BL Magazine Issue 38 May/June 2015

finance

business

technology

From crowdfunding and anti-money laundering, to family offices and funds, plus a look at the habits of the young rich

Feeling overworked? Let us help. We also take a look at private jets, and show you the least complex places to do business

How has Apple got more cash than Malaysia? And just what might financial services look like if Google got into banking?

“PRIVATE CLIENT SERVICES FROM A DIFFERENT PERSPECTIVE” IAIN JOHNS Group Head of Private Clients

To share your perspective contact Iain

iain.johns@jtcgroup.com +44 1534 816 251

• JTC is a multijurisdictional

• Expertise in providing services to Latin

independent provider of private client, corporate and fund services.

•

Specialists in residential and commercial real estate.

American, European, African, Middle East and Asian private clients through our network of international offices.

•

Private client services for leading global institutions.

• Over 20 years’ experience in providing Family Office Services inclusive of business and family succession planning.

• Expertise in administering structures housing a wide variety of financial and non-financial assets.

CORPORATE SERVICES | FUND SERVICES | PRIVATE CLIENT SERVICES

www.jtcgroup.com

Argentina • Brazil • British Virgin Islands • Cayman Islands • Guernsey • Hong Kong • Jersey • Labuan Luxembourg • Malaysia • Malta • Mauritius • New Zealand • Singapore • Switzerland • UK • USA The entities within JTC Group, carrying on the regulated business of JTC Group, are duly regulated as appropriate by the British Virgin Islands Financial Services Commission; the Cayman Islands Monetary Authority; the Guernsey Financial Services Commission; the Jersey Financial Services Commission; the Commission de Surveillance du Secteur Financier in Luxembourg; the Malta Financial Services Authority; the Financial Services Commission in Mauritius; as a member of l’Association Romande des Intermédiaires Financiers in Switzerland and is authorised and regulated by the Financial Conduct Authority in the UK. For more information about JTC Group, its offices and alliances please visit: www.jtcgroup.com. For JTC Group’s full terms of business, please visit: www.jtcgroup.com/terms-of-business.

2 May/June 2015

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Welcome

Welcome to the start of something new W

e’re delighted that you’ve picked up a copy of BL magazine. What used to be businesslife.co has undergone a total transformation into this new and exciting publication. With a brand new, fresh and modern look, we’ve switched to a smaller size, introduced some new sections focusing specifically on Guernsey and Jersey, and, obviously, changed our name.

What hasn’t changed is the quality of the writing, the topicality of the content, and commentary from leading figures in the Channel Islands, the City, UK and beyond. This is what our readers have come to expect from us, and we promise we’ll never let you down in that regard.

The change in name to BL is part of a major rebrand that sees us officially launch our four ‘pillars’ – BL magazine, BL Events, BL Publishing and BL Training. We already run some of the biggest finance-

related events in the islands, but our publishing and training operations will see us writing copy and producing materials, such as magazines and brochures, for other companies, and teaching people how to write their own stellar copy.

These exciting developments are the first stage in a massive change for our company. The next stage will see an overhaul of our website – the address of which has already changed from www.businesslife.co to www.blglobal.co.uk. As the name indicates, we’re going to be looking to the bigger offshore world in the very near future.

And we have to give a shout out to Jenni Dennis who helped create and inspire our new look, and to our own Art Director, Angela Lyons, for making it a reality. We hope that you enjoy it as much as we do.

This is the first stage in a massive change

The BL team

Compliance Resource.

Our professional team have industry and regulatory experience and can provide pragmatic and commercial solutions tailored to your business needs. To find out how we can assist you please contact Jo Carré on jo.carre@activeoffshore.com

Clockwise from top left: Deputy Editor and Sub Editor Nicola Tann; Editorin-Chief, Nick Kirby; Art Director, Angela Lyons; Business Development Consultant, Jane Gregory; and Chameleon Group CEO, Carl Methven

Compliance Regulatory Support Business Incubation Company Secretarial Human Resources

www.activeoffshore.com

Guernsey | Jersey | Isle of Man | Malta | Cyprus

www.blglobal.co.uk May/June 2015 3

Xxxxx

Ben

The firsT name in superior clienT service

We are one of the world’s largest independent providers of trust, fund and corporate administration services.

We are committed to helping our clients protect, nurture and grow their wealth.

Above all, we are a people business.

To find out more about our services and to get to know us better, visit www.firstnames.com

First Names (Jersey) Limited is regulated by the Jersey Financial Services Commission First Names (Guernsey) Limited is regulated by the Guernsey Financial Services Commission For further information, please visit www.firstnames.com/legal-and-compliance

6 May/June 2015

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Contents

INSIDE

BL MAGAZINE

BL is published six times a year

by Chameleon Group +44 1534 615886 www.blglobal.co.uk

CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk EDITOR-IN-CHIEF Nick Kirby nick.kirby@blglobal.co.uk ART DIRECTOR Angela Lyons DEPUTY EDITOR/SUB EDITOR Nicola Tann BUSINESS DEVELOPMENT CONSULTANT Jane Gregory jane.gregory@blglobal.co.uk ADVERTISING sales@blglobal.co.uk NEWS AND EDITORIAL news@blglobal.co.uk GENERAL ENQUIRIES enquiries@blglobal.co.uk

18

51

94

9 News

44 funds

67 automation

A round-up of the latest business news from the Channel Islands and beyond

How investors are taking more control of their money

Is technology dehumanising financial services?

14 Appointments

51 crowdfunding

71 the corporate state

The rise of niche funding and the role of the banks

Some companies have larger cash reserves than some countries – need we be worried?

Recent key hires for Guernsey and Jersey businesses

18 Interview Trevor Falle, Group Director at JTC, gives his take on the state of wealth management

Finance 23 Family offices

57 anti-money laundering What might Moneyval’s assessments mean for the Channel Islands?

79 Investing in innovation

Isn’t everyone a family office now?

Is Neil Woodford’s latest fund the start of a new trend for investing?

28 NEXT-GEN WEAltH

84 estate planning

Are young rich people getting a bad name because of programmes like Made in Chelsea?

The importance of including your digital assets in your will

33 trusts

From whisky to first editions – what are the new alternatives?

Are trusts falling out of favour?

41 when the money goes What happens when wealthy individuals fall on hard times?

88 alternative assets

technology 63 banking What if your bank was more like Google?

103 bl guernsey The latest financial and business news and views from the bailiwick

business 36 overworked and overwhelmed?

107 bl Jersey

Don’t be. We have a few tricks to make your work life more manageable

Reforms to divorce and discrimination laws – and much more from Jersey

92 doing business Discover the easiest place in the world to do business. You may be surprised…

113

94 PRivate Jets How the private aviation industry is staging a comeback

lifestyle 99 luxury rental

The Agenda

Can’t afford to buy flash watches and clothes?

Then why not just rent them instead?

Oh the glamour! It’s Oscar de la Renta, Rolls-Royce and Dunhill all the way

contributors

The BL Global Discussion Forum

DAVID BURROWS

Follow us @blglobalnews Office: Floor One, Liberation Station, Esplanade, St Helier, Jersey JE2 3AS © Chameleon Group Limited, all rights reserved.

Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

It’s an investing threesome for David, as he explores the decline of the funds blind pool, gets under the skin of Neil Woodford’s new fund, and hits the bottle looking at new alternative asset classes

HARRY McRANDLE

In his first piece for BL, one of the most recognisable names in the Jersey media helps make sense of antimoney laundering legislation and the forthcoming Moneyval assessments

KIRSTEN MOREL

It’s a triple header for Kirsten, who looks at companies who have more cash than some countries, the effect of technology on financial services, and why your will should include your digital assets

DAVE WALLER

In our third hat trick, Dave examines whether trusts are less popular, why crowdfunding is a lot more popular, and just what would happen if your bank was run by a company such as Google or Facebook

www.blglobal.co.uk May/June 2015 7

Understanding your local Channel Islands’ business landscape.

It’s in our nature.

The qualities you need in a local law firm come naturally to us. We provide a broad range of integrated pan-island legal services, with a pragmatic, commercial approach, and we are focused on delivering outstanding client service.

To find out how we can assist your business, please contact: Jersey Jonathan Hughes T +44 1534 504336 E jonathan.hughes@ogier.com

ogier.com

Guernsey Frances Watson T +44 1481 737157 E frances.watson@ogier.com

British Virgin Islands | Cayman Islands Guernsey | Hong Kong | Jersey Luxembourg | Shanghai | Tokyo

Information on the Ogier Group and details of its regulators can be accessed via our website.

in the NEWS Follow us @blglobalnews

Sign up for email updates at www.blglobal.co.uk

BL launches Channel Islands Funds Forum 2015

JTC HAS BEEN granted registration

AS PART OF its ongoing senior-

level conference programme for 2015, BL Events – sister company to BL Magazine – has announced this year’s major funds forum event.

The ‘Channel Islands Funds Forum 2015: Stepping Into The Light’ will take place 9am-3pm on Thursday 1 October at the Radisson Blu Waterfront Hotel in St Helier.

The event will bring together senior speakers and delegates from Jersey, Guernsey, the City and Europe to discuss issues, opportunities and challenges in the funds industry now and in the immediate future.

The agenda for the day includes a variety of panel discussions, presentations and breakout sessions on the following subjects: • What’s in store for the islands’ funds industries in the next 12 months?

• What is the Channel Islands’ track record in infrastructure and natural resources sectors, and is enough being done to target them?

• Will technology mean the end of the traditional fund manager/ administrator model?

• Is African private equity an area in which Guernsey and Jersey could make their mark?

• Reviews of the fund administration and legal landscapes.

• Are investors demanding more

JTC gains registration in Malta

control of what is done with their money? And is the blind pool declining?

• Current trends and issues in fund liquidation and restructuring.

• Guernsey vs Jersey – is there really much difference?

Carl Methven, CEO of BL Events, says: “The original intention was to have separate events in Guernsey and Jersey, but in putting together this conference we realised that so many subjects were relevant to both islands and that the crossover was glaringly obvious – so the decision was made to hold one major event. By bringing together funds professionals from both islands, the UK and Europe, we believe that this will be an informative, though-provoking and potentially fiery event.”

Delegate places start at £320. To find out more and to book your place, visit www.blglobal.co.uk/events

status by the Malta Financial Services Authority (MFSA) as a Company Service Provider, which allows the firm to provide professional services to third parties, including corporate entities, from the jurisdiction.

JTC (Malta) is one of the first service providers in the island to be recognised as a Company Service Provider. As well as allowing JTC to form companies and other legal entities, the registration enables the firm to: provide registered office, correspondence and address facilities to companies; act or arrange director, secretary or partner facilities to a company or legal entity; and undertake a variety of other related services for a company, such as accounting and day-to-day administration.

www.blglobal.co.uk May/June 2015 9

Follow us @blglobalnews

Louvre Group takes fund offering to Hong Kong

LOUVRE GROUP’S MARCO Ferreira is moving to Hong Kong to lead

the organisation’s fund administration expansion plans in the region.

Louvre already has a private wealth offering at the office in Hong Kong, led by Cally Ching. Marco will be joining Cally to establish the fund side of the business.

As Director of Louvre’s Hong Kong fund business, Marco will have oversight of local operations, and drive sales and business development activity within the fund services sector.

Greenlight launches new UK operation GREENLIGHT, THE CHANNEL Islands independent business change specialist, has created a new wholly owned subsidiary, True North, which will operate from offices in Manchester delivering programme management, project management and business analysis services.

Based at Chancery Place in the heart of Manchester, the company will service clients in Manchester, Liverpool, Sheffield, Leeds and Newcastle, and also offer a platform for exporting Greenlight’s services to the Isle of Man. Jonathan Atkinson, Chief Executive Officer of Greenlight (pictured), is setting up the new venture. As a result, day-to-day running of Greenlight will fall to Chief Operations Officer, Phil Ruelle. Moving into the position of Chief Consulting Officer is Greenlight founder Eliot Lincoln who will assume responsibility for the consultancy practice.

Ruelle commented: “Our research has shown that the North West of England will see unprecedented investment over the next 10 years and we are already seeing results from our move there.”

10 May/June 2015

double-digit growth at Quilter Cheviot THE JERSEY OFFICE of investment

management firm Quilter Cheviot achieved double-digit percentage growth in its funds under management (FUM) during 2014.

The team, which added £243 million to its FUM last year, now has £1.25bn FUM. This figure represents growth of 24 per cent from year-end 2013.

With a 23-strong team, the Channel Islands office manages assets on behalf of private clients, trusts and professional intermediaries in the Channel Islands, the UK and internationally.

Sanne Group IPO raises £142 million SANNE GROUP, THE Jersey-

headquartered specialist global provider of corporate and fund administration, has raised £141.6 million through an IPO and placing of shares on the main market of the London Stock Exchange. The IPO valued the company at £232 million.

Sanne’s clients include alternative asset managers, financial institutions, corporates and ultra-high-net-worth individuals. The group administers about €50bn of assets, and said it plans to accelerate its growth and is looking for potential acquisitions in Europe and Asia amid expected consolidation of the sector.

Sanne already has a multijurisdictional footprint with a presence in established international financial centres both in Europe (Jersey, Guernsey, London, Luxembourg and Dublin) and across Asia (Hong Kong, Shanghai, Singapore) and the Middle East (Dubai).

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News

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Mergers and Acquisitions Gentoo Fund Services has expanded into Europe with the acquisition of SHRM Financial Services (Luxembourg) SA, a Luxembourg-based provider of fund administration and domiciliation services. Having gained regulatory approval, the 13-strong Luxembourg team will continue to serve existing clients, supported

by Gentoo’s 29 Guernsey-based employees. The company will be renamed Gentoo Financial Services (Luxembourg) SA. The acquisition increases the group’s assets under administration to $15bn.

Ravenscroft has expanded into the UK after purchasing a 75 per cent stake in Peterborough-based private client stockbroking company A Vartan, which will rebrand as Vartan Ravenscroft. Ravenscroft will continue to operate under its present name. Andrew Vartan will become CEO of Vartan Ravenscroft, with John Ravenscroft remaining in his role as Group Chief Executive Officer of Ravenscroft, supported by the 50-strong team across Guernsey and Jersey.

Trust and corporate services provider Equiom Group has acquired Ardel Trust Company (Guernsey). Ardel was established in 1974 to offer a range of specialist trust and corporate services to private and corporate clients. Equiom first established itself in the Channel Islands with its Marine and Aviation Services Company in 2009, and latterly acquired Andium Trust Company in September 2012. Since then, Equiom Group has grown from 80 to more than 300 employees, and expanded across five jurisdictions – the Isle of Man, Jersey, Guernsey, Malta and Hong Kong.

Guernsey-based insurance and financial services specialist Heritage Group has taken a 33 per cent investment in Ambant Underwriting Services (AUS). Launched in October 2013, AUS is a subsidiary of Ambant, the Lloyd’s, London and international insurance markets professional services firm. AUS provides launch and host services to underwriters/ underwriting teams setting up as MGAs, service support to existing fully authorised MGAs, and general bespoke service support to firms in the delegated underwriting arena.

40% RAVENSCROFT SEES TURNOVER RISE RAVENSCROFT SAW a 40 per cent increase in turnover last year according to its 2014 results published in April. The company, a locally owned independent stockbroking and investment management company in the Channel Islands, saw turnover grow from £8.1 million at the end of 2013 to £11.37 million at the end of 2014.

Profit before tax increased 55 per cent to £2.35 million with assets under administration increasing 26 per cent to £1.62bn. The board is proposing an eight pence per share dividend to shareholders in addition to the four pence interim dividend, three pence more in total than was paid in 2013.

New Guernsey fund in £150 million IPO SEQUOIA ECONOMIC

Infrastructure Income Fund, a newly formed Guernsey fund focused on the economic infrastructure sector, has listed on the main market of the London Stock Exchange, raising £150 million in the process.

The fund expects to target investments in operational projects in the transport, transportation equipment, utilities, power, renewable energy, telecommunications infrastructure and infrastructure accommodation sectors.

Guernsey firms advising were Ogier, KPMG Channel Islands and Praxis Fund Services. The fund structure includes what is understood to be the first independent Guernsey-licensed fund manager to act as an alternative investment fund manager for the IPO of a new London-listed fund.

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News

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MJ Hudson opens Guernsey office MJ HUDSON, THE alternative asset law

firm, has opened an office in Guernsey.

This follows the firm’s expansion into Asia through the establishment of its Hong Kong office in August 2014.

The new Guernsey office will work alongside MJ Hudson’s offices in London, Jersey and Hong Kong to provide a fully integrated onshore and offshore specialist service for fund, investment, corporate finance and M&A work.

The Guernsey practice will be managed

by Stefan Gomoll, an English solicitor and Guernsey advocate.

Heritage Insurance gains Lloyd’s registered broker status HERITAGE INSURANCE HAS gained the coveted Lloyd’s registered broker status. This allows Heritage Insurance Solutions, the FCA-regulated arm of the Guernsey-headquartered Heritage Group, to place business directly with Lloyd’s underwriters.

Lloyd’s is the global centre for specialist insurance and reinsurance. It is an international broker market, where underwriters come together as syndicates to insure risks.

Heritage Insurance Solutions Managing Director Karl Bradley said that becoming a Lloyd’s registered broker was a significant boost to the firm’s global insurance offering. He added that gaining Lloyds’s registered broker status has been part of a longer-term strategic aim of developing the insurance intermediary client offering within the Heritage Group.

12 May/June 2015

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Done Deals Ogier Jersey has acted as Jersey legal adviser for Intermediate Capital Group, a specialist investment firm and asset manager, in relation to the establishment of its 10th Jersey fund, ICG Europe Fund VI, which has held its first close having raised €2.5bn. The fund, which was established as a Jersey expert fund, has a five-year investment period. It will carry on investment and ancillary activities with the objective of delivering attractive risk-adjusted returns by making investments that may be both debt and equity. Partner Niamh Lalor, who led the Ogier team, was assisted

by Senior Associate Alexandra O’Grady and Associates Tatiana Collins and Chloe Vaughan.

Channel Island law firms Ogier and Carey Olsen have advised the two firms involved in the largest insurance deal in the UK in the past 15 years. The acquisition of Friends Life Group – a London-listed Guernsey company – by Aviva, has created the UK’s largest insurance, savings and asset management firm.

The combined group will have some 16 million UK customers – equivalent to about one in every four people – and around £340bn of assets under management. The £5.6bn takeover of Friends Life is the largest insurance deal in the UK since the merger of CGU and Norwich Union in 2000, which created Aviva.

Ogier advised Friends Life Group on the deal. Ogier Partner, Caroline Chan led the Guernsey deal team, which included Managing Associate Andrew Munro. Ogier Partner Advocate Mathew Newman, with assistance from Managing Associate Sally Peedom and Associate Erin Trimble-Cregeen, advised and appeared in the Royal Court for Friends Life on its scheme of arrangement applications. A cross-practice and pan-

Channel Island team from Carey Olsen advised Aviva on the acquisition. The Carey Olsen team was led by Guernsey corporate Partner Tom Carey, assisted

by Senior Associates Adrian Sarchet, James Stockwell and Natasha Kapp, who advised on the Guernsey corporate, competition and insurance law aspects of the transaction. Senior Associate David Allen advised on the Jersey competition and insurance law aspects.

Carey Olsen’s Guernsey office has advised on the £61.3 million acquisition of the island’s largest commercial office building, Trafalgar Court, to South African property fund Stenprop Trafalgar. Carey Olsen’s commercial property team advised on all aspects of the transaction, and included Partner and Head of Property Jason Morgan, along with Senior Associates John Le Tissier and Jonathan Anderson.

Trafalgar Court forms part of the Admiral Park development in St Peter Port. It comprises 113,000sqft of prime office space.

Collas Crill has acted as Guernsey legal adviser to Challenger Acquisitions on its successful capital raising and listing on the London Stock Exchange’s main market. Challenger is a Guernsey company formed to undertake acquisitions of companies or businesses in the entertainment and leisure sectors.

Bedell Cristin and Bedell Trust assisted Artex Risk Solutions and PwC in the creation of Iccaria Insurance ICC Limited – a new regulated insurance platform structured as an ICC. Iccaria will enable pension schemes to access the reinsurance market to transfer longevity risks in their scheme membership profiles by utilising individual, regulated insurance ICC cells.

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LO C A L LY F O C U S E D .

G L O B A L LY C O N N E C T E D .

I N D I V I D U A L LY TA I LO R E D. D E L I V E R I N G A W A R D - W I N N I N G W E A LT H M A N A G E M E N T S O L U T I O N S F R O M HERE IN THE CHANNEL ISLANDS FOR OVER 50 YEARS.

FOR MORE INFORMATION, PLEASE CONTACT ADAM NORRIS IN JERSEY AT +44 (0) 1534 283496, ADAM.NORRIS@RBC.COM, OR DANIEL BISSON IN GUERNSEY AT +44 (0) 1481 744395, DANIEL.BISSON@RBC.COM, OR VISIT

RBCWEALTHMANAGEMENT.COM

There’s Wealth in Our Approach.TM

BANKING | CREDIT | INVESTMENTS | TRUST | TAX CONSULTANCY | CUSTODY | FUNDS | EMPLOYEE BENEFITS

The value of investments may fall as well as rise.

You may not get back the full amount that you originally invested.

This advertisement is issued by Royal Bank of Canada (Channel Islands) Limited (“the Bank”) on behalf of RBC® companies that comprise RBC Wealth Management in the British Isles The Bank is regulated by the Guernsey Financial Services Commission in the conduct of deposit taking and investment business and to act as a custodian/trustee of collective investment schemes in Guernsey and is also regulated by the Jersey Financial Services Commission in the conduct of deposit taking, fund services and investment business in Jersey. The Bank’s General Terms and Conditions are updated from time to time and can be found at www.rbcwminternational.com/terms-and-conditions-British-Isles.html. Registered Office: Canada Court, St Peter Port, Guernsey, Channel Islands, GY1 3BQ, registered company number 3295. Deposits made with the offices of the Bank in Guernsey and Jersey are not covered by the UK Financial Services Compensation Scheme; however, the Bank is a participant in the respective Deposit Compensation Schemes in Jersey and Guernsey (“the CI Schemes”). Links to the official websites which provide details of the respective CI Schemes are available on the Jersey and Guernsey pages of our website Copies of the latest audited accounts are available upon request from either the registered office or the Jersey Branch: 19-21 Broad St, St. Helier, Jersey JE1 8PB. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence

CA2001/Aug15

Appointments

Trust Corporation International has appointed Advocate Andrew Walters as an Executive Director, where he will spearhead the further development of the firm’s corporate and institutional fiduciary offering and client base. Andrew was called to the Guernsey Bar in 2008, having previously qualified as an English Solicitor and barrister. He spent many years in private practice as a corporate lawyer, notably at Hogan Lovells LLP in London and as a Partner of Ozannes and then Mourant Ozannes, and was named as a leading lawyer by the International Financial Law Review.

Collas Crill’s Joanne Seal has been promoted to Group Partner of the firm.

Joanne is Head of Wills and Estates in Guernsey, specialising in estate planning, inheritance, non-resident wills and Guernsey probate. In addition, she has a wide range of experience in private client matters, including assisting in the recognition of foreign powers of attorney and guardianships. Her role as Group Partner will focus on further developing Collas Crill’s international probate work and building solid relations with both UK and international clients who hold assets in the Channel Islands.

Knadel, a specialist business and technology consultancy to the investment services industry, has appointed David Randall to the board of directors of its offshore business. In his new role, David will act as a trusted advisor to senior executives contemplating or executing strategic change initiatives that impact business and technology. With over 25 years’ operational, financial and professional services experience, David has a reputation for providing valued advice to senior executives regarding risk management and strategic change with a pragmatic approach to delivery.

Mason Birbeck joins Parslows to head up the firm’s corporate, commercial and trust offering. Mason is a Jersey Advocate and former Partner and Head of Fiduciary at Collas Crill. Previously he was a Senior Associate at Bedell Cristin. He brings together expertise in corporate and commercial law, finance, trusts, foundations, risk and regulation, pensions and employee incentive plans. He has over 15 years experience advising banking institutions, global corporations, trust companies and international law and accountancy firms on a wide range of structures.

Volaw has appointed Aly Shah as a Consultant in the GCC region. In his new role, Aly will provide the firm with strategic advice and assistance for the GCC, help to build on Volaw’s existing relationships and establish new business contacts in the area. With an international career in law spanning over 20 years, Aly has been based in the United Arab Emirates since 2008. Prior to setting up his own legal consultancy, he was a Partner at several law firms and the Chief Legal Counsel and Company Secretary for an international bank. Aly has significant transaction experience and dealings with family offices and financial institutions in the GCC and Asia.

14 May/June 2015

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IT’S THE

Type area: 60w x 252h

PERFECT MATCH! PwC has appointed Justin Woodhouse to lead its Channel Islands tax practice.

Justin joins from PwC UK, where he was part of the International Structuring tax team for financial services in the UK. He also currently leads their European Banking and Capital Markets tax team and sits on PwC UK’s Tax Policy Panel. Justin has over 35 years’ experience in the financial services industry, and has expertise in all aspects of international tax, corporate tax, transfer pricing and tax risk. He advises a broad range of clients, including global and international banks, insurance companies and asset managers.

AFR Advocates has promoted Peter Stahelin to Partner. Peter specialises in corporate and commercial, utilities, banking and finance, and noncontentious commercial and residential property matters. Prior to joining AFR in 2011, Peter was Director of Legal and Regulatory Affairs and Company Secretary for Sure Cable & Wireless in Guernsey, Jersey, Isle of Man and Bermuda, responsible for all legal and regulatory matters. He has over 16 years’ experience in senior in-house corporate counsel roles, including Head of Legal for the Xafinity Group of companies.

Ravenscroft, a locally owned independent stockbroking and investment management firm in the Channel Islands, has appointed Anna Storey as Group Financial Controller.

Anna has over 13 years’ experience within the Guernsey finance industry, and in her new role she’ll be responsible for managing the day-to-day finances of the company. She will also undertake project work and have a number of operational responsibilities at the company. Anna moves to Ravenscroft from Legis Fund Services where she was Chief Operations Officer.

RBC Wealth Management has appointed David Foster as Head of Fiduciary Services, RBC Wealth Management - International. David will be responsible for leading the firm’s Channel Islands-based fiduciary business, which helps meet the estate planning needs of high-net-worth clients worldwide.

Currently Co-head of RBC Wealth Management’s Caribbean business, based in Cayman, David’s been responsible for the company’s trust, investments and private client services in the region since 2013. His new role, which is subject to regulatory approval, is based in Jersey.

Ogier has appointed three new Partners to its team in the Channel Islands –Jamie Bore (pictured) and Sara Johns in Jersey, and Christopher Jones in Guernsey. Ogier’s COO and CFO Jamie becomes the firm’s first Partner within its Business Services team, and is a member of Ogier’s Executive Board. Sara is a Jersey Advocate specialising in mergers and acquisitions, corporate restructurings, joint ventures and capital markets transactions involving offshore vehicles. Christopher, an Advocate of the Royal Court of Guernsey, advises financial institutions, investment funds and corporate clients on a broad range of multi-jurisdictional transactions.

The BL JOBS BOARD brings together top employers and star talent Looking to take your next step up the ladder?

Get online and start searching now – it’s completely free!

Want to attract your next big hire?

Post your latest position and connect with your next big name To get involved contact Carl Methven +44 (0) 1534 615886 +44 (0) 7797 796377 carl.methven@blglobal.co.uk

www.blglobal.co.uk May/June 2015 15

A BL event channel islands funds forum 2015

stepping into the light

thursday 1 october RADISSON BLU WATERFRONT HOTEL, Jersey 9am-3pm delegate rates from £320 five hours cpd available

The agenda for the day includes a variety of panel discussions, presentations and breakout sessions covering the following: • What’s in store for the islands’ funds industries in the coming year?

• Do infrastructure and natural resources offer opportunities?

• Will technology mean the end of the traditional fund manager?

• Can the islands make a mark in African private equity?

• Reviews of the fund administration and legal landscapes •A re investors demanding more control of what is done with their money? And is the blind pool declining?

• Current trends and issues in fund liquidation and restructuring • Guernsey vs Jersey – is there really much difference?

For more information and to book your place, visit www.blglobal.co.uk/events or email events@blglobal.co.uk In partnership with:

Supported by:

18 May/June 2015

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The Interview:Trevor Falle Interview

technology is redefining wealth management, and we must nurture young talent, exploit opportunities in Africa, and encourage businesses to constantly evolve. Trevor Falle, Group Director at JTC, tells it how it really is

struggle, largely due to their scale, to provide a quality personal service, and this combines with technological advances in delivering financial services without personal interaction. There’s just so much happening – it’s such a complex industry and we practitioners still assume far too much. At the top end, people are better informed and have had to learn more about the management of their wealth.

But in the middle to lower end, most members of the public don’t even find the subject interesting. I think there’s a lot more work to do on education, and so the role of advisers and managers will remain key.

You took early retirement, but were lured back to the industry. Why? I was downsizing really. I retired at 57, but I didn’t intend to sit around doing nothing. What I really wanted was to work on the subjects I enjoyed most, which are investment in general, emerging markets and Africa in particular. This coincided with my long-standing friend, Nigel Le Quesne, the Chairman and CEO at JTC, wanting to formulate an African strategy for his business.

So JTC’s needs matched my retirement aspirations.

Perhaps more important was the JTC value system closely mirrored my own, from employee engagement, the entrepreneurial spirit and proximity to clients, to a genuine emphasis on helping young people make a success of their lives. I consider myself a ‘sleeves rolled up’ kind of chap, and I wasn’t ready for more passive non-executive roles at that stage.

Development of young people is something you have spoken about passionately elsewhere. Why is it important to you?

In my opinion, the most rewarding part of any executive’s work is contributing to the growth and advancement of those forging their careers. In my experience, if you give people responsibility, they take it and generally positively surprise you. Today, educated young people display so much more initiative and confidence than my generation, who were relatively subservient and existed in hierarchies.

www.blglobal.co.uk May/June 2015 19

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Interview: Nick Kirby Pictures: Andy Le Gresley

YOU’VE WORKED IN the financial services sector for over 35 years. What significant changes have you seen during that time?

While living and working in London as a relatively young person in the 1980s, I saw Black Monday, the Big Bang, and the introduction of the Financial Services Authority firsthand. I didn’t fully understand the impact of what was going on at the time. The tech bubble bursting, the credit crunch, various debt crises are, of course, a different matter, and we’re still seeing the ongoing reverberations from these.

On the wealth management side, pricing has changed dramatically over the years. The cost of wealth management services has been under pressure for a long time, but is now both more realistic and more transparent. There will always be pressure on the levels of pricing, though, as well as the disparity between what businesses charge and what people think is fair value.

There’s also been the rise of the passive movement – index funds and ETFs. Apparently, 80 per cent of active funds don’t exceed their benchmark – added to which, charges for passive management are a fraction of the cost of active management.

And then there’s technology and the internet. The availability of information is limitless now, and so management of one’s information sources is critical and, by necessity, a dynamic process. I could spend all day reading and avoiding making decisions!

As for the Channel Islands in particular, we have to talk about the relentless push for transparency on tax issues – as we are all painfully aware, there’s been massive pressure on us in the last decade.

Yet we must be careful to protect the fundamental principle of confidentiality or privacy in one’s personal affairs. Because of the minority, the industry is distrusted (and with some good reason) and regulation is the inevitable result. I wish it weren’t the case, but while many industry participants complain, we have to accept that we only have our collective selves to blame.

For me there’s a revolution going on at the moment. Banks have fallen from grace and they

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Today’s young people are too impatient for that nonsense – they’re independently minded and prepared to challenge. That forces change to happen.

They take responsibility for their own careers and don’t allow the wrong behaviours to frustrate them.

This is good for the industry and for the islands.

Is capturing a slice of the emerging markets critical to the Channel Islands, or has that all been overplayed?

I’d definitely say it’s essential, but it’s not for the fainthearted and is something that requires longterm commitment and appropriate funding. The key for me is time zones – it’s so simple in my view.

When it comes to Africa, the Channel Islands have a big share of the continent’s international financial services business – historically private client work, but now increasingly more corporate and funds work.

So we’ve stolen the march on other jurisdictions, perhaps with the exception of Mauritius, which has adopted a different strategy. And the long-term opportunity is absolutely phenomenal.

For me, the time-zone challenge when dealing with the Far East is almost insurmountable from a Jersey point of view – although Jersey Finance might not agree, and there are exceptions.

I’m an emerging market fan, and I plan to spend the rest of my working life involved in this area – most notably Africa. I find it much more stimulating and challenging than focussing solely on developed markets. And the returns, while more precarious, are infinitely more attractive.

Technology is increasingly prevalent in financial services, but in the attempt to cut costs and gain a competitive edge, is traditional wealth management going to suffer?

First and foremost, we need to remember that we’re in a service industry. The whole concept of trust is very difficult to deliver over an electronic platform.

Undoubtedly, through technology and modern communication media, the traditional wealth management model space is being redefined. And the solution will differ depending on the nature of the client – their location, investable wealth, investment appetite and objectives. Ultimately, the market will determine pricing while the cost of delivery will remain a key factor.

While technology will never be able to satisfy all the sophisticated financial needs of individuals and organisations – which require human intervention if only for interpretation and education – the shortcomings of current models require revolution not evolution – that’s completely new thinking and not just adaptation of old models. We really are now on the cliff edge of technology delivering a significantly enhanced real-time solution in wealth management.

Do you have a view on the islands’ fintech ambitions?

I’m delighted that the States of Jersey have committed themselves so substantially to the idea that the island’s digital environment is of parallel importance to financial services, because I think it bodes very well for the local industry. I’m also impressed that the authorities have embraced the concept of cryptocurrencies.

The combination of our financial services expertise and those of Digital Jersey should work really well. And there’s every sign they’re making progress.

I’m probably the wrong age group to be asking about this, but I’m really very excited about it. I envy

20 May/June 2015

the next generation of ‘fintechies’ who have been born into such a revolutionary period in financial services. It has parallels with the late Eighties.

How can the islands compete with other jurisdictions, particularly those that offer a cheaper service?

We may be expensive, but we’re top-drawer. So provided we stay responsive, innovative and adaptable, we’ll continue to attract quality business. We don’t compete on price, we compete on service, stability and status. We operate in certain niches and pride ourselves on finding the best solution for clients.

To a large extent, the client is jurisdiction-ambivalent if they’re getting the quality service they require.

There’s been a lot of M&A activity in the financial services sector across both islands. Do you see this continuing?

It’s very difficult for smaller organisations to survive these days. We’ve heard it for years, but when you think of the investment needed – in regulation, governance in general, technology, keeping up to speed with the rate of change in the industry, in training and employing good people – sadly, it’s almost impossible for small businesses to thrive with those constraints.

I think boutiques do generally tend to provide the best service because they’re more focused on the client. But the reality is that you have to create that boutique mentality in a bigger business backed by the necessary infrastructure.

At the other end of the scale, banks are de-risking and divesting peripheral businesses, which is an opportunity for the larger business to acquire bank books. The quickest way to build scale is to acquire, if you can do it effectively. The other key factor is the global wealth management proposition – you can no longer provide solutions from one location.

If you want to provide a comprehensive service to an international client base, you need to be represented in multiple jurisdictions.

Sadly, sub-scale businesses can’t survive and will continue to be swallowed up – but hopefully by like-minded businesses who put clients first.

Are wealth managers having to innovate more to remain relevant – introducing new products, funds and alternative assets, for example?

A core portfolio for a client should be delivering something like two to three per cent over inflation

Today, young people display so much more initiative and confidence than my generation at an appropriate level of risk, and that principle hasn’t changed in all the time I’ve been in the industry.

The introduction of passive investment has been a game changer, along with the recognition that most active managers don’t outperform. And it’s still very difficult to find a real distinction between most asset managers – ultimately, the only major differentiator is whether their process delivers or not.

So the new asset classes do add something, but not necessarily in one’s core portfolio until that asset class is commoditised in some way – take REITS and commercial property, for instance. Having said all

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Interview

FACT FILE Name: Trevor Falle Age: 59 Position: Group Director, JTC Group Married to: Lee, a school teacher Children: Two ‘boys’ – a 25-yearold budding rock star and a 22-year-old rugby-playing student Hobbies: Outdoors, skiing, hiking, exercise, travel and family Interesting fact: “I’m a black belt in karate. I couldn’t find rugby or soccer within 100 miles when I relocated to the US, so I resorted to the next most aggressive sport and continued for 20 years.”

that, what is exciting in the industry is the fact that access to these wider investment opportunities now actually exist. So my advice is park your core portfolio with an appropriate investment manager or combination of managers, and explore other opportunities with your risk capital.

What do you think are going to be the key characteristics of wealth management in the next five to 10 years, or is it not going to change very much?

I think the core concept of wealth management won’t significantly change, but obviously the revolution is around how it is delivered. What we have now is a new generation of educated young professionals in the industry who don’t fit into the kind of model that I came into 35 years ago.

They are people who are well educated, very keen to progress quickly, technologically savvy and who are going to challenge the status quo. They simply won’t allow the hierarchical environment that I was accustomed to to frustrate their career growth and development. I think this is really good for the industry and encourages change.

I still believe that individuals who aren’t qualified in financial matters will want to discuss their affairs with a professional, and it’s important they feel they can trust them and their judgement. But this has also got to translate into an efficient technological platform – that’s the challenge and it’s going to get solved in the very near future.

Is the Channel Islands message in wealth management still a compelling one?

The Channel Islands are the best in the business. We have the status, stability and longevity that will keep quality business coming to us in areas where we can demonstrate our capabilities effectively. I’m happy with that, and to those naysayers who complain about regulation – and I do sympathise with those smaller businesses, because it is a challenge – we’re past that. The regulatory burden has largely equalised across all the credible offshore jurisdictions now.

I do think practitioners need to stop being so introverted and spend more time and effort making business happen. There aren’t enough entrepreneurial island folk prepared to get out there and make a long-term commitment to building networks and business opportunities in remoter parts of the world.

The Channel Islands are in a very strong position.

With real fortitude, our island governments and industry bodies continue to fight off ill-informed governments, supra-national bodies, NGOs and the like. In reality, our credentials as an international finance centre match those of the most sophisticated western nations. However, the brickbats will continue and we will no doubt face issues along the way. We are, without doubt, the most respectable, professional and best regulated of offshore environments.

In keeping with the islands’ traditions, we must keep evolving the laws, regulations and, ultimately, the services we offer to respond to this fast-moving environment – something that keeps me so fascinated and at my desk.

Do you think that being in such a strong position can lead to an element of complacency?

Absolutely. 100 per cent. It’s hard work. Some time ago, I calculated that over a 10-year period I’d spent three years travelling. You do what you have to do to build your business, and that’s the scale of investment people need to build a future for their businesses in Guernsey, Jersey or wherever. I think we’re in a good place and have earned our credibility over time, but we need to raise our sights, and go out and capitalise on it. We can’t rest on our laurels.

Should the islands be doing anything differently?

More of the same. Margins will remain under pressure, so outsource the labour-intensive work to cheaper jurisdictions, on- or offshore. Stay at the top of the reputation tables, be proactive and innovative in responding to the threats to our jurisdictions, and, most of all, stay close to clients and invest in staff.

For individual firms, don’t fixate on the Channel Islands. It’s no longer about single jurisdictions – it’s about being in locations that work effectively for your clients, and the strengths of particular places have polarised for reasons of competitive advantage.

Firms can no longer provide an adequate solution from a limited number of jurisdictions.

Finally, one of my key mantras is ‘people buy people’. You must bear the cost (in a disciplined way) of being out in the market, building networks and understanding the real needs of your clients.

Clients value nothing more than the commitment of their service providers over the long term. Don’t blame others for your shortcomings – get on and fix them. And most of all, employ the best people and invest in them. n NICK KIRBY is the Editor-in-Chief of BL Magazine

www.blglobal.co.uk May/June 2015 21

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Finance

Isn’t

Banks, wealth managers and trust companies are increasingly branding themselves as ‘family offices’. but is it a mere marketing ploy, causing confusion for families looking for a more traditional model, or is something else going on?

everyone a family office now?

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Words: David Craik

www.blglobal.co.uk May/June 2015 23

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NUMBER OF FAMILY OFFICES The definition of what constitutes a family office has been blurred, so figures are hard to come by. These are from 2012 and the only ones BL could find. Anecdotally they seem to be in keeping with what our commentators believe current figures to be.

THERE HAVE TRADITIONALLY been two types of family office to best manage, protect and expand wealth for current and future generations.

A single-family office, as its name suggests, is a privately owned company set up by the family itself, and dedicated to that one collection of mums, dads, children and occasional goldfish. The family recruits its own staff of experts in a wide range of financial services exactly suited to its needs.

It can be expensive, costing around $1 million a year to run, with Capgemini stating that it’s only really affordable for families with around $100 million or more of investable assets.

Famous billionaires who created singlefamily offices include John D Rockefeller and Oprah Winfrey.

The other option is a multi-family office, which caters for a group of families with its own dedicated experts. It’s slightly cheaper than a single-family office and tends to be used by those for whom a single-family office might be seen as an extravagance.

The key duties of a single- or multifamily office vary, but most offer services including wealth planning, asset management, investment management, tax and legal affairs, trusteeship, philanthropy and concierge services – such as securing the best opera tickets.

In recent years, the rising number of ultra-highnet-worth individuals (UHNWIs) has slightly altered the scene. Between 2009 and 2013, the number of UHNWIs in the US rose 25.6 per cent

NORTH AMERICA ~3,000

to 39,378, and 25.5 per cent in the UK to 10,149, according to wealth-intelligence analysts WealthInsight. This has subsequently led to growing demand for family offices.

The US Family Office Club believes there are around 3,000 family offices, both single and multi, in the US, and about 1,000 in Europe. It says the numbers are growing in both regions and in Asia.

As a result of this burgeoning wealth, more banks, law firms, trusts and hedge funds are either offering family office services or rebranding themselves as family offices. Bloomberg’s most recent top 50 list of family offices, which excluded single-family offices, was dominated by firms such as HSBC Private Wealth Solutions and Silvercrest Asset Management.

WHAT’S IN A NAME? Steffianna Claiden, CEO of Family Office Review, says: “A number of wealth advisers are choosing to enter the sector because there’s a lot of money there. Also, anyone is free to call themselves a family office, but the result is that families are very confused, and struggle to evaluate who’s best.”

She says families choosing these providers risk losing the specialised benefits of a traditional family office. “These firms have experience and knowledge in their fields, but many may not be able to do everything in-house. If so, who are they outsourcing to? And are these tax, estate planning or accounting firms all on the same page? Someone needs to be the family’s single point of contact

EUROPE ~1,000

ASIA PACIFIC ~100

Source: Capgemini analysis, 2012

24 May/June 2015

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Finance

THE PROFESSIONAL VIEW Karen Jones CEO, Citywealth “Ten years ago everyone wanted to be a family office, and private banks eagerly carved out family office divisions with specialists for a few select families. They offered anything from advice on schools to how to get the latest Chanel handbag, along with investment advice.

With a few years’ hindsight, pretty much all private banks and multi-family offices found this unworkable and unprofitable, mainly because the demands from clients were too great. Multi-family offices in the last five years have been rebranded ‘private investment offices’ and just stick to the business of investment. Many family offices have also disappeared into other organisations, generally because market conditions were tight. However, the credit crunch has shaken down the wealth industry, and new players either wish to attach to a bigger organisation for economies of scale, or are emerging along with the private equity money as a hybrid in a merchant banking model or an expanded trustee model which is now being hailed as a ‘family office’.”

Paul Douglas Managing Director, Trust and Fiduciary at Salamanca Group “Those firms who have simply rebranded as a family office will struggle. It needs to be a bespoke service tailored to the needs and demands of the family. It’s not a ‘stack ‘em high, sell ‘em cheap’ approach – you have to recognise that each family is different.”

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– the person managing everything and analysing how one decision on tax may affect another area and lead to bad consequences. You need a very close team.”

Paul Douglas, Managing Director, Trust and Fiduciary at Salamanca Group in Jersey, says its private office offering includes trust and fiduciary, education advisory, property management, lifestyle management, security and marine services. He agrees that families are finding the sector increasingly confusing.

“I’ve seen an acceleration in the number of different financial firms rebranding themselves as family offices,” Douglas says. “Some are genuinely offering family office services but others aren’t offering anything different from their existing services. It’s really added to the confusion in the sector – ask 10 people what a family office is and you’ll get 11 answers.”

Douglas says many families are willing to be wooed by the new providers, saying it was now ‘in vogue’ for UHNWIs to want to have access to a family office and say they are associated with one as a status symbol.

“Some of these people get a nasty surprise when they look into the significant costs of having a singlefamily office,” he says. “There are also issues with recruiting qualified and specialist staff and retaining them in a single-family office. That’s prompted them to shop around for the best solution.”

Douglas says Salamanca doesn’t offer families legal, tax or investment management advice, choosing to outsource these instead to ‘best of breed’ specialists. “There are positives in a single-family office having these services in-house when it comes to confidentiality and communications between families and advisers. However, there can be conflicts of interest: will investment managers be willing to acknowledge any underperformance?”

Douglas says there are potential dangers from families using a range of different providers. But agrees with Claiden that communication is vital.

“We have regular dialogue with our providers. We work in unison, putting the family at the centre,” he explains. “It’s really a partnership. You need to have open discussions between parties and regular transparent reporting.”

This is a point picked up by Lisa Vizia, Director at Saffery Champness. “We have a seat at the table of a family’s most senior advisers,” she explains.

“We’re part of the inner circle raising flags, such as suggesting the need for an aviation lawyer to manage tax if the family wants to buy a plane. It’s about offering a bespoke service and a long-term build-up of trust. If you don’t need a dedicated service – say you just need investment advice – then one of the new providers might work. It’s horses for courses.”

“Having more providers has complicated things for families,” says Douglas. “It’s hard for them to

www.blglobal.co.uk May/June 2015 25

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Finance

recognise who’s good and who’s bad. But over time it will become easier because those firms who have simply rebranded as a family office will struggle. It needs to be a bespoke service tailored to the needs and demands of the family. It’s not a ‘stack ‘em high, sell ‘em cheap’ approach – you have to recognise that each family is different.”

HORSES FOR COURSES When it comes down to it, however, doesn’t this all simply depend on what the family needs? They may have the money to start a single-family office; they may want a range of services but find that a multi-family office suits them best; or they may simply want wealth management services and decide to go to a firm that badges itself as a family office.

Christopher Scholefield, Partner at Jersey law firm Viberts, describes it as a building with a singlefamily office on the top floor with “dedicated staff who know your foibles, and a key code on the door”, a multi-family office on the middle, dealing with many families, and a traditional trust firm on the ground floor with “rows of files from different trusts and companies”.

“It’s possible that on the ground floor you’ll get a very close service to that on the top floor,” he says.

“You’ll get fiscal, legal and accounting advice and trust administration. The investment management and concierge services to get petrol for the yacht may likely be outsourced. But they’ll use the family money to find a skilled investment manager, and

THE PROFESSIONAL VIEW Steffianna Claiden CEO, Family Office Review “A number of wealth advisers are choosing to enter the sector because there’s a lot of money there. Also, anyone is free to call themselves a family office, but the result is that families are very confused, and struggle to evaluate who’s best.”

Christopher Scholefield Partner, Viberts “There’s an aspirational edge to a family office. It’s good for the ego to bandy the phrase around. There’s been a measure of dilution in the family office message. In the past you had to have hundreds of millions to have one, so yes the magic has diluted, but I doubt the quality of service has.”

Someone needs to be the family’s single point of contact – the person managing and analysing everything. You need a very close team

have the manager’s performance benchmarked so they can be quick on the case if they are not achieving. On the top floor, they’re less likely to buy in expertise.”

He agrees with Claiden that some families like the aura of a family office without having the funds to pay for a single- or even a multi-family service.

“There’s an aspirational edge to a family office.

It’s good for the ego to bandy the phrase around,” he says. “There’s been a measure of dilution in the family office message. In the past you had to have hundreds of millions to have one, so yes the magic has diluted, but I doubt the quality of service has.”

The increase in providers may be a positive for families. “They have a range of options, and money will decide which one they choose,” he says. “The single office is a Rolls-Royce. Ultimately it comes down to supply and demand.”

But where is this family office money coming from? Camilla Stowell, Managing Director of Coutts Private Office, says 80 per cent of its 350 clients are UK domiciled. “There’s plenty of M&A going on in the UK. There are still new wealthy clients with a big lump of cash not knowing where to start managing their family wealth,” she says. The remaining 20 per cent are UK non-domiciled or international, such as Middle Eastern families who may have family offices back at home.

Coutts offers investment advice, while tax and legal advice is outsourced.

Stowell points out that 10 years ago this may not have been so easy. “There used to be more conflict between different clients, now there’s collaboration.

It’s about clear expectations and clear accountability,” she says. “We love what we do. The only thing we stop short of is walking the family dog!”

What constitutes a family office seems to be constantly changing, and it looks like that trend will continue – especially with growing wealth in regions, such as Asia, where the family office concept is relatively new. Family life, it appears, is never dull. n DAVID CRAIK is a freelance financial writer

26 May/June 2015

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Do the young rich have more

Words: David Craik

Paris Hilton, the Kardashians, Made in Chelsea… thanks to TV and social media, rich kids have gained a certain type of notoriety, but are they the exception or the rule?

28 May/June 2015

THE POPULAR TV show Made in Chelsea has ‘graced’ – is that the right word? – our screens in recent years, showing the lives and loves of the capital’s rich kids in the bars and cafes of West London.

The not-quite-reality reality TV show features a cast of goodlooking well-off 20-somethings – among the fellas are Spencer Matthews and Jamie Laing (heir to the McVitie’s fortune) and among the ladies are Binky Felstead and Millie Mackintosh (of the Mackintosh Toffee clan) – quaffing champagne, jetting off to New York and generally having a nice time lavishly spending their mostly inherited cash.

It’s an irony not lost on many that Made in Chelsea and new social media sites such as ‘Rich Kids Of Instagram’ (think well-off youngsters posting photos of themselves on private jets or lying on beds stuffed full of €500 notes) have emerged at the same time as most Brits and Europeans are struggling through one of the toughest ever recessions.

But the image of smug-faced public school ‘Hooray Henrys’ puffing on expensive cigars and driving flash cars isn’t new. It’s been a staple of literature and film for many years.

But how truly reflective is this image of the latest generation of under-35 high-net-worth individuals (HNWIs)? Are they a bunch of trust-fund tearaways, showing off their wealth and

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Finance

thinking about no one but themselves, or are they more responsible with their money than you might think?

Steve Meiklejohn, Partner at law firm Ogier, says that Made in Chelsea is perhaps an unfair representation of the young rich.

“I don’t think it’s indicative of young wealthy people,” he says.

“I’m working with a family with three kids at the moment – worth around $8bn – and you couldn’t hope to meet a more modest bunch. I’m also seeing a trend of pooled family decisions, so older and younger generations, setting money aside for philanthropy.”

Lydia Essa, Senior Associate at Maurice Turnor Gardner, says she has rarely met the stereotypical Made in Chelsea character.

“So much depends on upbringing and education, but the next generation can be as sophisticated – if not more so – than their parents when it comes to investment and trust matters,” she says.

ALL ABOUT THE UPBRINGING Mentoring and developing the children is often regarded as the key to future successful transition of the family’s wealth. It’s not unusual for children to be groomed by their parents to succeed them in the family business, and they’re often encouraged to ‘learn the ropes’ by spending hours on the shop floor or seek employment in the wider business world before returning to the family business.

They’re also being given roles in asset-holding structures and family charitable foundations to help them develop their commercial acumen.

Maya Prabhu, Managing Director of Coutts Institute, which focuses on the governance of wealth, agrees that parental example and guidance, open communication and the preparation of heirs all play a vital part in ensuring the long-term survival of a family’s financial wealth. This is key, she says, because “around 80 per cent of wealth fails to go beyond the third generation”.

Families have different approaches to the issue. “One type see their children as custodians of family wealth, which is different from being beneficiaries,” says Prabhu. “Another category, who perhaps have made their own money as entrepreneurs, believe their kids have to learn the hard way like they did. Of course they will pay for their education or the deposit on a flat, but apart from that they insist that they make their own way.”

A third type is the ‘spender’ – they think ‘I’ve made a lot of money and if my kids are having a great time then that’s great. That’s part of the reason I worked so hard’. “This can cause the child to have no sense of purpose and create insecurities,” Prabhu says.

A final category are the philanthropists who believe their wealth might ‘ruin the kids’ and so provide them with only a safety net.

www.blglobal.co.uk May/June 2015 29

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Images: Featureflash and Tinseltown / Shutterstock.com

than

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Finance

“There’s no one single right way to approach wealth succession, as each family and the individuals within them are very different,” Prabhu says. “However, in our experience, all families need a plan as to how they wish to prepare their children for the opportunities and responsibilities that wealth brings. A plan for passing on values and not just valuables.”

Another parental concern is how and when to tell their children about the family’s wealth and the impact that this knowledge will have. “They worry that their children will immediately think about spending the money and that they will lose motivation,” Prabhu explains. “But when we conduct family wealth succession workshops and we explore this topic, we’ve often found that the next generation doesn’t wish to be profligate with money.

Sometimes this is simply because they don’t wish to be different from their friends. One young woman was so embarrassed that she was travelling on her dad’s private jet on holiday that she told friends she was flying BA instead. They don’t want to be defined by their parent’s wealth.”

Young people with money will continue to annoy everyone.

But when they grow up… they will show a lot more social responsibility

THE NEW GENERATION Many of our commentators note that wealthy young people today are showing more social responsibility with their wealth and investments than a decade or so ago. “They’re more aware of the impact they can have on the world and want to help with issues such as climate change or human rights,” Prabhu says. “They’re being more conscious about the impact of their investment strategies on the world around them. They see their charitable work and investments equally reflecting their values, while their parent’s generation have mostly had a clear separation between their ‘investment hat ‘ and their ‘charity-giving hat’.”

Ogier’s Meiklejohn believes young HNWIs, perhaps as a result of government and media pressure, are also showing less willingness to take part in aggressive tax planning than previous generations.

Greg Davies, Behavioural Finance Specialist at Barclays, says the financial downturn may have made young HNWIs more responsible with their cash. “The financial crisis has focused people’s minds. We’re seeing a greater interest in social-impact investing than in previous generations. I’m wildly speculating, but it may be tapping into a broader cultural thing where drinking, smoking and drugs is on the decline relative to the past,” he says.

Essa says a new development has been the emergence of young tech entrepreneurs earning their first million in their early 20s. Do they behave differently?

“Again it depends on the personalities involved, but you often find that since they have built their wealth themselves, there is a real determination there to succeed and, importantly, to preserve any wealth that has been generated,” Essa says.

There may also be cultural differences. One expert told BL that there’s a “concern about some young Middle Eastern males who have a certain sense of entitlement”. And that “in countries like Russia, the wealth has come quickly and there has been little time for families to prepare for that change.”

In conclusion, it’s difficult to generalise. Even some of the Made in Chelsea brigade have been on TV shows highlighting food poverty and running the London Marathon for good causes.

Young rich people will, like their less well-off peers, go out drinking and occasionally make fools of themselves. They just do it in more luxurious bars and end up staggering back home in a limousine rather than on a night bus. But it seems this generation of HNWIs are different to their parents’ generation. There appears to be a shift towards social responsibility. And that’s something we can all toast with a nice glass of bubbly. n

Ben Way started his business career as a 15-year-old in his bedroom in Bath. By the age of 17, he was a millionaire and had moved to a penthouse flat looking over St Helier Bay in Jersey.

“From sleeping on a mattress to a four-poster bed – it was a real ‘pinch-me’ experience,” the now-34-year-old California-resident remembers.

Way was one of the original tech entrepreneur millionaires after creating search technology Waysearch, which later became business-to-business product Pulsar.

When he was 19, an investment company paid £25 million for the rights to his technology ideas.

He says handling wealth at such a young age was challenging. “You get caught up in the lifestyle. You have the champagne and the girls next to you in a nightclub and you feel arrogant, too big for your boots,” he says.

“I was never too lavish – I didn’t have a Ferrari or a Lamborghini – but it was fun.”

Way had a rollercoaster early business career, making a fortune, losing it and then regaining it through a series of tech ventures. He is now boss of innovation and incubation firm The Rainmakers.

He has also dedicated himself to philanthropy after an epiphany in his mid-20s. “I became a more rounded person. I felt that having great wealth had become empty and that helping humanity was so much more important,” he says. “Money was no longer the centre of my world.”

His charity work includes supporting the Pedro Club, a youth club in Hackney, and Social Firms, an organisation dedicated to helping people with disabilities gain employment.

“Young people with money will continue to annoy everyone,” he says. “But when they grow up, from my experience of my friends, they will show a lot more social responsibility. I think it’s far more important to this young generation than it was 10 years ago.”

DAVID CRAIK is a freelance business writer

30 May/June 2015

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Are trusts falling out of favour?

Words: Dave Waller

TRUSTS HAVE BEEN a key part of the Channel Islands’ wealth management provision for around 50 years, as reliable as the winds blowing in from the Atlantic.

Well, you’d think. Yet if changes in the UK are any kind of gauge, there may be a shift in fortunes.

According to HMRC, the number of trusts in the UK dropped by a fifth between 2006/07 and 2012/13 – from 201,000 to 160,500. Meanwhile, the tax paid by trusts there fell below £1bn. So are trusts falling out of favour, and should the Channel Islands’ trust providers be preparing themselves for a rougher ride?

There’s a clear reason that trusts in the UK are declining. The UK’s tax regime has become hostile to domestic trusts, meaning fewer new trusts are being created and

▼

With trust numbers in the UK falling in recent years, should the Channel Islands worry about suffering the same fate?

www.blglobal.co.uk May/June 2015 33

Finance

high-net-worth individuals are seeking to protect the area’s newly generated wealth in a reliably stable environment.

And Nerine isn’t alone. The economic turmoil of the recent past has put long-term planning firmly back on the agenda for wealthy families. “The fundamental reason for trust creation in the Channel Islands has always been about succession planning,” says Kevin O’Connell, Commercial Director at First Names Group in Jersey.

“There’s no reason for that to change.

In fact, clients have now become even more focused on protecting their assets for future generations.”

CHANGING LANDSCAPE

▼

providers need to be multi-jurisdictional, bespoke and more complex in terms of their offering

existing trusts are falling away. In short, reforms by HMRC have rendered trusts unappealing to the wealthy families who’d have previously used them as a handy way of saving on tax. Take, for example, the transferable nil-rate inheritance tax introduced in 2007. This effectively increased the nil-rate band for a married couple to £650,000 – which meant there was no longer a need to create a trust to get that kind of tax saving.

Crucially for the Channel Islands, trust numbers haven’t dropped anywhere near as significantly as in the UK. Speak to trust providers in Jersey and Guernsey and it seems any change in the amount of work has been cosmetic rather than concrete.

Why? Well, people use Channel Island trusts for a fundamentally different reason.

“Here it’s all about the original purpose of trusts: multi-generational estate planning, not tax,” says Paul Matthams,

34 May/June 2015

Partner at Carey Olsen in Jersey. “These days, wealthy people have investments all over the world, and they create trusts as a holding entity – so that if the wealth creator drops out of the race, everyone else in the family can carry it on. People also use trusts for asset protection and confidentiality – they can be a safer structure for wealth if you’re worried about divorce further down the line, for example.

And if people have to go and work in dangerous jurisdictions, they can park their assets in a trust somewhere safer before they go. They’re a very good vehicle for that.”

This highlights a key point about the Channel Islands’ trust base: they have a diversified global clientele – a much wider audience than in the UK. Keith Corbin, Executive Chairman at Nerine Trust in Guernsey, points to this as the reason why his firm is experiencing healthy growth, especially in emerging markets, where

But while the volume of work isn’t posing a challenge to the Channel Islands, the trust landscape is still changing – and giving trust companies plenty to chew over.

The level of litigation in offshore centres has been steadily on the rise. Since the economic crash, lots of people have lost large chunks of money, and many of them choose to blame the trustees – if they’re holding something on trust and the investment has gone down, then fingerpointing is an inevitability, especially as some trusts have been around so long.

If the new generation comes through and doesn’t like some of the decisions made by trustees years ago, which they see as failing to preserve or enhance the value of the trust fund, then it’s natural for the beneficiaries to attack.

Hence trustees are having to look for innovative ways to protect themselves from the risk of claims. They’re tackling this through a number of different routes, from reserved powers trusts, where the investment responsibility sits squarely with the settlor, through to the appointment of panels of investment consultants, who monitor the performance of the investment managers they’ve appointed. Where a trust is to pursue a particularly aggressive or risky strategy, consideration is given to setting up purpose trusts designed to pursue the goal.

But, as usual with these things, the solution comes in getting the right personnel – something a long-established jurisdiction like the Channel Islands is well positioned to provide. “The response to it is really about trust companies and fiduciary

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providers retaining technically competent people at the right level, to deal with trust beneficiaries and the potential investments put forward for consideration by trustees,” says O’Connell. “You need strong, robust governance and risk management protocols sitting internally to ensure there’s a clear and documented rationale for any decision.

That’s the defence against any future attack from beneficiaries.”

If any sign was needed that Channel Islands trusts remain an attractive proposition financially, then one need only look at the levels of M&A activity in the sector. The last five years has seen a raft of mergers and acquisitions – including Europlan’s merger with Volaw, Kleinwort Benson’s acquisition of Close Brothers Offshore Group and First Names’ acquisition of Mercator – and a great deal of private equity investment.

This drive for scale is down, in part, to the changing needs of clients. These days, providers need to be multi-jurisdictional, bespoke and more complex in terms of their offering. It can be a big challenge for smaller companies to hold a trust in the Channel Islands for underlying assets held around the globe, off- or onshore, by families in various locations. Clients are increasingly seeking a one-stop solution, and to offer that you need scale. It’s a much less ‘vanilla’ offering than it was, say, 15 years ago.

EVOLUTION OF A SECTOR There are of course other factors driving M&As. Providers need that scale and stature from the regulatory perspective too.

Many will point to it as a sign that smaller operators can’t keep up with the pace of the changes and demands in the financial services sector – whether that’s FATCA, which has already increased the workload for many businesses, or the looming Common Reporting Standard, driven by the OECD. It all makes it harder for smaller companies to operate profitably.

“The regulator says it’s friendly towards both large and small trust companies,” says Hiren Mistry, Legal Counsel at Equiom in Jersey. “But the regulation itself is making it harder for smaller companies to stay afloat. And now they’re being bought up by larger companies. It’s a trend. That’s the view from people in the industry –

Number of trusts in the UK

201,000 2006/07

160,500 2012/13

increased regulation makes it much more difficult. You now need a legal team and compliance officers to do what a couple of people used to do.”

And so the picture emerges of a trust sector that’s evolving into something new.

The same amount of work’s being done, but by fewer and bigger players, together with a few niche operators offering an increasingly bespoke and tailored service, all for an increasingly global clientele.

“There will certainly be fewer licensees in a few years,” says Corbin. “Those smaller operations will find it very difficult to survive. That’s the major change.”

Families are getting richer, and their footprint bigger. This calls for more complex, more dynamic trust solutions, and trustees who are more technically savvy. “It’s fair to say I see fewer new trusts coming to the islands, but they tend to be bigger, for more wealthy clients, and often and increasingly for more complex structures,” explains Matthams. “Your seriously wealthy individuals will have

trusts and foundations in a number of different jurisdictions, including the Channel Islands.”

So the question remains, with all these changes to the global trust landscape, and particularly the decline in trusts’ fortunes over in the UK, are people right to continue to place their faith in the Channel Islands’ trust provision?

“The Channel Islands have a reputation as being premier trust jurisdictions,” says Corbin. “There’s a lot of expertise here, with a very strong infrastructure to support that industry. There are very good back-up professional services – in the legal and accountancy professions, investment houses, modern trust company legislation, regulatory structure, and a strong banking presence. There are no other jurisdictions at the moment who have all the component parts, that tick all the boxes, to make them as effective a trust jurisdiction as the Channel Islands.” n DAVE WALLER is a freelance business writer

www.blglobal.co.uk May/June 2015 35

Business

How to stop feeling

overworked and overwhelmed Is work getting on top of you? Feel like everything is just too much? You’re not alone – but thankfully there is something you can do about it Words: Jeff Haden

AFTER READING AN early

version of a new book, I decided to do a quick survey during a speaking engagement.

I asked the audience: “How many of you feel overworked and overwhelmed?”

As far as I could tell, every single hand was raised.

And that’s what I expected.

We all feel overworked. We all feel overwhelmed, at least some of the time, anyway.

Effectively managing our professional and personal lives is a problem we all struggle with. Maybe that’s because we look outside ourselves for solutions – software, apps, devices, time management systems, and so on.

Obviously all of those can help, but as Scott Eblin, author of Overworked and Overwhelmed: The Mindfulness Alternative, says: “The only person who is going to keep you from feeling overworked and overwhelmed is you.”

So how do you pull it off?

It starts with making one overriding commitment: you must commit to intentionally managing your time so you have a fighting chance of showing up at your best, your most inspired, and your most productive Here are Scott’s tips on how to achieve that.

ASK: ‘IS THIS REALLY NECESSARY?’ Challenge your basic assumptions about your regular habits. Do you need to have that meeting? Do you need to create that report? Do you need to respond to that email? In many cases you don’t, but you do anyway simply because that’s what you’ve always done.

Eliminate as many ‘nice to do’ tasks as possible – you’ll have more time and be more effective where it really matters.

SCHEDULE THE MOST IMPORTANT TASKS FIRST What are your priorities for the month? The week? Today?

36 May/June 2015

Determine what they are and do those things first. Why work on less important tasks when the truly important items are where you create the most value – whether for your business or your life? And if something important pops up, immediately reprioritise.

Getting stuff done is fine, but getting the right stuff done is what really matters.

UNDERSTAND AND SET YOUR OPERATING RHYTHM We all work differently. Some like to hit the ground running.

Others like to start the day by reflecting, meditating and thinking. Some like to work into the night. The key is to understand not just how you like to work, but also how you work best. You might prefer to work late at night, but if you’re tired or frazzled by a long day, you won’t perform at your best.

Do some experiments to figure out what works best for you. While you won’t always be able to stick to your plan, you will always have a plan to return to.

GIVE YOURSELF TIME FOR FREE THOUGHT This is key to making smart decisions when you face complex problems. Research shows people tend to make their best decisions when they have an opportunity to review the data and facts and then focus their thought on something else for a while.

So, take a walk; do a mindless chore; exercise. Do something where your body goes on autopilot and your mind does

too. You’ll be surprised by the solutions you can dream up when you aren’t purposely trying to be creative.

SET BOUNDARIES No one can be ‘on’ 24/7. Yet you probably feel you are – because you allow yourself to be. Set some boundaries: the time you’ll stop working, certain times you’ll do things with your family, certain times you won’t take calls. Then let people know those boundaries.

Other people won’t respect your time unless you respect your time first.

BE STRATEGIC WITH ‘YES’ AND ‘NO’ You can’t say yes to everything.

Sometimes you simply need to say no. Other times you can say ‘No, unless...’ and add stipulations. The same is true with yes. Saying ‘Yes, but only if...’ creates guidelines. Always consider the effect of a request on your most important goals.

An automatic yes takes time away from what you really need to get done.

TAME YOUR DISTRACTIONS Most people are distracted over 30 times an hour: phone calls, emails, texts, office drop-ins… the list seems endless. Schedule blocks of time when you’ll turn off alerts. The only way to stay on schedule is to work on your own schedule, not on that of other people. n JEFF HADEN is a best-selling business author. This article originally appeared on www.inc.com

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Advertising feature

The importance of going global Cameron Walker, Head of Relationship Management at Nedbank Private Wealth, explains how a global perspective has helped the firm’s investment portfolios beat their benchmarks NEDBANK PRIVATE WEALTH has always had a global bias to its investment portfolios, based on the belief that a global approach is superior to a portfolio with a UK home bias or, for that matter, any home bias.

Taking a global perspective has certainly been beneficial for the Nedbank Private Wealth discretionary investment management service, as it saw strong performance across its segregated investment portfolios throughout 2014.

Each of the multi-asset class portfolio strategies beat its LIBID-based benchmark and compared favourably against its peers, as measured by the sterling-based Private Client Indices (PCIs) produced by Guernseybased Asset Risk Consultants (ARC).

This global approach is cemented on two common-sense investment principles. l Diversification. Being global allows investment risk to be spread more widely – to avoid ‘putting all your eggs in one basket’. Risk concentrations created by a home bias can lead to serious consequences for investors, as shown by the recent blow ups during the Eurozone crisis in Spain, Greece, Italy and Portugal, and the impact these events had on local investors.

Even in the UK an investor is exposed to concentration risks, with four sectors dominating the FTSE 100 (finance, oil and gas, consumer goods, and consumer services), and the top 15 companies comprising 50 per cent of the index.

Similar concentrations can be found in the corporate bond sector, with the finance sector weighted at over 40 per cent.

l Opportunity set. Being global gives access to a larger opportunity set than if the focus was purely on a single country for all investments. For example, the best developedcountry equity market last year was the US, up 12.7 per cent in local currency terms, and nearly 20 per cent in terms of sterling. This compared to a return of just 0.6 per cent for the UK stock market in 2014. Being global means that approximately 40 per cent of each strategy’s equity exposure is the US. In addition, global real estate investment trusts (REITs) were up over 20 per cent last year – listed property is an area that has been ‘overweight’, and the company’s portfolios benefited from these returns last year.

MANAGING CURRENCY EXPOSURE Many investors still take the view that investor liabilities should be denominated in their home country’s currency, meaning that their assets should also be invested solely in that currency and therefore reduce risk. But while currency exposure needs to be managed – and, when appropriate, reduced to accommodate the needs of some clients to finance future sterling liabilities – Nedbank Private Wealth believes that this is best managed separately, rather than by holding home country assets.

The ability to also tactically hedge currency exposure gives another opportunity to add value while protecting the portfolio from potential currency losses.

For example, in 2014 the company hedged its euro currency exposure. With the euro falling by 6.9 per cent against sterling, the portfolios were able to benefit from the

stock market gains in Europe without being impacted by the currency loss.

It’s evident that 2014 was a good year to be invested globally, and Nedbank Private Wealth certainly reaped the benefits last year. With economic conditions clearly better in the US than in most other parts of the world, the US dollar strengthened significantly against nearly all other currencies. Having exposure to global assets, especially the US dollar as it appreciated against sterling, proved beneficial for absolute returns last year.

Looking forward, the positive economic momentum in the US looks likely to remain the key driver of global growth in 2015. n

FIND OUT MORE

Nedbank Private Wealth’s three global multiasset class investment strategies form part of its discretionary investment management service. The strategies are available through segregated fund portfolios for those with £500,000 or more to invest, or as collective investment funds for clients with a minimum of £1,000 to invest and who want to make regular savings.

To find out more about our discretionary investment management service, visit www.nedbankprivatewealth.com, email andrew.robins@nedbankprivatewealth.com or call Andrew on +44 1534 887889.

The value of investments and the income from them can fall as well as rise and you may not get back the original amount invested.

Past performance is not necessarily a guide to future performance.

www.blglobal.co.uk May/June 2015 37

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Life’s pretty dandy when you’re wealthy and you can buy anything you need or want. But what happens when, all of a sudden, the money’s just no longer there?

After the Words: David Craik

money has

GONE

www.blglobal.co.uk May/June 2015 41

▼

WHEN THE MONEY flows and the good times roll, the super-rich are coveted by private banks and wealth managers. They never have to look far for advice about which investment to add to their equity portfolio or how to set up trust funds for their nearest and dearest.

Their pot of gold is also an obvious sign of their success and hard work, as well as a comforter for family and a powerful way of making friends. Having serious money opens doors to a way of life that many of us can only imagine, from five-star hotels and firstclass flights, to flash cars, numerous properties and private education for the children.

But what happens when the gravy train derails?

When the well-paid job ends, the divorce gets nasty or when the investment goes horribly wrong?

How should high-net-worth individuals react when their worst fears are realised and they become low-networth? Both practically, in re-arranging investment portfolios to meet their new circumstances; and emotionally, with the change in fortune and status?

History is littered with rich and famous people who lost either all or big chunks of their wealth. Showman PT Barnum lost his fortune through bad investments and loans; singer Marvin Gaye through a costly divorce; and footballer George Best just spent the lot. In recent times, software anti-virus creator John McAfee was unable to protect his wealth from crashing from a reported $100 million to under $10 million following a series of bad real-estate investments.

The effects of lost wealth can be devastating. It forces individuals to make intense personal decisions that affect not just themselves but their families. They often have to liquidate assets, sell the beautiful house and car and perhaps end the private-school fees. It can

It’s a blow not only to your wallet, but your confidence and self-esteem too

42 May/June 2015

be humiliating, cause tremendous strain in family relationships and, in some cases, lead to thoughts and attempts of suicide.

And the fall from grace can be extreme. Following the dotcom crash there were tales of former internet millionaires finding themselves on the street, being forced to beg to get by.

A CHANGE IN THINKING Greg Davies, behavioural finance specialist at Barclays, says the emotional and practical reactions to sudden wealth loss are intertwined, making it harder for people to make sensible choices. “There are very strong emotional components that can get in the way of making good decisions,” he says. “Take two people with the same wealth. One is content with the level because it is the most money he’s ever had, while the second isn’t happy because he was divorced yesterday and previously had twice as much cash. He’ll struggle to make future decisions because of that loss.”

He says people in these situations may be unable to give up the past and “hanker for what used to be”.

This leads them to indulge in ‘casino’ type investing.

“They dial-up their investment risk taking. They’re tempted to roll the dice and put it all on 17 to get the wealth back,” he explains. “It then leaves them even worse off.”

Conversely, they can miss out on opportunities to restore at least some of their fortune by turning inwards and losing confidence. “The other extreme is to go ultra-defensive and keep everything in cash,” he says.

Davies says people should try and forget past events and return to investing and wealth-creating basics.

“Establish the right level of risk and invest in a diversified way,” he says. “It’s not easy, but you have to get rid of the emotional baggage. You have to let the emotional catch up with the financial.”

The best answer for that, he suggests, is the simple passing of time. “Give yourself some breathing space and don’t make any big financial decisions straight away,” he says.

The emotional hit, he adds, can differ depending on the way wealth has been lost.

“A divorce is clearly very emotional, and you will find it hard to make decisions. But your emotional state is independent of the finance,” he says. “If you have had a bad investment you will feel you have to stay away from that asset class. In the credit crunch, people sold out of shares or property at the bottom because they couldn’t live with the stress of it getting worse. They moved into collectables such as wine because it was something they felt more comfortable with – they could touch and feel it. But it was dangerous because I don’t think they really weighed up the financial risks. They bought emotional comfort.”

Lavinia Osbourne, Director of Personal Finance Consultants Butterfly Wealth Creation, reiterates the point about going back to financial essentials. “You have to review your investments and find out what’s working

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Finance

How I lost my fortune through gambling In 2009, Justyn Rees Larcombe was a director of a privately owned financial services firm in the City of London with a six-figure salary. Three years later, his wife and two sons had moved out of their home after he blew £750,000 of their family fortune on internet gambling.

“I’d only ever bet on the Grand National before, but I got addicted to the buzz,” he remembers. “I’d been so careful with my money but now I had spent all my savings, my wife’s savings, the equity in our house and the deposit we had for a new place. I also lost my job after using my company credit card to make bets.”

He sold his car, family antiques and paintings to raise cash, and had to reduce the support given to his ex-wife, who lived in Jersey with their son, who had attended Victoria College private school. As a result, their son moved to a state school in the island.

“I didn’t think about my pension or the return on my investments. I took out short-term loans with ridiculous interest rates and stopped making long-term financial planning decisions,” he says. “I had sound advice from financial advisers but I kept them at arm’s reach. I didn’t want to discuss it.”

After his wife found out his secret, via a bank statement, he moved back in with his mother. “I lost my self-esteem and became withdrawn,” he says. “I was no longer a husband and father, and had lost my wife’s trust.”

Justyn got help for his financial problems and is now reunited with his wife and children. He’s returned to the City, written a book about gambling called Tails I Lose, rescheduled his debts, and is working with a financial adviser to sensibly plan to finance a house deposit and for potential private-school education.

He’s also learned a valuable life lesson. “I used to hold money in a tight fist, but my relationship with it now is much healthier. As long as we have food on the table and my kids are looked after, I’m happy.”

and what isn’t. Are you utilising all your tax allowances, such as capital gains, and getting the best saving rates out there?” she asks.

It’s a basic point, but these are issues Osbourne believes some extremely wealthy people just don’t know enough about. “They delegate – in fact abdicate – the responsibility of their wealth to others. When it goes, they are faced with the responsibility and they don’t have the financial education,” she argues.

STARTING OVER This tends to happen to those with inherited rather than created wealth. “The creators have taken risks to get their wealth – they had the drive to attain that lifestyle,” she explains. “They will pick themselves up again because they have the financial skill sets. The inherited haven’t had to train their mind to make wealth, and perhaps their self-worth is more tied up with their net worth. It will be harder for them to get back on track.”

Steve Meiklejohn, Partner at law firm Ogier, urges the culling of costs and liabilities. McAfee is a good example here – selling off properties, planes and landing strips to even his losses.

Meiklejohn says costs can also be cut from expensive administration costs around trusts or companies. “We managed to change the administration of a trust for one family to bring fees down, and we closed or sold loss-making businesses,” he explains. “We turned the losses tap off.”

He also says emotional help can be sought from psychiatrists. “It sounds dramatic, but they can help people who have known a life of no financial worries.

It’s a mix of the psychology and the practical help of how to manage a smaller pot of cash.”

Mo Baluchi, Business Development Director at Quilter Cheviot in Jersey, believes a wealth manager can play both roles. They will sit down with clients who have lost wealth to find out their new aspirations and goals, and what investments they want to protect, such as their kids’ education, child trusts or equities.

“We’re there to preserve wealth and help it grow,” he says. “Our philosophy is to develop long-term relationships with our clients, and we’ll be there through good and difficult times.”

Losing wealth and the lifestyle that goes with it is traumatic. It can be a blow not only to your wallet, but your confidence, self-esteem and future life hopes too.

Obviously, the more money that’s lost, the greater the difficulties faced are likely to be. But it could be a time to reassess and appreciate the simpler things in life unfettered by concerns over dividends, share prices, or which luxury destination to go skiing in this year.

Stem the losses, evaluate what you have left and protect what’s important. The financial capital may have dwindled but the human capital – your experience, education, emotional health and family support – is still there, and will help you build again. n DAVID CRAIK is a freelance financial writer

www.blglobal.co.uk May/June 2015 43

Getting

out of the

44 May/June 2015

pool

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Finance

Are wealthy investors leaving collective funds and using structures that give them more control with less regulation?

Words: David Burrows

offices and sovereign wealth funds are building sophisticated investment infrastructure,” he explains.

“They are no longer just handing the reins over to third-party fund managers. They have their own due diligence teams to check all investments before they are made, and they have enhanced monitoring capability post-investment.”

THE AFTER EFFECTS of the financial crisis have

been plentiful – from the introduction of legislation aimed at stopping such a thing happening again, to a rise in compliance functions at financial institutions to make sure everything is done by the book.

Another direct effect of the crisis is that investors across the wealth spectrum are now questioning the value of fund managers and what they charge. This, allied with a rise in technology, is driving down costs across the board.

At the same time, investors, particularly those with considerable amounts to invest, are looking for more control over what happens with their money.

As a result they’re less likely to throw their money into a pot and let the manager get on with it. They want greater involvement.

“Having invested with managers and lost money through the credit crunch, some investors feel that they can either do a better job themselves or hire a team to do the job for them,” explains Joe Truelove, Head of Fund Services at Carey Group.

“They want to negotiate preferential management fees, and rather than have a side letter they want their own fund. Some managers have struggled to fundraise and are willing to operate a managed account – to effectively manage a pool of assets on behalf of one investor. Larger institutions don’t wish to have the additional bureaucracy and costs associated with regulated funds following the introduction of the Alternative Investment Fund Managers Directive [AIFMD].”

Ben Robins, Partner at Mourant Ozannes, agrees that the financial crisis is one factor driving greater investor involvement, but believes that investors themselves have changed in their level of capability.

“We’re seeing a higher level of competency among alternatives investors now – for instance, family

A greater independence in investing has meant a growing number of ‘club funds’ with fund managers either cut out of the equation altogether or seeing themselves very much dictated to.

Paul Wilkes, Group Partner at Collas Crill in Guernsey, believes the latter is more common.

“Typically a club fund is just a term for three or four investors coming together and employing a manager to invest on a deal-by-deal basis,” he explains.

“Because many investments are single asset, they aren’t classed as funds – they could be a joint venture between, say, three parties – so are very light in terms of regulation. We aren’t seeing a great deal of interest in club funds that are true, regulated funds, the appetite is a lot keener for unregulated single-asset structures offering economies of cost.

“Some of the bigger private equity wealth platforms are taking a more active role in managing funds but that is at the extreme of the market. Most investors are just allocating more carefully and using managers on a deal-by-deal basis, and then, if they prove their worth, the number and size of deals may increase.”

To some degree, there is a multi-tier system developing, with some investors still going in with existing managers in a traditional blind-pool fund but exercising more power, while others use their own know-how to take a very active role in the management process.

As Robins explains, the option really depends on what fits best with the investors. “In some cases you might still have 50 or so sophisticated investors in a fund with a third-party manager running its own defined strategy, but with a handful of key investors participating in an advisory committee whose views are taken on board by the manager. At the other extreme you might have, say, just three investors in a joint-venture arrangement with tight voting control, but with one having a more hands-on

▼

CLUBBING TOGETHER

www.blglobal.co.uk May/June 2015 45

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operational responsibility, who then takes a higher return in line with their additional management role.”

The type of investors looking for more control are predominantly family offices, institutional investors and sovereign wealth funds. And when it comes to the size of funds, assets held for investors in these structures can range from around £100 million to many billions.

As Paul Wilkes points out, there can be some very sizeable investments as clients build up trust with their fund manager over the years. “We know of one client who bought a significant stake in a European bank. In that particular instance, the client had built up a relationship with the manager over a number of years and as the trust developed, the deals got bigger and bigger, culminating in the bank.”

Outflows from blind-pool funds into more controlled funds is something that’s generally accepted, according to Wilkes, but since many of these structures wouldn’t be considered a fund, the assets under management wouldn’t be reported.

“It’s hard to be accurate, but I would suggest a ballpark figure for the number of controlled funds as a percentage of the market in the Channel Islands would be between one-fifth and one-third – and without doubt this is growing.”

We’re seeing a higher level of competency among investors now.

They’re no longer just handing the reins over to fund managers

DIFFERENT STROKES So what does this all mean for the Channel Islands, and is the offering different in Guernsey than in Jersey?

Graeme Paton, Head of Funds and Corporate Services at Minerva, points out that a very private fund (VPF) is one of a range of regulatory options available in Jersey, and it provides a highly flexible solution for small groups of co-investors.

“Versatility in the way VPFs can be structured and operated continues to attract interest from clients based in various jurisdictions around the world, and has made it one of the most popular fund structures we administer,” he says. “A VPF is usually closedended with a minimum subscription of £250,000 per investor, and formed either as a Jersey company, cell company, limited partnership or unit trust.

“However, this type of fund is only suitable where the total number of invitations made to investors doesn’t exceed 15, and where it’s organised on a private placement or private subscription basis, which means there can be no general marketing or public offering of the fund.”

Niamh Lalor, Partner in the Jersey funds team at Ogier, agrees with Paton that Jersey offers investors flexible options. “We’ve worked on a number of joint ventures for sovereign wealth funds looking to have more control over their investment strategy.

The Jersey regulatory regime is sufficiently flexible for very private structures to be set up quickly and cost effectively.”

In Guernsey, Truelove says there’s the opportunity to regulate structures that are considered funds, but frequently he sees clients setting up structures that aren’t funds at all – and if they aren’t funds, they aren’t regulated. “Under the Guernsey definition of a fund, a structure with either a single investor, or which acquires a single asset or has no external fund management, is not a fund,” he says.

Rather than being a problem, light-touch regulation is actually a benefit, as Ben Robins explains. “With retail funds there’s good reason for tighter regulation as retail investors often won’t have the resources to monitor the operation of the fund. But the investors

46 May/June 2015

we’re dealing with in private alternative funds are generally highly sophisticated and don’t need as much assistance with oversight. They can also rely on the support provided by independent Channel Island fund administrators watching over the managers and supporting an appropriate level of compliance outside the costly confines of AIFMD.” Robins believes the flexibility offered by privately held Channel lslands structures are a distinct advantage to the asset management industry. “It’s hard for new managers – who have perhaps left large investment houses to develop their own strategy – to attract money, especially for a classic blind-pool fund. But they can build up a track record with one or a small group of investors in a small fund or a deal-by-deal structure. It’s a great space to incubate new ideas. Say a new manager launches a VPF for 15 investors with €100 million cap – if it works well, there’s something to build on.”

Funds offering investors more control aren’t a fad, as individual and groups of investors around the globe increasingly look for new areas and jurisdictions to invest in on their terms. The appetite is growing to invest in more frontier territories such as African private equity, Latin American private equity, infrastructure, energy, and fintech funds.

In terms of where the money will come from to invest in these ideas via the Channel Islands, Robins says the volume business in recent years has come from Asia. “There’s been a huge increase in wealth in Asia – many investors are looking to diversify their investments and are finding good opportunities in the west. A Malaysian pension fund has formed part of a small consortium funding the Battersea Power Station development project, which is structured and administered using Jersey holding vehicles.”

He concludes: ”This is exactly the sort of deal, through Jersey structures, that we hope to see more of, easing the flow of cross-border investment. Ten years ago a deal like this would have been rare.” n DAVID BURROWS is a freelance financial writer

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Retirement: if you stop working, make sure your doesn’t

Since the global financial crisis, investment habits have been changing. From high-networths to everyday pension holders, people are waking up to the need for greater portfolio diversification, as Keith Heddle, Managing Director, Investments at Stanley Gibbons, explains THE UK HAS been undergoing

a pensions revolution. On 6 April, around four million over-55s woke up to new pension freedoms and many started to take cash lump sums out of their pensions. In Jersey and Guernsey we already had some of these freedoms. Our Retirement Annuity Trust Schemes (RATS) allow you to take out 30 per cent of the value of your fund tax-free when you retire. They also allow a wider range of investment options than traditional pension plans.

Without a doubt, the main lesson learnt from the financial crisis has been to ensure your investments are diversified. In 2008, many over-55s watched in horror as something like £150bn was wiped off moneypurchase pension schemes. The

48 May/June 2015

stock market has now recovered, but there are many rumblings about where the markets are going to go over the next few years. Shares can be a volatile ride and getting the timing wrong can hurt.

A recent Barclays study suggested that higher interest rates around the world are likely. This sounds like good news for savers, and in one sense it is – it will mean people will shift their money into savings accounts and away from equity investments. But this could in turn mean stock markets have reached their peak, and so have only one way to go. In part, this shift is due to the ageing population and higher unemployment. With fewer people saving for their retirement in what’s seen as more volatile financial markets,

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those markets will, in turn, suffer.

There’s no telling if Barclays are right and, if so, what effect this will have on asset prices, but it’s another salutary warning that we should all ensure our pension pots are not too narrowly invested.

Meanwhile, Henderson Global Investors recently issued a white paper on the rapid growth of multi-asset investing.

Based on findings by CoreData Research, there has been a huge increase in money invested in multi-asset products over the last 10 years, from £21.5bn to £126.5bn. It also found there’s been a significant change in the make-up of these multi-asset funds, with a move away from stocks and bonds. Our ageing population wants incomeproducing products, so while stocks and bonds are important, their domination has ended.

They’re not the only ones thinking that way either. In their latest survey of investment professionals, Baring Asset Management found advisers had become increasingly favourable towards multi-asset products to balance risk.

A STRONG HISTORY One thing you shouldn’t do is take too many risks with your money – especially if you’re already retired, or close to it. What you do want is an investment that has historically outpaced inflation and that offers low volatility and steady growth. You might also like to own something tangible – not just a paper certificate.

The prestige collectible market has been receiving a lot of attention in recent years as investors saw the low correlation with mainstream asset classes. Investing in items such as rare, investment-grade

stamps and coins can provide a buffer against volatility as well as a hedge against inflation.

There aren’t going to be any more Penny Blacks produced or 1933 Silver Pennies – these are a finite resource.

The 2015 Knight Frank Wealth Report states that the super rich are continuing to turn to collectible assets, with around 61 per cent of ultrahigh-net-worth respondents saying they are becoming more interested in them.

The report showed coins achieved double-digit growth in 2014, with gains of 13 per cent, bringing 10-year gains to a staggering 232 per cent. While 2014 saw British stamps grow by just three per cent (still more than most savings accounts), it also saw a new world record for a sale of a stamp achieved at $9.48 million; and stamps also notched up a 195 per cent rise over a 10-year period.

The other important point of note with the Knight Frank Luxury Investments Index is its volatility ratings. The most volatile asset over the last decade has been art. By contrast, rare coin and stamp prices have been less volatile than the index as a whole over the 10-year period, providing stability as well as growth.

Another obvious warning when it comes to making big investment decisions is to ensure you go to trusted sources. Stanley Gibbons is not an independent financial adviser, but we do know our stamps and coins. We are the world’s longest established rare stamp merchant, dating back to 1856. Through Baldwins

& Sons, we also have a 142-year numismatic (coin) business. What we don’t know about the market for rare stamps and coins isn’t worth knowing.

In fact we’re so confident in our ‘stock-picking’, that all our investment products carry a Lifetime Guarantee of Authenticity. Not only that, but we charge no management, valuation or insurance and storage fees for the lifetime of your investment with us. We only charge a commission on exit and then only on any capital growth, not the invested sum – which aligns our interests.

If you live in Guernsey you can include investment grade stamps and coins in your RATS pension. Unfortunately Jersey hasn’t yet widened its list of investment options, but there are still many other investment options open to you. Whatever you decide, the most important thing is to make sure your money keeps working for you once you stop the nine-to-five. n

coins achieved gains of 13 per cent in 2014, bringing 10-year gains to a staggering 232 per cent

INVEST THROUGH STANLEY GIBBONS

Stanley Gibbons is audited regularly by external independent philatelic experts – our experience and reputation mean we can provide a Lifetime Guarantee of Authenticity. Stanley Gibbons’ 159-year heritage means our brand is globally recognised for its quality and expertise – we are the perfect investment partners.

Here are our key investment products: The Flexible Trading Portfolio is our most popular product. It gives several thousand investors the freedom and flexibility to sell individual items (or your entire portfolio) or top up whenever you like.

Your share of profit (between 30 and 80 per cent) is determined by how soon you sell after you buy – the later this is, the higher the percentage.

The Premium Portfolio Builder enables you to build a rare-stamp portfolio with as little as a £10,000 initial payment plus quarterly payments of £1,000. Many clients use this as a regular savings plan for longer term investing, such as pensions or legacy planning.

For more information, visit sginvest.co.uk/bl or call +44 1534 766711

www.blglobal.co.uk May/June 2015 49

HIGH FLYERS Collas Crill brings together some of the brightest legal minds with a shared vision to deliver seamless solutions across the Channel Islands and the world.

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What next for crowdfunding? crowdfunding is booming, but is it sustainable?

Just what new markets can it tap? and what happens if the banks decide to get involved?

â–ź

Words: Dave Waller

May/June 2015 51

Global crowdfunding: the numbers predicted to raise

£34.4bn 167%

52 May/June 2015

2009

2010

2011

2012

$6.1bn

$1.47bn

Crowdfunding and peer-to-peer lending are now regarded as a truly credible source of alternative financing. According to a report by Cambridge University and Nesta, it’s actually the fastest-growing such source in the UK, growing by 410 per cent between 2012 and 2014, from £267 million to £1.74bn. Some 2,500 people attended this year’s LendIt conference for crowdfunding and peer-to-peer lending in New York.

That’s up from a mere 350 last year.

But the popularity of such models shouldn’t be a surprise given the state of the credit landscape following the financial crisis. Banks have retrenched, making credit much more difficult to come by. Even companies that would have previously easily secured loans may now struggle.

$899m

WILL THE BANKS GET INVOLVED?

$2.7bn

$16.2bn

increase on previous year

$559m

▼

SIMON WEST, DIRECTOR of Tomb Raider, has taken a new tack with his latest film, Salty. He’s using SyndicateRoom, the equity crowdfunding platform, to offer investors a share of the film’s returns. It’s been a smash hit already – in April the total pledged had reached £2.24 million, making it the most successful UK crowdfunding project ever.

While West’s idea to offer members of the public a share of the film’s returns is a new one – yes, that came as a surprise to us at BL as well – the wider crowdfunding model certainly isn’t. The first dedicated crowdfunding platform, ArtistShare, launched back in 2001, and was designed to help artists go direct to fans to fund projects. It was a revolution in democratising funding. But the model really took off with Indiegogo in 2008 and Kickstarter a year later. It’s now rapidly becoming a mainstream funding option for business too – take UK equity platform Crowdcube, which has raised more than £55 million for more than 185 small businesses.

Crowdfunding is a simple model: you pick a platform and create a campaign explaining exactly what you want to fund – a project, product or business – and letting potential investors know what’s in it for them. On sites like Kickstarter this will be a set of rewards related to the product, like a free ticket, say, or a product ahead of its official release. On others like Seedrs or Crowdcube, funders’ money buys them equity in the business.

Crowdfunding’s cousin, peer-to-peer lending, operates in a similar way, but instead of coming together for rewards or a slice of equity from a project or business, lenders pool together to offer a loan, and get returns in the form of interest – the same as any regular loan. With both models, it’s a matter of pressing ‘go’ and waiting for the cash to roll in – if you’ve done your homework, that is.

With crowdfunding enjoying massive growth – check out our graphic to see just how massive – this all begs the question: what next?

2013

2014

2015

www.blglobal.co.uk

Top five crowdfunding categories in 2014 Business and entrepreneurship

($6.7bn)

Social causes

($3.06bn) Films and performing arts

($1.97bn) Real estate

($1.01bn) Music and recording arts

Source: Massolution 2015CF

($736m)

And this has naturally presented a glaring opportunity to other new players.

“The credit market has been significantly disrupted by prolonged record low interest rates, and new players, such as specialist banks, pension funds and peer-to-peer lenders, are becoming much more aggressive in the market,” says Ben Thomason, Director of Asset Leverage Consultants in Jersey.

One peer-lending platform rivalling the banks is Funding Circle, which launched in the UK in 2010 with the stated aim to revolutionise ‘the outdated banking system and secure a better deal for everyone’. It has so far provided business loans of over £600 million.

But Funding Circle isn’t alone – plenty of other platforms are moving in to crowd the space, and it’s not just individuals who are fronting the cash. “This year is a bit of a turning point,” says David BradleyWard, who founded Ablrate, a peer-lending platform that provides asset finance to businesses. “With the wave of institutional money coming into the marketplace now, it’s difficult for the banks to ignore.”

These new platforms have one other key advantage over banks – speed. They seem to be free of the traditionally burdensome processes that weigh the old guard down.

“We act within two weeks,” says Andy Whelan, Co-founder of Sancus, a direct lender based in Jersey. “A bank will take months to tell you that no, they’re not doing it. That’s very frustrating for borrowers, so they don’t mind paying higher rates [from nine per cent] to ensure the deal is done – and done quickly.”

Yet the incursion of these new players into the banks’ territory doesn’t necessarily mean competition. While some platforms may wind up applying for banking licenses in the future to extend their operations towards deposit-taking, others will be absorbed by the banks, which are already in a position to handle the heavier work while satisfying the regulator.

But there’s also the option to collaborate.

“We can work hand-in-hand rather than compete,” says Brian Bartaby, Founder of property funding platform Proplend. “Banks have their own problems, and they need to recapitalise their balance sheets. They want to wind their existing loan books down, and we give them a way to offload those loans and keep their existing customers.”

Whelan cites a similar experience. Sancus’s loans provide the bridge to allow existing companies to get through a transition period, but once that risky period is complete, banks will be happy to refinance.

So maybe it’s not such the battleground it may appear to be – yet.

“Banks are definitely trying to be supportive,” says Whelan. “We’re not a threat yet. Peer-to-peer and crowdfunding still only accounts for less than one per cent of global lending, and the government has

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been telling the banks that loans they decline should be passed to SME lending platforms. Hence you get the British Business Bank funds heading to us, and we lend it to SMEs. That said, we will become a threat – we can get approval for a personal loan in 24 or 48 hours. At the consumer end, these platforms will be worth £40bn in the next five years.”

Food for thought for the traditional banking model, no doubt.

CROWDFUNDING GOES NICHE The most famous crowdfunding platforms have a very wide reach. Launch a product on Kickstarter, for example, and a business is likely to be competing for attention with anything from antler crafts to something described as ‘an evening-length dance by Michelle Boule’.

However, niche operators are now setting up with a more focused offering.

FundingKnight, for example, specialises in property bridging and renewable energy loans. Proplend offers people five to 10 per cent interest a year to lend directly to the owners of commercial property.

“Real estate loan syndication has been around for years, but our model allows the man in the street to get involved in what’s always been an institutional asset class,” says Bartaby. “People aren’t making much in their bank accounts, and they’re desperately seeking yield, so lending like this is appealing. Those seeking loans benefit because they’d otherwise have to go to a high-street bank, and those loans aren’t around any more.”

Meanwhile Ablrate has set itself up as the only platform offering investment in leases, and specialising in aviation finance for regional airlines.

“Raising finance for a major airliner is straightforward, but when you’re financing

With crowdfunding and peer-to-peer lending, it’s a matter of pressing ‘go’ and waiting for the cash to roll in – if you’ve done your homework, that is

54 May/June 2015

a 50-seater turbo prop in Tahiti the market for finance is a little bit thinner,” says Ablrate’s Bradley-Ward. “Banks in the regional aircraft sector have pulled out because of Basel III, and some of them haven’t come back. If they have, they’re now looking at lower loans-to-value. So it’s all opening up the market to investors and institutions who’d never thought of the aircraft industry before.”

It’s reasonable to assume niche operators have a better understanding of the markets they operate in than a more general lender, so can make better judgments on which investments are more solid. And this is essential when you consider the sums that some investors are putting in.

“We don’t cater for retail clients investing £1,000 or £2,000,” says Whelan.

“Our co-lenders are high-net-worth individuals, family offices and trust structures. These are sophisticated high-value clients. The minimum they can lend is £100,000, and we have some putting £1 million to £3 million into loans, or spreading £2 million across three or four loans with us. The largest facility we provided was £30 million.”

DO IT YOURSELF There are already more than 700 crowdfunding platforms out there. Still, for some companies that level of choice isn’t enough. Rather than having to put up with the potentially limiting format of established crowdfunding platforms – or having to stump up the fees they take for using their service – many are looking to launch their own instead.

That’s exactly how Ablrate came about.

“We looked at using other platforms, but none could do what we wanted,” says Bradley-Ward, who launched the operation last July. “It’s too niche. In the end we decided to go out and design and build a platform ourselves.”

While this may seem the kind of thing only larger firms could do, the technology is in fact open to anyone. Just a little research online will throw up a proliferation of cheap and easy tools and services to empower fundraisers to bypass the Kickstarters and Indiegogos.

Some enable people to create standalone campaigns on their own websites – meaning no fees, maintaining a common branding and the chance to give the user the exact experience you want to give them. Look at WordPress plugins like IgnitionDeck and Astoundify.

Others empower people and organisations to ‘be their own Kickstarter’, where they can host other people’s crowdfunding campaigns and collect the commissions themselves. These include services like Crowdhoster, Invested.in and Mimoona. GroundBreaker provides custom

410%

UK Crowdfunding and p2p lending growth from 2012 to 2014

“p2p and crowdfunding still only accounts for less than one per cent of global lending”

technology, plus guidance on legal matters, strategy, deal structure, marketing, and business models.

If by now you’re thinking a crowdfunding site would be a good idea if only you could afford it, then you can always try crowdfunding to fund the idea.

That’s not even a joke: Seedrs did just that back in 2013, used its own platform to raise money for itself, and raised a cool £1 million in a single day.

When all’s said and done, it looks as if crowdfunding is only going to keep growing in the near future. But like most things in this brave new financial world, it will need to keep adapting to survive – something it seems to be doing quite well for the time being. n DAVE WALLER is a freelance business writer

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A legal snapshot of Jersey Mason Birbeck, Head of the Corporate, Commercial and Trust team at Parslows, reviews some of the key legal developments that will affect Jersey’s finance industry this year IT SEEMS QUITE appropriate that as BL launches with a brand new design, and as a new starter myself, having recently joined Parslows, that I take this chance to look at how Jersey’s finance industry is being affected by the current legislative landscape.

It’s difficult to avoid coming to the conclusion that regulation and compliance will figure large in 2015. Proposals to revise the Money Laundering (Jersey) Order 2008 and the Jersey Financial Services Commission’s (JFSC) AML/ CFT handbook followed hot on the heels of Moneyval’s evaluation visit to Jersey in January. That month also saw publication of the final text of the Fourth Anti-Money Laundering Directive agreed by the Council of Ministers and the EU Parliament.

This year will also see developments in local regulatory investigation and enforcement. In July 2015, a year on from the introduction of the legislation that established Jersey’s Office of the Financial Services Ombudsman, the recently appointed Douglas Melville (currently head of Canada’s Ombudsman for Banking Services and

56 May/June 2015

Investments) will take on the role of Principal Ombudsman.

The Financial Ombudsman’s office will provide a mechanism to deal with complaints and resolve disputes involving local financial services providers and their customers, without recourse to the courts. The Jersey legislation provides for close cooperation with the corresponding ombudsman scheme Guernsey has introduced, and Melville’s role will encompass all the Channel Islands, thus continuing the trend of closer working between the islands on matters of law and regulation that affect both.

The consensus appears to be that the introduction of a financial ombudsman is a welcome move, strengthening the perception of Jersey as a leading international finance jurisdiction.

POWER AND FLEXIBILITY Last year saw a number of revisions to the JFSC’s Codes of Practice for regulated businesses. Following on from that, the Financial Services Commission (Amendment No. 6) (Jersey) Law is expected to come into force this year. It will amend Jersey’s regulatory

legislation, so as to add to the JFSC’s existing enforcement powers the ability to impose civil financial penalties on regulated businesses for serious contraventions of the Codes of Practice.

It’s anticipated that the new law will deter contravention of the Codes, provide the JFSC with greater flexibility in dealing with any breaches that occur, and encourage prompt remediation of those breaches.

The new law is also likely to be welcomed by compliant businesses on the basis that they will no longer have to subsidise, through the annual licence fees paid to the JFSC, the full cost of regulatory action taken against errant service providers.

The ability to add financial sanctions to the JFSC’s arsenal brings Jersey into line with IMF and FATF recommendations, and addresses concerns expressed that, in this regard, Jersey had fallen behind other jurisdictions, such as the UK and Guernsey, whose financial services regulators already possess powers to impose fines.

It’s difficult to predict the extent to which the trend of increased regulatory and compliance-based legislation will continue through 2015 and beyond. The next significant area of focus, though, may well be the UK government’s drive for global, or at least Europe-

wide, adoption of publicly accessible company registers.

Both of the UK’s main political parties have championed the proposal. In the run up to the general election, Ed Miliband served notice on the British Crown Dependencies that they would have a deadline of six months to “open up their books” should Labour take office.

Time will tell if that impetus remains following the election.

If so, much will depend on whether the new UK government, in whichever form it takes, accepts Jersey’s stance on the matter. The island’s position is that it has recorded company beneficial ownership information since 1999, and makes that accessible to foreign fiscal and investigative authorities – and, as such, its policy is already in line with FATF recommendations.

While we in the Channel Islands may only be bystanders, there’s no doubt local government and industry will be keeping a close eye on UK political machinations over the coming months. n

WANT TO KNOW MORE?

For more information on the matters covered in this article, contact Mason Birbeck on mason.birbeck@parslowsjersey.com or call +44 1534 630530 www.parslowsjersey.com

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Finance

As Guernsey and Jersey await the results of their Moneyval anti-money laundering assessments, some industry insiders have been left wondering if the examining body has shifted the goalposts

When the AML

Words: Harry McRandle IT WOULD BE understandable if the Channel Islands were complacent about the outcomes of external reviews of their financial regulations, as every examination conducted over the years has concluded they’re

among the best-regulated places on the planet.

The first major review was carried out by Whitehall civil servant Andrew Edwards in the late 1990s and positively crowed about standards in place to fight crime and safeguard assets. Others from the OECD, the IMF and even the G8 have all concluded that the islands were top of the tree

compared to competitor centres around the globe.

So, many will expect a similar outcome when the results are released later this year of an examination being conducted by an organisation named Moneyval, the independent anti-money laundering body within the Council of Europe. However, judging by what key industry

figures are picking up, that may not be the case this time.

Since the last, excellent IMF assessments of both islands about five years ago, new measures have been put in place to further improve defences against money laundering and to counter terrorist financing.

But questions have been asked as to whether the international community and Moneyval may

www.blglobal.co.uk May/June 2015 57

â–ź

inspectors came to town

▼

have moved the goalposts somewhat in how a jurisdiction’s performance is now being measured.

The Moneyval approach this time has been not only to examine the islands’ AML/CFT defences based on what’s written in their respective statute books, but also how rules and codes of practice are actually being applied in practice. That is a change in emphasis from previous assessments that looked primarily at the measures in place designed to deter the use of international finance centres for nefarious purposes.

Guernsey’s under the microscope first when the inspection team presents its report to the Moneyval membership at a plenary session in September. Jersey’s review could be done at the same session but is more likely to take place in December.

UNDER SCRUTINY

It may be that an ‘A*’ is no longer available, but that a ‘B’ is a good result in comparison to other centres

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Contents of the pre-publication draft reports are expected to be the subject of intense negotiation between the local authorities and the Moneyval experts, especially over how the Moneyval team has interpreted certain processes and actions.

The Director-General of the Jersey Financial Services Commission, John Harris, says a lot of time was spent talking to the inspectors about “definitions, understandings and meanings”. “But I expect there will still be imperfect understanding about certain things when the report is published,” he says.

As a result, he suspects that “previous excellent A* grades”

won’t be handed out when the verdicts on Guernsey and Jersey are given this time.

But Harris believes the international community needs to define what a good outcome looks like in drawing conclusions from assessments.

“It may be that an ‘A*’ is no longer available, but that a ‘B’ is a good result in comparison to other centres,” he says.

Guernsey’s regulator was more circumspect and declined to publicly answer BL’s questions on the Moneyval review, as it’s still ongoing.

Regulatory expert Sandra Lawrence, Head of Compliance at investment management firm Ravenscroft in Guernsey, says we should expect that the Moneyval inspectors will more than likely have suggestions for improvements in the regimes practised in the islands.

“A good regulator will rarely leave without making some comment after an inspection, but I don’t believe that means we are doing a bad job or falling behind the curve.”

Harris points out that the latest Moneyval assessment was part of an ongoing process that will see heightened future scrutiny of international finance centres, and there’s already a programme in place for an even more far-reaching round of assessments in the years ahead.

In this latest inspection round, it seems that the

international regulators want greater effort made by finance centres to pursue criminality – including tax evasion – even when that activity has taken place beyond their borders.

Therefore, it may not be sufficient in future for Channel Islands authorities to merely pass information to their counterparts where the alleged perpetrators reside.

“Moneyval’s point is that, in these circumstances, you – Jersey – should be pursuing that individual as far as you possibly can, independent of any cooperation elsewhere,” explains Harris.

If this was to become the internationally accepted norm, it would be a huge departure from current practice and could have far-reaching consequences.

“Such an approach would be time-consuming, expensive and uncertain. There may need to be a reality check about how far jurisdictions can actually successfully push cases autonomously,” says Harris.

Experienced funds and corporate finance lawyer Marcus Leese, a Partner at Ogier in Guernsey, questions the Moneyval approach. “Do they truly think we should be trying to act where the local authorities have decided not to?

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Moneyval explained

It’s unrealistic to expect us to be experts in the law of every single place that we do business with,” he states.

Meanwhile, it’s also possible that the Moneyval assessors may question the effectiveness of the Channel Islands regimes on the basis that not enough prosecutions have been pursued. They may highlight what Harris describes as a ‘numerical mismatch’ between the relatively small numbers of prosecutions compared to the increasing number of suspicious activity reports generated on an annual basis.

But Harris contends that a low rate of prosecutions could simply indicate that the system in place was effective in deterring criminals from using a jurisdiction in the first place.

“It’s not necessarily the case that a high level of suspicious activity reports and a low level of prosecutions are evidence of an ineffective centre. In fact, you could argue that it shows that your defences actually work,” he says.

Harris defends Jersey’s responses and says that in cases where sufficient evidence existed, the island had pursued prosecutions and assisted overseas authorities when asked to do so. He cites major money laundering probes, such as the Bhojwani case, as evidence of Jersey’s commitment to

bringing criminals to justice.

Away from the core elements of what Moneyval was actually assessing, industry sources were surprised about some of the questions raised by the inspection team. One area covered was how the islands assess the validity of the registers of beneficial ownership held by professional service providers. It remains to be seen whether this line of questioning is a precursor to some sort of future action where the Crown Dependencies are forced to allow public access to information held on beneficial ownership – as Labour leader Ed Miliband said he would make them do if he comes to power.

But Marcus Leese says such a move would be “all for window dressing and appearance and have no impact on AML/CFT or on tax evasion. The fully licensed and regulated service providers in the Crown Dependencies are already required to obtain, update and retain beneficial ownership information and to disclose it to the authorities when required to do so,” he says.

One thing is for certain: with the Moneyval reports due later this year, both islands are sure to be watching the horizon with interest. n

Moneyval – or the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, to give it its full moniker – was set up by the Committee of [Finance] Ministers of the Council of Europe in 2010, and acts as an independent monitoring mechanism on anti-money laundering.

Its aim is to ensure member states have effective systems in place to counter money laundering and terrorist financing. It’s also charged with ensuring states comply with wider relevant international standards in these fields.

These include the 49 recommendations of the Financial Action Task Force (FATF), as well as various other international treaties.

Moneyval assesses compliance with standards in the legal, financial and law enforcement sectors through a peer-review process of mutual evaluations.

Moneyval is one of eight regional bodies set up to disseminate the FATF international standards throughout the world. The regional bodies highlight schemes used by criminals for money laundering and terrorist financing, and work to ensure the private sector, oversight and regulatory bodies and law enforcement are using best practice to combat such threats.

Moneyval will not only assess the Channel Islands’ compliance with the FATF standards, but will examine submissions by other territories of their experience of cooperation with the Crown Dependencies.

The Moneyval teams visited Guernsey in October last year and Jersey in January this year. Assessors met the insular authorities, finance firms and associations as well as some non-finance contributors. The meetings focused on all areas of the FATF standards but particularly on AML/CFT risks in specific sectors, customer due diligence and reporting.

The results will be discussed at a plenary meeting of all 30 Moneyval member states, observers and its secretariat. For Guernsey this will be in September and for Jersey it is likely to be in December.

HARRY McRANDLE is a freelance business writer

www.blglobal.co.uk May/June 2015 59

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Advertising feature

What do accountants know about beer?

Quite a lot, if you’re talking about mergers and acquisitions, as Ravi Majithia, Advisory Assistant Manager at KPMG Channel Islands, explains BRITAIN’S BREWING INDUSTRY is enjoying something of a renaissance right now.

According to CAMRA, the number of UK breweries has grown more than 10 per cent for the last two years running, and sales of ale have grown four per cent over the same period.

British beer tastes are changing too. A sizeable shift in demand for stronger-tasting ale has inspired some traditional breweries to produce the most interesting and intense flavours the market has tasted in decades.

Inevitably, old-school traditional pubs, clad with studded leather and oak, will continue to be a cornerstone of British heritage.

However, innovation, creativity and variety are shaping the ale revolution as it continues to grow – at the expense of lager, which has dominated the UK beer market for nearly 50 years.

The team at the award-winning Liberation Group has a deep understanding of the market and has skilfully ridden the crest of this new wave of ale appreciation, achieving a significant share of the Channel Islands’ market. But where do you go when your market is subject to geographical limitations? Liberation’s answer has been to look to acquisitions in the UK. They recently turned to KPMG’s Deal Advisory team for their acquisition of Butcombe Brewery, one of the West Country’s biggest independent breweries, consisting of a 19-strong pub estate and a 40,000 barrel brewing capacity – 10 times Liberation’s current barrelage.

Strategically focused businesses have strong unique selling points that they can replicate with ease. For Liberation this means brand congruence, enhanced brewing capacity and a pub estate with enough UK momentum to launch their

hugely successful tenanted pub management style.

Working with Liberation Group was a great opportunity for KPMG’s on-island specialists to provide a piece of valueadding analysis and help obtain acquisition finance from lenders outside the financial services sector. Working with similarly acquisitive clients is something KPMG is replicating across a number of sectors in the islands as there appears to be a renaissance in M&A activity.

WHY NOT OUTSOURCE YOUR M&A ACTIVITY? If your business is innovative, acquisitive and possibly even thinking about seeking out opportunities to expand into new territories, we’d encourage you to seize the moment. You could use your knowledge of regulatory affairs in a stable, welladvanced economy and apply it to overseas opportunities.

Whether you’re currently looking at potential market opportunities, or have found the ideal target locally or abroad, the question is: where do you start? As with any acquisition, the key drivers of success amount to understanding the purpose of the acquisition and its synergistic value before executing the deal. But how do you decide whether your management team has the time and resources to dedicate to the deal process? Or beyond this, how do you perform your due diligence over the target’s performance?

You may think this due diligence can be done internally, but you might be

surprised by the range of issues identified when engaging with an independent adviser.

At KPMG, we take a fresh approach, focusing on key value drivers in critical commercial areas. We have an easily accessible network of international specialists and a reputation for executing deals in many sectors, from breweries and pubs to cutting-edge technology businesses.

Carrying out due diligence will not only help you sleep better at night, but may also help you to obtain a better price, understand the potential target, identify any underlying issues and weigh up any integration challenges.

Equally you will probably appreciate that island economies are infamous for a limited availability of data, but our proprietary data sets are growing rapidly, helping us unlock significant value. This insightful information, coupled with our breadth of corporate finance skills, can substantially improve decision-making when leveraged with our network of experience on other transactions executed in the Channel Islands.

As advisers, we understand that your management team may suffer from deal fatigue. Sometimes the sheer amount of emotional time and energy invested in a deal makes it harder to walk away. You may even become psychologically invested, believing the deal is more positive or valuable than it really is. What you need in such a case is the outside perspective of an adviser – so let us help you to remove those beer goggles and unlock the true value of the acquisition. n

FIND OUT MORE

To find out more about how KPMG Channel Islands can help with your growth plans, contact Mark Ashburn (Jersey) on +44 1534 608418, mashburn@kpmg.com, or Gavin Niven (Guernsey) on +44 1481 755765, gavinniven@kpmg.com

www.blglobal.co.uk May/June 2015 61

Advertising feature

WE’VE ALL BEEN there. Waiting for that pack of

Daniel Le Blancq, Director of Elian Due Diligence Services, explains how the firm’s new ID Check app is transforming the world of client due diligence

certified true copy documents to arrive from the client, knowing you can’t get the job done without it. We’ve all been on the other side of the fence too – customers in our own right, asked by our bank, broker, lawyer or estate agent to provide certified true copies so they can satisfy their client due diligence (CDD) requirements.

The best way to conduct due diligence on someone is to meet them face-to-face, have a conversation and check their ID. However, most organisations also need to deal with engagements where we can’t or don’t meet the client upfront.

AML regulations highlight the increased risk of identity fraud in these situations and demand that we use enhanced due diligence measures to mitigate it. And that’s the point of certified true copies: as an additional check to help combat the elevated risk of identity fraud in non-face-to-face relationships.

A NEW WAY OF THINKING Certified true copies represent just one type of additional check in the toolbox. AML regulations clearly spell this out with a number of equally acceptable alternatives listed for good measure.

Online databases and directories provide a great way of obtaining additional information, cross-checking identity elements and meeting that first alternative. These resources are cheap and effective if your client base is in one jurisdiction. However, the overheads rise inexorably and the quality of the available data falls the wider your client base is spread across the globe.

In a modern world awash with cloud computing, satellite networks, Google Maps and mobile technology, there must be a quicker, cheaper, better way.

One groundbreaking solution comes not from the tech firms of Silicon Valley, but here in the Channel Islands.

With around 10,000 CDD files to process each year to meet its own AML/ CFT obligations, Elian looked for a paperless solution and couldn’t find one that worked for its global client base. So we created ID Check and it’s now available as a service to other regulated firms.

Introducing the ID Check app

ID CHECK FROM ELIAN

Firms signing up for the ID Check service get a fully branded mobile app that’s available in the three main app stores (Apple, Google Play and Windows). Clients download the free app to their phone, submit all of their identity information and supporting verification from anywhere. It takes just a few minutes and requires the user to take photos of their identity documents, tap in some basic identity data, and pay £1 (or currency equivalent) using their credit/debit card.

It’s so simple, no wonder Elian’s clients love it, from fund managers in Manhattan to 86-year-old women in the Amazon jungle.

Having used the ID Check app to upload their information, data is encrypted and transmitted to the ID Check servers, where it’s assembled into a singlepage verification report and subjected to a suite of checks by Elian’s team of specialist CDD staff. This includes facial recognition comparison, data crosschecks, geo-location data comparison, and payment confirmation on the credit/debit card transaction. These checks squarely address two key alternative enhanced due diligence measures suggested by AML regulations.

Finally, the completed report is deposited in a secure online portal for the client firm to use as a truly paperless alternative to certified true copies.

As technology continues to transform our everyday lives, pressure builds for regulated firms to find ways to make things quicker, easier and cheaper for the customer. And ID Check is a clear step in that direction. n

FIND OUT MORE

To learn more about the ID Check app, please contact Elian Director Dan Le Blancq on daniel.leblancq@elian.com or call +44 1534 504000

62 May/June 2015

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BL technology

Technology

Banks are notoriously bad when it comes to making the most of the data they hold on customers, but do we really want them using it in the same way as social media firms and search engines?

What if your bank was more like ?

Words: Dave Waller

WE BET YOU’VE noticed the (not so) subtle changes to advertising lately, as we come to use the internet for more and more everyday tasks. An example? If you go to a DIY website to have a look at pedal bins these days, every website you visit for the next month will be pasted in adverts for pedal bins. And it doesn’t even matter if you already bought one – you’ve got a facefull of pedal bins for the foreseeable.

This is of course just a tiny, if peculiar, facet of the online revolution. Internet giants like Google, Apple, Amazon and Facebook have been collecting data on

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Bank account

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pretty much every interaction we have, and it’s enabled them to transform how the online world interconnects.

It’s also allowed each company to transform itself beyond recognition from how it started out. Google was once just a search engine, now it’s rolling out robots; Facebook was a way to stay in touch with mates, now it’s a publishing platform; Apple went from computers to music publishing and cars; Amazon was a book store, and now it’s a marketplace for anything – including pedal bins. These forward-looking companies have a combined market cap of over $1 trillion, and they’re continuing to transform how we live.

But there’s one type of organisation that’s sitting on data that may be far more valuable than anyone else’s – your bank. Think about it. Banks are no longer just a safe house to stash our money. By tracking card transactions and direct debits they happen to have a record of everything we buy and where we’ve bought it – not only online but in the physical world too.

They probably know more about us than we do.

Logic suggests banks should be using that data to revolutionise banking the same way Google and Facebook have transformed advertising. All in the name of giving us a better service, of course.

The main problem? Banks are notoriously rubbish when it comes to using data. “Banks have more data than they know what to do with,” says Matt Gorman, COO at Standard Bank. “But they’re immature with it – they don’t really use it as an advantage tool. It’s more about security, keeping things secret, than turning it round and using it to improve clients’ lives.”

Of course what comes naturally to a tech firm doesn’t for a bank. Fujitsu, the IT services provider,

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says more than a third of banks still buy data on clients from third parties because it’s too hard to extract anything useful from their own systems – much of which still takes the form of a paper trail.

But there are other reasons why banks have been slow to change themselves. “The banking sector has always been highly regulated, so it’s been hard to enter or to disrupt,” says Marc Beavan, Director at C5 Alliance. “And as customers are locked into the banking model, banks haven’t needed to change.

They’re not innovative or used to taking risks. Hence banks are a long way away from becoming properly data-driven like Google or Facebook. Some are now starting to look more at behavioural stuff, but they’re miles behind.”

GET WITH THE PROGRAMME Banks may not have the luxury of lagging for much longer. Supermarkets have already shaken their hold on the credit card market, and the likes of PayPal, Google Pay and Apple Pay are now transforming how we pay for things. Meanwhile people are demanding instant gratification when applying for loans, rather than having to endure needless weeks waiting for an approval. Then there’s the rise of Generation Y who are demanding a greater social media and mobile element to banking. The bottom line is this: if banks don’t change, they may find themselves locked out and looking for handouts.

So what would this transformation look like? For starters, it’s about making it easier to manage your wealth as a whole – collating that data from your investment portfolio, your savings, mortgages and loans into one place, and using their information to link you to products in countries you’re travelling to, with online and mobile applications. There are also potential benefits to ‘know your customer’ (KYC) checks. Banks can share your details more easily from

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the Jersey bank to, say, the Nigeria branch ahead of a trip, reducing the hassle of getting access to your affairs.

But it gets more interesting. Barclays is among the first UK bank to introduce social media to transactions in response to changing customer needs. Its customers can now transact with individuals and small businesses through Twitter. Meanwhile, data could lead to banks and retailers giving discounts – if your bank spots that you’re a regular shopper at Starbucks, it could organise a discount at Starbucks as one of its customers. Or something more akin to Amazon, which uses complex algorithms to suggest what your next purchase could be.

“Why not do that with investments?” asks Gorman.

“We can identify what people like you – with similar earnings and family circumstances – are doing with investments, savings and purchases. We have that personal client information, so it’s about using it in the right way. It’s about making life easier for people, and the first bank to do so would have a massive competitive advantage.”

STUCK AT THE START LINE Let’s be honest – this fare doesn’t sound typical of your HSBCs or NatWests. And true enough it may not be them leading this change. Most people still see banks as behemoth structures that are a secure place to put your money and handle your investments. You don’t necessarily want them interfering with your coffee intake, even if it is to give discounts.

Then there’s the issue of trust. People are shaky enough about massive organisations using their data, with everyone from Facebook to the GCHQ coming under fire for dubious behaviour. The public really don’t want banks – whose trustworthiness took a nosedive after the credit crisis – to wade into all that too. What if they started linking up to Facebook so they knew who you hung out with, and used that to judge whether or not to give you a loan to start your

business? Banks don’t do that – well, currently at least – but they could.

“It’d be a PR disaster waiting to happen if banks start exploiting data too much,” says Beavan. “People worry about Amazon, but the majority would get quite freaked out if they knew how much data banks had.”

Then there’s regulation. Banks need to ensure security is absolutely up to par, especially with transactions across borders. And this only gets more difficult as we rely more on technology. Sony learned all about that when its emails were hacked in the cloud.

“The regulatory landscape and security are two of the biggest issues,” says Gorman. “Of course, the bank that gets that right will have the advantage.”

So it seems the big traditional banks are hamstrung from the start. If they’re not leading the charge, who will? The answer may not be to anyone’s liking either.

“The real big changes are more likely to come from a disrupter like Apple than the old-school banks,” says Beavan. “Apple could well go one step further than Apple Pay into banking proper. It has the balance sheet, after all, and will need to find a use for that stockpile.

Plus it knows how to harvest and use data.”

With the world becoming increasingly interconnected it’s hard to imagine a future where this kind of stuff isn’t happening. It’ll start with improving engagement with customers via online channels, especially as Generation Y matures. Then more dynamic processes will come in. It’s happening already – in areas like Africa and Turkey, where the banking industry and business landscape are far less mature, more experimental ideas are being introduced as we speak.

“I’m not sure when it will happen, I just know it will,” says Gorman. “And it could come from anyone.

Uber has transformed how taxis work, yet no one even knew them 18 months ago.” Uber is now saying if it can get you a car in two minutes it can get you anything in two minutes. As to whether that includes a loan, we’ll find out soon enough. n DAVE WALLER is a freelance business writer

www.blglobal.co.uk May/June 2015 65

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Technology

Is technology

taking

over finance?

Technology has helped banks speed up processes, and it’s allowed customers to bank and trade online and make payments from their mobiles.

But is it dehumanising financial services?

IT’S TRUE TO say that the financial services industry has a pioneering history of adopting automation technologies. The sector moved quickly to take advantage of the earliest post-war developments in computing, which promised a new world of being able to calculate and process large numbers of transactions at speed.

As customer numbers swelled, banks faced a crisis of both space and staff numbers, and computing was a welcome answer.

From the installation of Bank of America’s ERMA accounting system in 1956 – through the automation of stock exchanges in the 1980s and the birth of online banking in the 1990s, to today’s advanced high-frequency trading algorithms that enable millions of deals to be made every second, beating humans to the punch every time – automation has been at the heart of the finance sector’s boom of the past few decades.

In the early days of computerisation, the focus for the financial services industry was

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at Quilter Cheviot in Jersey. “Automation provides more value from a time perspective and allows people to be more satisfied in more interesting jobs,” he says.

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the tension comes when automation moves from the back office to the front line

on back-end infrastructure, dealing with greater volumes of data and increasing the speed of transactions. Clients benefited by being able to trade more swiftly and more often but weren’t, themselves, directly able to access these systems.

This all changed with the sudden growth of the internet in the mid- to late-1990s. Although early forms of online banking had been available since the early 1980s, these systems – with the exception of Minitel in France – were trading rather than customer banking platforms. It wasn’t until the mid-1990s that customers started to get in on the action.

Whether the benefits of automation have come at the cost of jobs lost will always be a moot point because growth in the financial services industry wouldn’t have been possible without it. Neither the UK nor the Channel Islands would have such strong financial sectors if it weren’t for the automation of millions of repetitive processes.

There’s also an argument that jobs aren’t so much lost as changed. “By automating repetitive tasks, you change how you spend your time,” says Martijn Gribnau, Chief Change Officer at software firm IPSoft.

“The automation of repetitive tasks enables us to spend our time on more challenging and productive tasks.”

With those tasks comes greater job satisfaction, argues Mo Baluchi, Business Development Manager

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CUTTING OUT THE PERSONAL When seen as the enabler of industry growth and greater job satisfaction, it’s easy to understand why automation has been so eagerly adopted by the financial services industry – but if there’s a tension, then it comes when automation moves from the back office onto the front line.

We all enjoy the convenience of online and mobile banking, and often demand more from these services.

However, we also know the frustration of not being able to speak with a real person when we call the bank – or even when we walk into a branch.

“Automation takes away a lot of customer interaction,” says Rob Newby, Technical Director at security firm Dataseal. “I don’t know my bank manager, whereas I might once have done. I remember my father going to the football with his as he had a business account with him – nowadays my business manager is an automated email and a central phone number. That doesn’t create satisfaction, although it must signal good business for the bank.”

Interestingly, the type of transaction being undertaken may determine whether we’re happy to have it automated or not, says Mo Baluchi. “At Quilter Cheviot, we’re seeing that clients want their valuations and portfolios on their iPads. Clients do like automation when it’s purely information that they need.”

The client wants to control whether their interaction is automated or not, which means banks adopting a different approach to automation, says Gribnau.

“In the beginning, financial services companies tried to force customers to use automated channels. Instead, you want to stimulate customer demand positively.”

According to Gribnau, today’s customers demand choice – and that means using automation in particular ways. “Banks should transform their infrastructure into an automated utility on the back end and omnichannel on the front end.”

CUSTOMER CHOICE An omnichannel approach may well be the answer to keeping customers happy, and doing that may mean that human interaction remains an important element of the service that firms offer. But technological development only seems to accelerate, and already there are virtual alternatives coming onto the market, including IPSoft’s virtual service agent, Amelia.

“Amelia can really read and understand. She understands what you meant and not just what

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Technology

you said. She can follow a process, so if you connect her to a back-end system, she can solve problems.

Amelia is replacing what humans are doing, and you have to see it to believe it.”

Already in operation within a number of companies including Accenture and Shell, Amelia pushes automation towards the world of artificial intelligence, and while she can replace human interaction to some extent, Gribnau is clear that “it’s the combination of computer and human that will win.”

Looking beyond Amelia, we see elements of artificial intelligence being used in high-frequency trading to make autonomous decisions that can affect markets across the world, but there’s another area in which AI could transform financial services: big data.

“Computers analyse patterns of investment on a daily basis, and about the only thing we can say for certain about markets is that they are totally unpredictable, which doesn’t seem like a great place for computers to be. But on the other hand, big data is bringing with it new capabilities – the ability to see patterns where you weren’t looking in the first place,” says Newby. “A layer of AI over the top of a big-data store containing market changes would certainly produce new investment ideas we’re not aware of now.”

Alongside greater analysis could come greater personal control of our finances, which Newby believes may be the next big step forward in financial services automation. While we have plenty of platforms to choose from, he maintains that we currently only have the “illusion of control”.

“We don’t have the insight into our financial profiles that the banks do, we don’t know how attractive we are as customers. It would be much more impressive if I could do this sort of profiling on myself, see what my earnings are, get suggestions that might save me tax, show me if I’m in danger of missing future payments for things.”

This level of insight will become more likely the further we move away from a cash-based economy and the more we automate all processes. At IPSoft, they believe they can increase the rate of end-to-end automation from an average of 56 per cent up to 80 per cent in some companies. Add to this the changing world of payments – in which we are slowly moving towards a fully electronic payment environment, including payment by mobile or even wearable technologies – and the data we’ll all generate will one day enable us to fully track and analyse our own financial behaviours. n KIRSTEN MOREL is BL’s Technology Editor

What comes next?

Cashless spending Seemingly forever caught on stall, the world of mobile money will one day become an accepted reality, but it will take a real cultural change to get there – and that takes time. Whether you’ll end up swiping a card near a reader or using your mobile phone as your virtual wallet remains to be seen, but as Rob Newby, Technical Director at Dataseal, points out, the cashless society is but a generation away. “Doing away with physical money seems anathema to us, but to a new online generation it’s less tangible and more inconvenient than it ever has been to us,” he says.

Big data gets personal Alongside the growth in virtual cash transactions will come the ability to record and analyse every financial event in our lives. The banking industry is beginning to see the benefits of big-data analysis as banks realise that profiling can help them better understand both their customers and their own businesses.

There are already apps available to help you track every single penny you spend (such as The Birdy), but combine these with a world of purely electronic transactions and soon we will all have a mine of information that, properly analysed, will help us better understand our own financial lives.

Blockchain banking The phenomenal rise of Bitcoin’s value saw it hit the headlines worldwide, but in reality its role as a currency is unlikely to be its enduring legacy.

Instead, it’s the underlying ‘blockchain’ technology that is most likely to continue into the long term.

The blockchain is a virtually incorruptible public ledger that records Bitcoin (or other cryptocurrency) transactions, providing a time-and-date stamp that could be used to verify a range of financial transactions.

The Blockchain’s potential as a tool in banking has been acknowledged by the Bank of England and a number of financial institutions. In 2014, Oliver Bussmann, CIO of Swiss bank, UBS, said: “Blockchain technology will not only change the way we do payments but it will change the whole trading and settlements topic.”

www.blglobal.co.uk May/June 2015 69

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To learn more about our financial solutions for Family Offices, please contact Mark Osment, Financial Intermediaries T: 01534 889288 E: mark.osment@db.com Channel Islands Custodian of the Year Custody Risk European Awards 2012 - 2014 World’s No.1 FX Bank Euromoney FX Poll 2005 - 2013

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With some of the world’s largest corporations holding more cash than developed countries, what does it say for the state of the global economy? And should we be worried?

The

corporate state

Words: Kirsten Morel

$178BN IS A colossal sum of money – the kind of

money that’s traditionally the domain of nation states.

In this case, and in line with the company’s habit of breaking with tradition, $178bn is the amount of money that Apple Corp has in its bank account.

Or, to be more precise, it’s the kind of money held by a subsidiary of Apple that’s based in Knocknaheeny, a suburb of Cork in Ireland.

When it comes to cash reserves, Apple leads the pack. In 2013, when Apple sat on a mere $159bn, US Trust calculated that this put the tech company immediately ahead of Malaysia in the rankings of corporate and national cash reserves (excluding financial sector and gold reserves). Microsoft came in five places lower, its $84bn placing it below Indonesia but above Denmark. In case you’re wondering, the UK makes the list in 11th place with $70bn which is a little more than Google’s $59bn.

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rise of the

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The fact that certain corporations hold more cash than many of the world’s leading nations may be as much of a surprise as the fact that the first nondigital technology company in the list is Pfizer, the pharmaceutical company, which pips the United States to 20th place in the rankings. Having perhaps learned some lessons from the credit crunch, General Motors is the highest placed manufacturing firm (39th with $28bn) and Coca-Cola (46th) leads the way for the food and beverage sector, its £20bn nudging Ukraine down into 47th.

In the US, in spite of being decades younger than many of their rivals from other industries, it’s the technology media and telecommunications (TMT) sector that dominates with $701bn or 44 per cent of the country’s corporate cash reserves. However, according to Deloitte, in Japan the manufacturing sector dominates with 39 per cent of the country’s reserves, and in the UK it’s the energy and utilities sector that leads with 38 per cent.

OK, so all these figures may be making your head spin a little, but it seems that the financial crisis has taught the world’s global corporations to save rather than spend, a tactic forged in response to adversity and aimed at arming companies with the necessary

Rather than bailing out a country, they’ll buy it. countries would be tradable assets

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financial firepower to deal with unexpected events in the future.

“Cash reserves are being held to enable companies to be flexible when faced with a future black swan event,” says Terry Cox, Director at Jersey-based IT company Bootstrap. Importantly, the theory is backed up. Deloitte calculated that the US TMT sector’s reserves grew by 124 per cent between 2008 and 2013, while overall the country’s corporate reserves grew by 101 per cent over the same period.

Why have such young technology companies been able to out-save companies in other industries? Marc Winn, Co-founder of the Dandelion Project in Guernsey, says that the answer can be found in the “difference between linear and exponential organisations.”

“Look at companies like Uber, which is bridging the physical and digital realms and making the growth rates of Google look tiny,” he says.

The innovation and application of digital technology is taking companies to a new level in profit-making and the ability to stockpile cash. In a reflection of Moore’s law, which predicts the exponential growth in computer chip processing power, these companies are operating in a disruptive environment so they need to be prepared for the unknown.

“Tech companies are much more aware of the need to be ‘anti-fragile’ because they’re aware of working in an environment of exponential change,” says Cox.

CAUSE FOR CONCERN? Of course, having such enormous sums of money at their disposal immediately raises the question of what these firms are going to do with their cash.

One of the more prosaic reasons given for the growth in capital reserves is that US firms have to pay such large amounts of tax were they to repatriate their cash that it makes more sense to accumulate it overseas. If this were the only reason for these cash mountains then we could assume that a quick change in US tax law (which some politicians are already working on) and we’ll see the money heading back across the Atlantic. However, not all of these companies’ reserves are held abroad so it’s perhaps safer to assume that at least some of the money is intended for use.

Even if a proportion of the reserves were always going to be kept aside to help companies through difficult times, it’s the nature of the market that some of the capital will have to be deployed at some point.

Mergers and acquisitions activity is likely to be high on the list of priorities for any global tech CEO. Throughout the past decade we’ve seen Google, Microsoft, Apple, Facebook and many more buying companies to add to their technology portfolio, if not to bolster the bottom line.

“They do buy up competitors, but it’s not just to stop them,” explains Jersey-based technology consultant, Mark Forskitt. “They also buy companies in order to buy new technologies. It shows the innovative nature of the tech and biotech industries as opposed to manufacturing.”

In a sector defined by change, it’s important to have a war chest that offers the ability to dip into the market at any time. While that small tech firm might not be a competitor today, the acquisition

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Technology

of its technologies may end up giving you a competitive edge tomorrow.

Winn agrees that the buying of innovative technologies proves that these cash reserves are being used. “I think those cash piles will be spent around the world. Look at Google’s acquisition of DeepMind.”

DeepMind is a UK-based artificial intelligence company that Google is reported to have paid around half a billion dollars to acquire. It’s hard to tell when the fruits of its work will be seen, or for what reasons Google bought it, but given that Facebook had been linked as well, there’s every reason to believe that in one acquisition Google saw itself gaining an immediate competitive edge as well as preparing itself for the future.

While the technology sector has a track record for plentiful M&A activity, the industry’s combined cash reserves of $701bn in 2013 put it in the position of being able to prop up governments or bail out countries. This hasn’t been done before, and according to Forskitt, buying is more likely than bailing. “Rather than bailing out a country, they’ll buy it. These countries would be tradable assets.”

It’s a scary concept. The reality, however, is that wealthy companies are more likely to use their cash to buy influence, says Forskitt. “It gives them a lot of political clout. If they decide to do something with that money, they will have the clout. It’s dangerous for democracy because money talks.”

Then again, is this really all that different from the lobbying that goes on around the world from pharmaceutical, food, tobacco and other such sectors?

On the other hand, rather than seeking to influence nations, or even buy them, Winn points out that tech corporations are already looking to build their own real-world communities. “Organisations like Google will start building cities. Some are looking to build new states in the sea or in space, and some countries are looking to provide legislation-free zones.”

According to the residents of Mountain View, California, Google’s city building has already begun, with thousands of houses and even an airport terminal being built to service the company. According to The Verge: “Google could soon have a practically unbroken line of property bridging Palo Alto, Mountain View and Sunnyvale.”

It will always be difficult to know how these corporations plan to use their mega cash reserves.

Certainly some will be kept for security, some more may be left abroad for tax reasons, but given the constantly changing nature of their business, you can be sure that some will be used for change.

And for Winn, that is something to be optimistic about. “These companies can help the world in ways that governments can’t.” n

the rich list: nations vs corporates RANK 1 2 3 4 5 6 7 8 9= 9= 11 12 13 14 15 16= 16= 18= 18= 20 21 22 23 24 25 26 27= 27= 29= 29=

COMPANY/COUNTRY APPLE MALAYSIA TURKEY POLAND INDONESIA MICROSOFT DENMARK ISRAEL IRAQ PHILIPPINES UK UAE PERU GOOGLE CANADA SWEDEN NORWAY VERIZON COMMUNICATIONS CZECH REPUBLIC PFIZER US CISCO SYSTEMS HUNGARY ROMANIA AUSTRALIA SOUTH AFRICA COLOMBIA QATAR CHILE GERMANY

CASH/RESERVES ($BILLION) 159 130 109 99 93 84 82 80 74 74 70 67 63 59 58 55 55 54 54 49 48 47 46 45 43 42 41 41 39 39

Source: Business Insider

KIRSTEN MOREL is BL’s Technology Editor

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Technology

This issue, BL rounds up the very best must-have apps for making your everyday life a little easier DARK SKY A shockingly accurate weather app, the home screen might greet you with something like: ‘Rain starting in 13 minutes.

Nearest precipitation: 6 miles to the west’.

It has everything you’d expect – including beautiful weather graphics, a detailed look at the next 24 hours and a summary of the coming week’s forecast. But the reason so many people love this brilliant app is that it sends you a handy little alert if there’s any bad weather heading your way.

So eerily precise it could believably be renamed ‘Dark Arts’. £2.99, itunes.apple.com

F.LUX Most of us could do with more sleep - we know this. And a number of studies have found evidence that the blue light from our phones, iPads and all our other devices is interfering with our natural sleep cycles and can keep us awake late into the night. f.lux fixes the type of light your screen emits to imitate the natural light at any given time of day. You just tell it what kind of lighting you have in your home and where you live, then forget about it. It’s been rave-reviewed everywhere. Use it to help you sleep better, or just because it makes your screens look nicer. Win/win.

Free, justgetflux.com

Essential apps for… day-to-day living EVERNOTE Garnering an evangelical following, Evernote is essentially an organisational tool – but that description doesn’t quite seem to do it justice. There’s a text editor, photo upload tool and voice-recording device, and you can use any of these separately or together to upload content to your account. It’s all stored in the cloud, so you can access it anywhere. There are excellent features for organising, finding and editing it all, and a recent upgrade added a very useful ‘reminder’ function. It’s really the versatility and usability of this one that elevates it above its rivals.

Free (premium option available), evernote.com

MAILBOX Mailbox is a brilliant tool for simplifying the way you deal with your email. There’s a light, fast and mobile-friendly inbox where you can quickly swipe messages to your archive or trash, and scan entire conversations in a chat-like view. You can schedule messages you can’t deal with right now to be returned to your inbox when you actually need to see them. The company joined forces with the mighty Dropbox around its launch in 2013, and you can earn an extra 1GB of Dropbox storage if you sign into Mailbox with your Dropbox account. Sweet.

Free (premium option available), mailboxapp.com

WAZE Waze is an impressive app that helps you navigate your way through the chaos on the roads with aplomb. It differs from traditional GPS software in that it’s constantly gathering map data and traffic information from its millions of users.

Basically, people report accidents, traffic jams, speed traps and the like, and Waze uses the info to provide routing and real-time traffic updates. Users can also update maps with the online map editor. It even tells you where to go for the cheapest petrol along your planned route. It’s like a personal heads-up from a few million buddies on the road.

Free, waze.com

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99%

60% 8%

10%

Apparently, social media and mobile technology is about to transform the wealth industry as we know it. But are we really on the cusp of a technical revolution? David Randall, Director at Knadel Jersey, investigates

Wealth management technology: digital revolution or evolution?

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RAPID UPTAKE OF mobile devices and demand for instant information defines much of today’s world. But these developments are passing wealth management by. There are notable exceptions in new firms – Nutmeg and Money on Toast, for example – but established firms simply aren’t catching on, and the software firms that support them aren’t taking the lead in what new technology can deliver.

Why is innovation being stifled in our industry while others are leaping ahead?

And how can technology firms help managers stay current?

Here are the four main reasons why technology advances are slow to permeate wealth management.

1. WE’RE BUSY WITH REGULATION It’s been said time and again that changes in, and emphasis on, regulation have reached an unprecedented level in recent years. In 2013, wealth managers’ average spend on technology was 13 per cent of revenues. But consider that 80 per cent of that 13 per cent was playing catch-up with regulatory requirements, according to Compeer, and it’s not hard to see why discretionary spend on innovation is scarce.

Additionally, only 20 per cent of managers think their technology can keep up with regulatory changes to come. And this outlook seems unlikely to improve any time soon.

The impact is far-reaching – innovation is constrained not just by resource and budget, but by a creeping ‘bunker’ mentality that stifles intellectual capacity for change.

Once entrenched, short-termist, reactive thinking is hard to overcome.

2) WE’RE BUSY WITH MERGERS AND ACQUISITIONS Schroders/Cazenove, Bestinvest/Tilney, Old Mutual/Quilter Cheviot, Rathbones/Jupiter/ Tilney, Stonehage/FF&P – the list goes on.

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Advertising feature

5%

M&A continued apace in 2014, and it doesn’t look like it’s slowing down.

Buyers are still outnumbering sellers.

At best, an acquisition distracts from innovation in the short/medium-term.

Generally, immediate pressure is to begin payback through efficiency gains. This usually means creating shared services and unifying platforms.

During a merger, it’s rare to go out to find a new technology platform. Usually the choice is between incumbent technology (or service) providers with focus on consolidating, not enhancing. Strategic thinking about future customer experience is something that begins once this is done – if there’s time before the next deal.

3) WE’RE OUTSOURCING – INNOVATIONS WILL FOLLOW While 2013 saw increases in wealth managers’ revenues, these were mainly driven by buoyant equity markets.

Profitability remains hostage to the rising costs of regulation. Efficiency, then, is still the key focus, driving increasing commoditisation of back-office activities.

For many, this means outsourcing.

In Knadel’s 2014 survey – Knadel Wealth Manager Business Barometer 2014 – 48 per cent of wealth firms questioned already outsourced some back-office activities. And of those still in-house, 50 per cent would consider outsourcing in the near future.

When done well, outsourcing non-core activities provides headroom for thinking about innovation and differentiation. It shares the burden of regulatory change between a number of firms and the service provider, releasing budget and resource.

Managers can focus on what matters to investors – customer experience.

While outsourcing may clear some headroom, it’s still a relatively immature market – it takes effort to settle into a new operating model, and time to get used to managing a provider. Outsourcing is a potential promoter of innovation, but it will take time to see the results.

4) WHAT DEMAND FOR TECHNOLOGY? Wealth managers’ complacency has been built partly upon the supposition that the younger generation will drive technological change, but that the money is still with parents and grandparents.

In the Cap Gemini Worldwide Wealth 2013 survey of high-net-worth individuals, it seems that investment performance will

always be king. Brand and reputation come second with little mention of technology as a big enough driver to make someone swap managers.

So, can high-performing managers rest on their laurels?

It’s true that investors have been undemanding until now. However, the post-retirement demographic are picking up tablets more readily than they ever did PCs. Tablets are far more intuitive – apps are repackaging investment information in ways that create demand for more.

Sharing advice and experiences with friends and family through social media is building investor awareness, confidence and knowledge across all ages.

Taking a relaxed view is risky. While it won’t be an investor’s sole reason to move, a lack of technology creates a perception of a brand with a lack of investment in business improvement – and it could be the last straw and a potential deal-breaker for investors. Conversely, managers with web-access, good mobile apps, and who embrace social media as a two-way conversation will gain a positive selection factor if performance is at least no worse than their peers.

Demand is rising, and firms need to embrace this change before they alienate investors.

SO, WHAT TO DO? It’s hard to bring about technological revolution if we can’t deal in specifics.

Demand for ‘something’ is rising, yet we can’t define exactly what that ‘something’ is. Clients won’t say what they want, but they will know when they see it somewhere else. In the meantime, the wealth industry appears moribund and reactive – a sloth needing a good poke to make him uncomfortable enough to bother to move.

But there’s light. The notable exceptions mentioned earlier have much to teach us in designing customer interfaces. They’ve used talent, not from the finance industry, but, in Nutmeg’s case, the betting industry.

No traces of irony there, or indeed, with Seven Investment Management’s new app, 7IMagine, designed by a gamer – it looks great and makes you want to play.

It’s not exactly revolution, but the stakes are ratcheting up – and financial technology vendors need to get in there and help.

Along with managers, technology vendors have found it hard to get beyond fixing business-as-usual.

The regulation melee has absorbed money and resources; acquisitions have destabilised loyal client bases, polarising the technology market; and providers of back-office systems in particular face a diminishing number of prospective clients though outsourcing deals.

Technology vendors are mitigating some of these issues with defensive strategies.

Some have built lucrative relationships

The wealth industry appears moribund and reactive – a sloth needing a good poke to make him uncomfortable enough to bother to move

with service providers, and others are finding new ways to deliver software as services, appealing to a wider range of firms with a multitude of business models.

Vendors know they must also innovate.

With a client sponsor they’d be developing their socks off, but they need to be proactive – invest and show managers the way.

Wealth managers have neither the time nor knowledge to reinvent the industry by themselves.

Wealth technology vendors who succeed in the long-term will be those that: l Deliver cheaply, and standardise across their client base to implement regulatory change more efficiently; l Embrace the tech-savvy, rapid-response world of social media, mobile apps and instant data; l Aren’t afraid to bring in talent and fresh ideas from technically dynamic industries to complement their hard-earned industry knowledge and experience; and l Ring-fence budget specifically for innovation, bringing their own investment and ideas to the table, showing us the art of the possible.

The age of the behemoth wealthtechnology vendor has gone, and the wealth manager sloth needs to evolve or fall off his branch. If ever there was a time to work together to think outside the box, this is it. n

ABOUT KNADEL

Knadel is a specialist business and technology consultancy that provides valued knowledge, sound advice and costeffective delivery services to the investments industry. Our core areas of expertise are strategy, integration, target-operating model design, systems architecture design, outsourcing and change implementation.

To find out more call David on +44 7797 744631 or email david.randall@knadel.com; or contact our London team on +44 (0)20 7489 6355 or info@knadel.com. www.knadel.com

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Investment Outcome Charting your own Course, South of France

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To us there are no foreign markets.™

The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested.

In the UK, this advert is communicated by Canaccord Genuity Wealth Ltd (CGWL), which is authorised and regulated by the Financial Conduct Authority. In the Channel Islands and the Isle of Man Canaccord Genuity Wealth Management (CGWM) is a trading name of Canaccord Genuity Wealth (International) Limited (CGWI) which is licensed and regulated by the Guernsey Financial Services Commission, the Isle of Man Financial Supervision Commission and the Jersey Financial Services Commission. As CGWIL is not subject to regulation by the FCA any UK investors would not benefit from the FCA investor protection rules, including the Financial Ombudsman Service and Financial Services Compensation Scheme. CGWL and CGWI are wholly owned subsidiaries of Canaccord Genuity Group Inc. Canaccord Genuity Wealth Management does not make any warranties, express or implied that the products, securities or services mentioned are available in your jurisdiction. Accordingly, if it is prohibited to advertise or make the products, securities or services available in your jurisdiction, or to you (by reason of nationality, residence or otherwise) such products, securities or services are not directed at you. Investment involves risk. The investments discussed in this document may not be suitable for all investors.

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Star fund manager Neil Woodford has launched his Woodford Patient Capital Trust to great fanfare. but Is the hype around the fund justified? And is ploughing cash into innovation the next big thing for investors seeking high returns?

Investing in Words: David Burrows

fund management world with a higher profile than Neil Woodford. During a 26-year career at Invesco Perpetual, his consistently high performance was the envy of his peers, as investors who trusted his track record ploughed their money into his funds.

In 2014 he set up his own firm, Woodford Investment Management, and launched his first fund, Woodford Equity Income. However his Patient Capital Trust, launched this spring, has seen him shift from his traditional largely blue-chiporiented equity income sphere to the high-risk world of smaller companies and start-ups.

The message coming from Woodford Investment Management is that it’s by no means a leap in the dark, as for over a decade Neil Woodford’s equity income funds have been

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THERE ARE FEW in the

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innovation exposed to fledgling high-growth businesses – albeit in modest weightings.

Neil Mumford, Chartered Financial Planner with Milestone Wealth Management, agrees that Woodford is to some degree in familiar territory, and believes the new vehicle gives him greater flexibility. “It’s an interesting concept.

Woodford has recognised that too many ideas and innovations end up going abroad because of the lack of investment and government support for some businesses. Over the years he’s been able to support some of those companies to a very small degree, but has been restricted by the mandates he’s been running. A vehicle like this means that he can invest without restriction – apart from capital issues.”

Justin Oliver, Deputy Chief Investment Officer at Canaccord Genuity Wealth Management in Guernsey, echoes this: “Neil Woodford has always had a tail of unquoted stocks in his portfolio, but Patient Capital allows him to indulge his passion and make start-ups and unquoted companies the main focus of the fund.”

Oliver is keen to point out that the composition of the fund means this is not

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a venture capital trust (VCT) by another name – a claim that has been made by more than one observer. “The fund portfolio will typically have 25 per cent in mid- and large-cap stocks with 25 per cent in newly quoted names. With half the fund in quoted and half in unquoted, this is clearly not a VCT.” Patient Capital is set up as an investment trust listed on the LSE rather than an open-ended fund, and Mumford believes this structure was the logical choice.

“A closed-ended vehicle is the perfect wrapper for this sort of investment because it will allow Woodford to invest without having to worry about redemptions.

It’s likely to be popular and may well go to a premium, which is one of the factors that investors need to consider along with it going to a discount at times of under-performance.”

Mumford was interviewed prior to the launch of Patient Capital on the LSE, but his view was prescient. Woodford went on to raise £800 million, making Patient Capital the largest-ever UK-listed investment trust launch – and it indeed moved to a premium after making its

debut. Investors clearly wanted a piece of the action, as the fund was oversubscribed.

RISK AND RETURN Given the interest in the fund, it seems many retail investors will, through Patient Capital, be accessing non-listed start-ups, which they wouldn’t have the ability or knowledge to do otherwise. Oliver believes the Woodford name might well provide investors with a level of reassurance to invest in a higher-risk area that they’d ordinarily steer clear of. But he doesn’t necessarily think that’s a bad thing, so long as investors don’t invest all their money in the fund.

“Clearly there’s a higher risk with Patient Capital than with an equity income fund, so there’s an element of caveat emptor.

But assuming you understand the risk level, this is a great opportunity to invest in exciting companies that otherwise wouldn’t get funding,” he explains.

Mumford takes a similar line: “Obviously it’s higher risk, but with potentially higher rewards. There are likely to be high swings in the value at times – Woodford isn’t immune to getting some

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“Not charging investors an annual management fee is an interesting innovation, and the hurdle rate for the performance fee looks sensible given the returns he’s targeting. So the trust scores well from a charging perspective.”

Oliver believes the performance fee is the real differentiator with this fund.

“There are quite a few funds that invest in unquoted stocks, but Woodford’s pure performance fee and the fact that the fee is paid in shares rather than cash, makes this fund different. I think anything that aligns the interests of the investor with the fund manager is to be applauded.”

With crowdfunding increasing in popularity, is a ‘start-up fund’ like Patient

Neil Woodford

Capital a natural progression? And are we likely to see more of these in the near future? Oliver believes more fund managers will follow suit, though without the Woodford brand he thinks investors may be wary of the credentials of some managers to deliver. He also believes that, despite Woodford’s experience of investing in start-ups, Patient Capital represents a new challenge for him, as small, unlisted high-growth companies are now the core elements of the fund rather than just a marginal presence.

“I think the fund is very interesting.

Neil Woodford is a great fund manager and it could really take off,” says Oliver. “Of course it might be a different kettle of fish

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calls wrong – but the trick is to get more calls right than wrong and the winners will more than outweigh the losers. Therefore investors should be aware that this is a long-term investment, which is why it’s called ‘Patient Capital’.”

The fund will be diversified with a maximum of 100 holdings and no fewer than 40. It won’t invest more than 15 per cent in any single company and overseas holdings will never exceed 30 per cent of the overall portfolio. The manager isn’t hindered by any benchmark constraints so if he wants to strongly back a particular sector, he can.

Put simply, it’s a true stock-picking fund, with the planned return clearly defined.

By investing in early-stage, high-growth companies, Patient Capital aims to generate returns of 10 per cent per year. If Woodford doesn’t beat this target then he gets no performance fees. If the target’s exceeded, then a performance fee of 15 per cent of the excess returns is paid, mostly in the form of shares in the trust rather than cash.

Martin Bamford, Chartered Financial Planner with Informed Choice, likes the way Woodford has set up the fund.

Woodford’s pure performance fee makes this fund different. aligning the interests of the investor with the fund manager is to be applauded

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Finance

when he manages a portfolio with a high percentage of start-ups – only time will tell.

We saw with Anthony Bolton at Fidelity, when he set up his China fund, that it doesn’t always work when star managers enter new territory.”

TREADING CAREFULLY While Oliver remains broadly optimistic about the fund’s potential, Bamford still has reservations. “I struggle to get too excited by news of the launch of this investment trust,” he says. “A lot of the focus I’ve seen to date is on the ‘attractive target returns’ of 10 per cent a year, but little is mentioned about the levels of risk required to target returns of this magnitude. There is a clear link between risk and reward – in the current economic environment with low yields, you simply can’t target double-digit returns without exposing investor capital to high levels of risk.”

Bamford adds that as much as many investors and market commentators think of Neil Woodford as having magical skills when it comes to investing, he isn’t a magician. “He’s subject to the same laws and rules of investing as everyone else. So when he’s investing in early-stage and early-growth companies, it will mean exposing capital to high levels of volatility and the risk of capital loss. Only investors with the sufficient capacity to lose this

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portion of their portfolio should expose money to the trust.”

Patient Capital is certainly not a trade on/trade off investment, because it may take Woodford time to deploy the capital and time to get results. The portfolio will develop over 12 to 18 months, so initially it will invest in established mid- and large-cap stocks and steadily migrate into smaller listed companies and unquoted names as opportunities emerge.

The fund’s prospectus illustrates the type of innovation Woodford is keen to support.

Gigaclear is one such operation – an unquoted business that builds and operates broadband networks in rural communities where larger scale telecoms businesses have no interest. Another company he name checks is Xeros, which has developed washing machines that use 80 per cent less water.

Oliver thinks other fund providers may be watching to see how Patient Capital fares before they introduce a similar offering to the market. He says that while investing in start-ups may not be new in and of itself, Woodford’s star profile might drive what has essentially been seen as a niche investment option to a more mainstream market.

However, he also argues that fund houses may find it difficult to replicate what Woodford is doing, notably on the performance fees. “Neil Woodford can

afford to set up a performance fee that doesn’t earn him money in the beginning as he indulges his passion. However, other fund houses have bills to pay and I don’t think they’ll be able to offer the same fee structure.”

While initially the Woodford brand and the performance fee might attract investors, over the longer term the judgement call will be whether Woodford’s efforts to commercialise intellectual capital in the UK has converted risk into a satisfactory reward. We'll have to wait and see. n DAVID BURROWS is a freelance financial writer

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The sharp end of the law Tommy Fernandes, Head of Marketing at Viberts, explains why the firm has embarked on it’s successful new rebrand project and the attention it’s already attracting What does Viberts do?

Viberts is an award-winning international law firm. We provide a wide range of legal services to a variety of clients including multinational corporations, business start-ups and individuals.

Established for over 80 years and renowned for providing outstanding client service, Viberts was the first law firm in the Channel Islands to be accredited by Lexcel for its practice management.

Why did you decide to rebrand and why is it important?

The previous branding reflected where Viberts had come from but not where Viberts is now or its aspirations for the future.

Viberts has grown and evolved in so many ways over the last few years, from the range of services we provide, to simple things like the increase in our head count that has meant relocating to bigger offices. There’s also a great deal of positive energy in the firm which I think is a result of new talent joining and re-stoking the fires of creativity, bringing with them positive change.

Viberts acts as an international strategic partner for many of its clients. Therefore we felt it was important that we evolve our brand to communicate this to not only new but existing clients, as well as to support our long-term vision and objectives for future growth.

What happens as part of a rebrand?

Short answer, lots! Firstly we conduct consultations with a variety of people, both internal and external. It’s mostly about feedback at this stage and listening to what people are saying about your existing brand and also the firm. This feedback is then incorporated with clear aims and objectives that go towards the forming of a brief to our designers. Then it’s a process of working through the various design proposals, narrowing them down until you’re left with a single one and then planning how to implement it. Sounds simple but it actually involves a lot of negotiation, planning and support from everyone involved.

Who did you identify you needed to reach?

One of the objectives we included in the brief was that the brand had to appeal more to corporate and commercial clients while at the same time not alienating any of our existing clients. We didn’t want to change our branding completely, or change our name from Viberts to something no one would recognise and would have meant that we would have lost the link to our heritage which we’re proud of. But at the same time it was important to

strike a balance so as to have a brand that was forward looking, professional and positioned the firm for the future.

Did you come up against any internal resistance to a rebrand?

No, actually the reverse, everyone has rallied behind the rebrand and supported it from day one. I’m actually quite surprised how well and smoothly the consultations, design review and feedback sessions have gone. I suspect that all the partners and many of the staff have long known that a rebrand was required and so were more open to change. I think that timing wise with all the exciting developments currently happening at Viberts with our growth in staff numbers, new office move and diversification of work we’re undertaking, it seemed the right time to rebrand.

What has been the biggest benefit of the rebrand?

Exposure. We’ve had some fabulous feedback from our existing clients as well as new contacts who have started to see the new branding and all the other changes that come with a major project such as this. Primarily it’s changed people’s perceptions of Viberts and helped to communicate all the different practice areas that Viberts specialises in. Our brand is not only getting noticed by our audiences locally, we’re receiving feedback from international clients who have seen it. Comments have included; “It’s like a re-birth for Viberts – very powerful, clean and striking.

Certainly not what I was expecting, it really positions your commercial team well.”

What is the most important advice you could give to another firm thinking of embarking on a rebrand?

• Do your research and talk to both internal and external stakeholders about their views on a rebrand; • Understand why you’re rebranding and what are the ultimate goals and objectives of the project; • Set clear guidelines for what needs to be achieved and when. Is it raising the company’s profile, repositioning the company completely or simply a refresh or evolution to an already strong brand?

• Don’t be afraid to question something or go back to the drawing board if at any stage something doesn’t feel right.

It’s better to take time and achieve what you set out to do than end up with some watered down brand that neither aligns to the company’s values and ambitions, nor accurately describes what the company is about to every type of client.

www.viberts.com

www.blglobal.co.uk May/June 2015 83

Have you planned your digital legacy?

MAKING A WILL isn’t

one of life’s most pleasant processes. However, it is a necessity if you want to make sure everything goes where you intend after your death, and that any other wishes are also dealt with as you’d like. Whether you sit down with a lawyer or talk with your family and friends about the assets you’ll be leaving behind, the chances are that you’ll focus on the large items such as property, cash in the bank, financial investments and specific, personal objects such as cars, furniture and jewellery. But did you think about those assets you have online or on your hard drive?

When it comes to making a will, the simplest but least prescriptive way is to indicate who you wish to leave your movable and immovable assets to, without indicating what those assets actually are.

Of course, the younger we are, the less likely we are to know exactly what assets we will own at the time of our death – but while it’s usually quite easy for an executor to identify physical or financial assets, our digital property is far more difficult to locate.

Think about it. Whereas once upon a time your music collection would have been easily found in your home, today it’s likely to be found in cyberspace, courtesy of iTunes or Spotify. The cash in your

84 May/June 2015

You might have decided who gets your property, antiques and cash when you die, but what about your iTunes collection and your digital photos?

Words: Kirsten Morel

savings account at the local bank may be easy enough to identify, but what about your Bitcoins or the money you have deposited in an online-only bank account?

“There’s a real range of digital assets,” explains Corinne Staves, Partner at London-based law firm Maurice Turnor Gardner. “There are those assets that are actually physically yours, such as photos or a book that you’ve written, say. There are also your digital accounts such as iTunes or Kindle.”

While ownership of a manuscript that is held on your PC is easy to establish, problems arise with accounts that have been opened with service providers. “iTunes is a good example, because you don’t own it,” says Staves. “For young people who have their entire music collection online, that will be lost.”

WHAT DO YOU OWN? Digital assets raise two problems for executors. The first is the issue of ownership and the second is locating and accessing those assets. While we only have a lifelong license to access books on kindle or music on iTunes, it is the case that even the hardware from which we access those accounts comes with strict conditions that affect the legality of handing them down through the generations.

“We have cases where people want to pass on iPads, but under Apple’s terms and

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Finance

we have sent to the many people in our lives. Irrespective of whether we want those photos passed on to others or our messages saved for posterity, unless the accounts are identified and the usernames and passwords passed on, then they will just sit there in cyberspace as caches of some of our most personal information. And even if our executors do know they’re there, it’s not necessarily true that they’ll know what to do with them.

“People should express a view as to what they want to happen,” says Julie Melia, Partner at Ogier in Jersey. “Families can have different views on whether they want things to remain online or not.”

To expedite this process, it’s important that people make their executor aware of the digital assets they have, where they are and what they want done with them.

“We’re saying to clients that they should create a digital will that sits alongside their

ordinary will and helps guide the executor,” says Staves.

The problem that relatives have is that whether it’s passing on an iPad without wiping it first or handing over passwords to accounts, many of these actions are in contravention of the terms and conditions of the service. “Using someone’s details is technically an offence, although many providers are becoming friendlier in this regard,” says Staves.

PASSING IT ON An example of a service that offers a friendlier approach is Facebook, which now provides a memorialisation feature.

This allows friends and relatives to continue posting their thoughts and memories on the account after the account holder’s death. However, to enable this, a ‘legacy contact’ – someone to look after the account once it is memorialised

PASSWORD REQUIRED

www.blglobal.co.uk May/June 2015 85

▼

conditions, they have to be wiped first,” says Julie Harrigan, Associate at Channel Island law firm Collas Crill.

When it comes to the task of actually locating assets, it’s often the lack of clear documentation that can cause problems.

“People are increasingly banking online, so they don’t have a paper trail for their accounts” says Harrigan. “If someone does have online accounts and there’s no paper trail, the executor won’t know of their existence.”

As well as those digital assets that have an equivalent in the physical world, such as books or CDs, there are the countless services that we use entirely online and which didn’t exist before the digital age.

Facebook, Twitter, Gmail, Instagram… these are all services that exist only online, and which often contain our own intellectual property, such as photographs, thoughts we’ve written down and messages

Finance

▼

passing on an iPad without wiping it first or handing over passwords to online accounts could be in contravention of the terms and conditions of the service

– must be appointed during the account holder’s lifetime.

A key advantage of internet services, particularly those offered via the cloud, is that they aren’t limited by national boundaries, and in this regard, a deceased person’s local jurisdiction is secondary to those all-important terms and conditions.

“We would deal with the assets wherever they are,” says Melia. “Jurisdiction isn’t as relevant as terms of service. However, there might be a US statute which restricts access to the asset.”

The current situation in which relatives of the deceased aren’t technically allowed to access online accounts is likely to remain the case until jurisdictions bring in their own laws to change this.

“There are a number of states in the US that have legislation in place for digital assets,” says Julie Harrigan. “In Jersey, there’s none.”

In the US, the state-by-state approach has been bolstered by the Fiduciary Access to Digital Assets Act, which aims ‘to allow executors, trustees, or the person appointed by court complete access to the deceased’s digital assets’. Such a law would supersede a service’s terms and conditions and provide the right person with the access they need to carry out a deceased person’s wishes.

While the law has a great deal to do to catch up with our digital worlds, this lack of statute does create opportunities for the Channel Islands.

Staves points to Guernsey’s image-rights legislation as proof that the islands can capitalise on this lack of legal standing.

“Guernsey’s led the way in creating the image-rights registry, so perhaps they can

86 May/June 2015

manipulate the laws to take advantage of tax. This might represent an opportunity for the Channel Islands when it comes to inheritance tax. If these [digital] assets have inherent value wouldn’t you rather they are taxed in Jersey or Guernsey rather than in the UK?” There is no doubt we’re all behind the curve when it comes to providing for a smooth transition of our digital assets after we’ve died. As individuals, we are neglecting a whole new side to our lives and the simple act of providing a list could save our loved ones a great deal of pain.

As jurisdictions, the Channel Islands could set in motion lawmaking to protect their citizens from uncertainty when loved ones have passed. But lawmakers should also be aware that there are opportunities in the digital Wild West, and both islands are well placed to make the most of such uncharted territory. n KIRSTEN MOREL is BL’s Technology Editor

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Our services make business plain sailing

We have worked with businesses like yours for a long time and along the way we have discovered what works and what doesn’t. Often the answer is right in front of you, but it takes a fresh set of eyes and some Channel Island knowledge to see the right solution for you and your business.

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In search of the new

©www.lowry.co.uk

Everyone’s heard about investing in wine, art and cars, but what about all those alternative assets that might fly under most investors’ radars?

Words: David Burrows WHETHER IT’S A vintage bottle of wine

or a classic Aston Martin once driven by Sean Connery, alternative asset classes have always attracted investors. Not only do they provide diversification from stock market investments, but they can also have an emotional and aspirational pull.

Often referred to as ‘passion investments’, they can be as much about owning a tangible piece of history as making money – but that’s not to say they can’t provide a tidy return.

The Coutts index, ‘Objects of Desire’, captures the price return of 15 passion

88 May/June 2015

assets across two broad categories – trophy property and alternative investments.

According to the latest statistics, over a seven-and-a-half-year period from 2005, the index rose by 82 per cent – the MSCI All Country Equity Index only rose by 53 per cent over the same period.

Of all the alternative investments Coutts examined for their index, classic cars returned the most since 2005, rising by 257 per cent, with classic watches (176 per cent), Chinese works of art (163 per cent) and jewels (146 per cent) all doing exceptionally well too.

Clearly there’s good reason to invest, and, as Keith Heddle, Managing Director, Investment at Stanley Gibbons, explains, the

appetite for alternative assets has increased since the global financial crisis. “Without doubt alternative investments have attracted far more interest since 2008/09. Back then people looked at asset allocation differently.

They thought they were diversified, but weren’t, and they saw all stock markets in the world go down at the same time.”

Heddle insists there’s been a major shift towards alternative assets, as their low correlation to equity markets provides true diversity to a broad investment portfolio.

But while most of the attention within alternative assets tends to focus on wine, classic cars and fine art, what are the ‘new alternatives’ gaining popularity? And how do you access them?

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Finance

alternatives WHISKY Like wine, rare and highly sought after whisky can prove an attractive investment at auction – as long as you understand what you’re buying and have the discipline to leave alone rather than take the cork out and sample a wee dram.

In 2014, the 1,000 best-performing investment-grade bottles of whisky increased 15.82 per cent in value, according to the Apex 1000 index, compiled by Rare Whisky 101, a company that tracks whisky investment performance.

Andy Simpson, Co-founder of Rare Whisky 101, is confident that growth should continue on a similar trajectory. “I’d expect around 15 per cent a year to be seen moving forward, certainly for the next two to three years, and with peaks significantly above that for the right bottles,” he says.

But what are the right bottles and which are the distilleries of interest? Rare Whisky 101’s Whisky Investors index will show you the best-performing distilleries, while the Rare Whisky Icon 100 index will show you which bottles are currently top of the pops.

Like most other alternative investments, rarity and limited editions can add value. So if a distillery’s closed, the whisky may be highly prized and therefore worth a great deal. Port Ellen shut its doors in the early 1980s and the distillery’s most sought-after whisky can now fetch around £2,200 a bottle.

LIMITED-EDITION PRINTS

▼

©Master of Malt 2015

Owning an original painting by a great artist might not always be feasible – either due to financial constraints or just lack of works available. Limited-edition prints, however, offer good opportunities to invest in admired works. “For most people, an original Picasso is unaffordable, but the artist was known for running off 200 signed prints which are now highly sought after and cost thousands rather than millions,” says Heddle.

The market has developed hugely in recent years, but investors need to be aware that not all art prints will increase in value. According to British art gallery Red Rag, an artist signature on a print might have some value, but the print itself may be of poor quality. In some instances, artists have no involvement in the technical processes of printmaking other than simply signing the limited-edition print.

The price of a print often depends on the level to which the artist was involved in the print production. An ‘original print’, where an artist has worked on it themselves (say, drawing an image onto a metal printing plate with a stylus) will often have a longer lasting value than a digital reproduction.

There are a plethora of dealers selling limited-edition prints online, so it pays to do your research and find a reputable source.

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Finance

FIRST-EDITION BOOKS First-edition books by certain authors are increasingly sought after, and therefore attractive to investors. The first-edition market is very strong and it’s not necessarily the age of the book but the rarity that drives value.

“With US authors like F Scott Fitzgerald and John Steinbeck, the initial print runs were very small and it’s even rarer to find any of these first editions autographed, which is another factor that drives the price upwards,” says Heddle. Original, illustrated dust jackets can also make a huge difference to value as many have been thrown away over the years.

Manuscripts and documents also attract investors, and once again rarity as well as context tend to drive values. The PFC40 First Edition Books index might well be your starting point here. It measures the price performance of the world’s 40 most popular first editions, and was up 140.3 per cent between 2004 and 2014.

The supply-and-demand side of the autograph market is similar to other collectibles – serious collectors and investors battle it out with museums and institutions for the most soughtafter names.

According to Fraser Autographs, a memorabilia and autograph dealer, content, condition and authenticity of an item are vitally important and will affect the value. Manuscripts are often referenced by previous sales or ownership, so it pays to keep all paperwork if you want to cash in further down the line.

You need to be aware that valuations will be affected by fashion or circumstance. A longdead artist or author suddenly catapulted back into the limelight might boost your investment, as with anyone who hits the headlines.

Autographs of those who are no longer with us tend to be valued higher too. Fraser Autographs is currently selling a signed photograph of Marilyn Monroe for £17,500, one of James Dean for £9,500, and a signed photo of Ernest Hemingway posing with famous bullfighters in Madrid for £5,500.

As Heddle confirms, autographs of stars of a bygone era can often command high prices.

“You might think that huge stars of early film provided enormous quantities of autographs but the reality is that the likes of Charlie Chaplin didn’t do anywhere near the same level of red-carpet promotion as latter-day film stars.

There weren’t the same marketing teams in operations organising signing sessions, so these autographs are valuable.”

For those looking to invest, The Frasers 100 Autograph Price index provides the definitive measure of overall market performance.

90 May/June 2015

In a world seemingly obsessed with celebrity, items owned by iconic stars can fetch enormous sums. For instance the white diamanté glove worn by Michael Jackson was sold at auction in 2009 for just over a quarter of a million pounds.

While buying at auction is one option for investors, there are more structured ways to invest in pop memorabilia.

There are guitar funds that include instruments previously owned and played by, say, Jimi Hendrix or Jimmy Page. The Guitar Fund, managed by Anchorage Capital Investment, invests in rare vintage guitars as well as those with memorabilia status. The fund’s objective is to outperform the 42 Guitar index, which has demonstrated an average annual return of over 22 per cent in the last 19 years. Specialist asset management companies such as Marquee Capital run investment portfolios of celebrity memorabilia.

Whether investors have an interest in whisky, books or Hendrix’ guitars, there’s usually an option to buy directly at auction or invest via a fund. Funds continue to launch – for instance Stanley Gibbons is about to unveil its first ever GB Rare Stamps fund, and there are niche funds in other areas.

But as Mohammad Kamal Syed, Head of Strategic Solutions at Coutts, says, the motivation isn’t always returns. “While many alternatives have provided spectacular returns, there’s more to investing in these assets than price appreciation. For many people, profit is furthest from their mind. Owners can bond with like-minded people in an elite network. The idea of someone paying $50 million for an uncomfortable old car, with windows that don’t work and a noisy engine, seems illogical. In many ways it is. But the happiness such a car can bring is immeasurable.” n DAVID BURROWS is a freelance financial writer

www.blglobal.co.uk

Beatles image: www.rockpopmem.com

AUTOGRAPHS

POP MEMORABILIA

Finance

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Least complicated places to do business

OPERATING GLOBALLY IS almost standard for many businesses these days, but while we cross borders with ease, there’s

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a glut of different laws and regulations that greets us as we do. A recent study by TMF Group ranked 81 countries according to how complex they are to do business in when it comes to regulation and compliance. It turns out Jersey has cause for celebration, taking the number one spot as the least complex place to do business in the world – while Argentina languishes in last place as the most complex for the second year on the trot. Here are the rest of the winners and the losers…

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The private aviation industry was well and truly battered during the recession, but a recent upturn in fortunes has insiders thinking there could be less turbulent times ahead Words: Emma De Vita

94 May/June 2015

Business

happy because there was plenty of business to go around.” He says the recession streamlined the industry, helping to weed out companies with weaker business models and poorer service.

Consolidation has also helped strengthen the fortunes of successful firms, and Margetson-Rushmore cautiously thinks change for the better is in the air. “We’ve seen a positive and continual increase in business in the past 24 months, but we’re not back to the same levels of 2006.” LEA became part of the Luxaviation group in 2014, and now has 120 employees in the UK, turning over £35 million.

Ian Atkinson, Operations Director at Heritage Corporate Services (HCS), agrees that business is starting to pick up. A general trust company, HCS also provides services for US-registered aircraft. “Business had been flat for the three years before last year, with no new business coming in. Last year, there was a pick up in demand, which has continued into this year.” He puts this down to a more general upswing in the

market and a higher feeling of confidence, with people having more money in their pocket to spend on luxury purchases.

Maggie Barnes, MD of Aviation Beauport, is even more upbeat. With four aircraft and 38 employees based in Jersey, she says: “We’ve been able to weather these recent turbulent times, putting us in an enviable position compared to some competitors. We’re extremely optimistic about the future.”

IMAGE PROBLEM Private aviation was one of the recession’s sacrificial lambs, says MargetsonRushmore. Yes, there were firms who could no longer afford to use corporate jets, but many companies felt it was simply unseemly for them to do so. “The perception of people flying privately was not a good message for top management to give out,” he says.

Atkinson agrees corporate jets get a bad rap during downturns. “Through the years of austerity it’s a public perception issue for

▼

YOU CAN QUICKLY divine the state of the economy by glancing at the fortunes of the aviation industry, and especially the private jet market. Considered a luxury spend, the private or niche service provider will quickly boom when cash is flush, but nosedive during more austere times. And this is exactly what happened before and after the financial crisis hit.

In the course of 2007 and 2008, three experimental, business-class-only transatlantic scheduled operators – Eos, Silverjet and Maxjet – hit the rails, having launched with great fanfare not long before. But now, seven years later, slowly but surely, the fortunes of private airlines are taking off once again.

“Certainly there was a boom from 2004 to 2007,” says Patrick Margetson-Rushmore, Chief Executive of private jet charter business London Executive Aviation (LEA).

“The market was very buoyant, but also very excessive. It was comparatively easy to make money as demand outweighed supply.

A lot of firms weren’t efficient, but were

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Business

corporate entities to have lots of company jets flying around. It’s the reason why the market was not as buoyant. We used to have 300 clients but that has now come down to 200 through attrition. Now that we’re coming out of recession in the UK, there’s more latitude for large corporate boards to go to shareholders and ask for company funds for this, and make the case for time efficiency.”

Barnes, meanwhile, thinks it was a combination of both squeezed funds and a PR problem for corporates. She says: “Some organisations downsized their aircraft, and others chose to charter as a more cost-effective solution to their needs rather than retain ownership of their aircraft.”

So, while the recession has clearly shaken up the private aviation sector, there are other long-term changes at play too. Margetson-Rushmore has experienced the effects of consolidation first hand, when the Luxaviation group took a majority stake in the business last year. “Fifteen years ago, this was a cottage industry, viewed more as a lifestyle industry, yet it’s now seen as more of a business model. The market is consolidating. Our stated aim as part of the Luxaviation group is to have 500 aircraft within the next five years.”

It’s an ambitious aim, considering 95 per cent of operators in Europe have fewer than five aircraft, and only four businesses have in excess of 20.

Operating at the smaller end of the market is Barnes’ Aviation Beauport.

“There’s been a decline over the past few years in individual ownership of executive jets. However, of late we’ve seen more interest in fractional ownership.” However, MargetsonRushmore says that the impact of fractional ownership in Europe has been muted, though he thinks NetJet’s owner Warren Buffett “has done a wonderful job for PR for business jets”.

FLYING HIGH So who exactly is using corporate and private jets in 2015? Both MargetsonRushmore and Atkinson’s client bases include high-net-worth individuals, whose level of demand hasn’t shifted much during these recent lean years.

LEA also does a lot of band tours, according to Margetson-Rushmore, but a large chunk of demand still comes from the business world. Unsurprisingly, the number of clients from finance dropped during the recession, though it’s starting to make a comeback. Much business comes from executives from

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How much is the private aviation industry worth? n

.9b 0 2 $

2013 n b 8 .

33

$

2020 (estimated) Source: Smart Research Insights

the recession weeded out companies with weaker business models and poorer service

Most popular route

Moscow

to Nice Source: Knight Frank

mineral companies, where travel to more obscure places is necessary.

But it’s not just large businesses that use LEA – smaller companies and entrepreneurs are important too.

“It could be, say, a small firm with suppliers in eastern Europe and they need to go around factories. Using an executive jet means the trip takes two or three days instead of a week. It’s about taking control of their time, having privacy and being efficient,” explains Margetson-Rushmore.

“It’s very productive.”

According to new research from Smart Research Insights on global business jets, the market was worth $20.9bn in 2013 and is projected to grow to $33.8bn by the end of 2020.

And although it finds that both North America and Europe are showing recovery in business jets demand, it’s expected that in the next decade the business aviation industry in India will grow three times and emerge as the third largest aviation market by 2020.

And which are the most popular private jet routes in the world?

According to a new survey by global real estate consultancy Knight Frank, Moscow to Nice is the most popular (no doubt the oligarchs need to head to warmer climes), followed by Miami to New York, and New York to LA. The majority of private jet owners are entrepreneurs, and over 80 per cent of them are men, according to the report.

Their wealth tends to come from the finance and oil and gas industries.

While the most popular routes as of 2013 tended to be to and from the world’s financial capitals and luxury property markets (such as London to Nice, and New York to West Palm Beach, Florida), routes between some emerging markets and major financial capitals are increasingly popular, such as Lagos to London and Maiquetia, Venezuela to Miami.

But just how stable is the market?

Barnes is reassuring: “Inevitably in times of financial strain, it’s the companies at the luxury end of the market that suffer the most; however there are encouraging indications of buoyancy and growth.” Atkinson is hopeful too. “We’re a year into the resurgence of the market and I’m quietly confident that we’ve seen the worst of the downturn.”

The only way from here, it would seem, is up. n EMMA DE VITA is a freelance business writer

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Tiffany

Lifestyle

Gucci?

Fa k e i t Stellaartney?

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t i l l yo u make it T h e s e d ay s , Y o u d o n ’t n e e d a m il l io n dollars to look a m il l io n d o l l a r s .

If y o u c a n ’t a f f o r d to buy a Rolex or a Gucci handbag, why n o t ju s t r e n t o n e ?

Words: Sharon Gethings

Jimmy Choos?

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✁ LUXURY RENTALS ARE nothing new – we’ve all seen the tuxes and tiaras paraded around at the Oscars. Today, however, there are a fair few companies who aim to supply a bit of red-carpet glamour to anyone who wants it. From clothes and jewels to cars and watches – even entourages and robots – it seems there’s no luxury that can’t be hired. Here are some of the best places to go if you fancy a taste of the high life.

DRESSES CHIC-BY-CHOICE.COM Chic by Choice was founded by Filipa Neto and Lara Vidreiro. The pair met while studying in Portugal, and came up with the idea after they both struggled to find decent dresses to wear to a gala. The company now has more than 230,000 registered members and it’s become a Europe-wide hire destination offering dresses straight from the catwalks.

According to Neto, as well as being great news for consumers, hiring is good for retailers too. “Rentals are a powerful way to market a luxury brand, and to convert aspirational buyers into actual consumers,” she explains.

Chic by Choice has clothes by more than 50 designers, including Alexander McQueen, Christian Dior and Stella McCartney, in sizes ranging from six to 16.

The most expensive item in their collection is a Jenny Packham nude gown – it’s worth over £4,000, but can be hired for just over £600 for the standard four days.

Minor accidents are covered by insurance, so you can relax while you enjoy your red wine and chocolate mousse.

HANDBAGS FASHIONHIRE.CO.UK Fashion Hire opened its virtual doors back in 2006. “We launched the site after we realised the UK had nothing like this,” says Sales and Marketing Manager Kathryn Orme. “We have a huge range of bags, including older styles that you can’t get in stores any more. Our most popular bags are the Mulberry ‘Alexa’ and absolutely anything by Chanel.”

The firm’s gone from strength to strength since the UK launch, and there are plans to expand across Europe in the not-toodistant future. The range is impressive too, with items from Mulberry, Gucci, Chloé, Louis Vuitton, Fendi and many more.

There are three membership options: ‘pay as you go’, ‘silver’ and ‘gold’. Pay as you go costs between £5 and £9.95, but doesn’t include hire or delivery costs. Silver and gold cost £90 and £135 respectively, but this includes everything, and it allows you one (silver) or two (gold) bags per month. Tiny dog not included.

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SHOES CINDERELLA-ME.CO.UK Alexandra Hones set up Cinderella Me back in 2009. “We offer shoes to cater to everyone’s needs,” she says.

“Whether you want flats, kitten heels or 12cm stilettos, we’ve got it all. Louboutins and Jimmy Choos are our most popular items, as they’re seen on every celebrity out there.”

There are more than 200 styles to choose from, in sizes ranging from two to nine, although each pair only comes in about four sizes. Prices start from around £40 and a bit of general wear and tear is included in the hire price.

CARS PREMIEREVELOCITY.COM Première Velocity, founded by Ben Waine and Stephen Price, is a car-hire company specialising in prestige models and supercars. “It came about after I spent time as a supplier to hire companies and realised that I could provide a level of service that wasn’t being offered,” says Price. “We’ve slowly grown to become the class leader in our niche market, with our main focus on customer service.”

They offer a door-to-door service, subject to location. Based in Hertfordshire, they tend to work mostly in the London area, but they will pick you up and drop you off in Aberdeen if you wish – for an additional £300 each way.

Of course, it makes sense that the staff are enthusiasts. James Downham is the company’s car specialist. “My favourite car? It’s a toss-up between the Pagani Zonda F or the Ferrari F40 – two cars never to be repeated in terms of sheer excitement and automotive passion,” he says. “It’s unfortunate that you’d need to fork out close to seven figures for either.

I clearly have expensive tastes.”

Lifestyle

bentley & skinner made a £125,000 floral tiara that was seen on Downton Abbey WATCHES ELEVENJAMES.COM If you fancy hiring a watch from US company Eleven James, you’ll have to apply for membership. You will then receive different watches throughout the year, the style and number of which is determined by the preferences you set in your account area.

Eleven James adds a layer of exclusivity by organising members-only parties and events, where you can exchange your watches in person, and perhaps chat and network over a glass of wine with a gang of fellow aficionados.

“All our members can afford the watches and already own some of them,” says Randy Brandoff, Eleven James’ Founder. “But they want variety, which is why they use us.”

The watches come in three ‘tiers’ – 10k, 20k or 40k – and include brands such as Panerai, Rolex, IWC Schaffhausen, Patek Philippe and Vacheron Constantin.

Membership also includes the services of your own ‘watch concierge’, an expert who’s on hand by phone or email to answer any questions you may have.

Images: 360b, Darq / Shutterstock.com

JEWELS BENTLEY-SKINNER.COM Another service for those with deep pockets is offered by Bentley & Skinner.

This company boasts a heritage that’s probably 10 times older than all the dotcom-era whippersnappers on this list combined, with stunning Mayfair premises to match. They’re probably best known as the creators of Damien Hirst’s diamond skull artwork, ‘For The Love Of God’.

Other famous works are a £125,000 floral tiara that was seen on Downton Abbey.

While they’re first and foremost jewellery makers, designers and innovators, they also hire out their creations and acquisitions at one per cent of their retail value per day, plus a deposit that’s also based on the retail value. The pieces don’t come with insurance, so it’s highly recommended that you take out your own temporary cover.

PAPARAZZI CELEB4ADAY.COM This US-based company will give you a taste of the celebrity lifestyle with a choice of three package types: ‘A List’, ‘superstar’ and ‘megastar’.

Becoming a megastar will set you back $3,000 for two hours, but it does include six personal paparazzi shouting your name and invading your personal space, a bodyguard to manhandle them for you and a publicist to answer or deflect their questions. There’s also a limousine to take you to and from your event in chauffeurdriven luxury, and to act as a sanctuary from the flashing lights.

So who uses such a service?

“We’ve been hired by parents of six-year-olds for their birthdays,” says Founder and Chief Executive Tania Cowher.

“And a guy who wanted to surprise his 70-year-old brother on the golf course. Mostly it’s people treating their friends, but we do have one guy in Los Angeles who has hired us for three different dates.”

ROBOTS KOKORO-DREAMS.CO.JP What if you want to take things further and start making outrageous off-the-scale demands like Kanye or Elton? Well, we’ve got you covered too.

Kokoro (meaning ‘spirit’ or ‘heart’ in Japanese) is based in Tokyo, and has been creating handmade bespoke robots since 1984. Their website has four categories, including dinosaurs, such as tyrannosaurus, triceratops and velociraptors; giant insects; and many other modern-day predators.

They also construct and hire a range of eerily human female robots, the ‘Actroid-DER’ series. Seemingly modelled on newsreaders, these androids have proven to be a hit at various exhibitions around the world. The future, it seems, is now. And strange. n

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COMMUNICATE YOUR MARKETING WITH ONE VOICE

wearebwi.com Jersey. Guernsey. Gibraltar.

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Guernsey showcases ILS offering G

uernsey’s position as a centre for insurance-linked securities (ILS) transactions was underlined at an event held in London at the end of March.

Hosted by Guernsey Finance, ‘ILS Insight London’ attracted more than 140 delegates and featured two panel sessions with ILS experts from Guernsey, the UK and mainland Europe coming together to share their expertise and insights in this fastdeveloping asset class.

Dominic Wheatley, Chief Executive of Guernsey Finance, the promotional agency for the island’s finance industry,

said the event was particularly timely as it coincided with the announcement

by UK Chancellor George Osborne that the UK was committed to developing its own ILS regime.

“I believe the event clearly demonstrated how Guernsey has established itself as a major destination for ILS business, and that what sets it apart from other jurisdictions is its ability to innovate and to develop the technology that underpins the sector, rather than simply going after a large volume of transactions. Guernsey can boast a diverse range of transactions and risks across its ILS sector, including the reinsurance of satellites, lottery risk, football clubs and players, and marine reinsurance. The island’s focus doesn’t just revolve around traditional catastrophe risks,” explained Wheatley.

Examples include the introduction of the Guernsey-pioneered protected cell companies and incorporated cell companies, which are commonly used for ILS structuring, while the recent release of guidance notes on the formation and management of insurance and reinsurance special purpose vehicles in Guernsey has further reinforced the island’s position in the sector.

The event’s first panel session focused on structural innovation, with a particular emphasis on the effects of cross-border regulations and structuring opportunities.

Moderated by Kate Storey of Appleby, the panel consisted of Christopher Bell of GBF Legal; Mark Helyar of Bedell Cristin; Nick Bugler of Wilkie Farr & Gallagher LLP; and Caroline Bradley from the Guernsey Financial Services Commission.

The second panel session looked at Guernsey as an ILS jurisdiction and its continued growth in collateralised reinsurance, longevity risk and the use of cat bonds. Moderated by Clive James of Kane, the panel consisted of Justin Wallen of Robus; Stewart McLaughlin of Willis; John Rowson of Aon; Martin Bird of Aon Hewitt; and Ben Canagaretna of Barbican.

Figures to the end of 2014 show that the Guernsey regulator licensed 85 new international insurance entities last year, meaning there was a total of 797 international insurance entities domiciled in the island at the end of 2014. Further data showed that ILS was responsible for 45 per cent of new business last year. n

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BlueCrest departure hits Guernsey funds figures

Labour market stays stable in 2014

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unds under management and administration in Guernsey suffered a significant fall during the fourth quarter of 2014, largely due to the relocation of BlueCrest from Guernsey to Jersey. Figures from the Guernsey Financial Services Commission (GFSC) show that the net asset value of all funds under management and administration in the island fell by £42.2bn (16.2 per cent) to £218.7bn during the fourth quarter.

Guernsey open-ended funds decreased in value by £2bn (4.8 per cent) to £39.7bn, while Guernsey closed-ended funds remained unchanged at £135.8bn. Non-Guernsey schemes (open-ended funds that are not domiciled in Guernsey but have some aspect of their management, administration or custody carried out in the island) decreased by £39.5bn (47.4 per cent) during the fourth quarter to reach £43.9bn at the end of December.

Despite these figures, the number of investment funds rose during the quarter, with the GFSC approving 27 new investment funds, resulting in a total of 137 additions during 2014. The new funds comprised one open-ended fund, 18 closed-ended funds and eight non-Guernsey open-ended schemes, meaning the total number of funds currently approved for domiciling or servicing in Guernsey stands at 1,048.

Guernsey Finance Chief Executive Dominic Wheatley said: “While this development was disappointing, Guernsey remains an attractive destination for funds, as demonstrated by the number of formations approved in the final quarter of last year and over 2014 as a whole.” n

Review of the financial relationship between Guernsey and Alderney

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joint review, being undertaken by the Policy Council in Guernsey and the Policy and Finance Committee in Alderney, will look at the effects of the 1948 agreement between the islands.

It’s hoped that the review will ascertain not only the overall income and expenditure involved in this relationship, but will also review current financial arrangements and procedures with a view to making recommendations to modernise the relationship, making it fit for purpose in the current socio-economic climate.

In December 2014, the States debated a report from the Policy Council titled ‘The Airport and Economic Development in Alderney’, which sought to address the current interlinked issues of economic decline and depopulation in Alderney.

The States directed the Policy Council to publish an action plan defining the extent of the review no later than March 2015.

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The Policy Council in cooperation with the Policy and Finance Committee is now in a position to fulfil this resolution.

Guernsey’s Deputy Chief Minister Allister Langlois, who chairs the Alderney Liaison Group, commented: “I’m pleased we’ve been able to comply with the States Resolution by publishing the broad action plan defining the extent of the current review. However, there is now a great deal of work to do in gathering the necessary primary financial data, much of which has not been available to date as a result of the 1995 States decision to consolidate the Guernsey and Alderney accounts.

“The Policy Council and the Alderney Policy and Finance Committee are working jointly on this review, so that we can both report to our respective States. Given the significant challenges facing Alderney at this time, this review has never been more timely or more important.” n

he latest figures for Guernsey’s labour market show that, at the end of Q4 2014, employment has been relatively stable through the year. Guernsey’s Quarterly Labour Market Bulletin shows that 31,632 people were employed or self-employed in the island – only 69 fewer than in December 2013.

The number of ‘employing organisations’ also remained flat at 2,303 – a fall of only five employers.

The number of registered unemployed people stood at 343, representing a mere 1.1 per cent of the workforce.

Unsurprisingly, the finance industry is the largest employer on the island, providing 6,733 jobs, and accounting for 21.3 per cent of the workforce.

Interestingly, the hostelry sector saw an increase of over 10 per cent in employed staff – perhaps an indication of an upturn in that sector. n

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Guernsey removed from Italian tax blacklist

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he Italian Ministry of Finance has removed Guernsey from its revised tax blacklist. Amendments within the 2015 Finance Act mean that the antitax haven deduction blacklist has been revised to exclude all countries that have an adequate exchange of information with Italy.

Sinéad Leddy, Head of Technical at Guernsey Finance, said: “This is welcome news for the practitioners within our finance industry as it should open up some interesting opportunities across the finance sector, but particularly within the private wealth sector. The only disappointment is that it has taken so long for Italy to overcome some outdated prejudices and recognise the high standards of tax information exchange applied in Guernsey.”

Guernsey was among the first set of jurisdictions placed on the OECD ‘white list’ for exchange of information standards in 2009. A tax information exchange agreement (TIEA) with Italy was signed in September 2012, at the same time as the island’s tax regime was reviewed and given a clean bill of health by the EU. “I’m pleased [our ongoing commitment to meeting leading global standards for tax information exchange] has now been recognised by the Italian tax authorities, and we look forward to other jurisdictions following suit,” Leddy said. n

Guernsey’s population continues to fall

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ccording to Guernsey’s first electronic census report, the population in the island has continued to fall. The latest figures available indicate that at the end of March 2014, the population stood at 62,711, a decline of 96. This follows on from the 2013 figures, which showed a fall of more than 300.

The figures for 2014 show an increase of 101 people and migration of 197 – accounting for the 96 fewer residents.

Commenting on the fall, Chief Minister Jonathan Le Tocq told the BBC that the two-year trend was a worry and that: “Depopulation is far more of a concern than overpopulation.”

He continued: “Information from a traditional census is, in effect, out of date almost as soon as it’s published and would not then be updated for five or 10 years.

We now have more facts at our fingertips so this will prove invaluable when we’re faced with making decisions that impact on our lives as a community.”

Other statistics from the electronic census included: • The population is projected

to peak at between 65,500 and 69,000 between 2030 and 2050 • The 2014 dependency ratio was 0.53, which means that for every 100 people of working age (between 16 and 64) there were 53 people of dependent age • The dependency ratio is projected to increase to between 0.76 and 0.80 by 2040 • At least 50 per cent of the population was born in Guernsey; 20 per cent are from the UK; 1.9 per cent (1,100) are from Portugal and 1.5 per cent (1,000) are from Latvia • 29.1 per cent of the population live in St Peter Port, which has more than double the population of any other parish • The majority (at least 64 per cent or 40,000) lived in properties they own.

Since 1831 a census was held every 10 years, and then every five years from 1971, with the last held in 2001. In 2005 the States replaced the it with an electronic system producing annual reports. n

Guernsey Finance appoints International Business Development Director

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uernsey Finance has appointed Kate Clouston as its first Director of International Business Development.

Kate will be responsible for leading additional international business development work, with a particular focus on evaluating and developing new geographical markets. She will also be involved in developing emerging financial products and attracting new companies to Guernsey.

Kate speaks six languages, including Chinese and Arabic, and has previous experience as a Programme Head for the Royal United Services Institute (RUSI), the independent British think tank engaged in cutting edge defence and security research; as a Media Analyst for Edelman StrategyOne; and as a Senior Researcher at the House of Commons.

She has a degree in foreign languages and literature from Georgetown University, and gained a master’s degree in European politics and governance from the London School of Economics and Political Science. n

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CCA Galleries International showcases the very best of contemporary British art, including paintings, limited edition prints and sculpture.

Discover works by famous established artists and printmakers including Sir Peter Blake, Damien Hirst, Barbara Rae CBE RA, Bruce McLean and Dan Baldwin as well as young emerging artists.

Our exhibition space also offers a unique experience for those seeking to promote corporate events in a dynamic environment dedicated to art and culture.

‘The Marriage’ by Dan Baldwin

Find out more at www.ccagalleriesinternational.com

THE GALLERY

Royal Court Chambers | 10 Hill Street | St Helier ‘The Flood’ by Dan Baldwin

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Opening Hours: 10am to 5pm Monday - Friday 10am to 2pm Saturday For more details about exhibited works and future events please call 739900 or email enquiries@ccagalleriesinternational.com

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Jersey plays catch-up over discrimination

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n this day and age, it’s difficult to understand how any modern jurisdiction could be behind the curve in its discrimination legislation. It may come as a surprise to many outside the island, then, that the first element of discrimination law only came into force in Jersey on 1 September 2014, with more to come later this year. Even more remarkable is that in Guernsey, such legislation still remains nothing more than a concept.

While changes in discrimination law in Jersey were well trailed by government, it’s likely that no one in business was prepared for the speed by which each element was to

be introduced. The experience for all business – in particular small- and mediumsized businesses – is of an unprecedented process of bringing Jersey closer in line with UK legislation. At times this feels rushed, and it’s certainly presenting the island’s businesses with a severe challenge when their focus has been on growing their way out of the recent economic mire.

When the first element came into force last year, it covered racial discrimination (gender and sexual orientation are coming later in 2015). So, the first question then is: were you ready, or have you continued using advertisements for staff containing

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With Jersey at the beginning of its rollout of discrimination law, Lindsay Edwards-Thatcher, Solicitor at TM Legal Services, is concerned that the process is happening too quickly for firms to deal with

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in September, legislation will be introduced to cover discrimination on sex, sexual orientation and gender reassignment

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sentences such as ‘preference will be given to locals’? It may be used innocently enough, but it’s now in breach.

Let’s break this down. Discrimination is defined in two forms: direct and indirect.

Direct discrimination is when a person discriminates on racial grounds (or some other protected characteristic), treating that other person less favourably than they treat or would treat others. There’s no justification defence to direct discrimination, which makes it simple to grasp, and generally ensures compliance.

Indirect discrimination can be more problematic. This is where a practice or criteria adversely affects a person of a particular group by placing an ostensibly race-neutral barrier in the way of progress.

This would affect a particular class of person, and be something that the plaintiff in particular can’t overcome, even when all employees are treated the same.

For example, in 2013 British Airways employee Nadia Eweida took a landmark case against her employer. The airline put

in place a relatively soft ruling that no jewellery was to be worn. Apparently a neutral criteria. However, it adversely affected a small group of employees, more particularly Nadia Eweida, who wished to wear her religious ‘cross’ necklace. She was able to claim race discrimination as she was prevented from adhering to her religious beliefs once her employer issued a ‘no jewellery’ rule.

Discrimination law affects businesses in ways they probably never thought about, and it affects employers who never even considered they were being racist. Tribunals now tell employers they should have an HR member of staff to accommodate this everincreasing red tape, but businesses are questioning how practical that is given that an appropriate employee can cost around £80,000 a year.

That red tape – the work involved in dealing with new and forthcoming laws – is increasing year on year. For example, in September of this year the next tranche of legislation will be introduced to cover discrimination on sex, sexual orientation and gender reassignment.

Sexual orientation covers men’s and women’s sexual attraction to persons of the opposite sex or gender, the same sex or gender, or to both sexes or more than one gender – generally considered to be heterosexuality, homosexuality and bisexuality. Asexuality, the lack of sexual attraction to others, is sometimes identified as the fourth category. Gender reassignment covers those whose gender identity (how they perceive themselves in terms of male or female) doesn’t come from the sex that they were born with. This is commonly termed as transpersons, transgender or transsexuals.

The background to this dash for legislation is the sex discrimination law introduced in the UK in 1975, gender reassignment law that came in 1999, and sexual orientation legislation that came in 2003. This speed reveals a certain level of desperation to get this done rather than the gradual introduction that businesses would find more manageable to absorb.

With all legislation there are positive and negative elements. The notable thing about the new discrimination law in Jersey is that the speed of introduction may prove to be the sole cause of business fear and realised threat. Sadly, the old adage remains: ignorance is no defence in law, however flawed the process of bringing in the new legislation. n

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Couples could benefit from proposed divorce reforms

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he Jersey Law Commission’s recently delivered consultation paper ‘Divorce Reform’ includes a comprehensive and long-overdue overhaul of matrimonial law and practice in the island. If implemented, those affected will be able, for the first time, to decide how and when their marriage or civil partnership ends.

In addition, and in advance of England and Wales, those marrying or entering into a civil partnership will, subject to safeguards, be able to agree in advance how they want their financial affairs to be determined in the event that their relationship breaks down. Prenuptial agreements will become largely enforceable and will cease to be tools exclusively for the use of the wealthy or famous.

The Matrimonial Causes (Jersey) Law 1949, which currently shackles the Royal Court, not only prevents steps being taken to end most marriages within the first three years, but also fails to provide any steer to the judiciary as to how they should exercise their discretion when making financial provision for divorcing parties.

This leaves judges in the unenviable position of being restricted by the limitations of an anachronistic law that’s no longer fit for purpose.

Among the suggested changes to divorce, the Commission proposes that the current three-year period, during which parties must remain married or in a civil partnership before presenting a petition of divorce or dissolution to the court, should be abolished. It is also canvassing a change that will enable parties to issue a divorce petition at any time after their marriage or civil partnership.

The Commission proposes that ‘no fault’ divorce is introduced in an effort to avoid the blame culture that often permeates these cases. It also recommends that

The recurring theme is the empowerment of those separating

lawyers should be required to advise those considering divorce on reconciliation and help them to consider alternative ways of resolving their differences outside of the Royal Court.

These new revisions are mirrored by the welcome recommendations that have been put forward in relation to the thorny issue of settling financial disputes in divorce or the dissolution of a civil partnership.

These include enabling the Royal Court to set aside transactions intended to defeat claims by divorcing partners; permitting pension sharing and earmarking orders

(a significant gap in current Jersey law, especially in an island where so many are employed by the financial services industry, which has historically rewarded employees with sizeable contributions to pension pots); a presumption in favour of upholding the terms of prenuptial agreements, provided certain safeguards are in place; and allowing the Royal Court and the parties to agree to a ‘clean break’, so that a limit can be placed on the time that one partner is required to pay maintenance for the other.

The Jersey legislative framework around the dissolution of marriage and civil partnership is without doubt in urgent need of reform. The Royal Court has historically followed developments in matrimonial law and practice in England and Wales, but these proposals, if implemented, would create a divorce/dissolution law in advance of other jurisdictions.

The recurring theme behind these changes is the empowerment of those separating, affording them an opportunity to explore their options in ways and time scales that suit them rather than as dictated by the law. It would also allow them to manage the financial issues arising from their divorce or civil partnership dissolution, while at the same time preserving the Royal Court’s powers to protect those made financially vulnerable by relationship breakdown.

What is unknown is whether the legislature has the appetite to push this forward. New, groundbreaking legislation needs lobbyists to entice the States members to engage with, and be advocates for, the process of reform, and that’s no easier a process in Jersey than anywhere else. In the circumstances, while it’s possible for the reforms to be in place 12 months from now, it’s by no means certain. n

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For those wanting to put an end to their marriage or civil partnership, current Jersey divorce law may seem tortuous. Splitting up can be complicated and costly enough, both emotionally and financialy, but the process often appears to be exacerbated by the current state of divorce law. Sam McFadzean, Senior Associate at Carey Olsen, examines the proposed reforms and their potential impact

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Property case sets new legal precedent

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he release of the judgment in the case of Fogarty vs St Martin’s Cottage Limited in mid-April has been hailed as a welcome change to Jersey’s property law. This groundbreaking case, regarding a contested boundary between two properties in St Lawrence, means changes to conveyancing practice may now be expected, because an option exists to remedy property encroachments by the payment of damages rather than ordering the removal of the encroaching structure.

This Royal Court decision steps away from the approach previously taken by the Jersey Court in Felard Investments Limited vs Trustees of the Church of Our Lady, Queen of the Universe, which determined the Jersey Court had no alternative but to order any encroachment on a neighbour’s land to be demolished.

This departure from the traditional Felard approach may be viewed as a much healthier attitude to encroachment issues and a quiet victory for the ‘reasonable man’. The Court’s decision that it should be able to order compensation following an examination of the site and the mischief caused by the encroachment allows a far more pragmatic solution, proportionate to the circumstances of the case.

Neighbours involved in a dispute will now have to negotiate in the light of the nature and extent of the actual encroachment, which is

likely to result in far fairer, and indeed quicker, settlements between the parties.

Advocate Christina Hall, a Partner at Viberts, who acted for the defendant, said: “The Royal Court’s decision to distinguish the Felard Investments case is a welcome development in Jersey property law. When a building encroaches on a neighbour’s land by an inch or two, and there has been no deliberate wrongdoing, the court should not be powerless to do anything other than to order the encroaching structure be removed. In this particular case, the Court clearly thought it was inappropriate and unfair to demolish the defendant’s wall and instead ordered damages to be awarded. This decision marks a milestone in Jersey property law, as this is the first time an encroachment dispute has been settled by an award of damages.”

While this latest ruling means changes to surveying and conveyancing practice are likely to follow, it won’t prevent a landowner from seeking a court order to remove an encroaching structure from their land. A court can still order a structure to be removed if the facts of the case so warrant.

This important decision now allows the Court to consider an alternative remedy, recognising that not all encroachments materially impact upon a landowner’s ability to enjoy his property. n

Employment rising in Jersey’s finance industry

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he latest figures from the States of Jersey show that employment in the finance industry increased by 400 jobs during 2014.

The figures are included in the Jersey Labour Market statistics published by the States, which show that employment is up across all sectors by a total of 1,980 jobs in the year ending December 2014. The numbers working in the finance industry were recorded at 12,770 – by far the highest proportion of any sector.

That said, it looks like it’s a tale of two sides for the finance industry. The increase in employment in the sector was driven by the trust and company administration, and legal sub-sectors. In contrast, the

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banking sub-sector recorded a fall in employment, to a level of around 1,400 below that recorded in 2007 and 2008.

Geoff Cook, CEO of Jersey Finance, commented: “This is further welcome evidence of a more consistent upturn for the finance industry and an indicator of new business being generated, which is good news for the economy. While numbers working directly in banking have declined – a trend that has been reflected in western markets generally since the financial crisis – this has been more than balanced locally by the recruitment of additional people in the trust, private wealth and legal sectors.” n

Jersey property on the rise

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he latest figures from the Jersey House Price Index – for the fourth quarter 2014 – show that house prices have enjoyed an annual increase for the first time since 2009.

According to the figures, the index was three per cent higher at the end of 2014 than it was at the end of 2013. What’s more, the average price of properties that sold in Q4 2014 was five per cent higher than in Q3 2014, at £434,000. The Index measures the combined (mix-adjusted) average price of one- and two-bedroom flats, and two-, three- and four-bedroom houses, including share transfer properties. n

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Diversification on the agenda for Jersey funds

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ersey has an opportunity to diversify its alternative funds capabilities, and has a growing role to play as a European domicile supporting US fund managers, according to panellists at this year’s Jersey Finance Annual London Fund Conference.

Discussing global opportunities for Jersey, the panel at this year’s conference, which took place in March, highlighted Jersey’s potential to build on its strong track record in the real estate and private equity fund asset classes, galvanise its hedge fund offering, and diversify further within the alternative asset classes.

Pointing to PwC predictions that alternative assets will grow by more than nine per cent each year to reach £13trn by 2020, panellists also identified the hedge fund asset class as an area of growth for Jersey. This follows a number of managers choosing to establish a presence in Jersey in recent years, and the latest figures show that the value of hedge fund business in Jersey grew 46 per cent year-on-year at the end of 2014.

Last year, Jersey also introduced a change to legislation to make itself more attractive for hedge fund managed account structures A specific role was also specified by panellists for Jersey as a European funds jurisdiction that is outside the scope of European regulation and that, through its private placement regime, can enable US managers to access global and European capital without the onerous requirements of an AIFMD passport.

The conference was moderated by former Newsnight anchor Jeremy Paxman, who also gave a talk in which he offered his thoughts on the forthcoming election, emphasising the unpredictability of the outcome and suggesting that British politics needs a ’root-and-branch review’ to address disillusionment among the electorate. With keynote speakers including Dr Gerard Lyons,

Chief Economic Advisor to Boris Johnson; Bill O’Neill, Head of Investment Office UK, UBS Wealth Management; and Simon Witney, Partner, International Funds, King & Wood Mallesons; the conference was attended by more than 300 London, UK and European funds professionals.

Panellists included Joe Moynihan, Director of Financial Services, States of Jersey Government; John Harris, Director-General, Jersey Finance Services Commission; Ben Robins, Partner, Mourant Ozannes; Lisa Cawley, Partner, Kirkland & Ellis International LLP; Robert Milner, Partner, Carey Olsen; Mike Newton, Managing Director, Private Equity and Real Estate at State Street; Bridget Barker, Partner, Head of the Investment Management Group, Macfarlanes LLP; and Neil Robson, Partner, Katten Muchin Rosenman LLP. The latest figures for Jersey’s finance industry, collated by the JFSC for the period ending December 2014, show that the net asset value of funds under administration in Jersey grew over the final quarter of last year to stand at £228.9bn – an annual increase of 19 per cent. The value of Jersey’s hedge fund business grew by 46 per cent, real estate grew by 32 per cent to its highest ever level, and private equity maintained a steady increase of five per cent. n

Business optimism at six-year high

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ersey businesses are more confident about the future than they have been in the last six years, according to the most recent States Business Tendency Survey.

Activity across all sectors is at its highest since the survey began in 2009, particularly in construction, with financial services also strong in profitability.

The responses to 10 key questions, including employment prospects, are considerably more confident than the December 2014 survey, when there was an overall decline in business activity.

States Chief Statistician Duncan Gibaut said that the survey was “by far and away

the most positive” they had seen across all sectors, although there were still pockets of negativity. In particular, costs of supplies, purchases, wages and salaries have increased for both the finance and nonfinance sectors.

The survey, which is carried out by the States Statistics Unit every three months, asks Managing Directors or Chief Executives for their opinions on the current situation compared to the previous three months, and for their expectations for the next three months. Responses were received from 300 firms, accounting for 40 per cent of private sector employment. n

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THE AGENDA

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The Agenda is compiled by BL’s Fashion and Lifestyle Editor, Thom O’Dwyer, with additional material by Danny Cobbs, Peter Dean, and Jeffrey Chinn of Hettich Jewellers in St Helier

1. A LEGACY OF LUXE Oscar de la Renta was a true gentleman and the doyen of 20th-century American fashion. For over five decades, before his death last year, he created fashion that was the apogee of elegance, based on what he had learned as apprentice to the great Cristóbel Balenciaga and, later, with Antonio Castillo at Lanvin in Paris. He became the master of grand wedding gowns – his last great creation just a month before he died was the magnificent fairy tale ivory tulle gown that Amal Alamuddin wore to wed George Clooney. And she wore a glittering, golden, beaded tiered fringe Gatsby-style party frock at the evening party.

Oscar de la Renta’s designs reflected his extraordinary personality – optimistic, charmingly alluring, ebullient, and most importantly über-romantic. He was a colourful raconteur and wit, and in the Swinging Sixties he reportedly sent threeway mirrors to certain lady fashion editors who wore miniskirts to show them exactly why they perhaps shouldn’t have. He became the red-carpet king and dressed four First Ladies. The designer’s love of nature was often beautifully illustrated in his couture creations. Pictured here from his last-ever collection, is his leafembroidered silk gazaar gown with highlow asymmetric hemline. Leaf foliage, by the way, is this season’s new florals.

With more than 1,100 hand-cut and embroidered leaves applied by hand, the frock takes over 490 hours to complete.

Price on application, www.oscardelarenta.com

INSIDE THE AGENDA: INTERIORS, FASHION, CARS, GAMES, FOOD & DRINK, FITNESS, FOOTWEAR, ACCESSORIES, PERFUME, WATCHES Everything you need for a more stylish life.

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THE AGENDA 2. GOLD MINE Salvatore Ferragamo’s Signorina Eleganza eau de parfum is presented in a beautiful 1,000ml edition exclusive to Harrods.

Forged by the expert hands of skilled Italian craftsmen, the pure rock crystal flacon also features 18-carat gold detailing. The yellow gold plaque with shimmering 1.27-carat diamond embellishment is hand-engraved with the famous Ferragamo signature logo, and all is topped off with a spherical cap also in precious yellow gold. The heady scent itself is a lush, sensual, passionate mixture of floral allure combined with an aura of spicy sweetness. With notes of grapefruit, pear, almond powder, golden osmanthus petals, patchouli and white leather, the fragrance celebrates feminine grace and sophisticated seduction. £26,500, www.harrods.com 3. FIT FOR A KING This slick, sleek and chic machine is only for the elite and well-heeled who take their quest for haute fitness and a six-pack very seriously.

The creative spirit, passion for design and high technology that characterises the Tonino Lamborghini brand has inspired this new special limited edition of the world’s first luxury exercise bike, the Ciclotte Tonino Lamborghini. The awardwinning Ciclotte, originally designed by Luca Schieppati, is not only the world’s first designer exercise bike, but it’s also the most expensive. It features a touchscreen display, killer carbon fibre ‘bull horn’ handlebars with the iconic bull logo, and a set of industrial-strength magnets hidden in the wheel. The magnets generate a field providing 12 levels of pedal resistance evoking the dynamics and sensations of on-road cycling. Unmistakably Italian and undeniably stylish, this killer-cool exercise machine wouldn’t look out of place in Tate Modern’s Turbine Hall. €10,490, www.ciclotte.com

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4. WINNING HAND These 18-carat yellow gold ‘Four Aces’ cufflinks carefully hand-painted with enamel would be absolutely perfect for a long, self-indulgent weekend in Vegas.

They are produced by Deakin & Francis, a Birmingham-based manufacturer of fine handcrafted jewellery who have a vast catalogue of some of the most amazing, imaginative and downright crazy high-style cufflinks in the galaxy. Their meticulously crafted jewellery has been worn by everyone from leading businessmen and English gentry to film stars, pop glitterati and leading celebrity bons vivants.

Everything is handmade in England with precious metals, and fine gemstones feature heavily. This purveyor of fine, meticulously crafted jewellery and accessories definitely gets the Agenda thumbs up! £3,445, www.deakinandfrancis.co.uk

5 5. DO BELIEVE THE HYPE The hottest wine buy of the year so far is without doubt the 2010 vintage from Brunello di Montalcino, writes Peter Dean.

Newly released, it has all the wine critics, investors and the American market in a complete frenzy. The reason? It’s the vintage of a lifetime in this corner of Tuscany – one that in 1980 became the first Italian wine region to be awarded DOCG status. Brunellos are dark, full-flavoured wines that are made from 100 per cent Sangiovese and have to be macerated in oak bariques for at least two years then have to spend four months in bottle before they can be released. Deviating from these strict guidelines can lead to prison sentences of up to six years as the perpetrators of ‘Brunellogate’ found to their cost when they started blending with foreign grapes in 2003. Brunellos are an expensive wine but haven’t got the international recognition of, say, a Bordeaux, Burgundy or Barolo. This will all change with this vintage, with prices doubling overnight as soon as the wines became available this spring. With such a great vintage, quality is high across the board, but standout at a recent tasting was the Poggio di Sotto, the last vintage made by legendary vintner Piero Palmucci before he sold the winery on. Deceptively light in the glass, the wine has huge complexity with rose and spice lingering on the tongue for a full minute after you take a sip. Expect to pay about £100 a bottle from a good wine importer – if you can find one, that is. £595 for 6 bottles, www.foxyvintner.com

THE AGENDA 6. BESPOKE CLASSICS Dunhill is one of Britain’s oldest and most respected bastions of luxury masculine elegance and classical sartorial style. But recently they’ve decided to dust away some of the inevitable cobwebs that go with being a landmark heritage brand.

In 2013, John Ray was appointed Creative Director.

Having worked at Gucci with Tom Ford for a decade, then succeeding Ford when he left, he is just the man for the job. Last year, Ray brought on board highly skilled master cutter and Savile Row whizz-kid Martin Nicholls to spearhead the reinvigoration of Dunhill’s bespoke service.

Tailoring, of course, is at the core of the business, and their in-house made-tomeasure and fully bespoke services represent the very best of the great Savile Row tradition. A bespoke suit is built through a close collaboration between the client and the master tailor, with every detail and decision made to ensure a product of unparalleled quality and fit. There are more than 300 cloths for suits and 450 fabrics for shirts to choose from, and a bespoke specialist leather service is also now available. Every man should have at least one bespoke suit in his wardrobe.

And with its new direction – staying true to the brand but playing around with the roots of its heritage – Dunhill is now the place to go.

Price on application, www.dunhill.com

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THE AGENDA

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7. CARRIED AWAY Hermès, the mega-prestigious French luxury goods house, was established in 1837, and continues to be admired the world over for its iconic Kelly, Birkin and Constance high-end designer handbags.

The 35cm candy pink matte porosus crocodile Birkin bag with Palladium hardware, pictured here, is the perfect bag for a fun soul with plenty of money who wants to make a huge statement with a mind-blowingly beautiful leather accessory.

The other ladies who lunch and have money to burn will be drooling over it. £68,000, www.quintessentiallygifts.com 8. RUSSIAN RENAISSANCE Annoushka Dukas is one of the UK’s leading fine jewellery designers, having launched her world famous company Annoushka in 2009. She has always taken an active role in searching out and nurturing new creative talent, and is currently curating a selection of exquisite jewellery by young Russian jewellery designer Ilgiz Fazulzanov. Taking his inspiration from both western and eastern cultures, he is the two-time winner of the prestigious Grand Prix in Hong Kong’s renowned Jewellery Design Competition.

The Moscow-based designer – known by his moniker Ilgiz F – has led the way in reviving the fine art of enamelling, which is enjoying a huge renaissance among contemporary jewellery designers. Both the exquisite cocktail ring and matching earrings shown here feature an 18-carat yellow gold base with white enamel poppies intertwined with a sparkling 2.90-carat burst of the rare and highly valuable gemstone alexandrite.

Ring, £14,500; and earrings, £14,000. www.annoushka-jewellery.com

THE AGENDA 9. FINE DINING Art deco was a major art movement in the 1920s – all glass, mirrors and hard, clean, geometric lines. Having faded away into the mid-century modernism of post-war Fifties, by 1970 art deco was back with a bang, evoking drama and glamorous Hollywood grandeur. It’s currently paying a return visit to the world of interiors, perhaps as a flashier, more chichi alternative to the pared-back minimalism of the industrial chic style that has lately dominated interior design. London-based Juliette’s Interiors is definitely the place to go if the ‘deco glam’ look is your tasse du thé. This high-class interiors emporium offers the highest standards with products, design and specialist service.

Founder Juliette Thomas says: “All our manufacturers are the best of their breed, and everything is made and hand-finished in factories and workshops in mainland Europe.” The dining table and chairs pictured here are the ultimate in luxe elegance. The deco-inspired stainless steel table base is plated with highly polished 24-carat gold, comes with a beveled-edge oval glass top, and is available in three sizes. The Italian-made chairs feature tactile Nubuk upholstery with cross-stitched back detail, and the legs are also covered in Nubuk with gold feet. Pure five-star living.

Table, from £9,828; chairs, £1,956 each. www.juliettesinteriors.co.uk

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10. HOLY SPIRIT Situated in Vinapolis – 2.5 acres of great wine, superior spirits, fine dining and hospitality near London Bridge – The Whisky Exchange has won a string of top industry and specialist retailer awards since opening at the turn of the millennium. For whisky connoisseurs who can afford it, their Glenfiddich 50-year-old single malt has got to be the embodiment of the famous quote from George Bernard Shaw that “whisky is liquid sunshine”. Bottled in 1991 in a limited edition of just 500 bottles, this whisky came from a batch of nine casks laid down by William Grant who helped build the Glenfiddich distillery in the 1880s. One bottle set a world record in the 1990s when it sold at auction in Italy for a whopping 99,999,990 lira (around £37,630). The whisky itself is unsurprisingly quite oaky but not overpoweringly so, and it has an elegant, complex palate of subtle dried fruit flavours. After having a quick sip, one anonymous aficionado declared that: “it tastes like being kissed by God.” Considering the price tag, if you’re after a similar religious experience, it might behove you to sip slowly. £17,500, www.thewhiskyexchange.com

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11 11. THE RAREST OF RIDES Unveiled for the first time at the 2015 Geneva Motor Show, the Rolls-Royce Serenity may be a one-off concept, but for the right money there’s little reason to believe it couldn’t be built for real, writes Danny Cobbs.

The Serenity is all about interior opulence and luxury. Granted, Rolls-Royce has never been shy when it comes to that particular department – a bespoke and handcrafted cabin is, after all, what they’re renowned for. However, by taking inspiration from the world of textiles, and using copious amounts of the finest silks, they have raised the bar even further.

The Serenity is based on a Phantom, and apart from the ‘Mother of Pearl’ three-stage paint job, polished for 12 hours – the most expensive Rolls-Royce has ever produced – externally there’s no visible difference between this and the standard model.

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THE AGENDA

It’s all about what’s been created on the inside, once its doors are opened.

Rolls-Royce says the Serenity’s cabin harks back to an age when chauffeurs would sit on leather while backseat passengers would be able to recline, cocooned from the outside world in a car which resembled the magnificence of their stately piles. Metre upon metre of silk has been used to trim the Serenity’s cabin. The rear headrests are finished in woven silk, and the headlining, too. Even the floor mats are edged in matching silk. It took up to 600 hours to complete the intricacy of the silk-clad panels, with an artist employed to handpaint the Japanese inspired royal kimono design blossom motif on the headlining.

A basic Phantom retails for just over £310,000, so how much for the Serenity?

If they’ll build you one, that is. Well, if you need to ask the price, you probably can’t afford it.

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THE AGENDA

12. FEET FIRST GJ Cleverley, in London’s posh Royal Arcade, is where you’ll find the absolute finest in bespoke British shoemaking and superb craftsmanship. Founded in 1958 by George J Cleverley, the business was handed over to George Glasgow and lastmaker John Carnera when Cleverley died in 1991. The firm’s past and present client list reads like a copy of Who’s Who. Lately they’ve made shoes for Henry Cavill, Armie Hammer and Hugh Grant, who will all be wearing Cleverley shoes in the upcoming remake of The Man from U.N.C.L.E. A pair of GJ Cleverley shoes is a work of wearable art, and the shoemaking process, from initial consultation in their wood-panelled showroom to the final finishing touches, takes around five or six months.

They certainly don’t come cheap, but as George Glasgow Sr says: “There are two things in life you should spend money on: your bed and your shoes.

Because if you’re not in one, you’re in the other.”

Price on application, www.gjcleverley.co.uk

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13 13. ARM CANDY Montblanc is a brand synonymous with making fine pens and luxury leather – but watches? If you’ve missed Montblanc’s entry into the world of watchmaking, it’s time to get up to speed, writes Jeffrey Chinn at Hettich Jewellers.

As you’d expect from a brand that plays on its instant recognisability, the Montblanc TimeWalker Chronograph Automatic has great presence on the wrist. This is a watch that’s designed to be noticed, in part for its clear-cut contours and uncluttered dial with Bauhaus-inspired form and functionality, but also for its attention to detail, the signed Montblanc crown and the skeletonised lugs which take the weight out of the 43mm sizing. It’s substantial without feeling too heavyweight, handsome without being too rugged, bold yet considered. And there’s something that feels instinctively right about this combination of traditional lines with 21st-century aesthetics.

With its elegant masculinity, Montblanc’s TimeWalker bears all the hallmarks of a high-end Swiss-made timepiece, but adds an easy wearability that we predict will see it topping quite a few wish lists this year.

The pictured TimeWalker Chronograph Automatic has also been released in a date version with white or black dial. £3,115, www.hettich.co.uk

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THE AGENDA 14. STREETS AHEAD Geoffrey Parker is a British heritage company renowned for creating superbly crafted, hand-manufactured board games.

Their latest creation is the bespoke leather Billionaire Monopoly game, and it comes just in time to celebrate Monopoly’s 80th birthday. There was a time when, in the original game, £400 was an acceptable price for a sizable plot of Mayfair. No longer.

This enhanced version of the popular game is brought properly up to date for today’s wannabe oligarchs, so Mayfair now fetches £40 million. In this deluxe version, the playing pieces have also been updated.

Instead of the dreary old thimble, an old shoe or a battleship, you’ve now got a super yacht, a champagne bottle, a polo player with a crown, and a Rolls-Royce. Hotels have changed from red wood or plastic to golden luxury, and houses now come in the form of highly desirable Georgian townhouses. After all, if you’re going to play the money game, you’ve really got to play it in style. £8,185, www.quintessentiallygifts.com

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14 15. JEWELLED SUEDE SHOES Italian maestro Gianvito Rossi is one of the unsung heroes of elegant, sophisticated and expensive ladies shoes. His style is beautifully classic and always glamorous.

He knows what a real woman of style wants to wear, and caters for that exclusive following. Pictured here, a ravishing single sole court shoe with enduringly refined appeal. Given a glamorous update for the new season, the Embellished Bari Pointed Court is impeccably crafted in the finest suede and embellished with sparkling crystal in an exotic faux-snakeskin pattern.

With a flattering low-cut topline and a modish pointed toe, these statement shoes are finished with a towering 11cm stiletto heel for an ultra-feminine silhouette. What more could a woman want? £1,785, www.harrods.com

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THE AGENDA

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16. BEST CASE SCENARIO Established in 1989, the Aluminium Case Company – formerly Original Metal – was a proverbial overnight success.

Their hand-crafted, finely fashioned cases rapidly brought the company an unrivalled reputation of distinction. Ensuring that no two were exactly the same and each had its own special personality, the cases attracted a list of elite, top-drawer and hugely pleased customers including royal photographer Lord Litchfield and even Her Majesty the Queen herself. With only 100 cases made, the recently launched special limited-edition Aviator Briefcase was designed to celebrate the spectacular moment in British aviation history when RJ Mitchell’s Supermarine S6B brought the highly coveted Schneider Trophy back to Britain in 1931, and later broke the world air speed record. Comprising hand-polished, photo-etched, chrome-plated shells with blue anodised trim, an aviator ‘cloud’ handle and a royal blue Hainsworth baize interior, this case is a first-class beaut of a briefcase. A must-have for any serious businessman with the dosh. £4,560, www.aluminiumcases.com

17. A SCENT OF MAN British-born Roja Dove is a fragrance specialist, scent historian and perfumer whose fragrances are sold in luxury department stores worldwide. He began his perfumery career in 1981 at the famous French house, Guerlain. After working there for over 20 years, he left to start his own business. In 2004, the Roja Dove Haute Parfumerie opened on the fifth floor of Harrods, where the man himself or one of his trained consultants would guide the customer to his or her signature fragrance.

One of his most exclusive men’s scents is named simply ‘Roja’. Jasmine, ylang ylang and cananga form the heart of this creation, while fresh bursts of bergamot nestle on a dry, spicy base of clove, ginger, cinnamon, cedarwood, patchouli and oakmoss.

The scent is then softened by amyris, orris, vanilla, benzion, storax and ambergris.

It is an opulent and complex scent with a depth of masculine sensuality. The bold Deco-inspired bottle comes topped with a flash Swarovski crystal cap. £2,500 for 100ml, www.harrods.com

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Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

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Appleby is the leading provider of offshore, legal, fiduciary and administration services.

Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of London, Hong Kong, Shanghai and Zurich. We are also the only firm to have offices in all three British Crown Dependencies.

Active in Jersey’s Finance industry sector since its inception, the Jersey office has an excellent reputation for corporate, dispute resolution, property and financial services as well as private client and corporate trust work.

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Ashburton Investments is a new generation investment manager. We are the investment management arm of the FirstRand Group, one of Africa’s largest financial services companies.

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Cazenove Capital Management is the wealth management business of the Schroder Group in the Channel Islands, the UK and in Asia; and is a leading provider of specialist financial solutions to private clients, family trusts, companies, charities and pension plans.

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For further information on our services, please contact: Guernsey Julian Winser, CEO julian.winser@cazenovecapital.com +44(0)1481 703700 Jersey Matthew Sutton, Client Director msutton@cazenovecapital.com +44 (0)1534 848200 www.cazenovecapital.com/ci Cazenove Capital Management is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 1994 and the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended. Schroders (C.I.) Ltd is a participant of the Guernsey Banking Deposit Compensation Scheme. Registered address at Regency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 3UF, (No.24546). Terms and conditions apply. For your security, communications may be taped or recorded.

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www.blglobal.co.uk To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

About EY EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over.

We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

Our strong network has enabled us to build close working relationships with our colleagues in EMEIA and across the world.

This allows us to respond quickly to our CI clients’ needs, drawing upon our industry experience across all our services lines.

To discuss how we can support your business, please contact one of our partners below: Mike Bane, Partner, Assurance and TAS E: mbane@uk.ey.com T: 01481 717435 Andrew Dann, Managing Partner, Assurance E: adann@uk.ey.com T: 01534 288655 Geraint Davies, Partner, Assurance E: gdavies11@uk.ey.com T: 01534 288639 Chris Matthews, Partner, Assurance E: cmatthews@uk.ey.com T: 01534 288610 David Moore, Partner, Assurance and Advisory E: dmoore@uk.ey.com T: 01534 288697 Peter Willey, CI Head of Tax E: pwilley@uk.ey.com T: 01534 288 212

Grant Thornton Limited is a leading Channel Islands accountancy and consultancy practice with offices in Guernsey and Jersey.

We are the Channel Islands member of Grant Thornton International, one of the world’s leading organisations of independently owned and managed accounting and consulting firms. We provide a range of services in the Channel Islands that include: l Audit l Accounting services l Insolvency, Recovery and Reorganisation, and Liquidation services l Out-sourced Accounting and Payroll services l Private Client services l Tax services l Business Risk services For more information please contact: JERSEY OFFICE Adam Budworth Director Business Advisory Services E Adam.budworth@gt-ci.com T +44 (0) 1534 885885 www.gt-ci.com GUERNSEY OFFICE Dave Clark Managing Director E Dave.clark@gt-ci.com T +44 (0) 1481 753400 www.gt-ci.com

i2Office Guernsey offers a more flexible and lower cost alternative to the traditional long term lease with prestige serviced offices and meeting space in Royal Chambers on St Julian’s Avenue, St Peter Port, Guernsey. i2Office provides high quality serviced offices for rental on flexible, competitive terms with top-grade technology services.

The offices can accommodate all sizes of operations, from small start-up teams to companies looking to house more than 50 people, either for a project, an interim period whilst refurbishing or moving offices, or for a long term real estate solution. i2Office Guernsey also offers a business lounge plus meeting space to accommodate board meetings, seminars, training and events for 2 to 150 people. i2Office operates high quality serviced offices and meeting rooms in over 25 locations in the UK, including Mayfair and the City of London as well as major cities such as Birmingham, Edinburgh, Glasgow, Leeds and Manchester.

For further information please contact: Michelle Morley General Manager i2Office Guernsey Ltd The Rotunda Royal Avenue St Peter Port Guernsey GY1 2HL Tel: 01481 760000 Email: michelle.morley@i2office.co.uk www.i2office.co.uk

Wendy Martin, Executive Director, Tax E: wmartin1@uk.ey.com T: 01534 288 298 David White, Head of Tax, Guernsey E: dwhite1@uk.ey.com T: 01481 717 445

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The Intertrust Group is a global quality leader in the trust and corporate services sector, providing a broad range of specialised administrative services to multinational corporates, financial institutions, alternative investment funds and private clients from every corner of the world.

Intertrust in Guernsey is one of the Channel Islands leading fiduciary companies offering a range of trust and corporate services, fund administration services, taxation services and compliance out-sourcing services. With over 130 experienced and highly qualified staff and a presence in Guernsey which goes back to 1900, Intertrust Guernsey can provide professional, personal and multi-jurisdictional services for clients all over the world.

For further information, please contact: Intertrust Guernsey P O Box 119, Martello Court, Admiral Park, St Peter Port, Guernsey GY1 3HB Phone: 44 (0)1 481 211 000 E-mail: guernsey@intertrustgroup.com www.intertrustgroup.com/en/locations/ guernsey

A leading accountancy practice, with offices based in Jersey and Guernsey, KPMG in the Channel Islands provide audit, tax and financial advisory services.

KPMG’s global network enables us to draw on our international resources and skills to meet our clients’ needs. We address complex business challenges with methodologies and processes spanning markets and national boundaries.

Fundamental to KPMG’s approach is our focus on industry sectors. Our vision is simple, to turn knowledge into value for the benefit of our clients, people and capital markets.

For further information please contact: Neale Jehan Head of Audit njehan@kpmg.com Andrew Quinn Deputy Head of Audit, andrewquinn@kpmg.com John Riva Head of Tax jriva@kpmg.com

Marbral Advisory are the largest providers of change managers in the Channel Islands.

Our portfolio of clients covers many sectors; Legal, Logistic, Utilities, Financial and Government. Our team provides businesses in transition and change with the professional support they require to achieve their business objectives and goals. Change requires governance, great communication, drive, and innovation to succeed. Our success has been built on delivery.

Whether clients need seasoned Programme and Project Managers, highly skilled and experienced Business Analysts, Human Resources Consultants, PMO designers.

Project Administrators, or training we can provide these resources. Marbral also provide a number of services to individuals actively involved in or wishing to instigate change, with coaching and mentoring support either at their offices, or within private consulting rooms.

Marbral are continuing to grow and extend their range of exciting services including group facilitation, career support and a suite of technical change and personal effectiveness training courses.

Tony Mancini Executive Director, Tax amancini@kpmg.com

For further information, please contact Alexsis Wintour – Principal Consultant Tel: 00 44 1534 744303 / 00 44 7700 33333 alexsis@marbraladvisory.com

Ashley Paxton Head of Advisory ashleypaxton@kpmg.com

Kenan Osborne – Principal Consultant Tel: 00 44 1534 744303 / 00 44 7700 753753 kenan@marbraladvisory.com

Robert Kirkby Executive Director rkirkby@kpmg.com

Jamie Pestana - Principal Consultant Tel: 00 44 1534 744303 / 00 44 77977 99601 jamie@marbraladvisory.com

www.kpmg.com/channelislands

Chris Shield - Principal Consultant Tel: 00 44 1534 744303 / 00 44 7829 736810 chris@marbraladvisory.com www.marbraladvisory.com

126 May/June 2015

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www.blglobal.co.uk To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Minerva is a family owned business that has been in existence in Jersey for over 35 years.

As a leading independent provider of trust, corporate and fund administration services, we focus on internationally active clients located in sub Saharan Africa, India, the GCC and Europe.

We firmly believe in the value of personal relationships and are familiar with how our clients and professional intermediaries operate from a cultural and business perspective within these regions.

As a full-service law firm, Parslows regularly act for clients in all fields of law from corporate commercial trust and commercial litigation to conveyancing, personal injury claims, family law, wills and probate.

Whatever your needs, be you a corporate client or an individual instructing a lawyer for the first time, you will find Parslows lawyers and staff efficient, experienced and approachable. Above all, you can be sure that we will work in partnership with you to reach a positive outcome.

In addition to Jersey, we provide services from a number of offices based in key jurisdictions including London, Geneva, Mauritius, Dubai, Singapore and Amsterdam, as well as affiliate offices in Kenya, India and New Zealand.

Our lawyers are tenacious in litigation and pragmatic on transactional matters. Our forward thinking, imaginative and meticulous attitude has ensured that we have built a growing network of loyal clients.

Have a look at our website to find out more at parslowsjersey.com

For further information, please contact:

For further information please contact

John Wood Managing Director

Dispute resolution and Court work rebecca.morley-kirk@parslowsjersey. com

Minerva Trust & Corporate Services Limited PO Box 218 43/45 La Motte Street St Helier Jersey JE4 8SD Channel Islands T +(0)1534 702930 E john.wood@minerva-trust.com www.minerva-trust.com

Corporate Commercial Trust mason.birbeck@parslowsjersey.com Personal legal services natalie.jenner@parslowsjersey.com Property and conveyancing priya.jobanputra@parslowsjersey.com Risk & Regulatory chris.austin@parslowsjersey.com SME carl.parslow@parslowsjersey.com Parslows, 17 Broad Street, St Helier, JE2 3RR 01534 630530 www.parslowsjersey.com

Specialty: Bespoke IT Development & Business Consultancy Our Products PureClient is a new pioneering client data management platform that will maintain client records for any entity or relationship.

Built with an integrated customer due diligence and risk assessment tool, PureClient has 4-eyes control throughout that will ensure your business can trust the data within it.

Designed to support FATCA, PureClient provides the necessary transparency to enable “look-through reporting” that is needed to manage sophisticated structures and automatically identify U.S. or other high risk entities and relationships.

PureClient will automatically manage new, outstanding and renewable KYC and ensure entity documentation is stored and quickly retrievable on the integrated document management platform.

PureFunds is a powerful and intuitive investment administration platform supporting Hedge Fund, Mutual Fund, Private Equity and Real Estate businesses within a single application.

PureFunds multi-currency transfer agency platform brings a new and dynamic approach to dealing and administrative activities ensuring that all client, fund and company registers are automatically updated. The flexible straight- through batch processing functionality will automatically process, file and email all client correspondence. This functionality will minimise business risk and deliver many efficiencies without compromising control, integrity or security.

To find out more how Puritas can help your business.

Contact Mike Feighan Head of Business Development T: +44 (0) 1534 874100 E: mike.feighan@puritas.co.uk

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Understanding reputational tax risk In the current tough economic climate, tax authorities are under pressure to maximise revenues and prevent tax leakage, and attitudes to offshore financial centres are hardening, fuelled by coverage in the press.

Users of offshore centres not only need to ensure their tax structuring is robust, but also that it stands up to public scrutiny.

Have you considered the reputational risk buried in your client base?

We can help you: l Review your client portfolio and identify risk areas. l Develop client take-on procedures that evaluate the business risk associated with tax structuring. l Review tax risks including substance and management and control in practice. l Assist your clients in dealing with tax enquiries and investigations.

The goal posts are moving; make sure you and your clients are not caught out.

Contact Jersey – 01534 838200 wendy.dorman@je.pwc.com garry.bell@je.pwc.com Contact Guernsey – 01481 752000 david.x.waldron@gg.pwc.com

Rathbone Investment Management International is part of the award winning Rathbone Brothers PLC (“Rathbones”), which was established in 1742. Rathbones is a leading provider of discretionary investment management services for private investors, charities and trustees.

We enjoy the stability afforded by being a FTSE-250 listed company with significant critical mass (£20 billion of funds under management as at 31 March 2013).

We offer a range of tailored investment options: l Bespoke portfolio management l Multi-manager portfolios l Unitised portfolios (the RIMI Strategies Funds) Our services are delivered by a team of innovative and experienced offshore professionals based on an understanding of a client’s specific investment and risk objectives, backed-up by the performancedriven Rathbone investment process and encompass the full universe of assets.

For further information please do not hesitate to contact: Jonathan Giles, Managing Director Jonathan.giles@rathbones.com Phil Bain, Director Phil.bain@rathbones.com Vaughan Rimeur, Director Vaughan.rimeur@rathbones.com + 44 (0) 1534 740550 www.rathboneimi.com

Rowlands has been actively supporting businesses in Jersey for almost 40 years.

With a wealth of experience, in-depth market knowledge and a genuine enthusiasm for people, careers and resourcing we are well positioned to help you make the most of your recruitment opportunities and to secure the best possible people for your business.

Our performance is based on honest, effective personal relationships and it is our aim to provide you with a long term, valuable resource that will help to improve your business. The services we provide have developed through client demand; building a reputation for professionalism and confidentiality. Our services include: l l l l l l l l l

Permanent Recruitment – all levels Executive Placements Temporary/Flexible Solutions Contract Recruitment Graduate Services Pre Employment Screening Outplacement Services Psychometric Testing Remuneration Survey

For more information on these services and how we could support you and your resourcing strategy please contact: Jeralie Pallot Managing Director Rowlands Recruitment, Trinity House, Bath Street, St Helier, Jersey JE2 4ST T: +44 (0)1534 626722 E: Jeralie@rowlands.co.uk www.rowlands.co.uk

Rathbone Investment Management International Limited is regulated by the Jersey Financial Services Commission

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www.blglobal.co.uk To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Security & Simplicity Shared We provide exceptionally secure online access systems for sending and sharing highly confidential information.

Safelink’s virtual data rooms are perfect for M&A due diligence, allowing documents to be released to potential acquirers in a tightly controlled online “room” with the ability to restrict downloading and printing. Excellent local support, a simple but sophisticated interface and powerful page-level reporting make Safelink ideal for onshore and offshore transactions.

Our secure extranet service is used by trust, legal and accountancy firms to provide 24x7 access for peers, clients and intermediaries through a fully branded portal. You can share documents and send encrypted messages while retaining complete control.

For further information, a no-obligation demonstration or to discuss your specific requirements please contact: Karl.Anderson@safelinkdatarooms.com Safelink Data Rooms Suite 15, 4 Wharf Street St Helier, Jersey, JE2 3NR T: 020 8798 3140 E: hello@safelinkdatarooms.com W: www.safelinkdatarooms.com

At Santander Corporate Banking, we believe in building long-term relationships by placing you, the customer, at the heart of all we do.

We’ll strive to become your partner, not just a finance provider and we’ll take the time to listen to you and understand your business needs. We’re setting a new benchmark in corporate banking with a team of experienced Relationship Directors based within a Corporate Business Centre in Jersey.

Every business and organisation is different which is why we’ve assembled a range of products and services, together with tailormade solutions in day to day banking, deposit taking, treasury and lending.

We are consistent in all we do; a true relationship bank that has earned the trust of our customers by doing what we say, when we say.

To start working with us today, contact our team on 01534 767750.

Wil Beaumont wil.beaumont@Santander.co.uk Steve O’Brien Stephen.o’brien@santander.co.uk Richard Le Breton Richard.lebreton@santander.co.uk Jane Bond-Webster jane.bond-webster@santander.co.uk

We are an award winning, established law firm with a multi-facet approach to law.

Renowned for our integrity, accountability and vast legal network, we build longstanding relationships with clients who return to us time and again. This is substantiated further by our Lexcel status, recognising us for excellence in legal practice management and client care.

Representing clients across the Channel Islands, UK and Europe, we act as their strategic legal partner utilising our off-shore expertise and international reach. We understand your business is unique and that you require a bespoke solution to meet your business needs and responsibilities.

In this way, we ensure our services are aligned to your legal requirements - whether you are a global corporation, a business start-up, a national government or a private client.

Our range of bespoke legal services includes: l Personal l Commercial l Dispute Resolution l Property l Employment l Family For expert legal advice that can redefine your business, please contact us today.

E: info@viberts.com T: +44 (0) 1534 888 666 W: www.viberts.com

www.blglobal.co.uk May/June 2015 129

questions with NICK KIRBY

I ❤ SYDNEY

Tea or coffee?

A mug of ‘builders’ with two sugars – I’m from Lancashire after all.

Favourite TV programme?

I’m a real telly addict, so that’s a toughie! But it would probably be a toss up between The West Wing, The Killing and The Good Wife.

Fondest childhood memory?

Having chicken and vegetable Big Soup with Crackerbreads round at my Nan’s. It always felt like a real treat.

Favourite holiday destination?

I went to Australia for the first time a couple of years ago and completely fell in love with it, so it would have to be there. Or the US – I’ve been loads of times but barely scratched the surface.

Scariest thing that ever happened to you?

I got robbed at knifepoint by four people in my flat. It turned out there was a drug dealer living two doors down from me and they got the wrong address. They kicked the door in, and when they realised it was the wrong place, they just took whatever they could lay their hands on. It took me ages to get over it.

Your best quality?

Honesty. Although some people might say I’m too honest!

Any bad habits?

I have a tendency to butt into conversations when I think people aren’t making their point quickly enough.

LAST SUPPER

Last meal on death row?

Steak and chips. Or a really hot lamb vindaloo.

Cats or dogs?

Definitely dogs – I’d love to have a Rhodesian Ridgeback.

SPINNING AROUND

130 May/June 2015

Who do you admire?

Anyone bringing up children on their own.

I honestly don’t know how they do it.

First job you had?

Washing dishes in a hotel kitchen.

It feels like slave labour when you’re 16, but there was always something exciting about getting your little brown pay envelope at the end of the week.

Worst job you’ve done?

I did a very brief stint working at an undertakers. Say no more.

What did you want to be when you were growing up?

First up, a doctor. Then a psychologist, then a writer, then an actor/singer/dancer. Which is probably why I ended up going to drama school – from which I dropped out.

Any hobbies?

Fitness – although it’s more of a lifestyle than a hobby. I’m so obsessed that I check a hotel has a gym or that there’s one nearby before I book it.

Something that drives you nuts?

Oh, I get wound up by loads of things! But people who don’t say ‘thank you’ when you hold a door open for them or let them pass by really get my goat.

Favourite quote?

‘Get busy living or get busy dying’, from the film The Shawshank Redemption.

Dream job?

That’s easy. Screenwriter.

Buzzword you hate the most?

‘Thought leadership’ makes me want to scream. Most people or companies who use it aren’t anywhere near being thought leaders.

City or beach holiday?

Can I have both? That’s why I loved Sydney. Or closer to home, Barcelona with a little side trip to Sitges.

Something about you that people might be surprised by?

I’m a qualified personal trainer and spin teacher, I can tap dance, and I used to sing for a living.

NICK KIRBY is Editor-in-Chief of BL magazine

www.blglobal.co.uk

Image: The Sydney Opera House/Peter Zurek / Shutterstock.com

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