The Channel Islands’ relationship with the financial services industry goes back a long way. So much so that the two are often synonymous; the industry and local island life are closely intertwined.
It was this thinking that drove Pershing, a long-established custody and back-office provider to the wealth industry in the UK and Ireland, to establish a subsidiary business in Jersey in 2011 to support the offshore wealth industry.
Since the first bank was established in Jersey in 1796, local authorities have sought to make the island a centre of financial excellence through various structural decisions, the results of which are evident to this day. The fact that banks and wealth managers from around the world continue to choose Jersey as a base for part of their international operations is testament to the favourable climate the island provides.
Mike Rothwell, BNY Mellon's Pershing
So, what is it about Jersey that continues to attract financial services companies?
International wealth managers see Jersey as a strategic home for their client servicing activities, supporting a number of characteristics that not only mirror firms’ own priorities, but also those of their clients.
These priorities are embedded in three key areas: stability and neutrality when it comes to regulation and politics; an ability to future-proof in the face of ever-changing industry dynamics; and continued innovation in line with market trends.
While fundamental to the fabric of the island’s financial services community, these priorities should also be spotlighted as key focus areas for Jersey’s future. Each, in their own way, will require constant evolution if the island is to retain its leading position as a home for international finance.
Take political neutrality and regulatory stability first.
Stability and security are two of the most sought-after factors when clients are choosing which wealth manager should safeguard their assets. And, while this can come in many forms (such as brand strength, portfolio manager reputation and investment conviction), it is most commonly rooted in the way firms position themselves in both a regulatory and political sense.
In a world where the world’s largest demographic powers have faced a decade of political volatility, wealth managers place significant importance on neutrality when it comes to the political and regulatory nature of their international hubs. Creating a “safe haven” for clients’ assets is key; it helps to offset the impact of market headwinds and provides an environment in which to grow investments to meet clients’ long-term interests.
Jersey, as a self-governing jurisdiction, has the ability to design its own financial policies that fully meet industry requirements, while retaining the flexibilities that continue to make the island attractive on a global scale. This is further underpinned by a world-standard regulatory framework that covers all corners of the financial services industry.
Pershing, as a custodian of choice to multi-jurisdictional wealth businesses, views the safety and security of clients’ assets as its primary mission. With this in mind, the selection of Jersey as an offshore base was a critical, but easy, decision.
The island’s capacity to adapt to new regulatory requirements as they are implemented, and ensure firms are prepared and supported to respond accordingly, will be key to upholding both its own reputation, and that of the firms operating on the island.
Second, consider the need for future-proofing through a holistic approach to investment.
In addition to diversified investment strategies, wealth managers favour long-term investment in technology, people and physical office presence as a means of underpinning their forward-looking strategic objectives. This enables them to enhance their service with industry-leading talent to create and deliver bespoke offerings that meet the interests of clients of all ages, all over the world.
Over the past two years, wealth managers have adopted increasingly flexible approaches to their own work and the way they service clients, meaning the way firms address their technological capabilities has never been so important. As such, ensuring their international hubs can fulfil these requirements is a strategic priority for firms.
For years, Jersey has taken strategic steps to maintain its role as a leader in the international financial community. Recent initiatives include the development of state-of-the-art office facilities – many of which are now home to some of the world’s leading institutions – and the investment in full fibre-optic cabling across the island, which is the sole source of internet connection for all homes and businesses in Jersey.
The success of these efforts has manifested in Jersey’s resilience throughout the pandemic, and ability to transition seamlessly to the hybrid working model now established in many countries. Modern technology and connectivity have enabled firms across the island to maintain a high-quality service while minimising any disruption to the client experience.
Pershing’s choice to establish in Jersey more than a decade ago has proved fortuitous, not merely as Jersey has continued to grow as a premier offshore wealth jurisdiction, but also in the preparedness of the island to thrive during a global business continuity crisis.
Ultimately, the continued alignment of Jersey’s priorities as a jurisdiction (both with its residents and business community in mind), with those of wealth managers and their clients, is a clear compelling factor that will continue to draw firms to the island.
Thirdly, look at the way Jersey’s history of innovation aligns with wealth managers’ appetite for new products to help them service their clients.
Jersey has long been at the forefront of emerging market trends, embracing the themes that have come to define the modern financial services industry. This innovative nature holds strong appeal with wealth managers, who themselves are constantly seeking new strategies and solutions to meet the needs of increasingly complex investors.
For clients, investment strategies embedded in sustainability, and the use of digital currencies, continue to feature at the top of their lists of priorities. As wealth managers continue to identify new ways of satisfying these demands, the modern approach that Jersey takes to supporting its financial companies serves as a safe bedrock from which to develop new, creative offerings.
Jersey – and the companies which have chosen to operate there – must keep one eye on the future to retain a leading role in the global financial services community. The foundations are strong; however, continued innovation will be a critical focus area if the island is to remain at the forefront of industry trends and stay ahead of the game when it comes to responding to the evolving needs of wealth managers.