wealth management
SPECIAL FEATURE
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CASE STUDY
WINTER 13
Advising family businesses – what does it really mean? Sue Knight, Birmingham-based director in Grant Thornton’s entrepreneurial private client team, explains why one size definitely doesn’t fit all when working with family businesses Family businesses are a distinct area of knowledge and practice. As a result we have developed a similarly distinctive approach to advising family businesses, as we believe it is impossible to detach the interests and needs of a family from their business and advise them completely separately. However, blending these separate interests can pose some interesting challenges and this is particularly evident with succession planning and structuring family wealth. There are a number of different stakeholders in a family business and this creates the potential for conflict and inertia in decision making. We work with families to help manage these conflicts and avoid the inertia which tends to set in when things get just a little too difficult or uncomfortable to deal with. Our aim is always to help families get to the end of the succession planning process with their relationships intact and often with greater respect for and understanding of each other. But this is far from easy and requires advisers to have great coaching and negotiation skills. This is where our approach differs from many other professionals as we are able to bring in trained coaches to help guide families through what can sometimes be very turbulent waters. There are four stages in the business succession planning process and if any stage is ignored or not well managed, the transition is likely to falter or fail. The need to plan can be likened to an incessant drumbeat that goes on in the background, quietly at first but eventually building to an extent it cannot be ignored. Whilst some families at this stage opt for a DIY approach, perhaps because
SPECIAL FEATURE | WINTER 13
Sue Knight, director, Grant Thornton entrepreneurial private client
Our aim is always to help families get to the end of the succession planning process with their relationships intact it enables them to remain in charge of the process and the timetable for change, eventually something happens that motivates them to seek external help and advice. Once it is accepted and understood that something needs to happen the family can move on to exploring the options. There can be a temptation for advisers to jump straight in with a solution at this stage but this should be resisted
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as it narrows down the opportunity to help the family make some very important decisions. The exploration stage is perhaps the most difficult as with all the different family interests there is the potential for chaos, given the cauldron of opinions and emotions. Working with qualified coaches ensures that views are teased out into the open, beliefs and opinions discussed and when necessary, challenged. We assess the willingness and ability of the family and business to change, as succession involves change – major change – so unless key decision makers are committed to the process, it will fail. Options are discussed and we facilitate this exploration, helping the family come to a consensus as to best strategy for them. This might not be the perfect solution in everyone’s eyes as they might not agree on every aspect but importantly, they do not disagree strongly enough to want to sabotage the plan. We have also found that a family is far more likely to implement a strategy when they feel part of the team that has figured out what needs to be done. Once a choice is made, an effective implementation plan needs to be produced and completed. Using our extensive knowledge of family businesses, we have refined our approach to enable families to develop their own solutions to their own unique issues, helping them manage the relationships between the family and the business in a way that minimises conflict and maximises the value that only a family working together can deliver.
www.grant-thornton.co.uk sue.a.knight@uk.gt.com
WEALTH MANAGEMENT
WINTER 13
OVERVIEW
Partnership model challenges the big brands Steve Hollis, chairman of Sorbus Partners’ advisory board, opens our look at the wealth management sector, with a personal view of its evolution It’s been remarkable just how much the wealth management industry has changed in a relatively short period, since the world’s developed economies were torn asunder by the financial crisis. If you went back just ten years, there was an implicit assumption that its products and services were only there for the benefit of an affluent elite. Nowadays though, the basic principles of wealth management can be applied to everyone; as people look to make the very most of their finances and to plan for the challenges ahead - especially during a time of austerity. We had a roaring bull market for more than ten years, and as property prices rocketed, many people who would once not have considered seeking financial advice suddenly found that they, and their families, were holding significant assets. At the upper end of wealth management, it may still be about devising sophisticated and complex investment strategies for high net-worth individuals, but there is a vast new audience of potential customers who are looking for guidance about how best to manage their precious wealth. Equally, the providers of products and services have to demonstrate that they understand the new financial landscape, and to me, convincing people of their trust and integrity is as important as the returns which they suggest are available. There are significant challenges ahead, for the major financial institutions as much as the smaller partnerships, and the proof of how they have adapted comes in their pricing. I’ve always preferred the fixed-fee models which are commonplace in the United States, rather than the traditional commission-style
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Steve Hollis, Chairman of Sorbus Partners’ advisory board.
The current challenges will be good for the wealth management industry, and its customers, because they will shake up the long-established major brands approach, as I have never been convinced that adding the same percentage of charges to a £100,000 portfolio as to a £1 million portfolio is either fair or logical. My instinct is also to look for a business model based on a partnership ethos, having spent so
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many years working within such a structure whilst at KPMG, and seen how the success which such a mindset can deliver. Everyone who has spent time within financial services will have their preferred providers, and I must admit I like the way the Wesleyan works, for example. I also believe that genuinely independent advice is essential. There’s no denying that the giant institutions are capable of delivering good returns for their customers, but I still don’t believe people can be best served if their advisers are only able to offer proprietary products. Saying that, I do expect the current challenges will be good for the wealth management industry, and its customers, because they will shake up the long-established major brands to compete more effectively with the newer players, and the people to benefit most will be the customers. As the providers of products look to deliver strong returns for a broader range of clients, they’ll have to increase their service levels and evolve new ways of working. For example, the long-held belief that quality advice can only be provided from a handful of major cities within a global environment is now shown to have been a myth. You only have to look at Warren Buffett, the world’s most successful long-term corporate investor and stock picker. When he wanted to establish his company HQ, he went to Omaha in Nebraska, because he wanted to get away from the major financial centres. I’m not suggesting everyone in wealth management will follow his example, but I do believe we’ll see more spin-outs from the big financial brands and the old ‘location’ model will gradually start to fade from favour. n
SPECIAL FEATURE | WINTER 13
OVERVIEW
WINTER 13
LET’s see greater transparency With growing calls for more openess in fee structures, we catch up with the debate How effectively firms and advisers within the wealth management industry inform clients about fees and charging structures has been a debating point for decades. It’s well over two years since MyPrivateBanking suggested that only 22% of the world’s largest wealth management bodies provided specific information about their fees, on their web sites or in their ‘reporting’ documents. It also claimed that another 35% of private banks and wealth managers only referred to costs and fees in general terms. MyPrivateBanking did single out Deutsche Bank as a notable exception though, highlighting its decision to publish a comprehensive list of its wealth management fees on its public-facing web site. Criticisms of many providers’ opaque fee structures have also long been made by commentators in the personal finance sector and the media. However, the issue remained little more than an interesting topic of conversation whilst the Financial Services Authority was in charge of monitoring and regulation. That changed though when its successor, the Financial Conduct Authority (FCA) was created, not least to take a much more proactive role in its relationships with the City and the myriad players within the financial services sector. It wasn’t one of the first issues addressed by the new watchdog, but as October made way for November, the FCA’s chief executive, Martin Wheatley, used his organisation’s 2013 asset management conference to remind the City that greater transparency was essential. Wheatley told his audience that the global wealth management industry was at a crossroads and that issues surrounding charges and fees had to be addressed.
SPECIAL FEATURE | WINTER 13
“We need to be confident that managers are putting value for money, good returns and transparency at the heart of how they do business with clients,” he said. “Then, the discussion is about how best to get there. Is evolution enough or do we collectively need to be more revolutionary?” Wheatley’s language alone was enough to take the subject to the front page of the following day’s Financial Times, not surprisingly given that the UK’s asset management sector includes 2,100 firms, employing some 29,000 people and holding £5.2 trillion of assets. He also ensured no-one could imagine his speech was simply rhetoric, by unveiling consultations with asset managers to discuss how the current regulations on dealing
FCA’s Martin Wheatley.
transparency and accountability to our customers, and we will explore all possible avenues to make sure we do just that,” he said. There is now serious debate within the wealth management industry, as to whether change should be seen to come from within, rather than being imposed from outside. There are suggestions that a new standard charging methodology could be introduced,
We need to be confident that managers are putting value for money, good returns and transparency at the heart of how they do business with clients commissions, fees and charges - introduced seven long years back - could be updated. The FCA has also begun a review of earlier work looking at potential conflicts of interest within the asset management sector. The impact of Wheatley’s speech was then strengthened by his opposite number at the Investment Management Association. Its chief executive, Daniel Godfrey, revealed that his body had already been reviewing the same issues, and expected to report its conclusions early in 2014. “Our clear objective is to ensure that we deliver the greatest possible value for money,
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based on what are known as total account costs (TAC). Rathbones Investment Management is one of that concept’s biggest supporters, saying it would create deductions which can be very easily understood. “An industry-standard TAC allows advisers and clients to compare wealth managers more easily, which would inevitably drive down costs,” said a Rathbones’ spokesman. “That would be good for the UK asset management’s industry’s global competitiveness. More importantly, it would be good for clients.” n
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WINTER 13
insight
A global mindset is essential Charlotte Watson, chief investment officer at Cheltenham-based Attivo Group, explains the merit of taking a global approach to equity investment I understand why some people still prefer only UK-based stocks in their portfolio, but I believe there are investment ‘stories’ to be found everywhere, and that limiting your shares by geography limits your potential return. We’re constantly monitoring a wide range of data from each country, but equally, investment can’t just be about identifying countries which tick all the boxes, it’s more important to observe and analyse where each
particular country is going. Assessing how seriously corporate governance issues are taken is vital, especially when you are looking outside the Western bloc. Look at the strength and experience of a company’s management, its strategy, its debt levels, how its products appeal to certain segments of the market, and much more. It’s not just about identifying a trend, you’ve always got to see the bigger picture and to
understand all the influences which will impact on whichever stock you choose. Buying opportunities often occur quickly, so it’s essential that you have a solid and current data-base immediately to hand, so assessments can be made in real-time. Some clients prefer to use one of our model portfolios, others want a bespoke solution, and might want a particular focus; perhaps luxury goods, or maybe small-cap corporates from the US. However, whatever decisions an investor ultimately makes, it’s vital that they are comfortable with the long-term. It’s not about the size of your portfolio, but about realising that equity investment is never for the moment. n
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SPECIAL FEATURE | WINTER 13
A Lasting Legacy
Meridian SOLICITORS
Meridian Private Client LLP
Our specialist law firm is entirely focused on helping clients to protect their wealthwww.meridianprivateclient.co.uk through estate planning and long-term tax strategies. Our clients include those who are internationally mobile. We work in partnership with our clients and their other professional advisers to deliver creative and practical solutions that will help secure the financial future of entrepreneurs and high net worth individuals and their families. In addition to long-term tax planning, our services include advice on wills and trusts, the administration of estates and contentious probate and trust disputes.
info@meridianprivateclient.co.uk Wood Rydings Court, Packington Lane, Little Packington, Warwickshire CV7 7HN T: 01675 442430
www.meridianprivateclient.co.uk
WINTER 13
COMPANY VIEWPOINT
Inheritance tax threat emphasises need for estate planning Philip Harrison, partner at West Midlands-based Meridian Private Client LLP, solicitors specialising in estate and long-term tax planning. The inheritance tax threshold (‘IHT’) or nil rate band (‘NRB’) is to be frozen at £325,000 until at least 2018. Though it will be reviewed then, there is no guarantee that it will be increased. The current threshold has not changed since 2009 and inflation has dragged many more estates into the IHT ‘net’. This trend will continue and the £3 billion a year currently collected from IHT will rise dramatically. Estate planning to minimise the impact of IHT starts with the structuring of the will. Married couples and civil partners benefit from an IHT exemption which allows the assets to transfer tax-free on first death. Then, on second death, the survivor may have two NRBs to set against the value of his or her estate, increasing the assets passing free of IHT to £650,000. However, leaving everything to the survivor on the first death can ‘waste’ available reliefs. In particular, business assets such as shares in unlisted trading companies can attract 100 per cent relief from IHT, termed business property relief (‘BPR’). As long as the stake in the trading business has been owned for two years, full relief from tax can be obtained on the passing of the owner or shareholder. Businesses should be monitored to ensure that potential eligibility for BPR is not threatened. For example, BPR could be impaired or lost if the business were to undertake substantial non-trading investments, or have a surplus cash ‘mountain’. The problem may be avoidable through restructuring but early attention to the problem and regular reviews are essential. On the death of the shareholder or owner, the business asset will pass free of IHT regardless of who inherits. Therefore, leaving the asset to the surviving spouse or civil partner can ‘waste’ the
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Philip Harrison (right) with Drummond Kerr, both partners at Meridian Private Client LLP.
Professional advice on tax saving and asset protection is vital relief if it is subsequently sold because, after sale, the proceeds no longer attract BPR on the passing of the second partner. However, the benefit of the relief can be maximised by leaving the business asset in trust on the first death so that the proceeds of sale are outside the survivor’s estate but can still be used to benefit the survivor.
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Lifetime planning should also be considered. For example, BPR can be ‘banked’ by transferring shares into trust before sale, which will result in loss of relief. Through careful planning the potential loss of capital gains tax ‘entrepreneurs’ relief’ (which gives a 10% tax rate rather than the usual 28%) can be mitigated, particularly in family companies. Even if you don’t have business assets, there are other planning arrangements which can, over time, reduce the eventual IHT bill, maximising the value to your family in the long term. For instance, outright lifetime gifts to children or grandchildren are currently free of IHT provided the donor survives for seven years. However, large outright gifts can be unattractive in asset protection terms, and trusts are often preferable. IHT changes in 2006 made it more difficult to transfer large values into trust and careful planning is required to maximise the remaining opportunities. While there is no suggestion that any specific reliefs or exemptions are under threat, the need to fully utilise them has never been greater. Professional advice on tax saving and asset protection is vital. philip.harrison@meridianprivateclient.co.uk
Wood Rydings Court, Packington Lane, Little Packington, Warwickshire, CV7 7HN T: 01675 442 430
SPECIAL FEATURE | WINTER 13
INSIGHT
WINTER 13
shop around before you choose Ian Halstead looks at the crucial steps to take when devising a wealth management strategy Seduction is usually the greatest danger you’ll encounter; regardless of wealth, experience of the investment sector, or awareness about the products or potential options on offer. If you don’t take care to beware of the power of eye appeal, it’s easy to be impressed by a glossy slickly-worded brochure, a glitzy office or even a car park full of expensive metal. Over the decades, there’ve been sufficient cautionary tales about wealth management strategies which go wrong for lack of research and planning, but it can still be easy to be sidetracked from your chosen course. Just as you wouldn’t buy the first eye-catching property you spotted, as you passed by the first estate agency you saw when househunting, taking your time about identifying
your wealth management advisor is crucial. Ultimately, you have sole accountability for the investment decisions you make, whether it’s a single product or a sophisticated portfolio, so make sure you take a range of opinions as you search for an advisor you can trust. Even before you start your research, set your ground rules for what you want to achieve and what level of funding you can reasonably commit.You might want to start thinking ahead about early retirement, to ensure that your mortgage is safely paid off, or to create a complex multi-tiered strategy including a global equity and bond portfolio. Regardless of your targets though, assessing your advisor’s competence, expertise and track record is as important as understanding
their fee structure. And for anyone imagining that they’re too astute and worldly-wise to be caught out by tricksters, putting ‘Barlow Clowes’ into a search engine will prove instructive. When you’ve established what you want to achieve, and settled down with an adviser with whom you feel comfortable, the work has only just begun though. No matter how many instances of successful wealth management for other clients you might hear about, don’t forget that your asset allocation decisions must be fine-tuned to your precise needs. If you’re happiest with a moderate approach to risk, keep it. Don’t be dazzled by the theoretical returns which might be available with an acceptance of greater levels of uncertainty. All good advisors will spend a significant time building up your risk profile, understanding your tolerances and identifying your medium and long-term requirements for cash flow.
Putting your trust in SGH Martineau Lesley Davis heads the highly-praised private client team at Birmingham-based SGH Martineau. The team, which sits within the private capital group headed by the well-known family lawyer Mary Kaye, handles work across the spectrum of private client work; including trusts, estates planning, wills and charities, at a regional, national and international level. Lesley is regularly lauded for her skills in trust work and tax planning. The 2014 edition of Chambers & Partners - regarded as the legal industry’s bible - was fulsome in its praise, describing her as ‘a charming and efficient partner with a national reputation for excellence’ and ‘a talented lawyer with excellent relationship-building skills, which she blends perfectly with her knowledge of the law.’ Martineau’s team has a combined experience in private client work of more than 170 years, has been given a ‘Number One’ ranking for twelve successive years in the Legal 500 - which says the firm has ‘an outstanding reputation in this (private client) field’ - and includes members of the Society of Trust and Estate Practitioners, the Law Society Private Client Section, Solicitors for the Elderly, and the Country Land Owners and Business Association.
SPECIAL FEATURE | WINTER 13
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WINTER 13
INSIGHT
Creativity and quality at Grant Thornton Dan Hartland is a tax partner in Grant Thornton’s Birmingham office, heading its highly-rated entrepreneurial and private client team. He joined in 2001, training in both the corporate and personal tax advisory departments, including a stint in the national tax office, before being made a partner in 2008. He has built a reputation as a trusted adviser to a range of wealthy clients and private companies with complex, often with multi-jurisdictional and multi-tax issues, for providing clear, creative and commercial advice. Last year, Dan was included in Tax Journal’s ‘40 under 40’ based on client and colleague references, including: ‘Dan’s work is valued at the highest level. He places quality at the fore of everything he does, which resonates strongly within his team.’ ‘Dan has a broad technical expertise and is one of the most creative tax practitioners I know. Many tax people are technically excellent, but the added ability to think outside the box is invaluable when seeking to solve complex client problems.’ This year, two of his team won similar plaudits. Manager Mike Hyland was among Private Client Practitioner’s ‘35 under 35’, and director Sue Knight was the only Birmingham-based professional in Tax Journal’s ‘40 under 40’.
However, once your profile has been researched and agreed, do then open your mind to all options which your adviser puts forward. It’s likely that they’ll suggest asset classes you’d never previously considered, but do take time to reflect on their potential merit, rather than making a quick and instinctive decision. Equally, if you’re looking to build a balanced equity portfolio, don’t rule out stocks which are listed in what you might consider unlikely countries, or companies in sectors you know little or nothing about. The key to a successful wealth management strategy is developing a genuine two-way relationship with your advisor, so once you’re satisfied that they do have solid knowledge about the options they suggest, don’t shy away without giving their ideas proper thought. If eventually, you really are happiest with a portfolio which is purely based on UK stocks, then fine, but don’t blanch if someone suggests considering a firm selling luxury goods in India, or a casino operator in SouthEast Asia. Equally, you do need to have advisers who can access the latest market data from across the globe, and identify investment opportunities before they become evident to all. Stock-picking overseas, particularly in niche
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sectors, may be somewhere between an art and a science, but it’s not something to rule out without serious consideration. It may be, of course, that you’re in the later stages of a wealth management strategy, and your core aims are to ensure that your assets are passed on in the most tax-efficient fashion to your family. Just as succession planning is critical in the corporate sector, especially for family firms and owner-managed SMEs, it is equally essential to take the long view about estate planning. The creation of trusts and wills is just as sophisticated and complex as assembling an equity portfolio, and very much an area where nothing beats experience. It’s also a niche where discretion is everything, but your chosen advisor still needs to be able to demonstrate a record of long-term and successful guidance. Finally too, if you’re about to benefit from a maturing wealth management strategy, don’t forget to prepare for the opportunities which retirement will bring and also its challenges. Inflation will inevitably erode the value of your savings and your projected income, and as life expectancy increases, it’s essential that you carefully dovetail your investment decisions to your expectations and needs and the future requirements of your family. n
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The key to a successful wealth management strategy is developing a genuine two-way relationship with your advisor
SPECIAL FEATURE | WINTER 13
COMPANY PROFILE
WINTER 13
Financial Planning post business exit Punter Southall Financial Management’s Birmingham office has been operating for 12 years and over that time a number of clients have sold their businesses, receiving significant capital sums GIVE UP SEARCHING FOR THE ONE ‘RIGHT’ ANSWER It is impossible to identify what will be the best investment opportunity for the future, whether it be property, equities, or new business ventures. We encourage clients to diversify and invest in a wide range of assets to increase the probability of a good outcome. Equity markets have effectively now been on a five year bull run since 2008, whereas the price of property in many areas has remained flat, yet I’m not sure that many people would have believed this as the likely outcome at the time.
Richard Meek, chartered financial planner and principal at the firm, looks at the common issues and pitfalls, and maps out a sound approach to dealing with wealth following the successful exit of a business. TAKE TIME TO GET DECISIONS RIGHT Anyone coming in to new wealth, particularly on exit from a business, can often feel that they should be immediately investing their money, or is often made to feel like that by the advisers around them. Our experience is that the opposite can be the best approach, to avoid hasty decisions that you may subsequently regret. There are a number of considerations to work through that may take time to evolve: • Future work plans – Whether the original intention was to stop work or carry on in new ventures, our experience is clients have nearly always ended up doing something different than originally planned. • Desire to move house/ purchase additional properties – Again these change as clients get to the bottom of their priorities. • Income needs – These may be very different when compared to what was earned in work, and new roles may arise that lead to a much lower need from any investment than anticipated. • Plans to get involved in future business ventures – Directors with good reputations often get pursued to go back in to new ventures very quickly that they subsequently regret, and others think new opportunities will arise when they don’t. Again time allows this process to play out. • Extent to which you wish to help the wider family – The extent to which you may wish to help children and grandchildren both initially and long term takes some thought, especially when overlayed with trying to ensure any wealth passed down remains in the family ‘blood line’. Risk and how it evolves over 12 months from “don’t lose” to desire for protection against
SPECIAL FEATURE | WINTER 13
Richard Meek
Equity markets have effectively now been on a five year bull run since 2008, whereas the price of property in many areas has remained flat, yet I’m not sure that many people would have believed this as the likely outcome at the time inflation/saving tax and beyond – having exited a business where substantial entrepreneurial risks are likely to have been taken, the initial response can be to want to avoid all risks in investment at all. Sadly, returns on cash deposits mean you are heading backwards rapidly against inflation and therefore time needs to be taken to understand investment risks and find a level that you are comfortable with. Against all of these factors is the ‘opportunity cost’ of delaying investment set against a time period of the rest of your life.
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BE TAX EFFICIENT RATHER THAN TAX LED The desire to save tax can often lead to looking past the risks involved with a proposed investment, particularly in the EIS/VCT space, whereas correct tax structuring of investments can minimise ongoing taxation without taking excessive risk. There are more factors to consider than listed here, and in reality the planning process is best started well in advance of a sale completion. Furthermore, advice will be needed from a combination of professionals, including legal and tax advisers, which we often co-ordinate for our clients.
Richard Meek, Chartered Financial Planner Punter Southall Financial Management 1 Colmore Row Birmingham B3 2BJ T: 0121 230 1900 E: richard.meek@psfm.com
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AS I SEE IT
WINTER 13
PENSION DELAY WILL COST YOU Everyone’s seen the TV and press adverts about new workplace pensions. But how many businesses have done anything about it? Employment law specialist Adrian Barnes explains why urgent action is needed
SPECIAL FEATURE | WINTER 13
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WEALTH MANAGEMENT
WINTER 13
Survey results from small and medium sized businesses show that not everyone is getting the message about workplace pensions. Most say they know little or nothing about the new auto-enrolment pension scheme, and some who have heard about it say they intend to ignore it. They can’t ignore it, not without paying a huge penalty for every day they fail to comply, but the attitude shows that a real problem exists among the next level of auto enrollers. Let’s be clear: I think working people saving for their retirement with help from their employers is a good thing. It’s good for the individuals and it’s great for the economy. Pensioners with money to spend contribute to growth and they’re not a burden on the taxpayer. But I do wonder: does it have to be so complicated? Even small businesses have to wade through the bureaucratic quicksand of staging dates, opt-outs, deferrals, providers, hubs, contribution levels and entitlements. If that doesn’t confuse them, they will also need to understand whether the pension will meet the legislative requirements, or if it will be enhanced as a benefit to aid recruitment and retention of staff. The seminars on workplace pensions I’ve been involved with in Birmingham over the last six months showed me that many key representatives of businesses attending expressed their dismay at how much work is required for the auto-enrolment staging date. With four different definitions of pensionable pay at differing contribution rates, the ability to change or defer staging dates, a variety of ‘hubs’ and pension providers, and proscriptive wording for your letters to employees, it’s no wonder that some businesses are bemused by the prospect of initiating auto-enrolment. However, there will be no excuse for noncompliance, and some fairly huge penalties for businesses that fall behind in the process. So
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it’s time to buckle up. It is not just the pensions that have to be considered. Contracts of employment or terms and conditions have to be changed, and the workforce has to be informed and consulted. Employers should be positive about the new system; the pension is a substantial benefit for your staff and they should make the most of it. That said, you must avoid offering financial advice on the pension scheme, as that has to be handled independently. The problems don’t end when auto-enrolment has taken place, as it is only after staff have been enrolled and have received all of their paperwork from the pension provider that they can make the decision to opt-out of the pension. All eligible employees must be enrolled into the pension even if they tell you in advance that they do not want to join. Enrolling employees with no intention of staying in the pension may seem futile, but the Government’s thinking is that an employee can only make a completely informed decision once he or she is in possession of all the facts. Even after the employee has received this information and made his or her decision, the process is still not simple. The employee must opt out in writing using a form provided by the pension provider, not something from your own HR department. Provided all of this has taken place within 30 days, the employee has any payments already made returned to him or her and the employer has to keep a note of the opt out so that in three years’ time they can go through the whole process again. I would underline the need for companies to start working towards their staging date as soon as they are advised of it, and to allow at least 12 months from the first consideration of pensions to the final implementation day. It
AS I SEE IT
I would underline the need for companies to start working towards their staging date as soon as they are advised of it, and to allow at least 12 months from the first consideration of pensions to the final implementation day
is important to be confident that everything is in place, tested and working efficiently before the go live date. There are experts who can explain the requirements of auto-enrolment as well as some of the challenges employers face in achieving a successful outcome to the project. Law firms don’t usually provide pensions, but they can provide all of the legal back up that you need and can also point you in the direction of the people who can help with your pension provision. n
Adrian Barnes is head of employment at DBS Law Ltd. Email: adrian.barnes@dbslaw.co.uk
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SPECIAL FEATURE | WINTER 13
INSIGHT
WINTER 13
IBB’s decade of progress Sultan Choudhury, managing director of the Birmingham-based Islamic Bank of Britain (IBB) identifies some of the highlights during its first decade I believe the Islamic finance market has matured and is now an established sector in the UK financial services industry, demonstrated by high awareness of Islamic finance amongst Muslim and non-Muslim consumers, industry leaders and the Government. We celebrate our 10th anniversary in 2014, and during that time IBB has matured from being a small start-up bank to a pioneering industry leader; has attracted over 50,000 customers and offers the largest range of Sharia-compliant retail financial products in the UK. IBB’s core target market is always likely to be
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SPECIAL FEATURE | WINTER 13
Muslims, but market-leading rates, high quality and personalised customer service, and the growing recognition of Islamic finance as an ethical alternative to conventional banking, mean appeal amongst non-Muslims is growing. The ‘Move Your Money’ campaign and Ethical Consumer magazine have highly recommended IBB as a stable and trusted alternative. Between 1 Dec 2012 and 28 February 2013, almost 80% of applications for our 24-month fixed term deposit account were from nonMuslim customers, because of the marketleading rates.
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We offer a wealth management service and have accredited both a discretionary portfolio service and a self-invested personal pension as Sharia-compliant. We remain focused on developing innovative products that compete well with conventional banks. Education and awareness-raising are also key to ensuring consumers understand how Islamic finance products work and their benefits. I feel proud of IBB’s achievements spanning the entire decade and look forward to continue leading the bank towards success. n
06/11/2013 16:01
WEALTH MANAGEMENT
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