Up until now I’ve always started each year with a clean slate and a fresh set of aims and objectives.
This year, I still had a list of things that I hadn’t finished in 2015.
Number one on the list was getting registered for the latest Personal Finance Society regional conference.
The venue was Epsom Downs racecourse so I knew I always had the option of a cracking view to stare out over if any of the presentations were a bit dry and painful.
But, as it turned out the mist put a stop to that idea, as all I got to look at was a wall of white until about 4:00pm.
It did feel like the 50 metre long, 3rd floor glass window was being wasted given that we couldn’t see further than the edge of the balcony!
The day was packed with a lot of information and content that I was able to take away and mull over.
Positive UK outlook
Invesco Perpetual kicked off the event with a very positive presentation on the potential for a better year for UK financial markets in 2016.
Despite the fact that global growth as a whole will remain low it has been predicted that the UK will pull it out of the bag and come out with growth of around 2.4% to 2.6% in 2016. Way to go UK!
So, if we are to believe the analysts (yep, those same ones that never saw the last financial crisis coming until it knocked them for six in the bar brawl that was the 2008 crash!), we should be seeing higher opportunities in the cyclical sector and their corresponding investments over the coming year.
At this point we can all have our own ‘mini fist-pump moment’ as seen in the Just Eat advert.
Why? Because we were also informed that for the first time in a number of years we may well see wages in the UK start to rise in 2016. I’ll have a piece of that thank you!
Dividend taxation reforms
Thanks to Zurich we were then taught about the new dividend taxation reforms.
This is something that still brings more than just a slight look of bewilderment to my far too youthful face.
As a side note these conferences really bring it home how ‘mature’ the industry is. It is high time the industries demographic went for a check-up and had a 50ml shot of youth and at least 70ml of hair growth.
Anyway, that’s beside the point and may well have got me disciplined (Sorry, Nick)…
So, as it turns out George Osborne sitting in the Exchequer has been busy and decided that he needs some more money.
Under the guise of giving a generous 5% dividend allowance which is tax free, he is actually siphoning off your money through the back door.
As far as I can understand, he’s doing this by using the dividends allowance to eat into the basic rate tax band.
If you understand the ins and outs of it, then good for you, but I’m still stuck trying to work it out.
The one piece of advice I managed to take away was that if you are a corporate business owner hoping to mitigate the effects of the reform, you may be wise to bring forward dividend payments into this tax year, spread future dividend payments between spouses and make pension contributions.
We do like the last option and will be more than happy to assist anyone reading this who decides that the final option is the one to take.
Active portfolio volatility
Then Jupiter stepped in and brought the level of intellectual content back into this atmosphere.
We were reminded of the concept that, ‘an active portfolio is less volatile than a passive portfolio’. I think I can just about manage that.
Following this we were shown many different charts which to me all looked relatively similar, but given the presentation that followed apparently were far from that. Although I’m not new to charts I’ll put it down to industry inexperience.
However, they did present some seriously thought provoking facts about the ageing demographic of the globe and the consequences it will bring.
Retirement ages will be increasing throughout my life time as we grow to live older and yet studies show I will have up to three critical illnesses by the time I retire. Retiring at, who knows, age 75?
This is something we might want to start taking very seriously.
This ageing demographic also means that the world GDP is projected to fall.
Certain studies conducted by Credit Suisse show that the decreasing working-age population in Japan dragged down their GDP growth by just over 0.6% a year between 2000 and 2013, and that over the next four years that will increase to 1%.
We were told that this will likely be reflected in the world GDP. Yet another fairly eye opening statistic.
With less young earners than pensioners we may find ourselves in a bit of a sticky situation.
It has become so bad; China has even abandoned its one child policy.
Double option agreements
To finish off we were left to consider the topic of business and personal protection.
In all honesty I can’t say I was exactly filled with confidence when the speaker turned around half way through the presentation and said, “Now I’m not sure this has ever been done, but theoretically it could work”. Good job that man.
Now, a ‘double option agreement’ may sound like an overly complicated industry term and may well be in practice, but realistically it is exactly as it sounds.
For small businesses it sounds perfect and I’m not sure why you wouldn’t put one in place.
It manages to safeguard all the business interests and the future of the company in the event of the death of a key director.
This is done by making sure that those with the intellectual capacity within the business maintains control even if other spouses also have shares (Option one).
On the death of that director, their and their spouse’s holdings have to be sold to the other director. Or, if a spouse holding shares were to die then the director affiliated with them automatically gets the shares (Option two).
See, nice and simple I know.
This is in no way to be taken as a concrete explanation of a double option agreement nor is it advice on the matter (I’m still not qualified to give advice, remember).
I’m already looking forward to my next experience of a financial services conference.
Hopefully the next one will be just as informative and maybe even come with a better view!
