency?

The arrival of the Vanguard Direct to Consumer (D2C) platform has profound implications for transparency in the pricing of retail investment products (including DC workplace pensions).

Anyone with a head for numbers can see that there’s a pricing miss-match between workplace pensions, typically delivered at 0.5%pa and the same funds on retail investment platforms – delivered at at-least double the price.

Since the persistency with which investors hold funds in ISAs, matches the duration of their retirement savings accounts, there is no obvious explanation for the disparity. The arrival of Vanguard with an all-in price of around 0.3% for investment management and administration has the impact of the child who pointed out that the Emperor was wearing no clothes!

Detractors will point out Vanguard D2C offers no choice, no advice and no active management. They are already labelling it a “vanilla” product, (as if all we should buy is Tutti-Frutti).

I am glad that consumers now have the choice of paying less for less, especially if they can’t see much value in paying more. Having a benchmark price for the plain product allows us to assess the value for the expensive product with some idea of the money it’s costing!

I say “some” for it is not until we know the hidden “transaction” costs of the vanilla and tutti-frutti approaches, that we can really understand “value for money” in an investment product.

But the launch of Vanguard D2C is a big step on the road to fund transparency; a game-changer perhaps!

If we are to pay for the big ticket items, we will need assets. Vanguard have given assets a clear run to grow. It is not always so easy to find transparency.

The room heard yesterday that the Australian Super system, that manages some AusD 1.2tr of assets has had some $600bn of savings go missing. This is the money estimated to have been syphoned out of the system to pay the costs of the Pension Industry.

Jon Spain, a veteran actuary closed the meeting by asking – movingly – whether those who set occupational pensions up in the 50s and 60s – ever envisaged our having a pensions industry.

Vanguard’s bold move is a step away from the pensions industry to a simpler world where money is invested with limited intermediation, limited cost with the aim of maximising the amount of capital available to pay the big bills of tomorrow.

Jon Spain

Jon Spain had the last word

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Hargreaves versus the “vanilla solution”.


I was amused when opening Linked in this morning to find a pension leads salesman offering “clients who had got compensated for fault SIPP investment and were looking to adviser to provide them with a “vanilla solution”.

Just what the leads salesman knew about vanilla solutions or indeed about advisers is a matter of speculation. But any adviser who is buying leads to advise the once bitten twice shy would do well to look at what Vanguard announced yesterday.

Vanguard’s news is the game changer

Vanguard are offering their investment platform (administration to the older ones of us) at 0.15%, this compares with 0.45%pa for Hargreaves Lansdowne ( a reasonable market benchmark). Vanguard are offering “vanilla” funds at 0.15% , a third of what you’d pay for passive management on other platforms and a smaller fraction of the fees being charged by active managers. What’s more- you can DIY invest, by-passing advisory fees that can put another 1% pa on the bill.

The news was enough to wipe 8% off the value of Hargreaves Lansdown’s share price (on a day when the FTSE 100 broke the 7500 barrier). The general deflation in prices of platform and fund managers operating in the UK retail market suggests the market knows this is significant. It is surprising- the Vanguard announcement having been well heralded- that not more of the impact had been built into stock prices.

The fall in share price presages three shifts

  1. A shift in new flows away from advisory platforms with active funds
  2. A shift of existing advisory assets to Vanguard (and similar)
  3. A reduction in prices and margins at advisory platforms to compete.

Just how fast this will happen is also a matter for speculation. Vanilla funds sound unattractive when there is tutti-frutti at the stand. The trusted relationships built up by advisers will enable advisers to re-sell their services to troubled customers and much of the retail money flowing to advisers is coming from defined benefit pension schemes and will stay with advisers under “conditional” deals.

Hargreaves are right to tell the market they have been getting away with it for years and will continue to. For many people a stockbroker or an IFA who behaves like one, has a cachet not matched by Vanguard’s one dimensional approach.

Whether its for the razzle-dazzle of tutti-frutti fund management or the social cachet of “wealth management”, the funds industry and its platforms – has fight in it yet! But it has been hit below the water line – it will not be the warship it was.


Today there’s a “transparency symposium” of the “transparency taskforce” and I will be there. I will look forward to hearing what other delegates make of the Vanguard announcement and the speed they think , the changes I’m foreseeing- will happen.

The general view of the room will be interesting re. the parts of the market that will be impacted. The last game changer for the HNW community was the collapse of Equitable Life- which accelerated the remarkable rise of Hargreaves Lansdown and in its wake St James Place and the vertically integrated wealth managers.

Vanguard’s proposition has much of the virtue perceived in the Equitable – low cost, non-advisory and upfront in its dealings. Of course the Equitable turned out to be anything but a transparent organisation but it is hard to see the Vanguard’s weakness, The folly of the Equitable’s downfall was that its management did not react quickly enough to the new economic climate of low inflation and interest rates and continued to assume its invincibility.

The empires built on fund platforms and the massive margins within active funds look equally vulnerable today.

The vanilla funds, so avidly requested by the leads salesmen, may be more than a passing fad. In my view, the Vanguard announcement will do more for transparency in fund management than any other single event this so far this decade.

How others react and change their business , will be extremely interesting. I am intending to be an early user of the new Vanguard “vanilla solution”.

Further reading

Details of the Vanguard service can be found here;

Industry chit chat can be found here (and on all other retail sites)

Industry chit chat can be found here (and on all other retail sites)

Guardian promotes half-price fund management;


Very vanilla

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Tata puts pensions first


Though the details of Tata’s offer to the members of the British Steel Pension Scheme (BSPS) are only sketchy , it is clear that they are focussed on members getting “PPF+” on existing benefits and a defined benefit pension against future service.

The deal looks similar to that offered to members of  Royal Mail’s scheme and looks- as Steve Webb says to Professional Pensions

“a much better solution than the idea of a ‘zombie’ pension scheme with no sponsoring employer or a special deal done for one pension scheme, which was the government’s original plan last year.  The potential impact on the PPF is now much reduced and many pensioners will get a better outcome than they would have done”

Not the deal some expected

The deal will confuse those who saw the options open to the Regulator as binary “Zombie of Lifeboat”. Writing in the FT John Ralfe asserted in April

The regulator can only approve a deal if it meant the pension scheme got more cash than if Tata Steel UK simply went bust, and the pension scheme got its share of assets as an unsecured creditor, and by calling any guarantees from group companies.

Under the proposed deal Tata Steel would pay £550m into BSPS as well as provide it with a 33% stake in Tata Steel UK.

Tata Steel UK has also agreed that following the RAA it would sponsor a new scheme and would offer members of the BSPS an option to transfer into this new scheme.

This is a far cry from the £1.5bn cash injection that John supposed the PPF would demand to keep BSPS from its clutches.

The PPF’s new rules for zombie schemes — cleverly designed to minimise its risk — mean the British Steel Pension Scheme would have to start with a surplus against the assets needed to pay the PPF level of benefits.

In December 2015 the pension scheme had a £1.5bn PPF deficit, which will be at least that today. For the pension fund to qualify as a zombie scheme, Tata Steel would have to inject at least £1.5bn cash, and possibly a lot more, depending on the cushion the PPF requires.

How will members and their representatives react?

Tata states in its latest accounts that the deal has been agreed in principle with both the Pensions Regulator and the Pension Protection Fund but that it is subject to approval of the stakeholders of the new RAA.  Tata concludes that there is

“presently no certainty with regards to the eventual existence, size, terms or form of the new scheme”.

The new scheme would have lower future annual increases for pensioners and deferred members than the BSPS but offer better than PPF benefits as well as significantly less risk for Tata.

Importantly, the BSPS Trustee chairman Allan Johnson is recommending the terms of the new arrangement to members. This is no tick in the corporate box, Tata is one of the best run pension schemes in Britain, it’s operating costs per member at £63 are amongst the lowest to its sponsor.  Members have every reason to consider Johnson has been acting- as a trustee should, in their best interests.

No pre-pack

To what extent Tata are sponsoring the new scheme – as opposed to setting it up and walking away – is unclear. That is presumably the quid per quo for not stumping up the £1.5bn that the PPF are said to have originally demanded for an RAA solution.

But the matter is not open and shut and members appear to be free to choose the PPF instead (as they were in the Kodak case – where the business similarly became an asset of the scheme).

John Ralfe, writing in the FT in April, claims that all 70,000 members already drawing a pension, and many of those wanting to take early retirement, would be no better off, and around 6,000 would be worse off than going into the PPF.

TPR also point out that should the RAA fail, the impact on the PPF could be much worse than the current “deficit” it calculates for the scheme.

What is clear is that Tata are avoiding going into administration and “pre-packing” its pension liabilities into the PPF. This is surely a step in the right direction.

BSPS – a healthy scheme

As I’ve mentioned above, BSPS is a well run scheme, it has low operating costs and a relatively low PPF deficit to its £15bn size. As we pointed out last month, this PPF deficit is actually a surplus if considered using the FABI basis of valuation.

In April First Actuarial wrote on this blog

reports of an offer by Tata Steel to make a one-off payment of £520m into its £15bn UK pension scheme – the British Steel Pension Scheme (BSPS) – have been criticised as not going far enough to plug its funding deficit nor sufficiently protecting the Pension Protection Fund, with suggestions that its funding deficit could increase to as much as £2bn at its 2017 actuarial valuation.

Tata workers

First Actuarial have estimated that using assumptions in line with those used for the FAB Index, the BSPS could easily have a surplus of £2bn calculated on a best-estimate basis. Whilst not necessarily suitable for funding purposes, it does demonstrate that more context needs to be given when reporting on the financial position of UK pension schemes.

It would have been a great shame if the BSPS had gone into the PPF, because so much of it is good. That it looks like staying outside the PPF (at least for members who choose to stay in the RAA) is also good.

It is good that Tata are agreeing to risk sharing and that PPF and tPR are finding a way for that to happen.

It is good that the Trustees are a party to this solution and recommending it.

Let the members decide

Finally it is good that the make or break of this deal is in the hands of the members. It is clear they will be taking more of the risk themselves, at least in having to cover the shortfall between what they would have got and the terms of the new arrangements.

Some will argue- as John has argued- that the PPF presents a safer harbour and that reliance on a private arrangement is too risky.

The employer representatives (the Unions) could say no collectively. But ultimately it will be down to individual members to decide what is best for them; which – provided the choices are clearly laid out- is good for them.

FT article “It’s Zombie versus Lifeboat” by John Ralfe (April) here;

Professional Pensions article on the RAA deal (May) here;


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If it could go wrong – it did go wrong – a cracking night at Windsor races!

windsor 2

Back in 95 Windsor even had jumping!


We all had a cracking night at the Windsor Races last night!

  1. The Plowman was  bamboozled by the ticket website and ended up buying twice as many tickets as we needed.
  2. Most of our party were stranded at Waterloo station when a train got stuck on the points at Queenstown Road
  3. The meeting was abandoned half way through for the second year in running because of unsafe riding conditions
  4. Having had a couple, we returned to London on a train where SW trains had disabled the toilets!

That we still had a good time is due to the good nature and tolerance of our large party, arranged by E O’Connor – may thanks Eamonn.

It was also made very pleasant by the staff at Royal Windsor Reception who could not have been nicer about our super-abundance of tickets! Thanks too to the staff on the course and in the bars who were great throughout. Windsor races

Questions remain to be answered by those who run Windsor as to whether they are competent to do so. For the owners and trainers of the horses in the last three races – this was pretty bad news – for the jockeys – including Joe Egan who fell off- abandonment was the only option. The course will have some explaining to do to the BHA executive.

Question also must  be asked of South West Trains,  they have done the decent thing and handed the franchise on to GWR from October, but there seems no end to the misery (especially at weekends) for those who travel the London Waterloo – Windsor line.

Here’s to things getting better!

There is nothing so good as a jolly to Windsor on a Monday night, it has become a ritual not just for those who live in Berkshire but thousands of Londoners who come down on the train and the boat to the course.

Let’s hope that Windsor don’t have any more mishaps and that South West Trains and Network Rail get their acts together! We have a super summer ahead of us and I look forward to advertising a free night at the racecourse to 8 happy punters later in the year!

Report of the evening in the Racing Post ;

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“No more junkets if you cut our margins” – IFAs warned.


Delegates at PIMS 2017, a floating holiday for Financial Planners (and journalists), seem have  been threatened .

“Platforms will struggle to cut charges without affecting existing services”, Seven Investment Management (7IM) head of platform Verona Smith told advisers (including New Model Adviser to whom I’m grateful for this reporting!

‘I get asked all the time where platform fees are going. The answer is they are going only one way and that is not up,’ she said.

‘But the service I am going to give you is not a service you or your client is going to like if we put the platform fee down.

‘If you want me to halve the platform fee, then don’t expect the phone to be picked up after one ring.’

The threat is hardly veiled!

PIMS claims to support “financial planners” , but a cursory inspection of its sponsors suggests that it is really about wealth management. wealth.PNG

Make no mistake, PIMS is an aquatic trade show.

The context!

Here is what a typical day aboard the cruise-liner Aurora looks like for PIMS delegates

7.45am Pre-arranged breakfast meeting  with a supplier and fellow delegates
9am Mixture of conference sessions, supplier meetings and requested free time
1.15pm Pre-arranged lunch meeting with a supplier and fellow delegates
2.45pm Mixture of conference sessions, supplier meetings and requested free time
6.30pm Free time or an activity
8.30pm Pre-arranged dinner meeting with a supplier and fellow delegates
10.30pm Post dinner drinks and evening entertainment

While you toy with the negotiations around “requested free time” and speculate what kind of evening entertainment begins at 10.30, you can only marvel at the IFA’s complicity.

The main advantage of a cruise ship (for the suppliers) is that you cannot get off, other advantages include limited capacity to make phone calls and with a bit of luck, no access to the internet.

Delegates are sitting ducks for “suppliers” .

The threat itself

I am struggling to understand what an intermediary needs by way of “service ” from a fund manager like 7IM. If its measure is the number of rings an adviser needs to speak to Veronica, then advisers need not quake in their Church’s.

Coincidentally, a paper arrived in my inbox yesterday from a research organisation called Cicero, that directly addressed the question of service, not just the service that IFAs get from suppliers but the service they give to their clients.

Surprisingly, IFAs don’t seem particularly keen to embrace technology

cicero 1.PNG

Less than half the IFAs questioned saw much value in a higher level of technological integration with their “high net worth” clients.

Apparently the HNWs backed this up.

Cicero 2

The threat for IFAs is not from clients demanding new ways of doing things, the IFAs get this. The threat is that 7IM will stop picking the phone up after one ring. By extension they might even stop junketing IFAs on cruise liners while telling them this unpalatable message.

What of the customer?

In April the Financial Conduct Authority (FCA) announced it would review the platform market after it identified a number of concerns about competition in the space.

The regulator said it would look at ‘complex charging structures’ on platforms and examine whether platforms were able to put pressure on asset management charges.

By extension , it will be reviewing the users of platforms (the IFAs) to see what competition is happening. I doubt that the FCA will be asking how many rings an IFA has to wait to speak to their 7IM agent.

Instead , the FCA may be asking some of the questions asked in the Cicero Report “Distribution and Technology – the role of technology across the advice chain”.

The report concludes that the advice “industry” has no real long-term choice other than embrace technology.

“Millennials are living their advice on-line and that’s where they are going for advice”.

Which isn’t quite true, as by the time the millennials have built (or inherited)  the wealth to replace the current client bank, the advisers will be retired.

I think this is the real message for Christopher Woollard at the FCA. The current interests of clients and advisers is aligned. They want a comfy time where the phone is picked up in one ring, where no-one puts too much pressure on price so that a long and healthy retirement beckons.

If this is the message that IFAs are allowing to go to the FCA – and the Cicero paper was to have been discussed by Woollard (till Purdah came down) – then neither 7IM or the platform managers or the IFAs that use these platforms , has a leg to stand on.

Because the one thing that none of these discussions addresses , is the investment outcomes for the people whose wealth (or savings) are being managed.

Vanguard are reported to be about to launch a service where the total cost of ownership for a fund will be 0.3% pa (30bps). The reports are in the FT- a link is included at the end of the blog. While Vanguard will not disrupt the trusted relationship of IFA/client, it will attract the large number of non-advised HNW customers who are fee conscious. Increasingly the old style, high-priced advised platforms and funds will struggle to compete for these new customers.

Service must be digital – prices must be slashed and outcomes improved

The state of the wealth management marking is truly shocking. Compared to the deal being offered members by NEST , L&G and other workplace providers, the platforms are expensive and hopelessly intermediated. With a few exceptions, they need advisers to operate them and PIMS 2017 shows that nothing much has changed since the early 1990s (when I went on one of these cruises myself).

There is an alternative for IFAs keen to learn and create best practice. An example is the Great Pension Transfer debate which has been set up for IFAs by IFAs and features a great line up at an accessible venue and has no sponsorship from “suppliers”. There’s a link to the Great Pension Transfer debate below.

7IM provide a link to the two events, as the idea for the Pension Transfer Debate was born from the FT conference in April at which 7IM were both sponsor and speaker. So appalled were some delegates at the lack of technical knowledge and balance from some of the speakers that they decided to set their own event up – for their own learning.

The 200+ IFAs who have already signed up will be joined by many more before June 19th. If you are an IFA and you are fed up with being junketed, then maybe the Great Pension Transfer Debate is for you.

A word of warning though, there is no telephone to pick up. To register, you’ll have to do things digitally – it’s the only way to keep costs down and get standards up!

Places at the Great Pension Transfer Debate can still be reserved at

PIMS 2017; cutting prices will reduce service ,7IM warn – New Model Adviser –

FT report on the new Vanguard platform that looks like slashing the cost of fund ownership;


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Get us baby-boomers back to work!

Alison and Matthew

Alison Davis and Matthew Le Merle – very Joshua Reynolds


The photo is of two college friends who had a full page splash in this weekend’s Sunday Times. Alison, was born a few days before me and we were at College together, Matthew met her at Mckinsey in the early eighties, he too is my age. The article claims they have left the corporate rat-race but this is “utter bollocks” to quote JR.

Alison heads the RemCo at RBS while Matthew is one of the busiest business angels in the States. Both have portfolio careers as well as five happy children. They are of the world but have reinvented the way they live their lives to fit being wealthy, child independent and wise.


Alison Davis


They are an extreme example of the self-determinism that most of us aspire to. They do it- and it was good meeting them last week in Mayfair as they signed their first book on how to make a fortune.

My aspirations are lower, but like them, I am trying to reinvent myself as relevant to my world here in Britain. Fortunately, a couple of years ago, my employer – First Actuarial – realised that giving me their KPIs was going to be less successful than allowing me to work to my own. I very much doubt that their are more than an handful of employers in Britain who could show me the trust First Actuarial have done …in me.

For Alison and Matthew, the new start was possible because of their awesome reputations and the considerable wealth they had amassed in the jobs they had done in the first thirty years of their lives. But most people do not get to that level of lifestyle independence or even have the good fortune I have to be independent of an imposed work regime. Most people I know over 55 are demotivated and dysfunctional- at least at work.

We don’t lack energy – we may be in the wrong place!

If you want one great read, get hold of the digital FT and read this article by Lucy Kellaway. “To say older staff lack energy is ageist and wrong”. (the link is at the bottom of the article).

Us baby-boomers are booming with energy. “perky, well-rested and free from domestic ties” is how Lucy has us. She points out that the youngsters in the workplace are too busy getting wrecked to be good for work while the “thirty and forty somethings” are regularly hors d’action due to kids. She concludes that

 After a day at work in which I have been frantically active doing exciting and interesting things, I get on my bike and cycle home at a brisk clip. After a day in which I have wasted time, been bored or languished in meetings, I am so tired I can barely contemplate a short bike ride.

This may explain why some older people slouch around all day at work looking sluggish. It is not because they are over 50. It is because they do not find work especially exciting any more. They have simply been doing the same thing for too long

We all know about the demotivated and demotivating elder worker, eeking the days out till the pension kicks in. They are destructive to the workplace as any malware.

But  I feel in the right place right now, so do my friends Ali and Matthew and so could you, if you were our age and had the opportunity to live your own life, work your own work. People who I hang around with are getting this, they want to be back at work but want to be doing what they feel good at, not what the text-book job description tells them to do.

KPIs for the fifty year old should be set by the 50 year old and if the employer doesn’t want there skills and their work-plan, then an amicable parting of ways should be agreed.

Let’s hope that Britain keeps its next generation of Matthew and Alisons and that it makes more people like me productive- not destructive – to the workplace.

mark lee

Me and Mark Lee – another boomer adding value his way




Link to Lucy Kellaway article;

Link to Alison and Matthew’s new book;

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