Results of client ethical views survey

As many of you are probably aware we have a survey on our website entitled ‘What are your ethical concerns?’ We’ve put this up to find out what people’s ethical views are, mostly so we can further understand what funds we should be researching to add to our portfolios to better suit our clients.

The results are as follows:

·         100% of people would be concerned if their pension or investment was supporting animal testing for non-medical purposes, such as perfume or cosmetics

·         100% of people would be concerned if their pension or investment was supporting the intensive farming of animals.

·         100% people would be concerned if their pension or investment was supporting the manufacture of armaments.

·         87.50% of people would be concerned if their pension or investment was supporting climate change/fossil fuels-the extraction and exploration of fossil fuels.

Luckily, all our portfolios are now fully divested. Ensuring that our clients’ pensions and ISAs benefit from all the research and attention you would expect from a wealth manager, whilst helping the transition to a sustainable economy and relationship with the world.

·         87.50% of people would be concerned if their pension or investment was supporting gambling.

·         100% of people would be concerned if their pension or investment was supporting human rights violations.

·         62.50% of people would be concerned if their pension or investment was supporting pornography.

·         88.89% of people would be concerned if their pension or investment was supporting tobacco.

These results are intriguing and help us better understand what clients would possibly want in their portfolios, allowing us to narrow down our research.

We aim to keep these results regularly updated and shared with you to give you a brief look at what other people’s thoughts and ethical issues are.

Our Chartered status

Purposeful.Money have previously achieved Chartered Status and we now feel it is important to explain what this actually means, as it is an important award with significant recognition. 

The status was awarded to Purposeful.Money by the Chartered Insurance Institute (CII) and acts as a kitemark for quality in the eyes of the public being widely recognised as a symbol of trust. 

This recognition is more important nowadays as quite rightly consumers are more demanding than ever before. Understandably they expect to deal with Financial Advisers who can provide first class service, advice and support. Independent research has shown that consumers recognise the Chartered status as a symbol of professionalism and excellence.

What does the charter mean though and why is it such a symbol of excellence?

Essentially, Chartered Status enables us to be able to demonstrate our professional commitment to raising standards of knowledge, capability and ethical practice.  It lets our clients know that they will receive the highest levels of service from us.

Any client who engages the services of a Chartered Financial Adviser can expect the highest level of qualifications to have been achieved along with the highest standards of professionalism.

Royal Charters date back as far as the 11th century and can cover bodies such as Universities, Charities and professional Institutions.  On the advice of the Privy Council a Charter is awarded by the Monarch of the time.  These are granted in rare circumstances and in general terms is only done so where there is a convincing case that it is in the public Interest to provide Government oversight of the body and where a profession is able to demonstrate a track record of achievement over a number of years.

Once a professional body is granted this Charter they are then able to grant ‘Chartered Titles’ to individuals and firms which meet strict qualifying criteria.  In our circumstances the CII, who were granted its Royal Charter in 1912, must uphold the rules of its Charter and in turn the holders of the Chartered titles such as Purposeful.Money must comply with their Code of Ethics

Chartered Status brings with it some serious obligations on the part of the adviser.  We are required to ensure that our advice and ongoing support is:

• Of the highest quality

• Based on the client’s researched needs

• Provided by someone operating within their level of competency

Advisers must meet these requirements in a number of ways:

• A commitment to professional development, including attaining the highest qualifications

• An adherence to continual professional development that is evidenced to the CII.

Even though the Royal Charters are a British Institution it is widely recognised outside of the UK as well.  Being able to demonstrate an ongoing commitment to professional development is a set of values that is recognised the world over.

At Purposeful.Money we are proud to have achieved the status of Chartered Financial Advisers and continually strive to meet the code of ethics and standards of professional qualifications set by the CII.  Our core objective is to offer clients an opportunity to invest their money in a more socially responsible manner in order to help achieve positive benefits in the world.  We believe that the ethics and values required to maintain the Chartered Status are in perfect accord with our own principles of integrity and trust.

Palm Oil, good or bad?

Palm oil is a vegetable oil that is produced by simple steaming and pressing (Palm Oil Health), much like how olive oil is produced. Global consumption has risen from 14.6 million tonnes in 1995 to 61.1 million tonnes in 2015 (EPOA). This vegetable fat can be found in 50% of packaged goods, baked goods, cosmetic and cleaning products in supermarkets (Rainforest Rescue). Even though palm oil is widely popular it might be a bit tricky investigating product labels for a direct reference as it comes under various names, a few being: vegetable oil, vegetable fat, sodium lauroyl lactylate/sulphate, hydrogenated palm glycerides, ethyl palmitate, octyl palmitate, palmityl alcohol, palm kernel, palm kernel oil, palm fruit oil, palmate, palmitate, palmitic acid, palmitoyl oxostearamide, glyceryl, stearate, sodium lauryl sulfate or sodium palm kernelate.

The popular ingredient needs hot and moist conditions to thrive in. Conditions that are commonly found in rainforests, more specifically within 10 degrees north or south of the equator. Malaysia and Indonesia account for around 90% of the entire world’s palm oil production (Palm Oil Investigations). Why is it so popular you might ask? One reason is its ability to maintain its properties even under high temperatures, as the highest-yielding vegetable crop it produces up to 10 times more oil per unit as compared to soya beans and sunflowers (Earth and World). It also requires less than half the land required by other crops to product the same amount of oil, making it the cheapest vegetable oil in the world.

Even though palm oil has very recently come under scrutiny as Iceland released their Christmas advert and it was banned from the UK as it was ‘deemed to breach political advertising rules’, the debate on whether it’s good or evil can be dated back on the web to 2011.

The banned advert has had about 30 million views over social media streams. (Image Source: PA/Greenpeace)

The Iceland advert was originally produced by Greenpeace, it shows a cartoon orangutan mourning the loss of its home, a forest, that was wiped out to make way for palm oil plantations. Just like Brazil is clearing hectares of its rainforests to make way for cattle ranching, countries with optimal conditions to grow palm oil are doing the same. The WWF states that up to 300 football fields of forest are cleared every hour to make room for palm plantations.

This sensitive video has led to many questioning their unconscious usage of products featuring palm oil derivatives, is there a way to curb our thirst for it and use other more sustainable products?

It is said that in the past 10 years, the orangutan population has decreased by 50% as the result of habitat loss from the forest clearing for palm plantations (The Orangutan Project), at this rate many experts have estimated that orangutans could become extinct in the wild in less than 25 years. Not only are orangutans a victim of deforestation, but there are around 300,000 different animals found in the jungles of Borneo and Sumatra. These animals are being killed, injured and displaced due to the clearing of forests, they’re also at a higher risk by poachers and wildlife smugglers due to the increased accessibility. Apart from the impacts on wildlife, lies the impact on the environment- deforestation to make way for the palm plantations puts a huge strain on the biodiversity of the forests and ecosystems in the country. The ‘most efficient’ removal of the native forests is by burning invaluable timber, which releases vast quantities of fumes into the air- making Indonesia the third highest greenhouse gas emitter in the world.

Smog engulfs the forest as an annual slash and burning starts. (Image Source: CNN)

Wildlife and animals are as greatly affected as the local communities, indigenous communities have witnessed the government hand over their land to private companies and have subsequently become laborers on their own land. This dilemma dates to 1967 but started to get worse towards the late 1990s as locally elected officials began to exercise virtually total control of land allocation and used it to facilitate access for plantation companies that didn’t abide by environmental warnings or regulations. The problem here might not be so much palm oil as a crop but instead its profitability and the multinational companies that want to take a bite out of this profit.

As soon as Iceland’s advert went viral, several petitions popped up on the web urging people to join in the collective boycotting of palm oil and all its derivate products. While this seems like an understandable stance, there has been a lot of talking that this could bring more harm than good to the forests of Indonesia and like countries. A report published by the International Union for the Conservation of Nature stated that blacklisting palm oil would ‘just shift losses to wildlife and animals instigated by agriculture’, instead of reducing them. If palm oil was completely boycotted then we would need another vegetable oil to replace it and meet the vast global demand that comes with it, this would be even more devasting on rainforests as palm oil plantations would need to be eradicated to grow another crop which will yield much less product and require far more pesticides and fertilizers, This dilemma can be almost be mirrored to our problem with fossil fuels- our energy demand is ever-growing, it’s relatively easy to obtain and efficient through fossil fuels and we know its damaging our planet and that there are other options we should take, but right now they’re not very viable (e.g. solar power, which is  not yet economically viable as it’s expensive and relies heavily on government assistance.)

 ‘If all palm oil production was regulated and sustainable, would it be okay?’

The definition of ‘sustainability’ can differ from person to person, let alone from nation to nation. Even though organizations such as the Roundtable on Sustainable Palm Oil (RSPO) strive for transparency so that their growers are RSPO certified, it’s a very difficult thing to ensure- a lot of farmers just tend to a few hectares and sell bunches of the palm oil fruit for cash to traders. This is just one of 8 principles that the RSPO expects from growers, so one can imagine how challenging it must be to perform well against all of them put together. Greenpeace released a report in 2013 that demonstrates that the RSPO wasn’t producing anything close to truly sustainable palm oil and the Roundtable was in-fact certifying forest destruction mainly through slash-and-burn approaches to clear forests. In June 2018 new research was published in Environmental Research Letters comparing environmental, social and economic performance between certified and non-certified plantations, concluding that there was ‘no significant evident to suggest RSPO was better in achieving any of those metrics compared to non-certified plantations’.

As the world population is growing, so is the demand for this vegetable oil which means its production needs to be stepped up – this would expand the reach of organizations such as the RSPO if all palm oil were to be regulated, which so far haven’t been able to stick to what they promise.

So that leaves us as in question as before… what are your thoughts on palm oil?

Let us know!

Budget 2018. Purposeful.Money's Key Notes

In his third Budget Phillip Hammond has heralded that the era of austerity is now finally coming to an end – Note the careful language that he has used here, he has not said that austerity is over but ‘coming to an end’! He has also discovered that he had more money to play with than he had expected.

The Overview

The dramatic improvement in the outlook for the UK’s public finances gave the chancellor enough leeway to fund previous government pledges of extra money on the National Health Service and housing without big increases in taxes.

Borrowing has persistently come in under forecast. The OBR (Office for Budget Responsibility) expects borrowing to be £11.6bn lower than forecast at the Spring Statement.

But, with so much uncertainty in the air, economic growth remains anaemic by both historic and international comparison. The OBR now expects the economy to grow by 1.6% next year, 1.4% in 2020 and 2021, before picking up to 1.5% in 2022 and 1.6% in 2023.

The proposed digital tax is a political statement but won’t be the sales tax that might have affected UK internet businesses. Duty was frozen on beer and spirits (instead of increasing as it did for wine) which is good news for pubs.”

Aside from an increase in the tax-free personal allowance and higher-rate tax threshold there were no major tax announcements for individuals. This makes it an opportune time to make the most of valuable tax allowances, reliefs and exemptions that already exist – especially as this could be a short-term window of opportunity, with just five months to go to Brexit.

What are the key Purposeful notes from the budget

Plastics tax

A missed opportunity!

The Government will impose a new tax on the manufacture and import of plastic packaging that contains less than 30% of recycled plastic.

Disappointingly there will be no special levy on disposable plastic cups.

The Chancellor has reiterated previous comments that the UK must become a world leader in tackling ‘the scourge of plastic littering our planet and our oceans’. Mr Hammond stated that there are ‘billions of disposable plastic drink cups, cartons, bags, and other items are used every year in Britain. Convenient for users but deadly for our wildlife and our oceans’. These are sentiments that we at Purposeful.Money fully endorse.

It is sad that this commitment did not extend to a so called Latte Levy which had previously been suggested as a means of dealing with the country’s disposable cup waste. 

2.5 Billion cups are being thrown away every year. (Image Source: Acre)

The latte levy which was first floated by the Environmental Audit Committee would constitute 25p being added to the price of each coffee to encourage the use of reusable alternatives and also provide a fund for proper waste management.

Mr Hammond stated however that ‘I have concluded that a tax in isolation would not at this point deliver a decisive shift from disposable to reusable cups’.

It is important to note however that in 2015 the government added a 5p charge to plastic bags, a move that appears to have cut the sales of these bags by 86% and therefore seen fewer entering the environment.

There have been many calls therefore for the government to repeat this success with coffee cups and plastic bottles.

Greenpeace Executive director John Sauven said ‘Three weeks since the world’s leading climate scientists said government have just 12 years to turn the tide on the catastrophic and irreversible consequences of climate change the Chancellor has delivered a budget that reads as though he has missed the memo’

It does look as though when we are currently in the middle of a plastics pollution crisis the Chancellor has failed to take even a small step towards reducing the usage of single use plastics by not introducing a tax on disposable coffee cups.

Pensions

Pension tax breaks are safe…. for now!

This is despite the Chancellors recent gripes that the bill for pension’s tax relief is ‘eye wateringly expensive’.

This statement prompted many to think that he could be about to do something radical with pensions. So, it will have been a good news for many savers that he had little to say on this subject.  It has been a relief that the popular ‘perk’ which allows everyone to save into a pension from untaxed earnings  has remained untouched despite the bill being £39billion a year to the Government.

Specifically Mr Hammond did not cut the tax-free annual savings limit, or introduce a flat-rate of tax relief as had been feared.

The annual allowance – the maximum that most savers can put in pension pots each year and enjoy tax relief has also been left intact despite fears it could be reduced from £40,000 to £30,000.

The Lifetime allowance however for pensions will rise in line with inflation from the current £1,030,000 ceiling to £1,055,000 in April 2019.

The Chancellor’s comments on how expensive the current system is could however mean that the current pension tax reliefs are on borrowed time.

Inheritance tax

Earlier this year, the chancellor asked the Office of Tax Simplification to review the level of complexity in the current inheritance tax system. Its report is due this autumn, and Mr Hammond had nothing to say on it in the Budget.

Once again, given the interest the chancellor has expressed in the subject, and the possibility that there could be changes ahead, it makes sense to make the most of the existing allowances while you still can.

You don’t have to wait until death to pass on wealth – as most people do. Transferring wealth while you are alive can have a transformative effect on your family’s life and reduce an inheritance tax (IHT) liability.

There are a number of annual gift allowances which you lose if you don’t make use of them before the tax year end. For example, you can give away £3,000 each year and this will not be subject to IHT. You can give as many gifts of up to £250 per person as you want during a tax year, as long as you haven’t used another exemption on the same person.

If a gift is regular, comes out of your income and does not affect your standard of living, any amount of money can be given away and ignored for IHT. It is also possible to make further tax-free gifts – potentially exempt transfers – but you have to survive for seven years after making the gift to get the full benefit of it being outside of your estate for IHT purposes.

Income tax and ISAs

The Chancellor announced that from next April people will be able to earn £12,500 a year tax free and furthermore not pay 40 per cent tax until they have reached earnings of £50,000.  This increase has taken place a year earlier than planned.

This makes the tax-advantaged savings available in an ISA even more valuable. Investment returns are tax-free in an ISA. That means there is no income tax or capital gains tax (CGT) to pay – whether those returns come in the form of interest, dividends, or shares going up in value.

This tax year adults can put up to £20,000 a year into ISAs (so for a couple that is £40,000) and up to £4,260 a year into a Junior ISA for a child. The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs for 2019-20 will be increased in line with CPI to £4,3685.

Remember:

When you look to utilise your allowance in a stocks and shares ISA consider whether the investment also meets with your ethical values and concerns. 

Purposeful.Money can offer you advice to ensure that your ISA or pension is invested in funds where these important considerations are taken into account.

(Image Source: Which?)

Other Key Points from the Budget

• Stamp Duty abolished for all first time buyers of shared ownership properties valued up to £500,000, applied
  retrospectively to the date of the last budget.

• A freeze on beer and cider duty for the next year and a freeze on spirits duty, saving 2p on a pint of beer, 1p on a pint of cider and 30p on a bottle of scotch or gin.

• National Living Wage will rise in April from £7.83 to £8.21

• New Millennial railcard available by end of year

• Income tax personal allowance threshold to rise to £12,500 at the same time from April 2019

• Higher rate tax threshold to rise to £50,000 at the same time

• Counter terrorism police to get an extra £160 Million fund 2019/20

• A one off £400 million payment to schools to allow them to ‘buy kit’.

• An extra £1 billion for the MOD

• Business rates bills curt by one third for the next two years for all retailers in England with a rate able value of £51,000 or less, delivering an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, cafes and restaurants.

• Start-up loans funding to be extended to 2021.

• The Private Finance Initiative PFI and its successor PF2 abolished for future government projects

• UK Digital Services Tac to be introduced in April 2020 targeting On-Line giants with more than £500 Million in global revenues.

• Freeze of fuel duties for ninth consecutive year

• An immediate £420 million payment to tackle potholes, bridge repairs and other minor road works – Good news for cyclists!

• An extra £1 billion over 5 years for the Universal Credit benefit programme.