Astutefma

Category: Professional Planning

  • Bored In Lockdown!, Why Not Organise Your Finances?

    Bored In Lockdown!, Why Not Organise Your Finances?

    After we have re-decorated our houses, spruced up the garden and exhausted our streaming options on Netflix & Amazon Prime. Now is the perfect time to look at our personal finances? It may mean looking out paperwork and going online to update passwords, but it will keep you busy for the next couple of hours.

    As a Financial Advisor, the finance sector has managed to cope very well in lockdown, most companies have remained open, with many people working from home and servicing clients. For me in terms of work, nothing much has changed. However, the epidemic has made me look at my own financial situation.

    • Here are some areas, I have been looking at:
    • Check your Insurance policies – are you covered, are you getting a good deal?

    Do you have enough cover?

    Personally, the Coronavirus Pandemic has caused me to re-look at my personal insurance policies, to double check what exactly am I covered for? The pandemic really puts into context what is important and has made me really contemplate my own mortality. Also, I wanted to check that I was still getting value for money for the coverage I hold and the price I am paying.

    • Review your investments (Bank Accounts, Investment Portfolios & Pension pots).
    • Are your returns beating inflation in your area?
    • Can you save more?

    The Coronavirus outbreak has had a dramatic impact on people’s personal finances and investments. Stock markets have fallen considerably which impacts people’s pension & investment portfolio valuations. Although falls in financial markets are only a loss on paper if not crystallised, for the savy investor, market volatility is seen as an opportunity. In recent weeks we have witnessed more stabilisation in financial markets, as investors begin to look at life outside of lockdown. Financial markets tend to be more forward thinking than their underpinning economies.


    There will be undoubtedly be an impact to property markets around the globe during lockdown, however you would expect a return to activity once restrictions are eased. In times of economic downturn, estate agents rely on the 3 D’s (Death, Divorce & Debt) to stir up activity.


    And finally, there has been a direct impact to bank deposit rates too. In wake of the crisis, central banks rushed to cut interest rates to shore up their economies. While this is good news for borrowers, it is bad news for savers.

    What can you do about it?

    • Increase diversification and utilise different asset classes, most notably fixed income products to secure return in a challenging environment.
    • Financial markets are offering buy in opportunities, so now could be a good time to invest, if you currently do not have equity market exposure.
    • If you hold pension and investment exposure, the advice is to ride out volatility, check your holdings diversification range, check fees and look at moving providers to cut costs.
    • If you hold cash, check your real rate of return against inflation rate in your area. It may be that by simply holding cash, your earning rate is less than the rate of inflation, which essentially means your purchasing power is less. (You are losing money)
    • If you are relying on bank deposit interest rates to fund your income stream, again look to more attractive fixed income investments that return higher than bank deposit accounts.

    The lockdown if nothing else will provide us with real evidence on what we spend our money on. Many of us…me included, have realised that we probably do spend too much on entertainment, going to restaurants and bars and overspending on clothes etc. We have learnt that we do enjoy having home cook meals and with a little more organisation, will be easy to maintain when lockdown is over. Don’t get me wrong, I am looking forward to getting back to normal, but I think I will be socialising but spending less to do so. This will help me save more going forward.

    If you would like help to navigate any of the above, please contact leeann@astutefma.com for your free finance check-up.

    Have a great day,

  • 2019 UK General Election

    2019 UK General Election

    The 2019 UK election has been announced for December 12 and is likely to be the biggest – perhaps only talking point between now and Christmas. Today is the first day of official campaigning….

    While these are uncharted waters, political uncertainty is nothing new. On this occasion, as in the past, people will get on with their day jobs, and life will move on irrespective of the result.  Maybe the election result will provide more clarity with regards to Brexit or maybe it will return even more uncertainty.  Maybe markets will go up with the result or maybe they will go down.  Regardless, people will still wake up and resume their lives and the economy will function as it did.  This is an important point to remember.

    In times of political uncertainty, we know that people tend to hold off on plans, particularly financial plans, whether that be a big-ticket purchase, or booking a holiday.  It is the natural reaction to be hesitant during times of uncertainty. 

    Chief among these is the temptation to react too quickly or with too much confidence in the lead up to these significant events. Politicians and Financial Big Whigs are very guilty of this. I share the below quotes from the US election and Brexit referendum, where even the smartest of people got it grossly wrong:

    Incorrect US Election 2016 Predictions

    “We would expect a small global stock market rally if Clinton wins (about 2%) and a large decline if Trump wins (about 10%)”. Eric Zitzewitz, Professor of Economics at Dartmouth College

    “The S&P 500 will fall by 3% to 5% immediately if Trump is elected”. Tobias Levkovich, Citigroup’s chief US equity analyst.

    “If investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks – and a likely crash in the broader market.” Simon Johnson, professor at MIT Sloan and former chief economist of the IMF

    What happened? US stocks rallied 2.22% on the day after the election and around 9% in the three months following.

    Incorrect Brexit Referendum Predictions

    “A vote to leave would tip our economy into year-long recession with at least 500,000 UK jobs lost”. George Osborne, former Chancellor. 

    “Leaving Europe would tip the country into recession”. David Cameron, ex-UK Prime Minister 

    “Brexit would trigger recession” – IMF, predicting -0.3% GDP for Q3

    “Short term impact of -1.25% GDP”. OECD forecasts.

    “It would be likely to have a negative impact in the short term… I certainly think that would increase the risk of recession”. Mark Carney, Bank of England

    What happened? UK stocks fell 3.15% the day after the referendum but gained around 13% in the six months following. Economic growth also continued to rise.

    What About a Corbyn Government?

    Putting any political biases aside, one of the widely quoted risks to investors seems to be in a Corbyn government. When I meet with clients, it is a fear that is mentioned almost as many times as Brexit.  It is easy to build an ugly bear case, in which the media will no doubt take full advantage of between now and election day. Therefore, we urge investors to keep a level head and while these issues have substance, investors should look through exaggeration as political risk, which is largely unpredictable. Just as we seen in the 2016 Referendum & the US Presidential Election.

    Opportunity Knocks

    The key question on many investors lips is whether they should sell, hold or buy during these unpredictable times. The answer is simple: investments are made for future gains, therefore if you are looking to buy, continue to buy assets based on their merits and their ability to provide future returns. Short term events should not influence your long-term investment strategy.  Of course, we all need to manage risks, and stay informed and if in doubt stay the course.  The best investors are the ones who seek out opportunity and stay the course. 

    There is no doubt the current period is very unsettling for investors and will cause debate among your families, it certainly does mine.  If you are lucky or unlucky enough to follow me on Facebook, you will know that I am never too far away from political or financial debate amongst friends and family. 

    In terms of making financial decisions – any turbulence in markets may create great opportunities to purchase assets that will add meaningfully to returns in the future. We therefore look at this current period through the prism of opportunity, rather than fear.

    In case you are wondering the moral of the story is – buy that new sofa, book that holiday, continue as normal, as life and the economy will tick over, and we will all carryon regardless.

  • Finding the right Financial Advisor

    Finding the right Financial Advisor

    First of all, it’s important to establish the difference between a Financial Advisor and an Independent Financial Advisor (IFA). What makes an IFA different is that they are independent – that means they aren’t acting on behalf of any particular product provider or any other body. They usually work for themselves, acting on behalf of you, the client alone. This badge of independence is important because it means that the advice they give you must be impartial.

    An IFA’s role is simply to help you reach your financial goals. They do this by looking at your financial circumstances and building up a picture of what you want your finances to look like in the future. In the process they will take into account all aspects of your financial situation as well as looking at how you can make your finances more tax-efficient.

    An IFA will spot the areas in your personal finances where improvements could be made in order to help you reach where you want to be financially now and in the future.

    The Golden Rule.

    “If you’re using an adviser, always, always, always ensure it is an Independent Financial Advisor (IFA)”

    If you’re going to get professional advice, always check it’s from an Independent Financial Advisor, as the IFA will look at products from the entire market; unlike tied or multi-tied advisors who can only sell/advise from a limited range of companies. There is a legal distinction so ask them, Are you an Independent Financial Advisor? Don’t accept any hedged answers.

    The writers of this article are Independent Financial Advisers and as such are writing for the paper and you as opposed to a particular product or investment company.

    While it’s not foolproof the best way to ensure sound financial advice is to ask the following questions, which should help you find a reputable IFA.

    Questions to ask a potential Financial Adviser: –

    How long have you been established?

    In the UK when looking for an IFA company, one would recommend that it has been established at least three years, however in the TRNC I would go to five years. It is important that those looking after your financial needs are here to stay and will not be moving on.

    Are you authorised?

    This is difficult in the TRNC because there isn’t a Regulatory Body at present. All companies need to be registered and known by the Central Bank but sadly this is where it ends. A reputable company will self regulate to the EU standards, this will be seen in how they conduct business and themselves. A reputable IFA will gather the full facts and record your financial situation, advice will be given in writing and you will be issued with a terms of business (TOB). The advisors will hold the relevant professional qualifications.

    What qualifications do you have?

    There is NO requirement in the TRNC for a financial advisor to be qualified but a reputable company will want to make sure their advisors are fully qualified to the EU standard and  maintain the knowledge that they need to give solid advice. Therefore, an important question to ask is: what qualifications do you have and how do you keep these up dated? This is known within the business as Continued Professional Development (CPD).

    Can I see your Terms of Business documents?

    Ask to take a look at their ‘Terms of Business’ document, which will set out how they will work for you explain their charges and confirm that they are truly independent.

    What experience and knowledge do you have of the TRNC and offshore investments?

    There are very good advisers in the UK and other jurisdictions but when it comes to helping clients in the TRNC they are lacking because they do not have the local knowledge or expertise to make sure they get the best for a client.

    Do you hold client money?

    You should not give money directly to a financial adviser; IFA’s do not hold client money. This is very important and safeguards against theft or fraud!

    How many advisers do you have?

    A one man band may offer you a personal service but problems can arise in the event of illness or relocation.  If the firm is bigger than just one or two advisers then these problems will not be an issue. Firms with a group of advisers often have a greater level of technical expertise with ideas and training being shared.

    I believe the above will clear up any uncertainties about selecting an IFA. Astute FMA are Independent Financial Advisors established here in the TRNC in 2006. Astute FMA is steadily growing and expanding within the local community, we now have five fully qualified financial advisers and a team of ten employees looking after our client’s needs. Astute FMA are conveniently positioned in the heart of Girne thus making it easier to help you and the local Expat community.

    Each week in the Astute Angle I will cover various financial topics that may affect life and living in the TRNC, therefore if you have any financial questions or queries drop me a line, I will endeavour to answer your queries.