Highvern recently hosted a roundtable in Jersey, bringing together prominent and highly regarded UK wealth advisory practitioners.
Highvern was represented by Naomi Rive, Richard Joynt, Philip Carlton and Emma Furzer and welcomed Matthew Braithwaite (Wedlake Bell), Marianne Kafena (Harbottle & Lewis), Beatrice Puoti (Burges Salmon), Iain Younger (EY), Sangna Chauhan and Dominic Lawrance (both from Charles Russell Speechlys.
Ms Furzer, a trust manager at Highvern, reviews the event’s main themes and key issues....
Should advisers act as a moral guide?
Mr Joynt recalled Ms Chauhan had posed this question in a conference last year and wished to expand on what he felt was an interesting debate.
Mr Lawrance made a distinction between values versus personal views. “We can, and should attempt to act in accordance with our firms’ values however, we cannot enforce our personal views.”
Ms Puoti said: “We also need to be mindful of sanctions. If there is a piece of business relating to a restricted country I may struggle morally and therefore cannot do the best for that client. Ultimately, we can only advise client of the best of our practice.”
Mr Younger asked how we should proceed when a fellow partner takes on a client that another finds problematic.
Ms Kafena pointed out it is always possible for individual professionals to decline to advise a client.
Ms Chauhan added: “if an individual client does not align with the firm’s values, is it correct for the entire firm to decline to act? After all, each firm is an entire entity, made up of more than the individual professionals.”
Ms Kafena said: “I would always say you should be able to make decisions freely and in an informed way. One of the important aspects of our profession is to advise constructively and, by reference to the overall goal of family harmony, ask what future generations might think of the views and values expressed now. The legacy is more than just wealth.”
How is the ESG agenda affecting our work?
Ms Rive opened the discussion with a Jersey trust law point.
“Within Trust Law you cannot have a trust which acts contrary to public policy but the real issue for trustees is what this term means from time-to-time. Is it now anti-public policy to have a charitable trust that benefits white people only, or a discretionary trust that restricts distributions to same sex marriages? Will an ESG focus eventually become “public policy” within a fiduciary setting?”
Mr Joynt stated: “Generally, philanthropy is understood and has been a theme for many years however ESG is still relatively new, and it was unclear what it means for each individual client. It is also unclear how this fits in with the trustees’ statutory duty to preserve and enhance the trust fund.”
Ms Chauhan also felt it was possible to lose the big picture: “What if we focus too much on the E and not the S and the G?”
Mr Braithwaite wondered whether the ESG movement would become self-fulfilling since “companies with ESG credentials are endemically pervading the wider investment world.”
He also touched on inter-generational changes where views may differ. “It could cause tensions with the trustees as the client’s views could be at odds with yours and this can change through generations.”
Dealing with respect towards cultural differences
Sharia legal principles were discussed and the extent to which these are baked into family values.
Ms Chauhan said: “Cultural values can differ between generations. Beneficiaries brought up in the US and UK may not have the same principles as their GCC-based elders and may feel equality of inheritance is key.”
Ms Kefena said although it was important to respect cultural differences “whenever I earn a high level of trust with a family, I tend to feel comfortable raising sensitive issues with them.
“I am half Arab and believe that if there is an issue, the family would expect me to bring it to their attention. This has to be done with care and respect when faith, wealth and international planning intersect.”
Mr Younger said: “to give tax advice we need to understand our clients and what the right answer is for a particular family. It is all on a case-by-case basis.”
Mr Carlton reflected: “I had a client who was Indian, and his daughter was in a same sex relationship. I had known this client for many years therefore I was able to have an honest conversation with them to ask ‘do you love or care any less for your daughter because of whom she chooses to be in a relationship with’? This can be a real cultural issue in some jurisdictions.”
Advising our clients on financial responsibility
Ms Puoti opened this discussion.
“As advisers, we must make sure that our clients are financially aware, independent, and responsible since it is our job to help them to know how to preserve their wealth.
“It is a process of education to help clients feel confident, something I have done many times with women who come to wealth through divorce or widowhood. You can be a lawyer that gives advice as a task, or because you care about the clients, and I firmly believe in the latter.”
Mr Braithwaite said: “sometimes new wealth can be quite daunting, or clients can have financial naivete and require the assistance of experienced advisors who can manage this in their best interests.”
Mr Joynt said he was aware of non-confrontational methods of controlling client expenditure.
“We would ask the household budget holders to budget the day-to-day expenditure, ensuring that we held a true picture of the spending. As this is across all activities this makes the exercise a holistic budgeting process rather than a rebuke on spending to the wealth owner.”