What are the benefits of having a third-party portfolio manager to manage one’s accounts?

Ron Medley: Whether using a third party or an in-house portfolio manager, a key benefit is having a relationship with the portfolio manager in order to have a communication channel that can provide feedback beyond just the price and the news headlines of the day. The ability to get a view into the investment decision-making process can help provide the necessary feedback to inoculate you from the emotion that only looking at price and headlines can generate. Once you have that feedback, you can achieve certainty of process and peace of mind, given the variety of possible outcomes from the market. As an example of our practice, we use volatility as a factor for investment selection. Our research has shown that the risk/reward of owning lower volatility portfolios has generated a couple percent more return for about the same risk as the market over the last couple decades. We construct portfolios that are dynamic in their ability to adapt when unexpected things happen in the market and we can also build custom variations of this approach, which are unique to each client. Generally, once clients learn about how we implement the investment process and experience owning a portfolio constructed and managed this way, emotional energy can be channeled toward much more productive areas.

Our research has shown that the risk/reward of owning lower volatility portfolios has generated a couple percent more return for about the same risk as the market over the last couple decades.

What mechanisms do you use when identifying risks and opportunities for MSAM’s clients?

Ron Medley: What’s most important here is the ‘What, Why and How’ for the client: What are your beliefs and your mission? ; Why are we doing this? ; How do we tap into the positive emotion that is driving you and help you step toward making your vision reality? We listen first. And then we work to understand how we can help provide clarity to help turn those emotions, concerns and goals into positive actions.

What sets your firm apart from other asset management companies?

Chris Pelley: There are almost one million investment advisers around the world. We all look about the same and most people aren’t entirely sure what we’re talking about or how to differentiate us. But we all have three deliverables as follows:

• Comprehensive financial planning – We pull together strategies and views tying life goals and expectations. We are also aligned with both tax and legal advice.
• Portfolio design – Working to develop custom asset allocation profile and investing the portfolio accordingly.
• Education – We encourage our clients to ‘invest their time before they invest their money’.

At MSAM, we add a special fourth dimension that is often the primary focus on enhancing our client relationships. We are very mindful about making useful ‘connections’ that can help our friends’ companies, careers, children and charities. We believe that the way people invest their time is even more important than the way they invest their money. We open doors that enhance the quality of their lives. They reciprocate for us too.

What are some of the challenges that investment advisers in the US have been facing over the past year in relation to changes in what customers expect in terms of products and services?

Ron Medley: We have an overabundance of investment products - there are as many funds as there are stocks they invest in, and this is not only because of the proliferation of funds and ETFs. There are also less companies going public. Although the value of the market as a whole has grown, the US market had almost twice as many public companies 20 years ago. More and more, it seems investment capital is chasing companies long before they are accessible in the public markets. Historically, over the last century, small companies offered a 3%+ return premium over large companies. But with less small companies being public, we have to find more ways to access quality small companies. Alternatives, as an asset class, have attracted a lot of investable assets and are projected to become 15% of the investable universe by 2025, a recent PwC study has shown. We’ve invested a lot of energy in developing ways to allocate to alternative asset classes, such as private equity for example, in order to continue to broaden our access to the investable universe for clients.

Alternatives, as an asset class, have attracted a lot of investable assets and are projected to become 15% of the investable universe by 2025,

What strategies do you implement to ensure that your clients’ goals and objectives are achieved?

Ron Medley: We’ve got a full toolbox to work with, but it’s all about the journey, not the destination. We follow a structured process that has certainty in its steps, use a variety of solutions, enabling and advocating client significance in purpose and making useful connections, and we work to focus client conversations in areas that will help them have the greatest impact. Through a culture of continual discovery, we make adjustments as necessary, given whatever changes life or markets bring.

Additionally, investing is not just about risk/return – it’s also about innovation, impact and purpose. When we have built a trusted relationship with a client, worked together to position a portfolio overall to take care of a client’s financial planning needs and move conversations toward fulfilling the client’s greatest purpose, I know we are on the right track. We are happy to play whatever small part we can in helping our clients change the world for the better, one trusted relationship at a time. And it all begins with a conversation.

What two or three things would you look for in an adviser if you were seeking one?

Ron Medley: Trust and a willingness to invest in the relationship to create it. I’d also want to know that they weren’t going to waste my time with a bunch of product features and benefits without a depth of expertise in the approach and the process. I’d also like to be in the hands of professionals who experience both the up and down sides of the market, and who prepare themselves for the uncertainties, instead of just reacting to whatever crosses their path.

Finally, I’d like to know that we could learn from one another and make each other better. We’re only as good as the quality of the team we surround ourselves with.

Ron Medley has a passion for building custom investment portfolios - he works with advisers and clients to build, manage, protect and transfer wealth. As the President of Moloney Securities Asset Management (MSAM), Ron leads a team of over 50 independent advisers who provide wealth management services to clients primarily in the US, with some international exposure. Ron joined the Moloney Securities family of companies in 1999, after working for a mutual fund company and an insurance company in the 1990s

MSAM is a registered investment adviser, affiliated with Moloney Securities Company, Inc., a broker/dealer. Headquartered in St. Louis, MO, MSAM has a correspondent relationship with the Royal Bank of Canada (RBC) and has advisers across the US operating as MSAM or affiliated entities.

Chris Pelley, Managing Director of the Pelley Group, has been in the financial services industry for over 30 years and has a passion for helping investors make better decisions. He’s spent over 11 years working abroad for world-class financial institutions including Shearson Lehman Hutton where he specialised in retirement planning for corporate executives in NYC. In 1994, Chris founded Capital Investment Management Company (CIMCO), with the goal of offering clients independent investment advice. In 2014, he joined RBC Wealth Management and chose to affiliate with MSAM as an independent adviser in 2016.

For more information, please visit: https://www.msam.net/ and https://pelleygroup.com/

Thousands of tax refund claims have been made within the first few weeks of the new tax year, according to research conducted by Rift Tax Refunds.

The tax refunds specialist has analysed their own company data to discover thousands of Brits are claiming back what the tax man owes them.

With the rising cost of food bills, travel costs and other essential expenses, it is becoming more expensive to get to work each year, yet HMRC finds itself sitting on millions of pounds in unpaid tax refunds for expenses year on year.

However, the latest research by Rift Tax Refunds’ shows that Brit’s are becoming tax savvy to ensure they claim back what they are owed.

Despite only a few weeks into the new financial year, Rift Tax Refund’s company data revealed that over 5,000 claims have been filed already, with the value of tax claims totalling over a staggering £3.5 million.

Due to the rise in living and travel costs, Rift Tax Refunds have seen the value of an average 4-year claim rise 20% to £3,023.56 over the past few years. Similarly, the HMRC have noted a 25% increase in expenses claims since the 2014/15 tax year.

Bradley Post, Managing Director at Rift Tax Refunds comments: “‘We’re delighted that thousands of people have already come to RIFT for help with their tax refunds this year.

“While the number of claims made this year is based on Rift Tax Refund data, due to the rise in living and travel expenses we can assume that our statistics are reflected industry-wide.

“As the HMRC sit on millions of pounds in unpaid tax refunds, it is important for those who are eligible to claim to keep their receipts well documented to ensure they are able to claim back everything they are owed.”

(Source: Rift Tax Refunds)

In its new report ‘Tokenisation: Implications for the venture capital industry’, Mangrove Capital Partners highlighted that the performance of ICOs ‘has been nothing short of outstanding’ with blind investment in each ICO, including those that failed, generating an average return of 1,320%. The research also found the majority of large-scale ICOs (i.e. those over $10m) is focused on either the blockchain economy or financial services industry.

The report explains how ICOs could dramatically change capital raising for startups by allowing founders to “raise significant capital (perhaps even all the capital they could ever need) in one early round of fundraising without giving away any equity in the business”. It also explains the benefits for investors, with the disruptive new funding mechanism bringing liquidity, accountability and transparency to investing in private companies.

While the report acknowledges that the performance of ICOs is linked it the rapidly ascending value of ether – which has risen from around $8 at the start of the year to a high of $390 in September – it attributes ether’s rising value to the growth in ICO fundraisings and increasing demand for tokens. Furthermore, it predicts “the value of ether will continue to rise as more businesses opt to issue tokens and the ICO market matures.”

The report also suggests that a growing market for ICOs will lead to a decreasing requirement for venture capital and that ‘the balance of power would likely tip from the investors to the entrepreneurs’, with mid to late stage financing hit hardest. It explains how ICOs could have significant implications for the VC operating model with venture firms losing their various rights, which cover everything from board and governance issues through to economic rights in certain situations. It suggests they may also need to adopt a more active trading strategy more akin to hedge funds as investment in private companies becomes more liquid.

“ICOs do not put VCs out of the game. They are free to take capital and invest in startups of any kind, and, subject to authorisation from their own investors, could just as easily invest through Crypto into ICO as with FIAT into equity or convertible debt,” comments Skype’s former chief operating officer Michael Jackson, partner at Mangrove Capital Partners. “However, the rhythm of a weekly partners meeting and a monthly investment committee won’t work in an active environment responding to real world events.”

Mangrove’s report also suggests that regulated exchanges could be established to protect investors from fraud: “Interestingly, many projects today fit into existing regulatory frameworks and, with small changes to implementation rules, could easily be accommodated without anything other than a better understanding…In the mid term, it would be logical that a parallel structure to existing stock exchanges will be created - likely geographically and then vertically..” continues Michael Jackson, partner at Mangrove Capital Partners.

Background on ICOs:

-       The initial coin offering (ICO) market has since grown at a dizzying pace - with over $3bn raised through issuances of token-based digital currencies since the start of the year.

-       San Francisco’s Protocol Labs Inc., for example, raised $253 million in an ICO to build a network with blockchain technology on which digital storage can be bought and sold using the Filecoin tokens

-       ICOs have of course attracted considerable controversy and for good reason. ICOs currently lack a robust regulatory framework and do not confer any of the ownerships rights and legal protections that regulated shares do.

-       In September China banned ICO funding, stating that it had “seriously disrupted the economic and financial order”

-       UK regulators have warned consumers they are "very high-risk, speculative investments" and that investors “should be prepared to lose their entire stake”.

What is a token?

A token is a digital asset based on blockchain technology that can be transferred between two parties without the need for a central intermediary. Tokens created using the Ethereum blockchain can have a variety of attributes attached and, with “smart contracts” added, they articulate, verify and enforce agreements between parties. The ERC-20 token standard, defines a common list of rules for all Ethereum tokens to follow and has made launching tokens on top of the Ethereum blockchain very straightforward.

What is an Initial Coin Offering?

The use of ERC-20 tokens has led to a new method of raising capital known as an Initial Coin Offering (ICO) in which projects issue tokens to investors in exchange for digital currency such as bitcoin or ether. The tokens allow investors to use the digital services that the startup plans to produce or even sell them if they appreciate in value.

(Source: Mangrove Capital Partners)

Another financial year has passed, and as you look back, will you seek to do things differently next time around? Below, Dean Snappey, the President and Co-Founder of DocsCorp discusses with Finance Monthly 5 simple accounting tools that’ll make your life that much easier to navigate at this time of year.

Over the past 12 months we have seen considerable adjustments to taxation, such as changes to dividend taxation and the recent increased tax for landlords. Aim to prevent the end of year mess and avoid the kind of errors that carry implications to your and your company’s reputation.

There are several accounting tools and software solutions available at your fingertips to ease the process, stay organised and plan ahead. Make the most of these accounting tools and follow these five easy steps to make pre-emptive tax planning simple.

1. Bundle Documents. Best practice is to ensure any invoices, statements and paperwork are scanned and saved as a PDF document as paper filing systems and loose documents are at risk of being lost or damaged. Document bundling software gives you the ability to collate PDF content and bind all relevant documents such as tax returns, invoices and financial accounts into a single file for each client. By bundling all important documentation, it will make the process of finalising paperwork much easier as all documentation required will be stored together. Finalised documents can then be sent as a single secure file in one hit rather than multiple attachments, saving you time with each client and avoiding the risk of lost or separated files.
2. Redaction. As part of the process of preparing documents with such complex data, it is essential to redact classified or sensitive information. To redact is to remove, therefore ‘redacted’ is often used to describe documents from which sensitive information has been expunged. By using a redaction tool it is easy to search whole documents to redact multiple instances of a word or string of words in a way that is quick, easy and fail-proof. Redact personal information or bank account details in documents as part of an audit.
3. Make Scanned Documents Searchable. When you scan invoices, receipts and finalised paperwork onto your desktop, the scanned documents are image documents that do not have the text layer that’s needed to make them searchable. You can make the documents text-searchable with an Optical Character Recognition (OCR) tool. This software converts scanned, printed or handwritten files into its machine readable text format.  You can then search whole documents for a word, phrases or a set of numbers which makes finding information or documents for tax audits a breeze.
4. Remove Metadata. Metadata may appear hidden, however, every time you annotate, edit or alter a document, your decision is stored invisibly within the very document you’re working on. Metadata removal software removes metadata from files – eliminating any risk of unintentional information leakage. To put it simply, the metadata cleaner will ensure you only send the part of the document or spreadsheet you intend to – exactly what would be printed out on a piece of paper. Remove hidden cells and other sensitive metadata before uploading or attaching files intended to be sent to clients.
5. Compare Documents for Change. Working with numerous clients means navigating through each client’s financial accounts and complex paperwork. Throughout the year many changes can occur within clients’ businesses, often meaning multiple changes to important documentation. Analysing large volumes of documentation, in which precision is required, can be very time consuming. There is a simpler way to undertake this task, which is by using a Comparison software package. This enables you to compare and analyse the differences between two documents with incredible accuracy and reliability. The software is able to show you the smallest change in documents, spreadsheets, PDFs without needing to convert them first. Save time and never miss an important change again.