1. Not Doing Your Research
One common mistake that beginner stock traders make is not doing their research. It is essential to do your homework before investing in any stock. When trading online, you will have access to a wealth of information. You need to look at the financial statements of the company, as well as the overall performance of the sector. You also need to read the analyst reports and find out what the experts say about the stock. Not doing your research is one of the biggest mistakes you can make when trading stocks. How can you expect to make a profit if you don’t know what you’re buying?
2. Investing in Small Caps
Investing in small caps is one of the most common beginner mistakes. There are different types of stocks and these stocks are traded on the junior exchanges, and they are often more volatile than the stocks on the major exchanges. The reason why so many people make this mistake is that they are looking for a quick buck. They think that by investing in small caps, they will be able to make a lot of money quickly. However, this is not usually the case. The vast majority of small-cap stocks do not perform well. Over 80% of them lose money. Investing in stocks that are traded on major exchanges is much better. These stocks are much more likely to appreciate over time.
3. Not Diversifying
Diversification is one of the most important aspects of investing. Yet, many beginner stock traders fail to diversify their portfolios. The reason why diversification is so important is that it reduces risk. Investing in various stocks makes you less likely to lose all your money if one of them goes bankrupt. A well-diversified portfolio should contain a mix of large-cap, small-cap, and international stocks. It would help if you also had a mix of growth and value stocks.
4. Getting Emotional
Many beginner stock traders make the mistake of getting emotional about their investments. They become too attached to their stocks, and they hold on to them even when it is clear they will lose money. It is important to remember that stocks are just pieces of paper. They are not worth your emotional investment. If you find that you are getting emotional about a stock, it is best to sell it and move on. There is no point in holding on to a losing investment.
These are just some of the most common beginner stock trading mistakes. If you can avoid these mistakes, you will be well on your way to success in the stock market. Remember to do your homework before investing in any stock and stay calm and rational when making decisions.
[ymal]
There are a number of important things that you need to consider when you decide to make an investment in Bitcoin. It is important that you first do your research about cryptocurrency before you decide to put your money into it. Bitcoin may have made quite a few waves in the past decade, but it’s important that you don’t think of it as an investment vehicle. There are plenty of things to keep in mind before you decide to buy Bitcoin. Here are seven important things to know.
1. Do Your Research
Have you looked at the past trends of how Bitcoin has evolved? You have to understand that research is critical before you decide to purchase Bitcoin. At the end of the day, it’s a cryptocurrency, so the first thing that you need to do is research its prospects and how cryptocurrencies have evolved over the past few years. It’s imperative that you do your research about the different cryptocurrencies that are in circulation, check the whitepaper, and then decide whether to put your money into it or not.
2. Find a Suitable Exchange
Cryptocurrency such as Bitcoin is generally available from a number of different crypto exchanges. It is important for you to find a reputable and reliable crypto exchange from where you can buy the coin. Ideally, when it comes to investing in crypto, there are plenty of different exchanges from where you can buy it. When you are able to exchange your fiat currency with crypto, you have to make sure that you get a good rate too.
3. How Much Do You Want to Invest?
Another important thing that you need to consider is the maximum amount that you are willing to put in. You have to be very particular about the maximum amount of money that you decide to put in because there is a big chance that the values are likely to plummet in the future. It is important for you to make sure that you decide how much money to put into crypto. You need to understand that Bitcoin is obviously not as liquid as other currencies, so it’s going to be difficult for you to use Bitcoin freely.
4. Bitcoin Is Decentralised
One very important thing that you should know before you buy Bitcoin is that it is a decentralised currency. One of the biggest advantages that you get for buying this currency is that it can’t be seized by a central authority. They can’t be devalued either. The con of decentralisation is that there is no backing for the government, so the currency is actually quite volatile and liable to fluctuate in the future.
5. You Will Have Limited Options
If you own Bitcoin and are looking to invest your money into different things, you should know that the number of options available to you will be limited. Most government organisations have repeatedly denied applications for funds that are operated using Bitcoin, and you won’t have many decent options available for investment. So, if you were thinking of putting your money into Bitcoin simply because you want to invest it in other places, this might not be such a good idea.
6. It's Very Volatile
Volatility is not something that you would want when it comes to making a long-term investment. One of the main reasons why so many people tend to steer clear of Bitcoin and other cryptocurrencies is simply because they tend to fluctuate and move around in value quite a bit. For instance, Bitcoin has been around since 2008, but it wasn’t until 2017 when the currency really rose in value.
By the end of 2017, one Bitcoin was retailing around the $20,000 mark. Many Bitcoin millionaires rose to the fore because of that, and it wasn’t long before people realised that there was quite a lot of money to be made. But then, the value of Bitcoin crashed rapidly, and it even went down all the way to $4,000 within a couple of years. As you can understand, this indicates major volatility, and it just means that you will have to be very particular about where you put your money.
7. Deals Are Anonymous
You can easily buy Bitcoin online and transfer it to a crypto wallet with minimal hassle. Furthermore, you should know that the deals you make on crypto are simply traceable through a TRX ID and nothing else. No one will know who sent the money, and no one will know who received it. That is one of the main reasons why you have to be so particular about where you put your Bitcoin. It’s important that you choose a safe wallet.
The UK economy is predicted to grow at the fastest rate since the second world war this year, according to a widely cited economic forecaster.
The EY Item Club has upgraded its forecast for GDP growth during 2021 from 5% to 6.8%, which would mark the fastest annual growth since 1941. This comes in the wake of relaxing COVID-19 restrictions and optimism that rapid progress with the country’s vaccine programme will enable a swift return to business as usual.
Consumer confidence also increased at the fastest rate in a decade during the first quarter of 2021 on this vaccine-driven optimism. The EY Item Club added that the improved short-term outlook means that the UK economy is expected to return to its pre-pandemic peak by the middle of next year, aided by a surge in consumer spending as households saved during lockdown.
Elsewhere, analysts at Goldman Sachs have predicted a growth rate of 7.8%, stronger than that expected for the US, where President Biden is spurring economic recovery with a multi-trillion-dollar stimulus initiative.
Further pieces of data have added to observer optimism for the UK economy. Item Club analysts revised down their unemployment forecasts from 7% to 5.8% by the end of the year, and the HIS Markit/CIPS Purchasing Managers’ Index found that the service sector grew faster than manufacturing in April for the first time since the pandemic began.
"The UK is primed for a sharp snap back in consumer activity,” said Ian Stewart, chief economist at Deloitte.
[ymal]
"High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months."
The UK economy shrank by 9.9% in 2020, the worst performance among the G7 and the steepest annual decline seen in the country since records began.
Stuart Lang, Founder and Creative Director of We Launch, shares his insight on brand convergence with Finance Monthly.
In the world of finance, the convergence of two institutions – outside of an M&A - is uncommon. Beyond this, we rarely see two financial brands come together for a common cause. However, when it does happen, it’s critical that they present a clear and unified proposition if they are to achieve success. And the value of that should not be underestimated; the Marketing Accountability Standards Board, whose research from 2018 found that brands contribute an average of 19.5% enterprise value.
Playing your cards right
So how do you successfully unify two brands, without losing the individual equity of each? And how do you present it to prospective investors and convince them to trust the new brand the way they did the old?
Therein lies the biggest challenge.
Different firms have different histories. Different people. Different clients and case studies. They probably have different messaging and imagery styles. And sometimes – different cultures.
Taking advantage of each distinction and bringing them together harmoniously can be a tricky task to comprehend. Brand Value as a monetary value consists of a number of interconnected factors - everything from financial forecast to brand strength and the role that brand plays in the day-to-day business.
The first step towards brand unification is deciphering what makes each business unique and how (or why) to dial up that essence in a unified proposition. After that, sitting down with stakeholders - both internal and external - and pinpointing their motivations is key.
The first step towards brand unification is deciphering what makes each business unique and how (or why) to dial up that essence in a unified proposition.
As well as knowledge of your competition through detailed auditing, which can also help clarify what sets your brand apart from others, whether it be positive or negative.
This depth of understanding will then inform which qualities to amplify and which to put to one side. In a game of Top Trumps, the victor is the one who knows which card to play in order to win a hand. The same thinking applies here. Identify the strongest individual criteria for each brand and take advantage of it. Whether it be the seniority of relationships, calibre of past deals, global reach, or the strength of the existing brand, choosing the right qualities and combining them strategically will help improve your odds of success.
Being as clear and frank in what you want to achieve with such a proposal is the number one goal. Your new brand's visual language needs to present a unified and clear value proposition, running a thread through all of your communication channels as a joint business.
A recent study from RedhouseBrand, analysing 25 financial sector brands, found that clarity in messaging was a key value for these brands to pursue. Being open and honest with what your brands are and what the new venture is really trying to achieve will go a long way to making it legitimate in the eyes of any new or existing stakeholders.
Nevertheless, sometimes that means making a considerable change - which can be difficult. Taking a risk can be the quickest way to stand out in a cluttered market however, and businesses shouldn’t be afraid to embrace that. Finance is about taking risks and if it means building a bigger and better brand together then it's most likely the best option to consider.
Considering the right people for the job
It is also worth considering who you bring in to collaborate with you on crafting a fresh approach. A brand is a valuable business asset, and whilst risk of change does offer the opportunity to win big, it’s much more reassuring when that risk is calculated and in the hands of experts.
[ymal]
If you do bring in branding experts, make sure to fully immerse them in your world and be honest with them about your ambitions. This means putting them in front of stakeholders, your investors and letting them reach out to clients. The more information they have on why you are doing this and how the brands are currently working as independent entities, the more likely they are to implement the changes needed.
This fine balancing act was exactly what M&A advisory firm JEGI CLARITY’s refresh as a single, unified brand faced. Two singular entities with proven track records in their respective markets, they needed to align themselves with potential investors who had no prior knowledge of them. Working closely with their leadership teams and forming a strong understanding of both businesses in their own right helped us translate the qualities that made them successful into a seamlessly unified brand proposition.
It was crucial this was maintained not just at a macro level but threaded through all communication materials – whether big or small. If all brand materials, from messaging to imagery to the website and social, can sing to one another then they can better emphasise the objective of the joint mission.
Seizing the opportunity to unite
The 2019 edition of Brand Finance’s GIFT report stated that intangible assets - such as your brand identity - account for 48% of overall enterprise value, so time is always of the essence. Putting any kind of brand reinvention, whether through necessity or not, on the back burner is always going to be the wrong thing to do. It is always worth remembering that your competitor is probably already hard at work on a new look or campaign to communicate their offering. So not putting the attention into yours now, could mean that you are pushed down the pecking order before you even have a chance to start.
Being ahead of the crowd is the best way to make the biggest impact and show that your value proposition is the best around. Acting decisively is far better than remaining static – because those that sit still run the risk of being overtaken by others.
Andrew Megson, Executive Chairman at My Pension Expert, looks at the sources of distrust in financial services and how the industry can turn its image around.
Today, the topic of trust in financial services looms large. With decades of mis-selling PPI, investment scandals, and zero industry transparency, it is little wonder that many individuals have a hard time engaging with financial advisers.
This is a crying shame. Advisers play a vital role in helping people develop a tailored financial strategy and achieve their monetary goals – the current climate of economic volatility has only accentuated their importance.
The financial pressures brought on by COVID-19 have upended many people’s financial strategies. Individuals have been forced to dip into their savings or, in some cases, even bring forward their retirement date due to redundancy. Naturally one would assume that it would pay to consult a professional when re-evaluating retirement and investment strategies.
Yet, Britons are still reluctant to seek advice. According to research from My Pension Expert less than two thirds (38%) of UK adults ever sought the help of an IFA. Even amongst those aged 55-plus and approaching retirement age, this figure stands at only 46%.
Such figures are concerning. They suggest that many people are making complex financial decisions unaided. And without an in-depth knowledge of the industry, or various financial products, they might find themselves worse off in the long term. Clearly, urgent action is needed.
Re-tracing the history of adviser fees
Adviser practices have certainly been questionable over the years, with little to no transparency surrounding how adviser fees were calculated, and many individuals in the industry working on commission and resorting to pushy sales tactics.
With decades of mis-selling PPI, investment scandals, and zero industry transparency, it is little wonder that many individuals have a hard time engaging with financial advisers.
Worryingly, My Pension Expert’s aforementioned survey revealed that almost one in five (18%) of individuals lost money following the recommendations of a financial adviser in the past. Likewise, a further 26% of UK adults said that they felt pressured into purchasing a financial product, despite not fully understanding what it was. And it these negative experiences that have shaped Britons’ opinion of advisers.
Thankfully, in 2012 the FCA took action to tackle unethical practices with the retail distribution review (RDR). This means that IFAs are now only able to offer fee-based advice.
But in spite of the great strides made by the FCA, the regulatory changes have not been enough to mend savers’ relationships with intermediaries. Indeed, many are steadfast in their belief that financial advisers will not act in their best interests.
Too much choice can be a bad thing
As a consequence of such deep-rooted mistrust, many people prefer to make their own decisions about how to handle their pensions and investments.
This is troubling, as there are such a vast array of savings and investment products on the market for savers to choose from, individuals may fall victim to rushed and ill-informed decisions.
Indeed, too much choice can sabotage the ability to make well-reasoned and logical decisions. Research in academic settings, including a notable study conducted by Columbia University suggests that this is the case, as the group of subjects with more choices made knee-jerk decisions, compared those with fewer choices, who made their choices based on greater reason and individual preference.
Apply these insights to the world of financial planning, and problems start to rear their head. Our survey uncovered that the majority (65%) of individuals prefer to free guidance that can be found online, instead of seeking out independent financial advice. And although many will have a good grasp of their finances, relying solely on self-governed advice can be particularly harmful in the long-term.
[ymal]
Repairing broken bonds
Clearly, the industry needs to do more to repair its damaged reputation.
In addition to the FCA’s work, a good start in this regard would be for the regulatory body to make the benefits of independent financial advice more widespread. Take for example, the fact that regulated financial advisers are obligated to reinstate an individual’s original financial position if their advice leaves them worse off. Few savers know this, and many might be more willing to take advice safe in this knowledge.
Further to this, the results of My Pension Expert’s survey suggests that individuals also want to see the FCA come down even harder on unscrupulous advisers, with the overwhelming majority (78%) of respondents stating that they wanted to see harsher punishments for IFAs engaging in unethical practice. Meanwhile, a similar number (73%) believe that tighter regulations surrounding independent financial advice are in order.
Ultimately, the financial services industry has some work to do when it comes to restoring its reputation. Particularly as the UK progresses along on its roadmap out of lockdown and the economy eventually stabilises, savers are likely to remain in need of regulated financial advice. Although it will not happen overnight, so long as the industry takes steps to improve transparency and public understanding, I have every confidence that individuals will be more willing to seek advice to secure their financial futures.
A major new report on the UK’s fintech sector has found that, while the UK continues to lead in fintech, according to a long-awaited government-backed review of the sector.
The 108-page Kalifa Review, released on Friday, lays out a five-point plan for the continued development of fintech in the UK. The review was commissioned in 2020 to identify priority areas to support the UK fintech sector.
The report recommends the creation of a fintech growth fund, allowing UK pension funds to invest in early stage companies and disincentivise them from quickly selling to wealthy foreign competitors. It also recommends that a retraining programme be set up to encourage further education colleges to help workers understand new tech skills.
Further recommendations include the development of ten new fintech “clusters” across the UK and the establishment of a Centre for Finance, Innovation and Technology to coordinate and encourage growth across the sector.
Ron Kalifa OBE, former head of payments firm Worldpay, warned that the UK attracted only 4.5% of new financial company IPO listings between 2015 and 2020, falling far behind the 39% that floated on Nasdaq and the NYSE.
“Britain has a proud record of starting-up and scaling-up some of the best known fintech products, but we cannot rest on our laurels," Kalifa warned in a statement. "The next powerhouses will not be created by accident.
[ymal]
"We must continue to nurture our start-up culture, but crucially we must also give our high growth firms the support to become global giants."
After the 2008 financial crisis, fintech emerged as one of the UK’s most fast-expanding industries. It is now worth £11 billion and accounts for 10% of the global market, with high-profile London-based firms such as Monzo, Revolut and Checkout.com making the capital an international hub for fintech.
The pandemic has also pushed the sector further into the national spotlight. Financial services providers are under pressure to support businesses and individuals in distress, while facing increased scrutiny over customer experience – particularly when it comes to vulnerable customers. Finance Monthly hears from Craig Naylor-Smith, managing director of Parseq, on how firms can keep up with these demands and overcome the new obstacles 2021 will bring.
In this climate, firms must continue to invest in their operations if they are to remain competitive, protect their reputation and meet the constantly evolving demands of customers. By transforming inefficient processes, firms can develop more productive operations and free-up funds to help drive new investment in the year ahead. Here, the support of an expert partner can be key.
Transformation plans
It is encouraging to see that financial services executives already have transformation firmly on their agendas. At Parseq, we recently surveyed more than 50 C-suite executives at some of the UK’s largest financial services firms for our inaugural Big Business Efficiency Report to understand their plans for the next 12 months when it comes to transformation and efficiency.
Four in five executives (84%) plan to transform their business operations over the coming year, and every executive we spoke to is planning to make their business more efficient.
When it comes to transformation, executives’ focus areas are diverse. In the front office, marketing (44%), sales (37%) and customer experience (19%) are priorities. In the back office, finance and administration (35%), IT (30%), compliance (26%) and HR (26%) top the list.
The use of AI and machine learning (41%), digital channels for internal and external communications (35%) and new workflow management software (33%) are the most popular steps executives will take to help increase business efficiency in 2021.
[ymal]
When asked how they would use the capital unlocked through efficiency gains in the next twelve months, more than half of respondents said they will invest in new technology (57%), while almost two fifths said they would improve customer experience (37%) and expand into new markets (37%).
Overcoming obstacles
These findings highlight the broad range of efficiency and transformation strategies financial services executives are formulating. However, executives also highlighted several barriers when it comes to putting efficiency measures into action.
Our respondents cited cost (37%), complexity (35%), a lack of time (29%), a lack of knowledge (29%) and a reliance on legacy systems (29%) as their biggest hurdles.
And, while 71% of executives who said they were planning to use outsourcers over the next 12 months were more likely to do so after the UK’s first lockdown in March, a fifth (20%) said a lack of awareness of available third-party support was a factor currently holding them back.
From our 40 years of experience at Parseq, we know that outsourcing to a third-party can achieve permanent efficiency savings of at least 30%. However, while outsourcing partnerships can return impressive cost savings and help executives directly tackle issues such as complexity and time, its benefits can extend far beyond this. Through their expertise and experience, outsourcing partners can also play a key role in helping firms deliver long-term transformation in their operations.
Looking ahead, financial services firms that successfully enhance their efficiency and enact transformation will be well placed to overcome any obstacles that may arise this year. Through transformation, and by utilising third-party support, businesses will be able to unlock the capital that will be key to helping them thrive in a challenging and competitive environment.
With consumers these days growing extremely comfortable with digital channels and online buying experiences, B2B marketers are evaluating how their strategies fit into this new world.
Perhaps the most jarring aspect of this behavioral change has been reduced reliance on analyst research reports. A 2020 report by TrustRadius indicates that just 21% of B2B buyers rely on analyst reports.
Gartner's Magic Quadrant reports are an eagerly awaited and prestigious release every year. However, with the reduced reliance on research reports and increased trust placed on peer review platforms, are Gartner's reports even relevant anymore? The truth is that there isn't a clear yes or no answer.
Examining the facts through three key aspects of the B2B buyer's decision journey is instructive.
The Buyer's Journey
Business buyer journeys are getting more complex. Blog posts and other content assets are important first touchpoints, but company websites, social media conversations, product mentions, trade shows, video and audio content and sponsorships all play a major role in grabbing a consumer's attention at first.
Trustworthiness is the most important factor that consumers look to evaluate throughout their journey.
To this end, TrustRadius's report mentions that buyers use a company's website and product pages to determine how trustworthy they are. Furthermore, 87% of buyers want a self-service journey and do not want sales rep or marketing interference.
Trustworthiness is the most important factor that consumers look to evaluate throughout their journey.
This means that marketers have to adopt a soft-touch approach while maintaining consistent messaging throughout your channels.
Research reports and analyst mentions might not entirely help establish trust in a consumer's mind, but they do provide social proof. When a brand lands a favourable mention in one of Gartner's Magic Quadrant reports, the result is instant validation that the company is a major player in their space. Your company's categorisation in its quadrant quickly helps establish your specialty and nature in a consumer's mind.
However, increasingly, business buyers are looking beyond these factors. A company that doesn't allow consumers to self-service their journey through product trials is going to find itself out in the cold. An analyst mention isn't going to do the trick all by itself. You need to provide as much value and information as possible before you ever meet their clients face to face.
Credibility and Reviews
TrustPilot's report singles out product reviews and review content as the most important part of a B2B consumer's buying decision. It also highlights a disconnect between what companies focus on and what consumers want.
Most companies focus on their product's score instead of conversations around actual value and customer delight.
This is an important distinction to make. Secondary social conversation sites such as Twitter, Reddit and Quora offer tons of review content that users routinely review. These sites don't offer scores and can be ignored by B2B vendors. Review content performs the same function as a customer referral does, and this is why these secondary social websites are so powerful.
TrustRaidus's data highlights customer referrals as the most effective marketing tactic followed by personalized messages, online events and SEO. On the surface, it seems as if analyst reports have no major role to play in any of it. However, analyst mentions can augment many of these tactics. For example, a backlink from a high authority analyst website will boost your domain's authority considerably.
Sponsoring a research firm's online thought leadership event is an instant way to get your brand in front of thousands of potential clients. While it doesn't convey credibility all by itself, it helps your company occupy mind space and is one block in a larger picture.
It prompts consumers to conduct further research into you, and as long as you back it up with marketing that provides value, you'll engage and delight consumers.
Impartially Assess Industry Impact
Technology trends change quickly, and buyers often find themselves overwhelmed when tasked with keeping pace. Choosing a product that is behind its industry's direction could prove highly problematic, especially given that more sophisticated tech tools often involve extended onboarding processes and contractual lock-ins.
Gartner's MQR paints a quick picture for consumers that they can then use to conduct further research.
Gartner's report classifies companies as leaders, visionaries, niche players, and challengers. Buyers can choose their preferred vendors based on the challenges they're facing. For example, an enterprise that needs an end to end solution might be better served by a leader instead of a niche player. However, if their need is concentrated, a niche player might be a better fit.
[ymal]
Analyst reports also offer insight into the trends an industry can expect moving forward. Whether consumers choose to listen to them or not, the fact is that these reports play a critical role in determining which trends consumers pay attention to.
Positioning your product per these trends, with the characteristics of its relevant quadrant will raise your company's profile.
A Rounded Approach
The key as always is to adopt a well-rounded approach that supports your consumer's needs throughout their journey. Focusing solely on analyst reports, no matter how prestigious they are, is not a good strategy moving forward. Seek to provide value throughout the journey and avoid a PR-like approach at all costs.
A study has made a link between powerful bank CEOs and the risk of money laundering. Syed Rahman of business crime specialists Rahman Ravelli considers the research and argues that prevention is everyone’s responsibility.
It may not please certain figures at the top of a number of financial institutions, but research has linked powerful bank CEOs with money laundering dangers.
According to researchers at the University of East Anglia, banks that have such CEOs and smaller, less independent boards will probably take more risks and, as a result, be more prone to money laundering than those with a different concentration of power at the top.
The researchers’ study examined a sample of 960 publicly-listed US banks for the period from 2004 to 2015. The study’s results showed that money laundering enforcement was associated with an increase in bank risk. From its findings, researchers stated that the impact of money laundering is more pronounced where a powerful CEO is present – and is only partly reduced by the presence of a large, independent executive board. They concluded that banks that have powerful CEOs attract the attention of regulators engaged in anti-money laundering efforts, and that this is especially the case if the bank’s board of directors is small and lacks independence.
The study has been viewed by some as the first to demonstrate that money laundering is a significant driver of bank risk. This effectively means that it can take its place alongside business models, ownership structures, competition in the marketplace and regulation as having an impact on risk.
[ymal]
It is perhaps surprising that previous research on banks’ risk-taking has not explicitly homed in on the possible effect of money laundering, especially as regulators have made no secret of the importance they attach to tackling it. But now, it could be argued, is an appropriate time to make that link. The increased numbers of cross-border transactions – and the sheer scale of many of them – have made banks more vulnerable to money laundering. Regulators are carrying out ongoing assessment of money laundering risks posed by organised crime and those with terrorist links while states – many of which have had obligations placed on them in recent years – are increasing their use of sanctions against countries, organisations and individuals.
The banks that do not recognise and respond appropriately to this state of affairs could well find themselves suffering fines, claims against them and significant reputational damage. Such outcomes are the logical consequences for any bank that can be shown not to have done all it could or should to minimise the dangers of money laundering.
It is worth noting, at this point, the researchers’ argument that the size and independence of a bank’s board can mitigate the impact of money laundering on bank risk but cannot fully compensate for the possible adverse effects. Aside from the study’s conclusions, what also needs to be emphasised is that the shape of fraud and money laundering is constantly changing and developing. As the risks posed by money laundering grow, the regulators adapt to rise to the challenges and the banks themselves have to meet their obligation to identify and assess the risks to which they are exposed. Just as importantly, the banks need to ensure that those risk assessments are kept up to date.
Such procedures can and will, of course, be instigated by those at the top. But regardless of the concentration of power in the upper echelons, once those procedures are in place the bank needs to make sure that its employees understand and comply with them. Those procedures need to be subject to regular monitoring, review and, when necessary, revision to ensure they are effective in countering the threat posed by money laundering. Banks have many methods available to them to ensure this is achieved. It almost goes without saying that banks will have a money laundering officer to supervise all anti-money laundering activities. Investing in anti-money laundering controls involving artificial intelligence (AI) technology is another approach, as it can support enhanced due diligence, transaction monitoring and automated audit trails. But what cannot happen is that the CEO or the board simply issues an edict about the wish to prevent money laundering: genuine prevention will only succeed if it is adopted and carried out by all levels of personnel.
Investing in anti-money laundering controls involving artificial intelligence (AI) technology is another approach, as it can support enhanced due diligence, transaction monitoring and automated audit trails.
The standing of a CEO in a bank and the relative power of its board may well have an impact on the risk posed by money laundering. But a bank will always be vulnerable if its approach to tackling that risk is not embraced by all levels of its workforce.
]A survey of 600 financial services professionals commissioned by KPMG and the Financial Services Skills Commission, and carried out by Savanta, showed that 44% of respondents were considering a career change.
31% of those surveyed said that they planned to hunt for a new job within the coming 12 months in spite of the dire impact that the COVID-19 pandemic has had on the UK job market. A further 13% were looking to quit the sector altogether – a figure that rose to 16% for 18- to 30-year-olds.
The respondents’ stated reasons for wanting to change career paths included excessive regulation in the sector, in addition to overly long hours and commuting times.
Karim Haji, head of financial services at KPMG remarked in a statement that it “made sense” for workers in the financial sector to be reconsidering their roles as they spend more time at home, away from their colleagues and offices.
“With so many considering a career change, financial services must take this time to promote itself positively and wipe the slate clean when it comes to the associations people make with it, if it is to be genuinely competitive for talent,” he said.
[ymal]
Haji also emphasised the importance of dispelling myths around the financial services sector, including its supposed “conservative employee policies”. Much of this work, he said, has been accelerated by the COVID-19 pandemic.
Savanta’s findings in the financial services sector were largely consistent with the wider economy. The firm polled more than 1,500 people across various industries and found that around 46% were contemplating new careers.
Finance Monthly hears from Brice Corgnet, Professor at emlyon business school; Camille Cornand, Research Director at CNRS; and Nobuyuki Hanaki, Professor at Osaka University, on the results of their behavioural study and what they might mean for traders.
The COVID-19 pandemic has created unprecedented times. The lockdown measures that have been put in place have shut down schools, reduced socialisation to almost zero, and halted or hindered virtually all industries.
There has been a significant economic fallout from the pandemic, with job losses and bankruptcies occurring on a daily basis. Governments globally have been implementing various fiscal policies in an attempt to control the fallout, but they can’t do this indefinitely.
Even though events like the current pandemic are rare, they have a major impact as they are by definition surprising - meaning that they are highly likely to trigger a strong emotional response, which can have a significant impact on investments. For this reason, we decided to look into individuals’ behavioural and psychological response to extreme events and how these emotions can affect the way that they invest.
For this experiment, the participants were tasked with placing successive bids to acquire a financial asset that offered a positive reward, which also had the potential to have a large loss that could wipe out the participants accumulated earnings and bankrupt them.
Even though events like the current pandemic are rare, they have a major impact as they are by definition surprising - meaning that they are highly likely to trigger a strong emotional response, which can have a significant impact on investments.
During the experiment, the participants’ emotions were monitored by electrodermal activity (EDA). We placed electrodes on the participants’ index and middle fingers which measured their sweat. By doing this, we were able to learn how the individual was feeling at different stages of the experiment – when the decision screen was made and when the earnings were shown.
EDA is a valuable tool in physiological science as it is a biomarker of individual emotional responsiveness that can help detect, for example, anxiety.
The results show that different emotions can have various effects on investment decisions, but the most interesting result that we found was that, in times of uncertainty, anxiety could actually protect investors from extreme events. This is because investors who exhibit anxiety tend to take on fewer risks, which then means they are less likely to suffer extreme losses and bankruptcy than their less emotional counterparts.
Many people will find it surprising that being anxious could improve investment decisions as this is a complete contrast to what we are usually told. Normally, those that are more likely to take risks when investing are more likely to be successful. But we are in very unusual circumstances where experiencing anxiety when investing could be what saves your company.
[ymal]
Furthermore, the research revealed that emotions, such as anger and fear, can also affect investment decisions. Those who showed fear were more likely to decrease their bids, similar to those that are anxious. However, those who get angry when investing are more likely to increase their bids because they have an inability to make peace with their losses, which then promotes risk-seeking behaviours, creating a cycle.
The research highlights that the effect of emotions on financial decisions is particularly complex, since a negative event like COVID-19 can have completely different effects depending on the individual. But in our current circumstances, having emotions like fear and anxiousness can actually be beneficial for companies – something worth considering in this unstable climate.
Do you have an equal passion for both justice and crunching numbers? You undoubtedly know what economics is and you’ve likely heard of forensics, but do you have any idea what forensic economics is? Who knows, maybe this is the career path you were meant to take. Let’s find out.
What You Need to Know About Forensic Economics
According to the National Association of Forensic Economics (NAFE), forensic economics is classified as the application of economic theories and methods to legal matters. It’s a scientific discipline and those who work in the field are almost always master’s degree or PhD holders.
Someone who works in forensic economics is called a forensic economist. Economics and accounting are completely different as are forensic economists and forensic accountants. Though the roles are similar in nature, there are a number of factors that differentiate one from the other. Two of the biggest differences are the scope of work and the salaries associated with each.
What do Forensic Economists Do?
While of course it can differ from industry to industry, a forensic economist is generally tasked with conducting research, preparing reports and formulating plans that are aimed at specifically addressing economic problems relating to monetary or fiscal policies.
Forensic economists are well versed in services such as economic damage calculation and litigation consultation. They are often called upon to act as expert witnesses in a court of law. Their common areas of practice include:
- Toxic tort
- Accident claims
- Employment
- Medical claims
- Business
- Real estate
[ymal]
How Much do Forensic Economists Earn?
Now, onto the good stuff. How much do forensic economists earn? Considering the scope of their work and the academic credentials behind their names, it should come as no surprise that forensic economists earn a pretty penny. The average salary of a forensic economist in the US is around $124,430, which is approximately $60 per hour, with an average bonus of $4,405 per year.
The entry-level salary for those with one to three years of experience is $86,457 while those with eight years of experience or more behind their name can earn up to $154, 814. Again, much like the scope of work, the salary of a forensic economist largely depends on the industry in which they work and the company or organisation that employs them.
A forensic economist can work anywhere from smaller organisations or cottage businesses to one of the Big Four firms. This is also one job that accommodates remote working—unless your presence is required in court of course—so it’s a career path that caters to working mothers and those that prefer working solo.
Final Thoughts
Forensic economists are remarkable people who can take numbers on a piece of paper and paint a picture of a hard-done-by single parent who struggles to make ends meet. They’re people who can review pre-incident records and come up with accurate figures that represent a business’s loss of earnings. They fight for the little guy and big guys alike, so whoever hires them benefits from their expertise and they leave a positive legacy.
