Category: Banking

gold bullion
ArticlesTransactional and Investment Banking

Gold: Let’s get physical

gold bullion

Gold: Let’s get physical

By Shahid Munir, co-founder of MintedTM

It has been a turbulent year for the economy as a result of Covid-19, so it is no surprise that interest in gold has risen sharply within the investment world. The financial shock caused by the pandemic has left currencies and markets across the globe in vulnerable and unpredictable positions. With that in mind, more investors are turning to gold as an alternative way of strengthening their investment portfolio.

However, with the price of gold continuing to rise alongside its popularity, what is the best way to invest in the precious metal and how can new investors take a leap into the world of gold for the first time?

 

Gold, a safer option?

Gold has been synonymous with wealth and prosperity for hundreds of years. Coins were first introduced in 550 BC and quickly became the global currency before paper money came into existence. Ever since then, the precious metal has been an integral part of the globe’s wealth portfolio. During times of economic instability, gold is often looked at as somewhat of an oasis, compared with other investment options. With a history of retaining its value even when currencies and markets are in flux, gold remains a favoured asset as a result of its fundamental, intrinsic value anywhere around the world.

Despite the uncertainty the pandemic has caused, gold’s price continues to rise, potentially heading towards $3,000 per ounce in the near future. Now, with increasing numbers of people seeking a stake in this safe haven asset, the demand and the value for the precious metal will likely continue to rise in months to come.

 

Understanding gold investment

When investing in gold, it is important to note that it should only make up a portion of an investment portfolio, rather than the entirety. However, whilst signposting about ways to invest in other financial products, such as ISAs or premium bonds, is clear, there are multiple ways to invest gold, many of which aren’t often discussed.

A popular way that investors choose to own gold is through a mutual fund or Exchange Traded Fund (ETF). An ETF requires customers to pass their money over to a fund that will then pool it together with other investors’ money to buy a specific amount of gold, storing it in a high security vault. Although both mutual funds and ETFs work in a similar manner, mutual funds invest in gold mining companies, unlike ETFs, which invest in physical gold bullion. It is important to note that with both ETFs and mutual funds, investors do not own physical gold and are therefore more exposed to market fluctuations. Some ETFs, despite being described as ‘physically-backed’, are also not backed by physical gold, which can also be a risk to investors.

For some, investing in gold mining stocks through a mutual fund may be a better option than an ETF. A mutual fund will invest in a company that mines, however as investments will be contingent on the success of the company, rather than the value of the gold itself, investors will be exposed to any stock market turbulence or changes within the company that could affect this. Anyone investing in gold mining stocks should be prepared to carry out extensive research into the right gold mining companies, before selecting one to invest in.

Some investors may wish to own physical gold bullion and could therefore consider buying gold coins or bars. Whilst buying directly from dealers requires customers to ensure the gold is of a high purity level, and to ensure that they arrange suitable storage, tech platforms, such as Minted, make the process much more straightforward. Minted’s customers can choose how much money they want to invest as part of a regular savings plan, and the gold is stored in a high security London vault. Once enough has been saved for a gold bar, there is the option to either keep it in storage, or to withdraw it and have it delivered.

Unlike the other methods of investing in gold, owning gold bullion gives people complete control over their investment. With the opportunity to sell gold either back to a dealer or via the market, owning bullion is a relatively easy method of buying and investing in gold. 

 

So, should you invest?

The pandemic has sent ripples through the financial world, that will no doubt leave scars for years to come. This being said, the value of gold remains particularly strong, and many first timers are looking to invest.

Simply put, there is no set way to invest in gold; it depends on individual situations, appetite for risk, and long-term goals. For those seeking potentially higher returns in the shorter term, buying gold mining stocks or gold ETFs may be the better choice. However, for those looking to have more control over their investment, buying gold bullion could be the best choice. The price of investments cannot be influenced by bankers or politicians, has value all over the world, and can be stored and sold however customers choose.

digital europe
ArticlesMarketsTransactional and Investment Banking

Should Investors Stay Underweight Europe? Three Reasons Why It’s Time to Reconsider That View Now

digital europe

Should Investors Stay Underweight Europe? Three Reasons Why It’s Time to Reconsider That View Now

After a decade encompassing Brexit and the euro crisis, and amid disappointing returns relative to other markets, many investors have written off European equities, but River and Mercantile’s James Sym believes that stance now needs to change.

Investors underweighting European equities now run the risk of missing the recovery in the region, according to Sym, manager of the recently launched ES R&M European Fund, with the continent offering attractive valuations, a leading position in up and coming sectors, and political unity.

Europe’s major equity indices have lagged the US and other regions so far this year, with the double-digit gains seen in some US markets far ahead of country-specific and broad indices on the continent.

However Sym, who joined River and Mercantile this year, says this disparity has created a glaring opportunity for investors.

“European equities have been unloved and under-owned since last year, with August the first month that investors started to return to the asset class[1],” he says. “Turning points are often the best moments for relative returns – but it is critical to position ahead of that.”

Below, Sym outlines three factors as to why investors should be reconsidering their European exposure now.

 

1. A better crisis

The time to own European assets is when the region is making top down political progress towards convergence. That was true with the establishment of the euro in the cycle from 2002, it was true post “do whatever it takes”, and it is true today.

In some ways Europe needs a crisis to spur it into action. For years it has been obvious that for the euro to be sustainable there needs to be balance sheet mutualisation across Europe and fiscal transfers. The coronavirus crisis has finally catalysed this move, which should serve to bring the cost of capital down for unloved companies across the continent.

Under the recovery fund plans, the European Commission is likely to become one of the biggest AAA-rated bond issuers in the world. The initial issue was 14 times oversubscribed[2]. This gives the periphery access to capital markets under the same terms as Germany or the Netherlands. Additionally, the net effect of the grant element of the structure is that German taxpayers are paying for peripheral infrastructure investment. This should bring down the risk premium for the region and be good for growth.

 

2. Leading position in ESG

“In a post-Covid environment, the world is coming Europe’s way. Simply put, European stakeholder capitalism was never the ideal light-touch regulatory environment which big tech needed to thrive. This has been a big drag for equity returns as the FANG phenomenon drove US equity returns. However, pre-eminent themes for the next cycle, such as energy transition, are areas in which Europe excels and it has companies well placed to deliver this. Meanwhile, the regulatory noose is starting to circle some of the large US technology companies. At the very least it should be, or become, a more level playing field.

 

3. Unloved stocks

“With outflows for most of the last year, many investors find themselves underweight the region now, while index levels remain far below their highs – unlike other regions, such as the US.

“Year-to-date, the MSCI Europe index is down 14%, while the MSCI World is up 3%[3]. There is a relative valuation opportunity, and it looks even more attractive if you drill down further.

“The landscape in Europe is one that is full of growth funds which are (clearly) full of growth stocks which have outperformed. But if you look elsewhere, there are some really attractive opportunities that offer investors a great chance to take part in an economic recovery post the Covid disruption.

“While interest rates stay low, government spending stays high. We now see the mechanism for populism to ultimately lead to inflationary outcomes which if it transpires would set up a potentially difficult market for many clients.” 

 

[1] According to Calastone research, as quoted by Investment Week

https://www.investmentweek.co.uk/news/4019853/uk-equity-fund-outflows-hit-record-gbp-2bn-june-august-deal-jitters

[2] https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1954

[3] According to Bloomberg data, to 22nd October

car loan
ArticlesCash Management

Are You Ready to Get a Car Loan? Here are the Signs

car loan

Are You Ready to Get a Car Loan? Here are the Signs

Applying for a car loan can be both an exciting and scary process for those in search of the right loan, especially if you’re a first-time borrower. Buying a car can quickly become a much more complex process than the buyer originally anticipated, leading to some anxieties and stresses related to the shopping process if you go in unprepared. 

Things can be further complicated when a loan is involved, because adding financing to anything requires more work. Car loans are a relatively unique type of funding too, similar to mortgages in the sense that they get their own allocation of funds in comparison to general personal loans. 

Car loans should also be examined closely before electing to take on the repayment of one, because fine print misreading can lead to trouble down the road. Car repayments can add up quickly if you’re not careful, so be sure this isn’t overlooked.

If you’re planning to obtain financing for your next, or first, car purchase, it’s important to ensure you’re ready to undertake this responsibility. So, here are a few signs you’re ready for a car loan: 

 

You’ve Done Your Research

Buying a car is something that’s a big deal for most consumers. Unless you’re relatively wealthy or just purchasing a vehicle for novelty purposes to add to a collection, fronting the capital for a new car is not something to be scoffed at. 

When you’re making a purchase on something that exceeds thousands, and usually five figures, in value, this is a serious financial burden you’re taking on. Failing to make the payments can significantly damage your credit reputation, and also leave you without a reliable means of transportation as well.

This is why doing your research is important. On the car yes, but most importantly on the car loan. The car loan market can present a wide variety of options available to those buyers who are looking to finance. 

You can finance your car through an independent financial institution, or often times a dealer as well, with dealers sometimes offering unique caveats like “0% APR for the first 12 months” or something of the like. 

Different lenders will come with different rates, and different borrowers will get different rates based on their credit worthiness. It’s important to know your credit standing, and what type of interest rate you can expect to get on the loan because of it. 

You’ll need to do some independent research and compare the offers available to you for the vehicle you wish to buy. This way, you won’t just be walking into a dealership prepared to take whatever is placed in front of you. If you’ve taken this step and are fully aware of the best route to go, you may be ready for a car loan. 

 

The Rest of Your Finances are in Order 

This isn’t a personal finance class, but is it qualifying information in regards to whether or not you’re ready to take on a car loan. Because of that, it’s important that car buyers give themselves an honest audit on where they stand financially before proceeding. 

Taking out new loans with bad credit, a lot of outstanding balances, accounts sent to collections, insufficient income, or even sufficient income but strapped with a lot of other debt, could all easily turn your dream into a nightmare. Adding a car loan to an unstable stack of financial issues might just topple the tower, so it’s important to make sure you’re ready for this responsibility. 

Take an objective self-assessment of your financial situation before you consider purchasing a new vehicle, or taking out a car loan on one especially. This is easily accomplished by looking at your debt-to-income ratio, account balances, outstanding balances, monthly expenses, and so on. You know what you can afford and must act accordingly.

If you’ve taken it upon yourself to undergo this process and have determined that you’re financially prepared to handle it, then you are likely ready for a car loan. 

 

You Trust Yourself to Make Timely Payments

One of the worst things that can happen to an otherwise financially stable person is to forget to pay a bill on time. Imagine you’re just scrolling through social media before bed and suddenly, there’s no Wi-Fi. Oh, wait…you forgot to pay the bill this month. 

Yeah, forgetting to pay for things you can otherwise afford isn’t a financial literacy issue, but rather just something that must be remembered. The same goes with making payments on a car loan, with failure to pay eventually resulting in repossession of your car.

Now, in most cases you’ll probably be contacted by your lender if you’ve missed a payment at all, and repo not usually coming until after a couple. This isn’t always the case though, and it can depend heavily on who exactly you purchased the car from, and who you financed it with as well. 

You’re unlikely forget two or three times after being reminded, but if you purchased from a less lenient dealer or borrowed from a lender of the same cloth, one missed payment could be enough to do you in and damage your credit. 

The simplest way to avoid this ever even coming close to happening is to just authorize automatic payments each month. The money will be withdrawn from your account on a specified date each month to cover the payment. Just make sure the funds are there and it’s taken care of for you. It’s like direct deposit, but uh, in reverse. 

However, if this has never been an issue for you and you’re really on top of things, you’re definitely ready for a car loan

 

So, are You Ready for a Car Loan?

If you’ve read this far and are able to check all three of these boxes, you likely have nothing to worry about. You’re probably the kind of person who pays off the credit card balance as soon as it posts and only uses it to get cashback points anyway. You’re on top of things financially. 

If not, don’t worry. Even asking the question “am I ready for it” is a step in the right direction to financial responsibility, and eventually your dream car.

uk bank notes
ArticlesBanking

Savers Are Set to Miss Out on MILLIONS in Returns After Epic £75.5bn Savings Haul in Lockdown

uk bank notes

Savers Are Set to Miss Out on MILLIONS in Returns After Epic £75.5bn Savings Haul in Lockdown

Savers are set to miss out on millions in returns after an epic £75.5 billion savings haul in lockdown, according to a new report by Atom bank. 

On average Brits saved £1,974 each in lockdown, equating to £75.5bn across the UK[1], yet at least half of this is reported to be sitting in a savings account, likely offering minimal returns. Millennials saved the most out of all reported age groups – averaging at £2,200 each. 

In total 73% of people have been using lockdown as an opportunity to save and just 8% have spent more than usual during lockdown, Of those that have been saving, half (50%) said they’ve been putting it in an instant savings account so that they can access it easily when they need it. 

But with multiple rate cuts from the Bank of England leaving interest rates pitifully low, savers are set to pocket just £1.94 each in interest. After the latest rate cut, the current average interest rate on savings accounts across the big six banks[2] stands at just 0.01%.[3] . 

The situation is only set to worsen for savers as 82% of people say they will continue their new found saving habits, despite the little reward. Negative interest rates are also on the horizon, which if implemented, could see bank rates fall further and even result in banks charging people for holding money. 

It comes as Atom launches a new savings account with an interest rate of 0.75% – one that is 75 times better than the Big 6, with no restrictions on withdrawals and no minimum deposit required at opening. By way of comparison, for the amount each person saved on average during lockdown (£1,974), they would have pocketed £13.81 in interest each if their money had been sitting in Atom’s new Instant Saver – £12 more than if they had stashed their money with one of the big six.

 

Taking customers for granted

The majority of people (62%) view savings accounts as a place to safeguard money so they don’t overspend, whereas just 21% think they are a genuine investment opportunity, or a place to grow their money. As a result, banks have been getting away with offering incredibly low rates and giving little back in return for their customer’s hard earned cash. What’s more, two in five (42%) could not confidently say what the interest rate is on their savings account, meaning many are left unaware of how their money is or (more likely) isn’t performing. 

Just over 1 in 2 (55%) also said they believed high-street banks are prepared to take advantage of their customers, by offering little in returns and enforcing high – and growing – fees and charges. Lloyds, Halifax and Bank of Scotland recently upped the charge on their overdrafts and customers with a poor credit rating could be charged as much as 49.9%, which was initially due to be implemented in April but was delayed due to the pandemic.

When it comes to interest rates offered by banks, 1 in 2 people (46%) said they would describe the state of interest rates as bad and that they couldn’t generate any additional money. Over 1 in 10 (13%) even said terrible, and that they stood to lose money.

Recent figures from the Bank of England also revealed how more than 1 in 10 of us (13%) even stockpiled bank notes at home during the pandemic, showing how people would rather keep cash at home than in a bank.

 

Opportunities to save

Of those that have been saving more in lockdown, two thirds (62%) have saved money by staying at home and shopping less.

60% also saved due to restaurants and pubs being closed and a third (35%) saved from not commuting to and from work. One in three (30%) also saved money by making their own lunches. 

Lockdown has also caused people to change their food shopping habits with 35% of people reporting a change, for example buying in bigger or smaller batches.

Looking ahead, 82% say they are likely to continue saving, and as restrictions tighten across the UK we could even see this figure increase.

 

Financial confidence about the future

Despite the pandemic, people remain largely confident about both their short and long-term financial futures. Just under half (49%) report feeling confident about money in the short-term, with almost one in five (16%) saying they are ‘very’ confident.

When it comes to their long-term financial future, well over two fifths (43%) say they are confident, with well over a tenth (14%) ‘very’ confident. 

Millennials are the most likely out of any age group to feel confident about both their short-term financial future (62%) and long-term financial future (55%). 

Mark Mullen, CEO of Atom bank, commented: “Banks have been taking customers for granted for years. Lockdown has simply brought this into sharper focus. Brits have saved millions with little return for their efforts, while some of the UK’s biggest banks even pressed ahead with upping overdraft rates to an absurd 40% flat fee. 

“For too long it’s been the norm to offer customers shockingly low interest rates. People are even stockpiling cash in their homes rather than in a bank account, which shows just how little they think they’ll gain by trusting the big six with their money. Atom is here to remind us all that when you save, your money is used by banks to allow someone else to borrow. The borrower should get a great deal from the bank – whether to buy their home or sustain and grow their business – but so should the saver. It’s time to shine a light on the behaviour of big banks and to do the right thing by our customers. 

“People need to act now and take control of their finances. Our new Instant Saver has a rate that’s 75 times higher than the UK’s biggest banks, and with no short-term bonus rate to lure you in, no limits on withdrawals and no minimum amount required at opening, it offers people much-needed flexibility while their cash works harder for them. 

“We’ve built a bank that delivers award-winning customer service – one that’s determined to push the market in the favour of customers.”

student budget
ArticlesCash Management

How to Manage Your Student Budget

student budget

How to Manage Your Student Budget

What’s the age-old adage? Take care of the pennies and the pounds look after themselves. Well, this is just as important at university as it is anywhere else. 

When at university, you will be operating on a smaller budget than if you’re out of education. A student loan will only last you so long, so see how you can manage your student budget at university. 

Save up your vouchers and look for student discounts

Vouchers come in handy more than you can think! While it’s unlikely that you’ll be saving up £2,000 in vouchers over a one year period, you could still find yourself saving a fair bit on quite a few items when you go shopping. 

Tesco have a Clubcard points system which can entitle you to various discounts and perks, so signing up for a Clubcard is a good way of saving money and a good way of being able to offset potential costs against your points.

Some companies offer various student discounts and will have a lot of vouchers geared towards helping students that need to save money. Music streaming services like Spotify, Apple Music and TIDAL all have student programmes that will save you money in the long run, all you need is proof of being a student. 

Use your NUS Card

Your student NUS Card exists to help you out on the high street. Many students find themselves in need of a good deal here and there and an NUS Card is a great way of doing that. 

An NUS Card is mainly used as a form of identification for students and is essential for far more than just finding good deals in Nando’s! An NUS Card is also used for students that are looking for student council tax exemption as well. 

While you will need to pay an initial fee of £13, it’s worth it in the long run! On those rare occasions, you and your friends decide to go out for a meal, you will see 20-25% wiped off your overall bill. 

Look into transport options

Student Railcards are the best way for students to get around. 

For a lot of students, travelling to and from university or to certain campuses or even visiting home can start to tot up for you and can have a very negative impact on your student budget, so the best thing to do is to pick up some kind of subsidised travel service.

For some students, this will mean taking advantage of a travel bursary that is offered by their university, for others it will be about taking advantage of things like the aforementioned student railcard. 

Some universities also have transport systems offered as part of their campus, whether it be a coach service, integrated bus services, train systems that run through the campus itself or even a monetary scheme to help out. You can check out university rankings and see which universities are ranked best in their areas for transport. 

Use your university’s gym

Most universities will have their own gym on campus, which will help you to keep in shape. It makes sense to use your university’s gym rather than use a more expensive high street option that will likely cost an awful lot of money. 

It is unlikely that you would be charged for using a university gym and on the off-chance you are charged, it is likely to cost less than a regular high street gym would cost. 

A university gym will also have the added benefit of having a wider array of equipment for you to use as they will likely receive more people at the gym than a regular gym would, who said you couldn’t get ripped when saving money?

Avoid the meal deal

We’ve all been there, a long day and you fancy something quick to eat, so you quickly pick up the Tesco meal deal and drop £3 on a sandwich, a packet of crisps and a drink. Though it can be helpful sometimes and a good way of keeping yourself well-fed and hydrated, the deals do add up!

Five days-a-week of meal deals leads to £15-a-week being spent on lunch alone, factored over the course of a month and you’ll see yourself spending a whopping £60 on lunch alone! 

With this in mind, we recommend picking up the ingredients you need for lunch and preparing your own meal at home. This will mean that you will have food left over for dinner or for later lunches and the ingredients together will cost less or about the same as a whole meal deal does, while offering more possibilities. 

gender and savings
ArticlesBankingCash Management

Britain’s Stark Gender Savings Gap: Women Have a Third Less Money Saved Than Men

gender and savings

Britain’s Stark Gender Savings Gap: Women Have a Third Less Money Saved Than Men

New research published today reveals a stark difference in the amount of money British men and women have in savings, exposing a 32% gender savings gap.

The consumer study, by leading discount site VoucherCodes.co.uk, reveals that the average man in Britain has £24,880 in savings – 32% more (£8,038) than the average British woman. The widest gender savings gap is found amongst millennials, with female respondents in that age group reporting 60% less in savings than their male counterparts – a whopping £15.9k. This is followed by Gen Z, with a 47% gender savings gap.

 

Average men’s savings

Average women’s savings

Gender savings gap (£)

Gender savings gap (%)

Millennials

£26,553

£10,633

£15,900

60%

Gen Z

£17,552

£9,343

£8,209

47%

Gen X

£18,000

£11,265

£6,735

37%

Brits

£24,880

£16,842

£8,038

32%

Baby boomers

£29,902

£29,064

£838

3%

 

Gender pay gap making an impact

With the latest government statistics revealing that there is currently a 17.3% gender pay gap in the UK[i], the research also looks at how this directly impacts women’s savings. Just 38% of British women said that their current wage is enough to allow them to save their goal amount each month, much fewer than the 51% of men in Britain who say the same. In addition to having the widest gender savings gap of any generation, millennials also report the largest disparity between the sexes when it comes to whether their wage allows them to save. Just 36% of millennial women say that they are able to put away the cash they want to each month, compared to 55% of men. On the other end of the scale, baby boomers have the smallest disparity of any generation, as 50% of women and 53% of men said that their earnings mean they are able to save their goal amount.

 

Savings depleted by COVID-19

Just over six months after lockdown was introduced in the UK, coronavirus has widened the gender savings gap even further. Whilst, overall, British men and women have reported a similar impact upon their finances, with 24% of men and 26% of women confirming the virus has had a dramatic negative effect on their savings, the true picture is somewhat bleaker. The study reveals that more women than men are relying on previous savings to cover essential costs during the pandemic, depleting their already smaller savings pot. A third of women (35%) admit to dipping into their savings over the last six months, compared to just 15% of men. This figure jumps to more than half for furloughed women (54%), again higher than men on the scheme (40%).

The impact is even more pronounced for furloughed workers. Two thirds of those on furlough (64%) said that the scheme and resulting pay cut has meant that they have not been able to contribute their desired savings each month. Yet again, the data suggests that furloughed women have seen the biggest hit to their financial security as a result of COVID. Over three quarters of women on the scheme (78%) have not been able to save as much money as pre-pandemic, contrasting just half of furloughed men (50%).

 

A brighter outlook?

Looking ahead to a pandemic-free future, the nation remains cautiously optimistic when it comes to predicting whether coronavirus will have a long-lasting impact on their savings. Over half (55%) of British women and 57% of British men think their savings will be able to recover in the long term. Earlier in their savings journey, Gen Z-ers predict a tougher time, with just 42% of women and 50% of men predicting that their savings will make a full recovery. Unsurprisingly, those most worried about the future are women who have been furloughed, with 77% admitting they are concerned that they will never be able to replenish lost savings.

 

Anita Naik, Lifestyle Editor at VoucherCodes.co.uk, comments: “This report is really eye opening, exposing how far we as a nation need to come to achieve financial equality. It’s especially concerning to see that young women and those who have been enrolled on the furlough scheme during COVID-19 have been most affected, as this represents such a large number of women in the UK.

“To help reduce the amount you rely on your savings, budgeting is the most effective way to ensure that all essential costs are covered. Citizens Advice offer a free and easy to use budgeting tool on their website that works for any budgeting needs. When shopping, make a habit to always check for deals that could shave valuable cash off your purchase. If you shop online a lot, install a handy browser extension such as DealFinder by VoucherCodes – a free Chrome extension that automatically finds the best discounts as you shop, so that you never miss out on a deal.“

savings and investment
ArticlesCash ManagementWealth Management

Spending and Investments Top List of Life’s Most Difficult Decisions

savings and investment

Spending and Investments Top List of Life’s Most Difficult Decisions

New research has revealed the nation’s hardest decisions, with financial quandaries and how to invest your money topping the list of the most difficult decisions that Brits struggle to make.

The study, commissioned by Barclays Plan & Invest in partnership with researchers at UCL, set out to explore the challenges faced when making decisions – from the every-day choices of what to wear or eat, to the more important, longer-term decisions.

The extensive research revealed that financial concerns consistently rank top of the list when it comes to the hardest decisions, including choosing where to buy a house (32 per cent), how to invest your money (25 per cent) and how to spend your hard earned savings (25 per cent). The only non-financial decision to make the top five was choosing a partner, with nearly one quarter struggling to make up their minds when picking their other half.

 

The top 5 toughest decisions Brits face:
  1. Where to buy a house
  2. Whether or not to change jobs
  3. How to invest your money
  4. Choosing to spend some of your savings for a major purchase (house, car etc)
  5. Choosing a partner

Dr Bastien Blain, Research Associate at UCL, who co-authored the study, comments: “Our research has revealed that we are consistently bombarded with choice, often creating a sense of decision fatigue. This cognitive fatigue makes us more impulsive and therefore prone to choosing small, immediate rewards over larger, delayed ones. This may well explain why financial decisions are consistently ranked the hardest, as they require the most attention.” 

 

Nature or nurture?

The research also revealed a gender-divide when it comes to decision making. According to the study, women appear to be better decision makers when it comes to monetary matters, as nearly one third of men struggle to decide how to invest their money compared to just 21 per cent of women. This might be down to the power of female intuition, as the majority of women (43 per cent) reported that they base their decisions on gut instinct.

These findings are somewhat surprising, as women are often considered to be less confident when it comes to investing, with men taking up the lion’s share of the investment market. However, it does at least align with a historical difference in stocks and shares performance, with the average women’s investment portfolio on the Barclays Smart Investor platform beating that of their male counterparts over a three year period (April 2012-June 2016)*. The annual return on investments for men was, on average, a marginal 0.14 per cent above the performance of the FTSE 100, while for women it was 1.94 per cent higher.

 

Relieving the pressure

With one in four Brits struggling to make investment decisions, these findings highlight the need to give people the right tools and advice to plan for their financial future.

Plan & Invest, a new digital advice service from Barclays, has been designed to support people who don’t have the confidence or time to invest on their own. Customers will complete an in-depth questionnaire on their goals, timeline and risk appetite and Barclays will then use the latest technology to combine these findings with their expert team’s pick of investments, to create a personalised plan that can follow over 10,000 potential investment paths.

Robert Smith, Head of Behavioural Finance at Barclays Wealth Management and Investments, offers some insight into the research findings: “It comes as no surprise that financial, and particularly investment, decisions rank so highly as some of life’s tougher choices. It’s easy to be overwhelmed by the sheer number of investments on offer or be put off by the amount of  jargon – particularly if you’re new to investing. When deciding where to invest, some may instinctively choose to invest in the market closest to them, or may be swayed by what is trending in the news. However, creating a diversified portfolio, focused on an individual’s personal goals and attitudes is the most advisable strategy when investing.

“But for those who don’t have the confidence to make their own investment decisions, it’s worth considering a digital advice service, such as Barclays Plan & Invest, where you can get experts to create a personalised investment plan and make all of the difficult investment decisions on your behalf.”

ArticlesCash Management

Are You Financially Prepared For A Baby?

Are You Financially Prepared For A Baby?

Any parent will tell you that the moment you hold your little one in your arms, your priorities change. Having a baby is one of life’s most beautiful and joyous occasions, but it is also one of the most life-changing events with a substantial price-tag attached. Research shows that your little bundle of joy will cost, on average, £231,843 – a frightening figure for many soon-to-be parents. And with the spiralling costs of childcare and education, this figure is expected to rise.

Life with a newborn is a world away from a child-free life. The first month alone can put a strain on your finances; from nappies and clothing to feeding equipment, toys and furniture. Many parents say that they weren’t prepared for the initial costs, and when paired with tiredness and fatigue, this can put a lot of pressure on the relationships around you. That’s why it is important to budget well and manage your assets before the pitter-patter of tiny feet.

 

Take Control

To help ease this financial pressure, you should consider setting up a regular bank account with easy access to savings as soon as possible. We recommend choosing an account with no minimum balance to give you maximum control and flexibility over your finances. It is also a good idea to choose an account with the ability to set up standing orders and direct debits, so you can manage your money well without the fear ‘baby brain’ forcing you to forget a payment.

And while your baby may be a long way off adulthood, it’s always good to plan for the future. As such, you should consider setting up a trust fund once your baby arrives. This legal arrangement will ensure your assets are held safely for the beneficiary until they are of an age to manage their money responsibly. A trust fund can be of great support to your child; it can help ease the burden of university fees or help them get on the housing ladder when the time comes.

 

Make a Will

We recommend making a Will as soon as possible after your baby is born. Not only does this ensure that your assets are passed down to your offspring, but more importantly, a valid Will means you have full control over who cares for your child (if they are below the age of 18) in the event of your passing. It also allows you to decide who should look after your child’s inheritance until they are old enough to manage their money themselves.

It is also possible to make a Will even before your baby is born. Without knowing their name, you can leave your estate to your child. And if you have more than one, you can stipulate that you divide your estate equally between children.

At Turner Little, we have years of experience in delivering professional and specialist advice to those who need it most. We work closely with you to put a bespoke plan in place so you can to manage your money well. This includes helping you to financially prepare for your baby’s arrival, as well as managing your child’s finances as they grow, giving them the best possible start in life. To find out more about how we can help you prepare for the future, get in touch with us today.

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ArticlesCash Management

18-24’s Owe £225 to Buy Now Pay Later Schemes

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18-24’s Owe £225 to Buy Now Pay Later Schemes

Under-25s are increasingly likely to seek help for debt, according to debt charity StepChange with Buy Now Pay Later schemes cited as problematic for young shoppers.  

The Shop Now Stress Later Study from money.co.uk reveals that 18-24-year-olds owe a third more (£225 each) to Klarna-like buy now pay later schemes (BNPL) than the average UK shopper (£176).

How big is the fast fashion debt problem for 18-24-year-olds? 

The study found that 18-24-year-old shoppers owe £225.44 to BNPL on average, which is 28% more than the average UK shopper, who owes £176.   

The amount owed to popular BNPL schemes by 18-24-year-olds:

  1. Openpay – £360.50
  2. Zilch: £356.00
  3. Laybuy – £318.32
  4. Payl8r – £282.54
  5. Zip – £200.29
  6. Clearpay: £188.26
  7. PayPal Credit – £137.92
  8. Klarna: £122.16

The report also analysed 10 fast fashion brands based on how many times BNPL is mentioned throughout the shopping process, with Nasty Gal, Boohoo, and Pretty Little Thing the worst offenders when it comes to promoting them.  

Fashion Retailers Ranked by BNPL Promotion Mentions

  1. Nasty Gal – 46*
  2. Boohoo – 42
  3. Pretty Little Thing – 41
  4. Next – 40
  5. Nike – 40
  6. JD Sports – 38
  7. Clarks – 32
  8. Levi’s – 32
  9. Adidas – 31
  10. ASOS – 26

*Each brands BNPL score for mentions and how prominent BNPL is on their websites 

Over the past few years, Klarna, alongside other schemes such as Clearpay or Laybuy, has become a popular way for millennials and Generation Zs to buy clothes. The schemes offer the option to delay a payment or to split payments into installments. 

But debt advice charities are increasingly worried that BNPL is encouraging young consumers to spend more than they can afford.

These stores are all fostering a smash-and-grab mentality among young shoppers today. Many of them are buying their clothes purely online, often speculatively, and end up returning items that don’t fit or suit them later.

Shoppers aged 18-24 are more than twice as likely to use a payment platform (52%) than going into their overdraft (20%), but 25-34 are the biggest BNPL users. Over two-thirds have used a BNPL payment scheme like Klarna, Clearpay, or Laybuy. 

Almost a third of UK shoppers cite social media as a contributing factor (29%) in their decision to use BNPL and two thirds (55%) of shoppers aged between 18 and 34 admit to buying with the intention of returning, making millennials the most prolific returners. 

There are concerns young people might be encouraged to take on debt just to afford some new make-up or a dress for a night out.

Fast fashion is based on fleeting trends that may last no longer than a few months. Trying to keep up with such a quick turnover can be difficult, so young people turn to payment schemes to be able to afford them. 

Social media platforms, such as Instagram, exacerbate this as influencers post daily pictures in different outfits, never being seen twice in the same one, which puts pressure on young people to keep up. 

Under-25s made up 14% of those seeking help from the charity Stepchange in 2018, with an average outstanding debt of more than £6,000.

Retailers sign up with Klarna or similar BNPL schemes as it encourages more people to buy and some shoppers that use the service probably shouldn’t be. 

Impulse buying and online shopping can be very addictive. If you are thinking of using a BNPL scheme to purchase your items, think about whether you would purchase the items if you didn’t have the option to spread the cost. 

The full Shop Now, Stress Later study can be found here: https://www.money.co.uk/guides/generation-debt-trap 

business investment
ArticlesTransactional and Investment Banking

Post COVID-19 Trends: 31% Of Wealthy Individuals Intend to Support the Economy by Buying A Small Business

business investment

Post COVID-19 Trends: 31% Of Wealthy Individuals Intend to Support the Economy by Buying A Small Business

Brown Shipley, a Quintet Private Bank, has announced the results of a comprehensive research study of the nation’s wealthy. The survey of over 4000 UK consumers included a representative sample of over 800 of the nation’s ‘wealthy’ – defined as those with more than £100,000 in assets that they can readily access, 350 of whom have more than £250,000 in assets.

The research looked at how the wealthy had amassed wealth and what they want to do with the money they have, with some surprising results. Perhaps of most interest in the times of uncertainty with COVID-19, one in five (19%) of those with more than £250,000 in assets said they intended to buy a small business in the future to keep themselves busy, and a further 35% said they are planning on investing in a new business to help kickstart the economy post COVID-19.

Just under half of those wealthy individuals surveyed said they would leave an inheritance (48%). This increases slightly to 53% of those with more than £250,000 of investible assets. The research suggests that 1 in 5 (c10 million) UK adults fall under our definition of ‘wealthy’, which suggests that 5 million families may not receive an inheritance.

For those with more than £250,000 in assets, apart from leaving an inheritance, the other plans for their wealth include:

  • One in two (52%) will use the wealth to spend money on themselves, for example on  holidays; whilst one in six intend to buy luxury items, such as an expensive car or yacht (17%)
  • This is almost the same as those that wish to support a worthy cause (19%)
  • Almost six out of ten (59%) will use their wealth to fund their retirement

Whilst half plan to leave an inheritance, four in ten (39%) plan to gift some of their wealth to their families.

Regardless as to whether the wealthy plan to leave money when they pass on – the lack of planning for the future is of concern.  Only four out of ten (40%) say they had plans in place to pass on their wealth to minimise the tax paid by beneficiaries.  One in three (34%) say they will put in place plans in the next five years to minimise tax on their beneficiaries; whilst one in five (22%) say they never will.

Commenting on the research, Alan Mathewson, Chief Executive Officer of Brown Shipley said, “Whilst it is great to see that there could be significant reinvestment by the wealthy in UK businesses post COVID-19; it is worrying that so many haven’t made plans for their estates.  Solid financial planning is about wealth preservation today and having a wealth plan to meet future needs and we believe all can benefit from putting their estate in order, today.”

The research also reveals how today’s wealthy gained their affluence.  One in three (30%) of the nation’s wealthy credit an inheritance for contributing to their wealth; whilst 56% cite earnings from salaried work; and one in five (18%) say it is down to their entrepreneurialism.  Perhaps surprisingly one in twelve (7%) say that a lottery win; or gambling has helped them become affluent.  Other factors that the wealthy say have helped them amass financial assets include the performance of their pensions (44%); and investments (34%); whilst one in four (27%) have been helped by the property market.

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ArticlesBanking

Consumer Opinions Towards Digital-Only Banks Fall Almost Three Times the Rate of High-Street Banks’ During Lockdown

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Consumer Opinions Towards Digital-Only Banks Fall Almost Three Times the Rate of High-Street Banks’ During Lockdown

Customer sentiment towards 10 of the UK’s biggest high-street and digital-only banks fell by 7 percentage points (pp) during lockdown, according to new research from personal finance comparison site finder.com and social analytics specialist BrandsEye.

This leaves overall consumer sentiment for the banking industry at -24% on a possible scale of +100% to -100% for the period between 1 March and 31 July.

However, over 800,000 social media posts from customers revealed that digital banks saw a sentiment decline of almost three times that of high-street banks during the pandemic. On average digital-only banks’ customer sentiment fell by 14pp compared to just 5pp for high-street banks, compared to the previous 6 months (August through to the end of February).

While this is a blow for digital-only banks, it should be noted that high-street banks had, and continue to have, a much lower overall sentiment (-13% vs -35% currently). 

When asked, over half of high-street banks’ customers (52%) said that they felt negatively towards their bank throughout lockdown with customers saying that savings rates are what frustrated them the most (29%). 

Following this was poor customer service both online (14%) and in-branch (14%). The third most common customer criticism was their lack of communication during the pandemic (11%).

The story was very similar for digital-only banks – 53% of customers felt negatively about their provider during lockdown and savings rates were again the main problem (21%).

Customers’ main method of interacting with their digital-only bank is through an app, so this is perhaps why customers’ second biggest issue was around their bank’s app (15%). 

Poor customer service appeared to be a running theme with 14% of digital-only banks’ customers complaining about the level of customer service they received over the phone and digitally.

The bank that experienced the biggest decrease in sentiment was Monese, with sentiment falling from -0.1% to -19%. Currently, Atom bank has the highest customer sentiment of 9%, however, this is a drop from 11% pre-lockdown. 

Customer sentiment towards Barclays, Lloyds and NatWest actually improved during lockdown, with Lloyds bank experiencing the largest rise in sentiment from -36% to -33%. Despite this increase, these banks still sit in the bottom three positions for overall sentiment, with Barclays having the lowest score of -42%.

The full paper, Banking in lockdown: Is the honeymoon over for challengers?, includes expert commentary from industry leaders and can be viewed and linked to here.

 

Commenting on the findings, Jon Ostler, CEO of personal finance comparison site, finder.com, said: 

“Digital-only banks have enjoyed a golden period where dissatisfied consumers of traditional banks have flocked to them, attracted by market-leading apps, innovative features and a more human way of communicating to customers. 

“Now these digital-only banks are becoming recognised players in the industry, it is natural that they will start to be held to a higher standard. This is especially true during a crisis like COVID where people are relying on their bank more than ever – some banks have handled the situation better than others.

“Digital-only banks are still comfortably ahead in the sentiment stakes compared to the incumbents but perhaps it was inevitable that the high street banks would claw back some ground. The challengers will be hoping this fall in positive sentiment is just temporary and not the start of a bigger trend.”

 

Nic Ray, CEO of BrandsEye, noted that social media is growing as a platform for customer service and continues to be a rich source of consumer insight:

“As the adoption of digital banking services accelerated during the pandemic, the industry can expect an increase in digital conversation that includes social media customer service requests and customer feedback. Swiftly identifying and responding to service requests, and surfacing valuable feedback from within all of the noise of social media will be critical to improving customer experiences and building long-term customer loyalty for both digital and high-street banks.”

 

Sentiment pre-lockdown

Sentiment post-lockdown

Atom

11%

9%

Starling

12%

-1%

Monzo

2%

-2%

Monese

0%

-19%

Revolut

-18%

-29%

HSBC

-31%

-30%

Lloyds

-36%

-33%

Santander

-21%

-33%

Natwest

-40%

-37%

Barclays

-22%

-42%

 

house prices
ArticlesCash ManagementReal Estate

September Revealed as The Best Time to Buy A House

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September Revealed as The Best Time to Buy A House

New research suggests the stamp duty payment holiday isn’t the only reason Brits can make a saving on a property this month.

Watch and sunglasses specialist, Tic Watches, has conducted research and worked with experts to reveal the best time of year to find a bargain for high value products including homes, cars and holidays. The experts have compared prices to the peak time of year shoppers are searching for and buying products most frequently, to highlight how much people could really save with the right timing.

Here are the best times of year to find a deal:

January – Watches and sunglasses
  • Peak search time: 22nd-28th December
  • Potential savings: 70%

The January sales are a great time to pick up bargains on fashion items such as watches and sunglasses. Danny Richmond, Managing Director of Tic Watches, said: “For watches, the cheapest times of year to buy are generally Black Friday and January. This is when we run our biggest sales with discounts of up to 70%.

“For sunglasses, January sees the biggest discounts, of up to 40%. This is because it’s the period of lowest demand for summer products, so it’s a great time to get a bargain!”

February – A wedding
  • Peak search time: 28th July-3rd August
  • Potential savings: 50%

February sits in the middle of the wedding low season, which runs from November to April. This is generally seen as an undesirable time to get married, so as a result there are huge discounts available. In some cases, you can have a Saturday wedding in winter for half the price of the same in high season.

March – New cars
  • Peak search time: 10th-16th March
  • Potential savings: 25%

For new cars, the best time to buy is usually March and September because of bi-annual targets, although deals are to be had at the end of each quarter, depending on individual targets and stock availability.

April – Mattresses
  • Peak search time: 29th September-5th October
  • Potential savings: 53%

Dale Gillespie, Marketing Director for bed and mattress retailer, Bed SOS, said: “Retailers  tend to release their new lineups in April, so early spring is the best time to find the biggest discounts. Buying in early April, you’ll find some great value deals as retailers clear old stock to make way for the new ranges.”

May – Winter shoes
  • Peak search time: 24th-30th November
  • Potential savings: 70%

Buying shoes out of season will allow you to find the best value deals. May is a great time for this as there will be discounts on winter footwear such as boots, wellies and walking shoes, allowing you to buy good quality products for a fraction of the price. Similarly, the best deals for summer footwear can be found in autumn and winter.

June – A gym membership
  • Peak search time: 29th December-4th January
  • Potential savings: 20%

The start of summer tends to offer some of the best deals on gym membership, with January being another good month for discounts. 

There are often plenty of deals available through voucher websites such as Hot UK Deals, but if you’re signing up in person, a handy tip is to go at the end of the month. Sales staff likely have targets to hit and could be open to negotiating if they want to get their bonus.

July – An engagement ring
  • Peak search time: 29th December-4th January
  • Potential savings: 50%

July to August is the peak of the wedding season, and with all the focus on weddings, sometimes you can find big discounts on engagement rings. Also, as it is not close to any big holidays, jewellers use this time to lure in consumers with discounts.

August – Holiday clothes
  • Peak search time: 30th June-6th July
  • Potential savings: 75%

With summer drawing to a close, retailers look to clear as much seasonal clothing stock as they can. 

This is a great time to snap up bargains on items such as swimwear and shorts, which can see discounts of up to 75% for bikinis and 43% for shorts, although it’s worth saying that stocks go quickly, and there will be less choice than earlier in the summer.

September – A house
  • Peak search time: 2nd-8th February
  • Potential savings: Subject to negotiation 

Ross Counsell, Director at property firm, Good Move, said: “The best time to buy is August or September. The majority of buyers start searching at the beginning of the year, waiting until the end of summer, when there are fewer looking, you’ll have less competition.

“You’re also more likely to get a better deal, as with fewer offers on the table, sellers may well be more likely to accept a lower price.” 

October – Home appliances
  • Peak search time: 15th-21st December
  • Potential savings: 44%

Many manufacturers unveil new models in October, so older products will often be discounted. For products such as fridges, buyers can save as much as 44% at this time. 

November – Technology
  • Peak search time: 24th-30th November
  • Potential savings: 50%

Claire Roach at Money Saving Central, said: “Without a doubt, November is the best month to get deals, particularly on tech. A lot of people make the mistake of waiting for Black Friday – when the better deals are likely to be earlier on in November because retailers try to compete with Black Friday giant, Amazon.

“eBay, in particular, was 2019’s best place for tech deals, and the people who waited until further on in the month were left disappointed. Prices weren’t any better and stock was limited on highly sought after items such as the Nintendo Switch.”

December – Used cars
  • Peak search time: 17th-23rd November
  • Potential savings: Subject to negotiation 

Tim Barnes-Clay, Motoring Expert for Euro Car Parts, said: “Nobody thinks about buying a car at this time of year, as most people will feel the pinch over the festive season. With some forward-planning though, December can be a great time to get a good deal on a used car. 

“This is purely because dealers will be more inclined to get sales under their belts and therefore may be more willing to offer you a deal or negotiate.” 

Danny Richmond, Managing Director of Tic Watches, said: “It’s clear from the research that bargains can be found all year round, with the best deals coming at periods of low demand.

“It’s always best to plan your purchases ahead of time to maximise your savings. Don’t wait until winter to buy your winter coat and consider buying a new phone at the start of November, rather than waiting until Black Friday. Doing so could mean huge savings!”

For more information on when the best savings can be found, visit: https://www.ticwatches.co.uk/blog/2020/03/when-youll-get-the-biggest-savings/

online banking
ArticlesBanking

How Can the Banking Industry Emerge Stronger from The Covid-19 Pandemic?

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How Can the Banking Industry Emerge Stronger from The Covid-19 Pandemic?

Around the world, many countries now face a new period of uncertainty caused by the Covid-19 pandemic. While regional lockdowns had temporarily started to ease, the prospect of a second wave has caused some countries to reintroduce restrictions – a situation which may be ongoing and become a ‘new normal’ as part of the global effort to combat the virus.

Amid these challenges, society has been forced to digitalise many of its core functions at an unexpectedly fast pace, sparking unprecedented levels of innovation in a short space of time. This has led to an emergence of new digital services and triggered the transformation of key sectors including finance, education and healthcare. With growing levels of unpredictability around how the pandemic will unfold, there is a societal expectation that access to comprehensive digital services will continue and improve.

This expectation is particularly prominent in the banking industry, which rolled out an expanded range of digital services during the early stages of the pandemic to enable customers to manage their finances safely from home. New services include virtual appointments, expanded features for mobile banking and streamlined authentication processes for customer service. As banks look ahead to the future, Mobey Forum is drawing upon its Expert Groups to identify the key considerations for the industry.

 

A new era for online banking

The Covid-19 pandemic sparked a huge surge in demand for online banking; the United States is reported to have seen a 200% increase in new mobile banking registrations in April 2020, which is reflective of a broader global trend. Similarly, in the retail industry, there was a significant increase in the number of consumers using online shopping for the first time, and future ecommerce purchases from new or low frequency users are expected to increase by 160%.

While the increase in online banking services was driven by the urgent requirement for people to manage their finances without leaving home, many customers have since recognised the convenience of online access, and are calling for more comprehensive digital banking services. The pandemic also prompted many within the older generation to access digital services for the first time.

“The Covid-19 pandemic has encouraged banks to invest more time in developing tools which allow customers to manage their finances remotely. By ‘remotely’ we mean allowing customers to access their banking information independently without any third-party support,” says Mario Brkić, co-chair of the Open Banking Expert Group at Mobey Forum. The emerging social and behavioural changes caused by the pandemic require banks to undertake a careful evaluation of which financial matters can be managed in-person, and what can be dealt with online.

 

The digital identity opportunity

As well as rolling out new digital services, banks now have an opportunity to respond to the growing demand for digital identity. The pandemic has triggered a sharp increase in customers needing to verify their identity online: “During the Covid-19 pandemic, more people are relying on digital identity schemes than ever before,” says Jukka Yliuntinen, co-chair of the Digital ID Expert Group at Mobey Forum. “As an example, usage has increased in the UK where digital identity is required to access government benefits, and it is a similar situation across many of the Nordic countries.”

Mobey Forum has explored this opportunity further in a new report, entitled The Mobey Long Take – Post Covid-19 Digital Identity, which outlines why banks are in a unique position to seize the opportunity presented by digital identity, and indeed are best placed to lead the discussions and implementation going forward. Throughout the Covid-19 pandemic, banks have played an important role as a distribution mechanism for many of the government intervention and support strategies. They must now seize the opportunity to take this a step further and lead the development of a fairer, more trusted approach to digital identity.

 

A rise in customer data

With more customers utilising digital services, banks also have an opportunity to use the data to drive additional value for customers. However, this approach is not without challenges: “Data privacy and machine learning fairness are two of the most complex data-related challenges for banks,” says Amir Tabaković, co-chair of the Data Privacy in the Age of AI Expert Group at Mobey Forum. “On the one hand, banks need to innovate using technology and they must become data-driven to do that. On the other hand, trust is the biggest asset for banks,” he adds.

Banks have a long history of credibility and trust and their ability to demonstrate this through the secure management of customer data will be critical to creating confidence in new services. In rolling out new services, banks also have an important responsibility to ensure they remain accessible to all demographics. By sourcing feedback from the newest users of digital services – specifically those who are using them for first time – banks can test if their design is intuitive to customers.

 

Planning ahead

Covid-19 has irrevocably changed consumer habits and expectations. As we navigate the path forward, banks have a window of opportunity, to reflect on the learnings to date and use them to build a digital-first banking ecosystem which will serve customers for the years ahead. It is through this forward planning that the banking industry can help the global economy emerge stronger than before.

whisky
ArticlesMarketsTransactional and Investment Banking

Why Whisky is the Safest Investment to Make Right Now

whisky

Why Whisky is the Safest Investment to Make Right Now

Whisky Investment company Braeburn confirm why investing in whisky during economic uncertainty is a lucrative and sustainable asset for any portfolio.

Throughout history, whisky has proven a reliable investment even in time’s of economic decline. Whisky proved a popular choice during the Great Depression, and recent market behaviour would suggest that ‘liquid gold’ will continue to have significant financial gain despite the current climate.

“Societal turbulence is often a time when investors take stock of their portfolio and examine new ways in which they can protect and profit from their savings, this global pandemic is no different.” states Braeburn’s Sales Director, Samuel Gordon.

Whisky investment has been rising in popularity over the last decade, by 582%, according to The Knight Frank 2020 Wealth Report. This report also shows sales of scotch to India, China and Singapore rising by 44% in the first half of 2018 alone. However, in actuality, it’s whisky casks specifically, that offer the security and consistency that evade traditional asset classes.

With the surge in demand for single malts, distilleries are struggling to keep up. The process for crafting quality spirits that enthusiasts desire, happens over lengthy periods of time. Distilleries ultimately can only make and store so much resulting in a continually increasing value. As a result, independent bottlers, blenders and other investors are known to pay highly and quickly in current secondary markets.

While economic uncertainty can bring new levels of volatility to traditional financial markets like stocks, shares and housing. Samuel explains that whisky doesn’t follow these market trends and isn’t impacted by the reactive and turbulent swings of traditional investments.

“Instead of decreasing during periods of economic downturn, historically, whisky casks have increased in value. When whisky remains in its cask, its continuing is maturation process. Over years, the whisky interacts with the cask, taking on beautiful and unique flavours from the wood. Although in time, there is a golden moment to bottle whisky, in general, the longer it’s left the more distinguished and deep the flavour becomes along with the ability to demand a higher resale value.”

Unlike other industries that are impacted by developing technology and evolving consumer behaviour, the whisky industry is prized on its heritage and historical methods. Whisky has maintained consistency through every type of economy and returns are still on the rise.

Over the last five years, casks have earned an average of 12.4% per annum. The average cask doubles in value every 5 years with casks from popular distilleries earning even higher returns. This again, is due to the maturation process which allows whisky to ride through difficult times whilst still increasing in value. Instead of the cask values rising and falling violently with political and economic changes like the traditional stock market, whisky is left to mature in the cask, only to appreciate in value.

Whisky casks offer diversification into tangible assets allowing investors to enhance their portfolio across different asset classes. Traditional ‘paper’ investments puts future success solely in an endeavour outside the investors control. With whisky casks, no matter what happens in the economy, the whisky can always be bottled and sold, even if the market is down or a distillery closes. With an asset grounded in intrinsic value, an investor can safeguard wealth.

An important factor in whisky cask investment is that is offers further security against forgery or fakes. Unlike art, antiques and even bottled whisky, whisky casks mitigate this risk because the Scottish Government requires that they are stored under strict oversight.

Casks are stored in government bonded warehouses that are required to keep meticulous records. Because of this careful and impartial monitoring, investors can be confident in the provenance and value of their casks.

Samuel concludes,

“Whisky casks are a unique investment. They offer unique characteristics and can complement a portfolio in good times or bad. With a real, intrinsic value whisky casks are unlike any other tangible asset. And with the demand for authentic, mature single-malt casks on the rise, they’re more lucrative than ever.”

fintech
ArticlesBankingWealth Management

Fintech Usage Jumps by Over 50% During the Lockdown Period

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Fintech Usage Jumps by Over 50% During the Lockdown Period, with 21% Securing New Financial Products Without Speaking to a Single Human Being

A new survey of more than 2,000 UK adults commissioned by Yobota has uncovered how integral technology has been for people managing their finances during the lockdown. It found that:

• 64% of UK adults have been reliant on technology to manage their finances since March, up from the 42% before the lockdown.

• Checking accounts (88%), transferring money (80%), withdrawing funds out of an investment (35%) and searching for new financial products (27%) have been the most common uses of fintech.

• 21% have secured new financial products without speaking to a human being.

• 15% of people have been frustrated by their banks’ poor technology. 

• The figure rises to 28% among those aged between 18 and 34.

 
The majority of Britons have relied on financial technology (fintech) to manage their finances during the lockdown, new research from Yobota has revealed. 
 
The London-based technology company commissioned an independent survey among more than 2,000 UK adults. It found that 64% have become reliant on mobile and online banking to manage their finances since March, which is a sharp increase from before the lockdown, when just 42% of the nation were using fintech.
 
The most common uses of fintech have been checking one’s accounts (88%), transferring money (80%), closing or withdrawing funds out of an investment (35%) and shopping around for new financial products (27%). Millions of people have also used fintech to open new savings accounts (26%), apply for credit cards (18%), and extend overdrafts (17%).
 
Over a fifth (21%) of fintech users said they have successfully secured new financial products during the lockdown without having to speak to a single human being. 
 
However, Yobota’s research also exposed that 15% of consumers have been frustrated by their banks’ poor technology, with this figure rising to 28% among those aged between 18 and 34.
 
One in three (31%) people say the lockdown has opened their eyes to how many different ways technology can be used to manage their finances, with 42% planning to continue using tech much more even as bank branches re-open.
 
Underlining the increasing importance of fintech, almost half (47%) of consumers say their tech offering is a “key consideration” when choosing a financial services provider.
 
Ammar Akhtar, CEO of Yobota, said: “In light of the financial distress caused by COVID-19, millions of Britons have needed fast access to loans, credit cards and overdrafts, not to mention advice and guidance. Crucially, they have had to rely on mobile and online banking for almost all of this.
 
“Today’s research shows how some people have found managing their finances during the lockdown simple thanks to the advanced, easy-to-use fintech solutions deployed by their providers. However, others have clearly been frustrated and let down by their bank’s technology. 
 
“This must be addressed. Even as the lockdown passes, people will not be in any rush to queue up in bank branches or have lengthy telephone calls, meaning financial services companies must keep pace with the demand for fintech. As the survey results show, those who don’t risk losing customers.”

Retirement
ArticlesCash ManagementPensions

Forward Planning: 7 Easy Tips for Managing Your Retirement Savings

Retirement

Forward Planning: 7 Easy Tips for Managing Your Retirement Savings

We’ve all dreamed about a blissful retirement, spending more time with the people we love, in places we love and doing things we love. But is it just a pipe dream, or are you financially prepared for the life you wish to lead?

The good news is, it’s never too early to start preparing for retirement. Whilst most of us spend our twenties paying off student debt, as we approach our thirties, our financial priorities change somewhat as we’ve technically been there, done that, got the house, mortgage and family. It’s a time when we experience career progression, leading to promotions, bigger salaries and more funds that can be stashed away for later years.

To help you begin forward planning for the future, Alex MacEwen, expert at The Wealth Consultant has come up with 7 easy tips to get you on your way to achieving the retirement you imagine.

 

Before we begin, you might be thinking just how much stashing away should we do? According to research commissioned by finder.com:

– 55% of UK adults estimate that they will need £100,000 to live comfortably in retirement.

– Only 28% of people believe they are on target to meet this.

– The recommended amount for a comfortable retirement is between £260,000 – £445,000.

 

Shocked? Maybe it’s time to start planning the life you deserve.

 

1. Get independent financial advice

The future is an unknown – How should I save for retirement? Am I saving enough? How much will I need to live on? By enlisting the help of a professional, independent advisor, you will find the answers to all these vital questions. Your independent financial advisor will help you plan and make decisions based on your lifetime goals. They will advise on the various products that most suit your needs instead of pushing a product to boost their sales.

 

2. Create a realistic spending plan

Determine a budget by assessing your income, salary, interest, dividends, any rental income or child support. Define your outgoings, housing bills, utilities, transport, food, perhaps you are still paying off student loans. Decide on the things you really could sacrifice in the name of saving – do you need so many European city breaks? Are you still paying membership fees for facilities you never use because you keep forgetting to cancel the membership? Scrutinise your balance sheet and commit to saving as much as you can. Your future self will thank you, trust me.

 

3. Monitor old and new workplace pensions

It’s easy to get caught up in the excitement of landing a new job and just as easy to lose track of your old workplace pension! But it is important to keep track to know the value of your pension pot as this will help you decide whether it’s worth merging the old pension with the new one, and will give you an idea of how much you have saved for the future. It’s important to check the pension management fees as your previous employer will stop making contributions to old funds once you change jobs, the fees keep rolling, depleting your pension pot in the process. If you have a defined contribution pension, it is always worth checking where your pension funds have been invested, both from a risk level perspective and to ensure it aligns with your values.

 

4. Review investment performance

Keep track of your investments to ensure your portfolio is flourishing. If something isn’t working, figure out why. Perhaps it’s just a case of sitting tight and keeping your cool, or maybe time to diversify into a different sector or explore international opportunities to minimise losses. Remember, even if you have a few disappointing investments in your portfolio, a portfolio that is steadily increasing in value is always a sign that conditions are good.

 

5. Minimise retirement tax

After spending a lifetime working and sensibly putting money away for retirement, it’s important to ensure you keep as much as that money as possible. How? By ensuring your savings are as tax efficient as possible. This will mean working with an experienced financial advisor to ensure you are making use of all the tax allowances and pension tax relief.

 

6. Estate planning

Your inheritance and estate plan should set out your values and your intentions for how you wish your estate to be divided up and managed when the time comes. By focusing on your estate planning now, you can manage your tax obligations and safeguard the financial stability of those you hold dear. Inheritance matters can be challenging emotionally and financially, so it’s important to get professional advice and protect your wealth for future generations.

 

7. Save as much as you can

Save as much as you can, while you can. Achieving your dream retirement means making small short-term sacrifices in favour of saving for the future life you want. Remember, topping up your pension now means you will benefit from tax relief up to the annual limit of £40,000.

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ArticlesTransactional and Investment Banking

Ten Credit Markets Warnings Signalling Long-Term Alpha Opportunity

markets

Ten Credit Markets Warnings Signalling Long-Term Alpha Opportunity

The longest equity bull market since the Second World War led to high valuations and increased leverage. Now as the cycle turns, valuation multiples will inevitably contract and high debt levels will put pressure across the capital structure.

The weak structure of the credit markets and reduced liquidity will likely lead to increased volatility, more downgrades, increased default rates, lower recoveries and stronger terms for new lenders in a post Covid-19 world.

Below, Marc SYZ, managing partner of SYZ Capital, highlights ten warning signals that encapsulate the deteriorating fundamentals and illustrate the potential long-term alpha opportunities for alternative investors.

 

Complacent credit agencies

Since the Global Financial Crisis (GFC), we have seen a sharp deterioration in net leverage across the board. As an example, BB rated bonds are now more levered than single B bonds were in the GFC. The inevitable rating downgrade to come can therefore only be a lagging indicator.

 

Corporate leverage expands threefold

Since 2009, GDP has grown 47% – from $14.6trn to 21.5trn – while corporate credit markets have increased almost threefold. While US household debt has marginally increased by 10% over the period, and housing related debt has remained stable, the sub-investment grade market has vastly expanded, both in high yield bonds and leveraged loans.

 

Elevated leverage puts PE under pressure

Leverage has gone up on average 1.5x across the board since the GFC, and even 3-4x for some cyclical sectors – such as retail, travel and leisure. These will be the first to suffer. Looking at LBO loans, the debt level is also significantly higher. The leverage for large LBOs is even more extreme, with a debt/EBITDA ratio greater than 6x for roughly 60% of universe – double its pre-crisis average.

 

EBITDA adjustments on the way

The published leverage ratios above may be misleading as adjustments – such as add-backs, proforma, etc. – often account for 20% of published EBITDA, which leads on average to a 1x leverage increase from published numbers.

 

Growth of weakening covenants

Covenant-lite loans have increased significantly since the GFC and now represent more than 80% of the $1.2trn US leveraged loan market. Without these protections, company performance can deteriorate materially before triggering a credit event.

 

Rising default rates

Annual default rates peaked at about 10% in the last recessions – reaching about 13% during the GFC. This time around, as a direct result of no or little covenants, we expect a much lower default rate in the short term, but deteriorating metrics and potentially higher default rates by the end of 2020.

 

Lower recoveries

The absence of covenants allows borrowers to ‘kick the can down the road’, as lenders do not have the possibility to exercise oversight and act before it is too late. This time around, we should expect lower recoveries, as the credit event will likely occur when the financial conditions and balance sheet of the borrower have materially deteriorated.

 

Passive investor base

Since the GFC, we have seen a tremendous growth in passive investment products, or actively managed ones with rigid investment mandates often associated with liquidity mismatch. As per leveraged loans and particularly relevant for the private equity industry, their ownership is dominated by CLOs, which in turn are owned by a variety of bank

and nonbank lenders. Most of these passive investors have ‘bucketed’ mandates and may become forced sellers upon a downgrade.

 

Lack of liquidity

Market making activities significantly declined since the GFC because many banks exited the business and those remaining had to shrink this activity. As an example, dealer high yield inventories fell from $40bn to $3bn, and overall corporate bonds inventories declined from $250bn to $30bn.

 

Rise in volatility

As the credit agencies catch up with downgrades, this will cause many distressed opportunities as some passive investors will be forced to dispose of securities that no longer fit their mandate.

The weakest segment of the market is the lower investment grade BBB bonds. As these get downgraded to sub-investment grade in an environment characterised by limited liquidity and a much smaller natural audience for high yield paper, the price drops of such ‘fallen angels’ will be important.

Downgrades will trigger forced selling. Such forced selling will occur in a low liquidity environment, creating excessive price drops and volatility. The current environment will create various opportunities for our flagship strategy across its investment verticals.

Distressed investing, restructuring, litigation financing and secondaries appear to be well positioned, but also private equity, as not all companies will be equally affected. High growth can still be found in a recessionary environment for patient, disciplined, diligent and selective investors.

Martin Lewis
ArticlesBankingCash Management

Martin Lewis Financial Education Textbook Rolled Out to 700 Schools Across the UK

Martin Lewis
Photo credit: The Money Saving Expert 

Martin Lewis Financial Education Textbook Rolled Out to 700 Schools Across the UK

The first ever financial education textbook to hit Northern Ireland, Scotland and Wales will be rolled out over the next 15 months.

This week, Young Money announced the launch of the first ever financial education textbook to hit schools in Northern Ireland, Scotland and Wales. Over 45,000 books will be sent free to schools over the next 14 months, as well as an accompanying teacher’s guide (available digitally). The textbook will also be available as a free PDF download to anyone who wants it.

This launch follows the successful roll-out of the textbook in England. In November 2018 340,000 copies of the very first financial education textbook in the UK, ‘Your Money Matters’, were delivered into English secondary schools. This was funded by Martin Lewis, the Money Saving Expert, with a personal donation of £325,000 to the financial education charity Young Money to develop and distribute this milestone resource and accompanying teacher’s guide.

Aimed at supporting the financial capability of those aged 15 to 16, the reality is that the textbook has been used across multiple year groups and within a wide range of subject areas.

Since being delivered into every state-funded secondary school in England, the Money and Pensions Service funded an evaluation of the impact that Your Money Matters has had:

• 89% of teachers said that Your Money Matters would improve the quality of financial education in their schools.

• 88% of teachers said the textbook would increase their confidence to deliver financial education.

Subject Head at a Community school, said:

‘Excellent resource! Much needed for youngsters. We are very grateful to have received the textbooks and received excellent feedback from students. One student told me that our Financial Capability lessons changed the way her parents look at finances and motivated them to change the way they deal with money as a family.’

A Year 12 student, commented:

‘It’s so broad as well – if you want a general outline it is perfect for that. I actually brought one home so I could look through the university stuff. My older brother wanted to know about a work pension… I said ‘I have this textbook’ so he looked at that. He found it useful – it had the general information that he needed.’

Following the success that Your Money Matters has received in England, the Money and Pensions Service and Martin Lewis are splitting the cost of the £368,000 project, funding Young Money to develop versions of the textbook for Northern Ireland, Scotland and Wales. State-funded secondary schools in each nation will receive both printed and digital copies of their textbook over the next 14 months:

Northern Ireland – January 2021 (12,000 copies in total)

Scotland – March 2021 (21,500 copies in total)

Wales – September 2021 (12,500 copies in total)

What is in the textbook?

The educational textbook contains facts and information as well as interactive activities and questions for the students to apply their knowledge. The chapters are as follows:

1. Savings – ways to save, interest, money and mental health
2. Making the most of your money – budgeting, keeping track of your budget, ways to pay, value for money, spending
3. Borrowing – debt, APR, borrowing products, unmanageable debt
4. After school, the world of work  student finance, apprenticeships, earnings, tax, pensions, benefits
5. Risk and reward – investments, gambling, insurance
6. Security and fraud – identify theft, online fraud, money mules

Whilst the key financial topics will remain largely the same, a review in each nation, consisting of focus groups with teachers and devolved government representatives for education, is being conducted to identify the amendments required. This will ensure that the textbook in each nation maps to the respective education curriculum as well as taking into account the specific needs and financial legislation in each country.

Once complete, up to 75 copies will be delivered for free into every secondary school in each nation.

Why do we need the textbook?

Financial education is part of the national curriculum for every nation in the UK. Whilst integrated into each curriculum in different ways, it is an important part of secondary school education. Various pieces of research have identified that teachers’ confidence in delivering financial education is relatively low – there is little training provided to support this – and the degree to which young people receive financial education in school is hugely variable.

The textbook addresses this by covering key financial information in a relevant and engaging way for students. To accompany the textbook there will be an online teacher’s guide which will support teachers in each nation to use the textbook to enrich their own financial education provision in a variety of ways.

There is a strong need to help young people understand financial matters. For example, fewer than three in ten 14 to 17-year-olds plan ahead for how they’ll buy things they need, and one in ten 16 to 17-year-olds have no bank account at all. Gaining knowledge and confidence in financial issues is crucial to leading to better decisions now and in later life.


Martin Lewis, founder of MoneySavingExpert (though donating in a personal capacity) comments
:

“The pandemic has shown the lack of personal financial resilience and preparedness of the UK as a whole. Not all of that can be fixed by improving financial education, but a chunk of it can. Of course, we need to educate people of all ages, yet young people are professionals at learning, so if you want to break the cycle of debt and bad decisions, they’re the best place to start.

I was one of those at the forefront of the campaign to get financial education on the national curriculum in 2014, and we celebrated then thinking the job was done. We were wrong. Schools have struggled with resources and there’s been little teacher training. Something else was needed to make it easy for schools and teachers. So even though I questioned whether it’s right that a private individual should fund a textbook, no one else would do it, so I put pragmatics over politics and did it in 2018.

I’m delighted that now we’ve proved the success of that book in England. The Money and Pensions Service has agreed to team up to provide this much-needed resource for the rest of the UK’s nations – adding a rightful sense of officialdom to the whole project.”


Sharon Davies, CEO at Young Money and Young Enterprise comments
:

“We are thrilled that Young Money is able to develop the Your Money Matters textbook for every UK nation. Financial education is critically important for all young people, and it is fantastic that the difference this has already made within England can now be extended to Northern Ireland, Scotland and Wales. We look forward to working with our partners in each of these nations over the next year.”

Sarah Porretta, Strategy and Insights Director at the Money and Pensions Service comments:

“We know that learning about money when we’re young can have a direct impact on the ability to manage money later in life. However, too many young people are entering adulthood without being prepared for the money-related challenges that lie ahead.

The launch of the Your Money Matters textbook in Northern Ireland, Wales and Scotland is a vital step towards more teachers having the confidence, skills and knowledge to teach financial education. As part of our UK Strategy for Financial Wellbeing, we want to see a further 2 million children and young people getting a meaningful financial education so that they become adults able to make the most of their money and pensions.”

millennials
ArticlesBankingCash Management

How Millennials Can Get Ahead With Their Money

millennials

How Millennials Can Get Ahead With Their Money

Millennials are often painted as globe-trotting creatures that spend more money on avocadoes than their future. But that can’t be further from the truth. Millennials tend to be good savers, at least compared to other generations. Industry data shows that more than 70% of millennials have started putting money away for retirement and beyond.

“Millennials still struggle with investing. Often because they feel they don’t know enough about the market, but it’s never too late to invest in your understanding. It’s a great way to make your finances work harder for you,” says Granville Turner, Director at company formation specialists, Turner Little.

Here are some things you can start doing now, or preparing for, to set yourself up for a future of learning and investing:

 

Start early

The most apparent advantage millennials have over older generations is the luxury of time. Whilst everyone can weigh up the risks and rewards of investing, you’re particularly well-placed to see a solid return on your investments.

 

Challenge risk

When you invest money for longer, you can become less phased by the ups and downs and be able to view inevitable declines as opportunity instead. It’s better to look at yearly or even longer figures for a more accurate reflection of performance.

 

Put your money to work

Money that sits in a savings account, uninvested, is almost certain to lose value over time due to inflation, or a creeping higher cost of goods and services. If your money is growing or earning you a return, it’s going to help you reach your financial goals faster.

 

Start small

Many millennials believe you need to have a serious amount of money to start investing. But in reality, even small contributions can build over time. The important thing is to start early, and make it a habit.

If you’re ready to start having the right conversations about the future of your finances, get in touch with us today. With years of knowledge and expertise, we’ll be able to assist with any enquiries, no matter how complex.

UK credit score
ArticlesBankingCash ManagementWealth Management

Mapped: The UK’s Highest and Lowest Credit Score Hotspots

UK credit score

Mapped: The UK’s Highest and Lowest Credit Score Hotspots

The south is home to eight of the top ten areas with the highest credit scores in the country according to new analysis by Share to Buy.

Using the latest data from two major credit agencies, Share to Buy have mapped out the UK’s average credit scores by county showing where the country’s best scorers live, and who currently tops the national average of 570.

According to Google search data, interest around loans peaked between March and June 2020, with the phrase ‘can I get a loan’ rose by 11% compared to the same period last year, while the phrase ‘how to improve credit score’ was up by almost 27% since 2019.

UK credit score

The above image shows the England’s highest and lowest credit score hotspots rated out of 1699. 

Oxfordshire comes in at the top with a score of 1258, whilst Lancashire is bottom with 1132.

Top Five: Highest Credit Scores in the Country

Oxfordshire has the highest average credit score in the country, over two and a half times the national average of 570 and 154 points higher than Nottinghamshire, the area with the lowest credit scores in the UK.

 

Highest Credit Score Areas

Total Score out of a possible 1699

1

Oxfordshire

1258

2

Surrey

1255

3

Dorset

1239

4

Hampshire

1236

5

Berkshire

1236

Bottom Five: Lowest Credit Scores in the UK

All counties analysed have higher credit scores than the national average, but some areas in the UK lag behind their neighbours.

 

Lowest Credit Score Areas

Total Score out of a possible 1699

1

Nottinghamshire

1104

2

County Durham

1112

3

Leicestershire

1117

4

Yorkshire

1119

5

Lancashire

1132

What Impacts a Credit Score Positively

Several factors can impact credit scores throughout our lives. Registering to vote is an excellent place to start, as most credit scoring companies use this to help confirm your identity and address. Three ways to impact your Score positively include:

1. Set up direct debits where possible: Consistent, regular payments look good on your profile, so try to set up direct debits for as many payments as you can to ensure you pay on time and in full regularly. 

2. Maintain older accounts: The average age of your bank account is taken into consideration by credit scorers, so try to stick to one account that can be well managed over the long-term.

3. Don’t borrow more than you can afford: Always ensure you can meet minimum repayments easily, and pay off accounts sooner if you can. This shows you can manage within your set limits.

 

What Impacts a Credit Score Negatively

Credit scorers look for certain red flags when assessing your eligibility. Here are a few things you should try to avoid:

1. Missing payments: If this happens regularly, you could have a potential default flagged on your profile, and this can stick around for up to six years.

2. Lending beyond your means: Borrowing more than you can afford means sticking with repayments will be tricky, and when debt piles up, it can quickly become unmanageable. If you get a debt relief order or apply for bankruptcy, your credit score will be significantly impacted.

3. Regularly applying for credit: Each time you apply for credit, lenders will perform a ‘hard’ search on your credit history, and this is logged on your profile. If too many of these are logged, it could become a possible red flag.

 

Commenting on their average credit score analysis, Nick Lieb, Head of Operations at Share to Buy says:

“Many people have been asking us what constitutes a good credit score when trying to buy a home. The topic is more relevant than ever right now as we navigate our way through the uncertainty of the last few months, but with so many variables, and credit score companies all calculating scores differently, it’s not an easy question to answer.

We have combined data from two of the biggest agencies for our credit score review, and while it’s interesting to see the variation in numbers, average credit score is just one of several factors that play a part in your ability to get a mortgage. Therefore, even if your credit score is not where you want it to be, this shouldn’t be a deterrent in your search for a home”.

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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.

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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

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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.

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.”

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.

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.

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.”

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”.

bank of england
BankingCash Management

Traditional UK Banks Are Failing To Engage With Users

bank of england

Traditional UK Banks Are Failing To Engage With Users

One in five UK bank customers happy to see branches close in favour of improved digital experiences.

Boomi™, a Dell Technologies business, announced the results of its research on banks’ engagement with their customers. The research finds almost one in three (30%) UK adults consider the search for a better customer experience in digital interactions the main driver for changing banks.

The research quizzed 6,000 adults across the UK and Europe on the customer experience provided by their bank, and how the bank meets their needs.

Currently, nearly one in five (17%) UK customers believe their traditional bank feels ‘a bit old’ and they are looking for an improved digital performance. A fifth (22%) would even be happy if their bank closed its branches if it resulted in an improved mobile app / online banking experience. This figure rises to over a third (39%) among those aged 18-24, who also prioritise having a good banking app (58%).

The results showed traditional UK banks are not engaging with customers like they used to, and are failing to adapt and mitigate this, showing a deep disconnect between modes of communication chosen by banks (email 39%, mobile app 24%), versus those preferred by customers (phone 71%, email 69%, mobile app 62%). Most customers remain with their banking provider just through force of habit (39%), despite citing a good online banking experience (37%) and a good mobile banking experience (35%) as paramount.

The most dissatisfied customers are in the UK

On average, other European countries such as the Netherlands (33%) and Sweden (33%) are happier with their digital banking experience than UK customers (24%). The survey also found that EU banking customers (72%) don’t change banks, but add additional banks, with one in five holding a digital bank account with challenger banks like Monzo, Starling or Revolut as well as their ‘traditional’ bank account.

As of January 13th 2018, Open Banking has required banks to increase transparency and open APIs to enable third-party developers’ access to their account holder data and services. Just 21% of respondents, however, report their current bank offers open banking services, while 66% are not sure if it does – indicating a requirement for further education on the topic.

“New account holders won’t hold the same loyalty to their bank as previous generations have. New players entering the market have challenged the industry status quo thereby setting a new standard around the digital banking experience, forever changing customers’ expectations. Customers are looking for more than better products when choosing their next provider,” said Derek Thompson, VP of EMEA at Boomi.

“It’s therefore critical that banks assess their current IT ecosystem, ensuring they’re not held back by their legacy infrastructure and can quickly unite their digital ecosystems, deploying more agile technology to transform customer experience,” he added.

When asked why they bank with their current provider, a good all-round customer experience (44%) was the main reason cited by respondents, followed by having “always been with them” (39%) and “enjoying a good online banking experience” (37%).

aspen
BankingFamily OfficesPrivate Banking

Emotional Economics: The Challenges of Mixing Love and Money in Family Businesses and Legacy Families

aspen

Emotional Economics: The Challenges of Mixing Love and Money in Family Businesses and Legacy Families

Thirty years ago, the family business started by Daniel’s grandfather and great uncle was sold. Daniel and his three siblings received nearly sixty million US dollars each, as did each of their cousins. In 2016, Daniel, who had created a successful real estate and development business and on the advice of his financial and tax advisors, transferred to his four adult children twenty-five million US dollars each. The age range for the adult children spanned nine years, and one daughter worked in Daniel’s business. From the day gifting was announced it has resulted in family disruption. The surface discord resulted from a perceived economic injustice concerning “the time value of money” since all siblings received an equal share rather than a share based on their age. But the deeper disharmony stemmed from an unresolved historical emotional impasse between the father and one of the adult children dating back to the child’s teenage years. 

As Aspen Consulting Team, (ACT) we help members in family businesses and legacy families address the psychological dynamics of love and money, the interplay between emotions and economics, in the family system. 

Love and money are symbiotic and immiscible. They are connected, but do not mix naturally. The wrong mixture results in entitlement, disruption, and conflict; the correct mixture results in gratitude, opportunity, and resilience. The wealth connection in a family business and/or legacy family requires
Emotional Economics: The Challenges of Mixing Love and Money in Family Businesses and Legacy FamiliesMar19081
adult children to stay integrated in their family of origin much longer than typical families. The financial interdependence provides great benefits and at the same time creates complexities. A basic operating principle in our work is that the deeper the economic interconnections the higher the potentiality for emotional conflicts.

Every family business and/or legacy family is a system, a combination of small subset systems (individuals) connected to mid-size systems (family units), nested within larger systems (extended and generational family units), and linked to much larger systems (business and wealth management). Everything is connected and influenced by everything else. Within this system transitioning wealth takes place at two levels where the highest goal is to provide an inheritance without creating entitlement. 

• The “external” work is wealth creation and management. The task of continuing the vision set by the founders, operating with the values that made the family successful in the first place, protecting assets, defining financial goals, policies, and strategies, adjusting to taxes and market changes, understanding investments and ROI, implementing shareholder agreements and distributions, creating foundations and estates, and increasing the financial portfolio. Legal and financial advisors help with this work.
• The “internal” work is relationship harmony and management. The task of connecting and inspiring family members, strengthening the family culture, adapting to generational values, maintaining agreements, managing interpersonal stress, working as a team, responding to special demands, and enjoying the process as members of each generation face opportunities and transitions. This is the space in which ACT works.

There are always two parallel objectives in our work. The first objective is to create guidelines to “prevent the emotional tail from wagging the economic dog.” The second objective is to “not cut off the emotional tail.” Emotions, when accessed correctly, are powerful guides and cannot be ignored without damaging relationship harmony and overlooking important decision-making data. There are more emotions in an economic experience than meets the mind’s eye.

Emotions are actions, many of them are public and visible to others as they are expressed in body language or are verbalized. Feelings, on the other hand, are always hidden, unseen and perhaps unrecognized, to anyone other than their rightful owner. Feelings are the most private property we own. Emotions precede feelings, much to the common mistaken view. “We have emotions first and feelings after because evolution came up with emotions first and feelings later.”2 We, and our emotional system, are designed to solve the basic problem of how to continue life by being either competitive or cooperative and on the economic survival level this involves money. 

A study conducted with children, ages 3 to 6 years, showed that they did not understand the economic value of money, but they comprehended its emotional value. The first group sorted coins and banknotes, while the second group sorted buttons and candy. The children who worked with money demonstrated an increase in egotistical behaviors, were less eager to help the researchers, corralled more awards for themselves, were less likely to share their rewards with the other children, but were more persistent in completing individual tasks. Handling money reduced feelings of helpfulness and generosity while increasing perseverance and effort. These results are very similar to the results of a comparable study that looked at adult behavior. According to Agata Gąsiorowska, economic psychologist and a coauthor of the study:3

“Money is such a strong symbol in the world based on economic exchange that even small children are influenced by its significance. Money causes people to switch from the view of the world that values close relationships to the world that values market exchange, where the notions of ‘me’ and ‘my gain’ are in the center.”

Emotions, often considered “gut feelings” or conscious experience, really involve many systems
within our brain. Emotions create a burst of activity devoted to one thing, survival. Emotions trump non-emotional events, like thought, reason, and decision-making, even in the most rational analyst and business leader, because they are older in the human developmental process than economics. Emotions kept our ancestors alive long enough to create and give us an inheritance. Emotions, even those in our memory system, trigger certain features, feelings, and stimuli that are designed for homeostasis. 

Homeostasis is a self-regulating process by which our biological and psychological systems try to maintain stability while adjusting to conditions that are optimal for survival and success. In love and war, as in family and business, when homeostasis is successful, individual and collective life continues and flourishes. There are “natural triggers” like the sight, sound, and smell of a predator and “learned triggers” like the sight, sound, and smell of money that aid us in the pursuit for homeostasis.4

About 10,000 years ago, when the first farmer created more than his or her family could consume, the economy of the marketplace began. Before the agricultural age, our ancestors were daily hunters and gatherers, collecting and consuming without the ability or surplus to “store up” resources. When farmers took their extra bags of gain to the marketplace they needed a symbol of exchange. In time, this symbol became money. 

From that time forward, there are few interactions or decisions in a legacy family that do not involve money and a drive for the family to flourish. The recent college admission scandal in the United States is a brazen example. 

Money is an emotional trigger in families and how we react to it may be either positive or negative. In order to have a positive environment, family leaders must work toward stability between two social systems that continuously change as individuals change. The two social systems are the homogeneous system of being similar, the drive for family unity, and the heterogeneous system of being dissimilar, the drive for personal autonomy. These systems create interpersonal tension and ambiguity, along with creativity and drive that must be anticipated and proactively managed in a legacy family and family business. Wishing that anxiety or conflict would depart the family system or that love and harmony would show up is usually not enough. 

The tension among family members is from four psychological positions; Fight, Flight, Freeze and Flow . Three positions, Fight, Flight, and Freeze , are an extension of our evolutionary survival system. The fourth area, Flow, is the way to happiness and success.5 It requires psychological awareness, behavioral adjustment, and positive action on the part of family members and leaders and is difficult to create and maintain as family members grow and change.

• Fight: When both personal confidence (autonomy) and relationship security (unity) are low, one’s psychological position is hostile-dependent. This shows itself in behaviors of “moving against” others in the family or family system. The feelings and behaviors expressed are often confusion, anger, resistance, and opposition.

• Freeze: When personal confidence (autonomy) is low and relationship security (unity) is high, one’s psychological position is co-dependent. This shows itself in behaviors of “moving in” with others in the family or family system. What we often see is enmeshment, clinginess, entanglement, low selfesteem, fear, and anxiety.

• Flight: When personal confidence (autonomy) is high and relationship security (unity) is low, one’s psychological position is counter-dependent. This shows itself in behaviors of “moving away” from others in the family and/or family system. This is seen in acts of isolation and detachment, which can look like independence, if it were not for the financial dependence. 

• Flow: When both personal confidence (autonomy) and relationship security (unity) are high, one’s psychological position is inter-dependent. This shows itself in behaviors of “moving with” others in the family and/or family system. This is experienced as cooperation, maturity, accountability, and resilience. This, of course, is the most optimal position for family members.

For economic success and relationship harmony within a legacy family or family business, family members must purposefully address emotional historical impasses, resolve sibling rivalries, find comparable values, and work toward mutual goals. The psychological tools for doing this work are what we have termed “thick trust” and “mature adult communication.” 

Long-term success in family and business life requires a willingness to trust one another. The question is how we measure the trust. Scientific research shows that most people’s accuracy in discerning if another person can be trusted is imprecise. Much of the time, we have weak or no guidelines other than a set of emotional clues we have used in the past. Trust is dynamic—not static. The more we have at risk, the greater the need for trust. It is helpful to think of trust in three levels.6

1. One-Way Trust. Only one person has trust on the line. If the other person cannot be trusted to follow through on promises or commitments the relationship ends, as do any potential gains or losses. 

2. Mutual Trust. This is a reciprocity style, often called quid pro quo and “tit for tat,” for regulating equilibrium in transactional relationships. It is the most familiar type of trust in business, worked out among and between the same parties over a long period of time. Both parties play the roles of giver, taker and matcher, and exchange these roles for mutual benefit. When trust is broken, the relationships and transactions end.
3. Thick Trust. This is the highest form of trust and is required for family members to work together for the long-term. Family business relationships are complex because they occur across different settings and include a diverse series of interactions, both personal and professional. Action at one level may have ramifications at other levels, and every action has the potential for benefit or harm. Trust at this level, like in a marriage, requires the strength, resilience, and skill of mature character to overcome and forgive mistakes. 

Trust and trustworthiness are forms of social and relationship capital. A subjective way to think about your trustworthiness or that of another person in a family business is the following formula. Personal Character plus Competency Skills divided by Self-Interest plus Psychological Awareness plus Behavioral Adjustment determines Thick Trust.  

TT=[(PC+CS)÷SI]+(PA+BA)

A solid foundation of trust allows communication to be clear, constructive, and proactive, what we call Mature Adult Communication (MAC). We suggest that family members have a formal agreement to use MAC when important economic and emotional decisions need to be made. The first step in MAC is to clearly define the issue. Much of what is called “failure to communicate” is not having a clear and collective understanding of the problem or issue. The second step is to explore all the psychological dynamics, emotions, and feelings around the issue. This is often the hardest step and may require outside consultation. The third step is to have full commitment by all family members involved in the issue to the decision-making process (who, how, and when a decision will be made) and to make a clear and firm decision, with an evaluation process if necessary.

MAC eliminates what statistician and author Nassim Taleb calls narrative fallacy, “ a wrong ruler will not measure the height of a child. ”7 This is how we fool others and ourselves by a flaw in a story of the past, often emotional, which shape our decisions for the future. An accurate diagnosis of the problem sets the stage for the correct treatment. Decisions that address the wrong description of the situation can be made with a high level of determination, confidence, and authority, but will still be defective and require correction at a later time with greater expense. 

Creating, managing, and transitioning wealth within a family is a balancing act. It requires addressing the struggles not only among and between individual family members, but the tension created by money. The connections from our emotional system to our cognitive system are stronger than the connections from our cognitive systems to our emotional system. If this were not true, Daniel’s adult children would not have entered into the discord that has alienated and estranged family members.

aspen
Thomas Edward Pyles, MA & Edgell Franklin Pyles, PhD

Edgell and Tom, a father and son team, consult with family businesses on leadership strategies, particularly succession, and with legacy families on the complexities of mixing love and money. They are the co-authors of MAPS for Men: A Guide for Fathers and Sons and Family Businesses. Fourth generation business owner Charles S. Luck, IV, wrote, “MAPS for Men is one of the most comprehensive guides to families in business that I have ever seen.”

“Edgell and Tom weave a tapestry of insight for anyone seriously interested in building family relationship bridges that endure generational transitions.” Dennis Carruth, President, Carruth Properties Company. 

“I have clearly seen results. In all cases it is an inflection point to a fresh and positive perspective.” Chris Branscum, Family Office Advisor, JD, CPA.

“I have worked with Edgell for more than twenty-five years. He has provided counsel to our family, including our two adult sons, my business, and my YPO group.” James Light, Chairman, Chaffin Light Management Company. 

“Our family legacy is now in the fifth generation. I truly appreciated Edgell and Tom’s work. The lessons learned will bear fruit for many years and generations to come.” David Hardie, Founder and CEO, Hallador Management, LLC.

“The psychological and spiritual counsel offered by Edgell and Tom has proved very helpful to my family and business.” Jeff Wandell, Founder and CEO, Prairie Gardens and Jeffrey Alan’s. 

“Dr. Edgell came into my life in a time when I had failed and did not like myself in many ways. He helped me, at the age of 58, on a new journey of bliss.” M. Ray Thomasson, PhD, President, Thomasson Partner Associates, Past President, American Association of Petroleum Geologist, Past President, American Geological Institute.

“Edgell enriches lives of those he touches in a most profound way.” Paul Schorr, Past President, Chief Executives Organization.

Sources:

1. Erik Erickson, Identity, Youth, and Crisis.

2. Antonio Damasio, Looking for Spinoza: Joy, Sorrow and the Feeling Brain.

3. The study was conducted by an international research team, including: Agata Gąsiorowska, Tomasz Zaleśkiewicz, and Sandra Wygrab, SWPS University in Wrocław, Lan Nguyen Chaplin, University of Illinois, and Kathleen D. Vohs, University of Minnesota.

4. Joseph LeDoux, The Emotional Brain, The Mysterious Underpinnings of Emotional Life.

5. Mihaly Csikszentmihalyi, Flow, The Psychology of Optimal Experience.

6. Elinor Ostrom and James Walker, editors, Trust & Reciprocity, Interdisciplinary Lessons from Experimental Research.

7. Nassim Taleb, “A Map and Simple Heuristic to Detect Fragility, Antifragility, and Model Error.”

offshore
BankingCash ManagementOffshore

5 Reasons Why You Need To Bank Offshore

offshore

5 Reasons Why You Need To Bank Offshore

Offshore banking is often associated with negative connotations in regard to tax evasion and criminal activity, but this couldn’t be further than the truth. Despite what you may hear, offshore banking is completely legal. Put simply, they’re bank accounts held in a country other than the one you permanently reside in.

So why do you need one? James Turner, Director at York-based Turner Little, takes us through the benefits of banking offshore.

They’re not just for the ultra-wealthy

A common misconception is that offshore banks are just for ultra-high net worth individuals, who want to hide their money. Anyone can benefit from using an offshore bank account, depending on what their needs are. At Turner Little, we work with our clients to specifically identify their needs, and tailor our solutions based on our extensive experience and understanding of the banking industry.

They’re safe

Offshore banks are often considered to be politically and economically stable, with any associated risk considerably reduced. Using an offshore bank, based in a highly regulated, transparent jurisdiction that offers individuals an element of protection with a deposit compensation scheme, enables you to feel safe in the understanding that your wealth will be protected from the risks of capital accessibility restrictions, control and potential currency devaluation.

 
They provide flexibility and control

Banking offshore is completely flexible, often offering the same high level of service you would expect with traditional, onshore banking. It has always been a successful way of ensuring you maintain control over your long-term finances, which ultimately means you have greater freedom without depending on any one country. This convenience and flexibility is especially relevant for those who travel regularly, or have international assets.

You’ll always have easy access

Offshore banks have evolved over the last decade, and offer 24/7 online banking. This means that no matter where you are, you’ll always have easy access to your funds. Depending on which bank you choose, you’ll also have access to accounts in multiple currencies, allowing you to manage accounts and automate payments whenever you need.

You’ll be able to build on your investment portfolio

Many countries offer tax incentives for foreign investments and provide you with a wide choice of both funds and investments. There is no shortage of opportunities that are fiscally sound, designed to promote a healthy investment environment and, most importantly, legal.

m bills
BankingWealth Management

Slovenian mBills Pioneering with the Next Step in Mobile ePayments

m bills

Slovenian mBills Pioneering with the Next Step in Mobile ePayments

Innovation in the Fintech space can come in many forms. Whilst the idea of seamless mobile payments is far from a novel one, with many firms around the world moving to capitalise on a growing demand for accessible financial services, mBills mobile wallet has swiftly differentiated itself in the Slovenian market. Eager to find out more, we spoke to CEO, Primož Zupan to find out more about their expertise and services.

Fintech, long associated with swift moving developments and a certain innovative spark, has been the great driver of change in a comparatively sluggish market. Where brick and mortar giants have been slow to adapt, leaner more proactive entities have seen exceptional success through an ability to cater – intrinsically – to ever-changing consumer behaviour. This is where mBills have secured their success.

Indeed since 2015, mBills has been providing cutting edge solutions in the e-payment space. Through utilising mobile smartphone technology, they have, essentially, put the consumer at the centre of every transaction – giving them back control of their finances. This is especially important when considering the market that mBills primarily operates in – Slovenia. As Primož discusses, the novelty of mBills services helped them to quickly forge an impressive reputation in the industry, “mBills was the first mobile app on Slovene market to introduce mobile wallet solutions to its users and has since than implemented and significantly expended variety of solutions, constantly keeping the user and the best possible user experience in the centre of development.

“The vision of mBills is to give the user a complete control and overview of finances, so that paying, purchasing or ordering financial products will be at the user’s fingertips in one app, regardless of the bank, communications provider or operating system.” This user-centric ethos has resulted in mBills experiencing a burgeoning client base of consumers eager to make use of the company’s ‘next-generation’ approach to financial services – as Primož continues. “Our user database is steadily growing, and we have received huge positive feedback from both users and thought leaders of the industry. The ultimate vision of mBills is to give the user a complete control and overview of finances, so that paying, purchasing or ordering financial products will be at the user’s fingertips in one app, regardless of the bank, communications provider or operating system.”

“mBills mobile wallet is available to everyone and at any time – whatever the bank, operating system and mobile operator.”

Through their ‘all in one’ app, users can make quick and easy point of sale payments, pay monthly invoices, and manage their e-wallet, ensuring that budgets are followed, and finances are maintained. Moreover, through their partnerships with cash programs such as mintPOS, VASCO and microGRAMM, mBills has ensured their longevity for the years to come.

“As a fintech start-up MBILLS is basically run by a team of enthusiastic individuals who put their heart and soul in the product. We all share the same vision and complement each other to reach it faster, therefore staying ahead of the competition.”

All in all, mBills is a firm with the future firmly in mind. Even among the competitively crowded ePayment landscape, they have distanced themselves from the competition by prioritising the user experience. It’s a mindset that has proved to be the key to the firm’s enduring success and looks set to secure their longevity in the years to come.

Specifically, for Primož, the future sits with development of the app’s integration and features: “We plan to expend the variety of features in the app that will further cater to the needs of our users – making mBills the only application you need on your phone for keeping a track on your finances, enabling savings, donations, ordering financial products, supporting different loyalty programs, purchasing etc. Ultimately, we aim to fulfil our promise to become a ‘digital solutions’ provider. These multiple in-app solutions will simplify user’s everyday life. The future of mBills looks very exciting .”