Many of you have helped over the past 12 months or so with the surveys conducted by NMG, to establish who paraplanners are, where they come from and the type of work they do in their day to day role and we thank you for taking the time to complete the surveys.

This valuable and important work has provided not only a fantastic picture of the wide range of skills paraplanners have but also the important role they play in a modern financial planning practice.

NMG are conducting a series of surveys throughout 2010 to see how the role and the individuals who make up the population of paraplanners is changing and evolving over these changing times within UK financial services.

The second survey of 2010 is now open and we would like to encourage as many of you as possible to logon to the link below and take part. The more people who take part the better the results.

Paraplanner Survey May 2010

If that wasn’t enough everyone who completes the survey will be entered into a prize draw with the chance to win one of three fantastic prizes.

The survey only takes a few minutes to complete and your input is really appreciated.

As many of you will know, one of the most popular and respected conferences is the Morningstar Investment Conference. Held in May each year this is now only just a month away and we have 10 FREE passes to give away!

The conference is a high level event attended by many of the countries most influential, financial planners and advisers, fund managers and investment professionals. As the role of the paraplanner gets increasingly established in the framework of top financial planning firms, paraplanners themselves also need to ensure they are as knowledgeable as possible.

Having attended for the last couple of years I can say that for me this event has been an excellent way to listen, in detail, to some of the leading funds managers (Anthony Bolton, Robin Geffen, Sanjeev Shah, Richard Burton) and to hear them explain their thinking on the current and future economic climate and their justification for some of the decisions they have made.

During the two-day forum, some of the country’s leading fund management and investment professionals will deliver thought-provoking insight and analysis on topics including: what future for UK equity income in an era of dividend cuts?; ETFs and their future in Europe; opportunities in the emerging markets; the impact of the forthcoming general election on the UK investment industry.

To view the full agenda click here.

The event aims to deliver education and practical knowledge from those at the forefront of money management; open discussions with high-profile speakers on their ideas, concepts and presentations; and new information with actionable takeaways.

When: 11th and 12th May, 2010

Where: Park Plaza Riverbank London, 18 Albert Embankment, London, SE1 7TJ

How to Register for a Free 2-day Pass: Please email Priya.shinh@morningstar.com with your contact details and state ‘Paraplanner.com’ in the subject line. Only 10 passes are available on a first come first served basis so hurry.

This is a fantastic event, so if you want to really understand the thinking of some of the countries leading fund managers along with a deeper insight into the current economic climate (and all for free) make sure you request a pass.

Many of you kindly took part in the Paraplanner Census which we organised last November in conjunction with NMG.

The latest round of the survey is now open and it would be great to get even more people involved. There are some fantastic prizes on offer just for entering including a spa break and a Nintendo DS!

The survey has really taken off and is providing some really useful information about paraplanners, who they are, how they work, what they do and the tools they use. This provides a brilliant insight into just how influential paraplanners are and just how vital their role is within a modern Financial Planning practice.

The survey will be running until midnight on Wednesday 24th February 2010.

If you are a paraplanner please take the time to complete the survey. This is your chance to influence the way that the paraplanner role develops.

The link to the survey can be found here, it should only take 10 minutes or so.

The articles from T Bailey over the past few weeks have had a great deal of interest. T Bailey finish their articles this week with some further information about the Fund Managers.

There is also the final chance to win £25 Amazon vouchers. The questions are simple, so well worth looking at.

The winner of the Week 2 competition was John Burrows of Whichers IFA Limited; well done John.

Don’t forget there is also the ‘Ask Jason’  feature still running so if you would like to ask Jason or Elliott a question please send them to either martin@theparaplanner.com or info@tbailey.co.uk and we will get them to answer them for you.

The T. Bailey Fund Managers

Jason Britton is the Chief Investment Officer and Fund Manager at T. Bailey.  Jason has worked with the T. Bailey funds since their launch in 1999 and is an Oxford mathematics graduate and ACA with over 10 years’ experience of the fund management industry.

Jason’s main speciality is advanced quantitative analysis to help monitor and assess the ever-increasing universe of investment funds from which T. Bailey can choose when constructing portfolios.

Jason manages all five funds offered by T. Bailey and is supported by Elliot Farley, Assistant Fund Manager.  Elliot is a Warwick University mathematics graduate with 9 years experience in the fund management industry. He has worked with the T. Bailey funds since 2000 having previously been an ACA with Deloitte & Touche.

AMAZON VOUCHER COMPETITION QUESTIONS:

Jason Britton has worked with the T. Bailey funds since:

A)    1999

B)    1998

C)    2000

How big is the current fund range at T. Bailey?

A)    4 Funds

B)    5 Funds

C)    6 Funds

To enter please send your name and address along with your answers to both questions by email to info@tbailey.co.uk.

By entering this competition, you agree to be bound by the following Terms and Conditions:

1. No purchase is necessary and only one entry per person, per draw will be allowed.
2. One prize of a £25 Amazon Voucher, per draw (i.e. four prizes in total) is available to the winner, who will be selected from random from all correct entries received.
3. No cash substitution will be available.
4. The competition is open to UK residents aged 18 and over, except employees of T. Bailey Asset Management Ltd, its associates, their families or anyone connected with the competition.
5. For inclusion into the week 4 draw, entries must be received no later than 10 February 2010.

The draw for week 4 will be made on 11 February 2010.

1. Winners will be notified immediately and their names published online at www.theparaplanner.com.
2. The promoter will not accept liability for lost or delayed entries. Proof of entering is not proof of receipt of entry. No correspondence in connection with the competition will be entered into and the decision of T. Bailey Asset Management Ltd is final.
3. The winners agree to the promoter’s use of their name, address and photograph in relation to the promoter’s publicity material.
4. The promoter’s contact details are: T. Bailey Asset Management Limited, 64 St. James’s Street, Nottingham, NG1 6FJ.

As you know T Bailey have been sponsoring a competition over the past few weeks. The competition has had a fantastic response; to everyone who entered thank you.

When T Bailey started their sponsorship they very kindly offered the services of their Chief Investment Officer, Jason Britton to answer any questions that anyone wished to put to him.

As you can imagine we have had a number of questions and we hope to be able to publish many of the answers over the next few weeks however as a flavour, Jason has kindly answered the following two questions.

Question 1

I am reviewing a client’s portfolio and they have a large exposure to commercial property, what is your view on commercial property and should this be reallocated?

Jason’s answer

Our view is that we have moved from being negative on commercial property to neutral, so we are still relatively cautious and very careful about what opportunities there are, for example we only choose funds which have an adequate variety of both landlords and tenants to kick in an extra layer of diversity.  A high allocation to this asset class can be dangerous, in our view, but as you know it depends on the client’s risk tolerance and requirements.

Question 2

An IFA has asked me to investigate China as a region – is there more value there?

Jason’s answer

We view China as an unstoppable force in the emerging markets and, like many, understand the effect it has on the rest of the world.  However, these are interesting times and while Anthony Bolton has announced his intention to move there and establish a new fund, we tend to invest in the surrounding area (as can be seen from the T. Bailey Growth Fund exposure) as we find you can get a better risk/reward than investing direct.

If you have any other questions you would like Jason to answer, please feel free to email your question to info@tbailey.co.uk

Similarly, if you have not had the opportunity to look at who T Bailey are, or what they do, please click on their logo on the right.

As most of you will be aware, it’s always been important to us to try and provide some additional information or an added insight for paraplanners in order to help us all to be as knowledgeable and efficient in our work as possible.

To help with this T Bailey, who have been a supporter of this site for a long time, have agreed to their OBSR ‘A’ rated Growth Fund manager Jason Britton, to run a feature for the next few weeks where readers of the site will be allowed to ask him questions about his fund or how he manages a fund or perhaps fund management in general.

T Bailey have are also going to be running a number of (easy) competitions with prizes so if you would like to win a prize, please enter.

We hope you find this useful so send in as many questions as you would like and we will get Jason to answer as many as possible for you.

Martin

Introduction to Jason Britton

Jason Britton is the Chief Investment Officer and Fund Manager at T. Bailey.  Jason has worked with the T. Bailey funds since their launch in 1999 and is an Oxford mathematics graduate and ACA with over 15 years’ experience in the financial services industry.  Jason’s main speciality is advanced quantitative analysis to help monitor and assess the ever-increasing universe of investment funds from which T. Bailey can choose when constructing portfolios.

In the coming weeks we will be opening up an ‘Ask Jason’ forum where you will have exclusive access to communicate with Jason and pose any question that you would like to hear his opinion on.  Whether this be his opinion on asset allocation or what the markets will do next, this is your opportunity to interact with T. Bailey’s Chief Investment Officer and Fund Manager so make sure you don’t miss out!

Competition week 1

AMAZON VOUCHER COMPETITION FOR PARAPLANNERS – FOR YOUR CHANCE TO WIN A £25 AMAZON VOUCHER PLEASE ENTER BELOW

Nottingham based T. Bailey explain the investment strategy that works best for them:

For your chance to win a £25 Amazon voucher please read the text carefully below and answer the two questions shown at the end of the article.

Why do we believe in fund of funds?

Our preferred strategy is investing in a portfolio of funds, rather than investing directly in shares, bonds or other securities.

We believe this reduces risk while producing superior long-term returns. Which, of course, is the dream scenario for any investor. It also gives us flexibility and freedom.

In a more traditional model, all of a fund’s money is controlled by only one or two managers. The managers choose which stocks to invest in; but their scope is usually limited to a fairly constrained area or asset class. They can also be prone to invest in a particular style – their personal one or that of their company – which may not be universally appropriate.

But T. Bailey’s multi-manager funds allow our fund managers to put money into a diverse range of asset classes and funds. Eggs, therefore, can reside in a greater number of baskets. And the most apposite management style, as well as the best funds, can be selected.

Fund of funds v. manager of managers.

We’ve expressed our preference for a multi-manager approach to investing, but why did we choose fund of funds rather than manager of managers?

Well, the latter – often run by institutional investment houses – can be unwieldy because of the contracts that have to be put in place. Given the volatility of the market, we’d much prefer the ability to act rapidly and decisively. Fund of funds gives us that ability.

Fund of funds have the added advantage of giving us access to certain investments that are unavailable to retail investors. With a wider choice at our disposal than a direct client would have. And we can make investments more cheaply, too.

These general advantages of fund of funds should be considered in conjunction with T. Bailey’s rather more specific advantage: its skilled investment team. Ever-vigilant, our team aims to calculate the optimum combination of funds that should perform best together.

Competition Questions:

1. Where are T. Bailey Based:

A: Nottingham

B: Northampton

C: Norwich

1. What is the preferred investment strategy at T. Bailey

A: Manager of Managers

B: Fund of Funds

C: Direct property investing

To enter please send your name and address along with your answers to both questions by email to martin@theparaplanner.com. We will then forward all the entries on to T Bailey on your behalf.

GOOD LUCK !

By entering this competition, you agree to be bound by the following Terms and Conditions:

1. No purchase is necessary and only one entry per person, per draw will be allowed.
2. One prize of a £25 Amazon Voucher, per draw (i.e. four prizes in total) is available to the winner, who will be selected from random from all correct entries received.
3. No cash substitution will be available.
4. The competition is open to UK residents aged 18 and over, except employees of T. Bailey Asset Management Ltd, its associates, their families or anyone connected with the competition.
5. For inclusion into the week 1 draw, entries must be received no later than 15 January 2010.

For inclusion into the week 2 draw, entries must be received no later than 22 January 2010.

For inclusion into the week 3 draw, entries must be received no later than 29 January 2010.

For inclusion into the week 4 draw, entries must be received no later than 5 February 2010.

1. The four draws (one per each of the above weeks) will be made on 20 February 2010 with the winners being notified immediately and their names published online at www.theparaplanner.com.
2. The promoter will not accept liability for lost or delayed entries. Proof of entering is not proof of receipt of entry. No correspondence in connection with the competition will be entered into and the decision of T. Bailey Asset Management Ltd is final.
3. The winners agree to the promoter’s use of their name, address and photograph in relation to the promoter’s publicity material.
4. The promoter’s contact details are: T. Bailey Asset Management Limited, 64 St. James’s Street, Nottingham, NG1 6FJ.

So 2010 has arrived and a jolly cold start to the year it is too!  However I’m sure this won’t continue for long.

Firstly, Happy New Year to all our readers! We sincerely hope that you all get everything you wish for during the coming 12 months.   Richard and I have been working hard over the Christmas and New Year break and have a number of exciting ventures planned for the first part of this year so keep coming back to see what’s happening.If you haven’t signed up to the email updates, please do so.  This will keep you informed of all the latest changes to the site. Also if you haven’t signed into the Forum again please do so.

The Forum is the only forum specifically for paraplanners and you will find that there are many, many knowledgeable people only too willing to offer help and assistance or a their thoughts on whatever subject you care to mention.

The recognition of the role of Paraplanner has changed dramatically since we first started the site and this year should see the launch of the first UK paraplanner qualification from the IFP.

In addition, NMG are continuing with their Paraplanner Survey. For those of you that took part in the most recent one (November 2009) thank you very much. We should be able to publish the results very soon. If you have not signed up to do this please let me know here at theparaplanner.com and I will make sure you are included in the next round. It doesn’t matter how long you’ve been in the role the survey is for everyone and we all have valid opinion so make your voice heard.

If you have any other suggestions for improvements or articles or content you would like to see covered, please let us know. Similarly if there is a website you use a lot or one which has lots of good information or you’ve found some interesting; share it and let everyone benefit.

Here’s to a great 2010.

Martin and Richard

Probably the most important 10 minutes this year.

As many of you will be aware one of the major objectives of The Paraplanner has been and still is, to raise the awareness, professionalism and standing of paraplanning and paraplanners throughout the Financial Services industry.

This is an objective which is still ongoing and something which Richard and I are still working hard to achieve. The website has certainly raised awareness along with the Paraplanner of The Year awards.

This year will see the culmination of the work done with the Financial Services Skills Council on the National Occupation Standards for Paraplanning meaning that the role will officially exist and there will be a nationally agreed framework of the types of activities a paraplanner does and the skills required to fulfil that role.

From our own personal experience and from our conversations with many of you, it is clear that paraplanners play a far more important role within the industry than they are given credit for. Many of the large insurance companies, fund providers, platforms and wraps still tend to deal exclusively with the Financial Adviser, Financial Planner or Managing Director when in my experience it is the paraplanner who will actually make the decisions as to which product is used, who will be the provider of that product and where the funds will be invested.

Some of you may be aware of a very large and internationally respected Financial Services Consultancy firm, NMG. A link to their website can be found here:

http://www.nmg-group.com/

They conduct research for some very large companies and during that research have become increasingly aware of ‘paraplanners’. They approached The Paraplanner with a view to understanding the role, what paraplanners do and how they fit into an IFA practice.

The outcome of this is that they would like to conduct some research which focuses specifically on paraplanners and paraplanning and have devised a survey to do this. This will provide them with a much greater understanding of what a paraplanner does in an IFA practice and their (alleged) importance within that practice.

The survey can only be completed by paraplanners however if you are not a paraplanner please make any paraplanners you do know aware of the survey. The link can be found here:

http://paraplanner.surveydaemon.com/

This is a real opportunity to obtain some meaningful data which will provide insight into the role of paraplanning and paraplanners.

My hope is that it will show that paraplanners play an increasingly important role within the industry.

Prizes

As if this wasn’t incentive enough, NMG have been kind enough to run a prize draw as part of the survey.

If you complete the survey before midnight on Wednesday 6th May 2009 you will be entered into our prize draw with the chance to win one of the following prizes:

Prize Draw

No cash alternatives will be provided. Surveys must be complete in order to qualify for entry. Winners will be notified by phone or email the week after the survey closes. All prizes must be claimed within 6 months of notification, unless otherwise specified. We reserve the right to extend the closing date of the survey (by a maximum of 5 days from the closing date specified) if our target sample sizes are not achieved.

Thank you in advance for your participation it is really appreciated..

A short while ago here at Brand Financial Training, we had a telephone call from somebody studying for CF2 Investment and risk.  They were querying at what stage higher rate tax becomes payable and revealed a fundamental misunderstanding of how income tax is calculated.  We did of course explain the topic to them, and helped them to understand the calculation process, but it brought up such an important issue that we decided we’d write this article about income tax.  Note that this relates to tax year 2008/09 which is examinable by the CII up to the end of August 2009.We’ll start by looking at the basics, before delving a little deeper.

In the 2008/09 tax year anybody under 65 – including children – has a personal allowance of £6,035.  This means that the first £6,035 of income that they have is FREE of income tax.  For anybody over the age of 65 there is an additional age allowance.  If you are between the ages of 65 and 74 the personal allowance increases to £9,030.  And for anybody over 75 this increases again to £9,180.  However, if you have income of over £21,800 and are aged over 65, the age allowance is reduced by £1 for every £2 that income exceeds £21,800.  This can never be reduced below the normal single person’s allowance.

Any income over a person’s personal allowance is subject to income tax.  There are 3 separate bands – starting rate, basic rate and higher rate tax.  

Let’s look at earned income first – that’s income from work or pensions.

The starting rate tax band where you only pay 10% is only relevant for people where their taxable non-savings income is under £2,320.  For income between £2,320 and £34,800 above their personal allowance their income is charged at 20% which is the basic rate tax band, and anything over £34,800 above the personal allowance is charged at 40%.  Anybody with income in this band is a higher rate taxpayer. 

Here’s an example.

Mrs Lindam earns £45,000.  Assuming she has no other income, calculate her tax liability for 08/09

Mrs Lindam earns over £40,835 so is a higher rate taxpayer.

Her personal allowance is £6,035.  This amount will be free of tax.

The next £34,800 will be taxed at 20%.

For the remainder, she will be taxed at 40%

Already accounted for £6,035 + £34,800 = £40,835

£45,000 – £40,835 = £4,165 taxed at 40%

Interest on Bank Accounts

Now let’s look at interest earned on bank accounts.  This is taxed at 10% for starting rate taxpayers and is only relevant for people where their taxable non-savings income is under £2,320.  Interest is charged at 20% for basic rate taxpayers and 40% for higher rate taxpayers.  20% tax is deducted at source, however non taxpayers can reclaim this or can fill out HMRC form R85 which so that the 20% tax is not deducted at source.  Starting rate taxpayers who have taxable non-savings income under £2,320 can reclaim 10%, basic rate taxpayers have no more tax to pay and higher rate taxpayers have a further 20% to pay through their self assessment tax return.  This means that higher rate taxpayers pay a total of 40% tax on interest.  

Fixed Interest Securities

What about tax on fixed interest securities?  This is classed as savings income and is subject to the same rates as tax on bank and building society deposit accounts.  So, if an investor has non-savings income of less than £2,320 which is the starting rate limit for savings, then their savings income will be taxed at 10% up to the savings limit of £2,320.  Tax is then charged at 20% for basic rate taxpayers and 40% for higher rate taxpayers. 

Interest is usually paid gross unless the security is a Gilt, in which case the investor may have chosen to have 20% tax deducted at source.   Where tax is due and it hasn’t been deducted at source, the investor must pay this through their self assessment tax return.

Equity Income

Income from equities is called dividend income.  Any dividend paid is paid with a 10% tax credit.  So if Joe Bloggs receives a dividend of £90, he has already had 10% tax deducted.  So the actual gross dividend amount was £100.  If you are a non, starting rate or basic rate taxpayer you cannot reclaim this 10%.  If you are a higher rate taxpayer you will have an additional 22.5% to pay through your self assessment tax return.  This is because the full amount of tax due on dividends for higher rate taxpayers is 32.5%. 

Another Example

Raymond is aged 61 and earns £56,000 per annum.  He receives net bank interest of £3,400 and net dividends of £2,910.

Calculate his income tax bill for tax year 2008/09 (including any tax deducted at source).

Raymond is a higher rate taxpayer.

His personal allowance is £6,035

His bank interest has been paid net of 20% tax.  As a higher rate taxpayer, he has to pay an additional 20% to bring the total tax paid on interest to 40%.

His gross bank interest is £3,400 / 0.8 = £4,250.  He therefore has already had £850 tax deducted at source.

He owes an additional 20%.  £4,250 x 0.2 = £850

His dividend has been paid net of 10% tax.  As a higher rate taxpayer, he has an additional 22.5% to pay to bring the total tax paid on dividends to 32.5%.

His gross dividend is £2,910 / 0.9 = £3,233.33.  He therefore has already had £323.33 tax deducted.

He owes an additional 22.5%.  £3,233.33 x 0.225 = £727.50

His income tax calculation is as follows:

His total income was £63,483.33 giving a total tax bill of £15,776.83

Note: He has already paid 20% tax on his savings interest, and 10% on dividends

£850.00 + £323.33 = £1,173.33

He therefore owes £15,776.83 – £1,173.33 = £14,603.50 in tax.

I hope that helps you out. 

Need more help with calculations?  We have available workbooks for CF1, CF2, CF5 and CF6 with workbooks for J01, J04, J05 and J06 due at the beginning of April 2009. 

For more information visit www.brandft.co.uk/cf/all.asp for Certificate level exams, or www.brandft.co.uk/df/all.asp for Diploma level exams.

Don’t forget that all readers of TheParaplanner can get hold of free mock exam questions by visiting us at www.brandft.co.uk/TheParaplanner.asp    All our mock questions are delivered as downloadable PDF documents which allows you to print them out and complete them whenever and wherever you wish – no need to sit at a PC and no waiting for the postman!

Good luck with your studies,

Catriona.

Catriona Brand

Brand Financial Training

Catriona@brandft.co.uk

http://www.brandft.co.uk/

Follow Brand Financial Training on twitter at www.twitter.com/CatrionaBrand

 As many of you know I have been part of the Working Group working with the Financial Services Skills Council (FSSC) to develop the National Occupational Standards (NOS) for the role of a Paraplanner.

These are now virtually complete and I would like to personally thank everyone who has been involved in whatever way shape or form and provided feedback for this project. All of your comments have been really useful and helpful.

This is very important for me as it is the start of the role of Paraplanner becoming more understood and an accepted within the Financial Services industry as a whole. I still find that I attend events generally and even events within Financial Services, where people don’t know what a paraplanner is, don’t know what a paraplanner does and don’t know where a paraplanner fits into the financial advice process.

Having the NOS for the role and being able to direct individuals to the FSSC in order to get more information is a great step forward.

It’s also great that in the future people new to the industry will be able to choose paraplanning as a career path rather than having to accept either being an administrator or becoming an Adviser/Planner.

My understanding is that the completed NOS will be available on the FSSC website very shortly.

The next stage of the process is for the FSSC to determine whether or not the Financial Services industry feels there is a need for a specific paraplanner qualification.

They have asked me to speak to a number of different types of employers; large organisations and small companies; companies in different geographies particularly Scotland as well as people who may have used paraplanners for some time and companies who may not have used paraplanners before; and to understand from these companies and employers whether they feel a specific paraplanning qualification would be useful, what level this should be at and how any examination or assessment should be carried out.

If this is something you would like to be involved in please email me so that we can discuss this further.

The FSSC have also contacted a number of individuals to ask for their feedback via a questionnaire.

If you have been one of the people to receive a questionnaire, please fill it in a return it, it should only take about 5 minutes. Similarly if you have not received a questionnaire and would like to provide feedback to the FSSC that would be fantastic. The more comments and feedback we get the better any qualification (should the industry feel this is appropriate) will be.

If you would like to be involved (and I would welcome as many of you as possible) please send me an email and I will forward the questionnaire on to you. The responses have to be back to the FSSC by 30^th April 2009.