Newsletter – Summer 2017

By: | Tags: | Comments: 0 | July 21st, 2017

Sad News!

andrew-howard

My father, Andrew, is now in a specialist care home suffering from dementia. He is 80 this year and very frail although he is not giving up without a fight – he still thinks he has an idea or two to make money!

Many of you will be grateful for the advice and guidance that Andrew provided over the years – some may not necessarily have appreciated its significance at the time but will most certainly have later on.

That is one of the problems with financial advice and, indeed, one of the reasons why Andrew was the first IFA to introduce a fee based service: Financial advice is intangible and the value invariably unquantifiable which means that it is difficult to justify a fee. However, the annual subscription service founded by Andrew was not only years ahead of its time but an equitable and affordable way of paying for quality advice as opposed to being sold often inappropriate products.

Whilst selling insurance was his forte and he was evangelical about it, he always offered wise counsel and did not hold back in warning against the dangers lurking within the finance sector from the high pressure sales firms of the early 80s to unit linked investment plans, private pensions (over the NHSSS), rogue banks and timeshare. Indeed, Andrew wrote warning about Northern Rock in a newsletter dated August 1998, nine years before its collapse precipitated the banking implosion. He thrived on analysing products and picking holes in the most heavily marketed insurance policies and savings plans.

I was very fortunate that he laid the groundwork for me to have a solid career. He grafted long hours for his success and I will forever be grateful to him as I am sure so many of my clients are for the entrepreneurial spirit and hard work put in by their own parents.

Whilst I haven’t experienced the knocks and hardships that Andrew has, the lessons have been passed on and this is perhaps why I seem to have such a longstanding and loyal client base. The difference between MediClub and other ‘advisers’ is, in my opinion, the fact that my colleagues and I think as small businessmen not as sales people or employees. We think a few moves ahead to avoid our clients being outmanoeuvred or disadvantaged. This is crucial because so many of our clients are self-employed with above average aspirations and lifestyles.

Hottest Summer!

summer-pig!

June 21st was recorded as the hottest day for 41 years! Well, it’s certainly been a hot summer for Theresa May. We all chance our arm on occasions but she appears to have taken a reckless gamble not just with her future but ours! Irrespective of one’s political persuasion or one’s position on Europe, it would appear that she has definitely weakened her hand in an attempt to strengthen it.

Over-reaching can be inconvenient at best and catastrophic at worst. One successful Principal who shares a platform with me on a seminar to Foundation Dentists speaks honestly and humbly about his success and subsequent gamble, or investment as no doubt it was initially considered. He spent six days a week for years just standing still, basically paying back the bank with no profit before suffering the ultimate humiliation of being compelled to put the building back into the condition in which he took over the lease when he exercised the ‘break’ clause!

My father spent years trying to develop another way of making money. His shelves were full of files containing failed business ideas. If only he had stuck to what he did best one of the greedy banks would have bought him out and made us millionaires. Instead, I’ve got to carry on working for a living!

What were you doing 41 years ago, assuming of course you were alive then? I was on holiday from school having done my ‘O’ Levels, admittedly not very well, and was earning £1 an hour doing the garden which included cleaning the swimming pool daily! How about that – the joy of having our own swimming pool during that sizzling summer of ’76.

Dad had lost almost everything a couple of years before and very nearly his life as the stress of being stitched up by the bank took its toll. He’d bought a 463 acre farm with a syndicate of investors and worked it like a theme park – again many years ahead of the game. We had a lake with a two mile circumference, tea rooms, shire horses, donkey rides, shooting, fishing, boating, flamenco on

a Saturday night with a hog roasting on the spit; oh and a nature corner. I even had three pet badger cubs!

However, successive wet summers, the stock-market and property crashes of 1973-74 and local hostility killed the business. Andrew had agreed to sell to a property company which went into liquidation prior to exchange and the bank pulled the rug from under him. The real truth has been lost over time but he blamed the bank and learned a valuable lesson, one which we still preach to this day; don’t trust the banks!

Banks

They blow hot and cold and play by their own rules.

It’s also proving to be a bit hot for some former Barclays bankers. The not-so famous four are being charged by the Serious Fraud Office for making illegal payments to Qatari investors in return for capital to avoid the ignominy of the bank being bailed out by the government. The inference being that their fat bonuses would be seriously slimmer if the taxpayer took a share in the business.

MPs and financial commentators argue that this prosecution is long overdue and that many perpetrators of the banking implosion have escaped any criminal proceedings. You will be aware that there has been a succession of banking scandals since the collapse in 2008 with millions of pounds in fines being imposed on errant bankers.

Now, I wouldn’t argue that all banks are crooked but the corporate ethos leaves a lot to be desired as is evidenced by the millions of pounds in fines imposed over the last few years. Their priority is their shareholders so why not use our expertise and valued banking connections?. There is so much more to a loan than the rate of interest charged.

And it is those connections which are invaluable….

Finance Connections

jeremy-1

If you want help with finance please ask. Not only will we look over your shoulder and help you choose the most appropriate lender but we can introduce you to other finance connections where necessary to assist you. Why waste your own valuable time shopping around when we can identify which lender would be best suited to your particular proposition and secure the funding with the minimum of aggravation. Time is money!

No two deals are the same and the lenders have different criteria.

We have so many reliable and trustworthy contacts built up over many years. We also know who to steer clear of! And remember, the banks are only interested in profits – their own! Nothing wrong with that, of course. But if you go direct don’t be surprised if the deal you secure is more in their favour than yours. One of my orthodontists for whom I had arranged finance some years earlier approached his bank (to which I had introduced him) for additional funding to expand and acquire a retiring orthodontist’s practice. He told me what was on the table and I opined that the bank was taking the proverbial.

I felt the interest rate was excessive in relation to my client’s status and the deal involved. It had been pointed out that the new money was largely unsecured. I suggested that I should speak to a senior healthcare connection and explain that the existing freehold had escalated in value significantly since the initial purchase and, not only that, but the gross had increased as well. So where was the risk that justified the higher rate of interest?

My connection agreed and promptly facilitated the issue of a revised offer at a lower rate. My fee for this strategic and timely intervention? Nothing!

My reward is a hugely satisfied and grateful client forever in my debt (I hope) and the reputation of MediClub enhanced still further. Talking of connections, at Henley Regatta recently,I met up with Ian Crompton, head of Healthcare at Lloyds and Lily Head who runs a bespoke practice sales and valuation company. For discounted valuations and sound sales advice as well as practices to buy, please contact Lily at lh@lilyhead.co.uk

Family Home Allowance

A new ‘residence nil rate band’ was introduced on 6th April which adds £100,000 to the existing £325,000 exemption. However, the rules are complex and may necessitate rewriting your Will. It could render current IHT plans redundant, especially if the property has been left in a trust. Again, for a review of your Wills and IHT plans, please let us know and we will introduce you to a specialist for upto-date advice and guidance.

Credit Score

I appear to be constantly banging on about the need to be aware of your credit rating – and with good reason. Most of our clients require funding at various times in their lives for any number of projects, whether it be a domestic residence, a buy-to-let, practice purchase, equipment or home improvements. The personal finance correspondent of a leading daily national newspaper recently alerted its readers to the practise of hard credit searches undertaken by lenders when customers are simply shopping around for the most competitive loan. The very fact that you make an enquiry shouldn’t have a negative impact upon your credit rating, yet it does!

Lenders quote seemingly attractive rates only to offer something less appetising once your status has been determined. Simply applying for finance can result in a hit on your credit rating so by shopping around you can be reducing your score often to the point where you will be declined a mortgage. This happened to a young associate referred to us last year. If you need to borrow money it is important to seriously consider your future needs as well as your current requirements.

One of our clients, we’ll call him Erik the Viking, doesn’t have a British passport and so is not on the voters’ roll. This has had a negative impact on his credit rating despite the fact that he has a domestic mortgage with a big four bank and all his loans are paid on time each and every month. He needed a further advance to clear some short term liabilities but, despite a solid income, his mortgagor declined his application.

Thankfully, we had a lending connection that adopted a more sensible approach so we achieved the aim of raising the funds required. We also successfully secured the commercial funding needed to purchase the dental practice that he and his wife had set their hearts on. There’s a saying “It’s not what you know, but who you know”. Well, in my opinion, “It is what you know AND who you know”! I very rarely give up when I firmly believe something can be achieved, even when others don’t share my confidence. There have been a number of instances of this over the last few years so if you think you’re a lost cause or are having difficulty raising finance, do let us know and we’ll use our experience and valued contacts to try and help you.

Sickness Insurance

Most of us take our health for granted. Indeed, many of us consider ourselves fitter than perhaps we actually are! There is nothing like an insurance company medical to reveal the harsh and often inconvenient truth that all is not as it was.

High blood pressure, raised cholesterol, blood or sugar in the urine, height to weight ratio. All these can be have a negative impact on one’s insurance requirements and prove to be a major impediment if needed for practice finance.

One of my clients, a non-smoker, failed a cotinine test! Well, he puffed on a shisha pipe at a Christmas celebration having overlooked the fact that he was due to have an insurance medical. Claims statistics are pretty boring naturally but they tell a story and an enlightening one at that: According to figures supplied by Dentists and General, 47% of male claims and 35% of female claims in 2016 were in the 46-55 age group. Interestingly, 36% of female claims were in the younger 36-45 category whereas ‘only’ 23% of male claims were in that category.

This suggests that it is dangerous to rely on the assumption that, just because you have never had a day off sick in your life, you are unlikely ever to do so. The probability increases with age. Statistics confirm this, which is why premiums are higher at the older ages.

It must make sense, therefore, to buy your insurance at the earliest opportunity and whilst you are still fit. I had a ‘phone call from a longstanding and valued client recently who asked me to review his insurances and, ideally, increase them to a level more commensurate with his income. However, he confided that he had recently visited his GP with a bad back although earnestly tried to play down its severity despite having taken a week off work!

I pointed out that the fact that he had a week off was an indication of its severity and that in all likelihood any insurer would impose an exclusion. Well, the last thing a dentist needs is a back exclusion on his or her sickness insurance! Thankfully, he has a significant amount of cover already in force but, nevertheless, in the event of a claim any new cover would not pay out for any disorder of the spine and supporting ligatures etc etc.

Musculoskeletal disorders make up a sizeable proportion of claims with both D&G and Dentists’ Provident; indeed, with DPS musculoskeletal disorders made up 38% of female claims and 36% of male claims in 2014, each representing the major reason for claims. If you have a bad back, see the physio not the GP! Better still, see me first and get your cover up-to-date.


Jeremy Howard

Authorised and regulated by the Financial Conduct Authority.

jeremy@mediclub.org.uk 01689 607007 www.mediclub.org.uk

MediClub is a trading style of Chantler Kent Investments, 2 Roberts Mews, High Street, Orpington BR6 0JP.

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