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How Are Mortgage Brokers Paid?

June 30, 2011 — 2:04 am

Mortgage brokers are a secretive bunch.  While there is no truth to the rumors that they hold meetings “by the light of the blood moon,” or even that they have a secret hand shake, there are many things about mortgage finders about which most people have absolutely no idea whatsoever .  And one of those enduring mysteries is how exactly the mortgage brokers of the world get paid.

While the world may never know if brokers had any involvement in Watergate, the payment issue need be a mystery for no longer.

It would undeniably be easy to answer ‘how do these brokers get paid’ by saying, ‘either with a check or direct deposit, depending on their personal preference.’ Of course, the type of person who answers a question in such a literal way is just annoying.  When someone asks about broker compensation, they want to know precisely what they are paid to achieve .

As everyone knows , an employed person is paid primarily to play CYA (which is a crude acronym involving covering a particular body part), and an hourly employee is paid primarily to take up space between bursts of manual labor.  However, it is an entirely different world for a broker and their ilk. 

As self employed people, brokers have to eke out a living with little to no support from a corporation .  Often enough, the broker actually owns a corporation for him or herself, through which they pay their expenses (and guard their personal assets if legal hassles come up).  And of course, this means that there can be no room to simply ‘coast’ – since a broker has no backup, this means that the broker actually has to add value to the life of another person.

We all know that brokers handle mortgages.  When you wish to perform a mortgage comparison and desire an expert’s opinion, a broker will happily help you to compare all manner of mortgages.  For independent mortgage advice, brokers are head and shoulders above bankers, who are typically little more than salaried employees who also earn commissions for peddling bank products.

While most specialists do earn commissions, their opinions on mortgages can be trusted to a greater degree than the opinions proffered by bank employees.  Simply put, a mortgage comparison rendered by a broker will not be hindered by company loyalty.  Of course, there is the exceptional circumstance of a tied broker, who may have a lucrative contract with a specific company.

And some mortgage specialists have even started working on a per hour basis, akin to accountants, attorneys or fee only financial planners.  When you compare mortgages with a ‘by the hour’ broker, you can trust that what they are providing is independent mortgage advice.  After all, they are only paid to consult with you.

Of course, there is nothing intrinsically wrong with getting mortgages from a bank, or from a broker who has a contract with only one or two companies.  Simply keep in mind when attempting to compare mortgages, that the more independent a source of information on these mortgages may be, the less tainted that source’s information will be.

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Why Everyone Should Seek Independent Financial Advice In Recessionary Times

June 5, 2011 — 3:57 am

You might wonder if you’re a candidate for advice from a financial consultant. Often people save a considerable amount in their company pension plans and then don’t have any idea what to do with the money at retirement. Others are more familiar with investing funds but worry whether they’ll have enough money to live comfortably the rest of their life. Still others are uncertain about the ancillary financial products they might need to protect their investments. If you fit into one of these groups you need  financial advice from a competent  financial advisor.

No matter what the economic climate, it’s important to invest your money wisely.If everything is booming, you often feel like the smartest person in the world because you’re making a good return on your investment. However, during recessionary times, it can be extremely difficult to uncover the right investments that allow your money to grow faster than inflation. In order to do this, most people seek financial advice from someone, whether it’s a registered financial advisor or just their smart neighbour down the street.  

While the smart neighbour might offer some good advice. They don’t spend their entire day in the field of finances as a registered financial advisor does. Often non-professionals focus on one area and while they may be good at predicting some financial events, they don’t look at the whole picture. Of course, you often don’t want to share all your financial information with them so they can’t make specific recommendations.

Financial Advice entails more than just how to make your money grow.It also involves planning for the pitfalls that can suck away your life savings.  Illness, taxes and some unexpected unpleasant surprises can take you off guard if you haven’t planned wisely.  A good financial advisor outshines the neighbour next door planning for these events.

You also can confidently share any information with a financial advisor, knowing that he is obligated to keep all your personal information private.  You can share any specific worries or dreams you have and he’ll gear his advice to avoid the problem that concerns you or help you make those dreams come true.

Important financial advice from a registered financial advisor can often require more than a one-time consultation. It’s an ongoing process. The world changes dramatically over the course of a few years and those that can change with it survive and thrive.  People that retired during robust economic times often find themselves falling short when the tables turn and the economy goes into a slump. They planned to receive high returns on their funds and lived as though these were possible no matter what the economic conditions. Suddenly they find themselves with declining balances.

Using a professional that understands the market and the world of finance can help you prevent running out of money before you run out of time. Financial advisors don’t base all their advice for the future on today’s market but balance the accounts to maximize the returns while minimizing the risks. If they see an opportunity because of a changing market, they help you take advantage of that opportunity. If, they see risks that come from the changing financial environment, they also help you sidestep those risks to preserve your assets.

Who can use financial advice from a professional? The answer often shocks many people. While the rich often understand they require the services of a financial advisor, those with midrange assets worry they don’t have enough money to work with a financial advisor. In reality, these people need advice the most. If the very wealthy make a few mistakes in their financial planning, it won’t be a crisis. Those of modest wealth need to be the most vigilant about the assets they own.

 

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Financial planning and the new coalition government

May 29, 2011 — 4:41 am

Charles de Lastic, Managing Director of Bluebond Financial Planning, enlarges on some of the early outcomes of the new coalition government.

 

The campaigning is over and the coalition has been formed and there’s been arguing whether £8 billion or £10 billion worth of cuts now or next year is the right way to deal with a £156 billion deficit.  A new financial squeeze is beginning and we see taxes going up and public spending cut.

 

What’s happening with Inheritance Tax?

For financial planning purposes some of the waiting is now over as we now know that the Inheritance Tax (IHT) nil rate band will not be raised.  It is likely to either stay frozen at £325,000, or may benefit from some annual indexation.  Whilst not a definitive answer, for those of you who have adopted a ‘wait and see’ approach you can now revisit this area of your financial planning to lessen your IHT liability, as it is very unlikely the rules will change to your benefit for the foreseeable future.

 

And what about other taxes?

Meanwhile, we wait for June 22nd and the next Budget to see what changes will be made to lifetime taxes.  Frequent changes to tax regimes are not welcomed by long-term investors and their advisers.  You will, once again, have to review the provisions that are in place.

 

Financial planning and investments – what should I do?

Keep in mind that in the longer-term, we may find that we just have to get through a difficult, but short, period where taxation rates are unusually high.  The first option therefore, may be to just ride out the storm and keep investments in place and wait until a more favourable environment allows profits to be taken with fewer penalties.  This will suit many long-term investors who do not rely on encashment of investments to meet income needs or shorter-term objectives.

 

Whilst the ultimate drawing of profits may be delayed, most investors will want their investment portfolios to be actively managed and for their portfolio asset allocations to be adjusted from time to time.  This is vitally important in these current volatile markets.  Investment advice should be sought as there is not only the investment management to consider, but also tax implications in how you receive the monies.

Investors with funds that are proactively managed, such as the Bluebond AAA Investment System, are well positioned to absorb any tax changes.  Holders of the classic Trust versions of the plans already benefit from the inherent tax efficiency of the nil-yielding Bluebond AAA Investment System funds of funds.  As the choice between the CGT and Income Tax environment becomes more critical it will also be good to know that advisers like Bluebond offer access to their funds as direct Unit Trust/Open Ended Investment Company/ISA investments and within offshore bond wrappers, for Trust planning.

The most flexible variants of plans such as the Bluebond AAA Investment System, can also perform a key role in adapting a client’s overall investment strategy to the new tax regimes.  As well as the choice of tax environments identified above, this plan also allows the trustees to determine whether or not the flexible reversions (return of capital payment) take place.  Thus the independent financial adviser can recommend that more or less (or none) of the client’s income needs are provided for and balance the reversions with drawings (or not) from other sources.  This judgment can of course be made year by year and respond to changing tax regimes and client needs.

Here’s our suggested financial planning proposal in readiness for whatever the new coalition government decides

  1. Now is the time to revisit IHT planning that had previously been on hold
  2. Review tax wrappers
  3. Make sure your investments have the best income/growth profile to suit you
  4. Use pro-active investment management within a suitable wrapper
  5. Maximise flexibility – only choose plans that can adapt to your needs

Further questions on financial planning?

If you have any questions, or would like some help from us, you can visit the Bluebond Financial Planning website to contact us.  We’d be happy to help you create a financial plan that includes tax and investment advice.

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Enjoy The Advantages Of Your Retirement With A Company Pension

March 3, 2011 — 10:31 am

The problem with getting older is that it often costs more to live than when you’re young and working. When people retire from their jobs it will often cost more to survive that when you were young, healthy and working.The additional expense might be from unforeseen medical problems that require hiring additional help to do jobs you used to do or something quite lovely as additional time to travel and pursue all the things you wanted to do before retirement. Either way, living in retirement often costs more than during your working years.You now have more time but often less money.

In order to have a successful retirement you need money. While money isn’t everything, enough money to live without worry and provide shelter is important in the golden years. Those people now retired and living off both state and personal or company pensions understand this. If you aren’t certain of how much you need to save for a comfortable future, you need to see a financial advisor and start your retirement savings immediately.

Many people ignore to estimate their potential income and needs at retirement. Some have a company pension at several previous employers. They know they have some money at retirement but have never taken the time to calculate how much.  If you’re one of these people, consider contacting a financial advisor to help you consolidate your pensions and give you a better roadmap of your retirement income.

If you’re lucky enough to work for a progressive business that offers a company pension to which you can contribute, start immediately.  You’ll reap tax benefits but also insure a comfortable future for yourself. Don’t depend on the state pension for your retirement. As the population ages, unfortunately there aren’t enough workers to support the pension.  Those with private and corporate pensions can sleep better at night with no worry about their financial future. Others, without adequate retirement funds, may need to consider extending their careers.

It’s woth noting that if you own your own business it’s highly advised that you offer a company pension to your employees. Not only do you receive a tax benefits from including a pension in the employee benefit package, you also receive increased loyalty. Of course, if you’re in charge of the company a pension planoffers you the highway to save vast amounts on personal taxes and business taxes while giving you the opportunity to save more for your future.

There are a number of different pension schemes available and one that will suit you or your company. If you’re a self-employed individual, you are accustomed to going it on your own. You know that there’s no one you can depend on but yourself, but that’s been your forte for years. Don’t let your retirement years be any different. Take charge of your future and begin a personal or company pension.

Pension schemes contain many different tax benefits. Because of these complexities, it always pays to seek financial advice from a financial advisor which will help you find one that is right for your company or your personal needs. A financial advisor versed in pensions can make best use of your tax benefits and give you the best financial advice  for your personal or your company pension.

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Why It’s Important To Seek Financial Advice

February 9, 2011 — 6:11 am

During good times, it’s effortless to make your investments double in value. However, a recession or depression creates a slippery financial slope. During those perilous times, the importance of seeking financial advice is imperative.People seek financial adviceduring high growth times to make more money on their money or even on their comapny pension.  However, a recession calls for maintaining your equity and looking for safe methods of achieving growth.

Seeking financial advicefrom a qualified financial advisor can help you dodge the bullets of economic disaster. You spend your day making money or learning more about your specialty. A financial advisordoes the same.He occupies his days by studying the market place and looking for the next big investment. He also looks for safe investments with strong companies and knows exactly what to look for in the company’s background that might be an alert to disaster.

You may have spent most of your life accumulating assets for retirement, only to find that you now have to use some of the equity you built over those years, long before you expected to do that.  However, there are ways to protect many of your assets and prevent dramatic erosion of your savings. Sound financial advice can help you do just that.

During rough economic times, most people pull in the reins of spendingand worry that the services of a financial consultant will be too expensive for their more limited budget. Nothing could be further from the truth. A preliminary meeting with a financial advisor can actually save you thousands. He/She often can spot financial leaks in your investment pool.

You might think you have to delay your retirement because of the recessionary times. With proper direction and good sound financial advice, you might be wrong. Even if your savings has worn drastically, there are ways to prevent further erosion and turn your situation around in many cases. That is why seasoned investors seek financial advicemore in rough economic times.

Some people turn to friends and family during these times for their advice. You might know a very smart neighbor that you believe has all the answers. He/She may have some advice and might be able to help you, but does he/she know every option? Are you willing to put your entire future in to the hands of that person? put your years of hard work and graft in the hands of that individual? Would you rather seek council from someone that has formal training in this area and spends everyday, all day, studying the various aspects of personal finance and investments?

A more recent method of increasing supplementary income for retirement is through a lifetime mortgage or home reversion plans.You can harvest the paybabck of your equity in the home without losing that asset. If you only need a small increase there are programs that allow you to use just some of the equity.  However, the use of a home reversion plan or lifetime mortgage also requires that you find the best one and understand all the potential problems. Sound financial advice from someone that studied each type of home reversion is often necessary at this time.

It is best to find a financial advisor to help you look for the best method of supplementing your income or releasing the equity in your home. Sound financial advice will include an explanation of the differences between home reversion plans and lifetime mortgages. A financial advisor can evaluate your situation and help you decide on the most beneficial solution for your financial future.

 

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Financial Advice – Be Sure Is Right For You

January 9, 2011 — 11:56 pm

Financial advising a smart step to do if you are thinking about making an investment into a property as well as business. By looking for a financial advice, you’ll reduce the potential risks that accompany such moves and grow your probabilities to benefit.

If you do not are a financial expert, getting financial advice may be one of one of the most strongly suggested courses of action that you may take. For the reason that financial advice should come from anyone who has a very clear idea of finance concept, finance law, and the way trends are planning in the global markets. Whether you are investing in a business as well as real estate, getting financial advice can certainly set you on your path and reduce the risk that you will be exposed through. Usually, your lifetime savings could be on the line and also this is not some thing you need to play around with.

The most beneficial financial advice can come from somebody that you individually trust to look at a review of your investments and finances. This people is aware of several elements about your life and they can use their advice to different parts of your needs which they do understand. If this isn’t available, nonetheless, look for financial advice from a professional organization. The people who perform the job here are properly qualified and can have a look at all of your investments and determine how you should make investments and expand that money to offer optimum benefits.

When you have financial advice that you can trust, you’ll be able to help make certain you are not missing out on the chance. You will be able to easily make your savings grow in order that, once you do retire, you will be able to do so with no troubles. This should help you to live the maximum life imaginable, saving you the trouble of getting to always worry about your money.

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Thoughts And Advice On Sound Financial Planning And Investing Your Wealth

April 16, 2010 — 12:01 am

Being financially accountable has never been more essential than it is today. With the economic down turn, there is less stability, questionable opportunities and general untrustworthiness of key banks and financial institutions. It is time to take your own fiscal planning and investment into your own hands. Here are some guidelines for good fiscal planning and investment.

The key to fiscal planning and investment actually begins before you plan or invest. It is accumulating a margin of safety. It is developing a savings. They key to financial planning and stock trading is to constantly save more than you invest. If you do this, no matter what happens to the stockmarket or your investments, you will not go bankrupt. We have seen first hand now how a credit based society no longer works, and more and more families and folks are learning that you can’t live check to check.

So, what does this mean for fiscal planning and investment? Find ways to improve your earnings or, more likely, cut your expenditures so that you balance your budget in a beneficial way – you need a surplus. Now, this surplus is for investment, you really need to be scheduling a monthly deposit into your savings account as part of your budget, before investing the rest of your funds.

So what sort of advice do I have for your financial planning and investment. Well, now that you have most of your extra monthly cash flow going directly into a no-risk, low-return savings account or other similar investment, the rest of it should be either in similar no-risk CD’s or treasury bills, or it should be in the most mid-risk and lucrative investments you can find which is needless to say some option trading strategy. See how having a protection net can free you up to take a chance. Frankly, I think that your balance between no-risk, low-yield investments and mid-risk, high-yield should be something like eighty-five percent low-yield and fifteen percent high-yield. There is no such thing as a no risk stock trade – so learn stock trading properly first, and only if you have security in your other CD investments.

Sound financial planning and investment is not a cryptic magic, dark art, or insider secret. Knowing the way to invest is basically a question of shielding yourself, and maximizing your opportunities. Again, the secret to economic planning and investment is to plan for small growth that will yield large results in the long term and gamble a very small amount or percent for big returns.

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