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No 3, November 2011
Exclusive Financial Updates, News & Investment Ideas From Tower Hill Associates

As I write this piece, the economic outlook is extremely gloomy: turmoil in Italy and Greece are causing continued stock market volatility, in the UK RPI is 5.6% in September, the highest since June 1991, and interest rates are expected to remain at 0.5% for the foreseeable future. Protecting your wealth and planning for the future has never seemed more difficult.

Your financial advisor as "alpha"
At Tower Hill Associates we aim to add real value (i.e. alpha) by giving clients a crucial "context for investing" – a financial plan designed to achieve their short, medium and long term goals which is reviewed at least once a year. Only with such a plan in place can good client focused investment decisions be made. The thinking behind our relationship based approach is outlined in "Your financial advisor as alpha".

Financial advisor or salesman?
Acting in the best interests of clients requires financial advisors to have a fiduciary responsibility otherwise they are just salesmen selling the wares of their financial services company. Recently we commissioned independent research to investigate the probability of different portfolios, with different risk profiles, beating cash. The results were alarming. For example the cautious investment portfolio of one of the country's largest wealth management firms simply made no financial sense whatsoever - it only had a 44% chance of beating cash over the longer term after charges. Anyone paying 2% or more per annum for this type of over-engineered, off-the-peg portfolio (with no financial planning advice provided) needs to consider whether they are dealing with an advisor or merely a financial services salesman selling their in house investment products. I was extremely gratified that Matthew Vincent of the Financial Times took up the baton and used my research in his Serious Money article in September 2011 "When cash beats a portfolio" which is well worth Googling!


I hope that you find this issue of the newsletter useful. Please do not hesitate to get in touch if you wish to discuss any of the issues raised in greater detail.

All the best.

John Lang


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Your financial advisor as "alpha"

Rather than trying to outperform the market, a more realistic performance benchmark for your advisor might be "Better than investors are likely to do if they didn't work with a financial advisor". A fee-based financial advisor can add value (i.e. alpha) by developing long term relationships with their clients and by providing financial planning, investment advice and acting as the clients' behavioural coach.
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Preserve your lifetime pension allowance

Currently, the standard lifetime pension allowance is £1.8 million but this will fall to £1.5 million in the next tax year. You can take steps to preserve the higher allowance, by electing for fixed protection, but the form has to be received by HMRC's specialist pensions office in Nottingham before 6th April 2012.
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Junior ISAs now available

With university fees of £9,000 per annum, it is never too early to start saving for tertiary education. Junior ISA's, became available from 1st November 2011 which have the same tax benefits as adult ISA's. In each tax year, an annual contribution of £3,600 is permissible. To maximise contributions, initial investments should be made before 6th April 2012.
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Five tax planning strategies for 50% income tax payers

If you are paying 50% at the moment, it might be worthwhile to consider some tax planning strategies sooner rather than later
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