Category: Articles

ftse 100
ArticlesMarkets

New Tool Shows The FTSE 100 Is Recovering Slower Than Other Global Markets

ftse 100

New Tool Shows The FTSE 100 Is Recovering Slower Than Other Global Markets

The Coronavirus lockdown decimated economies all over the planet, but while some stock markets are showing signs of recovery, the UK’s FTSE 100 is taking longer to bounce back.

Since falling to its lowest point in March, the FTSE 100 has climbed by 23%, which seems impressive, until you compare it with other global indices. Both the Nasdaq and Dax have risen by over 50%, while other key markets, such as China’s CSI 300, have also significantly outperformed the FTSE since the pandemic hit.

Chris Beauchamp, chief market analyst at IG Markets, Europe’s largest online derivatives trading provider, believes the FTSE 100 is “an index that has become a victim of its own composition”. Financials currently represent its biggest sector and Beauchamp says “a huge chunk of the index in terms of weighting is really underperforming”. 

He adds that the recent resurgence in sterling has also hit the FTSE, as its firms have lost value overseas.

For traders looking to keep track of the global indices and their relative rates of recovery, Daily FX has launched an innovative new tool that provides an instant snapshot of international market performance. 

Market Health allows traders to get a complete picture of global markets and indices in a single place. The free tool provides an instant picture of global market performance, currency strength and exchange opening and closing times. 

Using data from Quandl, Market Health allows users to take a macro look at global markets and indices including the Dow Jones, S&P 500, FTSE 100 and DAX 30 to help formulate and deliver on trading strategies.

Split between three main viewpoints, users can easily switch between world overview, stock exchange open times and index performance.

world overview

The global view combines exchange opening times and currency performance, presented on a world map. The map, displayed as a heat map, shows currency strength against a base currency of your choice.

The stock exchange opening times showcase eight global stock exchange markets with details of exactly when they open and close, how long they’re open for and whether or not they’re closed for any public holidays. 

The performance section groups major market indices into geographical groups and is a quick way to get a picture of whether a geographical market is up or down. Users can also filter by developed or emerging markets.

opening times
exchange performance

Peter Hanks, Analyst at DailyFX, explains how the tool is useful for experienced traders like himself: “It is useful to use the tool on specific days when trying to discern which market or region was most impacted by an event. For example, if the Federal Reserve has an interest rate decision, since the central bank typically has the most influence over the American markets, we would expect to see the most activity in those regions. If, on the other hand, another region has outpaced the US markets, there may be another theme at play that is driving market activity, so the tool is great at providing a bird’s eye view of the market.”

He goes on to explain how the tool is also useful for new traders: “When starting off on your trading journey, understanding the impact of other market sessions is very important. Volatility in one region can easily carry over into another, so being aware of when regions are active or inactive is very useful as the crossover periods are often flush with liquidity and can set the tone for an entire session.”

He explains how the tool is useful in the current situation: “Having an instant view of global market health is particularly useful for fast-moving world events such as today’s pandemic. The Market Health tool will be useful to many for getting a quick snapshot of what Covid-19 is doing to the world’s economies and how the different markets are reacting as we are all in different stages of the health crisis.”

David Iusow, Market Analyst at DailyFX, said: “Before a day begins, a trader needs to know how markets around the world have performed in other time zones. It is the first overview that one can get of the general market conditions and from which one can deduce the start of trading on the domestic stock exchange. Similarly, a market status map facilitates the identification of relative outperformance of markets during regular trading hours. The DailyFX market status has the advantage of a clear and interactive structure, giving traders exactly the benefits, they need to start a day.”

To use the Market Health tool click here: https://www.dailyfx.com/research/market-status

order finances
BankingCash ManagementPrivate BankingPrivate Funds

10 Minute Money Challenges to Get Your Finances in Order

order finances

10 Minute Money Challenges to Get Your Finances in Order

Auditing finances can sometimes feel like a huge chore, and things may have been forgotten about or pushed to the bottom of the to-do list during the pandemic. This guide by KIS Finance has listed some very easy and quick 10-minute money challenges that people can do in order to get their finances back on track if things have started to get out of control.

Check your direct debits and standing orders

A great place to start is by checking through all of your direct debits and standing orders to make sure there’s nothing you’re paying for which you shouldn’t be. You’ll be surprised at how easy it is to miss some payments coming out of your account, especially if they’re small and you’ve got a lot of them, but it’s so important to make sure you’re aware of every single one.

Go to your mobile banking app and go through the lists of direct debits and standing orders. Look at every payment and ask yourself three questions: do you need it?, can you afford it?, and is it worth it?
Bills are obvious; you must pay them. But do you have a gym membership which you only use a couple of times a month? In which case, it may be worth researching into whether you can buy a day pass or pay for gym classes as you go – this could work out much cheaper if you don’t go very often.

Subscription services is another category to look at. Are you paying for three streaming services that all do the same thing? If so, can you live with just one or two of them?

This task shouldn’t take you very long at all, and you’ll be surprised at how much money you can save.

Check for any recurring payments

Another important thing to check for are any recurring payments – otherwise known as Continuous Payment Authorities (CPAs). They work essentially like a direct debit, but they’re different in the fact that they use the long card number instead of your account number and sort code and the company can take money whenever they think they’re owed.

The reason you need to do this separately is because they won’t appear in the lists of direct debits or standing orders, they will appear on your bank statement as if they’re a debit card payment. Most will be taken on a monthly basis, so just have a look through the last few months of bank statements and see what’s coming out regularly.

You may have purposefully set some of these up, Amazon Prime and Spotify are examples. In which case, apply the same three questions as mentioned in the point above and cancel any that you can live without.
However, you may have set some up by mistake and these are important to get rid of. This may have been a free trial that you forgot to cancel, or some retail websites have in the small print that you will be signed up to a monthly CPA after making your first purchase and you didn’t realise. You do have the right to cancel any CPAs that you no longer wish to pay.

Compare your bills

If you’re not somebody who compares suppliers and just let your bills roll over every year, then this task is a must.

In some cases, the difference between the cheapest and most expensive tariffs for products like gas, electricity, and insurances can be hundreds of pounds a year. So, a quick check through a comparison website could make a big difference to your finances.
This should be done just before each of your current tariffs/policies come to an end, so you don’t end up paying any early exit fees. You’ll normally just have to fill out some personal details and any information required for the specific product, then you’ll be given a list of all the providers where the cheapest one is normally at the top. With most comparison websites, they will do a lot of the work for you when it comes to switching, so you just have to select which product you want and make any relevant payments.

This won’t necessarily have any immediate effects on your finances, but it will definitely benefit you in the long run.

Switch bank accounts

Switching bank accounts sounds like a massive job, but most of the major banks now offer an online 7-day switching service where they do everything for you, so actually it doesn’t take much time at all and it’s definitely worth the effort.

All you have to do is go to a comparison website which lists all of the available current accounts and compare who’s offering the best interest rates, perks, and functions. It’s important to do this every once and a while and especially when you have a change in financial situation, for example, an increase in income or a big change in the amount you have saved.

Once you’ve decided on the best current account for you, simply go to their website and say you’d like to open an account with them and then they’ll do the rest. They’ll swap over all of your regular payments like direct debits and standing orders and the only thing you’ll have to do is give your new account details to your employer.

Remove your card details from websites

Most online retail stores give you the option to save your card details after you’ve purchased something in order to make the payment process faster next time. Whilst it’s convenient that you don’t have to fill out the details manually every time, it can actually make you spend more when all the effort is taken out of the process.

If you struggle with spending too much and you’re a bit of an impulse shopper, take some time to go through the websites where your card details are saved and remove them. Then, next time you come to purchase something from that website, having to get your card and fill out the details will just give you a little extra thinking time as to whether it’s something you really need.
This isn’t something that will dramatically change your financial situation, but it is something that will help towards curbing the spending if that’s something you struggle with.

banksy brexit
Capital Markets (stocks and bonds)Markets

What is the Post-Brexit Outlook for Sterling?

banksy brexit

What is the Post-Brexit Outlook for Sterling?

As we head through the agreed Brexit transition period, many questions remain. One of these uncertainties is that there’s no definitive answer whether by 2nd January 2021, a deal will be in place. One of the key areas of concern is what effect Brexit will have on the standing of sterling as, inevitably, the currency will be affected.

It seems like far more than four years ago now that the UK made the momentous, and unexpected, decision that it no longer wanted to be part of the EU. Since then, a great deal of metaphorical water has passed under the bridge and it was only Boris Johnson’s bold election move last December that finally achieved the Tory majority needed to pass the legislation.

But, as we head through the agreed transition period, many questions remain. One thing that is for certain is that there will be no extension to this beyond 1st January 2021. However there is no definitive answer yet on what the arrangements will be concerning the UK’s dealings with the EU after then. It’s equally uncertain whether, by 2nd January, a deal will be in place, and some observers believe that a no-deal Brexit is becoming a real possibility.

One of the key areas of concern is what effect Brexit will have on the standing of sterling as, inevitably, the currency will be affected.

Volatility is key

Perhaps the early signs weren’t good, as its value on the currency markets immediately plunged by around 10% on the announcement back in June 2016 that the country was set to go it alone. Since then, the trend seems to have been that its value has rallied whenever rumours of a softer, more negotiated split with the EU have been circulating. For example, back in October 2019 when it was believed, incorrectly as it turned out, that the transition period might be extended, the value of the currency rallied strongly on the world markets.

But, each time there is a feeling that the future is a little more uncertain, sterling’s essential volatility comes to the fore, once again causing considerable turbulence in the currency exchanges.

Good news for some…

Of course, this isn’t necessarily bad news for everyone – with people who derive some benefits from forex trading being a case in point. Through making the right decisions, and operating using a recommended forex broker, traders stand to benefit from significant changes in relative values between paired currencies. For those in this category, choosing an effective broker is a relatively simple process as in-depth reviews of said brokers abound.

… but not for others
Cargo Ship, By Szeke

Volatility in the value of sterling is, unsurprisingly, not such good news for many other sectors of the UK economy. A prime example is the country’s manufacturing industry, especially in the case of firms that rely on importing components and materials from abroad. At a stroke, they can find themselves having to pay more to continue operating – a cost that they are generally likely to pass straight on to the consumer.

Incidentally, this is not the only impact that Brexit is predicted to have on UK industry. There is a very real fear that it will limit the amount of investment available for research and development which could well have a far wider knock-on effect.

Because the value of sterling has always been so closely linked with confidence in the economy as a whole, the consequences of a country hamstrung in its efforts to develop and innovate could also make themselves apparent.

Looking on the bright side

But we should perhaps be wary of falling into the trap of becoming too pessimistic and gloomy about the prospects for sterling in a post-Brexit world. Deal or no-deal, the UK will definitely be able to open up new trade deals with the rest of the world once the restrictions imposed by EU membership have been lifted. Depending on the nature of those deals, this could mean sterling receives a real shot in the arm and that, now more than ever, will be what everyone should be hoping for.

pension
FundsPensionsPrivate BankingWealth Management

UK Gender Income Gap for Single Pensioners Widens by Almost 20% in Four Years

pension

UK Gender Income Gap for Single Pensioners Widens by Almost 20% in Four Years

Men over the age of 75 receive £114 a week more from their pension income than women of the same age, according to a new report.

Single male pensioners receive up to 26 per cent more income than female pensioners, according to official data compiled by digital wealth advisory firm, Fintuity. The findings, analysed using data compiled by the Office for National Statistics, reveals that the gender pension gap between single men and women was only eight per cent in financial year (FY) 14/15, noting a rise of 18 per cent in four years.

In 2018/19, the average incomes for males, who were under 75 and 75 or over, were £441 and £429 per week, respectively during this period. At the same time, these figures were significantly lower for the same age groups of women: their average income per week reached £333 for those under 75, and £315 for 75 or over.

Furthermore, according to analysis from Fintuity, a woman in her 20s would need to save approximately £1,300 extra per year in order to close the gender pensions gap. However, this average amount increases depending on age. For example, the average 30 year old woman would require an additional £2,000, a 40 year old woman would require an additional £2,900 and a 50 year old woman would need to acquire a further £5,300 in order to close the gender pensions gap.

Gross income of single pensioners consists of different sources, including; benefit income, occupational pension income, personal pension income, investment income and earning income. According to the most recent pensions data, in FY 18/19 occupational pensions income for men was on average 35 per cent higher than women, compared to 23 per cent four years prior.

The personal pension income gap was 63 per cent in FY 18/19, compared to 46 per cent in FY 14/15, and, the investment and earnings income gap between male and female pensioners increased from five and eight per cent in FY 2014/15, to a massive 61 and 74 per cent respectively. Suggesting that women are not as capable of making savings and investments due to low income which results in lower level of pensions.

Ed Downpatrick, Strategy Director, Fintuity comments:

“Despite government initiatives to improve the pensions income for women, it’s clear that no amount of support programmes can make up for the occupational gender disparity in the UK. This problem needs to be tackled head-on, with correct support initiatives put in place to enable women to get a much fairer deal.

“With Fintuity, women and men of all ages can receive professional, yet affordable, financial advice in order to see what options are available to them so that they can manage their pension income. All of this can be conducted online, via our digital platform, making professional financial help more accessible than ever.”

For more information on how to effectively save, spend wisely, understand alternative income routes, or improve monthly pension payments, please visit: https://fintuity.com/ 

Take care of what you share privacy and protection in a pandemic
LegalRegulation

Take care of what you share: privacy and protection in a pandemic

Take care of what you share: privacy and protection in a pandemic

Caroline Holley, Partner, Family & Divorce, and Oliver Lock, Associate, Reputation Management, Farrer & Co

A good reputation, hard won, can be ruined in moments. Never have those words been more true than in this strange new “normal”.

The coronavirus lockdown period has resulted in an exponential increase in the time that people are spending online, with greater use of video calls and social media platforms. This brings with it a number of security and confidentiality issues, some of which may not ordinarily be at the forefront of people’s minds.

Privacy has long been a concern of many, but recently we have seen a sharp rise in confidentiality provisions being included in a range of agreements, such as employment contracts, pre or post nuptial agreements, parenting plans used by separated parents, as well as non-disclosure agreements (NDAs).

Those who have entered into such agreements would be wise to review them in light of their new online lives. Others may think now is the right time to revise agreements to include new, or tighten up existing, confidentiality provisions.

Social Media
Social media use has become more prevalent than ever. People often share huge amounts of personal information on various social platforms, not only in terms of what they say directly, but also information gleaned from photos or videos posted or articles shared or retweeted. The potential pitfalls are wide-ranging and extend beyond simple privacy concerns. Both online and physical security, as well as reputational issues, need to be given careful consideration.

Employment contracts

Contracts for household staff, particularly nannies, regularly include confidentiality provisions, such as clauses preventing disclosure of personal information obtained during employment. However, they can also extend to the employee’s own use of social media. An open Instagram account of a high-profile family’s nanny could disclose the whereabouts of the family, details of their home or private photographs of children. There have been notable incidents where well-known individuals have been burgled when away from home, as a result of information gleaned from social media posts.

Pre and post nuptial agreements

Couples in relationships can have very different approaches to social media. Whereas one half of a couple may enjoy a large following or generate an income from their profile, the other may eschew social media entirely, potentially creating considerable conflict.

Some couples are therefore choosing to agree their intended approach to social media in nuptial agreements, ensuring that the family privacy is protected even in the event of marital breakdown. Right at the outset of their relationship, couples can discuss their views of social media – what they are comfortable sharing and with whom – and having reached a consensus, can record that understanding either in a pre-nuptial agreement or NDA.  As can be imagined, it is much easier to come to a consensus early on in a relationship than it is after it has ended.

Agreements such as these are flexible and entirely bespoke, dealing with the couple’s private life, business affairs or financial information that may have been shared by either party. They may include clauses on whether photographs of future children or of the interior or exterior of their home be shared, a particularly important consideration for those in the public eye.

As the number of people earning an income from their social media presence and posts grows, it has become even more important to consider such agreements, and the potential financial impact of them, when agreeing provision in a pre-nuptial agreement.

Video Calls
The coronavirus epidemic and resulting lockdown has seen many of us have turn to video calls to facilitate many daily activities; from work, and social arrangements, to exercise classes or even church services.

Keeping in touch with the outside world in this way has been a lifeline to many. But some people are using this technology without due consideration of security concerns and, again, confidentiality and privacy issues arise. Users may be sharing far more information than intended – their location, security weaknesses, evidence of expensive artwork on the wall, or even family photos. This is particularly concerning when the call could be recorded, or if there are a number of unknown people on the call. The simplest way to guard against such issues is to add a blank background to all calls, a feature available on most platforms, to ensure privacy, security and reputation are all protected.

What if an agreement is breached?
Breaching an NDA or confidentiality clause may be very easy to do without realising.  For example, it may have been agreed that neither party will share pictures of their children, but one of them forgets to remove family photos from the wall behind them in a video call. For couples on good terms, this may not be such an issue. But should the relationship have broken down, this could have serious consequences. Actual liability will always depend on the exact terms of the agreement and the level of fault asserted. But, as a minimum, parties are usually expected to take reasonable steps to ensure information does not get into the public domain.  

International considerations
Restrictions arising from the pandemic vary between countries and for those who continue to travel, it is important to keep abreast of the differing rules in different locations. In Singapore, for example, it has been reported that permissions to work have been withdrawn from a number of expats as a result of social media images showing them out socialising in breach of lockdown rules there.

Coronavirus has changed the way that we live and work, quite possibly forever. Restrictions are now beginning to lift but even so, our reliance on the growing online world is most likely to remain. It is important to consider these issues as we go forward into the ‘new normal’, remaining alert to possible breaches of agreements and ensuring that in future, appropriate provisions are incorporated into personal agreements.

 

boost economy
Finance

How The UK Furlough Scheme Boosted the Economy

The term furlough refers to a temporary leave of absence. Under the current economic and employment situation, a large number of employees in the UK have been furloughed. The UK Furlough Scheme is providing fixed wages to the employees who would have otherwise been unemployed.

What is the Furlough Scheme, and How Does it Work Now?

The UK Furlough Scheme is the government’s response to the economic damage caused by the coronavirus pandemic and its financial implications. The furlough scheme was launched on April 20, 2020, and aimed to reduce unemployment and related costs. The UK Furlough Scheme comprises of Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS).

While Coronavirus Job Retention Scheme focuses on paying the wages of employees who would have been laid off otherwise, the SEISS comes in the form of grants to self-employed individuals whose businesses have been adversely affected by COVID-19. To be eligible for grants under the SEISS, you must earn over 50% of your total income from self-employment, and your average annual profit must be less than £50,000. The individuals must have been self-employed from before April 6, 2019, and must have filed tax returns for the financial year 2018-19. The amount of grant will be based on the average of tax returns for the past three tax years.

For applications to the CJRS, the employers must have started a CJRS scheme before March 19, 2020, and should be enrolled for CJRS online. All employees, whether part-time, full-time, flexible, agency or zero-hour contracts, can be put on furlough. The coverage of the UK Furlough Scheme varies from town to town, depending on the percentage of employees furloughed. For instance, the maximum coverage is in the cities of Crawley, Burnley, Slough, Sunderland, and Birmingham, with the largest number of employees sent home by their employers. Crawley reported 33.7% of the employees furloughed in May 2020, while Cambridge reported 17.4% of the employees furloughed in the same period, being one of the least affected cities.

The employers and self-employed individuals are utilising the UK Furlough Scheme optimally. According to data released by the government, over one million firms were using the job retention scheme in May 2020 wherein the wages of 8.4 million workers have been covered. On the other hand, the self-employed income support scheme received 2.3 million claims for over £6.8 billion in income support. The construction industry has been the most affected and had the highest number of claims under the SEISS. The government has paid out a total of £1.76 billion to 680,000 construction employees who were furloughed due to the pandemic. The companies that have used the schemes include Costain, Morgan Sindall, and Wates, among others.

Updates on the Scheme and How is it Changing

The UK Furlough Scheme was launched on April 20, 2020, and planned to cover the wages for March, April, and May. The furlough scheme was later extended to cover the month of June and has now been announced to run until October 2020. Under the Coronavirus Job Retention Scheme, the government pays 80% of the furloughed employees’ wages to the employer, up to £2,500 per month, in addition to the national insurance and pension contributions.

For the months of June and July, the government will continue to pay the same and employers will not be required to pay anything; however, the employers will need to bear the national insurance and pension payments from August 2020 onwards. For September, the state will pay 70% of the employees’ wages and the employer will be required to take care of the remaining 10% and the insurance and pension payments, while in October 2020, the state will pay 60% and the employer will pay the remaining 20% of the wages.

Similarly, for the SEISS, the government currently pays 80% of the average monthly trading profits, paid out for three months together, capped at £7,500 in total. After the extension of the scheme in May 2020, the government will pay 70% of the average monthly trading profits, capped at a maximum of £6,750.

Benefits of the UK Furlough Scheme

The UK Furlough Scheme has proved to benefit the workers, employers, government and the economy on the whole. The scheme has helped to keep the unemployment rates low and avoid the financial and emotional costs associated with laying off and rehiring employees. Thus, the scheme has limited the damages caused by the pandemic and kept the money flowing in the economy.

Additionally, the advance notice about the furlough prepared people to save up the amount of money they would lose by reducing their expenses. The money saved can then be invested in general investment accounts, money market funds and short-term CDs to generate additional income. The returns on the investment will make up for the lost income.

How Does the Furlough Scheme Affect Pension?

The government has made it clear that furloughed payments are pensionable. The employers can claim the pension contributions made for the furloughed employees; however, the amount is capped at the minimum automatic enrolment contributions equating to 3% of the qualified earnings. For employers making additional pension contributions over and above the minimum, only the minimum amount can be reclaimed from the government.

Moreover, if the employer elects to top up the salary of their employees beyond the 80% offered by the state under the UK Furlough Scheme, the total salary is pensionable. The additional costs related to the top-up wages paid by the employer need to be borne by the employer itself. For the self-employed individuals, it is advisable to continue making payments towards their personal pension schemes or SIPPs every month so that they can sail through the difficult financial times later and also save on taxes.

What is the cost of the Scheme to the UK Government?

The UK Furlough Scheme is currently supporting about 7.5 million jobs. As a result, by June 2020, the government has already spent over £20.8 billion on the Job Retention scheme. The cost is expected to reach £80 billion by the end of October 2020. Furthermore, 70% of the individuals eligible under the SEISS have made a claim, for a total cost of £9 billion to the UK government.

Problems with the Scheme

The UK Furlough Scheme is proving to be highly beneficial for individuals and employers. However, the scheme is very expensive for the government and is costing about £8 billion a month. The generous nature of the scheme can pose potential problems for the economy as it may deter the transition of the economy to recovery. The scheme cannot keep on supporting the jobs that will not remain viable in the post-COVID economy and will only delay the restructuring of the businesses. Despite the high costs associated with the UK Furlough Scheme, it has been a saviour for the UK economy and its workers. The scheme has helped to avoid a surge in unemployment and saved many workers from layoffs. The hold on economic activities and the associated damages would rather be more temporary than permanent, owing to the scheme, as the workers will be able to go back to their businesses and the economy will bounce back sooner than later.

saving pounds
ArticlesFinance

Britons are Set to Accumulate £75.5bn in Savings as Lockdown Sparks a ‘Money Revolution’

  • UK adults with discretionary income set to save on average a record £1,434 in the three months to June 
  • More than double the previous quarterly record for household saving of £37.2bn set in Q1 2010
  • Surge in people investing and using digital banking services for the first time

Britons with unspent discretionary income are set to accumulate £75.5bn in savings in just three months as lockdown sparks a ‘money revolution’, eToro can reveal.

Joint research by the multi-asset investment platform and the Centre for Economics and Business Research (CEBR) shows those fortunate enough to have more discretionary income during lockdown are on course to save an average of £1,434 each in the three months to June.

The restrictions on movement have meant that, despite many workers being furloughed and the financial hardships associated with that, a significant number of people have been able to make regular savings on travel costs and other daily expenses.

In fact, the staggering £75.5bn of savings these Brits are forecast to make in the second quarter of 2020 will be more than double the previous quarterly record of £37.2bn set in Q1 2010.

Bank of England data reveals households saved a record amount in April alone and paid off a record £7.4bn of debt, more than two-thirds of which was on credit cards.

Further, eToro’s research can reveal that lockdown has sparked a widespread revolution in the way people use and think about money.

More than two-fifths (42%) of Brits – or 22 million people – plan to keep up their new savings habits even after lockdown is lifted, which would turn Britain from a nation of spenders into a nation of savers almost overnight.

It can also be revealed that an estimated 3.8 million UK adults have invested in the stock market for the first time since February this year. This suggests the market volatility caused by Covid-19 has awoken in many the idea of investing in shares as a means of wealth accumulation.

eToro’s research also reveals how coronavirus is speeding up the UK’s transformation into a largely cashless society.  

During lockdown, more than a third (37%) of UK adults stopped using cash altogether, the research shows, while an estimated 2.2 million say they won’t use cash again even after the threat of Covid-19 diminishes. This is on top of the 5.5 million people who stopped using cash prior to the crisis.

Lockdown has also led to an explosion in the use of digital banking platforms, the research shows.

An estimated 9.4 million Brits have adopted new apps and websites to manage their cash during lockdown.

Further, more than a quarter (27%) of Brits – or 14.4 million people – expect to increase their use of digital banking apps post-lockdown. 

Iqbal V. Gandham, UK Managing Director of eToro, says“Our research shows that lockdown has ushered in a revolution in terms of the way we manage, view and treat money. 

“For many of course there have been significant challenges with debt and loss of income. However, in just a few short months, a significant proportion of the UK households that are in a position to set money aside have moved away from spending and cheap credit and turned to saving.

“At the same time, this pandemic has awoken in millions the idea that the stock market can be used as a potent means of generating wealth and prosperity, while many of us have also embraced new, digital ways of managing that wealth.

“The period of lockdown has severely impacted the economy and household finances, but one of the positives is that it has transformed how we engage with money, which will hopefully make many of us better equipped to manage our finances in the future.”

Pablo Shah, an economist at CEBR, says: “Brits are on course to save a staggering £75 billion between April and June – more than triple the quarterly levels recorded prior to the coronavirus crisis. 

“The period of lockdown has narrowed spending opportunities and encouraged precautionary saving activity, which will bring the household saving ratio to an all-time record high of 23%.

“The survey results also reveal the longstanding behavioural shifts that will be brought about by the period of lockdown. Consumers use of digital platforms to manage their finances is expected to increase significantly, while the shift away from cash to digital payments is set to accelerate.”

cryptocurrency
Finance

The Emerging World of Cryptocurrency

As the name suggests, cryptocurrencies are an emerging currency based on cryptography. Bitcoin is the most famous example, but new ones are being launched all the time. But with so much information out there about cryptocurrencies, it can all get a bit bemusing.

“As it happens, cryptocurrencies have been in existence for quite some time, and many believe they are the future of currency, so it’s important to invest in your understanding,” shares James Turner, Director at company formation specialists, Turner Little.

So, here’s our simple cryptocurrency explainer – how they work, why they matter, and where to start if you’re considering investing in them.

How do they work?

There are a limited number of digital ‘coins’ available, and powerful computers ‘mine’ these coins by solving highly complex equations. People are then able to buy and sell these ‘coins’ via cryptocurrency exchanges. Cryptocurrencies are stored in digital wallets and can be exchanged for certain goods and services, although it’s important to note that not everyone accepts them. To reduce the risk of fraud, every transaction is recorded in a blockchain.

What is a blockchain?

A blockchain is a distributed ledger. In other words, every transaction is recorded as a new block of information in an encrypted chain of data. With traditional currencies, banks oversee the ledger, whereas with blockchain, it is shared and synced across multiple places. This means if anyone attempts to alter the blockchain, it will no longer match the other copies that exist.

Why do cryptocurrencies matter?

Cryptocurrency is transforming the financial landscape because it de-centralises financial transactions. Essentially, people no longer need to use banks to transfer money. Its fans say that this democratises money and respects people’s privacy. Its detractors say that this relative lack of oversight and regulation can make it unreliable.

Cryptocurrency also has periods where it has risen sharply in value in a short period of time, which has attracted investors. That said, its price has generally been quite volatile compared to traditional currencies.

Should I invest in cryptocurrency?

“There is no simple answer to this question, nor can we give direct financial advice. As with any potential investment, it’s worth considering the risks and rewards and consulting a financial advisor,” adds James.

To discuss your personal situation and find out more about the options available with cryptocurrency, get in touch with us today.

Bas NieuweWeme
FinanceWealth Management

Lockdown has crystallised what the S stands for in ESG

The coronavirus crisis and subsequent lockdown have finally given real clarity on how to evaluate companies’ ability to tackle social issues, “crystallising” what the S in ESG really means, according to Bas NieuweWeme CEO of Aegon Asset Management.

Historically the social element of ESG has always been more challenging to evaluate as it typically relies on qualitative measures with limited means to assess actual performance.

However, the severe impact from coronavirus and the changes to the way people have had to both work and live means this has very much now come to the fore.

“The lockdown has allowed a crystallisation of the real performance on social issues versus mere policies and positioning,” NieuweWeme said.

“We can now look at how companies have behaved during this crisis. For example, are they providing employees sufficient equipment and appropriate facilities to do their jobs, have they shared the burden of the crisis when it comes future board remuneration, and have they abandoned their employees or customers in these difficult times?”

The importance of employees’ health and safety in terms of both mental and physical wellbeing has risen in prominence during the lockdown and is at the forefront of our emergence from it.

NieuweWeme said the role for investors now was to assess how businesses have actually adapted practices and working environments to ensure employee wellbeing.

“Previously we have usually relied on discussions with executive boards, while assessing policies on areas such as diversity & inclusion, childcare and flexible working among others, while using sites such as Glassdoor to get a feel for corporate culture. Key events sometimes highlight poor performance on social issues and provide us with an opportunity to engage with the worst performers, but coverage is limited to what is reported publicly.” he said.

“Going forward, we will be keeping a close eye on how companies implement new rules and regulations around employees’ safety and wellbeing, and on the executive and shareholder remuneration of those companies accepting public bailout funds.”

More broadly in terms of markets and the economy, NieuweWeme said the current crisis was a clear catalyst for change.

“From an investment perspective, if there is any good to come from this episode, it is the fact it has created greater awareness about Environmental, Social and Governance issues,” he said.

“In respect to the environment, I think many of us have enjoyed that during lockdown there has been less pollution and consequently fresher air, while nature has seemingly started to reclaim some of our urban environment.  There is also some preliminary scientific research pointing to links between air pollution and Covid-19 mortality.  These, as well as other factors mean environmental standards will come under increasing scrutiny post pandemic.”

Aegon Asset Management runs €206m* in responsible investment solutions on behalf of its clients. Its responsible investment team, led by Brunno Maradei, comprises 13 investment professionals.

For more information about Aegon Asset Management, visit www.aegonassetmanagement.com

value stocks
ArticlesFinanceMarkets

These 5 stocks prove that value investing isn’t dead

Investors who ignore so-called “value stocks” are at risk of missing out on good long-term gains, RWC Partner’s Ian Lance warns.

While the valuation gap between growth and value stocks has been exceptionally wide for some time, that gap will not grow continuously, Lance believes.

In fact, Lance believes some of the most interesting investment opportunities throughout the coronavirus have been value stocks.

Some of them, he explains, have highly profitable subsidiaries that are actually worth more than the entire group, meaning you get, in essence, two investments for the price of one.

Lance says: “Some of our most successful investments have been ones in which sentiment towards a company becomes so negative, that the valuation ends up making no sense versus the worth of its various parts.

“Valuations have become very irrational and have reached the point where they are excessively punished for a temporary earnings decline. Therefore, we believe that the current market throws up the opportunity to buy great companies with long-term returns and earning potential.”

Below, Lance sets out five unloved companies that he thinks have decent long-term potential or that have highly-profitable subsidiaries that make them worth investing in.

Royal Mail

RMG owns a European parcels business, GLS, which makes a 6-7% margin in a normal market environment and which has grown at mid to high single digit (benefitting from structural growth of online retail). In 2019, GLS made an operating profit of £180m and is therefore worth c.£2b if we put it on a multiple of 11x. The current market cap of the entire group is £1.7b and therefore the UK business is not just in for free but actually valued at around £300m.

BT

BT’s Openreach division generates £2.6b of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) which we have valued at £22b. This represents a multiple of just over 8x historic EBITDA which compares favourably with other utilities and therefore ought to be achievable. The enterprise value[1] of the entire group is currently £31b meaning that all the other businesses are being valued at £9b, which is only 3x their historic cash EBIT of £2.8b. Rumours surfaced in the a recent Financial Times piece that BT might be about to monetise a stake in Openreach.

Marks and Spencer

Marks and Spencer have a food retail business which makes £237m of Earnings Before Interest and Tax. If we value this at 12x historical EBIT, add their £750m investment Ocado at cost (less the future performance payments), take away net debt and give no benefit for the company’s freehold property, the total is around £2.0b, which is in line with today’s market cap. The entire clothing and home business, which is still the largest clothes retailer in the UK and which last year made a profit of £224m, is therefore in for free.

ITV

ITV is, in effect two business; broadcasting which is very reliant on advertising revenue and content production. In 2019, the content production business made EBIT of £267m and we might value this at around £3.5b (13x EBIT). The enterprise value of the entire group is £3.8b meaning that the broadcast business which last year made c.£500m of EBIT is being valued at around £300m in the stock market. Another way to think about this is that companies like Netflix spend around $15b a year on content production; for a fraction of this, they could have ITV’s entire back catalogue and all future content.

Capita

Capita has a software business which made just over £100m of EBIT in 2019. As these businesses are high margin (28% in this case) they tend to be valued quite highly. Using a multiple of 15x(which would be the low end of their peers) would value this division at £1.5b which is not far short of the enterprise value of the entire group of less than £2b. The rest of the businesses, which in 2019 made around £200m are thus only being valued at around 2x EBIT.

Each of these companies has a strong franchise within them that is being undervalued by a market that is fixated on short-term earnings momentum and hence creating some genuine bargains in the market today.

managing finances
FinanceRisk Management

How can tech help people manage finances during isolation?

Yiannis Faf, CEO, What We Want

The spread of coronavirus has caused an incredible amount of disruption to lives and economies worldwide. The British Government has taken far-reaching steps in an effort to minimise the impact on the UK in both regards, by encouraging the population to practise isolating.

Such a massive overhaul of day-to-day life will come as a shock to many. However, for non-key workers who are staying at home, there are many things that can be done to allow life to still feel normal. Spending time on Facetime, Zoom on in WhatsApp groups, for example, can allow you to stay connected.

In terms of finance, self-isolation provides its own host of challenges and opportunities. With the help of tech, those staying at home should be able to successfully combat or maximise on these.

Here are five ways we can use tech to overcome financial challenges during self-isolation:

  1. Management

First and foremost, COVID-19 is affecting people’s finances and the way they manage them. With consumers unable to visit their local bank branch or speak to an advisor in person, many will be concerned about financial management. However, technology is on hand to offer a bit of reassurance throughout this testing time. 

Money management applications can be useful throughout this process. Mint, for example, is an application that collates all your income, expenditure and other any other important finance information, helping to outline your overall financial position.

For some, self-isolation might inspire a large financial overhaul, and prompt an investigation into digitally-oriented ‘challenger banks’ like Monzo or Revolut. Whilst these banks might seem targeted at younger people, they offer an incredibly streamlined way of managing your money, thanks to their well-designed and easy to use mobile apps and online platforms. For example, every time a purchase is made, an account holder will receive a notification and their app will be updated, ensuring they are able to easily track their expenditure. In a period of economic uncertainty, that’s certainly a major upside.

  • Switching providers

With more time on our hands, many consumers will consider reviewing the costs of their major outgoing. This includes switching providers.

There are many comparison websites that provide a clear breakdown of the options available. Here, the various products, benefits and charges of different firms will usually be clearly laid out, allowing consumers to find the best option to suit their needs and make an informed financial decision.

  • Bargain hunting

At a time when we are unable to visit bricks and mortar stores, we are forced to shop online. With these changes comes an added benefit – it is easier to find the best deal.

Whether it is toiletries, groceries or clothing, online shopping enables consumers to quickly scan multiple retailers to find the desired product at the best price. This could result is further cut-backs in ones expenditure.

  • Small acts of kindness

Here’s another, more heart-warming idea. Technology can go a step beyond aiding an individual’s personal finance and can be used to help others within the community.

In the midst of the COVID-19 pandemic, crowdfunding apps are being used by local communities to raise money for worthy local causes. These causes can be of any size; from raising money to help a local retailer stay in business, to a supermarket shop for a vulnerable neighbour. Demonstrating small acts of kindness has never been more important to boosting the morale of communities, and it certainly is encouraging to seeing technology facilitating this.

At WhatWeWant we have seen use of our crowdfunding app increase notably over recent weeks for this very reason. Even though we are separated physically, using crowdfunding technology – and social media to share funding campaigns – can help direct cash to great causes.

To that end, during the Coronavirus pandemic WhatWeWant is donating all fees, including payment provider fees, to the National Emergencies Trust. We do not want to profit from people using our app for such worthwhile reasons. What’s more, we can also use this money to support a vital charity that is doing great work to help people through this crisis.

  • Safety

Finally, technology can do more than simply help improve your finances when in self-isolation; it can also protect you. When going to the shop, for example, using a contactless card saves you from touching the receiver, thereby minimising the spread of the virus.

Moreover, cybersecurity and fraud detection measures are stronger than ever – with people managing their finances and shopping online more than ever during this period, this is an important point. We can rest easier knowing the banks and retailers are putting more robust measures in place to protect our finances.

There is no doubt that we are currently living in unprecedented times. However, for those looking to improve personal finances, or indeed help vulnerable people within the community, technology undoubtedly offers some much-welcome comfort throughout this difficult time. We must embrace this during this difficult time.

Yiannis Faf is co-founder of the crowdfunding app, WhatWeWant. The app, which allows users to upload what they want for an upcoming event for themselves, or someone else. Users can contribute to what their friends and family want as well as notifying them to contribute to whatever you have uploaded. Once enough has been raised, users simply use the money. During the Coronavirus pandemic, WhatWeWant is donating all fees, including payment provider fees, to the National Emergencies Trust. 

online broker
FinanceWealth Management

Quick Tips for Choosing the Best Online Broker

There are plenty of factors that contribute to making someone a successful trader. You need the right strategy, a good idea of your chosen market, and a commitment to constant learning. However, you’ll also need access to the right tools – including an excellent online broker. For those of you who are new to this industry, a brokerage service is something that facilitates the purchases and sales that you make each day to build a successful profit in your space. There are a lot of different options to choose from, including specialist companies that focus on a particular exchange, and experts that offer advice on how to make the most of your finances. The question is, how do you choose a broker that you can trust? If you’re not certain, the following tips could help you to make the right choice. 

Know What you Need

Before you start searching on Google for the ideal company, you need a good idea of what you actually need. Are you the kind of person who mostly wants to go it alone with your accounts? If so, you won’t need access to a bunch of professional services, but you might want to keep your fees and commissions as low as possible. If you’re new to the marketplace, then it might be helpful to search for a business that offers practicing with a demo account. These environments allow individuals to put their skills to the test and explore new strategies without spending any money. Some organizations may refer to these learning opportunities to paper trading. Be honest with yourself about where you are in your journey into securities and assets and use that information to decide what sort of broker is right for you. 

Look at Credibility

If you were going to buy a new television, you’d want to read the reviews first to see if other consumers thought it was worth the cash. In the same way, when you’re trying to decide which expert to work with on your investments, it’s best to check out their reputation. Examine the website for trust signals that put your mind at ease. For instance, some companies will have certifications from certain financial authorities. You can also find out if the accounts on a site are protected with things like two factor authentications. This reduces your chances of ending up with a stolen account after you’ve made a decent amount of cash. Checking for testimonials and mentions from other happy clients can also be useful too.

Try Before You Buy

Finally, remember that a lot of brokerage firms offer you the chance to check out an account and see what trading feels like before you commit to any long-term fees. If you’re not sure whether a particular company is right for you, it may be a good idea to test them out for a while and see how you feel. You can always switch to another company if you feel that you’re not getting the right results first time around. Just be sure you haven’t signed up for any long-term discounts on yearly subscriptions or anything like that before you switch.

banking
BankingPrivate BankingWealth Management

Quintet opens for business in Switzerland

Quintet Private Bank, headquartered in Luxembourg, operating in 50 European cities and parent of London-headquartered Brown Shipley, has opened for business in Switzerland.

The launch of Quintet in Switzerland follows the successful closing of the acquisition of Zurich-based Bank am Bellevue – the wealth management business of the Bellevue Group – including approval of the transaction by the relevant regulatory authorities.

Switzerland’s newest private bank, located in the heart of Zurich’s financial center, will seek to expand Bank am Bellevue’s base of domestic and international clients, leveraging the country’s status as a global wealth management hub and Quintet’s own family of leading private banks.

Under the leadership of CEO Emmanuel Fievet and with some 40 staff, half of whom formerly served at Bank am Bellevue, the firm aims to carve a niche in this highly competitive space by combining the agility that comes with smaller size and the group’s financial resources and reach.

The Swiss firm is actively recruiting additional staff and intends to double its current headcount over the next 12 months. According to Fievet, Quintet is placing particular emphasis on identifying experienced relationship managers who share its commitment to earning the trust of the individuals and families it serves.

In Switzerland, Quintet aims to define a new standard in private banking by combining a highly personalized approach with independent, unbiased advice. With firm in-house investment convictions and open architecture, clients have access to the solutions that are right for them – provided by a team that is passionate about helping them achieve their goals through an innovative investment process tailored to each client’s individual requirements.

“Today, as we mark the closing of this important transaction, we are opening new doors of opportunity for people with an entrepreneurial mindset,” said Fievet, a member of the Quintet Group Executive Committee since October 2019 who earlier served as CEO and Head of International Private Banking at Edmond de Rothschild (Suisse). “With the right team, corporate culture and financial resources – and with a long-term horizon – we have a unique opportunity to challenge the status quo.

“I am very excited about building a new and different kind of private bank, which is small enough to be truly personal and big enough to offer access to the world,” he said. “In partnership with my colleagues here in Zurich and across Europe, we will focus on what matters most to our stakeholders, cutting through complexity, embracing diverse perspectives and growing our business – one client at a time.”

“The launch of Quintet in Switzerland is a milestone for our firm,” said Jakob Stott, Group CEO and member of the Board of Directors at Quintet Private Bank, which will also open its first branch in Copenhagen later this year, subject to regulatory approval.

“Even as we continue to invest in great people, geographic expansion and long-term growth, we will keep our eyes firmly fixed on the real prize: Doing the right thing – and not just the easy thing – for the individuals and families we serve.”

About Quintet Private Bank:

Quintet Private Bank (Europe) S.A., founded in 1949 and staffed by 2,000 professionals, is headquartered in Luxembourg and operates in 50 European cities, spanning Belgium, Germany, Luxembourg, the Netherlands, Spain, Switzerland and the UK. Widely recognized as a private banking leader, Quintet serves wealthy individuals and their families, as well as a broad range of institutional and professional clients, including family offices, foundations and external asset managers.

About Brown Shipley:

Brown Shipley is a wealth manager offering clients informed financial advice and tailored services on all aspects of wealth planning, investment management and lending. Brown Shipley has offices in London, Manchester, Birmingham, Cambridge, Leeds, Edinburgh, Norwich and Nottingham; and a heritage dating back to 1810. For further information, please visit: www.brownshipley.com

For further information, please visit: www.quintet.com

Wealth Management
Wealth Management

A Wealth Consultants Guide to Changing Wealth Managers

Wealth managers are there to seek counsel and guidance with your investment funds. Like a critical friend, they are there to help with strategy and suggest solutions to any financial queries. But what if your wealth manager is not helping you meet your financial goals? What are your options?

Changing your wealth manager can seem like an overwhelming process. It definitely can be. But if you know what you should look out for – you won’t have a single problem. If you’re reading this article, you’re in the right place because we will share some of the best tips from Alex MacEwan, founder of The Wealth Consultant.

Why Should You Change Your Wealth Manager?

Do you know that feeling when you think that nothing can improve the relationship for better and that it’s the right time to move on?

Many people have been feeling this about their wealth managers – yet not many take action to actually change them.

Why?

Because everyone is afraid of the “overwhelming” process that can occur as a result.

Perhaps your wealth manager isn’t listening to you, brushes off your requests, and only calls you when they should take action on your portfolio?  Or maybe they are the friendliest person out there – and yet your financial situation is not be getting better. If their advice isn’t changing and you aren’t seeing progress – it’s another good time to think about looking elsewhere.

When is the Best Time to Change a Wealth Manager?

No matter how badly you want to make change wealth managers,  you should play it smart. There could be timing issues if you switch mid-year. Also, you might end up occurring prorated fees if your wealth manager is charging you annually and you leave before the end of the year. 

Therefore, think long-term and always think ahead. In most cases, this will even mean that you will have to go and read the fine print of your contract with your wealth manager to gain the best understanding. Since every contract and its terms will be slightly different – this is the best way to determine the best time for you to get a new financial advisor.

How to Efficiently Change Wealth Manager to Meet Your Financial Goals

  1. Read the Fine Print

Reading the fine print of your management contract isn’t fun, but it’s the only way to gain the best understanding of your own situation.

If you aren’t sure how to find the correct time to leave your advisor – it’s highly recommended to focus on the termination part of the fine print. Are you charged annually? Is there a termination fee if you leave before the end of the year?

These details can tell you what the best time is to change your wealth manager without experiencing any financial losses.

  1. Think of the Service You Want

By now, you probably know why you want to leave your wealth manager. These reasons are helpful because when you think about them, you can know what to look out for in a new professional.

It is recommended to figure out and write down all flaws you’ve experienced, but also what type of services you require. You shouldn’t forget about the good things your current wealth manager did for you, and list them as well, since you want your new wealth manager to match these services too.

  1. Collect Your Investment Records

If you are leaving your current wealth manager, he or she is obliged by law to transfer the historical records of your portfolio to your new wealth manager. Before you even ask for the transfer, you should ask for a copy of the transaction history so you are ready to make the transfer.

Funds can also be transferred quickly and simply through automated systems like ACATS (automated customer account transfer service). In some cases, these automated transfer services may mean you do not have to let your existing provider know that you are leaving.

  1. Get Professional Help

Other than knowing what you want from your new wealth manager and collecting your previous investment records – you won’t have to do any “dirty” work yourself.

How come?

Wealth Consultants can provide you with professional help and a free digital introduction to introduce you to three different wealth managers, that match your requirements.

Professionals will handle the transfer for you and ensure that you aren’t missing out on anything. They will also deal with organising technicalities such as fund requests, initializing investment transfers, and more.

  1. Be Ready for New Relationship

Once you have found a new wealth manager, you should go over the information you’ve received and the terms you’ve set with your new wealth manager. But what should you be looking out for?

Check to see if there are any expected services missing in your contract, as this is the right time to make additional changes if needed. Also, ask your new wealth manager about any sales charges you might be expecting so there are no hidden costs.

 

At this point, you’re pretty much set with your new wealth manager. However, double checking things and learning how they work is highly recommended to ensure you are always getting the best financial advice and service.  

investgrowth
Cash ManagementFinance

Why financial planning tools should be at the forefront of every modern wealth management firm

There has been a radical shift in client’s behaviour towards portfolio construction. No longer is there a requirement for costly active portfolios and instead, many would rather opt for passive low-cost investment products. With a range of advisors providing this offering, the market has become fiercely competitive. Wealth & Finance International sits down with InvestCloud’s Chief Growth Officer (CGO) Mark Trousdale, who gives his views on why modern financial planning tools should be at the forefront of every wealth management firm.

What is behind the trend of moving away from active portfolios towards passive investment products?

Both active and passive investment products have had their days in the sun. If you look at large-cap blended funds from 1985 to 2019, active and passive are nearly neck and neck on the number of years in which those portfolios performed better. In bull markets, many passive portfolios are rising, so active portfolios risk missing the wave. In bear markets, contrarian active portfolios sometimes avoid the pitfalls of the broader market. The rising popularity of passive portfolios is not a judgment of performance in a vacuum – it’s a judgment of performance against fees. Active portfolios simply cost more to invest in than passive portfolios; and given that active portfolios have not consistently outperformed passive ones, it’s becoming increasingly difficult to justify those higher fees.

 

Why is financial planning now more important to financial advisors (and clients)?

Fund fees are not the only ones under the microscope. Transaction fees have fallen significantly, and in some cases to zero – such as Charles Schwab’s move to eliminate fees in October 2019. Advisory fees are also under threat. The market has been taking a critical look at value for money in all areas of financial services. The lower the value of a service – or the more commoditised it is – the harder it is to justify high fees. One area that cannot be commoditised is financial planning, and investors really rate it. After all, what is the point of wealth management if not to ensure financial wellness and help families achieve their goals? Advisers are increasingly emphasising their financial planning offerings to stay at the forefront of investor value creation.

 

How is fee compression affecting firms? Will it get better or worse? How does this affect competitive dynamics in the market?

As noted above, fee compression is having a big impact on several areas of financial services, and it’s only going to get more intense for traditional offerings. But as we’re seeing with financial planning, service innovation and value focus are keys to success. I’m a big believer that price is only an issue in the absence of value. The imperative must be to innovate, focusing on value as the north star. This will spur further competitive dynamics in our market.

 

What do wealth managers and financial advisers need to do with regards to their business models and operations to support this?

In order to innovate and focus on value, advisers should focus on enhanced client communication. This involves empowering clients to interact with their advisers, view account information, track their private assets and held-away accounts, store life’s important documents, consume curated content, build goals and make confident decisions alongside their advisers. At the same time, advisers and other wealth managers need to focus on building in automation to improve operational efficiency. Across the middle and back office, advisers can automate account opening, simplified account funding, scalable model creation and distribution, automated rebalancing, personal balance sheet aggregation, one-click proposal creation and other digital advice apps. This list goes on. The aim is to reduce the number of manual, repetitive and laborious tasks so advisers can instead focus entirely on value creation.


From a technology perspective, what do firms need to implement? Should they build or buy?

Many firms focus on answering the build versus buy question. For advisers and wealth managers, delivering technology effectively is rarely a core competency. That’s not to say that these firms don’t have great tech talent – many do. But their track records are atrocious when it comes to delivering technology solutions on time or on budget. Most in-house technology projects ultimately fail for this reason. Besides considering explicit (vendor) vs. sunk (internal team) costs, firms should also look at risk costs – ‘can do’ is not the same as ‘have done’, and failing clients in this market is not an option. The value proposition to build simply doesn’t exist.

At the same time, buying technology off the shelf can seem like it will save money, but most financial technology is monolithic and cannot be customised at scale.  Logo-swapping is not customisation and clients will notice the lack of flexibility or functionality open to them.

By themselves, build and buy both lead to unsatisfactory results. Advisers and wealth managers should not approach this as one or the other and instead focus on how to take control of technology in a cost-effective, fast-to-deliver way.

The answer to this is via subscriptions to digital platforms that are flexible and modular – build and buy. With a truly modular platform, you can add functionality as your business evolves, versus an all-or-nothing proposition. This also controls recurring costs, because you pay for only what you need. The best type of platform is one that also supports mass customisation – a framework to flexibly configure and customise the look and feel as well as the workflow, integration points and data scope. From a risk and cost perspective, this should be able to be delivered in no more than six months at a price that beats your internal measures. These are all the benefits of a build and buy – the best of both, with none of the downsides.


Should wealth managers/financial advisors look to patch process with different technologies, or should they be focused on digital transformation?

Whether it’s the right answer to complement or replace existing processes and technologies depends on the process and technology in question. A firm should not throw the baby out with the bathwater. Instead, they should leverage existing investments if they are of value. But equally, firms have loads of technical debt, and can spend a significant portion of their budgets servicing bad tech. So, it’s about reviewing the technical tapestry critically and being strategic about enhancements. This is where hyper-modular apps and functions come into their own, as it means firms use only what they need, complementing their valued investments.


What other considerations do wealth managers and financial advisers need to take into account, e.g. from a digital/engagement perspective?

Investors simply expect more for their money these days, and the norms of consumer digital offerings have crept into many of their psyches. Wealth managers and financial advisers need to be extremely forward-thinking about how they automate workflows, and how they communicate with and manage their clients. Not only is a website no longer anywhere near enough, but also a basic client portal is no longer enough. Advisers and wealth managers should focus on truly enhancing client communication through things like enabling multi-channel adviser interactions and dynamic, holistic digital advice financial planning. These are the things that will matter most to them.


What other trends will affect how wealth managers and financial advisers conduct their business in 2020?

Wealth managers and advisers can expect further fee compression as well as even greater investor emphasis on financial planning. Depending on the demographic, ESG is coming much more into the mainstream. So, expect investors to be demanding more intuitive and engaging tools to compare financial products at a glance in order to help them achieve their goals. It would also not be surprising to see firms outside the US start to offer Turnkey Asset Management Programs (TAMPs) or TAMP-like platforms, which may fundamentally alter how wealth managers and advisers deliver services.

Mark Trousdale, EVP, serves as InvestCloud's Chief Growth Officer (CGO)

Mark Trousdale, EVP, serves as InvestCloud’s Chief Growth Officer (CGO). In this role, Mark is responsible for growing InvestCloud’s adoption and revenue in a consistent fashion, currently focused on the UK and broader EMEA, and headquartered in London. Mark’s responsibilities include business development, regional P&L and executive committee participation. As part of InvestCloud’s founding team, Mark has served in a number of different roles at InvestCloud throughout the years, building upon nearly 20 years of experience in financial and professional services. Prior to joining InvestCloud, Mark led the western region Asset Management Advisory practice of Deloitte. Mark holds a BA with Honors and an MA with Distinction from Stanford University.

Customers out in the cold the removal of banking services under UK civil and criminal law
BankingFinance

Customers out in the cold: the removal of banking services under UK civil and criminal law

Customers out in the cold the removal of banking services under UK civil and criminal law

By Jonathan Tickner (Head of Commercial Litigation & Civil Fraud), Neil Swift (Partner), James Gardner (Barrister) and Amalia Neenan (Legal Researcher) at Peters & Peters Solicitors LLP

Financial crime is one of the biggest threats facing the global economy. The 2019 Crime Survey for England & Wales indicated that 3,863,000 fraud offences were committed last year alone, with a high number of cases also unreported. The sheer volume presents law enforcement authorities with an impossible burden were they to investigate and prosecute every offence. And it is unlikely the problem ends here. The National Crime Agency (NCA) has warned that Covid-19 may heighten the risks of fraud and money laundering, with organised crime capitalising on the pandemic.

The old adage is that a problem shared is a problem halved: enter stage left the private sector, in particular the banks, who provide the front line response with Anti-Money Laundering measures to prevent criminals from obtaining bank accounts and laundering the profits of their crimes. But what if criminals obtain access to this system?

To tackle accounts suspected of harbouring ill-gotten gains, there are two measures available. Firstly, civil law provisions that permit banks to close a customer’s account without justification. Secondly, for law enforcement, the criminal law mechanism of Account Freezing and Forfeiture Orders (AFFOs) under The Criminal Finances Act 2017. However, although different in their outworking, both carry the risk of an unreasonable and unexplained deprivation of banking services for those swept up by their heavy-handed use and further detrimental effects for individuals and corporate entities.   

No Rhyme or Reason?
In the same way that customers are not obliged to stay with one bank forever, banks also have the ability to end contractual relationships with customers by closing their accounts. Banks will normally only close an account if the customer has been put on notice within a reasonable timeframe (at least 30 days for personal accounts). In these circumstances, the courts have traditionally been hesitant to interfere with a bank’s decision to cut ties with the account holder – termination on notice has been treated as an absolute contractual right. However, it becomes more contentious when banks execute these functions without giving reasonable, or indeed any, notice or reasons. This can occur either when the bank suspects the account holder of fraudulent activity, or when it decides that the risks associated with operating the account (sometimes particular to the account holder, sometimes not) outweigh the benefit to the bank in maintaining the relationship. Here, the bank’s discretionary decision whether to terminate a customer’s account may be subject to contractual fetters.

An attempt to impose such limits on a bank’s determination was recently made by a customer in
N v Royal Bank of Scotland Plc [2019]. N held approximately 60 accounts with Royal Bank of Scotland (RBS). Of key importance was Clause 9.4 of RBS’ Account Terms, which governed the contractual right to terminate banking services. The clause stipulated that RBS “will give the Customer not less than 60 days’ written notice to close an account, unless [it] considers there are exceptional circumstances”. Exceptional circumstances usually concern suspected fraudulent activity, and in this case RBS froze a number of N’s accounts, ultimately terminating the relationship on a without notice basis due to these suspicions. N initially asserted that RBS’ determination that there were exceptional circumstances was unreasonable or irrational. However, the High Court found that RBS had been entitled to terminate the relationship without notice as RBS had investigated the issue of potential criminality and had in good faith, and rationally, assessed whether there had been exceptional circumstances that justified the closure of N’s accounts without notice. The appeal dismissal on 10 March 2020 reaffirmed the court’s position in favour of the bank.

However, can it ever truly be
‘reasonable’ to deprive a person of access to banking facilities without warning? Understandably, the provision exists to ensure that if accounts are being used perpetrate fraud – either by storing the proceeds of crime or as a vehicle for money laundering – that the wrongdoer is not alerted to the possibility that the account will be closed, allowing time to move funds. But what happens if there is no fault, fraud or justifiable reason? This commonly occurs where banks take steps to ‘de-risk’ by sector. 

 

Freezing Cold!
AFFOs have the potential to result in similar problems, if used haphazardly. These new powers allow for authorised law enforcement agencies to freeze and forfeit accounts suspected to contain the proceeds of crime, and have been viewed as a great success by law enforcement. For instance, in December 2019, the NCA secured nine orders against property tycoon, Malik Riaz Hussain, amounting to £190 million.

Yet, the heavy-handed use of AFFOs risks undermining their legitimacy. Similar to the contractual removal of banking facilities, these orders are obtained without notice to the account holder. All an officer needs are reasonable grounds to suspect that the property is recoverable. Once again, the key issue centres on this notion of
‘reasonableness’, and if left unchallenged, or not challenged properly, the ‘reasonable’ belief of one officer can lead to further consequences. An ill-advised response from the account holder may open up further investigations. Even if successfully defended, the mere fact that their account holder has been suspected of holding the proceeds of crime may cause the bank to rethink the desirability of the relationship. 

 

Domino Effect
Both the civil and criminal law systems have similar detrimental effects on respondents, and a ‘domino effect’ on other accounts can occur. When a banking relationship begins, the new institution will no doubt wish to know what happened with the old, particularly if their own risk assessment indicates issues.

Nonetheless, remedies are available. The difficulties created by a bank giving notice to terminate can be assuaged. Subject Access Requests (made against both banks and compliance databases that have been used by banks to assess customer risk profiles) pursuant to the GDPR can be an effective way of discovering information that has likely caused or contributed to the refusal of financial services. Individuals can then seek to have damaging information removed pursuant to the GDPR if it is (inter alia) inaccurate or misleading.

The effects of AFFOs can be moderated too. No matter how modest the balance at stake, it is vital that a robust challenge is put forward to protect the account holders’ other accounts and their ability to bank. If necessary, AFFOs can be varied to permit the release of funds for this purpose. 

Given the scale of the world’s ‘financial crime problem’ , the public and private sector will inevitably continue to embrace such measures to respond to suspicions of fraud and risk as they are quick and cheap. Whilst undoubtedly effective, the challenge is ensuring that they provide a fair and proportionate response in the fight against fraud, with an acceptable level of transparency and customer certainty.

UK reduces its oil imports by over 75 million barrels in five years
Foreign Direct InvestmentMarkets

UK reduces its oil imports by over 75 million barrels in five years

UK reduces its oil imports by over 75 million barrels in five years
  • New tool charts global commodity trading over the last decade
  • China has overtaken the USA as the world’s biggest importer of oil
  • The UK is the 8th best European country at reducing its oil imports

The UK has reduced its oil imports by more than a fifth (21%) in five years, a new online tool from Daily FX has revealed.

While the country remains the 12th biggest global importer of oil, including petroleum oils, it has taken great strides towards reducing its reliance on such environmentally-harmful fuels.

Between 2013 and 2018, the UK had the eighth-best rate in Europe for reducing such imports, with its intake dropping by 76.9 million barrels (from 359 million to just over 280 million).

Malta (93%) and the Republic of Moldova (92%) experienced the most significant decreases across the continent.

The data has been visualised on a
new interactive tool built by Daily FX, the leading portal for forex trading news, which displays global commodity imports and exports over the last decade.

The tool shows that China has recently overtaken the USA as the world’s biggest importer of oil. The Asian giant imported nearly 3.4 billion barrels in 2018, which was over 240 million more than the USA. China tops the list having increased its oil imports by 64% since 2013 – nearly six times the rate of its rival (11%).

The top 10 global importers of oil (2018) are:

  1. China – 3.38 billion barrels
  2. USA – 3.14 billion barrels
  3. India – 1.65 billion barrels
  4. Japan – 1.09 billion barrels
  5. The Republic of Korea – 1.09 billion barrels
  6. Germany – 622 million barrels
  7. Netherlands – 506 million barrels
  8. Italy – 460 million barrels
  9. France – 397 million barrels
  10. Singapore – 376 million barrels

Daily FX’s unique tool allows traders to spot developments in the flow of commodities and the growth of both supply and demand while comparing the changes to critical economic indicators.

One trend highlighted by the tool is the decreasing reliance on oil among African countries. Five of the world’s ten best nations at reducing oil imports are found on the continent, including the top four. Morocco, Kenya, Burundi and Gambia all decreased such imports by over 99%.

John Kicklighter, Chief Currency Strategist at Daily FX, said: “The world is changing and so is the way that it uses energy. Renewable and environmentally-friendly fuel options are the future, and while the end of crude oil is still far off, there will be considerable changes in the world’s top importers and exporters. Our new tool helps track those changes.

“While some of the larger countries have increased their appetite, it is interesting from an investor’s perspective to see the UK exploring alternative energy sources and reducing its dependence on oil.”

Global Commodities’ takes the form of a re-imagined 3D globe where the heights of countries rise and fall to show the import and export levels of a range of commodities over the last decade. The data visualisation allows users to switch views from a single commodity or market and show information relevant to that commodity or market’s performance.

To learn more about Global Commodities and view the tool, visit:
https://www.dailyfx.com/research/global-commodities

THE FUTURE OF TAX HAVENS
Finance

The Future of Tax Havens

THE FUTURE OF TAX HAVENS

 

The EU recently added four countries and jurisdictions to its blacklist of tax havens, including British overseas territory the Cayman Islands.

“The EU set up the system in 2017, to put pressure on countries to crack down on tax havens and unfair competition, sanctioning those it considered unfair in offering tax avoidance schemes. However, with this news coming in just weeks after the UK’s withdrawal from the EU, many are concerned it’s a sign of things to come,” says Granville Turner, Director at Offshore Company Formation Specialists, Turner Little.

“The Cayman Islands have become well known for being a tax haven, offering foreign individuals and businesses a minimum tax liability, making it a prospering environment for offshore banking. The significant tax benefits aren’t the only offering making the Cayman Islands advantageous, they also have confidentiality clauses in place to protect the privacy of assets, as well as the individuals or business’s reputation. In September, the International Monetary Fund (IMF) listed the Netherlands, Luxembourg and Ireland, as world-leading tax havens, together with Hong Kong, Singapore and Switzerland. Some of these countries offer similar benefits to the Cayman Islands and none of them are on the EU blacklist,” adds Granville.

At the same time, the EU has removed the Bahamas from its watch list, after deeming the island fully compliant with tax standards, a decision that acknowledges that the Bahamas has implemented all the necessary reform to address concerns regarding economic substance, removal of preferential exemptions and automatic exchange of tax information.

“For those with assets in the Cayman Islands, it’s important to realise the blacklisting may be short-lived, and the fundamental change to existing structures should be considered in this light. There may however in the interim be increased reputational concerns surrounding the Cayman Islands, and new funds or structures may wish to consider an alternative jurisdiction,” says Granville.

At Turner Little, we specialise in creating bespoke solutions for both individuals and businesses of all sizes. The knowledge and expertise of our specialists, ensures we are able to assist with any enquiries, no matter how complex. To find out more about how we can help you,
get in touch with us today.

How COVID-19 is Impacting the Rental Market
MarketsReal Estate

How COVID-19 is Impacting the Rental Market

How COVID-19 is Impacting the Rental Market

TurboTenant, an
all-in-one, free property management tool, releases its latest industry report
– “How COVID-19 is Impacting the Rental Market.” This report
highlights key rental market indicators from March 2020 in cities throughout
the U.S. who have and are currently following social distancing and
stay-at-home orders.

You can read the report and how COVID-19 is Impacting the
Rental Market here.

TurboTenant’s new trend report analyzed 18 cities and four
key rental market indicators: total active listings, change in number of active
listings, total renter leads and the average number of renter leads per
property. While the full effects of the coronavirus on the housing market are
still unknown, delisting and new home listings steeply declined in March.
TurboTenant’s report found while some markets reflected those trends, others
had strong markets.

TurboTenant Highlights that New York, Denver and Houston all
experienced large net losses for new listings with New York holding the biggest
decrease at -65.17% while San Diego, Atlanta and Cleveland all experienced net
gains in listings. Lead growth in 14 of our cities, including Jersey City and
Denver, fluctuated throughout the month, but ended lower than they started. In
cities such as Boston, Houston and Milwaukee, leads were higher at the start of
April than at the beginning of March.

The reasoning for the report to be created is to give “insights
on how the rental market is starting to react to the COVID-19 pandemic,”
said Sarnen Steinbarth, TurboTenant Founder and Chief Executive Officer.
“With the peak rental season approaching, we want landlords to be prepared
and informed about the trends nationwide and in their own cities.”

“It is imperative to monitor rental trends during the
coronavirus pandemic,” Steinbarth said. “This report along with our
past and future trend reports, will help educate not only landlords, but also
property investors, businesses and the public.”

bank
ArticlesBankingCash Management

Cold Shoulder From Banks As Hiring Freeze Puts Pressure On Cashflow For Recruitment Firms

bank

Cold Shoulder From Banks As Hiring Freeze Puts Pressure On Cashflow For Recruitment Firms

The Association of Professional Staffing Companies called for a more responsible approach from the banking sector as a survey of its membership painted a picture of demands for personal guarantees, offers of alternative loans to the Government backed Business Interruption Loan (CBIL) and inflated interest rates.

The survey, which questioned 120 recruitment firms found that over a third of businesses who felt that the CBIL could benefit their business either do not know how to access it; find the criteria prohibitive or the process too complicated and difficult.

“Banks are asking for personal guarantees from business owners as there also seems to be a tendency to try and sell you anything but the Government scheme” said one APSCo member while another said: “The terms appear to be arbitrary rather than qualified by the Chancellor. One bank is charging 12% with a threat to seize homes if repayment terms are not met.”

The survey also revealed that hiring is at a near standstill with 22% of recruitment firms reporting that permanent hiring is at zero and almost half (47%) reporting a decrease in hiring activity of 90%.

Two thirds of recruitment firms have had up to 25% of their contractors terminated in the last week; 15% have had up to 50% terminated and 17% have had up to 100% terminated.

Commenting on the results Ann Swain, Chief Executive of APSCo said:

“The banks have to be made to take a responsible approach so that firms can get access to the cash they need as the Chancellor intended. We are, along with the Recruitment and Employment Confederation, writing a joint letter to Government asking them to urgently review the banks approach so that this lifeline can be made available as soon as possible. The collapse in hiring activity has hit recruitment firms very hard not least because the furlough scheme does not cover those who have been made a job offer but who have not started. 

“This of course is understandable and we appreciate why the Government could not stretch its already generous package further. This does mean though that there will be many recruitment firms unable to invoice for work that they have already done which makes it even more important that they are able to rely on the banks to do the right thing.”

hsbc
ArticlesFundsStock Markets

How Clued Up Are You On The FTSE 100?

hsbc

How Clued Up Are You On The FTSE 100?

Brits incorrectly believe household favourites Tesco and Sainsburys are in the top 10 biggest companies of the FTSE 100, according to a new poll by IG Markets.

The trader polled 2,000 adults, alongside the launch of its Decade of Trade tool, to discover how clued up the general population are on the FTSE 100. The results show that as a nation we are fairly savvy when it comes to our knowledge of the stock market and over two-thirds (77%) are knowledgeable on the definition of shares.

Online trading platform, IG Markets, created the Decade of Trade tool to help Brits gain an understanding of the FTSE 100 and to allow traders to view not only how companies in the markets are performing now, but how they have performed over the last ten years. The tool covers twelve world markets including the FTSE 100, DAX40, ASX200 and HANG SENG.

When asked to name which companies are in the top ten of the FTSE 100 from a list, Brits identified eight out of ten businesses correctly. The mistakes came from thinking the supermarkets had a bigger presence than they do, with Brits believing Tesco (23rd in the FTSE 100) and Sainsburys (100th in the FTSE 100) to be in the top 10 market share.

 

Perceived top 10 of FTSE 100

Actual top 10 of FTSE 100

BP (+3)

HSBC

HSBC (-1)

Royal Dutch Shell A

GlaxoSmithKline (+4)

BP

Unilever (+6)

Royal Dutch Shell B

Tesco (+18)

AstraZeneca

British American Tobacco (+2)

Diageo

Royal Dutch Shell A (-4)

GlaxoSmithKline

Royal Dutch Shell B (-4)

British American Tobacco

Sainsbury (+91)

Rio Tinto

AstraZeneca (-5)

Unilever

 

Brits failed to identify beverage company, Diageo, whose brands include Smirnoff, Baileys and Guinness and mining corporation, Rio Tinto, as top 10 FTSE 100 companies.

Brits were also tested on their knowledge of the FTSE’s sector market share. The results showed there is a perception that Oil and Gas, Chemicals and Banks and Persona are the three largest sectors of the FTSE 100 when it is actually Oil and Gas, Banks and Persona and Household Goods.

Respondents were also asked what they perceive to have the biggest impact on the FTSE 100, and just over a quarter (27%) thought the Brexit referendum would have the biggest impact on the stock market.

 

Top five things Brits think have impacted the FTSE 100

  1. Interest rates (43%)
  2. Economic releases about earnings reports (35%)
  3. The Bank of England quarterly inflation report (27%)
  4. Brexit referendum (27%)
  5. Eurozone politics (26%)

 

Almost four in ten (39%) correctly thought all of the above factors have an impact on the FTSE 100.

To view the Decade of Trade tool, click here: https://www.ig.com/uk/special-reports/decade-of-trade

will
Family OfficesWealth Management

Disputing A Will: Key Considerations

will

Disputing A Will: Key Considerations

By Monika Byrska, Partner at Thomson Snell & Passmore

As a jurisdiction England and Wales is proud of its testamentary freedom.   Anyone can make a Will and in their Will leave whatever they own to whomever they want.   Not far away from us geographically, in the Channel Island of Jersey, testators can truly freely dispose of only a third of their estate.  Two thirds of their estate will be distributed to their closest family, whether they like it or not.   Similar “forced heirship” provisions exist in most continental jurisdictions.  We are not so restricted in England and Wales.  We can leave all we have to our favourite child, the “cats’ home”, or a neighbour.  However, are we as unfettered in our freedom as we think? 

Research published by Direct Line Life Insurance in 2018 suggested that over 12.6 million Brits would be prepared to go to Court to dispute a Will of a family member if they disagreed with the division of their estate.   Apparently, inhabitants of Southampton are most likely to dispute their loved one’s Will (31% of those surveyed).   They are closely followed by Londoners (29%) and Brighton residents (26%).   When it comes to contesting a partner’s Will, Brighton tops the tables – 16% of those surveyed would contest their partner’s Will if they were disappointed by it.   If the law gives us testamentary freedom, how and why can people argue over the provisions of our Will? 

Looking at my own practice, it seems to me that one of the most common reasons for people to have concerns over Wills is an allegation of undue influence.  Though in practice, evidentially, it is one of the most difficult grounds on the basis of which one can pursue a Will challenge, the concern that a Will was signed only because of the influence of the evil sibling, greedy carer or child, are stories I hear most often.   These cases are difficult, as how do you gather evidence of coercion that forms the basis of undue influence? By its very nature, coercion is always carried out in private, shielded from the prying eye of others, even those closest to the victim.  At the same time, because undue influence will often be tainted by a history of mental or sometimes physical abuse of the victim, when discovered, it is very difficult to just let it pass.  Undue influence challenges are often not cases only about the money, but about justice, which those close to the deceased wish to achieve. 

The second most common ground for Wills being challenged is an allegation of lack of capacity, i.e. a situation where the person making the Will was not of sound mind.   Does mental illness or neglect mean we cannot make a Will?  It need not do. However, for those disappointed by a Will, an insinuation that the deceased could not have possibly known what they were doing, because they were elderly, showing signs of dementia, will be enough to spark up a Will dispute. That is why it is so important that Wills, especially those which are likely to come as a disappointment for friends and relatives, and those prepared for the elderly or vulnerable, ought to be prepared professionally.    

In addition to the two most common grounds, Wills may be challenged on the basis of lack of knowledge and approval or lack of proper formalities (i.e. being wrongly signed or witnessed). Estates may also be challenged under the Inheritance (Provisions for Family and Dependants) Act 1975 by closest family: spouses, partners, children and dependants for whom “sufficient provision” in a Will has not been made.    

Despite the testamentary freedom we like to boast about, there are therefore legal routes allowing us to try and change the provisions of the Will of our loved one, after their death.  The trend is only upwards.  Looking at official court statistics the increase in the number of probate cases issued in the Business and Property Court of England and Wales was 24 % in 2017 (when compared to 2016), 30% in 2018 and 18% when comparing the first three quarters of 2019 with the same period in 2018. 

Millions of pounds are being spent on such disputes.  The financial and emotional burden that they bring on those bereaved may be reduced only if you involve a specialist early on; someone who will have the required experience, but who will also be ready to provide you with their honest, emotionally detached from the family feud, opinion. Law does create possibilities to impact how wealth will be distributed post-death.  However, those possibilities are limited and the courts will defend the English principle of testamentary freedom.  There are no better words to summarise the position than those of Deputy Master Arkush in one of his judgments (Rea v Rea [2019] EWHC 2434 Ch):

 “On one level it is understandable that the defendants feel disappointed, upset and resentful that they have not benefited from their mother’s will. In my judgment they have allowed these emotions to override a more considered reflection (…)[It] is not my task to decide whether the 2015 Will was justified or fair. I am only required to decide if it is valid…”

high street bank
ArticlesBanking

Do You Trust Your High Street Bank?

high street bank

Do You Trust Your High Street Bank?

With the likes of Goldman Sachs and National Savings & Investments (NS&I) cutting the interest rates on savings accounts, consumers are beginning to lose trust in the value of high street banking in the UK.

“Today, the biggest threat to savings isn’t market risk. It’s the fact that a majority of Britons feel that banks have not rebuilt public trust despite over ten years of restructuring since the 2008 financial crisis. The unhappiness of customers with their high street banks is becoming cliché,” says Granville Turner, Director at Company Formation Specialists, Turner Little.

“With mobile banking set to be more popular than visiting a high street bank by 2021, it’s no wonder that consumers are starting to look further afield when it comes to managing their finances. If an offshore investment makes you a better return, and doesn’t increase or even reduces your risk, then it makes perfect sense to invest. If the same investment also saves you money in taxes or allows you to take advantage of foreign economic conditions, then again, why would you not consider it?” adds Granville.

Offshore accounts are often multi-currency accounts, and can be opened by anyone over the age of 18. Whilst it’s often necessary to invest at least £500 or, in exceptional cases, £10,000 to open an offshore savings account, there are many that require a minimum deposit of just £1. A common perception is that some of the most common offshore accounts available to UK-based savers are in the Channel Islands or the Isle of Man, but this is not the case, and anyone considering an offshore account might be well advised to look further afield.

Offshore accounts are often available with both variable and fixed interest rates, and offer easy access to your funds. Whilst there are a number of strict checks in place to prevent offshore accounts falling foul of criminals who want to evade tax, opening an account is easier then it seems, providing you meet the minimum requirements set by the bank you choose.

“Whilst offshore accounts may not be for everyone, this rapid rate of technological change is set to continue over the coming decade, as people embrace the ever-widening number of ways to manage their finances, depending on their needs and lifestyle,” says Granville.

Mechanical Clock
ArticlesTax

Five World-Changing Inventions With Big R&D Claims Today

Mechanical Clock

Five World-Changing Inventions With Big R&D Claims Today

R&D tax credit specialists, RIFT Research and Development Ltd, have looked at five historic advancements that not only changed the world but would have eligible for some big R&D tax credit claims if they had come about today.

 

5. The Wheel

Perhaps the first invention that changed the course of mankind notably, the wheel enabled us to transport goods quicker and in greater quantities, while facilitating the birth of commerce and agriculture. Created in 3500 B.C., but only used on chariots some 300 years later in its primary function, the wheel doesn’t just help us to travel easier but it also has a wide array of other applications, such as its use within machinery.
Should the wheel be invented today through R&D it would qualify in the transport and storage sector and see an R&D tax credit claim total somewhere around £71,000.

 

4. The Battery

In the 1800s a lack of consistent electrical lines meant a consistent supply of power was non-existent. Then an Italian, Alessandro Volta, developed the first battery using zinc and silver discs placed alternatively to form a cylindrical pile. This new device produced a repeated number of sparks that could operate a number of devices without mainline power. Today, the battery has evolved through R&D and now almost every day to day electrical device relies on one with a focus on smaller sizes with longer battery life and the latest advancements coming through their use in cars to reduce pollution.
If invented today, the battery would qualify for an R&D tax credit claim of £80,000 within the electricity, gas, steam and air conditioning sector.
3. Semi-conductors
Not the sexiest invention but semi-conductors form the firm foundation for all electrical devices and are pretty much the cornerstone of the digital world. The first device to contain one was developed by Bell Labs in 1947 but should they have waited until today, their work would be in line for an R&D claim to the tune of £105,000.

 

3. Semi-conductors

Not the sexiest invention but semi-conductors form the firm foundation for all electrical devices and are pretty much the cornerstone of the digital world. The first device to contain one was developed by Bell Labs in 1947 but should they have waited until today, their work would be in line for an R&D claim to the tune of £105,000.

 
2. Mechanical Clock

Our ability to tell time is pivotal to the way we live and work and without clocks to help us we would be living in a world of unorganised chaos. The clock was technically an R&D advancement on the sundial but when Yi Xing created the mechanical clock in China in 725 AD it would be the first that was widely accessible within society and would go on to change the world dramatically.

Today Yi Xing’s work would be in line for a £107,000 R&D tax credit claim within the professional, scientific and technical sector.

 
1. Penicillin

Last but not least, Penicillin is probably the most important medical advancement of years gone by that would qualify for an R&D tax credit claim today. Discovered by Alexander Fleming in 1928 and then researched and developed over the following 20 years, the drug revolutionised the way we treat a wide array of medical problems and helps fight infection without causing us harm in the process.

Like the clock, if invented today Alexander could have submitted an R&D tax claim of £107,000 for his work within the professional, scientific and technical sector.

 

Director of RIFT, Sarah Collins, commented:
“R&D has been changing the world before the term was even coined and in these cases, the impact of the developments made have changed the human race and created the modern world as we know it.

Of course, had these advancements been made today, the work carried out to develop them would have qualified for a pretty chunky claim where R&D tax credits are concerned. Instead, the government’s R&D pot of gold will have to remain for those making modern-day improvements in their respective sectors in today’s world.”

money loss
ArticlesRisk Management

Emergency Measures Called For To Support Insurers And Organisations Buying Cover

money loss

Emergency Measures Called For To Support Insurers And Organisations Buying Cover

  • Most Coronavirus linked losses will be uninsured, but investment profits for insurers have fallen dramatically – exacerbating hard market conditions
  • Insurance premiums set to rise, some insurers will withdraw cover, and more exclusions will be included in policies
  • This could lead to a major long-term shift in which risk is transferred back to companies, further limiting their activities as they attempt to manage their response to the ongoing economic disruption

Mactavish, the leading independent expert on commercial insurance procurement and dispute resolution, is calling for the Government to consider introducing Coronavirus related emergency measures to support insurers and organisations buying cover – especially those facing renewals in the next few weeks.

It says that without this, the impact of Coronavirus could have a significant impact on insurers over the medium-to-long-term.  However, this is not because of claims linked to the virus, but because of the effect of the losses insurers have incurred in their investment businesses.  It warns this could lead to premiums rising dramatically, insurers pulling out of sectors and classes of business, and an increase in claims being rejected along with payment of settlements being slowed down.  All which will worsen an already severe expected recession.

Mactavish is calling on the Government, insurers, brokers, business trade bodies and other relevant parties to enter into a dialogue about possibly introducing the following measures:

  • Insurance premium tax – which is currently 12% –  be temporarily suspended
  • The government should consider providing
  • cheap loans/funding to insurers to help support their cash flow/reserves
  • Insurers should temporarily freeze any increase in insurance rates
  • Insurance renewals should be automatic
  • Government should loosen its capital requirements on insurers
  • The Government should explore ways to compensate insurers from any losses incurred from these measures

 Mactavish believes the value of insurance claims paid out as result of the impact of Coronavirus will be much smaller than many predict because it will predominantly fall outside of traditional “Business Interruption” insurance. To be insured against the virus, organisations would have had to opt in for ‘contagious disease’ extensions on their policies, which very few do.  Even if they did do this, almost all such extensions are limited in both the range of diseases covered and the financial limit of cover as well as being subject to a wide range of conditions – which means very few offer any real protection in a situation such as this.

The bigger issue facing insurers is the losses they are continuing to suffer as a result of ongoing capital market falls and interest rate cuts.

Bruce Hepburn, CEO, Mactavish said: “In recent years, insurers have increased their riskier asset classes, in addition to their traditional investments in low risk corporate and sovereign bonds, many of which are increasingly returning low yields. Partly as a result of this decline in yields, insurers have tended to move away from long-term debt towards short-term gilts which must be rolled over more frequently. In addition to this, they have also increased their exposure to illiquid assets such as private equity and infrastructure, making it more difficult to manage their reserves and cash flow.

“For insurers, the impact on the investment landscape will be more pronounced than Coronavirus itself. It could see insurers increase their premiums to recoup poor returns and improve their cash reserves, reject more claims, slow down the process of settlements, and stop providing cover in certain markets. They may also include more restrictions on the policies they do underwrite”. Bruce Hepburn said: “The overall impact of coronavirus on the insurance sector could be more devastating than 9/11.

“We predict that insurers will now move to a model in which their businesses are primarily sustained by underwriting profits, rather than the traditional combination of underwriting and investments.”

“Prior to the emergence of Coronavirus, insurers were already coming under considerable pressure and we were already seeing the classic symptoms of a hard market. Coronavirus has just made this situation worse. In the long run, this could herald a seismic transfer of risk back onto companies who will in turn be forced to allocate more of their own capital to protecting themselves against high-severity losses, limiting their activity and ability to create returns for shareholders.”

“Given all of this we are calling on the Government to find ways to provide financial support for insurers and help alleviate any increase in premiums at a time when businesses are increasingly struggling to survive.  On a short-term basis, with the right support from the government, insurers could also offer to freeze premium increases for the short-term.” 

tax claim
TaxWealth Management

R&D Tax Credit Claims Could Pay 178k UK Salaries For A Year

tax claim

R&D Tax Credit Claims Could Pay 178k UK Salaries For A Year

While growth in R&D tax relief claims has increased by 35% annually since inception in 2001 to over £4bn last year the scheme is yet to be fully utilised by UK business according to R&D specialists RIFT Research and Development Ltd. 

However, even with many remaining unaware that the work they are doing could qualify, the number of claims made does demonstrate the huge amount of innovative work taking place across the UK.

To highlight this great work and put the sums claimed into perspective, RIFT has looked at how many people this sum could employ based on the average annual net salary and which region is top when it comes to R&D Tax Credit claims.

The research shows that there has been a huge £4.3bn claimed across all R&D tax credit schemes to date and with the average net salary currently sitting at £24,365, that’s enough to pay the wages of 177,711 for a whole year!

As you might expect, London is home to the largest number of claims with £1.2bn submitted and even with the higher annual salary of £31,567, the R&D work going on throughout the capital could employ 39,281 for a year.

R&D claims in the South East and East of England have accumulated enough to pay the annual wage for 30,109 and 21,863 people respectively. 

The West Midlands, North West and South West have also seen R&D claims total enough to pay the wage of over 10,000 people for a year. 

Northern Ireland and the North East have seen the lowest amount claimed, but with a similar average wage and claims totalling £75m and £85m, the great work going on in these areas could still pay the average annual salary for between 3,5000 and 4,000 people.

Location / Region

Amount claimed – All Schemes (2017-18)

Average NET annual salary (2019)

Number of people R&D credit claims could employ at average salary

London

£1,240,000,000

£31,567

39,281

South East

£810,000,000

£26,902

30,109

East of England

£555,000,000

£25,385

21,863

West Midlands

£395,000,000

£22,622

17,461

North West

£275,000,000

£22,510

12,217

South West

£225,000,000

£22,293

10,093

Yorkshire and The Humber

£175,000,000

£21,862

8,005

East Midlands

£180,000,000

£22,509

7,997

Scotland

£175,000,000

£23,207

7,541

Wales

£95,000,000

£21,399

4,439

North East

£85,000,000

£21,484

3,957

Northern Ireland

£75,000,000

£21,468

3,494

    

UK overall

£4,330,000,000

£24,365

177,711

Director of RIFT Research and Development Ltd, Sarah Collins, commented:

“R&D tax credits are a great way of paying back those companies that are committing to some outstanding work in their respective fields and regardless of how small the developments being made, they are all contributing to the future of their sectors and UK business as a whole.

While many of us are very aware of this, we wanted to put into context just how much the claims being submitted equate to when you consider an everyday part of life like the average wage. 

However, there is still so much great work that isn’t being recognised in terms of its qualification for R&D tax credits and while it’s staggering to think R&D claims could fund 178,000 peoples wages for a year, we also wanted to highlight this huge Government cash pot to those that aren’t currently claiming but should be.” 

Sources: Gov.uk and ONS.

Sweden
Cash ManagementWealth Management

Sweden Set For Dramatic Growth In Digital Wealth Management

Sweden

Sweden Set For Dramatic Growth In Digital Wealth Management

Nucoro, the London based fintech company providing bespoke investment and savings technology focused on delivering digital investment solutions to third parties, believes Sweden is set to see huge growth in its digital wealth management sector.

It believes there are three key factors driving this – a rapidly growing population of mass affluent and high net worth individuals; the fact that a significant percentage of Sweden’s workforce are employed in the technology and the telecommunications sectors, and the country’s huge and growing focus on fintech.

Growing population of mass affluent and high net worth individuals

Analysis of industry data by Nucoro reveals that 7% of people in work in Sweden earn over $90,000 a year or 906,000 Swedish Krona (SEK).(1) It’s analysis also reveals a growing pool of wealthy people in Sweden, many of whom Nucoro believes are increasingly open to using digital wealth management services.(2) There were around 200,500 millionaires in Sweden in 2018, and this is set to rise to 245,000 (an increase of 22%) by 2023. In terms of those Swedes worth $30 million or more, there were around 3,820 with this level of wealth in 2018, and this is expected to rise to 4,700 – an increase of some 25% – by 2023.

 

HNWs and the technology and telecommunications sector

Nucoro’s analysis of industry data reveals that around 16% of Sweden’s wealth is derived from the technology and telecommunications sectors.(3) This is one of the highest percentages of any country, and it means that many Swedes are comfortable using digital wealth management services. 

 

Strong focus on fintech

Sweden was one of the earliest adopters of technology in financial services, and this is reflected in its fintech sector, which attracted a record investment last year. Sweden’s fintech sector saw investment of €778 million in 2019, the seventh largest amount of any country in the world, and in Europe only the UK and Germany received more.(4)

Stockholm has one of the most thriving fintech scenes in Europe. It has 114 banks and nearly 400 fintech companies. Some 18% of the Swedish capital’s citizens are employed in the tech sector, and the most common job in Stockholm is a programmer. (5)

Nikolai Hack, COO Nucoro said: “Sweden is an incredibly attractive market for the digital wealth management sector. Over the next few years, we expect to see a rapidly increasing number of services in this area being launched to cater for a growing pool of people who are comfortable using digital platforms to manage their investments and wealth.

“We are keen to work with both traditional and non-traditional financial services companies in Sweden to help them develop propositions in this area.”

From client onboarding to portfolio construction through to billing, Nucoro combines all the tools required to build the next generation of savings and investment propositions. To help financial services companies move forward, Nucoro offers a new technology-based foundation built without legacies – a complete overhaul to the models of client service and accessibility. It offers a radically different approach to the relationship between technology providers and the organisations adopting their solutions.

Nucoro offers a fully automated, AI-powered wealth management platform to UK retail investors called Exo Investing.  Within the first year of operation, Exo won two industry awards (Best digital wealth manager OTY + Industry Innovator OTY at the AltFi awards 2018), was named as a finalist in three more and selected to two disruptive company annual indexes (Wealthtech 100 and Disruption50’s 100 most disruptive UK companies).

Nucoro is making this technology available for financial services companies based in Sweden that have the ambition to truly innovate and future-proof their businesses – and are struggling to realise their digital ambitions.

(1) https://www.averagesalarysurvey.com/sweden
(2) Nucoro analysis of Knight Frank Wealth Report 2019
(3) Global Data: ‘Wealth in Sweden: HNW Investors 2018’
(4) Innovate Finance: January 2020
(5) Invest Stockholm: Stockholm Fintech Guide

credit score hotspots
BankingWealth Management

MoneySuperMarket Reveals The UK’s Credit Score Hotspots

People living in the Eastern Central London postcode (EC) have the highest average credit scores in the UK, according to the UK’s leading price comparison site MoneySuperMarket.

Analysis of over 200,000 credit reports from MoneySuperMarket’s Credit Monitor1 reveals that those in the EC area have the highest average credit score at 583 out of a possible 710 points – 21 points higher than the UK average.

According to MoneySuperMarket data, the Surrey town of Guildford has the second highest average score across the UK – 13 points higher than the average score in London (565).

 

Postcodes with the highest credit scores:

Location

Average Credit Score

EC – Eastern Central London

583

GU – Guildford

578

KT – Kingston upon Thames

577

RG – Reading

W – Western London

576

E – East London

RH – Redhill

575

 

By contrast, residents in the north of England and parts of Scotland have some of the lowest credit scores in the country. Sunderland (548), Wolverhampton (549) and Kilmarnock (550) are the three lowest scoring postcodes. 

 

Postcodes with the lowest credit scores:

Postcode

Average Credit Score

SR – Sunderland

548

WV – Wolverhampton

549

KA – Kilmarnock

550

DN – Doncaster

550

HU – Hull

551

 

Sally Francis-Miles, money spokesperson at MoneySuperMarket, commented: “Although your credit score isn’t directly impacted by where you live, our research shows those with an EC postcode are the top credit scorers in the UK and are therefore likely to be most highly rated by lenders.

“What will strengthen your credit score is making sure you are registered on the electoral roll – it’s easy to do too. Using a credit card can also help. It doesn’t automatically improve your credit rating, but if you repay the balance in full every month, it shows lenders that you are reliable and credit worthy.

“Additionally, free-to-use monitoring services, such as MoneySuperMarket’s Credit Monitor, offer personalised tips to help increase your credit rating.”

 

MoneySuperMarket’s top tips for improving your credit rating include:

-Debt repayments – keep on top of repayments for loans, mortgages and credit cards
Avoid multiple credit cards – having credit cards that are no longer used can have a negative impact on your credit score
-Ensure a sensible use of credit – try not to use a high proportion of the available limit to avoid appearing over-reliant on credit

For more tips and information, visit MoneySuperMarket to see if your area falls into a credit score capital of the UK.

How to Deal with Malpractice Claims
Due DiligenceInsuranceRisk Management

How to Deal with Malpractice Claims

We all make mistakes. However, as a doctor or other medical technician, a mistake from one of these professionals can be incredibly damaging. Sometimes we do not even make mistakes, but patients will still file potentially damaging malpractice claims. Here are some of the best paths to follow if you do receive a malpractice claim from a former patient.

Keep Calm

Your first instinct will no doubt be to panic about the situation. However, this is unlikely to help you. You instead need to focus on making things right. It can be difficult to put your feelings aside so you can try to improve things. Make sure you explain to your friends and family what has happened so they can support you through the process.

If you a private medical professional, you should have insurance to help you out in such a scenario. An indemnity insurance policy is designed to protect you from negligence suits like these. Protect yourself and get the right insurance for your career here: https://incisionindemnity.com/

Gather Your Own Evidence

If you think the claim might have been filed falsely, you should do everything in your power to fight it. Make sure you consult a lawyer who specialises in these types of malpractice suits. The more knowledgeable you are, the better position you will be in to fight this claim.

The evidence is going to be a key part of this. Try to gather information about what you recommended as treatment and the path they should have followed. Make sure you include any notes you made during the appointments the patient they had. Even something that might seem inconsequential might be what you need to get the claim thrown out.

Be Sincere and Understanding

Even if the case comes out in your favour, the claimant might have had their life seriously affected by what has happened to them. Likewise, your reputation might become quite damaged by the claim, especially if the claimant decides to take it to the press.

However, you should instead try to stay as gracious as possible throughout the whole process. If you are seen to be sympathetic and genuinely sincere in your actions, it will serve you much better than if you are cold and withdrawn. Acknowledging that you have had an effect on this person’s life, even if they are later proven to be lying, will always be the better path to take.

Keep Business Running as Usual

You will still have a business to run even when fighting a malpractice suit. It cannot become neglected as that might result in many more suits. Though it can be very difficult to do, you need to make sure you are as focused on your business as ever.

Try to complete each new patient to the same standard and level of care as you always have. Just by delivering a stellar experience at your surgery, you might be able to dispel some of the rumours swirling around you. Sometimes, it is just simple changes like this that can really help you as you try to keep things going as normal.

A malpractice suit can be incredibly difficult to fight but there are ways to do so. As difficult as it might be, you need to make sure that you keep your head above water and continue as usual. Gather evidence, make sure your insurance is valid, and get some good legal advice. It is entirely possible to defend yourself through a medical malpractice suit if you make the right choices. Before you know it, you could be back to serving patients happily once more.

water cost
Wealth Management

The Money-Saving Tip That 97% of Businesses are Missing Out On

Since April 2017, around 1.2 million non-domestic English water customers have been able to choose their own water suppliers. This is referred to as ‘market deregulation’. Now, businesses can choose to buy their retail water services from any licenced company, regardless of how much water they use a year.

In Ofwat’s ‘State of the Market Report 2018-19’, the water regulator found that:

• Just over half (53%) of all customers are aware of the possibility to choose their retailer (48% last year).
• Around 13% of customers have been active since market opening, in that they have switched, renegotiated or considered doing so (10% last year).
• Switching rates of 3% largely unchanged in the second year of the market.

Despite the low switching rates, Ofwat estimates that customers were able to save around £10 million in bills in the second year of the market.

 

Switch and save to get ahead – here’s how:

When it comes to changing your business water supplier, there are a few important things to consider. For example, you need to think about the main differences between your existing and potential new water supplier to ensure you’re getting a beneficial switch.

So if you’re a small business thinking of making a change, follow our useful guide below to help you through the process.  

 
What are the benefits of an open water market?

Increased competition in the industry will encourage water suppliers to offer more enticing benefits to customers. Therefore, small business owners expect some of the following incentives:

• Reduced costs
• Improved service levels
• Lower management overheads
• Easier to meet regulatory compliance
• New solutions to water management challenges
• Improved corporate, social and environmental responsibility
• A greater understanding of water consumption habits

If your business hasn’t switched water suppliers yet, you may be missing out on significant savings. That’s why in this article, we outline everything you need to know about changing your business water supplier.

water

Here are our simple steps to switching water suppliers

Step 1: Understand your water consumption habits

Take a look at your previous water bills (ideally from the last three years). Look at how much you’re using and how much it’s costing you. If you operate over multiple sites, be sure to audit your business total, as well as the numbers from each individual site.

 
Key questions to consider for each site:

1. How much water do you use?
2. How much wastewater do you produce?
3. How much are you spending on water and/or wastewater – the average per month and per year?
4. How much trade effluent do you produce and what is the cost?

 
Step 2: Find the right water supplier for your business

Finding the right supplier is the most important step in the process. You need to spend time considering your options, as well as thinking about what the supplier can offer you.

 

Questions to consider:

• Is your supplier transparent and helpful in the quoting process?
• Do you want a transactional supplier?
• Would you prefer to work with a company that offers a higher level of customer service?
• Do they offer a wide range of value-added services?
• Do they offer a deal that suits your consumption habits?

 
Step 3: Collect and compare quotes

Once you’ve narrowed down your list of suppliers, the next step is to collect and compare quotes from them. Some suppliers quote their services differently, so make sure that you’re comparing ‘apples with apples’.
What you’ll need to get a quote:
• Your organisation’s name, address and postcode
• Annual consumption figures
• Supply pipe ID (a unique reference number on your meter and on your water bills)
• Your business’ point of contact for water-related services

 

Top tip for a QUICK WIN when it comes to your business water

If finding a supplier and comparing quotes sounds like a lot of work, that’s because it is! That’s why many businesses choose to partner with a business water broker who can do all the hard work for you. With their bulk-buying power, a broker may be able to get you cheaper rates than if you were to go straight to a supplier.

When you choose to switch using a broker’s services, you just need to sign an agreement and they will take it from there. They will contact your existing supplier to let them know you’re moving and get you set up on the new supplier’s systems. They’ll also deal with any queries and requests you have regarding your water services and can offer a full water management service.

 

Step 4: Enjoy the benefits

Switching suppliers can bring a multitude of benefits:

• Increased competition in the market can mean better prices and better service.
• If your business has several sites, you can consolidate your water to one single supplier, with one bill covering all your locations.
• When you use a water consultant, you can bundle your water and energy to streamline your business services even further.
• You’ll have access to billing and consumption data that can help you optimise your operations.

Stop flushing money down the drain – secure cheaper rates for your business water for a better bottom line.

Cash Isa
Private BankingPrivate ClientWealth Management

Death Of The Cash ISA – Big Banks Are Struggling To Cope With The Mass Cash ISAodus

Cash Isa

Death Of The Cash ISA – Big Banks Are Struggling To Cope With The Mass Cash ISAodus

The latest market insight and research from peer to peer lending platform, Sourced Capital of the Sourced.co Group, has revealed that a mass exodus of Cash ISA investors submitting transfer out requests from their Cash ISAs is causing a backlog with the big bank lenders.

Sourced Capital was recently advised by HSBC that transfers were taking a while to process and were requesting no calls for updates due to the substantial backlog, yet further indication of the death of the Cash ISA as investors look for more lucrative options.  

This is a trend that has been apparent for some time due to record low-interest rates and one that will no doubt be exacerbated with the Bank of England’s decision to keep rates frozen yet again at 0.75%. 

In fact, since 2008 the number of accounts subscribed to a Cash ISA has declined every year except one, with the total number down -36.38% all in all, averaging an annual decline of -4.69%.  

Some of the biggest annual declines have come over the last year and the year prior to that, with the number of Cash ISA accounts dropping by a notable -8.22% and -16.19% respectively.

Prior to the economic crisis, available rates averaged at 5%, but in more recent times this return has diminished to around 1.45%.

It’s clear that the preference of investing in a Cash ISA is well and truly on the slide and those looking to make their money work harder are opting for alternative investment options like the Innovative Finance ISA. 

The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs. Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax. This enables you to invest your money into the growing peer to peer market. 

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA and while your capital is of course, at risk, an IFISA can bring returns of as much as 10-12%.  

Founder and Managing Director of Sourced Capital, Stephen Moss, commented:

“A prolonged period of extremely low-interest rates has been great for some and has helped stimulate borrowing and spending activity, most notably across the UK property and mortgage sectors. However, it hasn’t been great for those attempting to accumulate a sizable savings pot with the return on their hard-earned cash remaining really rather poor.  

It comes as no surprise then that the declining health of the Cash ISA seen in recent years has now progressed to an almost fatal level as more and more investors remove their cash and look elsewhere for a more favourable return. This exodus has been spurred by more innovative options providing a better return and has become so prevalent that even the biggest lenders are struggling to cope with the paperwork.”  

CASH ISA – Number of accounts subscribed in current year (thousands)

Period

Number of accounts subscribed in current year (thousands)

Change / growth (yearly)

2008-09

12,234

x

2009-10

11,426

-6.60%

2010-11

11,859

3.79%

2011-12

11,187

-5.67%

2012-13

11,682

4.42%

2013-14

10,481

-10.28%

2014-15

10,288

-1.84%

2015-16

10,118

-1.65%

2016-17

8,480

-16.19%

2017-18

7,783

-8.22%

Total Growth

-36.38%

Average Annual Growth

-4.69%

Biz Stone
BankingMarkets

Twitter Co-Founder Backs Uk Bitcoin Banking App

Biz Stone

Twitter Co-Founder Backs Uk Bitcoin Banking App

London-based fintech firm Mode, advised and backed by Twitter co-founder Biz Stone, has launched its Bitcoin banking mobile iOS app.  This will make Bitcoin – the world’s most popular digital asset which many refer to as ‘digital gold’ – accessible to everyone at the touch of a button.

The platform is available to users globally, except in the United States of America.

A Mode account can be opened in less than 60 seconds, with Know Your Customer (KYC) requirements completed in less than two minutes through AI-enabled identity verification technology. Once users are whitelisted, depositing GBP via bank transfer and buying Bitcoin takes seconds.

Mode’s launch is supported by new research (1) which reveals that many current and potential Bitcoin investors are unhappy with the platforms and services currently on offer.  Findings (2) also reveal the potential for strong Bitcoin market growth, as 42% of people who currently own Bitcoin plan to buy more, 51% of people surveyed indicated they may buy Bitcoin soon, and just a small fraction of respondents, around 7%, said they have no intention of currently buying the digital asset.

Through its new easy to use app, Mode aims to bring down the barriers and open up the Bitcoin market to everyone, not just tech-savvy or professional investors. As a result, users can get started with only £50, and unlike many other apps, Mode only charge a very competitive fee of 0.99% at the time of purchasing and selling Bitcoin. Mode doesn’t charge for transferring GBP in and out of users’ accounts, and funds are credit almost instantly via Faster Payments – a process that can take up to 5 days with some of the most renown crypto exchanges.

Users can buy Bitcoin with bank cards or via a bank transfer, which is then safeguarded through one of the world’s leading digital asset custodians, BitGo. 

In addition to its new app, Mode has also announced plans to launch a Bitcoin interest-generating product later this year, which would allow users to earn passive income on their Bitcoin holdings without having to touch their assets.  

Biz Stone, co-founder of Twitter, joined Mode as an advisor of the project. He has also invested in Mode and acts as a non-executive director of R8, Mode’s parent company.

Although there are multiple existing ways to access the Bitcoin market right now, few appeal to the everyday person, who wants to buy and hold some Bitcoin. Most of the current apps all have one problem at their core—access.” Biz Stone commented; “Mode has removed needlessly complex processes from their app, building a beautiful and responsive UI and UX rivalling that of the major challenger banks—while also launching a completely new and innovative Bitcoin product.”

 

Ariane Murphy, Head of Communications and Marketing, Mode, said: “Our new app not only enables us to capture the huge growth in the Bitcoin marketplace, but also tackles many of the issues people have with the current platforms and storage services available, which our research shows are significant. The Mode app addresses transaction restrictions issues, low speed/high cost, lack of security and most importantly, tackles the poor user experience typically associated with Bitcoin apps.”

“Until the beginning of this year, we pilot-tested our app with some 1,000 early subscribers and their feedback has been very positive.  This, coupled with the strong growth in the marketplace, means we are confident that now is the right time to launch to the wider pubic.”    

 

Challenges to tackle in the digital asset markets – new research

Mode recently conducted research (1) with people who already own digital assets, revealing that 41% of respondents described the process of transacting Bitcoin through existing solutions as average or poor, with just 13% describing the process as excellent. 

Some 37% say the level of security offered by the platforms they have used is again average or poor, with 41% claiming security is good and 21% excellent – signifying some room for improvement.

In terms of overall user experience, just 56% describe other digital asset services as good or excellent, with 32% saying it is average and 11% describing their experience as poor.

Mode is part of R8 Group, a UK fintech group which raised $5m in a heavily oversubscribed funding round in April 2019, backed by an experienced management team with extensive experience in the financial services and technology sectors. Prominent members of the R8 Group include serial entrepreneur Jonathan Rowland, and Twitter co-founder Biz Stone.

savings
ArticlesCash Management

Low Interest Rates and Inflation Are Wiping Out The Nation’s Savings

savings

Low Interest Rates and Inflation Are Wiping Out The Nation’s Savings

The latest research by the peer to peer lending platform, Sourced Capital of the Sourced.co Group, has revealed how high inflation rates and below-par interest rates on savings accounts are making it tough for the nation’s savers.

Sourced Capital looked at the annual rate of inflation seen since 2012 on an annual basis and compared this yearly change in the cost of living to the interest secured on an annual basis via the average savings account rate and a one year, fixed-rate ISA, to see how if saving is really worth the time and investment anymore.

Inflation effectively shrinks the value of your money over time and according to the Consumer Price Index, which tracks the cost of household items, the value of £1,000 on the high street at the start of 2012, would now have climbed to £1,153 today.

But what about your savings? Had you invested that £1,000 in the average savings account with your bank or building society back in 2012, your money today would have climbed to just £1,048.

Opting for the average cash ISA with an annual fixed rate would have seen your £1,000 investment reach £1,126 today.

As a result, the interest earned on these savings options would have been wiped out due to the increasing cost of inflation.

In fact, since 2012 inflation has increased at a greater rate than the return available from the average savings account each year, with an ISA proving a better option in just two of the eight years (2015 and 2016).

With traditional routes to saving no longer providing a sufficient return, many armchair investors have turned to Innovative Finance ISAs, which while pose the same capital at risk as other investment platforms, provide much greater returns of up to 10%.

Looking at the last three years alone since they have grown in popularity, the value of £1,000 on the high street according to the CPI would now have climbed to £1,067 today. Again, a traditional savings account would have returned just £1,008, while a fixed rate ISA is slightly better but still offers a loss compared to inflation at £1,037.

An IFISA however, would have returned £1,331, £264 higher than the loss due to the rate of inflation over that time.

Period

Average Inflation rate (CPIH)

Example amount – relative value/cost

Average Instant Access savings rate

Example amount – savings

Average Fixed Rate ISA 1 year

Example amount – savings

start

£1,000

£1,000

£1,000

2012

2.6%

£1,026

1.45%

£1,015

2.54%

£1,025

2013

2.3%

£1,050

0.86%

£1,023

1.77%

£1,044

2014

1.5%

£1,065

0.67%

£1,030

1.49%

£1,059

2015

0.4%

£1,070

0.54%

£1,036

1.41%

£1,074

2016

1.0%

£1,080

0.35%

£1,039

1.07%

£1,086

2017

2.6%

£1,108

0.15%

£1,041

1.05%

£1,097

2018

2.3%

£1,134

0.23%

£1,043

1.31%

£1,111

2019

1.7%

£1,153

0.42%

£1,048

1.30%

£1,126

Founder and Managing Director of Sourced Capital, Stephen Moss, commented:

“It’s been a tough ask to get any form return on your savings in recent years and this has been largely down to interest rates remaining so low in an attempt to stimulate the economy through consumer spending.

Of course, the flip side to this is that inflation has remained fairly robust and has sat between 1.5% and 2.6% in all but two of the last eight years. As a result, not only has the return on our savings been minimal, but the increasing cost of living has pretty much wiped out any return available.

It’s no surprise that as a result, alternative methods of investing have come to the forefront and the likes of the Innovation Finance ISA have grown in popularity with armchair investors and investment professionals alike. While there is, of course, an element of risk, investing in peer to peer products particularly in the property sector has seen consistently higher returns over the last few years, despite quieter market conditions due to Brexit uncertainty.”

mediation
Family OfficesLegal

Keeping Divorce Out Of Court: Why Mediation Matters

mediation

Keeping Divorce Out Of Court: Why Mediation Matters

By Kirstie Law, at Thomson Snell & Passmore

People are increasingly looking to facilitate a smoother and faster divorce by keeping it out of court.  As such, former couples are turning to mediation as a way of resolving the issues arising from their separation (including financial and child arrangements).

Mediation can provide real benefits in appropriate cases. It reduces tension and hostility and helps couples make their own informed decisions about their futures. The process involves the couple working with normally one mediator, (but in some cases two mediators/co-mediators,) who encourages them to come to a solution that works for them both and their children.  The mediator is impartial, but will give the couple information as to the law and, for example, how in his or her experience the court might deal with a particular issue.

 

Children and mediation

With Children Act proceedings, if the case is being decided by a judge, he or she will want to know what is in the best interests of any children concerned.  This is often achieved by the court appointing a CAFCASS officer who normally visits any children with each parent before preparing a report, including recommendations for future child arrangements.

Some mediators are qualified to see children as part of the mediation process.  Having had an initial meeting with the parents, (who both have to agree to the mediator seeing any children) the mediator will then have a meeting with the child(ren) without the parents, although another adult will be present.  Having seen the child(ren), the mediator will report back to the parents any points that have been specifically agreed with the child(ren). If the child(ren) asks for some things not to be repeated to the parents the mediator MUST respect this.  The only exception to this confidentiality is if the child(ren) discloses he/she or another child is at risk of harm, in which case the appropriate referrals, e.g. to social services, is made.  This is explained to the child(ren) at the start of the process. 

The mediator will make an effort to ensure that the environment is relaxed, including providing appropriate child friendly refreshments. The child(ren) will also be given the opportunity to doodle or draw a picture.  Most mediators will also write to the child(ren) in advance of the session (in a way that is age appropriate) inviting them to attend. 

It is important to emphasise that the child(ren) is/are not being asked to decide what will happen, but told that mummy and daddy want to know what the child(ren) feel(s) about the current situation and any suggestions the child(ren) has with regard to arrangements going forward.

The feedback from both children and parents who have been involved in mediations where the children have had direct involvement and the opportunity to discuss issues with the mediator is extremely positive.  Mediation can be concluded very quickly enabling the whole family to move on and hopefully the parents to co-parent more successfully.

 

Finances and mediation

With financial proceedings, if the case is being decided by a judge, he or she will have quite a wide discretion as to what settlement is appropriate in any given case.  This can make it very difficult to predict the outcome with potentially thousands of pounds being spent obtaining an order that no one is happy with.  The mediation process can take into account the priorities of both (e.g. one wanting to keep the house, the other a pension) and consider whether a clean break settlement is the best solution.  It is arguably far easier to live with a settlement into which you have had input than one that has been imposed on you.

The mediator will want both to provide financial disclosure but the couple can decide when, and for what period, this is provided (the court process requires bank statements for a year but if the decision to separate is mutual and recent the couple can in mediation agree a shorter period).

It is normally possible to have a first mediation appointment within a week of the mediator speaking to both.  By contrast the first court hearing is normally three or four months after the court processes the application.

The mediation process is therefore normally significantly quicker and cheaper, and usually improves rather than damages the couple’s relationship, hopefully making future co-parenting easier.

 

Shuttle mediation

Shuttle mediation is a form of mediation where, instead of the former couple being in the same room as the mediator, they are in separate rooms and the mediator effectively shuttles in-between. 

Shuttle mediation can be used in cases where mediation is not appropriate because one or both of the former couple, for whatever reason, do not feel comfortable being in the same room.  This could for example be due to past coercive or controlling behaviour, or if one person is still finding it difficult to come to terms with the end of the relationship.

The potential disadvantage of shuttle mediation is that there is inevitably a duplication of costs because the mediator has to repeat what has been said by the other person.  There are also usually advantages to having the discussions directly, but in the presence of an independent mediator.  Witnessing these discussions directly can enable the mediator to assist with improving communication going forward particularly if, for example, there is a need for future co-parenting.

Ultimately the most important thing with regard to mediation is that both feel comfortable to discuss issues openly with the mediator and do not feel pressurised as a result of the other person’s presence. 

Shuttle mediation can be used for the whole of the mediation process or just to deal with a particular issue that the parties feel would be easier to discuss if they are not in the same room.

 

Final thoughts

The breakdown of a relationship can be a painful and difficult time for all involved. By opting for mediation, it is possible to help mitigate the stress of a divorce or separation, by making the process smoother and faster, and helping to ensure an outcome that works for everyone.

housing ladder
Cash ManagementTransactional and Investment Banking

An IF-ISA Can Get You Onto The Housing Ladder 7 Years Faster Than A Cash ISA

housing ladder

An IF-ISA Can Get You Onto The Housing Ladder 7 Years Faster Than A Cash ISA

The latest research by leading peer to peer lending platform Sourced Capital, part of the Sourced.co Group, has looked at how best to invest when it comes to saving for a house in order to save years’ worth of painstaking saving.

Cash ISAs have become a popular way for many to stash away the cash with the aim of climbing the ladder, with the Help to Buy ISA in particular helping many save that all important deposit.  

While buyers can no longer take advantage of the scheme there are a whole host of Cash ISA saving accounts that average a return of 2.12% a year with a maximum annual investment of £20,000 allowed.  

This means that investing £20,000 a year on the current average UK house price of £235,298, and when taking into account the addition of compound interest, maximising the benefits of a Cash ISA would see you pay off the cost of a property in 10 years compared to the 11.8 years it would require to save £20,000 a year with no benefit from interest.  

With the lower cost of buying in Northern Ireland and Scotland, it would take 6 and 7 years respectively, instead of 7 and 7.7 years saving £20,000 a year straight up, and in the North East a Cash ISA can also cut your saving time to 6 years instead of 6.5. 

In London, you’re looking at a longer saving stretch of 19 years although this is marginally better than saving for 23.8 years without the help of an ISA.

However, investing in an Innovative Finance ISA (IFISA) through a peer to peer platform such as Sourced Capital could help you pay off your property much faster, with annual returns hitting 10% and higher.

With backing from the UK government, showing their confidence in the sector, there is now encouragement to invest in property through peer to peer lending. The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs. Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax. This enables you to invest your money into the growing peer to peer market. 

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA.

While this investment option allows for a much quicker return across the board, nearly 3 years faster in the UK as a whole, the time saving is most notable in London where an IFISA investment could accrue a big enough saving pot to buy in the capital at a cost of £475,458 in just 12 year’s, as opposed to 19 year’s via the average Cash ISA – a seven year difference! 

Stephen Moss, founder and MD of Sourced Capital, commented: 

“Record low interest rates over such a prolonged period have been great for those looking to secure a mortgage, however, those still trying to accumulate a savings pot have suffered where the rate of interest is concerned.

As a result, the consumer has become savvy when it comes to saving and the market has been flooded with a whole host of options to make our money work harder. While some Cash ISAs are proving popular, the peer to peer sector has really led the way with some of the best rates of return and whether you are trying to save a mortgage deposit, or pay off your property completely, there are a number of platforms like Sourced who can help you reach your goal far quicker than some of the more mainstream options.  

As always, the biggest hurdle is educating the consumer on the additional options open to them and although their capital may be at risk, investing via more professional platforms in the peer to peer sector can bring a much better return.”

Sale Credit
ArticlesCash Management

Point Of Sale Credit: Latest Trap For Consumers

Sale Credit

Point Of Sale Credit: Latest Trap For Consumers

Applying for credit at the till or checkout is becoming more and more common. Klarna, one of the biggest ‘Buy Now Pay Later’ credit companies promote their product as a way to improve customer’s spending power, both in store and online. The concept is, rather than saving and waiting to pay for an item, you can seamlessly apply for credit at the checkout. This sounds extremely convenient for consumers who need to purchase a crucial item and otherwise might have had to rely on payday loans or emergency funding. The risk, however, is frivolous purchases and over-buying. 70% of consumers asked in a recent survey said they had used a Buy Now Pay Later (BNPL) scheme. 73% of those who admitted to using BNPL said it led to debt problems later down the line.

 

Increase Basket Sizes

Clearpay, another major competitor in the UK BNPL market, published that offering financing options at the check out increased online basket size by 20 – 30%. This data fuels Klarna’s statement that these payment plans increase customers spending power, but it does not take budgets into account. Although, assumedly, this does mean that customers get 20 – 30% more goods, they also have an increased bill. BNPL schemes distance the consumer from their payment, as money is not taken immediately from their bank account. This suggests that consumers that add to their basket when they find out they can spread the cost, might not take the time to think about the affordability aspect.

For retailers, offering Klarna or BNPL options at the checkout could be beneficial. Of course, these systems are most popular online, but in-store consumer credit is becoming more accessible. This is said to motivate sales again, which translates to a higher spend for customers.

 

Turning Browsers Into Buyers

BNPL credit continues to develop because it helps to bridge the gap between online convenience and real-life experiences. Consumer trends in 2020 highlight that customer experience is how companies will add value to their physical stores. It is suggested that Klarna, Clearpay and other schemes allow you to enjoy shopping online in your spare time, whenever that might be, and then take your ‘fun’ browsing one step further.

One of the biggest obstacles for online shopping is the returns process. Especially, for retailers targeting younger demographics who might need their returns credited sooner rather than later in order to manage other bills or outgoings. BNPL is the solution. If you return goods before the first payment, no money will leave your account. Yet this does depend on keeping track of returns and payment dates. It also runs the risk of fun, hobby browsing turning into an expensive, out of control habit.

 

An At-Risk Audience

The younger generation are known for their “on-demand” lifestyle. BNPL could be seen to feed this desire, because it means you do not need the money available to pay for new items. BNPL credit companies have identified the younger, Gen Z or millennial demographics as their target audience. This is evidenced by the stores they choose to partner with, most of which are apparel brands with an audience of 16 – 30 year olds. 

In the UK, the Financial Conduct Authority are the financial industry’s watchdog. After the sharp rise of BNPL credit companies, it’s not surprising that they promised stricter regulations. These were introduced in November 2019 and were estimated to save the consumer around £40 – £60 million per year. Klarna’s marketing tactics were also called into question, as it dissolved the responsibility and association with a purchase. Although there might be immediate financial benefits for companies that use BNPL, there might be a moral or ethical issue in the future that could deter sales. Interestingly, the CEO of Next, the clothing and homeware retailer, described the service as dangerous, stating, “there is a difference between spreading of the cost and just deferring it”.