Understanding the Gramm-Leach-Bliley Act Is More Important Than You Think – For Your Finance’s Sake!

Privacy is something that we absolutely need to have with our finances, yet there are times where we’re asked to disclose information in order to receive something else. For example, you are going to have to disclose a lot of information to open up a bank account or apply for a loan. In exchange for giving over some of your most sensitive information, you’re going to be able to demand certain privacy considerations as well. However, how do you know what you’re required to do and what they are required to do? As you might imagine, there are laws covering the nature of privacy when it comes to your finances. One such collection of laws can be found in the Gramm-Leach-Bliley Act.

The GLB Act can be divided into two categories — what is going to be required of financial institutions and what projects consumers and customers actually have.

So let’s start with the financial institution side, shall we? Well, the definition of a “financial institution” per the GLB Act is going to be any company that offers financial products or services to individuals, such as loans, financial or investment advice, or even insurance. So yes, your insurance company is considered a financial institution as well, even if they aren’t necessarily giving you money. The FTC is the watchdog of all financial institutions, and they have the authority to enforce the law with financial institutions that aren’t covered by the federal banking outlets, the SEC, the CFTC, or state insurance authorities. Non-bank mortgage lenders, loan brokers, some investment advisers, tax preparers, providers of real estate settlement services, and debt collectors are all included in this “umbrella” of sorts.

They are obligated to keep your information confidential and take steps to protect it at all costs. These steps are often audited in standard security compliance rounds, so you don’t have to worry about a company that claims to protect your information and never does anything to actually live up to their words.

So, what about the other side? Well, according to the GLB Act, a company’s duties are going to depend on whether we’re talking about consumers or customers. They might sound like the same thing, but they do have some differences according to the law.

A consumer is considered to be an individual that acquires or has acquired a financial product or service from a financial institution for “personal, family, or household reasons”. A customer is actually a consumer that has a continuing relationship with the financial institution in question. So it’s one thing to use a company’s financial services for the short term or one time, and it’s a different thing to establish a long term relationship.

Customers are entitled to receive a privacy notice automatically because they have an established relationship. That doesn’t mean that consumers are just out in the cold though. Consumers only receive a privacy notice if the company shares the consumers’ information with companies that are not affiliated with it. The privacy notice cannot just be posted on a wall — it has to be delivered by mail. Of course, there’s no guarantee that individuals will actually read the privacy notice, but that’s not the point of the law. The point of the law is to make sure that you know what the privacy provisions are for that company. They can’t force you to read it, and they can’t demand that you read it. They can simply provide it to you in a reasonable fashion.

For example, if you apply for a loan with an online lender and say that you read the privacy notice but you really didn’t, you can’t go back and say that you didn’t know something was in there. You said on the application that you read it; hence the company is not legally liable for any problems that arise out of the things that you didn’t read.

That’s why it’s so important to stop skipping over the fine print and get back to the things that really matter. Now is definitely the right time to get started with everything else on your financial plate — why not make today the right time after all?

Fixed Rate Savings

Fixed rate savings are an interesting beast. While they do not offer the long-term growth potential of over savings vehicles like mutual funds, stocks, and so on, they do offer a consistent rate of return over a fixed period of time. And after suffering through the stock market problems of 2007, 2008 and part of 2009, fixed rate savings offer something few other investments can — a principal guarantee (see “Risks” below).

The unattractive features of fixed rate savings are actually what allow investors to enjoy the benefits. For those reasons, this investment vehicle plays a vital role in any portfolio as a “cash” or “income” investment, depending on the type of savings you choose.

The benefits to fixed rate savings are that your principal is guaranteed by the bank or other issuer. Additional guarantees can come in the form of government insurance such as that offered by the FDIC in the United States, the FSCS in the UK and the CDIC in Canada (other governments will offer guarantees in their respective countries). With this type of additional insurance, depositors can rest assured that in the event of mass failures, their savings are safe to the maximums prescribed by each insurer.

Fixed Rate Savings

The drawbacks to this vehicle of savings, however, are that they pay poorly compared to similar-risk investments. Therefore, establishing a long-term savings objective based purely on the rates offered by fixed rate vehicles as well as the lack of growth opportunities does not make a fixed rate vehicle very attractive. There is one exception, though, and that is if the investor is able to lock in a rate that exceeds the average future rate of inflation time and again, which is unlikely if not impossible.

Additional drawbacks include the fact that many higher-rate fixed rate vehicles are locked-in, meaning they cannot be cashed in prior to maturity. This is different from bonds which can be traded at market values at any time prior to their maturity date.

Contrary to what many people believe, there are risks to fixed rate savings, even with insurance. The worst-case scenario would involve all global financial institutions failing and the government-backed insurer being unable to raise capital to compensate all depositors who make a claim. While clearly a far-fetched scenario, remember that a lot of investors never believed that an insurer like AGF could fail, yet it came dangerously close to failure in 2008. Additional risks are that the depositor invests more than the maximum prescribed under the insurance policy, but such risks are considered controlled risks in that the depositor has the discretion to limit them.

Using fixed rate savings as part of an overall portfolio/investment strategy makes the most sense in almost every instance. Depending on the investors risk tolerance, long- and short-term investment horizon as well as their overall objective, fixed rate savings are normally a part of the low-risk or risk-free income-generation portion of the portfolio. However, since fixed rate savings traditionally offer lower rates than bonds and for the most part lack liquidity, many investors will choose bonds.

An interesting bond/fixed rate strategy would involve buying bonds until the rates on fixed rate investments increase, then cashing the bonds to invest at the guaranteed rate and guaranteed principal fixed rate investment. The problem with such an approach is that yields and bond prices are inversely related, meaning that as rates increase, the value of the bond decreases. For that reasons, only sophisticated and knowledge investors should rely on such a strategy.

Ultimately, fixed rate savings vehicles make the most sense when the investor is able to lock in at high rates for extended periods of time particularly in periods where inflation is decreasing or expected to decrease.

The Different Debt Solutions Available to You

If you’re struggling to manage your finances, have mounting debts or have received letters demanding payments then you may have looked at the different debt solutions available to you.

From IVAs, to debt management plans and consolidation loans, there are so many different solutions out there that it can be difficult to know which is right for you.

With that in mind we look at some of the different debt solutions that you might have heard mentioned and explain a little more about them.

Debt Consolidation Loan

Consolidation loans are perhaps the most common debt solution available and one that you may have heard the most about.

A consolidation loan is a form of borrowing that is used to repay all of your existing creditors leaving you with only one repayment to make each month – making it easier to manage your finances.

In many cases you will benefit from reduced monthly payments, however, should you decide to reduce the amount you pay each month you could find yourself having to pay back larger amount in total. It’s also worth noting that consolidation loans are often secured against your home, so think carefully before signing up and ensure that you can afford the repayments.

debt solutions


An IVA, or Individual Voluntary Arrangement as it is also known, is a formal agreement between you and your creditors that is used to set out a timetable to repay your debt.

By registering for an IVA you will find that any interest or charges that you’re paying on your debts will be frozen. Also, a portion of your debt could be written off after five years.

Although there are many benefits to an IVA there are also drawbacks to consider. Firstly, your name will be entered on a public register and you will not be able to obtain further credit during the course of the IVA.

There are also strict guidelines you must adhere to during the course of an IVA and you may be required to remortgage your property.

Debt Management Plan

A debt management plan is relatively similar to an IVA although it is an informal agreement between you and your creditors and so can be setup quicker than an IVA.

With a debt management plan you will need to register with a financial provider who will negotiate with your creditors on your behalf and distribute payments each month. By opting for a debt management plan you will only be required to make a single, affordable payment each month, allowing you to regain control of your finances.

Whatever debt solution you opt for it’s important that you’re aware of every possible option available to you, included those that aren’t mentioned here. Although it can be difficult deciding exactly how to proceed, the best option is often to speak to an expert who can guide you through the process of finding a suitable solution.

Compounding interest

Most people don’t think too much about interest rates. They know that they are a number and the know that a lower one is better than a higher one, but they don’t take the time to think about what they really mean, or what the impact of them is on your finances. Our loans and credit cards all have interest rates attached to them and a small difference in the rates can make a huge difference in the cost of the debt over its term.

First, it is probably important to understand what compound interest is exactly. The opposite of compound interest is simple interest. With simple interest if I started with $100 and an interest rate of 10% I would get $10 in interest after one year and an additional $10 for each year after that. Compound interest works differently. I would still get $10 the first year, so I would end the first year with a total of $110. The second year I would get 10% of that $110 or $11, leaving me with $121. The third year I would get 10% of that amount, leaving me with $133.10, and so on. So after three years with simple interest I would have $130, but with compound interest I have $3.10 more. Every loan and credit card is calculated using compound interest.


To begin to understand the power of compounding interest, let’s take a look at two simple examples. Let’s we have a credit card balance of $10,000 at an interest rate of 8% and for some reason we don’t pay it for 5 years (This is, of course, a really bad idea). At the end of 5 years, the new balance would be $14,693. In other words we have built up an additional $4,693 in interest. Now let’s use the same example again, except for a 9% interest rate. This small change in interest rate makes the new balance $15,386, for a difference of $693 over the lower interest rate. That might not seem like much, but a mere 1% difference in interest rate over 5 years added an additional 7% to the original balance. That can really add up.

For a more extreme example, let’s compare 5% to 10% interest using the same example as above. 5% interest over 5 years would leave us with a balance of $12,763. Doubling the interest rate to 10% creates a balance of $16,105. Doubling the interest rate leads to considerably more than a doubling of interest.

By understanding interest rates and considering it when you are shopping for loans or credit cards you can save yourself literally thousands of dollars.


Pension rules and regulations are quite complex. Below we have provided an outline of some of the main rules. However, we recommend that you seek professional advice from a Pensions expert prior to acting on any of the information contained below.


Pensions are the most commonly used method of saving for your retirement. By making regular contributions into a pensions fund from your wages, you can be guaranteed a regular income after your retirement.

Pensions are also a very tax efficient method of saving, since the contributions you make into the fund are not taxable, and the growth of the pensions fund is also tax free, unlike investments in shares, or cash deposits.

Contribution Limits

Individuals without relevant earnings (salary) can pay up to £3,600 per annum into their pensions funds and receive tax relief. Employed and self employed individuals with relevant earnings can pay up to £3,600 or 100% of earnings if greater, subject to the overall annual allowance. Details of what constitutes relevant earnings can be found at www.hmrc.gov.uk

Employers can make unrestricted contributions provided the total of employee and employer contributions do not exceed the annual allowance.

Annual Allowance

The Annual Allowance is an annual limit set by HMRC. Contributions paid in excess of this amount are unlimited but will give rise to a tax charge on the pension scheme member.

The Annual Allowance for the tax year 2013/14 is £50,000, inclusive of your own contribution and any other amounts paid into an approved pension scheme. The Annual Allowance increases each year.

Lifetime Allowance (LTA)

The Lifetime Allowance is the total value of all your pension funds, including personal and work-related pensions, but not including any state pension, which you can build up without paying extra tax. The LTA is not a limit on the value of your pension, it is a limit on the amount of tax-relieved pension saving that you can have. So, while there is no limit to the size of your pension, you may be required to pay extra tax if it is worth more than the Lifetime Allowance.

Most people will not reach the Lifetime Allowance, and will therefore be unaffected by this rule.

The value of the Lifetime Allowance increases each year, for example in 2007-08, the Lifetime Allowance was £1.6m, in 2008-09 it was £1.65m, in 2009-10 it is £1.75m, and in 2010-11 it will be £1.8m.

Tax Free Cash Lump Sum

Many people are aware that they will receive a tax free lump sum when they take their pension. The lump sum is typically 25% of the whole fund value. For example, if their pension fund is worth £200,000, then they could receive a tax free lump sum of £50,000.

Changes to the pension rules in April 2006 make it easier for people to take the lump sum from their pension now, while leaving the rest of the pension in place to take when they retire.

If you are aged between 50 and 75, then you may wish to consider releasing a tax-free lump sum from your pension.  See our Pensions Release section. Please note, your pension is a very valuable asset aimed at providing you with an income when you are no longer working. Once a decision is made to take the benefit from your pension, it is irreversible. We would advise you only to take a lump sum from your pension if it can be used to make a permanent change to your financial circumstances. New cars and holidays may sound attractive, but we would ask you to consider the longer term impact to your lifestyle if you were to use the benefit for such a purchase.

Minimum Retirement Age

The minimum retirement age will be increased from 50 to 55 from 6th April 2010.


If the value of your pension fund is below a certain level, it may be possible to cash in the pension fund, and receive a cash lump sum.  This right was brought in from 6 April 2006.  However, this option is only available where the total of all your pension funds does not exceed 1% of the Lifetime Allowance. For the tax year 2009/10, this will equates to £17,500.

Help & Advice

There are many different options to consider when choosing a personal pension and it makes sense to take advice from a qualified pension specialist who is independent and can offer you products and services from the whole of the market place.

Purchase Life Annuities

It is also possible to purchase an annuity from funds that did not originate from a pension fund. These are known as Purchased Life Annuities, and work in much the same way as an annuity from a pension, but with one notable and extremely beneficial difference.

Under pension rules the annuity you receive from a pension fund is treated as taxable income in the same way as income from normal employment would be. However if you use other monies to buy a Purchased Life Annuity, the tax treatment is different.

Some of the income received is treated as capital which is not taxed, and therefore the tax burden is reduced. The example below (based on a 65 year old male, basic rate tax payer with £100,000) illustrates the point:

  1. Pension Annuity – Gross Income = £7,370, Tax = £1,621, Net Income = £5,749
  2. Purchased Life Annuity – Gross Income = £7,370, Tax = £367, Net Income = £7,003.

The illustration assumes that both annuities have the same gross income payable.

This therefore raises the question of whether you should always exercise your option of taking tax free cash from your pension funds, even if you intend to purchase an annuity?

You should ensure that the equivalent pension annuity and purchased life annuity rates are the same, and if they are then it makes sense to withdraw your tax free cash entitlement and use a purchased life annuity, as in the above example the net benefit is over £100 per month.

Specialist can assist you in making this decision and would be happy to provide comparative illustrations.

A Necessary Step

So you have finally gone for that equity release scheme which has enabled you to buy a second home in France and you have even found the property of your dreams. The buying process is slightly different in France in many aspects, but one interesting point is that many buyers complete the process without a proper structural survey taking place.

A survey is optional and as it is fairly expensive, adding to the overall cost of buying a new property, many people choose to skip it altogether. The important thing to consider is that skipping the survey is something that may be very detrimental to the buying process.

equity release scheme

It happens often enough in the UK that the survey throws up some unexpected problem which makes you think twice about buying or means that you have to go for a reduction in price. with this in mind, buying property ‘blind’ in France seems somewhat foolhardy.

If you cannot speak French there are registered chartered surveyors who are English or who speak very good English available to you. This means that you will really know what you are taking on with the property and should not have any nasty surprises further down the line.

When you compare the cost of a property survey on the new home you are considering buying, it actually works out to be a small fraction of the purchase price. And by ensuring that the property is legal and sound in terms of structure, you could save thousands in unexpected bills.

How to Budget

Budgeting can feel a bit like pulling teeth – painful but necessary. To avoid that slippery slope into debt, it is best to become the master of your own finances. It’s easy to look away – out of sight, out of mind – but take control now, and make room for guilt-free treats!

Step One: Determine Your Income and Expenditure

It’s a simple equation: if your expenditure exceeds your income, you’re in trouble. If you list your expenditures you can compartmentalise them into two categories: necessary and unnecessary. For example, TV license (unnecessary), water bill (necessary). Once you know what you don’t need, you can start making reductions in luxuries.

Step Two: Save

A great idea is to set up an emergency savings fund. Even if you contribute only £10 of your salary a week to this account, the saving will put you in a great position to accommodate surprise expenses that you’d otherwise have to charge to a credit card you can’t afford to pay off. Slowly increase your weekly savings amount, until you have a nice nest egg.


Step Three: Set Financial Goals and Reward Yourself

This may be: ‘I will reach my £1,000 target in my emergency fund account.’ Once you meet these targets, don’t be afraid to reward yourself for your hard work. Hopefully, with enough budget adjustment, you’ll be left with enough spending money to still enjoy nights out or treats.

Step Four: Make Lists

List your outgoings; all the things you need to pay for, however small. Keep a spending journal, and enter your expenditure every day. Use whatever software is available to you to draw up a budget chart. If your computer doesn’t have any, a good old excel sheet works wonders.

Step Five: Forget Windfalls

Windfalls like end-of-year bonuses are not to be relied on. Gamble on windfalls, and you may find that they are nothing but a puff of smoke.

Step Six: Take Out Money

Your budget should tell you how much money you need to take out every week. Keep this safe in your house, and don’t run back to the ATM as soon as you run out. This will help you stay under budget. Continue reading “How to Budget”

The Right Debt Settlement Company Will Help You

“Debt” is a word which by itself has the power to reduce a person to a wreck. The heart beats faster and a cold hand of dread clutches the heart, the forehead creases with worry and tension as the person remembers the amount of debt outstanding in his name.

In India suicides for outstanding debt are a very common thing especially among the farming community. Be it India or U.S.A or the U.K creditors are one of the worst nightmare of most people. There is a new industry in place that intends to help out such people. “Debt Settlement” is a method in which you try to settle down your debts for a lower amount than that you had originally borrowed.

Debt Settlement

Usually unsecured debt (i.e. the debt that is not against any property like the credit card bills or mortgage loans etc) is what is covered under this system. It is a win-win situation for both parties involved in the transaction. The creditor is able to get back some part of the money he had loaned out and the debtor is able to clear his debt for a lower amount of money and be free from his creditors.

Debt settlement is not a new concept in the world and has in fact been in place from the time that the system of giving money as loan started. Earlier the work of debt settlement companies was done by the middle men who would charge a heavy fee for their services. Today also the basic concept has remained the same. Continue reading “The Right Debt Settlement Company Will Help You”

How Can An Accountant Help With your Offshore Investments

Accountants can make all of the difference when you’re trying to change your personal finance strategy, but a lot of new investors still don’t take advantage of them. Why is this? Well, it’s really straightforward — a lot of people feel that accountants are really only for people that have a lot of money. So if they feel that they are more in terms of the beginner, then they’re not going be able to find the courage to get the help that they need. That’s not something that you want to try to deal with on your own. You want to always make sure that you get the professional help that you need and deserve. Anything less than that is just going to cheat your out of the financial security that you deserve.

So let’s move on to the real question: how can an accountant help you with your offshore investments? Personal offshore investment funds are all over the news, but this isn’t something that newcomers to the world of investing should just rush into. Thankfully, there is a way to take advantage of those powerful funds without getting caught up. You can always go with an accountant’s help because they can match the right fund to your overall financial goals.

You might be thinking about retiring someday, or you just want some extra cash every quarter or every month in order to do cool things with your family. Sometimes when you really like your job, you really don’t want to retire early. it’s going to be up to you to sit down with your family and really plan this out.

Don’t be afraid to share as much as you need to with the accountant. they are licensed for a reason — you have to be able to trust them with very sensitive information. There’s nothing wrong with doing this, and it can help you really move on to a brighter financial life.

Personal finance and credit can get tricky, and you may have other tasks on your list than talking with the accountant. but the good part about a professional like an accountant is that they can look at the bigger picture in order to give you the advice that you deserve. Why not chat them up today? You’ll truly be glad that you did, in the long run!