NEWS & INSIGHTS
Michelle Tring, Trust Director at Estera, examines the changing face of private wealth businesses and how colleagues are working more closely across jurisdictions
It’s an inescapable fact that the private wealth landscape is changing. From clients and families who are more globally mobile, to a shift from tax mitigation to broader succession planning, advisers are faced with a range of client needs that are demanding changes in the way they work. This includes forging closer working relationships with colleagues across borders in order to deliver the most efficient client-focused solutions.
Take businesses in Guernsey, Jersey and the Isle of Man as an example. While the Crown Dependencies have always worked together to some degree, their propositions – not least being well-regulated and having a proven legal framework for trusts – are very similar. Historically, because of these similarities, businesses operating in these jurisdictions perhaps did not appreciate how they could complement one another.
Now, however, it is more commonplace among fiduciary businesses to spot where one jurisdiction might have the edge in terms of expertise in a particular field and for jurisdictions to work together to provide a better-quality service, leveraging their strengths. This is often closely aligned with areas of speciality any given jurisdiction has.
Guernsey for instance, is recognised for its fund expertise, so, at Estera, when there are certain requests for fee proposals or new business enquiries, there are times when it makes perfect sense to work collaboratively with our colleagues in Guernsey to get their perspective and make best use of their experience. Likewise, if an existing Jersey trust client wants to talk to us about certain aviation requirements, it’s perfectly natural for us to speak to our Isle of Man office where that expertise lies.
In some cases, this may mean placing the business with another jurisdiction entirely, sometimes beyond the Crown Dependencies altogether. Recently, for example, our Jersey office had established an excellent relationship with a new client and was exploring foundations as a suitable structure. Examining the matter in more detail, it was decided that a Cayman Island Foundation would better suit their needs, so we passed that client over to our Cayman Islands office, which now holds that relationship.
Changing face of private wealth
Our ability to place the client relationship and their overall needs at the heart of what we do and be ‘jurisdictionally agnostic’ as part of that process seems a relatively new concept. In reality, the term has been around for some time but is increasingly commonplace in practice.
The client sits at the centre of everything we do – we pride ourselves on our service excellence – and if that means finding a solution from elsewhere in the business that works best for them, then that is what happens.
There are a number of drivers behind this shift within private wealth. Firstly, post financial crisis, the world generally is more aware of the way in which financial markets and the economy operates and clients are therefore more knowledgeable and sophisticated with access to more information and so have higher expectations
Secondly, clients are turning to their advisers to support them with more than just their private wealth concerns – family business is playing a larger part and that can mean supporting clients with issues such as payroll and tax compliance. These sit outside the traditional private wealth arena.
Finally, and allied with the second point, clients are arguably looking to reduce the number of providers they work with, sometimes looking for just one firm to do everything, realising efficiencies and yielding higher levels of consistency and accountability. It also facilitates a long-term relationship with their adviser, who, given their greater all-round knowledge, can bring increasing value to the relationship.
The structure of the fiduciary industry is also changing. The increasing involvement of private equity within the private wealth sector, aligned with mergers and acquisitions, are seeing firms grow in size, geographic footprint and, significantly, service offering, allowing them to draw on that inter-jurisdictional expertise. The recent acquisition of Estera’s business by Inflexion Private Equity (subject to regulatory approval) and its subsequent merger with Ocorian is a prime example, creating a business that operates from 18 key global jurisdictions to deliver more services in more strategically important jurisdictions and provide a complete range of services to clients with multi-jurisdictional needs.
The road ahead
So, with the landscape shifting like it has, can we expect things to continue in this way? In our experience at Estera, the answer depends on who you talk to and can range from ‘we’re probably going to carry on doing more of the same’ to the perspective that future generations of trustees will go about their work entirely differently to the last.
There is an assumption that the next generation are all going to want green funds and new technology, but it’s wrong to typecast them in that way. It’s our view that tech innovations in the delivery of trustee services won’t play as huge a part as some think it will. There won’t be a desire to lean on it to such an extent and the personal, face-to-face relationship will always trump technology.
That said, considering the world we are in right now, we need to be on our toes, be mindful of our service and make sure we do it really well. As much as businesses talk about how their clients are international, forward-thinking and operating without boundaries – you can’t provide services that align with those clients if you don’t think in the same way, so there is a balance to be had between the use of personal service delivery and tech innovation
The days of being siloed into just one jurisdiction are vanishing rapidly and in order to prosper, you need to be able to work with colleagues, and competitors if necessary, from other jurisdictions to properly service the needs of private clients. While that has required a change of mindset that isn’t always easy to get around, those that do are the ones that are likely to stay ahead of the game.
This article first appeared in the December 2019 / January 2020 edition of Connect magazine published by the Bailiwick Express. Click here to read the article.
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