Cash ISAs labelled unfair, unclear and poor valueBy Victoria Bischoff Citywire | 00:01:00 | 31 March 2010
Banks are not giving consumers a fair deal on cash ISAs, campaign group Consumer Focus has told the Office of Fair Trading (OFT) today.
Consumer Focus has attacked the cash ISA market for the:
•Difficulty in switching. Very few people are switching between ISAs despite the apparently large number of products available on the market. This is because it can take weeks to go through an unnecessarily bureaucratic and inefficient switching process.
•Lack of transparency. It is often unclear how much interest people are earning on their savings. Rates are hidden in complex tables and it is often hard to find interest rates on old accounts.
•Relative decline in interest rates. Interest rates on cash ISAs have fallen much further than what homeowners pay on their mortgages or even the rate of interest paid on other savings accounts.
•Banks are ‘bait pricing’. Many providers are using ‘bait’ or ‘bonus’ interest rates to attract savers, but after the initial bonus period has finished there is little competition and the products often offer poor value. Meanwhile, banks are secure in the knowledge that when rates plummet consumers are unlikely to switch.
The Financial Services Consumer Panel has welcomed Consumer Focus’ complaint, comparing the way banks sell cash ISAs to payment protection insurance sales and unauthorised overdraft charges.
Adam Phillips, chairman of the Consumer Panel, said: ‘Here is yet another example of banks being more interested in making money than in their customers getting a fair deal’.
‘We will press the FSA to take action. It cannot be a fair outcome for consumers – or what the Government wanted to achieve in providing this tax incentive – that people end up with little more interest from their tax free account than they would get from an ordinary account,’ he added.
However, the British Banker’s Association criticised Consumer Focus for not discussing its complaint with the banking sector, claiming if it had been given the chance it could have explained the work it is already doing with the regulator to help ISA customers.
The BBA said: ‘From May, customers will be given advanced notification of any material reduction in the interest rate on a cash ISA, plus advance notice of the end of any bonus or introductory rate. Consumer Focus erroneously refers to the Banking Code rules on this issue, but these were superseded by Financial Services Authority rules last November’.
BBA has also said the Consumer Focus investigation is ‘misleading’, as it was an online poll of just over 400 www.moneysavingexpert.com users.
Responding Martin Lewis, the founder of Moneysavingexpert.com, accused banks of ‘deliberately confusing’ consumers. He said their lack of transparency is a ‘clever trick’ and claims it is not ‘beyond their wit and wisdom’ to make the details of cash ISA accounts much clearer for consumers.
He advises customers to be more active in their approach to managing their savings accounts and above all 'ditch and switch' to a better account if they are not getting a good deal.
Wednesday, 31 March 2010
Tuesday, 23 March 2010
Capital asset pricing model
Capital asset pricing model
In finance, the capital asset pricing model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk. The model takes into account the asset's sensitivity to non-diversifiable risk (also known as systematic risk or market risk), often represented by the quantity beta (β) in the financial industry, as well as the expected return of the market and the expected return of a theoretical risk-free asset.
The formula
E(ri) = Rf + βi(E(rm) - Rf)
where:
E(ri) = return required on financial asset i
Rf = risk-free rate of return
βi = beta value for financial asset i
E(rm) = average return on the capital market
In finance, the capital asset pricing model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk. The model takes into account the asset's sensitivity to non-diversifiable risk (also known as systematic risk or market risk), often represented by the quantity beta (β) in the financial industry, as well as the expected return of the market and the expected return of a theoretical risk-free asset.
The formula
E(ri) = Rf + βi(E(rm) - Rf)
where:
E(ri) = return required on financial asset i
Rf = risk-free rate of return
βi = beta value for financial asset i
E(rm) = average return on the capital market
Monday, 22 February 2010
New client testimonial today - Professional and Trustworthy Approach
"I have been a client of HK Wealth Managers for over 5 years and have benefited from the professional advice and management of our portfolio, such that even during the recent economic turmoil we have felt assured that we had the right financial strategy in place. Approachable, trustworthy and with high integrity".
Interest rates could be held until 2011
Interest rates could remain on hold until 2011 but are likely to rise sharply thereafter, according to Skandia.
Skandia Investment Group (SIG) says interest rates are likely to remain on hold until at least the autumn, with tighter monetary policy after the general election delaying an increase.
SIG senior fund manager Ryan Hughes thinks a cautious outlook on behalf of the Bank of England could mean rates may not even rise until next year.
"The Bank may want to wait until it has seen two quarters of above trend growth, which on its forecasts will not happen until January 2011," he says.
But Hughes thinks once rates do rise they will do so sharply.
"The current level of interest rates is the lowest on record and a long way below the 5% rate many economists think of as neutral," he says.
"While there are good reasons why interest rates may stay low relative to history for some time to come, that should not stop significant rate increases in a year or two."
In the meantime, he adds, the low interest rate environment will support the economy, equities and corporate bonds.
His comments follow the MPC's decision to keep base rates at 0.5% earlier this month.
Garry Hale
www.hkwm.co.uk
Skandia Investment Group (SIG) says interest rates are likely to remain on hold until at least the autumn, with tighter monetary policy after the general election delaying an increase.
SIG senior fund manager Ryan Hughes thinks a cautious outlook on behalf of the Bank of England could mean rates may not even rise until next year.
"The Bank may want to wait until it has seen two quarters of above trend growth, which on its forecasts will not happen until January 2011," he says.
But Hughes thinks once rates do rise they will do so sharply.
"The current level of interest rates is the lowest on record and a long way below the 5% rate many economists think of as neutral," he says.
"While there are good reasons why interest rates may stay low relative to history for some time to come, that should not stop significant rate increases in a year or two."
In the meantime, he adds, the low interest rate environment will support the economy, equities and corporate bonds.
His comments follow the MPC's decision to keep base rates at 0.5% earlier this month.
Garry Hale
www.hkwm.co.uk
Friday, 19 February 2010
Sound financial advice - client testimonial provided today:
We have been clients of HK Wealth Managers for a number of years and continue to be impressed with the advice Garry provides. His ability to explain matters in a simple manner has helped us make the right financial decisions for the future. We particularly appreciate Garry’s style of advising which is to lay out the facts and let us make the decisions. He is thoroughly professional both in meetings and in his communication pre- and post-meeting. An excellent source of sound financial advice. Thank you Garry!
Thursday, 18 February 2010
Shelter your money from the tax man...
The Individual Savings Account (ISA) is a rare opportunity which the Government offers you to shelter your money from the tax man. For every pound you put in, you pay no further personal tax on any profits earned and do not even have to declare its existence to the tax man. This year, you can invest up to £7,200 - or, if you are over 50, up to £10,200. However, as the year end - and then tax year end - start to creep up on all of us, you need to make sure you act or you lose this year's opportunity forever.
Of the £7,200 (£10,200), up to £3,600 (£5,100) can be invested into cash - on deposit with a bank or building society or via cash funds. The rest can be invested in the much more volatile world of stocks and shares - or a funds of stocks and shares, the latter of which will at least spread your risk a bit further given that the value is at risk in this area and it is possible you may not get back the amount you originally invest.
ISAs are available for lump sum investment but also for regular savings. Whatever you choose to do, however, the deadline is approaching and you therefore need to start planning to make sure you can take full advantage. Of course, you do not have to use the whole allowance - but if you can, or if you have investments elsewhere that could be transferred over, sheltering them within an ISA does provide a more tax efficient way to hold on to any gains you do make.
Please note: the exact tax benefits of ISAs vary depending on your circumstances and are subject to change.
Of the £7,200 (£10,200), up to £3,600 (£5,100) can be invested into cash - on deposit with a bank or building society or via cash funds. The rest can be invested in the much more volatile world of stocks and shares - or a funds of stocks and shares, the latter of which will at least spread your risk a bit further given that the value is at risk in this area and it is possible you may not get back the amount you originally invest.
ISAs are available for lump sum investment but also for regular savings. Whatever you choose to do, however, the deadline is approaching and you therefore need to start planning to make sure you can take full advantage. Of course, you do not have to use the whole allowance - but if you can, or if you have investments elsewhere that could be transferred over, sheltering them within an ISA does provide a more tax efficient way to hold on to any gains you do make.
Please note: the exact tax benefits of ISAs vary depending on your circumstances and are subject to change.
Friday, 12 February 2010
The 'Truth About Money'.
The Truth About Money is to help more people, mainly business owners, professionals, successful high earners and those retired with capital, gain access to the TRUTH about money.
It’s a fact that the majority of people have no idea where they are heading financially. They may have assets, investments, and/or high levels of income, but most people have no idea what it all means, or where they are heading.
That is because the majority of financial advisers lack the necessary tools to demonstrate to clients ‘what their future looks like’ – quite simply they are guessing about their clients' future. They focus their attention on ‘products’ rather than REAL solutions that give clients what they want out of life.
More importantly, they fail to answer the BIG questions which really need answering.
Questions like:
• “When, precisely, can I afford to stop doing the things that have become a drag…and start doing the things
I really enjoy?”
• “What do I have to do to ensure I NEVER run out of money?”
• “How much do I need to earn, save or sell my business for to give me what I want out of life?”
• Exactly what level of investment return do I need to achieve my objectives?
And possibly the biggest question of all…
• “How much is enough!?”
These are questions that need answering, and answering fast. Life is not a rehearsal.
The good news is HK Wealth Managers Ltd are advisers that can answer these questions.
They are financial planning professionals who use a special financial planning tool called truth™. It’s designed to tell you the truth about money. Pure and simple.
Making YOU the Centre of Attention
We put the focus back on you – on your goals, on your aspirations. Through a process called Lifeplanning™ we help you identify what’s important to you, the things that you want to achieve in your lifetime. Then we carry out a financial planning analysis. Not only are the details of your income, outgoings, assets and liabilities considered, but resources that may become available to you in your lifetime. This gives an accurate measure of your net worth and current and future financial situation. We help you estimate the cost of the life you want to enjoy in years to come.
We use truth™ software to put the two together. It produces a dramatic picture, which spells out the reality of your financial future. Suddenly you see it, understand it, and believe it. You and HK Wealth Managers Ltd can then model realistic “what if” scenarios that will demonstrate the different outcomes you can create. Many clients have found they can retire years earlier when they are armed with the truth about money. Others learn how they can spend more now and still be financially secure for the rest of their lives. Other clients identify what they need to sell their business for to be financially independent.
Finally, if your financial plan indicates that you need financial or investment products, then HK Wealth Managers Ltd are able to offer advice to identify products suited to your needs.
Whatever your situation, HK Wealth Managers Ltd can help take the guesswork out of your planning and help you make more sense of your money. To find out the Truth About Your Money contact HK Wealth Managers Ltd today – www.hkwm.co.uk.
Garry Hale AIFP, Dip PFS
Owner of HK Wealth Managers Ltd
It’s a fact that the majority of people have no idea where they are heading financially. They may have assets, investments, and/or high levels of income, but most people have no idea what it all means, or where they are heading.
That is because the majority of financial advisers lack the necessary tools to demonstrate to clients ‘what their future looks like’ – quite simply they are guessing about their clients' future. They focus their attention on ‘products’ rather than REAL solutions that give clients what they want out of life.
More importantly, they fail to answer the BIG questions which really need answering.
Questions like:
• “When, precisely, can I afford to stop doing the things that have become a drag…and start doing the things
I really enjoy?”
• “What do I have to do to ensure I NEVER run out of money?”
• “How much do I need to earn, save or sell my business for to give me what I want out of life?”
• Exactly what level of investment return do I need to achieve my objectives?
And possibly the biggest question of all…
• “How much is enough!?”
These are questions that need answering, and answering fast. Life is not a rehearsal.
The good news is HK Wealth Managers Ltd are advisers that can answer these questions.
They are financial planning professionals who use a special financial planning tool called truth™. It’s designed to tell you the truth about money. Pure and simple.
Making YOU the Centre of Attention
We put the focus back on you – on your goals, on your aspirations. Through a process called Lifeplanning™ we help you identify what’s important to you, the things that you want to achieve in your lifetime. Then we carry out a financial planning analysis. Not only are the details of your income, outgoings, assets and liabilities considered, but resources that may become available to you in your lifetime. This gives an accurate measure of your net worth and current and future financial situation. We help you estimate the cost of the life you want to enjoy in years to come.
We use truth™ software to put the two together. It produces a dramatic picture, which spells out the reality of your financial future. Suddenly you see it, understand it, and believe it. You and HK Wealth Managers Ltd can then model realistic “what if” scenarios that will demonstrate the different outcomes you can create. Many clients have found they can retire years earlier when they are armed with the truth about money. Others learn how they can spend more now and still be financially secure for the rest of their lives. Other clients identify what they need to sell their business for to be financially independent.
Finally, if your financial plan indicates that you need financial or investment products, then HK Wealth Managers Ltd are able to offer advice to identify products suited to your needs.
Whatever your situation, HK Wealth Managers Ltd can help take the guesswork out of your planning and help you make more sense of your money. To find out the Truth About Your Money contact HK Wealth Managers Ltd today – www.hkwm.co.uk.
Garry Hale AIFP, Dip PFS
Owner of HK Wealth Managers Ltd
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