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UK investors being ‘ripped off’ because of lack of competition and transparency

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The UK investment industry is operating against public interest, according to a new report that calls for the Office of Fair Trading to conduct an investigation into the retail investment industry.

The True and Fair Campaign argues that the investment world is hiding fees from investors and leaving them out of pocket. SCM Private initiated the campaign in 2012 to raise awareness on the lack of transparency within the industry. The organisation has been calling for a code of ethics that would invoke new 100% transparency measures on all transaction costs and management fees.

When compared to the US, UK investors are paying 58% more for investments on a like-for-like basis, the report said. In the US, investors also benefit from economies of scale that are passed on to them, receiving a discount of 33% on charges when investing in the largest funds, compared to just 6% in the UK.

Furthermore, a third of UK investors are unaware of the fees they are being charged by fund managers and only 45% of investors know their overall returns. The figures suggest that a lack of transparency is confusing investors and 73% said they would like to see just one cost number.

The current charges are also reportedly eroding over half of overall returns after inflation, with “double charging and cartel-like pricing” costing savers £2.6 billon each year in UK retail funds alone.

The Retail Distribution Review (RDR), which was brought in at the beginning of 2013 with the aim of improving transparency, has also led to a rise in changes. The unbundling of fees has resulted in overall charges increasing by 28%, the report said.

Gina Miller, who spearheads the True and Fair Campaign and is a founder of SCM Private, said, “After reading this report, savers should be up in arms and demand to know why successive governments and regulators have allowed these scurrilous practices to continue.

“For over ten years US investors have has a much fairer deal, and benefitted from an investment industry with higher standards and ethics.”

Whilst the chancellor George Osborne’s shakeup of the annuities and ISA markets will give investors a wider range of choices and is described as a “positive step” by the True and Fair Campaign, the group added that the budget completely ignored the “endemic crisis of fee transparency that is crippling the returns of pension and investment products”.

Miller added, “The budget illustrates that the government has finally woken up to the scandalous treatment of pensioners in respect to annuities. However, the annuity pensions’ shakeup is only a partial fix.

“If pensioners choose an investment fund rather than an annuity, they can still be ripped off, as they will not know the true total cost. Instead they could be jumping out of the frying pan and into the fire.

“Without fundamental change across all pension and investment products in terms of total cost and fee transparency, millions of people will end up simply being fleeced by another part of the investment industry.”

Further reading:

F&C: responsible investment ‘continues to gather momentum’

Investors want trustworthy, qualified and experienced financial advisers

Report: responsible investment ‘increasingly important feature’ across EU

Sustainable investment performance criticisms ‘out-of-date’

The Guide to Sustainable Investment 2014

Environment

These 5 Green Office Mistakes Are Costing You Money

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eco-friendly green offices
Shutterstock Licensed Photo - By Stokkete | https://www.shutterstock.com/g/cyano

The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.

Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.

Here are some important mistakes that you will want to avoid.

Only implementing sustainability on micro-scale

The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.

Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.

Not prioritizing investments by long-term ROI

It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.

Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.

Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.

Implementing green changes without a plan

Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.

Before implementing a green strategy, you must answer the following questions:

  • How will I communicate my green business philosophy to my customers?
  • How will running a green business affect my revenue stream?
  • How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
  • How will my company finance green upgrades and other investments?

The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.

Not considering the benefits of green printing

Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.

Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.

According to experts from Doranix, environmental printers have several benefits:

  • They can process paper that has been completely recycled.
  • They consume less energy than traditional printers.
  • They use ink that is more environmentally friendly.

You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.

Poorly communicating your green business strategy to customers

Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.

The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.

You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.

Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
Shutterstock / By Sergey Nivens | https://www.shutterstock.com/g/nivens

Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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