“International Be Kind to Lawyers Day” may be somewhat short on celebrations, but findaWEALTHMANAGER.com is urging the UK’s legal professionals to mark the occasion nonetheless by doing themselves a kindness all too many seem to neglect: updating their wealth plan.
findaWEALTHMANAGER.com is an independent online matching service designed with busy high net worth individuals in mind, so it’s no surprise that lawyers are consistently represented among the 3,700 new users the site currently attracts a month.
Lee Goggin, co-founder of findaWEALTHMANAGER.com says:
“We often find that lawyers, and those in other demanding professions, come to us in a bit of a panic over their long-term finances. They may have started with the best intentions for managing their wealth, but in the course of building their career things get off track.
“The lawyers we speak to all want a clever investment and tax planning strategy, but many have accumulated scattered investments which are difficult to keep track of. These users are seeking a wealth manager to help streamline their portfolio and maximise their returns.
“Specialist advice is particularly important for professionals like lawyers. They may experience uneven income patterns or be an equity partner, which can complicate things. Happily, several wealth managers have dedicated teams for lawyers, but even the smaller ones are likely to have some special expertise. Lawyers are an important market for wealth managers and as clients face many common challenges.”
To help lawyers manage their wealth more effectively, findaWEALTHMANAGER.com has prepared the following tips:
1. Dig out those ISAs
As higher-earners, lawyers should already be in the habit of using their full ISA allowance every year (£15,000 for 2014/15). However, what many end up with is a series of largely forgotten ISAs which aren’t being managed properly.
A good wealth manager will help you get a full overview of your investments and how they are performing and could, for example, consolidate your ISAs into one actively-managed multi-asset portfolio likely to deliver far superior returns. This is particularly pertinent given the rock-bottom rates on cash ISAs at present.
It’s easy to miss the ISA deadline with a hectic workload, but with pension contribution limits coming down ISAs are an invaluable way to keep building retirement savings. You could ask your adviser to schedule the automatic transfer of assets into an ISA wrapper at the beginning of each tax year to take this stress away.
Extra tip: From 1 July your ISA allowance can be invested in cash or stocks and shares in any combination. The Budget shake-up also means that previous funds from stocks and shares ISAs can be transferred into cash accounts for the very first time.
2. Invest tax-efficiently
Higher-earners need to make sure they’re using all available tax reliefs and this might include taking advantage of all the generous incentives government has put in place for certain types of investment.
For example, investors who back unlisted, smaller UK companies through Enterprise Investment Scheme vehicles can obtain 30% income tax relief on investments of up to £1m per tax year, along with CGT exemption once shares have been held for three years.
Venture Capital Trusts, EISs and the new Seed EISs (which invest in start-ups) offer various tax planning opportunities. There are pros and cons to each type of vehicle, however, and it’s vital to take proper advice on these inherently riskier types of investment.
Extra tip: The Budget extended EIS-style tax reliefs to social investment, making it possible to generate social/environmental gains as well as attractive returns – all while minimising your tax liabilities.
3. Diversify your portfolio properly
Some still cling to the notion that a portfolio should be split 60/40 between stocks and bonds, but a professional investment manager is likely to favour a more sophisticated asset allocation (although stocks and bonds are likely to form the core of most portfolios).
Alternatives like hedge funds, private equity, commodities and real estate may all have a place within your portfolio, depending on your objectives, time horizons and risk profile. A good wealth manager will help you leverage the entire investment universe to maximise your wealth.
The fact that lawyers usually get paid an annual profit share means they tend to make lump sum savings contributions by making a few large investments, which can add up to an unbalanced asset allocation. A professional will monitor and rebalance your portfolio regularly to minimise risk and maximise upside.
Extra tip: Those with the time and confidence for DIY investing need to be aware of individual investors’ tendency to overly focus on trading a few securities and ignore the bigger picture. “Churning” your portfolio too much will also eat into returns due to dealing fees.
4. Be realistic about risk/return payoff
In light of recent year, many investors will be feeling quite risk averse. However, there is a certain level of investment risk you will have to take on to attain your financial goals.
Professional wealth advisers put a lot of effort into understanding your attitude to risk and capacity for losses and volatility (in both a financial and psychological sense). Time horizons are an incredibly important part of this process, particularly when it comes to saving for retirement. Younger people have longer to recover from losses and may also be able to hold more illiquid investments, for example. The Budget was a real game-changer for people of all ages, however, and you should certainly review things in light of it.
Wealth managers are required by the regulator to regularly review your risk profile to make sure your investments are suitable. But you should really inform your adviser whenever a life event is on the horizon. Children, marriage, divorce or even just changing law firm could mean overhauling your financial plan.
Extra tip: You could instruct your wealth manager to manage different “pots” of money along very different lines in terms of risk. The degree of volatility you will feel comfortable with will also probably be a function of what each tranche of money is for.
5. Choose the right wealth manager and relationship for your needs
There is huge diversity in the UK financial advice market. New entrants jostle among wealth managers which have operated for hundreds of years. Equally, some are owned by international banking groups while others are specialist boutiques. Each model has its own attractions (and pitfalls) and firms can also vary hugely in their style of servicing clients.
A big decision is whether to go with an advisory or discretionary investment management relationship. Time constraints will mean that many lawyers opt for the latter, where they set the parameters but day-to-day portfolio decisions are left to the investment manager. Bear in mind though that discretionary services are generally more expensive than advisory.
A further warning is that while industry reforms have greatly increased fee transparency, you still need to watch out for less reputable firms operating with opaque, layered fee structures.
Extra tip: Assessing a firm’s likely performance can be slightly tricky since every client portfolio is different, but a good wealth manager will provide indicative figures against standard benchmarks.
The Psychology Behind a Strong Security Culture in the Financial Sector
By Javvad Malik, Security Awareness Advocate at KnowBe4
Banks and financial industries are quite literally where the money is, positioning them as prominent targets for cybercriminals worldwide. Unfortunately, regardless of investments made in the latest technologies, the Achilles heel of these institutions is their employees. Often times, a human blunder is found to be a contributing factor of a security breach, if not the direct source. Indeed, in the 2020 Verizon Data Breach Investigations Report, miscellaneous errors were found vying closely with web application attacks for the top cause of breaches affecting the financial and insurance sector. A secretary may forward an email to the wrong recipient or a system administrator may misconfigure firewall settings. Perhaps, a user clicks on a malicious link. Whatever the case, the outcome is equally dire.
Having grown acutely aware of the role that people play in cybersecurity, business leaders are scrambling to establish a strong security culture within their own organisations. In fact, for many leaders across the globe, realising a strong security culture is of increasing importance, not solely for fear of a breach, but as fundamental to the overall success of their organisations – be it to create customer trust or enhance brand value. Yet, the term lacks a universal definition, and its interpretation varies depending on the individual. In one survey of 1,161 IT decision makers, 758 unique definitions were offered, falling into five distinct categories. While all important, these categories taken apart only feature one aspect of the wider notion of security culture.
With an incomplete understanding of the term, many organisations find themselves inadvertently overconfident in their actual capabilities to fend off cyberthreats. This speaks to the importance of building a single, clear and common definition from which organisations can learn from one another, benchmark their standing and construct a comprehensive security programme.
Defining Security Culture: The Seven Dimensions
In an effort to measure security culture through an objective, scientific method, the term can be broken down into seven key dimensions:
- Attitudes: Formed over time and through experiences, attitudes are learned opinions reflecting the preferences an individual has in favour or against security protocols and issues.
- Behaviours: The physical actions and decisions that employees make which impact the security of an organisation.
- Cognition: The understanding, knowledge and awareness of security threats and issues.
- Communication: Channels adopted to share relevant security-related information in a timely manner, while encouraging and supporting employees as they tackle security issues.
- Compliance: Written security policies and the extent that employees adhere to them.
- Norms: Unwritten rules of conduct in an organisation.
- Responsibilities: The extent to which employees recognise their role in sustaining or endangering their company’s security.
All of these dimensions are inextricably interlinked; should one falter so too would the others.
The Bearing of Banks and Financial Institutions
Collecting data from over 120,000 employees in 1,107 organisations across 24 countries, KnowBe4’s ‘Security Culture Report 2020’ found that the banking and financial sectors were among the best performers on the security culture front, with a score of 76 out of a 100. This comes as no surprise seeing as they manage highly confidential data and have thus adopted a long tradition of risk management as well as extensive regulatory oversight.
Indeed, the security culture posture is reflected in the sector’s well-oiled communication channels. As cyberthreats constantly and rapidly evolve, it is crucial that effective communication processes are implemented. This allows employees to receive accurate and relevant information with ease; having an impact on the organisation’s ability to prevent as well as respond to a security breach. In IBM’s 2020 Cost of a Data Breach study, the average reported response time to detect a data breach is 207 days with an additional 73 days to resolve the situation. This is in comparison to the financial industry’s 177 and 56 days.
Moreover, with better communication follows better attitude – both banking and financial services scored 80 and 79 in this department, respectively. Good communication is integral to facilitating collaboration between departments and offering a reminder that security is not achieved solely within the IT department; rather, it is a team effort. It is also a means of boosting morale and inspiring greater employee engagement. As earlier mentioned, attitudes are evaluations, or learned opinions. Therefore, by keeping employees informed as well as motivated, they are more likely to view security best practices favourably, adopting them voluntarily.
Predictably, the industry ticks the box on compliance as well. The hefty fines issued by the Information Commissioner’s Office (ICO) in the past year alone, including Capital One’s $80 million penalty, probably play a part in keeping financial institutions on their toes.
Nevertheless, there continues to be room for improvement. As it stands, the overall score of 76 is within the ‘moderate’ classification, falling a long way short of the desired 90-100 range. So, what needs fixing?
Towards Achieving Excellence
There is often the misconception that banks and financial institutions are well-versed in security-related information due to their extensive exposure to the cyber domain. However, as the cognition score demonstrates, this is not the case – dawdling in the low 70s. This illustrates an urgent need for improved security awareness programmes within the sector. More importantly, employees should be trained to understand how this knowledge is applied. This can be achieved through practical exercises such as simulated phishing, for example. In addition, training should be tailored to the learning styles as well as the needs of each individual. In other words, a bank clerk would need a completely different curriculum to IT staff working on the backend of servers.
By building on cognition, financial institutions can instigate a sense of responsibility among employees as they begin to recognise the impact that their behaviour might have on the company. In cybersecurity, success is achieved when breaches are avoided. In a way, this negative result removes the incentive that typically keeps employees engaged with an outcome. Training methods need to take this into consideration.
Then there are norms and behaviours, found to have strong correlations with one another. Norms are the compass from which individuals refer to when making decisions and negotiating everyday activities. The key is recognising that norms have two facets, one social and the other personal. The former is informed by social interactions, while the latter is grounded in the individual’s values. For instance, an accountant may connect to the VPN when working outside of the office to avoid disciplinary measures, as opposed to believing it is the right thing to do. Organisations should aim to internalise norms to generate consistent adherence to best practices irrespective of any immediate external pressures. When these norms improve, behavioural changes will reform in tandem.
Building a robust security culture is no easy task. However, the unrelenting efforts of cybercriminals to infiltrate our systems obliges us to press on. While financial institutions are leading the way for other industries, much still needs to be done. Fortunately, every step counts -every improvement made in one dimension has a domino effect in others.
Has lockdown marked the end of cash as we know it?
By James Booth, VP of Payment Partnerships EMEA, PPRO
Since the start of the pandemic, businesses around the world have drastically changed their operations to protect employees and customers. One significant shift has been the discouragement of the use of cash in favour of digital and contactless payment methods. On the surface, moving away from cash seems like the safe, obvious thing to do to curb the spread of the virus. But, the idea of being propelled towards an innovative, digital-first, cashless society is also compelling.
Has cashless gone viral?
Recent months have forced the world online, leading to a surge in e-commerce with UK online sales seeing a rise of 168% in May and steady growth ever since. In fact, PPRO’s transaction engine, has seen online purchases across the globe increase dramatically in 2020: purchases of women’s clothing are up 311%, food and beverage by 285%, and healthcare and cosmetics by 160%.
Alongside a shift to online shopping, a recent report revealed 7.4 million in the UK are now living an almost cashless life – claiming changing payment habits has left Britons better prepared for life in lockdown. In fact, according to recent research from PPRO, 45% of UK consumers think cash will be a thing of the past in just five years. And this UK figure reflects a global trend. For example, 46% of Americans have turned to cashless payments in the wake of COVID-19. And in Italy, the volume of cashless transactions has skyrocketed by more than 80%.
More choice than ever before
Whilst the pandemic and restrictions surrounding cash have certainly accelerated the UK towards a cashless society, the proliferation of local payment methods (LPMs) in the UK, such as PayPal, Klarna and digital wallets, have also been a key driver. Today, 31% of UK consumers report they are confident using mobile wallets, such as Apple Pay. Those in Generation Z are particularly keen, with 68% expressing confidence using them.
As LPM usage continues to accelerate, the use of credit and debit cards are likely to decline in the coming years. Whilst older generations show an affinity with plastic, younger consumers feel less secure around its usage. 96% of Baby Boomers and Generation X confirmed they feel confident using credit/debit cards, compared to just 75% of Generation Z.
Does social distancing mean financial exclusion?
As we hurtle into a digital age, leaving cash in the rearview, there are ramifications of going completely cashless to consider. We must take into consideration how removing cash could disenfranchise over a quarter of our society; 26% of the global population doesn’t have a traditional bank account. Across Latin America, 38% of shoppers are unbanked, and nearly 1 in 5 online transactions are completed with cash. While in Africa and the Middle East, only 50% of consumers are banked in the traditional sense, and 12% have access to a credit card. Even here in the UK, approximately 1.3 million UK adults are classed as unbanked, exposing the large number of consumers affected by any ban on cash.
Even when shopping online – many consumers rely on cash-based payments. At the checkout page, consumers are provided with a barcode for their order. They take this barcode (either printed or on their mobile device) to a local convenience store or bank and pay in cash. At that point, the goods are shipped.
There are also older generations to consider. Following the closure of one in eight banks and cashpoints during Coronavirus, the government faced calls to act swiftly to protect access to cash, as pensioners struggled to access their savings. Despite the direction society is headed, there are a significant number of older people that still rely on cash – they have grown up using it. With an estimated two million people in the UK relying on cash for day to day spending, it is important that it does not disappear in its entirety.
Supporting the transition away from cash
Cashless protocols not only restrict access to goods and services for consumers but also limit revenue opportunity for merchants. While 2020 has provided the global economy with one great reason to reduce the acceptance of cash, the payments industry has billions of reasons to offer multiple options that cater to the needs of every kind of shopper around the world.
Whilst it seems younger generations are driving LPM adoption, it is important that older generations aren’t forgotten. If online shops fail to offer a variety of preferred payment methods, consumers will not hesitate to shop elsewhere. With 44% of consumers reporting they would stop a purchase online if their favourite payment method wasn’t available – this is something merchants need to address to attract and retain loyal customers.
UnionPay increases online acceptance across Europe and worldwide with Online Travel Agencies
- UnionPay International today announces that two of Europe’s leading travel companies, Logitravel and Destinia, have started accepting UnionPay.
- This acceptance will enable users of the groups’ travel websites to make purchases using UnionPay payment methods.
The acceptance partnerships between the OTAs and UnionPay began in July 2020 for customers across 13 European countries and another 90 countries and regions worldwide. The European countries covered by the agreements include the UK, Germany, France, Italy, Spain, Portugal, Norway, Denmark, Sweden, Austria, Switzerland, Hungary and Ireland. The brands covered by these acceptances include Logitravel.com and Destinia.com which together deliver more than 8.5 million worldwide travel bookings each year covering flights, hotels, holidays, car hire and other experiences.
With over 8.4 billion cards issued in 61 countries and regions worldwide, UnionPay has the world’s largest cardholder base and is the preferred payment brand for many Chinese and Asian expatriates and students based in Europe, as well as an increasing number of global customers. These cardholders are also particularly attractive to the two OTAs. Despite the impact of Covid-19, Logitravel and Destinia expect to see the demand for travel across the European continent as well as that between Europe and Asia return to growth in the coming years. They are now placing significant focus on offering more payment options and smoother payment services to meet this demand.
The partnerships incorporate UnionPay’s ExpressPay and SecurePlus technology, which will ensure seamless transactions for the customers, contained within a single process through the relevant websites. UnionPay’s technology also provides for the requirement to authenticate transactions under the EU regulation Payment Services Directive 2 (PSD2) ensuring that sites will be compliant as soon as the relevant countries apply the requirements.
Wei Zhihong, UnionPay International’s Market Director, said: “This is a major partnership with two of Europe’s leading online travel companies. Logitravel and Destinia are brands which have been at the forefront of e-commerce for many years and we are very excited to be working with them to extend their reach to new audiences. This highlights the work that we have carried out in ensuring that our technology provides effective solutions for the biggest e-commerce sites both in Europe and around the world. We look forward to announcing many more similar agreements in the near future.”
Jesús Pons, Chief Financial Officer at Logitravel Group said: “UnionPay has always been on our radar, and since travel has become a crucial part of its development, Logitravel felt it important to develop this important partnership. It really was an obvious decision for Logitravel since both companies share a passion for e-commerce and emphasising the payment experience for their customers.”
Ricardo Fernández, Managing Director at Destinia Group said: “We believe that this is the beginning of a really strong relationship. Our discussions with UnionPay in reaching this partnership have demonstrated their understanding of the needs of major online merchants and their ability to deliver the highest quality systems. We look forward to working together on further partnership as we move forward.”
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