It looks like we’re all hoping to live forever. Well, that at least is one of the inferences that we might draw from the Financial Times’s report showing that Britain’s oldies are hanging on to their wealth in retirement, rather than ‘decumulating’ it in the expected manner. The Institute for Fiscal Studies says that, on average, individuals draw down only 31% of their assembled wealth between the ages of 70 and 90 – rising to 39% among savers in the top half of the wealth spectrum.
Are the oldies saving their cash so as to leave it to their millennial grandchildren when they die? (A fine sentiment, but also a fine prospect for HMRC, of course.) Are they preserving it so as to be able to defray care home fees? (In fact only 7% typically spend more than six months in a home, says the FT.)
Is their caution, generally, a vindication of the common sense attitude that many people expected from pensions when the 2015 Pension Freedoms came in? Or are householders sensibly shying away from the opportunity to put a Lamborghini in the garage, only to reach too far the other way and fail to get the most happiness they can from the fruits of their lifetime accumulation?
You can probably argue for all of those views, and the FT’s quotees predictably differ. An excellent piece, and worth checking out.
Money Mail can’t be accused of burying its head in the sand. Well, all right, on this occasion it looks as though the real paydirt is more likely to be found in rock than in sand.
An article from the Midas share tipster section draws attention to the activities of an outfit called Savannah Resources, which the Mail says is opening up the largest lithium deposit in Western Europe – a 1,300 acre site in Portugal which promises to address the chronic shortage of the metallic element that powers the batteries in everything from laptop computers to electric vehicles.
Yes, we’d add here at IFA Magazine, there’s a looming worldwide problem with assembling enough lithium to fuel the expected million electric vehicles on Europe’s roads by 2022. (Compared with 125,000 now.) And the situation is not very much different with cobalt, which is also in short supply. But, as the Mail makes clear, this is not an investment for your elderly granny – the company will need up to £110 million in order to exploit the mine at all, and nobody will know how much lithium is down there until the last of it has been abstracted.
The July/August issue of IFA Magazine features an investigation of the global market in metals – always a cyclical rollercoaster at the best of times, and a sector that’s best suited for risk-tolerant high rollers at its very sharpest end. What does Trump’s trade position mean for miners? (Especially in China, which has many of the scarcest deposits?) Could an investment downturn hit new energy development trends harder than conventional industries? Is there a bubble coming in rare metals? Don’t miss our report.
Writing in the Sunday Times Money, Ali Hussein is following up on last week’s ST story about what to do if your stockbroker goes bust. In case you missed our review last week, the gist of it was about the collapse of Beaufort securities, and how client assets and money which many thought was ringfenced, could be used to pay admin fees. It’s no surprise then, to see this week’s article (although it’s not the lead story) which is entitled “How to hold on to your shares if your broker goes bust.” With the huge rise in the popularity and use of nominee accounts and online investment platforms, it’s a situation which many clients of professional advisers will doubtless be very interested in. So what’s the ST advice? Sadly, as advisers will know, there is no magic solution. The options range from switching to the old ways with certificated holdings – downside administrative headaches – or getting a personal crest account – the downside here is extra cost and limited availability. The third option of not holding more than £50k in a particular account ( the maximum FSCS claim – although it does rise to £85k in April next year) is similarly problematic, especially for those with larger investment portfolios.
Meanwhile, in his Personal Account column, Ian Cowie has the Football World Cup on his mind. With the tournament starting later this week, his emphasis is on some of the companies which might be set to benefit from the business created as a result of weeks of footie madness which are set to dominate conversations and TV schedules until July 15th. Here at IFAM, we know that individual equities are not always a topic of conversation between advisers and clients so we’ll spare you the details – just to say that he is rather pleased with the performance to date of his holdings in Adidas, Heineken and McDonalds – all of whom are expected to gain from the wave of footie mania about to come our way.
Over at the Financial Mail on Sunday, Sally Hamilton is highlighting the need for individuals to take responsibility for planning their long term financial security – by starting serious pension saving early on in their careers. In a refreshingly honest account, she confesses to not having got her own savings into gear soon enough and now playing catch up. Hamilton reports that although more people are saving, worryingly, the sums being put aside are slipping. The average private sector worker’s pension contribution last year declined to a low of £3,873 – down from £6,782 in 2012.
She also quotes figures from Royal London which suggest a 25-year-old wanting to retire at 65 on an income of about £19,000 (including state pension) would need to save 16 per cent of their income (£370 a month); a 35-year-old 23 per cent (£550 a month); and a 45-year-old 39 per cent (£900 a month).
Her advice? Start early for less pain and more gain. And you won’t hear any of us disagreeing with that statement.
The MoS also reports that the Brexiteer Crispin Odey has bet £500m against UK businesses. It reports that his firm Odey Asset Management has taken out more than £500 million ‘short’ positions on some of Britain’s biggest firms such as ITV and Bloomberg amongst others. This apparent lack of confidence in flagship British firms stands in marked contrast to his fund’s investments in other countries, including France, Germany and the US, where he is mainly backing shares to rise. Readers are also informed that Odey Asset Management has also taken a £150 million bet against the value of Government bonds. Will he be right this time? One thing is for sure – only time will tell.
Writing in the Sunday Telegraph Money section, Sam Brodbeck is warning readers to “beware these robo advisers that can’t give advice.” His report is based on last month’s FCA review of the burgeoning market in robo advice which found that most of the firms it reviewed gave customers “unclear” information over the level of service and provided “potentially misleading” details of charges.
Brodbeck also warned that the FCA also said the majority of providers did not hold up-to-date information about their clients and were poor at identifying vulnerable customers.
This all means going back to the distinction between what constitutes “guidance” as opposed to “advice”. As professional advisers will be all too aware, the differences are not always clear to investors and it’s a point Brodbeck makes clear.
He has spoken to a few robo advice providers- including Wealthify, Nutmeg and Netwealth – and their comments are included. Of course, if you want to hear what they say, then check out his article.
Whatever the situation, here at IFAM we believe that it is a sad fact that many Brits who need professional help with their finances are not able to get it – for many different reasons. Building financial capability must be a growing focus, which is why we hope that this week’s My Money Week campaign continues its excellent work to educate young people about the fundamentals of finance.