TRAP: The Real Adviser Podcast
Four business-owning entrepreneurial knuckleheads chew the fat on the sometimes murky, always quirky, world of UK and Irish personal finance.
TRAP: The Real Adviser Podcast
105 - GRAHAM FOSTER: My DA Journey With The FCA
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In this latest pile of TRAP, the Trap Pack discuss
- Topical Titbits
- Meat and Potatoes: GRAHAM FOSTER: My DA Journey With The FCA
- TRAPist question from beloved TRAPist Neil B
- Culture Corner
Show links: http://tiny.cc/traplinks
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Yes, indeed, did that as well. What was that?
Andy Hart:Brilliant.
Nick Lincoln:That's our new intro. I did give. I shared it with you on WhatsApp. I thought the song was set up.
Andy Hart:I did. Okay, I listened. Do you want to explain it? Why we have a new intro?
Nick Lincoln:Absolute shot. Yeah, and but yeah, we had that because we kept getting demonetised by YouTube because the intro music that we had for the show, which was previously copyright free, has now been flagged as copyright material by the creator. YouTube is a nightmare in this case. We just thought, right, we'll do a new jingle, and that was Gemini did that. I gave Gemini the lyrics and said, "Do it in the style of Van Halen, 1980s hair rock. This is what you're seeing, and with three iterations, they came up with that. It was so anyway. That's what it is now. So like it and lump it, right?
Carl Widger:So welcome back, dear
Nick Lincoln:Trappist, to what many people are calling episode the Ento Ethinco of the Real Advisor podcast. T R A P Trap. My name is indeed Lick Lincoln, and joining me as ever in the digital studio of Doom are the three other horsemen of the Apocalypse and the ultra heart, Alan, the storyteller, Smith, and Carl, the voice de la vochi widger. Now, gentlemen, we have a show packed full of absolutely nothing, so let's start unpacking it straight away with another high energy and very lengthy review read read out by my very good friend, the Right Honorable mr. Andrew Husn Hart.
Andy Hart:So, do you mean we're going to lose our 15 pounds a year from YouTube now, Nicholas, because we're gone for long, demonetised. Okay, gone great, good stuff. I'm pleased to see you've changed it, Nick. We've been going for 105 episodes of the same intro, so a bit of a fresh music is great. Okay, over to the review. This review has been left by user. I'll read out
the name:244593780. Obviously, an anonymous review. We are running. We are running very low stroke, completely out of review. So, if you please do leave a review in the Apple Podcast platform, you'll get straight onto the show, and I'll read you out next time. So, this is a three star review. Obviously, they listen to the show. They're trying to dig it in. We don't like the three stars. We like the one or fives. It's entitled "Okay, three or two stars out of six, and the review is "Haven't Vanguard increased their charges? Full stop. We'll listen periodically. Make it whatever you wish. Vanguard normally decrease their charges, don't they? But they might have increased them on some obscure fund or something. Back to you, Nicholas. So yeah, we're at reviews. Please do leave reviews.
Nick Lincoln:Yeah, and also two double 4593780. You haven't put a question mark at the end of your questions. The whole thing's a disaster. Right, let's move on to putting a timestamp on topical tidbits of episode 105 with some topical tidbits. As ever, as I've been saying for the last few episodes, because it is coming up on the 18th of September, somewhere in deepest, darkest Surrey is the Vanguard Tough Mudder. I'm not sure if you still got time to enter, but if you want to enter, it's coming up. Two of the members of Trap are going to be there, maybe a third if we can coax if we can coax Carl over the Irish Sea. It's supposed to be a good fun, a good day, and it'll be a lot of a lot of laddish behavior. By the way, I'm having some trees felled at the end of the garden that backs onto my house. I'm sorry if that's bleeding into the microphone. There's nothing I can do about it because I can't mute what I'm speaking. So yeah, tough mudder. 18th of September. Will you shut up? 18th of September. The link is in the so-called show notes.
Alan Smith:So Nick, it's it's you and I at least representing the Real Advisor podcast. You will have to help me over a 10 foot wall. That sort of thing.
Nick Lincoln:I've been told that's the idea. I can't say that planning out in practice. I'll just I'll be pointing at people, clicking fingers. It'll be it'll get there.
Carl Widger:And maybe running around said was.
Andy Hart:You got to submerge yourself in a skit full of ice. It's horrendous. I think the last one
Nick Lincoln:is electric shocks. I know my son's done. Through water's electric shock wire,
Alan Smith:mud, all sorts. Who signed us up for this?
Nick Lincoln:I know. Well, you know, we're they're they're close personal friends of ours. Thank God, and they're they're they need the help. They're up and coming business. You know, the times are tough. So let's move on.
Andy Hart:Okay, moving on to some very sad news. A mighty figure in this mighty profession of ours, mr. Colin Lawson sadly died, aged 56, a couple of weeks ago. He was a force of nature, you know, a character, huge, strong personality. He spoke at Hum London 2025. The talk was greatly received, and he was also on this podcast only a few episodes ago. Trap 99. So I think it was about 12 weeks ago. Yeah, I love seeing Colin out and about, hearing his stories. He set up Equilibrium in 1995. I think they're now looking after close to 2 billion of families' life savings. Incredibly driven guy, innovative thinker. So yeah, thoughts with Colin's family. I know life is precious. Life is not rehearsal. So ROP, Colin, much missed.
Carl Widger:Here, here. Okay, Colossians. Well
Nick Lincoln:said. Well said. What else can you say? Rest in peace, Colin. Okay, so this is good. So, Trap Forum Smithy.
Alan Smith:Yeah, just a quick shout out. We've been for years extolling the virtues of. Mastermind groups getting like-minded people in a room together to spot best practice, share ideas, and so on and so on. And I think you know the three of us UK-based advisors have been members of a group in London for many, many years. And I think since we started talking about it, there's been at least three or four, to my knowledge, that have been set up around the country, certainly Glasgow, Northern Ireland. Northern Ireland, yeah. I think Carl's group now in Ireland, and on the back of that, also a friend of the podcast, Keith Hare, who some of you may know, fellow Scot, been around for a few years, good guy. He's put a shout out to say he would love to start a group in Yorkshire, where he's currently based, and basically the way to if you're if you're in Yorkshire in that region and you'd like to get together with fellow professionals, particularly obviously those that kind of follow the the trap ethos, then get in touch with Keith. Keith here. We posted a link to his LinkedIn profile in the show notes. So that's the simplest way of doing it. Connect. Check out the show notes. Connect with Keith, and get in touch. And hopefully there will be another emerging mastermind group network group of good quality advisors. Great
Nick Lincoln:stuff. Sorry, I've just shut the window now. The noise out the side was definitely, so I'm going to roast in here. Yeah, great stuff. Great stuff. Mastermind groups-they tend to work for sure, sure. And in fact, our guest interview on the meaty potatoes was also part of the mastermind group that Alan still is. Still
Andy Hart:is.
Nick Lincoln:No, he's left.
Andy Hart:Is he? Sorry,
Nick Lincoln:he left a year ago, Andy. He left a year ago. Obviously, when you go in the mornings, Andy, you're still waking up. I'm going
Andy Hart:tomorrow. I swear, I swear he rocks up still. Anyway, sorry. He
Nick Lincoln:goes to the socials, but okay. So, okay, so this is a subject that yeah, we've talked about this before, and I think it's like a lot of these things. It's going to come back into the news as as it gains momentum in possibly a negative way. Ultra.
Andy Hart:Yeah. Well, Alan brought this up on the last episode. Octopus inheritance tax scheme that a lot of advisors and companies invest in, but the huge companies St James's Place, Fairstone Group, and Open Work Partnership have basically pulled out of recommending any of their clients invest in specifically the Octopus Inheritance Tax Scheme. So, just a following on point from from Alan's, but I thought I'd raise it. Just a bit of an observation from my 20 years in this business. I do feel like a lot of the more esoteric type investments that clients end up in predominantly originated with usually a larger firm selling them. When a firm has a huge sales force, it's very hard to do high-end vanilla, full-fat financial planning without getting involved in a lot of the other stuff. So, just a point to raise, really. You know, firms like mine and Nick Solo Advisors, very small, super concerned about compliance, not having future issues with investments blowing up. Yeah, just a bit of a point to note, really, for people listening. As a general rule, the larger the firm, the more likely they are that they're going to have a wider range of investment solutions to offer and sell to their clients. What's your thoughts on that, Alan?
Alan Smith:Well, yeah, I think that's that's fair. If you look, I mean, some of SJP. Who else? Open work,
Andy Hart:Fairstone Group. I mean, maybe like a bit of a network.
Alan Smith:Yeah, but there are. I mean, SJP's got 5000 advisors. I think so. All added together, there might be close to 10,000 advisors in that, or certainly seven or eight. That's a lot of people, and I guess law of large numbers. If if you've got 5000 advisors and 10% or 20% are interested and avail themselves of some of these slightly more esoteric products, then you're going to have at least you know hundreds and hundreds of advisors getting involved in it. And again, I just think it's a lesson. You know, in my in my 22 years that I've been in business, we've never embraced them either. We just, we just, me and my colleagues, we've just never felt 100% comfortable with them on multiple different reasons. And obviously, we've done this to death over the last couple of episodes. So, and I just think it's look. I'm not saying these are all absolutely bad for sure, but anyone there's a lot of younger advisors who listen to this podcast, and I think you just need to be a bit careful looking at the latest shiny new object. I have been in endless over the years presentations from some of these things, and they look pretty good. And you know, when you've been pitched to by you know a salesperson from some of these specialist tax planning companies, then you know it does. It does look quite attractive, and only because you know the three of us, we've always just felt slightly wary of it. And you know, you can achieve all the things that the client needs to achieve in a plain vanilla method. So why are you going off piece in an area that is just another layer of complexity? If you want to build a business, if you. Want to just manage the risks that building a business entails, and as I mentioned before, create enterprise value in your business. I'm not sure these things stack up. So again, the story rumbles on. So what do you who is who is next before
Andy Hart:you just before you chip in, Carl? Do you regret that decision, Alan, or are you pleased that you have this clean business that hasn't had no. I'm I'm I'm really
Alan Smith:pleased. I don't. I mean, we may have lost some revenue over the years, but where we are right now in terms of as I two key apart from everything else, the two key things I mentioned last time are PI insurance. We just tick all the boxes. No, and as and when, if I ever do some sort of future transaction, then I'm not worried about a due diligence accountant or compliance specialist lifting the lid in our business and say you sold you know 120 of these products, which are which at the time seem to be okay, but are now looking pretty toxic. If all the big firms in the UK are washing their hands off them now, so it just yeah, it feels better from my viewpoint. Carl, Carl's got a different view, I think.
Carl Widger:I don't, I don't necessarily. Nick was first up.
Nick Lincoln:Thank you. Just want to, you kind of alluded to it, Alan. There is quite, and I want to just sort of underline it and emphasize the point. And we don't know if the FCA listens to this. You know, our egos would like to think that someone maybe the FCA does listen to this. But if they do, I don't think they'd be unhappy with us saying what we're talking about with these products and what I'm about to say, which is to amplify your point, Alan. If you're a younger advisor, steer clear of this rubbish. Do not be tempted in by the shiny sales patter. Steer absolutely clear of it. It does not mean you're forfeiting your independent status or any of that other garbage. You don't have to sell every product or tax wrapper under the sun to evidence your independence. I cannot say how happy I am that I've never given regulated advice around these products, and I can only imagine the absolute agony that, for what the sake of a few 1000 pounds upfront fee or what have you. That's that's with you for the rest of your days, and the P the PI thing I own would would give me the the sweats every year. So younger advisors steer clear of this rubbish and the stuff that Rachel Reeves did with the budget, decreasing the tax voucher rebate that you got on certainly VCTs down to 20% I mean that market, I I don't know. That's that's got to be dying on its legs. That's all I was going to say. So Carl.
Carl Widger:Yeah. Look, the the first point is exactly that. If we can have any impact here at all, if we can influence some of the younger folks coming through to avoid this stuff, then I think if that's the only impact we have, well, then that will make all of this very worthwhile. But I don't agree with Andy's point. Or certainly, the Irish experience would be that an awful lot of the one-man, two-man, three-man firms got involved in the likes of the Solar 20 Ones that I've spoken about before. So it wasn't the larger firms; it was the smaller firms. That's just the Irish experience, and perhaps the Andy. What are you waving at me for?
Andy Hart:Someone hears a noise again. I don't know if it's your mic card, but
Carl Widger:anyway. Yeah, the the last point I was going to make was that the the larger firms, I think are all leaning towards written investment philosophies, and then sticking their sales teams towards that. That's certainly my experience. Yeah, I think
Alan Smith:that's the direction of travel that everyone's going. Really, you've got. I think actually reflecting back on it, why we didn't get involved in these things when early days we we did create a documented like investment philosophy. This is what we believe in. Here's the evidence that supports it. And we looked at all the other products, not maybe not every single one. And if we couldn't come up with some sort of justifiable mythology that we could later rely on in court, as they say, then we had to. And it's it's just far easier then going forward. We just don't do it. Someone says, "Oh, this client wants to do it. Well, we we always refer back, and we still do this to this day. With when people want all sorts of crazy hedge funds and God knows what else, you say, "Well, let's go back to this. We called it the investment Bible, and I think whether you have to, you don't necessarily have to do that, but certainly at scale, and and your large organization car will, whether it has it now or in the future, you will have your core investment thesis, philosophy, and there's be an audit trail to support that. The reasons you've arrived at that. Actually, to be fair, I think you've got a good point as well, Carl. Yes, the big firms here are now catching up, and of course they have got exposure because they've got 1000s of advisors, but there are plenty of small firms that are all over this historically have have been doing it. Whether they saw that as their advantage as a smaller business to give clients access to some of these tax products, maybe. But yeah, it's not. It's certainly not restricted to the very big firms. That's for sure.
Carl Widger:Yeah, and and I think. Like, look, the the the point really here is that what's happened in the past has happened in the past, but it's it's what what does progress look like? What does the future look like? And it's for me, well, for all of us here, it's an evidence based philosophy. So, but have your philosophy, write it down, and stick to it, and that's what will help you.
Unknown:Okay, absolutely.
Nick Lincoln:Okay, right. Yeah, yeah. I mean, it's just another bad news story. I wish I wish we could bring more good news stories. Maybe now the summer's behind us, and we're we're getting into a new cycle. There'll be some better news coming out. Right now, Wads, you've got a new acronym, so we haven't got drop for it yet. But plow on.
Carl Widger:You're going to it. You're going to be hearing an awful lot about this. So this is our new savings and investment account, SIA. So the finer details will be announced at the budget in October, but they have come out with kind of a paper with the kind of more general details as to how this is going to work. So to try get the 170 billion off household deposits and into creating an investment kind of mindset amongst the Irish, and hopefully that will create generational wealth into the future. So there's there's a kind of a little bit of a cross. It's some of it some of it is going to be like the ISA that you guys have, and then some of it is going to be like the Swedish ISK account, so there will be a maximum annual limit. We just don't know what it is yet. There won't be a minimum. There will be an amount of gain that you can make every year without any tax, and then any gain after that will have a lower amount. The crazy deemed disposal that we have every eight years is not going to count towards these accounts. Now, whilst that's a very positive thing, they had promised that they were going to remove that, or there was a lot of talk from the government that they were going to remove it for normal accounts, and now they're saying that we'll have a look at that next year, which is a total and utter cop out. Like, so on the small, really small accounts that we're going to introduce, we'll have none of that. But on the existing ones, Jesus don't know. We haven't really looked at that. We haven't had enough time. You couldn't make this shit up. They aren't. They are going to allow shares and bonds and ETFs and all that kind of stuff, but you can't invest in crypto or unregulated products. But then, at the end of the article, I read this line: "But we'll probably be able to invest in Irish startups. So this is like, come on, guys! It's like either the standard regulated stuff or it's not. But you can't go standard regulated stuff can't have crypto, but look, we'll we'll invest in our own. You just for me that makes no sense at all. There's going to be no holding hold minimum hold period, no lock-ins, all this kind of stuff. So look, broadly speaking, I would welcome it, but there's there's a lot of stuff to be ironed out. Like for for example, if there there's no deemed disposal in this, and you do have it on existing stuff, well, are you allowed transfer existing funds into this scheme? Because then that's what you'll just do year on year up to your max limit, and you'll then do that for everyone in your family. So, but these are the unintended consequences, and it God, it didn't take a genius to figure out that. Oh yeah, sure, that's just what we'll do there. But maybe they'll say you're not allowed to put lump sums in. You have to pay it from savings. I don't know. Oh, it can't go on deposit as well, which at least that's encouraging. So, so some lots of really encouraging stuff, but like all of these things, you know, the unintended consequences. Well, we'll only see them as this is operational after a year or so. But very encouraging, I would say.
Alan Smith:That's good. So instead of the ISA, the ISA we've got, you've got the SIA. Yeah, and
Carl Widger:to read
Alan Smith:letters around,
Carl Widger:and to really confuse it, right? We have the SIA. We used to have the SSIA, and I think it was the Special Savings Investment Account.
Nick Lincoln:My God,
Carl Widger:yeah, and it was partially to blame for the for the Irish experience in the financial crisis because what happened was they had a five-year maturity date? The government topped up your every 100 euros by 25% Right? Guess when they all matured. Yeah, just in time, 2006. So all that money came out. Everyone loaded in, and then it went. Ooh, yeah, that's that's just too much. We have to crash from there. I'm afraid, so that's why there is no lock-in period and no kind of time frames and all that kind of stuff, because all that to say swell the coffers and then it all came into the market at the same time.
Alan Smith:The the UK ISA certain historically and its predecessor Nicholas, the Pep.
Andy Hart:Yeah,
Alan Smith:personal equity plan. That that has been a complete success story in the in in the UK. The amount of people that are now ISA millionaires because they just you know between a couple they just maxed out every year over 10 or 20 years. They've now sitting a north of a million pounds in a completely tax exempt account. They can take income from it. They can do any number of different things. Really, really smart thing. Of course, governments, being governments over the years, they've tweaked it and dabbled with it and created multiple different versions of it. And now they've they've got this other thing without going to. We talked about it before about you know cash holding cash in it and not holding cash and over certain ages and under certain ages and all that sort of thing. So it's adding layers of complexity completely unnecessarily. But as a as a savings product for the average person, they are they're brilliant, really good. But this is this is like
Carl Widger:the the key phrase here though is that this is an investing product, not a saving. Well, sorry, I meant I meant invest. You could do you could do
Alan Smith:either. Yeah. But
Carl Widger:but the other thing the the other the other important point here are not important but interesting point, and you guys have mentioned this before that the ISA was kind of slow to take off, wasn't it? So like, so the the what will be really important here is that we stick with this and that if we make tweaks, we make them for for for positive reasons, and that we give this the time that is needed to allow people come on a journey because that's exactly I think what will happen here. So you know, if in two years' time this isn't like you know we're not smashing it out of the park in terms of the amount of people that are doing it, that's not the time to ditch it. I think we do have to look at the UK experience here, and I think didn't you say Nick before that did Gordon Brown make some change or someone made some change that kind of that I don't know who it was. That that kind of turned things around and started making them a lot more attractive. So look, maybe tweaks like that are. So we'll increase the
Andy Hart:limit from 12 to 21 day, and that was the biggest news we've had in the ice again.
Carl Widger:Okay,
Andy Hart:sorry, Carl. In reality, there
Nick Lincoln:might be George Osborne. Yeah, I mean, the Peps were launched in 1986, and so we're talking here. That's a 40-year gestation period to have this overnight success. So you've got to you just got to let it lie, basically. And as you say, not well. And as Alan said, the trouble with our eyes for now is it was a beautiful, clean, easy to understand product. It's now got a host of siblings and bastard siblings and adopted siblings, you know,
Carl Widger:yeah,
Nick Lincoln:and it's complicated. And now the changes that Rachel Reed's brought into the cash officer, which, by the way, are unbelievably complex for a relatively straightforward investment. So just yeah, Irish Irish regulators, Irish finance ministers. There's your baby, feed it, walk away, leave it alone, come back in 40 years. Do not tamper with it, and that sounds wrong. Don't tamper with babies. Full stop. That's bad advice. Just don't do it. But you get my drift, right?
Andy Hart:Yeah. So, well, in 1986, Nick, you were you were about 40, so I appreciate you remember the pet being launched very well. 14,
Nick Lincoln:yeah, yeah.
Andy Hart:Carl, Carl. In reality, let's say a client. Fast forward. This is introduced. The client comes to you. Super simple. They can't do pensions for whatever reason. They've got 50 grand to invest. You now need to consider the
three options:the SIA, the unit trust, and the other weird thing that does the tax every eight years. Is that a platform's going to be ready for this, or or is this all easy stuff?
Carl Widger:Well, good. Yeah, very good point. Because that's why they came out with the paper in advance of the budget. Because what was happening was the providers were saying we ain't going to be ready if you don't give us some of the detail. We can't create the products to be ready. So I guess yes is the answer, but based on on what we've seen thus far, Andy, I can't see any or many cases whereby you wouldn't be maxing this out first and foremost before. Right. So this is
Andy Hart:the the first bucket to be filled. Then you look at the other ones. Right. I think so.
Carl Widger:But like, there might
Andy Hart:in are going to be a problem. You can't transfer a million quid in and then benefit from all this. No, there
Carl Widger:is there is going to be maximum annual limits that you're that you're allowed to. Now, look, will there be cases whereby, for example, maybe a pension might be better because you get the full tire? Yeah, yeah,
Alan Smith:yeah. I
Carl Widger:don't know. I don't know. Yeah, of course. I, I,
Andy Hart:I, yeah. I avoided that point, saying for pensions or whatever. Yeah, they can't do 50 grand. So this will be the first bucket, and then you consider the other stuff, and then and then you might filter it from the other buckets into this bucket every year, like we do bed and ices. You'll be doing bed and SIA's probably. Okay. I
Carl Widger:can't see any reason why you wouldn't be doing. Okay, fine. Okay, it wouldn't make no sense. Listen,
Nick Lincoln:that I can see Carl's eyes getting that panic look there as you were getting to get these games technical.
Unknown:No, no, I defer
Alan Smith:to my team.
Carl Widger:No, I am all over this. The the detail isn't out there yet. So that that they have they've been there's been a lot of criticism about the lack of detail around this kind of stuff, because we have to get clients ready for that. Do you know? Like, if if tell us what the limit is, so that you know, and if then if a client has him himself, his wife, and three kids, well, then we have to get ready for five of them, or start talking to our clients about that. So there's been a lot of criticism around, you know, that. If
Andy Hart:you had to hazard a guess, Carl, give me a number. How many 1000s of euros do you think this is going to be annual limit of the 20,000 UK?
Carl Widger:I I would say 20,000 as well.
Andy Hart:Okay,
Carl Widger:that's but that's a guess. Nobody knows that. Of course, yeah, totally understand. Okay,
Andy Hart:yeah,
Nick Lincoln:that was interesting. Thank you. So, okay, we've had IC millionaires. There are other millionaires.
Andy Hart:Yes, this is an article I came across. Did you come across this, Smithy? I'm all over it. HMRC have released their 2024 to 2025 tax data on crypto capital gains. There was 240 crypto millionaires, but that means they had an over a million gain, so they're likely millionaires, but we don't know their sort of net worth position. But anyway, it's just wording. Yes, there's a whole host of information on this. 240 people reported more than 1 million in capital gains from crypto assets in 2024, 2025, accounted for 717 million of crypto assets gains between them, and then it goes on to say 17,600 individuals made gains of 1.3 8 billion, and there's a whole other host of information in there. It doesn't say about the losses, which I'd be very intrigued about. It's interesting that the reason why gambling winnings in the UK are not taxed is because they don't allow people to offset their losses against it. So the that that's basically why gambling winnings are untaxed because there'll be far more losses claimed than gains paid. But in the crypto space, they've deemed the crypto losses are acceptable. So what I'm saying is, we don't know how the data is going to pan out long term. Is the revenue going to lose more money because more losses are going to be offset versus are they going to gain more by the the gains being registered? So we will see. Anyway, if you're into this sort of stuff, there's a whole host of information, and it's issued and published on the government website, which is quite interesting. Carl, over to you.
Carl Widger:Is 200 is sorry, Alan. Go on.
Andy Hart:240. Yep.
Carl Widger:240. Is 240 not very very low? Did you did you guys think that was sorry?
Andy Hart:240 individuals have locked in a gain of over a million pounds for that tax year, Carl. 240. So in other words,
Alan Smith:they have they have created a capital gains event. They've sold
Andy Hart:event
Alan Smith:right. So people have registered
Andy Hart:a gain of over a million and paid the tax according. Yeah, and and
Alan Smith:I think this is this is the the point, and they've declared it and paid tax, paid capital gains tax on it. So yeah, the number is relatively. But the losses,
Andy Hart:if people have got losses in their crypto assets, they can offset that for future gains in the future, which a lot of people will have. I'm assuming, and also it says that the the the main cryptocurrencies not going to be
a surprise here:Bitcoin, Ethereum, and Dogecoin. So that was locking in gains of Dogecoin, and also
Alan Smith:since 18. I must have met. I must have
Carl Widger:met at least half of those guys said they'd made millions out of crypto. Yeah, I've been facetious, but no, but they haven't sold
Alan Smith:Carl. They still, they still, they're sitting on their huge, huge gains
Andy Hart:in gain.
Carl Widger:Yeah.
Nick Lincoln:Okay. Hang on,
Alan Smith:just want to quickly see. Who's
Andy Hart:on the list, Alan? I didn't didn't see your name. I'm sold. Never
Alan Smith:sell. Never sell. Never
Andy Hart:sell. What are they called? Hoddle.
Alan Smith:Hoddle. Buy and hoddle forever. There's lots of stuff going on with tax, and it's interesting that HMRC in the UK is now beginning to sort of upgrade. As are the FCA. By the way, there's some new regulations coming in in the UK later this year on on crypto. Just to say that those people who do actively trade crypto, and there are quite a lot of them, you know, and it's not just Bitcoin; all the other coins that they do, and they sort of buy and sell the challenge. And they do it across multiple different platforms. They might even do it kind of on chain through a private wallet, which is not on any platform. It's a mess of complexity in reporting. I've been in a couple of conversations recently, which said people. I have to say, you know, anecdotally, people I might have bumped bumped into along the way weren't anticipating disclosing any of this stuff. Their view is that this is a crypto asset. This is nothing to do with mainstream money. From what I'm hearing, the like the regulatory and tax reporting net is really tightening. All these various sort of institutions and bodies are beginning to report to each other now. And if you've been doing a lot of trading, buying and selling, and if you're sitting on on gains, and in the UK you have got potentially a capital gains tax liability. You're right, Andy. You can offset losses, and it's a it's a mess to try. If you if you were literally actively trading as some of them are doing, like 20 trades a day, you know, in and out. That's for, and you've got to report on that for the last 12 months. Any, if anyone who's remotely in that world or has got clients, and a few of us have got clients that are, you know, quite proactive about crypto and and they buy and they sell. There's a fantastic piece of software called. Recap.io. I spoke with Dan, the founder, the other day. Check out Recap R E C A P. io, and if you know, if for the for the small number number of people that we know, if you're active in that world for for tax reporting that knows all the various trades that you've done, that would be a helpful resource for those people. Sorry,
Andy Hart:just a couple of final points on this one. Another article referring to the same information that the Revenue have released. HMRC sends warning letters to 81,000 crypto asset investors that it thinks might have underpaid taxes. So they've got inside 81,000 people that are on various trading platforms. That the platforms need to disclose the revenue. So that is interesting. Just the final point on this. I'm sure you probably came across it, Alan. But HL Hargreaves Lansdown.
Alan Smith:Yep, I did.
Andy Hart:Have opened up physical Bitcoin ETNs. They were one of the larger investment platforms that was reluctant to offer these on their platform, they have now succumbed to the pressure, as it were, and they are selling bucket loads of Bitcoin ETNs now directly on the Hargreez Lansdown platform. You need to fill in a short questionnaire to prove that you are
Carl Widger:a professional investor
Andy Hart:financially insane and don't mind losing all of your money, and then you click a few yes and no boxes and move a few sliders. Not that I've done it, and then you get through the gate. Yeah, they were they were
Alan Smith:the ones who very publicly disclosed that Bitcoin's not a real asset. Google couldn't possibly allow our clients to access it, and now they've shifted. So funny that's never
Carl Widger:say never. Yeah, even I might start buying it someday.
Alan Smith:You bloody should.
Nick Lincoln:Well, they're going with the money. I think it's a better investment than it was a year ago. Right, moving on to the next point. Have we done crypto half hour? Good. So, storyteller AI. Yeah, again, this is this is just
Alan Smith:this is just another shout out. When I come across things which I think are interesting and useful resources for our audience, yeah, it is. When you know what what immediately comes after crypto conversations on this podcast, we have to go back to AI, don't we? They're the they're the only games in town. Bitcoin and AI.
Nick Lincoln:Games is the right games is the right word to use. Yeah,
Alan Smith:yeah, wizards and clouds, all that sort of stuff, Nick. Wizards and clouds. clouds. Clearly, there is no shortage of interest in artificial intelligence and how it applies to financial planning companies, and people are getting sort of more and more involved with it, and getting engaged with it, and trying and testing a bunch of different sort of apps and services. And I think you can begin to get a little bit complex. There are issues around, you know, data and security and a bunch, and and and maybe you've tried two or three different applications, AI applications, but they don't necessarily speak to each other, and it's a bit of a bit of an issue. I think, as you know, I've mentioned before, we're doing quite a lot of work internally at our firm on this, but for those who aren't or don't or don't have maybe the resources or whatever, I've had a conversation with a guy called Philip Teal. Excellent, really brilliant. He is, I would say, he's an advisor slash consultant, not a financial advisor. He's an AI specialist. Really, really nice guy, and he's worked with a number of firms that we all know so far. And I mentioned to him, we jumped on a call last week, and I mentioned that I would give him a shout out because if you are one of those firms who's still kind of early stage dabbling, and and really want to make sure you've got a structured, thoughtful process about how you're going to implement and deploy AI in your business, what you're trying to achieve over what time and what order. I think this is one of the ones where it makes sense to hire an external expert. So again, link to his information in the show notes. Best way
contacting:he's got his website. Either go direct to him or connect with him on LinkedIn. But Philip Teal is a useful resource for lots of advisors. I would suggest that was it.
Nick Lincoln:Okay, sticking with you, Smithy.
Andy Hart:I think that's really useful, Smithy. He's also got a decent book I've just seen on Amazon, "The Consolidation Wave: How Advisors Can Thrive in the AI AI Transition. That's like quite a good book indeed. I've read it.
Alan Smith:I've read it. It's good. Good. Yeah, it's good. Worth. It's worth reading. It's you know. It's it's one of the few people who in books
Andy Hart:you just you just tell AI to summarize it in a paragraph. No, no, no. What's
Alan Smith:the point of doing that? Well, I do that. I did that with your book. It didn't. It just said summary. Same old shit. I
Andy Hart:go with equities. Yeah. Avoid all the other shit.
Alan Smith:Yeah, it's nice for somebody who's who knows at the intersection of our world of financial planning and AI. Not an AI expert doesn't know much about us, or a financial planning expert doesn't know much about AI. He operates at that intersection. So that's that. And whilst I'm giving kind of shout out, so hopefully trying to share some useful resources. Of the podcast, and I know he's helped a number of people in the past. But James Barden, who's a specialist recruiter, he pretty much exclusively deals with what we call full-fat financial planning firms. He doesn't work with consolidators and large, large sort of national brands, and he's helped. You know, we've always had quite a few advisors looking for a change of role, and we connected him with James. And last time I heard, he's placed at least four people in in other places in other companies where they can they can fulfill their ambition of delivering proper financial planning to clients. Had a chat with him last week as well, and just a couple of things. If anyone's listening to this to be aware of, he does have a number of people who've contacted him who I'd call very early stage in their financial planning career. So they haven't really sort of, you know, got their experience, built a book of clients, etc. There's quite a lot of those people, and as you said, they're quite difficult to place because, and we all know it, they are. It it takes you a few years before you're really valuable in our financial planning profession, you're still learning. You know, if you're a certain age and you've never really done the job before, yes, you want to be a financial planner, and you've got all the credentials and the ambition, and you've got the qualifications. But finding the right role for you in in certain types of companies, bearing in mind most of the companies we speak to are boutique, the smaller firms, they don't have the resources to bring in sort of 10 junior advisors every year, train them up for the following three years. So he just wanted me to mention that if there are firms out there who are open to recruiting younger, early stage financial planners and want to sort of take them on and build them up over time and kind of grow your own over a couple of over over a year or two, then do get in touch with James. He's he's got a lot of people looking for that role, and he doesn't have a ton of companies offering the role. So if you are one of those firms, then get in touch with James. And the other thing he mentioned to me, which was quite interesting, we have talked a lot in the past about M and A and transactions, and you know firms selling their businesses. And I think we spoke about it at Trap Live. There's a bit of reluctance amongst a lot of good financial planning firms to sell their business to what we call consolidators. We've heard a few stories about it. Not saying they're all bad, but James mentioned that there is an emerging new organization who are completely full-fat financial planning firm, and they have got the resources to make acquisitions, and they're really keen to make a number of acquisitions of proper financial planning firms because that's exactly what they deliver and have been doing it for many years. So again, if you're remotely in that world and you deliver that, and you and you're getting a little bit nervous about selling your company in the next year or two to a large national consolidator, reach out to James Barden. We've mentioned him in the past. Link on the link link check with him on LinkedIn, and he will point you in the right direction. Public service announcement ends here. Thank you.
Nick Lincoln:Okay, can you put a link to James, please, in the so-called show notes, Smithy? Because there's not one there.
Alan Smith:Yes,
Andy Hart:ultra. Okay, this is a bit of a theme today, then, isn't it? This is the FCA has potentially looked at considering easing the UK prediction market ban. There's a couple of companies in the US, Polymarket and Calshi. I'm on Polymarket quite a lot. Anyone else that go to Polymarket see what's going on, Smithy?
Alan Smith:Regularly, yeah, gives you a sense of what the world thinks of yeah
Andy Hart:what the world thinks and where things are going. Yeah, the main one is called Poly Market. If you're not aware of it, go to it. It's a predictions gambling platform. They're both worth 10s of billions, I think now. But the FCA still considers financial prediction markets as binary options, and they're banned for retail consumers nationwide. I didn't realize they had such a strong stance on it, but they may change their stance on this at some point down the line. So, prediction markets like Polymarket are still banned for retail customers in the UK. I don't know if they're in Ireland, Carl. Prediction markets is this like betting on politics, sort of. Yeah, poly market is the one of the biggest ones, and yeah, world events and stock prices and prediction markets. Pretty much anything,
Alan Smith:yeah.
Carl Widger:Yeah,
Andy Hart:pretty much anything.
Carl Widger:Holy God, if they approve that for investment, or fuck. Seriously, like that's just it might be
Andy Hart:coming. Yeah, but that's like
Alan Smith:look, this there's a whole there's a whole other thing there of particularly younger disenfranchised people that are just desperate to make some sort of return. Part of that, you know, some of these shit coins people have piled into because they went up 5,000% last year, and you know, getting a an eight or 10% compound return ain't going to be enough if you're 24 and you're literally struggling. So there, there is a huge market as there is for trading options, contracts for difference. There is a huge thing born by the economic climate in the last number of years. It's a real, it's a huge issue, and it needs to be carefully managed because people will end up, as you know, just blowing. Up, whatever modest means they've got right now, chances are they'll have even less.
Carl Widger:You're you're just going to have all. You're going all. You'll always have people who'll blow themselves up, Alan. So let let you know. There's a there's an element of let them, and there's an element of you know understanding that you got to work hard at something for a long period of time to
Nick Lincoln:yeah
Carl Widger:to make some money and in investing, you got to be patient. You know, this like instant gratification. This is pure
Andy Hart:gambling. This is pure gambling, Carl. They they pitch themselves as as gambling, and gambling and sports betting in the U.S. is having a huge resurgence because of various different legislation changes. And it's just getting started. They think this market in the US is going to be ginormous. It's definitely worth checking out Poly Market if you haven't already. Usually, the gambling and prediction markets are quite accurate. You know, I follow politics gambling. They're pretty. They're pretty off with. They're pretty off with the UK UK
Nick Lincoln:elections. UK elections they get wrong on a regular basis. No, but
Alan Smith:not these ones where there's money involved. Yeah, they do. They're not. Do they?
Andy Hart:Yeah, I think I think observing it over the past nick, I think they've been quite accurate.
Nick Lincoln:Okay, I think they haven't been UK policy. No,
Carl Widger:but you're thinking about the polls that people get paid for and all that. No, I should.
Nick Lincoln:I'm thinking about the poly market and what it says about UK elections. Right, let's move on to let's find a topical tidbit that's related to financial services and is relevant to our audience.
Andy Hart:Mainly, it's sport, Carl. Sport and politics. Is this, Carl? Is your point
Nick Lincoln:about retirement study? Is that relevant to financial services? Are we going to have a topical tidbit that's got some relevance to our listeners?
Carl Widger:Yes, Irish Life. Irish Life did a great study, fairly detailed study, on attitudes to retirement, and kind of I suppose the the setting of the scene of the report was the longevity of retirement. Like, do we understand, you know, that the the living to age 100 basically is how they're kind of framing it, right? And will people be running out of money? But there was a couple of interesting stats that came out of it. The average pension fund in Ireland is just over 100 grand.
Andy Hart:I think that's quite high, Carl.
Carl Widger:Is it?
Andy Hart:You think you think that's quite high? It's higher
Nick Lincoln:than here. It's higher
Andy Hart:than
Carl Widger:here. Is it?
Andy Hart:The average pension here, I think, is about 67,000 or something.
Carl Widger:Yeah. Well, it was. It's 108,000 to be precise. But sorry, is
Andy Hart:that when the person reaches retirement age, or the average across the board.
Carl Widger:Very good question. That's the average across the board.
Nick Lincoln:It's the average pension fund.
Carl Widger:Yeah, that's
Andy Hart:very high.
Carl Widger:Yeah. Okay. Yeah. So look, I suppose the the the the the report is talking about well, you know, people are desperately underfunding, and and then it was like the attitudes to well, how do you think we can fix this into the long term? Because clearly, if as an aging population we're going to be living for much longer, well, then the government coffers are going to be under massive strain. So how do we deal with all of that? And there's an awful lot of talk about flexible retirement and retirement not being what it was once, whereby you've stopped work on on a particular date and Friday
Andy Hart:and
Carl Widger:yeah, and that you kind of you work maybe at a lesser pace or whatever you know, and that that this is going to have to become the norm. That you know, not maybe this year or next, but over over the next decade or so, it's inevitable that this is going to be how the world, how the the kind of the the developed world moves towards seeing this go from retirement to kind of a third act. So it's just interesting. But also there's the usual because Irish Life conducted the story that the study that people who do get financial advice have much better outcomes, and like okay, we've all heard that before. You hear that at basically every pitch provider pitch that you go to, but but it is real at the same time. The challenge for me is how do we get that across without sounding exactly like that, like a sales pitch, but but the impact that we can have on people by preparing them into the long term is immense, you know. And and I think this report just kind of proves it. But I do think, you know, life changes, doesn't it? And and what was once you know 65 and you're out, it's all that's already changing, isn't it? You know, and a lot of people are looking to the early retirees are are looking maybe to go back in in consulting roles or whatever. But will we have people, you know, working into their 70s on on you know maybe three days a week or lesser hours during the day or something like that? I think that's just that's what's going to happen because we're going to live much, much longer. So we're all going to need a lot more money to fund those retirements. So interesting study, fair play to Irish life. Well done.
Alan Smith:Yeah, interesting. I posted something recently because there was a there was a similar-ish study in the UK earlier this year. Like I can't remember what they're called once any sort of retirement institute or something, and and they were talking about like two or three different levels of retirement. Like there was a, I don't know, it was like the top end. Like this is a really comfortable retirement. This is a kind of medium, and this is a you know struggling type of retirement. The figure they came up with, and I can't remember exactly what it is, but I mean, it didn't. You weren't like driving Ferraris and flying first class everywhere. The sort of top end one was. It was a two week Mediterranean holiday, a year something like a couple of city breaks, and a car. It was a Ford Fiesta, second hand Ford Fiesta every five years, so that's you know that's a nice retirement. Depends on your background, where you're coming from, but it's okay. So they concluded in order for you to support that sort of lifestyle, a couple would need again roughly this is the number, but it was 60 65,000 pounds a year factored in state pensions, and then you reverse engineer the numbers, and you realize to have that sort of lifestyle, which, as I say, is isn't like sort of lifestyles of the rich and famous. Hardly
Carl Widger:extravagant, yeah.
Alan Smith:You're going to need a million pounds, private, private or company pension. That's I posted that on LinkedIn, and of course, you get people piling in saying, "Well, that's so unrealistic. No one's going to have a million pounds. Most people, and that's true because majority will not. But it it tells you the extent of the challenge, though. If you want to have that type of lifestyle, and that that assumes again slightly different to your one, Carl, that you don't work again. There's no further income. You are retired at whatever age. You're going to live to the average life expectancy, and it's a couple, obviously. And the thing is, a single person is not, as we know, it's not half that amount. It's only it's like three quarters of the amount because basic basic costs are are fixed. But yeah, so to have a anywhere reasonable retirement, you're going to have a million quid.
Carl Widger:Yeah, and like life expectancy has gone up by a year in the last year in Ireland, I think, right? So so that's that's rapid, like, isn't it? And what's AI going to do for for life expectancy, and is that going to be for
Andy Hart:medicine stroke life expectancy? Yes.
Carl Widger:Yeah. Yes. And then you're talking about lifespan versus wealth span and health span, and like this is like mind-boggling stuff, but but very interesting. Found it very, very interesting. And talking of transitional,
Andy Hart:talking of transitional retirements, Nicholas, anything to share with us? You've been up to at the weekend?
Carl Widger:Yes. Very good segue. Yeah, like that. Well done. Well done. How did I get away with it? Well done, old job.
Nick Lincoln:Yeah, well done. Right. Well, yes. Just a good story. Penny is a TLP has just gone down to three and a half days a week from this academic year, which started last week. So she has Mondays off. So she's somewhere around Lincoln Lodge, causing havoc now. But the idea is that in the next year, two years, we're looking to relocate probably to a fine city called Norwich, the capital of Norfolk. So we're going. We're doing these weekend trips, these weekend trips to Norwich, just so we can get a sense of where the area is, and you know, just get the light of the land. And this time, we just come back from a weekend in Norwich, and Penny said, "Oh, we should know we should go up and speak to some estate agents. Some kind of partner is dying inside. I think we got right move. She goes,"No, no, let's forge a relationship with the estate agents. I think, "Okay, fine, we'll do that. We'll go out Saturday afternoon in Norwich, and we'll speak to some estate agents. So I printed off these crib sheets that I was going to give to the estate agents, just a bit of paper. This is who we are, my contact details. This is what we want the property. These are essentials for the property. This is the area we're looking in. This is our price range. And at the bottom of the page, I put some nice to haves, and there were cliched things like a southwesterly facing garden. Don't want any renovation work because I'm not up to it, and Penny's better than me, and she's still not that great. We want a modern esthetic, and ideally outbuildings that we can convert into a studio or something like that. And then the bottom of the the bottom of this nice to haves, I put this bullet point. Bearing in mind, I thought we were going to be talking to these people face to face, and they, you know, we would be human beings. I put this point in saying the final point that is nice to have is we must have neighbors who are tolerant of satanic rituals and regular sacrificial slaughter of animals. So I and we're going around Norwich with these bits of paper, and they don't staff the estate agents on on Saturdays. They're they're sharp. Yeah, could have told you. They just don't want the shopping foot forward. It was rammed with shoppers, Norwich. I guess. So I think we can go to Saville's. We go to Sowies, and they're knocking. And there's no one there, so I fold I fold these bits of paper and stick them through the letterbox of these estate agents, and now of course they're reading this cold. They don't know me from Adams. They're coming to office today. Today being a Monday, and they're reading. This guy looks. This is all very. And then wasn't even just
Alan Smith:imagine them arriving this morning. This is a nice new inquiry,
Nick Lincoln:Polly. This bit the bottom of our satanic rituals. I mean, you call him; he's a weirdo. So I got a call from Savills, from Polly, from Savills, to start before the recording, and she's sounding very pleasant but slightly nervous, and and and we're having this conversation, and I thought she she doesn't sound she sounds a bit flustered. So Polly, just just so you know, that final point on the sheet. About the neighbors who are tolerant of satanic rituals and regular sacrificial slaughter of animals. That was on there as a joke. I was supposed to be there with you and to sort of break the ice, not. And she goes, "Oh my God, thank God, because I was going to come to that because I was going to have to ask you about it. And she was she was absolutely deadly serious, thinking I was after someone with this satanic ritual. So, to the other estate agents in Norwich who are listening to this, it's a genuine. It's a genuine request. We are looking for property. We're not bothered about starting with it. That's a bonus if you get away with that up there. But not not doing it. So the property market in Norwich is pretty. You know, we were talking before we recorded about the property market, and we mentioned this in the show before. It is pretty static. It's certainly static in Norwich. It's not a big city. It's a small compact city. There's not a lot of stock, and things are just dead out there. So, yes, that's sorry. There's not a lot
Andy Hart:of stock, Nick, which means the prices will maintain themselves if they don't come on the market that often. Okay, so the so the prices will are stabilized as such because Norwich is coming up on all the lists of places to live and
Nick Lincoln:yeah, but people don't use unless they die. Once they're there, they tend to stay to they don't move on to somewhere else. It's a
Alan Smith:retirement town, isn't it? Hence, hence the link.
Carl Widger:Why would Norwich be famous? The
Nick Lincoln:university is bustling. It was done on Saturday. It was absolutely rammed, full of hen parties. But
Alan Smith:yeah, what about
Andy Hart:Zelia Smith?
Alan Smith:Aha!
Andy Hart:Let's
Nick Lincoln:yeah,
Alan Smith:yeah. Nick is the Alan Partridge of financial planning.
Nick Lincoln:My brother says I'm Alan. I'm morphing into Alan Partridge anyway, so there we go. Lynn, Lynn, don't do that. Right, so Dan, Dan, you're a mentalist. Right after Alan Partridge five minutes. So that's my story anyway. So I do apologize. What does that got to do with financial planning? Yeah, I am a bonafide inquiry. Yeah,
Andy Hart:what's that got to do in front of the transition into something? Well, listen,
Nick Lincoln:guys, listen. In all seriousness, we blabbered on about loads of stuff that wasn't necessarily relevant to our core.
Carl Widger:All right, but it's okay for you to do it.
Nick Lincoln:53 minutes in, and we still got to do a meat of potatoes and everything else. So, can we quickly, quickly do cyber security for the love of Christ! If you mention crypto AI or bloody poly market in this, I'm going to scream. Go.
Alan Smith:Let me ask you a question, Mister.
Andy Hart:Oh, sorry, Nick. It's my point. Sorry.
Nick Lincoln:No, yes, mate. No. Also, oh yeah, you're gone. We got two. Sorry, my friend. Go on. Yeah, plan with your. This is this is
Andy Hart:following on from it again. I don't know what Nick and Alan think, but I think the changes to pensions in 2027 are going to be the biggest change I've ever experienced in my career. I could be wrong, don't get me wrong, but the planning is going to be so unique to each individual. It's going to be unbelievable, and we don't know exactly how we're going to proceed. We don't know how much the the tax situation is going to be dictating the state of play, anyway. So, 2027 is probably going to be our Olympics year for financial planners on the front line here in the UK. Anyway, so following on from that, Voyant users, Voyant have introduced a new change where they allow maximum withdrawals from pensions in the basic and personal allowance band. Doesn't sound that exciting, but
Carl Widger:right
Andy Hart:modeling going forward. If you're not modeling, you know, sketching out everything, full fat financial planning with clients, especially advising them the transition to retirement and all their spending patterns and gifting the money down. I mean, how how else can you possibly do it? Anyway, so there's been a a good tweak and change that's been added into the Voyant suite of financial forecasting software. Nicholas,
Nick Lincoln:as as as other brands, another brand says the best just got better. I mean, Voyant has done a series of updates recently, some which I'm thinking that's just bloody window dressing. But this is a this is really this is this is this is this is good because I'm sure you've been modeling and Voyant doing this as a sort of work around doing it, and I have been. But this just does it all the work for you, and just says, okay, but cap your income,
Alan Smith:yeah, cap your income at 50
Nick Lincoln:270, and just so you pay better to pay tax 20% on it than than your heirs pay inheritance tax at 40% and then tax if they inherit after you've gone off age of 75,
Carl Widger:yeah,
Nick Lincoln:and all these other arcane bullshit rules and ages that mean nothing, right? Cybersecurity,
Alan Smith:Alan. Right, let me open by asking you all a question. If you take this call, as I did last week, from a really good prospective client, really good fit for us, switched on guy, and went through the whole thing, blah blah blah, and he said, one more question, can you tell me about your cybersecurity protections? He said. "I'm guessing, based on when we described the service that we deliver, he said,"You're going to know more information about me and my family than anyone else in terms of my accountant, my lawyer, and you're going to know everything. He said, "So what have you got in place that protects you from all this stuff that we know? These sort of bad actors in the on the internet, cybersecurity, AI deep deep fakes that we've talked about a little bit in the past. What's your story, Nick? Nick, you get a new prospective client. He asked that to you. What is your answer? Seriously, not dicking around.
Nick Lincoln:Yeah, I'd I'd say we do two factual things. Education for everything. Next.
Alan Smith:So, so how are you protecting the data that's held on your server? I
Andy Hart:actually think it's it's an unanswerable question, really, Alan. Yeah, so it's it's an AI question.
Nick Lincoln:It's an AI question. How would
Andy Hart:you answer it then?
Alan Smith:Well, I told him about exclusively. Well, I told him that we've got the most robust security we possibly can have because I know that we've had a whole. We spent so much. Yeah, but wasn't waiting. That's not telling
Nick Lincoln:you anything. That's just. I can't remember because I don't know the actual technical things.
Alan Smith:But I had a meeting with Shereen this morning, or talked to her about it, and she says, "Yeah, it's all documented. We've got a cybersecurity policy. We've got blah, a whole lot of stuff. We train our staff. Everybody's got a pass. The issues of
Andy Hart:cyber security are usually human error. Yeah, which is a very hard thing to try and protect against.
Alan Smith:Well, what I do know is what I do know is from our the people who support us is that our servers and systems are being attacked every day, dozens of times a day through China, Russia, everywhere else. People trying to access our client data, and we get reports on that. And it's it is a I've always said it is a massive, massive issue, and as I said to him, we do take it seriously because the reputational damage that we do to our firm if our data gets hacked and our client bank account. Or oh no, I made the point that none of us have got client assets. You know, you can't steal money, but you can steal data if you know what you're doing. And look, people get into the Pentagon, the White House, all the other big companies, but I think so. This is my recommendation on all this is for all of us to have. I don't know. It could be one page. We've got a quite detailed explanation, such that should anything untoward beyond our control, we can say, well, we've done absolutely everything we possibly can.
Carl Widger:Yeah, have done. And indeed, if a client ever,
Alan Smith:I've now again, like I often do, it's like compliance things. I'm turning this around, saying this is a proactive. We can go in the front foot sometimes with clients to say because we are doing it, doing absolutely everything. It costs us a lot of money and a lot of resource. Doing everything we possibly can. I hope that's reassuring for you, mr. and mrs. Client. So that's quite an interesting thing.
Carl Widger:Yeah, and therefore, Alan, your cybersecurity policy should be way more than one page, and it's not. Well, I'm just saying. I'm looking at Nick Lincoln. No, but yeah, but so so the answer to the question is, oh yeah, we have a written cybersecurity policy. Let me share that with you and make sure it's a nice document. We've talked about your terms of business. You know that it should be a really nice, well put together, well thought out, and well presented document that you can give to your clients, and all of your policies should be presented thus to your clients. I would say,
Andy Hart:I think it should be a recurring theme within your firm. Anyone that I work with within my business and the wider team, I'm constantly reminding them that be constantly on the alert. Everyone's trying to steal your money. Never trust any text messages. Never trust any phone calls. Never trust anyone. If anything ever happens, looks a bit dodgy, you call me straight away. So it's the clients as well. So I think the human error is far more dangerous than having a policy or there's been a trip. I mean, I I subscribe to like a VPN. I get emails every single day saying your data has been breached here, been breached there. Need to check this site. Need to check that. It is scary. So, yeah, it's just reminding anyone that's part of the team that you know don't trust anyone and be super cautious about every interaction that comes through through your phone, through your from through your computer. So yeah, it's a it's scary. It does slightly keep me up at night, Alan. But yeah, yeah,
Alan Smith:but but as Carl says, document it if you haven't done so already.
Andy Hart:But then also reiterate it, verbalize it, discuss it in team meetings. Yeah,
Carl Widger:and I think that's probably I think the the documenting it is really important from a client's point of view to be able to answer that question. But Andy's point there is the is the most important one because it's a human will will you know just be tired one day or just go oh yeah whatever, and then that's where you'll have all your problems. So yeah, it has to be part of the culture of the business. Exactly, our team. Talking about this all the time.
Alan Smith:We have to take and pass a whole series of online tests to show that at least you know what you're talking about a bit, and you're not, and you, and they give you examples of phishing attacks and all these various multiple different attempts that there are, just so we're aware of it. I can see Nick getting a bit just on that,
Andy Hart:just on that final point. If anyone uses DocuSign, I know I do, Nicholas. Do you use DocuSign? I think DocuSign is one of the most you know I use DocuSign cloned businesses on the planet. So just be very much on the front foot with clients that you use DocuSign with. You say, look, if before I send you any DocuSign, I will let you know. I'll either send you a text message or an email.
Carl Widger:Yeah,
Andy Hart:I had a little bit of an issue with DocuSign with a client recently. I think something got picked up on her end that was a bit cloned and stuff. So DocuSign is superb. It is amazing. It's used every single day. Millions of people use it, but it is one of the most cloned sites on the internet. So you need to be a lot more on the front foot of using DocuSign with clients. Nicholas,
Nick Lincoln:yes, I mean the point you made about I'm a one man band, so I don't. The human thing is the weakest part in the link in terms of security. I don't have that unless I f up, and that's totally on me. So I do think I'm pretty much secure because I don't have that tired admin person who doesn't pay attention to an email and and just something that was wrong.
Andy Hart:Yeah.
Nick Lincoln:In in hindsight, was DAS, so I don't have that. But obviously, it's it's on me. But I would, yeah, it's it's it's a it's a very it's it's a long question to answer, really. Okay, so listen, we're over an hour in. We haven't even done the meat and potatoes, but let's move on to what many people call the meat and potatoes of episode 105. This is where we take a particular subject and give it a damn good thrashing. And the subject of this episode of the Real Advisor podcast and the Meat and Potatoes is of launching your own firm and going directly authorized. It's come up in various episodes. We interviewed people such as Matt at his firm recently. He's gone via the network route. Really good episode that was as well. Listen to that as well. He decided the network route was right for him and his business partner, and they're two super smart cookies, but you can still go DA. It's not as impossible as it might seem, but it's a hard slog. So we now now going to introduce a chap called Graham Foster, who has been through the DA routes. This is Graham's story. I hope you enjoy it, and after you listen to it, we'll we'll we'll chew the fat on it. Well, a very special guest on this episode of the Real Advisor podcast, T R A P Trap. It's a it's a friend of mine from way back when in this thing of hours, and one of the all round good guys in this thing of hours. A chap by the name of Graham Foster, known colloquially as Foz, although that always gives me the Willies because I always think of Financial Ombudsman Service Foz whenever we mention your name. Graham, thanks for coming on Trap. It's great to have you here. You're going to talk about a subject that is very close and very important to a lot of the Trappists who are listening on the show and thinking about going out on their own. But before we get to that, you handsome devil, tell the dear listeners and viewers a little bit about this man who sits and talks to them now. How did you get where you are?
Graham F:Well, no, thank you for having us on the podcast, Nick. It's always a pleasure. And yeah, how did I start in financial services? Well, I had hair when I started. I was a young buck, 24 years old. I was quite sad, oh really. I did a degree in financial services, if there was ever such a thing, at Bournemouth University. 1994, I graduated and became a graduate trainee at Scandia. So most people will know Scandia. It's now all mutual, but for some of the older advisors, you would have known them through Cows Week and the various marketing bits that they did. So, I used to work in the marketing team there. Did worked at their pension section, did all of their boring marketing material around drawdown pensions, and then progressed to wanting to work as a consultant and advisor, so left there. Worked in IFA world, became an administrator. What was used to be called a junior IFA, they're now called paraplanners. So became a para planner, supporting a number of consultants, and became an IFA when I was about 27 years old. So I started out doing a lot of group work, working for schemes like Hamleys, all these companies are now defunct. I think so. Virgin Megastores, Virgin Media, Virgin Balloon, Brasserie Blanc. I think is still going, and yeah. So I used to go in and I used to do a lot of pension presentations, and from that I started winning a lot of individual clients, and I decided that that was what I wanted to do. So I wanted to sort of help people change their lives, make important decisions, do financial planning. So I became a director in a lot of larger firms, and I used to manage teams, build teams, build businesses, as well as manage my own client banks. And I decided eight years ago that I had enough of that because there's always that issue of wanting to deal with the clients but always having that aspect of having to deal with people and managing people, managing expectations, managing partners, managing a business, and all I wanted to do was really become a better financial planner and also give my clients a better service. So what I did was that I decided to set up my own business. I was 48 years old, and then my hairline is probably just about the same as it is now when I started that. And I became an AR of another IFA practice of someone we know particularly well. So he was very kind and gave me an opportunity to become an AR of his business. And the idea at that time was that if that didn't work out in terms of me setting up my own business, moving clients, and doing the right thing, then it just provided an opportunity where I could help him, which I was very good at at that time, building businesses, larger IFA practices, and just making them better places to work for delivery of services for clients, but thankfully that worked out. I went DA or directly authorized. Pardon me, just two years ago now. It was quite a journey as a solo advisor, not as an advisor in a larger firm, which is where the FCA like is to be positioned. But it was it was a good journey to go through. A lot of people, there's a lot of noise around becoming directly authorized, and I think yeah, there is a lot of noise. But I think it's actually not a bad process in terms of getting you positioned in the right way to run your business as a sort of SMF 16 SMF 17 person, which is in terms of running the compliance and the money laundering, because at the end of the day, the financial conduct authority aren't really bothered about whether you're a good advisor and whether you're good with your clients. What they want to know is, as a solo advisor in my case, that you know I had the skill set and I was building a group of people around me that could assist me to be to become a good SMF 17 and SMF 16 person in the business, as well as looking after my clients.
Nick Lincoln:So, just going back a step. Then, by the way, I never made it to Cows Week. I mean, I would have loved it. It's got kind of legendary for its successes, I think, and I think I think even Old Mutual's gone now, isn't it? Isn't that Quilter? I think Scandia more. Yeah, Old Mutual is.
Graham F:Yeah, they all morph into. It's a bit like Aegon with Standard Life, isn't it? I think they morphed into Old Mutual, which then all merged into Quilter. But yeah, the Scandia days were the old good old days, I suppose. Many would refer to you know you did a 300 pound a month pension and you probably earned that 100 grand's worth of commission. It was pre RDR, so there was a lot of money floating around. So they could then sponsor boats and cows weeks and all sorts of things. But a very good firm, as in, you know, this is where the younger generation I do think miss out slightly, and that the big insurers were a great place for people to learn, and also a great a great place for people to learn the industry and the mechanics of the industry. And a lot of advisors, as you well know, have come through that. The stuff that Trap are doing online, you know, as in the separate services that you're doing, is brilliant. And I know people like Verve Group, various companies do training for advisors coming through, but in the old days, the insurers were the were the shining light. I suppose of bringing people like well you and me. I suppose I'm not sure if that's a good or bad thing.
Nick Lincoln:Okay, so yeah, well, it's a bygone age, isn't there? We could we can reminisce forever. In fact, we're meeting up for lunch shortly, and we'll probably remember a lot about that. But Fos, just so okay, so you were an AR with our mutual friend Ian. I won't give away his surname, but what prompted you to think I want to actually go out on my own now? What was that? What what led you to that quickly? What led to that point?
Graham F:Well, I was very lucky. I mean, Ian, as you well know, is a is a great human being, one of the one of the fellow good guys in our industry, and a good IFA. I'd spoken to him quite a lot about setting up my own business, and I think he thought there may be a sort of situation where the business is, if the business was successful, let's say, that we could merge the two businesses together. But clearly, when you're an AR of a of a separate business, the you can't run two separate businesses. You have to be aligned. You have to do this. You have to run the same investment process, the same admin process. For want of a better word, the FCA don't like to see any disparity between how the two businesses are running. And in a nutshell, what we had was that it was more a legacy, really, from my previous role, which is where I was a director and a partner of a large accountancy practice, we were outsourcing quite a lot of the investment to fund managers. So we were using sort of managed portfolios, as you would call them now, NPSs and everything else. But but in a way, Ian was running a completely different investment scenario, and from an FCA point of view, doing two completely different things wasn't ideal from a compliance point of view for his business, and also there was just the freedom of having a vision about what you wanted to live for your clients and how you wanted that to look like. Now we we were both very much on the same page with that, but but clearly, I just had a vision of what I wanted to do, and because I had, or he gave me the great opportunity of running my own business under his umbrella, it just meant that I had the confidence, I suppose, to then go right. This is what I want to do. This is how I want it to look, and I just felt when we did come to the conclusion that we we were not going to really work together. Going directly authorized rather than me becoming an AR of another business was the best route for me at the stage that Sky Blue Wealth was in at that time.
Nick Lincoln:And you never you never considered joining a network for the same reasons, I guess. I
Graham F:did well. Funny enough, I did look at best practice. I looked at a few of them. I mean, nothing against them. I thought, I thought they were good. I think you always need a plan B. Is if you're a good advisor, you've got your clients, you're sitting in a business, you've always got that opportunity where you want to set up your own business. You've always got to have a plan B, haven't you? And for want of a better phrase, yes, you're self-employed. Yes, you're part of a network, but. But really, with the with the network, my conclusion-it was only my conclusion. It just felt like a glorified employed position in terms of yes, they gave you the support around you. If you're not good at building the support around you, then clearly that's a good route. But if you wanted to get out of it, it just felt a bit like the Hotel California of financial planning because once you're in, you're not getting out.
Nick Lincoln:Interesting. We had Matt Abuzade on the show a few episodes ago, and he's a very smart cookie, as is his business partner Monique. And they they've left institutional fund management Vanguard to set up on their own as IFAs. So a massive jump, and they have gone down with with one of these modern these newer networks, and I believe they're with New Leaf. So there's New Leaf, and there's valid, not Valley, ultra valid path. Who I'm hearing good things about, but for some people, they're just you know the networks of a certain generation. We the networks can have a negative connotation. So you you you skewed that route, and you went directly authorized. So just talk me through the process and what the key takeaways were for you, and and the time it took,
Graham F:yeah. I mean, just before I go through that, you're you're right. A lot of the so I get quite a lot of advisors that come to me independently talking about whether they've been with St James's Place or whether they want to go directly authorized or whether they want to go around the networks. I think best practice were were very good when I saw them. I think they've they've they've had to. The only issue, of course, is that a lot of the networks get taken over. Best practice case have got taken over by Schroders, so all of a sudden you're in best practice, and all of a sudden you're now part Schroders. It was just for me at that time. It was just a bit of an uncomfortable place, but they do offer a great platform for people where they want to get going. You've just got to pay a percentage of your income for them to cover your compliance, AML, PI cover, and it just depends what that percentage is. And and if if if you're determined to go and do it on your own, like we have, then you know what's your exit strategy from that network. That's the key bit you've got to look at, I suppose. In terms of the key takeaways, well, clearly the FCA maybe it's just some of the older advisors where it took about three weeks to get authorized, do six forms, send in your CV and maybe a passport. They they decided that that process probably wasn't enough. So when you look at some of our peer group, some of the older advisors, the process actually wasn't that hard at all. I don't know how it was for you, Nick.
Nick Lincoln:Thanks for asking. 2008, it was it was okay. I don't remember a lot about it, to be honest with you. I used Simply Biz to help me. They were great at the time. I certainly know that it was easier in 2008 than it is now. I had to do a fair bit of form filling, but it wasn't. It it hasn't left any scars for us. I'm assuming can't be that difficult.
Graham F:Well, the the process is much longer now. I think the FCO become wiser to it. So first of all, I would just say it's a long process. It's a one year process. It takes a year, and there's quite a bit in terms of getting your your ducks in a row and getting things organized prior to that process. So, for example, when I first started going down the process of becoming directly authorized, we referred to me and earlier we sat in a room and I said, "Look, I don't really want to go into a network. I don't want to be an AR of another firm. I want to go directly authorized. And our conclusion was was that that would take about four months. It took over from that point. It took 18 months. So he had the patience of the same as did I, I think. So what I'm really saying is, prior to going or engaging with the FCA, you need to get your ducks in a row. So it is a lengthy process. There are there are various forms you have to do for the FCA where you have to pay a fee prior to them looking at all those applications. There's about 30 applications. You have to get your CVs done. You have to make sure your CPDs in place. You've got to make sure that you've got. You know, if you're an existing business, just make sure you've got a good set of accounts that are done already. If you've not got a business, just make sure you give yourself a good three month period to go through those forms because trying to balance that with your day to day dealing with clients, being in another firm, not telling that firm you're going to move, you've got to get on, you've got to get on and get those forms completed. And I would say getting all that together, and I use Simply Biz, I use Simply Biz to help me. It was 150 pounds a month. They were fantastic actually, but I just use them because the success rate I saw as an advisor doing it on your own was 35% whereas if you engage someone like Simply Biz or any other compliance, there's lots of them. There's loads of them around 360. There's loads of them, but I'm just sort of saying the success rate of engaging someone like that is is plus 75% So just for 150 quid a month, might cost you five or six grand. But I have to say, it was a great process that they helped me through.
Nick Lincoln:Yeah, yeah, that's that's to me that's priceless. Okay, interesting. Sorry, gone.
Graham F:Yeah, no. Secondly, I would say the takeaway is is you've got to have whether you're whether you've got your. Whether you've got your DA business set up, or you're a new advisor and you want to go ahead and do that, you've got to clearly have a business plan. Sounds obvious, but there are business plans, and there are business plans, aren't there? Then there are the business plans of I want to get 100 families in five years, but then you've got to do a spreadsheet to map that out. You've got to say, well, if I get 20 families a year in the first five years, let's say you've got to map out what level of income that's going to give you, whether that's initial income, regular income, you've also then got a cost into the business as a DA advisor what your various costs are, and that's a whole myriad of different things, isn't it? Whether that's compliance, whether that's your accounts, but if you've got an existing business, clearly you're at an advantage because you've you spent years, whether that's as an AR or or something or in the some other guys of actually being able to do that. But as a brand new advisor going into a DA environment, you've got to make sure you map that out over a five year period. The reason why I say that is that when you become DA or directly authorized, and I'm a solo advisor, I've got people that help me, and I outsource that. But the reality is, is that they go back to that business plan and they start asking you questions about the business plan three or four years later, or certainly post after you've been directly authorized. So you have to make sure that that is absolutely watertight. So that can't be done in a day. That has to be done over. You have to put a lot of thought into that. A lot of thought into that. So what I'm really saying is, it's not just doing the business plan and writing the business plan out. It's mapping out over a five-year period where you see the turnover of the business, where the net profit in the business is, where the capital adequacy is going to be, because you need, you know, they they want to make sure. All they want to make sure is, in terms of the FCA, is that you have sufficient capital within the business over a short period of time, and you need 20,000 pounds of liquid assets in the business. So they want to make sure that outside of your PI cover, that there is other assets in the business, and also both that you're watertight yourself financially if clients come for you if there is a mistake that you make. So it's all about risk to the business when they go direct. When they're talking to you about being directly authorized, they're concentrating on what is the risk that you pose to them if you make a mistake, and and is there sufficient assets to cover any liability that may be posed against the business and you personally? That's the key to it.
Nick Lincoln:Yeah, which which I think is absolutely right, and I think yeah, coming back to the point you made at the top, you know, it probably was way too easy 2030 years ago to to become a DAIFA, and like all these things, the barometer, the pendulum swings the. You know, remember pre the credit crunch. You know, if you had a pulse, you could get a you could get a no income mortgage, couldn't you? With with brands like Bank of Scotland, and that suddenly it's gone completely the other way. And now, you know, just just if the thing about getting a mortgage, if you if you're Joe Public, listen to this. Just use a mortgage broker. He or she is worth their weight in gold because it is not like it was 20 years ago, and it's similar to that. Absolutely.
Graham F:And the reason I say that as well is that when you do the business plan, the business plan clearly will then filter into the regular confirmations you're giving back to the FCO when you're directing. You
Nick Lincoln:can't escape. They're going to find out anyway through the RMAR returns, so
Graham F:and that's it. So when you're doing your reg data regular returns, it used to be three monthly. It's now six monthly. You've got to give them you've got to give them key information at that point, which is what are your liquid assets, what is your what is what is the cash in the business, what's the net profit, what's the revenue and what's the net asset and liability position?
Nick Lincoln:And what's the expected expected expenses over the next three months? You know, you take that's right.
Graham F:Yes. So all they're looking for is to say, well, let's say you've got a starting point. Let's say 20,000 pounds capital adequacy sitting in the business. They just want to make sure, based on the size of your business, that your capital adequacy position is in is improving, or the liquidity position of the business is improving to cover any kind of liability or risk. It's a massive thing. I'm just saying one of the main mistakes that I made when I set up the business was that I I set up directors' loans in the business. So you know where you've got the cost of setting up the business and various things, and you know those you the accountants will always tell you to take out directors' loans, but the problem is, of course, is that wherever your net profit position is, if you've got directors' loans which amount to the same amount as the net profit, well, there's no, there's nothing that the FCA can see to cover the capital adequacy. So you've got to be very careful, even at outset, if you're starting afresh, how you actually offset sort of part of your own costs when you set up the business? I'm just trying to I'm just trying to say that you know these are sort of key takeaways, and people don't think about them; they just think about the flowery environment of having the control, I suppose, of running their own business and obviously working with their. But there's a lot of ducks in a row you need to get together. But I think a simply biz or whoever agency you can go to will be able to highlight these things for you.
Nick Lincoln:Okay, I'm just conscious of time, and I would just say if you are thinking about going out DA, don't be put off by the reg data returns. You know that they are a thing unto themselves, and it's like entering a parallel universe. But when you do them for a number of times, you actually you can get through it, and I wouldn't let that stop you. One of the things I would
Graham F:say on the red on the red data returns is that if what you should try and do if if you think about you've got your financial year end, we all have a financial year end, but if you could somehow build in the application to start at the start of your financial year end, well, the start of your financial year, and then the one year process will sort of finish. Hopefully, at the end of your financial year end, it's just that if you're doing it in between, they're going to ask you a lot of different questions about the the sort of accounts within the business, and that just takes time. It's it's it's a real good takeaway. I'm just sort of saying that if you can somehow build the application and submit it to the FCA at the start of your financial year with the reg data returns, it just makes life easier in terms of how you're going to have to report this stuff back to the FCA. Okay,
Nick Lincoln:that's a that's a really good point. Okay, listen, I'm conscious of time, fella. Anything else you want to tell people who are considering going down this route? That you know, given the experience you've been through, the time it took, the fact you've been in IFA all these years, and you still had to go through all of these hoops, how would you, how would you, how would you summarize your experience? I would say, I
Graham F:think first of all, again on the investment side, there's a lot of noise around ethical investing. I don't, I don't let that put you off either. I think whichever whichever way you invest, you've just got to have a process. So, for example, if we're outsourcing, we've got to find a process of watching the watchers. How do we monitor their marketing material? What do they do? What's the ethical screening process? Look, they're just looking to see that you're aware of the risks that are attached to your business, because as I said at the start, they're not interested in you running the business; they're interested in how capable you are at being SMF 17, SMF 16. So you've got to make sure that you just get those ducks in a row, and you're very clear about the communication lines that you give to them. As I said before, I think if you the consumer duty is is a huge part of this, so I would say the biggest risk to anyone that's an AR is that I reckon as an AR a lot of the a lot of the networks will do the consumer duty bit for you. They're going to be asking you for who's your vulnerable clients, who, what's the spreadsheet, are they temporary vulnerabilities, are they not? I'm just saying, if you're directly authorized, you've got to be doing, or you've got to get yourself set up where you're prepared for things around, you know, the consumer duty aspects of the business, and that is, you know, for example, we had a massive conversation in one of my interviews about the clients that we bring into the business. So, for example, I was very clear that we had a minimum review fee that was six and a half 1000 pounds a year for for clients that we were working with. We had a minimum assets under management of fees that we were bringing in as well. Their their carry back to me was well, how do you deal with smaller clients as they come through to you? And that we were quite lucky in that on our website we gave free key guides to clients. So look, whoever uses this, I'm not quite sure, but we were just saying we were paying a fee for these key guides through tax briefs, and we just didn't ever chase clients. So it was our way of saying, yes, we do. We have a certain. We have to run a business, not a charity. We have to do it in a certain way, but ethically, we are aware that we can help other people by giving them free information through our website or through a newsletter or whichever way it is. So what I'm really saying is, is that yes, you can be very clear about what your strategy is, but you also have to think about the other end. You know, what are you ethically doing for clients that may never see you, and I know it sounds weird, but that's the kind of thing that they're going to ask you a lot of questions about.
Nick Lincoln:Oh my god! Oh my god! The
Graham F:the other thing as well is that they have as a solo advisor. I'm not sure how it works for larger firms, but they have a they have a group of people called the Early and High Growth Department. So with consumer duty, what I would say is go and it's free to do it as well. Become part of the consumer duty alliance. I don't know whether you've heard of it, Nick, or whether you've been part or whether you're part of it. But but but if I if if I was you, if I was going to go DA, I'd I'd I'd register. It's a free registration. The website's amazing. It's a really well. A lot
Nick Lincoln:of this is how you present yourself, isn't it? As you said, they want they want to see that you know what you should be doing, and even if you're not totally, maybe internally, totally convinced of everything that you're being told to do, you've got to show that you're you're aware of it, that you've internalized it, that your website reflects the the current regulatory. Themed as your, and that you're playing along with it, and you're on side with it, and I and I and you know I'm I'm being absolutely fair. The
Graham F:consistency of that is that when you when you have a compliance agency helping you as a directly authorized firm, we have simply biz. I think you you use Mark, don't you? You've got Mark.
Nick Lincoln:Yes.
Graham F:So whoever who's who's amazing as well. I'm just saying that when these guys come into your firm, they're going to have a 4850-point, agenda to go through things like money laundering, consumer duty, vulnerable clients, you know. And you've got to you've got to just sort of tick a box and say, well, these are things that we're doing. But the the preparation for the FCA directly authorized process is to get you to that place, which is a completely different place to just looking after your clients. So, as you say, they don't-they're very fair. I have to say, they are fair. They don't expect you to know the answer to every question. Yes, you have to do a huge amount of work in the interviews around, you know, the FCA handbooks, and they'll ask you a lot of questions about what you're doing and what different principles are, but again, if you engage the services as simply biz, they will get you organized. They will get you organized before the meetings to sort of prepare you as best you can for the sort of higher brow meetings, rather than just going, "Who are you? Where did you work? What are you trying to do? The one thing I would say though is that I can't reaffirm
it enough:is get your accounts organized. Make sure if you if you are not if you're not a business, you're an advisor that works as an employed or self-employed advisor. You want to become directly authorized. You need to make sure you've got a three to five year plan, and you've also got to be clear with the FCA, and they will ask these questions and ask for the contract about how clear it is about you being able to move those clients, say after a three month, six month, one year period. So even though you might think, yeah, they'll all move, or they may, in their world, they they're assuming your business is at zero. So you've got to have a clear line of communication about how that business is going to grow outside of you just moving your clients. That's that's probably the best bit of advice I could give,
Nick Lincoln:Foz. That's been absolutely amazing. We said we said we'd tie you down for 15 minutes. We're entering our 26th minute there, and we could talk for for a lot longer. And that's that's that's gold, dust fella. So that Trappist Graham Foster Fos, his firm is Sky Sky Blue Wealth Management. Great. I'm not going to put on the spot here, Graham, but you are a giver. So if you are thinking of going down the DA route, I'm sure you can borrow a couple of seconds of Graham's time down the line if you look him up on the internet. But don't take the piss out of his time because we're all busy people. Foz, that was absolutely fantastic. Hope you enjoyed that. Thank you for those nuggets. Really, really do appreciate it, and look forward to catching up with you in the flesh soon, my friend.
Graham F:Yeah, no, thank you, Nick. And yeah, look, if people do need help, people have reached out, and I have helped a few people. You got to remember, as I get older and the firm gets longer into the DO process, then the relevance of what we did becomes less and less, of course. But hopefully, the the information we gave you, or certainly to the listeners, was was a was of value.
Nick Lincoln:Brilliant stuff, brilliant stuff. Okay, my friend, take care.
Graham F:Yeah, you too, mate. We'll see you soon.
Nick Lincoln:Adios,
Graham F:adios.
Nick Lincoln:Well, we all know Graham, don't we? Sorry, the three of us know Graham. I'm not sure you've met him yet, Carl. But a good egg and a guy who's been in this thing of ours for for a long, long time. I think he's got a pretty much unimpeachable record. He's an impeccable record in terms of his his his financial advice and his career. He's he's he's been through the DA route, and I thought that's really interesting. The guy is that he's he's a he's a good talker, Graham, and I mean that in a nice way. He's a good communicator and he's a giver. Um, so if if you are thinking about going the DA route with him and you want to tap him up, think about it, but also bear in mind that he's got you know he's got time constraints as much as anybody else. So just don't don't be too over generous with your requests of his time, but I hope the listeners got something from that. I I thought the main thing for I got it from there were three things really. He's been in this business forever and still had to go through all these hoops despite having a track record evidence of him being a good advisor. So they don't care really about that. Whether you're new to the profession or been around for decades, the second thing was he really focused on the business plan and how important that is to the FCA. So if you're going the DA route, just really, really focus on your business plan and refine it and hone it and maybe get other people to challenge you. And I can't remember what the third point was now, but they're the two main points I got from it. I don't know who's going to go next on this one. I think we got storyteller.
Alan Smith:You never went on the Scandia Cows Week then that you mentioned, Nick. Didn't manage to like didn't get the invite.
Nick Lincoln:Successful back then was he? No, my God, I think I could have, could I could have gone actually about the about 2002. It was it was
Alan Smith:that was the this is when corporate hospitality was corporate. I didn't actually want to really
Nick Lincoln:go for whatever reason, but I mean it was it was sailing. Anyway, time is pressing on. So, what do you think of Graham's input into the show, storyteller?
Alan Smith:Shoosh, it was it was it was. We're an
Nick Lincoln:hour and a half in, boys. I'm, I'm serious. The other, the other
Alan Smith:thing. Yeah, but we need to give it. This is a really, really important subject. He mentioned the point again. This is where we are right now. That us, most of us, or nick. And Foz and me grew up in the big insurance company type, where the training he he was at Scandia Standard Life, Allied Dunbar, a lot of good training which doesn't really exist anymore. So it's this is why we've got these younger advisors without that same career path that that we enjoyed. I thought what he said quite interesting. His he did it as a stepping stone. He's directly authorized now, but he went down the AR pointed representative route with our mutual friend Ian. And I thought, ah, I hadn't really given a lot of attention to that in the past. That can be quite a useful stepping stone if you know somebody and they know you, and you you're happy to sort of tuck in under their regulatory umbrella, pay them something for the the privilege of doing that. I think that that's quite a an interesting new angle that I thought rather than going direct, or rather than going through the network type thing. Yeah, look, I I'm speaking to a number of younger advisors who are either currently going through this process or are seriously thinking about doing it, and it ain't easy. I mean, I listened to that and watched it, watched him speak, and you're right; he is very eloquent in describing what it is. And I thought, bloody hell, that is that is comp. If I was starting from scratch today, is so the thing is, you've got to be, you know, as a as a sole trader business, which is half the market. You've got to be a great financial planner, but you've got to be a regulatory expert as well, compliance person. Everything changed when the senior managers regime came in, and now we are judged. As a compliance person told me, we're all judged to the same level as the compliance officer at Barclays Bank. It's the same rules apply to any regulated business, and you've got to be pretty smart and switched on to be able to deliver that and prove that you know all the rules and regulations on an ongoing basis. So, I thought you know, hats off to him to Foz for achieving that. But it's God, it sounds like a huge leap to make. So I personally think I think we're lacking a couple of other options right now. I think the market will eventually create. Someone was talking to me the other day about you know Andy, you know Shopify. Shopify, and if you if you're selling products, Shopify do everything for you. Set you all up, create your website, create your sort of your landing page, your communications, etc. That we need something like that for people setting up in business, like a digitally created regulatory framework to get set up, and and that will come. Something like that will come because there's a huge demand for it. Anyway, I thought it was a really, really valuable conversation. Well done, Nick. It was great. Who's next?
Carl Widger:Yeah, I thought so as well. A couple of things I won't dwell on it, but a couple of things throughout the Simply Biz. Am I understanding this correctly? That they're kind of a compliance consultant and they go through the yeah. So the the stats that he said if you don't use a consultant, you'll get 35% chance of getting approved, as opposed to 75% if you get approved with Simply Biz.
Nick Lincoln:Just to cut in quickly there, I mean I I used Simply Biz back in 2008 when it was much easier, and so did Andy, and they were a godsend even back then when it was an easier process. Full stop. So I would definitely the investment he made in Simply Biz will pay Graham back multiple times going forward. Absolutely, I would I would get someone to like package your application for you. I'd be quite
Andy Hart:shocked if someone went directly without having a consultant, you know, in their court.
Carl Widger:Unfortunately for everybody thinking about this, Simply Biz have just doubled their prices. Having heard that interview with with Graham,
Nick Lincoln:it's still only worth it.
Carl Widger:But and he said there was 30 forms. I'm Nick. I'm like going, oh my Jesus Christ, I couldn't couldn't cope. But look, it's a significant barrier to entry. Is it a good thing or is it a bad thing? I don't know. Maybe somewhere in between is probably the probably the right amount of of hoops to get someone to jump through to who wants to go into it, but you know what I loved his business plan. When he spoke about his business plan, you know he's a real financial planner because he spoke about 20 families every year, and I just went. This man is there. If ever you want to really, really listen to the language of someone who cares deeply about his clients-it's that phrase alone. He did not talk about money. He did not talk about turnover. He did not talk about profitability. He thinks 20 families. So, best of luck to for continued success for this guy. I know he's very generous with his time. I would say he might have to filter out some of the amount of calls he's going to get after this, but
Nick Lincoln:yeah,
Carl Widger:great, great, great story. Fair play to him. Congrats. Okay,
Andy Hart:final point on this. Yeah, Foz is a class act. I've known him many years, done quite a bit of work with him. Obviously, been part of the Ideas Exchange for about 1015, years with him. If I had to put one advisor forward to go directly authorize and do it in as smooth a way as possible. I'd probably mention him. You know, he's like the poster boy for getting directly authorized. The fact that it took him 18 months is very, very humbling.
Nick Lincoln:Yeah,
Andy Hart:yeah. Nick and I would find it very challenging to go directly authorized. And Alan.
Nick Lincoln:And Alan.
Alan Smith:No, I find forget
Andy Hart:about him. He's not even in. He's not even in the mix. Even even even attempt, we'd give it a crack. We'd give it. I would not say. I wouldn't. I would not. No way. Based on why I
Alan Smith:heard that, no, I wouldn't. But you're
Andy Hart:right, Alan. The going AR with another firm is a good stepping stone for you to like be on your own, run your own business, work in your own time schedule. And he, I've spoke to him privately, and he said the FCA are very, very keen on this business plan thing, and they and they revisit it even once you get authorized. So they're going to go back to him in three months, back to him in six months. I mean, we've had quite a bit of interaction with the regulator, Nick, but they haven't pressed us again about our business plans.
Nick Lincoln:Don't talk it up just yet.
Alan Smith:As you said at the beginning, did you listen to this?
Andy Hart:I'm sure they do. Yeah, we're speaking open. Well, he was. He was.
Nick Lincoln:I mean, as as as as we talked about in the interview, you know, he says that you do the business plan, and then Graham's convinced they do they do look at your reg data returns to make sure that actually the income figures you're projecting six months, 12 months, 18 months in are feeding through to this the information you're giving via reg data, so there's no you can't billy bullshit your way through it, you know, which is good, which is a good thing. I think the thumb, you know, the whatever the pendulum went, you know, back in 2008, you get loans for liar loans, couldn't you? You know, if you had a pulse, you didn't have to declare salary. You had all these non-status rubbish, and then the mortgage market went completely the other way, and now mortgage brokers are worth their weight in gold. Use them because it's it's bloody impossible now, because the regulations have just gone. And there's the same with, I think I think it was probably too easy once upon a time. You know, not that we're rogues, but thank God it was
Alan Smith:Nick for the three of
Nick Lincoln:us. Who and it was just maybe too easy. Now it seemed I think it's gone probably a little bit too much the other way. Yeah, I agree. I agree. People like Matt, the abazades of this world, thinking we're not doing that. We're going to go via our network. So there's always a middle ground. We never quite get the the porridge is never quite warm. It's either cold or scalding hot. Well, I think so that that feeds through the data in
Andy Hart:years to come. Yeah, but it's already feeding
Alan Smith:out. And what we're seeing now is a shrinking in the number of advisory firms. The the people of my age or older are selling, right? So they are getting out. So they're being consolidated number of firms, and there aren't that many new. I mean, I don't know many, if any, apart from Fos, like brand new directly regulated firms. You get ones that are going through the New Leaf and Sense and the other ones. It's a pretty rare recurrence. So the number of firms are shrinking now. Whether the FCA look at that over time and say that is negative for our for the community for you know clients, customers, investors. They want
Nick Lincoln:that. I think they want that. We have they want smaller numbers of firms. Big advice, Alan.
Alan Smith:Yeah, probably.
Andy Hart:We got we got simplified advice coming in, which is going to hopefully deal with the advice gap, so it's going to make it easier for firms to do simple business, as in simplified advice. So there's a couple of conflicts. Yeah, but you're still going to hear,
Alan Smith:but they're still regulated, aren't they? So you're still going to have to. Yeah, still regulated. So you have to adhere to all these stuff. Get
Andy Hart:access to investment products. You know, a lighter touch access to investment products. So there's going to be less of us, but we're going to be able to serve more clients via simplified advice potentially. I am knowing quite a lot of firms, Alan, go from network to DA, as in they've been at the sure, yeah, yeah, that's that's
Alan Smith:more common. But to go directly into it, to be working for a big firm, say I'm going to set up my own shop now. I'm going to apply DA.
Andy Hart:Foz went effectively joined a network. He was an AR for Ian, and then he went DA. Correct. That's the network. Then the DA. Yeah, but there's there is
Alan Smith:there's a subtle difference between joining another like a friend or someone you know and trust as an AR of their firm and joining a network. Some of the feedback I've heard from some of these networks is that it's kind of like being and I think Foz mentioned it. It's like being working for a company because they tell you you got to use our systems, our para planners, our processes, and sometimes apparently they say you're stricter
Andy Hart:than others. Yeah,
Alan Smith:you can't use certain funds and strategies that you might want to use. So yeah, it was very good though. I think it would be very helpful for a lot of our audience.
Nick Lincoln:And quick self promotion that we we just muted beforehand on our WhatsApp group, then maybe what we'll do will, if if with his acquiescence and obviously this is time, we'll try and get Graham perhaps to do a town hall meeting on on the trap form behind a wall, so you know it's for the trap members only. Where he'll field questions for an hour or so, and that might be your chance to do it rather than pinging him individual emails. Well, that's that's just an idea we're floating, but it's another advantage of joining. They're rapidly burgeoning and growing, don't miss out on it. Trap forum. Okay, so always be
Alan Smith:selling.
Andy Hart:1b C.
Nick Lincoln:We're one hour 51, hour 40 minutes into episode 105. So let's deal with the next part of the show, which, as you probably know by now, dear Trappist, is where we take Trappist questions. There's Postage. She's at my doorbell. She's hauled the bolting sack of letters up the driveway of Lincoln Lodge, and this is where we take a traffic's question. You can submit it via the pinned tweet on X, via the pinned X on tweet, or via the link in the so-called show notes. We will get to your questions. We rotate through them in time. This one is a this is a cheap this is a cheap looking envelope. This is Maldi. This envelope. This is from someone called Nick B. He hasn't got a social handle. But it's got a good question. What do you think about passive DFM portfolio funds? Seven IM, for example, have a strategic asset allocation for a given risk level. Oh my God! And then make tactical asset allocations under the strategy. It just seems like a disguised route to active management. Okay, so outsourcing to portfolios where they make the asset allocation tilts based on macroeconomics views, gentlemen.
Alan Smith:Avoid. I've seen I've seen this. I've seen versions of this in the past. The phrase I got is like you can't be slightly pregnant. They're trying to get a bit of everything. You know, we are we have got passive portfolios, but we take tactical positions within them based on, as you say, macroeconomics or something, that would just conflict with certainly with my philosophy. I think the philosophy that that we've got there is no evidence that supports short-term tactical, you know, trades moving in and out of different sectors, markets, or stocks delivers above market returns over the longer term. So, for me, avoid.
Nick Lincoln:Yep, I'm a strong agree with that. Carl is as well. Andrew, be contrarian.
Unknown:Oh, look at that. Four
Nick Lincoln:Nick B, you've got a four-nil scoreline. It really happens on trap because disagreeable buggers. But there we go. All right, let's move on to the last part of the show: culture.
Alan Smith:This is one of my better ones. You boys, going to blow your mind! I can't believe that Andy hasn't found this yet. This is up there with with my very best of a culture corner. There is an app, there is a facility, there is a service. It is called Instinct. It is the new thing. It's breaking through. San Francisco startup company. It's already valued at$5 billion. instinct.com. Basically, what it is is your own personal assistant that you can engage with via WhatsApp as as much as you want. So I signed up for it, of course I did, and I've been just. It's like having a mate that you're messaging on WhatsApp back and forward. I'm thinking just, and it can it takes care of everything for you. So you can embed it with your calendar, with your emails, with all that sort of stuff. But more than that, just other stuff. I'm going. I'm traveling on in a couple of days. You know, just find me the best train tickets. Find me the best day. Straight away, it just comes, and you're like, it's weird. You build up relationship because, all right, mate, how you doing? Like it was, but it's honestly, it is well worth engaging with. Now, the thing is, it's in beta right now, so it's all been only being sort of launched to a you know the top dogs, the people that are ahead of ahead of the game. But I have managed to secure for trap our trap audience a private invitation. I've got the link, so I don't think it's it's unlimited, but you or Andy's already downloaded it, I'm sure. So if you want to jump the queue, get accesses, and play around with it, it's like your personal assistant. It takes care of pretty much everything that you need to do day to day. I am a big fan of it already. I've been using it for three days, and it's been really, really, really, really good.
Carl Widger:Three days.
Alan Smith:Well, it's just it's just launched. Most people can't get access to it right now, but so far I'm just like it's like when your phone buzzes, you got a WhatsApp message. You go, what's that? What's going on? It's my so much. What we need
Nick Lincoln:in our lives is another bloody vibration. No, someone to take care of
Alan Smith:shit that you're dealing with yourself. Otherwise, with all the sort of operational admin that goes on with life. Let's
Carl Widger:diary this one for three months and ask Alan, how's instinct going?
Alan Smith:Yeah, yeah, come in.
Andy Hart:I'm in.
Alan Smith:There you go. Okay, new Andy Wood. There you go. Well done, mate.
Nick Lincoln:Next culture corner.
Alan Smith:Next,
Carl Widger:Daniel Priest
Andy Hart:looks like. Sorry, go on.
Carl Widger:Daniel Priest, Culture Corner, please. Key person of influence. I've just put the link to the actual his website link on that, but the book is absolutely brilliant. If you're looking to develop your business development skills, you should really, really, really read the book and have a look at a lot of Daniel's stuff. I know we've mentioned him loads before, but we haven't probably shouted out the key person of influence. That book has the 5p's, which is pitch, publish, profile, partnerships, and I can't remember the last one, but but it's really really really really good. And if you sort these five things. You will. It will help you develop relationships that will drive on your business.
Andy Hart:Sorry, Carl. Did you only read this recently?
Carl Widger:No, I read it again recently because I was encouraging some of the people that I'm now working with to read it. So I read it again. It
Andy Hart:is super. And I've been through the
Alan Smith:program. Yeah, of course, of course. 2019, it is brilliant, and I think more. And I also read it years ago, and read it again relatively recently. And I think it's very, very appropriate in the days of AI when everything. If things increasingly getting done, your own individual profile and personality needs to stand aside. Stand above all the other nonsense that just sort of comes through for your your audience. So yeah, strong recommendation. That's good, Carl.
Andy Hart:His latest book is also superb. Lifestyle business.
Alan Smith:Has he ever spoken as a keynote speaker at a world famous behavioral investment conference? Very much,
Andy Hart:Alan. Right, Nicholas. Mine is Masters of
Nick Lincoln:Business, the podcast with Barry Ritholtz. He had on as guest recently David Booth, the chairman and founder of DFA. Booth is obviously touting a book, which is entitled "Stay Calm in Investing and in Life. And it's just David Booth's got a nice style about him. He's obviously a massive figure in the world of investing. There's always a little snugger or story he tells about his time working with all the Nobel laureates at DFA. So I enjoyed that, and I think that's it for Culture Corner.
Andy Hart:I don't really have a Culture Corner, but following on from your Barry Retold's mention, this is his new book, How Not to Invest. It's very thick size of that book days ago. I mean, it's very very thick. Anyway, I'll be reading it and I'll be letting you know. But I'm sure a lot of you follow Barry, so buy his new book,
Nick Lincoln:because he needs the dosh. That's for sure. Okay, so there you go, dear Trappist. As episode, what is it, 105, comes to a close, and another pile of traps slides down the U bend of Father Time. Thank you, dear Trappist, for your precious time. Please do leave a review. Our out of reviews, as Ultra said at the top of the show, so please do leave a review. Six out of five stars, or one out of five stars. Do not be a nick, whoever it was. No, number 247932, and live with three out of five. That's the worst of all. Like and subscribe to our burgeoning YouTube channel. But until the next time, from the track pack, it's Adios. Take care of there, folks. We'll see you on the other side. See you at the tough mudder.
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