Autumn 2015 Newsletter

Welcome & Economic Outlook Jonathan Sheahan

2015 Markets Recap Ian Guider

Succession Planning O’Connell Brennan

MyFolio Market Investing Standard Life Investments

Irish Property Market Review Owen Reilly Property Consultants

Focus on the Business of Rugby David Wallace & Omar Hassanein

A Range of Financial Services Helping you to Grow, Manage and Preserve your Wealth Welcome & Economic Outlook

of individuals and businesses. This has helped us to grow our client base and expand our service offering in a relatively short space of time.

In May we launched the Compass Pensions service offering which caters specifically for pre-retirement pensions (Buy out Bonds, PRSAs, Personal Pensions, Executive Schemes & SSAPs) and post-Retirement ARFs. We put a significant emphasis on strategic retirement planning and ensuring that clients and their dependents are well catered for in their retirement years

For both Compass businesses, our primary goal is clear: We aim to provide our clients with best- Jonathan Sheahan in-class, globally diversified investment and pension portfolios with an asset allocation and Managing Director structure that is best suited to their needs & objectives. We will do all of this in a transparent Welcome to the Compass Private Wealth inaugu- and tax-efficient manner while remaining fully ral Newsletter for Autumn 2015. The purpose of independent at all times. this bi-annual Newsletter will be to keep you, the reader, well-informed as to the main economic and I sincerely hope that you enjoy this Newsletter and market developments that may be relevant to you, feel free to contact me at any stage to hear more your pension scheme and / or your business on an about our business and our services. ongoing basis. Yours Sincerely, Compass Private Wealth officially launched in February of this year and so far we have been overwhelmed by both the support provided to us and the confidence shown in us by a wide range

Irish Economic Update:

The Irish Economy has had a stellar 2015 so far are now also enjoying a boost in capital and is now officially the fastest growing country values. The above factors have contributed to a in the Eurozone in GDP terms. Our debt to GDP promised loosening of the purse-strings from our ratio is gradually reducing to more normalised Government in Budget 2016 and in future Budgets levels and inward investment to our shores has which has broadly been welcomed as a positive continued to strive thanks to our innovative development and the end to austerity. workforce, our low corporation tax-rate and our pro-business approach. In my opinion however, the biggest risk to the Irish Economy is the heavy reliance on our 2 Unemployment has also dropped to below 10% key trading partners in the U.S & the UK. These meaning that the Exchequer is benefiting from 2 economies represent a disproportionally high lower social welfare benefits and higher income percentage of our exports and our multinationals tax rates. so diversifying our international partners to other countries such as those in Emerging Markets While the pace of growth in property has slowed, should be very much prioritised by the Government we are still witnessing consistent year-on-year and the IDA in 2016 & thereafter. price increases and importantly areas outside of

Compass Private Wealth Autumn 2015 Newsletter 2015 Market Recap

queues at the ATMs have gone, the capital controls are still in force, all of which means we’re likely to see another chapter of the debt crisis break out sooner rather than later.

China represents an altogether greater problem for the global economy. The slump in share prices, and the government’s reaction by banning trading in many stocks, was just a foretaste of the measures it would go to in order to prevent the economy diving further. Ian Guider The unprecedented devaluation of the Yuan Sunday Business Post in August indicates the seriousness the leadership takes the signs of a deteriorating We have witnessed an incredible series of economy. events in global financial markets over the summer. From the ongoing debt spiral in The prospect of China hitting its target Greece, the collapse of oil and other growth rate of 7.5% looks slim and given commodities to the economic crisis developing its importance to the global economy, we in China. Investment markets globally have should arguably worry about events in China been very negatively affected from all of these more than in many other economy. The events with a significant sell-off at the end of ability to plot a soft landing is difficult, and August in particular. it will test the Communist Party leadership like never before. But is it crisis averted or merely postponed on a number of fronts? On the bright side, the source of so much gloom in recent years is finally looking It’s clear from what happened over the course better, albeit with baby steps as the Eurozone of the summer that senior figures in the recovers. The second quarter Gross Domestic European political establishment have run Product number may have been slightly out of patience with Greece, with many less-than-forecast at just 0.3%, but the bloc raising for the first time in public the looks like it isn’t slipping back into negative possibility of ‘Grexit’ being a real option. territory. A weak single currency and The cobbling together of an €80 billion-plus lower energy prices will help euro area bailout package is probably the last time exports, though, of course many European Greece can tap institutions in Europe. Real goods from German cars to luxury fashion economic reforms will need to happen on the end up in China. ground in Greece for its European and other creditors to keep the financial life support on. Volatility has crept into markets over the summer, however, disaster has been averted. Greece’s economy may have shown a bit of So far. life in the second quarter according to recent data - somehow - it managed to grow 0.8% - but the damage done this year has set it Ian Guider is Markets Editor of The Sunday Business Post. back. The bailout, however, does nothing for Greece’s debt dynamics. And while the

Compass Private Wealth Autumn 2015 Newsletter O’Connell Brennan Solicitors - Succession Planning

In July, the Minister for Finance indicated that he will examine the current rules in relation to inheritance tax in Budget 2016. It is anticipated that the tax free thresholds in particular, may be reviewed with a view to mitigating against the recent rise in property prices.

Given the amount of tax arising on even quite modest estates, it is sensible to plan for the passing of assets to the next generation.

Some tips for inheritance tax planning: Cormac Brennan is a partner and Andrea McNamara is a solicitor in • Make a Will, enabling you to pass assets to the next generation in accordance with your O’Connell Brennan Solicitors, a wishes and as tax efficiently as possible; specialist private client law firm in Dublin. • Consider benefitting the wider family. Depending on the family situation, providing benefits for grandchildren or other relatives For many individuals, the prospect of engaging can give rise to a significant overall tax in succession planning or making a Will may be reduction; daunting. As a result, many people fail to put in place a succession plan in order to ensure the • Consider lifetime gifts, which can be tax orderly and tax efficient transfer of their assets efficient, although the financial security of on their death. Making a Will enables you to the parent is always the paramount decide who will inherit your assets when you die consideration; and also enables you to ensure that your assets will pass to the next generation in the most tax • Take account of reliefs. There remain efficient way. generous reliefs from inheritance tax, the most relevant of which to the majority of Capital acquisitions tax is paid by beneficiaries people may be dwellinghouse exemption, of inheritances and lifetime gifts. As recently as which would enable a beneficiary to receive 2008, the capital acquisitions tax rate was 20% a dwellinghouse without any charge to and there were generous tax free thresholds capital acquisitions tax arising, in the event available – for example, children could each that the conditions of the relief are satisfied; inherit more than €500,000 from a parent and without paying any tax. Since 2008, the rate of capital acquisitions tax has risen to the current • In some cases, particularly where children rate of 33% and the tax free threshold for are young, trusts can be an effective way of children has been reduced to €225,000. passing on assets tax efficiently, on death or otherwise. Where inheritance tax arises, The effects of these changes are best illustrated assets can be disposed of in an orderly way by example - take an individual with assets to meet the tax bill. (including the family home) of €2M and four children. If this individual died in 2009 and left It is natural to avoid thinking about putting in his estate to his children, none of the children place a succession plan, but our advice to would have had an inheritance tax bill. If he dies anyone who has not yet done so would be to in 2015, his children will collectively pay €363,000 take the plunge sooner rather than later. As is in tax – nearly 20% of the value of his estate. evident from the above, there are many benefits to having a good succession plan in place.

Compass Private Wealth Autumn 2015 Newsletter Standard Life - MyFolio Investing

MyFolio V (higher risk) MyFolio – This may suit you best if: • You’re very comfortable with investment risk Which one is for you? • You aim for high long-term investment returns and do Each person has different investment needs and not overly worry about periods of poorer performance goals – some for the short term, while others are in the short-to-medium term more longer term. Some are quite conservative How MyFolio can help you spread the risk when it comes to investment decisions, while others A golden rule of investing is diversification or spreading are happy to take a more adventurous approach. It the risk. And when you think about it, it’s just common all comes down to finding the right balance between sense. Putting all of the money you have to invest in just risk and reward. one company’s shares is a really high-risk strategy. Diversification across different investments can help Standard Life has developed MyFolio funds, which reduce risk. help make investing really simple. All you have to do is choose the fund that matches your risk level. Multi-asset investing Diversification isn’t just limited to investing across shares What are MyFolio funds? of different companies. It can also mean spreading your They’re a family of multi-asset funds that invest in money across different types of assets, such as shares, different assets, including equities, bonds, property and bonds and property and also investing in a range of money market instruments (including cash), which help countries. Each asset responds differently to changes in spread risk. Each fund is designed to maximise potential investment conditions. Some could go up in value, at the returns for your chosen level of risk. There are two sets of same time as some go down. So, spreading your money MyFolio Funds to choose from. across assets can help to smooth out your investment over time. You should keep in mind that even a well-diversified MyFolio Active Funds are actively managed by Standard portfolio can still fall in value. Life Investment Managers, one of the top performing fund managers. What are the benefits of investing in a MyFolio fund?

MyFolio Market Funds are managed predominately Simplify your fund choice: on a passive basis by Vanguard Asset Managers, With so many funds in the market to choose from, experts at passive investment management. choosing the right one can be daunting. With only five funds to choose from – MyFolio funds makes this choice There are five MyFolio Active and five MyFolio Market a lot simpler. Funds to choose from depending on your attitude to risk, Diversification: as follows: These multi-asset funds invest in a broad range of assets. MyFolio I (lower risk) This helps to spread your risk. This may suit you best if: Choice of risk level: • You’re conservative with your investments As there are five different risk levels to choose from, if • You’re prepared to take a small amount of risk to your attitude towards risk or your circumstances change, achieve modest or relatively stable returns you can simply switch to another MyFolio fund that offers a higher or lower level of risk. MyFolio II (lower-to-medium risk) This may suit you best if: Ease of access: • You’re relatively cautious with your investments These funds are priced daily and are available across a range of our pensions, savings and investment products. • You want to try and achieve a reasonable return and you’re prepared to accept some risk in doing so Be aware though that the value of funds can fall as well as rise in value and your investment may be worth less than MyFolio III (medium risk) what was paid in. MyFolio funds will not be suitable for you This may suit you best if: if you do not want to take any risk. • You take a balanced view of investment risk • You don’t seek risky investments but don’t avoid them either Standard Life – A company you can trust, Pensions and Investments since 1834 MyFolio IV (medium-to-higher risk) This may suit you best if: It’s important to trust the companies you deal with. • You’re relatively comfortable with investment risk Standard Life is a leading provider of long term savings and investments. Headquartered in and operating • You’re aiming for higher long-term returns and internationally, they’ve been in since 1834 and have understand this can also mean sustained periods helped generations of Irish customers plan for their future. of poor performance

Compass Private Wealth Autumn 2015 Newsletter Irish Property Market Review

CPW: Compass Private Wealth; Jonathan Sheahan & David Walls ORPC: Owen Reilly Property Consultants; Owen Reilly & Anita Davey

CPW: What is your view on the current valuations of residential property in Ireland?

ORPC: Residential property still represents good value, particularly outside of Dublin, Galway and Cork. Whilst there has been a recovery in Dublin property values in the last two years, values are still 30% below peak. According to Myhome.ie there was a moderation in residential price growth in Q1 which continued into Q2 with the national price rising by 1.7%.

The national average rent between April and June was €934, compared to €860 a year previously.

CPW: We have had 2 noteworthy changes in rules around Property in the last 10 months: The abolition of the 7-year CGT exemption and the new Central Bank rules for first time Owen Reilly buyers. What has been the impact of these measures? Managing Director, Owen Reilly Property Consultants ORPC: The abolition of the 7-year CGT exemption had a significant impact on residential investment which was evidenced in the first quarter 2015. There was a frantic rush from investors to buy at the end of 2014 to avail of the exemption. In the first quarter of 2015 there was a drop in enquires from investors. Cash buyers still account for over 50% of transactions in the housing market. This is particularly affecting buyers looking to trade up in the €500,000-€1 million bracket who now have to save much higher deposits. This in turn has had an impact higher up the chain in the €1 million to €1.5 million bracket which saw an adjustment in prices in the second quarter.

CPW: Do you foresee any other measures similar to those above that could affect property markets?

ORPC: There has been speculation that building levies and VAT could be lowered or frozen. Don’t expect builders to start projects until these changes have been implemented.

The proposed Dublin City draft development plan for 2016-2022 may create the conditions for a type of development we have rarely seen in Ireland: build to rent. This will be driven by foreign investment funds like Kennedy Wilson and REITs. Anita Davey Senior Negotiator, South Dublin, CPW: What is your view on the direction of the residential property market nationally for the Owen Reilly Property Consultants next 1-year & 3-year periods?

ORPC: In my opinion we have seen most of the recovery in Dublin property values. The fundamentals are all positive and there will be growth over the next years at a more moderate level driven by supply & demand and the mortgage market. Outside of the main urban areas such as Cork and Galway, the recovery will be felt in some areas more than others. The market has bounced back in the commuter counties such as Kildare, Wicklow and Meath.

CPW: What do you think the best areas in Dublin will be for residential property investment in the next 5 – 10 years?

ORPC: Areas worth considering that would not be currently hot spots include East Wall, Irishtown and Dublin 7.

East Wall is north of the Docklands and will benefit significantly from the Strategic Development Zone (SDZ) for the Northern Docklands which will add to the existing infrastructure such as the Luas and Samuel Beckett Bridge. High rise commercial and residential development in the Northern Docklands will impact property prices in East Wall similar to the impact Grand Canal Dock had on Ringsend.

Irishtown is situated in Dublin 4 so is close to a host of amenities but values here are low for this postcode. Price increases in Grand Canal Dock and Sandymount are pushing more buyers to consider Irishtown and this is now the new trendy area in Dublin.

Grangegorman has massive potential. For the first time all DIT activities will be located on one integrated campus. When completed in 2017 the Campus will accommodate over 20,000 staff and students.

CPW: Any Other Comments??

ORPC: I would hope the government avoids inappropriate interventions in the market ahead of any election. An increase in the supply of property for sale in Dublin points to continued moderation in price increases. It’s likely a mortgage war will break out soon between banks which will be good news for buyers.

Compass Private Wealth Autumn 2015 Newsletter Focus on the Business of Rugby

Interview with Jonathan Sheahan & David Wallace, ex Irish Rugby International

JS: How have you found adjusting to life after retiring as a professional rugby player? DW: Strange initially, but I have a lot more flexibility now and much more time to spend with my wife and kids, which is great. Not having to do as much traveling is another bonus but I still travel a bit for business which I enjoy.

JS: Tell me a little about your working and business life since hanging up the boots. DW: I have been involved in a few businesses since retirement and with the business world evolving constantly, I enjoy the challenge of keeping fresh and up to date with these changes. I have seen first-hand the radical changes in the business of sport over the past few years which is an area that really excites me. I have recently set up an Agency for an Irish company called STATSPORTS which is going really well

JS: Tell me about STATSPORTS and your role within it DW: STATSPORTS is the world’s leading performance monitoring & analysis provider in elite sports such as Rugby, Soccer, Basketball, American Foot- ball, and Athletics. I spend a lot of time travelling around Europe on business development roadshows, particularly in France. A number of professional sports clubs have started using our products to assess and analyse key performance metrics such as distance covered by players in a match and the measurement of collisions, levels of acceleration etc. These metrics are very insightful for strength & conditioning coaches and ultimately the head coach when it comes to team selection. A number of broadcasters are now signing up to STATSPORTS too - so television viewers will soon be able to see all these statistics in real-time

JS: What are Ireland’s prospects for RWC2015? DW: I think we have a great chance of going a long way this time around under Joe Schmidt and, with the current bunch of players that we have, our chances look very exciting. A good confident start to the tournament and a low injury count is vital to how we progress.

JS: Is there any player or team that particularly excites you as we approach RWC2015? DW: England look strong and will be hard to beat in Twickenham and New Zealand always set a high standard. Simon Zebo is a player who rises to the occasion on the biggest stage and he could be a real “tournament” type player – he’s capable of creating magic out of nothing

JS: Being in business, have you seen an improvement in the economy in recent years? DW: Yes I certainly have. I’ve noticed a real pick up in Limerick city centre with many shops and businesses being revamped and many areas rejuvenated. The arrival and expansion of some multinationals like Northern Trust, Ethicon, Optel Vision and Regeneron to Limerick in recent years has added to local employment prospects which in turn has given a much needed boost to the local economy.

JS: In two words: Who’s going to win the World Cup & who will be runners-up? DW: Ireland to beat England in the final!! Could you imagine it?

Interview with Jonathan Sheahan & Omar Hassanein, CEO of the Irish Players Association

JS: Tell us how IRUPA helps players during and after their professional careers? OH: During players’ careers, contract negotiations and assisting young players with general advice as they enter professional sport are the main areas of our work. When players retire IRUPA has several support systems in place to help players with the main pillars being career development, personal development, branding & marketing, financial advice and counselling & support services. These pillars are available to current players also.

JS: In terms of the business of sport, are there any areas that rugby in general needs to work on or continue to improve upon? OH: I feel the game of rugby needs to constantly work hard to maintain the integrity of our sport. We have seen cases of match fixing in cricket, corruption in soccer and widespread doping problems in other sports and rugby has an obligation to uphold the integrity of the sport and this has to be driven by the players. There are also challenges with the seasonal structure from a southern v northern hemisphere point of view and trying to keep the fixtures alive all year round.

JS: You played for Australia A’s and Australia 7’s, do you lay awake at night regretting not having earned a full cap? OH: Ha – well I like to try and give it everything I’ve got in all aspects of life and I guess it’s every young aspiring players dream to play with their country. I suffered a broken leg and this hampered my playing career, but overall I’ve no regrets and very happy with my time on the pitch.

JS: Is there any team that you would view as a surprise package as RWC2015 approaches? OH: I guess Ireland would now not be viewed as a surprise package as there is a certain expectancy attached to this current team and it will be interesting to see how the team handles that psychologically. I expect them to do well. Australia is another side who has got their act together over the past 18 months and the return of a fully fit David Pocock is a huge addition, they could surprise a few people.

JS: Having seen professional sport in Australia and Ireland first hand, how does pro rugby in Ireland compare relative to other sports? OH: In Australia there are probably 6-8 pro sports whereas in Ireland rugby is the only full time professional sport domestically at present. Rugby here has been feeling its way somewhat but has made huge strides in the last few years and has met the majority of the challenges it has faced. New Zealand & Australia would still be the benchmark in terms of the overall professional game and structures within a country that most unions would aspire to.

JS: In two words: Who’s going to win the World Cup and who will be runners up? OH: I’m going to get in trouble on all sides here but I’ll go for a New Zealand Ireland final with the All Blacks just shading it!

Compass Private Wealth Autumn 2015 Newsletter Our Services

Investments & Asset Allocation: • Bespoke Investment Portfolios • Asset Allocation & Global Diversification • Lump Sum & Regular Contribution Bonds • Fixed Term Cash Deposits

Pensions: • Personal Pensions & PRSAs • Buy Out Bonds • Executive Pensions & SSAPs for Company Directors • Post-Retirement ARFs & AMRFs

Financial Planning & Protection: • Retirement Strategies • Financial Planning & Reviews • Life Assurance • Inheritance Planning

Thank you to all of you who attended our launch event in the Marker Hotel on 22nd May on European Quantitative Easing (QE) & the impact on investment markets

Kevin Coughlan Ronan Webster from J.P. Morgan from Green Property Asset Management discussed the Irish property provided an overview of market and the likely impact European Equities and the that European QE will have outlook for the Euro versus on the sector Dollar & Sterling

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