Except it hasn’t been like that. Not even a little. The UK is in the midst of its “weakest decade for pay growth since the 1930s”, according to a report by the Resolution Foundation, a think tank. Meanwhile, the cost of living in the UK is at its highest since September 2011, according to the Office for National Statistics (ONS). Then there’s inflation. This almost hit a 30-year high of 5.4% in December. But the great compounder of peoples’ travails is the energy crisis. In 2021, a typical home was paying around £1042 for gas and electricity per year, in April – when the price cap changes – that figure is likely to increase to £2000.
Crises require collaboration
People are hoping that governments, central banks, and energy companies will step in with measures to alleviate the spate of issues facing households. The chancellor's announcement to provide a repayable £200 discount on bills and a further £150 council tax rebate for most homes in England will serve as some comfort, but the majority will still face a shortfall. Is the right solution for people to quietly struggle? Of course not. As the situation worsens, we might anticipate a wave of radical creativity and activity from citizens. We know from experience that catastrophes are mobilising moments, they spark new thinking, collaboration, and help knit society together. Consider the pandemic – a single emergency inspired 436,000 people to join the NHS Volunteer Responders Programme. The service reckons these people carried out about 2-million covid-associated tasks. Then there was all the clapping and banging of saucepans in the street to celebrate the efforts of health workers - crises are traumatic, but they unite.
Take the power back
It’s easy to see how citizens might mobilise in response to covid – delivering essentials to quarantining neighbours, staffing a vaccine centre, or just being conscientious when it comes to handwashing and mask-wearing. But the issues at hand require more thought. What can people do in response to soaring energy prices and inflation? The answer might lie in the rise of a consumer-centric energy market. We are currently seeing the first phase of this with a year-on-year increase in solar panel installations. There is room for growth, as of 2020, 970,000 UK homes are using them, according to government figures – that’s only 3.3% of the country. Further along, it’s possible that citizens will tire of paying huge prices to huge companies and opt for creating energy themselves. This could see the birth of localised power co-operatives, where energy is produced peer-to-peer. New, low-cost and easy to use technologies will be key to making this revolution happen in the coming years.
In the short term, the UK is staring down the worst set of circumstances since the financial crash of 2008. But if government inaction and industry stagnation lead to an era when people are more conscious of their own collective power for social change, the twenties might roar at last.
About the author: Matt Hay is the founder and CEO of Bulbshare, a company on a mission to solve the world's biggest social and commercial problems through the power of community collaboration.
Based in Liechtenstein, Incrementum AG offers wealth management services for private clients, as well as a range of investment funds and investment solutions.
To hear about Incrementum’s wealth management offerings and services, Finance Monthly caught up with the company’s CEO and Co-founder Stefan M. Kremeth.
What inspired you to found Incrementum?
Our objective when founding Incrementum AG was to offer first-class services to private clients and investment fund investors at fully transparent and competitive prices and to work with an inspiring team, in a fun environment.
What would you say are the key issues that you assist clients with regarding asset management?
Our investment team is very interested in and has a profound understanding of monetary history, combined with out-of-the-box reasoning and prudent, fundamental financial research, purposely avoiding daily chatter and noise. This offers a distinct skillset that has proven to be utterly valuable for our private clients and investment fund investors alike.
What strategies do you implement to ensure that your clients’ goals and objectives are achieved?
We only offer cashflow generation and capital preservation strategies. Participation in listed companies is very tangible to us and equities therefore belong to our core investments. We are building truly customised client portfolios according to our clients’ requirements, needs and willingness to accept risk. We are long-term investors and we invest solely in equities of listed companies with a proven track record of producing net-free cashflows over years, happy to share those cashflows, at least partially, with investors in the form of dividends and/or capital reductions. On the other hand, and after many years of extraordinary money supply and ultra-low interest rates, we do not invest in government bonds, as we do not feel comfortable with the current risk reward profile offered by them. Large-scale monetary policies are difficult to judge and while we are not entirely certain that the increase in global debt will be sustainable, we are humble enough to recognise that so far, the leading central banks seem to have dealt with the 2007/2008 financial crisis rather well. Either way, at Incrementum, we see money only as a means for facilitating global trade, consumption, potentially storing short-term value and thus - as a lubricant for the global economy.
How important is a maintenance strategy for optimising asset value?
At Incrementum, we very much believe in an active portfolio management approach. We cut back positions that have reached our price targets and we are interested in buying into companies that have sound underlying business models, but have missed their targets for a quarter or two. We are very patient investors.
What are your hopes for the future of Incrementum?
We are happy with what we have achieved so far but are constantly striving for innovative growth. Last year, we entered a new business field by setting up our Crypto Research report, which swiftly became the most read research report in the crypto currency field.
Website: https://www.incrementum.li/
To hear about defined benefit transfers and pensions in the UK, Finance Monthly connected with Chartered Financial Planner and Chartered Wealth Manager Pierre Coussey. With over 30 years of experience in financial services both within the largest providers in the UK and at the coal face within private practice, Pierre is also the current Chairman of the Personal Finance Society (Kent region) and is a past Examination panel member of the Chartered Institute of Securities and Investment (CISI).
What are the typical challenges that clients approach you and Bond Wealth with in relation to transferring their defined benefit pension?
Pension freedoms, which came into effect in the UK back in 2015, introduced the ability for those with defined contribution pension arrangements to access their pensions without the need to buy annuities and also pass their pension funds onto family. The biggest headline was probably giving them a choice to buy a Lamborghini if they choose to do so. This did not cater for the 5.1 million people in the UK who held old benefits in an ex-employer or closed defined benefit scheme (pensions that promised an income for life). One of the things we have seen is a massive demand for pension transfer advice and this is partly being driven by some of these factors, together with historically very high transfer values in terms of multiples of deferred pension promise (with 30 to 40 times being quite common).
The complexities of what is best for a client are amongst the most challenging and are often not fully understood by potential clients. Our general view is that for the majority of people, sticking with the defined benefits will be correct unless they can fully take into account wider factors and understand them. Thus, a starting question would be “why would they want to give up a guaranteed pension for life?”.
What would you change about defined pension schemes, if you could?
As a pension pot needs to meet a number of needs, it is frustrating that in the main partial transfers from the existing defined benefit schemes are not facilitated. If I could have a panacea, this would be available to all, so that a mixed approach could be customised specific to a client’s actual needs rather that the current all-or-nothing transfer choice. Unfortunately, I do not see this changing as existing schemes have no appetite to spend on this flexibility for past members and are inundated with transfer value requests.
What is your overall piece of advice for Finance Monthly’s readers in regards to defined benefit schemes?
My overall piece of advice regarding defined benefit schemes is to start with the assumption that your existing pension arrangement will be best in providing for you and your family and then write down your three main reasons for considering or wishing to transfer and the three main drivers in your retirement planning. The bigger the lifestyle cost this needs to support, the bigger the value and risk transference you are putting into your own lifestyle bucket.
Additionally, talk to an experienced regulated adviser who can initially help you explore your real lifestyle needs. This should be followed by further working with them to explore your actual retirement needs that will fit with your lifestyle in the future. Ultimately, if they can save you from potential mistakes at either of these stages, the cost of good advice will be small compared to what would be at risk of getting it wrong. If you transfer out of a defined benefit scheme, you cannot reverse that decision and transfer back.
Ultimately, your chosen regulated adviser can take you through these initial steps at a relatively low cost. It is essential to bear in mind the merits or drawbacks that may appear with the transfer, but might not become clear until several years down the line. One example of this is that a client is probably not going to run out of money in the first year. The risk of this however could increase in the following 10-15 years, if they, for example, decide to spend all of their money on the aforementioned Lamborghini.
Contact details:
Telephone: 01892506891; 0203 096 3385
Email: pc@bondwealth.co.uk
Take a look at the inner workings of any modern enterprise, and there’s a good chance you’ll find IT silos - islands of departmental data only loosely connected across the organisation. Such isolation presents a potential regulatory risk and undermines the rich productivity gains that digitisation should be driving across commerce, and yet these silos are becoming ever more commonplace.
Whereas ten years ago the primary cause for disjointed IT was the existence of outdated legacy systems within operations, now it is the advent of hosted independently-sourced solutions that is driving compartmentalisation across the IT landscape. With some options coming out of operational, rather than capital, expenditure, departmental heads have empowered themselves to take the matter of updating their processes and software into their own hands.
This empowerment has bred productivity gains, as departments have acquired best-of-breed functionality from systems to support their specific needs. Front and back office operations - from finance and business development to HR, logistics and marketing - have been invigorated by the introduction of solutions specifically implemented to fill operational gaps; address deficiencies and bottlenecks; and allow functionality which had been on managers’ wish-lists for a decade.
Unfortunately, these upgrades have often been made without consideration for the rest of the organisation. This narrow-minded piecemeal approach will return to haunt organisations across most sectors in the years to come, if the issue is not addressed on a company-wide basis.
The dangers represented by such silos are already becoming apparent within many firms: Reliability of data, in particular, is becoming ever more important for both regulatory and operational reasons. But if customer information is stored separately by each department that needs it, the numerous versions which a company possesses can gradually digress. In the case of a financial services organisation, for example, a loan approval department may end up holding a different set of data on a client than the online banking platform. The eventual outcome could range from frustrating or embarrassing the customer, to incurring bad debt and regulatory sanction.
At the very least, such a situation is highly inefficient from a business perspective, and an obstacle to good customer service. There are also cost implications in time and money: Time, because it is harder for employees who require data to access it; and money because the charges for storing and processing data are not inconsiderable, particularly given increasing regulatory and security requirements.
Therefore, as digital transformation is helping businesses to address individual operational problems, the time has come to reassess the approach and ensure that the entire information ecosystem is supporting the greater demands of internal and external customers.
Executive leadership must acknowledge that digitisation alone will not enhance information flow, innovation and productivity, unless there is a clear enterprise strategy to ensure information is made available and can be freely interchanged. Without this, content fragmentation is likely to accelerate, creating further challenges to aggregating, connecting and managing the flow of digital content.
There are inherent challenges for businesses looking to safeguard the efficient and secure access to enterprise-wide information, while retaining the benefits of a distributed approach to technology. One approach that is working well for an insurance client currently in a process of change and growth, is to encourage departments to first seek a solution to any IT need they have from one of a ‘family’ of trusted providers.
In this scenario, it is crucial to work with partners who are committed to ensuring the best for your company: whereas some IT providers will be inclined to make a sale of their own software at all costs, others will be happy to recommend a ‘friend’ from the trusted business family, where they feel that their rival can provide a more suitable product.
At the same time, this ’friends and family’ approach encourages supplier firms to work together on inter-operability and connectivity issues, and to adapt their own products, where necessary, to ensure a solution that is both bespoke and easily integrated into a wider corporate system. With such an approach, all the core systems can be hosted under a single roof - our client works with five core suppliers - and the momentum is towards further integration, not divergence, as each new applications is added.
However, even with such practices, institutions of any size can end up running hundreds of applications. It is essential to link those data repositories and ensure that they are accessible to all potential users, with as much ease as possible. This can be accomplished with an enterprise information hub: a unified information platform, which facilitates an end-to-end view of the organisation’s entire ecosystem.
Such a hub is a valuable tool for management and a driver of innovation, as it is used to speed feedback times and analyse data on whole-company performance. It is also invaluable when it comes to increasing efficiency and diligence at the ‘coal face’, by allowing all documents to be viewed on a single platform or device.
As digitisation drives further changes in years to come - some not yet conceived or planned for, the ability to integrate new systems and view operations holistically will be crucial, if organisations are to fully realise potential gains and remain efficient.
Website: www.hyland.com
Sandy Tao Chen serves as Executive Director – Head of Trusts of the First Advisory Group’s Hong Kong branch and its entities. First Advisory Group is a wealth planning group that was founded in Liechtenstein in 1954.
Sandy’s professional career has been split between New York and Hong Kong, having accumulated more than 20 years’ experience in the provision of wealth planning solutions, specializing in asset protection and succession planning. She is a full member of Society of Trust and Estate Practitioners, the NYS Certified Public Accountant (CPA) and is a member of AICPA. Below, Sandy speaks to Finance Monthly about First Advisory Group and trust and wealth planning trends in Hong Kong.
Tell us about First Advisory Group and its mission?
First Advisory Group is a leading independent financial services provider with offices in Geneva, Hong Kong, Panama, Singapore, Vaduz and Zurich and has more than 300 experienced employees working around the world to fulfil this commitment. With expertise backed by 62 years’ experience and a diversity of external specialists, the Group offers an independent, one-stop and results focused advisory service for its clients’ wealth management needs.
Furthermore, the Group has formally operated in Hong Kong as a jurisdiction for a number of years, establishing a physical presence in 2010. First Advisory is present and active in all-important financial and business centers worldwide. With its head office in Vaduz, Liechtenstein and further offices in Zurich and Geneva, Switzerland, the Group offers unique locational advantages to its clients, i.e. banking and professional secrecy, highly flexible company law, high legal certainty, high political and economic stability and continuity, highly professional approach to financial services and central location in the heart of Europe.
First Advisory Group offers further attractive locations to its clients in Asia, namely Hong Kong and Singapore, as well as in Central America.
How can trusts be set up and structured in Hong Kong?
- English common law concept;
- One party (Settlor) has a fiduciary arrangement with another party (trustee);
- Settlor transfers legal title of assets to the trustee to hold “in trust”;
- Trustee Holds in trust for the benefit of a third party (beneficiary);
- Protector may be appointed to safeguard interest of beneficiaries.
How can trusts provide tax efficient solutions for clients?
- Minimization of income, estate and inheritance tax;
- Pre-immigration tax planning or planning for returned citizens.
What other wealth planning structures are available in Hong Kong?
At First Advisory, we offer clients diverse and innovative wealth planning services through a single platform. These include international asset structuring by using trusts, foundation and/or corporate solutions. The Group is positioned to deliver a dynamic and sophisticated service, precisely tailored to client needs.
Can trusts be structured in such a way that they can be open to abuse? Which preventative measures can be taken?
Although under the modern trust laws, settlors are given certain powers (i.e. investment power) on the trust, to executive certain investment decisions. The Group’s compliance has taken precautious measures to make sure that we, as a trustee, have the full discretionary power on the trust fund distributions. The investment powers given to the settlors/beneficiaries are only at the limited power of attorney basis. If there is a private company held under the trust structure, one of our Group subsidiaries must act as the director and shareholder of the company. Our compliance department has implemented a strict and powerful system to monitor our clients on an ongoing basis to make sure they are not involved in any legal transactions i.e. money-laundering, drug-tricking, etc.
What makes First Advisory’ services unique when compared to your competitors in Hong Kong?
First Advisory Group offers an independent, one-stop advisory service for our clients’ wealth management needs.
The wealth planning solutions that our Hong Kong office offers are flexible and enduring, aiming at smooth transitions of wealth from generation-to-generation. As all the services derive from one single platform, the Group’s offices can guarantee a seamless and effective solution for our clients. We are one of the very few independent trust companies in Hong Kong that can provide both trust and foundation wealth solutions to high-net-worth clients.
Contact details:
Telephone: +852 2537 9478
Facsimile: +852 2537 9476
Email: sandy.chen@first.li
Dickerson Wright, PE, is the founder, Chairman, and CEO of NV5 Global, Inc. (Nasdaq: NVEE), an infrastructure engineering and environmental services firm with over 2,000 employees and 102 offices internationally. He has 35 years of uninterrupted experience in the engineering sector and previously founded US Laboratories, took it public, and sold the company to Bureau Veritas in 2002. Mr. Wright then served as CEO of Bureau Veritas US where he grew operations to $280 million in revenue. In 2009 he started NV5 (then called Vertical V) through the acquisition of Bureau Veritas’s construction quality assurance practice in the US and shortly after, the acquisition of Nolte Associates (the “N” in NV5). NV5 went public in March 2013 at $6.00 a share with a market capitalization of $25 million and today trades at $37.00 a share with a market capitalization of over $400 million.
Could you tell us a bit more about NV5 – how did it develop into the company that it is today?
The roots of NV5 are really in our management team, which has been together over 20 years through the founding and sale of US Laboratories, through Bureau Veritas, and the founding of NV5. We’ve done over 50 acquisitions together in this time, and we believe in running a very flat, vertically structured organization (the “V” in NV5 is for vertical) where entrepreneurial leaders are given an opportunity to grow the specific business in which they are experts. We also believe in having partners, not key employees, so we drive stock very deep into our organization. NV5 has five service verticals: construction quality assurance, infrastructure, energy, environmental, and program management. We achieve organic growth by cross-selling our services among these verticals, so we are able to continually decrease sub-consultant fees by doing work in-house. We also grow through strategic acquisitions, which expand and deepen our service offerings within these five verticals.
What goals are you currently working towards with NV5?
We are aiming to reach $600 million in revenues by the end of 2020 and 12-15% EBITDA margins. We exited 2016 with 8% organic growth, which is well above the industry standard of 5% and we plan to keep growing organically through synergy, cross-selling, the scalability of our back office, and the integration of strategic acquisitions. The struggle, as our company gets larger, is to maintain a flat organization with many points of entry and resist the tendency of large companies to become organized geographically or in a matrix fashion. We don’t want our expert practitioners to become highly paid administrators. If someone is an expert in energy services, she or he should be working on expanding our energy services business, not running a region of the country that provides many services.
You have over 35 years of uninterrupted experience in managing and developing engineering companies - what have been your major achievements to date?
I think over the years our team has developed a really strong business strategy that we’ve learned through trial and error, and so now our experience has taken us to a place where we are not perfect but we make very few errors. This is especially important if a company is as acquisitive as we are. We’ve become known in the space for doing deals in the range of $5 to $50 million, and we won’t do a deal if we don’t perceive a cultural fit - our culture is one of growth and value for our shareholders. We also insist on our shared services platform. The acquisition has to be on our financial and IT platforms, so we can measure and track everything the same. They have to use our in-house legal counsel, so we don’t take risks on big contracts or projects and risk is managed in every single contract. They have to use our HR services, because we want everyone to have the same benefits structure, to have an annual performance review, and to have the same opportunities to advance within our organization. And they have to participate in our M&A program. We often get some of the best leads from our operators. If any of these changes seems onerous or undesirable to the acquisition, we won’t do the deal. There are over 140,000 engineering companies in the US and we have as many deals as 10 in the pipeline at all times. There are plenty of opportunities and it is a very fragmented industry.
Website: https://www.nv5.com/
