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February 2015
Wealth
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Fund Admins
We look at their ever-changing role
Virtual Currencies Is regulation on the cards in 2015?
Hedge Funds Our monthly pick of the best
The Adviser’s Advisor Plus... An opulent stay in the world’s chicest city
How MarketCounsel is leading the way in compliance solutions
February 2015 | Contents
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6-9 News & Appointments
Editor’s comment
Funds 12 The Evolution of the Administrator We take the services of fund administrators for granted -but it’s a complex role, and one that’s constantly changing
14 Hedge Fund of the Month The first of a new regular feature in which we take a detailed look at a fund we think stands out from the rest. This month: the Nordkinn Fixed Income Macro Fund
Wealth Corner 17
Rooted in Tradition, Growing Through Success For over 25 years, Burt Wealth Advisors has served as a trusted partner of high net worth individuals and families wishing to protect and grow their assets
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The Adviser’s Advisor We speak to Brian Hamburger, CEO of MarketCounsel, the leading business and regulatory compliance consulting firm to the America’s preeminent entrepreneurial investment advisors
Banking Zone 20
Regulating Bitcoin
Leading tech regulatory lawyer, Chris Finney, partner at Cooley LLP in London, asks: Will the UK and Europe begin to regulate Bitcoins and other virtual, digital and crypto-currencies in 2015?
Relax 28 A Glittering Experience We check in at the the Excelsior Hotel Gallia, a stunning reflection of Milan’s timeless elegance
Welcome to the February issue of Wealth & Finance. This month, we caught up with Brian Hamburger, attorney, entrepreneur, and author who is the founder, president and chief executive officer of MarketCounsel, a business and regulatory compliance consulting firm. He told us more about his successful firm (a double winner in our recent Wealth & Money Management Awards) and shared his thoughts on the current regulatory landscape (p.18). Elsewhere in this month’s issue, we take a look at the complex, challenging and ever-changing role of fund administrators (p.12). Bitcoins and other virtual, digital and crypto-currencies are now an accepted part of the financial landscape. But they’re not without their risks, and cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned. Chris Finney, partner at Cooley LLP in London, asks: Will the UK and Europe begin to regulate virtual currencies in 2015? (p.20). In our luxury lifestyle section, Relax, we mix with the fashion set at Milan’s glamorous Excelsior Hotel Gallia (p.28). And of course there’s our regular roundup of the news affecting the major regions and markets from around the world. I hope you enjoy the issue. Ollie John, Editor ollie.john@ai-globalmedia.com
News & Appointments | February 2015
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Digital Investing Tools “Disrupting the European Investor-Advisor Relationship” 27% of European investors have switched wealth management firms to get a new digital tool or service, survey shows Digital investing tools are changing the ways financial advisors connect with investors and will impact how investors use their advisors in the future, according to an Accenture report based on a survey of 1,200 middle- and high-income, digitally savvy European investors, which Accenture refers to as “Generation D.” The study found that investors value digital financial planning tools that offer investment education, advanced planning and scenario analysis, suggesting that wealth management firms that provide these tools and alter their business models to better serve both traditional and autonomous investors will come out on top. According to the survey, 27% of investors have switched firms to receive a new digital tool or service. The survey also showed that digital tools that offer education on long-term goals, retirement planning, estate planning, auto asset allocation and a 360-degree account view are considered “difference makers” that may drive an investor’s decision on which firm to select. Among the high-net-worth investors who were surveyed, 25% said they would consider switching their institution if they did not receive a desired online tool or service. “Investors are relying more heavily on digital tools to help them better understand investment trends, decisions and potential outcomes,” said Owen Jelf, global managing director of Accenture’s Capital Markets practice. “European wealth management firms have tended to be more reluctant to bring digital tools into their service offerings, focusing their efforts instead on helping to build personal relationships. Our research shows that firms that integrate digital tools into their business models will help strengthen these relationships rather than threaten them, and in fact help them attract the most lucrative investors.” The most popular digital tools among investors are those that reduce the cost of transactions and fees
(60%) followed by those that improve access to their account (50%) and improve access to their advisor (32%, underscoring the client demand for a blend of digital and advisor support tools. European investors increasingly becoming more autonomous The report shows that the relationship between Generation D investors and their advisors is evolving into a “counsellor” approach as investors increasingly become comfortable conducting their own investment research, rather than the advisor creating an investment portfolio that the client simply signs off on. “European investors are becoming more autonomous and increasingly working with their advisors in an unconventional way – using them as counsellors to run investment plans by, rather than as investment managers,” said Alfredo Avila, managing director for Accenture Wealth and Asset Management Services in Europe, Africa, Middle East and Latin America. “Firms need to embrace the changing relationship model and empower their advisors with digital education and financial-planning tools that add value and enhance the overall investment experience. These tools will not replace the role of the advisor, but rather help investors understand the advice they are being given and increase their level of trust.” The majority of investors still prefer more traditional communication channels when interacting with their advisor, regardless of the various digital options available to them. 71% of survey respondents said they prefer face-to-face meetings with their financial advisor, while 68% prefer phone communication over digital and social media channels. More than two-thirds of investors (68%) do not agree that a digital-only relationship with their advisor would be effective.
Appointments NIKE Announces Donald W. Blair to Retire as CFO NIKE, Inc. has announced that Donald W. Blair, Executive Vice President and Chief Financial Officer, will retire from NIKE in October 2015. As part of a planned transition, Blair will remain in the CFO role through 31 July 2015, and will remain with the company through 31 October 2015 in support of the transition. Effective 1 August 2015, Blair will be succeeded by Andrew Campion, currently Senior Vice President, Finance, Strategy and Investor Relations for NIKE, Inc. “Don has been CFO for NIKE during a tremendous period of growth for our company,” said Mark Parker, President and CEO of NIKE, Inc. “Don has been instrumental in shaping our long-term financial strategy and helping us deliver significant value for our shareholders over the last 16 years. I have personally appreciated his thoughtful guidance, his global perspective and his wisdom. He leaves behind a strong team and I know I speak for everyone when I say how very much he will be missed.”
One World Labs Names New CEO One World Labs, Inc. (OWL), a provider of cyber threat intelligence technologies and services, has announced that its Board of Directors has named Mark Turnage as the new Chief Executive Officer, effective immediately. Turnage, age 54, joins OWL with over 20 years of experience in the security industry. “As we seek to establish OWL as a top cyber threat intelligence firm, there is not a better person to lead the organisation than Mark Turnage. Mark is a proven leader and entrepreneur who has successfully grown startups in the security industry into global security companies,” said Marwan Fawaz, Chairman of the Board. “The Board is confident that Mark has the focus, vision and wealth of experience necessary to propel OWL forward.” Commenting on his appointment, Turnage said: “OWL has the world’s leading cyber threat intelligence platform with its OWL Vision Pro Tools product. We have uniquely created and indexed the world’s largest database of dark content, and our clients rely on this database to detect and mitigate breaches before they can cause damage.
February 2015 | News & Appointments
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Personal Finance: Too Personal to Talk About? Despite being tight-lipped about money, women are ready to dial up financial engagement and 92% want to learn more about financial planning, shows Fidelity Investments study A new study by Fidelity Investments found that women overwhelmingly want to learn more about financial planning (92%) and get more involved in their finances within the next year (83%). However, open conversations about money remain rare. Even among family and friends, eight in 10 women confess they have refrained at some point from talking about their finances with those they are close to. The number one reason given for avoiding these discussions is that the subject is “too personal.” (Watch this video to hear how women talk about money). The Fidelity Investments Money FIT Women Study finds this reluctance to talk about financial topics also occurs among married couples and partners – where financial assets are generally shared. Furthermore, while 77% of women are confident discussing medical issues with a doctor on their own, less than half (47%) say they are confident talking about money and investments with a financial professional. “Beneath women’s reticence to talk about money lies a lack of confidence in their knowledge of financial planning and investing,” said Kathleen Murphy, president of Personal Investing at Fidelity. “This confidence-gap is really unwarranted. Studies show that women actually demonstrate stronger
saving rates than their male counterparts and have historically enjoyed better long term investment performance when they do engage. Unfortunately, too many women still hesitate to take control of their investments.”
remain obstacles to becoming more actively engaged in their finances, the good news is that many women are developing strong savings habits, and three-in-four women surveyed (74%) are proactive about saving for the future.
Overall, 60% of women worry about having enough savings to last throughout retirement, with financial anxiety most prevalent among Gen X and Y women (born between 1965 and 1996). For many women, a lack of confidence is driven by a need for more in-depth understanding and experience with the investment process. Women who are not confident in making financial decisions cite these reasons:
Fidelity’s customer data supports this, finding that women at every income level contribute a higher%age of their salaries toward workplace retirement savings plans than their male counterparts.
• Haven’t done research about my options (37%) • Don’t have much experience because I haven’t done much with my finances to date (36%) • Don’t know who to talk to in order to get the best advice (36%) Further compounding the challenges holding women back are competing demands for their time both at work and at home. Flipping the mind set: women have what it takes to be successful investors While experience, confidence and prioritization
Working women also show more age-based asset allocation behaviors than their male counterparts. For example, looking specifically at women in the health care and higher education professions, industries in which women dominate the workforce and where Fidelity is a leading provider of retirement savings plans, analysis shows that 67% of women exhibit age-based asset allocation, compared to 61% of men. “Women are much more capable than they often give themselves credit for,” said Murphy. “The same discipline that makes them dedicated savers can also be applied to investing. The key is to take action now to ensure the money they’ve worked so hard to earn is working just as hard for them to achieve their goals and live the lives they deserve.”
News & Appointments | February 2015
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New Study Exposes Visual Hacking as Under-Addressed Corporate Risk Research finds that companies can be visually hacked in a matter of minutes, with visually hacked in a matter of minutes, with 45% occurring in less than 15 minutes and 63% of visual hacks occurring in less than a half hour While most security professionals focus on thwarting data breaches from high-tech cyber attacks, a new study exposes visual hacking, a low-tech method used to capture sensitive, confidential and private information for unauthorised use, as an under-addressed corporate risk. The 3M Visual Hacking Experiment, conducted by Ponemon Institute on behalf of the Visual Privacy Advisory Council and 3M Company, a leading manufacturer of privacy filters, found that in nearly nine out of ten attempts (88%), a white hat hacker was able to visually hack sensitive company information, such as employee access and login credentials, that could potentially put a company at risk for a much larger data breach. “In today’s world of spear phishing, it is important for data security professionals not to ignore low-tech threats, such as visual hacking,” said Larry Ponemon, chairman and founder of Ponemon Institute. “A hacker often only needs one piece of valuable information to unlock a large-scale data breach. This study exposes both how simple it is for a hacker to obtain sensitive data using only visual means, as well as employee carelessness with company information and lack of awareness to data security threats.” During the study, a computer security expert specialising in penetration testing, also known as a white hat hacker, entered the offices of eight USbased companies under the guise of a temporary or part-time worker. The white hat hacker attempted to visually hack sensitive or confidential information using three methods: walking through the office scouting for information in full-view on desks, screens and other indiscrete locations, taking a stack of business documents labelled as confidential and finally, using his smartphone to take a picture of confidential information displayed on a computer screen. All three of these tasks were completed in full-view of other office workers. The study revealed the following: • Visual hacking happens quickly: Companies can be visually hacked in a matter of minutes, with 45% occurring in less than 15 minutes and 63% of visual hacks occurring in less than a half hour. • Visual hacking generally goes unnoticed: In 70%
of incidences, a visual hacker was not stopped by employees – even when using a cell phone to take a picture of data displayed on a screen. In situations when a visual hacker was stopped by an employee, the hacker was still able to obtain an average of 2.8 pieces of company information (compared to 4.3 when not stopped). • Multiple pieces of sensitive information were able to be visually hacked. During the study, an average of five pieces of information were visually hacked per trial, including employee contact lists (63%), customer information (42%) and corporate financials (37%), employee access & login information/ credentials (37%) and information about employees (37%) during any given hack. • Unprotected devices pose the greatest opportunity for sensitive information to be visually hacked. 53% of information deemed sensitive (access or login credentials, confidential or classified documents, financial, accounting or budget information or attorney-client privileged documents) was gleaned by the visual hacker from the computer screen, greater than vacant desks (29%), printer bins (9%), copiers (6%) and fax machines (3%) combined. • Open floor plans pose a greater threat to visual privacy. In experimental trials completed in companies with an open-office layout, an average of 4.4 information types were visually hacked, while those conducted in a traditional office layout saw 3.0 information types visually hacked. • Unregulated functional areas were the most likely to experience a visual hack. On average, customer service roles consistently saw the highest number of visual hacks at 6.0, with communications at 5.6 and sales force management 5.2. Regulated functional areas like accounting & finance saw lower averages at 1.9, and legal at 1.0 experienced the least. • Visual hacking controls work. Companies that had relatively low visual hacking rates had more controls in place, such as mandatory training and awareness, clean desk policies document shredding process, suspicious reporting process, and employed the use of privacy filters, to protect against the threat than those without. For instance, in those companies that employed the use of privacy filters, 50% of trials saw three or less information types visually hacked while 43% of companies that did not use privacy filters saw four or more information types visually hacked.
Appointments NICE Systems Appoints New CFO NICE Systems has announced that Sarit Sagiv is joining the company as its Chief Financial Officer. Sagiv brings with her a wealth of experience in leading finance, operations and business activity for global, technology-based, publicly-traded companies. Sagiv will transition into her role over the next few weeks. Dafna Gruber, who recently announced her departure, will remain with the company during the transition period. Prior to joining NICE, Sagiv served as the CFO at Retalix Ltd., a leading global provider of software and services to retailers, where she played a key role in the company’s turnaround and acquisition by NCR Corporation. She is a Certified Public Accountant. “I’m happy to join during this exciting time at the company,” said Sagiv. “NICE has established a strong, leading brand and is rapidly expanding worldwide. I look forward to contributing to the future growth of company.”
Suntech Announces New President Wuxi Suntech Power Co., Ltd has announced that it has appointed Mr. (Victor) Haibo Xiong as President of Suntech, where he will be fully responsible for the management of the company. Xiong took the position after serving in various roles in the company for the past 10 years. Xiong brings a strong background and diverse experience in the solar industry value chain, successively serving as top management of Suntech and its affiliated companies. “Mr. Xiong has shown strong leadership in his roles at Suntech and I think his management expertise will be a great asset as we look to grow our company,” said Eric Luo, CEO of Shunfeng International Clean Energy Limited, who oversees Suntech’s international operations. “When we acquired Suntech, we knew it had the best PV modules in the industry. With Mr. Xiong’s leadership, we believe that the company will help drive our vision of becoming the largest integrated clean energy provider globally.” “It is a great honour to lead such a critical part of the Shunfeng group. Suntech ended 2014 with the strongest financial footing in the solar industry and passed the 8GW mark, shipping more than 30 million modules to date worldwide,” said Xiong.
February 2015 | News & Appointments
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SMEs Slow to Embrace Workplace Wellness Best Practices, Study Finds More than three quarters of US small businesses do not provide non-traditional seating options, despite health risks of extended periods of sitting still The role of workplace design on employee wellness has become an increasingly hot topic in corporate America, buoyed by studies that suggest sitting for extended periods of time, poor ergonomics in the workplace, and fatigue on the job can lead to potential health issues. However, a new poll by EMPLOYERS, America’s small business insurance specialist, finds that small businesses, which employ more than half of the American workforce, have been much slower to embrace the trend.
and wellbeing,” Quezada suggested. The EMPLOYERS poll looked at ergonomics in small business workplaces and found:
“The nature of work in this country has changed dramatically over the past two decades,” said David Quezada, Vice President of Loss Control at EMPLOYERS. “Jobs have become more sedentary and there are fewer opportunities for workers to get up and move around. Americans are also getting heavier, with some studies suggesting that 42% of the adult population could be obese by the year 2030. A growing amount of research is showing that increased time spent sitting and obesity are taking years off our lives.”
• More than one-quarter (29%) of small business owners surveyed said that their employees typically remain seated for more than an hour at a time.
“Small businesses should become more proactive about creating workplace environments and enforcing policies that promote employee health
• More than three-quarters (77%) of small businesses do not provide non-traditional seating options such as stand-up desks, treadmill desks or balance balls to employees, despite research that shows sitting for extended periods of time can lead to increased risks of heart disease, cancer and other ailments.
• Two out of five (42%) small businesses do not provide monitor stands to improve the posture and comfort of employees who primarily work on computers. Another trend that emerged in the EMPLOYERS survey is that small business employees do not take sufficient time away from work. Research has shown that vacations and other forms of restorative time off can reduce the risk of death and have other positive health effects. The EMPLOY-
ERS survey found: • Barely more than half of small business employees (55%) who primarily work on computers are encouraged to take routine breaks to rest their eyes. Not doing so can lead to eye strain or other injuries. • Nearly one quarter (23%) of hourly and salary employees often wait up to three or four hours before taking a break. • Two out of five (42%) small business employees do not use all of their allotted time off from work each year. • Nearly two-thirds of small business owners (65%) have worked at some point during their planned vacation time. “Creating a culture of workplace safety starts at the top,” Quezada said. “Business owners and other senior leaders need to set an example by offering healthier workplace environments and enforcing time off policies for themselves and their employees. Our poll found that often doesn’t happen.”
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Funds | The Evolution of the Administrator
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The Evolution of the Administrator The fund management industry is constantly changing – and with it, the duties of the fund administrator
But while their presence, and the important services they provide, are taken as given, the fund administrator’s role is a complex, challenging and ever-changing one, says Ron Geffner, Vice President of the Hedge Fund Association (HFA) and Partner of Financial Services at Sadis & Goldberg. “The fund administrator’s role has dramatically evolved in the past 10 years,” he says. “The administrator has become an essential service provider to the institutionalisation of every alternative investment fund manager seeking to attract institutional investors. In addition to working with the fund’s legal counsel, auditor and directors, the administrator’s front office services are client facing and can have a materially positive or negative impact each investors’ experience. “With the creation of web portals investors are able to safely and securely log in and review information in connection with their investment. Finally, administrators have also inserted themselves in the chain of regulatory and compliance related functions by assisting many clients in connection with the completion of data fields for regulatory filings, including Form PF.” Pat Lardner, Chief Executive Officer of the Irish Funds Industry Association, agrees that an administrator’s original remit – to reduce cost and ensure independence – has gradually widened in recent years. “It doesn’t matter what type of fund that is under administration here, the main elements of an administrator’s role include risk, regulatory and tax reporting obligations, the independent maintenance of NAV, books and records,” he says. “Supporting distribution efforts and communicating with investors is also an integral part of the role.”
The introduction of new fund structures, onshore vehicles, daily valuation and daily investor dealings have naturally meant that the services offered by administrators have changed too, he says. “The continued outsourcing by managers of back and middle office operations, reporting facilities and data integration allow managers to meet their requirements, through administrator services, to aggregate and consolidate the data that is consumed by the financial and tax regulators.” Today’s more stringent regulatory landscape means administrators are an increasingly vital part of running a fund, Lardner says – but they too have had to adapt. “With increased regulation and oversight impacting on all the relevant stakeholders in the value chain of an investment fund, there is a heightened pressure on fund managers to provide the real time aggregation of data. Fund administrators can provide this in an independent, transparent and structured way. “Reporting processes have evolved to daily and weekly demands depending on the regulatory structure. Service providers are able to manage the middle and back office responsibilities within the
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Managers and their investors value independent valuation and the transparency provided by administrators
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They’ve long been a vital part of the fund management industry, ensuring that boxes are ticked and costs are kept down.
complex regulatory frameworks while maintaining transparency and client protection as paramount. “Managers who used proprietary internal reporting now look to administrators to provide this for cost and transparency reasons. Administrators will usually provide these services to multiple clients, and in compliance with accepted industry standards. Technology has also played an increasing important role in the storing, manipulation, access and delivery of data and information to relevant stakeholders in a secure, integrated and prompt manner.” Lardner feels that fund administrators will continue to fill a skills gap in the fund management industry. “Some administrators now provide risk measurement and reporting services at a very granular level across a wide range of asset classes, covering many input variables,” he says. “The whole setup of an administrator is to be a supportive infrastructure. Reporting in real-time and aligning regulation – irrespective of product type – is not the area of expertise for a fund manager. Managers and their investors value independent valuation and the transparency provided by administrators. “Successful managers focus on making portfolio investment decisions and raising assets for their products. Managers benefit from outsourced administrative specialist providers that deliver scale and efficiencies, and improve the time it takes to get a product to market.”
Ron S. Geffner is Partner of Financial Services at Sadis & Goldberg LLP. Pat Lardner is CEO of the Irish Funds Industry Association.
The Evolution of the Administrator | Funds
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Funds | Hedge Fund of the Month
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Hedge Fund of the Month The Nordkinn Fixed Income Macro Fund aims to consistently generate stable absolute return over time and in all market environments by utilising a broad range of financial instruments to exploit desirable risks, neutralise undesirable risks and combining directional and non-directional positions. Ludvig Uddeholt, Partner and Head of Investor relations / Sales at Nordkinn Asset Management, told us more about the fund Nordkinn Asset Management AB was founded in 2012 as an independent Nordic asset management firm by a selection of absolute return specialists with outstanding track records within investment, risk and client management. Specialised in fixed income macro with a particular edge on the Nordic markets, the firm’s PMs have backgrounds from blue- chip organisations such as NBIM, Central bank of Norway, First Securities and Ericsson Group. As a single hedge fund manager seeking to capitalise on the institutional backgrounds of the seven partners, Nordkinn builds its business with the investor viewpoint in mind. “We strive for maximising absolute returns in all market environments as measured by consistent risk adjusted performance,” says Ludvig Uddeholt, Partner and Head of Investor relations / Sales at Nordkinn Asset Management. “Our investment philosophy resides in identifying fundamental fair values of assets across the developed economies and exploit when market dislocations and significant deviations from long-term fundamentals occur. “We do that by deploying a fixed income macro strategy, where we seek to express combinations of directional and non-directional views across developed markets and with a clear edge on Nordic markets. The team follows a strict “game
plan / tagging concept” inspired from behavioural finance. This concept brings discipline to our PMs in cutting losses in time and letting profits run, results in a clear asymmetry in losses vs profits over time, which in combination act as the fundament in our ambition to generate consistent absolute return. Our volatility target band corresponds to an annualised standard deviation of 4-8% over rolling 24 months.” The firm is a strong believer in absolute return as a concept, and, by extension, therefore hedge funds as an investment strategy – as it, if deployed correctly, can provide investors with clear diversification benefits in a portfolio context, says Uddeholt. “Entering into 2015 and onwards, this notion may prove even more evident when looking at hedge funds within fixed income in particular. Given the extremely low interest rate levels across developed markets, we believe that the challenging prospects for traditional long-only investing in fixed income going forward provides opportunities for hedge funds like Nordkinn to truly prove its worth for investors.” A significant development within the hedge fund industry currently is the accelerating trend for regulation, Uddeholt says. “A more regulated industry has its merits in securing confidence for the industry, yet is attached with risks for over-regulation, which needs to be properly ad-
dressed by both the authorities and the industry. We believe for instance that the European AIFM Directive provides Nordkinn with the combined benefit of remaining within the strict regulatory framework in Sweden and an ability to market ourselves towards professional investors across Europe through so-called passporting.” Uddeholt says Nordkinn’s team are strong believers in prioritising investors’ interests. “Our investor viewpoint is expressed in features such as equal ownership across our partners (with no bonus payments and partners reinvesting dividends in the fund with lock-ups), which we believe ensures an incentive structure truly aligned with the investors’ interest. “Regarding transparency, we believe that it is in Nordkinn’s interest that our investors truly understand what we do, thus we engage with our investors to ensure that they, from their perspective, receive full relevant transparency from us. Further, a team based investment process, integrated yet independent proactive risk management, onshore structure with strict FSA supervision, strong fund governance, are all elements that support in securing investors’ confidence in Nordkinn. In aggregate this, we hope, emphasises the uniqueness of Nordkinn as a modern institutional hedge fund.”
Hedge Fund of the Month | Funds
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Nordkinn says the Nordkinn Fixed Income Macro Fund, which has been named Best Nordic Fixed Income Fund in the Hedge Fund Awards, has a “Nordic edge”. This, explains Uddeholt, refers to the team’s local focus. “We seek to maximise our Nordic edge in our investment strategy, where being present in Stockholm and Oslo and attached to the local market information flow provides us with a clear competitive advantage,” Uddeholt says. “The strong backgrounds of the members of our investment team having successfully managed large portfolios for some of the most prominent institutions in the Nordic region is in the core of our investment skill-set. We are different from our global hedge fund peers in that we tend to approach the global markets from a Nordic perspective. “With the Nordic countries being open economies, our PMs have unique experiences and deep understanding of how the Nordic markets may relate to global markets. This does not only lead to Nordkinn having different exposures than those of our global peers (i.e. all equal higher allocation to Nordic markets) but also in Nordkinn having different underlying rationale/analysis behind our positions outside the Nordic region compared with our global peers.” Asked whether working in the Nordic region presents any specific challenges or opportunities that may not necessarily apply to firms in other parts of the world, Uddeholt says all fixed income hedge funds globally are faced with the same foray of challenges/opportunities in current market environment. “Specifically, however, Nordkinn sees ample opportunities in the wake of the ever decreasing level of proprietary trading from banks across Europe. In a Nordic context, less market participants are seeking to fill the gaps following market dislocations, which is something Nordkinn aspire to capitalise upon through the edge and skill-set of our investment team.” Over the coming year, Nordkinn will continue to focus on building its business further. “We’ll do this by means of remaining true to what we are and by focusing on consistent generation of risk-adjusted performance for our investors,” says Uddeholt. “This we believe are two critical components in keeping and in further expanding the investor’s confidence in Nordkinn.”
Address: Nordkinn Asset Management Parkveien 57 0262 Oslo, Norway Tel: +47 21 68 32 00 Email: post@nordkinnam.no Web: www.nordkinn.se
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Rooted in Tradition, Growing through Success | Wealth Corner
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Rooted in Tradition, Growing through Success For more than 25 years, Burt Wealth Advisors has served as a trusted partner of high net worth individuals and families wishing to protect and grow their assets As a fee-only independent advisor and fiduciary, we take an objective and proactive approach to enhance our clients’ financial well-being. Our Wealth Management discipline combines financial planning and investment management with tax, estate and business planning. Our talented and experienced staff is dedicated to providing the highest level of service to our clients. Our clients range from those who are actively working as business owners, executives, teachers, etc., to those who are partially or fully retired. Having accumulated over $1 million in investable assets they are looking for an experienced advisor to partner with in managing those assets. We focus on meeting client needs with a team approach, where every client has both a primary and secondary advisor. We maintain a low client/ advisor ratio to insure that we are never too busy to address any question or concern a client may have. We also regularly provide informative communications to our clients that both educate and enhance their understanding of the financial markets and their investments. We employ a conservative, balanced, and disciplined approach to investing that is customised to each client’s needs. Utilising a detailed and diversified asset allocation, our investment committee meets regularly to make investment decisions that are research based and strategic in nature. The collective experience of committee members helps drive the tactical asset allocation models that are designed to meet a range of client objectives. We offer detailed plans to help our clients reach their financial goals. In many cases, retirement planning is the central concern, but we can also help our clients with tax minimisation, estate planning, charitable planning, educational planning, business planning and insurance planning. www.burtwealthadvisors.com
Wealth Corner | The Adviser’s Advisor
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The Adviser’s Advisor MarketCounsel, which recently enjoyed success in our Wealth & Money Management Awards, is the leading business and regulatory compliance consulting firm to the America’s preeminent entrepreneurial investment advisors. We spoke to Brian Hamburger, CEO, to find out more about the firm and its approach
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arketCounsel is strategic counsel, implementation expert and leveraged outsourced provider to leading registered investment advisors (RIAs). The firm’s clients are entrepreneurs navigating their businesses within a highly regulated environment; the industry’s regulators have a substantial impact on businesses working in the wealth and money management arena. MarketCounsel works tirelessly to stay up to speed as to what they are thinking, talking about and doing, says Brian Hamburger, CEO. “It is our job to keep our clients ahead of the curve while quieting unnecessary noise. Our clients have a job to do – serve their clients as true fiduciaries – and our role is to protect the blind side, and help them to take care of all other critical areas pertaining to running their businesses effectively.” Big or small, RIAs set themselves apart by a steadfast determination to serve their clients and hold themselves to the fiduciary standard of care – that means clients’ interests, first and always. “To achieve this, they become something far more than they’re being paid for – advocates and champions for their clients,” Hamburger
says. “They must innovate. They must be product agnostic and unmotivated by securing benefits for themselves – rather, what will secure their clients financial futures? This is what makes a good business but it’s also what makes good people. And we are honoured to work with them.” MarketCounsel, with a front row seat to how the best advisers engage with and serve their most demanding clients, it committed to adhering to the same impeccable standards of client care, says Hamburger. “We value and strive to support our clients completely, every day – and then set out to anticipate their every need.” Asked what sets MarketCounsel apart from its competitors and peers, Hamburger says, “I may be the least qualified person to answer this question since we don’t pay attention to what competitors in the space are doing. We have an unrelenting focus on doing the best possible work for our clients within an extraordinary service platform. “We operate as true champions of financial advisory independence based on our long-term belief that what’s good for independent RIAs is good for those that steadfastly serve them. I know that we face
competition in different roles and functions we provide and I think they fuel our endless innovation.” MarketCounsel’s working culture exists within the space between its core values, says Hamburger: exercise sound judgment; make a substantial impact; drive continuous improvement; go forth with intense passion; and set out to win every day. It’s an approach that recently saw MarketCounsel achieve success in our Wealth & Money Management Awards, being named Best Regulatory Compliance Consultants - USA and Best Investment Management Conference, for the MarketCounsel Summit. “MarketCounsel is proud to receive this award, but we recognise that our win is really on behalf of the exceptional independent RIAs we serve,” Hamburger says. “We are grateful for the recognition, but more importantly, to have found ourselves in the middle of this amazing community of independent advisors,” he continues. “MarketCounsel is devoted to continuous improvement, innovation and advocacy.”
The Adviser’s Advisor | Wealth Corner
19 The money management industry Hamburger says there is currently a healthy dialogue in the money management industry about automation and efficiencies; debate over the confusion among brokers and advisers; discussion of a uniform fiduciary standard of care and how to improve investment adviser examinations; the issues of cybersecurity and identity theft - the increasingly urgent need to protect clients from hackers; good evolution on succession planning; and the ever-growing trend of the best advisers continuing to break from the shackles of wirehouse employment. Asked which of these developments is set to have the biggest change on MarketCounsel and the industry as a whole, Hamburger says one issue in particular deserves to be highlighted: the elevation of independent investment advice as a separate and distinct utility within the securities industry. “Consumers or investors still do not get understand the distinction between an RIA and a broker,” he says. “There is a still a prevailing fear of big banks and a palpable resignation to the fact that this may be ‘as good as it’s going to get.’ The first step is to establish some roots of understanding of the differences – the next is to map out a clear path to engagement with the public. So many independent investment advisers spend all their time talking about what makes them independent. But the commonality in cause between them unites them in far more significant ways.” Looking ahead MarketCounsel recently hosted one of the most talked about conferences in the industry, the MarketCounsel Summit in Las Vegas. Mark Cuban and Christopher Cox debated the role and relevance of the SEC, Tony Robbins opened with a message for the advisers in attendance, heads of the top custodians spoke, as well as a veritable who’s who of industry leaders. CNBC covered the event live along with over twenty media outlets. And the future for MarketCounsel appears to be no less exciting – although Hamburger is staying tight-lipped as to what developments are in the pipeline. “Stay tuned!” he says.
Address: 61 W. Palisade Avenue, Englewood, NJ 07631 USA Tel: +1 201 705 1200 Web: www.marketcounsel.com
Banking Zone | Regulating Bitcoin
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Regulating Bitcoin Leading tech regulatory lawyer, Chris Finney, partner at Cooley LLP in London, asks: Will the UK and Europe begin to regulate Bitcoins and other virtual, digital and crypto-currencies in 2015?
Regulating Bitcoin | Banking Zone
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Banking Zone | Regulating Bitcoin
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On 4 July 2014, the EBA issued a formal Opinion which: • Identified 70 virtual currency related risks; • Argued that, in the near-term: • The European legislature should consider imposing Anti-Money Laundering rules on virtual currency exchanges; and • European regulators should encourage banks, payment service providers and e-money issuers not to buy, hold or sell virtual currencies; and •Invited the European legislature to develop a comprehensive set of European regulations to mitigate the risks associated with virtual currencies over the medium and longer term. The UK has five potential virtual currency regulators: the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority, the Payment Systems Regulator, and HM Treasury. But: • The Bank does not believe that “Digital currencies … pose a material risk to monetary or
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Cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned. Also, when using virtual currency for commercial transactions, consumers are not protected by any refund rights under EU law
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n 13 December 2013, the European Banking Authority warned the public about the risks of buying, holding and trading virtual currencies: “consumers are not protected through regulation when using virtual currencies… and may be at risk of losing their money”. The EBA added that, “the ‘digital wallets’ containing consumers’ virtual currency… are not impervious to hackers. Cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned. Also, when using virtual currency for commercial transactions, consumers are not protected by any refund rights under EU law”.
financial stability in the United Kingdom”, so it’s not proposing to do anything for now; • The PRA has not shown any interest in virtual currencies – a position that might be reasonable (it works closely with the Bank of England), but is still surprising: the EBA expressly invited it (as a European regulator) to encourage the banks it regulates not to buy, hold or sell virtual currencies, some are already doing so, and it seems to have chosen not to intervene (at least for now); • Although the FCA republished the EBA’s warning, and it’s demonstrated an interest in FinTech (for example, it’s established an “Innovation Hub” to help innovators develop new FinTech products and services in a way that’s FCA rule compliant), it hasn’t said or done anything so far which suggests that it will seek to persuade e-money issuers not to buy, hold or sell virtual currencies; nor has it said anything which suggests that it wants to regulate virtual currencies; • Whilst the PSR has said that it will regulate the largest and most important payment systems, including BACS, CHAPS, and LINK, it hasn’t said anything about virtual, digital or crypto-currencies so far; and • Although HM Treasury has published a “Digital currencies: call for information”, which closed in early December 2014, and is part of “a major programme of work looking into digital currencies… with a particular focus on whether they should be regulated”, it hasn’t said when or how it will respond to the feedback it has received (if at all). At first blush, this seems to suggest that every European virtual currency using consumer is at risk, and that UK consumers may be left at risk for longer than those in some other European countries. If that’s right, it may also be regarded as strange:
Regulating Bitcoin | Banking Zone
23 be stifled, however much the opposite effect is desired (the UK’s recently regulated crowdfunding and peer-to-peer lending sector provides useful evidence of this). A “light touch regime” could also be a problem in and of itself. “Light touch” still has unfortunate undertones when heard by the British tin ear; and, if anything goes wrong, consumers will be scandalised by how little the government and “its regulators” did to protect them, especially when the EBA has so clearly identified so many risks, and invited them to act. So: will the UK and Europe begin to regulate virtual currencies in a substantial way in 2015? The answer in each case is “almost certainly not”. Recognising the complexity of the issues, the EBA has stopped short of using its formal recommendation power to 1) effectively compel the European Member States to impose their money laundering rules on virtual currency exchanges; and 2) pro-actively “discourage” banks, payment service providers and e-money issuers from buying, holding and selling virtual currencies. It is therefore up to the European Member States and the European legislature to decide what (if anything) to do, when there are plenty of other issues clamoring for their attention. Whilst the UK regulatory instinct is likely to be to regulate (if it can), regulation will be difficult to justify at this stage: • On cost benefit grounds - the Bank of England believes that Bitcoin is the most popular virtual currency in the UK, by far. Even so, there are only £60m worth of Bitcoins circulating in the UK economy at present (this represents less than 0.1% of the Sterling notes and coins in issue, and less than 0.003% of (so called) broad money); only 20,000 individuals / companies are using Bitcoin at present, and only 300 Bitcoin transactions occur each day; and • Because regulation could easily undermine the Treasury’s very determined FinTech innovation agenda. For these reasons, and others, the UK is therefore unlikely to want to begin to regulate virtual currencies in a material way in 2015.
the UK Digital Currency Association has expressly invited HM Treasury to develop and impose a light touch regulatory regime on the virtual currency sector, because that would provide certainty and instil confidence in virtual currencies, without stifling innovation. From a regulator’s perspective that looks like an “open goal” so what’s not to like?
Unfortunately, the answer is “plenty”. The regulatory issues are hideously complex, so it could easily take several years to develop an appropriate regime. It would be all too easy (for example) to regulate virtual currency exchanges and drive virtual currency business into the unregulated sector or off-shore. The law of unintended consequences probably also means that innovation will
Even so, we should probably expect some “tinkering around the edges”. Some examples: the regulators may want look for a way to apply the UK’s anti-money laundering rules to virtual currency exchanges (if they can do it without distorting the market). The FCA may also want to look at the application of its client money rules - neither the European Banking Authority nor the Bank of England regards virtual currencies as “money” today. There is therefore some significant doubt about whether the FCA’s client money rules apply or not. That is a gap the FCA could easily close in the near-term, if it thought it was appropriate to do so. At some stage, the FCA may also want to consider whether virtual currencies should be covered by the Financial Services Compensation Scheme – although that may be a step too far for now.
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Relax | A Glittering Experience
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A Glittering Experience The Excelsior Hotel Gallia is a stunning reflection of Milan’s timeless elegance
A Glittering Experience | Relax
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Relax | A Glittering Experience
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The hotel has recently reopened following an extensive refurbishment. Led by the award-winning Milan-based Studio Marco Piva, the architecture and interior design project marries contemporary aesthetics with the hotel’s original Belle Epoque architectural style. The renowned design firm also curated the unique collection of more than 500 art pieces, including paintings, sculptures and pictures, specifically for Excelsior Hotel Gallia. The interiors feature distinct references to the stylish Milanese lifestyle and timeless elegance of the Art Deco era, brought to life by unique furnishings that have been exclusively created by Italian designers and craftsmen. Light dominates the spaces throughout the hotel through a play between natural and artificial lights, bringing to life its glittering style – particularly the beautiful and immense glass façade. Specially commissioned light installations and lamps, including the custom “Gold Step Lamp” installation for the monumental staircase in the historic building and a dazzling waterfall of 180 light cylinders illuminating the heart of the eight-storey stairwell were created for Excelsior Hotel Gallia by world-renowned glass artisans. The impressive historical lobby pays tribute to outstanding Milanese architectures of the 1930s such as La Scala Theatre, Vittorio Emanuele Gallery and Villa Necchi Campiglio. Further along the ground floor, guests can relax in the Gallia lounge where the library and Cigar Room offer a warm ambience amidst silkscreened glass with patterns inspired by the Art Deco era. Excelsior Hotel Gallia comprises two main buildings – the fully restored historic palace and a modern new wing with a façade that resembles a delicate steel and glass curtain. The striking juxtaposition is inspired by the hotel’s luminous past and the emerging skyline of the Porta Nuova area, the up-and-coming city centre of Milan.
Buonanotte Excelsior Hotel Gallia features 235 luxurious guest rooms, including 53 suites, of which the most opulent is the 1,000sqm Katara Suite, one of the largest presidential suites in Italy. Situated on the seventh floor, the Katara Suite offers the epitome of opulent luxury with two terraces, four bedrooms and a private spa.
Atelier Suites – located in the historic palace, these are designed to recall the mood of creative workshops; Signature Suites – conceived as art galleries with theatrical use of illumination, colours and artwork; and Executive Suites – inspired by the intriguing and elegant atmosphere of Milanese lofts. Delizioso
The hotel’s two-bedroom Gallia Suite is conceived as a sophisticated private residence with luxurious tasteful finishings made from Carrara statuario marble, lacquered wood and leather. One of the outstanding features of the suite is the beautiful loggia with historical columns and statues leading guests to an inspiring view of the renewed Central Station and the magnificent square.
The destination roof-top bar and signature restaurant on the seventh floor offers a stunning panoramic view of the city alongside remarkable epicurean experiences and classic Italian hospitality. The restaurant and bar on the ground floor is designed in a contemporary reinterpretation of the 1930s. The hotel also features a sophisticated wine cellar ideal for an intimate lunch, aperitif or show cooking for small groups.
The other 51 suites revolve around five distinct themes: Design Suites – five of which are dedicated to a renowned Milanese designer or architect, namely Vico Magistretti, Achille Castiglioni, Giò Ponti, Luigi Caccia Dominioni and Franco Albini, and feature some of their most iconic creations; Art Suites – situated in the new building, these overlook the square and feature a large sliding panel with photos of the hotel’s historic façade;
Guests will be able to enjoy and indulge in the spa which is the largest hotel spa in Milan spanning over 1000sqm across the sixth and seventh floors. Providing a relaxing ambiance with natural daylight, the spa offers a wide range of beauty and wellness rituals as well as a fitness area with the latest equipment from Artis by Technogym.
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The interiors feature distinct references to the stylish Milanese lifestyle and timeless elegance of the Art Deco era, brought to life by unique furnishings by Italian designers and craftsmen
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Excelsior Hotel Gallia, in the heart of the city’s rapidly emerging Porta Nuova district, is a glittering reflection of Milan’s rich culture, sophisticated style and vibrant scene. The historic hotel has been one of the most prestigious hotels in Milan since 1932 when it first opened as “Palace Gallia”.
Excelsior Hotel Gallia also features an indoor “Promenade”, a charming 100-metre walkway with small boutique windows from the famous Montenapoleone Street, the heart of the Milanese fashion district. The Promenade connects the historical hall with the main hall of the new building. The ground floor of the new building is dedicated to meetings and conferences, featuring 12 meeting rooms spanning across 1000sqm and 700sqm of foyer space including a grand ballroom that can host up to 400 people. The hotel’s historical Cupola on the seventh floor houses an exclusive multifunctional room equipped with the latest in audio-visual technology and retractable seats that allow the room to be easily transformed, making it a spectacular and unique venue for hosting celebrations and events such as private concerts, weddings and movie screenings.
For more info...
www.excelsiorhotelgallia.com
All this adds up to a truly glittering experience – one which is worthy of one of the world’s chicest cities.
A Glittering Experience | Relax
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