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HOW TO HELP CLIENTS OPTIMISE THEIR WEALTH MANAGEMENT STRATEGY WHEN MOVING ABROAD

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Ben Barratt, Head of Investment at Arlo Group

 

The growing list of green and amber destinations has made international travel a real possibility with many in the UK thinking about their travel prospects. But while a holiday abroad might come as a long-awaited grasp of freedom, the pandemic will have caused others to reassess completely whether the UK remains where they want to stay more permanently. The greater outdoor space and larger homes, which can be found more affordably abroad, is more than ever an extremely attractive option for many people across the country.

As the number of people looking to move away internationally increases, it is key for advisers to be adequately equipped to help their relocating clients consider how this might affect their finances and financial plans. This includes preventive moves such as assessing existing assets, savings, and investments; carefully considering tax; planning to keep bills to a minimum, and ensuring they are compliant with legislation both in the UK and the country to which they wish to move.

How can advisers best help their clients optimise their finances when moving abroad?

 

Cross border legislation

As a first step, it’s crucial for advisers to be aware and make their clients aware of the legislation between the country of origin and destination nation, which is likely to vary. Helping clients to establish themselves in their new country is an important part of the role, but they should also ensure that clients remain within the legal parameters of both systems throughout the full process.

In that respect, a key consideration for any client looking to move abroad is tax. Without the right preparation ahead of the departure, clients could potentially face a few unnecessary and costly complications, including cross-border financial issues and tax overpayment.

It’s the role of advisers to ensure their clients are aware of the legalities surrounding primary and secondary residences for example, as well as how this might affect their tax payments. Capital Gains Tax (CGT), for example, differs considerably between primary and secondary residences. Therefore, a client who is not aware that spending more than six months abroad will mean their UK residence is no longer classed as their primary residence in turn making it eligible for Gains tax when selling, might have to bear unnecessary tax payments as a result.

 

Product suitability

Carefully assessing which products are available and relevant to each country is of paramount importance. These should be tailored to the clients’ needs as certain products, such as ISAs (Investment Savings Accountants) are not available in certain countries (Spain in this case). Advisers should ensure clients are aware of the full range of options and alternatives which are available to them and an adviser should ensure a client is aware of their full range of options, and alternative which are tailored to their circumstance.

Furthermore, clients looking to make investments overseas will look for open and honest conversations regarding the feasibility and worthiness of their proposed venture. Choosing and advising options for clients should be made with transparency and with the overall financial wellbeing of the client in mind. As an indicator, with general investment might incur anything up to 20% CGT, it is important for professional to consider other options such as offshore bonds which might be a better use of the client’s money.

 

Getting the full context

Understanding the clients’ personal objectives, and pondering it against any savings, investments, assets, and expenditure will allow for a holistic service which has the best result. This is necessary to grasp the full extent of a client’s financial goals and projects and reduce any liability or risk. Clients should be aware that if they decide to move back to the UK some financial tools may be irreversible.

People having recently reached retirement age often look to move abroad in the following months, however, it’s common that they change their mind due to family concerns or fear of separation and wish to return home. If a client goes ahead and places money in an offshore bond but ultimately decides not to move away, withdrawing the money back may have tax implications. Ensuring they are cognizant of whether they are committing to something permanent or changeable is then crucial.

 

Taking account of external factors

Factors such as Brexit also play a significant role in the financial advice clients will seek as regulations will only become more divergent between the UK and the EU. Clients wishing to move abroad must be aware of how changing regulations will affect their finances and advisers should recommend products that are up to date with British/EU regulations. In the same way, if moving into the EU clients should deal with someone who is regulated in the EU and can advise them with the right type of product accordingly. If that is not the case, asking for guidance from a colleague might be welcomed.

Increasingly, prospective expats are also being approached by unregulated advisers from countries whose regulatory framework differs from the UK. This can in turn lead to unnecessary charges and payments if the right framework is not applied. Financial advisers should discuss the implications of accepting unregulated advice with clients, including the financial consequences that may incur if they are not helped by a professional that has international credentials. Advisers need to reassure clients about their existing international credentials and should not be scared of getting multiple people involved in order to deliver the best comprehensive expert service.

Financial advisers should create an approach where their objective is to find solutions to their clients problem with on overall understanding of their finances rather than just trying to sell a specific product. Providing clients with a 360-degree view of their options will help them to make informed decisions about their finances when relocating and enable them to be discerning in their expatriation project.

 

Business

JUMP-STARTING PROCUREMENT TRANSFORMATION WITH A CLEAR AND REALISTIC PLAN

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by Alex Klein, COO at Efficio Consulting

 

Following a period of ongoing economic uncertainty, business spend has risen high up on the C-Suite agenda, with the procurement function shifted into the hot seat as the enablers of not only rapid cost-cutting but future profitability. In fact, according to Efficio’s experts and authors of recently released PROFIT FROM PROCUREMENT, companies that break down the silos between departments and effectively optimise the procurement function can expect to add 30% to their bottom line.

But where to begin? In order to successfully embark on a roadmap to profitability, a concrete and realistic plan must be put in place – one that has clear objectives and actions agreed amongst all involved. Unfortunately, this is not something that can be achieved overnight. As with anything worth having, this involves a program of gradual transformation and is likely to take no less than 18 months to really drive an impact. With a long lead time to success, the CPO must ensure that the program makes the desired splash – proving its value and keeping internal stakeholders engaged throughout. This requires a plan that will have a high impact, high visibility, cross-functionality, and be fully resourced. Only then can procurement’s profit potential be truly unleashed.

 

Take a step back and listen

When embarking on a Procurement Transformation mission, getting to know the key stakeholders involved will be a crucial first step to getting the project off the ground. Whether that be the CEO, CFO, functional heads, or business unit heads – the CPO must take the time to listen and understand their expectations, needs, and requirements before a vision for the road ahead can be formed.

Suppliers are often forgotten in this mix, yet they are equally as crucial. Questions need to be asked, such as – what improvement options do they see? How could they help us to reduce cost? And how can we help them in return? What each stakeholder wants from procurement, and where they see value will likely differ, so it is important to have all cards on the table upfront. Not only should these considerations sit at the heart of your plan, but they can actually assist in making it a reality.

 

Determining the desired outcomes

Next up, and at the top of the pyramid that comprises your plan, needs to be a clear vision. Whilst the outcome of your efforts may seem pre-defined – such as, to cut costs and release profitability – the scope of this can span as wide or as narrow as you’d like. Now is the time to consider how far you want to stretch this outcome, and the only way to determine this is to ask yourself, “what does the next level of procurement look like in my organisation”?

This procurement vision, of course needs to link back to the businesses overall corporate strategy. For example, if the business is looking towards aggressive growth, procurement should help facilitate this by aiming for scalability. If the strategy is to rapidly digitise, procurement can play a part in digitising the supply chain.

As part of this vision, the CPO must also consider their desired role and remit. For example, how do you see procurement’s way of working changing? How do you see your procurement people interacting with the rest of the business? What do you want your suppliers to say about you?  Once defined, a clear ambition can keep Procurement Transformation on track and aligned. Without it, and with every stakeholder having varying needs, the desired outcome can quickly become lost.

 

Establishing a step by step improvement plan

So, you now have a solid vision – you’ve spent time listening to your internal customers – surely, you’re now ready to focus on getting there? Not so fast – you now need to think about the various facets of the function, including the organisation, people, and processes to establish where you currently stand. This will act as a baseline, in which a roadmap can then be developed and will require set objectives along the way to keep the journey on track. “House of Procurement tools” can be particularly effective here – these frameworks break down the procurement function in terms of strategy, organisation, people, processes, and systems – marking them against a benchmark of bad, average, and good. By plotting against this framework, you can tackle transformation in chunks, setting concreate objectives as a sub-factor level.

Once the current state of play has been established, the goal can then be plotted at the other end of the roadmap, with the activities needed to get to this end goal plotted in between. Key to plotting such a roadmap will be a review of which activities matter, what people are doing currently, and whether these tasks having a meaningful impact. This may require a restructure of the current team, which may require investing in additional strategic procurement resources as well as upgrading internal capability.

Nevertheless, this plan must be granular, and it must be actionable. It is all well and good having great ambition, but it is nothing unless you know exactly how and what it takes to get there. Transformation takes time, and it will certainly not happen overnight, so make sure to break down your roadmap into smaller, more achievable, chunks. Rather than focusing on a single  end goal 18 months down the track, ensure you have milestones to aim for after month three and month six, that contribute to the overall picture. Assembling such a plan is no easy task, but it is the very foundation needed for procurement teams to jump-start transformation.

So, what comes next? Buy in from the rest of the business of course. After all, a plan can only be successful once it has board level approval and sufficient investment. In part two of this series, Alex Klein will explore the stages that follow, including: developing a savings execution plan, building a business case for procurement investment, and ensuring program structure and governance.

 

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Finance

THE IMPORTANCE OF MANAGING DATA RISK IN THE FINANCE FUNCTION 

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Written by Steph Charbonneau, Senior Director of Product Strategy, Vera by HelpSystems  

 

CFOs and financial controllers play a pivotal role in how organisations evaluate and manage data risk. Analyst firm Gartner reports that more than 30% of organisations will use financial risk assessments of their data assets to prioritise investment choices for IT, analytics, security, and privacy by 2022.

Data is particularly at risk within the finance function. Sensitive data such as customer and supplier information, financial statements, and personnel records are processed and shared daily both inside and with vendors outside the organisation. The finance team communicates with banks, auditors, and lawyers on a regular basis and while laws and policies exist to provide protection, there’s no certainty as to where your data could end up, and you can’t control it once it is sent. The information that resides outside the organisation’s security perimeter is accessible with equal permissions, meaning access is not restricted once someone gains it.

 

Assess Your Vulnerability 

All of this presents an immense risk. Understanding what the risks and potential costs are is an important component of organisational planning. How would the organisation react if sensitive information were disseminated to the wrong audience? What could it cost? Simply thinking ‘it won’t happen to me’ or assuming a party erroneously receiving sensitive data will act with integrity and delete the information can no longer be justified. Data breaches are common and can have a significant impact on your business.

The financial risk of a data breach is typically the cost of lost revenue, compliance challenges, cost of litigation, privacy regulation penalties, and reputational damage. Revenue loss risk and litigation costs risk are tangible impacts that can be measured. However, it is more difficult to quantify the probability. On that front, understanding your data’s level of vulnerability is important. If you are SOC2 compliant, your risk will be mitigated by the controls within the internal bounds of your system. On the flip side, it is difficult to assess the probability for data that leaves your repositories. Internal compliance, including SOC2, cannot address it.

Thankfully, there’s a multitude of methods to protect assets and minimise your cyber risk. Consider securing and managing your data with technology like digital rights management (DRM), data loss prevention (DLP), data classification and security incident and event management (SIEM) software. There are network controls you can put in place, and you should have a process for evaluating the security of any apps you use to minimise your vulnerability. Evaluate your cyber risk holistically to ensure nothing slips through the net, otherwise your vulnerability remains.

 

Implementing Data Security Best Practices

Cybersecurity can be very complex depending on the size and industry of the organisation. New attack methods and new technologies to deal with those attack vectors show up all the time. To maximise efforts at assessing security risk, allocate resources so the most effective tools and strategies (such as encryption or digital rights management) are used to protect the most important information assets.

Finance leaders should follow these best practices to manage their team’s cyber risk.

  • Identify exposures in either tools or processes and work with the IT team to close the gaps in security.
  • Classify your files and with it, understand where your sensitive data is located and how access is provided to parties that need it, especially those outside your organisation. Company policies and processes often overlook, or have no direct control of, data outside the organisation so this awareness is important.
  • Adopt a zero-trust approach to protecting your sensitive data and implement technology that allows you to manage your risk. Software such as digital rights management,for example, protects your most valuable data assets no matter where they travel, allowing you to secure, track, audit, and revoke access if data accidentally or maliciously falls into the wrong hands.
  • Educate and train finance team members to recognise and manage risk. Employees need to understand the importance of the data they are using and have access to the right tools and processes so that it is handled correctly.

 

Protect Your Most Valuable Assets

Evaluating an organisation’s cyber risk starts with clearly understanding the company’s risk tolerance. Is the organisation risk tolerant, or extremely risk averse? The answer may differ depending on what needs to be protected and what industry you operate in. In the finance function, what level of risk are you willing to accept and still justify and defend to stakeholders? Start by identifying those assets where the risk is unacceptable and where access needs to be carefully controlled and managed and focus your execution from there.

 

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