We (Paraplan Plus) are shortly launching our own cash flow planning software called MoneyScope – you can find out more here.

The initial release will be available to only 50 users who will have free access before the public release in return for feedback and their best attempts to break it!  We are nearly at the 50 mark and I would like to get some paraplanners involved whether you use cash flow software or not.  If you are interested please send me an email to richard at moneyscopehq dot com.

Day 2 of this informative and well received conference is today.  I was not able to make it but, due to the wonders of the internet (and Twitter in particular), was able to follow the event throughout yesterday and have written a review together with a list of the main points, tips and links which you can read here.

Just a year ago, you would be forgiven for thinking that Social Networking websites were just for kids, but all of sudden the business world is using them as a powerful new tool for networking, marketing and sharing best practice. And yes, even the financial advice industry is getting on board too – because according to IFA Life around a third of all IFAs now have a Facebook page, with many also using LinkedIn and Twitter on a regular basis.

Paraplanners too are getting on board and are using social networking sites to attract new clients to their employers’ businesses, whilst others use these sites to add value to and communicate with existing clients. So it’s very exciting that in January 2010 there is a special Social Media conference for IFAs, Paraplanners and Providers where you’ll learn from the likes of Google, YouTube, LinkedIn and others exactly how you can use social networking sites in your day-to-day work.

We’ve also negotiated a great deal for Paraplanners who are going to attend – just £150 plus VAT for two-day pass saving £££s on the standard prices! Visit www.ifalife.com/socialmediaFS for further details – but if you want to reserve one of the special tickets for Paraplanners please send an email to philip@ifalife.com.  Act quickly to reserve your place and to beat the VAT increase!

If any of you have been to one of my paraplanning workshops you will know that I am a big fan of mind maps and use them most days.  I have just written a brief  review of the three tools I use on my own blog and, rather than adding it here which is easier said than done (!), you can read it by clicking here if you are interested.

I am travelling to Belfast on Monday for a workshop on how paraplanners can use IT to make them more efficient and so I thought I would write about two things I have tried over the last week both of which are radically different.

First of all, I have started using Twitter.  I have been following the hype about this ‘micro blogging’ service for several months and at first I didn’t really get it; why would the world want to know that you have just got up or are walking the dog whilst thinking what to cook for dinner?  However, I have followed the tweets of several interesting people and can see how it is a useful tool for finding out information quickly or losing hours of time doing nothing!

I am using it to post information about paraplanning in terms of this site and also my ‘day job’ running an outsourced paraplanning service.   I am also following several IFAs and other people in the business and have found to be a quick and simple way to gather information.   So, do you use Twitter and if so, what for?  If you want to follow me, you can do so by clicking here.

I have been thinking for a long time about using a dual monitor set up for my office and last week took the plunge.  I have been printing far too much information out as it is far easier to refer to a piece of paper than Alt Tabbing to different screens.  This is costing too much money and there are also some green issues to think about.  I invested in two BIG new screens and some software to make the whole thing run and now have a mass of flat screen at my desk as you can see from this picture.

You can just about see Niki’s head on the other side and she was not overly pleased about having the IT equivalent of the Berlin Wall erected in front of her!  It has taken a few days for my eyes to adjust but the benefits have been immediate.  It is so much quicker and easier to have one screen showing the document I am working on and the other showing the referral or source information and my printing has been reduced dramatically.  I have talked to several IFAs, paraplanners and administrators already using this type of set up and they have all found the same benefits, so much so that some are thinking of getting a third screen.  So, if you are still using one, think about doubling up!

The Paraplanner.com has been up and running for 6 months now and during that time we’ve seen the site grow from strength to strength. Each month we have more and more people joining the forum and adding their views and comments which is fantastic. It certainly is a mine of information. We’ve also just announced the winners of the very first Paraplanner of The Year awards in the UK and we are about to embark on a series of road shows around the country giving you all the opportunity to meet and get to know other paraplanners in your area.Richard and I set out on this amazing journey of ours individually about 3 years ago and together for the last 12 months and during that time it’s been amazing, scary, enjoyable, frustrating, tiring exciting and brilliant all at the same time.

However we’ve never shied away from believing that there was a need for a site like this and that people would appreciate it.

We just hope that in some small way the paraplanner.com has helped you do your job more efficiently and that you’ve enjoyed the experience of using the site.

It was also our intention that we would try to make the industry aware of what paraplanners are! It certainly seems that the role of the paraplanner and the important part they play in a modern financial practice is slowly beginning to become more understood and recognised and that all of us who work as paraplanners and slowly beginning to become more valued and recognised for the contribution we make.

If you have enjoyed visiting the site, whether it be to contribute via the forum or to look at the articles or to get some insight on a particular topic we thank you and hope that you have found what you’re looking for. We couldn’t have achieved what we have achieved without you!

The reason for writing this short article is simple. The categories for the Online Finance Awards have been announced and the organisers are looking for nominations. We would like to think that we have created a site which helps you and one which you return to time and time again.

If you think this is the case please nominate us. You can do so by clicking this link and it will only take about 30 seconds. We would suggest that ‘Online Community’ and ‘Education’ are the most appropriate categories but we will leave that decision to you.  You can vote here.

We hope that by receiving a lot of nominations the organisers will be able to recognise the skills of paraplanners and the benefits they bring to both the modern financial planning practice and the industry as a whole.

Thanks for voting

Martin and Richard

When are you going to die?  I don’t see this on many fact finds and it is a bit of a brutal question but I think that we should all be asking clients and getting their opinion on the matter.  I am often putting together investment and retirement planning strategies with a ‘medium’ or ‘long’ term perspective which is fine but the issue of longevity becomes more relevant when recommendations and in particular financial plans are based on an assumed date of death.

I do a lot of lifetime cash flow forecasts and there has to be a defined start and end date.  The start date is easy but the end date not so?  I have seen and have often used each of the following strategies:

• The client wants to use a particular assumption based on his or her own views or family background.
• The client and adviser agree a ‘reasonable’ period based on health, background etc.
• Mortality tables are used.
• A standard assumption of 99 is used (this is often the default in most financial planning tools).

It is highly unlikely that any assumption will be correct other than when a terminal prognosis has been given.  However, technology has helped us to get a bit more scientific and this article looks at a new Longevity Calculator from Life Trust.

I have used myself as an example to see what it tells me.

• My parents are both close to 70 with no serious health issues so I would think that I have a fairly good chance of getting beyond that.
• The faculty and Institute of Actuaries mortality tables say that I will live to 83 which will probably be the State Pension Age by the time I get there.
• The New Model Adviser Lifeometer (used to be Deathometer but clearly someone more politically correct got hold of it) says that I was born in a good year but that on average I will only make it to 69.  Better cancel the 70th birthday plans then.

Each could be right or wrong – we won’t know until it’s too late.  Life Trust has produced some very useful information and tools on their site – start by having a look here.  The new Longevity Calculator is of particular interest.  The underlying data is based on the same mortality tables as above and the experience of pensioners in UK insured pension arrangements.  Rather than giving me an age I can expect to die the calculator shows my chances of reaching a certain age as you can see below.

The calculator is very simple using two sliders to change the parameters.  This shows that I have a 94% chance of reaching the same age as my parents.  Having played with it a bit more I have a 62% chance of reaching age 83 which the mortality tables say and, most interestingly, a 4% chance of reaching 99.

Now if I am writing a lifetime cash flow based on the assumption that my money needs to support me until age 99 am I being fair on myself?  This surely means that I will die earlier than expected with too much money left when I could have spent more during my lifetime?  The flip side of course is that I set a shorter term and live longer than expected and run out of money!

The Life Trust tool also allows you to plot a joint life expectancy and has some very useful inflation calculators which show what your income will be worth in the future:

And also what things might cost in the future:

The issue of death is important with any form of financial planning and this new tool is one I will use to give clients a more realistic and informed view.

JP Morgan has produced a white paper entitled changing fortunes: setting guidelines for financial well being in the UK. It is concerned with the nation’s deteriorating personal finance situation.   They have proposed 5 financial steps for healthy financial living which are:

• Arrange life/income insurance
• Build a rainy-day cash fund
• Pay off expensive debt
• Start an ISA and pension
• Review your position

All sounds pretty straight forward enough.  To offer some guidance JP Morgan have produced this Debt Obesity Scale which shows how much debt is too much.  It can be found here. 

The input screen is very simple:

The results screen (below) shows your total of secured debt and total of unsecured debt as a percentage of total income and then shows your position on a graph.

I’m unsure how much help this may be but credit to JP Morgan the tool is very easy to use and they are trying to do something to highlight what could be a major problem.

The amount of content being added to the site is set to increase at a rapid rate in coming weeks. Although all new articles will appear on the front page of the site (at least for a day or two), you may miss them.  As well as visiting each section of the site, don’t forget that you can subscribe to our email update service.

When viewing any post, article or page on the site, you will see the email updates box in the top right hand corner.  Signing up cannot be simpler; just enter your email address and you will be taken to a verification screen.  Once this has been completed you will be added to our mailing list.  On each day content is added to the site, you will be sent an email at around 18:00 containing each article.  You can unsubscribe at any time.  For information on other ways to keep up to date, please see this page.

Vince Smith-Hughes is the National Pensions Manager at AIG Life and considers the impact on the advice process of product research and best advice software.

The number of best advice systems has increased considerably over recent years.

By referring to an independent system, a whole of market adviser can demonstrate to their clients that they have undertaken some extensive research to establish which pension arrangement would be appropriate to their circumstances, once they have confirmed that a certain type of transfer arrangement, such as a personal pension transfer, is suitable.

Several software providers offer these systems and they contain a multitude of information from product features to estimated projections based on the charges of the plans.

An adviser would be able to obtain numerous illustrations from providers themselves but, by being able to see the results of a given client scenario instantaneously, a huge amount of time is saved.

But are these systems always reliable? The answer is, in the main, yes, but care is needed over how they are used.

Many advisers I know use these systems to ascertain which contract, or contracts, initially represent best value for money , usually by means of a projection to the client’s intended retirement date. Given the different timescales and investment amounts, the most attractive offices will, of course, vary all the time.

But it does appear that what is bought is not always reflected in the initial research.

It is easy when using these systems to use a default sector fund choice. This will often be the balanced managed sector and the provider’s own managed fund but this may not be a sound practice for all or some of the following reasons:

• The asset allocation of the sector (for example, the balanced managed fund sector can invest up to 85 per cent in equities) is not suitable for the client.
• The performance track record of the fund in question may be one that the IFA would consider to be not good enough.
• The stock selection of the funds may not be appropriate.
• The adviser may want to diversify over a range of funds and investment companies, not just those funds from whoever offers a cheap wrapper.

Using the default fund choice could be likened to comparing the price of small hatchbacks and then buying a family saloon from the same manufacturer – your research is not necessarily based on sound principles.

This trap has several potential consequences:

1. The adviser is recommending a wrapper which does not represent good value based upon his eventual recommendation.
2. The client is restricted to a limited range of funds when a more comprehensive selection would have been more appropriate.
3. The compliance audit trail is considered broken as the initial research does not bear a relation to the client’s requirements or eventual adviser recommendation.

However, with just a little work, these traps can be avoided. Some comparison systems allow the projections to be made across a combination of different funds and sectors rather than just a default fund.

Let us take one particular system as an example, O&M’s pension profiler system. This allows you to set up an investment portfolio based on specific funds (both internal and external) that providers offer. This allows the adviser or paraplanner to create a portfolio based on funds which they might reasonably recommend – and then do a far more accurate projection based on this real-life portfolio.

This can initially be more time-consuming than just using a default fund but once the portfolio is set up, it can be saved for use with further projections.

Some advisers with multiple outlets could take this approach one stage further and set up their best advice systems with portfolios dependent upon a client’s attitude to risk.

This may, for example, involve having five risk ratings for portfolios, ranging from one to five which are used as a standard by the company.

In this way, the adviser can demonstrate consistency of approach to asset allocation for advisers operating in different parts of the country and from different offices.

In summary, comparison systems have enabled independent advisers to demonstrate product research far more thoroughly than perhaps was the case 10 or 15 years ago.

It does, however, remain the responsibility of the user to ensure that these systems are used to their best advantage. By using these systems to their full capacity, a far more accurate assessment of suitable products can be made. Does that sound like treating customers fairly?

Please add your own experience of such systems and comments below or on the forum.