A disconnect between the growth objectives and asset allocation of SMSF trustees

Self-managed superannuation fund (SMSF) trustees have high growth expectations for the next 12 months yet as many as 55 per cent have moved to a more defensive asset allocation amid continuing market volatility, according to AMP Capital.

Statistics from AMP Capital’s latest Black Sky Report show that while SMSF trustees expect a 10.9 per cent return on their portfolio this year (6 per cent capital and 4.9 per cent income), only 18 per cent of trustees have made changes to position their portfolio for growth.  This is, however, an increase of five percentage points from 2015.

Further to this, nearly half of SMSF trustees surveyed for the report say their aim is to have a fully diversified portfolio yet more than 50 per cent of their portfolio is invested in just one investment type outside of managed funds.

AMP Capital Head of Self-Directed Wealth and SMSF Tim Keegan said: “If trustees continue to be exposed to significant portfolio concentration risk and remain in more defensive assets without seeking financial advice, they may struggle to achieve their retirement goals.”

AMP Capital’s Black Sky Report is developed each year to provide a snapshot of trustee investment trends.  It also helps to arm financial advisers with insight and knowledge of where SMSF trustees are looking for specific advice.

The 2017 report has identified the biggest investment challenges for SMSF trustees as market volatility (according to 18 per cent of trustees surveyed), investment selection (11 per cent) and regulatory changes (10 per cent).

Mr Keegan said: “It’s clear that many SMSF trustees need help especially around portfolio construction and understanding the regulatory changes that are coming into play.  With nearly 60 per cent of SMSF trustees remaining open to using the expertise of a financial adviser, it’s clear this is a huge opportunity for advisers to tap into.”

The research also revealed that SMSF trustees continue to find managed funds attractive, with 47 per cent each investing approximately $280,000 in them.  Thirty per cent of SMSF trustees made their most recent managed fund investment after receiving advice from their financial planner.

Mr Keegan said: “There is an increasing appetite among SMSF trustees to invest in Australian equity funds, both active and passive.  Advisers can be proactive in recommending high-quality unlisted managed funds as well as introducing trustees to the increasing range of active exchange traded funds that are now available on the market.”

Active ETFs replicate managed fund strategies but are able to be bought and sold during the trading day like any share on the Australian Securities Exchange.  AMP Capital, in alliance with BetaShares, launched three active ETFs during 2016: the AMP Capital Dynamic Markets Fund, the AMP Capital Global Property Securities Fund and the AMP Capital Global Infrastructure Securities Fund.

According to Mr Keegan: “With expectations for growth at an all-time high, regulatory uncertainty at its peak and new products such as active ETFs becoming increasingly popular, there is more need than ever for SMSF investors to turn to financial advisers for support.”

For the third year in a row, AMP Capital has released the Black Sky Report, which uses research and data from leading research house Investment Trends to uncover the latest SMSF investor trends and insights.

The research is based on a quantitative online survey of nearly 800 AMP Capital SMSF investors conducted by Investment Trends.  The 2017 Black Sky Report can be downloaded here.

The forgotten cost of the housing boom: your retirement

From The New Daily.

The house price boom is going to costing us thousands of dollars in retirement, according to a new report.

The entire retirement income system is based on the assumption that home ownership is affordable, and that anyone stuck in lifelong renting will be helped out by state governments.

But these assumptions are “increasingly dubious”, prominent economist Saul Eslake has warned.

The Australian Institute of Superannuation Trustees, which represents all not-for-profit super funds, commissioned Mr Eslake to dig into the potential impact of rising housing costs on retirement.

In 2013-14, about 88 per cent of households headed by Australians aged 65+ spent less than 25 per cent of their gross income on housing — down from about 92 per cent in 1996-97, the economist found, using official statistics.

Worse still, the proportion of 65+ households with housing costs of more than 30 per cent gross income has doubled from 5 to 9 per cent over the last 15 years.

This is partly because Australians are buying and paying off homes later in life because of price growth, Mr Eslake warned.

housing costs retirement

Many of us will never make it onto the property ladder at all, trapped for life in the private rental market, which a recent report estimated can cost an extra $500,000 in retirement.

Outright home ownership has fallen from 61.7 per cent in 1996 to 46.7 per cent in 2013-14, Mr Eslake found using official ABS data.

“Compared to 15 years ago when almost three out of five home owners owned their home outright, home owners with a mortgage are now in the majority.”

This is a serious threat to retirement balances, as renting in later life is a drain on income streams, and many more retirees will use bigger and bigger chunks of superannuation savings to pay off the remainder of their mortgages, he predicted.

“In other words, there is a clear link between deteriorating housing affordability and the adequacy of Australia’s current retirement income stream.”

While price growth is not the only explanation, it’s a big factor, Mr Eslake wrote. Other reasons include less state government investment in social housing, and adults spending more time in formal education.

So, not only are irrational prices in Sydney and Melbourne squeezing out first-time buyers, they are likely to punch big holes in the federal government’s coffers when today’s struggling buyers become tomorrow’s age pensioners.

Access to super is not radical: REIA

From The Real Estate Conversation.

If first-home buyers are allowed to use their superannuation to buy their own home, they are likely to end up with bigger ‘nest eggs’ at retirement than if they rented their whole lives, says Malcolm Gunning, president of the Real Estate Institute of Australia.

He said it is “nonsense” to suggest accessing super to buy a home will erode retirement savings, as both comprise the asset pool at retirement.

Giving young people access to their own money in a superannuation fund to purchase their first home should not be controversial, he said, and is already being used successfully in Canada, New Zealand, and Singapore.

“Accessing Super is not a radical idea,” said Gunning.

Gunning said first-home buyers are often able to save part of the deposit for their first home, but are turning to alternative measures, such as taking out personal loans and using credit cards, to get over the line and cover transaction costs.

“Surveys show that not only are aspiring homebuyers saving for longer but are also using debt to meet their deposit requirement,” he said.

Gunning said the idea of using some superannuation to help fund the deposit on a property purchase was “practical”, and could in fact mean young people have a larger ‘nest egg’ of assets at the time of their retirement.

“Superannuation and home ownership are both components of a retiree’s ‘nest egg’,” he said.

“By buying earlier in life, retirees have every prospect of having a higher equity on retirement and a larger ‘nest egg’ on downsizing.

“It is nonsense to suggest that early access to superannuation for a home deposit would undermine retirement savings,” said Gunning.

“Access to superannuation for the purchase of a first home could help reverse the trend of falling home ownership,” he said, adding that it addresses “the looming social problem of large numbers of long-term renters aged 45 years and over remaining in the rental sector and possibly requiring rental support in later years.”

Gunning said superannuation funds that invested in residential investment property have provided the best returns for their members over the last 20 years. He said individuals should be able to use their super to invest in their own home.

“REIA believes in the benefits of continuing the high ownership level in Australia, particularly as the population ages,” said Gunning.

“The Government should be applauded for considering a holistic approach to housing affordability which includes giving access to superannuation for first homebuyers,” he said.

New Superannuation Income Stream Rules

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, has released draft superannuation income stream regulations and a draft explanatory statement for public consultation.

The regulations continue the implementation of the Government’s superannuation reforms and introduce a new set of design rules for lifetime superannuation income stream products that will enable retirees to better manage consumption and longevity risk in retirement. The regulations are intended to cover a range of innovative income stream products including deferred products, investment-linked pensions and annuities and group self-annuitised products.

Closing date for submissions: 12 April 2017

The purpose of Schedule 1 to the Regulations is to introduce a new set of design rules for lifetime superannuation income stream products that will enable retirees to better manage consumption and longevity risk in retirement. The new rules are intended to cover a range of innovative income stream products including deferred products, investment-linked pensions and annuities and group self-annuitised products. The overarching goal of the rules is to provide flexibility in the design of income stream products to meet consumer preferences while ensuring income is provided throughout retirement. Superannuation funds and life insurance companies will receive a tax exemption on income from assets supporting these new income stream products provided they are currently payable, or in the case of deferred products, held for an individual that has reached retirement.

A contract for the provision of an annuity benefit, or the rules for the provision of a pension benefit (the governing conditions) will need to meet four key elements of the standards in subregulation 1.06A(2). These elements are:

  • A requirement that benefit payments not commence until a primary beneficiary has retired, has a terminal medical condition, is permanently incapacitated or has attained the age of 65.
  • A requirement that benefit payments, of at least annual frequency, be made throughout a beneficiary’s lifetime following the cessation of any payment deferral period.
  • A rule ensuring that, after benefit payments start, there is no unreasonable deferral of payments from the income stream.
  • Restrictions on amounts that can be commuted to a lump sum or for rollover purposes based on a declining capital access schedule commencing from the retirement phase.

Item 18 of Schedule 1 inserts a formula that will restrict the maximum commutation amount that can be accessed after 14 days from the retirement phase start day, on a declining straight line basis over the primary beneficiary’s life expectancy. The maximum commutation amount will be worked out by dividing the ‘access amount’ by the primary beneficiary’s life expectancy on the retirement phase start day and then multiplying this by the remaining life expectancy less one year at time of commutation. Life expectancy will be rounded down to a whole number of years. The maximum commutation amount will also be reduced by the sum of all amounts previously commuted from the income stream prior to the time of the commutation.

Item 11 of Schedule 1 will insert a definition to determine the value of the ‘access amount’ on the retirement phase start day for the income stream or at a point in time after the retirement phase start day. The access amount will be the maximum amount payable on commutation of an interest on the retirement phase start day as determined by an annuity contract or pension rules. Any instalment amounts paid for an interest in a deferred superannuation income stream after the retirement phase start day will then be added to the access amount at the point in time that an instalment is paid.

The Business Does First Time Buyers And Raiding Super

In The Business tonight there was a segment on the issue of making super accessible to facilitate first time buyers entry into the housing market. Something which today the Government has ruled out, killing off recent speculation. We feature in the segment.

The super industry has launched an unprecedented advertising attack against the big banks likening them to foxes in a hen-house. It comes as a debate rages about an idea to allow first home buyers to use retirement savings for a house deposit.

Why Using Super For Housing Is Wrong

Interesting modelling from from Rice Warner Consultants, which shows that extracting money from superannuation to facilitate a property purchase will cost in later life and put a greater burden on state pensions down the track.

Universal superannuation was first provided to most Australian employees through industrial awards from 1986 and then via the SG from 1992. The original benefit “award super” was provided in lieu of a national increase in wages. Many members have wanted to get their hands on their deferred pay and there have been constant calls to allow young members to use their accrued super benefits as a housing deposit. Many of those with vested interests in the property industry have been touting the idea ever since.

The superannuation industry has tirelessly pointed out to various governments that the mandatory employer contribution is not sufficient to provide all Australians with a comfortable retirement. That is why, it is planned to increase contributions from the current level of 9.5% of salary to 12% by 2025. Given this, it is nonsensical to dilute retirement benefits further by allowing benefits to be used for other purposes.

The Financial System Inquiry (2014) recognised this and recommended the government adopt the objective of superannuation as providing income in retirement to substitute or supplement the Age Pension. Last November, the Financial Services Minister Kelly O’ Dwyer accepted the FSI recommendation without modification and it will become law as soon as a Senate committee has finished discussing the finer details of how this simple phrase should be worded.

Despite this clear objective, the Assistant Treasurer Michael Sukkar has ignored his own policy and this week suggested that he is reviewing whether young people could use their superannuation benefit as a deposit to buy a home. Perhaps he will regret this when he realises what such an asinine policy would cost future governments in increased Age Pension costs.

This policy would create higher activity and would push up the price of housing as more people compete for the same amount of housing stock. It would benefit real estate agents and mortgage brokers who would get higher commission without needing to do any extra work – one of the consequences of distorting capital markets. State governments would also benefit from the higher stamp duties on inflated house prices. Again, rewarding an inefficient tax.

Self-sufficiency in retirement

We know that current levels of superannuation savings will not make people self-sufficient in retirement. If we look at people who have attained the retirement age, some 45% are currently on a full Age Pension and 31% are on a part pension. That means only 24% are not drawing a government benefit – and some of these are still working.

In 30 years, we estimate that the higher levels of superannuation benefits and a small increase in the pension eligibility age will push down the numbers on a full Age Pension to 33% with a corresponding rise in those on the part pension to 45%. However, the numbers who are self-sufficient will not change much at all. This shows that people will need to put more of their own money into super to become self-sufficient and they certainly cannot afford to take any out before retirement.

We have modelled the impact on a member aged 35 on average earnings taking $100,000 out of their super account to use as a housing deposit. Our young member now loses the power of compound interest and, assuming they only receive SG contributions and don’t top up their super later in life, they will draw an extra $92,000 (present value) in Age Pension payments in their retirement years.

So, the Federal Government allows someone to draw $100,000 and then pays them an extra welfare benefit of $92,000 later in life!

Some have suggested the super fund would simply lend the money to the member and it would be repaid. This would reduce the pain, though the member would still lose out on years of fund earnings – and investment returns make up a much larger component of a retirement benefit than contributions made throughout a career. The fund administrators would also need to keep records of this new activity which will increase fees for all members.

Clearly, there are far cheaper ways of getting people into home ownership, by looking at addressing the supply and demand for housing in our capital cities. Using super as a piecemeal solution is not the way to fix the housing problem.

Retirees renting need more than $1 million to be comfortable

The Association of Superannuation Funds of Australia (ASFA) released its Retirement Standard updates for the December 2016 quarter showing a slight increase in the cost of living for retirees.

The Association also released new figures showing Sydney retirees relying on the private rental market for accommodation would need more than $1 million in super savings, as will all retiree couples living in Australian capital cities. Single retirees renting outside Sydney slip under the million dollar indicator.

ASFA CEO Dr Martin Fahy said whether single or in a couple, renting retirees in Sydney, that is those without a debt-free family home, were at a distinct financial disadvantage and would need about $1,045,000 and $1,166,000 at retirement respectively to reach the ASFA comfortable standard.

“This compares to $545,000 for a single and $640,000 for a couple who own their own home,” he said.

“For a single person renting privately in Sydney, around $320,000 is needed to support even a modest standard of living in retirement, with a couple needing around $450,000 to support a modest budget.”

Dr Fahy said one in 12 Australians aged more than 65 live in private rentals.

“Housing affordability and availability is a significant and increasing concern for many Australians and particularly impacts older Australians grappling with the private rental market,” he said.

ASFA estimates a single retiree renting privately in a one-bedroom unit in Sydney will need to spend $62,434 annually to be comfortable and a couple renting a two-bedroom unit will need to spend $79,801.

By comparison, ASFA comfortable retirement standard annual budgets for home owners in Sydney are around $43,300 for singles and $59,600 for couples.

“All estimates assume people are enjoying reasonable health, so any serious illness or disability makes the situation even more challenging, as does rental instability and associated costs,” Dr Fahy said.

“Compulsory superannuation contributions at 9.5 per cent fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately.”

Currently around 75 per cent of households with the household head aged 65 and over own their home outright, 8 per cent are still paying off a mortgage and around 8 per cent are renting privately.

Housing affordability is a particularly serious challenge for residents of Sydney. Around 65 per cent of Sydney residents are home owners by the age of 60 compared to just under 80 per cent for the rest of the country.

Changes to ASFA Retirement Standard for December quarter

The ASFA Retirement Standard December quarter figures show budgets for retirees who own their own home have increased by 0.4 per cent for singles and 0.3 per cent for couples, at the comfortable level, compared to the previous quarter. Budgets for older retirees (those aged 85 and over) increased by less than 0.1 per cent.

At the modest level, budgets for retirees aged 65 increased by 0.5 per cent for singles and 0.4 per cent for couples. Budgets for older retirees (aged 85+) increased by less than 0.1 per cent.

The Consumer Price Index (CPI) rose 0.5 per cent in the December quarter 2016, according to the latest Australian Bureau of Statistics (ABS) figures. The small increase in the cost of retirement over recent quarters reflects moderate growth in the overall CPI.

In regard to the costs faced by all retirees, the most significant price rises in the December quarter were automotive fuel (+6.7%) and domestic holiday travel and accommodation (+5.5%). The most significant offsetting price falls this quarter were international holiday travel and accommodation (-2.6%), accessories (-5.1%) and waters, soft drinks and juices (-3.2%). The increase of the price of automotive fuel follows a 5.9 per cent increase the preceding quarter.

The main contributors to the rise in the food and non-alcoholic beverages group in the quarter were restaurant meals (+1.1%), other food products (+5.4%) and vegetables (+2.5%).

Over the last 1- months, the food and non-alcoholic beverages group rose 1.8%. The main contributors to the rise were vegetables (+12.5%), fruit (+6.9%) and restaurant meals (+2.4%).

The main contributor to the rise in the recreation and culture group in the December quarter was domestic holiday travel and accommodation (+5.5%). The rise in domestic holiday travel and accommodation is due to the October school holidays and the lead up to the peak summer holiday period.

Managed Funds Climb Higher, Again, To $2.8 Trillion

The ABS released their quarterly managed funds data to December 2016, which shows a significant hike in market value, to $2.8 trillion. The asset bubble continues.

At 31 December 2016, the managed funds industry had $2,841.8b funds under management, an increase of $61.4b (2%) on the September quarter 2016 figure of $2,780.4b.

The main valuation effects that occurred during the December quarter 2016 were as follows: the S&P/ASX 200 increased 4.2%; the price of foreign shares, as represented by the MSCI World Index excluding Australia, increased 1.5%; and the A$ depreciated 5.2% against the US$.

Superannuation funds held the largest share of assets.

At 31 December 2016, the consolidated assets of managed funds institutions were $2,237.9b, an increase of $49.2b (2%) on the September quarter 2016 figure of $2,188.7b.

The asset types that increased were shares, $22.9b (3%); overseas assets, $19.4b (4%); land, buildings and equipment, $1.9b (1%); units in trusts, $1.9b (1%); short term securities, $1.8b (1%); deposits, $1.6b (1%); bonds, etc., $1.3b (1%) and other non-financial assets, $0.7b (6%). These were partially offset by decreases in other financial assets, $2.0b (6%) and loans and placements, $0.4b (1%). Derivatives were flat.

At 31 December 2016, there were $498.3b of assets cross invested between managed funds institutions.

At 31 December 2016, the unconsolidated assets of superannuation (pension) funds increased $54.3b (3%), life insurance corporations increased $2.4b (1%), public offer (retail) unit trusts increased $0.3b (0%) and common funds increased $0.2b (2%). Cash management trusts decreased $0.6b (2%). Friendly societies were flat.

 

A housing plan that could kill your finances

From The New Daily.

The Turnbull government’s lack of serious action on housing affordability is most obvious when one of its own MPs is calling it to account, as backbencher John Alexander did again on Monday.

Mr Alexander last year headed a government-dominated parliamentary inquiry on housing affordability that, after he’d been transferred to another inquiry, made no recommendations on housing affordability at all.

But that has not stopped the former tennis champ making a lot of noise on the subject himself. For that he should be commended.

Mr Alexander wants to keep house prices roughly where they are – what he calls “stability in the market” – but to tilt the market towards owner-occupiers rather than investors.

Well, that would be a start, but real affordability comes when house prices and wages stop diverging and start to move closer together. In an era of low inflation and low wages growth, that could take a very long time.

Among some of his more useful ideas there remains a real stinker that others, such as billionaire property developer Harry Triguboff, have raised in recent years – namely, allowing young Aussies to use their super savings to invest in their first home.

OECD warns of a ‘rout’ in house prices

That would help owner-occupiers to outbid investors, but pouring such a large amount of capital into the market would push prices even higher.

Mr Alexander told the ABC on Monday: “The most important thing … is to understand that property bought with super remains the property of your super. If you sell it, the money goes straight back into your super.

“… People aren’t getting into the market until 45, they retire at 65, then they cash in their super to pay out their house. So the money … has gone into an unassessable asset, so those people have full claim on the aged pension. They have actually used their super to buy their house.”

That sounds like a good argument, until you consider the economic context: household debt has never been higher, house prices have never been higher, and wage growth has never been slower.

In short, the super-into-housing argument comes with the standard financial product warning that ‘past performance does not guarantee future results’.

A wobbly asset class

The housing market in Australia has outperformed all other asset classes in the past two decades, but to suggest it can do so again is arguing against simple arithmetic.

Try these nonsensical arguments on a maths teacher sometime: ‘House prices can continue to outpace wages and inflation forever. Each year’s first home buyers can afford to spend a greater portion of their pay on housing. Interest rates will never rise.’

Alternatively, we can learn from the painful lesson being experienced right now in Perth, where stretched home valuations are on the decline (see chart below).

In the past 12 months, Perth house prices have fallen 5 per cent, while the ASX has risen 10.6 per cent – and that’s without counting reinvested dividends.

So a young, would-be home owner could have got themselves in quite a pickle if they’d been allowed to tip, say, $100,000 from their balanced super portfolio into the single home asset.

Their ‘super-owned’ deposit would be worth $5000 less, their home equity would be down $20,000 and a comparable super portfolio that tracked the share market would be up $11,000.

Net result: $36,000 behind. The leveraged gains of earlier years have become leveraged losses.

It’s true, of course, that in the past two decades you can find times when these numbers have been reversed.

But that was then. Young home buyers may not fully understand that now is not the time to be playing Russian roulette with super.

Superannuation fund managers are trained to maximise returns across a range of asset classes, which they trade in and out of as markets change. None would tip all of a saver’s super into a single dwelling.

There are plenty of sound ways to fix housing affordability. But at this time, more than ever, raiding super isn’t one of them.

Despite superannuation changes, one tax loophole remains

From The Conversation.

The Howard government, when flush with revenue, made a bad tax decisions which continue to haunt current policy makers. It removed the tax on the retirement phase of superannuation, this has been partly resolved by current government’s recent changes. But the Howard government also replaced the full taxation of real capital gains with concessional treatment of capital gains (only 50% of gains taxed). This remains as a tax avoidance loophole which both parties acknowledge but are reluctant to act upon.

The reason is straightforward. Assets put into superannuation in the accumulation phase and held until the retirement phase, can then be sold with no, or minimal, capital gains tax payable. This a major incentive to put assets into super and hold them until the retirement phase.

Without further changes to superannuation taxation, this is simply going to worsen the social problem of the well-off adopting tax minimisation strategies by piling as many assets into super as possible. Remember, it will still be possible to contribute up to A$100,000 per annum as non-concessional contributions.

Consequently, the well-off could easily build up a pool of assets of several million dollars or more, which when sold in retirement will still get very, very, favourable capital gains tax treatment under super.

If superannuation assets in retirement are under the A$1.6 million cap, no tax will be payable on capital gains from sales of assets. If assets are above the cap, the tax rate applied to capital gains is 10%.

For example, an asset costing $100,000 and held for 15 years, increasing in price at an average of 7% per annum would be sold for $276,000. If in super, tax payable would be $17,600. If outside of super, on the top marginal tax rate (including levies) of 49%, the tax payable would be $43,096.

If the concession on capital gains tax was reduced (without addressing the concessionary rate in super), the incentive would be even bigger. For example, if the concession was reduced to 25%, tax payable on the capital gain outside of super would be $64,644, an even larger gap to the tax payable in super of $17,600.

Putting $100,000 per annum into super for 15 years with an average 7% capital gain per annum generates a portfolio worth $2.7 million. The capital gains tax savings on this being in super, rather than outside, are more than $1 million!

So, what are the consequences if a brave government elects to reduce the concession applied to capital gains tax? If they make no changes to super tax arrangements there are at least two likely consequences.

First, there is increased incentive for individuals to set up self managed super funds to exploit these tax arbitrage or minimisation loopholes.

Second, despite taxation of earnings on retirement income balances over the A$1.6 million cap, maximising non-concessional contributions into self managed super funds will remain attractive, to take advantage of the difference in capital gains tax rates on assets inside versus outside super – to the detriment of future government budgets.

The consequences for self managed super funds incentives to borrow (via non-recourse arrangements involving trusts) to purchase assets such as property are unclear. As described on one adviser’s website:

Such borrowing will enable trustees to acquire assets over and above the assets that can be obtained from contributions. The caps on contributions can therefore be “overcome” by such borrowings.

However, it is doubtful that there are tax arbitrage benefits from using leverage to purchase assets via super (because higher marginal tax rates mean higher tax deductions for interest on borrowings outside of super).

For reasons of social equity, any general changes to the capital gains tax rate will also need to address capital gains tax within super. Admittedly there is already a lower concession in the case of super (two-thirds of gains are taxed versus one-half).

But that means taxing capital gains in super at only a 10% rate, leaving strong incentives to thwart higher capital gains tax by locating assets within super. Failing to reduce the capital gains tax concession in super would be likely to undo a substantial part of the effectiveness of any general changes the government has already made.

Author: Kevin Davis, Research Director of Australian Centre for FInancial Studies and Professor of Finance at Melbourne and Monash Universities, Australian Centre for Financial Studies