GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS
• chasing yield • green credibility • opportunity in india • superyachts
Keeping control Retaining influence over your investment strategies
ISSUE 67 APRIL/MAY 2020
The city Edition 2020 Publishing in September FOR EDITORIAL QUERIES, CONTACT email@example.com FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK
life after lockdown THERE IS NO DOUBT these are uncertain and turbulent times. At the point of writing, the rapidly escalating global coronavirus pandemic has put more than half the world’s population in lockdown – 3.9 billion people either restricted in their movement, living under curfew or ordered to stay in their homes. The world of business has been understandably rocked. Small businesses have been forced to cease trading. Major financial organisations have had to completely rewrite their strategies and find new ways to operate, in markets that are turbulent and unpredictable – and where their staff are unable to attend offices. The battle against this pandemic has changed the world we live in. In March, the virus caused the FTSE 100 to drop by more than 10% in a single day – its worst day since 1987 – while in the US, the Dow and S&P 500 were also hit by their steepest daily falls since 1987. However, in places all around the world, people have been resilient and resourceful. As Jersey Finance CEO Joe Moynihan and Guernsey Finance CEO Dominic Wheatley tell us (page 6), the Channel Islands have been no different. From banks engaging businesses and individuals to help them through short-term financial challenges, to large organisations supplying admin and staff support to smaller businesses, the islands have witnessed a genuine coming together in a time of adversity. And, as Moynihan and Wheatley also explain, it’s that attitude – together with the Channel Islands’ infrastructure, talent and proven track record in handling change and turbulence – that will ensure the Channel Islands continue to thrive once coronavirus is under control and we return to some semblance of normality.
WEALTH MATTERS When normality, or at least some kind of ‘new normality’, arrives, investors will no doubt be keen to make up for lost time. We will no doubt see a return to an age-old discussion about the best investment strategy – ‘timing’ the market to cash in on predicted fluctuations or leaving your money in for the long run to ensure you capture the benefits of the good days. Our article (page 58) explores the pros and cons of a variety of investment strategies to drive wealth. On the topic of driving wealth, we know that a series of market pressures, from quantitative easing to increased regulation – not to mention the as-yet-unknown long-term impact of coronavirus – continue to make the search for
yield increasingly tough. Our article (page 30) examines whether the knock-on effect of that is that investors are taking greater risks. Somebody else who’s focused on wealth strategies right now is Andy Finch, who’s just taken up the role of CEO, International, at Canaccord Genuity Wealth Management after nearly two decades in a variety of roles across the business. In our interview, he sets out his strategy for making the company wealth manager of choice for investors (page 22). With 200 people working across the Crown Dependencies, and building a stronger business culture at the heart of his plans, he says the Channel Islands will continue to be the heartbeat of the organisation and set the tone for its activities worldwide.
THE BIGGER PICTURE Looking at opportunities farther afield, we reveal (page 40) some astonishing statistics around India’s wealth opportunity in the coming years. Private wealth in India practically doubled in the 10 years to 2018, and is expected to be more than double the total wealth predicted for individuals in the UK and Germany by 2028. What’s more, India’s private wealth holders are getting younger. And that’s creating some fantastic opportunities for international investors, despite continuing challenges around doing business in the region. Finally, I would like to add a few words on the opportunity I have taken up to edit Businesslife. Having written for the magazine for a number of years, I am delighted to be taking up the role of editor. The previous editors have created an excellent publication that has a very close relationship with the readership and businesses across the Channel Islands. My aim is to ensure we continue that relationship. So if you would like to drop me a line, whether with an article idea or to be more involved in the publication in other ways, please don’t hesitate to do so – firstname.lastname@example.org. Enjoy the issue. n
When some kind of ‘new normality’ arrives, investors will no doubt be keen to make up for lost time
Jon Watkins is Editor-in-Chief of Businesslife
April/May 2020 3
4 xxxx/xxxx 2019
12 Regulation watch
Is a recent antiBartlett ruling good news for the Channel Islands?
Businesslife is published six times a year by Chameleon Group +44 1534 615886 www.blglobal.co.uk
CEO, CHAMELEON GROUP Carl Methven email@example.com EDITOR-IN-CHIEF Jon Watkins ART DIRECTOR Angela Lyons SUB EDITOR Kate Wheal ADVERTISING firstname.lastname@example.org NEWS AND EDITORIAL email@example.com GENERAL ENQUIRIES firstname.lastname@example.org
6 The islands respond
How the Channel Islands are tackling the coronavirus pandemic
Investors are taking greater risks in the search for yield
The latest Channel Islands business news
Has the green agenda reached its tipping point?
40 India’s rise
Recent people moves across Jersey and Guernsey
What India’s soaring affluence means for wealth managers
Andy Finch, Canaccord Genuity Wealth Management’s new Chief Executive, International, tells us about his plans to grow the business
How families are seeking greater control when setting up wealth structures
58 Investment strategies
Are investors better off trying to time the markets or leaving their investment in for the long run?
Why women often invest more wisely than men, and project management as a career of choice
61 Personal data How taking back control of your data could prove financially lucrative
64 Test of time The enduring attraction of high-end watch brands
52 Yacht ownership
82 20 questions
Why the Channel Islands are becoming ‘home’ to many of the world’s superyachts
UBS Jersey’s Michael Clarke on being stuck in a lift with his wife, and dinner with Springsteen
The knowledge Being a ‘greener’ traveller, fishing by numbers, a guide to quantum computing, plus more
contributors The BL Global Discussion Forum
Follow us @blglobalnews Office: Meadowlands, La Rue a la Dame, St Saviour, Jersey JE2 7NQ © 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.
Following her profile of China’s investment landscape in our last issue, Amy takes a look at the opportunities India – with a rapidly rising wealth population – offers to wealth managers and investors.
Staying with wealth, David explores whether, in the face of a series of market pressures making yield increasingly hard to find, investors are finding themselves under pressure to take greater investment risks.
Alex looks at whether – during more stable times – investors are better off ‘timing’ the markets to take advantage of major shifts, or leaving their investment in for the long haul.
Meanwhile, in this increasingly data-driven world, Tim asks if you should take back ownership of your personal data – and whether this could even allow you to make money from it.
April/May 2020 5
“This situation is absolutely unprecedented…
Words: Jon Watkins
but we have the strength to recover”
Amid the emerging coronavirus crisis, BusinessLife spoke to Jersey Finance CEO Joe Moynihan and Guernsey Finance CEO Dominic Wheatley about how businesses in the Channel Islands are responding – and why the strength and structure of the islands’ financial sector mean they are well placed to return to normal as quickly as possible THE ENORMITY OF the coronavirus pandemic cannot be underestimated. As Dominic Wheatley, CEO of Guernsey Finance, puts it: “At the time of writing, one-third of the world’s population is in lockdown. That’s something like two billion people. This is absolutely unprecedented. “The sheer scale of it, and the impact it’s having on the human population, is extraordinary. It is, without a doubt, the single biggest human event of my lifetime.” The impact of that event on the Channel Islands has been clear. With businesses closed down, small- and medium-sized businesses under threat of collapse, people confined to their homes and global markets shifting erratically – as well as the threat to human life – the islands, like many parts of the world, have been thrust into uncertainty and difficulty. In the face of those difficulties, Joe Moynihan, CEO of Jersey Finance, believes that people across the islands
6 April/May 2020
have responded with a genuine sense of togetherness. “This is completely unprecedented, and it affects everybody,” he says. “But we have seen a fantastic community spirit right across the board. We have seen an incredible response to the government call for volunteers to help out in the voluntary sector and to support vulnerable people. And we have seen the banks here working very closely with the government to implement the financial help and support put forward by the government. “The banks have also been actively encouraging customers to come and talk to them – about things like mortgage holidays and loans for small businesses. “Furthermore, as this crisis was emerging, we wrote to the member firms of Jersey Finance and received a fantastic response from professionals in the industry offering pro bono support to small and medium-sized Jersey businesses – offering to help them with HR issues, with cashflow
management and other admin support. So, we’ve seen a very swift and prompt response, and fantastic community spirit, in these very difficult times.” That view is echoed by Wheatley. “In both the social environment and the business environment, this is a community event and we are facing it as a community,” he says. “We have a seen a huge bunker mentality. People have responded enthusiastically and together – and people have been trying to get on with business as best as possible. That’s very important, because sustaining our economy – both locally and internationally – is essential to our future success.” While people and businesses across the Channel Islands have clearly pulled together, Wheatley says there can be no doubt this is an unprecedented challenge for the financial sector. “It is absolutely a massive test for the Channel Islands,” he says. “There have been some transactions going ahead – some
we’ve seen a very swift and prompt response, and fantastic community spirit, in these very difficult times Joe Moynihan businesses have been keen to get things done quickly in light of the fast-moving events – but a lot of business has also been cancelled or postponed. “That is of course creating challenges across many areas and sectors. But what’s important is that we retain our overall infrastructure, conduct the business that’s available to us and deal as sympathetically as we can with those seriously impacted – such as suppliers and smaller businesses – so we can help them trade through this. “At some point, we will come through this pandemic and Covid-19 will either become one of those diseases we live alongside or it will disappear altogether. “Either way, there will be a return to some semblance of normality. That may not be the same normality – it may well be
different – but sustaining as best we can our economic infrastructure and economic activity is vastly important, so that we can respond as best we can when that time comes. We all want to come out of this as soon as possible and to return to being a successful economy and community.” Moynihan agrees, and adds that both the structure and strength of the Channel Islands mean they will quickly return to buoyant times once the pandemic has passed. “There is no doubt that we have the strength in depth of expertise here in the Channel Islands to bounce back from this,” he says. “We don’t yet know exactly what the world will look like when we come out of all of this. But we have proven over the years that the
Channel Islands have the ability to adapt to a change of circumstances. And, in this particular case, we will of course be responding along with the whole world rather than on our own. “Coming out of all of this, I expect Jersey Finance and the market itself to continue the great work we have been doing to show the world that we are an international finance centre of choice and that we are open for business. “Why should we be confident we should recover? We should be confident for all the same reasons we were confident in our operations before this crisis – because of the quality of the jurisdiction, the quality of the infrastructure and the quality of the people. Those things won’t change.” n
April/May 2020 7
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in the NEWS ISLANDS MOVE UP RANKINGS Jersey and Guernsey have seen a marked improvement in their rankings in the latest Global Financial Centres Index from Z/Yen. GFCI 27, which measures the competitiveness of global finance centres, has moved Jersey up 10 places to 49, with Guernsey rising 19 places to 73. The new edition covers 120 financial centres, with the main index increasing from 104 to 108. The main findings were as follows: • There was a high level of volatility, with 26 centres rising 10 or more places and 23 falling 10 or more. This may reflect the uncertainty around international trade and the impact of geopolitical and local unrest. • Nine of the top 10 centres in the index had lower ratings. Of the next 40, 24 improved their rating. • New York retains first place, extending its lead over London from 17 to 27 points – though the ratings for both fell by more than 20 points. • Tokyo moved up three places to third, while Hong Kong fell from third to sixth. Five Asian centres are now within 10 points of London. • Eastern Europe and Central Asia showed the strongest regional improvement, with 12 centres moving up.
8 April/May 2020
BDO LAUNCHES GUERNSEY ACTUARIAL PRACTICE BDO has launched an actuarial non-life offering to Guernsey-based captive insurance managers. The recent merger between Moore Stephens and BDO in the UK has given BDO in Guernsey access to 10 non-life actuaries. Nathan Hodder, Audit Director at BDO and Sector Head of Insurance in Guernsey, said the move enhances the service lines available to Guernsey-based captive insurance managers. “We’ve had a positive welcome from captive insurance managers,” he said. “Insurance is such a vital sector on the island and we wanted to offer our financial services expertise into a specialist growth area.” CONDOR TAKEOVER COMPLETED The sale of Condor Ferries to Brittany Ferries, announced last year, has been finalised. Brittany Ferries is the minority shareholder in the company. Last November, Columbia Threadneedle European Sustainable Infrastructure Fund and Brittany Ferries agreed with previous owner Macquarie Infrastructure and Real Assets to acquire 100% of Condor Ferries, which operates between Guernsey, Jersey, the UK and St Malo in France. Christophe Mathieu, CEO of Brittany Ferries, commented: “We are committed to working closely in the months and years to come to ensure the best service to customers and support to our friends and colleagues in the Channel Islands. It will be business as usual for Condor, but within a new ownership structure.”
Done Deals Collas Crill has advised JTC on its acquisition of Sanne’s private client business. The deal, subject to the relevant regulatory approvals, completed on 13 March and will result in existing Sanne clients and staff transferring to JTC. The Collas Crill team included Group Partner Dilmun Leach and Of Counsel Fiona Wilson. Collas Crill has also advised developer Le Masurier on its £70m Bath Street redevelopment project in St Helier, which will accommodate the island’s second Premier Inn. Partner Pamela Doherty (pictured) led the team acting for Le Masurier, advising on the development structure, lease agreement, funding, planning and construction. As well as a Premier Inn, 144 flats, commercial units and car parking will be built on the site. Appleby has acted as lead counsel for OakNorth Bank in a financing arrangement for LV Care Group. LV Care used a bespoke debt finance package from OakNorth Bank to refinance three care homes in Jersey and acquire a site in Jersey and one in the Isle of Man. The transaction included a facility for LV Care Group to redevelop one of its existing sites. This was OakNorth Bank’s first Jersey law financing. Appleby Partner James Gaudin and Associate Daniel Healy led the Appleby team on the financing aspects. Partner Tim Hart and Counsel Jonathan Anderson advised on the real estate aspects. Intertrust has assisted Bansk Group with the launch and servicing of its new private fund structure, established as a Guernsey Private Investment Fund comprising Bansk Group GP and Bansk Group LP. The sole purpose of the fund is to act as a private investment vehicle for the assets of a family trust. It recently completed its initial close at circa $1.1bn. Bansk is an investment group focused on a range of public and private companies. Mourant’s Guernsey corporate team have advised Johannesburg and Bermuda Stock Exchange-listed gemstones supplier Gemfields Group on its admission to the AIM segment of London Stock Exchange. The listing will seek to provide UK, European and international investors with easier entry into the precious coloured gemstone market, improve share trading liquidity and widen Gemfields’ investor base. The Mourant team was led by Partner John Rochester and Counsel Alex Davies, who advised on the Guernsey aspects of the listing, alongside UK Counsel Howard Kennedy. n
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MERGERS AND ACQUISITIONS JTC has announced its acquisition of US-based fund administration services provider NES Financial (NESF). JTC says the deal, subject to regulatory approvals, will help it develop its Institutional Client Services business in the US and develop its technology capabilities. Founded in 2005, NESF has 58 staff, all of whom will join JTC, delivering services from Boston, Massachusetts, and San Jose, California, the firm’s HQ. NESF Founder, Chairman and CEO Michael Halloran will become JTC’s Global Head of Technology Strategy and join the JTC Group Holdings Board. SandpiperCI has announced that, as a result of uncertainties surrounding Covid-19, it has been unable to complete its acquisition of The Guernsey Pub Company. The acquisition, announced in January, would have seen Sandpiper taking the entire share capital of the business, the holding company of Guernsey brewery Randalls. However, the sale and purchase agreement was terminated on 1 April. Sandpiper said it was unable to fulfil the conditions of the placing agreement required to achieve admission of the placing shares to the Official List of TISE. Asset management consultancy MJ Hudson, which has offices in Jersey, has acquired US and Canada-based marketing services and analytics business Meyler Capital. Formed in 2012, Meyler has clients in private equity, venture capital and hedge funds. Its 50-plus mostly North American clients will add to MJ Hudson’s 200 in the region, and the company will take on the MJ Hudson Meyler brand. Financial services provider LGL Group has acquired Mauritius-based Associated Consultants Limited (ACL), adding a jurisdiction to its operations in Jersey, Luxembourg and London. Founded in 1993, ACL provides corporate administration services to corporates and alternative asset managers. LGL says the deal will increase its exposure to the emerging markets of Africa and India. IQ-EQ has acquired Blue River Partners, a US provider of outsourced solutions to alternative asset managers. The deal will add to IQ-EQ’s presence in the US private equity and hedge fund services market. Founded in 2009, Blue River pioneered back-office outsourcing for alternative asset managers. Its CEO Mark Fordyce and President Michael Minces will now lead IQ-EQ’s US operations. n
JERSEY AMENDS SUBSTANCE RULES IN COVID-19 CRISIS The authorities in Jersey have reaffirmed the island’s commitment to the business community in light of the Covid-19 pandemic by amending the rules around economic substance. The jurisdiction has confirmed the circumstances under which it will not determine – under Article 6, Taxation Law 2019 – that a company has failed the economic substance test. This will only apply to adjustments to normal operating practices, and to the extent they are required to mitigate the threats from this outbreak. For example, a company would normally hold directors’ meetings in Jersey, but these meetings are temporarily being held virtually to allow those individuals – or alternatives – to attend. Similarly, where a company incorporated in another jurisdiction has been tax-resident on the basis of control and management in Jersey, and the Comptroller considers any Covid-19 changes are temporary, this will not disturb the determination of corporate tax residence from that before this outbreak. Joe Moynihan, CEO of Jersey Finance, said: “The measures will help to reassure Jersey’s finance industry and protect the 14,000-strong workforce specialising in banking, law, governance, accountancy, investment, private wealth and corporate activity. “We stand ready to help support global financial flows through these unprecedented circumstances. But it is
critical that companies show evidence where extreme measures prohibit them from holding an adequate number of board meetings on the island with directors in person, or necessitate meetings to be held by telephone or other means and on a temporary basis.” • See pages 6-7 for more on coronavirus JERSEY FINANCE WELCOMES BANKS’ SUPPORT Jersey Finance has welcomed measures introduced by the Government of Jersey to support island businesses: • £50m in a new Jersey Disruption Loan Guarantee Scheme • A Special Situations Fund to support larger businesses • Consideration of a small business emergency fund • Deferral of Social Security contributions/GST payments • Deferrals or rent renegotiations • Flexibility over utility bills • 1Gbit broadband upgrades. The Jersey Disruption Loan Guarantee Scheme will support new bank lending to businesses, backed by a Government of Jersey guarantee arrangement. The scheme, with an initial value of £50m, will remove uncertainty for banks, which may be reluctant to extend new credit to otherwise viable businesses. n
April/May 2020 9
Appointments Zedra has appointed Steven Bowen as Managing Director of its Jersey office, leading the development and growth of the business’s corporate, fund administration and active wealth business on the island. Steven takes up the new role having served as Chief Risk Officer at JTC Group for the past year. Prior to that, he was Group Managing Director and Head of Jersey at Minerva Trust. Steven’s 35-plusyear career in the offshore financial services sector has also included 20 years with JP Morgan Chase and six as Managing Director of Standard Bank Offshore Trust Company Jersey.
Jersey-based investment advisory business SaSo Strategic Advisers (SaSo) has appointed Peter Smart as Head of Investments. Peter will be responsible for a new dealing and managing investment function within SaSo, following the granting of a full-service advisory, dealing and managing licence by the Jersey Financial Services Commission. Peter joins from Bridport Investor Service, where he has served as CIO for almost three years. His Jersey-based career has also included 22 years with Brewin Dolphin and five with Chase Manhattan Bank, having started out as a bond dealer with HSBC Private Bank.
JTC has appointed Paul Fosse to the position of Director of Banking in Jersey. Taking up the new role, which forms part of the financial services provider’s Commercial office, Paul will work with partner banks, clients and the treasury team to build on services. He brings to the role more than 20 years’ experience in London, Paris and Jersey, working for Thomson Reuters, Santander and Mourant. He has spent the past 10 years with Jersey-based BankClarity, creating commercially led solutions for trust, family office and funds clients, focusing on banking and treasury/ foreign exchange offerings.
The Bank of NT Butterfield & Son has appointed Jane Pearce (pictured) as Group Head of Trust, based in Guernsey. Jane most recently served as Regional Managing Director of Vistra’s UK, Ireland and Channel Islands businesses, and she has also held senior positions in Jersey with EY, Deutsche Bank, Kleinwort Benson and Ogier. In addition, Paul Hodgson, former Managing Director of Butterfield Trust (Guernsey), has been named Deputy Group Head of Trust, having joined Butterfield in 2000. And Lindsay Ozanne, formerly Deputy Managing Director, has become Managing Director of Butterfield Trust (Guernsey).
Appleby has named Stuart Tyler (pictured) as a Partner in its Guernsey office. Stuart, who takes on the role of Group Head in the Corporate department in Guernsey, joins Appleby having spent 13 years with Babbé in Guernsey. Prior to this, he worked at Stephenson Harwood in London. In addition, Mark Brady has been appointed Group Partner in the Jersey office. Mark previously worked in private practice in Scotland, before moving in-house at Deutsche Bank and latterly with Standard Life Aberdeen. He specialises in banking and finance, with a focus on fintech.
PraxisIFM has appointed Robert Fearis (pictured) as its CEO. Previously the firm’s Group Head of Private Client and Corporate, based in Guernsey, Robert was a founder shareholder in PraxisIFM and has been part of the business since 1992. His expertise covers a variety of structures for private and corporate clients and regulated financial services businesses. Joining Robert in the top team is Richard Morris, who has been appointed Group Chief Financial Officer, based in the firm’s Jersey office. Formerly Group Reporting Manager, Richard joined PraxisIFM in 2016.
10 march/april 2017
Guernsey Finance has appointed Rupert Pleasant (pictured) as its new Chief Executive. He will take over from Dominic Wheatley, who is due to leave the role in June. Rupert joins the promotional body from Beauvoir Group, where he was Acting Group Managing Director. He has a strong background in the private wealth sector, with nearly 30 years working in Guernsey and abroad for firms including Lloyds Bank, Barclays Wealth, Credit Suisse, Investec and PraxisIFM. Rupert has previously worked in Hong Kong and South Africa, which are regarded as two important markets for Guernsey’s finance sector.
Jersey-based fiduciary and administration solutions provider VG has appointed Debbie Lumsden as its new Private Client Director. Debbie joins VG from Affinity Private Wealth, where she has served as Trust Director for the past five years. Prior to this, she spent more than nine years as a Director at Nedbank Private Wealth. Debbie has built up a strong track record in analysing and developing business opportunities and managing client relationships, as well as dealing with complex structures and transactions across a variety of jurisdictions for high-net-worth individuals and families.
Collas Crill’s Guernsey-based International Private Client & Trusts team has recruited David Cooney as Partner. David joins from Charles Russell Speechlys, where he has served as a Zurich-based Partner for the past three years, specialising in international private client work. Prior to this, he led Ogier’s Private Wealth team in the Cayman Islands. David works with trustees and individuals to establish wealth planning structures. He also advises on establishing complicated structures with connections to multiple jurisdictions. David’s relocation to Guernsey is currently on hold due to the ongoing coronavirus pandemic.
RBS International has named Seán O’Callaghan as Head of Institutional Banking within its newly revamped Institutional Banking division, based in St Helier. Seán brings to the new position a total of 19 years’ experience working for RBS International on the island, prior to which he worked in a variety of roles for Allied Irish Banks in Ireland. Part of RBSI’s Institutional Banking team since 2010, Seán most recently led the funds banking operation. In his new position, he leads 34 bankers based on the island, who will provide a range of banking services to local administrators and asset managers.
Guernsey-based investment company Polygon Collective has appointed Paul Wright as Chief Executive Officer and Joanna Leese (pictured) as a Director. Paul, the firm’s former Chief Operating Officer, has previously served as Finance Director for the Blue Diamond Group and the International Energy Group. Joanna, who joined one of Polygon’s investment companies in 2008, brings significant system development, change management and accounting expertise to the board. She has spent the past 12 years with Vantage Group (Channel Islands), most recently as IT Director.
VG has promoted Iain Mason (pictured) to the role of Managing Director, replacing Mark Hucker, who stepped down in January. Iain brings to the new role more than 30 years’ experience within Jersey’s financial services industry. He joined VG in 2012 to provide transactional, regulatory and risk management advice to client teams and to help deliver clients’ needs. He has served as the firm’s Chief Operations Officer for the past five years. Iain will continue to work with Mark Hucker – who has been moved to the role of Executive, Strategy and Projects – to deliver VG’s strategy.
www.blglobal.co.uk march/april 2017 11
R E GU L AT I O N WATCH
Anti-Bartlett clauses – some clarity at last?
12 April/May 2020
LYDIA ESSA Director, Trust Corporation International
Does a recent Hong Kong ruling on the effect of an anti-Bartlett clause spell good news for trustees in the Channel Islands?
t is a well-established principle of trust law that (in the absence of contrary provision) a trustee has the same duty to safeguard a trust-owned company as it would any other asset, notwithstanding that the trustee may not possess the requisite skills to contribute to the management of that company. The result can be a tension between commercial imperatives and the fiduciary responsibilities of the trustee.
HOW TO OVERCOME THIS
An ‘anti-Bartlett’ clause is often included in a trust instrument to circumscribe a trustee’s duty to intervene in the affairs of underlying companies and delimit the trustee’s responsibilities vis-à-vis that asset. It is different to an exclusion clause, which excludes liability for that which a trustee has responsibility. It instead allows the company to function without interference from the trustee and generally relieves the trustee from any duty to intervene in the absence of actual knowledge of dishonesty or misappropriation of funds.
WHAT ARE THE PRACTICAL EFFECTS OF AN ANTI-BARTLETT CLAUSE?
This question has long exercised professional trustees. But the most recent jurisprudence on anti-Bartlett clauses in Zhang Hong Li and another v DBS (Hong Kong) Ltd and others has arguably brought some long-awaited clarity. In November 2019, the Hong Kong Court of Final Appeal (CFA) delivered its highly anticipated judgment, which overturned earlier judgments. It decided that the anti-Bartlett clauses in that Jersey law trust deed exempted the trustee from any liability incurred in transactions undertaken by the trust’s underlying company at the instigation of its appointed investment manager, the wife of the settlor. In a unanimous judgment, it was held that the provisions of the trust deed restricted
the powers of the trustee to interfere in management of the underlying investment business (in the absence of actual knowledge of dishonesty). Importantly, there was not, and could not be, any ‘high level supervisory duty’ because any such duty would be inconsistent with the anti-Bartlett provisions in the deed. The judgment has brought home the importance of settlors, trustees and advisers agreeing the scope and intended effect of any anti-Bartlett clause at the outset of a trust relationship. It may be that a more appropriate balance of power can be achieved by expressly restricting the trustee from exercising voting rights that attach to its shareholding without the consent of a nominated person. This is quite different to being empowered not to do so by a traditional anti-Bartlett clause. It is also worth remembering that if there are investment management agreements or other contracts in place delegating trustee authority, the trustee will also always need to understand fully its duties and obligations under that agreement.
THE PRUDENT TRUSTEE
Whatever the nature of the anti-Bartlett provisions and delegation of investment powers, a prudent trustee will still undertake a general review of underlying investment activity. It will seek to maintain a sufficient level of oversight to ensure an appropriate understanding of underlying investment activity and comfort that any mandate has been observed. This is not, of course, the same as directly intervening in the underlying management of the company. Finally, while the Zhang judgment helpfully endorses a carefully drafted anti-Bartlett clause, it is worth noting that the case was based on a relatively unique set of facts. All underlying investment decisions were made and executed by an investment adviser who was herself connected to the structure and had, for all intents and purposes, acquiesced to the investment activity – in a deep global financial crisis unforeseen by most at the time. It remains to be seen, therefore, how the judgment will be interpreted in the Channel Islands and elsewhere. Watch this space. n
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record market attention to coronavirus outbreak
Market attention to coronavirus, measured by mentions in broker reports and financial media
Sars 2003 Score
swine flu Score
CORONAVIRUS: A CRISIS LIKE NO OTHER
The chart shows the sheer level of attention coronavirus has received among broker reports and financial media compared with other large-scale crises â&#x20AC;&#x201C; with coronavirus attention more than double that around SARS. The BlackRock Investment Institute identified specific words related to major disease outbreaks since 2003, then used text analysis to calculate the frequency of their appearance in the Refinitiv broker report, as well as the Dow Jones Global Newswire and Reuters News databases. A zero score represents the average level over its history, from 2003 up to that point in time. A score of one means the attention level is one standard deviation above the average. The BlackRock Investment Institute adjusted its analysis for whether the language analysed reflected positive or negative sentiment, and assigned a score. It weighted recent readings more heavily in calculating the average.
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THE BAHAMAS • BERMUDA • C AYMAN ISL ANDS • GUERNSEY • JERSEY • SINGAPORE • SWITZERL AND • UNITED KINGDOM Butterfield Bank (Guernsey) Limited (“BBGL”) is licensed and regulated by the Guernsey Financial Services Commission (“GFSC”) under the Banking Supervision (Bailiwick of Guernsey) Law, 1994, The Protection of Investors (Bailiwick of Guernsey) Law, 1987 and the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000, each as amended from time to time. Company Registration No. 21061. BBGL is a participant in the Guernsey Banking Deposit Compensation Scheme. The Scheme offers protection for ‘qualifying deposits’ up to £50,000, subject to certain limitations. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details are available on the Scheme’s website www.dcs.gg or on request. Butterfield Trust (Guernsey) Limited (“BTGL”) is licensed and regulated by the GFSC under the Regulation of Fiduciaries, Administration Business and Company Directors, etc, (Bailiwick of Guernsey) Law, 2000, as amended. Company registration No 31645. BBGL and BTGL are both registered under the Data Protection (Bailiwick of Guernsey) Law 2017 and are registered for the purposes of The Companies (Guernsey) Law 2008. Their registered office is P.O. Box 25, Regency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 3AP. Butterfield Bank (Jersey) Limited (“BBJL”) is regulated by the Jersey Financial Services Commission to conduct deposit taking business under the Banking Business (Jersey) Law 1991 (as amended), investment business, fund service business and money service business pursuant to the Financial Services (Jersey) Law 1998, (as amended). BBJL is registered under the Data Protection (Jersey) Law, 2018 and is registered with the Jersey Registrar of Companies for the purpose of the Companies (Jersey) Law 1991 (as amended). BBJL’s registered office address is St Paul’s Gate, New Street, St Helier, Jersey JE4 5PU. Company registration number 124784. BBJL is a participant in the Jersey Bank Depositors Compensation Scheme. The Scheme offers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the States of Jersey website www.gov.je/dcs, or on request. BBGL, BTGL and BBJL are wholly-owned subsidiaries of The Bank of N.T. Butterfield & Son Limited. Photo by Lachlan Dempsey on Unsplash.
CO M M E N T
Project management shows its value
16 April/May 2020
SUE KERSHAW President, Association for Project Management (APM), and Managing Director Transportation at Costain Group
Now accounting for nearly 10% of all UK full-time jobs, project management is far from a ‘nice to have’. A new initiative is raising awareness of its value to the Channel Islands
t APM, we have demonstrated that project work is an increasingly important profession for the economy. The APM and PwC 2019 Golden Thread Report1 identified that project work is already employing one in every 12 UK full-time employees, and generating £156bn gross added value to the UK economy. As the chartered body for project management, with a current student membership of approximately 9,000, we are working to encourage a pipeline of talent through clear project career paths. These are supported by our partnership with the Nottingham Trent and Anglia Ruskin universities offering APM-linked degrees. This link means no further qualifications are required in order to apply for chartered status — only project experience. Encouraging the project profession as a ‘first career’ option is considered essential by APM for building the skills needed by the economy of a modern world. Project management is a profession that provides a diverse and challenging career, one that can make a difference across society. While project roles exist in every industry, the profession is mindful of the aspiration to make societal change, with events such as the IPMA 31st World Congress 2019 in Mexico, which focused on climate change. We believe these aspirations align us with the ideology of the young business professionals of tomorrow, which APM is further supporting through Projecting the Future - a ‘big conversation about the future of project management’ that considers the impact on our economy and society2. Project management is also a profession for inclusivity and diversity that, as a young
profession without preconceptions, avoids stereotyping. I was delighted, in my capacity as the first female president of the APM, to deliver the keynote speech to 700 attendees of the 2019 Women in Project Management conference, which grows in attendance each year. In the UK, the APM Education team, led by Caspar Bartington, has been working hard to visit sixth form colleges and universities to highlight the virtues of the project profession and encourage students to consider this career. Student membership continues to grow rapidly and so this message is being heard. In the Channel Islands, a new Channel Islands APM Committee has been formed, with Jerseybased APM Fellow Carl Ibbet as its architect. In Guernsey, Scott Crittell, who is the first Chartered Fellow in the Channel Islands and an APM Committee member, has been talking to sixth form career heads in both islands’ schools about project careers. The latter led to Scott coordinating with Lesley Mourant, who works for Sionic, a global project consulting business with a Jersey office. Lesley has attended career fairs in Jersey schools to raise awareness of the opportunities that project work may offer the future workforce. “It’s great showing students they have access to varied and rewarding careers outside of the more traditional local roles in finance,” she told me recently. While the project profession is still largely a hidden resource, the skills required equip its professionals to work across industries in any country. This is a passport to a career and a profession for the 21st century. The profession is increasingly finding itself positioned at the institutional top table, with huge opportunities available to future employees. n For more on APM, go to www.apm.org.uk See the APM and PwC 2019 Golden Thread Report at www.apm.org.uk/goldenthread 2 See the APM’s Projecting the Future site at www.apm.org.uk/projecting-the-future 1
OUR CLIENTS THINK AT A SPEED VERY SIMILAR TO OUR OWN. FAST. Most successful people are quick thinkers, itâ&#x20AC;&#x2122;s a mindset we share. They want to achieve success not only through the money they have in the bank, but by their enthusiasm for living and working on their terms. Amen to that. If you like this approach, maybe we should talk.
Call: +44 (0)1481 706483
Minimum eligibility criteria and terms and conditions apply. Investec Bank (Channel Islands) Limited is part of Investec Private Banking and a wholly owned subsidiary of Investec Bank plc. This document is distributed by Investec Bank (Channel Islands) Limited which is licensed in Guernsey by the Guernsey Financial Services Commission under the Banking Supervision (Bailiwick of Guernsey) Law,1994, as amended, and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended, to carry on banking and investment business. Registered Address: Glategny Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WR. Registered Number: 5845. The Jersey Branch of Investec Bank (Channel Islands) Limited is regulated by the Jersey Financial Services Commission to carry on deposit taking business under the Banking Business (Jersey) Law 1991, as amended. The Jersey Branch address is One The Esplanade, St Helier, Jersey, JE2 3QA. The Isle of Man Representative Office of Investec Bank (Channel Islands) Limited is regulated by the Isle of Man Financial Services Authority and its place of business address is Second Floor, The Old Courthouse, Athol Street, Douglas, Isle of Man, IM1 1LD.
CO M M E N T
Women in investing
ROBERT BROUGHTON Senior Client Advisor, UBS Wealth Management Jersey
UBS’s Investor Watch, which reports on surveys conducted between September 2017 and January 2019, looks at how women around the world engage with their finances – and reveals that they often outperform their male counterparts
onventional wisdom often says that women don’t participate much in their financial wellbeing, letting their spouses take the lead instead. But our research shows this is only partly true. In fact, more than 80% of women globally are highly involved in their short-term finances, such as daily expenses, budgeting and cash flow. Surprisingly, however, almost 60% of women do not engage in the most important aspects of their financial wellbeing: investing, insurance, retirement and other long-term planning. And, while figures show that, in general, most women defer to their spouses on longterm financial decisions, there are significant differences across markets. For example, women in Singapore (72%), Hong Kong (71%) and Switzerland (69%) are the most likely to leave financial decisions to their spouses. For women in the UK (62%) and Germany (60%), this figure sits at around 60%, with just over half of women in Italy (52%) and the US (54%) deferring. Notably, women in Brazil (45%) and Mexico (39%) are the least likely to defer to their spouses. More than half of these women either make long-term financial decisions jointly or take the lead themselves, the highest among all the markets surveyed.
WHO KNOWS BEST?
The reason women defer to their spouses also differs, often dramatically, across markets. For example, women in the US and Singapore opt out of long-term financial decisions because they believe their spouses know more. Meanwhile, women in Italy and Brazil say they have more urgent responsibilities. Women
18 April/May 2020
in Switzerland and Germany say their spouses never encourage their involvement. Women who defer to their spouses have many reasons for doing so, such as having more pressing responsibilities, a lack of interest in long-term finances and even discouragement from their spouses. However, the main reason has to do with women’s assumptions about who knows more. A full 82% of women think their spouses know more about long-term finances, citing this belief as their top reason for deferring.
This lack of confidence in investing is unfortunate. Research carried out by Warwick Business School, which surveyed 2,800 investors between 2015 and 2018, found that not only did female investors outperform the FTSE 100 during the period of monitoring, but they also outshone their male counterparts. While annual returns on investments for men were on average a marginal 0.14% above the performance of the FTSE 100, annual returns on the investment portfolios held by women were 1.94% above it. This means returns for women investing outperformed men by 1.8%. Regardless of the rationale behind the lack of female engagement, failing to plan for the future carries risk. As women around the world live longer, the likelihood of becoming widowed or divorced increases and it is important to consider the consequences of these life-changing occurrences and the impact they can have on lifestyle. Inevitably, women who plan for these possibilities will be better prepared. We found that women who approach longterm decisions in partnership with their spouses report soaring levels of satisfaction. Nearly all have high confidence in the future, feel less anxious about money and make fewer financial mistakes. There is also an argument that by sharing decisions jointly, both women and men can face the future with optimism – and set an example of financial partnership for generations to come. n © UBS AG, Jersey Branch, is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business.
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0 - 202
LIQUORICE ALLSORT LOVER
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CLASSICALLY TRAINED BALLERINA
How ESG is being
driven by what
really matters The financial services sector is playing an active role in not just preserving the future of our planet, but also considering broader social factors. Many think this is solely client-driven, but Ian Rumens, Global Head of Private Wealth at Intertrust, insists that companies need to strive to be better for their own sakes as well as their clients’ and wider society THERE ARE SEVERAL leaders in global finance for whom everyone sits up and takes notice. The former Governor of the Bank of England Mark Carney is one such figure. European Central Bank President Christine Lagarde is another. And Larry Fink, the Chief Executive of the world’s largest asset manager BlackRock, is also a voice worth listening to. All three of them have something in common, beyond being held in universal high regard in the world of international finance – they’re all concerned by climate change as an existential threat to life as we know and enjoy it today.
20 April/May 2020
In a letter written to CEOs at the beginning of this year, Fink said: ‘The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.’ Carney and Lagarde both spoke of the need to speed up climate risk assessment and disclosure when they fronted the launch event for the 2020 UN Climate Summit, due to take place in Glasgow at the end of the year. If financial services firms were able to bury their heads in the sand on environmental issues before, they certainly aren’t now.
CLIENTS DEMAND CHANGES For institutions, of course, it’s important to adapt to meet shifting client demand. We’re having increasingly regular conversations with our international client base about what are often referred to as environmental, social and governance (ESG) factors. This is also called socially responsible investing, sustainable investing, green finance, impact investing and much more besides. But the phraseology we use is immaterial; what it boils down to is what matters to the client.
begin to take control of the wealth. Family offices are already addressing the client demand for ESG. According to the UBS Global Family Office Report 2019, one in three family offices is engaged in sustainable investing, and the average allocation from those entities is 19% of their portfolio. Those figures are certain to increase over the coming years.
ORGANISATIONS NEED TO CHANGE
A generational perception shift is already under way and that’s certainly contributing to the increased popularity of ESG. Millennials are much more concerned with the environment, being socially responsible and working for companies that prioritise their social and environmental governance and do not engage in harmful practices that detrimentally impact the planet. The things that matter to them – whether it’s ethical labour practices or sustainable building projects – are leading their decisions when it comes to wealth management. Previous generations generally concentrated on making their fortune and then, upon retirement, considering and supporting philanthropic causes that resonated with them. For the current generation, making money goes hand-in-hand with exploring the good that it can do. That dynamic is only going to become more prevalent as the current teenagers and twenty-somethings
Of the one in three family offices surveyed to be engaging in sustainable investing, 46% have adopted the integration of ESG factors into analysis and evaluation. This highlights an important facet of the ESG movement – reporting. ESG is not just affecting how we manage our clients’ assets, it’s affecting the way we report on those assets as well. This isn’t easy. There are a multitude of standards and criteria for reporting on ESG and none of them are universally accepted or applicable. Reporting for a manufacturer is going to require totally different metrics to those that are useful for a real estate fund. One wide-ranging standard that some organisations are integrating into their measurement is the UN’s Sustainable Development Goals. These attempt to address everything from climate change to poverty eradication to equality of opportunity – and the UN wishes to achieve them all by 2030. But factoring ESG into our client work is just the start. What organisations need to do is start looking inward and asking themselves that same question clients are asking – what matters to us? The company that doesn’t start to prove it’s working towards a better, more sustainable future isn’t going to survive to be a part of it. To return to Larry Fink’s letter: ‘Climate change has become a defining factor in companies’ long-term prospects.’ The next generation doesn’t just consist of future clients; it’s also made up of our future investors, workforce, political leaders and public figures. They will demand – far more vocally than any generation before them – that companies reflect their environmental focus. At Intertrust, our ESG policy is to play our part as a leader in responsible business practice. Within our own business, we are taking
ESG is not just affecting how we manage our clients’ assets. It’s affecting the way we report on those assets as well
a broad view, addressing everything from macro initiatives such as the Universal Declaration of Human Rights and antibribery measures, to a local focus on positively impacting the local economies where we live and work. In the Channel Islands, we’re aligning ourselves with Guernsey Green Finance to ensure that our offering reflects what the industry is aspiring to achieve and that our employees and solutions meet the best local standards. Our team is also working on a number of green transactions, ranging from green mortgages through to investments in solar farms. Our goal is to combine long-term profitability with social responsibility and ESG factors. That ambition is good for our clients, our employees, our industry and, most important of all, our world. n
FIND OUT MORE
For more information, contact Ian Rumens, Global Head of Private Wealth, Intertrust Tel: +44 1534 673 793 Email: firstname.lastname@example.org
Information correct as of January 2020. For disclaimer and legal messages, please visit the Intertrust Group website: intertrustgroup.com/legalnotice
April/May 2020 21
After 18 years working in a variety of roles across Canaccord Genuity Wealth Management, Andy Finch recently took over as CEO, International, at the wealth management firm. He sets out his vision for ensuring the business remains a leader in the sector – and why the Channel Islands remain integral to that
Words: Jon Watkins Pictures: Chris George
What drew you into the finance and wealth management space? I worked out very early on that being a butcher wasn’t for me – so I left school at 16, right in the teeth of the Thatcher revolution, and was fortunate enough to be offered a job at the local Lloyds Bank. Initially, I worked in behind-thescenes admin roles before gravitating to the banking hall – and again that helped me understand the value of service and
22 April/May 2020
building relationships with clients. I realised quite quickly, however, that career banking wasn’t what I wanted to do, so I moved to what was then the Standard Life Assurance Company on the insurance and pensions side and was responsible for a panel of local IFAs – persuading them to recommend our products to their clients. From there, I moved to a similar role at Zurich Financial Services. What I discovered when I got there was a business that really understood the importance of investing in its staff and giving them the opportunity to grow and develop. That’s something else I’ve taken with me from those early days and added to my own philosophy and approach. After 12 years with the business, I moved to Guernsey in 1998 – relocating my young family and taking up a role on the islands. And then in 2002, I moved to Canaccord Genuity Wealth Management. Tell us about your route through Canaccord to where you are today. Again, I was lucky to join a firm that would offer me a succession of opportunities to develop my career – and in roles that were tightly aligned to the areas the business wanted to develop and grow. I joined as Business Development Director in Guernsey. A couple of years later I moved to the Isle of Man to run the business there – and that was a really important step in my career. Historically, I had always run sales teams and business development. But this role had its own P&L and full responsibility for the success of the operation – and I guess that
was invaluable in equipping me with the experience I needed for the role I’m moving into today. We had a fair bit of success there, so I then took on the role of Sales Director for the wider business – across the UK and the Crown Dependencies. That was a great time to be in that role, because we were on an upward curve postcredit crunch and we were able to look at taking the business into new territories – the Middle East, South-East Asia and South Africa. Of course, as the business grew and the regulatory situation matured, we knew we would need regulatory status in those jurisdictions, and that’s what we did. In your new role as CEO of Canaccord Genuity Wealth Management International Division, what are your early priorities? There are two elements to my vision for Canaccord in the Crown Dependencies. The first is that I want us to be the employer of choice in the jurisdictions in which we operate; people should aspire to come and work for Canaccord. And I also want us to be the preferred supplier of investment solutions. Somebody sells a house and has some spare cash; they inherit some money that they want to invest; they sell a business… I want them to immediately think: “Oh, I need to speak to Canaccord”. If we can achieve those two things, that becomes a self-fulfilling prophecy – because if we get the best people, we become the supplier of choice – and if we can do that, then the best people will continue to want to come to work here.
What’s your background and how did you get to where you are now? I was born into a farming family and was raised on Bodmin Moor in Cornwall. The eldest of four boys, my competitive edge was honed from an early age. My father ultimately became a butcher and, while it was a pretty working-class upbringing, it was a fantastic time and place to grow up – I really enjoyed the freedom of the countryside throughout the 1970s. There was no such thing as pocket money in our house – you were very much expected to contribute to the family business in whatever way you could. As such, my dad had a market stall where I would work at the weekends and in the holidays – and that really equipped me with two things for my future career. The first thing it gave me was, from a very young age, the confidence to deal with people, to hold down a conversation with customers and to deliver really good customer service. The second was the ability to understand doing business – calculating profit and value as you went along.
interview Andy Finch www.blglobal.co.uk
April/May 2020 23
What else will you be focusing on? I mentioned the two elements of my vision, but I also have three key themes. The first is culture. I think that if you get the culture right, it can be a source of competitive advantage. I’m fortunate to be inheriting a business that is in great shape, so we already have a good culture. But just because it’s good doesn’t mean it can’t be better. So, we will recruit and retain the best people, invest in them and
24 April/May 2020
make sure there is a Canaccord ‘way of doing things’. My second theme is momentum. We need to run and administer our business with a sense of competitive urgency and there is always room to up the energy. My final theme is our platform. We have made a significant investment in our technology in the past five years, and we need to maximise the potential of the platform, because that will be the foundation of the future success of the firm. I believe that digital transformation is about using better tools to serve our clients. It’s not about the tech, it’s about the customer experience. Technology is the facilitator for that. How do you make all of that happen? It’s about culture, to be honest. Some businesses see achieving that as an HR project – but I don’t believe it is. There’s no secret sauce. The responsibility starts at the top – the senior leadership team must set the example and filter it down through the business. What is culture? For me, it’s the way we do things around here. What will be the areas of focus for growth and development of the business under your leadership? I think the really interesting thing here is that a lot of businesses that operate in mature jurisdictions talk themselves out of growth opportunities. Typically, that comes from their own inertia and lack of ambition to grow that business. We are certainly
finding no shortage of opportunities within our existing jurisdictions. If you look at the activity in terms of mergers and acquisitions just in the fiduciary marketplace, for example, we’re seeing the demise of the smaller ownerdirector trust companies and the rise of much larger firms. Well, if you’re a larger firm, you are likely to also want an investment solutions partner that’s also of a decent size, with the right level of capacity, the right level of service and the ability to invest in technology-led solutions. So, there is still a significant level of opportunity for us in the mature jurisdictions. That means we need to really ramp up activities – to remind people we are here, show them the breadth of our services and ultimately make us famous for all the things we do – not just the ones we’re already known for. We also need to get closer to the source of the wealth creation. We have a representative office in Singapore, for example, that’s taking us closer to that marketplace. How does the Channel Islands operation sit in the wider business and how important is it to your success? While we work closely with other regions, the Channel Islands continue to be at the heart of our operation. If you look at the figures, we have close to 200 people across the Crown Dependencies, 130 of whom are in Guernsey – which is without a doubt the beating heart of the business.
digital transformation is about using better tools to serve our clients. It’s not about the tech, it’s about the customer experience
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FACT FILE Name: Andy Finch Position: CEO, International, Canaccord Genuity Wealth Management Age: 54 Home town: Bodmin, Cornwall; and now Guernsey First job: Front counter staff at Lloyds Bank Family: Married for 33 years, with a daughter and a son Hobbies: Wine collecting – my wine cellar is my pride and joy
The world is fast-moving, but what might we see more of in the longer term? There are going to be some challenges to the business, which we know we will need to overcome. The first is from a regulatory and a competitor perspective. Nothing stands still and the pace of regulatory change means we are constantly reviewing the way we run our business – and we want to stay ahead of the pack in this area. How are we going to do that? It will be about technology-led solutions. We want to grow our assets and grow our clients, and technology-led solutions will be at the heart. The other challenge is fee compression. No-one ever feels sorry for the asset manager, but there’s no doubt that fee compression is a challenge and something we need to be on top of. All of that said, we are a business that is on the front foot. We have a Canadian parent that is focused on being a consolidator in the industry, and we
26 April/May 2020
we are a business that is on the front foot… that said, we have to be careful not to just chase assets. It is strategic fit that matters. grow but grow intelligently
have seen evidence of that in some deals already. We took a number of clients from Duncan Lawrie in the Isle of Man when that business closed. We purchased Thomas Miller in the UK and the Isle of Man. That said, we have to be careful not to just chase assets. It is strategic fit that matters. Grow but grow intelligently. Our priority now is to continue to bring clients the best experience from their wealth. We still believe we have business to go for and growth to achieve from an organic perspective. How do you see the wealth sector as a whole evolving from here? The wealth sector is seeing enormous change – the demographic that we wish to target is becoming younger. Millennials bring a desire for experience as well as pure wealth, and the green agenda is huge. There is no doubt that the sector, and the world, is changing rapidly. But the simple fact is that we need to change with it.
I meet lots of people who seem to think the world somehow owes them a living and that change is a bad thing. Actually, if you don’t constantly look at your business, make improvements, adapt to your market needs and retain that compelling reason to exist from your clients’ point of view, you will go out of business. Because nobody owes you anything. And how do you see the Channel Islands evolving in the coming years? We’re heavily focused on the Channel Islands. The islands are in a really good place, in my view. I love the fact that they have constantly reinvented themselves. Island life can be tough, so people need to generate opportunities and chances – and the Channel Islands have a great history of reinventing themselves to offer those opportunities. That said, we cannot be complacent – the pace of change is relentless. But we are in a good place. n
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Investing with HSBC: Mel and Olive Davison.
Contrary to popular belief, you don’t need to be a high net worth individual to start investing. In fact, even with a relatively small amount of savings, you could make a great start. You also don’t need to know your stocks and units from your hedges and gilts. Our advisers know the ins and outs of investing, so you don’t have to. Everyone’s investment journey is different, and at HSBC, we understand that individual expectations, financial aspirations and risk attitudes differ. We listen carefully, to ensure you get the best advice to achieve your goals. Mel and Olive have been investing with HSBC since 1996. And twenty-four years on, they still place their trust in their relationship managers. They have been with their current relationship manager, Tony for six years. From the start – and throughout their investment choices - they’ve been clear about their risk appetite as well as expectations from their investments.
When did you join HSBC - what were your circumstances at the time? Mel: “We started banking with HSBC a long time ago around 1950.” Olive: “It was Midland Bank back then. Gosh - it’s been 70 years! Then we married in 1962, in Durham, where we lived at the time.” Mel: “In 1971, we moved to Jersey. I got a job as the Director of Music for Jersey College for Girls, and five years later became the Advisor for the Creative and Expressive Arts for all the schools on the island. Olive was working in the Infant Department of St Saviours School.”
“The fact that HSBC was still strong during the recession was very reassuring. It showed us they knew about investing, and did so wisely worldwide. We know we’re in safe hands.”
What motivated you to start investing? And how have you found the journey? Mel: “When Olive retired, she was given a lump sum from a government income savings investment.” Olive: “Yes - an income bond. And Mel got a voluntary redundancy package, with a lump sum payment.” Mel: “Then, when my mother passed away, we received some inheritance money. That was when we decided to talk to the bank about making a will. Our relationship manager at the time suggested we might want to invest some of the money - we hadn’t thought about that until then.” Olive: “We’ve made various investments over the years. Then ten years ago, our relationship manager advised us to consolidate all our investments. This reduced the charges, which helped, and we now invest for growth, taking money out at regular intervals.” Olive: “For us, it’s about security. The investment is there to look after us if we need care - that’s always been the plan. Our relationship manager asked what we wanted and advised us on options that suited us. We’ve been able to do most of the things we want to because we have that financial security.” Mel: “HSBC has been with us for 70 years. We love visiting the bank - we’re always greeted with a smile and there’s such a helpful atmosphere. The support has been admirable. The fact that HSBC was still strong during the recession was very reassuring. It showed us they knew about investing, and did so wisely worldwide. We know we’re in safe hands.”
Premier Relationship Manager, Tony Stabler.
Any opinions expressed are given in good faith but no liability is accepted for any direct or consequential loss arising from the use of this information. The opinion quoted is for information only and does not constitute investment advice or a recommendation to any reader to buy or sell investments. Please remember that the value of investments, and any income received from them, can fall as well as rise, it is not guaranteed and you may not get back the amount you invested. *Financial and other eligibility criteria apply. Product charges will apply. You must hold or open an eligible HSBC bank account and invest a minimum of £25,000. Terms and conditions apply.
We’re right with you. Invest for the future with HSBC. Ask in-branch about ‘Wealth’ 03456 006161 ciiom.hsbc.com/investments
Issued by HSBC Bank plc, registered in England and Wales number 14259. Registered office 8 Canada Square, London, E14 5HQ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. HSBC Bank plc, Jersey Branch is regulated by the Jersey Financial Services Commission for Banking, General Insurance Mediation, Fund Services and Investment Business. HSBC Bank plc, Guernsey Branch is licensed by the Guernsey Financial Services Commission for Banking, Insurance and Investment Business. All Rights Reserved. 200312/MA/140
The perils of being a yield chaser A series of market pressures – from quantitative easing to increased regulation – are making the search for yield increasingly tough and putting investors under pressure to take greater risks Words: David Burrows IN RECENT YEARS, quantitative easing (QE) and regulatory changes have driven down interest rates, flattened the yield curve and pushed investors into higher risk assets in order to pick up yield. What started as emergency policy to save the financial system has turned into a longer term policy that’s had an impact on savers and pensions. Is this likely to change soon? Not according to David McFadzean, Head of Investments at Nedbank Private Wealth. He thinks a change of tack is difficult and warns that the dangers in the present climate are “palpable”. “The level – and expected level – of interest rates has a huge influence on global capital flows, infrastructure spending, investment plans and currency markets,” he says. “In many developed markets, including the UK, interest rate decisions are now taken independently, at one remove from government. This means that some of the unintended consequences of QE can be difficult for governments to address.” McFadzean points out that one of the key concerns around long-term QE is that increasing the supply of money can cause inflation. Even worse, if the increased money supply does not make it through to the real economy – for major projects and
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infrastructure, for example – then there’s a risk of inflation without economic growth, so-called stagflation. There is a further risk, too – domestic currency can devalue, making imports more expensive. The end result is a triple-whammy on savers: lower interest rates, capital erosion through inflation and lower purchasing power due to a devalued currency.
DIFFICULT CHOICES Nigel Garrard, Head of Asset Management at Butterfield Bank (Guernsey), agrees that meaningful movement on interest rates is unlikely to change in the foreseeable future. “What started out as an emergency measure is now the norm,” he says. “I really don’t see the interest rate environment changing much from where we are now.” Garrard accepts that investors have been forced up the risk curve in chasing yield, but warns that there could be dire consequences if they lose perspective and become too cavalier in their exposure. “At the outset of a client relationship, you have to ensure that the investment mandate balances requirement for risk with the capacity for loss. In many instances, you have to have some pretty grown-up conversations – maybe suggest drawdown
on capital or a change in spending habits.” Of course, different types of investors have different yield requirements, and tax implications vary too. While some may have the comfort of a well-funded retirement from various income sources, many who expected their pension and savings provision to be more than adequate are facing a rude awakening.
PENSION POT BLUES While the monetary policy of the central banks may have helped recovery from the 2008 financial crash, it has offered little comfort to pension investors. The reason is that pension funds have regular payments to make – they need income from their investments to pay today’s and tomorrow’s
UPPING THE RISK When we talk about pension funds or individual investors migrating to riskier assets, what does that mean in practice? Essentially, the move up the risk scale (since 2008) has been from cash to government bonds, to corporate bonds and then emerging market and high-yield bonds. As the rate of return from the lower risk options becomes less attractive, the appetite for spicier alternatives grows stronger. Mark O’Connor, Head of Investment Management at Brooks Macdonald, believes the fundamentals, for the foreseeable future at least, point to little gain unless you ratchet up the risk factor. “While markets, especially the US, are back to their January 2018
pensioners. But many pension funds face funding gaps, where the present value of future liabilities exceeds the market value of their assets. They can then be forced to invest in riskier assets to try to plug this gap. Many corporate trustee investors need to balance the obligations they have to beneficiaries who are entitled to capital growth with those entitled to income. As McFadzean explains, if they are chasing higher income for the latter group, they may be taking more risk than is suitable for the former group. “And of course, for many investors, income is taxed at a different rate from capital growth – which can distort investment decisions and thus capital allocation,” he says.
What some would call the knee-jerk regulatory response to the 2008 crash has resulted in possibly the worst liquidity conditions in bond markets over the last 35 years
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The worst-case scenario would be bond investors in a stressed market trying to sell when there is no natural buyer
highs (in forward PE ratio terms), the backdrop regarding central bank policy accommodation is very different,” he says. “Then, the markets were dealing with a US Federal Reserve focused on balance sheet reduction, as well as an expectation of rising interest rates. Now, we have balance sheet expansion at the Fed (and a restart of European Central bank QE), as well as three interest rate cuts from the Fed in 2019. This provides for a more supportive backdrop to risk appetite.” Mike Hollings, a Partner at Shard Capital, argues that investors seeking income will have to get used to sub-par returns as bond market returns flatline – showing little sign of upward momentum. In some instances, rules are in force that bind investors to hold negative yielding assets. For instance, a fund manager may
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have a mandate from their institutional investor (often a pension fund) requiring them to include, for example, a certain percentage of (negative yielding) shortdated Japanese or German government bonds in their portfolio. Where flexibility allows, pension fund managers are inevitably under pressure to try and increase their options on where they can invest – to take on more risk for the chance of improved performance. As Hollings explains, where yields on gilts and investment grade bonds are just not cutting it, the temptation is to try and push for higher octane, but potentially perilous, alternatives. “For instance,” he says, “if you have a pension with Siemens in Germany and you are not even close to hitting the target return, there are a lot of disgruntled scheme members. Pension fund managers are restricted on where they can invest, so they may lobby politicians to change the rules to allow them to invest in things like private equity.”
LIQUIDITY PROBLEMS If compression in government bond yields and wafer-thin spreads currently available on investment grade bonds weren’t enough to worry about, a lack of liquidity in the bond market is another major headache. Before 2008, dealers – essentially banks – acted as the brokers between buyers and sellers, taking bonds into their inventory for a short period of time and then selling them at a later date. By running big inventories, the banks were often prepared to buy bonds even if there was no immediate opportunity to sell them. This helped ease market pressure and improved liquidity conditions during periods of stress. Since then, changes in regulation regarding capital requirements, such as Basel II, have resulted in general bank risk aversion and major shrinkage in dealer inventories. Hollings believes the situation is alarming. “Nobody really appreciates just how illiquid these markets are now. What some would call the knee-jerk regulatory response to the great financial crash in 2008 has resulted in possibly the worst liquidity conditions in bond markets over the last 35 years. “While we don’t believe interest rates in major economies will rise any time soon, we are very aware of the elevated duration risk in most bond markets currently.”
WARNING SIGNS So, does an indiscriminate chase for yield, excessively poor liquidity, and political risk threatening emerging market bonds, mean we could be close to a market crash? Undoubtedly 2019 provided no shortage
of headwinds in the emerging economies; trade hostilities between the US and China; geopolitical flashpoints in the Middle East; and increased social unrest in Hong Kong, Latin America, Lebanon and Iraq. Given these negative factors, the relatively strong performance of the emerging markets debt (EMD) asset class seems surprising. But can such resilience continue? What does 2020 hold in store and should investors be treading carefully? Garrard certainly thinks so. While he doesn’t foresee a major collapse as imminent, he is concerned that several factors could tilt the balance. “We have seen some positive moves on US and China trade deals that would be good for the global economy, so less concerns in general for riskier assets. But with the Trump administration, things can change quickly. “You also have variables like the coronavirus – we don’t really know how that is going to play out and how it will affect global supply chains. And what if another virus hits soon after?” The worst-case scenario would be bond investors, in a stressed market, trying to sell when there is no natural buyer the other side. High yield is typically less liquid than investment grade, so when liquidity evaporates, the effects are more pronounced in the high-yield market. Hollings’ conclusion is that bond investors are being asked to take more and more risk for less return, which might call for a rethink. “If you’re chasing yield, you have to be sensible in your portfolio positioning. For instance, utility stocks could offer significantly better inflation-adjusted yields than bonds,” he says. “And with the selective use of options, investors could mitigate downside risks.” A little insurance never does any harm. n
Risks defined Duration risk – The longer the duration, the greater a bond’s sensitivity to interest rate changes. Duration is an expression of volatility. Liquidity risk – Relates to the difficulty in selling a bond at a time of the investor’s choosing – for example, liquidating the asset. Credit risk – The risk of default attached to a bond. From low-risk government and investment grade bonds right up to sub-investment grade and so-called ‘junk bonds’, where the risk of default is much higher.
The fear factor In 1933, with the US’s Great Depression at its peak, Franklin D Roosevelt’s inaugural speech included the famous words: “The only thing we have to fear is... fear itself – nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance”. Paul Donovan (pictured top), Chief Economist for UBS Wealth Management, and Marc Nightingale, Director at UBS Jersey, discuss the current reaction to coronavirus and speculate about the potential long-term effects THE BIG ECONOMIC impact of the virus
comes not from the virus itself, which may not have a significant direct economic impact, but from fear. Fear changes the behaviour of consumers (cancelling flights and hotel reservations), companies (encouraging employees to work from home) and policymakers (for example, the US Federal Reserve reducing interest rates). However, one thing we have learned from major events like this in the past is that the market consensus and economic forecasters always underestimate the resilience of humans and the speed and strength of the subsequent recovery. After the Fukushima Daiichi nuclear disaster in Japan in 2011, the immediate reaction was very negative, speculating that power would be out for two years and that Japan’s third-quarter growth would be 1.6%. In fact, the growth was 10.4% annualised, due in part to people adapting. And there were no blackouts; instead people turned off their air-conditioning systems and wore shorts to work. Fear is potentially irrational and causes big problems for economic models that don’t easily take irrationality into account. This makes it difficult, at least for the next quarter or two, to accurately predict the ongoing economic impact. Without a doubt, however, we are currently experiencing both a simultaneous supply and demand shock. The supply shock is the less important of the two, seen by the supply chain disruption experienced in China, which has now returned to normal and caused only temporary problems. The bigger shock is from demand, with people changing their behaviours, which will clearly vary from country to country. Reduced demand for services doesn’t really bounce back and can have longer term effects on the economy. For example, if someone chooses not to travel to Jersey
this year due to the virus, they won’t take two holidays the following year to make up for it. On the reverse side, however, reduced travel can lead to higher disposable income that will be spent elsewhere. So, we currently have a situation with relative demand shock as opposed to complete demand shock. How significant the demand shifts will depend on the spread of the virus and whether the fear factor continues to increase.
In the long term, we believe there are some key areas that may also be influenced: • Online retail – when a consumer starts buying online, they are less likely to go back to bricks and mortar. The current increase in online buying driven by a desire to reduce social interaction may well lead to a more rapid growth in the ongoing trend away from the high street. • Remote and flexible working – we have previously observed that an external shock is needed to persuade people that flexible working actually does work. During the 2012 London Olympic Games, the government encouraged people to work from home to reduce the strain on the transport system. Since 2012, the number of passengers travelling on the underground has grown distinctly more slowly than the economy
of London. Coronavirus may do this for other countries and we could start to see changing working patterns, accelerating the trend already in place. • Localisation – we were already expecting to see supply chains become shorter and simpler as people localised their production. US President Trump’s trade pact has possibly been one accelerant to this, and coronavirus could well be another. • Inventory – after 2008, there was a significant reduction in inventory levels and small businesses became notably more efficient. The impact of coronavirus could result in many businesses feeling the need to move away from ‘just in time’ inventory plans to build in contingency or insurance inventory. We don’t wish to downplay the effects of the virus, especially on those who have been or are going to be directly affected. However, we would advise against panic as whatever the outcome of the virus, and for however long it lasts, we will see people adapting. After that, the long-term effects will become apparent. n
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If you would like to obtain a clear and experienced view on how the current situation may affect your financial goals, please contact: Marc Nightingale, Client Advisor, UBS AG, Jersey Branch 1, IFC St Helier, Jersey JE2 3BX Tel: 01534 701173 Email: email@example.com
© UBS AG, Jersey Branch, is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business.
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It’s not easy being green Words: Richard Willsher IT FEELS LIKE every day there’s a new commitment. A major multinational corporation announces its green agenda; a pension fund or a sovereign wealth fund announces it is dumping fossil fuel stocks; another billionaire says how much he or she is going to give to make the planet a better place. So, has the green investment agenda reached its tipping point? ‘Green’ means different things to different people. For some investors, it means addressing climate change and preventing global warming. Others have a broader agenda of responsible investing and environmental, social and corporate governance (ESG) – see box on Principles for Responsible Investment (PRI), overleaf. Wider still are the United Nations’ Sustainable Development Goals (SDGs), which cover the complete global waterfront of fostering
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peace and prosperity for all. So it’s hardly surprising that different types of investor take a range of approaches to being green – with some greener than others. Take pension funds, for example. Because pension funds have very long investment time horizons – to match their future liabilities to pay out pensions – they’ve been quick to recognise that the long-term impact on markets of adopting socially responsible investment criteria could be significant. Malin Nilsson, Managing Director of Compliance and Regulatory Consulting at advisory firm Duff & Phelps, says: “Pension funds are the ones at the starting point of the ESG agenda. That trickles through the value chain in the investment industry. It means private equity firms have to think about ESG. “It’s access to investor capital, basically. Investor capital demands ESG consideration, and that trickles right down through to, for instance, portfolio companies.” In the private wealth space, investors have been a little slower to embrace green values.
Barely a day passes without mention of the need to increase our green credentials, for companies to ensure they are acting sustainably, and for the sector to deliver ethical products. But just how green is the finance sector?
What are the United Nations Sustainable Development Goals? The 17 SDGs are: • No poverty • Zero hunger • Good health and wellbeing • Quality education • Gender equality • Clean water and sanitation • Affordable and clean energy • Decent work and economic growth
• • • • • • • • •
Industry, innovation and infrastructure Reduced inequalities Sustainable cities and communities Responsible consumption and production Climate action Life below water Life on land Peace, justice and strong institutions Partnerships for the goals
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Local legal services
Local businesses are the engine room of the Channel Islands’ economy. With nine offices around the globe and a diverse practice, we’re known for our work with international organisations. But our heart is in the Channel Islands and we’ve never taken our focus away from the local market.
Local legal services in Jersey and Guernsey Business and commercial law Competition law Dispute resolution Employment law Offshore relocations Planning and environmental law Private wealth and family office Property and construction law Regulatory law Trusts Advisory Group Wills, probate and estate planning
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Sustainability “We’re at pre-tipping point,” says Eugenia Koh, Head of Sustainable Investing and Engagement Strategy, Private Bank, at Standard Chartered in Singapore. “I think a lot of investors are starting to think about it, but with all the terminology they hear, it’s still quite a confusing issue for them to navigate. “However, as the issue is increasingly discussed, and as more investors are being educated by banks and industry, that’s helping them develop their own thoughts, and is having an impact from an investment perspective.” Research carried out by Standard Chartered at the beginning of last year – among high-net-worth clients in Hong Kong, Singapore, the United Arab Emirates and the UK – showed that those clients are gradually moving towards sustainable investing. They showed a preference for investing to support several of the UN SDGs, particularly affordable and clean energy, clean water and sanitation and good health and wellbeing. They also found that 16% of wealthy people’s assets under management were allocated to philanthropy – but that a large majority of investors were open to shifting those funds to sustainable investing.
WHAT IS AND IS NOT GREEN? One of the issues with so-called green investing is that it is difficult to evaluate the offers available in the marketplace. While SDGs and the PRIs are helpful guides, how are investors to know how their funds are actually being deployed? Koh points to the “noise in the market” around ESG. She suspects marketing hype is used to seduce investors. Zoë Hallam, Senior Banking Counsel at law firm Walkers in Guernsey, notes the importance of being able to measure the impacts of investment, to make sure there’s no ‘greenwashing’ and to give investors the level of comfort they need. “There are individuals and organisations in the market that will advise you on setting your metrics for your goals rather than against, for example, the UN SDGs.” She also points to new taxonomy regulation that the EU is introducing, which will establish a classification framework against which to measure whether the activities into which investors put their money are, in fact, environmentally sustainable. “That framework is important from an investor confidence perspective – once you set your investments against those metrics, performance against them can be properly measured and independently verified.” Malin Nilsson sounds a more worrying tone, however, suggesting that what sometimes appears to be ‘ESG good’ is, in fact, not what it seems. “Plastic bags are considered bad,” she says. “But are they really? People may try
Principles for Responsible Investment The United Nations supports Principles for Responsible Investment, a large, international network of investors who believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios. They also ‘recognise that applying these principles may better align investors with broader objectives of society’. The six principles, launched in 2006, are: • We will incorporate ESG issues into investment analysis and decisionmaking processes. • We will be active owners and incorporate ESG issues into our ownership policies and practices. • We will seek appropriate disclosure on ESG issues by the entities in which we invest. • We will promote acceptance and implementation of the principles within the investment industry. • We will work together to enhance our effectiveness in implementing the principles. • We will each report on our activities and progress towards implementing the principles.
to push a canvas bag instead, but actually you’d have to use a canvas bag for your entire life to make the carbon footprint the same as using a plastic bag once and then burning it. “Electric cars are another example. They’re good, but do they take into account the social impact and the environmental impact of the battery production? It’s not as black and white as it might seem.” She adds: “Another example is fossil fuel companies – which are obviously considered bad. But what if a fossil fuel company wants to transform itself into a renewable energy company, which requires investment?” This highlights a further concern whereby companies perceived as environmentally bad find their stock being sold by investors and its value dropping. In fact, this may hobble their ability to operate and invest in what they do, such as drilling for oil. Their assets in the ground become orphaned, as they can’t afford to bring them to market. Some would say that this is market forces at work for good. But, like it not, the world still needs oil to be able to operate. We have not yet developed sustainable energy to a level where we can divorce ourselves from fossil fuels – and it’s likely to take quite some time to achieve that.
GUERNSEY GREEN INITIATIVE One response to such concerns is being delivered by Guernsey Green Finance. Its CEO, Andy Sloan, explains that the initiative is fully committed to delivering strategic action around green and sustainable finance. “The initiative brings together stakeholders from the public and the private sectors,” he says, “to develop projects, initiatives and products to route capital into climate change mitigation projects.” In the next few weeks it will be publishing its private equity principles to guide general partners in the private equity arena towards best practice for green and sustainable investing. “As a jurisdiction, we are committed at the most senior levels within the States of Guernsey. We’re at five funds now, with the sixth about go live, which in just over 10 months is not bad. And if you look at the AUM, it’s around $4bn. That’s about 1% of all Guernsey-administered funds.” Listening to the press hype and buzz around green investing, you might think that everyone is thinking green these days. But that’s only partially true. While investors such as pension funds and Guernsey Green Finance are well advanced, others such as private wealth have yet to reach their tipping point – where investing for good is front and centre of their investment strategy. For some, there is still some way to go. n
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The advantages of active management Quilter Cheviot Investment Director Michael Bull explains how the business delivers the advantages of active management to its clients through a well-resourced fund research team that can improve the probability of investing in funds that outperform
AS A RESEARCH-ORIENTATED wealth manager, we believe strongly in the value of active management. Sustained over time, the outperformance from active management can significantly improve returns and overall client results. In recent years, however, the value of active management has increasingly come into question. Academic studies have demonstrated the difficulty of outperforming the market, particularly after taking fees into account. To help provide our clients with the advantages of active management, we focus on two areas we believe are critical to delivering good client outcomes. First, we identify those managers who have a robust investment process that allows them to repeatedly outperform. Second, we negotiate proactively on fees with our recommended managers, allowing our clients to access the best opportunities at some of the lowest costs in the industry. All else being equal, you have a better chance of outperforming when the cost of your active management is low.
Seed capital is highly valued by third-party managers and our ability to help launch funds has helped us to secure preferential fee arrangements
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OUR EMPHASIS ON FEES When negotiating with third-party managers, we use the combined buying power of Quilter Cheviot and Quilter Investors to secure the best possible fees for our clients, and we have had major success in this regard. We have secured significant reductions in fees from Schroders, Baillie Gifford and AllianceBernstein, among others. We have led the way in securing fee reductions, both in comparison with other wealth managers and the broader asset management industry. Our clients are now paying significantly lower fees, with the ongoing charges figure of our balanced model having fallen to 0.56% over the past year. This and other reductions should make a meaningful difference to client returns over the medium to long term and we will continue to work to secure further reductions.
HOW DO WE ACHIEVE FEE REDUCTIONS? We aim to negotiate and secure fee reductions on a regular basis, proactively engaging with management and maintaining an open dialogue with managers of all buy-rated funds. Where appropriate, we will also provide the initial investment to help start a fund. Seed capital is highly valued by third-party managers and our ability to help launch funds has helped us to secure several preferential fee arrangements.
SEEDING FUNDING IN ACTION â&#x20AC;&#x201C; BAILLIE GIFFORD JAPAN INCOME GROWTH FUND Baillie Giffordâ&#x20AC;&#x2122;s Japan Income Growth Fund is a good example of how seed capital can help us to provide attractive investment opportunities for clients. We were interested in finding a Japanese equity income fund, with many Japanese companies paying an attractive and growing dividend, especially with corporate governance reforms encouraging them to return cash to shareholders. Importantly, Japanese companies often have very conservative balance sheets, with their dividends well covered by earnings. Existing funds within this space did not have enough of an income focus, were limited in their investment universe or were too expensive.
After speaking to several managers, we realised that Baillie Gifford was interested in launching a product that filled the investment gap we had identified. It proposed combining its growth style of investing with an income overlay, given that many of the companies it already covered in its growth strategy also paid an attractive dividend. We were familiar with the firmâ&#x20AC;&#x2122;s investment process, with this having produced strong outperformance for its Japanese growth strategy. Our offer of seed funding allowed Baillie Gifford a simple way to develop the product, knowing that it would be tapping into existing demand. We were able to shape the development of the investment strategy in return. We encouraged Baillie Gifford to launch the strategy as an open-ended fund, which allowed us to use the fund for a wider range of our clients. The resulting strategy, the Baillie Gifford Japanese Income Growth Fund, has outperformed by around 5% per annum over its first three years. Quilter Cheviot clients benefit from an exclusive share class that has an annual management charge of 0.42%.
By maintaining pressure on fees, we can lower the hurdle to outperformance
FUTURE FEE REDUCTIONS Given the pressure on active managers to reduce fees, we believe that there is scope to secure further fee reductions for our clients in future. We are in advanced negotiations to reduce fees with several other active managers, and we will work to continue passing on the savings to our clients. This includes gaining access to superinstitutional share classes. We are strong believers in the value of active management, particularly when combined with a wellresourced fund research team that can improve the probability of investing in funds that outperform. By maintaining pressure on fees, we can lower the hurdle to outperformance, and continue to advance the best interests of our clients. n
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For more information, contact Michael Bull at Quilter Cheviot Email: firstname.lastname@example.org
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The fastest growing economy on the planet
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What will India’s soaring affluence mean for wealth managers, international investors and the offshore experts who advise them? Words: Amy Carroll
reddees / Shutterstock.com
This surge in wealth is being driven by India’s educational culture and the country’s large pool of entrepreneurs – and is supported by competitive wages. The prevalence of the English language has also been credited. “Since the early 1990s, the Indian economy has undergone massive structural change and this has been reflected in the creation of a large middle class, making India one of the most attractive destinations for international capital,” says Arindam Madhurrya, a Senior Associate within Carey Olsen’s Jersey corporate team, who is qualified to practice law in the UK and India. “This has also invariably led to the country producing a large number of high-net-worth and ultra-high-net-worth individuals and families with investments and business interests all over the world. “Indeed, the interests of India’s wealthy citizens spread well beyond the country’s borders. “The emphasis on education and the high standards of educational institutions
in India have contributed to the wealth creation in India and the Indian diaspora overseas,” Madhurrya says. “This has led to Indian expatriates holding senior positions in global corporations and financial institutions which, in my opinion, is leading to a new section of Indians with significant wealth potential.” As a result, India’s wealthy families represent an exciting and growing opportunity for wealth managers, according to Danielle Organ, Associate Director of Private Client Services at Hawksford. “There is growing demand for proactive and trusted advice from Indian families, wherever they may be in the world,” Organ says, adding that the emphasis has shifted from tax efficiency to long-term wealth planning, across the generations. And with trust and confidentiality held in particularly high regard by the Indian community, the Channel Islands are well placed to service its needs. “We are also well positioned in terms of location, language and time zones, which is why we have been spending an increasing amount of time visiting India, cultivating new relationships and building on those that we have had in place for many years,” adds Organ. “That commitment is important to our Indian clients.” Madhurrya agrees. “Many financial institutions based out of the Channel Islands have significant clientele both within the Indian community in India and the Indian diaspora outside of India,” he says. “Because of the stable and well-regulated nature of the Channel Islands, wealthy Indian families often choose Channel Islands structures for asset protection and succession planning. “Real estate and investment holding vehicles established in the Channel Islands can be particularly attractive for Indian families who hold investments in Europe.”
INTERNATIONAL APPEAL An increasingly wealthy population has also created significant opportunities for investors, and the Channel Islands fund
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THE INDIAN POPULATION is getting richer faster than any other economy on the planet. Private wealth in the country soared by 98% between 2008 and 2018 and this is expected to grow even more rapidly over the next decade, according to a recent report by AfrAsia Bank and New World Wealth. By 2028, the total private wealth held by Indians will be around $23trn – more than double the total wealth predicted for individuals in the UK and Germany. What’s more, a surge in urbanisation is creating a substantial and aspirational consumer class. Indeed, by 2030, India’s middle class is expected to grow to almost 80% of the population – up from today’s figure of around 50%. That middle class will increase spending on essential products such as food, clothing, gadgets, transport and housing, by between 2 and 2.5 times the current levels, with increases of between 3 and 4 times the current levels predicted for spending on healthcare, education and leisure.
In 2019, investment levels hit $37bn, up slightly on $36.16bn in 2018, which was itself a standout year
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administrators that support them. Indeed, private equity deployment in India is booming. In 2019, investment levels hit $37bn, up slightly on $36.16bn in 2018, which was itself a standout year, according to data from Venture Intelligence. “The fact that the private equity investment tally of 2019 outdid the previous high of 2018 – despite uncertainties on the economic, political and global trade fronts – is very encouraging,” says Arun Natarajan, Founder of Venture Intelligence. “The sheer diversity of investors that are now actively investing in India, by geography – including North America, Asia and the Middle East – provides scope for optimism that the momentum will be maintained.”
INTERNATIONAL INTEREST Indeed, the vast majority of private equity investment in India comes from international investors. While private equity capital deployed in China, for example, is largely renminbi-denominated, in India more than 95% of funds are dollardenominated and sourced from overseas. Infrastructure investment has been a major driver, with recent deals including Brookfield’s $1.9bn investment in Reliance Industries’ east-west gas pipeline. Traditional Indian strongholds such as financial services have also continued to grow. But now, escalating wealth has created a surge in deal flow in sectors ranging from consumer and retail, to healthcare, education and real estate. As Madhurrya points out: “India’s large population, coupled with the average age being less than 30 years old, creates certain unique opportunities for international investors. “While there has been a recent downturn in the economy, there is still immense potential for growth, and India remains an attractive long-term destination for international capital. “The government has been creating
policies to attract increased investment in manufacturing, infrastructure and skills development. “Technology and digital innovation are also attractive sectors,” he adds.
TECH SAVVY Indian consumer tech companies in particular continue to draw crowds – understandably, as the country is on track to soon have more than a billion internet users. Furthermore, India is one of the world’s youngest economies. In 2030, 77% of Indians will have been born in the late 1980s or later. SoftBank’s $2.5bn investment in Flipkart, which resulted in a $16bn sale to Walmart, is the poster-child for Indian consumer technology. But it is not alone. Other recent success stories include vertical e-tailers such as Bigbasket, Lenskart and Pepperfry; food-based e-commerce companies such as Zomato and Swiggy; and travel and hospitality businesses OYORooms and cab firm Ola. And when it comes to the internet-based ‘usership’ model, India is leading the world. Indians are culturally predisposed towards using rather than owning – relying on public transport, rather than buying cars, for example. As a result, subscription platforms such as the Bombay Shaving Club Company and Fab Bag are proving a hit, providing innovative opportunities for savvy investors. Indeed, the consumer sector more broadly has attracted increasing levels of investment as affluence continues to climb. Deals of note include food sector stars Ching’s Secret and Gemini Edibles, as well as clothing business V-Bazaar Retail. In the healthcare arena, meanwhile, investors are seeking out targets across the spectrum, ranging from pharmaceuticals to equipment, specialist hospitals and diagnostics. Star Health Insurance has been a standout success in recent years. Exits have also remained strong in India,
India’s large population, coupled with the average age being less than 30 years old, creates unique opportunities for international investors
signalling investor confidence in the Indian ecosystem and healthy public markets. A total of 265 exits valued at almost $33bn were completed in 2018. While almost half of this exit value can be attributed to Walmart’s acquisition of Flipkart, even without this mega-sale, this was one of the best years for exits in the past decade. Stellar private equity disposals included Apax Partners’ sale of GlobalLogic, which generated a return more than five times its original investment value; private equity firm TPG’s sale of Vishal Mega Mart; and Blackstone’s sale of Intelenet Global Services to French outsourcing giant Teleperformance for $1bn.
A COMING OF AGE India’s private equity industry has certainly matured in recent years and, as a result, the variety of deals on offer is proliferating. Control-orientated transactions are increasingly common as entrepreneurs and family-owned businesses look for succession solutions. Indian companies have also come under increased pressure to reduce debt overhang, leading to the disposal of non-core assets. In addition, India now has a rich source of professional managers keen to have skin in the game, as well as an exceptional class of professional entrepreneurs. The government has made radical changes to create a more business-friendly environment, including the introduction of a uniform tax code across all 29 states. And
the market remains less competitive than neighbouring China or the more mature US and European markets. However, valuations have increased and there are undoubtedly still hurdles that international investors face when they are navigating the region – in particular the lack of a well-developed leveraged finance market. Opacity and integrity issues also occasionally remain, while regulatory obstacles and sudden changes in government policy are not uncommon. For example, in 2010, the government imposed restrictions on micro finance following a number of well publicised suicides, in a move that all but shut down the industry, crippling some private equity deals in the sector. And in 2016, the demonetisation of high-value currency notes, designed to strike at the heart of the black market, effectively put 86% of the currency out of circulation. This severely hampered the cash economy, and the ripple effects are still being felt today. “As an emerging economy, there remain significant challenges to doing business in India,” confirms Madhurrya. “Setting up a business in the country may involve onerous legal and regulatory processes; there continue to be stringent exchange controls on repatriation of capital; and the court system and enforcement of contracts can be slower than international investors would expect. “Having said that, Indian business relations tend to be quite ‘sticky’, so once the initial issues are ironed out, India can be a great place to develop long-term business relationships.” And the Channel Islands look to be well placed to support growing international investment in India. “Jersey and Guernsey vehicles are globally recognised and trusted by investors and are used for some of the world’s largest funds,” Madhurrya says. The Indian wealth story is unstoppable and the wise are getting in on the act. n
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Knowledge is power: five practical ways to unleash the full force of your data Your organisation is awash with data, but how much of it are you able to use effectively? PwC recently partnered with British Athletics to help it harness the power of data to inspire performance. Drawing on the lessons learned from this project, and how this relates to key challenges facing businesses in the Channel Islands, Callum McCutcheon, Manager in PwC’s Advisory team in Guernsey, looks at how you can make the most of your data
SUCCESS OFTEN COMES down to the finest of margins. The gap between gold medalwinning Usain Bolt and last-placed Trayvon Bromell in the 2016 Olympics 100 metres final was a quarter of a second, little more than the blink of an eye. With no disrespect to Bromell, we all know which of these two names we remember. Data analysis has the potential to help turn a promising athlete into a winning one. This might be gauging the optimum diet, judging the right balance between strength and agility, or tracking training performance in the lead-up to a big event. This isn’t about replacing coaches – their experience and insight are still vital. Rather, data analysis can help coaches to make more informed decisions, understand the results and ultimately enable their athletes to achieve more.
TURNING DATA INTO INSIGHT The big question is how well all this data is used. When PwC started working with British Athletics, it was clear that there was no lack of information, ranging from what the athletes had for breakfast to times run and weights being bench-pressed. But the data tended to be analysed separately. In turn, a lot of the resulting analysis was being presented to coaches in a way that was difficult for them to comprehend and turn into actionable insights. If coaches are confused or can’t see the value in the analysis they’re getting, they’ll simply bin it. The PwC team has therefore been working with British Athletics to bring all the data together and cross-analyse it to help gauge the patterns, interdependencies and telling insights. We’ve also helped them implement new ways to visualise the data, making it much easier for coaches to see clearly what’s going on and dig deeper into the analysis.
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ADVANTAGE CHANNEL ISLANDS What are the equivalent data opportunities and challenges we’re seeing here in the Channel Islands? The latest analytical techniques are already being used widely to help optimise everything from cost efficiency to regulatory compliance. In businesses that are under pressure to deliver more for less, and where time and resources are inevitably in short supply, one of the key benefits of effective data analysis is identifying the pain points most in need of addressing. Similarly, from a risk and regulatory perspective, analysis can pinpoint potential vulnerabilities and guide a proactive response. Yet a lot of the potential can often be undermined by inconsistencies and poor data governance. Key data can also be trapped within separate siloes rather than being brought together in an effective and actionable way. Like coaches, the other big problem is that a lot of business executives find the analysis they receive is either unintelligible or difficult to apply in practice. The good news is that a lot of these issues can be resolved without major investment. Analytical tools are getting easier and easier to use. In turn, effective data management strategies can help to iron out inconsistencies and create a single repository to allow data to be easily shared around the organisation. And to make sure the analysis is deployed to best effect, interactive visualisation tools make it much easier to get to the key insights, see how the data fits together, and allow users to drill down into areas they would like to investigate further.
GETTING UP TO SPEED How, then, can you make the most of all these possibilities? Rather than hiring data
scientists and buying in a lot of complex tools straight off, we would recommend a pragmatic and cost-effective approach: 1/ Learn as you go, build as you go Take time to find out the possibilities opened up by the latest technology and the kind of solutions they offer. 2/ Match the opportunity to the solution you need Drawing on your understanding of what’s possible, you can judge what solutions could be applied to help address the particular pain points and strategic goals within your business. 3/ Make the case Subsidiary businesses here can sometimes find it difficult to secure parent funding for data investment. Small-scale pilot projects in areas such as cost and risk can help to demonstrate tangible gains, and hence support the case for further funding. 4/ Don’t be afraid to fail Making these changes is hard. You won’t always get it right, but some will work well and help you win hearts and minds. 5/ Don’t stop changing There can never be a one-time fix. Technology will keep evolving, so you need to maintain skills, awareness and focus. n
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Callum McCutcheon, PwC Advisory Mobile: +44 (0) 7911 720801 Email: email@example.com
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More families are seeking to retain a degree of ongoing control when they set up wealth structures. How are they structured, what are the benefits and how much control can and can’t be secured?
PEOPLE ARE INCREASINGLY seeking to have more control over their personal and working lives – the choice to work from home to improve their work/life balance; changing jobs more regularly to be more fulfilled; or even streaming the movies or sport of their choice rather than following traditional TV schedules. That search for control is also extending to wealth management, mainly through trusts and foundations. With standard trusts such as discretionary trusts, a trustee is given discretionary powers, including how much and when they can distribute income to beneficiaries. The settlor has no ongoing involvement, aside from giving the trustees a letter of wishes. There is little retention of control or oversight. Jersey and Guernsey trust law allows settlors – primarily high-net-worth individuals and family business owners – to have more control over these decisions, by giving them the ability to create a reserved powers trust or sit on the board of a private trust company (PTC). “Setting up a conventional discretionary trust can ensure that your family business assets get passed down the generations on a long-term basis,” says Robert Dobbyn, Jersey-based Partner at Walkers. “But families are also aware that, although the trustees are professionals from well regulated businesses, they are strangers from the family’s perspective. In the old days, people would appoint their local family solicitor, accountant or a friend as the trustee – but now there is a geographical and emotional distance between settlor and trustee.
When setting up discretionary trusts, entrepreneurs are handing over a lot of control to trustees, and that can play on their heartstrings
WHAT ARE THE OPTIONS? One option is to install a protector role in the standard trust they have created, such as a trusted friend or adviser, and give that person certain powers over the trustees. “It is basically a discretionary trust where the trustees make all the decisions, but some require the protector’s consent,” says Dobbyn. “This often includes large distributions to beneficiaries, removing or adding beneficiaries or amending the terms of the trust. “Protectors can also be given positive powers, such as getting to pick the successor trustee. It’s tried and tested and very common.” Another is the ‘reserved powers trust’ option, which allows settlors to reserve decisions for themselves – most typically being able to direct how the assets of the trust are invested.
Words: David Craik
“As such, people increasingly want to remain involved with their family assets once they have been put into that trust or foundation structure, and giving themselves more control brings that extra comfort.” He says it is “human instinct” for entrepreneurs who have spent a large amount of time building up their family business and are thinking about how and when to pass it and the assets on to the next generation not to “wash their hands of it and walk away”. Michelle Tring, Trust Director at Ocorian, believes that there has been a shift in mentality and often emotions around wealth. “We are seeing more private wealth being created by entrepreneurs. When setting up ordinary, purely discretionary trusts, they are handing over a lot of control to trustees, and that can play on their heartstrings,” she says. “More and more of these families now want an element of control around passing on their wealth, particularly when they are passing over business assets that they have worked hard to make successful.”
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Other powers that can be reserved include adding, removing or excluding beneficiaries, appointing or removing a trustee, enforcer or protector, and revoking, varying or amending the terms of the trust deed. “They will choose the investments made and dictate investment strategy. A lot of settlors really understand business and the market they operate in and want to be involved,” says Dobbyn. “You can also mix and match having a trust with a protector whose consent is required for certain trustee decisions and the settlor making the investment choices.” This investment power is particularly attractive for entrepreneurs or family owners who may be well off retirement age and not yet ready to hand over to a new generation. “When clients are still making their wealth and earning money, it becomes important for them to retain control over investments in which they are particularly interested, from ESG to philanthropy,” says Philip Carlton, Private Client Director at Highvern. “They see it as part of their asset allocation strategy and have a different view of risk when it comes to trusts than those gone before. They want to have their say and use their expertise.”
FOUNDATIONS AND PTC S
A lot of settlors really understand business and the market they operate in and want to be involved
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A Jersey foundation is another option, which, unlike a trust, is treated as a legal entity in its own right. “A trust is essentially an arrangement between and relating to different people, but a foundation is more like a company that doesn’t have any shareholders,” explains Dobbyn. “The foundation can own investment portfolios or other assets and it can have beneficiaries. The family members can sit on the council of the foundation alongside a regulated qualified member. They can all then make decisions on investments and when it’s the right time to distribute assets.” Tring is involved in such structures and says it is particularly positive for secondor third-generation members. “You see younger family members on the council slowly and carefully learning about the business,” she says. Finally, a private trust company requires the creation of a company to act as a trustee of a trust or a group of connected trusts rather than transferring assets to a professional trustee company. The family members then typically sit as directors on the board of trustees. “It is the deluxe costly option, generally only for those with at least £50m or £100m of assets in them, because the structure now also includes a company that needs to be administered and annual
fees need to be paid,” explains Dobbyn. “You also need to think about who’s going to own the shares in the company. You don’t usually want the family members to own them as they might have a dispute and the shares then get argued over. “So, you may need to put those shares out of harm’s way in a purpose trust or perhaps a foundation. You have a lot of moving parts with this option.” Henry Wickham, Counsel at Ogier and Chair of the Jersey STEP branch, says a PTC gives clients more flexibility in terms of involving the family. However, the light-touch regulation means the PTC, for trusts, can only act as trustee in respect of a specific trust or group of trusts with some sort of connection – perhaps for the same family or possibly owning the same asset. “The administration must also be carried out by a registered person licensed to carry out trust company business,” he says. “Also, if the settlor and family were minded to be shareholders of the PTC, the potential tax consequences of that ownership would need to be fully investigated.”
SETTING PARAMETERS Apart from the issue of cost, there are other parameters and boundaries to consider when setting up these structures.
Wealthy families are more international, open-minded and willing to involve the next generation in their wealth
As Dobbyn points out: “You have to take advice from lawyers and accountants in your home jurisdictions. Your local laws may dictate what is possible. “The complexity of your family may also determine how complicated your trust needs to be.” Wickham adds: “Careful consideration needs to be given as to where a settlor is from, and the reasons the structure is being set up. For example, the relevant authorities may look at a structure and say that, because you are reserving extensive powers, beneficial ownership has not been divested and it is not really a trust.” Indeed, settlors of English trusts have been able to reserve powers such as power of appointment, but according to Trust & Trustees: “That ability is limited by case law and the doctrine of the ‘bare’ trust which may arise where a settlor reserves such extensive powers to himself so as not to part with any beneficial interest.” “If you want to have control in the UK then you add people like a co-trustee alongside the trustees,” explains Carlton. Even though they are in a more fortunate position than those in the UK, Jersey and Guernsey clients still want to push against the boundaries of their own laws. Dobbyn says there is a clear problem of people
“trying to have their cake and eat it” when it comes to control. “Some will say they want to retain all the control but that is not necessarily a good thing,” Dobbyn says. “If you have a protector and insist that they must consent to every single decision, even a small payment to a tax authority or opening a bank account, then it becomes expensive, bogged down and slow to administer. You have to find the right balance such as payments over a certain amount having to get consent.” Tring believes that it is important to discuss control, particularly where they may be stretching the limits, such as having a veto over who and where money is allocated to in a trust. “We don’t want them to undermine the fiduciary responsibilities of the trustees and the overarching purpose of having a discretionary trust in place,” she explains. “Where a trust is being used, it works better if the element of control is more of a hand in the steer of the assets rather than distribution powers. “You need to have a strong working relationship with the trustees.” Carlton warns such behaviour could endanger the whole trust. “You don’t have the power to distribute assets. It’s not about
going too far and becoming a trustee,” he explains. “Your lifetime planning could be jeopardised if you do that.” So, what can we expect going forward? Some of the biggest demand for this type of control in the past 10 years has been from Middle Eastern families and this is likely to continue given global volatility. “Some families are keen to protect their fortunes from seizure by political means in certain countries,” says Wickham. “Trusts can also provide help in terms of dealing with forced heirship requirements. And you avoid the issues of probate and divvying up assets when someone passes away.” Tring adds: “Wealthy families are more international, open-minded and willing to involve their families and the next generation in their wealth – and want to use structures to do that given the wider benefits they can bring, including fiduciary expertise, legal framework, guided succession and so on.” Wickham agrees, given the huge wealth transfer of trillions of assets worldwide that will be moved over the next 30 to 40 years. “It needs to be co-ordinated and there will be a flight to quality and reputation,” he points out. “Jersey has positioned itself well with our trust laws – and the future looks bright.” n
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Advertising feature, in association with Locate Jersey
Having founded global mortgage brokerage Enness amidst the credit crunch of 2007, Group CEO Islay Robinson (right) has grown the business into a mortgage solutions market leader for high-net-worth individuals. Now, as it looks to bolster its international proposition, Enness has established an office in Jersey. Robinson and Principal Representative Jack Goguelin (below) explain how this outlet will play a pivotal part in achieving the firmâ&#x20AC;&#x2122;s global aspirations
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Advertising feature, in association with Locate Jersey
a suitable lender from our 300-strong global network, to sourcing legal, tax or foreign exchange services to make sure the transaction comes to fruition. What made Jersey an attractive location for expansion? IR: Unsurprisingly, given our client base, our business was becoming increasingly international. So, in 2016, we decided to open a representative office in Monaco, and then later in Dubai, to help us diversify away from London and the UK and to better meet the needs of clients across Europe and the Middle East. However, our global interests were continuing to grow – last year, we supported the needs of clients of 78 different nationalities. So we took the strategic decision to review our model and find a platform that would give us a good basis to maintain this global dynamic. We needed a centre with a solid regulatory and legal framework to give clients peace of mind, which understood the private client sector that we were working in, and also had good experience of cross-border finance. In all areas, Jersey ticked the boxes – it was a perfect fit. So last year, we put the wheels in motion and established Enness Jersey.
Can you explain a bit about what Enness does? Islay Robinson (IR): We’re a mortgage brokerage business and have become one of the leading brokers for high-net-worth individuals in the UK. It might seem counterintuitive, but wealthy people actually find it very difficult and complicated to evidence affordability and access property finance. It’s often the case, for instance, that they do not have what are classed as ‘vanilla’ incomes. They might be looking to secure loans against a bonus or rental income, they can be self-employed, or they are looking at property acquisitions in different overseas markets in multiple currencies. That all adds up to quite a complex picture and it can be a real challenge to find lenders that will look at that – let alone offer decent terms. Jack Goguelin (JG): Our role is to find a solution when clients come to us with a challenge. That means providing a full range of services to make sure the whole mortgage process works, from identifying
Was establishing the Jersey office straightforward? IR: Once we started the process, we found gaining access to the right people who could support us was very easy. We spoke to the regulator, who helped guide us through the regulatory side of things – that was very important to us – and Locate Jersey was incredibly helpful in enabling us to navigate the licensing and administrative elements to setting up our office. We’ve been fortunate enough to secure space in the new IFC 5 building, putting us at the heart of Jersey’s finance hub and, I have to say, it’s been a very smooth process. How is Jersey suited to the business? JG: We see real synergies and mutual benefits to being in Jersey. For us, Jersey provides the opportunity to operate in close proximity with some of the leading experts globally in the private client world, from trust companies to wealth advisers and law firms. Jersey really is seen as being at the top of the game in this space and service levels are exceptionally high, which resonates with our clients. All of that is very attractive to us.
Last year, we supported the needs of clients of 78 different nationalities
At the same time, we feel we bring something different to support the local private client community – and since we’ve been here, we’ve had really excellent feedback about how we’ve been able to fill a gap in the market. How is the business evolving since it was launched and what are your future ambitions? JG: Our first few months of being in Jersey have centred around building awareness and relationships with key stakeholders in the region. The response has been really excellent from the local community and we’ve begun to see a strong uplift in enquiries. IR: Our objective is for our Jersey operation to be the pivotal driving force in building our non-UK regulated business. To that extent, we will be looking to grow our office over the coming months, on both the brokerage and operational side. Our initial experience of being in Jersey has been extremely positive, and with our operation now up and running and a renewed energy in the international property market, we’re really confident and excited for our future and the role the Jersey office will play. n
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This advertising feature was produced in association with Locate Jersey. Visit www.locatejersey.com
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Words: Dominic Dudley
Owning a superyacht is often complicated and always expensive, but some firms in the Channel Islands have spotted an opportunity to make life easier for wealthy boat owners â&#x20AC;&#x201C; and a healthy profit in the process
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shipyard in Germany or the Netherlands to its long-term home in the Mediterranean ports of Italy, Spain or France. And while most of these will simply be too big to be handled by the local ship registers, a growing number of them now have a direct connection to the islands through their ownership structure. “There are two elements to consider: where is the yacht registered and where is the company that owns the yacht based?” says Robert Ayliffe, the Jerseybased Executive Director of yacht services business Fiduchi. “It is very rare for an individual to own a yacht in their own name. They almost always use a company. And that’s what this island is good at: being a corporate services provider, with relevant expertise and transferable skills.” The reasons superyacht owners usually prefer to use a management company as the owner of their vessel are straightforward enough. By doing so, they can help preserve some anonymity. It can also be more convenient when it comes to estate and tax planning. Perhaps more importantly, it is also useful to limit the owner’s personal liability should anything go wrong. All this presents a clear opportunity for the Channel Islands, given their reputation as offshore financial centres with plenty of
It is rare for an individual to own a yacht in their own name. They almost always use a company. And that’s what Jersey is good at: being a corporate services provider
AS ANY VISITOR or resident will know, Jersey and Guernsey are no strangers to yachts. There is room for well over 2,000 ketches, motorboats and cruisers in the various marinas across the two islands, and often a long waiting list to get in. If you’re looking for a 15m to 20m berth in Elizabeth Marina, for example, you may have to hang on for up to two years – and it can take ‘substantially longer’ for a space to open up in St Helier Marina, according to Jersey Marinas. The yachts that are based on the islands tend to be fairly small vessels, relatively speaking. The Jersey ship register is only able to deal with vessels of up to 400 gross tonnage (GT), while in Guernsey the maximum is even smaller, at 150 GT. That might seem a reasonable size for most keen amateur sailors, but it is far too modest for the world’s super-rich, who prefer something rather more substantial. The world’s biggest yachts today weigh in at well over 10,000 GT, and in terms of length, the current record-holder is the 180m-long Azzam, built in 2013 by German shipbuilder Lürssen. On occasion, one of the world’s mega-yachts might call in to St Helier or St Peter Port while making its way from a
High fees on the high seas www.blglobal.co.uk
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Superyachts experience related to managing assets and offering related professional services to the world’s wealthy. There are numerous issues that a services provider can help yacht owners with, from setting up and administering the corporate structure used to own the vessel, to liaising with tax and legal advisers, and ensuring the yacht’s crew is paid on time. Indeed, Ayliffe contends that managing a yacht is not very different from dealing with other high-value assets – a loan taken out against a yacht is like one that’s attached to a house. “Fundamentally the same principles apply to yachts as to real estate,” he says. “You need professional managers to look after it. Jersey is well placed. It already has the skills and it’s a diversification away from financial services.” Others agree on the potential for Guernsey and Jersey. “Both Jersey and Guernsey are established financial centres.
And they’re very well regulated offshore financial centres, with good track records covering banking, admin, legal expertise, company formation and ownership of vessels of all kind,” says Paul Welch, Guernsey-based Founder and Chief Executive of Millionplus.com, which sells high-end yachts, houses and private jets, among other things. “Their history and track record of good corporate governance, being a wellregulated and stable environment, are key.”
FINDING A FLAG STATE Another issue which a services provider can help with is choosing the most appropriate flag state for a yacht, even if that’s a ‘rival’ jurisdiction to Jersey or Guernsey. Some yachts are suitable to be flagged locally. The starting point for something to be considered a superyacht is generally thought to be around 24m (the term ‘megayacht’ is less clearly defined, but often
The majority of yachts are based in the Mediterranean. Most service providers and crew are based in Europe. So Jersey is better placed than, say, the Cayman Islands
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implies a vessel of at least 60m in length). A 400 GT yacht allowed on the Jersey Ship’s Registry could be around 40m in length, which brings it easily within that definition. Jersey and Guernsey are both part of the Red Ensign Group, which means any ships registered there are considered to be British vessels and therefore entitled to diplomatic protection and, in extreme circumstances, help from the Royal Navy. Jersey is also the largest Category Two register, holding more than 2,000 ships on its books. The higher level of register, known as Category One, includes Bermuda, the British Virgin Islands (BVI), the Cayman Islands, Gibraltar, the Isle of Man and the UK – all of which can register ships of unlimited tonnage. It is these Category One flag states that currently dominate the market for superyachts. According to a guide to yacht finance from Jonathan Hadley-Piggin, a Partner at UK-based Keystone Law, the Cayman Islands register has attracted more superyachts than all of the other British registers combined. The islands also claim to have more superyachts than any other shipping registry, with estimates of more than 20% of the world’s fleet. The yachting world has not followed the habits of the international merchant shipping fleet in seeking out the open registers of ‘flags of convenience’ – states such as Panama, Liberia or the Bahamas. However, some of these jurisdictions are starting to get in on the action. According to Keystone Law, Panama and St Vincent and the Grenadines are occasionally used to register large yachts, while the Bahamas, Cyprus and Malta also now register an increasing number.
Maintaining a vessel is not for the fainthearted – it can add up to an additional annual cost of 10%-15% of the initial price of the ship
Convincing owners to set their yacht’s ownership structure in a different jurisdiction to where the vessel is flagged is at the centre of the Channel Islands’ business case in the sector. The Channel Islands have some advantages over the BVI and the Caymans. While the Caribbean jurisdictions also have wide-ranging professional services industries that can accommodate the needs of yacht owners, Jersey and Guernsey have the advantage of being in almost the same time zone as France, Spain and Italy. This is an important consideration, given that most superyachts spend the majority of their time in the Mediterranean (although some do head to the Caribbean for the winter months). “The Cayman Islands, BVI and the Isle of Man are the market leaders,” acknowledges Ayliffe. “But there is a lot of untapped potential in the sector. “We’re leveraging the reputation of Jersey as a jurisdiction with strong governance. The majority of yachts are based in the Mediterranean. Most of the service providers and crew are based in Europe. So Jersey is better placed than, say, the Cayman Islands.”
Running a yacht is a business in itself. Even for the richest individuals the cost of a vessel can be eye-watering, both in terms of buying the ship in the first place and then keeping it afloat. A minimum price for building a superyacht is estimated to be around $1m per metre, but the final bill can easily be two or three times that for the most luxurious boats.
COST OF STAYING AFLOAT Maintaining the vessel is not for the faint-hearted either – and can easily add up to an additional annual cost of 10%15% of the initial price of the ship, once you allow for insurance, maintenance, management fees, depreciation, fuel, the cost of crew and, perhaps, financing payments too. As a result, superyacht owners often like to offset some of their costs of ownership by hiring out their vessels. Chartering a large yacht will often cost tens or even hundreds of thousands of pounds a week. Despite those hiring fees, few make a profit on their ownership. “They are very expensive machines to run,” Ayliffe says. “Normally, the charter income
will merely offset the running costs.” Dealing with superyachts is still a fairly new area of activity for the Channel Islands and the number of local firms involved is still relatively limited, as is their share of the market. Ayliffe says his firm currently helps to supervise more than 100 superyachts and mega-yachts. The global market potential is far bigger than that, however. Estimates of the number of superyachts on the seas range from 5,000 to 7,500. Last year, a further 243 superyachts were built, according to Superyacht Times. The cost of ownership means these boats will always be out of reach for the vast majority of people, but the lure of the superyacht remains. Welch believes that fewer people want to buy a superyacht nowadays, but the other side of the market remains healthy. “There are a lot of mega-yachts being built,” he says. “But millennials and younger people are not so interested in ownership – they’re much more interested in chartering.” That alone means the case for professional assistance for owners will remain a lucrative potential market. n
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I ’ l l h av e m y b o t c a l l yo u r b o t John Gamble, Director of Professional Services at C5 Alliance, asks whether digital bots and other technologies are helping businesses gain valuable insights that truly enhance performance
IMAGINE A WORLD where you don’t have to remember to renew your home insurance – or your car, health or travel insurance for that matter. A world where you won’t have to spend precious hours combing through and poring over hundreds of offers. Instead, you will have a digital assistant – a bot – who will gently remind you at a convenient time. You will tell your bot to go and find the best deal and make the transaction. It will then go and talk to the insurance provider’s bots to identify the best possible deal that suits your preferences. The need for insurance isn’t going to go away, but it will become much easier to navigate, thanks to the advances of robotic process automation (RPA) and artificial intelligence (AI). RPA and AI are already making their mark in organisations, with many mundane
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and repetitive processes being automated, and robots taking on the workload. AI is the result of building machines that can work, think and react like human beings – except they don’t get tired and they don’t make mistakes. But RPA and AI are not here to take jobs away. A study by Gartner shows that more jobs will be created by AI compared with those lost, and that AI will be pervasive in almost all software products and services. AI and RPA are providing people with more time to think creatively whilst also reducing risk. AI is playing an increasingly significant role in many businesses. It is freeing up people in the workplace to innovate, to create new services and to add value to their customers. Everyone will soon be in an IT career, whether we like it or not. A bank will be
an IT company that sells financial services, with its data underpinning its value. Car manufacturer Ford is now a software company that makes cars. It employs developers and its latest F-150 pickup truck has more lines of code in its system than a Boeing 787 Dreamliner. When AI is fully immersed in all businesses, which skills will you need to survive and thrive? At present, people with specialist knowledge of advanced mathematics – statistical modelling and algorithm experts – are leading the charge. We need humans to train and evaluate AI to ensure that it meets customer expectations in terms of privacy, security and ease of use. As business applications become more intuitive, we will see opportunities for people with different skillsets to interact with data. For example, Microsoft tools are already
embedding user-friendly AI features into products such as Power BI and Office 365. Microsoft’s cloud computing service, Azure, offers people the ability to build image recognition services. For example, people working in warehouses can take a photo of a Coke bottle with their phone and then, without any real coding, upload that photo to a system that can recognise the image and assist in stock-taking. Many people have seen PowerPoint develop over time and now PowerPoint 365 has a ‘Presenter Coach’ mode, which will actively listen to your rehearsal. It then uses AI to make suggestions about how you can improve your presentation based on your speed of delivery and tone of voice. It can also add live subtitles to the screen, which can be translated instantly – very useful if you are presenting abroad. Microsoft also provides a QnA Maker to create chatbots. At C5 Alliance, we have used this service to analyse our extensive policies and procedures. Within minutes, it embedded a chatbot into our Microsoft Teams sites. So people can now, for example, quickly ask the bot what the dress code is on Friday and the answer will pop up instantly. You can create a smart app without any actual coding. It won’t be necessary for most people to understand how the apps work. The focus will be on making everyone more aware of the possibilities these apps provide. School leavers will come into the workplace already knowing how to make use of these tools. GCSE computer science is already preparing the next generation, making children more familiar with working with data. Despite having minimal coding experience, our children are now connecting to multiple data sources and becoming proficient at structuring and analysing data. And, as they enter the workforce, how they communicate with customers will be a critical skill in an AI world. At C5 Alliance, we employ consultants and it is our responsibility as an employer
to ensure our staff have the right skills to exceed customer expectations. Technical skills are one part of the job and we provide training to help our people keep up to date with the latest developments. But an enthusiasm for data and for technology are crucial elements that make up our consultants’ roles. We work on projects and change in organisations, where we find a technological solution that needs to be delivered, managed and communicated. We need team players to listen, to understand the challenge our clients are facing, to speak, to write and to present in order to get our message across. Communication plays a vital role in our profession. Future-proofing your career is going to be less about picking a safe job and more about a constant yearning to learn and update your skills throughout your career. Humans are creative, critical and curious. That differentiates us from the machines, and it will ensure our careers survive and thrive in an AI world. n
an enthusiasm for data and for technology are crucial elements that make up our consultants’ roles
FIND OUT MORE
Contact firstname.lastname@example.org for further information on how C5 Alliance can help your business harness new technology to gain valuable insights and enhance performance.
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Playing the long game With more data and market insight available than ever before, investors can be tempted to ‘play’ when the good times are looming and withdraw when the panic hits. But are they better off staying in for the long haul – and reaping the benefits of the few good days a year?
THE CORONAVIRUS PANDEMIC has created extreme market volatility. The FTSE 100 dropped by more than 10% in a single day – its worst day since 1987 – while in the US, the Dow and S&P 500 were also hit by their steepest daily falls since 1987. As packages of aid and other financial support were announced by governments, the markets responded accordingly, creating wild fluctuations in market activity. Of course, these extreme volatilities are unusual and rare. So, when the markets are in their more ‘normal’ state of activity, what’s the best way to play them? Rebecca Bettany, Head of Jersey-based JTC Private Office, had a client who summed it up beautifully: “All I want you to do is buy things when they’re cheap and sell them when they are expensive.” That, in a nutshell, is market timing – the art, or some would like to think, science, of predicting when prices are about to go up and when they are about to go down, and trading accordingly. After years as an asset manager, Bettany’s role now involves supporting clients –
at the bottom and buy the stock, market or fund after your predictions have come true, its prospects look bleak and the price has fallen.”
PAYING THE PRICE The consequences of getting the timing wrong, and not being invested when the market rallies, can be eye-watering. Figures from Fidelity International show that somebody who invested £1,000 in the FTSE All Share on 21 February 2000 and stayed invested over the whole period of the next 20 years would have generated a total return (including the initial investment) of £2,817.83. Had they missed the 10 best days over that period, however, the result would have been just £1,524.85. And had they missed the best 20 days – an average of just one day a year – the return would have been reduced to £1,006.68. “These figures highlight the importance for investors of taking a long-term
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Words: Alexander Garrett
wealthy families and family offices – with their investment strategies, including writing investment mandates and choosing managers. But if clients are tempted to time the market, she advises: “Markets are unforecastable. If you’re out of the market for the best 10 or 20 days in any given year, you may as well not invest at all.” Making money from buying and selling shares would be easy to do if you had the benefit of hindsight. The trouble is that not even the most hardened investment professionals know what’s going to happen next. As Terry Smith, founder and CEO of Fundsmith Equity Fund, has explained it, data on investment behaviour shows that, in practice, people tend to follow a herd instinct – with money flowing into funds and other assets when they have risen, and flowing out when they have already fallen. That is exactly the opposite of what market timing would hope to achieve. “It’s not hard to see why we are almost all bad at market timing,” said Smith. “It’s hard enough to have the strength of conviction to convince yourself that markets are too high and sell when the background is looking rosy and everyone else is bullish. But it requires an extraordinarily flexible psyche to be able to complete the required volte face
Investment But Andrew Prosser, Investment Manager at Brooks Macdonald, says: “Bubbles are easy to identify in hindsight, but much more difficult to identify in advance.” The real key to avoiding the impact of a bursting bubble in a portfolio, he says, is to maintain diversification. On the other side of the coin, significant market corrections – especially when triggered by events whose effect proves to be shortlived – can be the best buying opportunities for those willing to take a contrarian approach. Technical, data-driven strategies are used by some investment managers to time their interventions in the market – for example, identifying when a share price deviates from its long-term moving average, or the balance between buyers and sellers. The trouble is, aside from the fact that these are best left to professionals, stock markets often don’t behave rationally. And it’s hard for any individual to compete with automated trading systems that make decisions using algorithms and can make trades in tiny fractions of a second. That becomes particularly crucial when the market is volatile.
IN IT FOR THE LONG TERM approach,” says Ed Monk, Associate Director at Fidelity International. “In times of market turbulence, it can be tempting to retreat – moving money to cash to avoid a further drop in the value of investments. “But market movements are an inevitability for anyone invested over a number of years. Often the best thing to do is steel your nerves and stay in the market, rather than dipping in and out. Our analysis shows that the returns generated by time in the market far outweigh those generated by seeking to time it.”
Selling out is the easy bit because you can do it and swim with the crowd. Buying back in requires a contrarian approach that few are comfortable adopting
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Many investors are tempted to sell when news is bad and prices are falling, adds Monk. However, they should ask themselves when they will buy back into the market, as it only makes sense to do so when news is uncertain. “That’s the hard bit about trying to time markets,” he explains. “You don’t just need to get one call correct, you need to get two. Selling out is the easy bit because you can do it and swim with the crowd at the same time. Buying back in, on the other hand, requires a contrarian approach that few, when it comes to it, are comfortable adopting.” When there are anxieties about a market crash, the temptation to sell up is especially strong. With fears about the effects of coronavirus spreading in late February, Bettany says: “We had a few clients who expressed a wish to liquidate their portfolios on the back of the virus, to which I didn’t agree. In some of these cases, we went ahead and liquidated because that was the client’s ultimate wish, but personally I would stick firm.” Arguably, if you believe that gamechanging global events could leave the market in the doldrums for years to come, or if there’s a bubble that means a particular category of shares is inflated wildly beyond its true value, selling could be the right thing to do. That’s what happened with the dotcom bubble in the late 1990s. Most of the overhyped early internet stocks never recovered anything like their peak valuations in 2000 after prices started to fall.
At the heart of the matter is how long you should hold investments. Ups and downs in the market of a few percentage points can look significant at the time, but become tiny blips when performance is charted over a longer period of 10 or 20 years. “As a general rule,” says Prosser, “time in the market beats timing the market.” One of the main reasons for this is the way in which returns are compounded over the long term. He gives an example: “At a 7% rate of return, a £1 investment grows to £1.31 over four years, but over 40 years grows to £14.97. It’s only after investing for a decade or more that clients can really start to see the benefits of compounding.” Research published by Andy Haldane, Chief Economist at the Bank of England, however, has shown that the average holding period for shares in the UK fell from almost eight years in the mid-1960s to just 7.5 months by 2007 – and has probably fallen further since. So, those managing investments on behalf of private investors and families in the Channel Islands may need to educate their clients and encourage them to see the benefits of long-term investing. Bettany adds that, before you invest, you should take out what you need for running costs over the next three to five years, then choose the best managers and be prepared to pay them well. “The market rewards you for the amount of risk that you are willing to take,” she says. “And part of that risk is not being able to get your money back immediately. At the end of the day, markets are not for everyone.” n
My data, my rules?
Every corporation wants to harvest and scrutinise your personal data. But what if you could take back control and share it on your terms, Or even sell it?
Words: Tim Green
a maternity pack to a young girl. The company had deduced from her buying habits that she was pregnant. But it turned out that the teenager had not told her parents. Target knew she was expecting. Mum and Dad didn’t. The incident says something fundamental about the digital world we live in. Corporations have bought in to the idea that ‘data is the new oil’. They want to know all about us, and the consequences can be frightening. For some people, this brand of ‘surveillance capitalism’ is too much. They advocate going ‘dark’: installing a VPN, buying a feature phone, using cash.
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IN 2012 THERE was outrage when US retailer Target posted
Everyone will have their own micro-economy. And the collective result of all these microefficiencies will be huge
However, for most of us, this is not realistic. After all, we love the convenience of the digital lifestyle. Can’t we have that without the creepiness? A number of technology thinkers and startups believe we can. They are working on an alternative model that preserves privacy but doesn’t restrict the data sharing that underpins the digital economy. The proposition is simple: give people a way to curate their own data, so they can share it – or even sell it – on their terms with organisations they trust.
SOLID START This idea is niche for now. But some supporters are highly visible. Take the inventor of the web, Tim Berners-Lee: he’s working on a web platform known as Solid that gives users the ability to keep their
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data in a personal store called a POD. They can decide who’s allowed to see it. Announcing the project, Berners-Lee wrote: “Solid changes the current model where users have to hand over personal data to digital giants in exchange for perceived value. As we’ve all discovered, this hasn’t been in our best interests... “With Solid, you will have far more personal agency over data – you decide which apps can access it.” While Berners-Lee and others wrestle with big questions, startups including Digi-me, Meeco and Datacoup – which are sometimes known as PIMS (personal information management services) – have already launched live services based on a similar premise. Digi-me offers an app that users can connect to a large number of sources via
delighted because it has the information it needs – in seconds – with none of the legal or technical worries of holding the data.” This example shows how Digi-me expects to make money. It will take a small fee for enabling the processing of the data – a fee that is vanishingly small compared with the existing costs of processing something like a car loan.
A QUESTION OF TRUST
their phone – email, Facebook, Spotify, Fitbit. The app uses this data to build a real-time picture of the user. But here’s the important bit: any organisation can, with consent, interrogate this data to offer personalised services or speed up administrative processes. But crucially, all of this processing takes place on the device. The organisation doesn’t keep any data. Julian Ranger, Executive Chairman and Founder of Digi-me, gives an example. “Say I want a car loan, and the lender wants to know my credit worthiness,” he says. “Traditionally, that process could take weeks. Now the lender can analyse my data to make a calculation on my device. “But the app will only share back the score, not the details of my financial history. I’m happy; and the lender is
One challenge is to overcome the cynicism of the general public. Surveys show that data trust has been trashed. In a 2019 study, for example, the UK Open Data Institute (ODI) revealed that 30% of people trust central government to use personal data ethically, but for social media companies, it’s just 5%. Data experts wonder how companies offering a new model can overcome this suspicion. “We already give away our personal data,” says Mel Pardoe, Data Protection Officer at BDO Jersey. “We sign away rights to our data privacy in return for services all the time – with ‘take it or leave it’ terms and conditions that we all sign up to. It seems to be counterintuitive to say we can ‘take back control’ of our private data by selling or sharing it.” Sandra Lawrence, Executive Director at Collas Crill Compliance, agrees – although she believes people are hungry for a new approach. “I asked my colleagues about this idea and they were all intrigued,” she says. “But could it just add another layer of risk? How can we be sure that we’re not surrendering our data to a new layer of intermediaries?” Other observers flag up a different problem. They point out that some organisations have no choice but to store sensitive information. Huw Thomas, Counsel at Carey Olsen, says: “It’s a nice idea, letting individuals control their data. But it ignores that some organisations are compelled by law to keep it – for medical reasons, to protect against money laundering and so on.”
CASH INCENTIVE Although there is obvious disquiet among consumers about data harvesting, the challenge is to turn that disquiet into action. To encourage them, some PIMS offer a simple incentive: cash. Companies such as CitizenMe and UBDI have built apps that let people curate their data and then share it with brands for market research. When they do, users earn points they can trade for goods and
services. The companies aggregate the information, so no personal data is shared. It’s pretty radical. But some proponents go further. US tech guru Jaron Lanier argues that everyone should get paid for their data, all the time. In his manifesto, A Blueprint for a Better Digital Society, Lanier says that personal data should be re-defined as a legal asset. He writes: “Silicon Valley values companies at a trillion dollars – and the value comes from our data. It’s absurd to say it’s not worth anything. We estimate a small family could in the very near term make $20,000 as year.” Critics point out obvious flaws with the concept. It’s been estimated that Facebook’s annual profits equate to around $33 per user per year. Quite a gap to $20,000. And there’s another issue. If data is an asset, how can we be sure who owns it?
OWNERSHIP ISSUES This is the sticking point for Jeni Tennison, CEO of the Open Data Institute. “Data is rarely about a single individual,” she says. “For example, my DNA says something about my family. My social media feed is also about my friends. “There are also scenarios where it is impractical to get consent. If you are taking satellite photographs to improve land productivity, for example, can you really ask the consent of every farmer? So, thinking in terms of individual data ownership is not the best approach.” That said, seeing data as collectively owned might itself present new opportunities. Richard Field, Partner at Appleby in Guernsey, gives a healthcare example. “I can imagine how people with certain medical conditions might in future realise the value of their data,” he says. “They might team up to share or even sell it to pharmaceutical companies. “It would raise new questions about the best way to organise these groups, but the potential is there.” Katryna Dow, CEO of personal data startup Meeco, agrees. She believes it’s inevitable that people will take back control of their data, and that the outcome will be a kind of revolution. “Big data is amazing for detecting big patterns, crowd behaviour and so on,” she says. “But when you’re trying to serve this particular person right now, it doesn’t work. “Giving back data to customers is the key to unlocking that. When this happens, everyone will have their own micro-economy, in a sense. And the collective result of all these microefficiencies will be huge.” n
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Most don’t deliver great investment returns, and a raft of digital developments continue to challenge their standing, but demand for high-end wristwatches continues to grow. So what’s the appeal of watches to the wealthy?
PICTURE THE SCENE. It’s 1962. A handsome man is walking along a Caribbean beach talking to a bikini-clad blonde he’s just met. “What’s your name?” she asks. “James,” he replies. They are actors Ursula Andress and Sean Connery, starring in the classic James Bond movie Dr No. And, prominent on Connery’s wrist throughout the scene, is a Rolex Submariner watch. From iconic films to ads in glossy magazines and collaborations with daring sportsmen, the world’s top watch brands have long been adept at turning time-telling devices into desirable luxury items. Even in an era where our phones, computers and smartwatches tell accurate time, demand for high-end mechanical watches continues to grow – the sector was worth $6.9bn in 2018 and is expected to expand in the coming years. So how did luxury mechanical watch brands – think Rolex, Patek Philippe, Cartier, Tag Heuer, Breitling – become such a must-have item that people are willing to spend anything from £3,000 to more than £50,000 on them? Should they be treated as an investment – like a bottle of fine wine or a piece of art? And what is the future for these mechanical devices?
STORY OF THE WRISTWATCH For millennia, people have tried to measure time – the earliest attempts to do so involved sundials, water clocks and hourglasses. Mechanical clocks became increasingly common from the 14th century and were gradually miniaturised over the next 200 years. By the 16th century, pendant time pieces were popular among aristocrats, although they were often highly inaccurate and were largely treated
The first Submariner 1953 Rolex (photo: JeanDaniel Meyer)
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Daily Mail page from 1927 (photo: Rolex) recently bought was part of an inheritance. She notes that there are subtle differences between the ways that specific brands market themselves. “If you look at Patek Philippe’s branding, they strongly emphasise the idea of family and ‘old money’. Compare this with Rolex, which tends to associate itself with a successful person and meritocracy. Even someone with David Beckham’s background, for example, can wear a Rolex as a symbol of their achievements [Beckham has appeared in Rolex adverts]”.
THE RIGHT CONNECTIONS As with other luxury items, RichardsCarpenter explains that individuals will choose watches based on the kinds of people with whom they wish to be associated. For example, Cartier has had a long association with the early era of flight, decking out pilots with watches they could check while keeping their hands on the controls. For those who wish to associate themselves with deep sea divers such as Jacques Cousteau, a Blancpain FF would do. Or how about a Tag Heuer to recall the high-octane world of Formula 1? Richards-Carpenter also notes that there are two forms of luxury purchasing. In newly rich countries, conspicuous ‘experiential’ consumption is much more common – people want to experience the good things in life. More common in established economies is ‘intellectualised’
Words: Len Williams
as jewellery. Later, pocket watches were popularised, after Charles II of England introduced a fashion for waistcoats. Ornamental pendants were flattened and curved to fit into a pocket. There are various claims about who first strapped a watch to an appendage, but many historians say that the first wristwatch was created in 1812 for the Queen of Naples. For much of the following century, wristwatches were a feminine item. But this gradually changed as military men began to realise the benefit of a time-telling device that they could check while riding a horse and swinging a sword. It was the First World War that really popularised wristwatches among men, however. All officers were expected to wear a wristwatch to coordinate attacks – if you saw the recent World War One film 1917, you may have noticed characters wearing them. After the war ended, soldiers kept their military issue timepieces, and wristwatches became the norm. Over the next few decades, mechanical watches became ever more sophisticated and accurate, with various household-name brands leading the way in design and innovation. Impressively, the most high-end products rode out serious challenges from new technologies – be that the arrival of cheap, accurate electronic quartz watches in 1969 or the explosion of digital devices at the turn of the century. So how can this enduring interest in mechanical watches be explained? “I personally know someone who bought a vintage Rolex for himself, and who now claims it was left to him by his grandfather,” recounts Nastaran Norouzi Richards-Carpenter, Director of an MA in Luxury Brand Management at Richmond University. For Richards-Carpenter, “status is the main factor when it comes to purchasing a luxury watch”. The world’s best-known watch brands have developed highly successful branding models that ensure their products remain desirable – and motivate people to do things like pretend a watch they’ve
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Omega’s latest Bond watch, the Diver 300M 007 Edition (photo: Omega)
appreciation is more an exercise in fashion and spending disposable income.” If one were to buy a watch as an investment, Adams says, you would probably have to buy a very expensive timepiece. He adds: “The risk of loss is very high as the secondhand market is highly volatile and based on emotion more than anything else.” Chinn agrees. “We don’t recommend buying watches as an active investment. We sell products that people wish to purchase as a reward for an achievement or to mark a special occasion.” That said, he does believe that a large driver in the demand for luxury watches seen in recent years is linked to the sustained period of low interest rates in many markets. As a result, more people are putting money into stock, property and assets such as cars and watches.
WATCH THE HORIZON
If you bought a Rolex and an iPhone today, in 30 years’ time only the Rolex would still be working fine consumption, whereby people become fascinated with the heritage of brands. But what makes a Rolex or a Breitling a luxury watch, and a Casio an everyday purchase? Richards-Carpenter lists the ‘eight Ps of luxury’: performance, pedigree, paucity, persona, public figures, placement, public relations and pricing. If a watch ticks all these boxes, it is normally considered a luxury item.
Pictured right: Patek Philippe
BEAUTIFUL THINGS There are plenty of reasons people buy luxury watches, but Jeffrey Chinn of Hettich Jewellers in St Helier reminds us that they are inherently “beautiful things”. Even in the digital era, high-end mechanical watches have inherent value. Companies making luxury watches employ master craftsmen who spend hours oiling, cutting and hand-polishing every single cog and mechanism inside the device. Often made from rare materials, new generations of watches are incredibly accurate, and they are constantly improving. “Today’s watches have fewer service intervals and longer warranties than ever before,” says Chinn. So you might not need to take a modern Rolex in for servicing more than once a decade. And for all the benefits of digital
technology, our modern gadgets have far shorter lives than mechanical watches too. As Chinn points out: “If you bought a Rolex and an iPhone today, in 30 years’ time the Rolex would still be working fine; the iPhone would almost certainly have conked out.”
A WISE INVESTMENT? There are a handful of classic luxury watches that have, over time, increased in value. However, few watch industry specialists recommend treating wristwatches as an investment. Ariel Adams, who runs review and analysis website aBlogtoWatch, advises: “Wristwatches as financial investments are not a wise way to make money; wristwatch
One of the great achievements of the watch-making sector has been its ability to reinvent itself. Richards-Carpenter points to new marketing techniques used by Rolex, which partners with online video game companies. When characters pass ‘levels’, they buy themselves a Rolex to celebrate, thereby introducing the brand to a new generation. She also notes that luxury watch firms have adapted to societal shifts. For the past 100 years, luxury watches were mainly marketed at men, yet manufacturers are now producing ever more designs for women – mirroring a rise in female purchasing power. Adams believes the outlook for luxury watches may actually be improved by the emergence of digital products such as the Apple Watch. “It is a boon for high-end luxury watches because consumers now have a renewed interest in what people have on their wrist,” he says. All of which suggests we’ll be wearing wristwatches for a long time to come. In Spectre, the 2015 James Bond outing, nerdy MI6 tech expert Q hands Bond an Omega watch. “Does it do anything?” asks Daniel Craig’s Bond, sceptically. “It tells the time,” Q replies. That’s true, but wristwatches seem to do a lot more than that too. n
Top tips for purchasing a luxury watch Ariel Adams of aBlogtoWatch gives three pointers for purchasing a luxury watch: • A watch should match the wearer Spend plenty of time researching watches online and handling different watches to find one you love • Ignore trends Find a watch you develop an emotional attachment to • Test the waters Start by spending no more than a few thousand pounds and then gradually work your way up the ladder
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MORE PEOPLE H AV E B E E N I N TO S PAC E THAN H AV E PA S S E D THE MASTER OF WINE EXAM
Meet Pierpaolo, he’s one of three Masters of Wine here at Waitrose & Partners. He and his team spend their lives searching the planet to find the best wines for our customers. Think of them as your very own sommeliers. Because every single wine we sell has been hand-picked by them.
FOR US, IT’S PERSONAL
Pierpaolo, Partner & Head of Wine Buying
Knowledge Brain food for the busy business professional
The Knowledge is compiled by Alexander Garrett
points Investment banking falters
The revenues of top investment banks in 2019 fell to their lowest level since the financial crisis, according to research from industry monitor Coalition. It says the world’s 12 largest investment banks posted combined revenues of $147.5bn across their trading and investment banking businesses last year, down 4% year-on-year, and at the lowest level since 2008. According to Coalition, the banks responded by cutting 6% of workers in those divisions – some 2,900 people – the biggest drop in employment since it began collating the data in 2012. The growing trend towards passive investing has been identified as one of the causes, with fewer opportunities for banks to take trading commissions.
MBAs get ethical
Responsible and ethical leadership is a critical issue for MBA students, according to Tomorrow’s MBA, an annual survey by UK education market research consultancy CarringtonCrisp. In its latest study, of 600 prospective business school students, 70% identified ethical leadership as important to business education teaching and research. The next most important factor was diversity and equality, cited by 67% of respondents. Potential students regard responsible leadership as a fundamental aspect of business education teaching and research, not as a specialist add-on, says the company. They are asking for exposure to not-for-profits or NGOs as part of their MBA.
Babies in bilingual homes are 33% faster at switching attention than their peers in homes where only one language is spoken, a study has found. Researchers at Anglia Ruskin University used eye-tracking technology with seven- to nine-month-old babies to see how quickly they responded when a new picture was displayed on the screen in front of them. They chose babies to isolate the effect of simply hearing two languages from speaking them. The researchers concluded that “the bilingual babies were exploring more of their environment”. In the next phase of their research, they will look at whether this faster attention span in infancy will have a longer lasting development impact.
Reefs in danger
Cake culture threat
The world’s coral reefs may completely disappear by the end of the century, according to scientists at the University of Hawaii at Mānoa. Researchers at the university say that the reefs will be killed by a combination of warming waters – caused by climate change – and ocean acidification. They examined areas where they thought that reefs might be able to survive the changing ocean and found that, by 2100, on current trends, there will be virtually none left. The researchers simulated ocean conditions such as sea surface temperature, wave energy, acidity of the water, pollution, and overfishing in areas where corals now exist. They also considered human population density and land cover use to project how much waste would be released into the surrounding waters. Baja California and the Red Sea are among the few locations where coral is expected to survive by the end of the century.
HR health and wellbeing initiatives are being undermined by the prevalence of office cake, new research has suggested. A study on office ‘cake culture’, conducted by health coach Lou Walker at the University of Chester, highlighted the availability of cakes and snacks in office environments, and suggested that this could be reducing the benefits of companies’ investment in the health and wellbeing of employees. Of 940 UK office workers surveyed in the report, 87% said cake was available in their office at least once a week. More than a third (36%) said they never refused cake and 68% found it hard to resist, but almost all (95%) said cake should only be on offer once a week or less. Nearly a third (31%) of respondents said office cake had led them to gain weight, and 38% felt an abundance of cake made it difficult to eat healthily at work.
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New in… BOOKS
history of prosperity
Ladies Can’t Climb Ladders: The Pioneering Adventures of the First Professional Women by Jane Robinson (Doubleday, £20, hardback) Social historian Jane Robinson tells the story of the women who were among the first in the UK to enter fields such as medicine, law, academia, architecture, engineering and the church. The starting gun was fired with the Sex Disqualification (Removal) Act of 1919, which came at the end of World War One, when women had worked in every kind of occupation, from factories to government and military services. But the supposed liberation that ensued is something of a myth, the author finds, since the barriers to many professions remained firmly in place.
More: The 10,000-Year Rise of the World Economy by Philip Coggan (Economist Books, £25, hardback) Coggan, who writes the Bartleby column for The Economist, sets out to track the development of the world economy – “starting with the first obsidian blades that made their way from what is now Turkey to the Iran-Iraq border 7,000 years before Christ, and ending with the Sino-American trade war we are in right now.” It traces the history of mankind’s prosperity, through the evolution of products such as toothpaste and sectors from agriculture to finance. And, of course, the emergence of a globally connected system that’s put smartphones in the hands of billions of people around the world.
future of the corporation
Lift As You Climb: Women and the Art of Ambition by Viv Groskop (Bantam Press, £12.99, hardback) This latter-day perspective on women ascending career ladders is “part self-help guide, part masterclass in survival skills for life and work”. It sets out to examine how women can help each other on the way up, without any disadvantage to themselves. Comedienne and writer Groskop looks at the small actions and interactions that take place every day and how they can be approached in a way that is more ‘sisterly’. Intended as a companion to her previous oeuvre, How to Own the Room, Groskop says the new book was in part inspired by the saying “There’s a special place in hell for women who don’t help other women”. Look out for the podcast too.
Grow the Pie: How Great Companies Deliver Both Purpose and Profit by Alex Edmans (Cambridge University Press, £18.99, hardback) This book sets out to lay to rest the myth that business can only deliver social value at the expense of the bottom line. Edmans, a professor of finance at London Business School, espouses the idea that companies must work with stakeholders such as employees, customers and communities if they want to do more than merely reward shareholders. Those that indulge in this form of responsible capitalism, he finds, are more likely to be successful and sustainable in the long term. Purpose, says Edmans, is nothing less than the reason you exist as a corporate entity. And unlike some of the other social and environmental credentials companies strive for, it can only be driven at the highest level, rather than adopted as a bolt-on strategy.
All prices are RRP.
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In numbers: Fisheries
Worldwide production of fish, crustaceans, molluscs and other aquatic animals in tonnes, 2017 Source: United Nations Food and Agriculture Organisation
Leadership and Coding MBA IÉSEG School of Management in Paris and coding school Le Wagon are launching a full-time MBA programme to provide participants with management/leadership and coding/technical skills. The one-year programme, which opens in October, is taught in English and aims to develop managers and changemakers through business and coding courses. www.ieseg.fr/en/programs/mba/mba-leadership-coding/
Long-Term Stock Exchange
UK ranking in the European Union for size of fishing catch, after Spain and Denmark. The UK’s share is 13.6% Source: European Commission – Fisheries facts and figures
This new securities market in San Francisco aims to attract companies focused on sustainability. Led by Eric Ries, author of The Lean Startup, the LTSE has gained approval from the US Securities and Exchange Commission, to become one of only three stock exchanges in the US that can trade shares and allow companies to list through an IPO. longtermstockexchange.com
Vimeo Create Vimeo’s new app will enable businesses to create their own videos on a limited budget. It includes a set of tools for small businesses that lack the resources, time or budget to invest in video production at scale to tell their stories using social video. Available in app and desktop versions, businesses choose from pre-made templates that can be customised through clips, colours, fonts, layouts, logos and captions. vimeo.com/create
Average amount of fish consumed per year per person (kg), representing 17.4% of protein intake Source: United Nations Food and Agriculture Organisation
Average EU tariff (as a percentage) on fish imports to the EU
Source: House of Commons Briefing Paper
WeCrashed Six-part podcast WeCrashed follows how co-working firm WeWorks’ planned IPO, designed to net its founders billions, collapsed in acrimony. At one point, WeWork was valued at $47bn, but its IPO was pulled when investors began to have doubts, and the company was left in turmoil. Hosted by David Brown of the hit podcast Business Wars, WeCrashed promises “a story of hope and hubris, big money and bigger screwups”. wondery.com/shows/we-crashed/
4,236,930 Value in £s of Guernsey’s fishing catch, 2017. That’s greater than two EU states – Austria and Slovenia
Source: Guernsey Sea Fisheries, statistical bulletin, 2017
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...make your business travel greener
“Flying from London to Paris would generate 122kg of carbon dioxide, whereas the same journey by train would emit just 15kg”
WHEN the dust settles, coronavirus will have forced many people to cancel business trips in recent weeks – and it may prompt some to have a bigger rethink about their business travel, how necessary it is, and whether they could do it better. Air travel is a significant contributor towards global warming; just one return flight to New York uses up an individual’s personal allowance of carbon emissions for an entire year, according to the Environmental Transport Association. So how could you keep connected with the world while taking better care of the planet?
Our Health programme at health research group Wellcome, says in a blog: “Here’s how I approach travel – I interrogate every trip. First, do I really need that meeting? We’re all too busy, and we all have too many meetings, many of them not really necessary. If the meeting doesn’t need to happen, let’s cancel it! “Second, if the meeting has to happen, is my presence really needed? If I’m one of many people around a big table, if my presence won’t change the outcome, if I don’t have much to contribute, I’ll send my regrets.”
Understand your impact
Videoconferencing is now high quality and commonplace – especially among millennials. And collaborative tools mean you can share documents and other materials without being in the same room. A survey of 1,300 professionals by US supplier Lifesize last year found that 47% said they had reduced their business travel because of videoconferencing. Other studies have suggested that it could replace 20% of business travel.
The old adage holds true: to fix anything you need to measure it first. If you work with a travel management company, they should be able to provide you with comprehensive CO2 emission data for all your air and rail travel, as well as hotel stays. That provides you with a baseline from which to target reductions. It also helps you to see where business travel sits within your overall environmental impact as a company. At PwC, for example, business travel is the biggest part of the firm’s overall environmental impact, representing some 90% of its overall carbon footprint, with air travel alone notching up 79% of that figure.
Is it necessary? “The most effective way of reducing our travel-related carbon emissions is to avoid travelling wherever possible,” says professional services firm CapGemini. And Howie Frumkin, head of the Our Planet,
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Take the train Other forms of transport are generally, but not always, more environmentally friendly than flying. According to research by ecopassenger.org, an individual flying from London to Paris would generate 122kg of carbon dioxide, whereas the same journey by train would emit just 15kg. Using the train may not be an option for someone based in the Channel Islands, of course, but you can still reduce your impact by flying economy. For long-haul
Business leaders on making it to the top
Getting ahead Kay Parnwell, Head of private client team, Investec, Guernsey flights, carbon emissions per passenger per kilometre travelled are about three times higher for business class and four times higher for first class, according to the UK’s Department for Business, Energy and Industrial Strategy (BEIS).
Offset Many companies automatically invest in offsets for all their flights – and sometimes other forms of business travel – and a travel management company can usually arrange that. PwC says: “With support from our major supplier, Natural Capital Partners, our member firms select portfolios to reflect local priorities. Underpinning our approach is a set of strict quality criteria, including ensuring our offsets are verified by an independent third party to an established standard or protocol.”
Plan carefully Simply planning ahead can make a big difference to your overall impact on the planet. Try and tack trips together, rather than making multiple journeys; fly direct rather than making transfers – taking off and landing have a disproportionate impact; and think about even combining your business trip with your family holiday.
You grew up in Guernsey – did you expect to stay? I have an adventurous spirit, perhaps from reading ‘lashings’ of Enid Blyton when I was young, but Guernsey always will be special. Growing up here in the 1950s and 1960s, we always felt very safe and free. It was so good that I and three friends wrote two books about it – Bloney Good Times and More Bloney Good Times. I’m not totally sure about the provenance of ‘Bloney’, but it’s a good old Guernsey word, so no doubt your readers will offer a definition. I’ve always loved writing. It indirectly led to me staying in Guernsey after A levels – I was too distracted writing an end of year play, my exam results suffered, so I didn’t get to take up a place to read history and politics at Warwick.
How did you get into banking? My father was a manager at Barclays and he suggested banking as a good step while I figured out ‘what next’. Guernsey’s finance industry was growing quickly, so there were lots of opportunities. It wasn’t really work that satisfied my creative streak, but that changed when I became a cashier – I discovered that building client relationships can be rewarding. So it’s no surprise I love my current role.
What piece of advice has helped you along the way?
I’ve benefited hugely from advice given to me by people I’ve worked for and with, but one sage quote from CS Lewis stands out: “Integrity is doing the right thing even when no one is watching.”
What’s the key to building great relationships with clients? Integrity. Enthusiasm. Flexibility. Above all, you need to be true to yourself and others – clients can sniff out insincerity at 100 paces.
How have the arts enriched your working life?
It is important to have passions outside work and mine are literature, music and performance – been part of my soul from an early age. I was involved in Guernsey’s first Literary Festival, arranging sponsorship and appearing with the Bloney Girls to promote our first book.
What’s your advice to aspiring bankers? I’ve always been prepared to push myself, from climbing Kilimanjaro (physically demanding) to staging a musical performance for Investec staff at the Royal Opera House in London (mentally terrifying). It’s summed up for me by Michael Jordan: “Don’t be afraid to fail. Be afraid not to try.”
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o some, she will always be the single-handed yachtswoman fashion, packaging, climate change and artificial intelligence. who broke the speed record for circumnavigating the globe The Isle of Wight-based foundation has recruited a 100-strong in 2005. But Dame Ellen MacArthur has focused most of her team from around the world, and MacArthur has stepped back to energies on a very different field since then – the ‘circular economy’. chair the trustees. She’s as energetic as ever in promoting the circular The two are not unrelated. A circular economy sets out to reduce economy model, though, and much more than a mere ambassador. all wastage and re-use the world’s resources as far as possible. As She cuts deals with a cast of partners embracing the UN, fashion MacArthur recounted in a 2015 TED Talk, during her voyage designer Stella McCartney, and many business leaders. She’s she had a lightbulb moment: “Your boat is your entire been made a Dame, awarded the Albert I Great Medal world, and what you take with you when you leave is for her role in keeping plastics out of oceans, and last “We need to all you have… Our global economy is no different, it’s year joined the board of PACE, the global Platform for change the way entirely dependent on finite materials.” people think, the way Accelerating the Global Economy. She set up the Ellen MacArthur Foundation in But MacArthur’s role is less as an original thinker things are designed, in her own right, more a mover and shaker in getting 2009 to promote circular economy thinking, and the materials put has embarked on partnerships with governments, circular economy ideas onto the radar of the powerful big corporations, universities and cities to carry out – through the World Economic Forum, for example. into them” research, develop toolkits and publish case studies. The She also runs a charity that gives sailing experience to foundation also develops academic content that can either teenage cancer survivors. But few could doubt her passionate be accessed online – for example, through Massive Open Online commitment to the ideal to which she has dedicated her life. As she Courses – or is offered by individual institutions. told one interviewer: “We are trying to change a system, not one It’s become an important publisher within the sustainability business. We need to change the way people think, the way things world, with a wide range of reports covering topics as diverse as are designed, the materials put into them.”
As if dealing with a deadly pandemic were not enough, on 2 February the World Health Organization dubbed coronavirus ‘a massive infodemic’. Or: ‘An overabundance of information – some accurate, some not – that makes it hard for people to find trustworthy sources and reliable guidance when they need it.’ Social media has allowed disinformation to flourish at speed – ‘going viral’ has never been more apt. The term ‘infodemic’ was not coined specifically for the coronavirus crisis; online dictionary Wiktionary defined it almost a year ago as: “An excessive amount of information concerning a problem such that the solution is made more difficult.” What’s prompted its use around Covid-19 has been the proliferation of fake news sweeping the web – the WHO had been forced to move fast to dispel an online rumour that the virus can be caught from an infectious ‘cloud’ in the air, for example. But the remedies suggested for this type of virus certainly draw on the response to Covid-19: avoid sharing at all costs; and carry out the technological equivalent of washing your hands thoroughly after visiting social media.
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Phygital space The coming together of physical and digital, as in retail stores where you can interact on screen or IRL.
Centibillionaire A new name for Jeff Bezos.
ALSO NEW IN THE WORLD OF
Top tech Quantum computing: a duffer’s guide IF YOUR LAPTOP’S BEEN ON THE GO-SLOW AND THE SPINNING PIZZA’S BEEN ON OVERTIME AS YOU TRY TO CRUNCH A FEW NUMBERS, FEAR NOT – QUANTUM COMPUTING PROMISES TO DELIVER PROCESSING SPEEDS YOU’VE NEVER DREAMED OF. IT WON’T BE ON YOUR DESKTOP EXACTLY, BUT IT’S GOOD TO KNOW WE’LL SOON HAVE A NEW SUPERHERO TO TACKLE OUR DAUNTING PROBLEMS
WHAT IS IT? If you don’t have a degree in quantum mechanics, the first thing to understand about quantum computing is that understanding it is no easy matter. A quantum computer is fundamentally different from conventional computers in that it is non-binary, and it doesn’t operate in the same linear, sequential fashion. The computers we use today are binary in the sense that they store data and perform calculations using the digits 0 and 1; each ‘bit’ of storage has one value or the other, and there is no in-between. In quantum computing, data is stored in ‘qubits’ that can hold the values 0 and 1 simultaneously, as well as any proportion of the two. How? Don’t ask. This is known as the superposition – think about it in relation to a switch that can be in two positions – ‘on’ or ‘off’ – but what it means is that while four conventional computer bits can hold one of 16 different binary combinations, four qubits can hold all 16 simultaneously. Add qubits and the quantity of data that can be held and processed soars – 20 qubits can store a staggering one million combinations in parallel. Why is this important? Suppose you were trying to find a passcode, a conventional computer would have to try out each combination in turn; the quantum computer can try them all out simultaneously, taking a tiny fraction of the time to achieve the same result. This exponential acceleration in processing power is known as the quantum speedup. Another important concept to get your head around is entanglement; this is a characteristic/ property that means each qubit can react to each of the others simultaneously no matter how far they are apart. So if you can determine the state or value of one qubit, you can deduce the state of all its partners without having to look. The key thing is that a quantum computer can take in a vast amount of data, process it all in
one go, perform the most complex calculations, and come up with a single answer. If you want to know more than that, you’ll have to read a book.
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WHAT DOES IT LOOK LIKE? Search for images of a quantum computer and you’ll likely come up with something that looks like a weird chandelier, all wires and tubes and components hanging off a series of discs. The models that have been demonstrated until now rely upon having electrical circuits that are supercooled at a temperature closer to that in outer space. IBM, Google and Microsoft are among the better known companies that have put models into public circulation. Honeywell has recently revealed that it has developed its own quantum computer, which uses a different technology – trapped ions held in place by electromagnetic forces – to create the superposition.
WHAT’S IT FOR? Key applications that have been identified include carrying out far more accurate and long-term weather forecasts; simulating molecules in the process of drug research; materials processing; high-security encryption; and moving data from one place to another without transmitting it.
SCARY DRONE The MetaFly looks more like a giant insect and can fly at 20kph for those who enjoy freaking out their neighbours. It could certainly keep the birds from eating your runner beans, from €119, bionicbird.com
WHEN CAN I GET ONE? You’ll probably never be able to buy a quantum computer for personal use, but there are a number already on the market with limited capabilities. Minimum price today is around $15m and the sky’s the limit – according to one estimate, each qubit costs $10,000. In October last year, Google announced that it had achieved ‘quantum supremacy’ – the ability to solve a problem that conventional computers cannot. IBM promptly rubbished that. No doubt we’ll be hearing a lot more from both of them.
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Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or firstname.lastname@example.org
OFFSHORE LEGAL ADVICE & SERVICES
Unleash the Power of Automations with Agile Automations Agile Automations specialise in developing bespoke Robotic Process Automations (RPA) and Robotic Desktop Automations (RDA), putting automation at the very heart of your organisation’s infrastructure. An organisation – where employees perform predictable, rule lead, highvolume, transactional processes and data manipulation – will boost their capabilities, increase accuracy, save money and time with RPA. Our robotics act with outstanding efficiency and accuracy, 24 hours a day, while offering enhanced Risk & Governance controls, sometimes eliminating the need for human engagement altogether. At Agile Automations, we do not use any robotics platforms, which allows us to offer a complete, yet flexible solution, for our clients; each automation is bespoke, designed to their unique individual requirements, without any need to compromise. This results in an enhanced Return on Investment. Just as we have seen robots revolutionise manufacturing – by increasing production rates, improving quality and cost savings – RPA is revolutionising the way we think about business processes. To find out how Agile Automations could automate your business, please do not hesitate to contact our CEO Martin Keelagher Email: email@example.com Website: www.agileautomations.co.uk Twitter: twitter.com/AAutomations LinkedIn: www.linkedin.com/company/ agile-automations/ Facebook: www.facebook.com/ AgileAutomations/
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Great learning boosts performance It’s a simple fact of business that people who know how to use their IT systems properly are more productive and happier at work. At ALX Training, it is our mission to ensure that every person we work with can use their essential applications properly, saving time, smoothing processes and creating a more productive workplace.
OFFSHORE LEGAL ADVICE & SERVICES
Appleby is one of the world’s largest providers of offshore legal advice and 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 Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include:
Our trainers are renowned for their product knowledge, and their friendly and energetic attitudes to training help them get the best from every person they teach.
l Corporate l Dispute Resolution l Private Client & Trusts l Property
Learning starts at induction We are well-known for our range of Microsoft Office courses which includes Office 365, Excel, Outlook, PowerPoint, Word, Project, SharePoint and Visio but our clients know we can do much more.
Members of the Jersey and Guernsey offices regularly advise London City and international law firms on all legal aspects of offshore corporate, finance and investment fund transactions and arrangements in the Channel Islands.
Not only do we train on well-known accounting packages such a Xero and QuickBooks but we create courses on bespoke in-house systems. We design unique courses specifically for your organisation, so that your staff learn precisely the information they need to work efficiently and effectively.
For more information visit our website www.applebyglobal.com
We know there’s no better place for your new colleagues to start learning than during their induction programme, so we develop bespoke induction courses that give your new starters all the information they need to hit the ground running. We can even deliver content online, so training can be ongoing and continuous.
James Gaudin (Managing Partner - Jersey) Email: firstname.lastname@example.org Jeremy Berchem (Office Managing Group Partner – Guernsey) Email: email@example.com
Contact us to discover great learning opportunities: T: 01534 873785 E : firstname.lastname@example.org www.alxtraining.com
Independent and Professional We offer a full range of management and fiduciary services to our domestic and international private clients and corporate structures: Family office - bespoke assurance Wealth management - your strategy l Trustee - impartiality with vision l Corporate services - attention to detail l Good governance - a helpful eye l Strategic guidance - controlled ideas
Be Secure is a consultancy business providing services in the following areas; GDPR data protection ISO 27001 Information Security l Cyber Security l EU Representative services l l
(via Irish office)
Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Tim Cartwright – Director email@example.com Lisette Le Creurer – Associate Director firstname.lastname@example.org Wendy Warder – Associate Director email@example.com Áine O’Reilly – Director firstname.lastname@example.org www.baccata.co.je Tel: 00 44 1534 870670 We aim to assist in the provision of personal service to meet your requirements. Ask us. Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Regulated by the Jersey Financial Services Commission
Be Secure, in association with partners who are experienced professionals in data protection, technology, cyber security and legal services are working to deliver high standard assurance and advisory services to Channel Islands organisations. We work as a business partner to your organisation in support of the board of directors, trustees, partners, senior management and staff in managing the governance obligations of data protection in this new GDPR data protection world! Be Secure is lead by a highly experienced finance professional, who has worked in senior roles in private equity owned businesses, in both commercial and financial services business sectors. As a member of the International Association of Privacy Professionals (“iapp”) and an accredited Certified Information Privacy Professional Europe (CIPP/E), Certified Information Privacy Manager (CIPM), Certified Information Privacy Technologist (CIPT), GDPR Practitioner, ISO 27001 Lead Implementer and Lead Auditor, Be Secure’s founder and director can help you, and your colleagues, manage this area in a professional and practical way for your organisation and clients. For further information please contact:
Carey Olsen is a leading offshore law firm. We advise on Bermuda, British Virgin Islands, Cayman Islands, Guernsey and Jersey law across a global network of nine international offices. We are a full service law firm working across banking and finance, corporate and M&A, investment funds and private equity, trusts and private wealth, dispute resolution, insolvency and property law. Our clients include global financial institutions, investment funds, private equity houses, multinational corporations, public organisations, sovereign wealth funds, high net worth individuals, family offices, directors, trustees and private clients. We work alongside all of the major onshore law firms, accountancy firms and insolvency practitioners on corporate transactions and matters involving our jurisdictions. Our advice is delivered by an approachable and experienced team of globally-minded lawyers who work in partnership with our clients to help them achieve their objectives. We have the expertise and resources to handle the most complex international transactions combined with a personal approach to business. Contact: email@example.com T +44 (0)1481 727272 firstname.lastname@example.org T +44 (0)1534 888900 www.careyolsen.com
Brian Siney, Founder and Director, CIPP/E, CIPM, CIPT, ISO 27K Lead Implementer, Lead Auditor, FCA email@example.com +44 7797 738743 or www.besecure-consultants.com
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Deloitte LLP provides audit, tax, consulting and financial advisory services, bringing world-class capabilities and high-quality services to clients. The company has the broadest and deepest range of skills of any global business advisory organisation and is a world leader in the professional services industry. We advise and deliver for the public sector as well as global and local businesses across every industry. Deloitte employs over 200 professionals in Jersey and Guernsey and is part of Deloitte North South Europe (NSE). The NSE firm brings together 13 countries and over 40,000 talented people, giving the firm the expertise to solve organisations’ most complex challenges and make an impact that matters. John Clacy Partner, Guernsey D: +44 1481 703 210 firstname.lastname@example.org Jo Huxtable Partner, Guernsey D: +44 1481 703 308 email@example.com Alex Adam Partner, Guernsey D: +44 1481 703 214 firstname.lastname@example.org Martin Rowley Partner | Jersey D: +44 20 7007 7665 email@example.com Siobhan Durcan Partner, Jersey D: +44 1534 82 4274 firstname.lastname@example.org Theo Brennand Partner, Jersey D: +44 20 7303 0035 email@example.com www.deloitte.co.uk
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Fiduchi is a leading independent financial services company providing solutions to high-net-worth individuals and businesses around the globe. Our independence ensures we have the flexibility to deliver bespoke solutions - that’s what makes us different! Over 25 years, our director-led teams have built long-term valued relationships with clients and their professional advisors, ensuring a pragmatic and trusted approach to their wealth structuring needs. Using the latest technological cloud-based solutions ensures we have the flexibility to deliver timely and innovative solutions that our clients require. Visit our website to see the comprehensive range of services we provide in the following areas: l Private Wealth l Corporate Services l Fund Services l Yacht Services l Employee Services For more information, visit www.fiduchi.com Alternatively, you can contact: Robert Ayliffe - Executive Director Tel: +44 7700 349 750 Heidi Thompson - Executive Director Tel: +44 7797 966 408 Terry Northcott - Executive Director Tel: +44 7797 715 421 Follow us: Dubai / Jersey / London Fiduchi is regulated by the Jersey Financial Services Commission. Full legal, data and regulatory notices are published on our website. Fiduchi® is a registered trademark of Fiduchi Group Limited.
Highvern Trustees is a leading provider of wealth structuring, governance and advisory services to an international client base of high-net worth individuals, their families and businesses. It offers senior industry expertise and client focus, developing long term, sustainable client relationships by working closely with getting to know the individual ambitions of every client with whom it works. Highvern Fund Administrators provides a fully tailored suite of bespoke fund services to investment managers and family offices across private capital markets including renewables, private equity, real estate and debt. Both businesses are built on cutting edge technology, truly independent ownership and a team of experts with the shared vision of responding to clients’ needs in a flexible, timely and constructive manner. To discuss how Highvern can help you or your business achieve your goals please contact: Family Office Naomi Rive, Group Director +44(0)1534 480601 firstname.lastname@example.org Private Client Philip Carlton, Client Director +44(0)1534 480610 email@example.com Corporate Naomi Rive, Group Director +44(0)1534 480601 firstname.lastname@example.org Funds Aidan O’Flanagan, Head of Funds +44(0)1534 480690 email@example.com highvern.com Highvern is the registered business name of Highvern Trustees Limited & Highvern Fund Administrators Limited which are regulated by the Jersey Financial Services Commission.
www.blglobal.co.uk To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or firstname.lastname@example.org
Intertrust is a global leader in providing techenabled corporate and fund solutions to clients operating and investing in the international business environment. The Company has more than 3,500 employees across 30 jurisdictions in Europe, the Americas, Asia Pacific and the Middle-East. Intertrust delivers high-quality, tailored fund, corporate, capital market and private wealth services to its clients, with a view to building long-term relationships. The Company works with global law firms and accountancy firms, multinational corporations, financial institutions, fund managers, high net worth individuals and family offices. In the Channel Islands we offer a comprehensive range of services to our clients and business partners:-
Julius Baer’s origins date back to 1890. From that time the renowned Swiss private banking group has been dedicated to serving and advising sophisticated private clients and family offices from around the world – going on 125 years now. Julius Baer employs more than 120 personnel in Guernsey and offers a full range of financial services, including discretionary portfolio management, investment advisory, structured products and credit services. There is also a dedicated team that supports the needs of External Asset Managers and the Branch works closely with the wider Julius Baer Group through the provision of administration and support services that are delivered from its booking centre.
Corporate Services Fund Services l Real Estate Services l Capital Markets l Private Wealth l Performance & Reward Management Services
Stephen Burt Branch Manager email@example.com
We pride ourselves on providing professional, personal and cross-border services to our clients across the globe, enabling businesses to grow sustainably.
Craig Allen Head of Investment Management firstname.lastname@example.org
For further information, please contact Jacob Smed Managing Director, Jersey +44 (0) 1534 504000 email@example.com Marie McNeela Managing Director, Guernsey +44 (0) 1481 211275 firstname.lastname@example.org Intertrust Jersey is regulated by the Jersey Financial Services Commission and Intertrust Guernsey is regulated by the Guernsey Financial Services Commission.
Jean-Luc Le Tocq Head of Private Banking email@example.com
Shaun Kelling Head of External Asset Management firstname.lastname@example.org https://www.juliusbaer.com/gg/en/home/ Bank Julius Baer & Co Ltd, Guernsey Branch is licensed in Guernsey to provide banking and investment services and is regulated by the Guernsey Financial Services Commission.
Ogier provides legal advice on BVI, Cayman, Guernsey, Jersey and Luxembourg law. Our network of locations also includes Hong Kong, London, Shanghai and Tokyo. Legal services for the corporate and financial sectors form the core of the business, principally in the areas of banking and finance, corporate, investment funds, dispute resolution, private equity and private wealth. Ogier has strong practices in the areas of employee benefits and incentives, employment law, regulatory, restructuring and insolvency and property. We are a registered listing agent for The International Stock Exchange (TISE, formerly known as The Channel Islands Securities Exchange or CISE) and frequently advise companies listing on other exchanges whether offshore or onshore. We also provide pan-Island legal services for local Channel Islands businesses and individuals. Contact: Guernsey Redwood House St Julian’s Avenue St Peter Port Guernsey GY1 1WA T +44 (0)1481 721672 E email@example.com Jersey 44 Esplanade St Helier Jersey Channel Islands JE4 9WG T +44 (0)1534 514000 E firstname.lastname@example.org Website: www.ogier.com
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To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or email@example.com
Specialty: Bespoke IT Development & Business Consultancy
Building trust in society and solving important problems
Puritas is an award-winning provider of intuitive software and business solutions for the financial services industry.
We focus on three things at PwC in the Channel Islands: assurance, tax and advisory services. But how we use our knowledge and experience depends on what you want to achieve. So whichever one of our 390 staff in the Channel Islands you work with (or 225,000 people across the PwC global network of member firms), they’ll start by asking the following questions:
Specifically designed to meet the increasingly complex accounting, compliance, and reporting needs of our clients, all software features robust audit and control capabilities which can be easily updated to reflect changes in the regulatory environment. Our products include: l P ureFunds - a unitized product platform specifically designed to support many different types of asset class and fund structures and help fund administrators and portfolio managers better manage investor activity l P ureClient - an advanced customer due diligence/client management system which will maintain and update client records for any entity or relationship and provides the necessary transparency and look-through reporting that is needed to manage sophisticated structures l P ureManager - a bespoke software package for fund and investment managers which provides for effective control, analysis, reconciliation and reporting of daily trading activity. As well as software development, our services include: l Systems integration and implementation l Programme and project management l Project and business consultancy To find out more how Puritas can help your business. Contact: Mike Feighan - Director Phone: +44 (0) 1534 874100 Email: firstname.lastname@example.org
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Are you looking to build trust? Give your shareholders more value? Or do you want to do something completely different with your strategy? When we work with you we really listen, to understand you better. We’ll get to know you, your business and your goals. Then we’ll share what we’ve learned to help you get there. We want to deliver the value that you, our clients, our people and our communities are looking for. Talk to us about your issues and aspirations. For further information, please contact: John Roche, Partner, Guernsey Phone: +44 1481 752040 Email: email@example.com Karl Hairon, Partner, Jersey Phone: +44 1534 838276 Email: firstname.lastname@example.org Follow us: @PwC_CI www.pwc.com/jg
About RBC Wealth Management For more than a century, RBC Wealth Management has provided trusted advice and wealth management solutions to individuals, families and institutions. We are truly a global organisation, bringing our diverse expertise and deep knowledge to the sophisticated financial needs of our clients around the world. As one of the world’s top five largest wealth managers*, RBC Wealth Management directly serves clients globally with a full suite of banking, investment, trust and other wealth management solutions, from our key operational hubs in Canada, the United States, the British Isles, and Asia. The business also provides asset management products and services directly and through RBC and third party distributors to institutional and individual clients, through its RBC Global Asset Management business (which includes BlueBay Asset Management). For more information, please visit www.rbcwealthmanagement.com Contact: Phone number Tel. +44 (0) 1534 283 000 Address Gaspé House 66-72 Esplanade St. Helier, Jersey Channel Islands, JE2 3QT *Scorpio Partnership Global Private Banking KPI Benchmark 2018. In the United States, securities are offered through RBC Wealth Management, a division of RBC Capital Markets, LLC, a wholly owned subsidiary of Royal Bank of Canada. Member NYSE/FINRA/ SIPC. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.
BL Directory Redcoin – Your Cyber Security is our Priority. Redcoin are a Jersey based IT Security Distributor, providing Cyber Security Solutions, Services and Support across the Channel Islands and UK markets, through our established Reseller Channels. Our objectives are to deliver guidance, education and support to the Islands businesses, to enhance their protection and understanding of the ever-changing Cyber Security Treat landscape. Our Independent security reviews are designed to give a baseline understanding of the Companies current IT position, supported by an informative and high-level report summarizing areas of strength, areas that can be improved by optimizing existing IT investment, along with key areas for consideration when planning future IT spend. Our technology portfolio provides Industry leading technologies, at an affordable cost, for all sizes and requirements of our Channel Islands clients. We can supply and support local resellers with the implementation of chosen solutions or make unbiased recommendations of other more suitable offerings outside of our portfolio.
ONLINE DIRECTORY THE ONLINE DIRECTORY THAT WILL GET YOUR FIRM NOTICED. With a profile summary on every press release, and a historical press release archive linked to your directory entry, BLGlobal.co.uk is the place to be
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TO GET YOUR FIRM LISTED IN THE DIRECTORY CONTACT CARL METHVEN +44 (0) 1534 615886 / +44 (0) 7797 796377 OR CARL.METHVEN BLGLOBAL.CO.UK
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questions with MICHAEL CLARKE
Tea or coffee? Tea. Just a single cup of English breakfast in the morning (strong with one sugar). Favourite song ever? I could pick hundreds but my top choice would be I Believe to my Soul by Ray Charles. He wasn’t happy with his backing singers, The Raelettes, so sang the female harmonies himself. Most amazing place you’ve ever visited? The top of New York’s Rockefeller Center at dusk, watching Manhattan light up. Helicopters fly below and it feels as though you’re on the top of the world. Your best quality? I retain a childlike excitement and enthusiasm for the many people, places and things I love.
NEW YORK NIGHTS
The worst thing about you? Rumour has it that I sometimes talk too much. Favourite food? My wife, Patrizia, is Italian and easily the best cook on the planet. I could name a dozen dishes, but I’d go for hot and cold antipasti washed down by lots of great red wine. Cats or dogs? Dogs. We have a five-year-old Westie called Cara. Can you play a musical instrument? I have two beautiful guitars – a Canadian acoustic and an American Fender Stratocaster, as played by Jimi Hendrix. I play both very badly. First job you had? A caddy at the local golf club. I would earn £5 on a good day and spend the money on a couple of beers and a vinyl LP. Worst job you’ve done? My worst experience was when there was a cash shortage at a bank I worked at and I had to wade through rubbish bins to find the money. It turned out one of the cashiers had made a mistake.
BRING ON THE WINE
LEAGUE OF HIS OWN
Top of your ‘bucket list’? We’re visiting Vancouver for the first time this year and that’s high on the list.
Favourite book? Bob Dylan’s autobiography, Chronicles. Dylan’s words paint incredible pictures – I can read passages over and over again. Sweet or savoury? Savoury, although I do find it hard to walk past a milk chocolate Bounty. Ever met anyone famous? Yes, lots of sports stars and celebrities at sports and music events. My kids try to stop me bounding over and having a chat, but it never works. The only time I was ever lost for words was when, as a young boy, I met the entire Liverpool FC team. Standing next to Dalglish, Rush and Souness was pretty surreal. Who would you like to be stuck in a lift with? Patrizia. We still fancy each other after 28 years together. Who would be your three perfect dinner party guests? Jürgen Klopp (brimming with charisma and the best football manager), Bob Mortimer (I love his old-school comedy) and Bruce Springsteen (wonderful anecdotes on Desert Island Discs). Quite a night! What one item would you save if your house were on fire (family excepted)? A framed photo of my Mum when she was a young girl – the mirror image of our daughter. My biggest regret is that she never met our children. Buzzword you hate the most? “Let’s take it offline”. What do you have for breakfast? I make scrambled eggs on toasted sesame-seed bagel every morning.
Jurgen Klopp image: Vitalii Vitleo / Shutterstock.com
Something about you people might be surprised by? I’ve taken trips to New York with friends from Jersey to watch live jazz and blues. Terra Blues in Greenwich Village at 2am with a glass of Bourbon is my top tip! Michael Clarke is Executive Director, Head of Private Clients, UBS Jersey Branch
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The Asia Edition 2020 Publishing in November FOR EDITORIAL QUERIES, CONTACT firstname.lastname@example.org FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK
“The Carey Olsen team is truly first class.” THE LEGAL 500
The largest team of investment funds lawyers across the Channel Islands (CI).
Advising more investment funds in the CI than any other offshore law firm*.
Acted on the launch of the first ever Ethereum denominated fund (CoinShares Fund I).
Advising more CI funds by asset value than any other offshore law firm*.
96 LSE-listed clients – more than double the number of the next nearest offshore law firm.
The leading adviser for listings on The International Stock Exchange.
Advised on the launch of the SoftBank Vision Fund – the world’s largest ever investment fund.
Working with all of the world’s top 10 private equity and private equity real estate firms.
1st Advised on the designation of the world’s first Green Investment Fund under Guernsey’s new regime.
For further information, please contact one of our partners at careyolsen.com *Based on the latest available statistics from Monterey Insight.
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