Despite a global economic downturn it appears that companies offering financial advice are starting to see an upturn in fortunes as Jump Money have proved in their latest results.

The financial advisors saw strong growth in the number of advisors, issued policies and turnover for 2010 in figures announced yesterday.

The Leeds based firm saw the amount of financial advice they charged for increase to just over £3million, a demand which saw them increase the number of financial advisors on their staff from just 2 at the beginning of the year to 17 at the end of the year.

The number of policies issued throughout the year was also up 14% and that growth shows no sign of slowing.

Three months into 2011 the firm have expanded to 24 advisors, adding a further 7, and as a result issued policies and turnover has continued to grow.

The firms primary focus is the life assurance and protection sectors, although they have had to expand to offer private medical insurance, general insurance, secured loans, mortgages and credit cards through the difficult period.

They are now looking to expand into pensions, investment and equity release in the remainder of this year.

Managing Director of Jump Money, Adam Temple revealed, “The last 15 months has certainly seen the Jump Money business expand and develop as we have grown in a variety of areas. At the start of 2010 we had just two advisers and at the end of quarter one 2011 this had grown to 24 not including those based in our retentions department.

“As we currently stand we fully expect to substantially improve on our turnover and number of policies issued by the end of this year, whilst we will also be moving into a number of new and exciting product areas.”

The firm look to find customers without a financial advisor at present, and aim to offer financial advice through a web based platform.

Their existing customers have also welcomed the new ‘Personal Account’ section of their website that gives customers access to client reports, storage for all their policy documentation and the latest offers and discounts.

Brian Sweeney, the former education director of the Institute of Financial Planning has revealed plans to create an academy for advisors who wish to build up their own lifestyle financial planning proposition.

Sweeney’s new financial planning academy will offer Independent Financial Advisors (IFAs) who have reached their level four qualification the opportunity to join the year long course.

The Third Generation Financial Planner Academy will also be open to those about to take their level four qualifications, so long as they are set to do so before the retail distribution review deadline.

The course was set up by Sweeney, now chief executive of the Financial Planning Training Company, as a route into financial planning for all those IFAs who were unable to take the Manchester Metropolitan University masters in planning.

Sweeney criticised the masters course saying that it was, “great for those individuals who are either certified or chartered, of which there are about 3,000, because that’s the entry criteria, but what about everybody else?”

Sweeney went on to add that the requirements for his new course were more universal explaining that, “you don’t have to be chartered, you don’t have to be certified, but you do need to be heading in that direction to get maximum use out of this. We don’t want to exclude people because they are not there already.”

Sweeney pointed out that his new course also allowed students to learn financial planning principles that they would be able to apply in business as they moved through the course.

‘We will teach them how to do the fundamentals of financial planning,’ he said, adding, ‘We’ll teach them about how financial planning is different from financial advice, the skills they need, and what are the tools and techniques.’

The new course is intended to take a year to complete and will be split up into four different modules. The modules take three months each, with an away day to introduce the students to the different aspects of the module, followed by remote learning for the rest of the term.

The new academy is set to launch by January 2012.

Consumers organising a pension, mortgage, insurance or general financial planning much prefer to have independent financial advice, according to a new report from Axa.

Forty-four per cent of UK adults see  independent financial advice as much preferable to a bank adviser or an accountant, when choosing financial products, the research showed. Advice from a tied adviser in a bank was preferred by just 35% of consumers, with 11% saying they would approach their accountant.

The benefits of independent financial planning advice have been quantified and highlighted in various reports recently, but perhaps the most important single finding was that consulting an independent financial adviser for mortgage advice will, on average, save you £962 per year on your mortgage repayments*.

By seeking financial advice from an independent source, your financial planning is based on looking at the whole market, whereas an adviser at a bank or building society is ‘tied’ in that they can advise only on the small range of products they sell. Financial planning advice on mortgages at a bank or building society is based, on average, on a range of just 20 mortgages, compared to the many thousands that can be compared by an independent financial adviser, when making his recommendations.

The report is the 5th annual Axa ‘Retirement Scope Research’ report based on interviews with 500 working consumers aged 25-59 and 500 retired consumers aged 55-75.

*”The Value of Mortgage Advice” by the Association of Mortgage Intermediaries (AMI)

If you are close to the threshold where your next salary review could cost you your child benefits, then listen up. The good news is that some timely financial planning, with the help of a qualified financial adviser, could prevent that from happening.

The government is currently proposing that child benefits be taken away from any family where at least one parent is a higher-rate taxpayer, earning more than £43,875 per year.

There are many workers just below that threshold, who could rise above it if they were promoted, or following their next salary review. Those in the ‘danger zone’ may be currently earning £40,000 to £43,000, but are still eligible for child benefits of £20.30 per week for their first child, and £13.40 per week for younger children.

For a 2-child family, this means annual child benefit of £1,752.40 that would be lost through a wage increase – possibly wiping out the benefit of their salary increase in the process.

With financial advice, however, a salary sacrifice arrangement could be built into the employee’s financial plan.

Salary sacrifice is where the employee ‘gives up’ their raise, and instead their employer passes on the benefit in a way that does not increase their taxable pay. This could be through additional contributions to the employee’s pension, saving the cash towards retirement and with the bonus of tax relief as well.

Other options that could be negotiated with an employer include childcare vouchers, or a company car.

Over 60% of those wealthy enough to retire tomorrow are not building a retirement into their financial planning, because they plan to actively work for the rest of their lives, according to Barclays Wealth.

Despite this, the need for financial planning advice and a solid financial plan is still at the centre of the working lives of these ‘Nevertirees’, driven by issues such as inheritance tax and succession, personal health, and the unpredictability of return on existing investments.

Barclays Wealth’s global survey found that the expectation of a period of leisure after our working lives is a primarily anglo-saxon and European tradition, focussed on the UK, Europe and North America.

Countries where social attitudes did not include a retirement, and where retirement was generally not mandated or encouraged by government policies, on the other hand, showed up the highest percentages of Nevertirees – in Saudi Arabia (92% of those surveyed declared they will never retire), UAE (91%), Qatar (89%), South Africa (88%) and Latin America (78%).

At the bottom of the scale for Nevertirees were Hong Kong/Singapore, the US, Japan, Spain and Switzerland. Barclays pointed out that Hong Kong and Singapore may have featured at the lower end of the scale as both areas have longstanding mandatory retirement savings plans.

The conclusion of the Barclays Wealth report “The Age Illusion” highlighted the ongoing need for financial advice, and stated that ‘a clear-headed assessment of financial needs and how to fund them is essential. Whatever the circumstances, the focus is likely to remain on careful planning, rather than a radical change in the way in which we plan for and fund later life.”

Failing to predict the recent drop in pension income in their pension planning has trapped a third of pensionable workers, preventing them from retiring as planned, according to a report just published by Heartwood Wealth Management*.

The findings have led to a call for workers to begin their pension planning earlier, and treat pensions saving as ‘a 40-year engagement’.

Heartwood’s research revealed that nearly half of those aged 65 and over are planning to continue working until at least 70, but that most of those (29%) would prefer to be already retired, and are working because they cannot do without the money.

There are 3 main reasons why these over-65s believe they could not live on their current projected pension incomes:

- A third (32%) cited a fall in the value of their pension

- 27% blamed the higher cost of living

- 24% said they were still giving financial support to their children

- 8% were working to meet the rising costs of their medical care

“While the Government has chosen to position ending the Default Retirement Age as a victory for older people against age discrimination, the sad truth for many is that they’re not working through choice, but because they can’t afford to stop,” said Simon Lough, Chief Executive of Heartwood.

“While the current crop of working 70 year olds is still in the minority, this trend will rapidly spread through younger generations.

“ The only way to avoid being forced to continue working is to start saving earlier, and treat retirement planning as a 40 year engagement.”

Recent information from Moneyfacts showed that plunging annuity rates now give workers half the pension income they would have received from their pension savings 15 years ago.

*Survey for Heartwood by ICM of 450 adults aged 64+, July 2010

Almost 17 million working people (48% of workers) with a pension plan in place have never reviewed their pension plans, while only 21% have taken a pension planning review in the last year*.

Of those who have carried out a review of their pension planning, 38% opted for the default option offered to them by their lender, and 19% of these said that the explanation of how their funds would be invested was either poor, or not explained at all. Most alarmingly, 18% of people had made their allocation decisions on their own, acting without pension advice to decide how the funds in their pension plans would be invested.

A further 33% of those who had taken part in a review of their pension plans were unable to say whether or not they had simply chosen the default option offered to them.

Of those who admitted not knowing how their pension was invested, 1 in 5 were approaching retirement, aged 55 or above.

Given that some of the largest investment funds in the UK have underperformed, failing to meet their benchmarks for performance in each of the past 3 years, many pension savers who neglected their pension plans are likely to have lost out on potential pensions income they would have received, if their savings had been reinvested in better funds.

The research also explored who UK pension savers turn to for pension advice.

The largest group (33%) of those who did seek pension advice went to an independent financial adviser, while 10% indicated they turned to their bank manager.

One alarming fact to emerge from the report was that 13% of pension savers listen to unqualified advice on their pension plans, from a friend or family member. 

*Research for Baring by ICM Research, covering 1478 non-retired UK adults, July 2010

A third of couples over the age of 40 know nothing of their partner’s retirement pension plan and general finances.

As a result, there is no coherent financial planning in place, based on the full picture of a household’s finances, according to Prudential.

This lack of communication between partners is a barrier to sensible financial planning, and is particularly detrimental to retirement planning, as they have no idea of their probable combined income in retirement.

The Prudential research showed that nearly a third (32%) of couples over 40 but not yet retired ‘don’t know or understand’ the details of their partner’s retirement savings, and that 22% have never talked to their partner about financial planning for retirement.

Women are particularly prone to reticence, with a quarter having failed to discuss their finances, compared to a fifth of men.

Lower earners with household income of £20,000 or less also seem less likely to share their financial  planning, while 3 quarters of those households earning over £70,000 do have discussions on their financial future.

The research highlights the urgent need for structured retirement pension planning and financial advice, and general financial planning for couples to ensure that they are not simply ‘banking on hope’ by assuming that their household’s retirement pension plan will meet their future needs.

Prudential suggests that topics to be included in a rounded family financial plan should include making a will, discussing pensions and how much to save, talking about when to retire, working out retirement income, reviewing total savings, researching annuity options, leaving an inheritance, and financing long term care.

The main calculations required as the basis for the above family financial plan can easily be done online with the Principle First suite of financial planning tools. This information can form the basis of an informed discussion with a financial adviser as a concrete strategy for moving forward.

With the Principle First Pension Planner tool you can enter a target level of ‘buying power’ on retirement, by nominating a salary in today’s terms. The pension planner will then calculate how large a pension pot will be needed, to achieve that buying power, and how much must be saved monthly, as of today, to achieve it.

With the Principle First Inheritance Tax Planner it is possible to calculate the value of your estate, based on the value of your assets less the value of your debts and liabilities. On that basis, and taking into account the current individual IHT allowance of £325,000 per person, it is possible to see how much of the wealth you wish to pass to your children could be subject to Inheritance Tax at 40%.

The importance of client loyalty and the ongoing customer relationship were revealed in an Aviva / YouGov survey of 228 financial planning professionals, published this week.

Of those advisers surveyed, 85% said that word of mouth and referrals from satisfied clients were their best source of new business, and almost half (47%) said they also expected increasing revenues due to future work on a financial plan for existing clients.

The priorities for advisers in providing financial planning advice were good customer service (77%), competitive products (68%), rapid query and information turnaround (58%), and face to face contact.

“Putting the customer first has long been seen as the key to a profitable business, and our research shows that this is still the case. Financial advisers expect the majority of their new business to come through existing customers in the coming months, either directly or through referrals,” said Simon Badley, director of intermediary business at Aviva.

The key to success in offering financial advice was the ability of advisers to forge long-term relationships with clients, as well as the in depth knowledge gained in the course of financial planning for the client, their family and their business. The core value to customers was the comfort of knowing that the adviser was still around to take responsibility for financial advice given in the past, and to ensure that their financial planning advice remained relevant to the client’s needs.

The Office of Fair Trading (OFT) has launched a consultation document on how to protect consumers in the online age. The implications of the discussion emphasise the need for independent, unbiased financial advice to guide consumers on funds investments or purchases of life and critical illness insurance products online.

Earlier this year the Association of British Insurers (ABI) pointed out that consumers buying life and critical illness insurance and other insurances online, rather than with financial advice from an independent financial adviser, run risks in several key areas.

Principally, insurance companies rushing to provide a ‘quick quote’ online may do so without fully evaluating the circumstances and situation of the customer. Some providers make certain assumptions  about the customer, which can be inaccurate or incorrect. The customer, for their part, may have little understanding of the life cover or critical illness insurance policy they are buying.

One specific concern of the OFT is ‘targeted pricing’. Customers can feel seduced by attractive special offers on some life and critical illness insurance policies offered online. However, it may not be clear which of these are included as standard, and which are optional ’add-ons’ that come at extra cost.

Financial advice can also help a customer navigate the sometimes complex maze of terms, conditions and exclusions of life policies, but in particular of critical illness insurance. A simple mistake at the application stage can reduce or void critical illness insurance claims, later on.

Other factors the OFT will consider to protect consumers may include clarifying the levels of protection available for consumer-to-consumer sales, checking on non-compliant websites, and strengthening payment systems for online purchases.