Category: Finance

FinanceWealth Management

World Mental Health Day: Does More Money Correlate With More Happiness?

World Mental Health Day: Does More Money Correlate With More Happiness?

It’s an age-old question, does money really bring happiness? While many joys can’t purchased, money can give access to things that can lead to happiness.

Many of us strive to do better in our careers to obtain a higher salary, which we assume will lead to a more comfortable lifestyle – but do higher salaries actually equal happiness?

We firstly mined and then cross-matched ONS data from Average Weekly Earnings by Industry and National Well-being to understand if there were correlations between income and happiness. The infographic showing the results can be seen below:

info

Industries with Correlations Between Average Weekly Salary and Happiness

Happiness was calculated by asking adults aged 16 and over to rate on a scale of 0 to 10 where 0 was not at all and 10 was completely happy, how happy they were feeling.

The top-scoring industries with high correlations between happiness and average weekly earnings were as follows:

  1. Retail Trade and Repairs – 92.01%
  2. Accommodation and Food Service Activities – 88.91%
  3. Education – 88.59%
  4. Administrative and Support Service Activities – 87.4%
  5. Manufacturing – Engineering and Allied Industries – 86.3%

These industries showed strong correlations between earnings and happiness. This means that as earnings increase, happiness tends to as well.

The industries with the lowest correlations were:

  1. Mining and Quarrying – 22.15%
  2. Professional, Scientific & Technical Activities – 26.18%
  3. Manufacturing – Chemicals and Man-made Fibres – 33.22%
  4. Real Estate Activities – 33.68%
  5. Financial & Insurance Activities – 34.30%

While specific data as to why this happiness was so low or high was not provided, we can speculate. Many careers, such as mining and quarrying, can be highly stressful and demanding roles. Although these industries can often pay a decent salary, the satisfaction levels may not increase due to this as the intensity of these roles can often lead to strain regardless of the weekly earnings. The impact on the health of an individual working in mining and quarrying would be a good example of this.

This does not imply that industries with the highest correlations are not stressful roles, rather any unhappiness can be lessened with the benefit of a higher salary. Overall, skill, trade and administrative based jobs see higher correlations with happiness and weekly salaries.

Industries with Correlations Between Average Weekly Earnings and Anxiety

Anxiety was scored in the same way to happiness, by asking adults aged 16 and over to rate on a scale of 0 to 10 where 0 was not at all and 10 was completely anxious, how anxious they were feeling

The top-scoring industries with a correlation between anxiety and average weekly earnings were as follows:

  1. Retail Trade and Repairs – 74.52%
  2. Manufacturing-Other – 72.07%
  3. Manufacturing – Engineering and Allied Industries – 70.67%
  4. Education – 68.51%
  5. Accommodation and Food Service Activities – 68.04%

Although these are not as strong as the 80%+ correlations that are shown against happiness and average weekly earnings, there is still something to be taken from these results.

Happiness is strongest with average weekly earnings in retail and trade repairs, but this is also the highest correlation with anxiety. Most of the industries that reflect happiness, also reflect more anxiety.

Anxiety is not to be mistaken with unhappiness and you can have both alongside each other. We can hypothesise from these results that as wages increase, job responsibility increases and can cause more anxiety in the role.

Interestingly, health and social work scored the lowest correlation with anxiety at 53.40%. This industry is infamous for having high stress and anxiety levels but these results may show that anxiety does not increase with weekly wages.

 

Those That Reported as Living Comfortably or Completely Satisfied with Income Reported Higher Levels of Anxiety.

Respondent income was scored on the same scoring system as happiness (so is subjective to how happy they are about their level of income instead of actual income which is scored objectively in ‘average weekly earnings’) and was broken up into:

  • Completely satisfied
  • Mostly satisfied
  • Somewhat satisfied
  • Neither satisfied nor dissatisfied
  • Somewhat dissatisfied
  • Mostly dissatisfied
  • Completely dissatisfied

Managing financially also followed the same scoring system and was broken up into:

  • Living comfortably
  • Doing alright
  • Just about getting by
  • Finding it quite difficult
  • Finding it very difficult

Those who ranked themselves as ‘completely satisfied’ with their income showed a correlation with higher levels of anxiety at 65.68%.

Those who reported as ‘living comfortably’ reported an 89.97% correlation with anxiety.

With this, we can see that the higher the earnings, most likely from roles with higher responsibility and stress levels, the higher the anxiety.

Again, this does not correlate with happiness but we can conclude that for 65-80% of those who live comfortably or are completely satisfied with their income, the higher their levels of anxiety.

 

Correlation Between Bonuses and Happiness

Many companies throughout the UK provide bonuses to boost staff productivity and morale, however, it appears these bonuses may not be providing increasing feelings of happiness.

When workers were surveyed regarding if bonuses correlated with happiness, the correlation percentages were small and relatively inconclusive.

The industry with the highest correlation between bonuses and happiness was the construction industry, despite being the top scorer, showed at only 41%.

This could be interpreted in a few ways. Perhaps the bonus sums are not high enough to justify a change in attitude or income satisfaction may be high enough that some extra will not bring elation.

It could also be that performance-based bonuses can cause more stress in the workplace as employees push themselves to meet targets to achieve these. The outcome may not justify the means.

 

Income Satisfaction and Happiness

You may be forgiven in believing industries who previously reported a correlation between higher weekly and happiness would also report a high correlation with satisfaction with income and happiness.

Higher earnings do not necessarily equal income satisfaction. Those on more modest incomes can still report higher levels of income satisfaction and happiness.

The industries that had the largest correlations between income satisfaction and happiness are:

  1. Retail Trade and Repairs – 87.81%
  2. Administrative and Support Service Activities – 87.74%
  3. Education – 85.71%
  4. Accommodation and Food Service Service Activities – 84.87%
  5. Health and Social Work – 81.98%

The industries that had the lowest correlations between income satisfaction and happiness are:

  1. Mining and Quarrying – 9.28%
  2. Professional, Scientific & Technical Activities – 24.15%
  3. Manufacturing – Chemicals and Man-made Fibres – 29.18%
  4. Financial & Insurance Activities – 29.46%
  5. Real Estate Activities – 29.95%

Changes in income have very little correlation on happiness for mining and quarrying, likely because of the perceived poorer working conditions that remain regardless of income changes and the impact on the health of the worker.

Overall, retail trade and repairs show to have the highest correlations between income satisfaction and average weekly earnings, as well as income satisfaction and happiness but also showed high correlations with anxiety.

We can conclude from this, money can equal happiness but only in certain industries, as long as we are also willing to take on higher levels of anxiety.

boost economy
Finance

How The UK Furlough Scheme Boosted the Economy

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

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

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

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

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

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

Updates on the Scheme and How is it Changing

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

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

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

Benefits of the UK Furlough Scheme

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

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

How Does the Furlough Scheme Affect Pension?

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

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

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

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

Problems with the Scheme

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

saving pounds
ArticlesFinance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

cryptocurrency
Finance

The Emerging World of Cryptocurrency

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

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

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

How do they work?

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

What is a blockchain?

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

Why do cryptocurrencies matter?

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

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

Should I invest in cryptocurrency?

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

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

Bas NieuweWeme
FinanceWealth Management

Lockdown has crystallised what the S stands for in ESG

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

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

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

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

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

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

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

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

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

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

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

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

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

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

value stocks
ArticlesFinanceMarkets

These 5 stocks prove that value investing isn’t dead

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

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

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

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

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

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

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

Royal Mail

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

BT

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

Marks and Spencer

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

ITV

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

Capita

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

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

managing finances
FinanceRisk Management

How can tech help people manage finances during isolation?

Yiannis Faf, CEO, What We Want

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

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

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

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

  1. Management

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

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

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

  • Switching providers

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

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

  • Bargain hunting

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

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

  • Small acts of kindness

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

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

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

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

  • Safety

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

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

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

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

online broker
FinanceWealth Management

Quick Tips for Choosing the Best Online Broker

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

Know What you Need

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

Look at Credibility

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

Try Before You Buy

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

investgrowth
Cash ManagementFinance

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

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

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

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

 

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

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

 

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

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

 

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

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


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

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

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

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

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


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

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


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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

THE FUTURE OF TAX HAVENS
Finance

The Future of Tax Havens

THE FUTURE OF TAX HAVENS

 

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

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

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

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

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

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

car dealer
ArticlesFinance

How to Find the Cheapest Car Loans

car dealer

How to Find the Cheapest Car Loans

If you’ve found your ideal vehicle, whether it’s a dream premium sports car or a practical SUV to run the family around, you’ll now need to finance it. If you’ve got the savings to do so, great, but for the majority of you this will not be an option. You’ll need to look for finance options to do this instead, involving finding the right lenders to offer you the terms that you need. This should be a simple process but can be difficult due to the sheer amount of options out there. Here are some of the ways you can reduce your costs and find the cheapest car loans.


Compare Online

One of the easiest ways to find the best offers for a loan against a car is by using an online comparison tool. You should check how the offers are ranked, ensuring that you look at the deals that are best overall. The reason why you should do this is just because an offer has the lowest value repayments per month, doesn’t mean it will be the lowest value overall. You may have to pay a higher interest rate with lower monthly repayments. A comparison site will be able to speed up the process of searching for loans much quicker, as within a few clicks you’ll be able to see all the available offers for you on the market. This can include banks and online direct lenders so that you have a full overview. Filtering the results correctly will help you see the best overall deals, and with most online lenders, you can get quick approval and same day funding if approved.

 

Check Your Credit Score

Ideally, you’ll already know what your current credit score is, especially before you start applying for loans. You can do this by getting in contact with a credit reference agency who can show you what your rating is. Normally, you can see your score without charge, but if you want to see a more detailed report, you’ll need to either sign up or pay a one-off fee. If your score is currently showing good to excellent, you won’t need to worry too much about finding out the details of your score. However, if it is lower than expected or showing fair to bad, you should spend the time to find out what is causing this. You may already know what is causing this, such as multiple missed repayments or a default against your name. By finding out what the issue is, you can then work out if applying for further finance is going to be beneficial or only cause you to have a negative mark on your report.

 

Consider Leasing as Well as Car Loans

With so many loan options available, you may have overlooked the option to lease the vehicle you want. With a reported 9 out of 10 people confused over motor finance options, you may prefer to look at the available lease options. Leasing means you can choose a car to have over a 3-5 year period, paying monthly instalments, sometimes with a deposit upfront. At the end of the term, you can then give the car back and change to a different one if you prefer. Although you won’t own the car outright, it’s an increasingly popular way to afford a higher value vehicle. Monthly repayments are usually affordable, and you have the option of changing your vehicle to another new one every few years. 

 

Pay a Bigger Deposit

If you can afford to, you should definitely pay a bigger deposit when searching for car loans. If you can raise the funds, or preferably save up over a number of months, you can pay a larger upfront cost. This way, you can reduce your monthly loan amount considerably, saving huge amounts in interest. The idea is to not have to take out a loan over too long a period, meaning the amount of interest should be lower overall than if you kept it for an extra year or two. It may seem like you’re spending more money to begin with, but overall the total costs involved will be much less. If you can find lenders that will take a larger deposit you should consider doing so. Some lenders may not prefer this as they will not make as much interest on your loan, so shop around and ensure that the one you go with will allow this. Additionally, if there is an option to clear the balance quicker or earlier, you should go for loans that allow this. Keeping these points in mind will help to ensure you will always find the cheapest loans on the market for you.

Civil partnerships Exploring the financial benefits
ArticlesFinanceWealth Management

Civil partnerships: Exploring the financial benefits

Civil partnerships: Exploring the financial benefits

In October 2018, former Prime Minister Theresa May announced that the law would be changed to allow mixed-sex couples in England and Wales to enter civil partnerships. As of 2 December 2019, mixed-sex couples are now able to register their intent to enter a civil partnership, with the first ceremonies due to take place on 31 December 2019.

In recent years there has been a noticeable shift towards couples choosing to cohabit as opposed to entering into marriage. In fact, cohabiting couples continue to be the fastest-growing family type, with data from the
Office for National Statistics indicating that marriages between men and women recently hit the lowest rate on record. It remains to be seen whether the option to enter a civil partnership will influence the cohabiting trend. 

Those in mixed-sex civil partnerships will benefit from the same rights as married couples. The key difference is that a civil partnership is often free of any religious connotations and ideas of ownership and control – making it an attractive alternative for those who wish to legally recognise their relationship without aligning to a specific religion or tradition. 

Contrary to common belief, couples who live together are not entitled to the same protection or tax breaks as married couples and until now, couples who were opposed to marriage had no other option than to cohabit. Undoubtedly, the ability to legally recognise a loving and committed relationship between two people will always be the main motive for entering into a civil partnership.  Yet, there are several other reasons why couples may decide to legally formalise their union, one of which being the often-substantial financial perks which arise on the death of one of the civil partners.

From an income tax perspective, civil partners are entitled to the same income tax allowance as married couples. Often known as marriage tax allowance, if one lower earning partner is not utilising their entire personal allowance (£12,500 for 2019/20) they can transfer up to £1,250 of it to the higher earning partner, making a saving of £250 a year.

Similarly, from an inheritance tax perspective, civil partners will benefit from a complete exemption and the surviving partner will not need to pay any inheritance tax should they inherit the first to die’s estate. The surviving civil partner can also effectively double the amount that they can leave to family and friends on their death without having to pay inheritance tax, by transferring the first to die’s unused nil rate band. Should the first partner leave their entire estate to their surviving partner, it is possible to combine the nil rate bands – meaning that when the second partner dies an amount of £650,000 can be passed on tax-free. The same rules apply to the newer residence nil rate band and consequently, civil partners could ultimately benefit from a combined inheritance tax free allowance of up to £1million as of 6 April 2020 (subject to certain restrictions).

Civil partners can also inherit their partner’s tax-free ISA allowance, equal to the value or balance of any ISAs held by the first to die, by making use of the Additional Permitted Subscription (APS). This approach ensures that the tax-efficiency of the deceased’s ISA, which may well have been saved together by the couple, is not lost when transferred to the surviving partner.

Correspondingly, while the transfer of capital assets between cohabitees remains subject to capital gains tax on any gain in value they may have accrued, civil partners and spouses benefit from the fact that these transactions become tax neutral. This can present many benefits for civil partners, enabling them to manoeuvre funds and assets between them without the danger of generating an immediate charge to capital gains tax.

From a pension perspective, there are also tangible benefits to being in a civil partnership as both private and occupational pension schemes must offer the same rights to civil and married partners. Additionally, it may also be possible for a surviving partner to claim a higher state retirement pension, based on the deceased partner’s national insurance contributions. 

It is however important to remember that, just like marriage, there will be several administrative tasks to take care of when entering into a civil partnership. Any existing wills that may have been prepared before the partnership was recognised will be voided by the partnership itself and new wills should be drafted as soon as possible.

Equally, it is important to think about the assets that both parties will be bringing to the partnership and how they would be split in the event of the relationship breaking down. Those considering entering into a civil partnership should seek advice as to the suitability of preparing a prenuptial agreement to ensure that the intentions of both partners are recorded.

All couples, regardless of the legal status of their relationship, should consider their estate planning opportunities and how they can take advantage of sensible financial planning strategies to safeguard their estates for each other and their wider families. Ultimately, the extension of the law to allow mixed-sex couples to enter civil partnerships presents cohabiting couples with far greater flexibility and autonomy, while equally offering an opportunity to secure financial protection.

 

Matt Parr is an associate in the private client team at law firm, Shakespeare Martineau

 

engineering
FinanceTax

UK Engineering Companies Are Potentially Missing Out On £10 Billion Of R&D Funding Each Year

engineering

UK Engineering Companies Are Potentially Missing Out On £10 Billion Of R&D Funding Each Year

 

Engineering companies in the UK are potentially missing out on over £10 billion of R&D funding each year, new research has revealed.

The study[1], commissioned by innovation specialists MPA for Advanced Engineering 2019, found that one in five (21%) innovation active engineering firms are not taking advantage of the government’s R&D Tax Credit scheme, which allows companies to claim back up to 33p for every £1 spent on R&D activity.

On average, engineering companies invest £386,000 a year on R&D activity, meaning they are potentially able to claim £100,360 in funding[2]. With over 100,000[3] UK engineering firms not claiming, despite describing their company as innovation active, a staggering £10.2 billion is going unclaimed each year.

Reasons for not claiming the funding vary, but the most common answer given by engineers is that they don’t believe their companies are eligible (10%).

However, the research revealed that many engineering companies probably qualify without them realising. Some examples of indicative qualifying activities are, if your company develops new processes to improve efficiency, quality or performance; overcome unplanned technical difficulties or create bespoke solutions for clients.

Two-thirds (67%) of workers think that their firms are ‘innovation active’, which is the most accurate indicator that a company is eligible for the R&D Tax Credit scheme. Despite this, only a third (37%) say that their companies claim the available funding.

Another barrier blocking engineers from claiming is a lack of awareness about the initiative. Nearly a quarter (24%) of the surveyed engineers who aren’t claiming admitted that they didn’t even know that the scheme exists. Even among those who think they are innovation active, one in fourteen (7%) said that they were completely unaware of R&D tax credits.

While many are yet to take advantage of the scheme, engineering companies in the UK are planning on investing heavily in research and development. Over the next year, over one in five (22%) businesses in the industry are planning on spending over £1 million on innovative projects.

Nigel Urquhart, Senior Technical Analyst at MPA, said: “Engineering companies in the UK are respected all over the world for their quality and innovation, but a worryingly low number of them are claiming the R&D funding they are entitled to.

“Our research has highlighted that more work needs to be done to raise awareness of the R&D Tax Credit scheme, as these innovative companies could save themselves hundreds of thousands of pounds. This money could then be reinvested to fund further innovation, which would ensure UK engineering stays at the forefront of the industry.”

 

To see whether your company is eligible for the R&D Tax Credit scheme, visit:  https://mpa.co.uk/services/rd-tax-credits/

[1] Survey of 250 UK engineers conducted by The Engineer on behalf of MPA in September 2019

[2] R&D tax credits calculator: https://mpa.co.uk/services/rd-tax-credits/

[3] Office for National Statistics: ‘Engineering Industry in the UK’ (December 2018) – there are 721,940 active engineering enterprises in the UK. 485,143 (67%) of these are innovation active. 101,880 (21%) of these innovation active companies are not claiming R&D funding: //www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/adhocs/009383engineeringindustryintheuk

R&D
ArticlesCapital Markets (stocks and bonds)Corporate Finance and M&A/DealsTaxWealth Management

Meet the company recouping hundreds of thousands for UK business in R&D tax relief

R&D

Meet the company recouping hundreds of thousands for UK business in R&D tax relief

 

While growth in R&D tax relief claims has increased by 35% annually since inception in 2001 to over £4bn last year, and has already returned £26bn in total tax relief to businesses across the nation, the scheme is yet to be fully utilised by UK business according to R&D tax credit specialists RIFT Research and Development Ltd.

RIFT secures each client an average of more than £60,000 in tax relief due to R&D across sectors such as construction, manufacturing, agri-foods, ICT, advanced engineering, business and finance, mining and even education, but believe many are still failing to take advantage of the financial benefits. 

Introduced by the Government, the scheme is almost two decades old and encourages scientific and technological innovation across a plethora of UK business sectors. 

 

What is it?

It’s essentially Corporation Tax relief that when utilised, could reduce your company’s tax bill and in some cases, it can even result in you receiving payable tax credits.  

A company can qualify for R&D relief when they carry out research and development within their respective sector with the intention of advancing the overall knowledge or capabilities of science and technology within that field.  

 

R&D tax relief schemes

There are currently two R&D tax relief schemes in operation although the most beneficial is that aimed at SMEs which considers companies with a headcount of less than 500, a turnover of £86.3m or a balance sheet total below £74.3m – learn more.

If you want to see if your company qualifies and the types of costs you can reclaim, RIFT can also help you – learn more.

 

R&D sector success stories

RIFT has worked with countless companies who weren’t just unaware of R&D tax relief but had been incorrectly told by their accountants that they didn’t qualify.   

Here are some of the highest value claims.

Automotive: RIFT worked with an automotive industry tool manufacturer and identified £900,000 worth of qualifying costs, of which, the company was able to recoup £180,000 worth of previous costs.

Construction: RIFT worked with a leading construction company and identified £2m worth of qualifying costs for ongoing innovation across the entire business. Their accountant had identified just £50,000 worth of qualifying costs relating only to some new software they had developed and failed to recognise the gravity of the work they were doing within the sector. 

Architecture: Working with a private limited company practice within the architecture space, RIFT identified £1,000,000 worth of qualifying costs per year, after their accountant had told them their activities didn’t qualify as R&D.

Software: Thanks to RIFT, a client developing software was able to claim back a huge £750,000 from HMRC after £2.3m in qualifying costs were identified.

 
Head of RIFT Research and Development Limited, Sarah Collins commented:  

“Across the UK we have such a wealth of great businesses driving their respective sectors forward through research and development and it’s only right that they should be recognised in one form or another for doing so.  

However, time and time again, we see companies who are really leading the charge but are failing to maximise the return on their efforts by neglecting R&D tax relief. Some aren’t aware of the scheme full stop, while some are, but just didn’t realise that the innovative work they’re carrying out qualifies.  

Particularly now, while many SMEs are struggling with the potential implications of leaving the EU and the reductions in funding this might bring, R&D tax relief provides a very real, Brexit proof opportunity to maximise financial viability.”

Cyber threat
Corporate Finance and M&A/DealsFinance

EfficientIP and IDC Report Reveals: Financial services organisations suffer $1.3M cyber attacks

Cyber threat

EfficientIP and IDC Report Reveals: Financial services organisations suffer $1.3M cyber attacks

 

88% of financial services organisations surveyed experienced DNS attacks in the past 12 months.

EfficientIP, leading specialists in DNS security for service continuity, user protection and data confidentiality, revealed the financial services sector is the most targeted industry in its 2019 Global DNS Threat Report with 88% of FS respondents experiencing under-the-radar DNS attacks in the past year.

With 900 respondents from nine countries across North America, Europe and Asia, the report found financial services organisations experienced an average of ten attacks a year, a 37% increase from last year. In addition, 47% of financial services organisations were subject to DNS-based phishing scams.

Last year, a single DNS attack cost each financial services organisation $924,390. This year the research shows that each organisations on average spent $1,304,790 to restore services after each DNS attack, the most out of any sector and an eye-watering increase of 40%.

Rising costs is only one of the consequences DNS attacks caused for the financial services sector. The most common impacts included cloud service downtime, experienced by 45% of financial organisations, and in-house application downtime (68%).

While 65% of financial organisations are either already using or planning to incorporate zero trust architecture, they still appear to be behind the curve when it comes to making use of DNS analytics for enhancing overall network security. Just over 67% perform no DNS traffic analysis for their internal threat intelligence program, and 43% have adopted very little or no automation at all in their network security policy management. This still leaves the financial services sector vulnerable to DNS attacks, which appear to be on the rise. On the positive side, financial services organisations do see real value in using machine learning to bring predictive security into their capabilities. 90% of respondents see this as particularly useful for detecting unknown (“zero-day”) malicious domains.

David Williamson, CEO, EfficientIP, commented: “Financial services organisations have always been the gate-keepers of customers’ money, providing vital services people expect to be able to use all day and night. With so much at stake, the networks of financial services organisations are a predictable, prime target for DNS attacks.

“What is a surprise is these organisations are not amplifying their security measures. They are big targets with costly breaches coming thick and fast.
As our research shows, DNS security is a business imperative for the financial sector if hackers are to be kept at bay and to prevent services from caving in on themselves.”

santander
ArticlesBankingCash ManagementFinanceTransactional and Investment Banking

Santander Consumer Finance is expanding its online loan application platform across the UK

santander

Santander Consumer Finance is expanding its online loan application platform across the UK delivering an end-to-end digital solution

 

Santander Consumer Finance (SCF) is expanding its online loan application platform across the UK delivering an end-to-end digital solution for dealers further strengthening its commitment to growing the market.

The national launch of Apply Online which offers e-sign capability means customers can calculate the finance they need, receive immediate approvals and sign documentation at home or in showrooms ensuring that dealers remain in control.

Delivery of the end-to-end digital process has taken nine months since the launch of SCF’s online calculator in December and involved substantial financial and resource investments at SCF.

The calculator has proved popular – customers have generated more than 4.1 million quotes and 51 dealers have signed up for the calculator. Apply Online, which was successfully tested over the past month, is now available to all dealers using the calculator.

SCF’s digital solution is integrated into dealers’ websites and installation takes minutes for dealers who already have the calculator. SCF is providing additional support to help dealers make the most effective use of the digital proposition.

The system is designed to provide a simple, fair and personal experience for car buyers and builds on the success of SCF’s partnership with Volvo Car UK launched in April.

Stewart Grant, Santander Consumer Finance Commercial Director said: “We’ve worked hard to design a market leading end-to-end digital solution which ensures   dealers retain control of customer relationships while benefiting from our brand power.

“The financial investment and the time spent by our team in developing and delivering the digital transformation emphasises how committed we are to support our dealer network in maximising sales and profitability within the growing digital market.”

Dealers interested in using the calculator or wishing to register interest in the Online Application platform should contact their Business Development Manager or visit: www.santanderconsumer.co.uk/dealer

The importance of sports to the UK economy
ArticlesBankingFinanceFunds

The importance of sports to the UK economy

The importance of sports to the UK economy

The importance of sports to the UK economy

 

There’s no doubt that the summer of 2018 will be difficult to top! With an uncharacteristically hot summer making for the perfect backdrop to all the barbecues we ever dreamed of, alongside an unpredictably fantastic performance in the World Cup for the English football team that single-handedly boosted the nation’s spirits even further, it was by all accounts a cracking summer. 2020 is set to bring us another worldwide celebration of sport with the Olympics in Tokyo, so you’d be forgiven for thinking 2019 might end up being something of a lull for the sporting world to recharge.

Not so. In fact, some news correspondents are forecasting another great year for UK sports. In particular, cricket is set to be the focus of the year while men’s football takes a backseat, as both the Cricket World Cup and the Ashes series are to be held in England.

Even a ‘quiet’ year has so much going on in the sporting world then. With that in mind, just how integral is the sporting industry to the overall UK economy? In this article, we will cover how the sporting industry supports the UK both in a financial capacity and beyond.

Input to the economy

If you’re not into sports (and perhaps even if you are), the wages enjoyed by sporting professionals might seem ludicrous. In particular, the six-figure weekly wages of top-league football players is a point of contention for some. What are we, as a nation, getting in return for such a cost?

Well, beyond the enjoyment of watching sport, the industry supports a huge part of the UK economy. According to CareerBuilder, the sports industry tallies up a whopping £23.8 billion annually for the economy. Let’s put a little context on that figure with a look at other contributors to the economy. The tourism industry, which the sporting industry technically supports as well thanks to the number of sports fan tourists seeking out games to spectate, brings in £24.5 billion for the economy every year.

Meanwhile, the Royal Family brings in around £1.8 billion to the UK economy each year, depending on the number of royal weddings of course! But this is outstripped by even one single contributor of the sporting world, with cycling drawing in £3 billion each year on its own. It’s a clear contrast that shows just how important the sporting industry is to the nation’s economy, standing toe-to-toe with the tourism industry.

Input beyond finances

Naturally, the sporting sector brings in benefits for the UK beyond financial too. There’s the sense of community it fosters, such as the nationwide burst of pride we all felt, sports fans or not, when England performed so well in the World Cup! This sense of social value also extends to supporting skills outside of sports — for example, numeracy skills in underachieving young people were seen to increase by 29% when becoming a regular sports participant.

Then, there’s the employment side of things. The sporting industry supports over 400,000 full-time positions in England alone.

Plus, there’s the obvious health factor. Participating in sports, which is undoubtedly spurred and motivated in many ways by fans looking up to athletes they admire, brings a much-needed boost to the nation’s health.

Protecting the commodity

The pitches

With such a strong presence in the UK’s financial stability, what is being done to ensure our sports capabilities are world-class? Well, for one, we have to maintain the best venues for both the players and spectators! A poor pitch can have a huge impact on the game it is hosting. Take Euro 2016, for example: while that year’s unusually wet summer left the French pitches in a terrible state, the UK’s football pitches were kept in prime condition. Of course, wet weather is the very foundation of which groundkeepers are experienced in here in the UK! With hybrid turf technology, undersoil heating, and pop-up sprinklers, our fields are ready for any eventuality. Keeping the soil warm ensures the grass doesn’t fall into its dormant, brown hue and stays green all winter.

As well as keeping the grass warm to avoid it going dormant, adequate draining is also needed to keep the grass from succumbing to the usually damp and dreadful British weather. One such method utilised by football pitches is pipe and slit drained pitches, which consists of a layer of firmed topsoil, stone back-fill, subsoil, and a perforated plastic pipe, along with a slit drain and sand blinding layer to allow water to drain down and away.

Sports funding

Of course, it’s not just football being maintained to such a high level. Thanks to UK Sport investing in a range of sports with money from the National Lottery and Exchequer income, other sporting disciplines are also flourishing on UK soil.

Particularly with the run-up to the Tokyo Olympics in 2020, current funding is generous indeed. Example figures include £29,624,264 to cycling, £9,838,913 to taekwondo, and £16,457,953 to gymnastics.

The world of sport is hugely beneficial to the UK, in terms of economy and society. The sector sees a huge amount of funding and manpower, but for good reason, with the industry bringing in so much and putting the UK in the global eye as a key sporting participant.

Climate strikes
FinanceGlobal ComplianceNatural Catastrophe

Climate change transforms high finance’s relationship with society

Climate strikes

Climate change transforms high finance’s relationship with society

 

Extinction Rebellion’s city centre disruptions and Fridays for Future’s well attended school strikes across Europe inspired by Greta Thunberg have placed climate change firmly in the public consciousness. Now more than ever before, the question is not if something should be done, but when and how. Robert Blood, managing director of NGO tracking and issues analysis firm SIGWATCH, explains how this is already forcing the financial sector to take more decisive action.

In June 2018, Legal & General told Japan Post Holdings (JPH) that it was dropping the company from its $6.7billion Future World index funds. It added that any of its funds that still held shares would be instructed to vote against the re-election of JPH’s chairman. L&G justified the move by saying that JPH had “shown persistent inaction” to address climate risk.

L&G is not alone in taking action on climate risk. BNP Paribas, AXA, Allianz, RBS, Munich Re, ING, Rabobank, Standard Chartered, Barclays and HSBC are all now committed to exiting deals and investments concerned with coal mining and coal-fired power. In the U.S., despite (or arguably because of) an administration that is openly sceptical of the need for climate action, many of the largest banks including JP Morgan Chase, Bank of America, Wells Fargo, Citi, Morgan Stanley and Goldman Sachs have all announced coal exits, as they have begun to do in Australia. Japan’s largest banks and insurers, and their equivalents in Singapore and China, have come late to the divestment game but they too are finally rolling out new coal pledges.

Revival of campus activism

These moves are the consequences of growing pressure from stakeholders, driven by activist groups, for almost ten years. It was in 2013 that US student environmental groups first demanded college endowment and pension funds sell off their shares in fossil fuel-related projects. Their carbon divestment campaign was modelled on the Apartheid campus divestment battles of the 1980s, which aimed to undermine the economy of South Africa by forcing U.S. firms and investors to sell off South African assets. Congress imposed investment bans too. Until the Klerk-Mandela settlement of 1993, South Africa was for almost a decade a pariah state for investors.

While the priority for campaigners has been to drive out coal, the pressure on carbon does not stop there. Under the slogan, ‘extreme carbon’, campaigners have extracted concessions from leading financial institutions on Canadian oil sands, Arctic and deep-sea drilling, shale gas, and related infrastructure such as LNG terminals and pipelines. As these specific sources become demonized, conventionally produced oil and gas becomes more and more dubious. Divestment on the basis of increased risk has a tendency to become a self-fulfilling prophecy. When money flows out of an asset type, the remaining investors are by definition exposed to increased financial risk, and this in turn stimulates additional cycles of divestment. There is a reason why fossil fuels are commonly described by climate campaigners as ‘stranded assets’. Even giants like Shell are now openly reconsidering their futures.

The success of campaigners in getting their arguments heard and taken seriously is a relatively recent phenomenon. In fact, one of the most striking developments in the financial sector of the last decade has been the ‘mainstreaming’ of environmental and social responsibility standards in investing. Until relatively recently, these were the preserve of SRI and ethical funds, often funds that had been set up at the behest of well-funded environmental groups who insisted on strict exclusion criteria.

Now, environmental and social governance (ESG) is embedded in standard fund management practice, helped by pressure from political stakeholders and customers, particularly in relation to the institutions’ own funds, to take intangible risks such as human and indigenous peoples’ rights seriously.

Financial institutions’ increased willingness to listen

The financial crisis of 2008 also played an important part. With the reputation of the financial sector in tatters, leading institutions made a conscious decision to prove their ‘value to society’ by adopting ESG, and engaging with NGOs in a far deeper and more open way than ever before.

Campaigning NGOs have not been slow to exploit investors’ new-found willingness to listen, to push their wider agenda on a wide range of environmental and social concerns. These include human and indigenous rights, sustainability, corporate environmental responsibility and benchmarking, labour standards, animal rights, even the ethics of investing in industrial scale agriculture.

As NGOs become more active and more influential, their campaigning can provide an early warning system for emerging issues for investors. On plastics and shale gas (fracking), campaigning levels rose significantly ahead of public concern, anything up to 12 months prior. This is not very surprising, since activists are effective at getting media attention and this feeds into public awareness. We are now seeing this with ‘green vegetarianism’ – the switch away from meat for environmental reasons like deforestation and climate change (see chart 1). All these correlations show how campaigners can ‘make the weather’ politically.

It will become more important for global financial institutions, as they develop ever more expansive policies and standards under pressure from NGOs and other stakeholders, to track the long-term implications of the criteria they are enforcing.

Pension funds linked to ‘politically sensitive’ workforces such as public sector employees, health and education, are especially vulnerable to this kind of pressure. The campus campaigns of the carbon divestment movement quickly moved on to targeting staff pension funds once they secured the support of a significant number of faculty. In Denmark the state pension funds have been called out by Greenpeace on the same issue. In Sweden, Greenpeace launched a boycott of payments into the mandatory state pension scheme AP3 until it agreed to divest from all fossil fuels and related infrastructure projects.

ESG goes mainstream

With leading financial institutions engaging seriously with campaigners and their concerns, doing nothing is not an option. As more major mainstream funds are managed on ESG principles, investment managers and institutions increasingly have to justify to their peers why they are not doing the same, rather than the other way round. It is no longer a question of, Are the NGOs being fair, but rather, Do the NGOs have the ear of our stakeholders, and are they already influencing rival institutions? They may be small and apparently insignificant compared to a bank or investment fund, but NGOs have become critical players in transforming what society expects from finance.

Robert Blood, managing director of NGO
Robert Blood, managing director of SIGWATCH
CAR INSURANCE
ArticlesFinanceInsurance

Six of the best ways to reduce your car insurance

CAR INSURANCE

Six of the best ways to reduce your car insurance

 

Are you aware of all the ways you can potentially reduce your insurance outlay? Here, we look at the biggest contributing factors.

We all know that cars can be expensive — and not only to purchase. There are many extra charges that you may face as a car owner, including MOT charges, road tax and fuel allowance for things like your daily commute.

There are also the hidden costs to consider if your vehicle unpredictably breaks down. However, one of the biggest expenses you’re likely to face is your annual insurance just to drive your car. In Britain, there are over one million uninsured drivers on our roads, which in turn increases premiums for those who do insure their vehicles.

For many people, a yearly payment is too big of a lump sum, so they must break it down into monthly payments. But, are you aware of all the ways you can potentially reduce your insurance outlay? Here, we look at the biggest contributing factors.

Shop around

It goes without saying that it’s important to consider your options. Like any service, you should do your research. Many insurance companies will attempt to ‘better’ the offer on the table by a different provider, so be sure to know what you want and don’t just settle with the first, or your current provider. However, remember that cheaper isn’t always better. Check what is included before agreeing to a cheaper cover.

Reduce coverage on older cars

While you may be tempted to always choose comprehensive cover for your vehicle, be aware that choosing this coverage for particularly old vehicles may not be cost effective. For example, if your car is worth £1,000 and is in a crash, there’s a possibility that your insurer will just write your vehicle off. Therefore, if your insurance is costing approximately £500 for comprehensive cover, it may not make financial sense to purchase it. Comprehensive cover is most cost effective for those with new cars, or cars that have held their value.

Have a solid credit score

Having no claims bonuses are obviously a great help when it comes to lowering the cost of your insurance. But, were you aware that your overall credit score can also have a huge impact on your car insurance? That’s because insurers take in the impression that if you’re responsible in your personal life and with other financial situations, you are less likely to file a claim.

Include a black box monitor

Some insurers will lower the annual cost of your cover if you fit a small box in your car that can help insurers to track your driving methods. This will include aspects such as braking and speed via GPS, as well as taking into account the time of day you drive. This method, also known as telematics insurance, is effective for young and inexperienced drivers, those who have a low annual mileage, or older drivers who want to prove that they’re safe behind the wheel.

Add other named drivers

It may seem strange that more drivers being named on your insurance will bring down your costs, but that’s the case for many quotes. This is because it helps the insurer tie more people into their service. This works well for younger drivers who would usually be charged an extortionate amount. Being named on their parents’ insurance can help reduce their outlay.

Increase your excess

Your premiums are based on how much your insurer is likely to pay out if you claim. By choosing to pay a higher voluntary excess, you will lower the cost of what the insurer will have to pay towards the claim. Therefore, this can lower your overall insurance. However, you must ensure that you choose an excess you will be able to afford and make sure the excess doesn’t exceed the overall value of your vehicle.

While it’s a necessity to be insured when on the road, you don’t have to pay over the odds to do so. Following the above guidelines can help you reduce your overall payments — leaving you with extra money to spend elsewhere.

wealth management
Corporate Finance and M&A/DealsHigh Net-worth IndividualsWealth Management

Report calls for major digitisation of the wealth management sector but warns 84% of projects could fail

wealth management

Report calls for major digitisation of the wealth management sector but warns 84% of projects could fail

Over £20 billion of high net worth individuals’ investable wealth could be passed on to their loved ones every year, but as many as 80% of wealth manager’s don’t have an existing relationship with these beneficiaries. Digitisation is key to addressing this challenge.

A new report from Nucoro, a B2B fintech providing Wealth Management as a Service solutions, says traditional wealth managers need to totally re-engineer their operations if they are to prosper in the future. However, it warns that on average around 84% of companies generally fail at digitisation projects. 

The report entitled ‘The Future Challenges for Wealth Management’, says wealth managers and financial services companies in general need to prioritise and redefine what can be expected and achieved from digitisation, and make increased use of partnerships with expert solution providers.  

Nucoro says the digitisation of the wealth management sector needs to go beyond simply moving physical into digital, and fundamentally rethink products from the conceptual to execution. It says this is being driven by the rise of automation facilitating scalable growth, and the transformation of customers where their expectations, needs, behaviours and demographics are changing.

To illustrate this point, Nucoro estimates that on average, for the next decade over £20 billion of high net worth individuals’ investible wealth will be passed on to their loved ones every year, but as many as 80% of wealth manager’s don’t have an existing relationship with these beneficiaries. Many of these beneficiaries will be millennials who make great use of technology in all aspects of their lives, including managing their finances.

Nikolai Hack, the COO and UK MD of Nucoro commented: “As with any investment in a financial business, a central motivation should be to ultimately produce outcomes that can benefit customers. Adopting bolt-on enhancements like digital customer experiences or automations for back office functions are the best routes to upgrading the services to existing and potential clients due to their accessibility, scalability and affordability.” 

“Wealth managers must embrace technology. The industry is heavily regulated, and it therefore faces a large administrative burden, but technology can minimise the time and resources spent on tasks that are very basic but high in volume.”

The report highlights several key trends that innovative wealth managers need to address if they are to be successful in the future:

The growth of digital wealth management:

The report says it is now realistic to consider direct to consumer robo-platforms as legitimate industry challengers. By the end of 2018, they were managing $257 billion, and this could grow to $1.26 trillion by 2023. 

The rise of fintech new entrants:

While tradition still reigns supreme in wealth management, there are major indications that the next decade will see technology driven services enjoy strong growth. Taking an example from another industry, looking at the banking and payments market in Europe – new entrants (including challenger banks, nonbank payment institutions and big tech companies) that entered the market after 2005 now amass up to one third of new revenue, despite only taking 7% of the overall revenue.

Growing advice gap:

The cost of financial advice is demonstrably pricing out large sections of potential clients. A report in 2018 found that more than 40% of financial advisers has been forced to review their charging structures in the first half of 2019. This is a huge threat and opportunity for wealth managers

Wealth passed on to millennials/changing client needs

Beginning around 2030, an estimated $4 trillion of wealth is going to be passed on to millennials in the UK and North America from their parents. However, only some 20% of UK advisers currently have an existing relationship with their current clients’ beneficiaries, many of whom are millennials. This means that digital and mobile first access will become more universal as the younger generations mature. Digital finance is a highly effective engagement tool for younger generations.

Nikolai Hack said: “An unprecedented transfer of wealth is expected to be served by a shrinking pool of advisers. They will be dealing with a client base that is likely to need them to become more flexible and deliver a more modern and personal service.”

“This could mean more agile tech-driven firms will need to fill the gap. Alternatively, the existing firms could push to streamline their operational functions and manage overheads – cost cutting essentially – while handling an influx of orphaned clients at the same time.”

“For the next generation, their needs and expectations are centred on interacting with their finances via digitally accessible platforms that link their money, their everyday lives and their goals to the future. Greater customisation of service levels will also be key here.”

The reach of regulation

The number of individual regulatory changes that regulated organisations must track on a global scale has more than tripled since 2011. Tech can play a key role in helping wealth managers with this area of their business.

Conclusion

Nikolai Hack said: “For wealth managers, technology and digitisation can be applied across all functions, from onboarding clients and portfolio management to operations and reporting. It also enables wealth managers to become much more agile and focused on the needs of clients. However, wealth managers need to find the right balance between digital and human services and the key to success will be how wealth managers combine these two in order to meet the challenges now and in the future.”

From client onboarding to portfolio construction through to billing automations, Nucoro combines all the tools required to build the next generation of wealth management propositions. To help the wealth management sector move forward, Nucoro offers a new technology-based foundation built without legacies – a complete overhaul to the models of client service and accessibility. Nucoro’s is a radically different approach to the relationship between technology providers and the organisations adopting their solutions – in short, they can provide the new engine to power the next generation of financial services.

Whilst Nucoro has recently launched to the public, the technology behind it powers the retail investment platform, Exo Investing – a fully automated, AI-powered wealth management platform. 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 businesses in the wealth management sector that have the ambition to truly innovate and future-proof their businesses – and are struggling to realise their digital ambitions alone.

Hyper short-term investments what are millennials investing in
FinanceTransactional and Investment Banking

Hyper-short-term investments: what are millennials investing in?

Hyper short-term investments what are millennials investing in

Hyper-short-term investments: what are millennials investing in?

Despite the stereotype of the younger generation being frivolous with their money, it seems they are actually one of the savviest generations when it comes to turning a profit on their own. While they are hesitant to invest in stocks, millennials and generation Z are tapping into the hyper-short-term investment of fashion and beauty. For example, there’s a huge market for buying and selling trainers at the moment, or in vintage fashion.

In particular, limited-edition trainers have a huge appeal across the world, with people willing to camp outside of stores to pick up a particularly lucrative pair.


Art flipping

According to Business Insider, rich millennials are snapping up art as financial assets rather than as part of a potential collection — 85 per cent of millennials purchasing artworks say they are aiming to sell in the next year. Buying art with the intention of selling it on quickly is known as art flipping, and it’s something of a controversial subject in the art world. There are some who consider the process of art flipping as a potentially devaluing practice that harms the artist and their work.

The process can also seem more logical than artistic too, as many such purchases are made purely on the work’s monetary value. However, the piece’s social media hype can also spur rich millennials to part with their cash in a hopes of a quick resale profit — Instagram has been highlighted by Adweek as a viable platform for creating social media adoration for artists.


Clothes

One of the reasons why the younger generations are turning more to side-hustles and reselling as forms of investment is that the turnover is incredibly fast thanks to apps like Depop. There are so many stories about how entrepreneurial millennials are sniffing out limited edition items from the most popular brands, such as Supreme, during their famous limited edition ‘drops’, then rapidly reselling them.

Of course, the initial purchase is an investment, with many resellers spending hundreds of pounds or more on such a venture, but the resale of these goods can certainly turn a profit. It also taps effectively into the Instagram world we’re living in too. Sellers often combine their shop platforms with their social media accounts to merge both modelling and selling the items.


Shoes

The most sought-after trainers tend to be either limited edition or classic trainers for that much-loved vintage style. People are willing to set up camp outside a store before a particularly hyped drop of limited-edition trainers, in order to grab them at retail price, then sell it on for much higher prices. Some might seek to resell the items quickly, but there’s certainly a case to be made for popping a brand new pair of limited edition trainers away for a few years before reselling in hopes that their much-hyped status will only increase that price tag as the years roll on.

Arguably the biggest market in reselling is that of sneakers and trainers. Much like clothing, the main draw here is in limited edition shoes — but the sneakerhead culture is not anything new. In fact, it began nearly 30 years ago, though it’s enjoyed a huge resurgence in the last few years.

 
Sources:

https://www.sofi.com/blog/millennial-investing-trends/

https://www.adweek.com/digital/influencing-the-art-market-millennial-collectors-social-media-and-ecommerce/

https://www.businessinsider.com/rich-millennials-investing-art-flipping-build-wealth-2019-4?r=US&IR=T

https://www.standard.co.uk/fashion/should-you-be-investing-in-sneakers-a4014486.html

https://www.theguardian.com/fashion/2017/oct/23/teens-selling-online-depop-ebay

mobile bank fraud
BankingFinance

Mobile financial attacks rise by 107%

According to a recent report by Kaspersky, the number of mobile financial attacks it detected in the first half of the year rose by 107%, rising to 3,730,378. Analysts at the company said they discovered 3.7 million mobile financial attacks from January to June this year and found 438,709 unique users attacked by mobile Trojan bankers.

In the first half of 2019, attackers actively used the names of the largest financial services and banking organisations to attack mobile platform users. Researchers found 438,709 unique users attacked by mobile Trojan bankers. For comparison, in the first half of 2018, the number of attacked users was 569,057, a decrease of 23 per cent

Findings by Kaspersky showed the activity of a bank Trojan called Asacub banker, which attacked an average of 40,000 people per day, peaked rapidly in the second half of 2018 and reduced in half year 2019. The number of attacked users and detected attacks peaked rapidly in the second half of 2018; 1,333,410 users were attacked and there were 10,256,935 attacks.

The cybersecurity firm identified another malware, Anubis Trojan, which intercept data for access to services of large financial organisations and two-factor authentication data in order to extort money from users. The firm described the banking Trojan as one that spreads via instant e-messaging apps such as WhatsApp and sends a link to the victim’s contact list.

Lisa Baergen, director at NuData Security, a Mastercard company comments:

“Mobile banking fraud is easy to miss for consumers as Trojans are well hidden inside other legitimate-seeming applications or attachments. Once inside the customer’s phone, they can roam free to steal banking information or account assets.

With this increase on attacks through banking Trojans, it is hard for financial institutions to know if a legitimate user is making a transaction or someone else is hijacking the account. To avoid this growing type fraud many companies are including security layers that can see beyond credentials and passwords: passive biometrics.

Adding passive biometrics technology, banks are able to detect unusual behavior within an account, even if the right device is used. By having this visibility into the user’s behavior, banks can block or authenticate a user further when they detect unusual activity, thwarting account hijacking.

Building a holistic risk-based authentication infrastructure for user verification is proving effective in thwarting bad actors armed with stolen credentials or executing account hijacking. Many companies are now combining different layers of identification such as device, connection, and passive biometrics to power a dynamic and intelligent authentication system. This multi-layered security ensures a frictionless experience for customers while seamlessly eliminating fraudulent transactions.”

Finance Business
Finance

FINANCE BUSINESSES MISSING THE MARK WITH GAMIFIED REWARDS

FINANCE BUSINESSES MISSING THE MARK WITH GAMIFIED REWARDS

75% of finances businesses currently offer a gamified rewards system

But only a minority of these are utilising the most effective kind of gamified reward

Research reveals which types of gamified rewards have the biggest impact on motivation and productivity of financial industry workers.

A survey of 1,219 UK workers, carried out by workplace incentives and rewards provider, One4all Rewards, and published in The Gamification Report surveyed employees from different age groups, genders and industries revealing which type of gamified rewards systems would motivate them the most or for the longest period of time. The research found that 35% of finance workers were most likely to cite fixed action rewards as being the biggest motivator.

But the research shows just a third (33%) of finance businesses are utilising this type of gamified reward.

30% of finance industry workers stated that they would work harder or for longer to unlock social treasure style rewards, which are awarded by peers.

Surprise or unexpected rewards came in third place (27%), with finance workers stating they would be motivated to work harder if their employer offered them.

Meanwhile, rolling or lottery style rewards where workers hit their targets are then entered into a lottery or raffle to win a reward or bonus, would work for almost 1 in 4 (24%) finance industry workers.

Random rewards in return for completing a certain task or action would work for 19% of finance workers.

The research found that a large number (75%) of finance businesses currently offer a gamified rewards and bonus system.

But the study shows that they could be utilising this type of system in a slightly different way, to have a bigger impact.

The research found that majority (43%) of finance businesses offering gamified rewards systems are relying on surprise or unexpected rewards – which award workers for a job well done – but in fact, it is actually fixed action rewards which workers say would motivate them the most.

Michael Dawson managing director of One4all said: “It’s fantastic that such a large number of finance businesses have already adopted a gamified reward and bonus system for their staff – but the research shows that some could be using them to greater impact employee productivity.

“It’s definitely worth bosses considering which style of rewards and bonuses will have the biggest impact on productivity and effort amongst their workforce.

“Given that these types of rewards truly embody the spirit of gamified rewards – which recognise and praise good behaviour, to encourage workers to repeat this in the hope of receiving another reward – this makes sense.”

One4all Rewards are industry experts in benefits and rewards. Working with over 6,000 businesses of all sizes nationwide, One4all Rewards helps to transform customer and employee relationships through successful rewards and incentive schemes.

For more information and to read The Gamification Report, visit https://www.one4allrewards.co.uk/blog/blog/research-reports/gamification-report-2019

The most popular types of gamified rewards most likely to improve productivity and motivation levels for finance workers:

  1. Fixed Action Rewards – 35%
  2. Social Treasures – 33%
  3. Surprise Rewards – 27%
  4. Rolling/ Lottery Rewards – 24%
  5. Random Rewards – 19%
Bitcoin $150000
FinanceFunds

Bitcoin to hit $15,000 as consensus grows on safe-haven status

The devaluation of China’s currency that is rattling global financial markets has revealed that Bitcoin is now becoming a safe haven asset.

The analysis from the CEO of one of the world’s largest independent financial advisory organisations comes as investors piled into the Bitcoin and other cryptocurrencies this week amid growing trade tensions between the U.S. and China. 

The Chinese renminbi fell to under 7 to the U.S. dollar on Monday – the lowest in more than a decade – igniting drops in stocks and emerging market currencies and driving a rally in government bonds.

Nigel Green, chief executive and founder of deVere Group, notes: “The world’s largest cryptocurrency, Bitcoin, jumped 10 per cent as global stocks were rocked by the devaluation of China’s yuan as the trade war with the U.S. intensifies.

“This is not a coincidence. It reveals that consensus is growing that Bitcoin is becoming a flight-to-safety asset during times of market uncertainty. 

“Bitcoin is currently realising its reputation as a form of digital gold. Up to now, gold has been known as the ultimate safe-haven asset, but Bitcoin  – which shares its key characteristics of being a store of value and scarcity – could potentially dethrone gold in the future as the world becomes increasingly digitalised.”

He continues: “With the Trump administration now officially labelling China a currency manipulator, escalating the tensions between the world’s two largest currencies economies, investors are set to continue to pile in to decentralized, non-sovereign, secure currencies, such as Bitcoin to protect them from the turmoil taking place in traditional markets.

“The legitimate risks posed by the continuing trade dispute, China’s currency devaluation and other geopolitical issues, such as Brexit and its far-reaching associated challenges, will lead an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in crypto assets.

“This will drive the price of Bitcoin and other cryptocurrencies higher.  Under the current circumstances, I believe the Bitcoin price could hit $15,000 within weeks.”

The deVere CEO concludes: “Cryptocurrencies are now almost universally regarded as the future of money – but what has become clear this week is that they are increasingly regarded a safe haven in the present.”

IMMOATIVE
FinanceFunds

Proposed Placing of new ordinary shares to raise approximately £2.0 million Proposed broker option to raise up to £0.5 million

Immotion Group, the UK-based immersive virtual reality (“VR”) out-of-home entertainment group, announces, following the success of its recent VR installations into a range of high quality partners (“Partners”), that it has decided to focus its strategy predominantly on the roll out of its Partnership Model into high footfall locations. The visibility of higher margins and recurring revenues delivered from this model is, the Directors believe, the best strategy for the Group and its shareholders. To support this strategy, the Company is carrying out a fundraising to raise approximately £2.0 million, before expenses, via the issue of an aggregate of approximately 29.6 million new Ordinary Shares (“Placing Shares”) at a price of 6.75 pence per share (“the Placing Price”) (the “Placing”).

 

WH Ireland Limited and Alvarium Capital Partners are acting as joint brokers in relation to the Placing (the “Brokers”) and furthermore, the Company has authorised the Brokers to raise up to a further £0.5 million through a broker option (the “Broker Option”), (together with the Placing, the “Fundraising”) in order to allow existing and other investors to participate in the Fundraising.  Ordinary Shares issued under the Broker Option will also be issued at the Placing Price and will therefore be limited to approximately 7.4 million new Ordinary Shares (the “Broker Option Shares”), expected to close by 5.00 p.m. on 30 July 2019. It is intended that the net proceeds of the Fundraising will be used to accelerate the Company’s growth plans under the revised strategy. A placing agreement has been entered into today between the Company and the Brokers in connection with the Fundraising (the “Placing Agreement”).

 

The Placing is being conducted, subject to the satisfaction of certain conditions set out in the Appendix to this Announcement, through an accelerated book-build process (the “Bookbuild”), which will be launched immediately following this Announcement.

 

Operational and Trading Highlights

 

  • Currently the Group has a total installed base of 237 headsets;
  • 34 new headset installs agreed across Madame Tussauds, Washington DC; two Legoland Discovery Centres; and two Al Hokair sites in the Middle East;
  • A further 118 headsets installs agreed subject to contract, expected to be installed through the remainder of 2019;
  • Based on current headset yields, the Directors expect overall monthly EBITDA breakeven at c.410 installed  headsets (expected Q1 2020);
  • Strong revenue per headset performance in the Partner venues being driven by sector focus;
  • Launch of ‘Underwater Explorer’, ‘Thrill Coasters’ and ‘Raw Data’ themed VR stands;
  • Strong demand and enquiries from both existing and new high footfall leisure destination Partners;
  • Roll-out of the Company’s VR Cinematic Platforms with Merlin Entertainments plc (“Merlin”), now encompassing the Legoland Discovery Centre, LEGOLAND®, Sea Life, and Madame Tussauds locations with 70 headsets now installed; and
  • ImmotionVR, the Company’s own VR operations, now also includes a partnership-based model focusing on high footfall leisure destinations, such as The O2, Soar Centre in Glasgow, and Star City in Birmingham.

Fundraising Highlights

  • Proposed Fundraising of up to approximately £2.5 million before expenses at a price of 6.75 pence per share by way of a Placing and Broker Option.
  • Placing being conducted through an accelerated book-build process which will open with immediate effect following this Announcement.
  • The Placing Shares and Broker Option Shares (“New Ordinary Shares”), assuming full take-up of the Placing and Broker Option, will represent approximately 13 per cent. of the Company’s enlarged issued share capital.
  • The final number of Placing Shares will be agreed by the Brokers and the Company at the close of the Bookbuild, and the result will be announced as soon as practicable thereafter.
  • The timing for the close of the Bookbuild and allocation of the Placing Shares shall be at the discretion of the Brokers, in consultation with the Company. The Fundraising is not underwritten.
  • The Broker Option is expected to close by 5.00 p.m. on 30 July 2019.
  • The Appendix to this Announcement (which forms part of this Announcement) contains the detailed terms and conditions of the Fundraising.

Background and Current Strategy

 

Immotion Group was established to exploit the ‘Out-of-Home’ VR immersive entertainment market. Since inception, it has developed an extensive range of both CGI and live-action experiences, all of which operate on the Company’s proprietary Content Management and Reporting System. Immotion’s core offering provides virtual reality experiences to be enjoyed on sophisticated motion platforms delivering a truly engaging and immersive experience.

 

In addition to the Company’s own consumer-facing VR operation, ImmotionVR, the Company has thus far offered its solutions to third parties via both a straight sales model, as well as a revenue share model with Partners (“Partnership Solution” or “Partnership Model”). In addition, the Company has also used its CGI studio to offer the development of VR experiences for major brands, as well as licensing its own experiences into countries where it doesn’t operate.

 

Over the past year the Company has experienced positive feedback from its existing Partners as well as new potential Partners. Its innovative Partnership Model has been well received in what is a fast growing, but still nascent market.

 

The Partnership Model developed by the Company allows high footfall leisure destinations to embrace VR, adding both consumer value as well as ancillary revenue to these locations. The decision process for the Partner moves from a prolonged capital investment decision to a simple operating decision, thus speeding up the decision process considerably.

 

Feedback from Partners in regard to the Partnership Model has been very positive, with demand demonstrating a strong appeal of this model as opposed to the straight sales model. Consequently, the Company has taken the decision to focus on its Partnership Solution.

 

The Directors believe the Partnership Model, in terms of both experiences and hardware, allow Partners to enter the early stage VR market with confidence. This underpinned with the Company’s proprietary Content Management and Reporting System allows Partners, big and small, the ability to upload remotely new experiences, as well as see ‘real-time’ data on usage and revenues and to receive remote support from Immotion Group.

 

The Company has seen very encouraging results in the Partner sites generally with the aquaria sites outperforming all others.  This has led the Company to conclude that it should develop solutions for a number of high footfall “edutainment” destinations such as aquaria, zoos, science centres and museums. Initial efforts have focused on aquaria and this has now begun to gain significant traction with experiences now in 7 major aquaria locations and many further discussions ongoing. The year to date average total gross revenue per headset per month of c.£2,100 in the aquaria sector is performing 1.6x that of the historic headset averages across the Partner estate and delivers an annual margin per headset of £12,000.

 

The average annual gross revenue and average annual blended contribution margin to Immotion Group, including the ImmotionVR estate is per headset, across the continuing estate, running currently at c.£16,300 (or £1,356 per month) and c.£7,000 per annum (or £583 per month) respectively. On a Partner only basis, excluding the ImmotionVR own retail sites, based on year to date performance, this gross average revenue per headset increases to circa £18,200 per annum (£1,517 per month). At the current level of fixed operating costs (net of commercial contract work) of £240,000 per month this implies a monthly breakeven level of c.410 headsets assuming the margin contribution of £583 per month. 

 

The Directors believe that there is scope for the overall average revenue per headset to grow significantly, driven by a number of factors. The mix of sites is expected to grow in favour of Partner sites and stronger performing vertical channels within that (such as aquaria) as noted above. Furthermore, the Company is developing new marketing and selling tools to support Partners in growing revenue.  Additionally, H2 19 should yield better performance as there are a greater number of school and other holidays in H2 in USA and Europe.

 

The Directors believe the focus on the Company’s growing Partnership Model will deliver greater shareholder value as it builds these recurring revenue streams. The number of quality Partners such as The O2, Al Hokair, Merlin Entertainments, Shedd Aquarium and Santa Barbara Zoo to name but a few, all of whom are already enjoying the benefits of this model, continues to grow rapidly. With over 34 new headsets contracted, and due to be installed in the coming weeks, along with a further 118 agreed, subject to contract, this gives the Company visibility to c.389 installed headsets.

 

As noted in the final results announcement on 3 April 2019, whilst there is demand for direct hardware sales in the VR market and the Directors recognise the positive impact in the financial year in which these sales are recognised, and that they do aide cashflow, this does not in the Directors’ view outweigh the benefits of building Partner relationships with longevity and recurring revenue.

 

On balance, the Company believes due to the “one-off” transaction revenue nature of direct sales, the competitive landscape in a nascent market, the lead-times to gain decisions from prospective customers as well as the margins achievable of c.£2,500 per headset for a direct sale of hardware, makes the Partnership Solution considerably more appealing for the Group and its shareholders as a whole in the long-term.

 

The innovative Partnership Model provides a collaborative business relationship for both the Partner and the Group. The decision process for the partner is much easier, and with on-going segmental focus the Directors believe the Company can continue to drive revenue per headset up delivering added benefits for both parties. 

 

The revenue share Partner Model drives recurring revenues for both parties and with a contribution to the Group of c.£21,000 over the 3-year expected life of a VR Cinematic Platforms, the Directors believe it is a better route for the Company and its shareholders. Furthermore, the potential to grow these margins with better utilisation will further improve margins for the Company, as well as delivering a greater revenue share for Partners.

 

The Group currently has an installed base of 237 headsets, 118 of these headsets are operated by the Company’s own staff, with the balance operated by our Partners’ staff. The Group’s contracted and subject to contract pipeline is currently for a further 34 and 118 headsets respectively, which are expected to be installed throughout the remainder of 2019. The Directors are targeting an installed base of 1,000 headsets by the end of 2020.

 

Based on current contribution per headset and the current costs of operation, the Directors believe the Group will reach EBITDA breakeven when approximately 410 headsets are installed, and the Directors expect this to be achieved in Q1 2020.

 

The move to a Partnership Model will help the Company build a recurring revenue stream which the Directors believe will benefit the Group in future years as well as drive the Group to EBITDA breakeven. The short-term impact of the focus on the Partnership Model will be lower expected revenue for the 2019 financial year, as the forecast “one-off” revenue from direct sales are exchanged for recurring revenues with Partners. As the number of Partners increases, and the volume of recurring revenues increases, the revenue and profit potential for future years will not only increase substantially but will also be much more predictable.

 

As a direct result in the decision to focus on the ‘Partnership Model’ strategy the Directors have reviewed its forecasts for the year and the timing of pipeline of orders that support those forecasts. The immediate consequence of this strategy is the reduction in both top-line revenue and profit from the sale of machines, this combined with an increased overhead cost as the Company focuses its efforts on engaging quality Partners will result in lower revenue and EBITDA for 2019. As a result of this the Directors now expect the Group’s EBITDA loss (excluding one off and exceptional items) for the current financial year to remain broadly in line with the year ended 31 December 2018.

 

Once the breakeven level of installations has been achieved, the contribution from each new installation flows predominantly to the bottom line. The Directors believe, assuming continued interest from partners, this model will be highly profitable in the medium to long term and is very scalable.

 

The Company has invested heavily in building a range of experiences, along with its proprietary Content Management and Reporting System and a range of themed motion platform VR offerings. This combination, along with its unique business model has enabled it to secure a range of quality leisure partners operating in high footfall locations. As the business continues its roll-out and approaches the ‘tipping point’, the Directors believe the impact in the medium to long term will be beneficial to shareholders and that the Group is well placed to take advantage of the opportunities ahead, to become a leading out-of-home immersive VR operator.

 

Martin Higginson, CEO of Immotion Group, said:

“Since inception we have invested heavily in building a range of VR experiences, the quality of which has not been seen before at affordable price points in the ‘out-of-home’ VR market. This fact, combined with our proprietary reporting software, themed stands and on-going investment in VR motion platforms has positioned us well in this nascent market.”

 

“However, it has been our determination to create a new and exciting business model that has and will define us. Creating a Partnership Solution where we work together with high footfall leisure locations to provide them with not only a new and interesting attraction, but also a valuable ancillary revenue stream has transformed our business. Demand from high quality aquaria partners is very strong and we are beginning to see demand from other verticals.”

 

“Our continued focus in creating not only the right environment as well as VR experience for our partner, is starting to show encouraging signs with revenues in our Partner estate growing strongly. The performance of our aquaria partners is particularly strong and the Directors see this as a highly scalable, potentially global opportunity.”

 

“As we move closer to EBITDA breakeven, this tipping-point business is poised for substantial growth. Our offering is unique, our experiences are the best in class, and our list of quality partners just gets better every day. With an offering that benefits our partners as much as us, we believe this model will allow us to lead this new and exciting market.”

car management
Finance

What finance options are there to know about when buying a car?

Unlike other purchases, you don’t need to worry about saving loads of money to buy a car outright. In fact, Vindis, who are also VW service providers, have detailed various finance options available to you when getting your hands on your next set of wheels when it’s new — other than buying the car outright obviously.

Keep reading as they offer insight into how many finance options are open to you when in the market for a used car too…

 

What do you need to know when buying new?

Personal loan

A personal loan is often the cheapest method to borrow money over a long-term period and also means that you will own the car from the moment you take out the loan. Competitive fixed interest rates can be gained if you shop around for your personal loan too, while you often won’t even need to worry about paying a deposit to get the loan.

But how do they work? Well, personal loans are taken out at a bank or building society and enable you to spread the cost of purchasing a new car over a period of time that can last anywhere from one year to seven years.

In fact, according to a survey by WhatCar? a personal loan is the most popular way to finance a new vehicle, with a third of those who were involved in the motoring publication’s poll saying they favoured this finance option over all others.

Other benefits of choosing a personal loan to pay for your new set of wheels include the fact that you won’t need to worry about any annual mileage restrictions, as well as that you won’t need to hand the car back to the dealership once the loan is paid — thus no need to be concerned about reconditioning costs either. Make sure however that you can keep up with your payments, as any of your assets can be seized should you be unable to pay one of your installments — only your vehicle will be vulnerable to being reprocessed should the same thing happen with dealer finance.

It’s important to note that a clean credit rating will likely be required if you want to take out a personal loan too, while you’ll also beat the brunt of your car’s depreciation due to you owning the vehicle from the moment you take out the loan. Ensure the vehicle that you have your eyes on will be something that you can imagine driving for years to come, as the lender will still require you to repay the full loan even if you sell it or it gets written-off.

 

Hire purchase (HP)

Hire purchase — or HP — is the next simplest method of purchasing a car. Sixteen per cent of those involved in the earlier mentioned WhatCar? survey admitted they favoured this type of car finance.

After typically paying a deposit — usually 10 per cent of the car’s total value at the time of purchase — you then repay the remaining balance in monthly installments, plus interest, throughout the rest of the loan period. Once the loan is paid in its entirety, you will own the vehicle outright. Up until then, you won’t need to be concerned about any excess mileage charges and there’s no reconditioning costs to worry about either.

There are a couple of consumer rights associated with HP agreements too. You may be able to return the vehicle once you’ve paid half the cost of the vehicle and not be required to make any more payments, for instance, while your lender will not be in a position to repossess your car without a court order after you’ve paid a third of the entire amount that you owe.

You must be aware however that the vehicle is not yours until the final payment has been made. Miss a payment or a collection of them and you could well be at risk of losing the car. Likewise, you won’t have a legal right to sell the car until all payments have been made.

 

Personal Contract Hire (PCH)

Personal contract hire — otherwise referred to by its acronym PCH — is the leasing option of the types of car finance which are available to you. This is because you will never own the car in question when taking out a PCH plan; it must be returned at the end of the contract term.

Instead this works by paying a dealer a fixed monthly amount to use one of their vehicles. Fortunately, the costs of servicing and maintenance are both factored into this amount. Once a PCH agreement ends, you simply hand the car back to the dealer and needn’t worry about the vehicle depreciating in value.

A PCH plan is therefore a wise option for drivers you like to change their cars frequently. However, take note that you must ensure the vehicle remains in good condition during the entire time it’s in your possession and that you don’t exceed the annual mileage limit agreed at the start of the agreement — extra costs could come your way otherwise. 

 

Personal Contract Purchase (PCP)

Ranked as the second most popular finance option when buying a new car according to the aforementioned WhatCar? poll, with 25 per cent of those involved in the poll saying they favour this technique, personal contract purchase — otherwise known as PCP — has a few similarities to hire purchase agreements. You again pay a deposit, which is often ten per cent of the vehicle’s overall value too, before paying a series of monthly installments.

However, the monthly installments will this time be actually paying for the deprecation in the car’s value during the contract period — as opposed to going towards the whole value like with HP. Once you reach the end of the contract term, you’ll be presented with three options with what you want to do next:

  1. Trade the vehicle in and use any GFV equity as a deposit towards getting your hands on a new set of wheels.
  2. Return the vehicle to its supplier — this won’t cost you anything unless you’ve exceeded your agreed mileage or fail to return the car in a good condition.
  3. Take full ownership of the vehicle — though for this option, you will be required to make a final ‘balloon’ payment. This amount will be the car’s guaranteed future value, or GFV for short.

In effect, with PCP the GFV is where you will be repaying the difference between what your vehicle is currently worth at the time of getting it from the dealership and the amount that it will be worth at the end of your contract, plus the cost of interest.

Take note too that the GFV will be agreed before a PCP contract begins, though so too will a mileage allowance — and any excess mileage charges will apply if you go over this limit.

There’s a few additional points to consider when it comes to PCP finance options too. You will be unable to sell the vehicle during the contract period of the PCP agreement, as you won’t own the car during this term, while some PCP contract providers will have a limit on the number of days that a vehicle can be out of the country — something that’s certainly worth thinking about if you drive abroad at least from time to time.

You’ll also be required to pay the difference between the vehicle’s current value and the payments which are outstanding if you choose to settle at an earlier date. Early settlement charges sometimes apply here too, so bear that additional cost in mind too when thinking about doing this.

 

What do you need to know when buying used?

While you may associate the above finance options when you’re only in the market for a new car, both HP finance and PCP finance can be used to afford a used vehicle as well — both using the same principles as discussed too. Of course, you can also take out a personal loan when looking for a way to finance a used car.

Leasing is a bit more complicated in the used car market. Some dealers will allow their second-hand vehicles to be leased, but not all of them. Many dealers will determine the amount that you have to pay on a monthly basis based on how much they expect the vehicle that’s being leased will depreciate over the finance term you have in mind. This may result in you witnessing more expensive leasing deals that you’d have expected though, as the residual values of used cars are usually more difficult to forecast and so dealers will be aiming to always cover the cost of any unexpectedly severe depreciation periods.

We hope this guide has helped you take a lot of stress out of buying your next set of wheels — all that’s left to do is to wish you a happy new (or used) car day!

liquidation 2
Finance

What Is The Difference Between Solvent And Insolvent Liquidation?

Occasionally, some companies may find themselves not being able to make ends meet when it comes to their bills and creditors.

When long-term financial obligations become impossible to meet, it may be time to register your business as insolvent.

Doing so will force your company into insolvent liquidation; striking it from the Companies House register.

But what about solvent liquidation?

Solvency vs insolvency

There are many reasons why a company may enter into liquidation – whether it be voluntary or not – but it all depends on its debts.

If a company remains able to meet its long-term financial obligations, but serves no further useful purpose as a business, it can be classed as solvent.

This also applies for closure processes caused by something other than finances, for example the company director’s retirement.

If you’re unsure whether your business would be classified as solvent or insolvent, there are three different ways of finding out:

● The Cash Flow Test – Under the Insolvency Act 1986 a business is rendered insolvent if it is ‘unable to pay its debts as they fall due’. This cashflow test highlights that if you are unable to meet your PAYE and VAT requirements, you may well be insolvent.

● The Balance Sheet Test – if the outstanding debts of your company outweigh your assets (e.g. property, cash, stocks, equipment), the company will be considered insolvent. This will prove problematic when the company’s assets are liquidised as this deficit will make it impossible to repay all creditors.

● The Legal Action Test – if a creditor is owed over £750 they are entitled to put forward a formal demand for the sum, or a County Court Judgement (CCJ), which must be paid within three weeks. If it is not paid the law will deem the company insolvent.

The ‘winding up’ procedure

Whether your business is solvent or insolvent, the process for winding up is quite similar.

A company winds up when it decides to close down, by ending all business affairs.

This covers every aspect of the business, including everything from customer/client relationships to obligations with employees.

If these business affairs are settled by the company director, this is classed as a voluntary winding up.

However, it doesn’t always go this smoothly.

Creditors who are owed more than £750 from a business are entitled to submit a winding up petition (WUP) to the court, which forces the company to be investigated and liquidated by the Official Receiver.

This involves an intrusive investigation into the company’s debts and trading history, and is not to be confused with the conventional winding-up procedure.

What is liquidation?

Liquidation is the process of bringing a business to a close by distributing its assets to pay off its debts, once all relationships have been severed.

The cause of liquidation often lies in the hands of the director(s), but other factors may also affect cash flow, such as:

● Late customer payments

● Customers/suppliers entering insolvency

● Market fluctuations

● Increased competition

● Mistakes in pricing of goods/services

Due to the complex nature of the process, the only person qualified to liquidate a company’s assets is a professional Insolvency Practitioner (IP).

This can be done in different ways depending on the company’s position:

● Members’ voluntary liquidation (MVL)

A members’ voluntary liquidation is the formal process whereby a solvent company is closed down.

This method divides the company’s assets in the most tax efficient way between creditors and directors.

As this is a solvent liquidation process, all creditors are repaid in full and the directors must each sign a declaration of solvency.

This declaration provides evidence that the company is able to settle its outstanding debts within 12 months of beginning the liquidation process.

● Creditors’ voluntary liquidation (CVL)

When a creditor is threatening to take legal action against an insolvent company (e.g. through a WUP) the safest and most harmonious option is to enter a creditors’ voluntary liquidation (CVL).

This means the appointed IP works on behalf of the creditors as opposed to the company directors, with a main priority of ensuring all debts are settled.

This option provides the best chance for creditors to receive a return, as well as helping directors to avoid being investigated for wrongful trading.

CVL and MVL procedures are very similar but because CVL companies are insolvent and unable to settle their debts, a meeting with the creditors is a fundamental step in the process.

As this procedure is voluntary as opposed to court led, the company directors can decide who their IP will be.

The directors will also have the option to purchase any assets as part of the company rescue process.

● Compulsory liquidation

Compulsory liquidation may be considered the final resort for an insolvent company to be forcefully liquidated.

Although compulsory liquidation can be proposed by its directors, it is more often a forceful procedure brought forward to a court by a company creditor owed over £750.

This can be done so by submitting a WUP.

If the courts grant this, business assets are settled using an IP and directors face a rigorous investigation – much more severe than those following a CVL.

The investigation aims to uncover the cause of insolvency and reveal any evidence of misconduct or illegal, wrongful trading.

Any evidence found could result in directors facing disqualification for 2-15 years, and criminal charges if necessary.

 

Company dissolution

Dissolution takes place at the final stage of closing a business, whereby the company’s existence is officially withdrawn by the law.

This is recorded and registered by the Registrar of Companies.

Dissolution may seem like an easy and cheap way to strike off a company, with just a £10 admin fee to submit an application.

But be sure to seek advice from a professional before proceeding.

 

Why you should act quickly

If you are headed towards insolvency, it is your legal responsibility to act fast in order to protect the interests of your creditors.

To avoid personal consequences for continuing to trade while insolvent, seek advice from an IP and register your company as insolvent when the time is right.

Hudson Weir are licensed insolvency practitioners with vast experience in all industries, and are available for liquidation services.

accountancy hack
BankingFinanceFunds

Hackers set their sights on accountancy firms – 7 steps to minimize risk

Accountancy practices are facing an increase in cyber risks as criminals switch their focus to ‘softer target’ smaller firms. Joe Collinwood, CEO at CySure explains why accountancy firms are targets for hackers and what steps they can take to minimize their exposure.

When it comes to cyber crime, small accountancy practices are not exempt from the disruption that affects large organizations. If anything, their size makes them more vulnerable as they are perceived as a softer target. In the USA for example there has been an explosion in fraudulent W-2 filings and in the UK with more filings now on-line risk is increasing. So why are accountants being targeted?

• They hold large amounts of private data
• They have the information cyber criminals want – corporate financial data, social security numbers, Tax IDs, bank accounts, payroll data, identification data for validation and reporting purposes
• Accounting firms use similar software so if a criminal finds a vulnerability that can be exploited they have lots of potential victims
• Typically there is inadequate technical protection, policies and procedures that leave firms wide open to a cyber attack
• A lack of incident response and business continuity procedures means accountants are more likely to pay a cyber criminal money because they fear they may not be able to recover from an attack and the firm’s reputation will be tarnished.

Many accountancy firms are making it easier for hackers by underestimating the threat they face from cyber attacks. There were 438 (i) separate data security incidents reported to the Information Commissioner’s Office (ICO) in Q2 2018/2019 alone in the finance, insurance and credit sector. The cost to launch cyber attacks is negligible and the most likely method of breach is phishing i.e. human error. It’s time to think again.

Gateway to Information
Self-employed accountants and accountancy practices are on the radar of cyber criminals because of the amount of valuable data they hold. Firms collect and store highly desirable data and information on clients. This information enables hackers to pull off complex frauds at a later date. The more information they have, the better a picture they can build of the small business or person whose bank account they intend to target.
Cyber criminals view accountancy firms as a “gateway” to client information and are perceived as a soft target with few security barriers, limited cyber security tools and little or no in-house expertise. Additionally, as many firms use the same software systems, hackers are motivated to seek vulnerabilities in the software knowing there will be a substantial pay day by exploiting the weakness to attack multiple businesses.

Small but not safe
According to the Cyber Security Breaches Survey 2018 (ii), 42% of small businesses identified at least one breach or attack in the last 12 months. Depending on the severity of the attack, SMEs can suffer more disruption than their larger counterparts as they lack the processes and cyber expertise to deal with the ramifications of an attack. The impact to business operations and the inability for staff to carry out their day to day work can have longer term consequences, not only for an accountancy practice itself but also for its clients.

Minimize Risk – 7 simple steps to cyber resilience
No business is too small to be attacked, however with the right approach to security, no business is too small to protect itself. Accountancy firms can pave the way to cyber resilience by following these top cyber-security tips:
• Invest in effective firewalls, anti-virus and anti-malware solutions and ensure any updates and patches are applied regularly, ensuring that criminals cannot exploit old faults or systems
• Ensure business critical data, such as customer data and financial information, on all company assets is securely backed up and can be restored at speed
• Have simple, clear policies in place to create a cyber-conscious culture in the workplace and ensure it is communicated to all personnel so they are familiar with it
• Have regular awareness training so that employees are constantly reminded of potential scams or tactics that can be used to trick them
• Review contracts and policies with suppliers to ensure they have an accredited standard for cyber-security for themselves and their partners to protect the supply chain
• Have an up-to-date incident response plan that is practiced regularly so that employees know what to do when they suspect there is an attempted breach or if an actual incident occurs
• Consider investing in cyber insurance to cover the exposure of data privacy and security. Accountancy firms should research insurance policies carefully to understand the level of coverage offered and their responsibilities to stay within the conditions of the policy.

Where to start and what to do now
Cyber security need not be complex or prohibitively expensive, in the UK Cyber Essentials (CE) is a government and industry backed scheme specifically designed to help organisations protect themselves against common cyber-attacks. In collaboration with Information Assurance for Small and Medium Enterprises (IAMSE) they have set out basic technical controls for organisations to use which is annually assessed. In the US the National Institute Standards and Technology (NIST) framework guides organizations through complex, emerging safety producers and protocols.

By utilising an online information security management system (ISMS) that incorporates Cyber Essentials and NIST, accountancy firms can undertake a certification route guided by a virtual online security officer (VOSO) as part of their wider cyber security measures. This will help the organization to coordinate all security practices in one place, consistently and cost-effectively. Additionally, firms can take advantage of the expertise of online cyber security consultants at a fraction of the cost of a full-time in-house security specialist.

Demonstrating confidence to the client base
Cyber security certification has many benefits; it ensures standardization and is a good differentiator for accountancy firms as it shows a diligence to information security. By giving cyber security the same priority as other business goals, accountancy firms can proudly display their security credentials and demonstrate trust and confidence to their client base.

Joe Collinwood is CEO of CySure

dubai
FinanceFundsMarkets

Dubai International Financial Centre boosts UAE financial sector development and reports significant growth during first half of 2019

Maktoum bin Mohammed: “Strong performance by DIFC highlights the international financial institutions’ confidence in Dubai”

 

  • Total number of companies currently operating in the DIFC stands at 2,289 – a 14 percent increase year-on-year and a 7 percent increase since end of 2018
  • Over 250 new companies, a 10 percent increase from the same period in 2018
  • More than 660 jobs created, boosting combined workforce to more than 24,000 professionals
  • DIFC’s financial technology ecosystem doubles in size in first half of 2019 – now includes over 200 companies, of which more than 80 are fully-licensed FinTech firms
  • 425 applications received for third cohort of FinTech Hive accelerator programme – three-fold growth since 2017 and 42 percent increase from 2018

 

Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, reinforced its contribution to the UAE’s economy and its commitment to driving the future of finance, following strong performance during the first half of 2019.

The Centre saw sustained growth in the first half of 2019, welcoming more than 250 new companies, and bringing the total number of active registered firms to 2,289, demonstrating a 14 percent increase year-on-year. This has fuelled the creation of over 660 jobs, boosting the Centre’s combined workforce to more than 24,000 individuals, and has resulted in the occupancy of 99 percent of DIFC-owned buildings.

The DIFC now boasts more than 671 financial related firms, an 11 percent increase from the same period last year.  The financial services firms that joined in 2019 include Maybank Islamic Berhad from Malaysia, Cantor Fitzgerald from the United States of America, Atlas Wealth Management from Australia and Mauritius Commercial Bank. In addition, leading non-financial firms including Guidepoint MEA, Medtronic Finance Hungary Kft. and Network International, have also joined the Centre in the first six months of 2019.

His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of the DIFC, said: “Dubai continues to gain recognition on the global stage as the destination where business meets innovation, and the DIFC has been a significant driver of this.  The strong performance that the Centre has delivered during the first half of 2019 highlights the confidence and trust that international financial institutions have in Dubai.  Aligning with the 50-year charter announced by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the planned expansion of the DIFC will solidify Dubai’s role as a pivotal hub for companies from around the world to access regional opportunities.”

His Excellency Essa Kazim, Governor of DIFC, commented: “The DIFC has been a pioneer in the financial services sector since its inception in 2004, as the first purpose-built financial centre in the MEASA region. 15 years on, we continue to demonstrate our forward-thinking approach with the enhancement of our legal and regulatory framework, as well as the development of a comprehensive ecosystem. The Centre remains a fundamental driver in leading financial sector transformation, supporting the advancement of the UAE economy, and developing the next generation of financial professionals.”

Driving the Future of Financial Services in MEASA

In response to the strong demand the DIFC continues to witness from financial institutions across the globe, the Centre embarked upon 2019 with the announcement of new expansion plans, supporting the economic future of Dubai and the UAE. The phased growth plan will triple the scale of the leading financial hub and enable the DIFC to help deliver on Dubai’s ambitious growth agenda, whilst diversifying and transforming the financial services sector within the wider region.

The new development will provide an international focal point for FinTech and innovation, enhancing the Centre’s reputation as one of the world’s most advanced financial centres and reinforcing Dubai’s position as one of the world’s top ten FinTech hubs, as listed by FT’s The Banker.

The Centre has already seen a marked increase in the number of firms that make up its dynamic FinTech ecosystem, which more than doubled in size from over 80 to 200 companies in the last six months.  Similarly, the number of licensed FinTech firms operating in the DIFC increased from 35 to more than 80 in the first half of 2019. Key international FinTech firms that have made the Centre their MEASA base include Dublin-based software company Fenergo, InsurTech leaders Charles Taylor and Swedish crowdfunding platform, FundedByMe.

Arif Amiri, Chief Executive Officer of DIFC Authority, commented: ‘We are continuing to cement our global position as a pivotal business and finance hub, while making significant headway towards meeting our 2024 targets.  Our focus on innovation and technology is delivering a blueprint for sustainable growth as we continue our journey towards driving the future of finance. DIFC’s emphasis on transforming its lifestyle offering, alongside strategic investments within technology and FinTech means we are confident about reinforcing our position as a leading global financial centre – a great place to live, work, play and do business.”  

The Centre received 425 applications from start-ups operating in the RegTech, Islamic FinTech, InsurTech and broader FinTech sectors, for the third cohort of its DIFC FinTech Hive accelerator programme, a 42 percent increase from the 2018 programme. This also marked a three-fold increase from its inaugural cycle in 2017, exemplifying the pace of evolution of this fast-growing industry, as well as the preference of Dubai and the DIFC as the home for FinTech firms looking to scale their business across the region.  Approximately half of the applications received for the 2019 programme originated from the Middle East, Africa and South Asia. 

33 start-ups have been selected following a series of interviews, conducted in consultation with DIFC FinTech Hive’s network of 21 participating partners, including Abu Dhabi Islamic Bank (ADIB), Emirates Islamic, Emirates NBD, Finablr, HSBC, National Bank of Fujairah, Noor Bank, Riyad Bank, Standard Chartered, and Visa, as well as the associate financial institution partners Arab Bank and First Abu Dhabi Bank (FAB).

InsurTech start-ups will work closely with leading insurance players, AXA Gulf, Noor Takaful (Ethical Insurance), Zurich Insurance Company Ltd (DIFC), AIG, Insurance House, Cigna Insurance Middle East S.A.L. and MetLife, to help them develop game-changing solutions that address the growing requirements of the industry. In addition, this year’s finalists will be supported by strategic partner Dubai Islamic Economy Development Centre (DIEDC) and digital transformation partner Etisalat.

Furthering the Centre’s commitment to supporting FinTech in the region, DIFC hosted the first Demo Day for the inaugural cycle of the Startupbootcamp programme in April 2019, alongside HSBC and Mashreq.  The event showcased innovative concepts from ten graduates of the programme, consisting of entrepreneurs from the UAE, Singapore, United Kingdom, Greece, France, Thailand, Ghana, Morocco, Ukraine, and the Czech Republic.

The Centre’s thriving FinTech community benefits from the strong relationships the DIFC has continued to build with key international accelerators through ongoing delegations and partnership agreements. The DIFC signed four MoUs during the first half of 2019, one with Dubai SME to help foster entrepreneurship in the UAE and further the National Innovation Agenda, as well as three additional agreements with FinTech Saudi, Milan’s FinTech District and FinTech Istanbul, expanding the Centre’s network of international FinTech hubs to 14.

Furthermore, DIFC has worked to increase access to funding by engaging and building its Venture Capital ecosystem, as well as investing directly into promising FinTech start-ups.  In March 2019, the Centre announced the appointment of Middle East Venture Partners and Wamda Capital to manage USD 10 million of its dedicated USD 100 million FinTech fund.  To date, DIFC has received more than 50 applications from a variety of financial technologies, including payments, roboadvisory, blockchain and KYC platforms.  The applications received have been in equal parts from early and growth stage firms, signifying interest from firms across the start-up business cycle.

Supporting Human Capital Development and Delivering Sustainable Impact

As part of the DIFC’s efforts to support continued professional development and strengthen the regional talent pool, the DIFC Academy offers world class financial and legal education through strategic partnerships with 26 leading educational institutions and government entities. To date, the DIFC has seen more than 5,500 graduates successfully undertake executive education courses and programmes in finance, business and law, as well as two dedicated Masters of Laws (LLM) programmes.

Knowledge sharing and thought leadership remained a core focus for the financial centre in 2019. The third edition of the Dubai World Insurance Congress (DWIC) and the second edition of the Global Financial Forum (GFF) welcomed more than 700 industry leaders to each flagship event. Key speakers at DWIC included James Vickers, Chairman of Willis Re International and David Watson, Chief Executive Officer for Europe, Middle East and Africa and International Casualty at AXA XL, who shared global perspectives on reinsurance growth strategies. Meanwhile, the GFF, which brought together more than double the number of business leaders compared to the inaugural event in 2018, attracted the likes of Sir Gerry Grimstone, Former Chairman of Barclays Bank PLC and emerging markets guru, Mark Mobius.

In recognition of DIFC’s efforts towards building one of the world’s leading financial centres over the last 15 years, the Centre was the only free zone in the UAE to receive the Dubai Quality Award in April 2019. The award is a reflection of the DIFC’s hard work and dedication in building a sustainable and progressive business environment. 

In May 2019, another milestone for sustainable business growth was achieved as Majid Al Futtaim launched the world’s first benchmark corporate Green Sukuk at Nasdaq Dubai, supporting Dubai’s growth as the global capital of Islamic economy. The Green Sukuk investment will be used to finance and refinance Majid Al Futtaim’s existing and future green projects, including green buildings, renewable energy, sustainable water management, and energy efficiency. 

Enhancing the Legal & Regulatory Framework to Fuel Growth

The Centre has been at the forefront of enhancing its legislative infrastructure to provide the DIFC community with access to opportunities within the MEASA region, whilst providing greater stability and certainty when doing business in the DIFC. The Centre’s robust legal and regulatory framework remains the most sophisticated and business-friendly Common Law jurisdiction in the region, aligned with international best practice.

DIFC continues to support the development of the financial services sector and foster the UAE’s economic growth by encouraging the development of the domestic funds market. In May 2019, the DIFC’s independent regulator, the Dubai Financial Services Authority (DFSA), announced the a new regime to facilitate the passporting of funds, in collaboration with the UAE’s other financial regulators. The UAE passporting regime is a regulatory mechanism for the promotion and supervision of investment funds that encourages foreign licensed firms in financial free zones based in other countries to enter the local market.  

With the aim of ensuring businesses and investors can operate across the region with confidence, the DIFC also unveiled the new Insolvency Law in June 2019, enacted by His Highness Sheikh Mohammed bin Rashid Al Maktoum. The new law facilitates a more efficient and effective bankruptcy restructuring regime for stakeholders operating in the DIFC.

In addition, the DIFC has continued to create an attractive environment for the 24,000 strong workforce based in the Centre to thrive, whilst protecting and balancing the needs and interests of both employers and employees. To support its vision, the DIFC unveiled its new Employment Law in June 2019 to address key issues such as paternity leave, sick pay, end-of-service settlements and more.

As part of the Centre’s blueprint for the transformation of the financial centre and in line with global retirement savings trends the DIFC launched the Employee Workplace Savings (DEWS) scheme, which will see the evolution of end-of-service benefits from a defined benefit scheme to a defined contribution scheme, while offering a voluntary savings component for employees.

The Centre also unveiled a new unified, simplified and more expansive Prescribed Companies regime that makes structuring and financing in the DIFC faster, flexible and more cost-effective. The new regime encompasses structures previously offered by the Centre, including Intermediate Special Purpose Vehicles (ISPVs) and Special Purpose Companies (SPCs).  This has contributed significantly to a robust pipeline of prospective business from the aviation financing sector, as well as generating substantial interest from family offices looking to utilise these structures in their succession planning.

Creating a Vibrant Retail & Lifestyle Experience

Today, 91 percent of DIFC’s prime retail space is occupied by 432 leading lifestyle, art, fashion and food & beverage brands, an offering that will be significantly boosted once Gate Avenue is fully open.  Upon officially opening its doors to the public, the new development will provide seamless connectivity to the Centre’s comprehensive lifestyle offering, from The Gate building through to Central Park Towers.  The new retail experience will feature over 100 days of unique arts, culture and wellness activations, making DIFC the destination where business meets lifestyle.

During the first half of 2019, Hilton Hotels & Resorts announced the opening of Waldorf Astoria, Dubai International Financial Centre. The 275-key hotel occupies the 18th to 55th floors of the Burj Daman complex, including 46 suites and 28 residential suites offering unobstructed views of the Downtown Dubai skyline.  Combined with the two other world-class hotels based in the Centre, Four Seasons and the Ritz-Carlton DIFC, this brings the total number of hotel rooms available to those visiting the DIFC to 722.

In addition, the Centre welcomed a number of new culinary concepts to the DIFC’s gourmet scene including ‘Marea’, the New York fine dining experience led by multi-Michelin starred chef, Michael White as well as Grecian inspired ‘Avli by Tasha’. In March 2019, it was announced that renowned chef Nusret Gökçe is set to launch casual dining concept ‘Saltbae’ at the Centre this year.

DIFC is also home to one of the UAE’s largest collections of public art with sculptures from internationally renowned artists including Manolo Valdés and is the foundation for initiatives such as the One Mile Gallery in partnership with Brand Dubai which showcases the best of local, regional and international design and promotes art, innovation and entrepreneurship. 

The Centre also welcomed its seventh elite art gallery, Sconci Gallery to the DIFC in the first half of 2019. Established in Rome during 1977, the gallery has collaborated with leading artists and international auction houses to showcase collections from masters of modern and contemporary art, as well as emerging artists. 

During March 2019, the DIFC hosted the most successful edition of the hugely popular Art Nights in the last five years. The event, which marks the beginning of Dubai’s coveted art season, Art Dubai 2019, saw participation from international and local art galleries and artists, as well as installations accompanied by electric musical performances and light installations from interdisciplinary artists.

Finance

Thinking about starting a new business? Female entrepreneurs will face more obstacles than their male counterparts

Thinking about starting a new business? Female entrepreneurs will face more obstacles than their male counterparts

Women face more obstacles when starting a business, meaning they need more support in order to succeed, reveals new research from ESCP Europe.

Females and males experience the support provided by the ecosystem for their start-up activities very differently. Women in contrast to men tend to majorly rely more on social support, which interestingly applies to start-ups in both highly supportive as well as non-supportive environments.

Professor of Management Christian Linder and his co-author Sonja Sperber from the ISM International School of Management in Frankfurt (Germany) explain

“We found that when starting up a new business, women face problems with confidence and obtaining finance, and are more critical about their own capabilities and skills. In order to still be successful, this lack of confidence is compensated by mobilising their network for support. However, in contrast, males are more confident of their capabilities to overcome support constraints on their own.”

In addition, it was found that women face a work-family conflict, and struggle more to counterbalance their different roles when committing to new business ventures.

Professor Linder adds,

“starting a business is always linked to emotional or psychological stress. When facing a lack of resources, social support can serve as a source of information as well as provide assistance.”

As a result, the start-up strategies chosen are a reflection of the individually perceived support from the ecosystem, the current life situation as well as the intended goals (as for example, high level of autonomy, financial success, status). This research shows the highly complex situation of female entrepreneurs, and concludes that there certainly is a need for stronger, sustainable foundations so that females can catch up with their male counterparts.

This research was published in ‘Small Business Economics: An Entrepreneurship Journal’.

Finance

Best European P2P Loan Platform 2019

Swaper is a P2P loan marketplace offering an easy investing in pre-funded consumer loans from Poland, Spain, and Denmark in cooperation with Wandoo Finance Group.

Launched in 2016, Swaper began life from the idea to build better financial products and to offer many different financial products. When the platform was initially under construction, the firm’s main goal was to make it according to the needs of investors. As part of this focus, the Swaper team collected opinions and feedback of experienced investors. Investors expressed a need for easily accessible mobile platform with clear and understandable overview of their investments, and a possibility to have configurable push notifications, to decide what kind of information they needs and how often. 

As a result of this newfound knowledge, the Swaper team realized that in addition to focusing on the web platform, they should be also building the mobile application. Therefore, they launched the website version of the platform and after a short while Swaper was the first P2P marketplace that was also launched as a mobile application. Today, this innovative company offers investment options into loans driven by a dedicated team who are highly experience in the financial sector, and as such are able to offer clients the benefit of their extensive market knowledge and industry understanding. All investments offered on Swaper’s marketplace start from 12% annual interest with unique loyalty bonus to earn an additional +2%.

The firm makes investment convenient through the Auto-Invest Portfolio, which investors can easily set up with just one click. This innovative approach grants investors the maximum interest income based on their chosen investment amount and period. Seeking to remain ahead of emerging market trends, Swaper has developed a Mobile Application for both Android and iOS, which provides investors with the opportunity to manage their investments easily and conveniently, and have full control over investment thanks to the push notifications.

As part of the Wandoo Finance Group, a professional IT systems developer based in Latvia, Swaper is able to leverage its parent group’s vast technological expertise and infrastructure to ensure it offers clients the most innovative and reliable solutions. In today’s modern financial market where technology is key, Swaper is making waves thanks to its revolutionary online platform. 


Alongside offering cutting-edge support and innovative financial services, Swaper is also deeply committed to providing its users with exceptional client service and support they can rely on. For the Swaper team, the key to good customer service is building good relationships with customers. They believe in thanking the customer and promoting a positive, helpful and friendly environment, which will ensure they leave with a great impression. They also feel that good customer service means helping customers efficiently, in a friendly mannerand that it is essential for the firm to be able to handle issues for customers and to do its best to ensure they are satisfied. 


It is the provision of exceptional customer service and the constant collaboration with the investors, that sets Swaper apart from its competitors. By constantly working with investors to understand their needs and update its offering and processes, the firm is able to drive customer loyalty and ensure that customer expectations are met in all cases. 


“Looking to the future, Swaper will launch a range of exciting new products and features to enhance its already impressive platform. In 2019, the firm’s focus will be on growing both sides of the marketplace by satisfying increasing investor demand, as well as loan supply from current and possibly new locations by expanding the investment opportunities on the marketplace. These developments will drive Swaper to even greater global renown and establish it as the ideal platform for anyone seeking financial services,” said Danija Misus, the Product Owner at Swaper (pictured right).


Ultimately, with the FinTech market showing no signs of slowing down and investment in this growing industry higher than ever before, Swaper has a bright future ahead of it. The firm will continue to collaborate with clients to understand their needs and remain ahead of emerging market developments.


Web Address: www.swaper.com 

 

“Swaper will launch a range of exciting new products and features to enhance its already impressive platform. In 2019, the firm’s focus will be on growing both sides of the marketplace by satisfying increasing investor demand, as well as loan supply from current and possibly new locations by expanding the investment opportunities on the marketplace.”

Swaper picture

“Investors expressed a need for easily accessible mobile platform with clear and understandable overview of their investments, and a possibility to have configurable push notifications, to decide what kind of information they needs and how often.”

Women Finances
Finance

Financial Inequality: The Gender Gap

  • There is a financial inequality gap between men and women in developing countries and their economies and there has been no sign of improvements in recent years. There is no discernable gender gap in high-income economies.
  • 69% of adults. Which is a total of 3.8 billion people around the world have a bank account or mobile money provider. This number has increased by 7% in the last 5 years.
  • About 1.2 billion adults have obtained some sort of formal financial account since 2011, when the rate of financial inclusion was just 51%.
    However, 1.7 billion people around the world remain outside of the formal financial system.
 

In developing countries, the gender gap in financial inclusion between men and women has stalled at nine percentage points. FairPlanet researched further into the current situation.

 

When governments deposit social welfare payments directly into women’s digital bank accounts it can  empower their decision-making at home.

 

Research suggests that when women have more financial autonomy, spending in the home tends to be reprioritized. With factors such as the interest of families and children. It can also boost labour force participation among women.

 

The gap is large in the Middle East and North Africa: 35% of women compared with 52% of men, have access to some type of financial account.

 

Beyond labor force participation, women face an array of problems and obstacles to getting financial services, including discriminatory laws and conservative social norms.

 

Simple accounts accessed through mobile phones might help thwart some of these barriers.

 

Mobile money accounts are often easier to open than traditional bank accounts and they have the added benefit of allowing women to transact from the safety and comfort of their homes.

 

Mobile technology and money accounts may help to close the gender gap when it comes to financial equality. However, like anything, further research and data is needed to truly predict what the future holds.


Finance

12 Expenses You Can’t Deduct Against Business Even If You Incurred Them For Business

By Jonathan Amponsah CTA FCCA, The Tax Guys

One of the key ways to reduce your tax bill is to claim all legitimate expenses you incurred for the business. But the general rule that says you can claim all expenses incurred wholly and exclusively for the purpose of your business is not as straight forward as you may think.

 

So here are some surprising things you cannot tax deduct even if you incurred them for your business.

 

  1. Accommodation

Imagine you’re an actor who lives in London. You’ve secured a contract to shoot an exciting film in Edinburgh for three months. You realised hotel costs would be too high. So, you decided to rent an apartment for three months. Surely you can claim for the costs of the rent against your profits right? Well it makes sense but HMRC will deny the claim on the basis that the expenses were not incurred wholly and exclusively for the purposes of your profession as an actor. Why? One of the reasons HMRC will put forward is that there is a dual purpose in incurring the expenditure, namely to meet your ordinary needs for warmth and shelter as well as your stated business purpose.

 

  1. Travel

Here’s another scenario that might surprise you. You operate as a self-employed doctor or sole trader rather than limited company. You have a home-based office. You travel to see different patients or clients on a regular basis. Your journey starts from your office (at home) and includes a few itinerant travels from one client to the other client. Can you claim the full travel expenses? Logic will tell us that yes. However, the rules deem the travel from your home office to patients / clients as ordinary commuting and therefore not tax deductible.

 

  1. Client Entertainment

As part of your sales and marketing, you decide to take clients to a relaxed restaurant to discuss new business. The purpose is to negotiate and generate new business. The income will be taxed so the expenses should be ok to put through the business, right? Unfortunately, the rules specifically disallow these expenses to be claimed against tax. Part of the reason behind this is that you could have had the same conversation over a cup of tea in the office, plus there is an element of personal benefit in the entertainment.

 

  1. Promotional Gifts

It’s true that nothing ever happens in business until a product or a service is promoted and sold. And when it’s sold at a profit, tax gets collected accordingly. However, if you promote your business by spending too much money on promotional gifts to customers and the gifts cost more than £50 per customer, you won’t be able to deduct these costs against your income. Even where the gift cost £50 or less, make sure it carries a conspicuous advert for your business.

 

  1. Clothes for Work

Imagine you’re a barrister and you’ve purchase your gown to be worn in court. You don’t wear this gown in public. Can you go ahead and claim the cost of the gown against your tax? Not according to the famous tax case of Mallalieu v Drummond which established that “no deduction is available from trading profits for the costs of clothing which forms part of an ‘everyday’ wardrobe. This remains so even where the taxpayer can show that they only wear such clothing in the course of their profession.”

However, some protective and work clothing with logos and other business branding are claimable. If in doubt, speak with a tax accountant.

  1. Staff Reward via Trust

Your staff are well engaged within your business and you want to reward them. You decide to make payment into a Trust to demonstrate that the money has been earmarked for them and waiting to be paid when they hit their targets.

 

As the money has been paid out of your bank account to the Trust, can you claim it as a legitimate business or staff expenses? Unfortunately, not. Because of a specific tax avoidance rule, this legitimate expense cannot be claimed. 

 

  1. Parking Fines

Your business is delivering some items to a customer. The driver parks for a few minutes and get a parking ticket. Surely the reason for the fine is because of business activity so it should fall under the wholly and exclusive for the purpose of business rule? Not quite. Fines incurred for breaking the rules are disallowed.

 

  1. Legal Expenses

Legal fees can be expensive right…? And whilst they do add value to your business and may save you from making costly business mistakes, not all legal costs are tax deductible. For example, fees in connection with the purchase of a business premises or investing in shares are disallowed.

 

In addition, fees that have both personal and business elements may fail the wholly and exclusive test. And legal costs associated with breaking the law are also disallowed. For example, where you’ve got a parking fine and you decide to call your lawyer to defend the case and you lose, you won’t be able to claim the legal fees.

 

  1. Wages to Spouse or Kids

A great way to keep more of your cash within the family is to employ your spouse and kids. And there is nothing wrong with this plan. However, where you pay family members over and above the market rate, where they don’t actually perform any task for the business or where you’ve structured this working arrangement incorrectly with no evidence or paperwork to back up your plan, HMRC will not allow their salaries to be put through the business. Do take care with this as it’s currently a hot spot for HMRC enquiries.

 

  1. Sponsorship

Sponsoring an event is another area that might surprise you. HMRC will disallow the cost if they can show that perhaps the sporting field you are sponsoring is a director’s, partner’s or proprietor’s regular hobby or if the party being sponsored is a relative of the business owner, or if there is no proposed or actual return on investment from the sponsorship.

 

So, the trick here is to ensure that the sponsorship deal is structured correctly and there is a clear commercial benefit for your business.

 

  1. Donations

Donations made to political parties and non-registered organisations outside of the Gift Aid regime cannot be claimed against tax. This is to stop businesses offsetting costs through privately owned ‘non-profit’ organisations.

 

  1. HMRC Penalties

Penalties imposed by HMRC and other government departments are not tax deductible. So, avoid those penalties and get your accounts and tax returns done on time.

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Jonathan Amponsah CTA FCCA is an award-winning chartered tax adviser and accountant who has advises business owners on entrepreneurial tax reliefs. Jonathan is the founder and CEO of The Tax Guys.  www.thetaxguys.co.uk

Corporate Finance and M&A/DealsRegulation

Financial Services Employees Put Their Employers at Risk through Unsecure Communication

Symphony “Workplace Confidential survey highlights a worryingly casual attitude to workplace communications within the Financial Services Industries

Symphony Communication Services, LLC, the leading secure team collaboration platform, reveals that financial services employees are inadvertently putting company and customer data at risk through their communication channels.

These findings form part of the Symphony Workplace Confidential survey, which looked into the growth of new collaboration tools and platforms entering the workplace. FS workers are increasingly putting their trust in these platforms to conduct business, for both internal and external communications. For instance, the survey revealed that 34% have used these platforms to share strategic plans regarding their company, 40% have shared information regarding a customer, and 30% have shared financial information regarding their own employer.

However, many collaboration platforms are not protected with end-to-end encryption, and employees using them to share sensitive data points towards a worrying gap in security knowledge. Despite the fact that 94% of survey respondents have confidence that information shared via these platforms is safe from external eyes, a shocking 28% of financial services professional surveyed were not even aware of their employer’s own IT security guidelines. Interestingly this 28% figure is actually above the survey average of 22%; a cause for concern given the highly regulated sector of financial services.

“Financial services is about transactions and efficiency. And market workers have always been innovators when it comes to communication and speed. Fifteen years ago they ‘hacked’ AOL Instant Messaging and IRC into their workflows to help them get more work done faster,” states Jonathan Christensen, Chief Experience Officer at Symphony. “They adopted these tools for the ease and speed they offered but without regard to privacy, security, or compliance. The same thing is happening today with mobile device proliferation and cloud applications moving into the workplace.”

The use of these tools helps to accommodate a new way of working, allowing employees to work remotely from any location. While this is a positive move in powering the modern workforce, this also presents its own security and compliance challenges:


● 38% admit to accessing these tools from their personal computer
● 48% use their personal phone (higher than the 38% who use a work issued phone)
● 12% even admitted to using a publicly available computer

“Taking core capabilities away with draconian IT policies is not the way forward.” noted Christensen. “Workers need responsive, flexible collaboration platforms that are also safe to get their jobs done.”

Additional findings from the survey include:


• Only 31% of survey respondents said they were very confident they always stuck to company security guidelines
• 24% had shared information for HR including personal salary information, contracts, reviews etc.
• 25% admit they have used these tools to talk badly about a customer
• 33% have connected to unsecured internet to conduct work