Anticipating the Retail Distribution Review

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Insights from a firm that knows about alternative (consumer-friendly) business models
Key points

The background to the RDR is economic. There is a ‘market failure’ in the distribution of long-term savings products (FSA, Treasury, HOC Treasury Committee, Myners, Sandler). Three aspects: i) the business model for firms involved [...]

Charges: wake up and smell the coffee

In the weekend FT Money Josephine Cumbo tells of a reader looking for an income drawdown manager ‘who was stunned to find that charges ranging from £74,000 to £115,000 would be deducted from his wife’s pension pot depending on whether annual returns of 5, 7 or 9% were achieved’. The pot was £154,000. The provider was St James’s Place Capital. Its quoted charge of 2.7% pa would absorb 38% of the mid-range return. It is also near enough 100% of the ‘risk premium’ relative to a risk-free investment strategy. Challenged to defend its charges, SJP claimed they were justified by access to top fund managers.

Are equities overvalued?

Following a series of articles and letters in the FT disputing whether US equities are under- or overvalued, I sent a letter. My contribution to the debate reflects our company’s use, in wealth management, of a ‘long-term asset model’ which, amongst other clever things, generates projections for future real returns from market indices.

More grounds for scepticism about computer models of climate change

My first post on ‘the science’ of climate variance was very sceptical. No scientist, I do have experience of financial data analysis and the modeling of financial systems. Here is an interesting video from a group of Canadian sceptics, who call themselves Friends of Science

The housing ladder: what exactly pushes it out of reach?

Surely a silly question! Rising prices relative to income make house prices unaffordable. I’m not a property economist but if I apply my expertise in both financial asset pricing and personal financial planning, I think I gain further insights. I hope some property experts will take these further.