We spent some time in early January in the US talking to some of the financial world’s top experts including John Bogle, founder of Vanguard Asset Management, Dan Goldie, co-author of The Investment Answer, Weston Wellington and David Booth from Dimensional Fund Advisors, and Nobel prize-winning economist William Sharpe. What are their predictions for the year ahead?

The study, which shows that ‘adult dependants’ have cost parents a staggering £34 billion over the last year, reinforces the importance of planning effectively not only for our own future but for that of our children. Student loan repayments, ever-rising house prices and 25% deposts for first time buyers; paying off debts and funding their own children’s school fees mean that our kids could need help from ‘the bank of mum & dad’ way past adolescence and young adulthood. (Even ‘children’ in their early 40′s received an average of £1882.00 from the long-suffering parents surveyed.)

Supporting adult children isn’t always high on the list of priorities when families plan for their financial future. Yet in today’s financial climate, it’s harder for them to achieve the material and emotional milestones the older generation took for granted – a college education, dream wedding, buying their own home and raising a family – without going into serious debt.

That’s why it’s so important to take a long-term view when planning for your financial future: not only, “When can I think about retiring?” and “How many holidays can I afford?”, but also, “How can I help my children to achieve the lifestyle I enjoy myself?” These days, that could well mean more than paying for their wedding and helping out with school fees.

Lifestyle planning should be an integral part of the whole financial process. Preserving what you have, and ensuring future generations can enjoy the benefits of your hard work, are the driving factors in ‘future-proofing’ your finances.

It’s not about the rate of return you can expect from your investments, but the life your investments can help you, and your children, achieve – whatever their age.

To find out more about lifestyle planning, call us on 0121 454 0910 or visit www.brwm.co.uk.

With the stability of the Euro on the slide, Germany’s Angela Merkel and France’s Nicolas Sarkozy have made a joint proposal to rescue the struggling currency which focuses on the creation of a ‘new economic goverment’.  Their plans echos an observation made by renowned Princeton economist Burton Malkiel, author of  ‘A Random Walk Down Wall Street’ when he spoke to BRWM recently. Malkiel asserted that the Euro cannot work without a central economic authority, comparing European countries to United States, with federal authority but  a “central government which will bail out the losers”.

In a video made for Investment Week, leading academic Burton Malkiel, the Chemical Bank Chairman’s professor of economics at Princeton University and author of ‘A Random Walk Down Wall Street’  gave BRWM his views on the importance of emerging markets now and in the future; whether China’s economic weight is sufficiently represented in the financial markets; and how soon it will overtake the US as the world’s leading financial economy.

One of the biggest selling points of passive investing  and efficient markets hypothesis – the investment approach practised by BRWM – is the fact that it is endorsed and promoted by some of the world’s key economists and academics. Some of these global ecomonic superstars are lending their voices to a video documentary we’re producing, including Burton Malkiel, the Chemical Bank Chairman’s professor of economics at Princeton University and author of the classic A Random Walk Down Wall Street.

Prof Malkiel had some fascinating opinions on the current Greek debt crisis and the effect it will have long term on the future stability of the Euro, including:

• The austerity programme won’t work and it’s inevitable that the Greek government will have to restructure its debt.
• The European currency union is inherently unworkable as there is no central fiscal policy or labour mobility to make the Euro sustainable in the long run. Currency unions like the US work because it has a central government which will bail out the losing state or region, and people will move around the country to where the jobs are.
• Peripheral Euro nations will realise they are better off outside the single currency and the Eurozone will “shatter…in its present form, it’s not sustainable.”

The video clip shows some of Prof Malkiel’s comments, recorded when he came to Birmingham earlier this week.

Research by Barclays Wealth has shown that over 40% of investors feel they need to have more self-control over their money, but seemingly just can’t help themselves.

We know that over-frequent trading is a big drain on investments, adding even more to the fees and costs that investors unwittingly pay every year.

Even the fund managers are beginning to admit that things need to change, with Fidelity International publicly stating that investors shouldn’t be kept in the dark about hidden charges.

But investing isn’t a game and shouldn’t be played like one. Investing for the long term, with a portfolio comprising asset classes designed to reflect your attitude to risk and your lifestyle requirements, is simply a matter of forward planning and good stewardship.

Picking individual stocks and trying to beat the market rarely works – with around 80% of active investment managers doomed to underperform the market year on year.

So if the financial pages are making you twitchy and you feel that compulsion to shake things up a bit, just remember the old wartime saying: keep calm and carry on.

 In an article in the latest issue of dentistry magazine PPD, David recalls the process he went through as a new BRWM client – involving a thorough overview of his financial situation, an understanding of what he wanted to achieve in terms of lifestyle, an investigation into his income and outgoings, the agreement to a particular course of action and, thereafter, regular reviews.

 He compares this to the six stages a new patient undergoes before becoming a regular client, which include registration, establishing expectations, inventory and assessment, options and risks, costing the plan and regular reviewing.

 “Such a sequence is not peculiar to dentistry; it is used by many other professionals,” says David. “There is a very good reason for this. The six stages allow the professional and the client to develop a sound understanding, and the dialogue is essential for trust to develop between the parties.

 “By ensuring that adequate time is allocated to those conversations, sufficient trust can be developed so that the ongoing professional relationship is friendly and relaxed. This is very important when the case is particularly significant or complex. Indeed when it comes to personal income, investment portfolios and pensions the level of complexity and significance can be quite extreme.”

 To read David’s article in full, visit The financial check up.

A remarkable new book on investing hit US bookstores towards the end of last year:  The Investment Answer by former Wimbledon quarter-finalist turned financial adviser Dan Goldie and the late Gordon Murray, who spent 25 years on Wall Street before joining Dimensional Fund Advisors.     

 Apart from the fact that the book is only 85 pages long (that includes the index) and can easily be digested in a single sitting, it’s probably the most succinct and credible explanation of successful investing we’ve ever read. The Investment Answer deals with the five key questions all investors should ask themselves before choosing where to place their money:

 1. Should I use a professional advisor and, if so, which type of advisor is best?

2. How should I allocate my investments – equities, bonds, property or cash?

3. Which asset classes within those categories should I choose, and in what proportion?

4. Should I try and outsmart the market with active management, or seek market returns from passive management?

5. When should I sell assets and when should I buy?

 These decisions are at the heart of successful investing, and this book answers them all.

 Tragically, Gordon Murray passed away last month,  but The Investment Answer remains a monumental legacy to his wisdom and skills as a financial planner and communicator.

 Visit www.theinvestmentanswerbook.com to find out more.

The FSA is calling for financial advisers to be better qualified and regulated, following revelations that they lose between £400 million and £600 million every year for their customers through badly or inappropriately sold investment products.

We believe this is only the tip of the problem. Like an iceberg, the real scandal of investment charges is hidden below the waterline.

On average, financial advisers and traders can take a whopping 50% of your investment earnings over five years in charges and fees – all of which are completely above board and ‘earned’ through active management of your investments.

What does this mean in hard cash terms?

As an example, £1 million invested over 5 years and growing at 8% would give a gross profit of almost £470,000.  Depending on how it’s invested and by whom, you could see almost £200,000 of that profit going to the various brokers, traders and advisers. That means your profit slumps to just over £270,000.

Not only do these costs seriously reduce the performance of investments, this reduced performance can, over time, compound into millions of pounds which can never be made back.

Do you really want to give that much away?

We don’t think you should! We believe clients should know at the outset how much managing their investments is going to cost them – which is why we operate on a fixed fee basis that amounts to just a fraction of the fees and costs involved in active fund management.

Find out more about how we operate by visiting www.brwm.co.uk or calling us on 0121 454 0910.