connected A Tenet Group Publication Issue 72 Summer 2019
SPECIAL FEATURES 10 ways Intelligent Office will
REGULAR FEATURES Events coming up this Summer…
benefit your business Meet the Compliance Helpdesk Team
Current themes continue to be a focus for the regulator…
The Latest Provider Support Offering insight into market conditions and adviser opportunities
WELCOME – 3
CONTENTS… what’s in this issue
4 Current themes continue to be a focus for the regulator… Steve Jones, Adviser Relationship Director, takes a look at the latest regulatory landscape.
Welcome to the Summer issue of connected In this issue we provide you with our regular industry overview which highlights that a number of themes already in focus, still remain so. The update also touches on the implementation of Intelligent Office (iO), which is a key project for Tenet. This issue also includes a detailed article on iO, so please take a look at page 10 which highlights how iO will benefit your business. Also in this edition Meet the Compliance Helpdesk Team – our front line support for advisers and firms. They are only a phone call away and are a dedicated resource to help you remain compliant whilst implementing regulatory change, building your website content or advertising your services… plus much more! Take a look at page 6 and 7. Supplement enclosed with this issue With this edition we are including our supplement – ‘Fund Spotlight’. This is the second issue of the publication, created to provide a dedicated platform for Fund Managers to showcase their products and services to ensure you are up to date with all the latest news and information in the fund management sector.
6 Meet the Compliance Helpdesk Team
Meet the team and find out what this front-line support network can do for you.
8 Events coming up this Summer…
Don’t miss out – take a look at what is coming your way and make sure you get that all important CPD. 10 10 ways Intelligent Office will benefit your business An update on Intelligent Office and introducing Julia Elliott, IT & Change Director.
Finally - A note of appreciation from Richard Brook, Head of Insight & Proposition “I would like to personally say a huge thank you to all the advisers who recently participated with our research interviews and surveys over the last few months.
12 New for Mortgage and Protection business
– a structured development programme to help achieve CAS status.
We do appreciate this has taken time out from your busy schedules and it has provided us with some invaluable first-hand feedback about your experiences with us and the services we provide. The next steps involve analysing all the data we have collected and we look forward to sharing the outcomes with you in due course. Until then if you have any further feedback please don’t hesitate to get in touch.”
13 The Tenet Platform
– providing clarity in uncertain times
PROVIDER SUPPORT 15 – 28 Latest News and Products
Email: firstname.lastname@example.org Call: 0113 239 5150
I hope you find connected an informative and useful magazine. If you want me to include anything else in future issues, don’t hesitate to get in touch – you can email me: email@example.com Best wishes Sara J Healey Marketing Consultant
Editor Sara Healey
Published quarterly by Tenet Group Limited 5 Lister Hill, Horsforth, Leeds, LS18 5AZ
connected Magazine is for internal purposes only and is not intended as an advertisement. As a result this should not be issued in any form to clients. Not all the products in this feature are the responsibility of the Tenet Group Limited. Terms and Conditions. Although every effort has been made to ensure the accuracy of the information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage of any material, solicited or unsolicited. No reproduction of any part of this publication, in any form or by any means, without prior written consent from The Tenet Group. The views expressed in this publication do not necessarily reflect those of the advertisers or the publishers.
Tel 0113 239 0011 Fax 0113 239 5322
connected - a Tenet Group publication
4 – INDUSTRY UPDATE
Current themes continue to be a focus for the regulator… Who would have thought that Brexit would have a silver lining? The fact that the Government and the FCA have been so focused on preparing for Brexit however has meant that the volume of activity on the regulatory front has taken a definite gear change down and given us all some welcome breathing space. That’s not to say it’s been radio silence however, so let’s have a look through some of the activity of note over the past few months. FCA’s Business Plan 2019/20 Outside of supporting a smooth transition, post-Brexit, the FCA’s priorities for the coming year were mapped out in its latest business plan and included working to improve firms’ culture and governance and operational resilience, fighting financial crime and improving the treatment of customers. No surprises therefore as we are generally seeing continuations on current themes. Ensuring the fair treatment of customers will be achieved by monitoring firms’ practices, including the information they give prospective and current customers. This will include remedies proposed in the Mortgages Market Study and will be fed into by current work being carried out in a market study on general insurance pricing practices and a focus on competition in the cash savings market. We’ll touch more on the Mortgages Market Study further on, but in their other areas, the regulator will consider what action will best address any perceived issues, including whether price interventions may be appropriate. Unsurprisingly, the FCA remains concerned about the potential harm to consumers’ retirement income from unsuitable pension transfers and its future work includes implementing the remedies from its retirement outcomes review and starting a wide ranging programme of activity with firms who have pension transfer permissions, based on its 2018 information request in this area.
The message on financial crime is that it is still very much on the agenda and firms must remain diligent and declare any criminal activity that they become aware of, as well as have appropriate safeguards in place. Over the coming year, the regulator expressed its intention to monitor firms’ progress in improving their AML controls as one indicator of whether the potential harm to consumers and market integrity is likely to have reduced. In summary, all firms need to ensure that their client’s needs, (both new and existing) are at the heart of everything they do in pursuit of a good client outcome, delivered by appropriate and fairly priced products and services. This is underpinned by good MI capabilities and ensuring client files are complete and in order. Second Assessing Suitability Review This leads neatly to the FCA committing to conducting a second Assessing Suitability Review in 2019, following on from the results it published in May 2017, to examine the advice and disclosure firms give to different consumers, across different product types and by different types and sizes of firms. In 2017, the watchdog assessed 1,142 cases in 656 firms and said it was ‘disappointed’ to find the advice sector provided ‘unacceptable disclosure’ in 41.7% and ‘uncertain disclosure’ in 5.4% of the cases it had looked at. In this second review, regulator will use the results to assess how firms have implemented the requirements introduced by MiFID II, the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation and the Insurance Distribution Directive. It is possible we could be approached as a network in relation to this and again underlines the importance of having good client files as the suitability of advice and quality of disclosure will be an ongoing area of focus for the regulator. PFS Pension Transfer Gold Standard As you would expect, Tenet is a huge advocate of the recently launched PFS Pension Transfer Gold Standard and is fully supportive of member firms adopting it. The regulator’s focus in this
INDUSTRY UPDATE – 5
product, yet had identified that 30% of customers could have found a cheaper equivalent mortgage deal. The stand-out reason for this was clarity, particularly clarity of certain eligibility criteria, with maximum LTI and minimum credit score as the two biggest offenders. What I find encouraging is – against the backdrop of these findings - those consumers using intermediaries were much less prone to taking a mortgage product that was costlier than it should be, with “only around 20%” missing out on “significant savings”. It is recognition of the vital part advisers play in ensuring that UK consumers find the most suitable mortgage for them. And given the increasing proportion of mortgages sold through advisers, the study did not propose to intervene any further. Implementation of Intelligent Office (iO) I’m pleased to report that the project is currently on track, working towards a launch in Q4 of this year. We’re keeping you updated via our weekly Intelligent Office (iO) communications and our dedicated iO extranet area. If you turn to page 10, you can read more about the benefits that the system will offer for advisers. In terms of the regulatory environment however, technology is a very effective way of reducing the strain and helping ensure compliance, especially in light of the FCA’s ongoing suitability review work.
for FOS or legal cases, and our PI cover provides the same comprehensive cover for all sectors. Mortgages Market Study As I write, the FCA has published its consultation on mortgage advice and selling standards, which includes proposals to change its mortgage advice rules to make it easier to offer execution-only options to borrowers and to equalise treatment of advised and execution-only sales. It will also require mortgage advisers to keep a record of why they did not recommend a cheaper mortgage, if the product recommended was not the cheapest policy that met the customer’s needs and circumstances. These proposals are one part of a package of remedies from the Mortgages Market Study. In March, the regulator also stated it was concerned consumers were being “unnecessarily channelled” into advice and said its rules on advice could have been a barrier to the development of tools that help consumers choose and buy a mortgage. Based on the fact that the original study found that the mortgage market is working well for most customers, these developments are concerning – if it ain’t broke, don’t fix it comes to mind! We will therefore be keeping a close eye on how this progresses and as ever, represent your best interests via our board position within AMI and other channels. Looking back to the Mortgages Market Study (MMS) final report itself, in the last issue of Connected I focused on the two key areas that could drive change within the industry - a proposed digital comparison tool to help select the ‘right’ adviser and the desire to support ‘mortgage prisoners’ in switching to a better rate. Another topic under the FCA’s microscope is related to concerns about ‘making it easier for consumers to choose the right mortgage’. It cited the prominence a mortgage has, making up 80% of total UK household liabilities, and thus the importance in selecting the best value
area is not going to diminish and this is a positive move by the PFS in the wake of the British Steel scandal to better enable the public to understand what to expect from regulated advice. The gold standard is linked to an adviser code, based on nine principles underpinning good practice in pension transfer advice and firms need to have PI insurance that meets Financial Conduct Authority (FCA) threshold conditions. Although we can’t apply for this on your behalf, we can support your application, particularly around potential amendments to your IDD and client agreement. The required qualifications for advice on transfers of pensions with safeguarded benefits are changing in January 2020 and for this reason, applications can only be made by Tenet members who hold a relevant Level 6 qualification (G60, AF3, AF7). We want to maintain our own register of advisers who sign up to the Gold Standard to ensure we support your ongoing compliance with this and therefore, please contact our Compliance Helpdesk in the first instance to inform us of your intention to apply and we will guide you through the process. Once approved by the PFS, we can then provide you with the required amendments to your initial disclosure documents. Increased FOS compensation limit From 1st April, the Financial Ombudsman Service compensation limit increased from £150,000 to £350,000 for complaints about actions by firms on or after that date. There has been a lot of concern within the market about what the effect on advice firms and professional indemnity insurers will be, with the FCA estimating that PI insurance premiums could go up by 140 per cent and may force 1,000 ‘higher-risk’ advisers to leave the market. The worst-case scenario modelled by insurers sees premium hikes of between 200 and 500 per cent! We are pleased to report that there is no change to our own captive PII policy however in relation to this, as we don’t set a single claim limit, so cover will be the same
Steve Jones Adviser Relationship Director
6 – MEET THE TEAM
The Helpdesk Team (Zoe Warrington absent)
Meet the Compliance Helpdesk Team
The Compliance Helpdesk is a front- line support network for advisers and firms, offering guidance on key issues including regulatory change. We look to offer detailed advice to queries raised via telephone or email, allowing advisers to deliver the best possible service to their client. A selection of the services that we offer are: • Support in the understanding and implementation of regulatory change, such as Passporting, MiFID II, and RDR. We have also provided guidance on forthcoming change including SM&CR and Brexit. • Full approval process of new websites as well as support for content changes on existing sites. We also undertake a continual review of our excellent off-the-shelf Tenet package, which advisers can use to build their own website using pre-approved content and layout.
• Assessment of Social Media posts across all platforms, checking against policy for content and image suitability. It is important that all posts promoting the services are reviewed before posting, so that we can be sure your business avoids using non-compliant content.
• Content-checking of branded stationery, including letterheads, business cards, and email footers.
• We offer a large number of templates and working examples of key documents, including the IISD and Client Agreements. We also sense-check your fees, ensuring they are clearly set out and in line with our fair fees policy. • Hand-holding of new firms during the authorisation process, providing telephone support for the creation of new documents, as well as offering guidance to ensure they can start capturing new business as soon as possible. Let’s introduce you to the members of the team...
MEET THE TEAM – 7
Kevin Sim (ASCI) Compliance Helpdesk Team Leader Kevin moved to Tenet in February 2019, and has 20 years’ experience within the industry. His background is primarily within stockbroking and finance, and he has managed a wide range of teams in Operations and Risk functions. He has recently completed his Lean Six Sigma / Continuous Improvement qualifications, and is keen to implement this wherever he can. In his spare time, Kevin is a Scout Leader, and also a season ticket holder at Brighton & Hove Albion, along with his two children.
Graham Hadley DipPFS Senior Compliance Helpdesk Officer
Mark Forsey DipPFS Compliance Helpdesk Officer
Mark joined Tenet in 2009 and has over 20 years’ experience within the financial services industry. His working career commenced in design and production engineering after attaining BEng (Hons) Mechanical Engineering (Design) and then changed career path with the first financial services role at DBS. Mark has also worked in various Directly Authorised firms within FS compliance roles involving compliance oversight, implementing systems & controls, creating and / updating processes & procedures, business assessments, training & competence, complaint handling, financial promotions and has undertaken due diligence and compliance audits.
Graham joined Tenet in June 2012 from Lloyds Banking Group after just over 30 years’ service. During this time he fulfilled a wide variety of roles in both the branch network and head office, including acting as an adviser for both the independent and tied arms of the financial services division.
Mick Foster DipFA Compliance Helpdesk Officer
George Healey Trainee Compliance Helpdesk Officer
Simon Hunt Compliance Helpdesk Officer Simon joined Tenet on the Compliance Helpdesk in April 2015. He has 35 years’ experience within financial services having performed various roles including financial adviser, compliance oversight, complaints, investigations and training & competence. In his spare time Simon enjoys walking and
Mick joined Tenet in August 2015, following 31yrs in the industry both as an adviser and latterly in Compliance, covering Complaints, Risk, Investigations and file reviews. He transferred to the Helpdesk in July 2018, bringing a valuable wealth of experience to the team.
George joined Tenet in September 2014 as a General Office Assistant, then moved to be an Authorisations Consultant in March 2015. He recently joined the Compliance Helpdesk in November 2018. He is currently working towards Diploma status, having completed his Level 3 Certificate in Mortgage Advice.
mountain biking whenever he can. Simon is currently working towards Diploma status.
Zoe Warrington Compliance Helpdesk Administrator Zoe joined Tenet on 1st March 2007 as an Authorisations Consultant and moved to the Compliance Helpdesk as Administrator in January 2016. Zoe deals with the Compliance Helpdesk and also the Compliance Audits. Zoe previously worked for a firm of Solicitors specialising in conveyancing, wills and probate.
If you have any queries, please feel free to give us a call on 0113 239 5318 or you can email us at firstname.lastname@example.org
8 – EVENTS FOCUS
1) CYCLE TWO PROFESSIONAL DEVELOPMENT MEETINGS CONTINUE… YOU STILL HAVE TIME TO BOOK… These events are designed with the main aim to meet advisers’ development needs and provide valuable insight into key industry issues. The PDMs offer a variety of important information from both our provider partners and Tenet’s senior management. Target Audience: Investment, Pension and Protection advisers Timings: 8.45am arrival 9.15am start - 3.15pm finish CPD: Approx. 4 hours structured and 50 minutes unstructured To book your place on Cycle Two PDMs, visit: https://events.tenetgroup.co.uk/cycletwopdms2019 Date Location Venue 25/06/19 Maidstone Hilton Maidstone 26/06/19 London Millennium Knightsbridge 02/07/19 Exeter Sandy Park 03/07/19 Southampton Hilton at the Ageas Bowl 09/07/19 Glamorgan The Vale 10/07/19 Nottingham Doubletree Hilton Nottingham Gateway 11/07/19 Sheffield Tankersley Manor 2) PROTECTION WORKSHOPS During the course of the day you’ll hear from mainstream and specialist providers covering a range of protection topics, including how to identify the life stages of protection needs, critical illness survival rates and statistics, and why it’s important that clients look to the future when thinking about their protection needs and consider later life costs. Our provider partners will discuss the need for various types of protection including income protection, critical illness and how to identify opportunities to include GI in the sales process and the added value that protection can provide in the workplace. Target Audience: All Advisers Timings: 9.30am arrival, 10.00am start - 2.15pm CPD: Approx. 3 hours IDD To book your place on a Protection Workshop, visit: https://events.tenetgroup.co.uk/protectionworkshops2019 Date Location Venue 20/06/2019 Cumbernauld Doubletree Hilton, Westerwood 16/07/2019 London Millennium Knightsbridge 17/07/2019 Leeds Village Leeds South 18/07/2019 Birmingham Village Solihull Attending our events will provide you with an excellent insight into current markets, changes to legislation, new products and services. It is also a chance to network with your colleagues, product providers and Tenet staff, plus you get 3-4 hours of CPD awarded and recorded for you. All events are free of charge and your support staff can attend too, so don’t miss out – book your place(s) today!
EVENTS coming up this Summer…
EVENTS FOCUS – 9
3) CPD WEBINARS – WATCH LIVE OR ON-DEMAND Get your 30 minutes of CPD for each webinar you view! Throughout 2019, Tenet will be hosting a series of CPD webinars which are available to view from the comfort of your home or office, at a time to suit you. So if you need to top up your CPD, take a look at the webinars that are available. All you need is a device to view it on and your headphones! Webinars now available to watch on-demand NO 1: VIRGIN MONEY - ‘WELCOME TO TRUE PARTNERSHIPS’ The webinar looks at how Virgin Money are supporting the challenging First Time Buyer Market, the New Build Market, the ever complex BTL market together with some key areas to support your Self Employed customers. Presented by Kim Dickinson, Senior Business Development Manager on 1st March 2019 http://webinars.tenetgroup.co.uk/webinar-1-2019
NO 2: NATWEST INTERMEDIARY SOLUTIONS - ‘TECHNOLOGY AND INNOVATION IN THE NEW BUILD MARKET’ The webinar will focus on what innovations are being made in the New Build sector, including the improvements made at NatWest Intermediary Solutions relating to service and proposition. Presented by Andy Ingham, Senior Corporate Account Manager on 29th March 2019 http://webinars.tenetgroup.co.uk/webinar-2-2019 The webinar will cover the recent and upcoming changes in the Buy to Let Market and discuss some of the key areas landlords need to be aware of as a result of the changes. Presented by Andy Cooke, Senior Business Development Manager on 31st May 2019 http://webinars.tenetgroup.co.uk/webinar-3-2019 NO 3: POST OFFICE FOR INTERMEDIARIES - ‘BUY TO LET – A CHANGING WORLD’
WEBINARS COMING SOON We recommend registering for all the webinars, then opt out as and when, if you are not available or the content is not relevant.
Link to View
http://webinars.tenetgroup.co.uk/webinar-4-2019 http://webinars.tenetgroup.co.uk/webinar-5-2019 http://webinars.tenetgroup.co.uk/webinar-6-2019 http://webinars.tenetgroup.co.uk/webinar-7-2019
28/06/2019 Shawbrook 28/09/2018 Together 26/10/2018 The Exeter
30/11/2018 Precise Mortgages
If you have any queries, please call the events team on 0113 239 5334 or email email@example.com
COMING IN AUTUMN – BOOK NOW! MASTERCLASS TWO – STARTING NOVEMBER 2019 The second round of our exceedingly popular Masterclass events. Tenet will utilise the expertise of providers and fund managers, to create a valuable event; giving key industry insights, technical guidance and sales support. The purpose of these events is to provide a higher level of education, through the use of case studies, planning scenarios to provide you with a greater understanding of each product and a proposition’s place in the market. Target Audience: Investment, Pension and Protection advisers Timings: 9.00am arrival 9.30am start – 3.30pm finish CPD: Approx. 3hrs 30 minutes structured and 30 minutes unstructured To book your place on a Masterclass Two visit: https://events.tenetgroup.co.uk/masterclasstwo2019 Date Location Venue 05/11/2019 Glamorgan The Vale Hotel 06/11/2019 Manchester Haydock Park Racecourse 07/11/2019 Leeds Village Leeds South 12/11/2019 Southampton Hilton at the Ageas Bowl 13/11/2019 London Amba Hotel, Marble Arch 14/11/2019 Birmingham Village Solihull 19/11/2019 Belfast Stormont Hotel 21/11/2019 Cumbernauld Doubletree Hilton, Westerwood
Date: Thursday 5th December 2019 Location: Queen’s Hotel, Leeds The Adviser Forum is open to all Tenet advisers, paraplanners and support staff and is free of charge to attend, including the gala dinner. Partners can also attend the gala dinner at a cost. The event will include many of the popular elements of a large forum - optional topic specific breakout sessions, trade fair, Tenet senior management and external key note speakers. At the Adviser Forum we will also be recognising top performing firms and advisers in our annual awards. Book your place today https://events.tenetgroup.co.uk/ adviserforum2019 Adviser Forum Date for your diary
10 – TECHNOLOGY FOCUS
10 ways Intelligent Office will BENEFIT YOUR BUSINESS
Following our recent Value Proposition Review interviews with members, three quarters of you told us that improving your back office system was a top priority over the next 12 months and 73% of you want to improve your efficiency via IT over the next year. Intelliflo’s Intelligent Office is the market leader in terms of business management systems, utilised by over 31% of the UK’s financial advisory firms but what tangible benefits will it bring to your business? We’ve summarised the top ten areas where we feel Intelligent Office really adds value, both directly as a technology system and via making Tenet more efficient as a business.
Electronic valuations - Intelligent Office has over 80 integrations with platforms and providers including Aviva Wrap, Old Mutual Wealth Ltd and AEGON (CoFunds).
A core off-the-shelf solution that we have configured to the needs of a modern financial advice firm, to help you effectively manage the full end-to-end advice service.
Accurate and streamlined remuneration matching service, offering improved income related business reporting.
Electronic, pre-approved fact finds and suitability reports, published directly to firms through the system.
Single client view – Only ever enter a client’s details once and these will be pre-populated through the system, from lead management through to the initial fact finding, needs analysis, suitability and annual reviews.
Regulatory protection for your business through more transparent, automated processes – perfect for ongoing servicing.
Support with GDPR requirements - Secure client communication, with a clear audit trail for evidencing how documents have been securely shared and handled, plus Amazon data storage is included as part of your licence.
Integration with best of breed third parties to give you access to a wide range of tools via the online iO store.
A more streamlined, responsive service from Tenet with integrated file checking, leading to improved service level agreements.
Client Portal - gives you and your clients an invaluable tool to be able to view financial information 24/7 and interact via a secure, online ‘hub’ anywhere, and on any device.
Are there any actions for me to take? Currently, there are three actions we have suggested that you could undertake: Getting your data in good shape for migration – we outlined six data housekeeping activities that it would be beneficial to undertake, including removing any duplicate client records and ensuring that ongoing fees are accurately recorded.
Add any additional documentation that you would like to be migrated over from Tenet Advantage - these documents need to be added against the client. Review your notice period with your current data storage provider if you currently purchase data storage but would like to utilise the Amazon storage post go-live, which is included at no additional cost.
To make sure you’re up to date with the latest news on implementation, please ensure you read our weekly Intelligent Office updates or you can visit our dedicated extranet area within the ‘My Business’ section of the extranet. If you have any questions, please email firstname.lastname@example.org
TECHNOLOGY FOCUS – 11
Meet our new IT and Change Director – Julia Elliott
So you’re familiar with working with Intelliflo – why do you think they are a good partner for Tenet? Intelliflo really understands what advisers need, but more importantly, they are IT experts working in the finance world and not the other way round. Because Intelligent Office has been built by people that know technology, it’s really robust and well thought through – what you want is essentially something that works at every level and it does exactly that. They are not just a safe pair of hands, they are passionate about open architecture – their IO store for example offers huge flexibility for advisers in terms of integrations. Because of all this, I think they represent an ideal fit for Tenet’s needs. What attracted you to the role at Tenet? This role offered a great opportunity to oversee a large change project and I felt that with my background, I could really add value as well as be challenged. I enjoyed helping the advisers at Skipton to leverage technology and the chance to do the same within the largest independent advice group in the UK was too good to miss!
Julia Elliott joined Tenet at the start of February as our new IT and Change Director. She was previously Financial Advice Head of Business Change and Application Development at Skipton Building Society, and is now leading Tenet’s ongoing strategic IT delivery, which will be focused primarily around the adoption of Intelligent Office over the coming months. We caught up with Julia to find out a bit about her career, what attracted her to Tenet and what elements of technology she believes are the biggest enablers for advisers. Has your career always centred on technology? I’ve always had jobs that are closely linked with IT, previously in a project and operational sense and in the last ten years, working purely in IT and change roles within financial services, firstly with Engage Mutual and latterly with Skipton Building Society. During my time at Skipton, we built technology for the in-house advisers and back office, moving them from paper factfinds to a streamlined advisory process underpinned by Intelligent Office.
It might sound a bit geeky but I’m passionate about data and I really believe that if you have access to the right data then you can really understand your customers, which in turn enables you to offer a great service with that competitive edge. Culturally, I feel that Tenet has the right attitude to change and with its ambitious growth targets, I’m excited to see where we could all be in a few years’ time. The fact that the head office is local to me is also a bonus! Finally, tell us a bit about yourself, what do you do in your spare time? (As I mentioned), I live locally and have been based in Ilkley for 18 years. In my spare time I enjoy walking, cycling (although I totally admit to being a fair weather cyclist) and generally being outdoors. I am married to John, who is an engineer and have three daughters who are all currently studying science-based subjects at university, or ‘maxing their student loans’ as it is otherwise known! I joke that we are their personal finance portal so am holding on to the misguided belief that all this will change when they all graduate over the next year.
12 – SPECIAL FOCUS
New for Mortgage and Protection business – a structured development programme to help achieve CAS status
Our exciting new programme for people who have achieved CeMAP (or equivalent) and are looking to achieve Competent Adviser Status (CAS) is now open for applications. We are looking for adviser firms who are interested in taking on a trainee mortgage and protection adviser, or is there someone you know within your firm who is CeMAP qualified (or equivalent) and would be interested in a fully supported programme to get them to Competent Adviser Status? There are limited spaces available, so please make sure you get your application in as soon as possible. We are running the programme on a first come, first served basis. What can the trainees expect? Trainees will have the opportunity to work alongside a dedicated Tenet Business Mentor as part of this programme. The Tenet Mentor will ensure the trainee has an opportunity to enhance their personal and professional development, increase their confidence and obtain CAS. We will help set their goals and work with our mentor to develop a plan to achieve CAS within 6 months. The rate of progress rests with the
trainee’s own ambition and business levels/ opportunities. As part of our new structured development programme, the trainee will get the support and development they need to build their experience and ultimately achieve CAS for mortgages and protection. For the duration of the programme and once CAS is achieved, the trainee will be positioned within the firm they will be looking to work with in the long-term. Pre-course workbook includes: • MCD initial assessment • Suitable advice standards, Tenet template orientation • Case study scenarios The induction programme includes: • A dedicated induction course in Leeds over 5 days as well as 2 days of assessment and revision • Agenda, objectives • Overview of the journey to competence (full & reduced supervision) • What KPIs are required to demonstrate competence
• What happens if not demonstrating competence within timescales • Sales Process
• Introduction and disclosure, Fact-Find, Research and Advice, Presentation, Close and Next Steps, Suitability Letters and Documentation • All above sessions to include standards, facilitation and practice using Tenet standard tools • Consideration as to the modulation of protection and general insurance • Client Meeting Assessment • Client Advice and Suitability Letter Assessment • Assessment (business mentor to assess role-plays) • Assessment (AST to Grade File Assessment) • The duration of the course costs £1,500 + VAT • The next course will start 14/10/2019*. * As course material is issued in advance, interest must be registered by 14/09/2019 We believe that Tenet Group is the best place for trainees to learn, develop and flourish in their new career in the financial industry.
For more information or to express your interest in this programme, please contact Mark Penswick in the Central Recruitment Team on 0113 239 5118 or email email@example.com
A little about our Tenet Mentor, Cath Coates “Like many people in the advisory world, I come from a banking background, having worked at Barclays and First Direct in Leeds before working at Yorkshire Building Society as a Mortgage Adviser. During my time here I moved my way up to Branch Manager while continuing to give mortgage advice. After a short time I was approached to utilise my expertise and become a Development Coach which I was delighted to accept. This involved developing freshly CeMAP qualified colleagues to obtain CAS and continuing to supervise them to ensure standards were adhered to. During my time at the Tenet Group I have been a Senior Assessor and am delighted to take up the mentor reins again. I am excited that Tenet has launched this programme, which offers a fantastic way to support firms to ‘grown their own advisers’”
The need for intergenerational financial planning has never been greater. According to the Centre for Economics and Business Research, those in their 50s, 60s and 70s command almost 70% of all household wealth in the UK. Generation-to-generation wealth transfer is predicted to increase from £69 billion in 2017 to £115 billion by 2027. Intergenerational wealth – why making wealth a family discussion will benefit everyone
Despite this immense transfer of wealth, some families find it difficult to have an open discussion about it, maybe feeling it’s a bit of a taboo subject, best avoided. Encourage your clients not to put their heads in the sand With the older generation living longer and potentially needing help in managing their finances as they get older, it’s never been more important for children and parents of any age to be able to communicate effectively about family wealth issues. We’re in this together – embrace a fresh perspective As an adviser, if you can encourage wealth matters to be openly discussed as a family, it will help to establish financial priorities and expectations. Having a considered approach to the impact of wealth on the family is probably the best way forward; the purpose of the family’s wealth is agreed upon and all parties are aware of their roles, rights and responsibilities. It also helps to clarify goals and to ensure that the right plans are in place to support each generation according to their needs. The benefit for advisers is obvious – a continuing client base through the generations.
give investors access to a variety of investments, balanced to reflect specific risk profiles, providing diversified investment solutions to meet a range of financial planning needs. Understanding how people define investment goals and regard risk, led Sinfonia Asset Management to pioneer the development of its risk-targeted fund range. Each of the five funds has a defined profile designed to meet the needs of a discrete type of investor and can cater for both income and capital appreciation goals, designed for medium to long- term time horizons (5 years+). The managers of these funds aim to build a diverse portfolio that delivers consistent risk-targeted returns. If your client’s risk profile or family risk profile changes, then there is the flexibility to switch to another risk targeted fund within the range that meets your client’s new requirements. Keep talking Passing down wealth in an efficient way requires expert advice. Advisers should show their experience of looking after family finances in a holistic way and demonstrate that they are happy to be involved with these discussions. Once goals are established, the adviser’s role is to make plans that will deliver the outcomes their clients seek, whilst ensuring that the practical needs of each generation are respected and addressed.
Risk-targeted investments to span the generations
Risk-targeted funds provide a great solution for a family friendly investment opportunity as the funds
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PROVIDER SUPPORT – 15
Plugging the interest-only gap
So what next? One option could be an interest serviced lifetime mortgage. Increasing consumer demand has led to much innovation in the lifetime mortgage market over recent years. There are now several lifetime mortgage lenders who offer borrowers the opportunity to service the interest. They’re designed to help those who are used to making monthly repayments and who wish to continue to pay at least some of the accrued interest each month. However, due to strict affordability requirements, they wouldn’t qualify for a residential mortgage. Unlike an interest-only mortgage, there’s no risk of repossession. If borrowers stop making their monthly payments, the interest is instead added to the amount they owe each month on a ‘roll-up’ basis and repaid when they (or last surviving customer if borrowing jointly) dies or goes into permanent long term care. With our Just For You Lifetime Mortgage, borrowers can choose to pay between £25 and 100% of the monthly interest for the duration of the lifetime mortgage. The products also include interest rate reductions based on the amount of monthly interest they choose to pay from the roll-up rate. They can borrow either a one-off maximum lump sum, or release a smaller sum initially, with the option of releasing further sums up to the amount of a pre-
The number of new interest-only mortgages sold has fallen steadily in recent years following a change in lenders’ criteria. However, there is still a high proportion of these mortgages due to mature every year until 2032. In fact, research from the Financial Conduct Authority shows 30% of existing interest-only mortgages are currently held by the over 55s. And, approximately 40,000 mortgages due to mature each year are held by borrowers who will be over 65 at the end of the term. Many of these borrowers are expected to be financially vulnerable. For various reasons, including endowment shortfalls, it’s expected the majority will not have enough capital to repay their debt, leaving them at risk of losing the home they love. Lenders may agree to extend the existing term of the mortgage, although an extension may only be granted for a relatively short period. This has the impact of delaying the inevitable as the capital balance remains outstanding and would still be due to be repaid in full at a later date. Some lenders are happy to explore the option of converting the debt to a Capital & Interest repayment mortgage. While this may seem like the simplest solution, it’s likely to be deemed unsuitable for a large number of borrowers. This is particularly the case for those who rely solely on their state pension for income and are assessed by the lender as unable to afford the higher monthly repayments.
agreed cash facility at a later date when needed. They’re able to make monthly interest payments on any further sums they choose to release. Additional features, unique to Just, include the option for borrowers to take a payment holiday of up to three consecutive months in any 12 month period. This feature is designed to allow them the added flexibility needed should they have a short-term need for additional cash. Outside the payment holiday, should the borrower miss six monthly payments, the mortgage will automatically convert to interest ‘roll up’. Another significant advantage for the client, is that all the time they choose to service a proportion of the interest, they’ll have the benefit of a reduced interest rate, compared to if this option isn’t selected. For more information visit our website: justadviser.com
Peter Borley Director of Propositions, Retirement Lending
PROVIDER SUPPORT – 17
Smaller Companies: not as risky as you think
Simon Evan-Cook, Senior Investment Manager for Premier’s multi-asset funds, explains smaller companies are never going to be risk-free, but still look a better long-term bet than buying a market-weighted tracker. We often conflate the vulnerability of one member of a species into the vulnerability of the species of a whole. An individual mosquito is weak and easy to kill, but as Bill Gates would attest, wiping out all mosquitoes is impossible. In fact, any efforts to do so only strengthens the species, as you kill the weakest individuals, leaving the strongest to refill the gene pool. The same principle applies to smaller companies. Individual members of those ‘species’ can go bankrupt at any time. But it’s usually the weakest that do so, leaving the stronger ones to pick up their customers, and to learn from the mistakes that derailed the failures. This is one of the reasons why we like small-cap funds. They allow us to access the strength of the ‘species’, while removing the existential risk that threatens each and every individual smaller company. Naturally, like anything, there are good and bad examples of small-cap funds, which is why we only invest with the very best. They should avoid most of the companies that go bust, leaving us with more of those that will survive and prosper. Sure, they won’t get them all right, but they only need to get more right than wrong to outperform their peer group (which itself has wiped the floor with its all- cap equivalent). Given this track record, why do people (us included) bother with large-cap funds at all? There are several answers to this, some good, some not so good. Most are linked to that widespread perception of small caps being riskier than their larger peers. This means that, in times of stress, investors are more likely to abandon their small-cap holdings, leading
to sharper drawdowns. This is why we use small-cap funds as part of a portfolio, not all of it: volatility is not the same thing as risk, but there will be times when the journey will be rougher than most investors can stomach. So putting everything into small-caps runs the risk of frightening investors into selling their holdings after a pull-back, which is usually the worst possible timing. There will also be times when small-caps as a whole become too expensive, and it will make sense to pare back. These are rare, and usually happen after a very good run for small caps, when greed is in the ascendancy, and investors’ collective tolerance for risk is high. This is another factor that makes small-cap investing psychologically tricky: Those are the only times when it feels comfortable buying small caps, but they’re also likely to be the times when you probably shouldn’t. Conversely, when it feels uncomfortable to own them, which is about 95% of recorded history, you probably should. They’re never going to be risk-free, but still look a better long-term bet than buying a market-weighted tracker. Find out more Contact Simon Morris, Head of Strategic Partners, on 07738 958 072 or email email@example.com.
Simon Evan-Cook Senior Investment Manager at Premier Asset Management
18 – PROVIDER SUPPORT
Adrian Gasper Multi Asset Investment Specialist, M&GPrudential
ACTIVE AND PASSIVE FUNDS
THE ROLE OF ACTIVE FUNDS
Core to a portfolio Where portfolios are not exclusively made up of active funds, they will often have significant core holdings invested in them, blended with passive funds, structured products and possibly ETFs and investment trusts. However, advisers should take into consideration the fact that the time, resource and expertise required to research, understand and be able to blend all of these investment types may be prohibitive. As a specialist play Many advisers who take a passive approach to investing may still use active funds to invest in specialist asset classes, to fulfil the output from an asset allocation tool, to access a particular fund manager or simply to adhere to a client request. Several of the fund groups have hired experienced teams to be able to tap in to new opportunities whilst the index tracker fund groups have largely concentrated on the key markets, although ETFs now offer a solution for almost any index. Benefits of active funds Active funds can underperform their indexes but talented managers who are able to meet and beat their objectives do exist. Many of the largest retail funds in the various IMA sectors have outperformed their indices.
Hence the weighted percentage of assets under management (AUM) in superior performing funds will be greater than the percentage of funds that have outperformed. Advisers recommending active funds will say that good active managers have the skill and flexibility to avoid fads or sectors/countries that are unattractive whilst being able to take advantage of opportunities that they can identify, or sell holdings when they feel value has been achieved or maybe is unlikely to be achieved. Active managers will contend that pricing anomalies do exist and a simple example is a company entering the FTSE100 which will inflate the share price automatically. Recent times have caused shares in many countries to be sold on fear with no assessment made of company balance sheets which many companies have strengthened after the financial crisis of 2008. Volatility in stock markets will always exist and whilst this can provide a bumpy ride for investors it will also provide opportunities to buy companies at very attractive prices. Finally, many advisers with investment expertise and resource simply feel it is part of their role to add value to their client service proposition through selecting good active managers.
Whilst passive funds have gained traction in the UK retail funds market, a huge number of advisers still use actively managed funds either exclusively or in tandem with other investments. Performance in volatile markets over the longer term is difficult but has been achieved. Exclusively The bewildering array of investment solutions available to advisers means there are numerous ways of building a portfolio for a client. Ultimately if the portfolio delivers on its objectives and meets the client’s aspirations one could argue there is no right or wrong combination of investments products. Many firms believe they can meet their client’s aspirations exclusively using active funds and have been doing so for a number of years. The wide variety of fund types within most sectors provides advisers with ample choice and combinations of fund management styles and approaches. If combined sensibly these can not only provide index beating returns but more importantly meet client expectations. Investment returns may continue to be subdued across some asset classes for some time, so it seems perfectly logical that advisers should seek to find fund managers who are able to generate extra performance for clients in these difficult times.
THE ROLE OF PASSIVE FUNDS There are numerous ways in which passive funds can be used within a portfolio: including active funds and possibly ETFs may be appropriate.
Removal of a risk element The performance of a good passive fund is unlikely to deviate much from its benchmark index and hence investors should not have to worry about the relative volatility of the fund’s performance in any market conditions. The volatility of the underlying index can of course deviate significantly depending on the prevailing market conditions. Client perception The concept of index tracking is relatively straightforward to explain, particularly for an adviser using a fund that ‘fully replicates’ an index. The client simply needs to understand the characteristics of the relevant indices in the knowledge that the performance of the underlying funds will pretty much mirror them. It does become slightly more complicated if the adviser needs to explain ‘stratified sampling’ or ‘synthetic’ trackers (more on these later) but whatever the vehicle, the concept is generally the same. Fewer surprises for the client If the adviser has explained the concept and dynamics of stock markets and the investor understands that the performance of their funds will be aligned to them then they should not get too many unpleasant surprises regarding performance. Investment conditions in recent years have provided many challenges to both advisers and investors alike but if an adviser has recommended an index tracker fund and explained to the client how this works then this will remove concerns over the potential ‘double whammy’ of underperforming funds in falling markets. Fully diversified exposure to a market where value is difficult to extract due to over research As discussed, a lot of academic research says that it is very difficult for an active manager to beat the index in an ‘efficient’ market because the amount of data and analysis available on each stock would prevent them from gaining a competitive advantage as the market price always reflects the stock’s true value. Passive funds therefore take one layer of the decision making process away (i.e. which manager can outperform) simplifying the investment advice process and arguably making it easier to manage the client’s expectations. Reduced research requirements Passive investors may argue that even if it was possible for an active manager to beat the market, the amount of due diligence required to find managers who can both consistently beat their benchmark within a fund that meets the client’s requirements is too costly and disproportionate to the overall benefit for the client. One could also argue that once a panel of passive funds have been established the ongoing due diligence required for each client review is significantly reduced as well.
Some advisers will not use passive funds to gain exposure to asset classes like corporate bonds and property and there may also be specialist funds whose objectives and mandates are difficult to replicate.
Exclusively A segment of the adviser market often build client portfolios exclusively from passive funds, with some firms/advisers using ETFs as well. These firms are likely to construct and monitor these solutions via wraps/platforms, particularly if they wish to trade in ETFs. These businesses will generally have taken the view that active fund management does not work and that it is more important that the client is invested in the right combination of asset classes at the right times. They will often use the output from a risk tolerance questionnaire and stochastic model or investment committee as a framework for asset allocation decisions, overlaid with shorter-term tactical adjustments to the model based on the firm’s views on the markets. The benefits to the end investor of this approach are low costs and relatively predictable performance characteristics. The adviser or firm should also save significant amounts of time both initially when constructing a portfolio and at each client review as there won’t be as much work involved in monitoring any over or underperformance. There will also be fewer worries around any changes to management, investment processes and other factors likely to trigger a review of a fund’s endorsement. A quick assessment of a passive fund’s adherence to its objectives via an analysis of performance along with tracking error and difference will generally suffice for reviews at a fund level. Proponents of passive investing would argue that with a lot less investment decision making to be done, much more time can be spent discussing a client’s ongoing requirements. Core to a portfolio Having carried out the relevant ‘risk assessment’ and asset allocation for a client some advisers will combine active and passive funds within a client’s portfolio. They will possibly use the passive funds as a low cost, low volatility (relatively) core holding, providing an opportunity to research and use higher alpha managers as ‘satellite’ holdings. Another way of combining the two approaches is to predominantly use passive funds to gain exposure to ‘efficient’ markets and active funds in ‘inefficient’ markets. This is because there is a belief among some advisers that it is difficult to outperform an ‘efficient’ market because so much information is available on each stock - and hence reflected in its price - that it is difficult for fund managers to find pricing anomalies and gain a competitive advantage. There will be a greater perceived opportunity for active managers to use the skill and the resource available to them to find value in ‘inefficient’ markets as theory suggests that stocks in some markets are not always accurately priced. This perception has been challenged and many active managers have failed to beat the index in many overseas/developing markets. Whilst there is a reasonable spread of index tracking funds, there may not be enough choice to be able to populate a model portfolio for instance, so the use of other vehicles
As a specialist play Passive funds, particularly ETFs, have
increasingly been used by advisers and many fund managers to gain exposure to a particular geographic area or asset. ETFs can provide very quick, cheap access to specialist areas and are very easy to trade. There are however, potential added counterparty risks to using some ETFs and many niche investments may be unsuitable for most retail investors. Disadvantages of passive investing There are disadvantages to passive investing. Most passive funds will marginally underperform their benchmarks; either because of tracking errors or fund fees/expenses. This could be frustrating for some investors when a cursory glance at the financial press reminds them that talented active managers can generate significant returns over and above the same index/benchmark net of charges. Passive investing is often not the most efficient way to gain exposure to some asset classes - corporate bonds and property are good examples. Simply put, a market weighted corporate bond index tracker would leave investors with higher exposure to the most indebted companies, as well as exposing them to underperformance through higher costs and relative illiquidity. To accurately track the performance of UK commercial property a tracker would need to own/part own potentially thousands of properties, which clearly is not feasible. Finally, with passive investing an investor may often end up buying shares in companies at historically high prices, if they enter the FTSE 100 for instance, and be forced to sell the same shares at very low prices if the same company subsequently falls out of the FTSE 100. Benefits of Passive Funds Exponents of passive investing will point to numerous advantages: Lower cost Passive/index tracking funds are generally cheaper than active funds and often by a considerable margin, although investors should seek to understand the ‘total expenses’ involved in owning passive funds and ETFs. Passive funds will often have a lead fund manager to oversee operations although there is very little human input to any decision making. Hence there is no need for investment committees to make stock, sector or geographic calls and no need for a large team of analyst to provide ideas for the fund manager. This means the overheads for running a passive fund, including trading activity, are much lower and this is usually reflected in lower annual management charges.
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