William Ostick, Mourant
We Are Guernsey's annual Guernsey Private Wealth Forum, 'Changing Families in a Changing World', hosted in London in November, brought together important players in the international private wealth space, from investors to fund managers, bankers to lawyers, for interesting panel sessions which explored the latest trends and issues facing the sector.
The forum’s keynote speaker, Sir Trevor McDonald OBE, also provided fascinating insights into his career as a BBC journalist and newscaster, including accounts of his interviews with Saddam Hussein and George W Bush.
This article highlights the key insights gathered from the panel discussions at the event, where speakers shared their perspectives on the themes of politics, environment, economy and social dynamics.
Developments in succession planning
The geographical spread of modern-day families has created the need for coordinated advice in many jurisdictions, with succession planning being impacted by assets and family members spread across the world. The four 'Ds' – death, divorce, disputes and disposal – should be considered and test driven when it comes to the selection of jurisdictions for the asset-owning structures.
On the issue of measures for preventing contentious disputes in succession planning, some recommended strategies include having an appropriate 'advisory' board in place, obtaining pre-emptive advice, family mediation and 'test-driving' the planning by running death rehearsal exercises.
Other developments in this area can be seen in the Middle East, which is currently undergoing a significant change in approach to succession planning. Where previously much reliance was placed on Sharia Law principles, there is now a trend towards involvement from all members of the family in business, investment and ownership of family assets and on taking active steps in relation to succession planning.
Considering Guernsey as the jurisdiction of choice
Despite the stagflation and uncertainty on the trends in the private wealth market, from a jurisdictional perspective, the forum speakers discussed the relative stability of Guernsey.
A key benefit of this jurisdiction is due to many Guernsey companies being subsidiaries of multi-national corporations, these investments are protected by the umbrella of international parent entities.
From a compliance perspective, Guernsey is on the Financial Action Task Force (FATF) whitelist. This is a list of jurisdictions which have been identified by FATF as successfully maintaining financial systems that comply with its anti-money laundering recommendations.
What's more, Guernsey offers a wide range of flexible and mobile legal structures, including the Foundations (Guernsey) Law, 2012, a law which came into force on 8 January 2013 and offers clients a solution to use alongside or instead of a trust.
Guernsey also has a strong and established use of trust structures with the option of contractual alternatives (for example, a retirement annuity contract scheme operates in a similar manner to a retirement annuity trust scheme, but the funds are held under contract as opposed to being held on trust). This enables other jurisdictions to recognise a contractual relationship if that jurisdiction might not recognise a trust relationship.
Investing strategies are changing
There has been regime change in monetary policy in recent times, in the role of central banks and fiscal policy, which has had a real impact on investments. As a result, emotional decision making in relation to investment is quite natural, that is best avoided by introducing frameworks which consider at least the medium-term goal. The regime changes have seen investment options such as private credit, hedge funds, private equity and AI open up and increase in popularity.
From a tax perspective, using structures where tax is passive is key, the payment of tax upon enjoyment of the asset in question is preferable, thereby mitigating tax leakage.
It is widely considered that sustainable investments should no longer be considered 'alternative' investments, and that pure financial upside could be dialled off in place of making a sustainable impact.
Planning and navigating change
Events such as the next UK election in 2024 or early 2025 will no doubt alter the landscape once again and private wealth advisers should always be braced for change. In a new political environment, the approaches that have worked in previous years may no longer be appropriate.
Global dislocation and lack of cohesion on major issues – for example, the pandemic, the environment and war – is creating a tendency for clients to diversify their risk by investing and housing assets in different jurisdictions.
Private client trends
For the final session of the day, Katie Royals, managing editor at PAM Insight, elaborated on a recent report which examined trends within the private client industry.
The results reflected the points that were made in the previous panel discussions at the forum, and also covered in this article, highlighting that clients are focused on being a good global citizens, sustainability, stability and reputation, as well as utilising technology to make an impact.
The We Are Guernsey Private Wealth Forum was hosted at The Leadenhall Building, London on Thursday 2 November 2024