Record sale takes place during lockdown

Posted on 10 August 2020 by Danny Blair

We are now in the recovery mode of COVID-19, having been in full lockdown and then varying levels.

At Level 1 we are much closer back to the normal than many other countries across the globe.

There is certainly an air of the unknown going forward from an economic recovery, but Hawke’s Bay is well poised to recover at a faster rate than other regions. There’s significant residential, commercial and industrial building activity on construction books and we have also had several prominent sales.

The Colliers Hawke’s Bay team was busy during lockdown working on many leads and listings and it was a major highlight to announce at Level 2 that we had closed a history making transaction with the sale of The Tomoana Food Hub for $41m, at a yield of 6.23 percent.

It was a fantastic feeling to announce the record sale to the Hawke’s Bay business community, providing confidence that there are willing investors keen to invest in Hawke’s Bay.

The sale was to a new property syndicate established by Mitchell Mackersy Lawyers. The syndication scheme didn’t close until end of March and was over subscribed, which is another indicator of investor confidence in Hawke’s Bay.

Tomoana Food Hub also has some high profile multi-national tenants that are long established in Hawke’s Bay such as Tomoana Warehousing, Jamestrong Packaging and Fonterra.

During lockdown the Colliers International market research team based in Auckland launched a new investor and occupier sentiment survey which sheds some light on how landlords, tenants and investors have reacted to the impacts from COVID-19 and expectations for the future.

Approximately half of the respondents believe that conditions will stabilise within a year and 58 percent see the year ahead providing new opportunities and indicating that they would like to make their next acquisition within the year.

Enthusiasm amongst purchasers has clearly been bolstered due to a general belief that values will ease over the short term from the peaks apparent over the latter part of 2019. Approximately 80% of respondents are picking a decline in values, but some may be disappointed. Transactional evidence to date suggests that high quality properties with premier tenant covenants remain in demand with limited shifts in pricing.

Rent relief during lockdown has been a significant issue and is clearly illustrated by responses to the survey with 82% of landlords and 55% of occupiers confirming that rental assistance packages have been agreed. In April, 84% of occupiers reported paying of 50% or more.

It is likely that the May statistics will be similar with 67% of landlords and 76% of tenants expecting rental payments to be the same as they were in April.

The lockdown also enforced a massive change in working habits with a vast majority of office workers conducting business from home. Survey results show that the move has proved popular for employees.

Although working from home is likely to be an ongoing topic of discussion 75% of respondents to the occupier survey indicated that they would retain the same or increase their footprint over the next 12 months.

Further, the traditional office setting continues to offer many advantages. According to respondents, being able to collaborate with colleagues in person (34%), bumping into co-workers (13%) and the ability to have spontaneous meetings (12%) were rated as key benefits.

The industrial property sector is viewed by investors as being the most resilient in the current economic climate. While there will be some disruption in the short term due to the impact of COVID-19, history shows the resilience of the industrial sector in periods of uncertainty and market disruption.

At the heart of the industrial sector, goods-producing industries such as manufacturing and construction accounted for around one-fifth of New Zealand’s $300 billion economy in 2019, according to Statistics New Zealand. In addition services such as transport, warehousing and postal services, industries in growth pre-COVID-19, has been boosted significantly in recent months as people shift to online and ‘click and collect’ services more than ever before.

Thinking change? – get the process right

Posted on 29 June 2020 by Craig Sidoruk

COVID-19 has caused many employers to consider making changes within their business. If you are a business owner who needs to downsize, or re-align to new market conditions, there’s an important process you need to follow if those changes have the potential to impact an employee’s employment, and while there’s a lot at stake for you, it’s just as important to consider the employee.

Plan and prepare:

Before embarking on any proposed changes, you should describe the genuine business reasons for the change in a clear and transparent manner. Even as a result of COVID-19, an employer needs to be able to describe the specific reason for the change, the problem you are trying to fix, and the outcomes you are hoping to achieve.

Develop a proposal:

The next step is to develop the proposal for change. Depending on the extent of the change, this could be in the form of an individual letter or a more comprehensive change proposal document. This should clearly describe the change being proposed, provide the potentially affected employees with access to information relevant to the proposed changes, and clearly set out how the employee(s) will be affected by
the change. The proposal should also set out the timeframes, how the employee can provide feedback and any support you will offer. If new positions are being proposed, or there is a reduction in the number of employees who hold the same position, you will need to clearly outline the proposed selection criteria for those positions.

Consultation:

Under the Employment Relations Act an employer is required
to consult with employees potentially affected by the proposed change, and allow them the opportunity to provide feedback on the proposal. Feedback could include any alternatives to the changes proposed.

Ideally, you should meet with each affected employee. This is an important discussion, so if you feel a bit nervous, prepare a script and follow that. Employees also find these discussions difficult and potentially upsetting, so should always be given the opportunity to have a support person or representative present.

Employees should then be given sufficient time to consider the proposal, seek independent advice if necessary, and provide

feedback on the proposal. There’s no fixed timeframe, but I generally recommend a minimum of five business days.

Once you have received the feedback, it’s important that you consider that feedback carefully, or any alternatives suggested. Often employees provide viable alternatives that you may not have considered or thought acceptable to the employee such as job sharing or reduced hours. You don’t have to accept everyone’s feedback or suggestions, but it’s important to show you have considered it.

Making the decision:

Once the consultation period is over and all feedback considered, the employer must decide what the final decision will look like. The final decision needs to be conveyed in person to each employee.

If an outcome is that an employee’s position is to be disestablished, you must comply with the terms and conditions of their employment agreement in regards to any redundancy entitlements or notice provisions. It’s also important to consider any opportunities for redeployment within the business.

Don’t undermine your brand:

While it’s important to get the process right from a legal perspective, it is also important to get the process right from
a humane perspective. Demonstrating genuine empathy during meetings, treating employee’s with respect and dignity, taking the time to meet individually with affected employees, being aware of the employee’s emotional state and being
able to respond appropriately to that, offering support or outplacement, allowing time off to attend job interviews or
to talk to professional advisors, considering requests for shortened or extended notice periods – all make this a better process for both the employee and the employer.

Businesses often spend years building their employer brand and recruiting the right people, don’t undo all that good work and good will by cutting corners through the change process.

This article deals with complex legal issues. If you are considering change management or restructuring, please seek specialist advice first.

A timely reminder to review your affairs

Posted on 24 June 2020 by Bramwell Bate Lawyers

As we slowly return to our day to day routines following the COVID-19 lockdown, it’s a good time to reflect on the lessons learnt from the paired back existence we experienced during these unprecedented times. One of the overwhelming messages to come out of the lockdown, was an even greater appreciation of our families and our desire to protect them.

It is at times like these, that we should take stock of our personal affairs to ensure that in the event that something happens to us, the very people we want to protect are not left behind to sort out our unfinished business. A timely reminder to review your personal affairs and ensure everything is in order. Below are some areas worthy of consideration:

Wills

Anyone over the age of 18 years should have a Will. A Will is a legal document which sets out how you want your estate to be administered upon your death. It is legally binding. Without it, your assets will be administered according to a formula set out by the law and this may not align with you or your family’s wishes.

If you have already put a Will in place, you should continue to review it and ensure it reflects your current intentions and wishes. Perhaps you have married since you last made a Will, and if so, you should check to ensure it was made in contemplation of marriage otherwise you may find that it’s invalid. Likewise, if you have recently separated or divorced, it is likely that the intentions for your estate will have changed.

Enduring Powers of Attorney (EPA)

Putting in place an EPA enables you to decide ahead of time who will make decisions for and about you if you become unable to make those decisions yourself. An EPA gives a specific person the legal power to act on your behalf if you become “mentally incapable”.

If you don’t make an EPA, and you become unable to make your own decisions, or unable to communicate your decisions to others, people close to you will need to apply to the Family Court to have the Court make various kinds of decisions about your life, or the Court may appoint someone to make those decisions for you.

You can put in place an EPA for personal care and welfare and one for your property and finances. You can have either type of EPA or both, it depends on your personal circumstances.

Memorandum of Wishes

If you have a family trust, putting in place a Memorandum of Wishes is one way that you, as the settlor, or creator of the trust,

can signal to the trustees your intentions. A Memorandum of Wishes is read alongside the trust deed and trustees should have regard to the Memorandum of Wishes in the exercise of their discretionary powers in dealing with the trust assets and making distributions.

Lease Renewals

The compulsory shutdown of many businesses over the lockdown saw a number of leases being considered in greater detail. It is important that you review your lease documents
to ensure that you have current arrangements in place. If
the renewal or review dates have passed and the lease arrangement remains in place, it is likely it will be on a month by month basis with either party having the ability to terminate the lease with one month’s notice. This situation does not provide a great deal of financial certainty moving forward.

Moving to the Cloud isn’t enough

Posted on 18 February 2020 by Lisa Townsend

Over the second half of the last decade we have seen the progression and growth of the tech sector all but explode and stamp its claim on the world’s business landscape. These developments have revolutionised the way that businesses operate and streamlined many of their day to day processes.

Accountants may appear to be on the endangered species list in this era of rapidly-increasing automation, but we’re finding that as Business Advisors we are adapting to the changing landscape, working diligently to stay ahead of the curve and thinking differently to stay relevant in order to assure demand for our services in the future….

The business landscape has gone through such significant changes over the last decade, particularly regarding the utilisation of technology in even the most basic of businesses that it wouldn’t be surprising to envisage a period of stability or cooling-off as business operators come to grips with the raft of tools now available to them – however this seems very unlikely. It is within the next decade that we are likely to see which businesses can thrive in this new landscape and those which may fall by the wayside through their own inactivity or inability to embrace change.

The really exciting element from our perspective is how Hawke’s Bay has managed to position itself at the forefront of this change. Hawke’s Bay is now seen as a booming business economy that has the required elements to expedite the achievement of business goals. This teamed with the Bay’s reputation for true work/life balance has ensured that the New Zealand business community stands up and takes notice of our little slice of paradise. This as well as our own local success stories such as the Napier Port, Ahuriri Tech Hub and the Airport expansion project has enticed a range of business investors and opportunities to our region.

Dynamism is a fundamental component of many successful businesses and the required strategy can dictate short timeframes for growth, sale & purchase and market penetration

opportunities. This means we really need compliance and reporting to run like clockwork, with the data available at our fingertips. Neither we as advisors nor you as business owners can afford to waste time on historical results.

One change by product is how we work to align the current business environment, technology and new generations entering the workforce together. This is a fundamentally important investment for every organisation, and our clients value good advice around what works and what to do when it doesn’t.

Futurists talk of the threat that Artificial Intelligence poses to so many businesses by manipulating the way in which we conduct our business. We see this advancement and evolution

signalling a somewhat inevitable move towards robotics and automation taking over the logical, predicable and monotonous tasks within society. And while the further development and future influence of AI is uncertain, it is another element of the change cycle that businesses will need to take heed of and build into their strategic planning in order to stay relevant.

To address these changes Businesses must embrace cloud- based accounting software in all its glory. Harnessing the cloud for efficient accounting compliance is not enough. The real benefit is in utilising apps and add-ons to provide privately- owned businesses with a broader, more integrated solution that is the envy of larger corporates. It is likely that within the first half of the next decade we will see who can succeed in taking their Business to the next level and those that have been weighed, measured and found wanting.

Which one is your business??

New themes emerge in RMA changes

Posted on 18 February 2020 by Cam Drury

An emerging theme in our sector is that there are more matters to be considered – and more to be considered earlier. An inevitable outcome is that things may take longer – meaning its even more important to be aware of the necessary inputs and to set realistic timeframes.

Some of the main changes we’re observing relate to archaeological matters, cultural values and hazards. None of these are necessarily a bad thing, however – it’s just an element of change.

Section 6(h) of the Resource Management Act requires all persons exercising functions and powers under it to recognise and provide for the protection of historic heritage from inappropriate subdivision, use, and development. This has generally been given effect to by District Plans and property information identifying the presence of archaeological sites, for which the Heritage New Zealand Pouhere Taonga Act 2014 sets out a framework for allowing and managing works that may affect such sites.

There has always been an overlap between the two Acts, and while authorities in relation to archaeological sites are sometimes obtained prior to or as part of resource consent applications for larger projects, it is becoming more common for this to be focused on for smaller projects as well – requiring greater inputs up front of a process.

This has pro’s and con’s. On one hand, greater certainty is obtained for all parties, but on the other, gone are the days of stepping through the process one regulatory step at a time and managing cost as you obtain more certainty. Whether the RMA actually envisages the Heritage New Zealand Pouhere Taonga Act 2014 being implemented concurrently seems to be a mute question, as the emerging theme is that if it needs to be done at some point, it needs to be done now.

It’s a slightly different situation with cultural impact assessments, but there is again an emerging theme that these are beginning to be required on what would have been considered less complicated applications. Again, I’m not suggesting this is a bad outcome, as in most cases they reveal some pretty interesting findings and matters that are worthy
of consideration and management.The message is that inputs previously associated with only larger scale projects are becoming common day requirements.

As we’re becoming more aware of different natural hazards, this is another topic which is requiring a lot more consideration earlier. Again, not a bad thing considering the idea is to avoid making decisions that could put people, property and infrastructure in harm’s way. However, while the technical inputs are based on very hard science, there is subjectivity around the parameters used to generate models and predictions, and a lot of time can be spent between designers and auditors in agreeing on the inputs and being comfortable with the solutions.

So, the message is there are actually a lot more things to consider earlier now. This shouldn’t justify just wanting to know things for the sake of knowing them, but where reasonable, it’s a transition we all need to make, meaning projects need to be well scoped and momentum maintained.

As a company we have increased our capacity and are continuously reflecting on and responding to changes in the industry and have developed processes to identify necessary inputs early so that key areas can be refined and focused on and certainty obtained so that costs and timeframes can be managed as best as possible.

2020 shapes up as a stellar year

Posted on 18 February 2020 by Danny Blair

This year is shaping up to be another stellar 12 months for commercial and industrial property in the Hawke’s Bay. Investor confidence remains high and market activity is strong on the back of an outstanding 2019.

Yields are likely to compress further on the back of record lows in 2019. The sale of the 19-unit Harvest Lodge Motel in Havelock North for 4.54 per cent last year was the sharpest yield in history for a Hawke’s Bay commercial property. While not all properties will attain such returns, we see yields in the 5 to 7 per cent range as representing the new norm, given the continuing low interest rate environment and strong investor appetite.

The Hawke’s Bay industrial sector is expected to continue its strong run in 2020, buoyed by the thriving horticulture sector. This trend is exemplified by the sale in 2019 of a 6.3ha industrial property at 22 Irongate Road, Hastings, which will be transformed into a $30 million new pipfruit facility. This was the largest industrial land transaction in the Hawke’s Bay last year.

Havelock North will continue to be a focus for growth, particularly in the office sector. Numerous investment advisory and management firms have established offices in Havelock North in recent years, putting the town in a position to become a regional financial hub in the future. The location is attractive due to its relatively affluent residential population and its proximity to key markets in Hastings and Napier. Strong horticulture and tourism sectors are also adding to growth.

The future of retail continues to be augmented by the tech sector, rather than disrupted. Tenants benefit from a wide range of apps to assist them with business, focusing on customers, staff and productivity benefits. Owners benefit from better understanding about property management and facilities management requirements. Investors get a better understanding and assessment of risk and potential future benchmarks.

Key to all of this is access to data and information. The advent of 5G in New Zealand will help transmit significant amounts of raw and visualised information at an immense pace. Connectivity will be a major game changer over the next few years.

To assist our clients in this space, Colliers International has been running Colliers Proptech Accelerator to create solutions, shape technologies and find opportunities.

Commercial property transaction volumes in Hawke’s Bay across all asset classes are likely to remain buoyant in 2020. Colliers had very strong years
in 2018 and 2019, resulting in our Hawke’s Bay office being named Small Commercial and Industrial Agency of the Year at the 2019 REINZ Awards. Commercial property investor confidence was 23 per cent net positive in Colliers International’s latest survey, which is line with national averages over the past two years.

The cost of compliance

Posted on 18 February 2020 by Paul Harvey

It is hard to believe that The Profit is celebrating its 10th birthday and that Williams’ Harvey, has been writing a column for a decade now. I went back over all the articles written and it appears that in a nutshell compliance has been the single biggest change in our sector. Whether in response to economic upheavals such as the Global Financial Crisis (GFC) or natural catastrophes especially the Canterbury earthquakes, the level of compliance we need to adhere to in our reporting to satisfy stakeholders stands out.

We set up our business in 2006, little knowing the world was about to be plunged into one of the biggest periods of financial stress since the 1930 Great Depression with the
GFC.

Worldwide housing prices plummeted approximately 31% – more than the price plunge of 1930. As a result, and in response to the GFC by 2010 regulators worldwide were responding to the financial crisis experience with a large and ongoing program of reforms to “strengthen requirements on banks’ capital and liquidity structures and bolster domestic and international financial supervision”.

Regarding valuing property in New Zealand a panel ordering system was established. In February 2011, I wrote an article titled ‘Changes Afoot’ which signaled that lending institutions would adopt the ‘panel ordering’ system if you required a residential property valuation for mortgage security purposes.

Essentially, lending institutions felt this brought about “greater independence and rigour and through its risk management policies, highly incentivise bankers to correctly assess the risk of a loan, and with an independent assessment of value of the collateral for security, which is a critical aspect of the policy.” ANZ was the first adopter and as predicted all banks have now adopted one of the two panels (Corelogic and Valocity) available followed by second tier lenders and mortgage brokers.

Subsequently reporting has considerably increased the amount of compliance placed on as Registered Valuers in order to mitigate the stakeholder’s aversion to risk. Not entirely popular at first and reports made pretty ‘negative’ reading, however, I predict they are here to stay and are now an accepted part of the lending process for all.

No sooner had these changes been implemented when the 2011 Christchurch earthquake hit. The impact on valuing and property values was profound. As a result, earthquake risk was prioritised and adherence to the Building Act of 2004 regarding a building withstanding a moderate earthquake was enforced rather than being a best practice option. Words such as ‘liquefaction’, ‘seismic strengthening’ and ‘earthquake prone buildings’ (EPB) became part of the reporting landscape, driving the Building (EPB) Amendment Act 2016. As Valuers we have to comment on all of the above and in some cases where buildings were found to be earthquake prone, values plummeted.

Commercial property owners found themselves in the insidious position of having to remediate buildings (with regulatory timeframes now set) as well as manage tenants and/or their businesses, if owner occupied. From a valuation perspective lending institutions and insurers became more concerned with a building’s ‘New Building Standard’ (NBS) percentage. As these factors impacted property’s value lending institutions had the ability to structure funding to mitigate perceived risk. Ultimately, the more relevant information we can analyse means a more accurate assessment of value can be determined.

Residentially there were impacts too. Pre the Canterbury earthquakes residential property was insured on a replacement basis for a floor area size, with no regard to cost. Post the earthquakes insurers and reinsurers found themselves to be considerably underinsured. Consequently, there was a change to an agreed sum insured which needed to include
the house, all other site improvements, services, demolition and inflationary provisions. A substantial change and costly exercise for homeowners who wanted to set an accurate sum insured.

The aim is to satisfy the auditing process for both banks and insurer’s risk management systems. This together with the Reserve Banks move to increase the loan to value ratio (LVR) has meant more equity is required by buyers when purchasing a home. Therefore, whether by mother earth or man-made the impacts of the last decade on the property sector have resulted in compliance, taking more time to produce a considered and accurate report.

Looking ahead – what will change

Posted on 18 February 2020 by Tobias Taylor

What are your predictions?

I can hardly claim this is a prediction, because it is well documented. But certainly, in the immediate term, we will continue to live in a low interest rate environment. For borrowers, this is good news. However, for savers and investors in income assets, it’s not so great.

One aspect of this is not fully understood. Post KiwiSaver, main street banks do not have to compete for the term deposit billboard rate as much as they used to. This is because within their own KiwiSaver products, they can assign the income end of the portfolios to their own instruments.
This effectively helps fund their domestic loan book by stealth, while charging a management fee to do so. When the organisation then sells you this as an investment solution, this is called “vertical integration”.

So better deposit rates at the bank billboard are a long way off. Time to think differently!

What’s likely to change in your sector?

More regulation and more compliance. On the lending front, the Credit Contracts and Consumer Finance Act (CCCFA) Amendment Bill is going to have some immediate implications come June 2020.

Here at Midlands, with both investing and lending, we are mature in our adoption of anti-money laundering (AML) considerations, as well as continuous disclosure, transparency, and our focus on good customer outcomes.

These changes mean that financial services providers like Midlands must get “closer” to clients. That requires investment into relationships and the delivering of soft skills if not actually giving financial advice per se. But we have to ask a lot of questions of our clients.

For this reason, I struggle with organisations moving away from genuine local relationship models and with “robo advice” or online lending models. To me, it’s an exploration in protecting margins and revenue without investing into customers and communities. Because we have had a very good run in investment returns, I do feel there are some fair-weather models being rolled out to investors that may be challenged in a market correction.

I also struggle with some passive management models for this same reason. Automated electronic trading based on macro asset allocation, with no micro company research really bothers me. Especially when you consider Environmental Social and Governance (ESG) factors.

But personally, I hope the powers that be do look further into “vertical integration” and if it is delivering better client outcomes. Certainly, the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia indicate it may not.

What opportunities do you see?

For us at Midlands, it’s pretty easy. Invest in our relationships and educate our investors and borrowers. We have a vanilla offering that suits our conservative investors.

We continue to significantly outperform bank deposit rates, while remaining fully liquid (no lock in of funds). We do this by close management of a quality first ranking security loans book across New Zealand.

While banks have reduced their lending and offer low interest rates to retail investors, we can continue growing as we are. We are proud to be non-bank.

What technology advancements will have an impact on how do business?

During our lending process, while we personally inspect every property we lend against, a lot of the initial discovery due diligence process can be done on-line now. This is important to ensure the quality of our lending book. This is only going to get better.

Regarding investments, the speed to market of online services used to be hamstrung by AML requirements. This gap has closed very quickly, and we are aware of this. Certainly, something we are looking into.

More compliance for Trusts

Posted on 18 February 2020 by Edward Bostock

In my last article, I summarised some of the key changes to Trust Law arising from the Trusts Act 2019, which comes into force on 30 January 2021. One of the key changes.

The Act aims to make trusts more accessible and to strengthen the ability of beneficiaries to hold trustees to account. In doing this, the Act increases compliance requirements for trustees, which will likely increase the costs to operate and maintain a trust, and increases risks associated with being a trustee of a trust.

Requirement to keep core trust documents

As mentioned in my previous article, Trustees are required to keep core trust documents necessary for the administration of the trust.

Keeping the core trust documents together is clearly prudent and sensible, however at present the documents may not all be held together (e.g. some with trustees and some with advisers, lawyers and accountants). It is permissible for one trustee to hold most of the documents but each trustee must hold the trust deed and any variation of those terms. Where one trustee is to hold most of the documents, they will need to be held in a manner to allow the other trustees to access them easily.

Disclosure of information to beneficiaries

The Act creates a presumption that a trustee must make ‘basic trust information’ available to every beneficiary and ‘trust information’ available to beneficiaries who request it.

Before any information is provided the trustees must consider a range of factors and may choose to withhold the information if the trustees “reasonably consider” that the information should not be disclosed.

In either scenario (disclosure of information or non- disclosure) there will be ongoing requirements to update information previously provided and to review a decision to withhold disclosure of the information.

Review of Trustee decisions

A beneficiary will be able to apply to the court to review “the act, omission or decision” of a trustee “on the ground that the act, omission, or decision was not or is not reasonably open to the trustee in the circumstances.”

We will have to wait to see how this will work in practice, however we may see beneficiaries challenging trustee decisions more frequently particularly in circumstances that could be considered “contentious”.

What I suspect may occur is that trustees will seek professional advice more frequently for decisions for which they would not have previously done so. By way of an example, a trustee may now seek advice from a financial adviser on how to invest funds from the sale of property rather than placing the funds with the trust’s bank as they have done previously – where a court is considering whether a trustee is liable for a breach of the duty “to invest prudently to the applicable standard” the court can consider if the “trust investments have been diversified, so far as is appropriate to the circumstances of the trust” and whether “the investment was made in accordance with any investment strategy”.

Exemption and Liability Clauses

Following on from the increased compliance, is the inability for a trust deed (both new and existing) under the new Act to limit a trustee’s liability for breach of trust arising from dishonesty, willful misconduct or gross negligence (rather than ‘ordinary’ negligence), and does not allow a trustee to be indemnified out of trust property for such breaches. This means that trustees can no longer rely on broad indemnity clauses that purport to protect them against gross negligence.

You may consider that this is fair and reasonable, however when determining if a trustee has been grossly negligent, the Courts will consider:

The circumstances, nature and seriousness of the breach;

The trustee’s knowledge and intention relating to the breach;

The trustee’s knowledge and skills and whether the trustee has been paid;

The purpose for which the trustee was appointed;

The type of trust, including the degree to which the trust is part of a commercial arrangement, the assets held by the trust, how the assets are used, and how the trust operates.

While the threshold for gross negligence has been set very high, these changes may result in a trustee’s exposure to liability increasing which some trustees may not wish to carry.

Where professional persons, such as lawyers and accountants, are still happy to act as trustees, we will expect that they will become more involved in the day-to-day affairs of the trust.

We hope that the above gives an idea of how working with trusts may change and importantly how it could mean that the increase in the time and cost of administering some trusts, will result in some trusts no longer being cost-effective.

Key Tech trends set to emerge

Posted on 18 February 2020 by Duncan Wallace

Whether you have a decent grasp on technology or not, you’ll probably be aware that emerging technologies are changing the way we work and interact with others. In fact, with things like machine learning and touch commerce becoming increasingly popular across every industry from banking to healthcare, technology is transforming the way we do business, making hi-tech investment inevitable for most organisations.

Here are four key technology trends you should know about as we head into 2020:

1. Internet of Things (IOT)

One of the biggest tech trends to emerge in recent years is the Internet of Things. In layman terms, Internet Of Things (IOT) consists of web-enabled smart devices that use embedded processors, sensors and communication hardware to collect, send and act on data they acquire from their environments. Sometimes, these devices communicate with other related devices and act on the information they get from one another. How could this impact you? It depends on your industry.
For example, for those who work in marketing, advertising, media or business management, IOT could provide a wealth of information on how consumers engage with products by tracking their interactions with digital devices. In turn, this data could be used to optimise marketing campaigns and user experiences.

How will it affect your business?: The exciting thing about IOT is that it can change the way we do business and the business models we use to do it. IOT technologies will drive process automation, home automation, smart cars, decision analytics, and smart farming.

2. Machine learning

Another exciting emerging technology is machine learning, which is essentially a computer’s ability to learn on its own by analysing data and tracking repeating patterns. For example, Google is using machine learning and satellite data to prevent illegal fishing. On any given day, 22 million data points are created that show where ships are in the world’s waterways. Google engineers found that when they applied machine learning to the data, they could identify why a vessel was at sea. They ultimately created Global Fishing Watch that shows where fishing was happening and could then identify when fishing was happening illegally.

How it’s affecting industries: Machine learning is also changing the way companies do business with customers. Companies like Google are using machine learning on mobile devices which can continue learning even when offline. The result? Machine learning will redefine the way businesses interact with their customers by helping them anticipate and meet their customer needs.

3. Virtual reality (VR)

Remember watching movies about virtual reality and wondering what if it was actually like that in real life? Well, it’s about to be! VR has been around since the mid 20th Century, but
until recently the technology wasn’t able to deliver the fully immersive digital experience users have been expecting. That’s about to change with recent improvements to both hardware and programming, and the effects are going to be felt across almost every industry from retail to education.

How it’s affecting industries: Virtual reality has been a popular component of video games for several years and this trend is continuing to expand. In addition to video games, VR is likely to affect companies across the board as they adopt the technology to help them engage customers more effectively and optimize their sales and marketing efforts. It’s also a potentially useful tool for health and safety training and job learning, and is increasingly being adopted by educational organisations.

4. Cognitive Technology

Cognitive technology is a field of computer science that mimics functions of the human brain through various means, including natural language processing, data mining and pattern recognition. For example, the cognitive technology umbrella includes things like natural language processing (NLP), and speech recognition (e.g. Siri, Alexa and Google Home). Combined, these different technologies are able to automate and optimise many tasks that were previously done by people, including certain aspects of accounting and analytics and predictive decisions.

How it can impact our world: Cognitive technology could be a great ally in protecting our planet. Physics-based prediction models already exist for forecasting things like weather, pollution, and drought. But with machine learning, we can systematically understand which model performs better when, where and under what circumstance. Through machine learning and video analytics, cognitive technology can help us understand what the norms are and discover anomalies or problem areas. This will help us minimise deforestation, track urbanisation, mitigate diseases and to better understand and control ecosystems.

With emerging technologies changing professional industries including banking, eCommerce, agriculture, healthcare and education, staying up to date on the latest trends will give you a better understanding of your industry. This will be a catalyst in opening up new opportunities and hopefully making your business more sustainable, relevant and competitive.

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