Monday, 16 August 2010

Solvency II: An iron fist in a verbose glove

I've been meaning to have a look at the original content of the EU's Solvency II directive, and today I finally got around to downloading it from here. This is an important document: on it apparently rests our best hope of avoiding financial institutions overstretching themselves in ways we don't understand and bringing the rest of the economy down with them. We should all have a grasp of what's in it, certainly those of us in or around the financial sector.

It's going to be a real page-turner, as they say: in fact I'd turned 69 such pages until I finished the table of contents. Good to know the financial crisis is generating employment somewhere.

Friday, 30 July 2010


So let me get this straight: New high street bank Metrobank is targeting people who find it difficult to open bank accounts, have a hungry dog, need access to an indoor loo and have regular requirement to consolidate big volumes of small coins. So they’ve opened their first branch round the corner from the YMCA at Centrepoint.

Well, it’s a segment...

Seriously, it's such a shame that their proposition differentiates itself only on pointless trivia when there are real opportunities here. Hopes now rest on Walton & Co.

Monday, 14 June 2010

A frenzy of DIY investment

There was an interesting piece in the Financial Times on Friday entitled Investors opt for DIY over advisers, citing various recent surveys showing a significant rise in execution-only investing. Given many people's poor experience of IFAs - dating back well before the market crash - this is not particularly surprising and hearteningly rational.

The worrying bit is the observation that online investors are ‘making 3x as many share trades as 18 months ago’: maybe the FT’s headline should say “Now retail investors churn their own portfolios so IFAs don’t have to.” Let's hope we've all learned to buy at the bottom and sell at the top.

Monday, 17 May 2010

Ending compulsory annuitisation: a good idea?

Fairly well buried in the Con/Lib coalition agreement was the news that the government will be removing the requirement to buy an annuity at age 75.  While we welcome this new freedom, we're still having a debate in the office and with industry players on what the implications will be.

Do people only buy annuities because they are forced to, and will they shift to drawdown products?  They'll be able to pass the fund on in their legacies, but the 'pooled mortality benefit' will be heavily eroded.  This could start a further slide in annuity rates and hasten the end for these products.

Or are most retirees going to carry on as before?  Trust and understanding of the industry being what they are - dismal - people just want the certainty an annuity provides.  Most are shocked by how little income their defined contribution fund buys them though...