Useless IFA on BBC 3 Counties Radio - Translation please - "12.3K CGT allowance Wrapper"

solidpro

Coveredinbees!!!! said:

I heard that whilst eating my lunch, I was going to ring up but he went on to something else so I didn't bother. You might find JVS a bit pompus but that's the way we like our radio presenters down here in the shires.

I like JVS. Despite the fact he is gay and thinks it's hilarious to laugh with people that think being gay is disgusting/disturbing over putting them straight. Still it's better than the Jeremy Vine Show Show which despite what "Zanderman" is trying to trick us all with actually hosts a show called "Jeremy Vine". Where "Zanderman" got the "show" or "show show" part from, I'll never know.

Then again "Zanderman" like to eat house spiders. Disgusting.

bowlhead99

solidpro said:

Zanderman said:

Just to clarify, as OP still hasn't quite taken the hint, though has provided a link, the radio programme in question is the Jeremy Vine Show.
Which, until today, I'd never seen referred to as 'JVS Show' either.  Each to their own TLAs.

What on EARTH are you talking about? Jonathan Vernon-Smith has never ridden a bike in his life.
Look at the last 4 years shows on iplayer https://www.bbc.co.uk/sounds/search?q=jvs+show it's quite clearly called the JVS show.

So, on iplayer, for some years up until March, they did call Vernon Smith's show "the JVS show". As you now know because you've found the recording yourself, it can't be found on the iplayer or Sounds under that name. What we were searching for was a ten minute slot within a four hour recording of 'Mid morning on Three Counties Radio', which is on the programme guide as 'Stories to make you smile and Make A Difference'.

For those that don't have ten minutes to waste listening to it, some examples of things said
- Presenter intros with comments that UK savers have £1.5tn sitting in ISAs, savings or current accounts with low interest rates so it's hard to make money work for you at all. 

IFA starts off with a few quick comments:

-         Need to grasp reality, your money sitting in cash is going backwards in real terms due to inflation, so you are going to have to look for growth. You should make sure you’re using your allowances, and may not be doing.  There are things you can do, but you have to take some risk; that risk has to be professionally assessed. You can do things such as:

-         You can invest into wrappers (a wrapper is just a different form of holding the money)

-         You can invest using your capital gains tax allowance, which everybody’s got, and very few people use  - you can make up to £12300 per annum, tax free.  If you’re smart, you can have the provider feed that money into ISAs for encashing – to take your income -so you’ve had tax free growth and tax free encashment.

Generally fair comment, but continuing with high level bullets about all the different things people might do with money is not going to be very radio friendly, so at this point the presenter does the presenter's job of steering it a bit: 

Let me stop you as you’re talking a different language (for me, you might as well be talking Swahili). So let’s just take it down a stage and say I’m a 65-y/o person who’s retired and through my working life I’ve put some money aside, and I’ve got savings of £30,000 – at the moment they’re sitting in a cash ISA with my bank making next to no interest even though I’ve got that substantial amount of money.. and I’m thinking what do I do.  Do I put in premium bonds where at least I might stand a chance of getting a big win, or at least those £25 dividends every month or whatever it might be, do I keep it in the cash ISA, or – you talked about putting it somewhere with a bit more risk..., what are you talking about there?

IFA says this would be a different type of investment in a different environment – you’re not looking at ‘interest’ returns, you’re talking about an investment medium where it’s professionally hands-on managed and you’re looking for ‘capital growth’, which is to say you’re looking for the initial amount that you invest to physically grow.  It’s down to the treatment of the taxation on that wrapper. Everybody knows they’ve got their income tax allowance which is currently £12.500, but how many people know they also have an additional allowance, which is the capital gains tax allowance – you can make up to £12300 a year tax free.

- Presenter: ok, but does what you’re talking about involve people having a financial advisor, to set all these things up for them and to be able to manage their money?

IFA: the advisor’s not managing the money, to be fair, it’s managed by a professional fund manager.  But yes, they really should be using a financial advisor because as I said there is a degree of risk here, the capital can go down as well as up… but cash is a guaranteed loss anyway, and it’ll be a professional financial advisor that would carry out a professional risk assessment on the client because the amount of risk they take should be commensurate with their true appetite.

From there, the presenter made the obvious comment that it might not be a route available to someone "with not a huge amount of money to save? We all know that financial advisors love people who’ve sold big houses and they’ve got £250k, but if someone for example has got £15k in savings, I mean financial advisors aren’t going to be interested in someone with that low level of savings are they?"

IFA: No you are right, we’ve got to be realistic about this and actually someone with that low level of savings shouldn’t be investing into equities anyway to be truthful.... With them, it’s a really sad situation as you’ve rightly said at the outset – the interest that they get is very very poor, and the best thing that can be done for them is that they’re using all the allowances that they have available to them.

So basically the IFA, who would never try to manage someone's £15k, is being asked what should be done by someone who only has £15k - enough money to buy a new car, a new roof or a few holidays, if that's all they have. There was a question about what would he personally do if he had £15k in a cash ISA, to which the IFA replied that he wouldn't have it in a cash ISA.  But the answer of course, which he gave, is just to make sure you're getting whatever rate you can and using allowances where needed (because if you're using all your allowances, and only have small amounts of savings you are not going to pay tax on the interest anyway, so you wouldn't need to be limited to just cash ISAs at your high street bank).

There was some comment around what the allowances actually were (personal allowance, starter rate for savings, personal savings allowance). Ultimately you have to search for the best rates and realise that whatever meagre returns you get, you can probably get without paying tax.  That is pretty much the only answer he can give to someone with a small amount of savings.

The presenter wants to know whether this is going to be another cash ISA, or a savings account, or a bond, or what.  The IFA just says all he can say, for that requirement of having only £15k and wanting to do something with it - look for the best returns - he has comparison tools where they search for the best cash returns for clients, depending on if they need instant access, can afford to tie up for longer, etc etc.

Presenter asks if you can just go into your bank and say-  I’m not too happy with my interest, do you have an ISA scheme that may have a level of risk, not too much risk, where I can see a better return on my money, and I’m happy to keep it tied up for, say two years?

The IFA is quick to make a couple of points, because the presenter clearly doesn't know anything about savings or investments or is trying to pretend he doesn't for the benefit of his listeners who are unemployed or retired and listening to the local radio all morning and are probably not financially savvy. Firstly there won't be risk with that 2 year bank ISA because it’s cash, it won’t be a stocks & shares ISA, but the problem is that bank – whichever bank it may be – can only offer their own products. They really need to be looking at the whole market to see who’s offering the best rates. The challenger banks are providing much better rates than the main highstreet banks that you know and love.  And then the IFA has to explain what a challenger bank is.

All of this is stuff that comes up on the forum here all the time. It's not rocket science for us, but might be useful for some audiences.

The presenter took up some of the timeslot to ask what about sticking it in wine, cars, art or other investment. As the advisor chuckled at the idea and that someone with £15k can't be doing that, and you'd need to be fairly well-heeled to be investing in those sorts of things, JVS kept down the path making some jokes about how you probably shouldn't just put it in some pinot grigio in your cellar, and then continued wasting more time with his 'banter' about how at least you could drink it.

Then it was back to reiterating the point that there was an awkward middle ground:  people with no money at all didn't have a problem finding a home for it, and people with a lot of money could employ an advisor, but it was difficult if you had a small amount. The adviser made the point that If there’s enough time left for them and they don’t need access, it’s not going to make them a busting amount of money but they can stick it into a pension and get the tax relief- immediate gain as they’ll get tax relief on that money, even if they’re not employed there’s an amount they can put into a pension every year.

The presenter said then you've still got to have someone set it up for them; adviser said well yeah,they’d need to put it with a decent low-charging provider. But even if they’re not employed, you can put £2880 into a pension and it’ll gross up to £3600.
JVS's follow up to that, after the sudden realisation that there was some free money out there after all, but that the presenter had unfortunately burned through the remaining time with dumb jokes about investing in wine to keep the segment light-hearted, was simply: "Very good talking to you, Steve!"

solidpro said:

Towards the end, the IFA essentially says don't bother investing in anything unless you can get a quick return on it. Bad example (booze) but still his message is don't bother buying a house, getting a LISA, investing in equity (his original wrapper example which I still don't understand what is it) because it isn't an instant return. ???

Then the presenter just says stick it in premium bonds. I don't blame the presenter, I blame the 'so called' expert. I won't be ringing him, I'd have more luck calling an IFA in Peru. It's all Swahili to me.

He didn't say 'don't bother investing in anything unless you can get a quick return on it'. 

He made the sensible point that you could get a quick return with tax relief on a pension. He made the point that you could not get a quick return on wine, and it wouldn't be reliable and shouldn't be done unless you had a very large amount of money.

He didn't suggest that the made-up example listener, a 65-y/o retiree, get a LISA, because that product is not available to 65 year olds.   He didn't give a message 'don't bother buying a house'. Simply, houses were not mentioned because the example person who had just retired having accumulated £30k (reduced later in the conversation to £15k) could not have bought a house with it.

When the presenter queries if sticking it in premium bonds is OK, the adviser said that sometimes they do that for clients who are holding money for different reasons, maybe for a year-end tax bill but, "The only problem for somebody with £15k to use your analogy, they’re not getting any interest on that, and there’s no capital growth – so if they put £15k in and hold if for a year and don’t have a win… in real terms, that’s no longer worth £15k, it’s gone backwards and is worth less. So premium bonds are not the panacea for everbody’s ills".

It's impossible for a financial advisor to give a decent financial education in ten minutes to someone who just wants to create talking points about the fact that people with modest life savings can't use comprehensive investment advisory services and can't get good rates from their banks. 

The presenter had started off at the beginning of the segment talking about someone with £30k, where you could imagine some might be saved and some invested. As a regulated advisor, he had to suggest that people see a professional advisor rather than throw money into random investment funds and see what sticks. He is not going to be able to get into a quick summary of how to conduct investment due diligence within a few minutes on local radio speaking to people who have never heard of the concept of investment funds. So, fair enough. But there would be a possibility of exploring it more.

However then the presenter, to enhance his talking point about the difficulty for people with modest savings, reduced the example savings amount to only £15k. Which should probably just stay in cash, if it's all you've got. There was no way the investment advisor was going to usefully get into a back and forth about the merits of different S&S ISA investment platforms or how to select investment funds, when the example person is retired with no more employment income to come and only £15k savings to see them through to the end of their days and no ability to buy tailored financial advice. And if the grand total of your life's savings is £15k, retired with no more earnings to come, you would not expect him to recommend putting it some sort of 'bricks and mortar' investment, so it was not an error to omit any discussion of BTL or high risk property crowdfunding scams etc.

I don't know how much of an expert the guest was, but it seems a shame to have a rant about him and call him a "so-called expert". Super-technical people are not always good on radio or telly, and his area of specialism (investing someone's £200k) was not something he got to explore ("what can I do if I only have £15k in a cash ISA?" "well, find a better account and understand whether there's tax to pay on it or not, but beyond that, what do you expect me to do about it?"). 

He seemed to cover the points within the narrow range of questions he was asked, and then when started to mention pensions - something that could actually be pretty lucrative for someone age 65 who could get instant tax relief and draw the money back out of the pension making an instant gain - he was already out of time because the presenter had made him explain what challenger banks were and whether it was a great idea to spend the £15k on wine or art.

solidpro

Good evening. Good detail. I disagree with some of what you've said and I think all the quotes reads better than it sounds. You're not the IFA's agent or mother are you? He begrudgingly described what he meant by challenger banks along with some random examples when if what you say is true, should have been the focus of his conversation as the best someone with £15k they can't lose should do.

My original query was, what is this secret he is giving us, with my false teeth and leaking roof, with £15k - £30k in savings to somehow gain from this CGT allowance and wrapper that nobody ever uses? I just want to understand what I'm missing out on that he felt so important that he made it the prime show-stealing bit of news he had to talk about at the top of his stint on Dunstable's premier short wave radio station at 12.35pm before discussing challenger banks or indeed the bump you get putting money into a pension...
 

solidpro

oh and i didnt see the quote where the IFA is asked about an example where he has some money in a cash ISA and the IFA goes "HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAAHHAHAAHAHAHAHA i wouldn't have it in there in the first place" or something like that. That was a good quote.

eskbanker

Ignorant and deluded local radio DJ tries to outsmart expert and ends up making a fool of himself?  Sounds familiar....

The_Earl_of_Streatham

I wouldn't lay much store by someone on the radio giving vague, generic financial advice. What anyone really needs is personal advice and pointers to really valuable investments. Only last month I placed £30,000 in an investment about which someone took the trouble to phone me personally. It'll be returning 12% annually risk free. The radio or indeed the television could never offer this degree of personal service.

Apodemus

solidpro said:

I'm not sure if IFAs are trained to speak in Swahili or it's the way their brains work, but Swahili it is.

Haraka haraka haina baraka...

bowlhead99

solidpro said:

Good evening. Good detail. I disagree with some of what you've said and I think all the quotes reads better than it sounds. You're not the IFA's agent or mother are you? He begrudgingly described what he meant by challenger banks along with some random examples when if what you say is true, should have been the focus of his conversation as the best someone with £15k they can't lose should do.

He probably didn't come on the show with a brief that the host was going to want to know what the best savings account was for someone with only a small amount of savings, so didn't have a list in his head of the top rates for every circumstance - that's not generally what people employ financial advisers for, because the adviser would just refer to a comparison tool, just as you have found your own way to this website (which has various pages showing best rates by category under the 'banking and saving' section, and is owned by moneysupermarket who have a filtering tool for all sorts of savings accounts and other financial products). 

It would be unreasonable for you or the radio station to expect an IFA to spend most of the ten minutes on that topic when the request to work with an example of someone with only £15k did not come into the conversation until part way through it. The answer is just go to a comparison site.

When the presenter prompted for examples of challenger banks, the guest did say erm a couple of times, likely because he would not know exactly which bank is the leader for each type of account and may have been mindful not to endorse one specific bank over another on the BBC; he ended up giving examples of Shawbrook and Aldermore which we have heard of here but his listeners will not have seen on their high streets.

My original query was, what is this secret he is giving us, with my false teeth and leaking roof, with £15k - £30k in savings to somehow gain from this CGT allowance and wrapper that nobody ever uses? I just want to understand what I'm missing out on that he felt so important that he made it the prime show-stealing bit of news he had to talk about at the top of his stint on Dunstable's premier short wave radio station at 12.35pm before discussing challenger banks or indeed the bump you get putting money into a pension...

He came on the show as an advisor introduced with a segment backstory of: the country's households apparently have £1.5 trillion in savings accounts and ISAs and are in a market environment where base rates are 0.1%. With 28million households, that's more than 50k each. So it would make sense that an independent financial advisor - who routinely advises people with several tens or hundreds of thousands of pounds how to spread their investment capital - would give some explanation to what sort of investment options are out there. 

If you are making investments, you can either do them inside a wrapper (a special account type with tax benefits - such as ISA, pension or some more niche products such as investment bonds; each have their own limits and operating rules), or you can invest outside a wrapper and make use of the CGT exemptions and dividend allowance that everybody gets and the personal savings allowance etc that most of us get.

When you are making investments and deciding what sort of investment funds to put in those account(s) you may benefit from professional advice in understanding the various types of investment funds that exist that you could put into your accounts.

It does not seem wholly inappropriate to mention these things as the segment starts. They are not 'prime show-stealing bit of news', they are the start of a discussion about what sort of conventional investment options exist (i.e. financial investments rather than wine or art or classic cars) and how they might be accessed. As it turns out, the presenter does not really want to explore conventional investments that you would look at with £50k of spare cash burning a hole in your pocket and a long investment timeframe, but wonders what you might do if you have only £15k in the bank (example given by JVS part way through the show), perhaps a "false teeth and a leaking roof" as you suggest (and some retirees will have), and some sort of idea to 'take a bit of risk for more return' but only lock the money up for two years (example given by JVS part way through the show)

As an FCA regulated professional, you can't recommend that an audience of radio listeners take on a bunch of investment risk to gamble on the returns in a two year timeframe, so you would expect him to suggest sticking to cash options. But if your money is languishing in a cash ISA at a high street bank, look more broadly at better paying accounts - being aware that you have various allowances for savings and investment income so don't need to stick to cash ISAs for tax efficiency or focus too overtly on premium bonds which are tax free, because your returns on £15k won't exceed your personal savings allowance anyway.

All of this is sensible stuff within the parameters of what was asked, but you would not go to the investment advisor and spend ££ on advice if you only have a few thousand and want to know the name of the top paying challenger bank or what's a good link to a savings account comparison website. You would go if you have more money and do not want to 'do it yourself' when it comes to exploring investment options.

If you are a bit loopy, you will conclude that you should not ring this sort expert for a one to one discussion where you ask him questions about what he meant by something until you get the answer, because you fear he will respond in Swahili, so you would do better with an IFA in Peru instead. If you just want to rant you will come on a savings forum and say you listened to a radio show and didn't understand it, and then when someone writes out quotes from the show you will begrudgingly accept that the quotes make sense and read better than they sound. In future, perhaps if you hear something on a radio show and have a link to the recording, you could write down what was said and then read it.

If when doing that you struggle with terminology, you could always google some of the buzzwords and click on the links that come up. I expect a great many people here have improved their understanding of investment options simply by being curious about them and deciding to spend a bit of time - which might otherwise be spent doing something non-essential, such as watching telly or listening to a local radio phone-in show - doing some research.  As the IFA mentioned, a 'wrapper' is just a type of account.

bowlhead99

The_Earl_of_Streatham said:

I wouldn't lay much store by someone on the radio giving vague, generic financial advice. What anyone really needs is personal advice and pointers to really valuable investments. Only last month I placed £30,000 in an investment about which someone took the trouble to phone me personally. It'll be returning 12% annually risk free. The radio or indeed the television could never offer this degree of personal service.

Yes, the best investment opportunities are the ones where someone makes the effort to find out your personal contact info and calls out of the blue to tell you about the great returns that could be obtained from your money. You can tell by the fact that they are selfless and offering you the opportunity - rather than gobbling up all the investment opportunity for themselves - that they are honest, generous and altruistic, which is what you are looking for in a business partner or financial salesperson.

solidpro

The_Earl_of_Streatham said:

I wouldn't lay much store by someone on the radio giving vague, generic financial advice. What anyone really needs is personal advice and pointers to really valuable investments. Only last month I placed £30,000 in an investment about which someone took the trouble to phone me personally. It'll be returning 12% annually risk free. The radio or indeed the television could never offer this degree of personal service.

Was this a Nigerian Prince?