Our graduate training programme (The Grad Scheme) is going from strength to strength and last month we welcomed yet another two recruits to the team. We held an Assessment Day at the beginning of June, where 10 fresh and eager grads arrived ready to impress us with their energy and enthusiasm and luckily for us, we didn’t find just one, but two perfect candidates!

Having been with us just a short amount of time, Lee and Sunaina took no time in rolling up their sleeves and getting their feet firmly under the table and for us, already feel like part of the family. They have shared with us their reflections at the end of their first week and thankfully, it sounds like the love is reciprocal! Phew…

Have a look below and be sure to check them out on our Meet the Team area too where you may find out a little bit more about them both.

 

I have been inspired to write this blog following a recent leadership course I attended. It was a course for female leaders and I admit to some initial scepticism as to why it needed to be female only; surely the leadership values were the same for all genders? However, there were two reasons I felt afterwards that it was useful being a women only course:

• The content on the course reflected the fact that women naturally have different leadership styles to men, and was focused on those styles and how to best develop the stronger ones.
• There was something about the room being full of women, all 80 of us, that gave it an amazing energy. I don’t want that to sound naff; but it was such a friendly, open, sharing environment. I genuinely felt that everyone in there had known each other months – not minutes by the time we did our first group session. And because of this, I got so much more out of the day than if the environment hadn’t been as relaxed.

Anyway, unnecessary scepticism aside, I took quite a few learnings away from the day, which I wanted to share. I’m a very practical person; I like tangible outputs. And so immediately after the event, I could say I had taken away:

• An understanding of my leadership style. An important one this; I was classified as a ‘Pioneer’. I like challenging things and coming up with new ideas. Not a great shock. What was good to learn though was that I always assumed that this created an exciting, fun environment to work in, and the course showed me that that’s only the case for other Pioneers. Everyone else would just feel unsettled and insecure, craving a bit of stability and for me to not come up with a new idea every 5 minutes!
• A list of practical things I could implement, such as training for my strategic leadership team (the all female Para-Dolls!), and an accountability partner to make sure I stick to my plans (and vice versa); someone to be accountable to is actually something I’ve never had since starting the business, so is an interesting one!
• I got on well with a group of the ladies there; we immediately set up a Whatsapp group and so now I have a network of people to bounce ideas off or ask for advice, again, something I’ve never really had.

However, there are more, intangible benefits from the day; things that have only come to light as I’ve spent more time reflecting over the last few days, and which I think will profoundly impact the way I take the business forward now.

1. Firstly was the reminder as to why I started Para-Sols in the first place. We did some work on what our passions were as children, to trace how they led to what we do now. I really struggled with this – I couldn’t think of anything I was passionate of as a child! Eventually I remembered my favourite ever Christmas present… a box of stationery (insert geek emoji!)*. I absolutely LOVED all the coloured papers and envelopes and little stamps. My other passion, which I’d forgotten about, was writing stories. My school even arranged for some of my short stories to be displayed in the local library; so no surprise at the paraplanning career!

However, we then delved a bit deeper. Those reasons explain, to some extent, my career choice. But not why I had started a business. The exercise brought up my true reason; that as a child, I was one of six children, to a single parent, and we didn’t have two brass tacks to rub together. I mean really, we were so far under the breadline, the breadline was a dot to us (to paraphrase Joey Tribbiani). While I don’t think it did me any harm, I always knew that I would never, ever want my own child to know the embarrassment of not having school shoes, or being unable to afford the gas and electric meters on a regular basis. And that was why I started the business; because I needed control of my own destiny, and control of the future for my babies.

The upshot of this, on reflection, is that I’ve always been guilty of micromanaging the company. I knew I did this, and I knew I shouldn’t, but now I know why. I know it’s because I’m terrified of losing what I’ve built and so I try and control every single element of it, which just results in stifling the growth. To counter this, I’ve decided to create a Plan B; what I will do if Para-Sols collapsed tomorrow. I haven’t finalised this yet, but just the process of it is giving me comfort and reassurance in the future for me and my children, which, in turn, will help me to unshackle the business and allow it to blossom.

2. Any other business owners recognise this scenario? Someone asks what you do for a living and you explain that you run your own business. They ask a few more questions, which you answer, and then say they’re really impressed. You respond with something self deprecating like “yeah I really don’t know how I’m running a business; I just kind of bumble along and make it up day to day”… That is how I ALWAYS respond to these questions. I was always aware of suffering Imposter Syndrome; who doesn’t suffer it to some degree on at least one part of their life?

But on the course I was in a room with 79 other female leaders. I had expected them all to be entrepreneurs, but actually only one or two I spoke to ran their own business. The rest were in leadership in roles in organisations of all shapes and sizes, across all industries. And as we talked, each time someone asked what I did, I told them, they expressed how impressed they were, I put myself down, or blamed my success solely on luck, or ‘joked’ how it will all probably end tomorrow since I don’t know what I’m doing and that’s why I’m on a leadership course….

After the 7th or 8th person told me how impressed they were, and after two ladies who were in really influential roles asked for my number as they were ‘inspired’ by me, something started to click. It’s taken a few more days of marinating but I’ve decided that it’s time to stop. To stop putting myself down. To stop saying that my business is only functioning down to luck. To stop assuming everyone else is doing a better job at managing their companies than me.

Instead, I’m taking ownership of what I’ve done. I always say how proud I am of my team, and I am. But, it turns out I’m also proud of myself. I’m proud to have a built a successful, profitable business, that employs 17 people. I’m proud that although I started off bumbling along with no idea what I’m doing, I’ve studied, and developed and learned so that I actually can run a business, by design, not chance. And I’m proud that this has been achieved not through luck, but through learning from my mistakes, making any necessary changes quickly, no matter how painful, and from sheer bloody hard work.

So there we go – pretty useful course huh?! The upshot is that I feel far more confident about the business, far less scared to take risks, and I think you’ll see that in the coming months as I now have the strength to launch some of the things I’ve thought about, but cautiously held back from.

It’s going to be quite a ride, and I can’t bloody wait!

Cathi x

* True story. I asked my mam a few days later “do you remember what my favourite Christmas was as a child?” and she replied, without hesitation, “the year you got all the stationery”! Apparently I used to spend hours pretending I worked in a Post Office (no surprise then that I worked at Royal Mail for 6 years from the age of 16).

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Recent press coverage of the problems in Defined Benefit funding and the combination of factors leading to increased transfer values, has led to a substantial increase in people looking at the options of transferring their funds to a personal pension.

The recent FCA paper suggesting a change away from the traditional TVAS and critical yield guidance, although in the absence of any concrete alternative measures, the critical yield is still seen as a major factor when reviewing the value of defined benefits schemes. However, looking instead at a drawdown option can shed unseen light on the suitability of transfer.

Scenario

Claude is aged 51 and has received a CETV of £187,000. He was a member of the scheme from September 1999 to May 2004.

The pension income in May 2004 was £3,365 per annum and based on the revaluation, would be £6,002 at his normal retirement age of 60. This income escalates by RPI up to 5.00% per annum.

Assuming total costs for a new pension of 1.58% per annum, the critical yield has been calculated as 8.24% per annum.

This yield is high and one unlikely to be achievable unless a particularly aggressive risk approach is adopted.

Looking at it from a drawdown perspective, however, we can take the CETV and assume growth on this to age 60. We would then take the £6,002 per annum figure in line with the scheme benefits, and calculate what would be required as a return for this to be sustainably withdrawn while increasing by 2.50% each year.

An analysis of this type shows that a return of 4.12% per annum would be required pre- and post-retirement to provide the income until age 100. This includes the investment charges of 1.58% per annum.

Taking the income until age 110, in effect 50 years from the starting point, would require 4.85% per annum returns.

Summary

To replicate scheme benefits Critical Yield
Annuity purchase at age 60 8.24% per annum
Drawdown from age 60 to 100 4.12% per annum
Drawdown from age 60 to 110 4.85% per annum

Of course no account here is taken of the client objectives, considerations in terms of their risk and capacity for loss and their overall feelings towards the transfer of risk to them, from the scheme.

However, a full drawdown analysis does offer an alternative consideration to the critical yield, which has historically always been based on the fact an annuity had to be purchased by 75.

What this comparison shows is that the yield required to match the income, is much lower with drawdown than it is via an annuity, in no small part due to the extremely low annuity rates currently available. Much like the critical yield, the drawdown growth figure is only one part of the overall picture, as other factors such as a client’s poor health could affect the annuity rate available, and therefore the relevant critical yield.

We would however suggest that it is a more appropriate starting figure than the current standard critical yield and would like to see the FCA guidance reflect something similar in future.

I recently attended the Intelliflo Change the Game conference. The technology focus is what initially attracted me to it. However, the main take away I got from it in the end was the talk by Graeme Codrington of Tomorrow Today.

His presentation focused on future proofing your business, both in terms of considering what the future may hold for your company, what challenges might be facing it, but also considering the future of your clients, or, more importantly, how your future clients may look.

We are all aware that the pace of technology is astonishingly fast and the impact of this is the world changing at a greater speed than it ever has. This impacts on everything; automation, working patterns, health, job expectations, and all of these will affect our businesses to some extent.

Some of the facts he shared which I found particularly interesting were:

  • For every week we live, we are adding 1.5 days to our life! This reflects the pace of medical advances. How does this affect you? Think about cashflow planning you do with clients. Or the critical yields on their drawdown plan. On the relative value of an annuity (if it’s being paid out for 50 + years, it might look a bit more attractive!

 

  • 78% of people check their emails within 15 minutes of waking up. 15 minutes! Most people, if they realise they’ve left the house without their mobiles will go back just to pick them up. How does this affect you? The future is mobile. In some way, shape or form, everything will be impacted by this. Does your client have access to real time valuations or a client portal on their phone? This will be an expected feature in future – is it time to start thinking about it now?

 

  • Automation; not to say something as dramatic as ‘the robots are coming’.. but.. the robots are coming! Maybe not in their current format (“robo-advice” has some developing to do), and maybe not in the next 5 / 10 years. And if you’re not expecting to be working in 5 / 10 years then maybe you don’t need to be concerned. But for the rest of us, it’s definitely something we need to consider. What are we currently doing that can be automated? This takes a big leap of imagination – but it’s an exercise worth doing as it can help identify the parts of your service that are weak and can be replaced. By assuming the robots will take them at some point, this leaves, the parts of your service that can’t be automated. And THAT’S where you add value, where you can make a difference and how you can future proof your business.

I won’t repeat his whole presentation but needless to say I took away many ideas to implement both in Para-Sols, and in the service we offer our firms.

Most definitely food for thought.