View more on these topics

Statistically speaking

I recently read in the press some of the statistics published in the Office of National Statistics&#39 annual report. There was much contained in the report of direct and indirect relevance to those marketing and advising on financial services products.

Everyone accepts that we are in a time of significant and continuing demographic and cultural change. We also have a Government which appears to be committed to being the architect of overwhelming behavioural change, especially when it comes to the issue of self-provision in many areas of life.

Properly and thoughtfully used, statistics present good opportunities for proactive discussion with key clients, distributors and markets, depending on your particular interest.

The statistics to which I refer are not evidence of anything other than a continuance of a trend that we all know to be under way. However, that does not prevent them presenting an attractive business opportunity to advisers and providers with clients who are concerned about making adequate provision for education, retirement and other specific savings objectives.

Clearly, one of the key issues to address (and which is being addressed) is that of provision for retirement. We have already seen and considered the ISA consultative document and wonder what is in store in respect of stakeholder pensions.

Many, in their representations on ISAs, have expressed the opinion that stakeholder pensions and ISAs should be considered together with, possibly, a single savings scheme so as to avoid the potential confusion and conflicts that could arise by offering both products.

According to the latest statistics, the number of people over the age of 65 has risen by nearly half in the past 35 years, reaching 9.3 million. Between now and 2007, there will only be a slight increase before the numbers rise rapidly again to 12 million by 2021, peaking at over 15 million in the 2030s.

Added to this, 71 per cent of the population rate pensions as their top priority for greater social security spending. Despite these wishes (a good indication of the high anxiety that financial security in retirement causes), increased state spending on pensions is generally accepted to be unlikely.

The message to these people must be to encourage serious consideration of greater pension contributions. This is especially so in advance of March 17 in respect of those higher-rate taxpayers who were going to do it anyway. The increase in the number of retired people may well also increase the size of the investment market, if current experience is anything to go by.

Turning now to employment. Apparently, the number of women working is almost 45 per cent of the workforce. In 60 per cent of married couples with dependent children, both partners work, which is a rise of 10 per cent since 1980.

Advisers and providers alike must not underestimate the value of an independent taxation audit for appropriate clients to ensure that each of a couple is maximising the use of allowances and exemptions.

With a systematic client-focused approach, this task will usually yield tangible results with the right clients.

This is especially so when it comes to maximising Pep, Tessa and ISA investments and also, of course, reliefs and allowances.

It is especially important, wherever possible, to ensure that the personal allowance of each spouse is used in retirement by providing a pension for the spouse in his or her own right. Stakeholder pension developments may well be of great relevance here for those with no pensionable income.

With regard to investment, interest should be shown in the following statistics:

Life insurance and pensions now account for 36 per cent of the net worth of the personal sector. This is a rise of 10 per cent since 1986.

Stocks and shares now account for 14 per cent of net personal wealth. This is a rise of 4 per cent since 1986.

The opportunity for advisers and providers in the investment market is that the need to save personally to provide a secure future is being increasingly accepted. It is essential that valued, differentiated and creative advice is given to these people in the context of a strong, valued relationship.

Finally, education. The numbers entering higher education have trebled since 1990.

Against this background, it has to be said that the cost of further education is increasing and state support is diminishing.

One source estimates that some graduates can take 83-167 years to repay their student loan – perhaps we should be looking at intergenerational loans in the light of this.

Add to this the fact that education is a very important issue to many parents and students and you have the possibility of completing good business.

Advance funding for the costs of further education or student loan avoidance may offer the opportunity to give a specific point to saving through Tessas, Peps, ISAs, investment bonds, either UK or offshore, or mutual funds (unit trusts, investment trusts and Oeics), where appropriate (obviously not for Tessa, Pep or ISA) structured through designation or trust to maximise use of allowances and exemptions.


Murray Johnstone sets up third VCT

Glasgow-based fund manager Murray Johnstone is launching a new venture capital trust. The Murray VCT3 is the fund manager&#39s third venture capital launch since September 1995. It aims to provide investors with a diversified fund and hopes to offer attractive income tax and capital gains tax breaks. Murray Johnstone venture capital trust portfolios fund manager […]

Another new spin to our CD-Rom

The Money Marketing CD-Rom this month introduces another innovation to the Investment Fund Index, the first interactive online investment key features service for IFAs. You can now view and print brochure-quality documents from the CD-Rom using Adobe Acrobat technology as well as viewing and printing the normal wordprocessed documents. The Investment Fund Index is our […]

ScotEq Intl business rises 118% to £197m

Scottish Equitable International&#39s new business soared by 118 per cent last year. The Luxemburg subsidiary of Scottish Equitable saw new business increase to £197m last year from £90m in 1996. SEI deals in single-premium business. UK-sold new business made up almost 80 per cent of the offshore arm&#39s new business, with a total of £155.7m. […]

L&G in apology to Virgin as ads compare wrong figures

Legal & General has been forced to make a humiliating apology to Virgin Direct and change its advertising after admitting it got its figures wrong. Virgin complained that figures used in L&G&#39s national press ads for its corporate-bond Pep dramatically underestimated Virgin&#39s performance. The L&G ads compared the running yields of four providers. L&G&#39s Pep […]

Sticking to valuation discipline when investing in China

Journalist Alexis Xydias discusses the opportunities – and potential pitfalls – of investing in China with Artemis fund manager Peter Saacke. With Peter holding significant positions in China in the Artemis funds he manages, journalist Alexis Xydias quizzes Peter on the risks of investing in Chinese stocks – including over-valuations, margin trading and financial reporting issues. Click here for video


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm