W&F Issue 8 2018

Wealth & Finance International - Issue 8 - 2018 5 The reality of trading taking place on the floor of the stock exchange, with traders shouting down telephones and punching in orders is long gone. As are the days of having to call your stockbroker and place an order. This perception might continue on TV, but the reality is that the modern trader is equipped with a mobile phone. This new generation of traders is smart. Empowered by hyper-connec- tivity’s offer of unprecedented vol- umes of knowledge and 24/7 access to the market, they are tearing down societal constructs and preconcep- tions. This generation wants to be its own boss. Social media has become a platform to learn from, emulate and showcase success. Wealth creation has gone mainstream. With the mil- lennial and Gen Z traders being some of the most enterprising members of our society, it’s little surprise that an entirely new generation of traders is now emerging. Characteristically, they are entrepreneurial and in many cas- es self-starters ready to follow their own paths. But, how has technology made trading and finance more main- stream to these generations? Crypto as catalyst The appeal of trading has in recent years been catalysed by the public’s fixation on cryptocurrency. With the allure of quick money, Bitcoin epito- mised this fascination. Sage traders sceptically watched as this strange decentralised network of digital tokens became mainstream, while novices made their millions. Yet what goes up must come down, and once its value was done exploding, it started spectacularly falling. But with media hype and fabled success stories, the concept of crypto began to tempt casual observers. The ensuing rush to develop user friendly trading apps made the concept even more accessi- ble to the everyday person. Contributing to this has been the residual sour attitude toward the financial crisis. People have become more suspicious of and disillusioned with the “so called experts” entrusted with handling their hard-earned money. ‘They’ had nearly brought the global economy to its knees. Further backlash was also brought about from charging a lot of money to trade, whether it be pension funds or other- wise. This combination of discontent and new accessibility drove this new wave of do it yourself trading. Celebrity of social Trading is complex. There’s jargon, complicated explanations, and under- standing the thinking that went into a certain trading position can be almost impossible at times. Social media has changed all this too. Now there is an active, always online, accessible com- munity of people to simplify, explain and advise. It’s easy to find out what’s going on in the market in seconds. And what’s more there is the celebrity, a new wave of Twitter traders, ama- teur and professional alike, who have established themselves as trading gurus to be followed, mimicked and aspired to. The concept of “piggy backing” on other people’s trading is age old, but never before has it been so prolific. It’s proved to be extremely popular, both as a way of profiting from others’ expertise and as a way of learning. But new traders need to remember that sometimes you might be following a loser, and that making correct trades doesn’t always mean you’re being profitable overall. Good bye 9 to 5 Trading’s popularity has risen along with the ‘side-hustle’, freelance, and sharing economy. Technology has without question been an enabling force behind all of these, as people strive for more reward and flexibility in their working lives. Indeed, there has been a concerted effort to break away from the traditional construct of 9 to 5. How trading maps to this is clear but it is not without risks. It can be seen to promise a lot, with some traders claiming to live off of one trade a day. However the reality the modern trader is facing is that it is just like any other employment in that it takes persistence, patience and grit. What it does offer though is autonomy and flexibility. With the ever-increasing interest in the viability of pursuing a career in trading for the millennial and Z generations, an onus of responsibility has formed. We expect that in the next few years we will start to see the wider education focus shift, to start to cover money management and investment too. For far too many who missed out on this knowledge it seems like too little too late. Baby boomers now coming into retirement are left considering whether they have enough to see them through, or how they can manage their own account without having to pay people to do it for them. Increasingly, there will be more of a push from all demographics to have an entry point to the market. But with enough knowledge, expe- rience and foresight to understand market volatility and risk anyone can trade with the technology out there and available to them. Advisers highlight expected increased use of flexible inheritance tax solutions for clients. As a result, independent financial advisers are looking to firms with IHT product expertise. Number of Retail Investors Seeking IHT Advice Set to Rise More than three out of four (78%) financial advisers expect the number of retail investors seeking help for IHT planning to increase over the next three years, according to new re- search from TIME Investments, which specialises in tax efficient investment solutions. The findings come as IHT receipts hit a record £5.2 billion in 2017-18 despite the introduction of an additional nil-rate band. Six out of ten (63%) advisers also predict an increase in the number of IHT products and investment solutions to be launched in the UK. However, whilst this will offer more choice to investors, it also comes with a health warning – 88% of advisers questioned are concerned that new products will be launched by firms that don’t have the appropriate track record and/or expertise. Two thirds of advisers predict an increase in the use of Business Relief (formerly known as Business Property Relief) over the next three years to help people reduce their IHT liabilities. To encourage investors to support UK businesses, the Government allows shares held in qualifying companies that are not listed on any stock exchange and some of those listed on AIM to qualify for Business Relief. This means that once owned for two years, the shares no longer count towards the taxable part of an inheritable estate and are free from inheritance tax at point of death. The accessibility of Business Relief investments and the range of invest- ment opportunities available help to provide flexibility in IHT planning. Three quarters of advisers felt that the increasing use of Power of Attorney due to rising dementia rates would contribute to the growth in the use of these flexible IHT solutions. Henny Dovland, TIME Investments’ IHT expert comments: “The number of families in the UK being caught in the IHT net is increasing. This represents a significant opportunity for advisers specialising in IHT and intergenera- tional planning and is reflected in our findings that reveal more specialist products are set to be launched in this market. However, care needs to be taken to ensure any new solutions are fit for purpose. Our specialist team has a track record of over 22 years in this complex area.” News