Monthly Archives: June 2015

Greece’s precipitous position and its implications for investors
June 2015

euronotesgreeceThis weekend’s announcements that bail-out talks have stalled, the Greek government has called for a referendum on whether to reject or accept the terms on offer from the Eurozone, and the announcement that the ECB will cease to provide liquidity to Greek banks means that, barring any other surprises, the Greek debt boil is about to burst.

The great tragedy of the situation that Greece finds itself in lies in the fate and daily plight of the Greek people. The finger pointing, insults and intransigence of two groups of politicians backed into a corner by their own political dynamics appear to have led to a place where, by all accounts, no-one wants to be – the potential Greek default on its debt and ultimately its exit from the Euro, or ‘GREXIT’ as it has become known.

For sure, both sides have egg on their face – the Greeks for entering the Euro having hidden debt offshore with the help of investment bankers, an over-bloated state with laughably generous pensions and a failed and corrupt tax system – and the Eurozone for persisting with the demand for austerity that is crippling the economy and the inability to see its way to some form of debt moratorium (a route supported by the IMF).  History will apportion blame.

How bad is the situation?

For the Greek people, the situation is dire: unemployment is more than 50% amongst the young, suicide rates have risen dramatically and it has been estimated that food consumption has dropped by around a quarter since the crisis began, a sure sign that things are very tough.  The wealthy remain so, but the rest are struggling, despite years of sacrifice.  The Greek economy is 25% smaller than it was before the crisis.

From an economic perspective, if Greece fails to repay the IMF loan on Tuesday and the people reject the Eurozone terms, then Greece and the Eurozone are in uncharted waters.  Default, capital controls, exiting the Euro and the re-emergence of the Drachma are all possibilities, as are social unrest and contagion in other markets.  Perhaps the Greek people will step back from the brink – who knows?  Markets are, as a result, likely to be volatile in the coming days, weeks and months.

Keeping things in perspective

It is important to keep this all in perspective.  Whilst the Greek debt crisis continues to make headline news in the UK, it is unlikely to be making as much of an impact in countries like China, the US and India.  Total Greek debt stands at €320 billion (although the ECB may have some exposure via is bank liquidity programme).  To put that number in perspective, Dimensional – the fund management company – manages almost $400 billion of client assets.  The US national debt is $18 trillion and global debt stands at over $56 trillion.  The entire Greek debt represents approximately 3% of Eurozone GDP.  From a direct economic viewpoint, it is a smallish problem.  The political ramifications for the Eurozone are, possibly, larger.  The UK’s exposure is small with only around £1.7 bn at risk, which relates to its commitments to the IMF.  UK banks’ exposure is estimated at less than £10 billion, far lower than the fines they have incurred this year.

Direct exposure to Greece in investment portfolios is virtually non-existent

From an investor’s perspective, the direct exposure to the Greek stock market is miniscule.  In 2013, Greece was moved from the developed markets back into the emerging markets and it represents only 0.33% of the MSCI Emerging Markets Index.  Given that the emerging markets element of a 100% equity portfolio makes up only  10% of the overall  mix, that would represent a 0.03% allocation, and less than that in a balanced portfolio.  On the bond side, Greece’s credit rating has been downgraded to sub-investment grade, which does not meet the high credit quality constraints that we impose and is therefore not included in client portfolios.  Any Euro weakness will be hedged out of the bond element of the portfolio.

The most likely market impact is short-term volatility as markets try and absorb the impacts of developments and new information as it is released – that is what markets do.

This is a time for fortitude and persistence

In terms of your investment portfolio, you should remain confident in its structure.

The temptation is always to do something, but usually – and we believe it to be so in this instance – the best thing to do is to believe in your long-term, globally diversified structure, and ride out the uncertainty.  In the meantime, spare a thought for the Greek people.

As ever, we will remain vigilant on your behalf and keep you posted, but for the meantime keep calm and stick with the programme.  Please do call us on 0115 9075100 if you have any specific concerns.

Interest rate rise: now it’s 2016
June 2015

The latest Quarterly Inflation Report from the Bank of England suggests there will be no base rate rise this year.   

“Free beer tomorrow” is a sign that used to be spotted in some pubs before they were closed down or became eateries rather than drinking establishments. Of course, tomorrow was always one day away, so free beer was an illusion. It feels the same with increases to the Bank of England’s (BoE) base rate, which has been stuck at 0.5% since March 2009.

“Interest rate rises next year” has become a variant on “free beer tomorrow”, with learned predictions from pundits, experts and even the Bank of England’s Governor, Mark Carney, proving to be mere shibboleths. In presenting the Bank’s latest Quarterly Inflation Report, Mr Carney deliberately avoided making himself a hostage to fortune, saying that the Bank “… has long expected that these (economic) headwinds will likely merit not only a more gradual rate of increase in Bank Rate than in previous cycles, but also require levels of Bank Rate to remain below average historical levels for some time to come”.

Look inside the Report itself and there is a graph showing how the money market (not the Bank) expects official interest rates to move over the next three years. At the same time, the BoE avoids confirming that the market’s figures are built into the Bank’s economic forecasts. As of May 2015 the market reading was that  “…Bank Rate is expected to rise from early 2016, but to only 1.4% in three years’ time”.

That is a much slower pace of increase than in previous interest rate raising cycles, but it ties in with the Governor’s remarks. It could also be wrong: as Mr Carney wryly remarked six days after the general election, “Last week, we were reminded of the difficulties in forecasting the outcomes of complex, interacting systems”.

Fortunately there are plenty of ways of generating income that do not rely on base rates and some which, in recent weeks, have seen an increase in yields. For more information on your options, please talk to us. And do it today, not tomorrow!

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Get ready for the second budget of the year
June 2015

budgetLast month’s unexpected election result has been followed by the more anticipated announcement of a second 2015 Budget. Quite what it will be about is unclear for now – the Treasury’s press release gave little more than the date.

In terms of what was in the Conservative manifesto on tax, there are two measures that could be fleshed out next month that were not mentioned in the March Budget:

  • More changes were proposed to the pension annual allowance, following the Budget statement that the lifetime allowance would be further reduced to £1 million from 2016/17. The manifesto suggested that for those with income of over £150,000, the allowance would be reduced by £1 for each £2 of excess income, subject to a minimum of £10,000 if income exceeds £210,000.
  • The cut in the annual allowance was intended to fund a new main residence inheritance tax allowance of £175,000 transferable between spouses and civil partners on gifts to children or grandchildren. The allowance would be phased out for estates above £2m, again at the rate of £1 for each £2 excess. It would be much easier just to increase the nil rate band to £500,000. This may yet happen, as the manifesto proposals met with some criticism on various grounds, e.g. discouragement of trading down.

Either of these ideas could disrupt your existing financial planning, so do make sure you keep in contact with us for post-Budget news.

The value of tax reliefs depends on your individual circumstances. Tax law can change. The Financial Conduct Authority does not regulate tax advice.

Exam success double!
June 2015

Congratulations to David Britton and Tim Stubbins David Britton and Tim Stubbins
on their recent exam success.

Both David and Tim have passed the Institute of Financial Planning’s CFP case study and are now CERTIFIED FINANCIAL PLANNERCM professionals.

This is a level 6 degree status qualification and demonstrates their ability to deliver excellent financial planning solutions to our clients.

This once again confirms our commitment to ongoing continuous professional development and the highest possible professional standards.



We’re Recruiting
June 2015

Current Vacancy – Paraplanner

A role has arisen for a Paraplanner to provide a high level service to our clients by supporting our Advisers taking responsibility for the client file from data gathering, analysis, production and implementation of the Financial Plan.

Please click here to view the Job Description.

On offer is an excellent office environment. Salary is completely dependent upon experience and qualifications.

If you are interested in working with us, simply send your CV together with details of your current salary by email to

Russell Ulyatt ladies Race for Life
June 2015

race numberWell done to Alison Hallford, Jane Canlin, Jackie Cooper and Sarah Smithies who took part in Race for Life on 7th June to raise money for cancer research.

Our RU Runners were joined by friends and family and together have raised a very impressive £1,195.   Gift aid will increase the final total to £1,438.75.  FANTASTIC!

Our Just Giving page will remain open for a little while longer if anyone would still like to donate.  Please visit

Below are a few pictures to prove they actually took part.

RU Runners





Sarah and co

Jackie and family