Burke Files discusses due diligence in the digital realm of social media, its increasing use as a tool to check up on job and college applicants and asks what could people share online to make them more or less desirable.
03 December 2013
IFC Review: The Rule in Hastings-Bass Under Jersey Law
Mason Birbeck examines the rule in Hastings-Bass, as applied under Jersey law, which has its origins in the English courts and has been a hot topic among those working in the Jersey fiduciary sphere.
IFC Review: Dispelling the Offshore Myth
Ingrid Pierce and Grant Stein discuss transparency, the industry buzzword of the past year, and why IFCs can be less defensive about their role in the global economy going forward and more vocal about their attributes
28 November 2013
Transport & Environment: Particle emissions from petrol cars
Vehicle tests show that without the use of gasoline particulate filters (GPF) the number of particles emitted from gasoline direct injection (GDI) engines is likely to exceed future European emissions limits, known as Euro 6 standards. Nowadays, particle emissions from these new petrol engines are higher than equivalent diesel vehicles. The cost of a filter to eliminate particle emissions is low (around €40), with no fuel economy penalty. Despite this, carmakers are delaying fitting filters on GDI cars and instead rely on manipulating tests. Their reluctance is worsening urban air pollution and reducing the health benefits of the new limits.
Air pollution in the EU is estimated to contribute to 406,000 deaths annually and cause over 100 million lost days of work, costing the EU economy €330-940 billion per year. Small particles in the air pose the greatest risk to health, penetrating deep into the lungs and being absorbed into the blood, causing a range of illnesses and even death. T&E calls upon carmakers to ensure GDI cars minimize their particle emissions by fitting filters.
22 November 2013
Fitch Publishes Special Report on Protected Cell Insurance Captives
Fitch Ratings believes the legal separation of the protected cells, the credit profile of the protected cell sponsor and the credit profile of the protected cell company are important considerations when analyzing a captive insurer organized as a protected cell. Accessibility, if any, to the assets in the general account is a potential credit positive. A protected cell company is an insurer that consists of a general account, or core, and one or more protected cells. A protected cell company and its protected cells are a single legal entity, though the individual protected cells are designed to be segregated from each other in the event of a protected cell's insolvency.
Cell company legislation has been enacted in several jurisdictions throughout the world, including 10 U.S. states. Clearly the legislative intent is that the assets of each cell are segregated and not available to satisfy the creditors of another cell in the event of that second cell's insolvency. However, in most jurisdictions the cells are not organized as separate legal entities. Further, there is not a substantial history of these structures being successfully defended, or even challenged, in court. This introduces uncertainty into the rating process for protected cells.
"It may be helpful to borrow insight from structured finance," said Don Thorpe, senior director of the Insurance group at Fitch, "In structured finance, it is common to obtain legal opinions regarding the enforceability of contracts and the nonconsolidation of the transaction parties in the event of one transaction party's insolvency. This is often referred to as bankruptcy remoteness."
Fitch also believes the financial strength of both the captive sponsor and the entity that sponsors the protected cell company could affect the credit profile of the individual protected cell. This will depend on the degree of linkage between the entities and structural mitigants, if any. Once again, Fitch believes there are analogies that can be drawn between protected cell companies and structured finance.
Some protected cell credit profiles may benefit from access to the assets of the protected cell company's general account. However, this will require a thorough analysis of the applicable regulations, and agreements between the protected cells and the protected cell companies, if any. Thus, this determination would rely heavily on the individual circumstances.
04 November 2013
Deloitte advised big business on how to avoid tax in some of the poorest countries in Africa, ActionAid report reveals
One of the world’s Big Four accountancy firms, Deloitte, offered advice to large companies on how to avoid potentially hundreds of millions of dollars of tax in some of the poorest countries in the world, according to an ActionAid investigation released today.
ActionAid has uncovered a Deloitte document called ‘Investing in Africa through Mauritius' (pdf) which details how tax can be avoided in African countries by structuring business through Mauritius.
The strategy, which is entirely legal, could potentially be used to deprive African countries of vitally needed tax revenue.
As part of the presentation, the document gives the specific example of how tax can be avoided in Mozambique. It shows how withholding tax can potentially be reduced by 60 per cent and capital gains tax by 100 per cent.
Mozambique is one of the poorest countries on the planet, where one third of the population is chronically food insecure and average life expectancy is only 49.
The document was part of a presentation given by Deloitte in China in June this year at a conference attended by more than 80 major western and Chinese companies with interests in Africa.
The document also reveals how Mauritius is being promoted as a favoured tax haven for use by big businesses operating in Africa.
Amade Suca, Country Director of ActionAid Mozambique said:
"When big companies avoid tax in Mozambique they are taking money out of the hands of the poor.
"Mozambique desperately needs increased tax revenues to lift people out of poverty, build schools for our children and hospitals for the sick, and reduce the need for foreign aid.
"But as long as wealthy companies continue to avoid tax in our country – none of this will happen.
"The people and government of Mozambique have a right to expect big companies making big profits in our country to pay their fair share of tax.
"We must also close the tax loopholes that allow big companies to behave in this way.”
Last year Deloitte generated more than $32 billion in revenue – more than any other Big Four company.
The document was presented at the conference two weeks before the G8 summit when David Cameron condemned tax avoidance both in the UK and in developing countries.
ActionAid Tax Policy Adviser Toby Quantrill said:
“This document helps lift the lid on the tax avoidance techniques that are being used to deprive poor countries of hundreds of millions of dollars in tax.
“These techniques may be legal, but that does not mean they are moral. Tax revenues are desperately needed to meet peoples most basic needs and to move countries away from aid dependency.
“Big businesses have an important role to play in economic development in poor countries. But they also have to act in a socially responsible way. Deloitte is failing Africa for as long as it continues to advise on tax avoidance strategies in the way they have been doing.”
According to the Organisation of Economic Co-operation and Development, developing countries lose more than three times more money to tax havens than they receive in aid.
A Deloitte spokesperson said:
"It is wrong to describe applying double tax treaties, such as the treaty between Mauritius and Mozambique, as tax avoidance. Such treaties are freely negotiated between the Governments of the countries involved.
"Double tax treaties exist to enable the countries concerned to strike a balance between the need to encourage investment, including cross-border investment, to raise tax revenue, and to work together with other countries who have the same legitimate concerns to raise revenue and promote business.
"The absence of such treaties could result in a reduction of investment, and less profit subject to normal business taxes in the countries concerned.
"Any discussion of tax treaties by tax professionals would typically be around the technical and administrative aspects of the treaties and not an expression of favour of any particular country at the expense of any other country."
ActionAid: Deloitte’s tax avoidance advice could cost poor African countries hundreds of millions of dollars
From Starbucks to SAB Miller, and from Associated British Foods to Google, there’s been a constant stream of tax avoidance controversies over the last couple of years.
But who dreams up the tax plans that make this kind of avoidance possible?
The answer is that some of the chief architects include accountancy firms.
These firms not only audit the books of other companies, but also sell them advice on how to minimise their tax bills.
Until now it has been quite difficult to see how this might work in practice – but today we hope to partly answer this by revealing evidence of how Deloitte is advising big business on how to avoid tax in some of the world’s poorest countries by using the Indian Ocean tax haven of Mauritius.
Deloitte earned made more than $32 billion in revenue last year alone – the most money out of any of the Big Four firms.
The kind of avoidance it is advising, which is entirely legal, could be costing African countries hundreds of millions of dollars a year.
It could mean teachers or doctors don’t get hired or roads and sewers don’t get built, keeping whole countries dependent on international aid.
The document we found is called Investing in Africa through Mauritius (pdf) and was part of a presentation which Deloitte made at conference in June this year attended by many large companies.
Using the country of Mozambique as an example, Deloitte showed how withholding tax and capital gains tax could be avoided by structuring a business through Mauritius.
Mozambique is one of the poorest countries in the world, where the average age at death is 49 and 40% of people are malnourished.
However the document is also important for another reason – because it lifts the lid on how big businesses with operations in Africa use the tax haven of Mauritius to avoid tax.
According to one estimate, three times as much money is being lost to tax avoidance globally as developing countries receive in aid each year.
Want to know more about Deloitte and tax?
02 November 2013
Offshore Investment (November 2013): The OECD / G20 tax agenda
The recent St Petersburg G20 declaration endorsed (obviously without much thought by jetlagged and overburdened heads of government with too little time to think about things), a Tax Annex prepared by the Organisation for Economic Co-operation and Development (OECD) in conjunction with various tax agencies and foreign ministries across the world. Perhaps because the G20 government leaders could not agree about things like Syria (and their involvement in promoting and financing the civil war that is costing thousands of lives and has made 2 million or more people homeless), they were more willing to agree on motherhood statements about tax, thinking that they were subscribing to nothing more than the nostrum that “we ought to do something about tax dodgers”.
Offshore Investment (November 2013): Special Purpose Vehicles - Clarity in Type
The world of private wealth planning has become more complicated and this has been in response to both client demand and legislative change. There has been a gradual shift away from classic trust and company structures to more exciting and innovative structures which more closely match the requirements of the clients. This has to be a good thing but it has also meant that advisers have had to up their game and start understanding how these new exotic vehicles actually work.
01 November 2013
IFC Review: Caribbean Financial Centres – Where Does the Future Lie?
Timothy Ridley comments on the future for the offshore financial industry, amid exaggerated reports of its demise in the aftermath of the 2008 financial crisis.
IFC Review: Due Diligence - Chinese Corruption
Burke Files assesses the various levels of corruption in China and considers where this problem might lead in the future.
IFC Review - The Bahamas: The Right Choice for Latin America
Ryan Pinder examines how The Bahamas has sought to align its financial services strategies with the needs of the emerging economies within Latin America, continually evaluating new products for Latin American clients.
IFC Review - Money Does Not Buy Happiness: Can Bermuda Help?
Randall Krebs discusses the issues facing wealthy private clients in Bermuda - one of the oldest private client jurisdictions in the world.
IFC Review: Q&A with… Julien Martel and Brian Balleine, Butterfield Trust
IFC Caribbean speaks to the MDs of Butterfield Trust in The Bahamas and Cayman to assess how the international finance industry is developing in the region.
IFC Review: BVI - Regulation ‘Right’
Marianne Rajic discusses the BVI's success in both implementing AIFMD and preparing for FATCA, further evidence of why the jurisdiction is considered one of the most flexible and user friendly in the region.
31 October 2013
Chinese Mauritians: Paradise Island’s Next Dodo?
While the fat island fowl (RIP) is infamous for its stupidity, flightlessness, and large rump, the Chinese Mauritians, and Chinese across the world, are known for their work ethic, adaptability, and mobility. Like any competent bird, they will migrate elsewhere. They won’t go extinct; they will simply change form. They will become Chinese-Mauritian-Canadians and Chinese-Mauritian-Australians.
Novare Investments Africa Fund Manager Survey 2013
This survey focuses on Africa (including North Africa) and the funds that give investors access to listed instruments on the continent. Although the focal point of the survey is to review at what is available excluding South Africa, the latter remains the continent’s most developed and regulated financial market, providing unbridled access for investors as a gateway into the rest of Africa.
Mauritius: FSC Public Notice - Suspension of COPEX Management Services Limited
Notice is hereby given that in accordance with Section 27(7) of the Financial Services Act 2007 (the “FSA”), the Management Licence of COPEX Management Services Limited has been suspended with immediate effect.
In accordance with Section 27(5) of the FSA, COPEX Management Services Limited shall cease to carry out the activity authorised under its licence but shall remain subject to the obligations of a licensee and to the directions of the Commission until the suspension of the licence is cancelled.
Financial Services Commission
FSC House
54 Cybercity
Ebene
Mauritius
30 October 2013
Mauritius: FSC Public Notice - Suspension of COPEX Trustees Limited
Notice is hereby given that in accordance with Section 27 (7) of the Financial Services Act 2007 (the “FSA”), the Management Licence of COPEX Trustees Limited has been suspended with immediate effect.
In accordance with Section 27(5) of the FSA, COPEX Trustees Limited shall cease to carry out the activity authorized under its licence but shall remain subject to the obligations of a licensee and to the directions of the Commission until the suspension of the licence is cancelled.
Financial Services Commission
FSC House
54 Cybercity
Ebene
Mauritius
30 October 2013
30 October 2013
Investment Planning – Where to begin!
Interview with John Cronin, CFA, by Francis Katamba
Francis Katamba – John, why do you put such a strong focus on investment planning before the investment process?
John Cronin – Well Francis, before people rush to buy an off-the-shelf investment product, or decide to make direct investments in the financial markets; they really need to consider their current financial circumstances and where they would like to get to – their goals. By doing this they can reduce their risk of buying an investment plan or building an investment portfolio, which is not consistent with their current situation and/or their financial goals.
Francis Katamba – So how would you recommend going about the investment planning process?
John Cronin – You have to be methodical; you must go through a process of self-analysis, even if you are using the services of a financial adviser. Self-analysis is important as it helps you develop an understanding of your own situation. Further, in addressing the issues raised in your self-assessment you can assist your financial adviser in designing an investment plan that best suits your personal circumstances, goals and preferences.
Francis Katamba – Interesting, so this methodical process of self-analysis can help you make better decisions. Can you outline the self-analysis process?
John Cronin - The methodical process has seven elements, the first two concern setting up your risk and return objectives, the remaining five are your:
- liquidity needs,
- time horizon,
- tax circumstances,
- legal and regulatory issues, and lastly
- unique circumstances.
The last five are potential constraints on your investment strategy, affecting the type of investments that you may choose. Today, I am mainly going to talk about the process of setting up your risk and return objectives, which can actually be quite a fun and thought provoking process.
Francis Katamba – What are the key points in setting risk and return objectives?
John Cronin - There are two elements here. First you have an individual’s willingness to take risk, which is based on personal experience. Second you have the individual’s ability to take risk, which is based on cold analysis. The tricky issue is reconciling the individual’s willingness to take on risk with their ability to take such risks, where the two differ.
As I said an individual’s willingness to take risk is built on experience, which brings us into the realm of behavioural finance. In shorthand, behavioural finance is the study of why people don’t invest rationally. There are many types of irrational investment behaviour; the two best known are loss aversion and biased expectations.
Loss aversion is the tendency for people to feel the regret of their losses more deeply than the pleasure of their gains.
Francis Katamba – Why does this matter?
John Cronin - There has been a lot of research in this area and what emerges is that people’s financial decisions are often swayed by emotion rather than rational analysis and this means that they do not always act in their own best interests! So for example, behavioural economists have observed that the tendency of people to react more strongly to losses than to gains, which is known as an “asymmetric tendency” can lead to people holding their losing investments longer than they should, and selling their winners too early.
This behaviour has been identified as one of the most common reasons why many investors suffer poor investment returns. The solution is to take a completely dispassionate approach and assess every investment on its expectations and whether those expectations have changed – fundamentally – on the arrival of new news.
Francis Katamba – What other kinds of behaviour commonly lead people to make poor financial decisions?
John Cronin - As I mentioned, there are many different types of irrational investment behaviour. Loss aversion is one of the most common, but another is having “biased expectations”, which results in misplaced self-confidence. Some people are overconfident in their approach to investing, whereas others can suffer a serious lack of confidence.
The over confident feel they have better judgement and insight than they really have, which can lead to poor investment decisions.
Francis Katamba – Can you provide some practical examples of how this might manifest itself?
John Cronin - Sometimes people convince themselves that they have influence over uncontrollable events, such as predicting the outcome of a toss of a coin. This character trait can lead to overoptimistic expectations of investment returns, where judgement is biased on overoptimistic feelings rather than assessment of the facts. Look at how many people became self-declared property tycoons because they bought and sold houses during the property boom, only to become unstuck when house prices faltered and fell in the subsequent house price crunch. They developed unrealistic expectations that strong house price inflation was the new norm. They overlooked several controlling factors that influence house prices, such as affordability, economic prosperity and the level of employment.
An indication of just how widespread overconfidence is in the population is the famous survey of US drivers, which found that 88% of those interviewed believed they were safer road users than the average American driver.
Francis Katamba – You have explained how overconfidence can be a problem and you have also touched on how people tend to react emotionally to losses. Before moving on from this point, could you just expand on how lack of confidence can also negatively impact on people’s financial decision making abilities?
John Cronin - Yes, there are people with little self-confidence; who may appear to be at less risk, because they cannot begin the investment appraisal process and therefore would not normally make any risky investments. However the outcome can be very similar to that of the overconfident. Sadly these people often end up investing into booming markets just as they are reaching their peak, this is known as the bandwagon effect. They then panic sell, deeply feeling their losses, vowing never to do it again, which is called the snakebite effect. When they come to reconcile what has happened, they conclude that they invested against their better judgement, known as hindsight bias, and never learn from their mistakes. Like the overconfident, the under confident also suffered from the busting of the property market, because they were some of the last buyers before house prices started to slide.
As you can see behavioural issues can knock an investor off making rational investment decisions. Hence self-appraisal of your behaviour traits is a key part of the investment planning process, as it permits a clearer understanding of your ability to take risk.
Francis Katamba – Having assessed my attitude towards risk what sorts of factors should I consider in order to weigh up my ability to take risk?
John Cronin - The determining factors that dictate your ability to take risk weigh upon your age and how much you can contribute towards attaining your savings goals. A person in their 30s who can contribute 25% of their monthly income towards a pension can take more investment risk than a person in their 60s who can only set aside 10% on a limited stock of accumulated wealth. The former is more able to withstand adverse market movements, because they have a long contribution period ahead of them and a greater likelihood of earning the long term expected return on the financial markets in which they invest.
Francis Katamba – How would I then go about measuring the risk of a particular investment?
John Cronin – Well there are a number of ways to measure risk. One common method is the absolute measure that uses standard deviation of return. Standard deviation may have been something that you came across at school. In this instance, you don’t need to know how to calculate it, but just be aware that the larger the standard deviation of return the larger the investment risk.
Francis Katamba – So assuming I have gone on the internet or, dug out my old school books in order to calculate the standard deviation how do I apply this to an investment strategy?
John Cronin – All investments have an expected risk and rate of return. What this means is that you might expect an investment to go up by 10% in any one year, but because this is a forecast, you can expect a range of outcomes either high or lower than your expected return. This range of outcomes is your investment risk. Hence investment risk is not only getting a return that is less than you expected, but also getting a return that is more than you expected. By using the standard deviation of return (the value that is produced from the calculation) you can establish the probability of the expected range of outcomes using some simple maths.
To expand a little, financial models predict that 68% of all expected outcomes lie in a range that is one standard deviation either side of your expected return. 95% of all expected outcomes lie in a range two standard deviations either side of the expected return. Using this knowledge we can work out that if an investment is expected to appreciate by 10% in one year and has a 5% standard deviation of return, there is a 68% probability that your return at the end of the year will lie in a range between 5% (10% - 5%) and 15% (10% + 5%). However if the standard deviation of return is 10%, then, applying the same principles, you could expect a range of returns between 0% (10% - 10%) and 20% (10% + 10%). In other words, the higher the standard deviation of return the more risky the investment return. Knowing the standard deviation of return is therefore a very useful tool for getting an idea of how risky a particular investment is.
Francis Katamba – OK, so the principle seems to be that your risk objective sets your return objective?
John Cronin – Yes you are almost right, as there is a strong link between risk and return, your risk objective largely determines return objective. However there are other factors to consider. Firstly how much return do you need? Is that expected return realistic? Naturally, you can’t hope for high returns that are risk free!
Francis Katamba – Let’s say I wanted to buy a house but, I needed to save and invest in order to have enough money, how would I apply the principles we have discussed?
John Cronin – Well, suppose you want to buy a house in two years’ time and, your savings are 15% below what you expect to pay in two years’ time, then the target annual rate of return needed to fill the gap between your savings and the purchase price is in the region of 7.5%. Fortunately due the effect of compounding, the fact that after the first and subsequent years your savings are larger by the return earned in the previous year, the compound annualised rate of return needed over two years is slightly less at 7.24%.
Therefore to fill the gap between your savings and the purchase price, you need an investment capable of earning at least 7.24% per year for the next two years that carries an acceptable level of risk. The challenge here is to identify investments (assets) that can reconcile the return objective with an acceptable level of risk.
By way of example, let’s look at the historical returns and standard deviations of return for two classes of asset: UK government bonds and the UK equity market. The UK government issues many types of government bonds (known as Gilts) with different interest rates and different maturities. The UK’s Debt Management Office provides at full list on its website. The long term historical rate of return and standard deviation of return for UK gilts, with a 10 year maturity, is 5.5% and 13.8%. Therefore in any one year you can expect with a 68% probability of earning a return between minus 8.5% (5.5% - 13.8%) and plus 19.3% (5.5% + 13.8%). Equities have a higher expected return and a higher standard deviation of return, 9.4% and 19.9% respectively. Using the same formulae again an investor has a 68% probability of experiencing a range of returns between minus 10.5% (9.4% - 19.9%) and plus 29.3% (9.4% + 19.9%). As you can appreciate these results demonstrate the different risk and return characteristics of UK Gilts and UK equities. However I must caveat this statement by stating that past performance is no guarantee of future returns.
Both the historical returns on ten year UK Gilts and UK equities illustrate that they capable of delivering the required return. However the current yield on 10 year Gilts is 2.73%, which is well below the 7.24% required return. It is unlikely that 10 year Gilts will achieve the required return because interest rates are close to their historical lows. Further, if interest rates return towards historical averages, then investors face a capital loss. Because when interest rates rise, the price and capital value of bonds fall. Given the associated expected range of returns that we discussed above, then both 10 year Gilts and UK equities are too risky (too volatile) to be used as investment vehicles to help buy your house, because of the risk of losing a substantial amount of the capital sum invested. An alternative strategy, which provides a high degree of capital protection because it matches the time or investment horizon to the pending house purchase, is the purchase of a UK Gilt with a two year maturity. Unfortunately the yield on two year gilts is 0.44%, a long way below your required rate of return.
Going through this exercise demonstrates that it would be wiser to buy a smaller house or put more money aside in savings, because the investments that meet your return requirement exceed what would be an acceptable level of risk, given these specific circumstances; the chief investment constraint being the short time horizon. You can go through a similar exercise with retirement planning, where you might find your investment horizon is much longer and hence your ability to use more risky assets to take advantage of potentially higher expected returns increases.
Francis Katamba – Are there other issues you should consider?
John Cronin – Yes indeed, once you have established your risk and return objective, you need to consider the five investment constraints: liquidity, time horizon, tax concerns, legal and regulatory issues and your own personal choices. The first two, liquidity and time horizon directly influence your ability to take risk.
Liquidity is your need for readily accessible funds, money set aside for anticipated near term expenditure or for precautionary reasons, such as unemployment, sickness or domestic emergencies – like the need to buy a new boiler for your hot water system. These readily accessible funds could take the form of money in your deposit account, or some investment which is safe and accessible at short notice. Naturally the low risk nature of liquidity reserves means they do not earn a high return. As a rule of thumb, households should aim to have the equivalent of three months of salary or wages set aside as precautionary liquidity. If the amount of money set aside for precautionary liquidity represents a large portion of your portfolio, then your overall ability to take investment risk is constrained, compared to if your liquidity reserves represent only a small portion of your overall wealth.
Your time horizon, also affects your ability to take risk. The house purchase example I mentioned earlier illustrates a relatively short time horizon, in that example the desire was to buy a house in two years’ time, hence the time horizon, the period between now and realising your investment goal is two years. As I mentioned earlier, a short time horizon limits your ability to take risk. Whereas if you are investing for a retirement that is 30 years in the future your time horizon is long; hence you more able to bear short term adverse movements in stock and bond markets, and likely to earn the long term expected return.
Francis Katamba – You mentioned three other investment constraints: tax concerns, legal and regulatory and lastly personal choices. Can you expand on these issues?
John Cronin – tax concerns are simply the taxes that you may be liable for on your investments. The point to recognise is that taxation on investments reduces your net return. Some investments are taxed on income, some on capital gains and sometimes both. Consequently this is a consideration for the type of investments you make. However care must be taken not to distort your portfolio by investing in assets which lead you to exceed your overall risk objective. In Jersey, where the tax rate is 20%, 80% of something is worth considerably more than 100% of nothing.
Legal and regulatory constraints are often put in place to protect your interests. For example certain investments which would be regarded as high risk are only available to investors who can prove that they have wealth that exceeds a certain threshold. UCITS funds are required to manage risk by being diversified and being virtually prohibited from using loans to magnify their returns – both up and down – known as leverage.
Personal choices are restrictions that the investor places on their portfolio. For example some investors invest with an ethical style, refusing to invest in companies that produce alcohol, tobacco, defence equipment, or provide gambling services, damage the environment or use child labour. Another personal choice could be a requirement to hold investments that generate an income, for example to fund retirement. Either way, personal choices affect the type of investments that can be held in your portfolio.
Francis Katamba – Briefly summarise how investors should set about the investment planning process?
John Cronin – Investors need to be methodical in their self-analysis. An investor needs to recognise the behavioural weaknesses that could cause them to embark on a less than optimal investment strategy. An investor must balance their appetite for risk with their ability to take risk; this depends on their age and relative wealth. They should plan with an investment horizon in mind, to help calibrate the level of investment risk they can bear in their investment portfolio. They should make evidence and facts the source of their investment decisions, not feelings. Lastly, they should always have a precautionary reserve of readily available funds for rainy days.
Biographies
John Cronin is a Chartered Financial Analyst (CFA) with over 20 years of experience as a financial markets professional. During this time he has worked as a stockbroker, stock analyst and portfolio manager.
Francis Katamba is qualified lawyer, with over 10 years of professional experience in corporate finance and commercial law.
Both John and Francis are senior managers in the policy section of the Jersey Financial Services Commission.
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