Category Archives: News

Election-watch: the business of politics

The old joke used to be that the Church of England was the Conservative Party at prayer. Almost as true, the Confederation of British Industry (CBI) was once the Conservative Party at work. No longer: “Theresa May’s Conservatives” – the manifesto’s brand – has retreated from business. The party’s proposals include:

  • A corporation tax rate of 17% in 2020 (already in legislation).
  • A simplification of the tax system which “…remains too complicated”.
  • “…longer-term reforms” to, and “a full review”, of, the business rates system, including an exploration of “self-assessments in the valuation process”.
  • Action “to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the gig economy are all properly protected”.
  • Giving the Pensions Regulator “the right to scrutinise, clear with conditions or in extreme cases stop mergers and, takeovers or large financial commitments…” There will also be an “update (to) the rules that govern mergers and takeovers, with a focus on overseas takeovers.
  • Executive pay packages will be “subject to strict annual votes by shareholders and listed companies will have to publish the ratio of executive pay to broader UK workforce pay”.
  • A doubling of the Immigration Skills Charge to £2,000 a year, alongside widespread tightening of immigration controls. The CBI labels the immigration approach as the manifesto’s “Achilles’ heel”.

Labour’s business proposals are more immigration-friendly, but other aspects are not:

  • A staged increase in corporation tax to 26% (21% small profits rate) by 2020/21.
  • An “efficiency review” of corporation tax reliefs, expected to yield £3.8 billion a year.
  • “A package of reforms to business rates…exempting new investment in plant and machinery”. Longer term, there would be a review of “the entire business rates system” and possibly a land value tax.
  • A new “Ministry of Labour”, the strengthening workers’ rights and empowerment of their trade unions.
  • Amending the takeover rules “to ensure that businesses identified as being systemically important have a clear plan in place to protect workers and pensioners” on takeover.
  • Introducing an “Excessive Pay Levy”, payable by employers, on total compensation exceeding £330,000.

The Liberal Democrats’ proposals are a blend of the other two parties’ ideas, including:

  • Corporation tax would rise to 20%, backed up with “tough action against corporate tax evasion and avoidance”.
  • A review of business rates and their possible replacement with a Land Value Tax.
  • “Modernise employment rights to make them fit for the age of the ‘gig economy’.
  • A requirement for “binding and public votes of board members on executive pay policies”.

If all that sounds unappetising from a business viewpoint, then remember, another truism: businesses do not have a vote…


Brave new world? Waking up to a Trump presidency


So today Donald Trump, the President Elect as he’ll be known until the inauguration, will visit Barack Obama in the White House. Those are words that I, like many, many others, never thought they’d be writing. (Full disclosure here – I voted for the other candidate).

It’s been a rollercoaster 48 hours. The world’s media has expended millions of words trying to explain how the former host of the US Apprentice has managed to leapfrog conventional party politics into the most powerful job in the world. And online, commentators as well as ordinary people people have engaged around the clock in what has been probably the first social media election of the age.

Amid the wall to wall coverage, we’ve focussed on some areas that seem most relevant to our sector. Our sister publications here at Centaur Media have covered investment, advice and marketing insights that we thought might prove useful and insightful.

Our colleagues at Money Marketing yesterday looked at a round-up of adviser reaction to the Trump victory. The mood was one of urging clients to stay their investment courses. The overnight reaction of markets, which seem to have heeded the ‘keep calm and carry on’ mantra, would appear to bear them out.

Over at Corporate Adviser, the focus is on division between economic analysts over the effect a Trump presidency has promised to revive the US economy and improve prospects, but there are contradictions inherent in his plans?

Much has been made on both sides of the Atlantic of analogies between the Trump victory and the Brexit vote. Marketing Week looks at the wider implications of the uncertainties surrounding the Trump ascendency for business and brands.

And finally leading on from the social media point above, Marketing Week published an interesting piece looking at just how the Trump campaign has changed the rules of political communication with its appeal to emotion over reason. It’s a tactic that has more than paid off.

While we all take stock of what the next four years might look like, the one certainty is that there will be much more discussion and analysis yet to come.

Money doesn’t grow on trees, but it can fall into your lap


When the Duke of Westminster died earlier this week, much attention was focused on his only son, 25 year-old Hugh Grosvenor, who has inherited his vast estate which is worth £9 billion (although most of it is long held property and in trusts which he can’t access). It’s a heavy responsibility.

Many parents would be concerned about their offspring inheriting such wealth at a young age for fear of them mismanaging assets, taking ill-informed decisions and worse still, going off the rails.

As financial advisers, you will be used to explaining to parents that their children need to know more about money than merely spending it. They’ll hopefully want to ensure that their offspring are financially literate, and aware of how to best invest and manage their money. It’s not just the especially rich who need to be savvy about the responsibilities that come with inheriting wealth, particularly if they are set to take over a family business.

Some financial institutions run seminars a couple of times a year for the children of wealthy parents to help them understand these points. For example, HSBC Private Bank offers a programme aimed at teaching the next generation “financial planning and investing, philanthropy, the dynamics of shared family wealth and longer-term issues including wealth preservation”.

Hambros, on the other hand, offer children the opportunity to come into the office and participate in internships with the institution, which gives them valuable experience in working within an office and sitting with the investment managers.

Financial literacy is a key life skill. When discussing saving for children, estate planning and more complex inheritance arrangements, the recipients of family wealth need to be clear about their position and how to manage their affairs. This could be a good time to consider what your firm could offer their clients by way of extra help.


Now what? Our handy round-up of the Brexit financial fallout

British newspaper frontpages following Brexit vote result

The last few days have certainly been momentous for the UK and it seems that nobody really knows what’s going to happen next. It is clear, however, that the country’s departure from the European Union will have an impact on everyone’s finances.

The financial services industry has already been one of the first to see the effects, with dramatic falls in share prices as the markets reacted to the outcome of the referendum. Providers, fund groups and banks have all taken a hit. As with any major change, there will be winners and losers so who will they be? Our colleagues on Money Marketing and Fund Strategy provide in-depth round ups. Tax is a major concern, obviously, and some of the main issues are set out on Accounting Web.

What is the Financial Conduct Authority saying?

Much of the financial regulation currently applicable in the UK comes from EU regulation and this will remain applicable until any changes are made (by the government and Parliament). Firms must therefore continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect. Consumers’ rights and protection are unchanged by the referendum. Of course, uncertainty is flavour of the month (or perhaps longer) and the longer term impacts of leaving the EU on the overall regulatory framework will depend on the future relationship the UK has with the EU.

What is the Governor of the Bank of England (BoE) saying?

Mark Carney has said that we can expect an inevitable period of uncertainty and adjustments following the referendum result, but there will be no inital change in the way our people can travel, and in the way our goods and services can be sold. He has also said that it will take time for the UK to establish new relationships with Europe and the rest of the world, which will result in some market and economic volatility. Mr Carney has sought to reassure the public that the BoE is well-prepared for this through contingency planning, beginning with ensuring that the core of the UK’s financial system is well-capitalised, liquid and strong.

What is the government saying?

Not an awful lot. But this is one thing the British people agree on whichever way they voted: they need to say something soon.

On an interesting note Marketing Week provides an in-depth look at the brand effectiveness of the campaigns.


National Living Wage is no joke

iStock_000055085200_SmallIt’s not an April fool – on 1 April 2016 millions of workers over 25 will see their minimum pay rate rise from £6.70 to £7.20 under the new National Living Wage (NLW). Who are the winners and the losers?

Think tank, the Resolution Foundation, said that in some parts of the UK as much as a third of the workforce will get more money, whereas workers elsewhere will see little difference to their pay. The NLW will mean an increase from £6.70 to £7.20 for millions, yet those under the age of 25 will continue to receive the National Minimum Wage. Hotspots include Sheffield, where 22% of workers can expect an increase, but parts of London and the South East are unlikely to benefit, with just 3% of employees in the City of London benefiting. The groups that will benefit most are women, those between 25 and 30, and people still working over the age of 66.

Of course, there is a cost to this wage increase which lies at the door of employers, and several large companies have said it will hit their profits significantly as well as reducing hours worked by four million a week. As a result, thousands of workers could lose their jobs (according to the Office for Budget Responsibility) or be given shorter hours.

Despite the obvious cost to employers, some companies, such as IKEA, are actually going above and beyond by introducing an increase to £8.25 and hour and £9.40 in London, which is the Living Wage Foundation’s voluntary living wage rate.

What do you make of the NLW?

Financial Therapy


How can you get people to pay attention to their financial affairs?

Polls often show money to be a leading source of worry for people and it’s also one of the main causes of rows between couples. But this doesn’t seem to be related to how much money one has – the rich also have sleepless nights over their piles of cash, according to Capgemini’s annual World Wealth Report. They tend to worry about how to maintain their lifestyles and whether their children will be able to effectively manage their vast inheritance. Cue ‘Financial Therapy’. The Guardian recently published an article about this field which is becoming increasingly popular in the US, where there is a five year-old Financial Therapy Association with more than 250 members. According to the Guardian, it ‘combines traditional financial advice with a more touchy-feely psychological exploration of what is driving a client’s behaviour towards money’.

How does it work? As with most forms of therapy, Financial Therapy would explore the client’s psychological ‘blocks’ about money and make use of classic financial planning tools such as balance sheets and cash flows.

Financial advisers, of course, know all about behavioural finance and can take many of the ideas and lessons from this field and make use of it with their clients in a number of ways – so perhaps it’s becoming more mainstream.

Date set for Budget 2016

The Chancellor has set Wednesday 16 March 2016 as the date for the next Budget. This will be Mr Osborne’s seventh Budget and the second all-Tory set of announcements of the new Parliament.

What can we expect to hear in March?

As a pre-Christmas taster, the Chancellor unveiled details today of a new secondary annuities market to be introduced in April 2017, which will include a U-turn on plans to block providers from buying back guaranteed income streams from existing customers.

In addition, it’s likely there will be a heavy focus on taxation and pensions, as well as the inheritance tax residence nil rate band, capital gains tax changes and possible reform of self-employed NICs.

The following topics are also tipped to make an appearance:

  • New rules on replacement capital within EIS and VCT
  • A possible review of salary sacrifice
  • A reworking of inheritable ISAs to retain tax advantage during administration
  • Further details on the apprenticeship levy

This is just a snapshot of what we think the Chancellor may talk about next March but of course Mr Osborne is prone to delivering the odd surprise so watch this space…

Our Budget 2016 service is now available – get in touch to discuss your requirements.