Find out what the Mission Statement can do for you!

It was all the rage in the eighties and nineties, but with the turn of the century, the Mission Statement seems to have fallen out of favour. Startbucks provides the classic example of how the Mission Statement was reduced to a one-liner describing the purpose of their organisation:

"We inspire and nurture the human spirit — one person, one cup, and one neighborhood at a time."

The first four Navigator principles all dealt with the human side of money. The fifth is the first to deal with money directly through spending plans and cash flow. Cash flow is the mechanism that enables you to merge life plans with financial plans to support your life goals and give clear direction to your financial strategies. It helps you to measure and balance the twin goals of leading a fulfilled life now with long-term financial security and responsibility.

The first three Navigator steps - letting go, self knowledge and planning - have been about setting the scene to achieve life goals. Unfortunately at this point, when the rubber hits the road, obstacles start to appear and have the potential to throw plans off course.

Last month we introduced the second step in Planning for Life’s Navigator system to achieving freedom and an authentic life – getting to know yourself. This should have left you with a clear vision of your deepest and profound goals, the values you want to live by and your own personal resources for getting there.

The Government announced this week that it intends to scrap compulsory retirement at 65.

Predictably, the media is full of articles about the proposed scrapping of the default retirement age. Some reports are in favour, others look at the potential problems that might occur. All are worthy of a read. The proposals are important for everyone as they might potentially impact upon any current retirement planning in place.



However, it is important to note there is an element of doubt about the whether the proposals would actually be workable. The recently settled case of Seldon v Clarkson Wright and Jakes illustrates some of the reasons why. It centres on the principles of age discrimination and whether this can be overridden by employment and contract law. This case was decided in favour of the partners of the firm, implying anti-age discrimination  rules can be overridden by employment contracts. See the article on the case in the Solicitor’s Journal, which is both topical and very relevant.

The Chancellor will present an emergency budget on 22 June 2010. There has been much speculation that the rate of CGT will rise, possibly up to 50%.

The alternative view to CGT is this. The 18% CGT rate was introduced in 2008 after the tax rate was decoupled from the income tax rate (prior to 2008, gains were added to income in a tax year and taxed at the marginal rate of income tax). At the same time indexation (which in effect allowed only for the taxation of gains in excess of inflation) was abolished and replaced with a taper relief depending on the time the assets were held. 18% was chosen because, relative to the 40% tax rate, it was an appropriate rate taking into account the loss of indexation and the introduction of taper relief). On this basis, 18% is still seen as a "fair" rate. That does not of course mean no increase, but we could see things like a re-basing of assets from the 1982 base to a later year, plus an increase in the 18% rate.

The Pru has announced a delay to its record breaking $21 billion rights issue, earmarked to fund the acquisition of AIA in the Far East, after the FSA expressed concerns about the insurer’s capital position.

It is only a temporary delay, and the Pru is adamant its timetable still stands. However, it will add fuel to the flames in the UK life and pensions industry and strengthen rumours that the Pru is considering pulling out of the UK, along with the likes of Skandia, Old Mutual, even Aviva.

As we progress through 2010 we are seeing an increasing divergence in the performance of regional stock markets.

During the first four months of 2010 American and Far Eastern / Asian markets have shown reasonably steady growth. As at the May Day holiday, US markets were up 6% year to date, Japan was up 9% and although China / Hong Kong are both down on the year, many of the other Far Eastern markets such as Indonesia, Malaysia and the Philippines are all in positive territory.

European markets, however, have fared less well. Indeed it has been a switchback ride so far this year and after sharp falls today most European markets have moved back to break even or even negative territory for the year. The reason of course, is Greece, with Spain, Portugal in close support.

One debt crisis does not a  crash create, but it seems our long standing asset allocation stance of favouring the Far East and the Americas at the expense of Europe and the UK continues to have merit.