Charitable giving: It’s not just about taxes

LONGEVITY PLANNING
For decades, clients planning a major gift would often focus with their advisers on maximizing the tax benefits (income and estate tax) of the donation. By contrast, today’s prospective donor may need to weigh the impact of a major gift on future financial security.

If a retired client has a 30-year planning horizon, how will a major gift or a long-term charitable commitment affect his ability to meet decades-long financial targets? The focus is changing as the worries of funding for long post-retirement years have overshadowed tax and estate planning.

A result of this change in focus should be more comprehensive financial forecasting to guide a client on how to structure large donations. More complex gift structures may be in order. A client may be willing to commit certain dollars now and in the future, but she might wish to make other commitments contingent on her future financial condition. The giver may pay part of a charitable pledge currently, another part over time and the balance upon some future event, all to permit the client to remain secure financially.

Here’s an example: A donor wishes to commit $500,000 to a charity. This may consist of an outright gift of $100,000 now and the funding of a $400,000 charitable remainder trust. If the donor’s financial status is secure in future years, she might donate some or all of the annuity payment she receives from the CRT to the charity. If in 10 years she is still meeting her financial targets, she could donate her remaining annuity interest in the CRT to the charity, thereby accelerating the entire gift.

Such discussions are more likely to involve the charitable gift officer and the financial adviser — rather than the client’s estate attorney, as may have been more common in the past.

Here’s another example: A donor would like to make a large visible commitment to a charity in which she is a board member. To address cash flow concerns, the donor funds part of the donation now and the balance with a life insurance policy. That way she feels more confident that if she dies prematurely her spouse will not be burdened by a large bequest. Further, since the bequest provides no estate tax benefit, she prefers the current income tax deduction for the amount she gives the charity each year to pay her premium.

Giving a remainder interest in a residence can permit a client to assure the intended charity will receive a valuable bequest even while she retains the economic benefit of continuing to live in that residence for life.

Sometimes, clients planning a large charitable gift will factor long-term care considerations into the plan. Long-term care insurance coverage may be purchased as part of the charitable planning to assure the donor a safety net.

Road to financial freedom

Up to this day, I have been noticing that majority of investors are clueless as to what exactly they want to achieve or accomplish.

They are inspired and guided only by the beautiful–but very dangerous–thought that one can possibly “become a large winner” and have financial freedom. Having been in their place before, I know they have no idea exactly just how.

Even among those who know how to use technical or fundamental analysis, or those who are supposedly adept in the method of “forecasting market trends and timing or measuring a stock’s intrinsic value,” there are still those without any particular goal except make a killing and become rich.

Google launches APAC financial dashboard, reveals brands top search in mature markets

Google launched the APAC financial dashboard, revealing financial search trends for 10 countries, Australia, Hong Kong, Indonesia, India, Japan, Malaysia, Singapore, Philippines, Thailand and Vietnam.

The dashboard segments the search volume into mobile searches as well, giving a picture of what financial questions countries are asking via smartphone.

This dashboard launches as search blooms for social networks.

While two in three Singaporeans conduct searches with brands in mind, Google said that mature markets tend to see consumers search for financial products with a brand in mind compared to emerging markets.

“More mature markets will have a skew towards a brand in mind, especially for geographically sparse location like India, where the presence of a retail bank is quite sparse, you’ll find less people searching with brand in mind, they’re still at the undecided phase,” said a Google spokesperson.

Insurance search terms emerged as top of mind for mobile searches across the region, where the term insurances pops up in the top 10 search terms for mobile. Loans were also a popular search term, as well as investing, as countries look to search to better understand financial products.

Zooming in on Singapore

“Financial literacy in Singapore is one of the highest in Asia and consumers like to be well-informed before making any decisions. Singaporeans care about financial planning and often turn to Search to help them understand financial products and investments. We hope the Asia-Pacific financial dashboard can serve as a useful tool for financial institutions to better serve their consumers based on their interests,” said Michael Yue, industry head for banking and financial services, Google Singapore.

This statement is reflected in Singaporeans’ searches, with searches in the Euro peaking with Brexit announcements, as well as local developments such as a retail bond by Singapore listed companies and new Digibank by local bank DBS. A slump in the Dow Jones Index in August 2016, also promoted a surge in searches according to Google.

Singaporeans appear to be planning for the future and on the lookout for insurance, with eight out of the top 10 queries were about insurance policies. The other two queries were about home equity loans and how to start investing in Singapore. The rise of interest in insurance could also be prompted by the launch of digital initiatives by insurance companies such as Sompo, FWD and a financial comparison site.

Travel insurance remains top of mind when Singaporeans search for insurance online, with 61% of searches for travel insurance, with 72% of online Singaporeans buying it online. Brand appears to be top of mind as well, as three in four Singaporeans search with a brand in mind.

“Two in three Singaporeans have a brand in mind when searching, and I don’t think this is surprising because we have very dominant brands here in the financial sector in Singapore. One of the key takeaways for new entrants, establishing your brand, especially in the digital sphere is very important, if you understand that users are looking this way,” said Yue.

Local banks too command top of mind recall, with the biggest local bank, DBS, commanding the most search volume, followed by OCBC, POSB and UOB. Credit cards also follow the theme of travel, with searches showing that miles-based benefits are most sought after feature for credit cards. In terms of loans, general, home and personal lead the category, while interest in business loans is growing the fastest.

Singaporeans punch above their weight in the investment category, contributing to 13% of all investment-related searches across the top five financial hubs (London, New York, Tokyo, Singapore, Hong Kong), surpassing Hong Kong. Searches in wealth management have grown 41% year-on-year, with the top five investment categories forex and currencies, Securities, retirement investments, commodities and brokerages.

“70% of Singaporeans turn to their smartphones when they need information about a local business compared to 43% in the US Using insights from Google’s APAC Financial Dashboard, financial brands can respond better to their consumers and engage them in more relevant ways, both online and offline,” said Yue.

Your bank account number could become common identity platform for financial products

Your bank account could become the standard know-your-customer proof serving as the common identity for all other savings and investment products as the government moves towards a uniform and simpler KYC process across all financial sectors.

So if you want to purchase a life insurance product, mutual funds, insurance or pension you may just have to quote your bank account number, which will serve as the KYC guideline. Sources said that the government is looking into this proposal.

At present, customers have to provide and comply with various layers of scrutiny for different financial products. The KYC norms differ from product to product as well.

Finance minister Arun Jaitley has already directed financial sector regulators, including the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA), to chalk out a plan to move towards a single uniform KYC norm.

“As we seek greater financial inclusion, the need to move towards a single uniform KYC pattern is critical and one of the proposals that is under consideration is to consider the KYC scrutiny of a customer while opening a bank account should hold as the common KYC norm for other products as well,” a senior official government official told Hindustan Times.

A meeting was recently held between the government and other stakeholders including the regulators to discuss the KYC issue.

The government is also moving towards making Aadhaar number mandatory for filing income tax returns. Besides, the permanent account numbers which are not linked to Aadhaar will eventually become invalid.

Banks may soon have to seek their customers’ Aadhaar number for identity proof. The Supreme Court said on Monday that Aadhaar can be made mandatory for opening new bank accounts.

Pegasus Markets and Solid Global Investment, two NZ financial service providers, and their misleading statements

I will be contacting the management of both companies today to advise them both to amend the information on their websites, Reps said.

What the FMA says

We also asked the FMA about the two companies.

The FMA cannot comment on individual cases. However, where a company has been deregistered from the FSPR but its website has not been updated, the FMA will write to them seeking the removal of the misleading statement. If it continues to advertise its listing on the FSPR, then the FMA may consider issuing a warning to investors. When the FMA discovers a company that is advertising that it is regulated by the FMA when it is not, then the FMA will, in the first instance, engage with the company and its directors to seek the removal of any misleading statements, an FMA spokesman said.

Pegasus Markets Ltd, the NZ registered company, was incorporated on March 3, 2014. Aside from Reps, its other director is listed as Rafeal Ruiz Lemonche of Barcelona, who is also listed as sole shareholder. The companys registered office and address for service is that of Business Results (HB) Ltd, an accounting firmin Napier. A call to the phone number on Pegasus Markets website went through to a recorded message asking for the caller to leave a name, account number and contact email address.

Deborah Jeffares is listed as sole director of Business Results (HB) Ltd and shareholder alongside Kelvin Jeffares. She previous featured in two interest.co.nz articles in 2015 about a series of companies the FMA had removed from the FSPR.

The image below comes from the Pegasus Markets website.

Gold expansion touted

On its website Solid Global Investment says it is a brand of the Hong Kong-based Solid Financial Group, which is 38 years-old. It is committed to providing diversified online trading services regarding financial products including foreign exchange, gold, silver, crude oil and indexes for the global market.

Under wholesaleon its website Solid Global Investment says; We are looking to expand and are developing a selection of investments suited to the wholesale investor. If you are seeking access to the physical gold market just email us and we can discuss further our opportunities. Become a wholesale distributor of our products and services in New Zealand.

The NZ registered company Solid Global Investment Ltd was incorporated on September 17, 2013. Its registered office and address for service is level 2, 11 Matakana Valley Road, RD5, Warkworth.

Reps and Tsui Yiu Ming of Hong Kong are listed as directors, with the latter sole shareholder. The image below is taken from Solid Global Investments website.

Scores of companies

NZ Companies Office records show Reps is, or has been, a director of scores of other registered companies. These include registered financial service providers Brightwin Securities and Finance Ltd which has Singapore-based shareholders, and Instadirect Ltd which has a Russian-based shareholder, and deregistered financial service providers Gage Capital Ltd, Starfish Markets Ltd, Mediafin Financial Ltd, Tradesto Ltd, Suisse Credit Capital Ltd, whose shareholder is in Cyprus, and Derbivi Ltd.

Despite being deregistered from the FSPR, Gage Capital, Starfish Markets, Mediafin Financial, Suisse Credit Capital and Derbivi Ltdremain NZ registered companies. See more on howthis is possible here.Repsis also listed as a director of Vitruvian Trustee Company Ltd, whose shareholders are listed as resident in Panama.

Meanwhile, Reps is sole director and sole shareholder of Yield Qwest Ltd, whose websitepromotesNZ incorporations,NZ trusts, company directors, office services, plusbanking andinvestments. See more on company agents here.

None of Pegasus Markets, Solid Global Investment nor Yield Qwest are reporting entities under NZsAnti-Money Laundering and Countering Financing of Terrorism Act.