There is an investment ‘confidence gap’ for both experienced investors unwilling to pay for advice upfront and for novice investors who don’t have the understanding of financial markets, or the confidence in their understanding, to invest their savings. As a result, many investors are holding too much cash, and risking their financial future as a result.
Presentation is taken from paper titled Crowdfunding: An Infant Industry Growing Fast, from Eleanor Kirby and Shane Worner
Content:
1. Definition and various form of crowd funding
2. The Nature of Industry
3. Business Model
4. Risk & Benefit
5. Regulatory Regimes
6. Analysis of Systemic Risk
7. IOSCO Principle
Petros Law Group- SEC Investment Contract Framework BreakdownPeter Hatzipetros
A powerpoint summary of the recently released (April 2019) guideline from the Security and Exchange Commission's FinHub Division entitled "Framework for 'Investment Contract' Analysis for Digital Assets".
Official Framework Release: https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets
Video: https://www.youtube.com/watch?v=TfvlNiLpjVQ
Presentation is taken from paper titled Crowdfunding: An Infant Industry Growing Fast, from Eleanor Kirby and Shane Worner
Content:
1. Definition and various form of crowd funding
2. The Nature of Industry
3. Business Model
4. Risk & Benefit
5. Regulatory Regimes
6. Analysis of Systemic Risk
7. IOSCO Principle
Petros Law Group- SEC Investment Contract Framework BreakdownPeter Hatzipetros
A powerpoint summary of the recently released (April 2019) guideline from the Security and Exchange Commission's FinHub Division entitled "Framework for 'Investment Contract' Analysis for Digital Assets".
Official Framework Release: https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets
Video: https://www.youtube.com/watch?v=TfvlNiLpjVQ
Market volatility, changing regulatory requirements, increased service demands, advancement in technology and increased competition are posing challenges to build innovative solutions for interoperable and cohesive systems. This whitepaper defines the role of an advisor portal, reveals the challenges faced by the advisors, with particular focus on those providing services to High Net Worth Individuals (HNWI), explains the underlying complexitie s faced by the advisor community and lists the business processes used by advisors.
Impact of the JOBS Act on Private Offerings (Series: The Job Act - A Retrospe...Financial Poise
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/on_demand_webinars/impact-of-the-jobs-act-on-private-offerings/
This webinar explores what many call “accredited investor crowdfunding,” effectively established by the JOBS Act in mandating the elimination of a ban on general advertising and solicitation in private offerings carried out pursuant to Rule 506 of Regulation D under the Securities Act of 1933, and authorizing the creation of Internet platforms specifically designed to facilitate compliant Rule 506 offerings to accredited investors.
Pathway Lending, the Tennessee Bankers Association, and the Tennessee Housing Development Agency are working together to identify qualified developers, underwrite loan requests, and participate loans with Subscribing banks.
These loans provide developers with a long-term, fixed rate, permanent mortgage for their Low-Income Housing Tax Credit awarded developments. These loans also play a major role in improving economic conditions, incomes, taxes, and jobs in low-income communities across Tennessee.
Whether a communication need be filed depends on the content, context, and presentation of the particular communication or set of communications and requires an examination of the underlying substantive information transmitted to the social media user and consideration of any other facts and circumstances, such as whether the interactive communication is merely a response to a request or inquiry from the social media user or is forwarding previously-filed content. The following examples of interactive communications are intended to provide more guidance.
GBRW Consulting has been analysing the major Multilateral Development Banks - International Bank for Reconstruction & Development, or World Bank; International Finance Corporation; Inter-American Development Bank; African Development Bank; Asian Development Bank and European Bank for Reconstruction and Development- since the late 1990s.
This is the second of two presentations available on SlideShare. It illustrates some of the main characteristics of the financial statements of this very specialised group of institutions, which we refer to as MDBs.
Study on Mutual Fund is the Better Investment PlanProjects Kart
Mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual fund is the ‘safety of the principal’ guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer Mutual Funds to bank deposits, life insurance and even bond because with a little money, they can get into the investment game. One can own string blue chips like ITC, TISCO, Reliance etc., through mutual funds. Thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to an ordinary investor with his small investment.
Market volatility, changing regulatory requirements, increased service demands, advancement in technology and increased competition are posing challenges to build innovative solutions for interoperable and cohesive systems. This whitepaper defines the role of an advisor portal, reveals the challenges faced by the advisors, with particular focus on those providing services to High Net Worth Individuals (HNWI), explains the underlying complexitie s faced by the advisor community and lists the business processes used by advisors.
Impact of the JOBS Act on Private Offerings (Series: The Job Act - A Retrospe...Financial Poise
To view the accompanying webinar, go to: https://www.financialpoise.com/financialpoisewebinars/on_demand_webinars/impact-of-the-jobs-act-on-private-offerings/
This webinar explores what many call “accredited investor crowdfunding,” effectively established by the JOBS Act in mandating the elimination of a ban on general advertising and solicitation in private offerings carried out pursuant to Rule 506 of Regulation D under the Securities Act of 1933, and authorizing the creation of Internet platforms specifically designed to facilitate compliant Rule 506 offerings to accredited investors.
Pathway Lending, the Tennessee Bankers Association, and the Tennessee Housing Development Agency are working together to identify qualified developers, underwrite loan requests, and participate loans with Subscribing banks.
These loans provide developers with a long-term, fixed rate, permanent mortgage for their Low-Income Housing Tax Credit awarded developments. These loans also play a major role in improving economic conditions, incomes, taxes, and jobs in low-income communities across Tennessee.
Whether a communication need be filed depends on the content, context, and presentation of the particular communication or set of communications and requires an examination of the underlying substantive information transmitted to the social media user and consideration of any other facts and circumstances, such as whether the interactive communication is merely a response to a request or inquiry from the social media user or is forwarding previously-filed content. The following examples of interactive communications are intended to provide more guidance.
GBRW Consulting has been analysing the major Multilateral Development Banks - International Bank for Reconstruction & Development, or World Bank; International Finance Corporation; Inter-American Development Bank; African Development Bank; Asian Development Bank and European Bank for Reconstruction and Development- since the late 1990s.
This is the second of two presentations available on SlideShare. It illustrates some of the main characteristics of the financial statements of this very specialised group of institutions, which we refer to as MDBs.
Study on Mutual Fund is the Better Investment PlanProjects Kart
Mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual fund is the ‘safety of the principal’ guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer Mutual Funds to bank deposits, life insurance and even bond because with a little money, they can get into the investment game. One can own string blue chips like ITC, TISCO, Reliance etc., through mutual funds. Thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to an ordinary investor with his small investment.
The Securities and Exchange Board of India (SEBI) on Tuesday issued a consultation paper on proposed rules on crowdfunding aimed at allowing start-ups in India to raise funds from the general public over the Internet.
Presentation at the Vaughan, Ontario, Canada Business Series with Panelists: Jim Turner, VP of Ontario Securities Commission, Christopher Charlesworth and Hivewire, Adam Spence, SVX
How emerging managers can raise capital, hire the best people, sustain profitability and organize for tax efficiency. More here: http://gt-us.co/1qG5Xlu
The growth of ‘DIY investors’: RDR changes pushing a move to self directionPhilip Brooks
It will soon be two years since the Retail Distribution Review (RDR) came into force and represented a major shake up for the retail investment market. Incorporating the latest Harris Interactive poll data, we assess the impact on the use of professional advice and the implications for the future.
The growth of 'DIY Investors': RDR changes pushing a move to self direction?Harris Interactive UK
It will soon be two years since the Retail Distribution Review (RDR) came into force in the UK and represented a major shake up for the retail investment market. Incorporating the latest Harris Interactive poll data, the latest edition of viewpoint assesses the RDR's impact on the use of professional advice and the implications for the future.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Yes of course, you can easily start mining pi network coin today and sell to legit pi vendors in the United States.
Here the telegram contact of my personal vendor.
@Pi_vendor_247
#pi network #pi coins #legit #passive income
#US
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Social Investing: Opportunity to Address Confidence Gap - Black Swan Partners
1. 1 | P a g e
Specialist Retail Investment and
Trading Consultants
Social Investing Part I
The Opportunity to Address the Confidence Gap
Authors:
Dominic Crosthwaite
& Stuart Millson
16 May 2014
Social Investing Part I : The Opportunity to Address the Confidence Gap
3. 3 | P a g e
1. Executive Summary
1.1 Advice and Confidence Gap for Private Investors
The Retail Distribution Review (RDR) created an ‘Advice Gap’ among private investors, with many
smaller investors unable or unwilling to justify the cost of paying for investment advice upfront. An
additional less documented problem is the ‘Confidence Gap’ among potential investors, because
even before RDR, there were large numbers of people who did not have sufficient confidence in their
own understanding of investing to even approach an adviser.
Giving people the understanding, confidence and skills required to become self-directed investors is
key to increasing the future wealth of millions of UK families. The increase in the ISA threshold,
ability to switch between cash and stock ISAs and the abolition of the need to buy an annuity has
increased the opportunity for private investors, and for the operators that cater for them.
1.2 Social Investing
Social investing is anything that allows clients to see other clients, communicate with each other or
view and copy investments.
The FCA’s recently issued guidance suggests that regulated entities can operate social investing
platforms, as long as the operator has investment advisory and management permissions and
ensures that any advice or investment management is suitable for the client receiving it.
By allowing clients to view each other’s investments and identify and seek guidance from fellow-
clients they know, social investing can bridge the confidence gap among novice investors. For more
experienced investors, it avoids the upfront fees required to use a financial adviser following the
Retail Distribution Review (RDR) and reduces the time necessary to research self-directed
investments, as well as providing the reassurance of peers.
1.3 Opportunity
The clients least well served by the current market are a) those who previously used a financial
adviser but do not have a sufficiently large portfolio to justify paying upfront fees for advice
following RDR (‘IFA Orphans’) and b) clients holding savings in cash who would benefit from holding
more risk-based assets but are put off by lack of confidence or understanding.
IFA Orphans hold investments of £30 billion1
, while cash ISA holdings at April 2013 were £210
billion2
. Investors with larger portfolios seeking alternatives to the upfront fees of a financial adviser
or the high basis point charges of discretionary managers can also benefit from social investing.
Social investing offers existing financial firms the opportunity to reach these clients. Retail banks can
attract more sophisticated investors and increase portfolio sizes, self-directed platforms can attract
less confident investors and wealth managers can attract more mass-market investors. Meanwhile
new entrants, whether start ups or established retail brands such as social networks, supermarkets
or others, can use social investing to enter the retail investment market.
This paper explains why social investing and the harnessing of social media trading tools can improve
the quality of the investment experience for novice and experienced investors, and benefit operators
by expanding their client base and incorporating referral functionality to lower cost of acquisition.
1
BSP Estimate based on IMA Asset Management Survey 2012
2
http://www.hmrc.gov.uk/statistics/isas/statistics.pdf
4. 4 | P a g e
2. Social Investing
2.1 An Introduction to Social Investing
Social Investing is the act of facilitating the communication and sharing of individual and aggregated
investment decisions via a network and allowing users to take guidance from their friends and peers
before investing in suitable financial products.
Social investing fills the advice and confidence gap faced by many clients and potential clients in the
modern investment market. Modern consumers, both naturally distrustful of professional advisers
and often unable to justify the expense of advice, are at risk of under investing in risk based assets
and having an over allocation of cash3
in part due to a lack of confidence and understanding of
financial markets. Social investing can address this confidence gap, as investors become more
familiar with the investment decisions taken by friends, family and colleagues who they trust.
The Elements of Social Investing
Table 1: The Elements that go into making an investment platform social
Social Investing Element Description
1. Aggregated Data &
Market Insight
Show the most relevant client fund choices and related holdings by
the different groups of clients and individuals
2. Client Network
Clients can interact with each other, create groups and individual
profiles and for these to be viewed publicly
3. Analysis & Investment
Sharing
Clients are able to post investment analysis and analyse and share
investment portfolios
4. Social Guidance
Allow clients to receive guidance by following the monitored activity
of other groups and individuals in regulated environment
5. Socially Guided
Investment
Enable clients to manually or automatically copy investments of
others, subject to suitability profiling
CONFIDENT THAT YOU ARE NOT BEACHING ANY REGLATORY CONSTRAINTS CHECK
Some of these elements, such as social guidance, are new concepts, whilst others, such as discussion
forums, are more established but are being challenged by emerging social technologies. The
elements that have the greatest potential to bridge the confidence gap and improve client
acquisition for operators are the creation of client networks and socially guided investment. In these
ways clients are able to view people they know who use the investment platform and lean on them
for the guidance and support they are unable to find elsewhere.
Upside for Operators
From an operator’s point of view, the introduction of a social element can deliver:
Improved client trading decisions
Increased transactions through increased confidence
Increased number of client acquisitions through referrals
Lower cost of client acquisition
3
Blackrock – Global Investor Pulse Survey 2013
5. 5 | P a g e
Issues & Misconceptions
Social investing should not be confused with the emerging sector of social trading. Social investing is
focused on guiding customers to make medium to long-term investment decisions. Social trading is
the act of following customers into short-term, leveraged CFD trades, often at wide spreads, which
make it very difficult for the follower to generate positive returns on an ongoing basis.
2.2 The Market for Social Investing
While social investing can be suitable for any investor, it is likely to be of most benefit to those who
are least well-served by the current market, put off by what they consider to be complexity and a
lack of confidence in their own ability to make investment decisions. Most obvious and talked about
within the industry are ‘IFA Orphans’, investors who previously used an IFA, with a portfolio of less
than £100,000, but are put off by having to pay an upfront hourly fee. There is believed to be at least
£30 billion4
in portfolios of this type.
An even bigger potential market is the group of people who have never sought advice and never held
a risk-based asset, but could benefit from doing so. Nearly £150 billion was invested in cash ISAs
between April 2009 and April 2013 alone5
. For many of these investors, a stocks and shares ISA
would have been a better choice.
The changing regulations, including the merging of cash & stock ISAs into the New ISA (NISA), will
reduce some of the barriers to risk-based investments and provide operators, able to offer
appropriate guidance, a new potential market of 12 million6
new investors.
2.3 The Regulation of Social Investing & Social Media
Social investing shares many of the attributes that are currently being considered by the FCA in its
review of social trading in the CFD/FX sector. A consultation paper is expected mid-2014, but a letter
issued7
on social trading in March 2014 outlines the FCA’s initial thoughts.
The letter suggests that offering clients the opportunity to copy the investments of others could
constitute ‘Advising on Investments’. If the trades can be copied automatically, without being
individually approved by the copier, then it constitutes ‘Managing Investments’.
The regulations can be applied differently depending on the nature of the social investing business
model and there are also a wide range of ‘social investing’ components, such as profiles, alerts and
market sentiment that can be added to a financial company’s services without the need for specific
regulatory permissions.
It is clear that regulated operators can create suitable environments where investors can engage
with each other about specific investments and to copy each other’s investments, but if operating
with Advisory or Investment Management permission, a company will need to have appropriate
controls, for example processes and systems in place which prevent clients from making investments
which are unsuitable for their personal circumstances.
The regulatory environment around social investing is evolving and the FCA is also scheduled to
publish social media guidance for financial services firms in 2014.
4
Black Swan Partners estimate, based on IMA Asset Management Survey 2012
5
&4
http://www.hmrc.gov.uk/statistics/isas/statistics.pdf
7
http://www.ft.com/cms/s/0/fa905d08-a606-11e3-b9ed-00144feab7de.html#axzz2zuG9owD5
6. 6 | P a g e
2.4 The Opportunity for Existing Operators
2.4.1 Addressing the Confidence Gap
Graph 1: Illustrating the Confidence Gap between Retail Cash ISAs and Other Investments
By addressing the confidence gap through social investing, retail banks can attract more
sophisticated investors and increase portfolio sizes, self-directed platforms can attract less confident
investors and wealth managers/stockbrokers can attract more mass-market investors. Marketing
costs can be greatly reduced by building a referral mechanism into the business model.
2.4.2 Core Influencers
Although a truly social investment platform is a new concept, designed particularly to help those
who have little experience of investing to feel more comfortable doing so, it relies upon acquiring a
core group of influencers who can provide the guidance that clients lack in the post RDR
environment.
These influencers are likely to be experienced investors, and existing users of direct investment
platforms. The challenge is to sufficiently motivate experienced investors to share their trading
activities and to facilitate the sharing of investments and trade ideas through technology.
2.4.3 The Potential Providers
The social investing functionality can be offered by start-ups or incorporated into existing financial
services companies or established non-financial brands.
Established financial institutions have an existing group of customers and assets under management,
but have struggled to attract clients whose confidence in the stock market has been shaken by the
financial crisis. Social investing tools can be used to reassure this type of client and grow their client
base.
New retail investing entrants can establish a trustworthy brand over time and have the technical
flexibility to add new functionality quickly, which will help them grow from a small base. Established
non-financial brands, in particular social media brands, with an established presence and large
socially minded client-bases to target have an ideal target audience for a social investment service
that addresses the perceived failings of existing investment services.
7. 7 | P a g e
3. The Retail Investment Market
3.1 IFAOrphans & Lost Savers
3.1.1 Advice Gap
The ’Advice Gap’ refers primarily to IFA clients with portfolios of less than £100,000. It is not
considered viable for investors with less than £100,000 to pay £500 a year for advice upfront, which
represents in excess of 50 basis points a year. Of the £300 billion placed into funds by UK investors at
the direction of IFAs before RDR, it is estimated that £30bn was in portfolios of less than £100,0008
.
The alternative for these clients, ‘IFA Orphans’, representing 70% of IFA clients and 10% of their
AUM, is a self-directed portfolio. Historically they may have shied away from self-directed investing,
lacking the understanding or confidence to make investments without advice. However in many
fields technology and culture are creating a shift away from the need for regular personal advice and
establishing an environment where customers seek guidance. The most sought after guidance comes
from friends, family or colleagues, and this will apply to investments as it does in other industries.
IFA Orphans will want to have some source of guidance for their investment decisions, but in a
simple, transparent and above all cost-effective form. There is a gap in the direct to consumer
market to provide IFA orphans, and others, with the confidence and reassurance they need to make
self-directed investment decisions.
3.1.2 Confidence Gap
Beyond IFA Orphans, there are significant numbers of people in the UK who have never sought
financial advice and never owned a risk-based investment, despite being regular savers. The total
value of Cash ISAs in the UK was £210 billion in April 20139
. While a cash ISA is an appropriate
investment for some people, it is likely that the age, financial circumstances and risk profiles of many
of these savers would have made a stocks and shares ISA a more appropriate option.
Table 2: Comparison of £1,000 a Year Invested in Cash vs. FTSE All-Share ISAs Since 2004
Year
Amount
Invested
Yearly
ISA Cash
Value
Savings
Interest
%/Year
FTSE All-
Share ISA
Value
FTSE All-Share
Total Return
%*/Year
2004 1,000 1,000.00 1,000.00
2005 1,000 2,049.20 4.92 2,215.40 21.54
2006 1,000 3,145.10 4.68 3,575.40 16.25
2007 1,000 4,319.65 5.55 4,747.73 4.82
2008 1,000 5,539.52 5.09 4,303.00 -30.43
2009 1,000 6,661.94 2.21 6,577.54 29.62
2010 1,000 7,848.48 2.8 8,499.06 14.01
2011 1,000 9,064.31 2.75 9,162.50 -3.96
2012 1,000 10,318.11 2.8 11,243.67 11.8
2013 1,000 11,498.68 1.75 14,527.26 20.31
Table courtesy of www.swanlowpark.co.uk
* FTSE All-share return includes 0.5% management fees for tracker fund
8
BSP estimate, based on IMA Asset Management Survey 2012
9
HMRC ISA Statistics, http://www.hmrc.gov.uk/statistics/isas/statistics.pdf
8. 8 | P a g e
The Governments amendment to the ISA rules will lower the boundaries for potential investors to
enter the investment market. However, there are several reasons why these ‘lost’ savers - people
who would benefit from risk-based investments but don’t use them – choose not to. Above all is a
lack of guidance as well as flexibility to move investments, which contributes to a lack of
understanding or at least a lack of confidence in their understanding of the products. Marketing
often doesn’t reach them, and when it does the presentation and jargon of those warnings doesn’t
sufficiently tackle shortages in understanding and confidence.
This issue of ‘lost’ savers is particularly prevalent among women. Although women save a higher
percentage of their income than men do, the number of male platform users is more than double
the number of female users, and only 26% of women hold a risk-based investment at all compared
with 32% of men.10
3.2 What are the Lost Savers looking for?
Besides a return on their investments, in the simplest form, inexperienced, uncertain investors are
looking for three things from investment providers – simplicity, transparency and trust.
Table 3: Required Attributes of Investment Products
Required Attribute Description
1. Simplicity
Is the provider’s website simply and clearly laid out, showing only the
information they need to know but with any information they might
want to know easily accessible?
2. Transparency
Is it very clear where your money will be invested, why, and how
much it will cost?
3. Trust
Does the site inspire sufficient confidence to trust them with your life
savings?
Examples of providers that best adhere to the principles of simplicity, transparency and trust are
Nutmeg in the UK, and Wealthfront in the US.
10
The Platforum
9. 9 | P a g e
Picture1: Screen grab of Nutmeg Portfolio
The image above shows a sample Nutmeg portfolio, tailored to the circumstances of the client. A
new user can view a tailored, sample portfolio with 5 clicks after reaching the website, choosing their
investment goal, investment timeframe, investment amount (lump sum and monthly) and risk
appetite.
Simple
questions
to establish
risk profile
Asset allocation
explained
Chosen timeframe
affects asset
allocation
Name your
fund to
add
meaning to
your goal
Costs shown on
additional tab
Performance stats
available
Lots of ways to view
asset allocation
10. 10 | P a g e
Wealthfront has a very similar approach, though they also ask two questions on attitude to risk to
assign clients a risk profile, rather than allowing clients to choose their own. Nutmeg asks these
questions later, alerting the client if their answers do not match their chosen risk profile.
On Wealthfront, the prospect can open an account and invest with 10 more clicks by entering their
name, address, birthday, phone number, social security number and amount they wish to invest.
Deposits are then completed electronically and the securities purchased as soon as funds are
cleared. In all, a portfolio can be selected and an account opened and funded within 10 minutes. The
only disappointing element is that the account cannot be funded with a real-time deposit, meaning
that clients cannot view their live portfolios as soon as they have been opened.
This approach is catching on – as at April 30th
2014 Wealthfront has $800,000,000 under
management, up from $100,000,000 in January 2013 and $538,000,000 in mid-January 2014, yet
when compared to the largest asset management firms there remains significant potential for
further growth. With fees at 0.25% (0% on first $10,000) Wealthfront needs to manage costs and one
key area is marketing expense - as of August 2013, Wealthfront had no advertising of paid marketing
spend11
with growth coming through referrals.
3.3 Track Record & Referrals
One of the biggest issues is a lack of a track record. Nutmeg has not yet been in operation for long
enough to have a meaningful track record12
, and Wealthfront uses the historical performance of ETFs
it offers to illustrate potential returns. Both companies are relying on trailblazers and early adopters
spreading the word. The advantage for existing operators is the opportunity to combine an existing
track record with social investing components.
For Wealthfront, in the absence of a long-term track record and minimal marketing spend, the
source of growth over the last 12 months has been referrals from existing clients, of which a lot are
employees of tech firms in Silicon Valley, which is its own close-knit network. It leverages this
network by featuring some of its well-known tech clients on the homepage.
Picture 2: Wealthfront Clients as shown on its website
11
http://pando.com/2013/08/12/hungry-index-ventures-cashes-out-3-5m-in-early-wealthfront-employees-stock/
12
http://www.nutmeg.com/how-we-invest#portfolio-performance & https://www.wealthfront.com/questions
11. 11 | P a g e
3.4 The Missing Element
Existing and emerging platforms have so far failed to create meaningful social functionality within
their platforms.
For example on one of the emerging platforms, the prospects cannot easily see which of their
contacts are already clients, and they can’t see which portfolio their peers have chosen to invest in.
This lack of effective social investing mechanism built into the product is impacting the chance to
bridge the existing investment confidence gap.
For example established and emerging companies all use suitability questions to determine a
customer’s risk profile, which ultimately leads to a numerical score. Online customers want more –
they want to get a feel for what other users with similar circumstances are doing.
Combine the social element with the track record and platform functionality of an established player
or the low cost simplicity of emerging providers and you have the perfect combination; customers
being given the confidence to invest in products at the appropriate risk level and being guided to
invest in suitable investment products.
In Social Investing Part II we will examine the components that make up a good social investing
offering and how operators can address this market. To receive a copy of Social Investing Part II,
please email stuart@blackswanpartners.co.uk.
12. 12 | P a g e
4. Black Swan Partners
Black Swan Partners specialises in innovation in the retail investment and trading sectors. We marry
a hard-nosed commercial framework to innovative thinking and have the expertise to bring your
vision of the future to reality. We can assist operators and new entrants develop a social investing
product that will help attract new clients and reduce an operator’s cost per acquisition.
Our consulting approach puts the client experience at the centre of everything we do. Optimising
and understanding every stage of aspect of the client experience enhances the customer acquisition
process, lowers the cost per account, improves client satisfaction and increases revenue and profit
margins. With social investing, our aim is to build elements into the client lifecycle that help
inexperienced investors overcome the barriers currently dissuading them from investing and
experienced investors invest more.
Black Swan Partners have completed projects advising operators in this space, as well as presenting
to the FCA about the social trading sector and their approach to this market.
We are excited about the opportunities that social investing offers, especially the prospect of
opening risk-based investments to a wider-audience, and would be happy to meet with any
operators to discuss in more detail.
4.1 Contact Details
For further information, please contact:
Dominic Crosthwaite Director, Black Swan Partners Limited
Email: dominic@blackswanpartners.co.uk
Tel: 0203 176 0090
Mob: 07764 195 501
Skype: dcrosthwaite
Stuart Millson Analyst, Black Swan Partners Limited
Email: stuart@blackswanpartners.co.uk
Tel: 0203 286 8975
Mob: 07786 551 764
Skype: stuart.millson