Wealth & Finance International | November 2016
The New Modern in New York City Led by Lilian Weinreich, AIA, RAIA, LEED AP BD+C, NCARB, we find out how Lilian H Weinreich Architects aims to transform ordinary spaces into spectacular and unique environments in the most straightforward, practical, precise and functional way. PAGE 10
The Benefits of Investing in Renewable Energy Assets
Leading the FinTech Challenge We speak to Rich Wagner, CEO of APS financial (APS) about the company and his own CEO of the Year - UK accolade. PAGE 44
James von Claer from Notz Stucki (London) Limited and Mortimer Menzel of Augusta & Co LImited talk to us about the approach to excellence that has led to the selection of Augusta & Co, a leading adviser in the renewable energy industry. PAGE 26
TYLER TIPSÂŽ 21st Century Edition by Richard Tyler Your Essential Guide to Building a Profitable, Sustainable Business in Todayâ€™s Marketplace. PAGE 38
Wealth & Finance | November 2016
Welcome to the November edition of Wealth & Finance International magazine, which has a remarkable array of thought-provoking and engaging content, from architecture to banking, to personnel and wealth management. Heading up this edition is Lilian H Weinreich Architects (LHWA), an impressive boutique multi-disciplinary architectural and interior design firm based in New York City. Lilian Weinreich turns the spotlight on how this practice aims to transform ordinary spaces into spectacular and unique environments in the most straightforward, practical, precise and functional way. In recent news, the financial markets could be being ‘short-sighted’ over Trump’s victory, a leading investment analyst warned. Tom Elliott, deVere Group’s International Investment Strategist, says this comes as the S&P 500 Index wiped out a 5% loss by the end of trading, that had been triggered by Donald Trump’s surprise presidential election victory. Thinking about what happens to us when we are no longer around is something most of us try to avoid, but there are some simple steps we can take to make life easier for the loved ones we leave behind. Philip De Ste Croix, head of future planning at Damsons, says we should not be afraid of discussing these issues, and offers some advice on how to make a difficult period more manageable. On technology, according to Sopra Banking, governments are starting to realise that blockchain holds promise and offers opportunities for innovation in its methods of interaction with citizens and building digital services. Also, referred to as ‘distributed ledger technology’, the blockchain is a way of recording information in a linear manner, somewhat like a database. I hope you enjoy reading this compelling edition. Jonathan Miles, Editor
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Lilian H Weinreich Architects
Wealth & Finance International | November 2016
The New Modern in New York City
Led by Lilian Weinreich, AIA, RAIA, LEED AP BD+C, NCARB, we find out how Lilian H Weinreich Architects aims to transform ordinary spaces into spectacular and unique environments in the most straightforward, practical, precise and functional way. PAGE 10
The Benefits of Investing in Renewable Energy Assets
Contents ARCHITECTURE 10. Lilian H Weinreich Architects 16. Hyatt Announces Plans for a New Park Hotel in Kyoto, Japan
Leading the FinTech Challenge We speak to Rich Wagner, CEO of APS financial (APS) about the company and his own CEO of the Year - UK accolade. PAGE 44
James von Claer from Notz Stucki (London) Limited and Mortimer Menzel of Augusta & Co LImited talk to us about the approach to excellence that has led to the selection of Augusta & Co, a leading adviser in the renewable energy industry. PAGE 26
TYLER TIPS® 21st Century Edition by Richard Tyler Your Essential Guide to Building a Profitable, Sustainable Business in Today’s Marketplace. PAGE 38
Front cover image: Andy Marcus / Fred Marcus Photography Hair and Makeup by Yana Gorcheva On location: Noho Duplex, New York
INVESTMENT 18. What Does Brexit Mean to Property Investors & Developers? 21. Innovation to Play Critical Role in Managing Hedge Funds 22. Best North America Real Estate Fund: Real Estate Fund II & Best for Opportunistic Real Estate Asset Investment - California 26. The Benefits of Investing in Renewable Energy Assets 30. 20 Years of Experience in Capital Markets 32. Money, Money, Money 35. Exceeding Expectations and Achieving Financial Objectives PERSONNEL 36. Gender Pay Gap at 19.6% for Info and Comms Sector 37. A Pioneering Spirit and Innovative Approach 38. Your Essential Guide to Building a Profitable, Sustainable Business in Today’s Marketplace BANKING 42. Blockchain - the New Vogue in Government 44. Leading the FinTech Challenge 46. FCA Publishes the Final Report of Its Investment and Corporate Banking Market Study ACCOUNTING 47. Post-Implementation Review Concludes GASB Standard on Fund Balance Reporting Achieves Its Purpose 48. Qtrade Financial Group WEALTH MANAGEMENT 50. Planning Ahead for Bereavement 52. Investors Can ‘Seriously Build Wealth’ in This Wave of Anti-Globalisation WEALTH PRESERVATION 53. Six Reasons to Consider Transferring Your Defined Benefit Pension 54. HMRC’s Approach to Collecting Tax from High Net Worth Individuals PRIVATE WEALTH 56. UBS/PwC Billionaires Report Reveals Billionaire Wealth Facing Headwinds with Overall Wealth Declining by $300 Billion 58. China-Based Investors Show Rising Sentient Towards ‘Safe Havens’ Markets PRIVATE BANK OF THE MONTH 59. Wells Fargo Delivers 10,000 Free Winter Coats to Low-Income Students RETIREMENT 60. Current Pensioners Have Managed to Secure Unprecedented Leisure Time but Fail to Enjoy the Fruits of Their Labour 62. 9 out of 10 Retirement Savers Remain in the Auto-Enrolment Default Fund TAX 63. Zero Tolerance Needed Against Tax Secrecy 64. Digitisation of Tax ‘Harder on Small Businesses’ 66. Winners’ Directory
Wealth & Finance | November 2016
Are the Financial Markets Being ‘Short-Sighted’ over Trump’s Victory? The financial markets could be being ‘short-sighted’ over Trump’s victory, warns a leading investment analyst at one of the world’s largest independent financial advisory organisations. The warning from Tom Elliott, deVere Group’s International Investment Strategist, comes as the S&P 500 Index wiped out a 5% loss by the end of trading that had been triggered by Donald Trump’s surprise presidential election victory.
Mr Elliott commented, “against most analysts’ predictions, the S&P 500 ended yesterday in positive territory. Investors focused on three planks of Trump’s economic policy that are seen as beneficial to the US stock market.
“First, the lightening the load of regulations on certain sectors. This will help banks (repealing Dodd-Frank perhaps), mining and energy (repealing of some environmental laws), abolishing Obama’s Affordable Healthcare Act and the government’s pressure on pharma companies to reduce drug prices to European levels, which boosted pharma stocks. Second, the creation of an infrastructure fund to build bridges and repair roads will boost certain sectors through increased government demand. “And third, Trump is seen as fiscally lax, following the record of previous Republican presidents. He has promised to lower taxes for companies and various segments of the population and his infrastructure projects will be pro-cyclical – that’s to say, boosting demand in an economy that is already growing at a decent pace of 2.9% annualised in the last quarter.” He continues, “however, there are concerns that the financial markets are being somewhat short-sighted with yesterday’s rebound – the biggest stock market rebound since 2008. There are some potential risks that should still be taken into account. These include the threats to trade agreements, old and new, and his pledge to halt immigration on which so many sectors of the American economy rely.” He goes on to say, “Trump’s plans could well increase overall demand in the economy, boost growth and corporate earnings in the near term, but result in inflation further down the line. A typical boom and bust scenario may follow. Avoid Treasuries in this longer-term scenario, which will react badly to a reassessment of currently low long term inflation and interest rate expectations. Mr Elliott concludes, “investing under Trump may be a volatile experience, but with this comes key opportunities. As always, investors need to remain diversified globally, by sector, and by currency exposure.” www.devere-group.com
Brexit and Interest Rate Rises Will Expose Shortage of Valuation Surveyors, EDM MSS Warns There are too few valuation surveyors to deal with the greater demand for their services that will follow a rise in interest rates sparked by Brexit, EDM Mortgage Support Services (EDM MSS) warned in early November. The sharp fall in sterling following the Brexit vote has prompted speculation that interest rates will have to rise to tackle inflation brought about by higher import prices. Higher interest rates will then prompt mortgage borrowers to shop around more for the best deals and boost the demand for associated valuations, EDM MSS says.
them to focus on more challenging properties and reward them accordingly. “Using data to streamline the processes and number of valuations is a win for everybody involved, including brokers and their clients too so the status quo is not sustainable in the long term.” The overwhelming majority (93%) of delegates who attended an industry roundtable organised by EDM MSS agreed that organisations should work more collaboratively to share property data for the good of the industry and 70% agreed that processing costs could be reduced if they did so.
Yet the number of valuation professionals has decreased steadily since the financial crisis because of a dramatic drop in business and a shortage of new recruits, Joe Pepper, managing director of EDM Mortgage Support Services, says. More extensive use of technology will help the industry address the problem, however. Joe Pepper commented: “A lot of borrowers are paying historically low fixed and tracker rates at present with very little incentive to move and re-mortgaging volumes are at a low ebb.
In its response to the government’s consultation document on improving the consumer landscape, EDM MSS said that implementing new technology and sharing property data will create a far richer experience for brokers and their clients, as well as play a key part in fulfilling seven-day mortgage switching.
“It will only take a small rise in interest rates for borrowers to shop around much more again but then the valuation profession will have a big capacity issue. For example, there was an uptick in the market in 2012/13, especially in London, which caused long delays for lenders and lots of customer aggravation. If that happens on a wider scale it would be very challenging for the customer experience.” He says that surveyors could cope with an increase in demand if they were to make greater use of technology to streamline the valuation process and allow more triaging of valuation assignments. EDM Mortgage Support Services’ new PRISM product facilitates such triaging by providing a central platform of information and enabling users to sift out properties that do not require valuations because sufficient data already exists. Joe Pepper added, “there are many benefits from such a system. A key one is that it will allow lenders to make decisions in principle on the suitability of a property as an asset within seven seconds, improving the customer experience and enabling lenders to consider variable application fee models. Reducing the volume of work for valuers will also enable
Wealth & Finance | November 2016
£500 Pensions Advice Allowance May Lead to Misconceptions over the True Cost of Financial Advice David Hetherton, CEO of Walker Crips Wealth Management, on plans to enable savers to use £500 from their pensions to pay for financial advice on their retirement says that, “the Pensions Advice Allowance is a big step in the right direction which will encourage savers to consider taking valuable financial advice on their retirement strategy.
“While the £500 allowance is an important recognition of the value of financial advice, it may also create misconceptions. The fee is not necessarily sufficient to cover the cost of financial advice that many clients require. Additionally, advisers must now assess a much wider range of options following the introduction of pension flexibilities, and consider more complex strategies such as intergenerational wealth planning. It is unlikely that the £500 allowance will purchase fully rounded advice which dovetails holistically with clients’ other financial requirements.
“We applaud the introduction of the Pensions Advice Allowance but believe there should be tiered system relating to the size of the pension pot and the complexity of the financial advice required. This will give clients a more realistic expectation of the cost of the financial advice they may need to meaningfully inform their retirement strategy.” For more information or to speak to David, please contact Anthony Cornwell/Josh Voulters/Danae Quek on 020 3697 4200 or email walkercrips@ fourbroadgate.com.
Andrew Porter Appointed President of CISI Birmingham and West Midlands Branch Andrew Porter, Chartered FCSI has been appointed President of the Chartered Institute for Securities & Investment (CISI) Birmingham and West Midlands branch. Andrew achieved a Master’s degree in European Studies at Bradford University before beginning as a graduate recruit at regional stockbroker Albert E Sharp in 1994. Andrew achieved his CISI Diploma in 1996 and has been a CISI member since 1993. He works at Barclays Wealth & Investment Management and is also a trustee on the CISI Educational Trust.
Of his appointment as CISI branch President, Andrew said, “I have always enjoyed my professional body, the CISI. I am particularly really interested in the education, both ongoing professional development for members as well as educating those interested in a career in finance and financial education generally. It is a privilege to be appointed President in Birmingham and the West Midlands and to connect my work on the CISI Educational Trust.
ham and West Midlands branch. We look forward to supporting him in the promotion of the branch’s professional development and membership programme.”
“Using our skills and experience as finance professionals within the wider community in schools and colleges is a great example of where CISI can make a difference. I would like to thank my predecessor Ian Bailey in his work as former President in progressing the committee and furthering its presence. “There are many forthcoming events, such as student Insight Days and the Professional Skills conference that the branch is becoming involved in and I would like us to build on our successes as well as involving the broader membership.” Iain Bailey, Chartered MCSI and outgoing branch president said, “increased professionalism in both the financial advice and investment arena is providing a far better experience for clients as well as career opportunities for CISI members. The glue holding everything together remains cast iron integrity, which is clearly the driving force behind so many people working in the region. I wish Andrew all the very best in his new role with this great team.” Kevin Moore MCSI, CISI director of global business development said, “we are delighted to welcome Andrew as President of our CISI Birming-
Wealth & Finance | November 2016
Amicus Applies for Banking Licence Amicus Finance plc, a leading specialist financial services group announced that it has submitted a banking licence application to the Prudential Regulation Authority and the Financial Conduct Authority. Subject to authorisation it anticipates receiving its banking licence in 2017.
The new banking licence will enable Amicus to fulfil its long-term growth objectives by accessing an alternative and efficient source of funding. In advance of authorisation, Amicus will convert £30m of the debt currently used to fund its lending activities into equity and this will form the capital base of the bank’s operations.
John Jenkins, CEO of Amicus said, “applying for a banking licence is an important milestone for Amicus as we continue our growth journey. Becoming a bank will ensure we have the resources to grow, adapt and evolve our proposition in the market over the coming years. “I am delighted to welcome David Fisher, Alex Shapland and Paul Stevens to Amicus. They have outstanding reputations in the financial services sector and will play an important role in strengthening our governance structure as we prepare for the next phase of our growth.”
In preparation for this next step in its evolution, Amicus has strengthened its senior management team and governance structure by appointing David Fisher, Alex Shapland and Paul Stevens as non-executive directors to the Board. David Fisher is the former CEO of Sainsbury’s Bank, Alex Shapland was previously a Partner at PricewaterhouseCoopers and Paul Stevens is the former Head of Investec Private Bank in the UK (please see note to editors for full biographies).
Keith Aldridge, founder of Amicus and managing director of Amicus Property Finance added, “from our modest beginnings in 2009, I am proud to be part of the ever-expanding team driving our growth. This is positive news for Amicus Property Finance. “Strengthening the board allows me to spend more time doing what I enjoy most, delivering for our customers and partners and capitalisation creates more capacity to deploy.”
Since its formation in 2009, Amicus has rapidly expanded its specialist lending activities and currently provides short term property loans, SME lending and working capital solutions through its three divisions, Amicus Property Finance, Amicus Commercial Finance and Norton Folgate.
Deal Enabling Cross Border Recognition of CISI Financial Services Qualifications Between Ireland and the UK The Chartered Institute for Securities & Investment (CISI) have announced an initiative which could herald the beginning of increased harmonisation of financial services qualifications between Ireland and the UK.
UK based professionals transferring to Ireland, who hold the CISI’s Investment Advice Diploma (IAD), will now be exempt from three modules of the Qualified Financial Adviser (QFA) designation. The QFA is the benchmark professional designation for financial advisers in the Irish market, approved by the Central Bank of Ireland and provided by the Institute of Banking (IOB) in Ireland, LIA and The Insurance Institute.
The CISI has had representation in Ireland since 2006. For further information on this Institute of Banking Ireland and CISI initiative please contact Deirdre.Heffernan@cisi.org or contact Institute of Banking Ireland customer support on email@example.com and 00353 (01) 6116500.
This will free up the movement of firms and individuals and further facilitate the continued growth of the financial services industry in Ireland. The CISI is the leading professional body for securities, investment, wealth and financial planning professionals with over 40,000 members in 116 countries. In addition to London and Dublin, CISI has representative offices in financial centres including Singapore, Hong Kong, Manila, Dubai, Barcelona, Mumbai and Colombo, working in close cooperation with Regulators, firms and other professional bodies worldwide. Over 40,000 CISI examinations were sat in 80 countries in the last 12 months, with 92% of the world’s international banks taking CISI qualifications. It is also in discussions with the IOB to arrange mutual recognition for those Irish financial advisers possessing the QFA Diploma working in the UK and Northern Ireland. Frank O’Riordan MCSI, president of the CISI Ireland branch committee said, “we are extremely pleased to be working with the Institute of Banking and delighted to have achieved this important milestone. “We are very supportive of the concept of mutual recognition of capital markets qualifications to make it as seamless as possible for practitioners and firms to move between jurisdictions, while maintaining high standards of professionalism”
Wealth & Finance | November 2016
The New Modern in New York City Founded in 2009, Lilian H Weinreich Architects (LHWA) is a boutique multi-disciplinary architectural and interior design firm based in New York City with roots in Australia. Led by Lilian Weinreich, AIA, RAIA, LEED AP BD+C, NCARB, the practice aims to transform ordinary spaces into spectacular and unique environments in the most straightforward, practical, precise and functional way.
Lilian H Weinreich Architects
Lilian Weinreich. Photo: ÂŠSteve Freihon
A Considered Process When beginning a new project, LHWA’s approach to design is defined by a specific set of criteria: the unique needs of the individual clients and their space; the development of an unequivocal, clean, simple, seamless and sophisticated background for the programmatic requirements; and the creation of an aesthetically unencumbered environment.
ormal simplicity requires intellectual rigor and aesthetic restraint - which is immediately apparent in each of the firm’s projects - from the reinvention of a building in Gramercy Park with duplex apartments to the remodel of a Central Park South bath and dressing room. The firm’s portfolio includes a range of high-end apartment building, duplex and townhouse renovations, as well as institutional work. Each project is opulent in the clarity of its spatial and functional resolution.
Weinreich’s pure sensibility evolves not from a predetermined architectural style, but rather from the intent to design clean, intelligent and functional space that operates as a background to what is contained within them. Working with space and light as sculptural materials, LHWA constructs architecture dramatic in its purity of means. “My aesthetic is entrenched in the modern, using prevailing technology to create leading-edge environments that are simple yet intelligent and sophisticated ‘the new modern’”, Weinreich says. “My goal is always to aim for the essence of timelessness and the paramount in design as well as in execution.” Weinreich cites her Australian upbringing as a major aesthetic influence, instilling sensitivity to the natural environment as well as a proclivity to architectural modernism from her family home. Her parents, Holocaust survivors, commissioned famed architect Harry Seidler, an Austrian-born Australian architect, to design a house in the early 1960s. A leading proponent of modernism in Australia, Seidler was the first architect to fully express the principles of the International Modern Bauhaus in the country. In 2013, the Weinreich house was given a Sydney Heritage Building Registry citation. Weinreich’s parents recognised her artistic talents at a young age and, when she was 14, they arranged private tuition with Professor Maximilian Feurerring in his Woollarah studio. Feuerring was considered to be one of Australia’s leading painters. Feurring did not teach children, but made an exception for Weinreich, whom he considered a prodigy. In rigorous weekly sessions, she reproduced works by modern painters such as Gauguin, Cezanne, Chagall, Modigliani and Clave and all of these paintings still hang in the family home in Australia. Through these lessons, Weinreich developed a regular following amongst his other pupils and friends, unbeknownst to her until years later. She chose Feurring as subject of her highly awarded Bachelor of Fine Arts Honours Thesis at Sydney University.
Above: The NoHo Duplex exterior. Photo: ©Francis Dzikowski/OTTO Before the first meeting with a prospective new client, Weinreich always requests the real estate floor plan or a site plan, existing photos, and the clients’ wish list. She wants to take the time to think about the opportunities of the prospective job and to come to the first meeting prepared with an initial design idea. “Interestingly enough, and to great personal satisfaction, my first sketch often reflects the built end product,” says Weinreich—a testament to her intuitive and visionary design ability, as well as her dedication to uncovering the right architectural solutions for her clients. For an interview for one particular apartment commission, she had learned from the real estate broker that the client had previously interviewed six other architects before meeting her. “The client selected me on the spot,” she recalls. “About halfway through the job, I asked him why he chose me. His reply: ‘You came with a vision’.”
Growing up in a home and within a family that fully embraced the methodology of modernism shaped Weinreich’s uncompromising aesthetics. These influences can be seen in the firm’s signature vocabulary—defined by essential reductivism, fastidious attention to detail and execution and sensitivity to the intrinsic properties of building materials and the environment. “Australians, by nature, have an honesty in their intent,” Weinreich says. “I strive to find the most direct and honest resolution in my work.” The day after Weinreich became a registered architect in Australia, she set off to New York City. She says, “This was an unexpectedly difficult transition. While I still consider myself an Australian, I could not imagine being based anywhere else in the world. The United States has awarded me amazing opportunities and career choices – for which I am very grateful.”
Painting with Light A key signature of the LHWA aesthetic is the precise application of light. The lighting schemes in all of the firm’s projects are designed to enhance spatial quality. In New York City apartment buildings, ceilings are tradi-
Main Image: The NoHo Duplex master bath’s lit infinity edge. Photo: ©Francis Dzikowski/OTTO Inset: The West 72nd Street Duplex master bath’s lit cove edges. Photo: ©Francis Dzikowski/OTTO
Wealth & Finance | November 2016
tionally lowered in bathrooms to accommodate plumbing pipes above, and Weinreich’s innovative solutions can often be found at this transition between ceiling heights. In the NoHo Duplex in downtown Manhattan, this condition becomes a design feature; lit cove edges soften the lowered ceiling at the entry to the powder room and master bathroom are ghosted behind full-height, eleven-foot tall sliding glazed panels doors. Inside the master bathroom, backlit dropped ceilings at the rear wall visually heighten the space while giving the interiors a warm glow. In the West 72nd Street Duplex on New York City’s Upper West Side, an infinity lit ceiling edge visually opens up the ceiling plane of the Calcutta gold clad master bathroom. This visual elongation of space appears throughout the firm’s portfolio, developed in response to working and building in Manhattan. Many post war high-rise apartments in New York were built with low ceilings throughout—a developer device to minimise cost and to maximise the number of apartments. In the West 72nd Street duplex, LHWA’s renovation opens up the ceiling on the main floor to full height, while using a hovering ceiling plane softened with lit coves as a visual highlight.
Above: The West 72nd Street Duplex main floor’s hovering lit ceiling plane. Photo: ©Francis Dzikowski/OTTO
Above: NoHo Duplex entrance to master suite with powder room at right. Photo: ©Francis Dzikowski/OTTO
In the West 67th Street Apartment, now under construction, perimeter dropped ceilings frame and define the main living spaces and innovative knife-edge cove lighting emphasises the full-height ceilings. The lowered ceilings house mechanical equipment, ducts, pipes, structural support for the tracks, audio-visual equipment, wiring and recessed light slots. By lowering a ceiling height to highlight function, the sculptural interplay of dropped ceiling planes creates an illusion of a vertical spatial openness.
Large open spaces with flexible functions are highly desirable in cities like New York, where real estate space is at a premium. The combination of two apartments on Lexington Avenue, currently under construction, incorporates sets of sliding translucent panels to create options in how the clients can configure the spaces—all open for entertaining and maximum daylight, or closed in multiple configurations for varying levels of privacy. The renovation of the West 72nd Street Duplex opens the main level of the duplex into one large, open, utilitarian space for dining, living and entertainment with full width unobstructed window views. The den space can be partitioned off with three full-height Shoji screens, designed in collaboration with the Italian manufacturer, when it needs to serve as a temporary sleeping area.
Sliding Panels, Flexible Space LHWA also employs full-height sliding panels as a signature design feature to enhance the feeling of soaring verticality—no matter if the floor to ceiling height is an eleven-foot loft space or an eight-foot post-war highrise. The firm’s design vocabulary uses full-height sliding panels to shape and elongate space, provide functional flexibility and shield visibility. In the NoHo Duplex, the powder room and master bedroom ensuite are separated by a series of eleven foot-tall, fully retractable, sliding, steelframed glass panels. These featured full-height elements create a perspectival vista to what appears to be an ostensibly larger space beyond. The glazed panels soften the glowing cove edges above the entries.
Blackened steel, refinished red oak and glass-railed floating stairs at the NoHo Duplex. Photo: ÂŠFrancis Dzikowski/OTTO Wealth & Finance | November 2016
Above: The commercial-quality kitchen at the Central Park South Apartment. Photo: ©Francis Dzikowski/OTTO Recognition LHWA enjoys a high-profile Internet presence, which continues to be a strong source of new work. The firm’s number of projects has tripled over the last two years with commissions of increasing size and scope. However, Weinreich never turns away a project because of its size. “If I see a potential design interest, I will take the job,” she says. The firm’s greater visibility includes three publications featuring Weinreich’s work coming out at the end of 2016. Her work was prominently featured in the latest edition in the BBeyond Publication Series, entitled Fabulous Interiors and Architecture. The coffee table book’s international theme covers “interior and architectural icons of today/classic landmarks of tomorrow”, targeting a high net worth audience and covering the issues that matter to them and their lifestyles. LHWA in the only New York City architect featured in the publication.
Above: Translucent panels, at right, to partition off the den at the West 72nd Street Duplex. Photo ©Francis Dzikowski/OTTO Design and Material Innovation (see left) Weinreich’s work highlights an innovative use of materials. The design and fabrication of the NoHo Duplex’s staircase presented the biggest single challenge of the project. The staircase’s co-planar, clear-tempered glass rails and childproof open slots elegantly comply with rigorous code and child safety standards. For a unique handcrafted industrial appearance, metalworkers forged all of the project’s metalwork, including the stair supports and door frames, on site.
Weinreich credits her success to her dedicated team of collaborators, skilled contractors and artisans as well as her husband, Dr. Michael Ezekowitz. Weinreich calls upon the support of the world-renowned cardiologist—cited by Thompson-Reuters in the top one percent of scientists in the world due to his research and publications—for his innate eye for detail and skill as a client and contractor liaison. LHWA is currently working on several new projects, including two large apartment remodels, one on Park Avenue and the other on Central Park South, a building in Gramercy Park with duplex units and a house in Avon, Connecticut. The firm is also exploring new markets, including the design of private jet interiors and commercial projects, where Weinreich’s considered, innovative design aesthetic can be applied in new ways.
Functionality The work of LHWA combines a clean modern aesthetic with an understanding of how people will actually live and use the spaces on a daily basis. All of the firm’s projects integrate extensive storage. The NoHo Duplex has floor-to-ceiling storage in the master bedroom, lower level playroom and children’s bedrooms. In the Central Park South Apartment’s kitchen, the renovation integrated a commercial-quality kitchen into a residential setting, enabling the client’s in-house chef to cater for over a thousand guests per year. The kitchen facilitates both intimate family gatherings as well as formal sit-down banquets for heads of state, dignitaries and royalty, complete with silver service and tuxedoed waiters. New full height upper cabinets, floor-to-ceiling pantry closets and the utiliSation of all under the counter island spaces, increased the storage capacity of this kitchen by 20%.
Name: Lilian H. Weinreich, AIA RAIA LEED-AP(BD+C), NCARB Firm: Lilian H. Weinreich Architects Email: firstname.lastname@example.org Web Address: http://weinreich-architects.com Address: 150 Central Park South #502 New York, New York 10019-1566 United States of America Telephone: +1 (917) 770 1000
Wealth & Finance | November 2016
Hyatt Announces Plans for a New Park Hyatt Hotel in Kyoto, Japan Hyatt and Takenaka Corporation announced in early November that their affiliates have entered into a management agreement for a 70-room Park Hyatt hotel in Kyoto, Japan. Expected to open in 2019, Park Hyatt Kyoto, will combine the elegance of the Park Hyatt brand with the distinctive culture of Japan’s ancient capital.
ark Hyatt Kyoto will blend the iconic city’s historic landmarks, gardens and modern architecture to offer experiences that will capture the harmony of traditional and modern Kyoto culture. Similar to the existing 38 Park Hyatt hotels around the world, Park Hyatt Kyoto will be designed as an inspiring sanctuary – a home away from home with highly personalised service, renowned art and design, a profound reverence for culture and exceptional food and wine.
ato Restaurant will remain in operations as present. We look forward to serving our community as a beloved Japanese restaurant, honouring the loyal patronage of our long-time guests.” “We are delighted to have reached an agreement with Kyoyamato Co. to move forward with the Park Hyatt Kyoto project in the scenic Higashiyama region of Kyoto,” said Toichi Takenaka, chairman & CEO, Takenaka Corporation. “Our goal is to restore the historic building of Sanso Kyoyamato and its surrounding gardens with an infusion of modern architecture. Together with Kyoyamato and Hyatt, we hope to create a hotel that exceeds the expectations of our community and a property that is best suited for one of the world’s most renowned cities, Kyoto.”
Park Hyatt Kyoto will feature a low-rise building in consideration of the Ninen-zaka cityscape and the surrounding landscape. Ideally located, the hotel will be walking distance from the Kiyomizu-dera Temple, will be surrounded by UNESCO World Heritage sites, and will boast views of Kyoto City and the Yasaka Pagoda. There are also several historical buildings on site, the oldest of which is a teahouse dating back 360 years.
Construction of Park Hyatt Kyoto is scheduled to begin at the end of 2016 with a targeted completion date of 2019. The construction and design will be overseen by Takenaka Corporation with interior designs by Tony Chi and Associates.
Takenaka Corporation has come into an agreement with Kyoyamato Co., Ltd., owners of the renowned Sanso Kyoyamato restaurant in Kyoto, to construct the luxury hotel on the site, and the 67-year old restaurant will continue to remain on site and be operated by Kyoyamato.
The term ‘Hyatt’ is used in this release for convenience to refer to Hyatt Hotels Corporation and/or one or more of its affiliates. Park Hyatt hotels provide discerning, affluent business and leisure guests with elegant and luxurious accommodations. For more information, please visit www. parkhyatt.com.
“For the past 22 years, the Park Hyatt brand has established a formidable reputation in Japan, by defining and delivering understated luxury for both international and local guests. Together with Kyoyamato Co. and Takenaka Co., we are excited to bring the Park Hyatt brand to Kyoto, the ancient capital of Japan. Our vision is to weave Kyoto’s rich culture and history with the Park Hyatt brand’s promise of rare and enriching experiences,” said Hirohide Abe, senior vice president of Hyatt, Japan and Micronesia.
Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company with a portfolio of 12 premier brands and 679 properties in 54 countries, as of September 30, 2016. For more information, please visit www.hyatt.com
“Kyoyamato Restaurant was established in Osaka during the Meiji Era in 1877 and has continued as a family business over 5 generations,” said Keiko Sakaguchi, CEO of the Kyoyamato Corporation. “The head of the family operated the restaurant despite hardships, and we are committed to carrying on the strong will of our successors and will continue to grow the restaurant. With the cooperation of Takenaka Corporation, Kyoyam-
Wealth & Finance | November 2016
What Does Brexit Mean to Property Investors & Developers? In short, we have opportunity. The Initial shock at the prospect of leaving the EU sent the markets into decline, but have they not reacted pretty much as anticipated? Never letting a crisis go without opportunity, selling high to force a low, and then buy back? Since then there has been some indication stability is returning to the markets though GBP to USD and Euro are still trading lower.
part of the negotiations to leave the EU. Outside the EU, the Prime Minister’s current visit to India has the subject of immigration firmly on the agenda for a post Brexit trade deal.
his is a good thing for UK exports, making them more competitive, assisting those companies that rely on export markets to grow. The UK vote for Brexit probably doesn’t mean that the housing market in the UK is about collapse either. While some uncertainty in the short term may reduce house price growth, for the longer-term property investor, this could be a good opportunity for investing.
Fundamentals of the UK Property Market The uncertainty of the exact outcome of Brexit may cause the property investor a little nervousness, but the fundamentals for UK property remain strong.
The foreign property investor has a boost in value-for-money In the 24 hours after the Brexit vote, the value of sterling fell on foreign exchange markets. Not by as much as predicted but by around 6% against the euro and 8% against the dollar. As I’m writing this, the pound is now worth €1.11. This fall means the European property investor has more sterling to spend.
In terms of capital growth, there are a number of comparable data choices but the Real House price tracker provides more meaningful guide to house prices and has been adjusted for the effects of inflation over the same period. Results confirm the increases in house prices have risen faster than inflation, and includes the last recession where the fall can be seen as a correction when compared to the overall property performance.
Demand for property, specifically in London from foreign investors is still likely to increase, interest has been high from China and Asia as their currency exchange has automatically allowed them a discount on current prices. This though is likely to be a short window of opportunity as we see markets recover from the initial shock.
There has been widespread comment as to the likely effects on house prices, with falls of between 5% and 10% for areas outside London, though little evidence can be found to support this so far. The BTL investor has also seen positive movements since 2001 with the size of private renters beginning to grow again.
Domestic demand will remain strong Demand from home buyers and renters probably won’t collapse either. There is concern that demand for housing will fall in London and the UK. However, parliamentary research produced for the 2015 Parliament put demand at between 232,000 to 300,000 new housing units per year through to 2020. Demand for new homes is exceeding supply by around 150,000 every year. This demand, fed by the number of new households created each year, is unlikely to fall below the level of supply.
Annual rent rises too have accelerated in recent years and these are not limited to London. Bristol and Brighton both enjoyed increases, averaging circa 18% in 2015 compared to the previous year. The insurer Homelet reported similar rises in the North (Newcastle upon Tyne and Edinburgh) with around 16% over the previous year. Ultimately the increases are attributable to what’s happening in their specific area and will be influenced by strong fundamentals. Perhaps Hull can expect some positive growth when it is crowned City of Culture?
Immigration will probably remain strong One of the main negotiations the UK and EU will have to discuss is the free movement of people. Despite the ‘Leave’ campaign suggesting a limit to immigration, we now understand there needs to be movement but objective negotiations will have taken place. This will form a significant
Rents in London have continued to rise with greater pace than other areas in the UK but have slowed since 2014, therefore a narrowing of the rent inflation gap between London and the rest of the UK.
Even with the recent policy change for buy-to-let investors paying additional stamp duty, more people have turned to BTL investments perhaps as an alternative to low interest rates, bolstered with the knowledge the pace of house building has not kept up with demand therefore sustaining their investment. At the time of the referendum result, there was speculation the base rate would reduce from 0.5% to 0.25% which did take place in August.
2) Change - Nothing ever stays the same, what works for today may not be right for tomorrow. A pertinent example is Kodak, they tried to ignore new technology hoping it would go away by itself on the basis of it being too expensive, too slow, too complicated etc. It wasn’t and their market changed irreversibly in a relatively short period of time, moving from wet film to digital technology. 3) Opportunity - Leaving the EU does provide opportunity. With price correction, there is opportunity to procure better land deals than prior to the referendum, as there may be fewer developers with available funding. Contractors had full order books and build costs had become very high prior to the referendum. We are aware some development contracts have been cancelled as a result of Brexit. Therefore, there might be more opportunity to reduce build costs as price elasticity plays out. The current volatility will ease. The fact the UK has to build more houses to meet demand won’t change.
The Bank of England indicated they would consider reducing further if the economy worsened, which so far has not been the case. It was also confirmed at the time, they also would add money to support confidence and restrict banks freezing liquidity, if not this would probably cause a further credit crunch and restrict mortgage finance. The governor of the Bank of England, Mark Carney, confirmed the reserve of £250bn can be made available if required. Carney further commented the substantial capital held and large liquidity gives banks the flexibility to continue to lend to businesses and individuals even during challenging times. This suggests provision and safeguards are in place to maintain current lending to suit demand.
Bastien Jack Group Ltd has a strong project pipeline and always procures sites which have strong fundamentals and in areas where people want to live. There is a huge amount of due diligence which goes into every site appraisal including courting many local agents and advisors to confirm local demand and Gross Development Values. Speaking with agents in our pipeline areas, they have confirmed confidence is still strong and enthusiastic house viewings are still going ahead. As long as lending is still being offered and liquidity remains within the economy, there remains a great opportunity for us to progress.
Since the referendum, the markets have rallied well and only recently fallen as investors are perhaps concerned that central banks around the globe are easing up on the monetary policies given the uncertainty of the US election result. In the UK, mortgage approvals by the main banks increased in September after a 19-month low in August. They were lower than the year before but speaking with our local agents, they suggest it’s down to a lack of supply of new build property rather than purchasing confidence.
Company: Bastien Jack Group Ltd Name: Rick Nicholls, managing director Email: email@example.com Web Address: www.bastienjack.com Address: Suite 6 The Regatta Henley Way, Lincoln LN6 3QR Telephone: 01522 503 711
There are three main areas for focus as we get to grips with the prospect of the UK outside the EU. 1) Calm - we have some indication this is already with us; the markets do seem to have calmed. This is probably due to all the positions the markets took on ‘Remain’ have now well and truly played out. It’s not over yet though, the volatility is set to continue until Article 50 has been triggered and a new directional plan from the government for the UK to leave is known.
Intellectual Property Office and International Law Office
Innovation to Play Critical Role in Managing Hedge Funds Hedge fund managers are innovating and increasing their investment in technology to create new competitive advantages and to address regulatory and operational issues, according to a new study by KPMG International, the Alternative Investment Management Association (AIMA) and Managed Funds Association (MFA) titled Transformative Change: How innovation and technology are shaping an industry.
As hedge funds start to rely more heavily on technology, many managers are becoming increasingly concerned about data risk. Hedge fund managers around the world are clearly worried about the safety of their most valuable data, with 83%of respondents ranking cyber security as an important technology capability that will attract significant investment.
n overwhelming percentage of hedge fund managers, 90%, say they are investing in technology today to improve controls and compliance, with an almost equal number, 88%, identifying efficiency objectives as a top reason. The survey polled more than 100 global hedge fund managers representing approximately US$300 billion of assets under management (AUM).
“Hedge fund managers are making investments in their future and are focused on becoming more efficient in both their regulatory compliance and operations,” said Richard H. Baker, President and CEO of MFA. “Ultimately, this should lead to a stronger sector with tighter controls and improved performance – something that regulators, investors and managers can all support.”
“This new survey underlines how the alternative investment industry continues to invest in technology across the entire fund management organisation,” said AIMA CEO Jack Inglis. “Investment in new technologies will help to keep the industry ahead of the competition over the long term, delivering consistent and positive risk-adjusted returns for investors while continuing to address the ever-increasing regulatory burden.”
For further information, please visit AIMA’s website, www.aima.org. For more information, please visit: www.managedfunds.org.
Of those polled, 58% of managers say that AI and machine learning will have a ‘medium to high’ impact on the sector over the next five years. As one hedge fund manager noted in the study, “AI is going to continue to make inroads in the sector. There’s a very strong business case for replacing humans with algorithms in a lot of areas of the business.” 74% said they believe automated trading technologies will have at least ‘some impact’ on hedge fund returns over the next five years. Virtually all – 94% -- fully expect technology to have an impact on competition over the next 5 years. “Hedge fund managers may not be building slick customer apps just yet, but they are clearly focused on making sure they are innovating – in the front, middle and back office – to ensure they remain competitive,” said Robert Mirsky, KPMG’s global head of hedge funds. The survey found that 32% of hedge fund managers polled are already using predictive analytics to uncover new trends and new opportunities. However, 42% (largely smaller funds) said they are still unsure of the value and are just monitoring the industry and 27% said they don’t expect predictive analytics to play any role in their trading strategy.
Wealth & Finance | November 2016
Best North America Real Estate Fund: Real Estate Fund II & Best for Opportunistic Real Estate Asset Investment - California Ethika Investments is a real estate private equity firm formed to provide investors access to a unique platform by tactically investing in opportunistic real estate assets primarily in the United States. We invited Ethika President Jean Paul Szita to talk us through the firm and how it came to win this prestigious accolade.
thika Investments, an affiliate of Laurus Corporation, a real estate investment and development company that specializes in hotel and resorts, office buildings, multifamily and mixed-use properties, is a Registered Investment Advisor which specializes in management of private equity real estate funds with a vertically integrated solution.
execution of value-add investment business plans and maximization of end value. “Partnering with a local private equity real estate fund like Ethika provides foreign investors a trustworthy alignment of interest. Our funds also allow for vested interest as well as a clear objective, breadth of cycle-tested experience and an expansive skill set.”
The firm’s fund partners vary throughout each real estate cycle, but generally are a 65% /35% split between foreign and domestic capital sources. Its clientele includes a wide variety of investors, from large institutional pensions to private sovereign wealth funds. Jean Paul explains the firm’s investment strategy and how it aims to provide these clients with the best possible financial solutions which meet their needs.
It is this strategy which sets the firm apart within the financial market and highlights the suitability of its investment offering to clients, as Jean Paul explains. “Ethika is vertically-integrated, serving both as a fund manager and real estate services provider, and working in tandem with our affiliate Laurus Corporation, we are directly involved in the management of the business plan for every investment, ensuring execution of the value-add process from start to finish.
“Here at Ethika, we believe timing and diversification are the key components to any successful investment strategy. “Therefore, our team focuses on investments in value-add and credit strategies where our team can stabilize the assets to produce dependable yields as well as upside opportunity, or provide financing that requires a deep understanding of transitional assets outside of the purview of traditional commercial real estate lenders to produce outstanding risk-adjusted yields. In today’s market, underperforming transitional assets remain attractively priced, and continue to deteriorate as distressed owners are unable to continue investing in them. After the strong acquisition period that occurred post 2009, we are finding that today is the era of strategic
“The company puts together entire strategies for investing that encompass everything from sourcing the asset, underwriting the asset, escrow, design, construction, repositioning, accounting, investor relations and property management, consolidating the entire process to a single operation, again minimising risk and the room for error. Ethika also has a highly diverse client base and prides itself on developing and maintaining relationships with their clients as the core of its business.
Wealth & Finance | November 2016
Central to the firm’s success is its experienced and dedicated staff, who are ambitious and eager to support clients however possible.
Looking at the challenges the market faces, additional interest in U.S. real estate is increasing competition, making it imperative that fund managers understand the subtleties affecting regional deals and dig deeper into secondary markets, moving beyond U.S. gateways. Ethika’s recent investments in Minneapolis, San Antonio and San Diego are cases of upside opportunity brought about by the dynamic growth in these local markets and beyond and are testimony to the success of the firm’s approach to investment.
“At Ethika our staff are integral to the firm’s continued expansion, into new markets and alternative investment strategies, as we explore unique approaches to value creation while upholding our commitment to delivering outstanding risk-adjusted returns to our investors. As such we look for individuals that prioritize relationships with clients and who possess a diversified and substantial background in the industry.
Moving forward, an increased migration of both domestic and institutional capital into alternative investments is predicted, with the real estate market set to increase its focus on funds that strive for alpha creation, or with respect to yield driven investments, which are insulated from risks of cap rate expansion. As such Jean Paul concludes by highlighting Ethika’s focuses for the coming months, which are revolve around supporting these industry changes.
“Individuals who have a history of excelling in their careers both professionally and academically and in particular, value those who have demonstrated their ability to provide leadership in their prior organizations are highly sought after, and we aim to support them and provide a working environment in which they can flourish and grow in their careers.” Within the wider financial market, while there seems to be no shortage in available capital, funds and investment managers are taking their time, carefully combing for smart deals, and adopting a wait and see approach as the market transitions.
“Looking ahead, our plan is to continue to focus on our most recent fund, Ethika Diversified Opportunity Real Estate Fund II. The fund focuses on opportunistic and value-add investments in the top 30 U.S. markets, continuing to capitalize on underperforming assets priced below replacement cost with significant upside potential.
“An experienced fund manager like Ethika Investments relishes this period in the market cycle because our team possesses a deep understanding of the nuances within the real estate marketplace and an ability to spot the pockets of opportunity, not only in the commercial office sector, but across the great real estate landscape, that will undoubtedly arise from this period of uncertainty”, Jean Paul comments proudly.
“Additionally, the firm is enhancing its focus on credit strategies with its first platform dedicated strictly to debt investments launching in Q4 2016. With more cumbersome regulations impacting the desire and ability of banks and traditional debt capital channels to lend, the market for private lending continues to grow at an exponential rate. Ethika’s specific experience in value-add real estate provides the firm a unique capability to provide borrowers with financing solutions on projects not able to fit a narrowing criteria of bank, CMBS and traditional balance sheet lenders.”
“While there are some challenges in the hospitality sector as the gap widens between buyers and sellers, office and retail are offering solid investment opportunities with a substantial upside if you know where to look.”
Company: Ethika Investments Name: Jean Paul Szita Email: firstname.lastname@example.org Web Address: www.ethikainvestments.com Address: Suite 1016, 1880 Century Park East, Suite 106, Los Angeles, CA, 90067 Telephone: 1.310.954.2009
While there are some challenges in the hospitality sector as the gap widens between buyers and sellers, office and retail are offering solid investment opportunities with a substantial upside if you know where to look. For the office sector, positive projections for the next three years anticipate absorption of existing office space to total 175 million square feet, which is more than the past eight years combined. Jean Paul explains how his firm works to ensure that it stays ahead of market shifts in order to remain at the forefront of innovation in the industry. “At Ethika, we diligently track trends in market level economic and real estate fundamentals and demographic shifts to predict where markets are growing, and maintain diversification across each fund. It’s important to look at opportunities that are not purely cycle-driven, selecting strong investments that take into account macro trends. Our team buys assets that are not perfectly stabilised in order to acquire properties at an attractive price. These practices place us as a leader in the investment market and build our clients’ trust in our investment judgment.”
Wealth & Finance | November 2016
The Benefits of Investing in Renewable Energy Assets Notz Stucki has over fifty years’ experience of selecting external portfolio managers, many of whom are among the best-known managers of their time. This experience has influenced the way the firm selects managers, employing deep knowledge of the industry as a whole, combined with an accumulation of data on many hundreds of individual managers. The emphasis is on diversifying risk across a range of managers using complementary styles, which include long/short equities, fixed income and macro strategies.
xperience has taught Notz Stucki to pay as much attention to the individual as to the quantitative side of portfolio manager selection, which is part of the legacy of its founders, Beat Notz and Dr Christian Stucki. This approach has enabled the firm to secure exposure to a new generation of highly-skilled PMs coming from famous houses who are now launching their own funds. Allocations have recently been made to two of these, with a third currently under review. It is this same approach to excellence that has led to the selection of Augusta & Co, a leading adviser in the renewable energy industry.
business models are now more sustainable, and returns on invested capital with free cash flow generation have improved to the point where a wind turbine producing power with a predictable regularity, can now be structured as a reliable financial investment. Market growth is assured, we believe, with renewables being on their way to becoming the ‘new mainstream energy source’. Only recently the International Energy Agency released figures showing renewables overtook coal in 2015 as the world’s largest source of installed power capacity. This position is supported by: - Renewable Energy representing an increasing part of total EU power capacity; - Growth driven by the regulatory framework and reduction in CAPEX due to technological progress; - Developers and investors alike looking to recycle capital, opening up substantial growth in the secondary market and; - Renewable energy projects continuing to attract institutional investors due to attractive, and crucially, stable yields.
The launch of the new fund by Augusta The new Fund started from two premises: firstly, that the risk-return profile of real assets is expected to be more attractive than that of equities and fixed income securities in the coming decade, with capital flows increasingly being directed into infrastructure investments that offer stable cash flows. Secondly, that there is increasing evidence that responsible, sustainable business and investments are profitable, and that conversely the cost of even short-term environmental impact is significant.
Taking the example of France: - After hosting the COP21 climate change conference in 2015, France has committed to an energy transition towards renewable energy, and has recently announced the reduction of its nuclear power station fleet; - Government support to become a leading financial market for renewables growth and; - Mergers and acquisitions (M&A) activity currently in full swing in an increasingly commoditised onshore wind sector.
Combining this with the need to offer investors an ESG investment product that delivers attractive, risk adjusted returns, Augusta and Notz Stucki set out to structure a product that provides stable long-term returns and low volatility, with low correlation to the public markets. The product will be designed to deliver returns in a transparent way, with a full alignment of interests between the promoters and investors, and will offer investors a level of liquidity which is not ordinarily associated with the renewables asset class.
Wind energy will remain a driving force of a more sustainable future, while offshore wind will become more economic, while continued coal and nuclear plant retirements and improved grid storage solutions, all acting as long-term drivers.
Augusta Renewable Opportunities Fund, ‘AROF’, will be the first onshore open-ended structure of its type in the market. The benefits of investing in renewable energy assets In the infrastructure field, renewables have come of age, and taking the example of onshore wind, it is fair to say that technology and performance has evolved considerably over the last ten years. Significantly,
Hydro power as a secondary technology – an important focus for the Fund One of the markets for the Fund’s hydro investments will be Norway which generates over 96% of its power from hydro power.
Wealth & Finance | November 2016
In addition to being an economically proven technology in terms of maintenance and operating costs, hydro power has among the best conversion efficiency rates of all energy sources with a factor of between 90-95%. A largely negative correlation is typically observed in the capacity utilisation within any given year between wind and hydro assets, which makes an allocation to hydro an attractive technological diversification to wind investments.
renewables transactions than any other adviser in Europe. The firm has been transacting as a mainly sell-side M&A adviser since mid-2002 and to date has completed over 74 transactions for a cumulative value of Euro 7.5 billion. With each transaction, it processes around 20 bids which represents significant knowledge in terms of investor demand and valuations. Access to this proprietary data is key to understanding capital flows in the industry, and the knowledge Augusta has from its sell-side advisory business is a major advantage. This is especially true for a Fund which is designed to actively trade assets and provide liquidity by way of redemptions that may require asset sales, thereby relying on the core skill Augusta has developed.
In all, the Fund has three types of diversification: technological: the two main technologies being onshore wind and large hydro power; geographical: across major north western European markets; and size: a diversification across many individual power producing projects. Type of renewable energy projects the Fund will invest in AROF will focus primarily on existing operating assets located in North Western European markets with stable jurisdictions.
The secondary market for onshore wind is strong, with the total recorded transaction volume for operating onshore wind projects amounting to 3GW in 2015 according to the Augusta database. The actual number of transactions including unreported deals may well be substantially higher. Transaction volume is expected to increase further in line with the overall growth of the market.
Moreover, AROF will focus on acquiring onshore wind projects with long term commitments, and hedged power price risk. The asset size will tend to be below 40MW in order to add diversification and to increase liquidity. With a view to optimising the IRR to investors, the Fund will invest on a leveraged basis to take advantage of current low interest rates but with flexible re-finance arrangements should interest rates increase substantially. A further aspect of the Fund is that AROF will actively seek to sell projects whenever a capital gain can be made which will provide further upside to investors that they do not get in traditional yield funds.
The following tables illustrate how the market has evolved in recent years:
The Fund will focus on hydro power investments that deliver long-term stable cash flows which the Fund will reinvest or pay out (in the case of the Fundâ€™s dividend share class). AROF will invest into Norwegian hydro projects, and is working closely with an Augusta-funded local team on deal sourcing. Augusta believes that for several structural reasons the market for such assets is currently very attractive. There are also significant barriers to entry to the hydro power market in Norway as investments require active management, extensive know-how and significant valuation, control and risk management resources. The Fundâ€™s investment highlights - An existing portfolio of pre-negotiated assets to acquire, ensuring rapid deployment of capital: - Stable 7-9% IRR (net of fees) for the accumulation share class or 5% (net of fees) annual cash dividend with the dividend share class; - Regular active divestment and reinvestment strategy to take advantage of dynamic market movement and to boost capital gains - Open-ended with regular subscriptions; - 6-monthly redemptions after initial ramp-up period; - Multi-currency share classes; - Attractive management fees, with the performance fee subject to an annual 7% hurdle rate and; - Luxembourg onshore structure offering transparency and leading industry standard terms. - At the request of certain initial institutional investors, a separate, closed-end fund compartment will also be available with the same strategy but for separate assets and without the redemption feature. In summary, access to these returns in this asset class, with these liquidity terms is not available elsewhere. Liquidity - Augustaâ€™s main advantage As a leading specialist in the field, Augusta has handled more individual
An entrepreneurial spirit - teamwork, flexibility and discipline Augusta has been working on renewables since its founding in 2002. Since then it has had a relatively low staff turnover, especially of senior staff. The two current partners Mortimer Menzel (who will run investment management) and James Knight (who will run the advisory business) have been working together at Augusta since 2004. Teamwork is at the root of everything the firm does. Since inception the firm has been funded without outside capital and this continues to be the case to this day. The capital is owned by the partners who have managed the strategic growth entirely on their own. The future With the development of the fund management business, Augusta is recruiting three new staff, notably one for fund compliance and operations and another for hands-on asset management, as well as a support analyst. Two of these staff have already been recruited. Creating an investment management business out of a successful track record of advisory in a highly specialised industry is possible but not easy. The firm had been planning this move for a while but before the cooperation with Notz Stucki, the right product with the right characteristics was elusive. Market movements have helped here: the recent volatility of hedge funds, the lack of yield in government and investment grade bond markets, the lack of success of the classic private equity model in this sector, and the growth of a secondary market in renewables have all helped to make an innovative and practical proposition AROF into a truly interesting proposition. With its liquidity provisions, the Fund is a unique investment opportunity. Given the growing allocation by investors to real assets that provide stable returns from reliable cash flows, the conditions to launch the Fund today are optimal.
Company: Notz Stucki (London) Limited Name: James von Claer Email: email@example.com Web Address: www.notzstucki.com Address: 22 Upper Brook Street, London W1K 7PZ, United Kingdom Telephone: +44 (0) 20 7529 5350
Company: Augusta & Co Limited Name: Mortimer Menzel Email: MMenzel@augustaco.com Web Address: www.augustaco.com Address: 24/25 The Shard, 32 London Bridge Street, London SE1 9SG, United Kingdom Telephone: +44 (0) 20 7776 0826
Wealth & Finance | November 2016
20 Years of Experience in Capital Markets
Hedge Fund Manager of the Year 2016 - Canada
Crystalline Management is an alternative investment manager established in Montreal, Canada, since 1998. The company was founded by Marc Amirault, President and CIO, who shortly after this was joined by Jean-Pierre Langevin as Vice President and PM. Marc formally introduced absolute return strategies at the Caisse de Dépôt et Placement du Quebec (CDPQ), in 1994, after 10 years in the world of traditional asset management. CDPQ is the largest institutional investor in Canada, with assets under management (AUM) at over $US 180 billion.
he firm is driven by an approach that values low volatility and returns independent to that of major asset classes, the company’s management philosophy is based on three core principles:
With three portfolio managers, two of which joined in 2014 when Crystalline purchased the assets of a local boutique global-macro manager, the Fund targets a net return of 8-12% above the risk-free rate with a volatility of 10-14% and little to no correlation to the Crystalline’s other funds. Although currently only available to Canadian residents, there are plans to launch a version for non-Canadians in the medium term.
Integrity – Transparency - Expertise Crystalline’s clientele includes Canadian and international institutional investors, family offices and private clients looking to diversify their portfolio without penalising the portfolio performance.
Oriented more towards private clients, the Topaz Multi-Strategy Fund launched in 2012, is a multi-strategy fund that will gradually over time offer a mixture of a limited number of low covariance alternative strategies. It is currently invested in both arbitrage and global-macro strategies via the firm’s current offerings. With the addition of a third strategy, it is likely we will see the fund offered internationally, a milestone expected in the course of 2018.
Crystalline’s flagship product, the Amethyst Arbitrage Fund, was launched in July 1998 and is the continuation of arbitrage strategies initiated by Marc four years earlier while at CDPQ. Amethyst is a low volatility hedge fund using three sub-strategies, with a special focus on the Canadian market. While event driven (mainly mergers & acquisitions) and convertible securities (debentures, warrants) arbitrage take advantage of pricing anomalies between contractually related securities, the fixed income arbitrage segment converges on credit spreads between related securities of Canadian federal, provincial, municipal, and government agency issuers.
At the heart of our operation is a multidisciplinary team with expertise in economics, North-American equity, corporate and sovereign bond markets, financial mathematics, information technology and compliance, with an average of over 20 years of experience in capital markets. The firm now counts 16 specialised employees, including seven investment professionals along with post graduate interns, all dedicated to constantly improving our absolute return strategies. Crystalline’s operations and compliance are handled by an experienced team, headed by Bryan Nunnelley.
Disciplined portfolio management with a rigorous and systematic ‘bottom-up’ analysis of opportunities, have allowed Amethyst to offer its investors returns (ann. net return of 8.8% with 8.0% volatility since 1998), with a fairly high degree of independence from both traditional asset classes and comparable arbitrage strategies. From an institutional standpoint, the Fund is viewed as much as a substitute to traditional bonds, offering an attractive alternative to fixed income assets while being entirely uncorrelated, as a proper arbitrage strategy in an alternative allocation. Launched with a modest amount of capital, the Fund has won several awards in recognition of the quality of its results.
With an exceptionally talented team and an enviable client base consisting primarily of institutional investors and family offices, Crystalline is committed to gradually increasing its offering through the development and management of innovative and rewarding alternative products, highlighting the extent of its investment team’s expertise on North-American and especially Canadian capital markets.
In early 2016, Crystalline launched the Emerald Global-Macro Fund, a more directional product designed to express a worldview on G20 economies, employing futures (on equity, bond, commodity and currency markets), as well as exchange-traded funds (ETFs) and direct bond investments.
Company: Crystalline Management Inc. Name: Jean-Pierre Langevin Email: firstname.lastname@example.org Web Address: www.cristallin.ca Address: 1002 Sherbrooke St. West, Suite 2110, Montreal, QC Canada H3A3L6 Telephone: +1 514 284 0248 ext. 228
Wealth & Finance | November 2016
Money, Money, Money
Money Management Awards
A founding member of the Institute of Chartered Accountants in England & Wales in the late 1880s, MHA MacIntyre Hudson has come a long way since those early days. The firm is now one of the leading accounting and business advisors in the UK, with 14 offices, over 80 partners and some 600-professional staff. More recently, MHA MacIntyre Hudson became a founding member of MHA, a national association of eight independent accountancy firms across 46 locations within the UK, with fee income in excess of £110 million. On a global level, the eight MHA member firms are also proud to collectively be the UK member of Baker Tilly International, the world’s eighth largest international accounting service, with operations in over 140 countries and fee income in excess of US$3.8 billion.
orporate finance Corporate finance plays a major part in the group’s growth aspirations and MHA employ some of the UK’s leading M&A experts, as demonstrated by a string of leading award wins in recent years. The MHA MacIntyre Hudson corporate finance team, which covers the South East, South East Midlands and Midlands regions within the MHA association, offers the complete deal advisory service tailored to meet clients’ specific requirements. The team has over 100 years’ collective experience and provides proactive deal management support in the following areas: • Corporate acquisitions & disposals; • Private equity, venture capital & debt funding; • Management buyouts; • Business valuations; • Strategic planning; and • Financial due diligence. The team is led by partner Laurence Whitehead, whose previous roles have included senior corporate finance positions in the UK, Russia and the Middle East with one of the ‘Big Four’ accounting firms. He joined MHA MacIntyre Hudson 15 years ago to set up a corporate finance advisory service and has overseen the growth of the team during those years. Laurence feels that the team’s creative approach to finding solutions to problems is one of the key factors that enable them to win new work, provide clients with high quality advice and efficiently close deals. Furthermore, the team has longstanding, close relationships with all of the leading debt and equity providers in the UK, thus providing a vital channel to potential investment partners. Laurence and the team are highly experienced in knowing whom to approach and in determining the level of funding that a corporate client may be able to source. Once these key parameters have been set, team members are then highly trained in liaising with funders to agree and arrange the funding package. Recent corporate finance deals The team continues to demonstrate a track record of successful deal completions across a variety of sectors. Below are details of six high profile deal completions during 2016, which demonstrate the breadth and depth of the team members’ expertise.
One of the above deals, the MBO of Briggs & Forrester, was announced in early summer, and was a transaction that the team were delighted to advise on. B&F is a leading player in the building services market and one of the industry’s largest independent contractors. The MBO was led by Paul Burton, managing director of the Engineering Services division. The transaction has enabled the Stanton family, who founded the busi-
The future While Laurence’s overall view is that Brexit and the election of Donald Trump have led to market uncertainty, he still strongly believes that there are excellent growth opportunities out there for well run businesses with strong management teams. If this proves to be the case, then Laurence’s ambition for the team is to expand its size and offering even further, whilst continuing to focus on high quality service and advice to clients.
ness, to reduce its stake to 30%, leaving the management team and an employee benefit trust owning the remaining 70%. Paul Burton said: “This is a huge opportunity for the management team to drive the business forward, providing future visibility and certainty. Having led the management team buyout, I was really impressed by the close involvement of the MHA MacIntyre Hudson corporate finance team. All the team members were extremely professional and assisted us in completing this successful transaction.”
With this in mind, the team is actively seeking new assignments. If you or one of your contacts require corporate finance or strategic planning advice from a team with a proven track record, contact them now on 0845 366 4793 or email email@example.com.
Laurence commented: “Our corporate finance, tax and accounting teams were delighted to be involved advising such a high-quality management team. The deal has ensured a seamless transition of control from the Stanton family and represents an exciting opportunity for Paul and his fellow management team members to implement their vision for the future of the group. We wish them and the Stanton family every success in the future - exciting times lie ahead for this great Northamptonshire business.” Another completed deal is the sale of Fernbrook Bio to Whites Generation. Fernbrook Bio has developed and manages an anaerobic digestion plant in Kettering. The plant was established in 2008 and is capable of processing 40,000 tonnes of organic waste per year. The business uses anaerobic digestion to convert food waste into biogas, a renewable energy source that is used to generate electricity and heat.
Company: MHA MacIntyre Hudson Name: Holly Brookes Email: firstname.lastname@example.org Web Address: www.macintyrehudson.co.uk www.macintyrehudson.co.uk/services/corporate-finance Address: 201 Silbury Boulevard, Milton Keynes MK9 1LZ Telephone: 01908 662255
Whites Generation is a wholly-owned subsidiary of ReGen Holdings, which also owns Whites Recycling. Whites Generation is a newly incorporated company set up to develop the anaerobic digestion activities of ReGen and to take advantage of the synergies between the recycling business and the anaerobic digestion plants. Shaun and Alan Cherry, shareholders of Fernbrook Bio, said: “We have been really pleased with the advice given to us by Laurence and Craig. They assisted us from the very outset, providing solid advice and support related to the value of the business and the heads of terms, as well as the financial and accounting aspects as matters progressed. A number of complex issues arose during their discussions with Whites, but the team kept clear heads, represented our interests well throughout and were instrumental in helping us to conclude the deal.” Wealth management Pensions, investments and savings are the three key elements that make up a secure financial future. With the right combination, you are well placed to deal with whatever the future may hold. MHA MacIntyre Hudson Wealth Management’s independent consultants offer much more than investment advice. They will consider your whole financial situation in order to develop a complete approach to the management and growth of your wealth; and not just for you, but also for your family, your family’s family, and your business. They understand the need to help manage change from both a personal and a business perspective. Their wealth management service includes advice on: • Financial planning; • Maximising your inheritance for future generations; • Retirement planning; • Savings plans; • Preserving and enhancing your wealth; • Minimising your tax burden; • Assessing your attitude to risk and return and; • Asset allocation.
Opportunities in Brazil
Our Company in 60 Seconds
Exceeding Expectations and Achieving Financial Objectives Capstone’s goal is to provide the clients they serve with tailored investment portfolios that exceed their expectations and achieve their financial objectives. They implement this objective through their fixed income and equity strategies, Institutional Custom Index Services, and their Steward Mutual funds, which are faith-based and screened mutual. The consistent application of their disciplined strategies has helped many of their clients achieve long term success, reveals the firm’s Victoria Fernandez in a special interview.
hat does your client base look like? We work with major home office advisor partners such as Stifel Nicolaus, Wells Fargo Advisors, Benjamin F. Edwards & Co., Kovack Securities, as well as various independent advisors, religious trusts, endowments, healthcare organizations and educational institutions.
ner throughout their investment experience. This objective remains constant, even as times change and markets fluctuate. As we move towards the future, Capstone has a goal to expand our outreach to assist a greater number of clients, supporting all aspects of their financial needs. We have a strong desire to provide the highest level of service from all areas of our business and will consistently strive to improve our services offerings through exceptional personnel, attentive practices and high-quality, investment services.
What factors set your firm apart from others in the same field? In addition to concierge level service for all of our clients, we provide tailored portfolio solutions, which includes a custom social screening portfolio structure to meet individual client needs. We are able to implement an existing client restricted securities list or create and maintain a new restricted securities list based on the client’s social screening policy. Our mutual funds provide unique investment solutions for a growing niche of investors seeking competitive investment returns without compromising their personal convictions.
What individual in your industry and beyond do you admire the most and why? There are two women whom I greatly admire: Indra Nooyi of Pepsico and Sheryl Sandberg of Facebook, Inc. At a time where soft drinks no longer play a central role in many American diet choices, Ms. Nooyi has taken Pepsico on a different path and had great success in fostering new products while changing current product offerings to greater reflect trends in society.
What are the most interesting challenges facing your company today? Similarly, to the rest of the financial industry, we have been working in a low interest rate environment to provide our clients the best possible investments to meet their goals. With the markets leaving fundamentals behind and focusing more on the actions of the central banks and the recent election, we must continue to keep our eye on the investment goals of each client and position our portfolios to weather such circumstances.
This has all been done with strong financial results and tremendous cost cutting measures. Ms. Sandberg has also shown tremendous leadership as she helped form Facebook into the giant it is today. In addition, she has faced horrific personal struggles and yet maintains her professionalism and desire to succeed in the workforce. She serves as a great inspiration to many women around the world on how to balance a tremendously successful career with the ever-important role of mother along with her family duties.
This has been a challenge, as securities have not behaved in characteristic fashion against such a backdrop. However, our firm has taken a conservative approach with an elevated level of cash flow vs. the market, which has enabled us to continue to support our client’s needs while providing the income stream they are accustomed to.
Name: Victoria Fernandez Company: Capstone Financial Services, Inc. Email: email@example.com Web Address: www.capstonefinancial.com Address: 3700 West Sam Houston Parkway South, Suite 250, Houston, TX 77042 Telephone: +1 800 262 6631
Looking to the future, what is the main objective for your company? At Capstone, our main objective is to always provide our clients with quality investment services required to meet their needs and serve as a part-
Wealth & Finance | November 2016
Gender Pay Gap at 19.6% for Information and Communication Sector • ONS statistics show the gender pay gap has narrowed to 18.1%; • National gender pay gap now lowest on record – 18.15; • Lowest gender pay gap since the survey began in 1997, when the gap for all employees was 27.5%
he Minister for Women and Equalities, Justine Greening has welcomed figures showing the gender pay gap is now the lowest on record. The Annual Survey of Hours and Earnings, published by the Office for National Statistics, provide the most accurate data on the median average difference between men and women’s earnings. These statistics show that the information and communication sector has a gender pay gap of 19.6% – that’s 1.5% above the national average.
“We’ve achieved amazing things but there’s more to do – that’s why we are pushing ahead with plans to require businesses to publish their gender pay and gender bonus gap for the first time ever from April next year.” To help drive further progress and help eliminate the gender pay gap in a generation the UK government is: • Introducing requirements for all employers with more than 250 members of staff to publish their gender pay and gender bonus pay gaps for the first time ever from April next year; • Working with business to have 33% of women on boards by 2020 and eliminate all-male boards in the FTSE 350; and • Doubling the amount of free childcare available to working parents of three and four year olds, helping to remove the barriers that can prevent women from returning to the workplace.
From next April, the government will be taking action to tackle the gender pay gap by requiring all employers with more than 250 employees to publish their gender pay and gender bonus gaps. This will help shine a light on the barriers preventing women from reaching the top. The benefits of helping women to unlock their talents are huge – tackling the UK gender gap could add £150 billion to our annual GDP in 2025. That’s an opportunity that neither government nor businesses can afford to ignore.
This builds on the changes, the government has already introduced to support women in the workplace, including: • Extending the right to request flexible working to all employees; • Introducing a new system of flexible parental leave; • Supporting women’s enterprise by helping female entrepreneurs start up and grow their own business; and • Increasing the National Living Wage, of which two-thirds of recipients are women.
Minister for Women and Equalities, Justine Greening said, “it is fantastic to see we now have the lowest gender pay gap on record. No woman should be held back just because of her gender. The changes we’ve made so that men and women can share their parental leave, the support we’re giving to get more women into the top jobs at our biggest companies and our drive to get more girls taking STEM subjects at school are all helping to reduce this gap.
Our Company in 60 Seconds
A Pioneering Spirit and Innovative Approach Green Park is an award-winning supplier of international executive interim management, senior executive and board search and leadership advisory services. They work across the public and private sectors and host a plethora of clients from Prince’s Trust, TFL and London Stock Exchange to Fitness First, HS2 and Co-Op Group and multiple private equity firms. In an interview with one of the leading figures in the UK’s senior interim management and executive search industries Raj Tulsiani, he reflects on the firm’s rapid journey of growth and development.
hat factors set your firm apart from others in the same field? We are built on three simple principles; honesty, humility, and a commitment to delivering exactly what we promise. On those core tenets, our tight-knit team has created a level of customer service that means more than two thirds (67%) of our business in the last 12 months was repeat purchasing from satisfied customers. We call our commitment to ethical and productive partnerships with customers the ‘Green Park Standard’. This is what we, and our clients, agree is our true differentiator.
business and to continue seeing the impact of our efforts and increasing the diversity of workforces around the world will be our best way of strengthening this going-forwards. What individual in your industry and beyond do you admire the most and why? Gary Elden, the CEO of SThree plc is a true role model for ethnic minority communities and business leaders. He has risen through the ranks to the top of a FTSE listed firm whilst maintaining his integrity and authenticity and still finds time to do an incredible amount of philanthropic work with little recognition, just because he cares.
What are the most interesting challenges facing your company today? BREXIT, cross-continental unrest and the pending realities of tighter movement controls are having a already having an impact on the agility of global talent. Collaboratively, the recruitment industry needs to start getting companies to think more creatively and innovatively about how we will continue to ride this wave, especially if it continues to swell.
Name: Raj Tulsiani Company: Green Park Email: firstname.lastname@example.org Web Address: www.green-park.co.uk Address: 54 Brooks Mews, London, W1K 4EG Telephone: +44 (0)20 7399 4300
Looking to the future, what is the main objective for your company? Across our 10 years of operation, we have always found new ways to fortify our proposition. We are longstanding proponents of diversity in
Wealth & Finance | November 2016
TYLER TIPS® 21st Century Edition by Richard Tyler
Your Essential Guide to Building a Profitable, Sustainable Business in Today’s Marketplace
Do you know the single biggest expense in your business? (hint: It’s not what you think.) Most managers are not conscientiously aware that the single biggest expense to their business each year is rework. Rework is defined as anything, which is not done correctly the first time and must be redone or adjusted to get the work to acceptable levels.
ework occurs for many reasons: poor communication, inadequate skills, unmotivated people and no pride of ownership are just a few. If you are not a manager now, this will be a great lesson for you if and when you choose to become one.
Employers often tell me that their ‘supervisors’ are quick to point out the wrong and slow, if ever to point out the right. With that information as a starting point, one of your best tools to make improvements in recognition and performance should be your company’s formal employee evaluations or appraisals.
I also suggest you share this information with your management team to help get them on the right track. Sharing ideas in a positive fashion that can assist your company in saving or making money is always a great way to be recognised for your upward mobility potential.
Notice I said should be. I feel very confident in telling you that 95% of all the evaluations or appraisals used today are counterproductive, a tremendous waste of time and could be thrown in the trash with no loss of productivity or negative effect on your company.
One major area of rework is employee retention. If you want to save tremendous amounts of money, you must hire the right people, retain the right people and motivate those people to perform as consistently close to excellent as possible. This is no easy task; however, it is not as difficult as most managers think.
I say this for several reasons. They are: 1. Evaluations are not done frequently enough; 2. Evaluations are too generic; 3. Evaluations give very few specific enough improvement instructions; 4. Managers don’t know how to use an evaluation; 5. Employees don’t know how to improve from evaluations; 6. Evaluations are viewed by most as tools of punishment or deprivation; 7. Evaluations are not properly prepared for by anyone; 8. There is usually no clear-cut action plan with deadline dates and; 9. Evaluations are done unfairly or without consistency to employees for all the mentioned reasons.
Primarily this TYLER TIPS® will give you some excellent points on retaining and motivating employees. I will save attracting excellent people for another feature. In employee surveys conducted by our research division, Tyler International Research Institute, as well as numerous other national research organisations, ‘feeling important’ and ‘receiving recognition for a job well done’ rank #1 with employees as to why they stay with or leave a company.
“One way to retain people is to give them recognition for what they are doing correctly.”
This is as long as a fair wage is offered for services rendered. You would think that as simple as this sounds all managers would be able to easily master this task, wouldn’t you? Well, they don’t!
Wealth & Finance | November 2016
with target dates. The employee and the manager should both affix their autograph to the activity program.
Notice how the name correctly works from a positive rather than a negative premise. Recognition - the #1 reason for employees to stay or go is right in the title. Assessment - clearly indicates review of specific skills and or behaviours. It’s impossible to have an excellent tool if right at the start it turns the employee off.
5. Resolution Every Employee Performance Recognition and Assessment™ should have a specific set of resolutions at the end. Those resolutions are to be determined by the cumulative ratings on all the assessment points.
1. Purpose Clearly outline why this is important to the company and to the individual being recognised and assessed. Use an opening statement such as this one, which we developed for a number of our clients:
When all of these components are utilised properly in an Employee Performance Recognition and Assessment™ program you will begin to get excellent results. An additional benefit of this type of program is that it also makes an assessment of the manager since it clearly defines areas that the manager must be an expert in as well as the specific areas a manager must train in. Following these principles will improve your employee retention as well as motivate your people to excellent performance.
To formally discuss with you the area’s ABC Corporation has determined are critical in striving for market dominance as they relate to your job function. These areas have been determined through years of experience and by constantly evaluating existing market conditions. Some of these principals are unique to our industry and others are universal to all industries.
If you are an excellent manager or on your way to becoming one you will embrace these principles. If you are a weak manager, you will shrink away and say this ‘sounds too difficult’ or ‘that can’t work for our company or me’.
This assessment is meant to give you a straightforward analysis of how you are currently performing in the designated areas. This assessment is meant to recognise you for excellent performance so you may continue to develop and shape your strengths. This assessment is meant to give you a concrete diagram of the areas you currently need to concentrate your effort so that your performance standards may be elevated. Through this evaluation process you will better be able to achieve your personal and professional goals; thereby making it possible for ABC Corporation to achieve our company’s goals. Notice our Purpose outlines clearly our opening objectives.
You decide. If you need help with developing your own Employee Performance Recognition and Assessment™ give us a call and we will design one for you. ©1989-2016, Richard Tyler. All rights reserved. Except as permitted under the United States Copyright act of 1976, no part of this publication may be reproduced or distributed in any form or by any means or stored in any database or retrieval system without prior written permission from Richard Tyler.
2. Frequency It is critical that Employee Performance Recognition and Assessments™ be done considerable more frequently than most evaluations are done today. I strongly recommend a minimum of once per quarter with monthly progress assessments based upon the formal quarterly Employee Performance Recognition and Assessment™.
If you truly want to retain and motivate employees this is critical. Imagine if the pilot of an airline only adjusted course one or twice during a flight. You would never reach your destination.
I N T E R N A T I O N A L Company: Richard Tyler International, Inc.® Name: Richard Tyler Address: 5773 Woodway Dr., Suite 860, Houston, TX 77057-1501, USA Phone: Tel: (+1) 713.974.7214 Websites: www.RichardTyler.com www.SalesImmersion.com www.RichardTylerTechnologies.com
3. Specifics Very specific, actionable areas must be outlined. They must be customised by; job, department and industry. As an example, if you were doing an Employee Performance Recognition and Assessment™ on a salesperson in the beverage industry you would have category headings like: Product Knowledge • Merchandising, rotation, distribution; • Sales - practices and performance; • Personal and professional appearance and; • Sales - technical skills. Each category should have very specific action areas to recognise and assess. 4. Activity Programme Every excellent Employee Performance Recognition and Assessment™ should include an activity program. This will list out the specific areas that the employee agrees to work on improving immediately. Activity programs should also make it clear that maintenance of other areas is necessary. The activity program should include managerial review and an action plan
“Remember, your success tomorrow is in direct proportion to your ‘Commitment to Excellence®’ today.” ™
Wealth & Finance | November 2016
Blockchain - the New Vogue in Government According to Sopra Banking, governments are starting to realise that blockchain technology holds promise and offers opportunities for innovation in its methods of interaction with citizens and building digital services. Also referred to as ‘distributed ledger technology’, the blockchain is a way of recording information in a linear manner, somewhat like a database.
United Kingdom: The UK government and their Government Digital Services division have been exploring how to use the blockchain technology as a digital register. These authoritative lists include records such as land registry information, company data and car registration details. The data within these registers is often sensitive and security is paramount. GDS are looking at the use of the blockchain as a possible protocol for these registers to maintain that integrity. The UK government Office for Science has created a detailed report entitled, ‘Distributed Ledger Technology: beyond block chain’ to guide a range of government services and reduce fraud, improve communication and boost innovation in this area.
rotected using encryption, each part of the chain is digitally signed for non-repudiation of the information therein. For example, cryptocurrencies, such as Bitcoin, use a blockchain based on a decentralised model, replacing the traditional middleman of current banking processes, and as a result making it a more seamless and potentially faster way to transact money or data.
Described as a ‘linear database’ each ‘block’ holds time stamped and encrypted details of a transaction in the history of the coin (when used for cryptocurrency) or data (in other uses like a ledger).
United States: The USA government has awarded $3 million to researchers to look at the uses of cryptocurrencies, including their application to ‘smart contracts’. Smart contracts are methods of turning a standard contract into a rule based executable program - the rules then executing the various parts of the contract throughout its lifecycle. In a government context, smart contracts could revolutionise the way that financial transfers such as tax and funding grants take place. This is because each transaction is recorded and time stamped in the blockchain and so the security of the transaction can be assured and the encryption make it tamper proof.
Where Do Governments Stand on the Use of the Blockchain? Governments all over the world are starting to embrace the blockchain for a variety of uses. However, until recently there was controversy around the use of the blockchain cryptocurrencies, like Bitcoin. This was mainly down to the use of encryption to protect the transfer of money or data, which allowed a degree of privacy and anonymity integral to the model. This anonymity of ownership that governments value was seen as extremely attractive to criminal forces who would use to hide their identity. However, earlier this year, this anonymous model was shown to be fallible when FBI agents were able to trace $13.4 million worth of Bitcoin transactions from the infamous Silkroad to a drug dealer.
Singapore: The Singaporean government along with the Monetary Authority of Singapore (MAS) are investing around $225 million in FinTech and innovation, using blockchain technology for assured record keeping, prevention of money laundering, and other uses.
But blockchain is not solely used for cryptocurrencies, and the recognition of this has prompted governments to become more involved in looking at alternative uses of the technology. Uses that can allow for better government - including citizen services and communication. Governments need to make use of modern technologies, both to control criminal activity in their jurisdiction and maximise on economic opportunities for the sake of their citizens and blockchain technology offers a tantalising prospect for this to happen.
Tunisia: The Tunisian government are using blockchain technology to improve accessibility of financial services to all of their citizens, something that was previously not offered in Tunisia. The system is being hailed as visionary e-government, offering a future-proofed system that allow Tunisia to build a more robust citizen finance platform, when in 2015 it become the first nation to offer its national currency for transmittance through cryptographic technology.
Many world governments are now looking into the various uses of the blockchain, not just in terms of financial transactions, but also on a far broader scale.
Whilst governments are starting to utilise the available technology, there are still many further opportunities to explore.
Citizen Identity Citizen identities are used to access online government resources and make various financial transactions, from tax returns, to benefit claims. The identity has to be verified and offer assurance that proves that the person claiming the identity is who they say they are. One place that this is being explored is via identity standards bodies such as Kantara Initiative. In this way, the blockchain is seen as a way of creating a trusted history of an individual, which can then be used as part of the verification process. This use of the blockchain could solve some of the issues of secure user verification, which can be onerous at best, and especially for wide citizen demographics in countries with larger and more mobile populations. Assured Voting Electronic voting is already used in a number of countries, but is subject to fraud. Now cryptographic voting is also being trialled in countries such as Denmark, where the Liberal Alliance party used blockchain technology for internal voting. Blockchain technology allows a user to cast a vote in the form of a â€˜coinâ€™, which can then be validated and verified - all whilst remaining anonymous. In Virginia, the group Follow My Vote are advocating strongly for blockchain technology, due to the fact that individual voters can follow their vote and confirm whether it has been correctly allocated. Land Registry and Title Deeds The registration documents that are generated whenever, land, a house, or other building, changes hands can go back years, need to be notarised and often are held by lawyers to initiate contract exchange. The Honduras government is currently implementing a blockchain system for maintaining a state-owned land registry that is much more centralised and accessible. Official Acts and citizen transactions The fact that the blockchain allows a traceable and secure ledger to be created for any particular act or transaction makes it perfect for creating a timeline of events and record of transactions. A perhaps unusual case of the use of the blockchain was the recent marriage in Estonia of Edurne Lolnaz and Mayel de Borniol - only recorded on bitcoin, and made possible through the flexibility of the Estonian e-residency program. Crypto-Government - what does the future hold? Gartnerâ€™s The Hype Cycle for the Programmable Economy 2015, report describes how blockchain based technologies will cause massive transformation across world economies as they become more mainstream and accepted and as a result integrated into government use. The blockchain has great potential for creating more transparent government processes using its decentralised model of transaction, as well as increasing the speed and security of transactions between departments, bodies, and with citizens. Of course, national governments are not renowned for their speed of implementation. However forward thinking governments may start to make small steps, such as in the sphere and smart contracts, and so the replacement of outmoded legacy systems may well be in sight. For more information, please visit: www.soprabanking.com
Wealth & Finance | November 2016
Leading the FinTech Challenge Advanced Payment Solutions Limited, trading at APS financial (APS) is not a bank, but a regulated digital banking services provider that has been leading the FinTech challenge to banks for more than 10 years. As a company, APS provide current accounts to SMEs and consumers, along with credit propositions which are alternatives to traditional bank accounts.
data and turning it into information, so this is something I did early in my career by building one of the largest SQL databases at Visa.
t APS, we do not believe in barriers, we aim to provide a simple and smart answer to payment and banking services that meet the needs of the modern day, digitally savvy customer. From our consumer and business debit cards to currency cards and alternative lending products, we are changing the very nature of how financial services work.
At Providian, they were looking to expand internationally, and back then I was part of a team of five individuals who started up a monoline credit card operation. As chief operations officer for Providian, I was very much embedded into the payment ecosystem, which really provided me with a tremendous foundation for understanding how an effective organisation works. We built a huge portfolio and sold it at one of the largest premiums to Barclaycard in 2002.
In regards to APS’s client base, many of them are just like us, in the sense they are start-ups and early entrepreneur organisations with a great idea. One of the foremost things on their mind is getting a business bank account, which in our current environment, is time-consuming and challenging in the UK. SMEs can specifically get a current account with us within five minutes, as opposed to travelling to an actual branch, they can have a similar account. Everything we do as a company is digital and online, which we believe gives the end-user a superb customer experience.
Although I enjoyed a brief period at Barclaycard, I felt an entrepenurial need to start APS as I identified a big gap in the market for products which meet the needs of customers who were very dissatisfied with their banking services. Over the last 11 years, APS financial has gone from strength to strength, making it one of the leading non-banks in the UK today.
The leadership figures within APS play a crucial role behind driving innovation, by providing products to businesses and consumers which will allow them to thrive, without too much understanding of the idiosyncrasies of the workings of a traditional bank account.
As a company, not only do we have to build our own business, but APS also has to keep the regulatory environment aligned to the needs of nonbanks. We are proving every day that we can provide banking products without being licensed as a bank. Although regulated ourselves, it has always been the case that banks have certain advantages over ourselves.
When it comes to FinTech, the one differentiator we have is that APS are payment experts, and it is the strong leadership and expertise at the senior level that really understands the payment ecosystem. While a lot of people in the industry have great ideas, we compliment it with a rich knowledge of how the payment ecosystem works. The payment environment is a complex one, indeed without the 20-30 years’ experience of understanding the benefits of the ecosystem that we operate in, we cannot create those innovations and really deliver them without our undoubted expertise.
APS constantly find ourselves driving the industry, in order to create a level playing field which will allow all non-banks the opportunity to have access to payment ecosystems and leverage those, so that customers can receive similar if not better products than traditional banks offer. At present, the biggest challenge for APS is hiring the right talent and skillsets which will allow us to grow as a company. As we are growing fast, trying to find and retain the right talent to ensure that we have the best systems to manage the servicing and support of these customers, is crucial. We hope to continue these innovations, so we can achieve the rapid growth rates we have witnessed during recent years.
As CEO of APS, I believe you should always try and hire people who are smarter than you. We try to take the democracy out of our decision making and apply a flat, collaborative approach as we believe that we are all equal in delivering our service to the end-user. Providing every member of staff with the knowledge of how well or poorly the company is performing is something I have done every single month since operations began, this gives them a sense of inclusion as part of the company’s success.
APS’s success has proved that you do not need to be a traditional bank in order to provide banking services. Since our inception, we have seen a lot of challenger banks come in and get a lot of publicity, but we have proved there are many ways in which you can provide a better product without the burden and costs of being a traditional bank. Going forward, if we can continue to thrive as a company and maintain our reputation in the industry as a leader in digital banking services, then we are confident our future will be a positive one.
At the beginning of my career, I was a customer service representative for one of the largest banks in the United States, which really grounded me with some very early views of the customer experience in the financial services industry. Everything I learnt here, I took on board as I completed my graduate degree in Business Analytics. I was very interested in taking
Company: APS financial (APS) Name: Rich Wagner Email: Rich.Wagner@apsgroup.com Web Address: www.apsfinancial.co.uk Address: Cottons Centre, Cottons Lane, London SE1 2QG Telephone: +44 (0)203 535 7100
CEO of the Year - UK
Wealth & Finance | November 2016
FCA Publishes the Final Report of Its Investment and Corporate Banking Market Study The Financial Conduct Authority (FCA) in October published the final findings of its investment and corporate banking market study and set out a targeted package of remedies to ensure effective competition in the market. The final report confirms the findings of the interim report published in April 2016. It finds that whilst many clients feel well served by primary capital market services there were some areas where improvements could be made to encourage competition, particularly for smaller clients.
he FCA’s final report outlines a targeted package of remedies, including:
Christopher Woolard, Director of Strategy and Competition at the FCA said, “wholesale financial services markets play a vital role in the economy and the FCA has an important role to play to ensure these markets work well.
• Banning banks from using contractual clauses that seek to limit clients’ choice on future transactions. The FCA has published a separate consultation paper alongside this final report setting out the proposals. Depending on the responses to the consultation paper, the FCA expects to publish the final rules in early 2017. • Ending league table misrepresentation in banks’ pitches to clients: banks routinely present league tables to clients in a way that inflates their own position. The FCA is working with the BBA and AFME so that they can develop and adopt industry guidelines to improve the way such information is presented. • Removing incentives for loss-making trades to climb league tables: league tables that rank investment banks can be misleading because some banks carry out loss-making transactions purely to generate a higher position in such tables. The FCA has asked league table providers to review their recognition criteria so as to reduce the incentives for banks to undertake such league table trades. • Supervisory programme for initial public offering (IPO) allocations: allocations of shares in IPOs are at times skewed towards buy-side investors from whom banks derive greater revenues from other business lines (for example, trading commission). In the run-up to the implementation of MIFID II, the FCA will work with those firms where shortcomings in their allocation policies or practices have been identified.
“The universal banking model clearly works well for a wide range of participants but areas such as the use of restrictive contractual clauses, league table credibility and the allocation of shares in IPOs are not always working as well as they could. We’ve developed a package of remedies designed to address these problems. This sends a signal that we expect firms to compete on the merits, not by restricting clients’ choice on future transactions, drawing misleading comparisons with competitors’ performance, or exploiting conflicts of interest. We are also continuing to look at how we can improve the IPO process.” Update on the IPO process discussion paper In a separate discussion paper published at the same time as the interim report, the FCA proposed changes to the IPO process. The consultation period closed in July and the FCA expects to publish a separate consultation paper on changes to the IPO process in winter 2016/17. www.fca.org.uk
Post-Implementation Review Concludes GASB Standard on Fund Balance Reporting Achieves Its Purpose The accounting and financial reporting standard for state and local governments that addresses fund balance reporting and governmental fund type definitions achieves its purpose, according to a report issued on 16th November by the Financial Accounting Foundation (FAF). The Post-Implementation Review (PIR) Report on Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, addresses technical, operational, and cost-effectiveness aspects of the Statement.
• Overall, Statement 54 is operational because it is understandable, can be applied as intended, and enables fund balance and governmental fund type information to be reported reliably. • The changes made to financial and operating practices as a result of Statement 54 were not significant or unexpected. • There were no significant unanticipated consequences as a result of the adoption of Statement 54. • Overall, implementation and continuing application costs associated with Statement 54 were not significant and were consistent with the GASB’s expectations. • Overall, Statement 54 achieved its expected benefits.
ASB Statement 54 was issued in 2009 to improve the usefulness of information provided to financial report users about fund balance by providing clearer, more structured fund balance classifications, and by clarifying the definitions of existing governmental fund types.
“The PIR process has provided some important stakeholder feedback on the benefits and costs of Statement 54 in light of actual experience in using and preparing the information,” said GASB Chairman David A. Vaudt in the Board’s response to the PIR report. “On behalf of the GASB, I would like to thank the Foundation for undertaking this important process and all of the individuals and organisations who gave their time to share their insights and experiences with the PIR staff.”
The PIR team’s review did not result in any standard-setting process recommendations for the GASB. The review of Statement 54 was undertaken by an independent team of the FAF, the parent organisation of the GASB and the Financial Accounting Standards Board (FASB). The team’s formal report is available here. The GASB’s response letter to the report is available here.
The PIR team received broad-based input from GASB stakeholders including auditors, preparers, financial statement users, and academics. Based on its research, the review team concluded that: Overall, Statement 54 resolved the primary issues underlying its stated need—it introduced fund balance classifications that are easier to understand and clarified fund type definitions. Although some stakeholders have indicated that it is difficult to distinguish between committed and assigned fund balances, the Statement was an improvement over prior literature.
The next PIR of a GASB standard will not be conducted for a few years, as the PIR team has completed all the reviews of significant GASB standards that have been effective for at least two years. For more information, www.gasb.org
Statement 54 provides users of financial statements with decision-useful information.
Wealth & Finance | November 2016
Qtrade Financial Group Following up from the opportunity to speak with the CFO of Qtrade Financial Group about the challenges of running the finance department of a B2B fintech operation, we took a closer look at how other components have journeyed towards their current day status and how they operate as an important cog in the company’s success. This is how Shayne Kong, Controller, recounts the past few years of the Finance - Corporate Accounting Team.
Building upon a stronger foundation, the focus quickly turned to the reporting of information. What good is the information captured if it is not used to achieve the ultimate goal of accelerating and maximising profit? In tandem with the ERP system, the development of our proprietary finance database brought our financial reporting to a whole new level. Expectations within the team and from elsewhere were raised. Senior management needed to understand the financial levers of the company and the key performance indicators in order to make informed decisions on resources. Partners also looked to us to report useful financial information in a timely manner.
t its core, the corporate accounting team at Qtrade is tasked with the responsibility of capturing and disseminating financial information arising from financial transactions. Beyond this is the opportunity to separate ourselves from the other accounting teams and become the best performing team! The corporate accounting team has certainly evolved over the last several years and together with the reporting & analytics team, the finance department has embraced the choice to deliver outstanding service and be a top performer.
In order to deliver at that top-tier level, the work starts at the hiring stage, continues at the training and development stage and simply continues on after that. It simply never ends! The financial services industry is constantly changing, and technology continues to evolve and improve, becoming readily available to those equipped to quickly identify and put into use. Qtrade Finance attracts, hires and retains staff that can consistently deliver on these demands.
As you can imagine, the financial services industry is laden with transactional information. Working with our IT department and reporting and analytics teams, we set out to define and organise all the information already captured within the core operational systems into usable data sets for populating the newly created finance database. Integrating internal and external reporting was starting to come together. For example, we utilise a 5 segment, 17-character alpha-numeric string in our general ledger account numbering to provide not only flexibility and scale but to offer the ability to bring reporting and analytics to the forefront. We have the ability to report and analyse by division, department, expense type, and even by partner or any other category. Bringing together the ERP setup with the data sets in the finance database, we were able to efficiently marry the requirements of internal users while also meeting the demands of external users. One early by-product of this integrated process was the ability to auto-generate a monthly journal entry comprising of 800 plus lines for seamless upload into the ERP system.
In total, Qtrade Financial Group is comprised of several operating entities offering comprehensive solutions all along the wealth continuum. As a result, a certain level of complexity arises requiring the corporate accounting team to focus on internal as well as external stakeholders or users of our services and output. These stakeholders or users include shareholders and management and department heads, our ever-growing list of partners, industry regulatory bodies and associations and external auditors. Generally speaking, the corporate accounting team is organised in such a way to align a team member to one or more corporate entities while at the same time taking into consideration the aforementioned stakeholders and users. Functions which tend to permeate across all entities (for example - payroll, accounts receivable and accounts payable) are, however, assigned to specific members of the team. Building a strong, cohesive and effective team requires improvements in workflow and processes and integrating financial information capture and reporting.
It soon became very clear very quickly that we needed to streamline processes, and where possible make use of technology to automate. As a result, we could spend less time keying in entries and more time on analysing information and communicating the findings. Looking towards 2017 and beyond, the corporate accounting team at Qtrade is poised to take on greater challenges. We continue to work closely with our reporting and analytics team to further strengthen our department’s ability to meet and exceed expectations. Perhaps we will also reach out to our finance counterparts at the partner level and offer them a monthly automated set of journal entries, to go along with their existing reports. Regardless of what challenges may lie ahead, we have the infrastructure, we have the tools and more importantly we have the people to move towards even greater success.
One of the most pivotal moments in our success today was the decision to invest in an ERP system in 2012, which paved the way for the capturing of financial information at broader and deeper levels. The initial vision of providing granular details for internal and external use forced us to build a framework around flexibility and scale. For example, the combining of all the Qtrade entities into a ‘singular entity’ within the ERP system proved to be the turning point for what was to come. Though not revolutionary, this multi-entity-management concept gave us the opportunity to introduce a shared-services model that quickly paid dividends. With Qtrade having such a fully integrated suite of product offerings, the shared-services model became an obvious necessity.
Most Innovative Finance Team â€“ Canada & Online Brokerage Firm of the Year - Qtrade Investor
Name: Shayne Kong Company: Qtrade Financial Group Email: email@example.com
Wealth & Finance | November 2016
Planning Ahead for Bereavement Thinking about what happens to us when we are no longer around is something most of us try to avoid. But there are some simple steps we can take to make life easier for the loved ones we leave behind. Philip De Ste Croix, head of future planning at Damsons, says we should not be afraid of discussing these issues, and offers some advice on how to make a difficult period more manageable.
Probate and Estate management One of the key points you need to think about is who you want to take on the role of executor when you pass – the person in charge of handling and distributing your estate. You may want to make a family member or friend the executor of your will, but it is also worth considering using a professional administrator.
clear will: Make sure your possessions are distributed how you want A will is one of the most important documents you will ever write. Having a will in place ensures your possessions go to specific friends or family members that you have chosen. It also helps avoid confusion about the administration of your estate and/or who will care for your children and dependents when you are gone.
The executor of your will is responsible for managing your estate, including paying any inheritance tax, and handling an estate’s assets. Typical duties of an executor also include collecting money from the sale of property, paying off any unpaid bills and dealing with any life insurance policies. An executor is also responsible for making sure property, money and possessions go to the people they are supposed to.
Whilst you are free to write your own will for your family to access at a later date, having a professional on hand to help will guarantee everything in this document is accurate and unambiguous. Failing to write a clear and legally correct will could mean the law decides what happens to your money, property and possessions after your death. Often, the rules of intestacy dictate that any property or estate of the deceased goes to the closest relatives – a spouse, children, parents, siblings, etc.
Before someone can deal with your estate they may need the legal right to do so by applying for the ‘grant of representation’, also known as probate. Your executor can apply to do this themselves or could ask a professional support service. Another route is to set up a Trust, which gives you control over how your belongings are distributed. Seeking professional advice about setting up a Trust will allow you to understand how a Trust can protect assets from debt collection, give you complete control over how assets are distributed, and provide regular income for loved ones after you are gone (removing inheritance tax liabilities in the process).
Not only does this deny you the right to distribute your estate your way, it could also lead to lengthy legal processes and unwanted family rifts – the last thing you would want for your family at an already difficult time. It is vital you store your will in a safe place, and somewhere it can be easily found. You may have taken the time to make your wishes clear, but if your will cannot be found, or is damaged, it is worthless. You could consider storing your will with a solicitor or a professional will writer, or you could even lodge your will with the Probate Service. If you do opt to keep hold of your will and store it yourself, be sure to tell the executor of your estate where to find it.
Future planning – personal care and preparing for a funeral It’s not fundamental to have an exact plan for your funeral written down, but there are things you can do now to make the process easier for your family and friends when the time comes. As the average cost of a funeral continues to rise, being financially prepared has never been so important. Like saving for a pension, paying regularly into a Funeral Plan will ensure your loved ones are not left with a financial burden when you are gone. A Funeral Plan also lets you outline what type of service you would like, be it traditional or something a bit more personal and reflective of you.
Also, keep in mind that the will you write today may not reflect your estate or your desires later on. Between the time you first write your will and the time you pass away, certain aspects of your life might have changed. Ideally, your will should be reviewed and updated once a year, taking into account any major life changes such as a marriage or birth of a child. It may even be worth considering writing a new will if a number of major changes occur. Many divorcees, for example, start a will from scratch.
Preparation is key: whether that be financially or logistically. While we should be busy living and enjoying our lives, simple steps can be taken now to prepare for our future and protect our loved ones in the months after we pass.
Company: Damsons Future Planning Name: Philip De Ste Croix Email: firstname.lastname@example.org Web Address: damsonsfutureplanning.co.uk Address: Damsons Future Planning, PO BOX 522, Manchester M16 6EP Telephone: 0800 088 4670
Wealth & Finance | November 2016
Investors Can ‘Seriously Build Wealth’ in This Wave of Anti-Globalisation Investors should not “obsess about the wave of anti-globalisation” projected by many politicians across the western world, affirms the boss of one of the world’s largest independent financial advisory organisations.
he bold, somewhat contrarian, message from Nigel Green, the founder and chief executive of deVere Group, comes after the surprise results in both the U.S. presidential elections and the UK’s referendum to leave the EU. Mr Green comments, “populism is an increasingly important force in global politics. Understandably, people are worrying about their jobs, their wages, and stagnating economic growth. As a result, they are seeking alternatives on the more radical left and the more radical right of the political spectrum.
“For instance in America, should Trump hold true to his election pledges, the banking sector is likely to do well due to the lifting of regulations, mining and oil will get a boost the repeal of some environmental laws, and pharma stocks will rally should Obama’s Affordable Healthcare Act be scrapped or modified.” Mr Green goes on to say, “therefore, investors should not obsess about the wave of anti-globalisation. They need good fund managers who select investments that aim at the winning sectors, taking care to be diversified in their overall structures.
“This phenomenon is evidenced by two high profiles populists – Boris Johnson who successfully led the Brexit campaign and Donald Trump, the new U.S. president-elect - having won the two key popular votes in the western world of 2016.
The deVere CEO concludes, “the changing sentiment will take time to play out, but investors who are prepared, ahead of the curve and vigilant are likely to be able to seriously build and maximise their wealth.”
“Elsewhere, in Europe, Marine Le Pen, leader of the far-right National Front party, is gaining considerable ground. Could she win the presidential election on 7th May next year? She could be up against Nicolas Sarkozy. With Sarkozy often perceived as a controversial Establishment figure with a lot of baggage, this would draw inevitable parallels with the Trump vs Clinton battle.”
He continues, “despite the increasing abundance of anti-globalisation rhetoric, the tough policy talk from the politicians may fail to materialise to the extent that many observers are expecting and/or fearing. Their more extreme approaches are likely give way, to some extent at least, to pragmatism and geopolitical and economic realities. After all, the world is becoming ever smaller, we’re all more interdependent, and globalisation is happening whether we like it or not. He adds, “however, that said, there is indeed a ground swell of anger within huge swathes of the electorate in many countries and sentiments are changing. This is being reflected in what we’re seeing now across politics in the West – and, of course, politicians will jump on this with their policies. As such, there will be winners and losers in this new shaken-up era.
Six Reasons to Consider Transferring Your Defined Benefit Pension As pension freedom encourages more and more people to consider ways to realise value from their pension pots, Matthew Brown, private client partner of Thomas Miller Investment, suggests why now might be the time to consider transferring out of a defined benefit (DB) pension scheme.
ransfer values from defined benefit pension schemes are hitting historic highs following further reduction in Gilt yields this year, making it well worthwhile for individuals to explore the recent pension flexibilities and whether transferring a final salary scheme is beneficial to their long-term planning.
4. Conversely for some the fund can be left untouched as a highly efficient IHT vehicle. 5. Tax free cash amounts can be higher. 6. Investment returns required to replicate the guaranteed income foregone have often fallen to acceptable levels as transfer values have increased.
“A final salary pension scheme has long been regarded as the golden route to a comfortable retirement and for most this is still very much the case, however, some are now thinking the previously unthinkable. Deferred scheme members of traditional final salary pension schemes have been afforded an opportunity to transfer funds to more flexible pension arrangements at more favourable rates.
Why now? “The value offered for transferring out of a final salary pension is higher when the yields on government bonds (gilts) and UK interest rates are low, because falling gilt yields increase the notional cost for scheme sponsors providing benefits, in turn prompting them to offer improved transfer values to members.”
“Swapping a guaranteed pension income for life for an invested personal pension account won’t be the right decision for many. However, for some, a transfer will make a lot of sense, effectively giving control of what is a significant asset. More often than not it will still be right for the individual to remain in the scheme but there are compelling reasons to at least consider a transfer.
“The advent of ‘pension freedoms’ whereby a pension holder and ultimately their beneficiaries can freely access their pension funds has seen a surge in those considering this option. This is particularly the case for those with some element of guaranteed income who would like to take advantages of the new rules for some of their other pensions. “There many reasons to consider a transfer, here are six of the most common: 1. Health concerns – it may take 20 years or more to receive the transfer value in equivalent income. 2. Death benefits – transferred funds are likely to offer much better income to spouses as they will not see income automatically reduced. Generally with a DB Scheme, no benefit is left for future generations who can again benefit from transferred funds. 3. Full access is available to the fund at any time, for some the ability to choose when to take income can have tax planning benefits.
Wealth & Finance | November 2016
HMRC’s Approach to Collecting Tax from High Net Worth Individuals HMRC estimate that its specialist unit dedicated to collecting tax from high net worth individuals raised £416m from its compliance work with this group in 2015-16 according to an early November report by the National Audit Office (NAO). This is separate from tax already voluntarily declared by these individuals. As this specialist unit expands HMRC needs to do more to identify the most effective approaches to maximising the tax revenue paid by the very wealthiest people in the UK.
18 months, 4,000 of which have been open for more than three years.
igh net worth individuals often have complex tax affairs and they generally have more choice over how they manage their income and assets than the average taxpayer. It can be challenging for HMRC to understand their tax affairs and assess if there are any risks to address.
HMRC recorded yield of £416 million in 2015-16 from the work of the high net worth unit. This is an increase from £200 million in 2011-12, and exceeds HMRC’s internal target of £250 million in 2015-16. In addition to the work of the high net worth unit, since 2009 HMRC has recorded yield from high net worth individuals of around £450 million. Around half of this – £230 million – has come from its work in tackling marketed avoidance schemes. A further £80 million relates to fraud investigations and around £140 million from the use of offshore disclosure facilities (Liechtenstein disclosure facility).
In 2009, HMRC established a specialist unit to manage the tax affairs of high net worth individuals to give it a better understanding of the overall tax position of high net worth individuals and their behaviour. At the start of 2015-16 HMRC considered there to be around 6,500 high net worth individuals, roughly 0.02% of all taxpayers.
HMRC prioritises the recovery of tax where it identifies fraud and uses civil investigations in the majority of cases. Where high net worth individuals are suspected of tax fraud, their case is passed to a specialist team within HMRC which examines whether the evidence is sufficient to merit a criminal, rather than civil, investigation. In the last five years, HMRC has investigated and closed 72 cases relating to high net worth individuals. 70 of these were investigated with civil powers, raising £80m in compliance yield including penalties. Two cases were criminally investigated and passed to the Crown Prosecution Service, one of which was taken forward and successfully convicted. At October 2016 HMRC was criminally investigating a further 10 high net worth individuals.
The amounts of tax revenue that are at stake are significant. In 2014-15, high net worth individuals paid over £4.3 billion in tax. This included £3.5 billion in income tax and national insurance (1.3% of the total revenue for those taxes) and £880 million in capital gains tax (15% of all CGT). HMRC does not record other types of tax that are collected, such as Inheritance Tax, in a way that easily allows it to identify the amounts paid on high net worth individuals’ wealth. HMRC is investigating risks from high net worth individuals with a potential value of £1.9 billion. This figure is an initial estimate of the tax that could be due and covers more than one tax year. £1.1 billion of this relates to the use of marketed avoidance schemes; around 15% of high net worth individuals have used at least one scheme. HMRC has identified that the risks from high net worth individuals relate primarily to tax avoidance and the legal interpretation of complex tax issues, rather than tax evasion.
Identifying high net worth individuals is not straightforward as most of the information about their wealth such as sources of income or assets owned does not need to be reported. During 2015-16, HMRC undertook a review and identified an extra 1,000 people with net worth of more than £20 million.
HMRC is currently running a formal enquiry on around a third of high net worth taxpayers, with an average of four issues being examined per taxpayer. Formal enquiries occur where HMRC does not understand or agree with the position taken by a taxpayer. These enquiries can take a long time to resolve with 6,000 issues under enquiry open for more than
HMRC has developed its approach to high net worth individuals over time. HMRC initially focused on getting a better understanding of the circumstances of high net worth individuals. It has since refined its approach to become increasingly focused on the riskiest taxpayers.
HMRC has not evaluated its approach to high net worth individuals. While HMRC knows more about this group that it did when the high net worth unit was set it, it has not looked at what works and why in its current approach. It could use such analysis to increase the impact of its work. Amyas Morse, head of the UK’s National Audit Office commented, “the tax affairs of the wealthiest in society are complex, making it harder for HMRC to ensure that they are paying the right amount of tax. HMRC’s specialist team gives it a better understanding of the tax affairs and behaviours of these taxpayers. While the yields from HMRC’s work in this area have increased, it needs to evaluate what approaches are the most effective and to understand the outcomes it achieves.” Facts and figures • 6,500 is the number of taxpayers HMRC considered to be high net worth individuals at the start of 2015-16. • £4.3bn worth of tax collected from high net worth individuals in 2014-15. • £416m is HMRC’s estimate of the yield from the high net worth unit’s compliance work in 2015-16. • £20 million wealth required to be designated a high net worth individual by HMRC until 2016 when the threshold was reduced to £10 million. • Marketed avoidance £1.4bn tax at risk from 1,000 high net worth individuals (1% of all users of schemes, but 10% of the tax at risk). HMRC is making good progress in tackling the use of marketed schemes. • Offshore evasion 137 high net worth individuals have voluntarily told HMRC about £141 million of tax liabilities through the Liechtenstein Disclosure Facility (2% of all disclosures and 11% of total value). • Inheritance Tax HMRC has identified 161 Inheritance Tax records relating to high net worth individuals’ estates between May 2014 and April 2016. Inheritance Tax of £183 million has been paid on these 161 estates to date. The final amount due is not yet known. www.nao.org.uk
Wealth & Finance | November 2016
UBS/PwC Billionaires Report Reveals Billionaire Wealth Facing Headwinds with Overall Wealth Declining by $300 Billion For the first time in 10 years, average wealth of self-made US billionaires surpasses average wealth of US billionaires with inherited fortunes Key findings: • Total billionaire wealth declined in 2015 by $300 billion to $5.1 trillion while average billionaire wealth fell from $4.0 billion to $3.7 billion due to headwinds such as the transfer; of assets within families, commodity price deflation and an appreciating US dollar • Europe has the greatest number of multigenerational billionaires at 182 (54%), and they have proven to be the most resilient at preserving their fortunes. The US has 175 (33%) multi-generational billionaires and APAC has 76 (15%); • For the first time in 10 years, the average wealth of self-made US billionaires surpassed the average wealth of US billionaires with inherited fortunes ($4.5 billion vs $4.3 billion); • Approximately 460 billionaires will transfer $2.1 trillion to their heirs in the next 20 years and; • Led by China, Asia created one billionaire nearly every three days accounting for over half of new billionaires in 2015.
BS Group AG and PwC last month presented their joint annual billionaires report, ‘Are billionaires feeling the pressure?’ The report examines wealth creation within the billionaire segment in 2015 and singles out the transfer of $2.1 trillion in billionaire wealth that is expected over the next two decades.
The findings build on UBS/PwC’s previous billionaire reports, released in May and December 2015. According to the new report, we are about to witness the greatest transfer of wealth in history. Approximately 460 billionaires will transfer $2.1 trillion, the equivalent of India’s GDP, to their heirs over a period of just 20 years. For most of Asia’s young economies, where over 85% of billionaires are first-generation, this will be the first-ever handover of billionaire wealth.
2015 saw a pause as total billionaire wealth fell by $300 billion to $5.1 trillion. Headwinds such as the transfer of assets within families, commodity price deflation and an appreciating US dollar, have impacted the growth of billionaire wealth. Average billionaire wealth dropped from $4.0 billion to $3.7 billion and the US added only five net new billionaires in 2015. In contrast, Asia produced one billionaire every three days, with China alone accounting for over half of the 113 additions.
John Mathews, head of ultra-high net worth, UBS Wealth Management Americas, comments on the new report, “the U.S. has always been a standout for creating wealth, and this report shows that the American dream is alive, with the wealth of the self-made billionaires outweighing that of the multi-generational billionaire. As we head into the greatest
period of wealth transfer we’ve ever seen, there is much insight that we can gain from the experience of the successful wealth transfer and legacy planning that takes place in Europe. The findings of this report help UBS stay ahead of the issues that matter in order to better advise our clients, which include over half the world’s billionaires.” Michael Spellacy, global wealth leader at PwC US added, “as the shockwaves from regulatory upheaval in the EU continue to trigger global currency fluctuations, strategic planning becomes even more crucial for wealth preservation. Those who control assets face tough investment questions. “Encouragingly, this year’s report shows that Europe’s billionaires were the most resilient with many of the 60 individuals from Europe inheriting their fortunes in 2015 for the first time. The US, which boasts the biggest collection of billionaires by region, sets the trend. Total US billionaire wealth fell, but ‘new money’ fared better than old, falling by just 4%, from an average of $4.7 billion per individual to $4.5 billion.” The key findings from the report include: A $2.1 trillion inheritance The past 20 years of exceptional wealth creation will soon be followed by the largest-ever wealth transfer. We estimate that less than 500 people (460 of the billionaires in the markets covered) will hand over $2.1 trillion, a figure equivalent to India’s GDP, to their heirs in the next 20 years. For most of Asia’s young economies, where over 85% of billionaires are first generation, this will be the first-ever handover of billionaire wealth. The Gilded Age pauses After more than 20 years of unprecedented wealth creation, the Second Gilded Age has stalled. The transfer of assets within families, commodity price deflation and an appreciating US dollar have emerged as significant headwinds. In 2015, in the markets covered, 210 fortunes broke through the billion-dollar wealth ceiling and 160 billionaires dropped off, leading to a net increase in the billionaire population of 50 to 1,397. Yet their total wealth fell from $5.4 trillion to $5.1 trillion. Average wealth fell from $4 billion in 2014 to $3.7 billion in 2015. It is still too early to tell if 2015 signals a pause in the Gilded Age or something more. Old legacies’ lessons for new billionaires Of the billionaire fortunes that have fallen below the billion-dollar mark since 1995, 90% were not preserved beyond the first and second generations. At a time of economic headwinds and imminent wealth transfer, Europe’s old legacies are a model for new billionaires to avoid this fate. Germany and Switzerland, in particular, are the countries with the greatest share of ‘old’ wealth. Asia’s family-orientated billionaires may wish to adapt the European model of wealth preservation to their own needs. New philanthropic models In the first half of the 20th century, entrepreneurial families such as the Carnegies and Rockefellers funded significant advances in areas such as education and health. By doing so, they displayed many traits associated with billionaires – chiefly business focused and smart risk-taking – to drive success. After over three decades of this new Gilded Age, billionaire philanthropy is growing all over the world. New philanthropic models are emerging (loans, guarantees, contracts, impact investing and so on) and the millennial generation is putting philanthropy at the heart of their family values. In spite of this the current Gilded Age may not match its predecessor’s record. To find out more, read the full report here: www.ubs.com/billionaires
Wealth & Finance | November 2016
China-Based Investors Show Rising Sentient Towards ‘Safe Havens’ Markets Mainland China-based investors showed rising sentient towards markets perceived to be safe havens, according to results of the 2016 Chinese Outbound Investor Intentions Survey released by DTZ/Cushman & Wakefield, a global leader in commercial real estate services. The U.S. and Australia saw a bump of 6% and 2%, respectively, in sentiment over the first 8 months of 2016, as respondents said they increasingly favour tried-and-true destinations in established markets.
A copy of the report can be found here: http://f.datasrvr.com/ fr1/616/50108/2016_Chinese_Outbound_Investor_Intentions_Survey_-_ EN.PDF?cbcachex=941772.
early three quarters of Chinese investors surveyed felt the investment environment post-Brexit is a good opportunity to invest in UK real estate over the next 5 years. James Shepherd, DTZ/Cushman & Wakefield’s managing director, research, Greater China said, “the markets that feature a wide selection of available assets, high liquidity and relative ease of financing appear to be winning the attention of Chinese investors in search of capital appreciation or wealth preservation.”
To learn more, please visit www.dtzcushwake.com or follow us on WeChat (DTZ_China) and LinkedIn (https://www.linkedin.com/company/ dtz-cushman-wakefield).
Commercial property grabbed the most attention in the survey, with almost 80% of Chinese investors who responded indicating interest in UK office assets. Hotel investments are gaining favour at the same time, capturing one-third of Chinese outbound capital over the first 8 months of 2016 at US$7.7 billion, according to data from Real Capital Analytics. Justina Fan, DTZ/Cushman & Wakefield’s managing director, Asia Pacific & head of outbound investment, Greater China, commented, “hotels are an increasingly attractive target for institutional Chinese investors thanks to growing demand for Chinese tourists and relaxed U.S. visa policies that encourage visits.” Elsewhere, America’s West Coast cities are emerging destinations for outbound Chinese investment. While New York City commanded the most investor interest at 96%, Chinese investors who responded identified Los Angeles, San Francisco and Seattle as top-5 U.S. cities and are widening their choice of asset classes. According to survey results, the U.S. held the top slot for overseas capital allocation by Chinese investors at 44%, followed by second-place Australia at a 22% share. Rounding out the top five investment destinations by share of interest were the UK (10%), Hong Kong (6%) and Canada (3%). The survey of mainland-Chinese based investors was conducted by DTZ/ Cushman & Wakefield in August 2016.
PRIVATE BANK OF THE MONTH
Wells Fargo Delivers 10,000 Free Winter Coats to Low-Income Students For the seventh-straight year, local Wells Fargo & Company volunteers are fitting 10,000 Chicago students in low-income neighbourhoods with free winter coats. Every grade school child at 10 schools will receive coats from the bank this week.
Wells Fargo has contributed to local communities since the company’s inception in 1852. In 2015 in Chicagoland, Wells Fargo donated more than $2.8 million to 382 non-profits, gave more than $803,700 to match local team members’ gifts to 370 educational institutions and foundations, and totalled $1.4 million in team member contributions to local non-profits through our annual Community Support and United Way Campaign. Wells Fargo employs more than 800 team members in Chicagoland, serving a broad range of commercial, corporate, and individual customers in Chicago and throughout the Midwest.
ells Fargo team members in Chicago have raised $650,000 over the past seven years, providing nearly 40,000 new cold-weather jackets. This year, Wells Fargo’s Coats for Kids campaign raised $180,000 from team member donations, company contributions, and private matching grants to buy 10,000 jackets.
Operation Warm Inc., one of the nation’s largest non-profit providers of new coats to children in need, uses the funds raised by Wells Fargo to provide high quality, new winter coats to the schools, where Wells Fargo volunteers distribute them before Thanksgiving break. In addition to helping students, Wells Fargo contributed another 2,500 coats to low-income city residents at a Chicago Housing Authority event in early October.
Wells Fargo & Company is a diversified, community-based financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy.
“Kids without coats can’t go to school when the temperatures drop in Chicago,” said Kevin Ortmeyer, managing director for Wells Fargo Advisors. “Making sure children in need have brand-new coats is the highlight of the year for our Chicagoland team members, who live and work in the communities we serve. At Operation Warm, we believe a new winter coat is more than a coat,” said Executive Director Rich Lalley. “We believe that when a new coat is given to a child, it says to that child, ‘You’re worth it’ and helps build self-esteem through pride in ownership.”
With approximately 269,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories. www.wellsfargo.com
Private Bank of the Month
Wealth & Finance | November 2016
Current Pensioners Have Managed to Secure Unprecedented Leisure Time but Fail to Enjoy the Fruits of Their Labour Current pensioners have come close to achieving Keynes’ 80-year old vision of economic bliss – where people are able to capitalise on extended periods of leisure time . However, many have fallen short of his ideal because they are unable to remain active and spend their accumulated wealth. Meanwhile, future generations may be forced to work longer hours and experience a sustained reduction in leisure time
ased on analysis of OECD and Bank of England datasets , the findings were presented by ILC-UK Head of Economics, Ben Franklin, at the ILC-UK’s Second Annual Future of Ageing Conference on 8th November.
Yet just as we get accustomed to shorter working weeks, the trend has started to reverse. New analysis of 300 years’ worth of data suggests that the post-World War II period was an economic anomaly characterised by high wage growth, substantial increases in the productivity of labour and in the successful diffusion of productive invention. Since the year 2000, growth in each of these areas has stalled meaning people have had to work for longer to keep the economy ticking over.
Those reaching retirement today have benefitted from falling working hours, earlier exits from the labour force and longer life expectancy. New analysis from the ILC-UK shows how this has translated into far fewer working hours over the expected lifetimes of adults retiring today: • An average of 23 hours per week for those retiring in the UK today versus 30 hours in 1970. • An average of 19 hours per week in France for those retiring today versus 34 hours in 1970. • An average of 21 hours per week in Norway for those retiring today versus 30 hours in 1970 .
Speaking at the conference, Ben Franklin said, “over eighty years ago, Keynes had a vision that people would work substantially fewer hours and have much more leisure time to use in meaningful ways – to “enjoy the abundance when it comes”. Yet while we reduced the number of working hours across the lifetimes of those retiring today and created extensive periods of adult life outside of the workforce, most leisure time in retirement is spent watching television and, later on, living at home alone. Poor health and disability remain significant barriers to economic bliss in retirement.
Mr Franklin argued that despite the success in substantially reducing lifetime working hours and increasing leisure time, those in retirement are not necessarily “enjoying the abundance when it comes” . He highlighted ILC-UK research which finds that, on average, older people are “underspending” , that poor health prevents older people from doing what they want in retirement, and that most leisure time is taken up watching TV and later on, living at home alone.
Meanwhile, weak economic fundamentals may mean that Keynes’ vision of bliss will slip further from the fingers of those in the workforce today, with slower productivity growth leading to longer hours in work. If, as the data suggests, it turns out that the period 1950-2000 was an economic anomaly rather than the new normal, this will have profound implications for the future leisure opportunities of today’s workers.”
David Sinclair, ILC-UK director, also speaking at the conference, set out a positive vision for the Future of Ageing. He argued that we are at a tipping point where staff shortages, the increasing economic cost of ageing and poor economic fundamentals will force action by policymakers. Speaking at the conference David Sinclair commented, “over the past decade public policy has started to respond to the challenge of ageing. Auto enrolment into pensions has got millions more people saving. We have seen falls in serious illness among older people over the past decade as well as, for example, falls in excess winter deaths. We have seen a growth in age friendly communities as our society slowly adapts to ageing. We have begun responding to ageing but we are miles from where we need to be. Health and social care funding is inadequate to meet demand, too few people are saving an adequate amount for their retirement and most of us aren’t living as healthily as we should. But while ageing may seem an impossible challenge for politicians, with political will and action we can ensure the future of ageing is a success rather than a threat to our economy” Speaking at the conference, Sinclair highlighted 6 “silver bullets” for policy makers to focus effort on, pointing out that achieving change in all these areas is possible with leadership and political will. The 6 ILC-UK silver bullets. • Maximising the economic contribution of older people; • Getting us healthy; • Maximising the potential of technology and big data; • Stop patronising old age. Treat adults as adults; • Start talking about end of life and; • Let’s make ageing fun. The ILC-UK Future of Ageing conference (www.futureofageing.org.uk) brought together representatives from the UK government, business, academia and civil society. On Friday 12th February 2016, the ILC-UK published a report based on the information presented at the 2015 Future of Ageing conference, guest blogs written for our Future of Ageing series, and research and analysis from ILC-UK. The report is available on the ILC-UK website at www.ilcuk.org.uk
 John Maynard Keynes, The economic possibilities for our grandchildren (1930)  The Bank of England’s Three Centuries Macroeconomic Dataset Version 2.3 - 30 June 2016  We used OECD data to estimate likely hours in work as a proportion of total expected adult life. This is total estimated working hours over a lifetime divided by the number of adult years. Adult years is calculated as current life expectancy at the point of retirement minus age of entry in the labour force (we use age 18 for year of entry since time series data on entry is not available for all countries).  John Maynard Keynes, The economic possibilities for our grandchildren (1930)  http://www.ilcuk.org.uk/index.php/publications/publication_details/ understanding_retirement_journeys_expectations_vs_reality
Wealth & Finance | November 2016
9 out of 10 Retirement Savers Remain in the Auto-Enrolment Default Fund Defaqto, on 16th November released insightful research that shows that the most commonly used default funds for auto-enrolment pensions vary greatly. The most commonly used default funds vary in terms of benchmark, manager structure (in-house manager, third-party managers or a mix), investment approach (active, passive or both), level of diversification, performance and charging across the main auto-enrolment default funds available.
Richard Hulbert, insight analyst for wealth at Defaqto adds, “auto-enrolment default funds will affect the retirement standard of living for millions of us. This is the first time many of these funds have been publicly scrutinised and compared and the findings are really quite revealing. As a result of this study I hope that more auto-enrolment schemes will be recommended based on impartial analysis and facts that evidence ‘value for money’, enabling savers to enjoy a better standard of living in retirement”.
videncing ‘value for money’, not necessarily in terms of the cheapest or best performing fund, through an assessment that includes all of these elements will ultimately create a good outcome for the client. With 9 out of 10 savers remaining within the default pension fund throughout their retirement saving lifetime, it is vital that advisers recommend the right auto-enrolment scheme for their clients.
Patrick Norwood, insight analyst for funds at Defaqto said, “with some of these attributes, such as manager structure and investment approach, the choice of provider and fund might come down to the investment beliefs of the employer or their adviser. In terms of the other more objective features, namely risk-adjusted performance and charges, some providers and funds are clearly more competitive than others.”
Defaqto’s CPD accredited How to analyse auto-enrolment default funds highlights the factors advisers need to consider and understand when reviewing a default fund for their clients. Access further information about Defaqto at defaqto.com
Zero Tolerance Needed Against Tax Secrecy There needs to be a “comprehensive global approach” against secret tax structures, says the Nobel Prize-winning economist, Joseph Stiglitz, who called for “zero tolerance”. Speaking to the European Parliament’s Panama Committee on Wednesday 16th November, the former advisor to the Panamanian government suggested that secrecy in tax affairs should be treated like a disease which needs to be isolated.
ax secrecy is the “darker side of globalisation” said Stiglitz, adding that the hiding of money undermined the functioning of global society. “So there has to be, basically, a comprehensive global approach with essentially zero tolerance for secrecy” he said.
Stiglitz likened companies which refused to comply with “global norms” to carriers of disease. He said the EU could adopt an approach such as “you have a contagious disease and we won’t allow our corporations to interact with you.” Petr Jezek (ALDE, CZ) raised concerns about enforcing transparency rules not only against small off-shore jurisdictions, but also ‘on-shore jurisdictions’ min major economies, like the UK and the US. Stiglitz pointed out that most tax evasion and avoidance took place outside of Panama. He said the EU “shouldn’t discriminate between Panama and the United States.” He acknowledged the role of realpolitik but “the fact is that if there are these secrecy havens within the United States, you need to take strong action against them.”
President-elect tax “avoider-in-chief” The Columbia University professor expressed reservations about the U.S.’s future commitment to fighting tax secrecy, pointing to President-elect’s record as a tax avoider. “When your president is avoiderin-chief, it’s hard to have confidence in where we are going to go,” he said. But he added that Europe, acting alone, could make a significant difference.
Transparency in international trade agreements Stiglitz added that the EU could also consider adding transparency provisions in international trade agreements requiring trade partners to meet minimum transparency requirements such as a register of beneficial ownership or minimum corporate tax rates. “Put a floor on tax competition through minimum tax rates and get rid of the extremes of tax competition that we see today,” he said.
He described as “absolutely critical” the creation of publicly searchable registries of the owners of corporations who ultimately benefit. “The reason it has to be searchable is because it has to be possible not only for law enforcement agencies, but also the media to find out who is doing what activities,” he said. Stiglitz resigned in August from the inquiry panel set up by the Panamanian govern after the leak of the Panama papers after the authorities refused to guarantee publication of his final report. Introducing Professor Stiglitz, Werner Langen (EPP, DE) Chairman of the Panama Committee, said the common goal of all EU member states was to end “the obscure practices of companies who are selling secrecy. The most effective tool we have at hand is transparency”.
Tackling ‘enablers’ of tax avoidance The former advisor backed the suggestion by Jeppe Kofod (S&D, DK) that there should be stronger sanctions against the “enablers” of tax avoidance, evasion and money laundering, such as law firms, advisors and wealth managers. Countries that refuse to comply with “transparency norms” should be cut off, he suggested, including prohibiting non-compliant companies from doing business with firms from compliant countries.
Wealth & Finance | November 2016
Digitisation of Tax ‘Harder on Small Businesses’ In preparation for its ‘Making Tax Digital’ project, HMRC is reviewing the results of its official consultation period with the business community. The UK200Group, the UK’s leading membership association of quality-assured chartered accountancy and law firms, has been an active part of the consultation process and has in turn asked its members for their views and the views of their SME clients.
he UK200Group represents the interests of 150,000 SMEs through its members and it is taking a lead on tax digitisation to guide business owners through the process. So what exactly does HMRC mean by ‘making tax digital’? By 2020, businesses, self-employed people and landlords earning over £10,000 per annum will manage their tax affairs through a digital, online account, and will be required to update HMRC at least quarterly.
don’t have someone to input the data, keep the system up-to-date – who is aware of how things need to be done – they will have to get to a place where they have one. And often, that will be a bookkeeper who has never had to deal with taxation before. “HMRC officials think that getting small business to use accounting systems will reduce errors, and if people are making fewer errors they should have a more accurate idea of how their businesses are performing. That’s got to be a good thing.
These digital tax accounts will be a more sophisticated version of the personal tax accounts which are already in use for individuals, and allow taxpayers to see their Pay as You Earn position, tax credits and National Insurance Contributions, plus an estimate of state pension on retirement. However, by 2018, banks and building societies will be required to report interest payments to HMRC to be included in digital tax accounts, and individuals will be able to report additional sources of income digitally.
“However, they don’t seem to appreciate why people aren’t using accounting systems at the moment. I think what they’ve failed to identify is that businesspeople aren’t doing it now because of the cost of implementing an accounting system - this isn’t just financial, but includes the time and effort spent learning how to use it and keeping it up to date. It’s not just a case of putting a few numbers in various boxes – it takes a whole new set of skills to use these programs properly.
Digital tax accounts for businesses will show an overview of income tax or corporation tax, VAT and National Insurance Contributions, plus income and expenses on a quarterly basis. Taxpayers will be expected to use software accounting systems to record day-to-day transactions, categorise them into different types of income and feed back to HMRC.
“This, again, is going to affect small businesses more than it affects larger ones because the overheads for setting up accountancy systems are going to remain broadly the same, regardless of turnover. A complex accounting system, for example, is also massively over-engineered for a lot of the UK’s businesses, which might only have half a dozen clients or customers.
Andrew Jackson is head of tax at UK200Group member Fiander Tovell and chair of the UK200Group Tax Panel, and is also on the consultative committee of the Office for Tax Simplification.
“HMRC seem to acknowledge this, and are also proposing that businesses be allowed to use simplified methods for doing their accounts. Unfortunately, what this would do is destroy a lot of the useful information that is the whole the point of preparing accounts in the first place. There are also technical issues that Andrew sees as potential problems for his clients, such as whether he’s going to be able to access their digital tax accounts easily and effectively.
He said, “the digitisation of tax is going to have a very different effect on small companies compared to larger ones. For larger companies with financial controllers, accounts teams and reasonably sophisticated software accounting systems in place, the switch will be much easier than for smaller businesses without a dedicated accountant or bookkeeper. There is already internal reporting going on in a large business so it is not so difficult to start diverting that reporting to HMRC.
“HMRC officials are happy to make the information in the digital tax account available to agents. Agents will be able to dial into HMRC’s systems, download the information they need and pull it into the tax return or the accounts that they’re preparing, or use various interfaces to see the information in the way that they want to.
“Making tax digital will force all businesses and self-employed workers to start using accounting systems, and that implies having someone to deal with accounts – even if they’re not a chartered accountant. If they
“They’ll not be restricted to seeing the information in the way that the client does, and the format will be more flexible and more useable. I like that. However, what HMRC officials have said is that the agent will not be able to see the digital tax account itself. What they’ll have to do is reconstruct the account from the data they have available. Now that is very dangerous because it means that the taxpayer and the agent are potentially seeing different things. I think it’s crucial that we can see on our screens what the client can see on theirs. If we can’t see your tax affairs, how are we supposed to help you handle them?” The subject of tax digitisation was covered in more detail at the UK200Group Annual Conference, held at the Ageas Bowl, Southampton, S030 3XH from 16 to 18 November 2016. www.uk200group.co.uk
Wealth & Finance | November 2016
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