Capital Markets Corporate

November 15, 2019

Our Weekly Newsletter


Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

Chatbots aim to fill the UK advice gap
The rise of regulated financial advice chatbots is disrupting the traditional financial advice space by embracing artificial intelligence to provide clients with personalised recommendations in areas such as pensions and savings. These chatbots serve to fill the “advice gap” within financial services, which has seen the number of financial advisers halve since 2011 from 40,000 to 26,000. Some speculate how valuable this technology will prove, as there are several personal finance scenarios that chatbots are unable to adapt to such as complex pension rearrangements and supporting vulnerable customers (From Financial Times, 8 November 2019)

Sexist Apple algorithms offer higher credit to men
A Twitter storm kicked off after a series of tweets from tech entrepreneur David Heinemeier Hansson accused the Apple Credit Card (which is offered by Goldman Sachs) of gender discrimination by offering him 20 times the credit limit than his wife – despite her better credit score. The tweets, which criticised the card’s algorithms, led Apple co-founder Steve Wozniak to chime in, noting his wife also received a lower credit limit on her Apple Card, even though she shares an account with her billionaire husband. A Wall Street regulator has since launched an investigation into Goldman’s credit card practices. (From Bloomberg, 10 November, 2019)

Boomers get twice the returns on taxes compared to Millennials
A new analysis by a UK think tank reveals that every generation born after 1931 is on average expected to receive a greater amount from the state than they actually paid in taxes throughout their lives. The think tank used a novel formula to analyse research to find that Baby Boomers are the greatest beneficiaries of the state system, receiving £1.2m after making average tax payments of £945,000 – a return of 30%. Millennials, however, will only see half of the return enjoyed by Boomers, with their return calculated at 14%. (From The Telegraph, 9 November 2019)

10 year wait to climb the property ladder for first time buyers

First-time buyers are taking more than ten years to save for a deposit for a home in London, according to research published this week. Highlighting the North-South divide, aspiring homeowners only have to save up for three years in Blackpool. Despite recent falls in house prices in London and in the South-East, owning a home remains an aspirational goal for many, who will have to save £15,681 a year to be able to afford their property. (From The Daily Mail, 12 November 2019)

FTSE companies accused of female “tokenism” on boards

A Government-backed report has revealed a shortage of women on FTSE 350 company boards, with more than one in ten having only one female board member. However, the report also found that the FTSE 100 index of blue-chip companies is on track to meet its gender diversity target, which aims to see at least a third of the seats in boardrooms filled by women by the end of next year. (From This is Money, 12 November 2019)

Is bashing billionaires bad for business?

As we enter election season, it has become a political talking point to attack the country’s 151 billionaires. And while this populist sentiment will likely win votes from Britons suffering from stagnating wages, should financial services firms have an opinion? Will backing UHNW prospects hurt brands also trying to attract mass appeal?

Particularly for the left, attacking billionaires is a big vote winner. On the very first day of election hustings, Labour leader Jeremy Corbyn pledged that he would go after super-rich people who exploit a “rigged system”. Meanwhile, in the United States, Senator Elizabeth Warren is using billionaire bashing as the basis of her 2020 Presidential bid. Labour candidates went as far as to call for a ban on billionaires.

It’s an easy win for some politicians. Billionaires make up just 0.000000002% of the population and around the world there is mass dissatisfaction with the inequality of wealth distribution in capitalist societies. More billionaires are becoming lightning rods for worker angst and are being blamed for low wages and any number of societal issues.

And it’s also not the easiest task to defend the privileged few to the nation. Multi-millionaire sports stars were roundly mocked for defending billionaires recently and Mark Zuckerberg, who has spent the last few years defending Facebook’s deeply unpopular data profiteering and political ad policies, was criticised for saying billionaires like himself “do a lot of good things”.

But there are two sides to every story, and the trend has not stopped financial services firms sticking up for their UHNW clients. UBS recently stood up for the ultra-wealthy and noted that billionaires outperform as corporate leaders – an opinion that was equally agreed with and mocked as “targeted flattery”.

It’s not hard to see why UBS would want to get in the good books of UHNW individuals and families. The small group is hugely profitable for financial services firms and the global UHNW sector is booming. Also, there are of course plenty of people who do not subscribe to anti-billionaire sentiment and plenty of justifications to look beyond the populist caricatures. Many see attacks on billionaires as attacking success and examples abound to support the view that they do a lot of good in the world.

A fine line must be walked for financial services firms courting the ultra-wealthy. While UHNW individuals may be good for business – and involved in work that delivers broader business and social benefits – there’s an increasingly vociferous and negative sentiment towards rising inequality. It calls for carefully constructed and targeted messages that look beyond the numbers, so that communications which court the wealthiest elements of society are not too unpalatable to the other 99.999999998%.

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