The new report* reveals that while the number of seriously underperforming funds has risen from 77 to 90 over the last six months, the amount of money invested in these s0-called ‘dog’ funds is now £14.25bn, almost double what it was in January 2009. This is because adverse conditions in the markets in recent years have caused some of the country’s largest funds to slide into the ‘dog’ category.

“The last three years cover a period in which markets have fallen sharply and then recovered strongly. Funds which have managed to perform poorly in both conditions need to be inspected closely,” said Bestinvest.

In order for a fund to qualify for the ‘dog’ category in the Bestinvest report, it must be a UK-registered unit trust or open-ended investment company (OEIC) investing mainly in equities. The fund is then compared to the relevant benchmark or index, which for most is the FTSE All Share Index.

Then the fund must have underperformed the selected benchmark in each of the last 3 years, and have underperformed its benchmark by 10% cumulatively over three years as well.

The report serves as a reminder that any shares investment or stocks investment needs to be monitored on an ongoing basis, as a fund performing above its benchmark this year may not maintain its performance in the future.

One way to ensure that a shares investment is still performing well is by taking financial planning advice, preferably from an independent financial planner.

Principle First Financial Advisers offers a free funds portfolio analysis within its investments advice service, which will analyse a client’s existing shares investment portfolio, identify any underperforming funds, and recommend changes that should be made. Clients interested in setting up funds investments, Principle First offers a range of investment portfolios.

*Bestinvest’s quarterly ‘Spot the Dog’ guide to UK funds, Spring 2010

Would you like to discuss funds investments, or check  how your funds are performing? Contact us by making an online investment enquiry or ring freephone 0800 678 5929 now

Consumers who would never dream of cutting their own hair will happily ’have a go’ at sorting their own finances without expert financial advice.

While 38% of us would turn to an expert for ‘cutting or dying hair’, and 60% of us would call an expert to repair our car, only 14% of those between 50 and 70 would turn to an expert for help with pension planning, according to a new survey*.

In other areas of our financial planning, we show an equal tendency towards being ‘advice shy’. Only 32% of people would seek help in arranging their mortgage, only 24% would ask for expert financial planning advice on tax matters, and only 23% would ask for qualified investments advice.

People are more likely to consult a hairdresser, an electrician, a plumber, or hire in a painter and decorator than make a financial plan on the basis of qualified financial planning advice, the research revealed.

Younger people are more open to seeking help with their financial plan than older people. While only the 14% of people in their 50s and 60s (mentioned above) would seek financial advice on their pension planning, this figure rises to 29% for people in their 20s and 30s.

The percentage of people in their 20s who would seek financial advice on buying a mortgage is 52%.

“Seeking independent financial advice on your finances, whether it be mortgages, retirement or savings and investments, is an invaluable step in making sure you are getting the right advice and the best solutions, both for you and your family’s financial requirements,” said Karen Barrett, chief executive of unbiased.co.uk..

“It is understandable that people may naturally shy away from the often daunting task of sorting out their finances, but by using an independent financial adviser, you can entrust an expert to research the whole of the market and make specific recommendations for your individual circumstances.”

*Source: financial advice researcher unbiased.co.uk / Opinium Research survey of 2.065 UK adults

Who has not, at some time, read the warning that ‘the value of investments can fall as well as rise’? Despite this, over 1 in 5 stock market investors stated that they never take financial planning advice to review their fund investments, in a recent survey by the pensions and retirement division of Prudential. In response, Prudential emphasised the wisdom of regular financial reviews with the comment “It is staggering how few are seeking financial advice.”

The dangers of failing to seek financial planning advice are not limited to pensions and investments, however. Failing to review your financial plan may cost you thousands over your whole financial portfolio, from savings and investments, to personal insurance and your mortgage.

Here we look at these individual areas, to show how, by neglecting your financial planning, you fail to adapt your investments to market and other changes, as you build your financial plan. The flip side is clear: great savings are possible by streamlining your financial planning with regular reviews with your financial planner, and a very hands-on approach to your money.

Financial Planning Advice - Funds and Stock Markets

A financial adviser can show you, the client, any number of league tables charting the performance of the funds where your savings, investments, and pension may be invested. What may strike you is the fact that, year upon year, the leading funds in any sector may have changed, as market conditions and the fortunes of individual investments rise and fall. Your own attitude to risk may change over time, creating another impetu to review and realign your holdings. The advantages of financial planning are clear here – a very active investment strategy is crucial to keep your money where it is working hardest for you, switching if necessary out of an underperforming fund and into a better fund. In 2009, over 11% of investment funds were classified as ‘dog funds’, at the bottom of the market measured by performance. More shocking still, the poorest performers included some of the largest funds on the market*. The amount of money invested in dog funds in the UK more than doubled during 2009, from £7.2bn to £14.2bn, as more recession-hit funds sank into the dog fund category. Only those investors working with their financial planner could be alert to these developments, and act as needed to fine-tune their investments.

Financial Planning Advice - Pension Planning

Many pension savers forget that their pension savings are not simply held in a ‘pension fund’ – they are invested on the savers’ behalf by the pension fund manager. As a result, pension savings are, indirectly, very much a stocks and shares investment, and subject to the same short-term fluctuations as conventional investment funds. They can, therefore, also be monitored for maximum efficiency, and changed and switched to better performing funds if needed.  Visiting your financial planner to review your pension planning on an annual basis is crucial, to ensure that you are on track to achieve your desired income in retirement.

Of course, in relation to pensions, financial planning has a special and secondary meaning. For over half of the UK population, neglecting financial planning here means not having a pension set up at all – which was the case for 52% of the working population in 2009, according to Halifax. This situation has given the industry the phrase ‘pensions timebomb’, as the dreadful consequences of such a lack of financial planning will take their toll, not immediately, but in the decades to come.

Financial Planning Advice - Savings

Many savers, living their busy lives from day to day, put their financial planning on the ‘back burner’. This often means that they have large sums languishing in bank or building society accounts, where returns, in the current low-interest climate, have rarely been so low. Again, good financial advice would show savers that shifting this cash into Individual Savings Accounts (ISAs) would mean that no tax is payable on growth. Furthermore, both cash or stock market investments are available. Other tax-efficient options include Venture Capital Trusts (VCTs), which offer 30% tax relief on cash that can be invested for at least 5 years, and Enterprise Investment Schemes, which offer tax relief of 20% on savings invested for the shorter term of 3 years.

Financial Planning Advice - Mortgages

If you have had a mortgage for several years, you may be coming to the end of an initial mortgage deal. If you decide to stay with your existing lender, you may be moved to their Standard Variable Rate (SVR) of interest, which may or may not be the best deal for you. At this point, financial planning advice will make you aware of the various mortgages available to you. Mortgage holders working with their independent financial planner may decide to switch to a different mortgage deal with their existing lender, or check the whole mortgage market in search of a better mortgage deal. In the end, you may well decide to stay with your existing lender. If so, fine! There is a huge difference between opting to stay put based on good information, and opting to do so based on no information! 

There is intense competition between mortgage providers for the business of those with equity built up in their homes, and taking financial advice is key to taking advantage of that. In relation to mortgages, the advantage of regular financial reviews was brought home recently, when research showed that seeking out an independent mortgage adviser and actively reviewing your mortgage will save you, on average, £962 per year on your mortgage payments!**

Financial Planning Advice - Insurance

Life insurance is traditionally regarded as a once-off investment which, once purchased, is left in a bottom drawer and forgotten. In today’s market, nothing could be farther from the truth. Industry watchdog LifeSearch revealed recently that in the last decade, the cost of term insurance has dropped by 50%. This means that good financial planning can find you a cheaper deal with a new policy, even though you are older.

If you are interested in taking a more active investment strategy and fine-tuning your savings, investments, insurances, mortgage and pension, make a financial advice enquiry or call 0800 6785929 now

*Source: investment management company BestInvest, October 2009

**Source: Association of Mortgage Intermediaries, 2009

Reduced ink consumption can also result in significant financial savings, with Ecofont’s manufacturer, the Dutch marketing firm Spranq, claiming that a company with 5,000 employees could save over £100,000 a year on its printing costs.

The ‘Ecofont’ system is a subscription package that ‘drills holes’ in your normal fontface, eliminating between 20-25% of the ink from your printout by leaving tiny, circular unprinted areas peppered over the letters and characters you use. As the holes are smaller than the eye can see, this has no affect on the legibility of your text.

You can punch environmentally-friendly holes in your favourite font for €15, which provides you with a 3-year licenced download of your font’s eco-variation.

Try before you buy

You can also download a trial ecofont to try the system out. The free-of-charge single font, based on the Bitstream Vera typeface, is available at the website ecofont.eu.

The ideal point sizes for using ecofonts is 10-11 point, roughly the size used in most newspapers and magazines. For lettering larger than this (headlines and larger print) Ecofont is unsuitable, as the tiny holes in the font become visible. In this case, the software senses that the font is too large, and does not add the holes.