Banks to the rescue?

The latest information suggests that the current Independent Financial Adviser (IFA) has an average age in the fifties and the advent of the Retail Distribution Review (RDR) is estimated to reduce the adviser population by anything between 20% and 50%. Putting these two factors together, it is highly likely that the overall IFA numbers will be reducing substantially, unless there is a steady influx of new blood.

Where will the next generation of IFA’s come from?

A large number of the current populace entered the profession via one of the big salaried salesforces (i.e. Prudential, Pearl, Co-op Insurance etc). They enjoyed a great grounding in the ways of providing sound advice to their clientele and later moved into the independent arena. These large salesforces, generally, no longer exist. They were deemed by the companies to have become an outmoded and expensive method by which to distribute their wares. Therefore, by default, the traditional training ground for “wannabe” advisers has disappeared.

The cost of Financial Services regulation

One effect of (much needed) regulation has been an escalation in costs for the companies operating in the Financial Services sphere. A further “knock on” of the  increased costs is that few of the smaller firms are able to afford taking on a new adviser, who then needs a large degree of supervision and training before making any significant contribution to that firm’s bottom line profit. Consequently, the movement within the adviser population has been mainly of the experienced personnel changing from one employer to another and not, as is really vital, the arrival of “newbies”.

The banks to the rescue

Just about the only players in the market, who have deep enough pockets to take on trainees, are the banks and they did not seem willing to accept that mantle – until recently!

I have made comments on this before,

“Interestingly, the banks also appear to be addressing the issue of new entrants to the Financial Services ranks. There has been a marked increase in the number of potential positions for individuals wishing to become a financial adviser – some are prepared to take on individuals who have yet to pass the requisite examinations, train them initially through the mortgage advice requirements and move them into a position of Mortgage Adviser. The career path is designed to progress the adviser onto becoming a fully fledged Financial Adviser over time.”

The political agenda

This government, and previous encumbents of Number 10, have expressed the desire for the public to take more personal responsibility for pensions, savings, healthcare etc etc. – the State cannot continue to provide “cradle to grave” benefits at current levels as the overall population increases by it’s own longevity. The public, generally, do not instinctively think about these issues of their own volition. Therefore, there needs to be a sufficient body of advisers to carry the message out there and provide the advice, which may prompt more folk to accept responsibility on behalf of themselves and their families.

More Financial Advisers required

The ranks of the Financial Adviser (independent or otherwise) need real replenishment – the banks seem to be making good moves in that direction.

 

This blog post was brought to you by David Shirley of David Shirley Associates Ltd. The Financial Services Recruitment specialists helping you with Independent Financial Adviser Jobs, Financial Adviser Jobs and other Financial Services Jobs.

 

 

 

 

 

 

Multinational companies in the Eurozone, and in the EU in general, face a nightmare trying to find a single platform for keeping electronic track of time and attendance. As you can see from the following chart, each country has different legal requirements for working hours. Also, overtime requirements and restrictions vary dramatically from country to country. These cross border requirements create havoc when trying to implement an enterprise time and attendance system.

Weekly working hours for men and women

Country	LFS average hours for all workers (inc. part-time)	Average hours for full-time workers**	Legal maximum†
Austria	38.0	44.1	50.0
Belgium	37.1	42.7	40.71*
Czech Republic	41.7	42.9	48.0
France	36.9	41.0	39.68
Germany	36.3	42.9	48.0
Italy	37.7	40.8	45.2
Netherlands	32.5	46.0	48.0
Poland	40.1	42.2	43.13
Spain	38.0	40.8	41.68
Sweden	36.4	42.7	48.0
United Kingdom	36.5	42.1	48.0††
EU27	37.7	42.1	48.0

Sources: EU-LFS and FedEE
* 38 hours per week and 130 hours per year overtime.
** Calculated from LFS figures
*** Excludes sickness absence (one week+)
† Effective annual maximum (inc. overtime)
†† May be exceeded with individual consent

The above chart only explains some of the differences between countries. Beginning in 1988, the EU began to actively pursue its social agenda of improving worker's conditions and their social safety net. This agenda included rigid provisions concerning maternity leave, family leave and the ability to work on a part-time basis. While the EU had a single standard for all members, member countries often seized the opportunity to provide even more generous benefits. While employers bear the brunt of these costs, many governments increased pension benefits and other social safety net programs. One who is studying the current Eurozone crisis would not be wrong to heavily score these policies as a major contributor to the debt crisis in the Eurozone.

Surprisingly, the UK had opted out of this policy when it was implemented - a harbinger of its contrariness in today's crisis?

While the idea of more time off was to improve working conditions for all workers, many human resources experts in the EU suggest that the opposite has occurred. With such fractured time required at work, employees are under great stress to know more about how their companies functions. One day they may be working in the sales department and another they are moved to accounts receivable to cover for workers not in attendance. This creates anxiety and lowers productivity, suggest some observers.

Looking at the chart below, it shows that actual work time in the UK is not much greater than the average of all EU countries.

Proportion of weekly working time spent at work*

Country	% Working time spent at work Q3 2007	% Working time spent at work Q4 2007	% Working time absent from work Q3 2007**	% Working time absent from work Q3 2007**
Austria	86.71	92.51	13.29	7.49
Belgium	77.95	88.74	22.05	11.26
Czech Republic	87.28	93.67	12.72	6.33
France	74.45	89.60	25.55	10.40
Germany	90.09	93.99	9.91	6.01
Italy	83.33	95.47	16.67	4.53
Netherlands	78.87	91.93	21.13	8.07
Poland	94.54	97.74	5.46	2.26
Spain	78.97	88.33	21.03	11.67
Sweden	73.54	90.37	26.46	9.63
United Kingdom	86.51	90.88	13.49	9.12
EU27	85.62	93.36	14.38	6.64

Sources: EU-LFS and FedEE
* During one reference week in Q3 and Q4 2007
**Includes annual and public leave, maternity and parental leave, sickness absence etc.

Interestingly, the UK, which did not agree to the improved working conditions when they were implemented, has almost no difference from the participating members in average time worked and time off with pay.

Of equal interest is their veto for participation in treaty to salvage the Eurozone that is to be implemented in March of 2012. They will attend the treaty negotiations but only as observers. One wonders if the reluctant Brits will then take away and implement some of the changes that the rest of the EU makes.

 

 

 

 

Just a short while ago Germany underwent a strong debate and was resistant to setting up the European Financial Stability Facility and European Stability Mechanism. Cost was not the issue, sovereignty was.

So it may seem a bit surprising that Chancellor Merkel of Germany has pushed so hard for the new treaty that will be effective in March. It appears to give away even more of the German's parliament right to self regulate.

But Germany doesn't see it that way. It feels superior to the rest of the Eurozone because of an amendment to the German constitution that limits structural deficits to 0.35 percent of national output. As long as the Germans comply with their own constitution they are in compliance with the debt limits of the proposed EU treaty. (Which Britain will not be party to).

While this may come at no cost to Germany, the cost to other countries in the EU could be high, especially for the smaller countries in the EU.

Without the UK along for the ride the influence of the Eurozone countries and the entire EU could be diminished in both regulatory and foreign affairs. Also, smaller countries have had their voices effectively stifled the voice of EU countries with smaller economies leaving them distrustful of the EU.

While the Germans view the treaty as extending a unified fiscal entity, the joint fiscal union will now share in public debt for members as well as taxation and spending to fight economic adversity. This makes a bit of sense as the current Eurozone crisis was caused only partly by governments and more by the imbalances found in the Eurozone periphery.

However, the proposed structure does not address the causes of these imbalances and will not prevent them from occurring again. Since the fundamental problems of the Eurozone are not resolved the coming years of austerity may actually worsen them.

The employment outlook also looks very bleak in the coming future. High unemployment throughout the Eurozone is likely to continue through 2012. Countries most in need of resolving employment problems are least equipped to do so. Spain for example has a two tier employment system comprised of permanent employees who by law can never be fired and temporary employees who can be let go at will. Spain's regulations are counter-productive. Permanent employees are not motivated to be very productive. On the other hand, temporary employees work hard in the hopes of obtaining permanent status. Of course few do, as soon as their is the slightest upset in the economy they are the first to be sacked and contribute to high unemployment rates.

Other countries have equally destructive but different rules and regulations. government mandates are changing too. Lower pension benefits, longer times to retirement, less vacations and benefits are all being implemented throughout the Eurozone. There is no single HRIS—otherwise known as a human resource management system--that can centrally administer a company with locations throughout the EU. Human resource management is a nightmare for multinationals and compliance with each countries different employment laws requires at least a human resources department wherever business is done. this is a costly expense only made worse by the proposed treaty.

Germany may think it has protected itself from the effects of the treaty on sovereignty, but, if contagion from countries who are not doing as well as Merkel's country invade, economic forces may trump Germany parliament forcing it to take actions it would rather avoid.

 

 

 

 

Real estate investors are well aware that every investment carries some risk. However, real estate experts say that property investors in Euro Zone countries should be asking for increased risk premiums due to risk exposure that is likely if a country leaves the Euro Zone and returns to sovereign currency.

Speaking at a seminar at the EXPOREAL real estate trade fair in Munich, Germany in early October, Patrick Artus, Global Chief Economist at investment bank Natixis,

“The sovereign debt crisis in the eurozone has driven up banking risk and corporate risk, creating an environment characterised by high risk aversion, abundant liquidity and sluggish growth in the OECD countries. We believe, however, that at the brink of the precipice the EU will muster sufficient financial firepower and political will to refinance the banking system, allow an ‘orderly default’ of Greek debt and prevent the break-up of the eurozone.” Sylvain Broyer, Deputy Chief Economist at Natixis, added that: “the abundance of liquidity is only benefitting safe haven assets, including gold and a select few government bonds. This category doesn't include emerging market assets, for example.

Despite this less than optimistic view of property investment, in fact Natixis offered the following schedule for risk increases:

·         France and Belgium – 10 basis points (bps)

·         Italy and Spain – 50 and 90 bps respectively

·         Greece – 375 bps

Investment in Spanish property is on the rise. Ben Walker, Sales Manager at

 

PropertyInSpain.Net, a company that deals in distressed properties said:

 

"We have more than 3,000 registered buyers looking for bargains and generous mortgages. The increase in activity in the last quarter of 2011 suggests that many of these mañana buyers have decided to make their move while the choice of well-located, well priced properties remains good. Some banks have already announced plans to withdraw the 90% and 100% LTV mortgages that have boosted sales during 2011 and having dispatched poor quality property into their bad bank divisions, prices on the remaining better properties are likely to stabilize or increase during 2012.”

 

The most hesitant buyers have been from the UK. But as reported on December 12, 2011, that appears to be changing. The UK economy is distressed, with little investment opportunity; the Sterling is strong against the Euro, interest rates have declined and other European rain belt investors are snapping up the best deals. These factors appear to have spurned interest for British investors to look seriously at investment property opportunity in Spain.

 

However, time may be running out to get the most advantageous deals. Some banks in Spain have already announced that they will be ending the 90 percent and 100 percent LTV mortgages that resulted in higher sales during 2011 and prices on the better properties that have not yet been purchased appear to have stabilized and could increase during 2012.

Spanish real estate experts note that some properties have been discounted up to 70 percent. These properties could see equity gains in as short a time as 3 to 5 years if Spain's newly elected People’s Party Government continues policies designed to grow tourism to Spain, already one of the favorite vacation spots for Europeans.

Walker said the market was doing extremely well and that:

"It took just 15 days to sell 26 key ready 3-bed golf villas with 100% mortgage priced from EUR 140,000 listed on the PropertyInSpain.Net website. Just one villa is available at EUR 175,000, on a bigger plot overlooking a large communal swimming pool and a 27-hole golf course."

 

 

 

 

The Euro zone roller coaster continues. After last week's rising optimism by traders that a crisis will be averted, today Moody's squashed immediate hopes that the situation will turn around critical. Moodys did two things today that put the markets in near free fall:

1. They announced they will be doing a credit review of all European nations and,

2. Made a statement that: the summit last week of European leaders produced "few new measures" and that Europe remains in a "critical and volatile stage. The region remains "prone to further shocks and the cohesion of the euro under continued threat." Moody's said. As a result, the agency will review the credit worthiness of all European countries in the first three months of 2012

The United States was not unscathed by the European news. The Euro zone and all the overall European markets were held responsible for a mid day loss for the DOW of well over 200 points.

Asian economies are also fearful of the impact of the Euro zone crisis on their own economies. South Korea has significantly lowered its growth estimates for 2011 and 2012, tying these lowered estimates directly to problems in Europe. South Korean Finance Minister Bahk Jae-wan indicated that he expects the economy to grow 3.8% this year and 3.7% in 2012, down sharply from 4.5% growth tipped for both years previously. The government also raised its 2012 inflation outlook slightly to 3.2% from 3.0% previously. He said:

"We won't deny that downside growth risks are greater than [inflation risks]But we don't expect a global economic hard-landing."

As pressure continues to mount on the Euro zone and other European nations, the trickle over into the United States could be a tsunami. Already US retirees are continually seeing their retirement funds decimated, and most look for deals on just about everything. Groupon, Social Living and Everleaf as well as other coupon sites are more popular than ever and its likely that retirees are as likely to be using these sites as young couples wanting to extend their consumer reach.

Fortunately, the United States government is giving a small increase to Social Security recipients in 2012 of around 3.5 percent. A move that is counter to the austerity measures that fixed income recipients in the Euro zone are living under. However, continued negative pressure from the Euro zone crisis could very well erode even this small gain for the retired folks in the short term.

Some financial advisers are telling clients with long-term strategies that now is a good time to be shopping for European based stocks. Prices are low and countries that are multi-national and do business in markets other than Europe good be considered bottom fruit.

In his column today, analyst Joe Schaffer wrote:

“The bargains are definitely there for the buying. Between the last week of April and the last week of November, the MSCI EMU Index (which follows the performance of major eurozone markets) gave up nearly 35% of its value. As always, the Good Kids (in this case, those which derive a huge portion of their revenues in nations outside Europe) got pummeled the same as the bad kids."  

At present this appears to be a minority view with most advisers steering clear of European stocks, they feel the Eurozone and related stock markets are just too unsettled.

Used to be roller coasters were fun, we knew that the “scare factor” was contrived. If you are riding today it is just bone-chilling.