This week’s Personal Column features: Latest Financial Ombudsman Report | Household Incomes On the Rise | Third of homeowners are still on an SVR | Lifetime mortgages become fastest growing product.
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Would you like to keep your client bank updated with all of this week’s news?
This week’s Column…
Explore the Business Development Suite…
Located within your member portal, there are five key sections:
- Marketing Toolkit
- Sales Support
- Training and Development
- Product Corner
- Communication Centre
In order to excel and grow, each of us need to have clear goals and understand what it takes to achieve the results we want. Marketing is a good place to start, so this week we’re focusing on the Marketing Toolkit and how it can help you on your quest for success.
- Financial promotions – meet the team and access the guides to help you on your way.
- Customisable literature – choose from our selection of flyers and posters.
- Social media – guides, images, templates and planning to get you started or inspire you.
- PR guidance – get hints and tips: from finding opportunities to targeting journalists.
- Website solution – get your business noticed.
What do you think?
This site is an ever-evolving concept and we welcome your feedback and suggestions.
If you have any questions or feedback, please get in touch at email@example.com.
A List We’re Proud Not to Be On
The Financial Ombudsman Service (FOS) has published their complaints statistics for H2 2016.
For the third consecutive period, Personal Touch doesn’t appear in the published information. This is because FOS received less than 30 new complaints from your customers and produced less than 30 decisions to resolve existing cases, in the specified six month period.
Once again, this demonstrates that your focus on customer experience excellence and high quality advice is producing fair outcomes for customers, whilst protecting your business. These results are testament to the high quality advice you provide – thank you for your support!
“Knowledge is the only form of capital that doesn’t get smaller when you share it.” – Unknown
Do you frequently use advertisements to promote your business? Maybe you haven’t tried it before, but it’s on your list?
Whichever camp you fall into, we’re proposing something for everyone: an Inspiration Library.
What would it look like?
This would be a membership-wide effort, designed to involve businesses of all shapes and sizes. It’d be a place to display a variety of advertisements and ideas to inspire you and help you grow your business.
How can you get involved?
If you’re interested in sharing some of your inspiration, please e-mail firstname.lastname@example.org.
A generational divide in UK households’ income growth has been confirmed in the latest government figures – but incomes are little changed in the last year.
Average household income rose by 1.4% in 2015-16 after adjusting for inflation, new data from the Department for Work and Pensions (DWP) shows.
Working-age household incomes have been stagnant since 2007-08 compared with a 10% rise for pensioners.
Yet, 14% of pensioners’ households are still on low incomes.
The DWP figures also show that in 2015-16, rises in pensioner incomes stalled.
A number of reports and previous data have shown that income growth has been faster among pensioners than working-age people since the financial crisis.
This has led to widespread debate over the future of the triple-lock – a promise made to pensioners that the state pension will rise in line with prices, wages or 2.5%, whichever is highest.
This latest set of figures shows that recently retired pensioners in the UK have seen their incomes rise compared with a decade ago.
Average incomes among this group have risen from £314 in 2005-06 to £357 in the last financial year.
The DWP figures show a regional split, with older people in the South East of England having much higher incomes than those living in Wales and the West Midlands.
For all UK households, the median average income rose by £8 in a year to £481 a week before housing costs in 2015-16.
This stood at £413 a week after taking housing costs into account, the DWP figures show.
Official figures published last week showed that wage growth had slowed to 2.3% (excluding bonuses) in the three months to the end of January, from 2.6% in the previous three-month period.
Source: BBC News (published 16 March)
Third of homeowners are still on an SVR
Not only are these rates typically higher but if interest rates rise, as the Bank of England has hinted is a possibility, the 4million people who are on SVR mortgages could see their payments rise further. The L&C research also highlights that a further 1.1 million households are wasting £2.78billion by sitting on the wrong mortgage deal.
L&C analysed both external research and internal data which examined the type of mortgage deals homeowners are on, their outstanding loan size and the remaining term before identifying a potentially better rate to calculate the savings they could make on their monthly mortgage payments.
The mortgage adviser found that by switching to a better deal, UK homeowners can save £216 each month or over £2,500 annually. However, surprisingly over half (58%) have never re-mortgaged to save money. That is particularly worrying given the recent news that inflation is at its highest point since June 2014, energy prices are on the up and there is the potential for interest rates to rise as well. In addition, L&C discovered that 3.4million households don’t know the current interest rate of their mortgage, highlighting just how many people could be paying over the odds.
David Hollingworth from L&C Mortgages said:
“It’s worrying to see so many people still on a Standard Variable Rate mortgage as they are not the cheapest rates available. Not only is there a lack of awareness around how much could be saved but worse still a huge number of people have never even tried to remortgage to get a better deal.
With the cost of living on the rise and day to day expenses like energy prices soaring, it is hugely concerning to see that people are paying so much more than they should be. On top of this, our research shows that while homeowners believe they are paying too much for their mortgage they still aren’t taking action to cut their monthly payments.
“Not only have we found over a third (36%) of homeowners are on their bank or building society’s standard variable rate, but 3.4million people don’t know their mortgage rate – the chances are they could potentially save hundreds or even thousands of pounds a year by re-mortgaging to a new deal.”
L&C also looked into the UK regions who are overpaying the most and unsurprisingly London tops the table with an average monthly overspend of £266. The south of England and the Midlands collectively overspend by an average of £222 and the North is paying £201 more than they should be.
L&C’s research shows that the average pre-tax income for households with a mortgage is £45,141 and households are paying an average of £597 per month. However, 38% of mortgage holders can’t imagine a time not having to pay their mortgage.
“A mortgage is likely to be someone’s biggest monthly outgoing, and in only a few easy steps they could get a better deal. It’s crucial that homeowners regularly review their mortgage, to see how their rate stacks up against the record low rates that alternative deals currently offer.”
Source: Financial Reporter (published 22 March)
The article is now available to share with your clients! Here’s the link for you to share on social media: Third of homeowners are still on an SVR: http://bit.ly/2403ClientNewsletter
7 in 10 Remortgagors Consulting a Broker as Activity Surges
Remortgage activity continued to accelerate at the turn of the year, rising by 10% between December and January, from 27,700 to 30,439, according to LMS data.
The value of remortgage transactions also rose month-on-month by 7% but suffered an annual fall of 15%, from £5.8 billion in January 2016 to £4.9 billion in January 2017.
January also witnessed the most frequent remortgaging since February 2009. Homeowners remortgaged every four years in January – four months faster than January 2016.
The frequency of remortgaging has improve substantially since January 2011, when the average term was six years and five months, but January 2017’s remortgaging rate of every four years is beaten by January 2009’s three years and eight months.
Fixed five-year deals rose in popularity at the start of the New Year. The percentage of remortgagors with a fixed five-year mortgage increased four-fold among those who switched their mortgage type, from 7% who had them previously to 29% who do now. As a result, fixed two-year mortgages suffered a fall from grace as five-year deals became the most popular product type.
The number of remortgagors consulting a broker also increased sharply at the turn of the year. Nearly seven-in-ten (69%) opted to remortgage via a broker – more than the 58% of remortgagors who did so in December.
Price remains the most important issue for homeowners when remortgaging. Over half (54%) of consumers selected their lender based on them having the cheapest mortgages or lowest interest rates. Meanwhile, recommendations from brokers and advisers remain the second most popular means for selecting a lender (27%).
Four in five (87%) remortgaged to take advantage of low rates, while nearly a quarter (22%) remortgaged to release equity in order to make home improvements.
Andy Knee, chief executive of LMS said: “When remortgaging in January, homeowners weren’t solely looking for good value but also seeking long-term security, hence the increasing popularity of fixed five-year deals. With inflation on the rise – rising to 1.8% in January, the highest since June 2014 – and both the Budget and Article 50 mere months away, remortgagors took advantage of January’s favourable conditions and record-low rates to guard against potential upsets in the near future. Almost half (45%) of remortgagors in January now expect interest rates to increase in the next year so homeowners would be smart to remortgage now – before it’s too late.
“The opportunity to secure lower mortgage rates, reduced monthly repayments and free up extra capital for a holiday or home improvements is continuing to drive both frequency and activity. What’s more, a greater number of homeowners sought out professional advice to help them take advantage of these benefits.”
Source: Financial Reporter (published 03 March)
Lifetime mortgages become fastest growing product
A record-breaking year for equity release in 2016 saw lifetime mortgages become the fastest growing segment of the mortgage market in terms of customer numbers, according Equity Release Council data.
The volume of lifetime mortgage customers grew by 22% in 2016, surpassing buy-to-let remortgaging at 16%. The growth rate of equity release lending between 2015 and 2016 was 34%: more than double the 16% seen from 2014 to 2015.
Other segments of the mortgage market had a mixed year in 2016: while remortgaging numbers grew 14% and first-time buyer numbers by 8%, the volume of home mover mortgages fell by 2% while buy-to-let purchase mortgages fell 13% from 2015.
In 2006, there was one new lifetime mortgage agreed for every 27 home mover mortgages and 43 remortgages. By 2016 this had reduced to one lifetime mortgage every 13 home movers and 14 remortgages respectively.
Equity release products saw the most significant fall in rates across all mainstream personal borrowing options. Over the year to January 2017, average equity release rates experienced a decrease of 75bps from 6.20% in January 2016.
At the same time, the number of products available to customers has continued to rise along with the flexibilities these offer, including downsizing protection, capped variable interest rates, and options to make monthly interest payments or annual capital repayments without incurring a charge.
Drawdown mortgage products continued to be the most popular type of equity release plan in 2016, with 65% of new customers opting for drawdown compared to 35% opting for lump sum mortgages.
However, over the course of the year the proportion of lump sum customers increased slightly, from 33% in H1 to 37% in H2 (drawdown fell from 67% to 63% as a result).
The proportion of older equity release customers is also rising. Between H1 2016 and H2, the proportion aged 75-84 increased from 19.4% to 20.2%, while the proportion aged 85 and above increased from 3.0% to 4.1%. The proportion of customers aged 55-64 remained relatively stable, rising from 21.2% in H1 to 21.3% in H2 2016.
Source: Financial Reporter (published 17 March)
Setting up a trust is now even easier
There are many benefits to trusts. But the process of writing a plan in trust can be long and complicated. That’s changed with the launch of Royal London’s online trust service – where trusts are completed more easily and faster, using the latest e-signature technology.
Sign here for added security
Royal London think asking for a signature is the most secure approach to setting up a trust. Without a signature how can you and your client be sure that the trustees have accepted their appointment and are willing to act when the time comes? By signing the form, trustees are positively confirming this.
Use with existing plans as well as new ones
A unique feature of their online trust service is that it can be used with existing protection plans, as well as new ones. This isn’t possible with a signature-free approach, as you can no longer make a request to issue the existing plan subject to the trust.
Setting up a trust is now even easier
Their five most popular trust forms can be completed online and signed electronically. It follows a simple step-by-step approach that reduces the risk of trust forms getting delayed or wrongly completed – saving you time and giving your clients peace of mind that their trust is set up securely and efficiently.
To find out more visit adviser.royallondon.com/onlinetrusts
Source: Royal London promotion
General Insurance News
With the GI renewal changes coming into force next week, here’s our top tips to help you make the most of the upcoming opportunities.
1. Capture clients’ contact details
Don’t ignore the most important marketing tool – make sure you capture clients’ e-mail addresses. This ensures that you can update them on any important information in relation to their policy, products and advice.
2. Review and retain your client bank
We’ve created a complimentary sales process through Virtual PA to ensure your clients continue utilising you as their adviser.
This will support you by identifying customers that are coming up to their renewal date. It will provide a number of pre-approved communications that you can automatically distribute to the customer at key points, to remind them that you can provider a tailored review.
3. Re-visit processes
Make sure that you have incorporated the required changes and that you understand how they affect your business.
To help you streamline your processes, incorporate Virtual PA.
Save Time at This Tax Year’s End
Midnight, 05 April 2017 is closer than you think. You know all too well that certain allowances your clients are entitled to will disappear if they don’t use them before 06 April 2017. This is when timely reminders can help.
Aviva’s adviser toolkit and guides are designed to help save you valuable time, by collating useful technical and practical information into one handy package. They recognise that meeting clients and providing face-to face advice is essential at this time of year, which is why they offer such extensive additional support to advisers.
Adviser toolkit: easy-to-use client letter templates for pension and ISA top-ups, based on different client segments. There are e-mail and Twitter examples, too.
Adviser tax year end guide: maximise pension and ISA tax allowances. Practical examples of income, capital gains and inheritance tax planning.
Client tax year end guide: simple, non-technical guide about tax planning, aimed at clients. Customise it for your business.
Source: Aviva promotion
Join us for one an upcoming Buy-to-Let Workshop near you.
We’ll be exploring market trends, overlooked opportunities and discover new ways to maximise your buy-to-let client bank.
Dates and Venues
- Tuesday 02 May Midlands – Hilton Hotel, Warwick
- Thursday 04 May Scotland – Houstoun House, Livingstone
- Tuesday 09 May North – Wetherby Racecourse
- Thursday 11 May London – LDC Offices
Look out for your invitation to register, coming soon…
Source: Personal Touch Events Team
Investing a £1 coin when it entered circulation in 1983 could have seen its real value grow more than tenfold, according to an investment firm.
The current £1 coin will be discontinued this year, as a 12-sided coin enters circulation on 28 March.
Asset manager M&G has calculated that, if left in a piggy bank, inflation since 1983 would have corroded its buying power to the equivalent of 32p.
Investing in shares would brought a much higher return, it said.
If the £1 had been invested in shares in 1983 and tracked the rise in the FTSE all-share index, it would have had a value of £11.66 by the end of 2016, after allowing for inflation. This would have required any income to be reinvested each month – to make the most of compounding over time.
Ritu Vohora, investment director at M&G, said that the replacement of the old round pound coin was a “timely reminder” of the corrosive effects of inflation – the rising cost of living. Any investment carries a risk of losing money, unlike saving, but Ms Vohora argued that there were potential rewards.
“Our analysis shows that you can turn even a modest investment into a healthy pot of money if you are willing to accept an element of risk and are in a position to make a long-term investment,” she said.
This investment in shares would outstrip investing in gold, which would have had a real value of £1.05 by the end of 2016, and a cash savings account (real value of £1.33).
However, the appeal of shares over cash was challenged by Susan Hannums, director at independent savings advice site Savingschampion.co.uk.
“For some people, cash is the most appropriate asset to hold, certainly for some of their money, but it should still be looked after properly to make sure that it works as hard as possible,” she said.
“The secret to making sure that cash is not a wasted asset, is to keep switching in order to ensure it is earning the best rates of interest possible. This can prove invaluable.”
The M&G calculations suggest that investing one pound in government bonds would have seen it grow to a real value of £4.93 by the end of 2016.
Putting the money in UK residential property would have seen the real value grow to £2.42 over the same period, M&G said.
However, this only measured the growth in value of property which, unlike shares, could not be reinvested each month, so this comparison is questionable.
Source: BBC News (published 17 March)