We (Paraplan Plus) are shortly launching our own cash flow planning software called MoneyScope – you can find out more here.

The initial release will be available to only 50 users who will have free access before the public release in return for feedback and their best attempts to break it!  We are nearly at the 50 mark and I would like to get some paraplanners involved whether you use cash flow software or not.  If you are interested please send me an email to richard at moneyscopehq dot com.

On June 30 2010, Institute of Financial Planning (IFP) officially launches the Certificate in Paraplanning, the first qualification in the UK to test the specific knowledge and skills relevant to the role of Paraplanner.

The launch will form part of IFP’s “Financial Planning in Practice” Conference, taking place on 30 June at the Village Hotel, Solihull.  The press release from the IFP continues…

The qualification brings well deserved recognition to this important role and will differentiate successful candidates from other Paraplanners carrying out a more administrative function. It has been developed by IFP over the past couple of years during which time it has consulted broadly within the Financial Planning community. The support of Scottish Widows with this development has been invaluable.

The qualification builds on the Paraplanner Job Role already developed by IFP. It will be set at QCF level 4 and awarded to candidates who have successfully passed the Principles of Financial Planning examination. The examination is available to candidates at convenient locations across the UK, with the first sittings taking place in November 2010. One section of the examination will be multiple-choice in format, with the remainder being case study based with candidates being required to produce highly focussed answers including calculations and recommendations.

Nick Cann CFPCM, CEO of IFP comments:

“For me this new qualification is the most important development yet within the Financial Planning profession. By working with the core of the Financial Planning community, IFP has defined and set out the Paraplanner role and requirements, and can now offer appropriate testing for those individuals who fulfil this important role. I am very excited by the prospect that we will now see a thriving Paraplanner community develop very quickly as a result of this. IFP looks forward to serving all the professional requirements of Paraplanners as well as others working within Financial Planning firms, to help them deliver an increasingly valuable service for their clients.”

Simon Massey, Intermediaries Director at Scottish Widows, says “Paraplanners have a growing role to play in the modern IFA business. There is an abundance of support available to IFAs including our own academy but, as yet, nothing in our industry specifically for Paraplanner development. This Programme and Qualification from IFP fills this gap and we are delighted to be supporting it.”

A new e-learning programme is available to candidates studying for the examination, as well as a two day Paraplanning workshop, which will help candidates to focus on the standards required to pass the examination. For full details of the examination as well as the training options developed by IFP to support candidates studying for it, visit www.financialplanning.org.uk

Many of you have helped over the past 12 months or so with the surveys conducted by NMG, to establish who paraplanners are, where they come from and the type of work they do in their day to day role and we thank you for taking the time to complete the surveys.

This valuable and important work has provided not only a fantastic picture of the wide range of skills paraplanners have but also the important role they play in a modern financial planning practice.

NMG are conducting a series of surveys throughout 2010 to see how the role and the individuals who make up the population of paraplanners is changing and evolving over these changing times within UK financial services.

The second survey of 2010 is now open and we would like to encourage as many of you as possible to logon to the link below and take part. The more people who take part the better the results.

Paraplanner Survey May 2010

If that wasn’t enough everyone who completes the survey will be entered into a prize draw with the chance to win one of three fantastic prizes.

The survey only takes a few minutes to complete and your input is really appreciated.

The latest round of the NMG / theparaplanner.com survey was completed recently and the results have been collated and can be seen here.  They consider the time paraplanners spend on various activities as well as the qualifications paraplanners hold along with their position prior to becoming a paraplanner and are very informative.

The results shown here are only the salient points which are relevant to the paraplanners role and more questions were asked in the actual survey.

We would like to thank greatly, all those who have already taken part in the survey and will continue to do so. This is an excellent way of us communicating as a group to professional bodies and financial services providers. It allows them to understand more fully exactly what it is we do; where we spend our time and how they can improve and make our working life more productive.

We are always looking for more paraplanners to complete the survey so if you would like to take part in the next survey please send an email to martin@theparaplanner.com and I will make sure you are included.

As proof that the survey has an effect, theparaplanner.com has for the past two years presented the Paraplanner of the Year award, indeed we were the ones who created the first award specifically for paraplanners in the UK.

As part of the last survey we asked as number of question about the award and it was pleasing to see many of you providing comments both positive and negative.

We would like to run the award again this year but wish to ensure that it is an award for paraplanners which is meaningful and allows paraplanners to demonstrate their skill rather than just a letter from an employer or work colleague.

Therefore we would like to hear your views!!

Please tell us the type of award you would like to see; the format; the types of things that you would look for when entering, in fact everything surrounding the award.

This way we will ensure that we can create an award for paraplanners which not only allows them to demonstrate their skill but is also exciting, meaningful and worthwhile.

Thanks for your help.

As many of you will know, one of the most popular and respected conferences is the Morningstar Investment Conference. Held in May each year this is now only just a month away and we have 10 FREE passes to give away!

The conference is a high level event attended by many of the countries most influential, financial planners and advisers, fund managers and investment professionals. As the role of the paraplanner gets increasingly established in the framework of top financial planning firms, paraplanners themselves also need to ensure they are as knowledgeable as possible.

Having attended for the last couple of years I can say that for me this event has been an excellent way to listen, in detail, to some of the leading funds managers (Anthony Bolton, Robin Geffen, Sanjeev Shah, Richard Burton) and to hear them explain their thinking on the current and future economic climate and their justification for some of the decisions they have made.

During the two-day forum, some of the country’s leading fund management and investment professionals will deliver thought-provoking insight and analysis on topics including: what future for UK equity income in an era of dividend cuts?; ETFs and their future in Europe; opportunities in the emerging markets; the impact of the forthcoming general election on the UK investment industry.

To view the full agenda click here.

The event aims to deliver education and practical knowledge from those at the forefront of money management; open discussions with high-profile speakers on their ideas, concepts and presentations; and new information with actionable takeaways.

When: 11th and 12th May, 2010

Where: Park Plaza Riverbank London, 18 Albert Embankment, London, SE1 7TJ

How to Register for a Free 2-day Pass: Please email Priya.shinh@morningstar.com with your contact details and state ‘Paraplanner.com’ in the subject line. Only 10 passes are available on a first come first served basis so hurry.

This is a fantastic event, so if you want to really understand the thinking of some of the countries leading fund managers along with a deeper insight into the current economic climate (and all for free) make sure you request a pass.

Dividends, it is generally agreed, are a good thing. Indeed, the majority view is that the more the better. Long term research by Barclays, Credit Suisse, Société Générale and Professor Jeremy Siegel all provide convincing evidence that the bulk of equity returns over the long term, five years and more, actually comes from dividends, growth in dividends and from reinvesting dividends.

On the basis of these data then it should be a straightforward process to construct a market beating portfolio. Simply buy a collection of the highest dividend paying shares and away you go. Indeed, for many investors over the last decade that has been a winning strategy. A number of professional money managers made great careers running high yield funds; until 2008 and 2009 that is. The last two years have been very painful for income funds with catastrophic falls in 2008 for many and lacklustre returns in 2009 when market recovered very sharply.

To the detached observer these events simply proved the validity of stock market aphorisms like “There’s no such thing as a free lunch” “You can’t beat the market” or “Higher returns only come with higher risk”.

To understand better why income and yield funds have been so disappointing over the last two years it might help to do a little analysis on what exactly a high yield share is. Yield is the product of two figures divided together. The top line is the dividend a company pays, usually expressed in pence per share. That number is then divided by a second figure, the share price, to calculate the yield. Although they are related there is no direct correlation between the two except through the yield calculation. It might therefore make sense to look at each figure separately to see how they originate and what they are telling us.

A dividend is the amount of money a company feels it can afford to pay out to its shareholders after it has paid all its creditors and invested enough to sustain and grow the business. Although it represents a cash payment of several tens or hundreds of millions of pounds it is invariably referred to in pence per share. The figure is set by the board in relation to the reported earnings per share and by what the company has paid in the past. Determination of the dividend may also be impacted by the board’s view of the future. A particularly worrisome outlook may persuade the directors to leave the dividend unchanged, cut it or reduce it.

Alternatively, the board may be so confident in the future of the company it might want to send a signal to the market that things are great, and are going to get better. An earnings per share figure is, more or less, simply a record of what the company has done and does not send a message about future prospects. Even though two of the options open to the board are reducing or not paying a dividend in practice boards are reluctant to do this and will often pay the same dividend as the previous year even when its financial circumstances might indicate otherwise.

Much is made of the dividend cover. This is the difference between the earnings per share figure and the dividends per share. Typically boards and investors like a figure of around two or more as this provides some scope for maintaining the dividend even if the company has a bad year. In practice these days the many distortions to profits from exceptional and or non-recurring items often makes the earnings figure a poor guide to what the company can pay out to its shareholders. A better understanding can be gained from analysis of the cash flow statement, although that too can be fraught with issues around lumpy capital expenditure and corporate activity.

The dividend that a company actually pays is thus a complex blend of what the company can afford and what the directors think is appropriate given the current business conditions.

In contrast the directors have no control over the share price. That said directors now are all acutely aware of the requirement to inform the market if they believe current consensus forecasts are more than five percent adrift from what they think will happen. In essence share prices are set by “Mr Market” as sagacious investor Warren Buffet calls it. All the available data is collected and assessed by existing and potential holders of the stock to discover the most accurate price for the shares. Except in periods of extreme market dislocation exactly half the market will think the shares too expensive while the other half will view them as too cheap. Share prices can therefore best be viewed as an opinion while a dividend is very definitely a fact. The question is what happens when we divide a fact by an opinion. Surely, it must just be another opinion.

And that is where income and yield funds run into problems. High yielding stocks are trying to balance the conflict between the fact of the last dividend payment and the opinion of the market over the size of the next dividend. In many cases, especially over the last few years, the market opinion that a dividend will be cut, or reduced, has been correct. Even when that downside has been priced in a dividend cut usually triggers a further fall. And that is painful for funds that hold the shares. In practice the effect is compounded because income and high yield funds will migrate to stocks that, on paper, offer a high yield and ignore stocks where the income is safer, but smaller. In effect what is happening is that dividends are being valued by price and these funds over-invest in shares whose income has a low value; in many cases for good reasons.

Investors buying conventional tracker funds ignore share prices when they invest. So what happens if we ignore the price of dividends? Why don’t we use some other measure to assess them? The simplest way to do that is to rank companies by the gross cash dividend they pay out. In other words you measure dividends by volume rather than price.

When we compare a portfolio constructed in this way we see a lot of similarities with a conventional portfolio ranked by market capitalisation. After all a company paying out several billion pounds in dividends is hardly likely to be lurking in the Small Cap sector. It is therefore no surprise to see that companies like Vodafone and BP that constitute the largest companies in the market are also the largest dividend payers. Moreover, assessing dividends in this way gives an excellent mechanism for determining how much of each stock a portfolio should hold. Using each company’s contribution to the total income of the market provides a logical basis for calculating portfolio weights.

Using dividend data in this way provides a neat riposte to Oscar Wilde’s accusation that some men know the price of everything and the value of nothing. It is more important to know the value of dividends than their price.

Article written by Rob Davies, Managing Director of Fundamental Tracker Investment Management Ltd and reproduced with kind permission of IFA Life

Many of you kindly took part in the Paraplanner Census which we organised last November in conjunction with NMG.

The latest round of the survey is now open and it would be great to get even more people involved. There are some fantastic prizes on offer just for entering including a spa break and a Nintendo DS!

The survey has really taken off and is providing some really useful information about paraplanners, who they are, how they work, what they do and the tools they use. This provides a brilliant insight into just how influential paraplanners are and just how vital their role is within a modern Financial Planning practice.

The survey will be running until midnight on Wednesday 24th February 2010.

If you are a paraplanner please take the time to complete the survey. This is your chance to influence the way that the paraplanner role develops.

The link to the survey can be found here, it should only take 10 minutes or so.

Many of you will have completed the paraplanner census at the end of last year which we thank you for. Due to various things beyond our control we had not been able to bring you the results until now. The census is a fantastic way of making your views heard and of providing real statistical evidence of the increasing importance paraplanners play in IFA practices.

The salient points from the survey can be found by clicking this link – Paraplanner Census Nov 09

As you can imagine this is only a part of a much larger survey; if you wish to discuss the full survey please contact NMG who will be happy to help.  To make the survey meaningful we would like as many people as possible to take part so if you are a paraplanner and would like to be part of the next survey please send an email via the enquiry form in the Contact Us section and we shall make sure you are included.

The articles from T Bailey over the past few weeks have had a great deal of interest. T Bailey finish their articles this week with some further information about the Fund Managers.

There is also the final chance to win £25 Amazon vouchers. The questions are simple, so well worth looking at.

The winner of the Week 2 competition was John Burrows of Whichers IFA Limited; well done John.

Don’t forget there is also the ‘Ask Jason’  feature still running so if you would like to ask Jason or Elliott a question please send them to either martin@theparaplanner.com or info@tbailey.co.uk and we will get them to answer them for you.

The T. Bailey Fund Managers

Jason Britton is the Chief Investment Officer and Fund Manager at T. Bailey.  Jason has worked with the T. Bailey funds since their launch in 1999 and is an Oxford mathematics graduate and ACA with over 10 years’ experience of the fund management industry.

Jason’s main speciality is advanced quantitative analysis to help monitor and assess the ever-increasing universe of investment funds from which T. Bailey can choose when constructing portfolios.

Jason manages all five funds offered by T. Bailey and is supported by Elliot Farley, Assistant Fund Manager.  Elliot is a Warwick University mathematics graduate with 9 years experience in the fund management industry. He has worked with the T. Bailey funds since 2000 having previously been an ACA with Deloitte & Touche.

AMAZON VOUCHER COMPETITION QUESTIONS:

Jason Britton has worked with the T. Bailey funds since:

A)    1999

B)    1998

C)    2000

How big is the current fund range at T. Bailey?

A)    4 Funds

B)    5 Funds

C)    6 Funds

To enter please send your name and address along with your answers to both questions by email to info@tbailey.co.uk.

By entering this competition, you agree to be bound by the following Terms and Conditions:

1. No purchase is necessary and only one entry per person, per draw will be allowed.
2. One prize of a £25 Amazon Voucher, per draw (i.e. four prizes in total) is available to the winner, who will be selected from random from all correct entries received.
3. No cash substitution will be available.
4. The competition is open to UK residents aged 18 and over, except employees of T. Bailey Asset Management Ltd, its associates, their families or anyone connected with the competition.
5. For inclusion into the week 4 draw, entries must be received no later than 10 February 2010.

The draw for week 4 will be made on 11 February 2010.

1. Winners will be notified immediately and their names published online at www.theparaplanner.com.
2. The promoter will not accept liability for lost or delayed entries. Proof of entering is not proof of receipt of entry. No correspondence in connection with the competition will be entered into and the decision of T. Bailey Asset Management Ltd is final.
3. The winners agree to the promoter’s use of their name, address and photograph in relation to the promoter’s publicity material.
4. The promoter’s contact details are: T. Bailey Asset Management Limited, 64 St. James’s Street, Nottingham, NG1 6FJ.

As you know T Bailey have been sponsoring a competition over the past few weeks. The competition has had a fantastic response; to everyone who entered thank you.

When T Bailey started their sponsorship they very kindly offered the services of their Chief Investment Officer, Jason Britton to answer any questions that anyone wished to put to him.

As you can imagine we have had a number of questions and we hope to be able to publish many of the answers over the next few weeks however as a flavour, Jason has kindly answered the following two questions.

Question 1

I am reviewing a client’s portfolio and they have a large exposure to commercial property, what is your view on commercial property and should this be reallocated?

Jason’s answer

Our view is that we have moved from being negative on commercial property to neutral, so we are still relatively cautious and very careful about what opportunities there are, for example we only choose funds which have an adequate variety of both landlords and tenants to kick in an extra layer of diversity.  A high allocation to this asset class can be dangerous, in our view, but as you know it depends on the client’s risk tolerance and requirements.

Question 2

An IFA has asked me to investigate China as a region – is there more value there?

Jason’s answer

We view China as an unstoppable force in the emerging markets and, like many, understand the effect it has on the rest of the world.  However, these are interesting times and while Anthony Bolton has announced his intention to move there and establish a new fund, we tend to invest in the surrounding area (as can be seen from the T. Bailey Growth Fund exposure) as we find you can get a better risk/reward than investing direct.

If you have any other questions you would like Jason to answer, please feel free to email your question to info@tbailey.co.uk

Similarly, if you have not had the opportunity to look at who T Bailey are, or what they do, please click on their logo on the right.