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Welcome to the October edition of Specialised Investments Simplified! As the year winds down, now is an ideal time to assess new opportunities that could benefit your clients’ portfolios. This month, we’re diving into the potential of US mid-cap equities, exploring the strategic advantages of real estate debt, and examining the factors behind gold’s recent performance. Each of these investment themes offers potential avenues for adding value to your clients’ strategies, and we’re here to break down how.

US Mid-Cap Market: A Potential Opportunity for Client Portfolios

With US mid-cap stocks trading at significant valuation discounts compared to large caps, now might be an opportune time for financial planners to consider adding exposure to this segment. Bob Kaynor, manager of the Schroder US Mid Cap fund, recently shared insights on why these companies—often referred to as the “heartbeat of the US economy”—are poised for growth. Given the current market environment, mid-caps offer a compelling blend of value and potential upside for client portfolios.

Key Considerations for Financial Planners:

• Valuation Entry Point: Mid-caps are currently trading at a 15-20% discount to the S&P 500, offering a lower entry point at a time when earnings growth is expected to accelerate. This could serve as a tactical allocation to enhance portfolio returns.

• Economic Sensitivity: Mid-cap companies derive around 84% of their revenues from the US, making them more directly impacted by domestic economic conditions. With fiscal stimulus on the rise, this sector may provide clients with targeted growth exposure.

• Risk Management: While mid-caps can bring additional volatility, the current discount in valuations may help mitigate some downside risk. This presents an opportunity to balance growth potential with risk management across your client base.

For planners looking to diversify clients’ equity exposure or tap into US economic growth, mid-caps could be a valuable addition to portfolio strategy.

Listen to Bob Kaynor’s Interview on Mid-Cap Opportunities

Real Estate Debt: A Strategic Diversification Tool

Real estate debt can offer an attractive risk/return profile for clients seeking income without the responsibilities of direct property ownership. For financial planners, this asset class allows for tailored strategies that align with clients’ financial goals, risk tolerance, and time horizons.

Why Financial Planners Should Consider Real Estate Debt:

• Enhanced Income Potential: Investing in real estate debt allows clients to earn steady income through interest payments, which may offer a more predictable cash flow than traditional equities or direct property investments.

• Risk Mitigation: Real estate debt can help diversify client portfolios, providing lower correlation with other asset classes. This can be particularly valuable during periods of market volatility.

• Accessible and Flexible: The ASK model enables a tailored approach that suits clients with varying levels of risk aversion. For clients concerned with managing real estate directly, this option presents a lower-maintenance, time-efficient alternative.

Incorporating real estate debt into a client’s strategy could be a savvy way to achieve diversification while still tapping into the property market’s potential returns.

Gold’s Rally: What It Means for Portfolio Hedging

Gold has gained 4.6% in September alone, driven by a weaker dollar and ongoing geopolitical tensions. For financial planners, gold remains a classic hedge against market uncertainty, with its role in portfolios serving as a buffer against volatility and economic downturns.

How to Position Gold in Client Portfolios:

• As a Hedge Against Inflation and Uncertainty: Given the recent Fed rate cuts and rising geopolitical risks, gold can act as a safe-haven asset to protect against downside risks in other markets.

• Diversification Benefit: Gold typically has a low correlation with traditional equities and bonds, making it an effective component for reducing overall portfolio risk.

• Liquidity Considerations: Gold-backed ETFs can provide liquidity and flexibility, making it easier for financial planners to make tactical adjustments as market conditions evolve.

• Gold’s continued rally underscores its strategic importance in comprehensive portfolio management, especially as global uncertainties persist.

Looking Ahead

With the final quarter of the year underway, now is the time to reassess client strategies and explore new avenues for growth and risk management. Whether it’s considering mid-cap equities for value opportunities, real estate debt for income generation, or gold as a protective hedge, this edition provides actionable insights to guide your planning.

Thank you for reading the October edition of Specialised Investments Simplified. We aim to support you in navigating the evolving investment landscape and achieving your clients’ goals. For deeper insights, check out the links below.

Stay informed and keep empowering your clients to make the most of market opportunities. See you in the next edition!

Welcome to the October edition of Tech Talk, where we bring you the latest tech updates designed to help financial advisers streamline their operations and elevate their client service. In this issue, we highlight new integrations, sustainability-focused tools, and cutting-edge services aimed at making financial planning more efficient and personalised.

Transact Integrates with Moneyinfo for Automated Document Delivery

Transact, a leading adviser investment platform, has launched an integration with fintech provider moneyinfo, aimed at simplifying the delivery of client documents. This integration automates the process of sending valuation reports, statements, and other key communications to clients, freeing up advisers from manual tasks and enhancing operational efficiency.

With more than 2,000 adviser firms using Transact, this collaboration marks another step in the platform’s commitment to improving adviser processes through advanced technology. By using Moneyinfo’s secure portal and app, advisers can now ensure documents are delivered automatically, safely, and efficiently, while also benefiting from features such as encrypted delivery and audit trails.

Tom Dunbar, Chief Development Officer at Transact, said: “Our mission is to make financial planning simpler for advisers, and a key part of that is improving the tech ecosystem available to them. By integrating with platforms like Moneyinfo, we’re helping advisers work smarter, not harder.”

Moneyinfo’s Managing Director, Tessa Lee, added: “Advisers have been asking for solutions to make their administrative tasks more efficient. This integration not only saves time but provides peace of mind, allowing advisers to focus on what matters most: their clients.”

Moneyinfo integrates with Transact to simplify document delivery

Etcho: Aligning Wealth with Values

As ESG becomes increasingly central to investment discussions, Etcho offers a fresh approach by focusing on what really matters to clients—their values. Rather than overwhelming clients with complex ESG metrics, Etcho helps advisers personalise the investment experience by aligning portfolios with individual sustainability preferences.

Etcho’s innovative platform allows advisers to:

• Import clients’ holdings seamlessly with one-click integration.
• Use value profiling tools to understand the driving principles behind their clients’ decisions.
• Share personalised insights, helping clients see how their investments align with their values.
• Generate automated reports that support Consumer Duty compliance and reduce regulatory risks.

Co-founded by Liall and Charlie, Etcho’s mission is to make sustainable investing straightforward and engaging. By prioritising storytelling and personalisation, advisers can increase client engagement, especially among the next generation, who want their portfolios to reflect their values.

Etcho’s vision is clear: “Less about ESG metrics, more about what resonates with clients’ personal values.”

Etcho Align wealth management to what clients truly care about

Standard Life Launches Pension-Finding Tool to Reunite Britons with Lost Pensions

Standard Life UK has teamed up with pension-tracing platform Raindrop to help individuals find their lost pensions. With nearly 20% of those with multiple pensions admitting they’ve lost track of one or more pension pots, this free tool offers a practical solution.

Users simply provide the name of a previous employer and the timeframe they worked there—Raindrop’s technology does the rest. With the process typically taking between 4 to 6 weeks, a dedicated case manager provides updates throughout.

This new tool comes at a critical time, as an estimated 2.8 million pension pots in the UK, worth £26.6 billion, remain unclaimed. The collaboration aims to empower savers by giving them access to lost pension savings and helping them take control of their financial future.

Dean Butler, Managing Director of Retail Direct at Standard Life, emphasised the importance of tracking down pensions: “If you don’t know where all your savings are, planning for retirement becomes difficult. Our new pension-finding service removes these barriers and helps people regain control of their pension savings.”

Raindrop co-founder Vivan Shridharani added: “With more jobs and workplace pensions in the modern working world, the number of lost pensions will only increase. We’re proud to partner with Standard Life to offer a simple, effective way for individuals to track down and manage their pension pots.”

Standard Life and Raindrop launch revolutionary free pension tracing service

That wraps up this month’s Tech Talk. Stay tuned for more insights and tools to help you provide outstanding service to your clients!

Welcome to the October edition of Regulation Round Up!This month, Hannah Keane brings you the latest updates on regulatory changes and key developments in the financial services world. HMRC has issued new guidance on pension regulations in Newsletter 162, offering clarity on issues surrounding the abolition of the Lifetime Allowance. We also look at the significant £29 million fine imposed on Starling Bank by the FCA for financial crime control failings.

Additionally, we dive into a recent case from the Financial Ombudsman Service (FOS) that highlights the importance of robust client documentation in financial advice. Read on for more details!

HMRC Pension Schemes Newsletter 162

When the Lifetime Allowance was abolished back in April, there were a few areas of legislation which weren’t completely clear. Just 2 days before the new rules were due to be implemented, HMRC published Pension Schemes Newsletter 158, which outlined some last-minute changes to legislation, as well as some areas that were still under consideration.

Last month, HMRC published Newsletter 162, which provides a long-awaited update on the areas that were still under consideration in April. They stated that they have considered the feedback they received on the draft regulations, and the final regulations will be introduced as soon as parliamentary time allows.

Newsletter 162 — September 2024

Starling Bank Fined £29m by FCA

Starling Bank has been fined £28,959,426 by the FCA. According to the FCA, the bank repeatedly breached a requirement not to open accounts for high-risk customers, and also failed to implement proper anti-money laundering and sanctions processes.

The FCA state that Starling had grown massively between 2017 and 2023, but the measures the bank took to tackle financial crime “did not keep pace with its growth”.

The FCA initially reviewed the financial crime controls at Starling in 2021, as part of a review into financial crime controls at various challenger banks. During this review, the FCA identified some serious concerns, and imposed a requirement on Starling to restrict the opening of new accounts from high-risk customers until this improved. The FCA state that Starling failed to comply with this and “opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.”

Read more here

Recent FOS Decisions

As it’s been a bit of a quiet month for financial services regulation, I think this is a good opportunity to take a look at some recent decisions that have been made by the Financial Ombudsman Service.

FOS decisions can be really valuable reading for anyone who works in the financial planning world, and I recommend that all paraplanners, in particular, take a look at some recent decisions from time to time. You might find some of the decisions and the rationale given to be surprising. Regardless of whether you agree with the decisions made by the FOS, looking through their decisions gives a really interesting insight into the sort of things they look at when investigating a complaint. I’ve found this to be invaluable when writing suitability reports, and it helps you think critically about the processes and procedures that are in place where you work, and how they would be perceived by an external person.

The case I’m looking at today concludes with the complaint not being upheld. The investigator’s rationale for not upholding the complaint highlights the importance of making sure your files are robust, as a lot of the investigator’s rationale hinges on the research and KYC processes recorded by the adviser and their team.

Decision DRN-4758506

In a nutshell, this case relates to a compliant made by a client who believes the advice given to him was unsuitable. His adviser recommended a pension transfer and consolidation exercise into a less expensive pension. The client was determined to be a ‘moderate’ risk investor, and the adviser recommended a fund in line with this. Around a year after the transfer took place, the client was unhappy that his pension had suffered a significant drop. He argued that he was invested inappropriately and raised a complaint.

When investigating this complaint, the FOS investigator based his decision on what was recorded in the suitability report, as well as the content of the fact find, and the attitude to risk and capacity for loss questionnaires on file. The investigator looked through the client’s answers to the individual questions that made up the questionnaires, and assessed whether these answers, when looked at alone and also when looked at together, could reasonably be accepted as supporting a moderate risk profile. In this case, the answers supported the adviser’s argument.

When a client completes a risk profile or capacity for loss questionnaire, it’s so important to make sure that all their answers add up. I’m sure we’ve all seen some questionnaires where certain answers seem to be totally at odds with other answers, or with the overall risk profile. In cases like this, it’s best practice to follow this up with the client and make a note of any conversations. This can make sure that the client really understands the implications of the risk profile they’ve chosen, and will also help make your file more robust.

Effective paraplanning has never been more crucial. At We Complement, our dedicated team of paraplanners is committed to providing comprehensive support, ensuring your financial strategies align seamlessly with current regulations and best practices. Whether you need assistance with documenting your CIP, paraplanning, or enhancing client communications, we’re here to help.

Reach out to us today to discover how our paraplanning expertise can elevate your practice and provide peace of mind in an increasingly complex financial environment.

As the global conversation around sustainability intensifies, the role of financial advisers in supporting climate-positive initiatives becomes more crucial than ever. This month, our team had the opportunity to attend Goodstock, a pioneering event focused on sustainability and positive social impact. It brought together passionate individuals and thought leaders working to combat climate change, including those of us in the financial planning industry. In this edition of Investment Matters, Paul Kenworthy will be sharing insights from the event and exploring how Financial Planners can help bridge the gap between wealth and impactful climate solutions.

The first-ever Goodstock event was held on the 19th of September at Dynamic Earth in Edinburgh. Amy North and I were able to attend, and all I can say is that it was a brilliant event, full of people passionate about sustainability and making a positive difference in the world.

Firstly, I’d like to applaud NextGen Planners s for organising the event, and I look forward to attending more of their events in the future.

There were a number of great speakers and participants at the event, each with different ideas and philosophies but sharing one collective goal—combating climate change.

In this post, I’d like to highlight some points raised by Jack Chellman (Chief Project Officer at the Global Returns Project). He spoke about Green Philanthropy and explained the untapped potential for Financial Planners to work with high-net-worth clients who want to gift some of their wealth to help tackle the climate crisis.

One of the key issues raised in Jack’s speech is that many of these people don’t know where to turn when they want to make such gifts, and a number of Financial Planners are unable to assist their clients with these needs.

This is where the Global Returns Project comes in. They are creating systemic change to fund the highest-impact climate charities at unprecedented speed and scale. Their mission is to make high-impact climate philanthropy normal and easy in financial planning, investment management, and corporate social responsibility.

Clients are increasingly concerned about climate change and biodiversity loss. While sustainable investing is important, its overall impact is limited. Many critical climate solutions do not deliver financial returns.

Meanwhile, philanthropy offers fast and tangible climate impact, yet less than 2% of global philanthropy goes toward climate mitigation.

The Global Returns Project currently works with over 20 different client-facing Financial Planners, and this number will hopefully continue to grow. They can hold direct conversations with clients about the charities they support, or they’re happy for Financial Planners to facilitate these discussions.

Using a proprietary methodology, they have identified a portfolio of six different climate charities that clients can donate to. These charities are: Global Canopy, Rainforest Trust, ClientEarth, Whale and Dolphin Conservation, Blue Marine Foundation, and Trillion Trees.

These charities are reviewed regularly (at least every six months), and they will be replaced if they no longer meet the stringent criteria.

Donors can choose to support all of these charities or select a particular one if they prefer. 100% of the proceeds are passed on directly to the charities without any deductions. After making a donation, clients will receive impact reports from the charities every six months.

For large donations, the charities may provide specific literature detailing how those funds have been used and the positive impact they have achieved.

The Global Returns Project is doing valuable work in helping to mitigate the climate crisis, and we feel they can help bridge the gap between Financial Planners and clients who want to donate money for the good of the planet.

They allow you to have in-depth discussions with your clients about how they can make a positive difference, helping to demonstrate the value Financial Planners can provide.

At We Complement, we believe in aligning financial goals with positive global impact. As financial planners, it’s time we expand our role beyond just managing investments and start offering solutions that truly make a difference.

If you’re interested in exploring how Green Philanthropy can complement your financial services, get in touch with us today. Together, we can help your clients achieve their financial goals while contributing to a sustainable future.

Welcome to this week’s Specialised Investments newsletter, written by one of our fantastic team members, Lucy Wylde. In this edition, Lucy delves into the latest market developments, providing valuable insights on structured products, cryptocurrency trends, and the impact of recent economic events.

August began with disappointment and panic amid fears that the US economy could fall into a recession, rather than “achieving the soft landing investors have been banking on,” according to Angharad Carrick of This is Money.

Concerns about a US recession were stirred by data showing that far fewer jobs were created in July than estimated, while the unemployment rate continued to rise. This was compounded by the Federal Reserve’s decision to hold interest rates steady, whereas other central banks, such as the Bank of England, cut interest rates for the first time in more than four years.

Globally, stock indices plummeted, with Tokyo’s Nikkei index taking the brunt of the dip, plunging over 12%—the index’s largest crash since 1987’s ‘Black Monday.’

The above, along with increased violence seen across the UK in early August, had a knock-on effect on the FTSE 100, which closed below its near-record high value of 8,000. That said, overall in 2024, the FTSE 100 has averaged a monthly value of 8,253.97, according to structuredproductreview.com.

It is therefore unlikely that most investors in UK retail structured products will have been phased by these events, due to the defined contractual returns, longer-term durations, and built-in protection.

With that in mind, let’s recap the latest maturities of 2024.

Structured Products Maturities – The UK Retail Sector

When considering the maturity results in recent months, August recorded a total of 73 structured product maturities, 72% of which were linked to the FTSE 100.

Furthermore, the majority of these maturities triggered early, thanks to elevated stock market levels, while only 5 autocalls in August matured on their final observation date.

Focusing on capital-at-risk autocalls, the average annualised returns were 7.18% over an average duration of 2.63 years.

Autocalls linked solely to the FTSE 100 or FTSE CSDI outperformed the sector by 0.65%, returning 7.83% over an average term of 2.58 years.

No deposit-based contracts matured last month.

The outstanding maturities, with final gains of 80%, 73.50%, and 60% respectively, were the Tempo Structured Products FTSE 100 FDEW Long Growth Accelerator Plan August 2019 – Option 1, FTSE 100 FDEW Long Kick-Out Plan August 2019 – Option 3, and the Mariana FTSE 150 Kick Out Plan August 2020.

Despite the FTSE being slightly below its recent all-time highs, it is expected that September will bring further generous maturities.

Cryptocurrency

Following the Federal Reserve’s decision to hold interest rates earlier in the year, the reverberations of its latest move to cut interest rates are also being felt throughout the world of cryptocurrency.

According to CNBC, despite rising by 12% in the past week, Bitcoin’s value is now fluctuating between a 1% gain and a 1% loss following the news of the rate cuts, while Ether has fallen by almost 2% (as of 18th September 2024).

Data has also shown that it is becoming increasingly difficult to make money from crypto mining, partly due to the all-time high hash rate (the combined computing power of all miners within the Bitcoin network).

As a result of the significantly increased presence of crypto miners, since Bitcoin has become a more established—arguably mainstream—part of the economy, the investment banking company Jefferies Group reported that mining was considerably less profitable in August. According to Jefferies Group, the “average daily revenue per exahash, or income per miner, fell by 11.8% from the prior month.”

In potentially better news, US asset manager Janus Henderson is preparing to become the latest large asset manager to experiment with securities tokenisation by assuming management of the Anemoy Liquid Treasury Fund. The Anemoy Liquid Treasury Fund is an open-ended, British Virgin Islands-domiciled fund that invests in short-term US Treasury bills. The fund, launched in December, is open to non-US professional investors.

This move sees Janus Henderson following in the footsteps of BlackRock, Fidelity International, and Franklin Templeton, all of which are already running tokenised Treasury or money market funds on public blockchains.

Finally, after more than a month of vague descriptions and promises from former President Donald Trump and his family, new details have been released about the family’s new crypto venture, World Liberty Financial.

The launch event, held on X (formerly Twitter), suggested that World Liberty Financial will be something akin to a banking platform, where the general public will be encouraged to borrow, lend, and invest in cryptocurrency.

It was announced that 20% of the project’s tokens will be allotted to the founding team of World Liberty Financial, while 17% of tokens are to be set aside for user rewards, and the remaining 63% of the coins will be made available for the public to purchase. There will be no pre-sales or early buy-ins, however.

As the financial landscape continues to evolve, staying informed is essential. If you’re looking to optimise or review your Centralised Investment Proposition (CIP) or Centralised Retirement Proposition (CRP), our team is here to support you. We specialise in helping firms create and refine these strategies to ensure they align with both regulatory requirements and your clients’ needs.

Contact us today to see how we can help enhance your proposition and deliver better outcomes.

Welcome back to TechTalk, where we bring you the freshest insights on the tools and tech transforming the world of financial advice! We’re particularly excited about this month’s edition, packed with useful resources and innovations to help you offer your clients even more tailored support. Grab a coffee and dive in.

Mabel Insights – Are You Onboard?

Paul Kenworthy recently managed to drag himself away from paraplanning and headed to the Professional Adviser roadshow in the picturesque town of Harrogate. There, he had a conversation with Martin Coyle about Mabel Insights. If you haven’t heard of Mabel yet, let us bring you up to speed.

Mabel Insights is an intuitive, free (yes, FREE) tool built exclusively for financial advisers. Think of it as your one-stop shop for comparing and analysing the Model Portfolio Service (MPS) and multi-asset market. Here’s why we think it’s so valuable:

• All-in-One Market Coverage: Mabel provides in-depth data on over 1,000 MPS portfolios from more than 80 discretionary fund managers. That’s right, all that data in one place, designed to make your life easier!
• Speaking the Same Risk Language: Mabel has its own risk rating system, allowing you to compare MPS portfolios using consistent risk metrics. No more guesswork—just clear, aligned results.
• Due Diligence & Reporting: Need to perform CIP research or put together a client-specific report? Mabel helps you stay efficient and thorough.

Lawrence Cook, CEO of Mabel Insights, perfectly sums up their vision: “It’s time advisers had wide-ranging access to MPS information across the market, and we’re thrilled to offer this free service to help them make better decisions for their clients.”

And in case you missed it—Mabel recently launched a cashflow planning tool, packed with advanced features like one-button tax optimisation and both deterministic and stochastic modelling. It’s another way to ensure you’re working with the most up-to-date, reliable information.

Explore Mabel Insights

The Importance of Care – My Care Hub

With an ageing population, we all know how challenging it can be to navigate care options. Did you know that by 2032, the number of people aged 65 and over needing care from unpaid carers is expected to grow by over a million? As advisers, it’s critical to have the right tools to guide your clients through these complex journeys.

Source: Carers UK

That’s where My Care Hub comes in. My Care Hub is an independent platform offering comprehensive care advice, designed specifically for advisers who want to support their clients through the entire care process. Whether your client is caring for a loved one or in need of care themselves, My Care Hub helps with:

• Identifying the Right Care: From finding appropriate care options to funding advice, My Care Hub simplifies the process so your clients get the guidance they need without all the confusion.
• Full Care Planning Support: My Care Hub is there every step of the way, helping you assist your clients as they navigate one of the most emotionally and financially taxing aspects of life.

Join Karl Steadman and Jacqueline Berry, MCC the founder of My Care Consultant on September 26th at 10:00 AM for a special webinar, where they’ll dive into how to approach care planning and funding in the right order. Plus, you’ll get an introduction to My Care Hub, the UK’s first online “one-stop shop” for all things care-related.

Register for the My Care Hub Webinar

To subscribe to My Care Hub and start providing your vulnerable clients who are caring or in need of care with valuable support to navigate their care journeys and avoid foreseeable harm, click here:

Join Us

Enhance Your Skills with the CISI Certificate in Ethical AI

Interested in how AI is shaping the future of financial advice? The The Chartered Institute for Securities & Investment (The CISI) Certificate in Ethical AI is a fantastic opportunity to deepen your understanding of the ethical challenges and opportunities AI brings to the industry. Whether you’re new to the topic or looking to expand your expertise, this qualification is packed with interactive content—videos, interviews, and case studies—that will keep you ahead of the curve.

For more information on this valuable qualification, visit CISI.

This month’s Tech Talk is all about bringing you the tools and resources to help you provide even more value to your clients. Whether you’re looking to streamline your MPS analysis with Mabel Insights or need support for your clients’ care journeys through My Care Hub, there’s no shortage of ways to enhance your advice proposition.

So, what are you waiting for? Register for Mabel Insights at www.mabelinsights.com and don’t miss out on the My Care Hub webinar on September 26th. We’d love to hear how you get on!

Welcome to our monthly newsletter, Regulation Round Up. Once a month Hannah Keane covers some of the main stories to come out of HMRC and the FCA, as well as anything else related to rules and regulation in financial services.

FCA to Launch Pure Protection Market Study

Last month, the FCA announced that they are planning to launch a study later in 2024/25 into how pure protection insurance products are sold.

The FCA stated that this comes after some concerns that competition is not working well in the market. In particular, they have concerns about commission arrangements and how these might prevent good outcomes being delivered to clients, as well as concerns about some products providing poor value (for example, if the total premiums paid over the lifetime of the product exceed the maximum payout).

The study will focus on term assurance, critical illness cover, income protection insurance and whole of life insurance.

Read more here:

FCA announces work into pure protection market

FCA Call for Input – Review of FCA Requirements

The FCA have launched a Call for Input which asks for opinions on refining their retail conduct rules, with a view to simplifying their guidance. They stated that they want to “address potential areas of complexity, duplication, confusion, or over-prescription, which create regulatory costs with limited or no consumer benefit.”

If you’re interested in taking part, responses need to be sent to the FCA by 31st October 2024.

Read more here:

Review of FCA requirements following the introduction of the Consumer Duty | FCA

Pensions Review Terms of Reference published

The Chancellor has launched a landmark pensions review, and The Terms of Reference for Phase One of this review were published in the middle of August.

The pensions review aims “to boost investment, increase saver returns and tackle waste in the pensions system.” It will be led by the Minster for Pensions and will focus on defined contribution workplace schemes and the Local Government Pension Scheme.

The first phase of the review is focussed on investment. In particular, it will focus on four areas:

• Scaling and consolidating defined contribution workplace schemes;

• Tackling inefficiency in the Local Government Pension Scheme;

• The “pensions ecosystem” and how we can achieve a greater focus on value, rather than cost, to deliver better outcomes;

• Encouraging  pension investment into UK assets to boost growth.

Initial findings from the first stage of this review will be reported later this year, ahead of the introduction of the Pension Schemes Bill. The second phase of the review will begin later this year and will consider further steps to improve pension outcomes, including assessing retirement adequacy.

Read more here:

Pensions Review – Terms of Reference: Phase One

Plans to Scrap ‘British ISA’

According to the Financial Times, “two people close to the process” told FT that Labour has scrapped the idea of the British ISA, which would have allowed an extra £5,000 for UK-listed equities only, on top of the existing £20,000 yearly allowance.

The Treasury have said that no final decision has been made. At the moment, plans for the British ISA haven’t been officially  scrapped, so only time will tell.

Read more here:

https://www.ft.com/content/64cd3caf-c36a-4e51-8e19-d430f3324d77

Payment Services Regulator Reduces Compensation Limits

The Payment Services Regulator is introducing new protections for victims of APP (authorised push payment) scams, while incentivising the industry to implement enhanced fraud prevention tools. The rules are due to come into effect on 7th October 2024.

Initially, the PSR stated that these rules would require banks to reimburse their clients up to £415,000 if they lost money due to an APP scam. After looking into this further, the PSR is consulting on reducing this to £85,000, in line with the FSCS limit.

Read more here:

PSR confirms implementation date for APP scam protections as 7 October, and publishes high value APP scams review and consultation

That concludes this month’s Regulation Round Up. As always, we encourage you to stay informed and keep an eye on upcoming consultations, reviews, and regulatory changes that may impact your business and clients. With several important developments on the horizon, such as the FCA’s ongoing reviews and the upcoming pensions and payment services changes, it’s crucial to remain proactive and engaged. We’ll be back next month with more updates and insights on the latest in financial regulation. Stay tuned!

In this week’s Investments Matter, Paul Kenworthy covers essential updates for financial planners, including the latest changes to Prudential’s PruFund range, an exciting industry event focused on sustainable investing, and what to expect from the upcoming UK Autumn Budget. These developments could have a significant impact on your clients’ portfolios, making it crucial to stay informed and prepared.

PruFund Updates

Prudential have released their latest quarterly Expected Growth Rate (EGR) and Unit Price Adjustment figures for their PruFund range.

As part of the smoothing process, Prudential set EGRs. These are the annualised rates that an investment would normally change in line with. The EGRs reflect Prudential’s view of how they think each PruFund fund will perform over the long term (up to 15 years).

Although Prudential use a long-term view of performance to set EGRs, they also have to take into account shorter term performance. On a daily basis, if the shorter-term performance differs too much from the current EGR, Prudential would have to amend the value of the fund up or down to ensure they are not returning too much or too little. These are the UPAs.

In this recent announcement, Prudential have confirmed that the EGRs have decreased by 0.30% for the following funds: PruFund Risk Managed 4 & 5 and PruFund Planet 4 & 5, whereas the EGRs have decreased by 0.40% for the following funds: PruFund Growth, PruFund Cautious, PruFund Risk Managed 1, 2 & 3 and PruFund Planet 1, 2 & 3.

An upward UPA of 2.19% has been applied toe the PruFund Cautious and Protected Cautious (Dollar) funds for the following plans, International Prudence Bond and International Investment Bond.

Goodstock Conference

On 19th September 2024, NextGen Planners will be presenting the Goodstock Conference at Dynamic Earth in Edinburgh.

NextGen have called this event ‘The first-of-its-kind Conference for Financial Planners who are passionate about investing for good.’

However, this is not just a sustainability conference, it is a long term project to change the way that financial planning conferences are held in the UK.

All proceeds from this event will to towards Lauriston Farm, which is an urban farm in North West Edinburgh which grows food for people and Wildlife.

Myself and Amy North will be attending the Goodstock Conference and we will be providing our insights in the days following the event.

The agenda and speakers have been announced, and it sounds like it will be a very exciting and informative event.

If anyone reading this is attending and would like to catch up with us, either contact one of us in advance, or just come and say hello to us on the day.

UK Autumn Budget

The new Prime Minister Sir Keir Starmer has stated that the Autumn Budget (due to be delivered on October 30th) is going to be ‘painful’. He stated that “we have no other choice given the situation that we are in”, clearly laying the blame entirely on the previous Government.

The Prime Minister and Chancellor have both committed to the previous pledges to not increase National Insurance, Income Tax and VAT, along with protecting the State Pension Triple Lock.

This has lead to much speculation that some of the areas of focus in this Budget will be Inheritance Tax (IHT) and Capital Gains Tax (CGT). This could come in the form of increased levels of taxation, or in the reduction of the allowances / exemptions.

The CGT annual exemption has been reduced significantly over the last few years, from £12,000 on 2022/23 to £6,000 in 2023/24 to the current amount of £3,000.

The amount of IHT that was collected in the 2023/24 financial year was a record £7.5bn, with it being expected to reach around £10bn by the end of the decade.

The Office for Budget Responsibility has estimated that a total of £15.2bn will be raised in CGT in the current tax year. This represents 1.3% of all receipt and is equivalent to £530 per household and 0.50% of national income.

Source:

Capital gains tax Office Of Budget Responsibility

We will be keeping a very close eye on the announcements made in the Autumn Budget, as it will likely affect a large number of investors. The potential changes to Inheritance Tax and Capital Gains Tax, in particular, could have significant implications for the financial planning strategies you offer to your clients. As financial planners, it’s crucial to stay informed about these developments so that you can provide timely and accurate advice that aligns with your clients’ best interests.

At We Complement, we understand the challenges that financial planners face in adapting to an ever-changing fiscal landscape. Our service is designed to support you in delivering the best possible service to your clients by offering resources, insights, and tools that complement your existing expertise.

If you’re looking to deepen your knowledge, streamline your practice, or simply stay ahead of the curve, We Complement is here to help. Connect with us today to explore how our solutions can enhance your service offering and keep you prepared for the changes ahead.

Empowering Financial Advisers with Clear Insights and Tailored Investment Strategies

Hello and welcome to the August edition of We Complement’s Specialised Investments Simplified newsletter, thoughtfully written by our very own Lucy Wylde.

At We Complement, we understand the important role you play in guiding your clients through often complex investments. We’re here to make that journey a little easier for you, offering clear, practical insights that you can share with confidence. Whether it’s helping your clients navigate inheritance tax, uncovering opportunities in AIM portfolios, or exploring the exciting potential of Venture Capital Trusts, our goal is to arm you with the knowledge and tools to better serve your clients and support them in reaching their financial goals.

Continuing the trend for the 2024/25 tax year, Inheritance Tax (IHT) continues to raise a significant level of revenue for the government. Data published by HM Revenue and Customs (HMRC) on the 19th of July 2024 show that between April and June of this tax year, inheritance tax receipts hit £2.1 billion. This figure is £83 million higher than the same period last tax year.

Although omitted from Labour’s manifesto, it does feel like Inheritance Tax would be an obvious target for the new Chancellor to raise the £22 billion required to cover unfunded pledges inherited from the previous government.

However, while there have long been calls for reform to the system, it now seems increasingly unlikely that any major overhaul will happen. Of the changes that may be made, it appears unlikely that they will benefit ‘the many.’

In particular, there have been reports that the new government may abolish the current reliefs for farms and businesses, which enable either 100% or 50% of certain businesses and business assets to qualify for IHT exemptions under Business Relief. This would also impact investors with qualifying AIM-listed shares, which, after two years of ownership, also qualify for 100% IHT exemption.

Of course, this is all speculation at present, as the new government’s actual plans will not be revealed in full until Labour’s first Budget on Wednesday, the 30th of October.

With the above in mind, we have taken a look back at the Q2 2024 performance of the Rathbones I W & I AIM Portfolio IHT Plan and look forward to the launch of the Foresight Technology Venture Capital Trust (VCT) PLC.

Rathbones I W & I AIM Portfolio IHT Plan

Having recently become part of the Rathbones Group Plc, Investec Wealth & Investment (UK) now manages over £1 billion in assets, including those under Rathbones.

Individually, as of the end of June 2024, Investec Wealth & Investment (UK) managed just under £750 million of assets for clients purely in AIM IHT accounts.

According to the Q2 2024 performance update published on the 1st of August 2024, the Rathbones I W & I AIM Portfolio IHT Plan net 12-month return (on a rolling quarter-by-quarter basis) is 5.1% over the last 10 years.

In terms of the estimated revenue split for the portfolio, as of the 30th of June 2024, the UK has a 44% revenue exposure. This was reduced from approximately 50% as more global companies were introduced into the portfolio. While revenue in the UK has decreased, there are 10 companies within the Rathbones I W & I AIM Portfolio IHT Plan where over 80% of revenues are derived domestically.

From a market capitalization point of view, nearly 50% of the companies in the portfolio have a market cap above £500 million, with the average weighted market cap at £516 million. This aligns with Investec Wealth & Investment (UK)’s investment philosophy of quality, where many companies that meet their investment criteria are well-established and have grown into sizable companies.

The dividend yield at the end of the second quarter of 2024 was 1.7%.

Turning to performance, it was another strong quarter. Quarter 2 of 2024 closed with the cumulative performance of the portfolio up by 4.6%, compared to both the FTSE AIM All-Share Index at 3.5% and the FTSE All-Share Index at 3.7%. This continues the trend of the Rathbones I W & I AIM Portfolio IHT Plan outperforming the FTSE AIM All-Share Index over the past 1, 3, 5, and 10-year periods.

In connection with the above, the top three contributing companies during Q2 2024 were Keywords Studios PLC, followed by Alpha Financial Markets Consulting PLC and Lok’nStore Group PLC.

The panel and market research business, YouGov, was the worst performer, costing the portfolio 0.230 basis points (bps) of performance in the second quarter of 2024, due to an overweight asset allocation compared to the index.

Foresight Technology VCT PLC

Over the past three years, total fundraising into Venture Capital Trusts has exceeded £3 billion.

Managed by Foresight Group LLP, the Foresight Technology VCT PLC is the only VCT with a focus on deep technology.

Deep technology refers specifically to companies that solve significant, high-value problems through scientific or engineering breakthroughs. This is a sector that has consistently delivered strong returns, with these types of companies making up 25% of all so-called unicorn exits (startup companies with values exceeding $1 billion USD) within the last year.

Foresight Technology VCT PLC consists of one share class, the FWT Share class, which intends to invest principally in early-stage UK technology companies.

After originally raising £37.8 million through an Ordinary Share issue in 2010/2011 and 2011/2012, the Foresight Technology VCT PLC subsequently issued the “C” shares fund of £13.1 million and a “D” shares fund of £5.6 million. However, on the 29th of June 2018, the C and D shares funds were merged with the Ordinary Shares fund, which was then merged with the FWT Share class just over five years later.

As of the 31st of March 2024, the number of FWT Shares in issue was 32,445,165, with investments made into 30 companies totaling £20.2 million. The Net Asset Value (NAV) per share at this time was 98.8p.

So far, the strategy’s first two exits, Codeplay and Flusso, have generated returns of 16 times and 3 times the capital invested, respectively.

The Foresight Technology VCT PLC, which is currently closed to new investors, aims to target UK unquoted companies that it believes will achieve the objective of producing attractive returns for shareholders.

A further launch is planned for mid-September of this year.

As you close out this month’s newsletter, we hope you’re walking away with fresh insights. At We Complement, we’re more than just a resource—we’re your partner in helping your clients achieve their goals. We know that every client is unique, and we’re here to help you tailor investment strategies that not only meet their needs but also reflect their aspirations. Whether your clients are looking to optimise their tax planning, diversify their investments, or explore new financial opportunities, we’re right here with you, ready to support your efforts. If you’re looking for more personalised guidance or have any questions, don’t hesitate to get in touch with us. Let’s work together to simplify the complexities of specialised investments and make a real difference in your clients’ financial lives.

In this issue, we’re bringing you a roundup of industry innovations designed to streamline your processes, enhance client service, and keep you at the forefront of financial technology. From Aegon’s cutting-edge pension transfer comparison service to Plannr’s game-changing integration with Transact, these updates are set to transform how you operate and succeed.

Aegon’s Pension Transfer Comparison Scheme

Aegon has just unveiled an innovative pension transfer comparison service, making it easier than ever for members to evaluate their old pensions. The new ‘red, amber, green’ system, developed in partnership with The Pension Lab, allows users to retrieve and assess their pensions with ease.

Here’s how it works: pensions are categorised as red, amber, or green based on their features and associated charges. Only those pensions without additional valuable features, and where the fees post-transfer into an Aegon plan are lower, receive a green rating. On the other hand, pensions with guarantees, such as defined benefit schemes, are marked red.

After a successful pilot phase, Aegon is offering members the convenience of a fully digital transfer process—no more paperwork. Transfers now take just over two minutes, saving both time and money. Excitingly, Aegon plans to extend this feature across all its Workplace platform products later this year, gearing up for the launch of Pension Dashboards in 2026.

Nick Roy, Aegon’s Director of Client and Partnership Development, commented: “Our collaboration with The Pension Lab is a significant step forward, offering our members a seamless and secure way to manage their pensions. This aligns perfectly with our commitment to enhancing the member experience.” Scott Phillips, CEO and founder of The Pension Lab, added: “Through our collaboration with Aegon, we’ve delivered another industry first with the provision of a fully digital non-advised pension transfer solution, which includes pension finding, detailed feature checking, and a bespoke charge comparison.

https://www.lifeinsuranceinternational.com/news/aegon-unveils-pension-transfer-comparison-service/?cf-view

Aegon unveils pension transfer comparison service

Standard Life’s New Annuity Tracker Service

Standard Life is making strides with Origo’s new Annuity Transfer Tracker service, revolutionising how advice firms manage pension-to-annuity transfers. This service, an extension of Origo’s Transfer Service, provides advisers and paraplanners with real-time updates on the progress of their clients’ transfers, all at the click of a button.

Jon Scannell, Head of Annuity Distribution at Standard Life, emphasised the benefits: “The Annuity Transfer Tracker will streamline our service, enabling advisers to quickly access transfer statuses and keep their clients informed. It’s a game-changer for both efficiency and customer service.”

Origo’s CEO, Anthony Rafferty, highlighted the broader industry impact: “Our new tracker significantly cuts down on time and resources for both providers and advisers. With seamless API integration, this service exemplifies how we’re connecting the industry to enhance performance and service delivery.”

Standard Life rolls out new annuity transfer tracker service

Plannr and Transact’s Integration to Boost Adviser Efficiency

Plannr Technologies and Transact have joined forces to supercharge the efficiency of financial advisers with a new integration. This partnership is set to drastically reduce the time spent reconciling income statements for financial planning practices across the UK.

By utilising Transact’s enhanced API, advisers can now feed income statements directly into Plannr’s Income Reconciliation Engine, eliminating the need for manual uploads and reducing the potential for errors. This integration is immediately available to all Plannr subscribers.

Gareth Thompson, Plannr’s Director, shared his enthusiasm: “This integration is perfectly aligned with our mission to equip advisers with cutting-edge tools. We’re setting a new standard in financial services for income statement processing.”

Transact’s Chief Executive, Jonathan Gunby, echoed this sentiment: “We’re thrilled to offer advisers a streamlined and secure process, eliminating manual work and saving time. Our collaboration with Plannr has been incredibly fruitful, and we look forward to further innovations together.”

LIVE! New Integration with Transact Automated Remuneration Statements

LCP’s New Tool for Widows & Widowers to Check State Pensions

In light of recent errors by the Department for Work and Pensions (DWP) affecting state pension claims, LCP has introduced a new online tool to assist widows and widowers in checking their state pension entitlements. The DWP has already paid out over £280 million in arrears to more than 23,000 individuals who missed out on inherited state pensions.

Given the complexity of the rules, LCP’s tool aims to simplify the process, helping individuals understand what they are entitled to inherit alongside their own state pension. If you or your clients want to explore this further, you can find the tool by clicking here.

DWP making new errors on widows’ state pensions – LCP launches new tool to help people check

At We Complement, we’re committed to equipping financial advisers with the tools and insights they need to succeed. If you’re looking to enhance your practice and better serve your clients, explore our tailored solutions designed to streamline your processes and elevate your business. Get in touch with us today to discover how we can support your growth.