Transforming personal finance since 2011

#64 — My new book is here - what's it for?


August 11th, 2020

By Andrew Craig

Reading time: ~ 11 minutes

If you've been a subscriber for a while, you may have noticed that we have been radio-silent for a lot longer than usual in the last few weeks.

The reason for this has been that the Plain English Finance team and I have been very busy getting my new book, "Live on less, invest the rest..." up in lights.

Today I am delighted to be able to share that it is now available on Amazon.

I wanted to take a moment to explain a little bit about what it is, how it has come about, the purpose it serves and why I hope you might find it valuable. To do that, below I have included some of the first few pages of the book. I concede that this is quite a long and detailed excerpt but I think it is important to explain things in sufficient detail, so I hope you will forgive the length!


Excerpt from "Live on Less, Invest the Rest"

AN IMPORTANT INTRODUCTION

Before you go any further with this book, it is important to understand that it is the evolution of a document that was previously called “The Complete Guide”. We created the first version of our “Complete Guide” back in 2014. To explain a bit about how and why it came about: I had published the first edition of my book, “How to Own the World” in 2012. Within a reasonably short period of time, we had sold a few thousand copies. Lots of people started to get in touch with me to ask questions about what they should do with their money and investments.

Long term readers of my output will know by now that there are very strict rules around giving people any kind of investment advice, particularly anything that can be seen as personal investment advice.

Anyone seeking to give specific, personalised financial advice in the UK, is required by law (by the financial regulator, the Financial Conduct Authority) to conduct a detailed “fact find” process with someone before they are permitted to give such advice. (This is true for regulated investments such as shares, bonds and funds at least. Sadly, anyone can say anything they like in unregulated investments such as bitcoin or dodgy property schemes. I think this is an absolute scandal personally - and has been and will be hugely damaging for so many people’s finances, but I digress...).

This “fact find” process can also be called a “Know Your Client” or “KYC” exercise. The idea is that any financial adviser must get to “know their client” to ensure that they give “appropriate” advice – that is to say advice that has very carefully taken account of the specific circumstances of that individual, including the full detail of things like their:

  • ...income and expenditure,
  • mortgage or rent,
  • other debts,
  • current investments,
  • existing pension arrangements,
  • attitude to risk,
  • long term financial goals...

...and so on. This legal obligation is obviously, quite rightly, aimed at protecting people from the risk of bad or inappropriate advice. The aim is to minimise the chance that people lose money, take on more risk than is appropriate for their personal circumstances or do something fundamentally silly like make investments whilst they still have significant expensive unsecured debt (such as credit card debt or a bank loan. I address this issue specifically in a few pages time).

I think it is important to note that conducting this “fact find” or “KYC” process involves a great deal of work. There will need to be a face-to-face meeting in someone’s home or office, or a long phone call or series of phone calls in order for a financial adviser to get the full understanding of that person’s entire financial picture that they are obliged to get by law. An adviser will then spend many more hours gathering paperwork from the client and preparing a formal investment report which provides appropriate, specific and personally tailored recommendations.

Although I have passed the requisite exams to give financial advice, I don’t actually do this activity. I just don’t have the bandwidth to be travelling around the country doing face-to-face meetings, fact-find questionnaires and the preparation of detailed personal investment recommendations for individuals. I am an investment banker and fund manager, not a practicing financial adviser.

...but – as a result of the success of the book - that didn’t stop (and hasn’t stopped) lots and lots of people from getting in touch with me to ask me for personal financial advice.

Since about 2012, hardly a week has gone by without me fielding an email or message on social media from at least one person asking me for personal financial advice. It is not uncommon for someone to get in touch, say something very kind about “How to Own the World” (which is very much appreciated of course) and then give me detailed chapter and verse on their personal financial situation and ask me specifically what they should do.

Questions will include things like:

  • “Which fund should I buy?”
  • “How much gold should I buy and what is the best way to buy it?”
  • “Should I increase my mortgage to invest in the stock-market?”
  • “Should I pay down my credit card before I start investing?”
  • “Which accounts do I need to open and which stock-broker should I use?”
  • “What should I do about my pension?”

We produced the original “Complete Guide” document and created our online “How to Own the World Community” in an attempt to help people with all these sorts things as best we could within the boundaries of what was legally allowed.

It is against the law for me to give anyone personal financial advice or answer specific questions about their own personal circumstances without going through that detailed “KYC” process I have explained above. I can’t do this. What I can do, however, is talk in general terms about things that people might do and that could be a sensible broad- brush approach to getting their financial affairs really nicely in order.

ADVICE VERSUS EDUCATION

I suppose the fundamental difference here is between financial advice and financial education. The idea is that members of our Community get to the point where they can make their own decisions with real confidence and peace of mind.

I would also note that it is extremely difficult for me to keep up with all the inbound enquires I get – as I’m sure you can imagine. Even today, several years after we created our website and put a tonne of information on there for free, lots of people continue to get in touch with me by email and via social media platforms like Facebook, Twitter and LinkedIn to ask me for personal financial advice.

To be clear – I am delighted about this. It is an incredible honour that people do it and even feel comfortable sharing very personal details with me about their income and net worth, but it is also a real headache keeping up with it and explaining the legality around what I can and can’t do.

This is the other reason that we created the “Complete Guide” and, arguably even more importantly, the live and interactive “How to Own the World Community” which accompanied it.

As I say: This is the best way I could think of to help the largest number of people with their finances within the bounds of what is legally permissible and logistically possible.

SOLVING THE “ADVICE GAP”?

Another point I would make is that proper personalised financial advice from a financial adviser is necessarily reasonably expensive. As I have said, financial advisers will have to go to the all the effort of travelling around the country and do a great deal of work in order to be able to give legally appropriate financial advice.

The costs of doing this business are significant - including the costs of regulation and compliance, ongoing compulsory education and training every year, liability insurance, premises and employing staff.

Bear in mind that they will also have to do all this work for people whether they become customers or not - so they have to price in a meaningful number of people who decide not to become clients in their business model - driving the costs up even further.

To make this work economically, and actually make a living, the cost of this sort of personally tailored investment advice is usually several thousand pounds. This is quite obviously too much for the vast majority of people.

As the FT has put it, regulation of financial advice in the UK has:

"...priced small investors out of the market by making it uneconomical for IFAs to advise anyone but the extremely wealthy."

This fact has attracted a great deal of press coverage in recent years and is generally referred to as “the advice gap.” In a nutshell: Good financial advice costs thousands of pounds. Most people really can’t afford this but need it, nevertheless. This is the “gap”.

The original “Complete Guide” document, and our accompanying “How to Own the World Community” were an attempt to help as much as we could for a tiny fraction of those thousands of pounds that such financial advice usually costs.

And this brings me on to an important point of clarification: The original “Complete Guide” document from which this book has evolved, was really designed to go hand in hand with being a member of our online Community.

This new and very significantly updated and improved version is available as a stand-alone book – and you may have acquired it on that basis. My belief is that it can certainly work as such and the reader is under no obligation to join our online group, but this is why you will find references to the accompanying Community at points throughout. Hopefully this makes sense!

--End of excerpt


Plain English Finance online Community

In Summary

So “Live on less, invest the rest…” picks up where “How to Own the World” leaves off. It is a companion text to that book and to the Plain English Finance online Community. The book embeds what we have learned from that group over the last several years.

In that time, we have been able to see all the various questions and concerns that are most regularly raised by our members in their quest to sort their finances out.

“Live on less…” is a reaction to those questions and an attempt to summarise the answers as succinctly as possible in one place.

Topics covered include:

  • How you can find the money to invest.
  • Paying off any expensive debt you may have.
  • Saving up a “rainy day” pot to cover you in a crisis.
  • Setting up the right investment accounts such as ISAs and pensions.
  • Simple investment strategies you might consider.
  • Sensible asset allocation based on your age.
  • Annual housekeeping and valuable Further Resources.

The broad point is that investment need not be that complicated – it is just that most people never learn anything about it. The approach outlined in “Live on less, invest the rest…” should give you the confidence to sort your finances out once and for all. For most people, this is a huge relief and one of life’s great problems solved.

The book can work as a stand-alone product but is ideally designed to work hand in hand with our live and interactive online Community as I say.

With this in mind, there is a promo’ code in the back of the book which gives you three months of free access to that group if you purchase a copy (access is usually £5 a month).

…Or you can do it the other way around - in that anyone joining our group receives a free digital copy.

This gives you the chance to experience the benefits of the group for three months whether you’re the sort of person who prefers a print or a digital copy.

Our fervent hope is that the approach outlined in “Live on less, invest the rest…” could very well help you make a five, six or even seven figure difference to your net worth over the long run.

If that sounds like it could be of interest - please do pick up a copy, and / or join our growing online Community.


For anyone who has purchased the Complete Guide in the past...
The last thing I wanted to flag before signing off today is that if you purchased the original "Complete Guide" document at any point in the last few years, we will be emailing you a free digital copy of the new book as soon as we are able to as a thank you for being one of our "early adopters" and so you can benefit from the very significant upgrade to the product. Please watch this space...