I'm back - sorry it's been so long since my last post!

Wow - six months since my last post! It's hard to believe, but then there has been a lot going on. We have decided that Carrington Wealth Management will, in future, be (a) directly authorised (we're currently part of the Paradigm network of financial advisers) and (b) a limited liability partnership.

There are two main reasons for the first change - one is that being part of a network places restrictions upon us in terms of the subjects that we can advise clients on (for example, we aren't permitted to advise clients in Spain on QROPS pension plans) and the second is that as we are authorised via the network we could be unable to advise clients in the future if the network got into financial difficulties (as has happened with others in the past). Direct authorisation ensures the continuity of our service and the widest possible range of options for our clients.

The change to an LLP (Carrington Wealth Management is currently an 'ordinary' partnership between myself and my wife Jill with unlimited liability) is for two reasons - the first is our own financial security and the second is that it makes it easier to grow the business.

Our application for direct authorisation is currently undergoing scrutiny by the Financial Conduct Authority and we hope to hear that the new LLP has been approved within the next few weeks, after which time I'll be posting much more regularly. If you have any ideas for subjects that you'd like to see covered in the blog or on our YouTube channel them please let me know.

Kind regards, Steve Laird

A New Year = A New Dawn for financial advice in the UK

Jan 1st, 2013 marked the beginning of a new era for financial advice, particularly in the areas of investments, pensions and general planning. It's called the Retail Distribution Review (RDR). As a result of the RDR it is no longer possible for advisers to receive commission on new investments or pension plans (including top-ups) so you need to be prepared to pay a fee for the advice - either directly or indirectly (some, but by no means all, providers will facilitate fees being paid out of the capital that you invest with them, if you prefer it that way).

Fees will be explicit i.e. you'll know exactly what your adviser is being paid and what you can expect in return, both initially and on an ongoing basis. You may be tempted to pay for the initial advice and save money by not agreeing an ongoing review aervice but this may be an expensive mistake, unless you are expecting your circumstances never to change, nor your attitude towards investment risk, nor global economic conditions, nor the managers who look after your money on a day-to-day basis etc.

That said, most people do not need to see their adviser more than once or twice a year. Your own adviser will be able to explain what review services they are offering and how much they'll cost you. If you are unhappy you can always vote with your feet and pay the fees to another firm instead.

One final point - paying your adviser a fee shouldn't increase your overall costs - they would previously have been paid commission which came out of the charges made on your investment/pension. Those charges should now reduce as the providers are no longer (without your express permission) paying the adviser, although you shopuld be aware that many providers intend to keep that money for themselves - a shameful policy imho and perhaps a good reason to take your savings elsewhere?

Chancellor's Autumn Statement

Pleasantly surprised by the Chancellor's speech today. Given that he has nothing to work with he managed a generally upbeat message and some genuine creativity. Ultimately, our fate is decided not just on these shores but by the state of the global economy and until it picks up in a sustained manner our ability to control our own destiny is limited, albeit much less so than if we'd be in the Eurozone. We may all have to be patient for a long time yet, so I'll be making sure that my investments are well-diversified, primed to give me protection when, inevitably thanks to Quantitative Easing, inflation takes hold and keeping a bit in cash for buying opportunities when the markets react adversely to bad news.

Our Sept/Oct Digital Magazine

The latest version of our client magazine is available on the Carrington Wealth Management website. www.carringtonwealth.com

Morningstar, the research company, has published its list of the worst-performing funds in the UK over the past five years, as follows:- 1. Rathbone Recovery Fund 48% cumulative loss over the last five years 2. Scottish Widows Investment Partnership UK Real Estate Fund 45% cumulative loss over the last five years 3. Manek Growth Fund 41% cumulative loss over the last five years 4. UBS UK Smaller Companies Fund 41% cumulative loss over the last five years 5. Neptune Green Planet Fund 41% cumulative loss over the last five years 6. Standard Life Select Property Fund 40% cumulative loss over the last five years 7. Aberdeen Property Share Fund 38% cumulative loss over the last five years 8. JP Morgan Global Financials Fund 37% cumulative loss over the last five years 9. SVM Global Opportunities Fund 37% cumulative loss over the last five years 10. Artemis European Growth Fund 35% cumulative loss over the last five years Morningstar OBSR Analyst Rating: Bronze These are the worst out of 1300 funds but looking at these figures in isolation doesn't mean much - for example, the worst performer has actually performed really well over the past three years i.e. since they changed the investment strategy. It all shows the folly of people trying to pick funds themselves - better results can be obtained by paying for the expert advice that my firm and others offer. Please note that past performance may be no guide to future performance and the capital value and income arising from asset-backed investments can fall as well as rise.

We would like to congratulate Hugh McGoldrick (a recent intern of Carrington Wealth Management) on his successful climb up Mont Blanc in aid of Macmillan Cancer Support. As you can see from the pictures this is the highest point yet for our corporate logo!

When Senior Partner Steve Laird presented him with our sponsorship cheque earlier today Hugh confessed that it had been much tougher than he'd expected. His next challenge is to climb Everest, which he plans to do in 2016! We wish him well.

Concrete trampolines

I'm working in Spain this week and have been advising a new client on how to invest their spare capital. Having done our research it was clear that one of two 'Spanish' bond providers would be best, so we put together a portfolio for him and requested the illustrations.

The first provider can only produce a generic illustration - so no details of the funds or their charges and thus about as much use as a concrete trampoline. Their illustration assumed growth rates of 6% and 8% per annum. The other provider listed the funds and used growth rates of 5, 7 and 9% per annum. Apparently, neither provider can change their projection rates making a straight comparison virtually impossible. A little further digging and I found that both providers had completely ignored the underlying fund managers's annual charges (part of which they receive) when producing the illustration, because the client isn't in the UK and so they can get away with it.

I wonder what they expect me to say to the client - perhaps 'here is a misleading illustration designed to make Company X's bond look cheaper than most of the others'. I don't think he'd be very impressed - do you?