Nearly two-thirds of financial services firms struggle to store, access and share data, and more than half are considering single data hubs to enhance their ability to make data-driven investment and business decisions, indicates research released today by Waters Technology, the leading financial market technology information provider, and MarkLogic Corporation, the next generation data platform provider for simplifying data integration.
The research, based on a survey of more than 100 firms including investment banks, asset managers and broker-dealers across Europe, North America and APAC, underscores the vast challenges and opportunities for financial services firms to better use data to boost investment returns, improve operational efficiencies and more easily meet regulatory reporting requirements.
To tackle this, 56% of firms are considering a single investment research “hub” to store all research and ancillary information to better make data accessible. Two-thirds of these firms say a single hub will enable them to make better investment decisions, and 59% expect it to enhance the client experience via personalized research, the research indicates.
The research is revealed in a new report, Investment Data Practices Under the Spotlight. Other highlights include:
- 64% of respondents, on aggregate, believe their organization’s research data is stored in too many disparate systems or locations across the enterprise.
- 66% of firms, on aggregate, are not able to access all their core investment data in one place.
- 72% of respondents, on aggregate, have no tools or insufficient tools to create personalized, authoritative research for clients in a timely manner, which hinders the client experience.
- Half of the firms considering a single data hub say it will help them streamline processes around storing and curating investment research.
“For any buy-side firm that wants to make the best possible investment decisions, having data at their fingertips is critical,” says Giles Nelson, Chief Technology Officer, Financial Services at MarkLogic. “It’s also important to regulators that firms understand how a conclusion was derived, which means they’re able to track data lineage to justify decisions— not only to regulators but to investors or other key stakeholders. This is not about getting every decision right and proving your case, it’s about showing there’s a process, and you have data to support decisions.”
The biggest challenge to achieving approval for investment in new technologies is the business case. However, 69% of firms believe building the case for investment in a data hub around improved operational efficiencies will help them secure the funds. Meanwhile, 49% believe the business case for an improvement in investment decisions that enable them to achieve alpha is also key.
What happens to your investments after your death?
By Jaco Prinsloo, certified financial planner at Alexforbes
Financial planning regarding the succession of investments is rarely carried out, at least in South Africa. As a result, potential heirs are often not sure what to do or where to start to claim and settle a loved ones investments. In many cases, the family is unaware of the existence of an investment portfolio. With succession planning, the transfer of assets (whether property, your bank accounts, cars or investments) is facilitated.
Today I want to focus on investment and the succession planning of investments, specifically discretionary investments, compulsory investments and policies. The type of investment will determine how the assets and proceeds get distributed, so we first need to look at the different investment types:
Discretionary investments are any investment you make with after tax money at your own discretion. Discretionary investments include:
- Unit trusts
- Money market accounts
- Fixed deposits
- South African retail bonds
- Share portfolios
- Tax free savings accounts
These investments will form part of your estate and will be subject to estate duty and executor’s fees. However allthou a tax-free savings account forms part of your estate there are no executor’s fees payable. The proceeds from the investments will be distributed as per your Will to your nominated beneficiaries after your estate has been settled. Because these investments form part of your estate the investments will be “frozen” and no transaction or changes can be made to the investments until the proceeds are paid to the estate.
Investment and Life Policies
Life insurance is a type of insurance contract where you agree to pay premiums to keep your life cover active. If you pass away, the life insurance company will pay the life cover benefit directly to your nominated beneficiaries, which can be a person or your estate.
You also get investment policies like living annuities and endowment policies where the investment value pays to the nominated beneficiaries on your passing. One benefit of investment and life policies is that it does not form part of your estate, which means no estate duty and the proceeds get paid directly to your nominated beneficiaries giving them access to cash while they wait for the estate to be wind up. Making it an essential part of anyone’s overall financial plan.
Compulsory investments are investments which are compulsory with some employers. Working for some companies you might be required to be part of a provident or pension fund as part of your employment contract. Compulsory investments might also offer some tax benefits but investors have limited access to their money and these investments are governed by Regulation 28 stipulating where and how you can invest. Compulsory investments can be summarised as “retirement funds” and include:
- Pension fund
- Provident fund
- Retirement annuity fund
- Preservation funds
The proceeds from retirement funds are distributed as per Section 37C of the Pension Fund Act.
Which means the trustees of the fund will use their discretion to distribute the proceeds of your retirement savings to insure all dependents and beneficiaries receive equal and fair benefits. Belonging to a retirement fund you will be required to nominate beneficiaries but its important to remember the beneficiary nomination is seen as a guide to the trustees or a “wish list” and the ultimate decision on how the benefits get distributed lies with the trustees of the fund.
As shown above, it is important to keep your Will and nominated beneficiaries updated on your policies and retirement funds. So how to plan for succession?
The first step is to talk to your family members about your investments and the administrator of these investments. Secondly you can create an organised folder with all the documentation of your investments, policies, copy of your Will and personal documents like your ID copy and bank statements. Your family does not need to know the value of the investments but the knowledge of the investments and where to find all your important documents will make it easier for them to start the claim process. Speak to a certified financial planner for advice on your beneficiary nominations and to formalise your wishes in a document, thus setting up a will.
YOUR PARTNER SHOULDN’T BE YOUR RETIREMENT PLAN
By Buhle Langa, certified financial planner at Alexforbes
Financial independence is important during any person’s lifetime, at all stages.
By starting to plan for your retirement early in your working life, you can maintain your standard of living in your retirement years. While a life partner can be wonderful, they should not be considered as a part of your retirement plan as they may not even have saved sufficiently to meet their own requirements.
Women tend to live longer than men, and since research shows they generally earn less, this means that they need to save more, for longer, than their male counterparts.
It is important to familiarise yourself with how you were married and what the terms are should the marriage end either in divorce or death. If you are married in community of property, both you and your spouse’s assets will form part of your deceased estate and your spouse will automatically, by law, be entitled to 50% of the combined assets.
You can be married out of community of property with or without the accrual system. Being married without accrual is the easiest system to work with in your will and estate; your assets remain your own and you may deal with your assets as you wish with no claim from your surviving spouse.
Often, a home will be registered in one partner’s name while the other contributes to the bond repayments. If you are not married or are married out of community of property, ensure that you have a written cohabitation agreement. These financial contributions can be difficult to prove if the relationship ends, leaving the one partner with no claim to the property.
Having sufficient planning in place for both parties is always advisable, and each party should have their own savings and investments. A tax-free savings account is a great place to start, allowing you to save up to R36 000 a year without paying tax on the growth.
Increasing your contributions to your work retirement fund will help you accumulate larger savings for your retirement. To take advantage of the benefits of compound interest and avoid a hefty tax liability, it is also advised to keep your retirement savings invested when changing jobs. When leaving your employer, a number of tax-free options are available to you and one should seek financial advice in order to understand which of these is the best choice for you:
- Transferring your savings to your new employer fund
- Transferring your savings into a retirement annuity fund
- Transferring your savings into a preservation fund
- Keeping your funds invested within your previous employers retirement fund through a paid up status (not contributing further to the fund).
Each of the options noted have varying implications such as when you would be able to access the retirement funds either through resignation, dismissal or retirement and whether you are able to continue contributing towards the fund, therefore each individual person would need to seek financial advice from an accredited financial advisor so as to determine which option would best suit their individual needs.
Regular consultations with a certified financial planner will ensure that you are on track for a secure retirement.
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