≠Success in ≠Relocation: out with the old and in with the new

The modern wealth manager must provide more than just a strong relationship with their clients. To retain their relocator clients, wealth advisers will need to have the right knowledge to satisfy their client’s international requirements and objectives.

Notably, we discovered that high-net-worth individuals under 35 are the most likely to change their wealth manager following a move abroad.

Disloyal? Unattached?

Not necessarily – many of these millennial magnates simply feel their home-based primary adviser would not be able to fully grasp the complex nature of their international aims. Interestingly, 65% of relocator Baby Boomers are not likely to change their wealth manager. They worry initiating a new relationship abroad will never match the relationship they currently have.

Find out more in our recent thought leadership report: “≠Success in ≠Relocation: The Relocation Journey.”

Marc Stevens and Wim Dieryck, respectively CEO and CCO of OneLife, discussed the question of the future of distribution for life assurance at a conference organised by Wolters Kluwer.

OneLife was sponsor of the 5th edition of the BIC (Belgian Insurance Conference) organised by Wolters Kluwer at the Aula Magna in Louvain-la-Neuve, Belgium, on 21 November with almost 500 participants.

Marc Stevens and Wim Dieryck, respectively Chief Executive Officer and Chief Commercial Officer of OneLife, also presented on the subject of « Digitalisation and personal advice, the future of distribution for life assurance ».

The speakers’ biographies, the full programme as well as the photos of the event are available on https://belgianden -insurance-conference.wolterskluwer.be

≠Success in ≠Relocation: the playbook of international wealth

European HNWs know what they want – especially when it comes to their wealth management. Trust, security and stability are indispensable. And these attributes become even more important for HNWs living in new countries with different tax laws.

To understand their preferences further, we asked relocators and non-relocator European HNWs which capabilities they believe are or would be necessary as part of a wealth management proposition. Quality of service came out on top for both these groups as the most important factor when working with a wealth firm.

Interestingly, the wealthy wanderers of the world also tend to seek out digital offerings much more than their peers who decide to continue living in their country of origin. In contrast, non-relocators seek to work with firms who provide high quality investment performance monitoring services.

Delve into the data even further by clicking: here.

OneLife’s year-end Digital Fireworks!

In 2016, OneLife embarked on a digital transformation journey making it one of the early movers in an area where man and machine are increasingly interacting to improve customer experience. Since then, a number of initiatives have been delivered as per the roadmap, with still more to follow in the coming months and others in the proof of concept stage due for early 2018.

Launching its Digital Days in June 2017 to fully engage employees in the transformation process, the Digital Days Breakfast on 30^th November is the opportunity to highlight the year’s achievements and set out the initiatives to come. Employees across departments at OneLife are involved in implementing digital innovation to improve the experience of partners and clients and in so doing learn the techniques which will allow them to compete in tomorrow’s world.

Training and development at OneLife has also gone digital with the introduction in September of the Lynda.com learning platform from LinkedIn. This tool, offering over 10,000 e-courses, actively encourages employees to learn on a regular basis across all disciplines with certification awarded to acknowledge completion.

Once upon a Digital year – what’s been done?

Data aggregation

OneLife worked closely with Harvest, the leader in France in data aggregation, to offer their mutual independent financial advisors in France this new service, the advantage of which is to provide an overall view of portfolio positions for each of their clients. This initiative is part of a comprehensive digital approach to which other data aggregation initiatives will be added. OneLife is now able to fully support the Penelop format so allowing us to extend our partnership with other market aggregators over the coming weeks. In addition, OneLife recently put a B2B service in place enabling our partners to log on in real time to our platform to view all the information available on their respective portfolio.

The project was delivered in record time thanks to the particularly fruitful collaboration between OneLife and Harvest enabling the new flows to be taken on to further extend the integration of the Luxembourg contracts in O2S. Making the flows available is part of a legal and technical mechanism which guarantees integrity and confidentiality of the personal data (data masking, secure file transfer protocol, cryptographic communication, authentication key, etc.)

Automation of standard processes

Identifying the stages in a well-mapped process which can be done just as well by automated means – and even enhanced in terms of time, accuracy and reporting – is a key area of the firm’s focus. The automation of parts of the OneLife service workspace is just one example. Generating automatic emails to confirm transactions, request missing documentation and manage life policies effectively leaves the company’s Customer Services team with more time on their hands to deal with more complex live customer queries – and so better manage the relationships with their valued partners and clients.

Once upon a Digital year – what’s just around the corner?

A number of other digital initiatives are due for release in the coming weeks.

For the 2017 year-end portfolio statements, the firm is putting in place Dematerialisation, a process which allows the policyholder and his intermediary to view statements directly on the firm’s secure portal, youroffice yourassets instead of in paper form by post. The pdf may be downloaded and stored as appropriate for future reference. The dematerialised statement has the same legal value as the paper form. Efficiency, security and speed are all watchwords of this new paperless process.

Accelerating the client on-boarding process through the automation of KYC and AML checks has been through the test-drive stage at OneLife and is about to be launched. RegTech, or Regulation Technolgy as it is widely known, provides the Compliance team with a powerful technology tool to run the checks and then revert with a recommendation. The team can then intervene to run further checks and/or on-board the clients so significantly speeding up the process from the days when all stages were manual. OneLife partnered with KYCTech, a Luxembourg start-up company, to establish a Proof of Concept for the platform. The service will be implemented in February.

OneLife launched the OneLife OneApp for its partners in Belgium in 2016. It was then made available to the rest of its partner base in August 2017. The next step is to offer it to all OneLife clients from December. The App offers real-time access to portfolios on-line in a secure environment, as well as the ability to track operations and outstanding items. OneLife partners and clients can be sure that their portfolios move with them and are accessible 24/7!

As the final piece in the digitalisation of its on-boarding and service offering, OneLife will introduce an electronic signature capability in the first quarter 2018. The new service will allow partners and clients with access to youroffice, yourassets to sign digitally, eliminating the time-consuming process of physical signatures on switches and top-ups in a first phase and other operations in later stages.

Once upon a Digital year – what’s for next year?

OneLife is also innovating in the area of RPA (Robotic Process Automation). A number of Bots have been launched in 2017 and are already serving the business. A larger scale deployment is planned for 2018.

As a digital front-runner, OneLife is using its internal AGILE approach to identify and implement change across the organisation fast. From concept to delivery, the firm’s digital transformation is not just a promise but a reality. Watch this space for more!

≠Success in ≠Relocation: the mind of a HNW relocator

HNWs’ financial needs are constantly changing depending on personal objectives. Add to the mix a move across borders and things can get complicated. Wealth managers must ensure they are aligned to an individual’s goals and avoid adopting a ‘one size fits all’ approach when offering solutions to their clients.

In our most recent research, we identified various types of high net worth personas. By understanding the specific attributes, behavioural traits, and financial objectives that distinguish one high net worth investor from another, we were able to determine specific ways in which wealth managers need to provide tailored solutions to their entire client base.

We asked European investors how they would sum up their most recent relocation experience, and the results consisted of both positive and negative reactions.

European HNWs claimed they felt their move abroad had been exciting, challenging and adventurous. So with this in mind – what communication styles and specific solutions can wealth managers adopt and offer in order to best align with the cross-border hurdles these relocator clients inevitably have faced? How can they keep hold of clients as they move further away from their home base?

Read more in our thought leadership piece… here.

The ISF is dead – long live the IFI?

Between 17 October and 10 November, France’s National Assembly, the lower house of parliament, has been examining the country’s finance bill for 2018. The bill introduces a new final flat tax (Prélèvement Forfaitaire Unique or PFU), applicable to all savings and investment accounts, including life assurance on a retroactive basis from 27 September, 2017.

While common in the UK or the US, the flat tax is an innovation in the French tax system, applying as it does a single tax rate to a broad range of different situations and sources of income.

The French tax system normally customises tax liability according to the personal situation of the taxpayer and the type of income. This therefore represents a significant change of approach to taxation that originates from the presidential programme of Emmanuel Macron.

The underlying idea is to simplify the taxation of capital held by French residents through the application of a flat tax to a broad range of savings and investment accounts and income:

through application of a single tax rate to all financial income;
to avoid the complexity of the application of France’s income tax for different categories of income, including interests, dividends and capital gains.

The 30% rate of the PFU consists of the following:

5% in income tax and 15.5% in social security contributions up to 31 December, 2017, and
8% in income tax and 17.2% in social contributions from 1 January, 2018

The PFU is applicable to all financial and investment accounts held by French residents from 1 January 2018, and for life assurance retroactively from 27 September 2017.

Certain types of investment or account are not liable to the PFU:

Regulated savings accounts (livrets réglementés) such as the Livret A or Sustainable Development Account, or income tax-exempt savings products such as employee savings plans and pension schemes.
Investments predominantly in shares such as Equity Savings Plans, reflecting the government’s policy to encourage investment in the real economy.
Real estate income, which is, however, impacted by the conversion of France’s wealth tax into a tax in real estate assets.

Therefore, neither life insurance nor bank savings accounts such as home ownership savings plans are exempt from the PFU.

As a result of divisions within the government and poor wording of the draft legislation, taxpayers and life assurance policyholders feared they would face higher taxation on existing contracts than under existing rules. The 30% flat tax was supposed to apply to life assurance contracts with a value of more than €150,000 for an individual and €300,000 for a couple, regardless of the length of time the contract had been held.

However, the government has introduced two amendments to clarify the PFU regime.

All contracts subscribed before 27 September, 2017 will be taxed at current applicable rates, according to the length of time the contract has been held. Should the policyholder make top-ups on the contract, the PFU will apply, with the opportunity to apply the lower tax rate of 24.7% from 1 January, 2018 for the share of premiums paid below €150,000 for an individual and €300,000 for a couple. Contracts subscribed after 27 September, 2017 will be subject to the PFU whatever the length or value of the contract.

Up to now, the tax applicable to withdrawals from life assurance contracts has depended on the length of time the contract has been held and whether the policyholder opts for a one-off levy or income tax. The applicable rate of the levy decreases over time as follows:

A 50.5% tax rate where the life insurance contract has been held for less than four years (35% in income tax and 15.5% in social security contributions).
A 30.5% tax rate for life insurance contracts held for between four and eight years (15% income tax and 15.5% social security contributions).
A 23% tax rate for life insurance contracts held for more than eight years (7.5% income tax and 15.5% social security contributions).

These rates are due to increase to 52.2%, 32.2% and 24.7% as of 1 January, 2018 due to an increase of the level of social security contributions.

It should be noted that the rate of the PFU is lower than that of the one-off levy for a withdrawal within less than eight years but potentially higher after the eight year threshold.

We recommend keeping existing contracts until the eight year threshold without making any top-ups after 27 September, 2017. New contracts should be subscribed for investments after 27 September to ensure the policyholder benefits from the lowest possible rates covering all the premiums they have invested in life contracts above €150,000 euros for an individual and €300,000 for a couple.

This is a unique opportunity to take advantage of the new legislation and benefit from the lower tax rates available to policyholders. OneLife would be happy to help you take advantage of the changes.

Replacement of the ISF by the IFI

Approved on first reading by the National Assembly, the finance bill will replace the wealth solidarity tax (ISF) by a real estate wealth tax (IFI). Here’s the basic outline.

The ISF taxes assets in excess of €1.3m on a progressive scale. The IFI will replace the ISF will the same thresholds and rates.

The taxable base (the assets that are subject to tax) will change considerably, however.

Financial assets (including life assurance policies) will henceforth be excluded, along with forestry assets, works of art, real estate assets related to professional activities and rented furnished accommodation (exclusively under the furnished accommodation rental business regime). By contrast, unfortunately, shares in SCPI real estate investment companies or OPCI real estate collective funds, even when held through a life assurance policy, and all other real estate assets fall within the scope of the new tax.

Fortunately, the allowance of 30% of the value of the taxpayer’s principal residence will be maintained. The other side of the coin is that usufructuaries and reversionary owners will now be liable for their respective fiscal share, and no longer the usufructuary alone.

The bill has now passed to the Senate, which may not necessarily agree with these changes, given a report of 9 November that denounced the changes as incoherent and damaging to the economy.

Nevertheless, the proposals represent appreciable tax savings for many wealthy French households, but at the expense of a sector that accounts for 18% of national wealth and 8% of total employment. More battles may lie ahead between a National Assembly firmly behind the president’s vision and a Senate that remains resolutely opposed to it.

All this underlines even further the advantages of Luxembourg life assurance policies for French residents, and OneLife will keep its partners up to date with further developments on this issue in order to help them guide their clients through the changes.

Article by Jean-Nicolas Grandhaye

≠Success in ≠Relocation: HNWS’ confidantes

Inevitably, stresses and concerns can follow intense change. For relocators creating upheaval in their lives by moving across borders, getting the right support is paramount. Of the 280 European relocators we surveyed, 44% seek advice from their peers.

However, many referenced that actually family advice was the most helpful.

Wealth managers must use relocation as an opportunity to build strong relationships with their clients. Currently, however, they are noticeably absent from the process. Only 25% of relocating HNWs look to their wealth advisers for guidance and just 8% found them the most helpful resource.

Becoming more influential in this process will mean providing clients with a blend of technical advice and emotional support as they embark on this significant change.

Find out more from our recent research: here.

≠Success in ≠Relocation: sentiments towards relocation

The decision to relocate is not easy to execute, especially without an expert guidance.

Individuals must consider the logistics of the move, financial planning, potential tax implications and the impact of moving on social and professional networks. For some, this is enough to put them off relocation!

In our recent research on ‘≠Success in ≠Relocation: The Relocation Journey.’, we asked European HNWs, who have relocated or are planning to, their true feelings about starting afresh in a new country. The general consensus is that relocation is an opportunity which is facilitated by having a flexible approach.

While those who have international aspirations believe relocation has no bearing on their wealth creation potential, the relocators we surveyed were typically wealthier than those who had never moved abroad.

To find out more about what HNW relocators think, click here.

“Quote, unquote” – managing well-diversified portfolios with non-traditional assets

These days, investment portfolios reflect the often global and complex lives which the HNW and their families live. Non-traditional assets such as global real estate, private equity – regulated and non-regulated – and securitisation vehicles are becoming more the norm than the exception when dealing with international wealth.

OneLife is well-placed to take on and value non-traditional assets as part of a life assurance contract, integrating them into the client’s global wealth solution no matter how diverse the portfolio. This has the benefit of giving our clients and their advisors a clear overview of their portfolio as a combination of both traditional and non-traditional asset classes.

Our dedicated team of Unquoted experts carefully analyses each asset within the portfolio to ensure it meets tax and regulatory requirements. A thorough understanding of cross-border jurisdictional matters is necessary to allow us to assess the risks of a broad range of assets.

This is in line with OneLife’s strategy to offer comprehensive, flexible and up to date wealth solutions for its partners and clients. OneLife’s expertise is backed by Luxembourg’s insurance regulation which not only allows a wide range of underlying investments in internal funds but also regularly updates and enriches the arsenal of unlisted related tools like Specialised Insurance Fund (SPIF), a self-management solution, as well as other structures. The regulator’s pragmatic approach offers interesting and flexible wealth planning opportunities to individuals with different tax jurisdictions by considering the potential benefits and risks.

Non-traditional assets were on the agenda of OneLife’s 10^th Investment Forum held on 19^th October in Brussels. This year’s anniversary event gathered together over 550 visitors, 40 fund houses … and included 38 working sessions on diverse themes.

Anthony Lorrain, OneLife Director Non-traditional Assets and Liana Aghabekyan, OneLife Financial Assets Analyst, held a panel presentation for an international audience giving insight into current topics such as, Why is Luxembourg Life Insurance particularly suitable for the non-listed world? How can non-traditional assets be integrated into life insurance contracts? Unlisted in regulated or non-regulated environments: risks associated with non-traditional assets.

OneLife is a member of the Luxembourg Private Equity & Venture Capital Association (#LPEA). With over 120 members, LPEA plays a leading role in the discussion and development of the investment framework and actively promotes the industry beyond the country’s borders.

To learn more, please contact Anthony Lorrain or Liana Aghabekyan.

#Success in #Relocation: motivations for HNW relocation

European HNWs are increasingly becoming internationally mobile and over a quarter are already planning their next move. Yet in spite of these widespread aspirations to relocate, the specific drivers for moving abroad are diverse. For 37% of HNW relocators, career progression is the most influential factor, followed closely by lifestyle reasons. Professional development is important for 42% of HNW women alongside the desire to provide their children with better opportunities. By contrast, a primary motivation for men is to have a more comfortable retirement.

HNW relocators clearly think beyond the financial reasons for relocation and are driven by opportunities to improve both their careers and their lifestyle. So, it is critical that wealth management providers acknowledge what makes HNW relocators tick and provide services which are aligned with their cross-border motivations.

Discover more about the reasons why European HNWs move abroad by accessing our latest research: here.