Muslim Money Talk
Introducing the Muslim Money Talk Podcast, a place for all things Muslim and Money related.
Every week we'll be sitting down with Founders, leaders and industry experts from across multiple disciplines to discuss lessons learned, mistakes made and most importantly 'How they did it?'.
Brought to you by Kestrl: The Muslim Money App, software to help Muslims grow their wealth without compromise. Find out more here: https://kestrl.io/
Muslim Money Talk
Halal Pensions 101: Investing £10k, Tax Benefits, Employee Schemes and More | Abul Uddin - Ep 37
Abul Uddin UK Head of Private Client Services at Wahed Invest, discusses the importance of Sharia-compliant pensions, financial literacy among UK Muslims, and shares personal insights into his career transition to Islamic finance. He emphasises how Muslims often leave money on the table by not taking advantage of pensions and tax-efficient investments.
This podcast is hosted by Areeb Siddiqui, the founder and CEO of Kestrl, the app that helps people to grow their wealth without compromise
Find out more about our app here: https://kestrl.io/
And how we help banks here: https://business.kestrl.io/
Show Notes:
00:00 - Opening
07:20 - Abul Fazal Salah's Journey into Islamic Finance
18:53 - Cultural Differences in Financial Literacy
32:25 - Understanding Sharia-Compliant Pensions
47:15 - Tax Benefits of Pension Contributions
53:05 - Strategic Investment Planning Advice
A lot of Muslims do have pensions. A lot of Muslims may not know that they have pensions. Really, yeah, when did you set this up? Maybe 15 years ago? It's just like okay, crikey, it's probably worth quite a bit of money right now. Yeah, from doing nothing.
Speaker 3:What's your response to people who would just opt out of a pension and say you know, I'd rather have the £100 now than maybe £200 in the future? Yeah, the first question that I always ask is why are you giving me up free money? Really, yeah, for your 10 000 pound investment.
Speaker 1:It's only net cost to you is 6 000 pounds.
Speaker 3:So not only have you been given that 2 000 there in the pension pot, you can claim back an additional 2 000.
Speaker 1:Yeah wow, exactly, exactly. That's the reaction that most people have is like hold on a minute. Why haven't I been doing this? Why isn't anyone doing?
Speaker 3:I will listen. I've got a hundred thousand pounds. What, in your opinion, should I be doing with that money today? So in today's episode, I'm joined by abul fazal salah, uk head of private client services for Wahid Invest, the world's largest Islamic fintech. We'll be doing a deep dive into his thoughts on UK Islamic finance, the problems that Muslims have with financial literacy, as well as what our hangups are when it comes to pensions. We're doing a bit of a deep dive into Sharia compliant pensions. So stay tuned. We've got some very interesting tips and tricks about not leaving money on the table.
Speaker 3:As always, I'm your host, areeb Siddiqui, and this is Muslim Money Talk. Before we begin, we actually noticed only about 10% of you are subscribed to the podcast, so if you like what you're listening to and you want to hear more from us and see more things Muslim and money related, then please consider subscribing and, of course, leaving this episode a like and share it with your friends. Leave us a comment or a review, because it really really does help us out and help more people to find us. Thank you. Now back to the show. Abu'l-assalamu Alaikum and welcome to the show.
Speaker 3:It's been a long time coming. Wa Alaikum Assalam, jazakallah khair for to the show. It's been a long time coming for having me, you, this is the first time you've done a in-person podcast.
Speaker 1:It is. Yeah, it was the first podcast I've ever done. No, no, that's not true. You're right in person. In person, credited to jordan maxwell and his podcast, which I think was money and me I think it was yeah, yeah, I think you and I were both in the second season of that podcast.
Speaker 1:Yeah, yeah, that's right, it's a very long time ago 2021, I think was it 22? Yeah, I think it was 20 during pandemic, if I'm not, oh, maybe, yeah, yeah, I think you're right. I think you're right, gosh, so much has changed from that.
Speaker 3:Right, tell me about it gosh, and I don't know if you remember how we first met.
Speaker 1:Uh, I do, I remember it vividly uh, you was outside the dutch center after jumma I'd forgotten about this. Yeah, yeah, yeah, you were handing out leaflets asking for questionnaires in terms of just asking about banking and things like that. Yeah. And I took one of the leaflets and I was reading it and I was like, okay, this is super cool, let me go and speak to this guy. And that's when you and I started speaking.
Speaker 3:Oh, my God.
Speaker 3:Okay started speaking. Oh my god, okay, so my recollection was different. Okay, because I remember what happened after that. So, quite rightly, we were we. When kestrel was at its inception stage, um, we used to stand outside of masjids after jumbo with our leaflets to do questionnaires, asking people about islamic finance, their relation with money. Did they care about islamic finance? Were they using it? And that was the survey that found okay, look, 95 of muslims in the uk say they do care about growing their money in line with their beliefs, but fewer than 3% of people were doing anything about it. And that was the beginning of Kestrel. But I remember when you invited us to your offices back when you were at Liverpool Street on top of the McDonald's and.
Speaker 3:I met with you and Asad Asad, yes, yeah, yeah, that's right. Just to talk, I think, about Islamic FinTech potential collaborations and alhamdulillah, I think Kestrel and Wahid have kind of been. You guys are like the big, big fish and we're like the little fish that's just been swimming in your wake, I think so far I wouldn't say that. But yeah, I wouldn't say that, but you're one of the ogs. How has what had changed over the years? Why it's changed?
Speaker 1:considerably, I think, um, you know when, if I say, when I first joined wahid, that was back in what? Early may 2019? Um, you know, there was a small office. We were actually in all gates. This was before really yeah, yeah, wow and um, you know, there there was three guys. Three guys and two sisters and that was it. That was the UK operation, Because it was mainly in New York at the time. So, yeah, so it was a UK business, US business primarily.
Speaker 1:So investment committee finance everybody was based in the US and then we started in the UK in late summer 2018. So I joined a few months after that and for me it was quite a stark difference, because I've come from an organization where there was on a floor there was about 200 guys just on one floor, you know as part of a bank, and you know the bank was a few thousand people. So, yeah, so it was quite a bit of a shock, a culture change.
Speaker 3:Yeah, a shock to the system. It was like a proper startup environment you were thrust into yeah the whole company's based in one office.
Speaker 1:Wow, yeah, it's very interesting.
Speaker 3:Wow, and now mashallah, huge offices on Baker Street internationally renowned, the world's largest Islamic fintech. I think has been the tagline for a while and we'll come into the whole journey, but I wanted to go back to your early origins when it comes to money. And I think everyone has that first sort of memory about money when they realize its value and how. You know it doesn't just come easily. You can't rely on the bank of mom and dad any longer, do you have that?
Speaker 1:memory. I do, I do, um, it's actually something that I talked about on jordan's podcast as well and uh, so, up until uh, I passed my driving test, uh, bank of mom and dad, well, bank of dad, really uh paid for everything you know schooling, clothes, food, whatever I wanted. And then, um, you know, and we'd always talked about passing my driving test, sure, and getting a car and things like that, and this was freedom for me and obviously it's a badge of honor, getting your own car and things like that. So I remember dad taking me out one one a few weekends, uh, and we checked out a few different cars and I'd set my sights on a Golf GTI. I'm 18 years old.
Speaker 1:Golf GTI, back then uh was a lot of money, even as a secondhand car, and I was just like, yep, that's what I want. I'm 18 years old, I hadn't got a clue about anything. And uh, so at the end of it, I was like, right, dad, that's the one that I want. And he's like great, he's really, really excited. I was just like, yes, fantastic, anyway. So how are you going to pay for it? And that. And I was just like you're gonna pay? No, no, I'm not gonna pay, for you're 18, you know and you know.
Speaker 1:Come to that realization that actually do you know what? And him reminding me that when he was a child, coming to the UK with literally nothing, and for me to then expect as an adult, because I was 18 years old, to have the same, that's not going to happen. You know he will support me, but I'm going to have to stand on my own two feet, especially if I want this big, flashy car. Yeah, you know, and so it was coming to that realization that actually this is not going to happen. So I ended up with a Volvo 340D instead of a Golf GTI, because that's what I could afford at the time.
Speaker 3:And that was it Fantastic. That really taught you, instilled that early idea of money in you. Has that changed how you deal or speak about money to your children today? Do you know what?
Speaker 1:if I'm honest with you. Um, my attitude towards money has changed, but it's changed more so since getting married, if I'm honest. Yeah, yeah, yeah, my wife, uh, you know, bless her for putting up with me for nearly 20 years now. Wow, um, she, she's very, very good with money. Okay, like the saying goes, cobblers in their shoes.
Speaker 1:So, even though I've been in finance for nearly 25, years she's the one who's got a very firm grasp on finance in the house and budgeting and things like that. A lot of what I've learned in terms of budgeting and things like that it's actually come from her over the last 20 years. So even though I'd been in finance for a good 10 years before we got well, five, six years before we got married, it was she who who taught me a lot about how to budget, managing my money and things like that your wife's not in financial services no, no, no, she's just, uh, mashallah, she's been brought up, uh, you know, with a very keen understanding and appreciation for for money.
Speaker 1:That's so interesting, yeah, so, alhamdulillah, a lot of what the kids learn as well as me has come from my wife.
Speaker 3:Wow, yeah, okay do you in your day job. We're jumping all over the place here but in your day job, do you notice that difference between the way men and women approach money? Do you think men are more like, prone to taking risks and cavalier, and women are better at budgeting and saving?
Speaker 1:Yeah, I think that's just our nature as well. The mother is the safety, the safe haven, the caregiver, and men are hunter-gatherers by nature and things like that. So it's in our DNA to take a little bit more risk, and I think for the vast majority of us, I think men still are the main breadwinners in the house, and so perhaps a little bit is well. Actually I'm earning, money's coming in every month and things like that, and so therefore I can afford to take a little bit more risk, whereas women may not always have that option, but they're just a little bit more cautious.
Speaker 1:They're more slower to make a financial decision, but once they've made it, it's more sticky in terms of-.
Speaker 3:Way more committed.
Speaker 1:They're far more committed to what they want to do Men are a little bit more fickle jump from one thing to another.
Speaker 3:We can talk about the psychology of money. I feel like that's a whole different chapter and podcast. But how did you find your way into private banking?
Speaker 1:interesting so so, yeah, so um, I went to university, did a financial services degree I think I realized from a very early age that if I want to make money, then you learn to get into finances. And that's that was the case, you know. You know, in the eighties, nineties, that's where everybody wanted to earn money. It was in finance. So that was just a knock on for me. So I did a financial services degree and at the same time I started working in a bank services degree and at the same time, I started working, uh, in a bank, um, as a cashier in a building society.
Speaker 3:Oh really, during university, junior university, to save up for that goal?
Speaker 1:well, yes, but also to build up experience, okay, um, obviously, being from an asian background father, first generation asian in the uk, I mean, I'm the first generation who was born in- the UK we didn't have that background in terms of being educated and having that safety nets of a network, professional network that you could leverage. So I knew that I would need to get in somewhere to build up my CV because up until then, helping out my dad's Indian takeaway over, really can stop.
Speaker 1:That's all I had on my cv. That's why I went into, um, you know, securing a part-time job while I was at university, um to to build up that cv so that, once I've graduated, I then have a reasonable experience, which is, uh, going to be really important for me okay, okay, and you spent think was it the best part of 20 years working for private banks? No, no, so not just private banking. So I started off as cashier.
Speaker 3:I've been in finance for 25 years.
Speaker 1:So most of that has been in wealth management, so managing clients. Certainly the last 15, 16 years has been in doing exactly that. Actually it's a lot longer than that, subhanallah just thinking about it. But yeah, most of it has been. But yeah, started off as a cashier, worked my way up into branch management financial advisory, then got a good break into working at HSBCbc as a senior relationship manager in their high net worth retail banking high net worth division so you were dealing with like very rich people.
Speaker 1:Yeah so minimum ticket size was like 250 half a million pounds okay about five, six million pounds and what were you?
Speaker 3:what were you doing? So for people who don't know? Yeah, for a relationship manager for these high net worth type individuals. What are you doing for them?
Speaker 1:so you're just, uh, essentially you are the main point of contact for anything that the client has, um, with regards to the bank, um, you take care of everything from their lending needs, their savings needs, their investment needs, anything that they need from a banking perspective. You're there to be that point of contact be that conduit.
Speaker 3:I'll board as a penthouse that I want to get and can you arrange some financing for me quite quickly?
Speaker 1:That kind of thing would be like a typical More or less, yeah, and in the early days I was able to underwrite a lot of the mortgages myself, so it didn't need to go to an underwriter or anything Whoa really yeah, yeah, yeah.
Speaker 1:So this is part and parcel of that world. Okay, this is you know, and so credit cards changed a lot of that. So they took a lot of that away and you know they had separate underwriters managing the risk better and things like that. But yeah, we were able to underwrite some of it, you know, up to certain levels. Wow. But yeah, you could just do it for your client.
Speaker 3:It seems like a very mashallah comfortable position that you had attained within, I guess, for all intents and purposes, conventional financial services. And then you found yourself moving to Islamic, islamic finance, islamic fintech. How did that jump happen? What motivated it.
Speaker 1:It was. So I went Hajj in 2015. Alhamdulillah, and I was very fortunate to go Hajj with Sheikh Haytham and Sheikh Farid Haybatan, the Amala boys. And so it was at that stage that, you know, I was starting to get a lot more serious about my deen and things like that my wife said, look, if you, you know, wipe the slate clean, go hajj. You know, I'm very fortunate that she had already done hajj before we got married. She said just go and do it.
Speaker 1:After doing that, it was at that stage that the whole you know, sheikh Haytham was giving a talk one evening and he was just like right, you know, it's great that you're here and you want to ask for forgiveness and things like that, but don't go home to continue to wage a war with Allah and his messenger. And, if I'm honest with you, I've been taught about a lot of this when I was younger, as most of us are right, but, you know, I'd moved away from that lifestyle and things like that. Things had changed for me and so I'd forgotten a lot of that. It was at that stage that being reminded about that and this was a real culture change for me and it came as quite of a shock. But coming back I was like, right, you know I'm going to do something about this. And then, lo and behold, I get a job offer to become a proper full-on private banker with a private bank.
Speaker 1:So no longer just looking after retail high net worth clients you're actually in the private bank, um and uh, so yeah, so I I took it suhanallah, um, and you know the, the lifestyle shaitan, you know fully, knew what he was getting with me and uh you know lifestyle, all of the trappings which came with it, um, you know I took advantage of.
Speaker 1:But it's only when I made that transition, um, that over a period of time, that I realized that actually this isn't right. So the seed that Sheikh Haytham had planted had started to blossom while I was there. Um, had planted, had started to blossom while I was there, really, and you know you're dealing with ultra high net worth people and serious sums of money. But yeah, slowly, slowly, it just started eating at me, eating at me more and more that actually what I'm doing isn't right. But it took a conversation with my son and somebody. You know my son was quite young at the time, as naturally you know. When you speak to son and somebody you know my son was quite young at the time, as naturally you know, when you speak to a young boy, you know what do you want to do when you're older? That was the question he was asked. He just said, yeah, I want to be a banker like my dad. That was his default, you know, without even thinking about it Now, it would be like, yeah, anything but my dad, right, he's a teenager.
Speaker 3:But at the time he was, you know, dad was still the hero and things like that. You know how it is right with your own kids. My boy is still. He's only two and a half. Exactly, you're everything right.
Speaker 1:Cherish these times honestly and um, for for me it was having that conversation and I've always taught my kids you know, don't, don't do as I do, but do as I say. You know, try to do better yeah um, and I think that's what our parents wanted for us as well, right, so it was having that conversation that actually banking is not good. It's not. You know, as Muslims we should try to do better. So simple question from him was why do you do it then?
Speaker 1:And I think that was trying to find a justification to your child which was you know what hit home really for me, and it was after that that I made the the sense in here that yeah, I'm out wow.
Speaker 3:Conversation with your son, yeah, literally altered the course of your life. Yeah, wow. So then how did you find wahid did? Did they reach out to you? So?
Speaker 1:six months, so I left banking Without a job to go to.
Speaker 3:Wow so you just walked in and said that's it.
Speaker 1:No, I'm leaving.
Speaker 1:Qadr of Allah, I made the niyyah that I'm leaving. Okay, this is coming up to the end of 2018. Okay, I was on leave at the time and I thought, right, okay, I'm going to see out my. I'm expecting a bonus, you know, january, march time, something like that. I'll be told about what my bonus is, get paid before the end of the tax year, and then I'll go right, I'll give my notice and then I'll leave. That was the plan.
Speaker 1:First day back manager calls me in. Good news, bad news, bad news Bonuses are cut in half. Good news is I can offer you voluntary redundancy, and for me, that was. You know, I regarded that as a sign. You know, allah had accepted my niyyah and he's just showing me an easy way out. You know's, you don't have to wait. Wow, and that was it. And so I again, I didn't have a job to go to. That. That was a 20, uh 2019 plan. Right, you know, take, get your bonus awarded and then start looking for a job, and you know you'll get that by the time your notice period is up. So that was the plan. And yeah, so no job to go to early December. And I thought, okay, so this is a sign great, and so, alhamdulillah, you know. Once I'd said you know I'm open for new roles and things like that, I wasn't sure of job offers. Alhamdulillah, you know my CV.
Speaker 1:Yeah, of course it speaks for itself Exactly exactly, and like that, I wasn't sure of job office. Alhamdulillah, you know my cv. Yeah, of course, it speaks for itself. Exactly, yeah, exactly and and so, but the the question that I was asking every single recruiter was like it, or every company that I was interviewing with do you have a sharia solution, do you? Have something and I thought, even if there isn't a sharia compliant business out there, remember, this is 2018, right? So islamic finance was only for the lawyers yeah, right or the investment bankers he was very nascent
Speaker 3:and kind of retail islamic banking had kind of come and gone yeah, I mean literally.
Speaker 1:One one uh recruiter just said yeah, good luck trying to find that needle in the haystack. I mean literally, it was. It was non-existent but you found the needle I did. I mean wahed was you know? I've been hearing about wahed because obviously they'd just launched in the US and things like that and I've been following that. Obviously, you know I do keep a keen eye on these kind of things being in banking, but the fact that they'd come to the UK, I hadn't got a clue.
Speaker 1:I mean they'd. You know, I wasn't looking at managing my own personal finance, so I didn't need to go online to research and all of that. I just knew the providers that I wanted and just invested right. So I wasn't doing the research to find why I had been in the UK. So it was six months of looking for a job and trying to find maybe even a niche right, and having interviewed a number of different places, the first organization which said, yeah, we don't have a sharia solution, but we're thinking about it I thought brilliant. And uh, at this stage I knew I wasn't going back into banking and I thought, okay, asset management, just managing client wealth is where I wanted to be. It's not as bad as lending people money.
Speaker 1:Yeah, yeah right but something was still niggling in the back of my head that, look, you know you're still dealing with interest-based products and things like that, even managing wealth, but there's nothing else out there. And you know, I'm coming up to my 40s at this stage in 2019. So, and I'm looking at it and I'm thinking, well, I can't restart my career, I can't do something else completely different. Right, nearly 20 years of doing this now, um, I, I can't mix it with 20 something year olds. I'm far too old for that. Um, so I thought, okay, this will be the solution.
Speaker 1:So, alhamdulillah, you know, the interviews were going very well and you know, second or third round interview, my, you know, the commercial manager. He's commercial director, should I say he's actually interviewed. You know, showing me around the building introducing me to staff. This is Abel. Hopefully he's going to be joining us. I thought this is brilliant. This is absolutely fantastic. And the fact that this is the first organisation which said we're looking at a sherry compliant solution, it's only reflecting at home. And I was thinking, well, hold a minute, just because they're saying that right now. And I know what banks are like. And I remember I've worked at hsbc when they had the amana range and they pulled it and all of that.
Speaker 1:They could drop it at the drop of a hat, right? It reminded me of a conversation that I had with, you know, my previous private bank, when I was there and I was looking after Muslim clients. I was very fortunate to look after a few Muslim footballers at the time and you know they had a lot of money sitting there doing nothing and my job was to get them to invest it. And I'll be doing an even better job if I could get them to borrow money from me and then invest that even further. Right, that was the name of the game. And so I took that to the board of directors. I thought, oh, this is a great opportunity. Maybe I can carve out a little niche for myself within this business. You know, just look at, you know, be, yeah, it's one of two or three muslims in the whole business. So I thought maybe I can just carve out a little niche. So any muslim which comes up, send them over to apple and and that'll be the end of it.
Speaker 1:Uh, and they said, yeah, not a problem, you could do that, but you need to give us about 250 million pounds if you want to do that, it's just like, okay, what the hell do we do? And even these guys, I mean yes, they're wealthy, they've got a few million pounds sitting in the bank account, but not 250 million. And so this is where the whole journey just started off. And I thought well, you know these guys, it may or may not happen, right? And if it doesn't happen and they don't offer something shari'a compliant, am I happy to stay there. You'll be back at square one.
Speaker 3:Right, exactly the reason you wanted to leave in the first place. Exactly, and so for me.
Speaker 1:You know, one morning I just it was going positive and I thought, thought, just make dua to Allah. You know, after, after salah one morning and I just said ya Allah, if it's meant for me and it's, it's acceptable to you, make it easy for me. If it's not, show me another route and subhanAllah. Within five minutes of making that dua, I get an email to say Wahid is looking for somebody with my background and my CV matches eight percent of their requirements. Do you want to apply?
Speaker 3:Within five minutes of making that, though. Alhamdulillah Incredible, alhamdulillah Incredible. And you've been now at Wahid for six years now.
Speaker 1:Yeah, I think yeah, this is your sixth year. This will be coming up to my sixth year, mashallah.
Speaker 3:Seventh Ramadan Okay, alhamdulillah.
Speaker 1:As the head of private clients manager, talking to all clients and I still do, okay, um, but, given my background, what we started to find was that, actually, alhamdulillah, we had quite a number of, you know, wealthy families coming to us and wanting to invest in a sherry compliant way. Okay, and so, because of my experience, I just naturally gravitated towards looking after them and, you know, guiding them as to the kind of things that we can do, but also just talking to them generally about financing, cause a lot of these guys, they're used to making wealth, but but what do you do?
Speaker 3:with. What do you do with it once? Yeah, you just put it in the bank. Yeah, what we see at kestrel a lot of our customers are just putting money into a current account and not doing anything, exactly that's so interesting, so I I wanted to ask as well, firstly for our listeners who didn't check out the fantastic episode we did with umar soliman. Yes, um, over a few months ago now. It was one of our first episodes, so do check that out. But what is Wahid in?
Speaker 1:like one or two lines Wahid is a digital investment platform which takes the headache away from the everyday Muslim from making investment decisions. We offer numerous different types of accounts that you can utilize, but the key thing is, it's a way for you to grow your wealth in a Shari-compliant way.
Speaker 3:Thank you for listening to grow your wealth in a shariah compliant way, whether it's on their belief or user experience or price. I founded Kestrel because of how fed up I was at how poor Islamic financial services were in this country. Often people didn't use them because of how bad the user experience or customer service and indeed, how high in price they were. So Kestrel was the answer to that. If you download the Kestrel app today, it can help you by creating a budgeting plan. Plug in whatever bank account you have and it will create an auto budget just for you. You can then tell us what goals you're saving for and we'll save towards them automatically into pots and then, crucially, link you towards Sharia compliant investment and savings products as well. So download Kestrel today and try it out for yourself. Now back to the podcast. Okay, and you offer a range of different products, from investing into etfs, pensions, uh venture fund as well.
Speaker 1:kestrel ourselves at kestrel we raised through your fund um too, one of our most successful ones yeah, it's been.
Speaker 3:It's been very good and we look forward to raising with you guys again in the future, inshallah. But I remember you once telling me that before you kind of avoided dealing with, like the south asian community and perhaps the muslim community and in some way with your uh in your previous career yeah, so was it a bit of a culture shock when it came to suddenly now dealing almost exclusively with muslim and, I imagine, mainly south asian, yes, customers. What were the main differences?
Speaker 1:so, so I I think what you've got to think about is the mindset. Now, I was used to at that stage dealing with a lot of European, white, english, generational wealth. So these are people who are accustomed to managing money and investing and knowing the benefits and wanting to take advantage of that. I think for the South Asian community, most were only ever interested in borrowing money. It wasn't actually to invest, it wasn't to create wealth from their own wealth. They they're only. You know, what I've experienced up until up until that stage was the only way I can make money is actually I can borrow money and then buy property. Yeah, and that was it property gold, property, gold that's it exactly, exactly, and so that is.
Speaker 1:For me it was like well, actually there's more out there and actually it's more tax efficient, and when you start talking about this kind of stuff, they're just like tax. You're going to report me to the tax man and it's just like oh God, it's quite a hard conversation to have.
Speaker 3:So there was like an educational barrier around, sometimes more basic financial literacy, I guess, how comfortable they were with different investment asset classes as well beyond just property or gold. And did you find there was like a skepticism towards you guys because you were saying you were Islamic or Sharia?
Speaker 1:Sharia Islamic, as well as investments into the stock market yeah. A lot of people had seen the dot-com bubble. A lot of people, more recently, had been thinking about the credit crunch and things like that. So all of that was still very fresh in people's minds, which is what causes people to do and rightly so to be a little bit apprehensive. Sure, sure.
Speaker 3:But do you feel like Muslims have more of a problem with money? Do you think we get in our own way?
Speaker 1:No, I think what you've got to remember I wouldn't say we have a problem with money. Do you think we get in our own way? No, I think what you've got to remember I wouldn't say we have a problem with money, and what you've got to remember is that, subhanallah, we're probably the largest wealth creator in the ethnic minority communities today, which is growing the most right. Look around all the entrepreneurs. You, for example, you know and Wired and there's other institutions out there, but also you know restaurants, businesses, other kind of ways of creating wealth. So I don't think it's that.
Speaker 1:But what you've got to think about is in the UK, generally, the UK general population financial literacy is quite poor, yeah, and then when you look at the ethnic minorities, muslims then fall to the bottom of that. Why? Because most finance-related stuff is interest-related. So generally, a lot of Muslims stay away from it, yeah, so generally, a lot of muslims stay away from it, yeah, and the only ones that they think is okay is borrowing money. Right, that's the only thing. Other everything else is like no, I can't touch it, um, and so that is what I've seen as a problem. But also, like you said, property, gold, property gold, and that's, you know a generational thing again. You know when, when my father came over uh, growing up I remember a lot of money was sent back home. It wasn't invested here.
Speaker 1:Yeah, of course it was sent back home to support a wider the. What you've got to remember is that generation they I mean my dad was one of five siblings, um, and he was the first to come to the uk, uh, with his father, right, and so everybody else relied on them, um, and so this is what happened. And so, you know, I was brought up with not real any real substantial wealth being kept here. It was all shipped back home, yeah, um, and so that was, I think, the problem.
Speaker 1:Now I think, uh, you know, as I've got older, we're a little bit more established here now yeah, so for for me, I've got the ability to create wealth here now and I think that's the stage that we're out, and you know the six years that I've been doing this. It's been phenomenal to see the mindset change.
Speaker 3:Just in the six years.
Speaker 1:Yeah, how so? Well, think of it this way right, six years ago, I was looking for a job in Islamic finance. There wasn't an Islamic finance provider out there that could offer me a job. Six years later, how many Islamic finance providers are out there for the everyday Muslim to use? Why Demand Exactly? That only comes from understanding, educating and things like that. So it's phenomenal what we've been able to achieve in six short years, and I think that is really really exciting for the future, yeah, for our community.
Speaker 3:Subhanallah, I hadn't thought about it like that, but we've been doing this since 2020, so kind of like following you guys in parallel, but so it has changed. It has changed a lot of people. I remember in the early days, some people have fallen away and I think that's natural in any kind of industry but there are still quite a few of us who are still here establishing and growing, so, alhamdulillah, yeah, that's a really good way of looking at it. So to bring us to, I guess, the crux of the topic we wanted to talk about, today which is pensions.
Speaker 3:A big part of your role is now in getting people to sign up to Sharia-compliant pensions offered through the Wahid platform. I wanted to ask you how that's been and what exactly is a Sharia-compliant pension?
Speaker 1:First of all, Sharia-ari compliance means that there's certain criterias that a particular investment needs to meet in order to be deemed to be shari compliant. So, and the, the scholars at aofi, they set these rules and you know many of your listeners will probably be familiar with them. But essentially, you know there's there's two key financial criterias one's debt to equity and the other is impermissible income. So as long as a stock meets those two requirements, as well as not being, you know, arms manufacturers or a bank or alcohol producer, it's sherry compliant. So it's taking that simple understanding and applying it to the investment universe which will make something sherry compliant. So that's pretty easy, right. The the hard part comes in trying to navigate what's the right thing to invest into. And so here at why head we? You know we have an investment committee, um, you know, headed by samin beddy. Um, he joined us from, from.
Speaker 1:He managed over $45 billion at Google. Prior to that, he was at JP Morgan, managing over $100 billion. That makes my $100 million as a private banker that's paling to insignificant. As Ibrahim once said, it's a rounding error, right? $100 million is a rounding error for somebody like Samim Samim's based in New York, isn't he?
Speaker 3:He is, yeah, and the rest of the investment committee somebody like uh samim, so um so he's based in new york, isn't he?
Speaker 1:he is yeah, so uh, and and you know the the rest of the investment committee. So when you've got people like that, who are constructing portfolios and and undertaking the, you know the the reviews the due diligence yeah, exactly to.
Speaker 1:To make sure that these are not only sherry compliant but also fit for purpose and they stand up to scrutiny. Forget the you know, the sherry compliance. And so also fit for purpose and they stand up to scrutiny. Forget the sherry compliance. And so my aspiration for the business is and this is how we see it is we're actually a very good asset management company. We're managing investments on behalf of clients in a very, very good way. We just happen to be sherry compliant as well.
Speaker 3:So how are you noticing Muslims are dealing with their pensions today? Do you find that most of them have pensions?
Speaker 1:a lot of muslims do have pensions yeah a lot of muslims may not know that they have pensions really, yeah, yeah. So people that I speak to they, they are employed and you know legislation has meant that they've been enforced to have a pension scheme set up for them. So most people that I speak to have some kind of pension. It's just they haven't contributed because they thought, oh, I can do something better with my money.
Speaker 1:I'd rather have £100 in my pocket rather than £200 in a pension scheme for myself. For a lot of people, that's actually the case, but legislation meant that their employer wouldn't still need to pay in, or something like that, or they're very fortunate to to be able to do that. More recently, you are, you have to pay in as well, um, under auto enrollment rules, um, but previously there was non-contributory pension schemes. So people have pension schemes set up doing nothing and they weren't even aware, wow, or I've never paid into it, so I don't know whether it's worth anything or not. Never really taken any note. Um, and yeah, when did you set this up? Oh, maybe 15 years ago. It's just like okay, crikey, it's probably worth quite a bit of money right now. Yeah, from doing nothing, yeah, um, so, yeah, so it's. It's.
Speaker 1:A lot of people do actually have them. A lot of people don't, um, and what you'll find is is those who are, you know, lower income earners, the gig economy and things like that. Um, even myself, you know, when I first started in finance, I opted out of my pension because I thought I'd much rather have that extra 60 pounds in my pay packet at the end of the month. But, alhamdulillah, now we're a lot more comfortable and you know, disposable income has increased and things like that. So now, yes, you can have pensions, and I think that's the journey that most people have gone on but as you get older and your income bracket increases and things like that, you'll then have more substantial pension pots how you?
Speaker 3:what's your response to people who would just opt out of a pension and say you know, I'd rather have the £100 now than maybe £200 in the future?
Speaker 1:Yeah, yeah, I mean, I see a lot and you know, the first question that I always ask is why are you giving up free money? And most people are like what, what do you mean? Free money? It's £100.
Speaker 1:It's, and my people are like what, what do you mean? Free money? It's 100 pounds, it's my 100 pounds, I get to keep it. No, no, okay. So look, if you pay into a pension scheme, by law your employer is obligated to pay into a pension scheme as well. So if your employer is obligated to pay into a pension scheme, that part that they're paying in is free money as far as you're concerned. It's not your money, it's theirs that they have to pay in and it's part of your, your contract.
Speaker 1:Yeah, that they're going to be doing that yeah, exactly, if you stop paying into a pension scheme, they don't say, oh, thank you very much for opting out, here's that extra bit of money that we were. They're no longer obligated. Yeah, yeah, and so therefore they're not going to give you that instead, right, okay?
Speaker 3:so not a charity, but but when it comes to sharia compliant options available right now, aside from yourself and, I think, hsbc, I don't think there are any sharia compliant pension solutions out there. Do you think there's enough options?
Speaker 1:so, there's, there's, loads of options right um, they're just very limited.
Speaker 1:So what I mean by loads of options. So vast majority of any person who has a pension scheme will have a Sharia solution. Really, yeah, whether you're with Aviva, scottish Widows, prudential, nest, they will have a Sharia-compliant solution for you. But that Sharia-compl compliant solution is very limited. It's one fund. It's the HSBC Islamic Global Equity Index fund, that's it. So every single pension company out there does offer it and that's what I've experienced so far.
Speaker 1:The issue comes when you're 20s, 30s, like you fine, right, having one fund pure equity fine. But when you get into your mid 40s like you fine, right, having one fund pure equity fine. But when you get into your mid forties, like I am, and you're thinking, well, actually, retirement's only 10 years away now for me, um, that's when you start to think, well, actually, I don't want to be carrying all of that risk. Okay, certainly, for the next five years, I'm fine still, but in the next five years I want to be de-risking, so reducing volatility within my investment. Right, these are my life-saving quote-unquote as a pension, and that's not available anywhere. So it's only when Wirehead started offering workplace pensions and personal pensions through the SIP product that we started to be able to give the average person the ability to diversify and still have something managed. And that's the important part A lot of people talk about oh, you can do it yourself.
Speaker 1:And this, that the other Great. Yes, you can. All the funds that we invest into you can do it yourself. And this, that the other Great. Yes, you can. All the funds that we invest into you can invest into yourself. But how many of us actually have the time, knowledge or inclination?
Speaker 3:So let me just break this down, just so I'm fully understanding it. Before, wherever you're working at maybe you're working at a Google or a JP Morgan or wherever else you'll sign up to that workplace pension scheme. You'll say to them I'm muslim, I want a sharia compliant option. They say, fine, there's only one fund available, it's hsbc. Yeah, now why have this created a different fund? But it's not just a single fund, it's one which is more diversified and I guess the main difference between this one and hsbc's, which is primarily equity based, higher returns but also quite risky, is that this one has some more, I guess, lower returns, but less risky assets, and they're like sukuk or sharia compliant bond type product yeah yeah, within those.
Speaker 3:So can you choose your different risk level and say yeah I want something which has higher return but I understand is a bit more risky, or lower risk, lower return with why?
Speaker 1:hit exactly exactly so, so, um. So, first of all, it's not a fund, although why it does have its own fund. Yeah, it's a portfolio. Okay, so the the technical term is it's a managed portfolio service. That's exactly what why it provides what's the difference? So the difference is a portfolio can be made up of different funds I see right, okay, you do in different asset classes and things like that, whereas a fund typically does one thing, okay, um, and investing into one particular type of asset class say like tech stocks or you know, smp 500, yeah, or something like that.
Speaker 1:Right, so that's just one index or one type of investment. You're only investing into stocks. You can have funder funds, but what a funder funds does is exactly what a portfolio does, is it's one fund, but then that one fund owns underlying funds, right, okay? So obviously at that stage, when we first launched here, we weren't a fund provider and so we couldn't do that.
Speaker 3:So we're a portfolio service provider as well so it's a portfolio made up of other people's funds yeah, fine exactly which are all inherently sharia compliant yes fine, okay, okay so that's the starting place.
Speaker 1:What that gives you is the ability to choose different risk levels, and the proportions that we invest into different funds, which then gives exposure to particular asset classes, will be determined by the level of risk you're taking. So the more risky, the very aggressive, the more of it's allocated towards stocks global stocks as well as emerging markets, the less risky you are.
Speaker 3:More of it's invested into sukuk so so these funds which make, which are in the portfolio, it's beyond just hsbc so why weren't the avivas of the world offering access to these before and just saying here's hsbc, that's avivas are that, and that's the problem.
Speaker 1:It's just that's all they're offering. Okay, right, so so for for the conventional investment houses out there pension companies it's a tick box exercise for them. Right, we need to offer the muslims in our workforce a sharia option. So here you go. But their default option is what they offer to everybody, including the muslim, when they first go into it. It's called a lifestyle managed option, which means that as you get older, risk is taken off the table.
Speaker 1:Right, so they move you from riskier assets, when you've got the timeline to ride out the volatility, to stuff which is less volatile, closer to when you need access to the money. That's exactly what you should be doing with your money. Yeah, so, pension companies do this day in, day out, but as soon as you say I'm muslim and I want something Shari compliant, all of that goes out the window. You no longer have any of that. You only have one equity-only fund, and so, therefore, when you were 64 and a half in late 2019, and then the pandemic hit and you were planning to retire in the first six months of 2020, that went out the window. Why? Because you were carrying equity only risk, and if you was invested in that one fund.
Speaker 3:You carried that risk, whereas joe blogs, who was in their lifestyle, managed all of that risk was taken off the table for him two or three years before that's crazy to think, because if you are at that point retiring, at the point of a financial crisis, you would have seen a huge, huge dip in the, in the value of your pension, yeah, of your pension. There's nothing you can do about it. Exactly In that case, were you dealing with clients who were in that position at the time?
Speaker 1:Yeah, I mean we still are. I mean we're in another period of volatility right now.
Speaker 1:Of course, not as extreme, but you know, 10% is still 10 down, uh, generally. But yeah, we do. We do speak to these kind of clients every single day. I was just talking to somebody just the other day. Uh, he's saying you know, I've lost uh best part of 200 000 pounds from my investment portfolio. Um, that's 10 for for them, right? Um, so that's quite substantial, yeah, but is still 10%. And what you've got to remind them is that, look, okay, it's down, but what does that actually mean for you right now? Is that your goal? Do you need access to the money right now? If you need access to the money, then what we should have been doing is having a conversation about de-risking long before that, and by de-risking I mean reducing volatility, right, yeah, de-risking I mean reducing volatility, yeah, right, and that's exactly what, at whyhead, we do when we're talking to our clients and things like that.
Speaker 3:So through your pension products you can do that de-risking.
Speaker 1:So our workplace pension, yeah actually does exactly the same as what you know. Joe blogs gets at work. Yeah, they fully lifestyle manage. You don't ever need to make that decision for yourself if you didn't want to. Yeah, and that's in partnership with, uh, you know, a master trust provider called smart pensions. Do that, okay. Yeah, but we have a personal pension product. Yeah, so a workplace pension is usually. Your employer sets it up, um, and so you're then limited to whatever investment choices your. You know, you, uh, the investment house has, yes, that your employer's chosen the personal pension or self-invested personal pension. You get to choose. So you can choose to have one with Wahid and then you get to choose the level of risk or the level of volatility that you would face within your investment.
Speaker 3:But your employer won't pay into your personal one, but they would into a workplace one.
Speaker 1:Employers can Most employers won't I your personal one, but they would into a workplace. Employers can. Most employers won't. I see admin rarely, yeah so the person who's managing payroll, if they had even five members of staff, at the end of each you know payroll month saying, oh, pay into my private pension scheme, it's just going to add to their admin headache so, with the way forward, say there's someone listening to this right now who's like that sounds great, I want to sign up to that product.
Speaker 3:Could they go to their employer and say listen, this company, while here in partnership with smart pensions, have this workplace pension. Can we onboard them in some way? Is that an option for them? Yeah, 100.
Speaker 1:We, you know, we speak to potential employers all the time. Uh, with with that exactly in mind, um, what a lot of them may do is turn around and say well, actually, why am I doing this for such a small segment of my work?
Speaker 3:employee population yeah um.
Speaker 1:Does my current employer offer a sharia solution? So so, then we get back to that tick box right. So what we found is that it's actually the Muslim employers who need to make that change on behalf of their staff. So the ones where there is a Muslim majority or the employer, ie self-employed, they're Muslim. They're the ones who we approach. And are you seeing?
Speaker 3:large uptake from Muslim employers? They're the ones who we approach. And are you seeing large uptake from muslim employees?
Speaker 1:we've, uh we've had some really, really positive um uptake. In terms of the, the product, more can be done. Pensions, if I'm honest with you, is the last thing any employer wants to think about, or anything like that. Um, for a lot of us, uh, from a personal wealth perspective as well, it's probably not high on the agenda. But when you start to delve into the tax benefits going back to what you're saying about the free money and all of that kind of stuff when you start to delve into it, people start to take it very seriously once they get their head around actually what it can benefit Tell me about those.
Speaker 3:What are the tax benefits of paying into a pension?
Speaker 1:So tax benefits if you pay into a workplace pension scheme, right you through your employer, pension contributions are deducted from your salary before income tax or national insurance is applied. So you get tax on what's left right. So you're saving not only national insurance oh sorry, income tax but the national insurance as well. Most people forget about the national insurance. That's still about about 10%, something like that, I can't remember. And then, from an employer's perspective, you paying into a pension scheme is a good incentive for employee loyalty. You're paying into something that they're benefiting from, but also it's a cost for your business. So it's discounted against your corporation tax, but also it's discounted against your business employer ni as well. Okay, right, okay. So as an employer, there's a lot of benefit to you, which is why employers pay in, which is why a lot of employers who are big enough, they actually say if you pay more, we'll pay him more as well, because that NI saving that they're making they can afford to then pass on.
Speaker 3:Incredible.
Speaker 1:And then that just again builds to employee loyalty as well.
Speaker 3:No, absolutely. And I think, putting it in that way to the employee side of it that ultimately you're paying less tax, yeah, and the money is just being saved for later, yeah, and it is there being stored, but you're paying less income tax at the end of the day, okay, I think that's the kind of like next level thinking when it comes to our money that we're lacking today.
Speaker 1:Yeah, and personal pensions as well. So if you have missed the boat with work or something like that, or if you want to do something in addition to that, any contributions you're making into a pension scheme you'll get. Whatever you pay in from your personal savings, you'll get 25% back into the pension scheme. All right, so 25% of your contributions is added back in by the administrator, so it's claimed back from the taxman. Now, if you're a higher rate taxpayer so let's say, for example, eight grand you know you pay in 8,000 pounds into a personal pension scheme.
Speaker 3:So I'm a gig economy worker, I'm working for myself.
Speaker 1:Yeah, I pay an eight thousand pounds into the personal pension scheme into any personal pension forget the white label for a second here. Any personal pension, the administrator, the, the sip administrator, will claim back two thousand pounds. That works out to be 25 of what you've paid in eight grand. Yeah, two grand is 25 of eight grand. Where are they claiming that from? From HMRC?
Speaker 3:Okay, yeah, from.
Speaker 1:the taxman, we're getting this back so that your eight grand lo and behold becomes 10,000 pounds before it's even been invested in your pension.
Speaker 1:So you've got a 25% uplift on what you've paid in. Now, 2,000 is actually 20% of the 10, which is the basic rate to relief. This is how HMRC perceives it. So they look at the 10,000, they've given you back two. That's 20%, which is your basic rate of tax. Then on your tax return, if you're a higher rate taxpayer, you can claim back the remaining 22,000 on your tax return. So this is brilliant. So now you've got 40% relief. So for your £10,000 investment. It's only net cost to you is £6,000.
Speaker 3:So not only have you been given that £2,000 there in the pension pot, you can claim back an additional £2,000. Yeah.
Speaker 1:Wow, exactly, exactly. And that's the reaction that most people, when they start to actually talk about it yeah, that's the reaction that most people have is like hold on a minute, why haven't I been doing this? Why isn't anyone doing exactly? And when you then say to them well, actually, do you know? Your, your pension allowance is actually three times what your isa allowance is each year. So between both of them your ISA and your pensions you actually have £80,000 potentially as an allowance each year.
Speaker 3:Wow, it's phenomenal. And both of those products are offered by Wirehead. Yeah, the ISA and the pension. Exactly Incredible, exactly. So are you quite optimistic about the future? Then? With all of these products out there, you're working at the forefront of one of the largest Islamic fintechs in the world. How do you see the future of this landscape?
Speaker 1:I think the future is very exciting. If you look at, you know, going back to what I was saying earlier, six years ago there wasn't anything. We've got people like Kestrel, you know, innovating in terms of digitalizing banking. You've got institutions like Wirehead who are creating, you know, investment products which the everyday person can use, the type of products. When I first joined Wirehead, you know we offered an ISA and a general investment account. That was it. Today, we offer personal pensions, workplace pensions, ISAs, general investments, charity accounts, business accounts, you know, real estate crowdfunding, venture capital crowdfunding, and that's just in the last couple of years. Most of this has come about. It's phenomenal and it's really, really exciting. We look after. We haven't even scratched the surface in terms of the number of users we have, in terms of compared to the UK population of Muslims. So it's very, very exciting. There's a huge growth potential Incredible, incredible. So it's very, very exciting there's a huge growth potential.
Speaker 3:Incredible, incredible, subhanallah. It's always really heartening to hear that, especially when you're coming up against some of the skepticism from um just the general uk muslim population. You know they've been burned before, yeah, so there's some of that there and rightly so.
Speaker 3:They should be skeptical yeah, of course, but now I think we're starting to get past that and seeing more and more of an adoption. So I guess, to finish this off, because we're a little bit short on time, if someone were to give you or if I called you up, I will listen. I've got a hundred thousand pounds. What, in your opinion, should I be doing with that money today? So and this isn't financial advice- yeah, yeah, but this is just, you know, a hypothetical scenario hypothetical.
Speaker 1:I think, uh, what you know always start off and I always start off this conversation is okay. What are you hoping this money does for you? What's your objective here? Um, when do you think you will want to access this money and do you perceive that there may be liquidity events that you need?
Speaker 3:along that way as well so in response in this hypothetical scenario uh, my horizon's about 20 years I want to save up, I think, for my children's education, liquidity events. I don't want it 100 locked away, sealed tight, but I'm not expecting any liquidity events from this amount of money, so it's a longer term investment. But if I need need the money, worst case scenario I would like to draw down.
Speaker 1:Yeah. So this is where now, by asking these questions, what I'm doing is actually establishing your investment needs, but then that your responses is leading to then for us to understand what your capacity for investment risk is. So you've got a long timeline 20 years you don't need it. This is money that you're comfortable putting aside because it's for something specific in 20 years time yeah and so your capacity for investment risk is actually quite high.
Speaker 1:Yeah, you've already told me this is money that I don't need, so if it were to drop in value again, you don't need it, so you can. You've got the timeline now to ride that drop and so, therefore, your investment, your capacity for investment risk, is high, so you can afford to go for things which are more going to be volatile, like stocks. But also, maybe because you've got the timeline now as well and you've got the sum of money, you can now start to think about venture capital investment or private equity as well. Alongside that, to complement, probably, if you're new to this, no more than about 10 percent of your overall wealth should go into this kind of area, but it's more illiquid. But that illiquidity, risk and reward go hand in glove. It means that actually, that small part could actually blow the returns compared to the rest of it could be the bulk of your return 100 100, but equally it could be nothing you could lose everything
Speaker 1:which is why we say you know, think about no more than about 10. But yeah, you should be thinking more long term. 20 years, equity orlike investments those are the kind of things more volatility within my portfolio. But when your 20 years becomes five years, that's when you want to take risk off the table. That's when you want to reduce from pure equity down to something which is going to have more safety, security like Sikooks or real estate or something like that which is going to be a little bit more stable. So you've locked in the profits from the previous 15 years and then reduce the likelihood of losing those profits as well as the rest of the money.
Speaker 3:Understood Closer to you.
Speaker 1:And as you get closer and closer to needing access to the money, this is exactly what pension companies do, believe it or not. As you get closer and closer, you're just taking more and more risk off the table, so that when you're six months away, maybe it's all sitting in cash, I don't know. Or, like you said, like I was talking to a client this morning, I can draw what I need to, but I can leave the rest of the money invested, so you could do that as well. So the world is your oyster. All of these kinds of things are open to you, and that's the beauty of of having a sip and things like that. You've got a choice. Alhamdulillah, today we've got. The world really is for us as muslims. The world is our oyster. We have so many opportunities and so many choices to to invest in so what a beautiful way to to end the episode.
Speaker 3:But if people are interested in finding about, finding out more about you and about why had services, where can they reach out?
Speaker 1:yeah, they can reach out to us on on our website. Why hadcom download the app, um? But uh, yeah, they can find my contact details in in the description. If, if you'd be kind enough to share, I will do.
Speaker 3:We'll put that in there yeah, I will thank you so much. Assalamu alaikum we actually noticed, only about 10 of you are subscribed to the podcast. So if you like what you're listening to and you want to hear more from us and see more things Muslim and money related, then please consider subscribing and, of course, leaving this episode a like and share it with your friends. Leave us a comment or a review, because it really really does help us out and help more people to find us. Thank you. Now back to the show.