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Gordon Bennett, that was poor

Confucius say, “Success depends upon previous preparation, and without such preparation there is sure to be failure.”

Having ignored these wise words; Natalie Bennett, leader of the Greens, has no doubt crawled into a hole to hide for a while and lick her wounds.

This morning she was quizzed on the radio about some figures on Social Housing. She ummed, ahhed, coughed and spluttered and generally made a bit of a pillock of herself. It was truly awful. If you’ve not listened to the interview and you get a kick out of schadenfreude, set your cringe-o-meter to high and have a listen here http://order-order.com/2015/02/24/natalie-bennetts-fuel-efficient-car-crash-on-lbc/

So, why am I blogging about the misfortune of Ms Bennett? She has nowt to do with platforms, pensions or investments.

Preparation is the answer. It doesn’t matter what the subject and it doesn’t matter who’s interviewing you. It could be Paxo, it could be an intern on a community radio station. If you’ve not prepped, you (and worse still the company you’re representing) risk coming across as ill-informed and irrelevant.

I’ve had to prep many execs and company spokespeople for interviews over the years. Some recorded, some live. The best spokespeople are always prepared. They accept that they are there to make their company look good. They accept they might be asked awkward and uncomfortable questions. And they accept that they need to do their homework – not just on the topic de jour, but on all the toxic stuff that you hope never to have to answer.

I suspect Natalie Bennett might be doing one of two things today: Accepting she was to blame for being utterly unprepared and taking personal responsibility, or firing her PR adviser whose job it is to ensure she doesn’t come across as Kermit the frog…. (a green Muppet… Geddit?)

D2C Platforms – the lang cat heatmaps

If you’ve come to this page looking for the latest lang cat D2C pricing tables, then you’ve hit an extraordinary stroke of luck. (Or just followed a link sent by us. Whatever)

Attached below are 2 files showing the most up to date lang cat #heatmaps for D2C investment, one for ISA and one for SIPP. Both show the annual cost of investing, displayed in both percentages and pounds. As with any set of data, some house rules apply so it’s well worth having a quick read of the assumptions we make;

  • We look at ongoing core platform and wrapper costs. We don’t add in any initial costs. These are few and far between and quite frankly are finicky to amortise (posh – convert) to an annual, ongoing basis.
  • We assume investment in funds. Tables looking at equity investment are available on request.
  • We assume the cost of making 5 full switches throughout the year, equating to 5 buy and 5 sell transactions.
  • There are a few special offers on the go at the moment – namely for the upcoming ISA season. We include these along with a note of the terms.

The tables will be updated on a regular basis, typically whenever a provider makes a change to its pricing model or if we make a change to our assumptions.

If you’re a journalist, and would like to use these tables, then please do get in touch typically via either Mark Locke (07718424711) or Steve Nelson (07429404356) for comment or further content.

Latest ISA Tables

Latest SIPP Tables

It’s all getting real – Hargreaves puts its vest(ing) on

I’ve always liked those moments when big, abstract concepts become real and commercial. A-Day was like that – it was fun debating what was going to happen, but much more fun when you started to see how providers, advisers and clients were going to relate to it in real life.

An important step towards this stage (or stage towards this step if you prefer, doesn’t matter) happened today for the NEW GOLDEN DAWN OF PENSION FREEDOMS with big Bristol beasts Hargreaves Lansdown announcing a £295 plus VAT (£354) charge for stripping your fund completely in drawdown.

Let me qualify. Clients who transfer into a HL drawdown plan and strip the fund within a year will be expected to stump up. Those who are Vantage SIPP clients already and move into drawdown won’t (says our man in the thick of it in BS1). Provisions are in place (use your best ominous voice for this) for those who either try to leave a peppercorn amount in their plan to avoid the charge, or who transfer to a Vantage SIPP, flip to drawdown quickly thereafter, and then get their money out.

HL has also removed its ‘standard’ drawdown charges, meaning you no longer get charged £354 on the way in, £12 to change your income, or £30 for ad-hoc withdrawals (all including VAT).

Now, we don’t like exit penalties here at the lang cat, and we’ve poked HL with a stick numerous times in print on that basis. But this feels OK to me, and here’s why.

First, it’s not an exit penalty (despite Money Marketing’s headline to the contrary). It’s an admin charge. This looks remarkably like the immediate vesting pension (IVP) market of the 90s and early 2000’s, where a time and effort charge was applied to those who wanted to bounce their pension in and out of a provider.

(One of the potential outcomes of the new freedoms is a re-emergence of the IV market as people try to turbocharge their access by side-stepping cumbersome lifeco systems, especially in the non-advised space. We view that as a potential area of concern; something we’ll be writing more about soon.)

Secondly, HL is playing it with a pretty straight bat in that this is only aimed at those using them for ‘clearing’ and not for genuine longer term customers. Whether their provisions to combat those who try to game the system are good enough, only time will tell. So that feels OK – and the removal of their other drawdown charges is very welcome.

If you’re Hargreaves, you’re the most visible and accessible direct pension and investment provider in the UK. That means people will try and use you for all sorts of pension matters, and not give much thought to whether it’s economic for you.

In one sense – who cares? In another, HL has every right to levy a charge.

Is £295 plus VAT the right amount? I don’t know. But I do know that HL has now established a price anchor in the direct market, and others with similar capabilities will most likely now feel more able to declare their hand.

We remain of the opinion that HL charges very fully for what it does, and that its £25 a line exit fees need dragged out behind the woodshed and killed with an axe. A charge for immediate vesting is not the devil’s work.

It’s all getting real, sports fans. We’ll keep you up to date with what happens next…

THE LANG CAT WILL SOON NEED A BIGGER BASKET

Worldwide press release. 9 February 2015. The lang cat, (probably) Leith’s leading independent platform, pensions and investment consultancy is delighted – no, scrub that – tumescent to announce three new additions of financial services misfits to its burgeoning ranks. 

Terry Huddart will join the lang cat Market Intelligentsia team on 16 March. He will be tasked with extending the lang cat’s infamous capacity for market insight and rudimentary arithmetic, complementing the current combination of adding, subtracting and dividing with the crucial skill of timesing. Terry brings with him a whole heap of baggage having worked for various reputable financial services companies over the years, and Nucleus.

Shona McCowan joins the team at the end of February. Shona will be Mark Polson’s PA. It’s important at this time of tremendous growth that the principal of the lang cat feels important enough to warrant special attention. Shona’s main task will be to stroke Mark’s already-inflated ego and keep him out of mischief, and/or prison. Shona joins from a seven year stint at Aegon UK where she was a PA for industry luminaries, Nick Dixon and Steven Cameron. The lang cat has agreed to fund an experimental medical treatment to expunge Shona’s memory of her recent work experiences.

Jeff Salway is an award winning financial journalist and current Financial Services Consumer Panel member. He is also Welsh. Despite these obvious character flaws, the lang cat has still reluctantly agreed to take Jeff on for a couple of days a week. We’re hopeful that Jeff will be able to help the lang cat write better and stuff. 

Mark Polson, principal of the lang cat, said: “It remains a source of pleasure, pride and consternation to me that so many high quality misfits are willing to drag their sorry carcasses into the lang cat on nothing more than a promise of poor conditions and sustained and relentless personal abuse. Mind you, the coffee’s not bad so, y’know, swings and roundabouts and all that.”

When asked to comment on the imminent departure of one of his key members of staff, David Ferguson, Chief Executive of Nucleus, said: “Terry who? Life companies are rubbish. Did you know we have #bigplans and Terry McDermott wasn’t part of them?”

 

Life is harder now (in investment outsourcing, anyway)

Earlier this week the lang cat and CWC Research launched Never Mind the Quality, Feel the Width, a new, in-depth study of the outsourced centralised investment proposition (CIP) marketplace.

The report is made up of qualitative adviser and industry interviews by CWC Research, alongside quantitative analysis by the lang cat of a range of discretionary fund manager (DFM), multi-manager (MM) and multi-asset (MA) portfolios.

You can read the abbreviated version of the report yourself for free (see link below), but in a nutshell, it uncovered concerns over both due diligence, with no real sense of advisers using a definite rationale in portfolio selection, and demonstrating relative suitability of the various outsourcing options, with very little variation between MM/MAs and DFMs in terms of cost, outperformance and holdings.

But probably the most important point to come out of the whole exercise was the difficulty we had in getting any sort of comparable data at all. Although fund managers are arguably more transparent than DFMs, different ways of reporting information meant it took forever to wrangle the data to a stage where we could pin down consistent like-for-like comparisons. If it’s that difficult for us, what hope is there for an adviser, with all the other demands on their time?

It’s maybe not a surprise that advisers don’t display consistent usage patterns when they can’t access the data they need to make informed decisions. This is one area where providers of outsourced investment solutions really do need to step up.

At the launch, a couple of providers, quite sensibly, asked what they can do about it. The answer is obvious. Buy the report, which alongside the in-depth, detailed, no holds barred, data analysis sets out clear action points for fund managers, DFMs and platforms.

But apart from that, as an industry, clearly we all need to agree how we can disclose information in a consistent way before we are compelled to do so by the regulator. After all, making life easier for advisers isn’t a totally selfless activity for a provider, is it?

The free, downloadable abbreviated version of the report is available here.

quality-image

Nothing to do with buses

Hello again. You know what they say; platform pricing changes are like buses. You wait ages for one to come along and then…

Actually, no-one says that. It’s a rubbish analogy. And the buses around here are pretty good.

Anyway. Yes, only a week ago we were digesting the pricing changes made by Ascentric, and now Transact has come along and given us more to think about with a tweak of its own. Some corners of the trade press got in a bit of a fankle trying to articulate the complexity of the charges so let’s have a bash at laying it out:

  • Previously, Transact charged 0.325% for the first £600k, 0.2% for the next £600k and 0.075% for the balance above.
  • That was unless your portfolio was lower than £300k, in which case the first £60k was charged at 0.5%.
  • This £300k threshold is changing to £180k on 1st April.

That wasn’t so bad, right? The net effect of this is that mid-market portfolios will be seeing a bit of an annual saving. Specifically, £105 per year for everyone between £180k and £299k. Because maths.

Also reducing – on 1st March – are dealing costs:

  • The buy commission on fund dealing is halving to 0.05% for portfolio values up to £1 million. Portfolios above this will see no charge as the tranche for free trading is reducing from £2m to £1m
  • Equity trading costs are reducing too. Deals will now cost £3.75, £1 and 50p for standard, phased and regular transactions respectively. (Down from £7.50, £1.25 and 75p)

So, how do these changes affect our heatmaps? Usual house rules apply. We assume ongoing platform and wrapper charges only, investment in funds and the cost of 10 switches for those who unbundle and charge explicitly.

Remember too that our blogs show a subset of providers and portfolio levels. Subscribers to our annual Advised Platform Guide will get the full whack in our next round of updates.

SIPP first:

TransactSIPP

And ISA/GIA:

TransactISA

Given that the change to core pricing is a tweak at a very specific tranche as opposed to a wholesale change, it’s no surprise that this has a minimal effect on our tables. Just the one cell of each in fact, with 5 basis points coming off both tables at the £200k mark.

So, it’s not the most exciting change for our heatmaps but we know that Transact will be just fine with that. Transact unapologetically holds a premium price position, differentiating on high quality service (we do hear many good things, particularly about the quality of the people) and holding no truck with racing to the bottom of pricing tables. What it does do from time to time though, like here, is apply some of its profit into reducing customer charges.

Transact, unlike many of its peers, has a clear narrative and knows exactly what it does for its price. More power to it.

LeithBus

A bus in Leith. Probably on time too.

Cards on the table: Ascentric goes all-in

It’s been ages since I’ve blogged, mainly as it’s been a while since a provider made a big pricing shift. Most of the activity on that front in recent times has understandably focused on changes to SIPP and drawdown fees following the budget. Quite a number have trimmed charges, with some removing them altogether. Which is good. At the lang cat we firmly believe that customers should be able to GYMBOA[1] with the minimum of fuss.

So, it was good to see AXA Elevate get its ducks in line and make the announcement recently that it was waving goodbye to its £48 SIPP fee. A change that is reflected in the tables you’ll see in a bit.

But that’s not why we’re here today. No, our blog focuses on Ascentric, as it is the first advised platform for a while to make a full-tilt price move. Not content with successfully dodging an avian rebrand last year (we’re imagining the Ascentric management, the Benny Hill theme tune and a pelican. Please make this happen.) the platform arm of Royal London has made a pretty big adjustment to its pricing strategy. A move that includes a Brand. New. Shape. Ooft.

Let’s look at the changes;

  • Gone is the clunky mix of fixed fee and bps charge in the first tier. Customers now pay 0.25% for the first £1 million with a £60 minimum. Not a massive change, but a simpler structure.
  • Standard trading charges have been trimmed from £12.50 to £9.50.
  • As previously announced, annual SIPP admin is reducing from £150 to £100. (Remember VAT on top)
  • Perhaps the biggest change though is the introduction of a bundled pricing shape. With this, you’re all-in on the fund side for 0.30% for the first £1 million, with any funds above being charged at 0.10%.

So, how do these changes affect our heatmaps? Remember that for our blogs we only show a highly scientific (chortle) subset of providers and fund values here. Fully paid up subscribers to our Platform Guide will get more detail in our next quarterly update.

Usual assumptions of ongoing platform and wrapper charges plus the cost of 10 switches apply.

SIPP first:

And ISA/GIA:

Asc_ISA

Straight off the bat we can see that the new shapes are keener than the old, with the new all-in shape in particular shaving a fair few basis points off at the lower end. (34bps in SIPP at £50k is a big difference)

The AXA Elevate SIPP fee removal is reflected here too, with the stepped platform fee being the only charge applicable so what you see now is a mirror image of charges in both tables.

There’s no denying that Ascentric has struggled a bit of late in our tables, mainly due to our 10-trade assumption highlighting that its £12.50 charge for funds was a big blind. So the all-in shape makes a big difference and advisers have a pretty full house (we’ll stop the poker references now) of choice depending on how your trading mileage varies.

In the standard option, trimming trading charges to £9.50 is a welcome move, but still pricey on the fund side. For equities, it’s broadly in line with the rest of the market bar some renegades like AJ Bell. Ascentric is proud of its ETP trading, which it says is getting better spot prices than others manage, but we haven’t tested this out, so if that’s your thing then take a closer look.

The £100 SIPP fee still hurts at the lower end, but it’s good to see Ascentric following the momentum of the market and reducing this from £150. It will be even better if it can follow this up with more cuts. Zero is now the market norm for additional costs for an on-platform SIPP.

We’ll go into more details in our subscriber update but for now we conclude that this is a good move overall. We’ve shoed Ascentric in the past about the complexity of its structure  but these changes – particularly the all-in shape – will probably mean we have to shut up.

And finally, good luck to Hugo Thorman as he moves onto whatever’s next. All the best from everyone at the lang cat.

[1] Get Your Money Back Out Again. See The Value of Nothing for more.

The freedom to get screwed

We measure out our lives by different things. J Alfred Prufrock measured his out by coffee spoons. For many of us our lives are marked out by Christmases, Hogmanays, birthdays and anniversaries.

But in financial services, our lives are marked out by two things: politicians dicking around with pensions, and mis-selling scandals.

This being an election year, it seems inevitable that we’ll see a considerable amount of the former, at least some of which will lead to the latter.

Such an instance of said dicking may be found in the pronouncements of the usually-sensible Steve Webb, who has suggested that it might be a whizzo jape to extend the new retirement freedoms enjoyed by those who haven’t yet crystallised, or ‘taken’, their pensions to those who have already annuitised.

Says Steve, “…given that we now accept that individuals should be given more control over their retirement savings, I would be concerned if we were to exclude up to five million people who are currently receiving annuity income”.

Webb’s new gambit is annoying on a number of counts, not least the fact that it neatly demonstrates the ‘thin end of the wedge’ argument, which is beloved of conspiracy theorists, UKIP and my wife when I open a bottle of whisky. This is not helpful.

I’m on record as loving the other freedoms that have been opened up, and encouraging the industry to trust savers with their own money. So why buck and kick against these freedoms being extended to current annuitants?

There are two reasons.

Firstly, on a micro level, it’s going to be terrible value for those who participate. If we accept the mighty Ned Cazalet’s recent figures that up to 20% of the purchase price of an annuity is snaffled in charges, then annuitants have already borne significant pain.

Do we really believe those that purchase second-hand annuities will be doing so pro bono? Of course not. We don’t know how the figures might look, but the purchase has to be profitable for those putting up the capital, and that’s just another way of saying that the annuitant will receive what we like to call a ‘secondary screwing’.

For sure we won’t be multiplying monthly payments left to the actuarial cohort’s expected age of death and paying that to the individual. And you can expect medical underwriting and postcoding to work in reverse.

As Cazalet’s 129-page blockbuster proves, annuities are anything but simple, and unwinding them will be even worse – think Ginger Rogers’ famous quote that she did everything Fred Astaire did, except backwards and in heels.

Can we expect the industry to behave itself and not give annuitants looking to flee a worse-than-usual screwing? No, we can’t. And it is for this reason – the supply side, not the demand side – that at an individual level this proposal shouldn’t go ahead.

Freedom to get re-screwed by an industry hell-bent on loading the decks against you is no freedom at all.

At a macro level it gets even worse. Purchasers of second-hand annuities will only make it work by pooling – that is, by buying lots and lots of them to spread mortality risk. Once we’re in that world, we’ll start profiling those pools.

We might have ‘A’ pools, with healthy folk in good postcodes, ‘D’ pools for people who didn’t listen to their wives about the bottle of whisky and all that.

Once that’s happening, it’s only a matter of time before we have second-hand annuity funds in the life settlement/second-hand endowment fund style, and we know how well those went. And am I the only one who can see packages of annuities being bundled up, collateralised and sold on on what I suppose would be a tertiary market? CAOs anyone? Anyone? Bueller?

Any policymaker will tell you that you aim for the line of best fit and try to hurt as few people as possible along the way.

I don’t doubt that Steve Webb is the best pensions minister we’ve had for a long time. I don’t doubt his populist instinct. But I also don’t doubt his electioneering instincts, and in this case a short-term vote winner will, I fear, turn into something quite unpleasant in the medium and long-term.

Maybe he doesn’t care. But he should, and this omni-screwing proposal should be put down humanely before it has a chance to breed.

 

This blog first appeared in Professional Adviser.

The lang cat’s albums of 2014

Another year passes, another trip around the sun, another year closer to our eternal reward, another blog about music that no-one will read.

Time, as you know, is an artificial construct designed to explain the otherwise random passing of events, and an attempt to place order on a pointless and terrifying universe. 365 days is no more meaningful than any other number of days.

All that said, here are the records that eased our (well, my) path through 2014.

Machine Head – Bloodstone And Diamonds – probably the metal record of the year. Sounds exactly like a Machine Head record should, which is to say brilliant.

Hector Bizerk – Nobody Seen Nothing – this is hip-hop from the back streets of Glasgow. Louie, the MC, is the Weedgie Eminem, except funnier and better. I saw them live a couple of times this year – fantastic, and I don’t even listen to hip-hop very much.

Arctic Monkeys – AM – this got heavy rotation in the lang cat office, along with Mark L’s disco treats and Linda’s 90’s indie fetish. We’re fans of clever words here, and there are lots on AM.

ExodusBlood In, Blood Out – for those who liked their thrash Bay Area style back in the 80s, Exodus’ 10th album is like a warm (very violent) hug. Steve Souza is back and yelping. Salt The Wound features Kirk Hammett doing something worthwhile for a change.

GodfleshA World Lit Only By Fire – very, very nasty. And great.

Anaal Nathrakh – Desideratum – see Godflesh. AN is almost becoming camp, but it’s for the best.

Taylor Swift – 1989 – a deeply misunderstood post-modern…no, not really.

Mogwai – Rave Tapes – if you know Mogwai, then there’s lots here to like. If you don’t then it’s actually not a bad place to start before jumping into Young Team and The Hawk Is Howling.

Lana Del Rey – Ultraviolence – I’ve said before that the distaff Chris Isaak shouldn’t be to our taste at the lang cat, but it is, and this is great. Linda hates it, mind.

And album of the year…

James Yorkston – The Cellardyke Recording And Wassailing Society (CRAWS) – truly as braw as a craw, how could JY, the man who gave the lang cat its name, not top our list? CRAWS is a JY classic, low-key and introspective, but gorgeous throughout. Listen to Broken Wave (A Blues For Doogie), written about the premature death of sometime JY bassist Doogie Paul in 2012 and keep a dry eye, I dare you.

MAKING A DRAMA OUT OF A CRISIS

Those ‘OMG… I’m going to get fired!’ moments in the life of a PR are actually quite rare. Thankfully. But they are moments that stay with you for ever. My biggest OMG moment came on 17 January 2008 when a relative non-story (I would say that, wouldn’t I?) around the temporary closure of a property fund made the front page splash of the Guardian with a screaming “Northern Rock style run on fund” narrative (on the same day a plane crash landed at Heathrow, by the way).

It was entirely my fault. I didn’t think the story was that big, the journalist I pre-briefed did.

Things really kicked into ‘Crisis Management’ mode the day that story broke. I dragged my sorry self into the office and sheepishly apologised to the CEO and Director of Comms, who were remarkably understanding under the circumstances. I dusted off the Emergency Response manual and got to work drafting reactive statements, taking and making calls and tried to kill the story before it got out of hand. And it worked, more-or-less. The following stories were all balanced and fair and it all blew over relatively quickly. And I wasn’t fired.

But it only worked because there was a process in place to manage a crisis scenario. Everyone around me pulled together. Everyone followed the plan and there was no blame or recrimination.

I only mention this because when I was reading the Davis report of the inquiry into the events relating to the press briefing of information in the FCAs 2014/15 business plan this morning – admittedly with a certain amount of Schadenfreude – something struck me as a bit bizarre.

Actually, a few things struck me as bizarre, but this above all others:

4.94 – When the events unfolded on 28 March 2014, the FCA was taken by surprise. There was no emergency action plan in place to deal with an adverse market reaction to a story which appeared to have originated with the FCA.

There was no Crisis Management plan in place! That’s frankly unbelievable and unforgivable given the size and influence of the FCA.

If there had been a proper action plan in place, I’m sure that something could have been done to lessen the impact of the story. Instead, it looks like a bunch of people ran around panicking whilst simultaneously donning Teflon suits, rather than just manning-up, taking responsibility and knuckling down quickly to minimise the damage to the industry.

And there’s the lesson for all of us in communications and PR. Stuff happens. Mistakes are made from time to time. But when things go wrong, if you don’t have a plan to put it right, quickly, events will take over and you’ll be left looking a little bit useless.

It really is this simple. Plan for the worst* and hope for the best.

*We can help you do this by the way. And it won’t cost you £4m.