Spanish Financial Services & Mortgages – Recent Developments That Will Effect Your Financial Lives!

At Rose Financial Services, being recognised as a specialist mortgage brokerage and independent financial adviser, it is accepted that we are and will remain abreast of any developments affecting the products and services we provide to our clients. In recent weeks and months there have been some changes that I would like to summarise for you. The content can sometimes be complex so, if you want further details and specific advice for your own personal circumstances, please contact us.

1) EU Savings & Tax Directive

In August of this year the EU implemented a little advertised but significant piece of legislation to reduce some of the tax avoidance that has existed for years via numerous international or ‘offshore’ banking centres.

The actions they have taken allow for a freer flow of information between EU states and some offshore centres primarily for the benefit of each member nations tax authorities. In other words, the insurance and investments providers are obliged to not only provide tax-related information but, in some cases, will automatically withhold a percentage of interest to meet the likely tax payable.

The action has the affect of ‘watering down’ some of the benefits previously attached with using offshore arrangements, but they have not fully closed all the windows of use. Indeed, some centres will continue status quo and, if not excluded from the directive, will simply ignore the pressure being applied.

So, for the time being at least, there are some very good reasons to continue to explore the tax breaks on investments offshore.

2) The European Central Bank (ECB) increases its Base Rate by the first time in 4 years

Concern for rising inflation in its EU member states has forced the ECB to take a defensive stance by increasing its base rate by 0.25%. Not a lot and not as much as the markets had expected, but enough to make the cost of borrowing that much more expensive.

Most mortgages in Spain have an interest rate that is priced against an index known as the ‘Euribor’ (European Interbank Offer Rate) which is how banks calculate the interest charged to one another. Because of the long term nature of residential mortgages, the banks use the annual rate when the price a mortgage loan for you. It is the Euribor annual rate that has seen the largest increase of late, again because the money markets expected a half point rise in the ECB’s base rate rather than just a quarter. That has translated to an average mortgage costing 3.5% rather than just 3% just a few weeks ago. Of course, it could be that the quarter point may be enough and the markets may adjust the index in a downwards direction. But it is reasonable to assume that the new price is here to stay for a while.

The 3.5% average rate is an increase of nearly 17% in real terms so it is not insignificant! However, we have to put things into perspective here. A mortgage of Euros 100,000 will now cost 291 a month rather than 250 if arranged on an ‘Interest Only’ basis. Still an awful lot less than the cost of borrowing in the UK!

3) Using your property for pension planning via a SIPP

With effect from next April, the UK Revenue will be offering a tax break by allowing various types of assets, in particular property, to be placed under a tax umbrella known as a ‘Small Self Invested Pension’ or SSIP for short.

Whilst this is not likely to used by most people, even those owning their home, it will be of interest to property portfolio owners and even those folk owning a holiday home overseas. That applies to a lot of people with property in Spain.

Whilst the final rules have yet to be announced by the Inland Revenue, it is understood that the fundamental benefit will be reduce if not eliminate capital gains tax and inheritance tax by transferring such assets into a pension. In the long run, of course, the savings could be significant so this has to be an option to consider when buying property, either in the UK or elsewhere such as Spain.

4) UK pensions – The Turner Report

I know! You are probably fed up with hearing and reading about this. But I am not a politician so I can say what I really think without worrying about the consequence!

I have been in finance a long time and that means around the issue of pension planning and the potential ‘time bomb’ that it is whenever it is raised and brought into the public eye.

There are a few basic facts that cannot be ignored, even politicians try to.

1) We are all living longer! That means that pensions are payable for a longer period and that extra money has to come from somewhere. The UK’s system of ‘Pay as you go’ (tax collected is paid out immediately as a pension) cannot continue to work as the ratio of people paying tax will fall against those in pension payment. Fact!

2) The birth rate is in decline! This has the same effect as 1) above i.e. that, in time, there will be fewer people to pay tax. That being so, can future governments persuade the then tax payers to continue to pay an ever increasing amount? I doubt it! Fact!

3) The UK’s private pension funds are the largest in Europe. That’s simply because we do have the intellect to understand the need to save for the future albeit that the bulk of these monies are via the large public and private pensions funds. However, the small man who does not have the benefit of a company pension really does need to plan more for himself. Fact!

The fundamentals are not good and cannot be avoided. The realities of the decisions that have to be made are obvious but, as always, needs some political courage and conviction to bring about action. What is needed is pretty obvious;

– An older state and retirement age as Lord Turner correctly surmises. But why wait until 2020! It’s an issue now so make the change now!
– Save more! The New Zealanders realised some years ago that they had the same problem and have reacted. They have implemented a second tier pension plan. Yes, it costs more but this is now unavoidable.
– Save more yourself! Do you really want to rely on third parties that may, when you need it the most, not be able to deliver. Savings as a percentage of earnings has fallen dramatically in the UK in recent years as people spend for today. Time to change attitude I think!

So there we have it! A flying visit to various issues that can and will impact your daily financial lives. If there are any points that you would like further explained do not hesitate to contact us at Rose FS.

Banking and Financial Services for Radical Change

Many countries are facing troubling economic conditions and slowing growth rates, this is the reason banks and financial institutions are coming forward with more innovative products and flexible approaches. They are trying everything to solve such deep problems that are continuously digging gaps. They are revolutionizing in order to fix social and economic problems. Their steps are customer-centric and are addressing key economic issues. They are mainly focusing entrepreneurs to empower them so that they can sustain growth. It will help to improve societies through growth, innovation as well as transformation. The banking and finance sector revolution will bring major change and will eliminate conventional form of banking as well as mindsets.

Today, economies are greatly looking at entrepreneurs to help elevate their conditions. Banks are supplying verve’s to the entrepreneurs through their unmatched services and products. This will solve problem and empower them with powerful and reliable change agents. They are incorporating more and more approaches to reach customers and making their services available to everyone. They are not only creating a paradigm for businesses, but also handling them power to enter into ventures that can handle economic steering. They have understood that proper banking awareness and education is very important to raise public consciousness.

Today, societies are demanding more efficient and integral banking services in order to fulfill the necessities. To make all this happen, entrepreneurs should also understand that through new ventures they will help building prosperous nation. In the same scenario, banks have started evolving themselves for the business’s long-term sustainability. Because without the help of banking technology, financial products and integral services enterprises fail to stand competitively.

They are providing innovative their products and have successful introduced personal, corporate and privilege banking for sector wise development. They are offering NRI banking, internet banking (funds transfer, money management), mobile banking, loans, and different types of cards, project finance, insurance plans (home, travel, and health, motor) as well as investment plans for enterprises and common people.

In fact, they are indulged in wealth management and asset management services so that they can empower nations and pour strength in its roots. Unquestionably, through all these integral features that have dissolved convenience to lives. They are offering different techniques to safely manage finances. In short, banks are working at the highest level of efficiencies for fast economic growth and propelling their strategic, innovative and creative plans for radical change and differentiation. They are discussing their future plan of actions in banking and financial services conferences.

How to Generate All of the Leads You Need for Your Financial Services Practice

Each day, many independent financial planning practices wake up with the same dilemma – how do I keep my marketing pipeline full of qualified prospects for my practice? Scores of books and articles have been written on the subject and the old adage still applies. Within this article, we are going to explore traditional and non-traditional forms of marketing to determine the best way to grow a financial services practice with the people you enjoy working with the most. Then, we will end by discussing how to implement the greatest lead generation strategy that I have ever come across – bar none.

To this day, it pains me to see well-intentioned sales managers teach their students traditional marketing tactics to grow ones financial services practice. The tactics I am talking about are easily identifiable – telemarketing, direct mail, and door knocking. In order to have an intelligent conversation, we must discuss the pros and cons of each strategy. So, let’s put these marketing strategies to the test to see what type of people they attract and why in today’s environment. The positive aspects of these strategies are that they do create leads in a relatively short time period. One can have a lead within a few hours of implementing these marketing tactics. However, what is the cost? Many professional services firms do not put a price on how much their time is worth. A good way to determine your hourly rate is to take your trailing 12 months of production and divide it by 2,000 hours. For example, if your trailing 12 months of production was $250,000, then your hourly rate is $125 an hour. Now that we have an idea on what your hourly rate is, we now have to count the cost of buying a marketing list. Typically, a good lead list will run around 50 cents a lead. Therefore, if you buy 1,000 leads, the total cost is $500. If you do direct mail, the costs go higher due to postage bring your cost per lead up to $1.00 per lead. So, let’s say that you engage in a traditional marketing approach to this lead list you have purchased. Question – what type of person are you going to attract to your business using these strategies?

During my 16-year career of providing professional services to my clients, I have conducted numerous interviews to find out how my best customers choose their trusted advisors. NONE of them have said that they would respond to a cold call or direct mail, even if they were in the market for that service. Think about it. If you are marketing to successful, quality people who talk to other quality people, don’t you think they may ask each other who they use as a financial planner should they need one? The answer to this question is obvious. At one point in my career, I made a list of the people I enjoyed working with versus the ones that I hid underneath my desk every time they called. The answer was startling and it changed my outlook on marketing. Every single one of the people I enjoyed working with came from a referral or word of mouth. ALL of the ones I could not stand working with came from a traditional, old school marketing tactic known as cold calling, direct mail, and door knocking.

The reason is simple. Quality people refer their trusted advisors to their friends and business partners because they know them and trust them. A majority (not all – there are needles in a haystack) of those who respond to traditional marketing methods are either living under a rock or are so difficult to deal with that no one in their right mind would want them as a client. Most of these people want to stay at the Ritz-Carlton and pay Motel 6 prices. Sooner or later, they will find another service provider who will do it cheaper or make promises that they will never keep. Do not let this be you. Instead, practice the simple art of relationship marketing.

Relationship marketing’s goal is to fill your sales pipeline with people you enjoy working with the most. In other words, the intent is to “clone” the clients you enjoy working with the most. How? You know the popular saying that says “bird of a feather flock together?” Not only is this true for bird migrations, but it is also true in business. Great clients who you love working with hang out with other great people that have a high probability of fitting into your practice. I have seen this time and time again. The wise saying is true that if you show me who your friends are, then I will tell you whom you are. So, how do you develop relationships with the friends of the clients you enjoy working with? Simple. Make a list of your top 20 clients. If you only like working with 15, then stop at 15.

Then, invite your clients out to lunch and ask them for their feedback. Ask them what they like about your service, what can you improve, how you can serve them better. Each time you ask them, write down their answers, listen, and implement them into your practice. Then, ask them what the best way is to reach people just like them. You will be AMAZED at the answers. Again, just listen, take notes, and then get ready to implement their ideas. When I asked my clients this, some would say that they have been meaning to introduce me to their friends but that I never asked. Others suggest joining their trade association. Let this be a normal conversation. Successful people love giving advice. During the whole conversation, make it a practice to listen 80% of the time and talk/ask questions/clarify 20% of the time. You will be amazed at the results. Soon, you will have more quality leads than you can handle.