Irish Financial Review

Billionaires Club 2015

With technological innovations forever changing our world today’s up and coming billionaires are younger than ever, with a record number of women becoming billionaires this year. The world’s billionaires have a combined net worth of $7.05 Trillion.

Courtesy of Cork-based All Finance Tax

Billionaires Club 2015

Billionaires Club 2015

Have annuity funds gone sub-prime under accounting alchemy?

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, or so one dictionary would have you believe.

In fact, when it comes to global insurance, reinsurance and annuities markets, things are working out a lot different.

Way back in the 1860’s, on a visit to London, Elizur Wright was so shocked at the sight of elderly men auctioning off their life policies to speculators that he set out on a mission to establish the foundations of the modern insurance industry.

For so long, insurance was governed with some very important yet straightforward rules; assets should at least cover liabilities. In real terms that insurers sold policies, accepted policy premiums and made sure that they would always have enough funds on hand to pay out policy benefits. And, in order to achieve this, they invested money wisely, in safe investments, including bonds.

But time moved on and many of the original Life insurance companies moved on from being mutual in nature to becoming publicly traded organisations where profits trump prudence.

Across the US, insurance companies are increasingly taking greater risks in how they invest funds; this includes Life insurance as well as annuities which millions of people rely on for retirement income.

Hollow assets and creative accounting

Various state requirements and so-called ‘permitted practices’ are creating more and more shell games and increasingly creative accounting where assets that are supposed to underpin the financial structure of various insurance companies are little more than worthless I.O.U’s, in effect, they are underpinned by hollow assets.

Aside from denying state’s of tax revenue, this creative accounting is also at risk of undermining the very nature of the foundations that Mr. Wright fought for.

Glass-Steagall all over

The repeal of the Glass-Steagall Act is widely cited as the catalyst that eventually led to the financial crisis of 2008. Under Glass-Steagall, banks commercial and investment activities were strictly separated. Some observers, especially those in banking dispute this but overwhelming opinion agrees that the repeal was a disaster. The bottom line was old-fashioned banking was safe banking and reforming a law that had served so many for so long was ever only going to serve a few and hurt many. This is exactly what happened and it has had massive global implications.

Something similar now seems to be taking place in the global insurance markets where ‘black box’ activities, shell games, propping up of balance sheets, hollow assets, permitted practices and financial alchemy are all taking the place of safe investing strategies. And we all know what happens when creative accounting replaces the time-proven practice of safe investing; the tax payer generally ends up paying!

When it comes to investing for the future, reading and interpreting key financial data is key to your investing success. If you cannot read the accounts of companies you invest in then your chances of success will be limited by lack of core information.

Frank Conway is a qualified financial advisor and author of Cents & Sensibility – a financial guide for young adults. He provides corporate financial training and personal investment advice.


“Whether you think you Can or Can’t, you’re right!”

This famous quote from Henry Ford is often misinterpreted, with some people believing that if you do not have self-belief this will keep you from achieving your dreams. Let’s face it; if your dream is to turn brass into gold, then you don’t want to spend the rest of your life in the garden shed trying to achieve this goal, especially when all the scientific evidence tells you that your efforts will be in vain.

A plan of action is needed if one is to be successful

A plan of action is needed if one is to be successful

Henry Ford had a different meaning in mind when he uttered this phrase.

For example if you think you have the ability to run a sub 4 minute mile, either you Can or you Can’t. There are only two possible outcomes, so Mr. Ford is advising you to think carefully before you give your answer, because if you keep making the wrong calls in life it could have a profound impact on your ability to succeed.

Let’s work an example of what this all really means; let’s say that you think that you have what it takes to be the next president of Coca-Cola. Great ambition but unfortunately, your CV shows that your background is in graphic design and that you have worked from a home office for the past 10 years. Most likely the next president of Coca Cola will have senior experience of managing a large corporation listed on the stock exchange, so realistically your chances of becoming the next Coca-Cola president are slim.

However, you may be a great graphic designer and have some great creative ideas which would be of interest to Coca-Cola. So in making your call, you should be saying “I would like to be president of Coca Cola, but I think that I Can’t achieve this position, but I think I Can become an important supplier of graphic designs to this organisation”. By making the right calls you are adding to your own credibility, so other people are more likely to take you seriously and believe what you are saying.

Our passion is in showing people how to understand Finance, because Finance is a critical part of both business and everyday life, from the cradle to the grave. If you understand this subject it Can have a profound impact on your ability to succeed within business. For example it Can help you identify inefficiencies within the business, which Can only be good for your career progression. In addition it Can help you make better long term personal investments, because you will know how the numbers stack up and not be totally reliant on an advisor who just wants the sales commission.

See how you get on with the following five questions:

Ablata - Can or Can't

If you answered “Can” to all of these then you are on the right track. However, if there is just one “Can’t”, you need to take action to correct it.

At, we have created a dynamic portfolio of solutions that will move you from Can’t to Can at minimal cost. Take charge of your future with

Eugene Daly is the Director of Executive Financial Training at


How one bank customer negotiated a sweet deal on their SVR

Two months ago, I got a message from a Facebook friend who was really mad with their bank.

I can’t believe that I have been a really loyal customer and they have never offered me a better deal on my mortgage” they claimed.

Did you ask them for a better deal” I enquired.
It can pay to negotiate

No. I didn’t!” was their reply.

At that, I got to work. First, I got some general details about how much mortgage was outstanding, the approximate value of the home which produced the current loan-to-value, compared the market for some better deals and then gave them their argument with which they could go back to their bank to negotiate a better deal.

In this particular case, the math was pretty straightforward; there were better deals available in the market and their bank knew it!

The end result was surprising and generous.

First, the homeowner was offered a special discount deal for 2 years. In real terms, the bank offered to cut their rate from about 4.6% to under 4% for 2 years. Then, after the 2 years, the new long-term rate would settle at about 4.3%.

I did not negotiate the deal with the bank, the mortgage holder did using the tips I had given them along with the competing deals in the market.

The point here is that unless mortgage holders do their homework, have real negotiation power, make an approach to their lender, they are never going to be offered a better deal on any product or service.

Over the course of the last week or so, there has been a lot of bluster on why banks have some sort of moral duty to cut the interest rates they charge their standard variable rate mortgage customers. The truth of course is that they don’t…and it is highly likely that they won’t except in the case that mortgage holders come prepared with a better deal and are ready to move their business.

At the end of the day, it is imperative that consumers understand the role that they must play in their financial well-being. Knowing the detail of how they spend, doing their homework on the best deals on the market, having an in-depth knowledge of the terms and conditions of policies they own and planning ahead for insurance renewal, spending events and life’s unexpected expenses. This is the key to personal financial health.

92% mortgages with Gov’t programme

Months after Irish banks were forced to require 20% deposits from first time buyers (in excess of €220,000), the Government-backed Home Choice Loan programme still offers prospective buyers up to 92% finance.



While the Home Choice loan programme has been in existence for several years, for most of those, it was underused due to generally more favourable lending conditions from the commercial mortgage lenders. Additionally, applicants to the Home Choice loan programme are required to provide evidence of two loan application rejections from commercial lenders before they could be considered for a Home Choice Loan.

Using data taken from the Home Choice Loan website, the lending criteria are as follows:

– It is a Government backed mortgage for First Time Buyers.

– Is available through authorised mortgage brokers.

– It is a mortgage for First Time Buyers and is provided nationwide by four designated Local Authorities.

– First time buyers can apply for a Home Choice Loan to purchase a new or second-hand property or build their own home.

– Home Choice Loan provides up to 92% of the market value of a property purchased. The maximum loan amount is €285,000.  The loan is a normal Capital and interest bearing mortgage  which is repaid on a monthly basis.

– Home Choice Loan offers one variable interest rate. The rate is currently set at 3.70% variable.  APR 3.76%.

For details on the loan application process, those interested can access further details HERE.

The phoney war on standard variable rate mortgages

There has been a lot of political bluster around the issue of standard variable rate mortgages over the last day or so. It’s become the cause célèbre for some politicians. The only question is where have those same politicians been for the past 6 years.

Political bluster


When the credit crunch really began to bite in the spring / summer of 2009, the ECB by that stage was well into its rate cutting programme, which continued through to last year (except for a slight blip) when interest rates were effectively cut to zero.

During that time, Permanent TSB was the first of the banks to run counter to the ECB where it began to increase interest rates. At the time, there was little or no comment from the same politicians that seem to be hanging their hats on the matter over the last few days.

As the ECB continued its rate reduction programme, banks had little choice but to pass those reductions directly onto tracker mortgage holders but almost always refrained from doing so to SVR customers. And so, while those with SVR’s did not suffer an ‘increase’ per se, their mortgage repayments remained frozen despite this running counter to ECB policy. The banks effectively became monetary black holes that neutralised ECB policy.

And it’s not as if the political personalities were unaware of the dilemma faced by SVR holders. Many media, in consultation with industry experts covered the issue in detail.

Six years into the rate cycle, the latest political bluster rings a little shallow. Mortgage holders, especially those with SVR’s continue to struggle but the recovery in the economy should finally provide many with some sense of hope…and some extra cash to meet their repayments.

What is of major concern now is as banks slowly scrape their way back to profitability, some of the very same political parties that put political kudos ahead of economic prudence in the first place are back to their old tricks.

Mortgage borrowers wanted! Special discount rates on offer…just 12%.

It seems that no matter where one lives, the matter mortgages and property sales will always be a focus of Governments.



Here in Ireland, the Central Bank stepped in with the new 20% deposit requirement (there are some exceptions) to protect against future property bubbles. It seems that the rise in property prices have fallen back since the introduction but this is just as likely to be as a result of the end of CGT rules as it is the new lending rules. Time will tell.

In China, limited access to equity markets means that properties are a major store of personal wealth and investment class. In a desperate attempt to quell rising house prices, the Government there introduced hefty taxes on investment property purchases. But, in major cities such as Shanghai and Beijing divorce rates spiked as couples chose ‘divorce’ as a way of circumventing those punitive taxes.

But for mortgage holders here complaining about ‘expensive’ standard variable rates, take a moment to consider the plight of would be first time buyers in Russia. Ahead of Western sanctions last year, many Russians took the property plunge and purchased a home only to later be hit with a spike in interest rates which peaked at 17%.

Fearing a collapse in property sales, the Russian government has just introduced a ‘special discount’ mortgage deal of 12% (where’s the discount I hear you ask). Borrowers in Ireland (and across the Eurozone) might have a moment of panic at the thought, but in Russia, officials there seem to place really high hopes that the special offer will reignite the market.

Of course, the reality is that what Russians endure today is what many existing mortgage holders in Ireland endured just two decades ago and who knows; could we face significantly higher borrowing costs in the future?

For all mortgage holders, putting some extra cash aside for an eventual rise on mortgage rates make for prudent financial planning.

Hopefully we won’t be in the sky high rates Russian borrowers have to suffer but even a 2% rise in rates can cause significant financial strain for any household.


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