Tenet business development boss to join SimplyBiz

SimplyBiz has hired Tenet head of business development Tom Hegarty as managing director of its New Model Business Academy.

Hegarty joins the training and development division after four years at Tenet. He previously held roles at MetLife and Friends Provident.

The not-for-profit NMBA has over 16,000 members and provides support to advisers developing skills in new business areas, as well as helping advisers work towards professional qualifications.

Hegarty says: “I intend to build on the solid foundations of the NMBA and improve and enhance the range of services it offers to advisers.”

He will be joined at SimplyBiz by Cath Faulds, who comes to the business from the Institute of Financial Planning and will serve as the firm’s head of strategic relationships.

‘Banned’ self-cert loans set for return

A new lender is looking to bring back self-certified mortgages at the start of next year.

The FCA banned so-called ‘liar loans’ in the Mortgage Market Review.

However, Graeme Wingate, the founder of unsecured lender Quick Loans, is looking to bypass UK regulation by setting up in an Eastern European country, the identity of which he would not disclose.

While the new lender, selfcert.co.uk, will not have to abide by UK regulation, it will have to adhere to the incoming Mortgage Credit Directive, although it is less strict on rules around creditworthiness and income verification.

The directive merely states that the borrower’s income must be “appropriately verified, including through reference to independently verifiable documentation when necessary”, whereas the MMR explicitly states “a firm must not accept self-certification of income”.

Wingate says: “We’re setting up a new company [in Eastern Europe]. The regulator out there has been very friendly and helpful to us, walking us through the process of getting a licence. It is quite a straightforward process.”

Wingate plans to passport into the UK under the Electronic Commerce Directive.

An FCA spokeswoman says: “A firm located in an EEA Member State can provide a lending service under the Electronic Commerce Directive to UK consumers, but the service has to be provided solely at a distance and online.

“This service, however, would not be regulated by the FCA and if something went wrong, the FCA is not generally able to intervene. Additionally there would be no recourse to the compulsory jurisdiction of the UK’s Financial Ombudsman Service.”

Wingate says he expects to obtain a lending licence within the next week.

Self-cert loans were initially meant to be for self-employed borrowers or those with irregular income but in 2007 they accounted for over 50 per cent of new lending, according to the FCA.

Trinity Financial product and communications manager Aaron Strutt says: “Self-cert mortgages are a real blast from the past and many brokers will be surprised that there is even a chance they will be available again.

“It is hard to see how self-cert can play a part in a modern financial market, even if a lender can get around the rules by operating online and via another country.”

The lender expects to launch in mid-January.

The announcement on Quick Loans’ website:

We are pleased to announce that as of January 2016 we will be at the forefront of bringing back self-cert mortgages to the UK through our new sister site.

Self-cert mortgages are important vehicles for those who are self-employed and want to get on the property ladder. Without them, those who went in to self-employment have often found themselves unable to get a mortgage – we want to reverse that.

We believe that the products were unfairly blamed for the banking crisis – in reality they actually had little or nothing to do with the crash, on this side of the Atlantic anyway. Blatant fraud (often by brokers) and mortgage backed security swaps in which banks lost their common sense were the real reason that the banks crashed. We intend to avoid both of those major factors.

The majority of people on self-cert mortgages did not default and are up to date on their repayments. We are confident that our own assessment process will reduce fraud as much as humanly possible and well within manageable levels.

Quick Loans Ltd has recently purchased the domain name SelfCert.co.uk – it is from this site we and our partners will slowly look towards proving the concept and viability of bringing back these products to the market on a larger scale. We expect interest to be high from day one, so much so that we don’t expect to meet demand on our own.

We will be in a position to release more details on this in the coming weeks with a launch date of mid-January 2016.

How to combine retirement income strategies

Aegon’s consumer research shows that 70 per cent of investors want some form of guaranteed income in retirement, and most also want to maximise the growth potential of their savings.

The good news is they don't have to choose. Clients can use Secure Retirement Income to create a guaranteed income that covers essential costs. Then they can invest remaining savings in flexi-access drawdown to maximise their growth potential.

Aegon currently has the only platform in the UK that lets clients combine a secure income with the growth potential of flex-access drawdown, all in the same place.

So why use one when you could have the best of both?

This simple explanation shows how investment priorities can change depending on spending needs.

To find out more visit www.aegon.co.uk/flexibility

Ian McKenna: What must platforms do to survive?

So platforms are dead. Or are they? After 15 years of an almost unanimous view that platforms are the future, their obituaries have appeared overnight. The death of platforms is perhaps an exaggeration but they are in need of serious surgery. Most are in the intensive care unit and, indeed, some will not survive. It is time to explore what they need to do to have a valid role in the future.

Selecting the platforms that are best for their business and their clients is going to be one of the most important factors in determining an adviser’s growth and profitability. This makes the FCA’s recently restarted review of their due diligence even more timely.

Ultimately, platforms provide a technology function and this will be even more the case in the future. The best platform going forward may be one you do not even realise is there. Standalone platforms, where an adviser has to manually enter data and transactions with all the duplication of effort and risk of error that brings, will not be viable commercial partners going forward.

Adviser firms want to reduce the costs incurred in providing and executing advice and so platforms that can seamlessly move data between the key systems they use and execute the related transactions will become increasingly attractive.

There has been a significant shift in the epicentre of the adviser technology market. The practice management software through which an adviser manages their firm is no longer the most important system in the business. In a digital world, the system that matters most is the client portal. This technology is increasingly the public face of the adviser firm, available 24/7 when the adviser cannot be, not replacing them but complementing the relationship, making it a day-to-day part of clients’ lives.

Platforms have fallen to third, even fourth, place in the hierarchy. They were always subordinated to practice management systems in any business that wished to optimise efficiency – and consequently the cost of advice – through the effective use of technology. They have grown through making it easier to manage multiple assets via a single infrastructure. Now they need to make this far easier to achieve in order to continue to deliver real value and enable the adviser to do far less to achieve more.

Every action within the software the adviser is using to interact with clients (which is increasingly the client portal, not just the practice management system) must be automatically transferred to the platform with any necessary transactions sanctioned from within the advisers’ chosen system. Anything less than this will create unacceptable additional costs.

To reduce regulatory risk, having a consistent solution for risk profiling and portfolio construction is also important. It is only fair to recognise a significant number of smaller firms are not investing in sourcing independent tools, relying instead on platforms to deliver such capability. But this brings risks.

Unless they are going down the single platform route, or all selected platforms use the same tools, this means clients will have risk attitudes, capacity and even investment strategy assessed in different ways. Firms that go down this route may still see the traditional platform approach as appealing, although they will increasingly find this a false economy.

In practice, seamless integration can be a very expensive activity. It requires deep pockets and is likely to tip the platform playing field in favour of those who have the ability to not just build but also maintain extensive interaction. Advisers should not be misled into thinking this is easy to do. There is a huge variation between what different platforms actually deliver in this area.

However, for those looking to decide which adviser software to use, understanding which providers your preferred platforms have detailed integrations with will be a significant factor to consider.

The closer the integration between the different systems in an adviser business the greater the scope for reducing cost, improving efficiency and enhancing service. Three compelling reasons for making such factors a key part of any platform or software selection process.

Ian McKenna is director of Finance & Technology Research Centre

Money Marketing sweeps the board at personal finance media awards

Money Marketing scooped four awards at this year’s Santander Media Awards, including financial trade title of the year and trade website of the year.

Money Marketing pensions reporter Sam Brodbeck took the title for trade journalist of the year, while deputy head of news Tessa Norman won the judge’s award for trade article of the year, for revealing the raft of pension freedom cases to hit the Financial Ombudsman Service.

This is the second year in a row Tessa has won the trade article of the year award.

The awards were held at The Banking Hall in London and were hosted by BBC breakfast business presenter Steph McGovern.

It is the fourth year in a row that Money Marketing has collected the award for best trade website. Money Marketing also won the best trade title award last year.

Earlier this year Sam Brodbeck won the pensions journalist of the year award at the Headlinemoney awards. Tessa Norman also won the Protection Review protection journalist of the year award and the James Hay Media Award for her coverage of the platform market.

You can follow Money Marketing on Twitter by clicking here, sign up for our regular news and analysis email alerts here and subscribe to our weekly magazine here.

You can also join us at our upcoming Brave New World retirement conferences, including a keynote session with the FCA and the FSCS here

European Central Bank: all options on the table

By Paul Diggle, Economist, Aberdeen

European Central Bank (ECB) President Mario Draghi opened the door to further easing of monetary policy when, following the bank’s 22 October meeting, he announced that “the degree of monetary policy accommodation will need to be re-examined at our December monetary policy meeting”. Two important questions for the next few months are: what form will further ECB easing take and what are the implications for the US Federal Reserve (Fed)?

Click here to read full article

Danby Bloch: Handle alternative investments with care

Most advisers avoid alternative investments due to problems that have been caused by them in the past. However, eschewing their use altogether could deprive clients of a valuable source of diversification alongside other benefits. Indeed, the case for at least considering alternatives is compelling, but it is essential to be discriminating.

Investments that qualify for inheritance tax business property relief can be especially useful. They allow the amount invested to become IHT free after just two years’ ownership and without leaving the client’s possession.

These investments are great for short(ish)-term IHT planning – for example, for someone who might be too ill or too old to expect to live for seven years.

There is a range of BPR investments, including Aim portfolios and generalist EISs, which have high investment risk but low likelihood that the tax position will change. These are probably more suitable for clients who might turn out to be relatively long-term holders with the ability to cope with fluctuating investment values.

Then there are the BPR solutions with very low volatility but negligible or nil return on investments. It is difficult to believe these are what the Government had in mind when it was designing this particular tax relief, and if the Treasury and HMRC knew how to stop them without messing up the more kosher business arrangements, they probably would.

There is a constant tussle between successive governments and the tax efficient investment industry. The government gives these tax incentives to investors to take risk and put their money into small businesses, while the industry mostly aims to minimise these risks as much as possible. With this in mind, there is always the danger the government will restrict BPR.

The best way to counter this admittedly fairly distant threat is to make sure each client understands the possibility of changes to the rules of the game.

It is also probably best to share the recommendations with the rest of the family at the time of the investment, so that everyone is clear about the objectives.

Another potential threat is that something goes wrong with the investment or the structure technically that disqualifies it from benefiting from the tax relief. This is a pretty rare phenomenon but it underlines the importance of using providers you trust to get it right.

VCT tax relief

Venture capital trusts can also look attractive, especially in the context of retirement planning. There is an upfront tax relief boost to the initial investment of 30 per cent, which helps compensate for the extra risks involved in investing in smaller companies. In the longer term the main attraction for many clients in retirement may lie in the freedom from tax on the dividends.

When planning a portfolio in retirement, stability of income flows is probably a higher priority than low volatility of capital values. So it is worth finding out about VCTs’ dividend policy and the likelihood of them being sustainable.

Past performance of certain VCTs has been reassuring. Tax Efficient Review’s Martin Churchill has been running and monitoring a portfolio of successive VCT investments since 2004. From a net cost of £82,500 after tax relief the portfolio has turned a profit overall of over £101,000 that includes pretty stable tax free dividends of just over £74,000 in aggregate, with annual internal rates of return ranging from 2.03 per cent to 18.3 per cent.

Of course, past performance is an unreliable guide to the future, as we all know. And it is not just that the investment environment over the past decade has been in a state of flux, encompassing the biggest market slump followed by a major revival. The rules restricting what VCT managers can invest in change pretty much every year as well.

This year, the rule changes have been especially restrictive and, according to Churchill, seem likely to cut back the flow of good generalist VCT investment opportunities, according to Churchill, particularly following the ban on management buy-out based investments that will take effect this month.

Do not get into this area without doing serious homework and preparation. Alternative investments have their attractions – some of them unique – but there are dangers for the unwary in the form of scams, mistakes, high costs and simple changes in taste.

Danby Bloch is chairman of Helm Godfrey