“What is the hatter with you?”

Counselling. Not often a function closely associated to roles within financial spheres, but results from our recent thought leadership report ‘The Many Hats of the Modern Wealth Manager’ have proven the undeniable need for wealth managers to become guiding lights to their clients.

Wealth has a way of stirring up complex emotions – familial strains can result in stress, inheritance planning can lead to worry, and structuring investments opportunities can result in feelings of excitement and curiosity. To make a long story short, just like Alice and the Mad Hatter, things come into perspective when she gradually learns about the rules of the universe she has stepped into.

Similarly, advisors need to learn the rules outlined by their clients, so as to make them feel that they can fully trust their wealth managers. In fact, a majority of the HNW European investors we surveyed stated that as opposed to fully dedicating areas of their wealth management to advisors, they much prefer seeking advice and collaborating with the professionals.

In a nutshell? Clients want strong relationships. They want to be counselled.

Discover more about wealth managers’ Counselling hats and HNWs expectations. Download ‘The Many Hats of the Modern Wealth Advisor’ report.

Coming shortly!

OneLife will soon be ready to launch its capitalisation contract product designed for Finnish legal entities. Due to the impact of Finland’s inheritance tax rules, capitalisation contracts are generally recommended only to legal entities, while life assurance products, such as Wealth Finland, are recommended to private individuals.

Capitalisation Finland complies with Finnish law while benefiting from the advantages offered by Luxembourg regarding flexibility and protection. It is a unit-linked capitalisation contract that enables underlying investments in multiple asset classes including both listed and unlisted equities and bonds. The new product permits open architecture involving multiple custodian banks and asset managers as well as self-management. However, the policyholder should not be involved in the management or business activities of the underlying investments. The policy can be pledged and its ownership transferred to a new policyholder accepted by OneLife. Premiums may be paid in cash or in kind by transferring an existing investment portfolio into the policy.

Capitalisation Finland enables legal entities to consolidate investments and postpone taxation of income from investment activities. The product may also be used in Management Incentive Schemes (MIPs). It enables passive investment in both listed and non-listed assets, for example equities, bonds and different types of funds as long as the assets are freely transferable and other legal and internal requirements are fulfilled.

The tax treatment of capitalisation contracts has been clarified in Finland thanks to written guidance from the tax authorities. There are also multiple new tax and court rulings that can make investments through Luxembourg-based assurance products attractive, for instance to private equity and real estate funds operating in the form of limited partnerships. Moreover, according to a recent decision by the Supreme Administrative Court of Finland, it is possible to obtain dividend withholding tax relief on Finnish-sourced dividends paid to the Capitalisation Finland policy.

Legal update – Changes in Finnish inheritance and gift taxation

On 1 January 2017, Finland’s inheritance and gift tax legislation was amended, involving the following main changes concerning life assurance policies:

The inheritance and gift tax rates have been lowered (for the first category of heirs/beneficiaries the top inheritance tax rate was reduced from 20% to 19% and the gift tax rate from 20% to 17%).
The standard spousal allowance was increased from €60,000 to €90,000 and the standard allowance for minor children was increased from €40,000 to €60,000.
The €35,000 tax-exempt allowance on death benefits to close relatives is abolished with effect from 1 January 2018.
The 50% tax-exempt allowance for widows on death benefits is abolished with effect from 1 January 2018.

On its own, the impending abolition of the €35,000 tax-exempt allowance for close relatives will increase the tax impact for beneficiaries. However, the overall reduction in inheritance tax rates may in many cases compensate for this and even result in a lower tax burden for beneficiaries.

The abolition of the widows’ 50% tax-exempt allowance will affect policies where spouses are named beneficiaries. For these policies in particular, it is recommended to review with a local advisor whether the existing beneficiary nominations are still viable. Please note that the existing beneficiary nomination can be changed through a written request signed by the policyholder, although changing irrevocable beneficiary nominations also requires the consent of the irrevocable beneficiary.

When millenials tip their hats to Life Assurance.

Did you know that 66% of HNWs under 35 have a life assurance contract?

Amongst the 604 HNWIs we spoke to in our most recent study ‘The Many Hats of the Modern Wealth Manager’, more than half hold investments in life assurance. These respondents pinpointed this investment vehicle as particularly pertinent when considering wealth transfer strategies.

Most interestingly however, it is the millennial generation who have most readily caught on to the myriad of benefits life assurance can offer – with 66% of respondents under the age of 35 stating they have contracts to hang their hat on.

With its ability to span borders, life assurance enables its users to benefit from tax optimisation, wealth planning and inheritance planning.

Discover more about HNWs’ expectations of their wealth management relationships. Download ‘The Many Hats of the Modern Wealth Manager’ report.

HNWs can identify their formulas for success at the drop of a hat.

Berthold Auerbach once said, “With hat in hand, one gets on in the world.” And oh, how right he was.

Wealth managers must be prepared to offer clients a holistic solution – someone who can act not only as their financial expert, but also their counsellor, their teacher and their planner. Someone ready to listen before he gives you any advice.

When we asked 604 wealthy European investors what factors contributed most to their current wealth levels, we uncovered the individuality of each client’s path to success. By digging even deeper, specific generational trends soon became apparent.

Whilst older clients believe their success was born from personal factors such as a strong work ethic, younger clients instead harness a broader set of experiences to achieve their goals.

As a result of these varied approaches to success and wealth, advisors must be able to adapt to each and every situation at the drop of a hat.

Check out our most recent study ‘The Many Hats of the Modern Wealth Manager’

Belgium : new regulation in the Flemish Region (VLABEL)

Since 1 January 2015 and the transfer to VLABEL of fiscal powers regarding inheritance tax and part of the registration fees, intermediaries and insurance companies, lawyers and financial planners, and of course Flemish citizens seeking to structure their assets, have acted in line with decisions published by the Flemish tax authorities. While these opinions were able to clarify the position of the Flemish tax authorities on the matters in question, the points of view taken by VLABEL were surprising to say the least and have caused turmoil in the sector, going so far as to freeze certain solutions currently used and thus far accepted by the federal administration. Although VLABEL has published its new general code which consolidates the inheritance tax and registration codes, no amendments have been made to the law which could justify these contradictory views. In March 2016, Assuralia also entered the fray, lodging a complaint with the Council of State against the Flemish tax authority. Thus, the political world could no longer ignore this issue.

Shortly before Christmas 2016, a new decree was issued. Published on 30 December, its application as of 1 January 2017 has, on the whole, put a smile on people’s faces and enabled the new year to begin on a more optimistic footing. Two issues relating to insurance policies were on VLABEL’s radar and were therefore reviewed.

Donating an insurance policy by assigning all rights

VLABEL’s decision to tax the donation of insurance despite the payment of donation fees generated hostility in November 2015. Several amendments to the original position were published without enabling the assignee/recipient to prevent the benefits that were paid to them upon the termination of the policy being subject to inheritance tax. The decree of 23 December 2016 put an end to this practice by subjecting only the gains on a policy to inheritance tax. Gains should be understood to mean the difference between the value of the insurance policy at the time of donation and the value of the policy upon termination by the death of the donor. The arrival of this new decree therefore reduced the applicable taxation for citizens in comparison with the point of view of the Flemish administration. We must not overlook the fact that the Flemish taxation is not in line with the legal principles underlying insurance policy donation. Consistency between the legal and taxation arguments is, however, well established in other regions of the country.

Joint applications

VLABEL’s position with regard to policies taken out jointly by two policyholders, equally insured, which terminate upon the second death, has generated huge controversy which has still not eased due to cases that remain unresolved to date.

The decision intended to tax beneficiaries under the inheritance tax regime when the latter had not received any benefits and were not even certain to receive benefits at some point in future (as a reminder, the policyholder has the right to revoke the beneficiary clause at any time, provided that the beneficiary has not accepted the benefit. Pursuant to an increase clause between the policyholder in the aforementioned policy structure, this right of revocation returns to the surviving policyholder following the death of the first).

According to the decree now in force, the taxation shall come into effect upon payment of a benefit which may arise from the surrender or termination of the policy. In other words, the partial or total surrender of the policy by the surviving policyholder will generate inheritance tax, which can only occur by means of an additional succession declaration. The collection of inheritance tax upon the termination of the policy by the beneficiary remains unchanged.

This decree is not a panacea, nor a miracle cure for the much criticised decisions made by VLABEL during the last two years. While it is a relief for the recipient/assignees of existing policies, and the beneficiaries of policies taken out jointly, it offers no solution for policyholders whose aim was to optimise the fiscal impact of transferring assets between themselves. It also puts a stop to any discussion regarding policyholders married under a shared property regime. The decree raises other issues that we have chosen not to address in this article and which must, of course, be taken into consideration in finding a solution for asset structuring. We recommend that our clients contact their advisor before making any decisions on the matter and we are available to provide any information they may require.

The most stylish of modern wealth managers

They say one must wear many different hats in order to be successful. Those who can adopt numerous roles are often those best prepared to tackle unexpected situations.

Our upcoming paper ‘The Many Hats of the Modern Wealth Manager’ explores this very concept. We began by asking 604 European HNWIs from six different countries about their reliance on wealth managers when making financial decisions. For almost half of these HNW individuals, their wealth manager is the most trusted opinion in the room – even more than spouses. As a result of this reliance, wealth management advisors must ensure they act as clients’ guiding lights, offering advice built in accordance to who each client is as an individual.

The key to wealth management success, then? The modern day wealth advisor must have access to five specific ‘hats’ – the Counsellor’s hat, the Teacher’s hat, the Architect’s hat, the Navigator’s hat, and the Technician’s hat.

~~Stay tuned. Next week, we will tell you all about wealth managers’ hats in our freshly written report.~~

UPDATE : download our newly released report ” The Many Hats of the Modern Wealth Manager ” !

If you cannot wait to dive into our upcoming research, have a read of our last report “Success in Succession: Life Assurance in the Context of Wealth Transfer”.

What are HNWs’ formulas for success ?

High net worth (HNW) clients are all very different from one another – their requirements are constantly changing, and their financial complexities tend to grow as their wealth does. Providing wealth management solutions to the world’s wealthiest then, must steer far away from cookie cutter approaches. Advisors managing such enormous sums of wealth simply cannot be one trick ponies.

In order to understand the ways in which clients have formulated their views and attitudes towards money and their financial accomplishments, we asked 604 European HNWs about their formulas for success. It became clear to us that these wealthy individuals’ success has not come easily – their formulas are certainly complex. Having a strong work ethic is seen as the largest contributing factor to their current wealth levels, but their character and education levels do not fall too far behind.

~~Interested in learning more? Get ready for the launch of our new report, next week on this blog!~~

UPDATE : download our newly released report ” The Many Hats of the Modern Wealth Manager ” !

Bastien Perrine speaking at Gestion de Fortune’s Round Table

Bastien Perrine, OneLife’s Regional Sales Director for the French market, was interviewed by Gestion de Fortune for their special Round Table dedicated to “The new opportunities of the Luxembourgish Life Insurance”.

The following topics were discussed: French Sapin 2 legislation, client profile, advantages for expats or non-residents, Brexit, protection of assets, Specialised Insurance Fund, private equity and digitalisation.

In addition to Bastien Perrine, other experts included Sabrina Riviere (La Mondiale Europartner) and Jean-Baptiste Pleynet (Périclès Group).

The different views from the Round Table are available in a special leaflet that was enclosed in the March edition of their Monthly newspaper and also sent via their Newsletter (+- 50 000 subscribers).

Interested ? Have a look at the digital French version by clicking here.

OneLife – IT Team of the Year

On December 1st, Eric Lippert and his team were rewarded for their projects and best practices as they have been named ICT Team of the Year. Our team met with the CIO of OneLife to discuss the main challenges he faced in 2016, his team’s main achievements and the top priorities for 2017.

Eric Lippert, CIO, Jean-Philippe Quin, IT Operations Department Manager, Christophe Risse, IT Development Department Manager, Marc Leoka, IT Achitect, receiving their trophy. © Dominique Gaul

Two main challenges

The first main challenge was to simultaneously lead the rationalization of our legacy systems and the development of innovative digital solutions. On the one hand our highly efficient project portfolio management ensured we could build solid foundations in terms of IT infrastructure. On the other hand, we worked in small groups with agile methods on digital initiatives to both quickly identify opportunities and take decisions, and eventually create added value.

The second main challenge was more the management linked to all the changes in the way of working that the new IT/digital environment was bringing to our different users. We overcome this by involving the end-users quickly in the process. We first organized digital awareness workshops to make people understand the “why”. We then involved the users in our agile working groups in order to get their buy-in for the transformation. We finally together designed the new working processes in order to be ready at each stage of our digital transformation.

The IT Team main achievements:

On the software architecture side, the setup of a new SOA architecture.

On the regulatory side, the finalization of IT tools to help our financial department to produce the Solvency II reporting.

On the operation side, first the new policy administration platform with which we succeeded in developing 11 new life assurance products for our markets. This is a significant achievement as we did this in less than 9 months when the average time to automate one new product in the IT system used to be 2 years in the past. Secondly the setup of a new workflow system linked to a new document management system. All our policy transaction processes are now harmonized and orchestrated by these new tools with a substantial gain of efficiency and data quality for our Client Service Team.

On the sales side, the setup of a new CRM with additional online marketing and prospecting tools. This entirely moved our Marketing and Sales teams into the digital age.

The “cherry on the cake” is the mobile app that we launched at the InsurTech Summit in October and deployed in November for our partners.

Read more :

LUXEMBOURG ICT AWARDS 2016: AND THE WINNERS ARE… >>> Here.

ERIC LIPPERT: “DEVELOPING AND OFFERING NEW SERVICES TO OUR PARTNERS” >>> Here.

OneLife – Digital Personality of the Year

For the first time in eight years, the Gala Marketers committee has named a Digital Personality of the Year. Christophe Regnault, Digital Marketing Manager of the OneLife Company was presented with the honour on 24 November.

He met the challenge of launching a digital dynamic and successfully building a three-step action plan entirely around the HUMAN: holding workshops for teams to explain the impact of digital, creating a user-oriented digital ecosystem (internal and external) with interesting and relevant content, and the last step, developing a mobile app.

Step 1:

The first major step was leading some 24 workshops to raise awareness so all employees readily understood digital and how the process could change both their careers and homes lives, all without forgetting to have a little bit of fun in their work! This greatly contributed to the success of the project. The end result was OneLife’s highest SSI (Social Selling Index) industry ranking on LinkedIn.

Grateful thanks are due to everyone who created new profiles, who faithfully updated them and to all employees who shared them.

Step 2:

The second major step involved our rebranding. We took the opportunity to turn this project into a platform to introduce and integrate all the tools our teams needed to start moving forward. Our partners played a critical role, especially since we kicked off everything at once: a CRM system linked to a campaigning dynamic (with the Néréa Company (link)), a new website (with the e-Proseed Company(link)), with all the content, SEO (with the Vanksen agency(link)), social networks and more … all with a new image and feel that allowed us to integrate a much more digital approach.

Step 3:

The third big push in the plan was officially launching our mobile app at the InsurTech Summit (link) in October.

Once again OneLife worked in a very agile mode, that is to say, with three people internally in ongoing contact with our partner (Ainos (link) ) to deliver a mobile app in less than three months … then we spent a lot of time involving our colleagues who to helped refine the tool with all the teams. This way, everyone could test the app and make comments. The Customer Services team was heavily invested and even changed its operating procedures to incorporate the added value sought for our brokers. And that’s only the beginning … because as I have said, we have other ideas for the next versions and our colleagues have given us so many more.

In the end, the desired dynamic has been achieved, that is to say, a real substantive change that went so far as to even change our teams’ ways of working, another form of added value. Through these measures and our teams’ hard work, we (digitally) transformed testing.

Read more:

“LUXEMBOURG MARKETING & COMMUNICATION AWARDS: MEET THE WINNERS” >>> Here.

C. REGNAULT: “BUILDING MOMENTUM AND DYNAMICS IN DIGITAL” >>> Here.