Posted May 2nd, 2013
Showrooming is a verb used to describe the act of browsing goods in a “bricks and mortar” establishment and then buying them at reduced cost elsewhere – generally via the internet.
Is it me or does the phrase sound perilously close to “shrooming”?
Anyway, the act itself is being pitched as one of the biggest factors in the demise of many high street stores; particularly the likes of Jessops. Jessops even went as far as displaying a sign in one of their stores that read “the staff at Jessops would like to thank you for shopping with Amazon.” I like the humour in that and the irony too. Of course I feel sympathy with the staff there that now find themselves looking for work. Aside from that though you have to say that as a consumer what else are we going to do? Our wallets are being squeezed and disposable income is something of a luxury currently for many people.
Using a store as little more than a “try before you buy from somewhere else” type of environment does show a certain amount of gall but considering the goods in front of you can be bought for substantially cheaper online, can you really be blamed? Should you even feel guilty? Not only that, but the actual process of finding something that you have in your hand much cheaper online probably goes some way to counteracting buyer’s remorse and impulse buying.
Have you ever wandered up to a counter in a shop with something in your hand and felt a bit nervy as you approached the counter? You feel more and more on edge as you realise that you’re not as sure about your purchase as you were when you first picked it up off the shelf. So what stops you putting it back and leaving the store? I’d say perhaps a little embarrassment? Maybe? Fishing around online for the same item gives your psyche a chance to work through those impulsive feelings to the point where you’re more likely to be thinking “if I can’t find this cheaper online then I’m not buying it.” For the consumer this is actually very savvy and all well and good but is there a way for retailers to combat that? In the case of corporate chain stores I fear not. Ironically though, I feel there may be a place in the market once more for your sole-trader.
I remember when I was a youngster; there was a small record store in my village. On a few occasions I remember perusing the rows of albums just to see what they had in. I’m not sure if I bought anything from the store but I was always struck with the owner’s enthusiasm and knowledge. Is this something that can be replicated by training in bigger department stores?
I’d argue that the majority of staff at Jessops, friendly and diligent they may have been were probably only working there as it was a job. I’m sure that there may have been a handful of staff across the whole chain that were passionate about the product at hand but generally I would bet they really couldn’t care less. However, the chap that has his own little store selling cameras and photography equipment may be of a different type entirely. He could be an ex-professional photographer that is highly passionate and knowledgeable about what it is he is selling. Moreover, he’ll know what is right for you and be able to sell it.
Staff in chain stores will want to flog you the most profitable items. Mr one shop will care more about customer loyalty and making sure you’re happy than pressing you in to purchasing expensive items that you don’t need. Bottom line – passion is infectious.
When you make enquiries about a product, you want to know that the person you’re talking with truly understands and believes in what they are telling you. You want to know that it isn’t corporate spiel that has been drummed in to them through endless (pointless) customer training workshops. In that regard you are little more than a mark. You’re the sell. Big wigs will tell that they care about customers but the way I see it, the truth in that statement is apparent in the way they patronise their staff.
Naturally, we all feel more comfortable when talking with someone face to face when purchasing a product. It just feels a bit safer. You have a bit more comeback because if all else fails and you find your waffle iron is actually a trouser press, you can go back in to the store and say “but you said…….!” That confidence really only comes from the passion of the person that sold you the product. You know you can go back to them and they will sort it out for you. Why? Well of course they are earning a living but it’s more because ultimately they want you to feel as passionate as they do!
Like I said earlier, of course I feel sympathy for those wage earners at the likes of Jessops and HMV that are now looking for work. I can’t bring myself to feel much sympathy for the corporations themselves though. They missed an opportunity and if consumers are calling the shots then I say that can only be a good thing. For you and your wallet!
Image Credit: Flickr.com/timetrax23
Posted April 22nd, 2013
A report by the Fabian Society entitled “Ageing in the middle” is arguing that pensioners should pay more tax to match their younger counterparts. Perhaps you could argue that this argument makes great debate fodder but in my mind that’s all it is – debatable!
The argument goes that a pensioner with a £35,000 a year income pays less tax than someone working to earn that. Well let’s point out the obvious shall we?
To have a pension pot that pays £35,000 per annum means that you would have more than likely been a high earner during a significant portion of your working life – ipso facto you’d have paid higher rate tax. However, you would have been encouraged to save for retirement due to fairly generous tax incentives on your pension contributions. You cannot promise not to take away now, only to take away later.
Also, if you have that sort of pension pot, you may be in a position to pay for any long-term care you may need in the future. In this regard you’re hardly likely to become a burden to the state. You’ll have paid your dues throughout your working life and then some.
I have wondered about the merits of making sure you have loadsa dosh in retirement when you’re arguably not going to enjoy it as much as you would have when you were let’s say 40ish; but then a bit more perspective tells you that this isn’t about living in the lap of luxury in your golden years. For a start, if ever you’re going to need money it’s in your latter years. True you may not be going to week long raves on Ibiza, go-Karting around Monaco or deep see diving for hidden treasures off the coast of Jamaica, but you will be trying to make sure that you’re not burdening your family beyond popping round for the odd cup of tea or looking after the cat while you and your other half spend a week at your favourite holiday spot (the hedonism!). Not only that, but a lot of my clients are continuing to help their children and the expectation that children leave the “payroll” at 16,18 or 21 is diminishing fast. You may have one eye on what you can do for them after your gone and to find it eroded by taxes (which it may also be upon your passing) before you’ve had a chance to even think about where it’s going isn’t what you plan for.
(well maybe not quite go-Karting)
I do agree that we all need to muck in to some extent to get the economic ball rolling again, but if I’m honest, I’m not convinced this government has done or is doing enough to warrant attacking pensioners and their pensions; and the fact is, that is what they are trying to do with the reductions in Lifetime Allowance and Annual Allowance. If this generation of retirees is well off (and they are generally classed as neither rich nor poor) it is only because of forward planning and making sure they took advantage of the rules in the first place.
To implement something like this would be tantamount to taxing someone simply because they are a retired pensioner which smacks of prejudice to me. Of course the cynical would point to the fact that it’s easy to tax pensioners because the tax man knows where to find them!
During your life it is almost a given that the goalposts will be constantly moved with regards to planning for retirement. To me the idea of taxing pensioners sounds a bit more like changing the score after the final whistle! Do you agree?
Image Credit: Flickr.com/.Storm
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Posted April 19th, 2013
That is a deliberate typo! It’s the best I can muster pun wise on a Friday morning I’m afraid.
The BBC are highlighting the dangers of selling your house to one of those leaflet through your door companies.
We’ve all had those leaflets right? “We’ll buy your house for cash at its market value!” Raise your hand if you’ve ever felt even slightly tempted.
My advice; give this the same wide berth that you’d give a CD entitled “Jeremy Clarkson sings Ruggiero Leoncavallo’s opera Pagliacci”.
Its little more than a scam. I can understand quick sales when you’re in a fix. I know people who have sold cars, musical instruments, clothes, antiques – all for less than market value to make a quick buck. It is a bit sad but it’s the way of things these days and I’m confident that things will pick up again. You learn from your mistakes and you say to yourself “I’ll make sure that when the economy hits a rocky patch in the future I’m not forced in to selling things I don’t want to sell.” These sorts of items, sentiment aside can be purchased again in the future.
But your house?!!! So let’s say you have a 4 bed end terraced worth around £180,000. One of the “webuyanygaff” companies comes along and offers you say £170,000. Not shabby and realistically it’s probably not a lot less than what you’d have got for it. You may be thinking “well that’s ok….I don’t see the point here.” Well, how would you feel if the day before you were due to move the company offering to buy your home dropped the price by 46%? Not only that, but you’re tied in to a contract that prohibits you selling your house to another buyer should they make a better offer; not to mention the lack of transparency in the charging structure!
These scams can present themselves in a lightly different way as well. They will sometimes offer to purchase your property and let you rent it back. It has been known for tenants to be given their 6 month notice on the day of sale completion.
This is your house. If you have to go without for the sake of keeping it then I would advise doing so. When I say go without, I’m not talking about food and clothing as such. I mean the little things that you probably don’t actually need anyway. You have a 32” flat screen that does the job. You don’t need a 50” flat screen smart TV. You have a cheerful old Renault that gets you from A to B and back again. You don’t need a brand new Jag. There are plenty of wonderful places in the UK that offer excellent, cheap deals on city breaks. Edinburgh, London, York, Llandudno, Cornwall………..you don’t need a 5 star, all singing , all dancing 2 week jaunt to the Dominican Republic.
Of course if you feel you do need these things and can easily afford them then I probably should have said that you can switch off about 3 paragraphs ago. However, if you do feel you need these things but can’t afford them then perhaps you should be asking yourself if you really need the responsibility of owning a home.
Posted April 18th, 2013
As many of my clients know I’m very much a fan of the beautiful game. I’m also very heavily involved in coaching the Bolton Lads & Girls club under 13’s football team. I’m a spurs fan and enjoy a good debate around all things football. As an IFA I do take an interest in footballers and finances.
In that respect I came across a fairly shockworthy statistic – 3 out of 5 premier league footballers file for bankruptcy within 5 years of retirement. There are reasons offered and I have no doubt that they are solid. The changing rooms in premier league stadiums are hotbeds of one-upmanship. You get a £200k car so I’m going to buy a £250k car. You get a 5 bed villa in the south of France; I’m going to get a 10 bed mansion in Spain. You get the picture.
I wonder though if perhaps there is more of a fundamental human explanation. I do have some very wealthy clients. The sort of income your ordinary Joe would drool over; and more power to them I say. There is something very admirable about self-made success which is a demographic many of my wealthy clients occupy. What intrigues me though is the extent that happiness and contentment factors in to all this.
Are happiness and contentment the same thing? I think there is an overlap and one may often lead to another. I have a simplistic view though that goes something like contentment is having everything you need and happiness is having everything you need and a little of what you want. That doesn’t tick all the boxes though. There are many people that have everything they need and pretty much everything they want and they are miserable. Perhaps it’s the chase, the anticipation of having everything you want that offers excitement and once attained the gloss falls away. Many of us have things that we don’t need that make us unhappy. Debt is an obvious example. Yet I also know people that have moderate levels of debt that are actually quite content. Perhaps there is an apathy in there that may not necessarily be a good thing – but happiness is an abstract concept and frankly has little to do with material wealth.
From a financial perspective though, I am intrigued as to how even the most wealthy of people live right at the top end of their means. Where you’re average Joe quite happily (allegedly) gets by on his £1200 net per month (a 2011 report in thisismoney.co.uk put the average UK net annual income at £38,547), I have known people that earn that in a week and still have little capital in their bank account come pay-day.
I wonder if this is perhaps what is happening with these bankrupt footballers. Boredom may be a factor and I wonder if they too live right at their means. Finance 101 is to live within your means so what stops them? Boredom, rivalry, one-upmanship, bad management and lack of forethought all play a role in stripping away at finances. This is true for anyone. Any career that offers high wealth, particularly a sporting career that will be relatively short needs careful planning to ensure the wealth lasts a lifetime. Many of us can only dream of that sort of income and I’m sure would baulk at the thought of feeling any sorrow for a bankrupt premier league footballer (some of whom are still playing for high profile clubs!). But look at it this way – would you have been much different at 18 with £10k a week furnishing your bank account? Many dismiss the notion of financial and pension education in high school for the basic reason that it would be lost on kids of that age but I disagree. I would whole heartedly suggest that introducing that sort of wealth to a youngster means that guidance and education should be an absolute priority. This is the tip of a much wider issue.
Footballers with high wealth often get roped in to dodgy, unproven investment schemes. The apartments that were built on Arsenals old highbury football stadium would testify to that (Sorry just had to). Many of them were bought by pros and dropped in value once they were completed. This of course led to them being sold at a loss when the plan was to flip them for profit; and this is a very meek example compared to some of the ventures that footballers probably get wrapped up in.
Anybody with high wealth needs good solid advice. The two should go hand in hand. Of course the cynic would point out that I just want your money and all I’m going to do is tell you what you already know anyway. If I’m honest I’d agree with the second point. Many of us know what we should do but don’t have anybody whipping us in to doing what we should do. That’s my job. As far as wanting your money I’m not going to apologise for earning a living but what I will say is, it’s not your money I want – I get my job satisfaction from helping clients meeting their goals and seeing them comfortable well beyond their career end. I get my kicks out of seeing your wealth in such a good state that it will provide for your grandchildren’s education if needed well after you’ve kicked the proverbial. Money should be a facilitator of extraordinary things.
P.S. To really get an insight in to what it’s like being a Premiership footballer I would absolutely thoroughly recommend reading ‘I am the Secret Footballer’ published by Guardian books. His identity is unknown other than he is a very recently retired Premiership player. The language is a little choice at times but does reflect that locker room, testosterone driven atmosphere. And some of the stories will make your eyebrows raise so much they’ll keep your ears warm!
Image Credits : Flickr.com/E G Focus
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Posted April 16th, 2013
UK inflation held steady at 2.8% in March according the Office for National Statistics (ONS).
The idea of a continually growing economy is a good thing on paper but simple economics teaches us that it all goes in cycles despite what Mr B has us believe. After all, an economy that is growing smacks of prosperity………….doesn’t it? I have to say though, the idea of inflation during a recession……it sounds like the answer but is it?
We’re in a recession despite what the figures tell us and if you consider what the banks got up to (and discount their input in the “good years” perhaps we have been in recession longer than anyone thinks! The fact you’re getting a meagre return on your savings, the fact that your shopping basket has a lot more room in it after the £70 you have spent on groceries, the fact that unemployment is high, and the fact that many town centres are little more than boarded up ghost towns; this all smacks of recession and the usual cyclical economy.
The average rate of inflation in the UK last year was around 3.2% and we’re not far behind that at the moment but does it honestly feel like we’re part of a growing economy currently? If you have found yourself adversely affected by the recession (as most people have) then being told that inflation stands at around 3% isn’t really going to engender any warm fuzzy “everything is going to be ok” type feeling. Bank interest rates are woeful and for me these banks have very short memories – when no banks were lending to each other and QE was in full flow private investors were the ones who kept their deposits in place (despite low returns) preventing even more problems. How have these depositors been rewarded.
I feel that getting the economy stable with regards to employment, affordable housing and (perish the thought) giving savers a bit of return by giving up on quantitative easing might be a better way forward.
I know it’s a lot easier to say all that than actually put it in to practice but focusing too much on the figures will rarely give you the bigger picture. You end up playing a numbers game which often leads to foolhardy predictions and second guessing and even complacency. Hmm, who does that remind you of?
Figures can lull you in to a false sense of security. Of course we all want to see the economy turn around (and it will), but we must learn from the past if we are really ever going to be able to sustain any long term growth. When you find yourself working to live rather than living to work then that will tell you everything you need to know. Perhaps it is time as a nation that we start to put something aside and invest for our future generations.
Image Credit: Flickr.com/One Way Stock
Posted April 15th, 2013
That could almost be an explanation for bureaucracy in a nutshell.
Website unbiased has conducted research on the effects of the Pension Simplification rules (A-Day); and according to 83% of the advisers surveyed, the shakeup has done nothing to make the rules around pensions easier to understand. In fact, I’d go so far as to say it’s just made the whole process worse.
This time next year yet more changes come in to effect. That means that there have been big changes since A-day that will include:
- 2 major reductions in the Lifetime Allowance limit
- 2 reductions in the annual allowance limit (including the reduction in 2011/12 that saw the annual allowance limit reduced by over 500%!)
- Scrapping the default retirement age
- Creation of a flat rate state pension
- Capped drawdown
All this in the name of simplicity of course however, one thing does remain simple and straight forward – saving in to a pension is still the most cost effective way of living comfortably in retirement; how you get there is another matter.
If there is one thing any government tightening the purse strings will do, it must be tinker with pensions. What irks me the most is the fact that on one hand the government doesn’t really want to support you in your golden years. The changes to long term care fees will testify to that! Yet on the other hand they will do everything they can do to fleece your retirement pot.
According to unbiased over a quarter of the advisers surveyed believed that retirement planning should be taught in school. I applaud the sentiment but come on……….anyone who was bothered about what inflation meant at 16 raise your hand……..no?…….didn’t think so. School kids and school leavers really don’t care about retirement. That’s something old people do. Let’s get the economy furnishing with jobs first eh, before we start beating them over the head about the difference between RPI and CPI.
21% thought that businesses should offer financial advice from an IFA with regards to retirement advice as part of the employee benefit package. Now there is a statistic I can bank! I’d say that it should be compulsory when having employees opt in to a retirement scheme – advice, and not just any advice but GOOD advice. Where do you get good advice? From a good IFA that’s where. That sounds obvious I know, but I have known people stay with the same IFA for years because they’ve been with them for years! There is no place for sentiment when it comes to the unforgiving landscape of saving.
Posted April 10th, 2013
That is icebreaker as in a special-purpose sea faring vessel designed to move and navigate through ice-covered waters, not the first person to say hello in a quirky way at a dull party.
So Ice-dodger? Well, any other sort of boat I suppose; one that upon meeting a chunk of ice, would rather go around it than try and plough a path through it.
How would you describe your portfolio in this sense? Is your portfolio actively managed and able to plot a path through around icy economic waters? Is it proactively managed to make twists and turns and defend itself against the ever changing markets and the unexpected ice-bergs it throws your way? What if it takes a wrong turn and hits an ice-berg?
See, in normal waters an ice-breaker will act like any other ship. Same as a 4×4 land rover will just act like a normal car on the road; both are suited to more than one environment. An ice breaker can just plot a course forward generally speaking, where as a regular ship would have to plot a path around.
I may be no mariner, but it would be reasonable to assume that navigating a way around icy waters would take a lot more planning, concentration and effort than plotting a course through. Not only that, but if an ice-breaker misses a sheet of ice, it isn’t going to sink. On the other hand, your regular boat could have its hull breached if the calculated route is compromised unexpectedly, or else it could run aground on a sheet of ice.
So your portfolio? Can it plot a way through choppy, icy waters? Or does it have to be nursed around an ever changing watery landscape?
Posted April 8th, 2013
Have you taken the test? If not you can have a look here:
The Great British Class Calculator – BBC News
You can read the story behind the results of the survey here:
The Great British Class Survey – BBC News
So how did you fare? Apparently there are now 7 different social classes. It does stir my curiosity when looking at how these things come to be defined. As far as I knew we had 3 classes within which everybody could be lumped and depending where you are, you could stick or twist. Then of course on top of that we have the lovely bunch we refer to as the aristocracy; or if you like, those for whom class is a way to distinguish those that are not born in to privilege.
However, we now have 7 social classes according to the survey, within which we all fit nice and neatly. Those classes are:
- Precariat, or precarious proletariat
- Emergent service workers
- Traditional working class
- New affluent workers
- Technical working class
- Established middle class
And I submit that this is all one helluva hideous over generalisation. Why? Well, because it boils down to one thing and one thing only………..dosh!
If you have lots and pots of money yet stay at home playing computer games, listening to rock music and hip-hop you will still come out as Elite. However, if you are of low-income but very enlightened in your pursuits you will still be termed as Precariat. Therefore the whole exercise is complete hog-wash as far as I’m concerned.
You cannot slice the country up in this way and expect it not to engender all sorts of horrific stereotypes. Yes there are some that will always fit the bill. The self-made millionaire that studied at Cambridge on a scholarship and came out with a first class honours degree, set up his own bio-chemical research company, loves reading, the theatre, classical (and rock!) music and has a high IQ would probably be fairly considered Elite. Yet it tells us nothing of the sort of person he truly is. Did he cheat at all on his exams? Did he muscle his way in to his friend’s ambitions and does nothing but sit on a board that he bullied his way on to?
What of the dishevelled young man you see at the bus-stop every morning, in one of only two sets of clothes you’ve seen him wearing; constantly plugged in to his iPhone listening to music, looks like he could do with a good wash (and a good meal!). Probably a scrounger just counting the minutes till he can get back to his bedsit to watch daytime TV and smoke roll-ups all day right? Or a voluntary worker with elderly people who has a part time minimum wage job as a morning cleaner and is quite content thank you very much. Also very well read and studied hard in school. Has A-levels but couldn’t afford to get a degree as he was already up to his eye-balls in debt by the time he was 19 due to soaring further education fees.
It’s easy to make judgements of others (and yourself) when surveys like this pop up; but do you really need to belong to a class system?
I’d suggest firmly that you don’t. All you need to do is be your own class act. That is class enough in itself.
And in case I sound bitter, just so you know I came out as Elite. Obviously that doesn’t take in to account that I’m a Tottenham fan.
Image Credit: Flickr.com/yewenyi
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Posted April 4th, 2013
And the main beneficiary is … (Long X factor-style pause)
Not announced like this I hope. But something I always counsel my clients to do is to talk to their children about their financial plans including what provision they have made in case of death.
A bit of a taboo subject I know but the more open you are with your children the better. I always recommend placing all pensions and life assurance policies in trust. The benefits of this are twofold:
- The proceeds can be paid more quickly without having to wait for probate.
- Generally it avoids the potential for Inheritance Tax to be paid.
Sometimes it is not possible to do this because the provider does not offer a standard trust document and it is not cost effective to write a trust via a solicitor due to the value of the benefits.
With pensions there is another option which is to direct the pension company on where you would want the proceeds to be sent. This is done via a nomination of beneficiary form. Effectively, this is a piece of paper where you indicate who benefits should you die and in what proportions.
This issue was raised in an article I was reading in one of the pinks last week – Financial Adviser - as it happens.
Now what is not always understood is that there is no consistent approach taken across the providers. Some providers do not consider the nomination of beneficiary to be binding where as others will always take the nomination into account.
The key lesson here is to understand this and to ensure that within your affairs there is clarity. If a discrepancy occurs during the claims process then the insurance company will be obliged to investigate. So if your circumstances change you need to document this and ensure the nomination is kept up to date. Separation, divorce, illness or death of a partner can be reasons to look at your nominations.
So before signing your next nomination of benefit form, please take the time to understand the process of what happens next, go for a trust document if possible first, and if not available, make sure you leave clear instructions with no ambiguity.
Now you can go back to watching the X factor knowing that your wishes will be met.
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Posted April 3rd, 2013
BBC News – George Osborn to defend benefit changes.
Chancellor George Osborne is to defend recent tax and benefit changes saying “this month we will make work pay”.
In a speech, Mr Osborne will say 9 out of 10 working households will be better off.
That sounds like a statistic to me and as Neil Kinnock once said “statistics don’t lie!” Maybe not, but they often do a pretty poor job at masquerading as truth. If you are one of the 90% of working households then all well and good and according to Mr Osborne you don’t need to worry; but what if you are the lowly 1 in 10? 1 in 10 in your favour sounds like good odds. From a financial point of view it could almost sound like a shoo in. Yet, I’ve never been one for gambling when it comes to finances. The fact is that still represents a very significant slice of the working population. If a 10th of the working population decided, because of the fact (Osbornes words – not mine) they are worse off in work, not to turn in tomorrow morning the impact on the economy would be vast and wide reaching.
Cutting through red-tape and legislation changes to quantify exactly who will be better and worse off would be next to impossible. George Osborne is telling us that he wishes to stop working families feeling penalised for earning a living and paying their own way. Of course in this case we are to ignore the cuts in tax credits, child benefit and the VAT rise.
It must be difficult to balance the books on a national level, particularly when we are talking about the welfare state. It doesn’t pay for itself! People often come up with off the cuff solutions which sound fair yet would be difficult to put in to practice; and I’m sure that being Chancellor around budget time is a very difficult, demanding and challenging role and you are never going to please and appease everybody. It has to be the mother of all accountancy jobs.
A criticism often levied at internet providers, energy companies, mobile phone operators etc. is that you always end up paying more than the seemingly advertised “upfront” price. We’ve all seen the like. Get the fastest, most super-dooper high speed internet for £5 a month! Only to read the small print to find you are being charged £40 a month for your line-rental. That is what the budget looks like to me. Noble sentiments inside headlines and of course hard working families shouldn’t be penalised for being as such; but looking at the small print reveals the same old “what they giveth with one hand, they take away with the other.”
I suppose if we all knew exactly where we stand and exactly what we’re paying, then that would be a good place to start budgeting from. Leading families in to believing that they are going to be better off will give some a false sense of security and could actually exacerbate their struggles. That may sound farfetched, but I’ll bet 9 out of 10 families that listen to George Osborne’s speech will feel that way.
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