Here's our weekly heads-up on the stories that may have caught your clients' attention over the weekend …
Fund managers who talked up their sectors - and lost
Fund managers are rarely types to talk down their own area of specialism, says this Telegraph article. So perhaps in an effort to try and humble a few - or, just possibly, because it proved a slow week for news - the paper has had a dig through its archives to uncover some "extreme instances where managers have been publicly positive about a type of asset that has then fallen heavily in value".
The article picks out five examples across three asset classes - gold, oil and Russia - three of which featured in Telegraph articles that talked about them in glowing terms … showing what a dangerous game this is to play. And, if you do decide to play the 20:20 hindsight card, surely you can come up with chunkier examples of fund manager hubris and from one or two higher-profile payers as well?
Still, noting reasonably enough that "the optimism of managers ahead of significant difficulties in their sector is jarring", the article offers the sensible conclusion: "That is not to say that fund managers should always be ignored. They often offer valuable insight. But investors should be aware of their self-interest, apply a critical eye and seek independent research."
How to cut the new £20,000 ‘death tax'
The government recently upped probate fees - a move that will see estates worth more than £2m now pay £20,000 to execute the wishes of the deceased - but our second Telegraph article suggests a way to reduce the charge dramatically.
Old Mutual Wealth tax expert Rachel Griffin suggests those with such large estates should look to give a proportion away during their lifetime using discretionary or bare trusts. By giving away £2.1m of a £3m estate to a bare trust where their children are beneficiaries, she adds as an example, the estate's value would fall to £900,000 and thus the probate fee to £4,000 - a £16,000 saving.
As a bonus, there would also be an £840,000 inheritance tax (IHT) saving - so long as the individual lived for a further seven years after making the gift to the bare trust. The article does warn, however, that trusts whose assets do not pass directly to beneficiaries do not qualify for the residential nil-rate IHT band or ‘family home allowance'.
My granny's home was a money pit
The Law Commission last week published its conclusions from a two-year investigation that found owners of leasehold retirement properties were being hit with "unfair fees" worth up to 30% of the value of their property. It said there was "a real potential for abuse" as the sector is unregulated - and this Sunday Times articles suggests that is a warning elderly people and their relatives ought to heed.
The grandparents of freelance journalist Harriet Meyer ‘downsized' in 2003, buying a two-bedroom flat in Willicombe Park, Tunbridge Wells - part of Audley Retirement Villages - for £523,500. Following Meyer's grandmother's death in 2015, the flat was put on the market for £800,000 - a price Audley's sales team assured her and her family similar properties had recently sold for.
The flat was eventually bought for £560,000 - almost two years later - during which time the family have calculated they had paid £48,160 to the Audley in deferred management charges and selling fees. They also paid an additional £23,794 in service charges, which continued to be levied even though the flat was empty.
A spokesman for Audley emphasises all charges are explained to prospective owners while Age UK policy adviser Joe Oldman is quoted as saying: "Even if there is greater transparency on exit fees, which would be a positive step, there is still a danger many older people will sign up without fully realising the implications."
The chairman isn’t answering his email
Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea