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  • The subject of behavioural finance is one that has been in the press recently and it is one I am particularly interested in, but what does it mean?

    Essentially, it is the crossover between investing and the sub-conscious psychology that forms the basis for an investor’s rationale.

    The subject can generally be broken down into 8 recognised concepts;

    • Prospect Theory & Loss Aversion
    • Anchoring
    • Mental Accounting
    • Confirmation and Hindsight bias
    • Gambler's Fallacy
    • Herd behaviour
    • Overconfidence
    • Overreaction

    I will choose two to look at in this blog.

    Loss Aversion

    Ask yourself the following. Would you rather have;
    A) A guaranteed payment of £90 or
    B) A 90% chance of receiving £100

    Then ask yourself this, would you rather have;
    A) A guaranteed loss of £90 or
    B) A 90% chance of losing £100

    This principle suggests that if investors are faced with the possibility of losing money, they often take riskier decisions aimed at loss aversion. Did you choose the same as the majority; answering A and then B? The two questions above are mirrors of each other, but most people would answer A for the first and B for the second, thus proving the theory.

    Gambler's Fallacy

    This is the lack of understanding that results in incorrect assumptions and predictions about the onset of events.

    For example; in the Monte Carlo casino in 1913 the ball of a roulette wheel fell on black 25 times in a row. Many gamblers thought this an excellent opportunity to bet on red. However, the next spin was black and millions were lost. If an investor thought about it logically; on every single spin, there is an equal chance of the ball falling on red or black. On this occasion, they were therefore falling into the gambler's fallacy trap and not thinking clearly.

    I find this a very interesting topic and one that I have done quite a bit of reading on. If you, like me, found this interesting, I would recommend reading “Thinking Fast & Slow” by Daniel Kahneman. Hopefully, your good investment behaviour will lead to good investments!

  • There are some important changes happening at FMB at the moment that we are very excited about.

    The main change is that we are implementing a new back office system. This system holds all of our client details as well as creating portfolio valuation reports and storing all communications – amongst many other things. Our current system has been in place for almost two decades (with many updates of course) and, we feel it is gradually becoming outdated.

    As a company, FMB strives to provide our clients with the best service possible and after some deliberation, towards the end of 2014 it was decided that a new back office installation was essential.

    We believe that change is necessary to remain a forward-thinking and successful business, with both happy clients and staff.

    Choosing our next system was not a quick or easy task. After masses of research and testing, our management team decided that Intelliflo (Intelligent Office) was the right system for us. Our ‘go live’ date with the new system is 1st July 2015. Fortunately, I shall be on holiday that day, at a Fleetwood Mac Concert!

    Now the appropriate system has been selected; the work doesn’t stop there, unfortunately. A number of staff are regularly attending training sessions and are heavily involved in the preparation work which includes:

    • Testing the line capacity
    • Data cleansing
    • System configuration
    • Defining system roles
    • Staff training plans
    • Designing letters and several forms with FMB’s logo


    Intelliflo will provide us with much greater flexibility and functionality; allowing us to deliver more detailed information to our clients and present it in a format that our clients want. The system is much more integrated than what we have currently, meaning it will be much more efficient and accurate as the information can be pulled from one main source as opposed to multiple sources.

    Everybody at FMB is extremely enthusiastic about the change; myself included, and seeing the dramatic improvements that the system will have on FMB processes and even day-to-day work – 1st July just can’t come quick enough.

  • The 75th anniversary of the evacuation of British and French troops from Dunkirk has been celebrated this last week. Some of the ‘little boats’ and a few of the surviving veterans headed back to France to feature on television.

    I wonder how many people are aware of the evacuations of other troops from occupied France which took place some days after the last soldiers were taken off the beaches at Dunkirk?

    After Dunkirk had fallen on 4th June 1940, any remaining British troops still at large in France were ordered to make to France’s Atlantic coast. This involved a dangerous and chaotic journey on roads crowded with refugees fleeing from the furious advance of the Wehrmacht.

    'Operation Aerial' Map

    Back in England, 'Operation Aerial’ was being planned in the hope that a miracle similar to Dunkirk could happen - this time many miles to the south. It was hoped that troops could make their way to Cherbourg, St Malo, St Nazaire and Bourdeaux. A fleet of ships was assembled and between 15th and 25th June a total of 190,000 troops of the allied nations were safely brought back to England.

    It didn’t all go accordingly to plan, however, particularly at St Nazaire.

    One of the ships sent there was HMT Lancastria, a sleek Cunarder “with two masts and a single funnel” which had already been involved in bringing back exhausted troops from Norway. On 17th June, she was anchored about 10 miles off St Nazaire and throughout the day she steadily filled up with soldiers and airmen being ferried out to her in smaller craft. These smaller boats also brought out French civilians men, women and children who were also taken aboard.

    At about 1pm, another ship nearby, the Oronsay, was attacked by German aircraft and badly damaged. Those aboard the Lancastria feared that they would be next. Sure enough, at around 4pm, the Luftwaffe returned to attack the Lancastria. The ship was straddled and then hit by bombs and almost immediately began to list; pouring oil from her ruptured tanks into the sea. All those aboard were forced into the water in a desperate attempt to swim through the thick oil to get away from the doomed vessel.

    RMS Lancastria in Cunard days

    HMT Lancastria after the attack

    The ship sank within twenty minutes of the first attack and she took with her many lives. No-one can say exactly how many were aboard when she was attacked, but it has been estimated that it was in the region of 9,000 men, women and children. Sadly, less than 2,500 were rescued and brought ashore in Plymouth.

    Winston Churchill immediately hid the news from the public. In 1940, after Dunkirk, he thought that revealing the truth would have been too damaging for civilian morale. He said, 'The newspapers have got quite enough disaster for today, at least.' Since that time the disaster has never been recognised for what it was - the greatest maritime disaster in Britain's history.

    More people were killed on the Lancastria than on the Titanic and Lusitania put together.

    A memorial service is held each year on the first Sunday after 17th June.

    This article is based on an account of the Lancastria's sinking, by Raye Dancocks, Chair of the HMT Lancastria Association.

  • A misconception of financial planning is that it is just for the super wealthy. But define wealthy?! One of my favourite financial quotes comes from Ramit Sethi, “Anyone can be rich; it’s just a question of what rich means to you.” And he’s right!

    Financial Planning is all about getting to the heart of what’s important to you; quantifying your goals and objectives and finding a way to help you achieve them. Whether you are a novice to the financial world or a savvy DIY investor; I’ve put together five reasons why you should use a financial planner.

    1. My best friend, Google

    The Internet has come so far in the last decade; so much so, you can turn to Google for just about anything nowadays - your finances being no different. But where do you start? You will be inundated with information in under 1 second (impressive!) but what to do with it? How are you meant to find impartial advice when all sites will no doubt be offering the “best products/services available”? At FMB, we are completely independent. We’re not interested in making our clients fit the product; we will find best options for you from the entire financial market.

    2. How much is enough?

    Once you have outlined your life goals and ambitions, the next battle is determining how much money you are going to need to achieve them. Unfortunately, this is not an easy task as there are so many factors that need to be taken into account. Inflation, what age you plan to retire and what pension and savings income you expect to receive once you are no longer working are just to name a few.

    Financial planners are skilled at quantifying your goals and with the use of some extremely powerful cashflow modelling software; we can forecast just how much you are going to need. This software is extremely flexible too. It can be tweaked to look at many different options such as whether you would have enough money to last you if you retired a few years earlier or what difference saving a little bit more each month would make over the long-term.

    3. Planning your spending

    Many find that by defining a ‘target’, financial decision-making can be a lot easier. Sometimes sitting down and writing out your expenditure can highlight areas that you hadn’t realised you were overspending on. Being financially prepared for those rainy days and luxuries will keep you on top of your saving and help you build up financial security for the future effectively.

    4. The ‘what ifs’ of life

    Nobody wants to think about the bad things that life can throw at us but being prepared for the worst can provide you with peace of mind. We hear ‘if only we’d thought about this before’ all too often.

    We will cover ‘disaster planning’ as part of our comprehensive financial planning process. We can use our cashflow modelling software to demonstrate what effect certain things could have on your financial situation such as whether you would be able to cope if the main breadwinner of the family fell ill or passed away. By highlighting the implications that these disasters could cause, we can help you put plans in place early to protect your assets and your family should the worst happen.

    5. Keeping you on the right path

    Unfortunately, many people who make their own financial plans forget that the reviewing process is just as important as the implementation. As with anything, things can change.

    Financial plans need to be reviewed regularly to ensure that they are still in keeping with your long-term goals and that you are still on target to reach them. A financial planner will monitor your plans regularly so any necessary tweaks can be dealt with early.

    Call us on 01539 725855 if you would like to speak to a financial planner about your financial future.

  • FMB's Jon Nicholson presenting Ian Nicholson with the FMB Super 32 Trophy
    Caption: FMB's Jon Nicholson presenting Ian Nicholson with the FMB Super 32 Trophy

    Sunday 5th April saw me attend the second annual FMB Super 32, held on the hallowed turf of Netherfield Crown Green Bowling Club. Dream child of Alan Gilpin and organised by the Kendal and District Bowling League, it is an invitational champion of champion’s event to kick start the new season. Invitees represent the crème de la crème of the area’s bowlers who are all winners in their own right. Entrants are invited based on the previous season’s results. Most originate from the top half of the Division 1 merit table; with the remaining places being filled with the winners and runners-up of the lower divisions respective merit tables and championship competitions from the 2014 season.

    As proud sponsors of local sport in the community generally and the Kendal and District Bowling League Website in particular, the Directors’ at FMB were only too willing to help when Denise Noble, League Secretary, asked for FMB’s assistance in getting the Super 32 Competition off the ground last year. We are thrilled that we can continue our sponsorship for the second year running.

    Bowls may look like a very simple sport. And it is. But like any sport there are good players and bad; with most fitting somewhere in the middle. Line and length are the most important factors but understanding the speed and undulations within the green are also crucial to success. Many club bowlers are constantly caught out with a quickening or slowing green depending on the time of day. A rising sun will warm up the playing surface and speed up the green and the reverse happens as the temperature drops. Similarly, rain will slow the speed of the bowls over the ground with the game quickening up as it dries or drains away.

    Rules are simple, each player has two bowls and the first player to start will bowl the jack. This is a smaller bowl quite often coloured yellow for official matches and competitions. Nearest to the jack wins one point and if the same player has first two nearest he will score two points. The winner of each end retains the jack and will put it wherever he/she likes on the green. The only condition is that it must travel at least 20 metres. First to 21 wins the match.

    As part of the FMB Super 32 format, division 2 players are given a +2 handicap; division 3 +3 and so on. The early rounds of the Super 32 have become known for who will be the 'giant-killing' victims and the crowd was not left disappointed by the displays of several underdogs from those lower divisions this year. Verna Ashley (Lower Holker) was the first of those to triumph over #11 seed Dave Grisedale (Holme). Ashley started the game 5-0 up and finished it with the same points advantage, 21-16.

    However, more impressive perhaps was Tom Wilson (Sedbergh); a fourth division entrant (starting 4-0) who demolished #16 seed Kevin Tomlinson (Bowness) 21-7.

    The first semi-final saw a family affair with father and son Martin and Alan Gilpin (both Victoria) competing against one-another. Gilpin was the only semi-finalist outside of the top four rankings (#7) and led superbly on short lengths to defeat his father 21-15.

    In the second semi-final top seed Ian Nicholson took on Holme youngster Mark Ashburn in the game of the day, with both players illustrating their quality and it was only a bowl-sized gap at 20 each that stopped Ashburn from reaching the final.

    Ian Nicholson in action

    Nicholson quickly built a 9-4 lead in the final but Gilpin was determined not to disappoint the crowd and came back to 11-12. But Nicholson played excellently to complete the win.

    There are several attractions to this FMB sponsored event that have seen it grow in popularity in such a short time frame, as witnessed by the large crowd. Lower division club players get to pit themselves against the area’s best and the winner is invited to a £3,500 invitational tournament in Lancaster against the countries elite.

    There are 25 clubs in the south lakes area with my own club Netherfield running 7 teams on a competitive weekly basis. If you would like to find the nearest club within your area, click here

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