Ted Scott on the wire: 10 predictions for 2010

Ted Scott, F&C's Director of Strategy, considers some of the risks and opportunities facing equity investors as we enter a new decade.

  1. A strong rally in the dollar
    One of the principal features of the economic backdrop in 2009 was the weakness of the dollar. The US currency, still a global safe haven, saw its value eroded by a sharp increase in appetite for riskier assets over the course of the year. However, the US economy is improving and as long as the market is not too unsettled by fears of inflation and the need to finance the burgeoning fiscal deficit, the dollar should enjoy a significant rally. Much of its weakness has been due to speculative selling and, as the dollar will not fall to zero, the rebound could be quite sharp when it comes.
  2. Gold continues its ascent
    Perhaps the most important reason for gold's strength in 2009 is that it accurately reflected the ongoing fragility of the global financial system. After the scare over the possible debt repayment default by Dubai there could be further alarms this year given the explosion of government debt since the crisis started. This has also raised fears of a currency crisis and has contributed to the weakness of the dollar, which is all good news for gold. Gold is likely to be viewed as an increasingly attractive asset in this uncertain world and, with the likelihood that the pace of the global recovery will falter in 2010, the metal should benefit.
  3. Markets fret about inflation
    The main reason to be concerned about inflation is the continuation of ultra-loose monetary policy. With interest rates likely to remain near zero in the short term and quantitative easing still being applied, the massive monetary stimulus could have serious inflationary consequences. Quantitative easing has also helped keep bond yields low (because the Bank of England has been buying gilts aggressively as part of the programme) and when it finishes bond yields should rise as a precursor to higher inflation. This could happen sometime this year but probably in the second half. For equity markets, the rise in bond yields anticipating inflation before it happens will make further positive progress more difficult.

Read more predictions.

 

Article last updated: Feb 5, 2010

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Panacea is the only active community for small directly regulated IFA firms who are looking for access to help, educational support, advice and technical training from major product providers.

What we do

www.panaceaifa.com is a community for small to medium, directly regulated IFA firms. The portal, launched in February 2007, is designed for IFA's by IFA's and aims to bring small to medium sized IFA's and Providers closer together in an efficient, meaningful and cost effective way.

On the site IFA's can access technical, business and industry expertise in one place by browsing the Investments, Pensions, Protection, Retirement zones of the site, connect with fellow practitioners via the online forum, and keep up to date with the latest news, comment and industry trends with our free weekly email newsletter.

Going forward, the Retail Distribution Review (RDR) will impact greatly upon providers who rely on the network and national IFA model to distribute their products. The remuneration model will change as will the support model. All of a sudden the small, directly regulated IFA has become attractive again as they currently are best equipped to deal with the changes proposed for 2012, but how do providers engage with their world again?

After all, over the years, smaller IFAs have lost the face-to-face support resource that existed and providers no longer have an in-house method of economically delivering support and maintaining relationships.

The answer is simple. PanaceaIFA's role is to join up the loose connections between directly regulated Independent Financial Advisers and product providers. Its aim is also to correct the support and service imbalance with providers - currently in favour of Networks and larger national IFA firms- in a way that is in fact RDR friendly as resource support is delivered by a free to use, independent industry supported portal.

Therefore, at a time when product provider marketing budgets are being scrutinised and reduced, the decision has be to be made whether to reduce the amounts being invested in distributor marketing programmes and look for opportunities that are more new media, more new model adviser to deliver resources, support, education, training, marketing, business promotion ideas and more to the distribution channel best placed to quickly adjust to the changing landscape the industry faces.

Who we are

Panacea is a portal and community where smaller IFAs can exchange ideas and seek advice, where providers can establish direct contact with a new and active distribution channel of small, directly regulated individuals or firms and all in one place. With a community growing toward 1,800 members made up of small, directly regulated IFA firms it will come as a surprise to many that such a small group of "difficult to service" businesses can produce so much business.

Touchstone analysis has shown that PanaceaIFA members premium income from sales from Q1/09 to end of November 2009 was £639.9m. This level of production is as a result of very little, and in many cases no, provider support. If Panacea was a network and involved in distribution it would be responsible for the highest volume of business production by far.

Simply put, the PanaceaIFA membership represents a quality communication opportunity that will be difficult to find anywhere else. Our members are loyal, receptive and hungry for knowledge.

Touchstone top ten business product types during this period were:

1 Unit Trust (SP) 29.69%
2 GPP (RP) 20.85%
3 Pension Trans 6.75%
4 Pensions (RP) 6.33%
5 Pension Annuity 7.62%
6 Offshore Bond 3.87%
7 UL Bond 3.71%
8 Pensions (SP) 3.57%
9 GPP (SP) 2.50%
10 Term 2.21%

Who we work with

Supported by founder sponsors Aviva, Aegon, AXA, LV=, Scottish Life Thames River Capital, Scottish Widows, Lincoln, Bright Grey, 7IM, Scottish Provident, Ascentric, Unipass and Adviserwise and new for 2009/ 2010 J P Morgan, Artemis, M&G, FundsNetwork, Gartmore, Fidelity, Prudential, Schroder and Royal London 360. Panacea has also established key alliances with leading companies operating in the financial services support market such as Voyant, Paraplanner, Defaqto, Trustnet, PYV, Citywire, Asset.TV, Wizard Learning, The Personal Finance Society, Funds Library, Rayner Spencer Mills, Marketing Hub, Mortgage Brain and Regus.

All these firms bring to the community relevant, trusted information in a timely and objective fashion. Many services they offer are free, some at a beneficial cost to Panacea members.

Unipass is a service provided by Origo Secure Internet Services Ltd. for the UK financial services industry. In simple terms, Unipass is a secure digital certificate - a small encrypted file on your PC used to uniquely identify you. It's like having your own electronic passport. It allows users to move seamlessly between supported provider sites.

Why we need you

Panacea is free to IFAs thanks to the support of our sponsors and partners. As our resources develop and grow we aim to introduce a members-only zone where, for a small fee, you will have access to premium content expanding upon what is already available in regard to training, business development, technology and technical help. The membership fee will be very low, so please do use Panacea to the full, tell your industry friends and colleagues about us, and help build a unique community that serves your needs.

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As an IFA you can join simply by registering for your Unipass certificate. If you would like to join our prestigious panel of sponsors or partners or to advertise on our site, please call our team on 0191 206 4030.

If you are a life assurance, investment, pension and retirement product provider and want to find a realistic and cost effective way to reconnect with the valuable distribution channel of small IFA firms, then look no further than Panacea. Opportunities exist for strategic partners to sell tools, training, back office or legal services to our IFA members – please call us for more details or send us an email.