Investment Scams

Tuesday, 17 December 2019 / Published in Advice, EFPG, Investment Advice, Services

Generally speaking, members of the public rely on professionals to provide services that they do not have the knowledge or experience to do themselves. I have tried to replace a toilet cistern with quite amusing results and now rely upon the services of a plumber.

I should imagine that if DIY dentist kits (drill included) were available in the supermarket, they would not be a good seller.

We do tend to rely upon the professionals that we choose to help us with our lives but as with all professions there are a few cowboys amongst the decent tradesmen. This includes Financial Services. When financial advice is given with the main objective being benefitting the person giving the advice, then serious long-term financial problems can result.

In 2013 EFPG decided to not to recommend commission paying products for our regular personal pension and savings plans – unless we were specifically asked to. We thought them inflexible, expensive and had extremely confusing and complex charging structures. Instead EFPG decided to design our own products with simple and clean charges, no commissions and as a result the plans are extremely flexible. We take great care in listing every cost that our clients’ savings and investments will face. EFPG wants our clients to have a pleasant investment experience with no hidden surprises. We also offer on-line 24 hour access so that our clients can monitor their investments. By doing this we hope to be seen as transparent, honest and trustworthy.

Not every IFA has the same philosophy.  In 2015 we were approached by an introducer that had pointed clients to two Advisory companies who then advised these clients into pension transfers and a truly awful investment.

The Cayman Island Fund

EFPG was presented the fund by the introducer to see if we would accept it in our overseas pension if they arranged the financial advice. We rejected it because on reviewing the investment prospectus our interpretation was that it offered no investor protection whatsoever. The directors and investment manager could do pretty much as they pleased and invest pretty much without restriction.

Time proved us to be right.

The introducer also controlled the fund’s investment management company. The investment management company invested in assets that the introducer also controlled. The investment management company also made investments in a way that the fund was not permitted to make. Additionally the same introducer also acted as the financial adviser to everyone (that I know of) who invested in the fund either from his own company or as a representative of another advisory company.

Completely staggering.

Currently the fund is being liquidated (meaning that the fund’s assets are being sold) and investors are facing very significant losses and delays in getting what they can out of the fund. Some investors were relying on the income from their pensions – income that has not been forthcoming for over 2½ years.

Although pension providers are not expected to be investment experts, a cursory glance at the fund and the surrounding arrangements should have set off all kinds of warning signals. Additionally, the fund had only just come in to existence, as had the investment manager.

There are a couple of easy methods that enable us to reject an investment offhand without spending too much time and effort reviewing the proposal. Firstly we look at the companies that provide services to the fund (auditors etc.). If the companies are not well-known this is a warning sign. Secondly we look at the Conflicts of Interest section and if it isn’t blank or short, we steer clear. Conflicts are a clear sign that a scheme exists not to achieve returns for investors but for insiders to strip out their cash in fees before it inevitably collapses. The investment mandate is also good reading as it permits us to judge how risky a fund is – risk with respect to liquidity and capital being the most pertinent elements of risk for a pension investment.

Obviously the stress and financial hardship suffered by the investors is the worst aspect of this mis-selling fraud/ investment fraud. However, the IFA acting in such a duplicitous manner compounds the issue – the investors have been betrayed by a trusted “professional” and as a result are extremely unlikely to seek financial advice in the future which could mean they would continue to make bad decisions.

The above shows that you do need to do your homework when seeking financial advice. Get personal recommendations, look online, make sure that the investments being advised are regulated and suitable for retail clients and if you are being shoe-horned into an investment bond, find out about the costs to you and the inflexibility of the product.

EFPG Goes Social

Saturday, 07 September 2019 / Published in Advice, EFPG, Products, Services, Technology

EFPG took the decision to stop using radio as a means of advertising a while ago. We thought it was expensive and we were doubtful as to whether it was effective. Also, to relay our vision to our clients (both present and future) is not easily done squeezed between George Ezra songs.

EFPG’s aim is to be a lean mean pension machine – we cut down on our operating costs so we can afford to offer pensions with lower fees and no commissions. Obviously we cannot spread this message if we are paying a small fortune to do so.

The obvious solution was to switch to social media.

Currently EFPG posts a blog on our Website which we then post on Facebook, Twitter and LinkedIn. We use a free version of Hootsuite which enables us to schedule three posts on all three platforms. As we do not intend to annoy people by constantly bombarding them we just need to set up the schedule once a week.

Our aim is not to simply sell via Facebook as people would quickly get tired of seeing the EFPG logo with a boring sales pitch beneath. Being a Facebook user myself, when I see an advert I feel like my privacy has been impinged upon. So what we attempt to do is mix some sales-orientated content with interesting content that in a roundabout way illustrates our core values; namely transparency, low costs and quality advice.

Currently we only boost our posts on Facebook (due to the demographics of Facebook users). By “boost” I mean we pay for our posts to appear on people’s news feeds. In the last week we spent the princely sum of £8.28 and our posts reached nearly 6,500 people out of whom 300 people actively engaged with them. We have seen 25% increased web traffic compared to last month since we boosted our posts. These figures came from the Facebook native analytics tool – Insights – which allows us to see what content we post is effective and what is not. I’m sure we will look into Twitter and Instagram a bit more seriously in the future but for now getting to grips with Facebook and creating content is enough.

Considering more than two billion people use social media every day and the average person spends 135 minutes per day on social networks it is unsurprising that the number of small businesses advertising on Facebook has doubled to 50 million in recent months.

A final point to consider is that although you may be attracted by spending only £8.28 a week on advertising and engaging with 300 prospective clients, there are additional costs. You have to pay someone to create content and that content must look and feel good. So if you don’t have members of staff that have the requisite skills or suitable software, you will have to pay someone else to do this for you.

I hope you find the above of interest but unfortunately EFPG cannot advise you on social media marketing – just pensions, investments and protection plans.

Ethical Investments

Wednesday, 07 August 2019 / Published in Advice, EFPG, Financial Advice, Investment Advice, Products, Services, Tax
More and more people are putting their money where their mouth is when it comes to investing and consider their own ethical values when making investment decisions.

“Sin stocks” such as shares in tobacco and arms companies are obvious omissions from portfolios. Inclusions may include shares in companies that have a positive ethical stance on environmental, social and governance (ESG) factors.

For most people the work involved in selecting appropriate companies to invest in and then trying to find a mix that will provide them with a profit is too complex and time-consuming. Fortunately there are fund managers specialising in sustainability and ethical investing that can cater for those with such investment requirements. The funds may not be an exact match for every investor’s principles but they can provide a good compromise solution if investing is not your forte.

EFPG has written a brief article about Ethical investing, expanding on the above and also covering what it means to invest ethically, a very brief history of ethical investing, comparisons in profitability between ethical and unrestricted investments and EFPG’s preferred solution.

Please follow this link to read more.

Reviewing Your Life Insurance Cover

Wednesday, 12 June 2019 / Published in Advice, EFPG, Financial Advice, Life Insurance, Products, Services

Should you consider replacing your life cover policy?

  • Are you paying smokers rates but have stopped smoking?
  • Did you start your life policy over five years ago?
  • Are you in good health?
  • Have your circumstances changed?
  • Does your current policy cover critical illness?
  • Is the level of cover still sufficient?
  • Is your level of cover fixed or is it periodically reviewed?

The cost of life insurance has dramatically reduced over the last few years, all the above are reasons to review your life cover.

You may be able to increase your level of cover without paying extra.

Did you know smokers rates are twice that of non-smokers? If you have given up for longer than 12 months we may be able to provide a cheaper option.

Old style policies did not have critical illness cover. Considering that you are more likely to suffer from a critical illness than die, this is worth considering.

Have your circumstances changed? Marriage, children it might be a good time to review levels of cover and include your partner.

For a free impartial review of your protection needs please contact us to arrange an appointment with one of our experienced advisers. If you do not ask you will not find out.

Occupational Pension Schemes

Friday, 07 June 2019 / Published in Advice, EFPG, Financial Advice, Products, Services, Tax

EFPG has just posted an article about considerations that both employees and employers should consider about the Occupational Scheme or Group Personal Pensions that the employer is offering or is going to offer.

The article is not technical but covers general points that EFPG believes to be the most relevant areas that should be reviewed.

For employees the article covers the points:

  • How much will my employer pay into my pension?
  • How much will I have to pay into my pension? Is this flexible?
  • Will the combined contributions be sufficient to provide enough income in retirement? If not can you contribute more?
  • Where is my money going to be invested?
  • What costs will my pension face?
  • How flexible is the arrangement? Are there any penalties for altering/stopping contributions? Can the pension be transferred? Can the arrangement be cashed in and invested elsewhere?

For employers the article covers the points:

  • Should you offer your employees a pension scheme?
  • If so how much should you pay into it?
  • And at the end of the day will your employees thank you?

The full article is quite long but does give insight to the questions as posed above. If you would like to read it, please follow this link.