Businesslife Magazine - City Edition 2022

GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS

BUSINESSLIFE

CITY EDITION 2022

• • The rise of private equity • Legal opportunities • Tackling gender equality • Green finance • Chinese investment

BUSINESSLIFE

SAFE HARBOURS

How the Channel Islands continue to be a dependable partner in times of upheaval and uncertainty

CITY EDITION 2022

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Welcome

Stronger together YOU CAN BARELY log on to a news site or open a newspaper at the moment without being confronted by yet another emerging fiscal pressure.

Whether it’s soaring inflation, the rising cost of living, the energy crisis or supply chain disruptions – the macroeconomic upheaval currently hitting from all angles is putting equal pressure on the markets. This in turn is fuelling concern among investors and creating headaches for those charged with growing and managing their clients’ wealth.

The headlines in June alone will have delivered plenty of food for thought for investors and wealth holders. It was announced in June that US stocks had suffered their sharpest first-half drop in more than 50 years; the S&P 500 was on course to post its own worst first-half since 1970; markets fell further as global downturn rattled investors again; and European markets closed sharply lower than in previous weeks.

In such a turbulent period, it’s no surprise that wealth holders and investors are increasingly looking to pivot to more stable and less volatile investment strategies.

What’s more, they are looking to exploit the opportunities of investments made and managed in stable, secure and established jurisdictions.

SAFE AND SECURE In this City of London special issue – looking at the relationship between the City and Jersey and Guernsey – we explore the ways in which City wealth and investment managers are looking to take advantage of the Channel Islands’ reputation as a strong and stable partner for the long term to deliver on their clients’ changing needs.

One contributor to our feature starting on page 48, for example, tells us: “Investors and advisers are familiar with the islands’ expertise and have confidence in what we offer. The islands have unique products that provide managers with global access and flexibility, while wrapped in a strong regulatory framework that gives investors confidence.

“Unlike the UK, the islands have never been part of the EU, so they have remained unchanged over recent years and have an unbroken track record of stability.”

Another contributor tells us the islands are seeing particular interest in the Jersey Private Fund (JPF), with its attractive 48-hour turnaround and cost-effective administration.

“This makes it a popular choice among investors and investment managers. In my opinion, this is the most successful fund

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product coming out of Jersey,” our contributor says.

Another area seeing growing interest at present is green finance, and our article starting on page 40 explores how the Channel Islands are also at the heart of delivering on demand here, too.

While green finance has multiplied more than 100-fold in the past 10 years, it still represents only around 4% of the overall financial markets. But the Channel Islands’ financial services sector is central to efforts to drive further growth. Our feature also sets out how the ongoing symbiotic relationship between London and the Channel Islands underpins future success.

ENTER THE DRAGON Of course, the current macroeconomic upheaval and the global factors that are driving changes in investor patterns are having impact beyond the City and the Channel Islands.

Our article starting on page 52 sets out how, as sanctioned Russian oligarchs vacate London, they are rapidly being replaced by new wealth holders – from the East.

With Russian oligarchs now in retreat following their country’s invasion of Ukraine, China’s high-net-worth and superhigh-net-worth individuals have become the dominant force in personal wealth targeted by international financial centres.

Research conducted by private wealth law firm Boodle Hatfield last year found that mainland China and Hong Kong provided the two biggest cohorts of non-domiciled high-net-worth individuals relocating to the UK in the previous 12 months, with 650 and 620 individuals respectively moving to the UK. Our article examines the appeal for these mega-wealthy individuals, and the solutions they are looking for.

Also in this issue, we look at other topics pertinent to the City of London. Our feature starting on page 30, for example, looks at the steps being taken to redress gender imbalance at board level, while our article on page 20 looks at how the City is handling a shortage of emerging legal talent.

Like so many of the topics covered in this issue, the answer may lie in the growing relationship with the Channel Islands.

Enjoy the issue. n

Wealth holders are looking to exploit the opportunities of investments made and managed in stable, secure jurisdictions

Jon Watkins is Editor-in-Chief of Businesslife

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Contents

INSIDE

52

BL

BUSINESSLIFE

Businesslife is published quarterly by Chameleon Group, with special editions covering the City, Middle East and Asia +44 1534 615886 www.blglobal.co.uk

CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk

30 6 interview

20 legal services

40 sustainability

John Clacy, Partner in charge of the UK offshore offices and head of the offshore wealth management sector group at Deloitte

Lawyers with Channel Islands expertise are in huge demand among City firms – and Jersey and Guernsey law firms are seeing the benefits of having their own staff in the Square Mile

Green finance has surged over the past decade yet still only represents a fraction of the financial market – but Channel Islands organisations are driving growth

26 private equity

As uncertainty across the world’s financial markets gathers momentum, the Channel Islands continue to serve as a safe haven for City firms

EDITOR-IN-CHIEF Jon Watkins

Billion-dollar valuations, investment scandals and failed IPOs may be grabbing the headlines but private equity is quietly stamping its mark on the sector too

ART DIRECTOR Angela Lyons SUB EDITOR Kate Wheal ADVERTISING sales@blglobal.co.uk NEWS AND EDITORIAL news@blglobal.co.uk GENERAL ENQUIRIES enquiries@blglobal.co.uk

14 fiduciaries

30 gender diversity

The growing need for specialist secure services means fiduciary firms are still in high demand from private equity

Rethinking the language of diversity is one way to help put more women in top-level and boardroom positions

48 global markets

52 china

56

Chinese wealth holders with fast-changing investment attitudes are stepping in to fill the recent gap that’s been left by sanctioned Russian oligarchs

Money Saving Expert Martin Lewis, Champagne in numbers, plus translation apps and tips on retiring

The knowledge

contributors The BL Global Discussion Forum

DAVID BURROWS

Follow us @blglobalnews Office: 7 Castle Street, St Helier, Jersey, JE2 3BT © 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.

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As wealth holders and investors look to offset the volatility and uncertainty of the current macroeconomic climate, David finds the Channel Islands are providing the stability they crave.

SOPHIE McCARTHY

Sophie challenges the notion that gender inequality in the boardroom is fast becoming a thing of the past, and asks what can be done to speed up progress.

DAVID STIRLING

And David explores how, 10 years after the Channel Islands saw a flurry of management buyout activity across fiduciary services, demand remains from private equity businesses.

ALEXANDER GARRETT

Alex takes a look at the influx of Chinese wealth-holders bringing their money to London, as heavily sanctioned Russian oligarchs steadily leave the market.

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Interview

As a Partner responsible for both Deloitte’s UK offshore offices and parts of its UK financial services audit practice, John Clacy has a front row seat to the symbiotic relationship between the City of London and the Channel Islands. He shares his view on how the two jurisdictions can continue to grow together – and the challenges in the road ahead…

Words: Jon Watkins

Tell us about your career trajectory – you’ve been with Deloitte for nearly 25 years, so talk us through what first attracted you to the firm and your rise to your current role…

What attracted me to Deloitte in the first instance was that while it was a well-established business in the islands, it was also part of a bigger UK business, and I realised that would give me lots of opportunities to work on different types of projects and to spend some of my time working in the UK while getting my qualification in the island. That really appealed to me.

I’m now Head of UK Financial Services Portfolio Audit, which includes overseeing Deloitte’s Channel Islands, Isle of Man and Gibraltar audit practices, as well other parts of the firm’s UK financial services audit practice, such as investment funds and pensions audits.

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What is it that excites you about working in one of the Big Four firms and about the accountancy/consultancy sector – and what has kept you with the business for such a long time?

It’s absolutely true that working for an organisation as large as Deloitte had great appeal for me in the sense that I knew that I would get a lot of variety and I would work with many different businesses along the way. The challenges are always changing and I’ve never had a boring day at Deloitte.

And on top of that I get a real buzz from the fact that we bring in really different people – lots of people in the early stages of their careers – and we help them develop

we are able to tap into the breadth and experience of our UK business, while retaining our local knowledge

and grow with the organisation. That’s also a big part of the appeal and the reason I have stayed for so long.

It provides me with great variety but it is also very inspiring to watch how we are developing those people, and of course how they work with our clients.

Tell us about Deloitte’s presence in the Channel Islands and how that has evolved over the past quarter of a century. How has the business grown here and how does it fit with the UK business and the wider organisation?

The business has grown significantly in the Channel Islands over the past 25 years, and in the 1990s it became part of Deloitte UK – one of the country’s leading professional services firms. I think that’s really valuable, in the sense that we are able to tap into the breadth and experience of our UK business, while retaining our local knowledge and relationships here in the Channel Islands.

In my role I oversee Deloitte in Guernsey, Jersey, the Isle of Man and Gibraltar.

Last year, Deloitte’s offices in the Channel Islands, Gibraltar and the Isle of Man joined forces to create a single audit and assurance offering across the four offshore jurisdictions. This enabled Deloitte to bring a broader suite of expertise to each location.

It really pleases me to see how the local teams are developing and growing, and delivering high-quality services in those jurisdictions – all the while still having the ability to tap into the UK business when needed. The way that happens on a day-today basis is that the local teams of course have relationships in the local market with

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Tell us about your background – where you were born, grew up and studied...

I was originally born in Scotland but my parents moved to Guernsey when I was just two years old, so in effect Guernsey has always been my home. So I grew up in Guernsey and then I went to Sussex University to study experimental psychology, of all things. While I found that incredibly interesting, my father had always been a bit of an entrepreneur, and so I really wanted to go into business.

And what I realised pretty quickly was that if I became an accountant, that would give me the insights and background I needed to go pretty much wherever I wanted within business.

Interview

The

interview John Clacy www.blglobal.co.uk

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Interview

The islands’ attitudes to risk, systems and compliance have really contributed to the growth of alternative investment products

What are the big trends you are seeing in the Channel Islands at the moment?

Without a doubt one of the big challenges across the islands is the much talked about race for talent. It is genuinely a challenge right now for all organisations to get the right people, with the right expertise and knowledge, in the right roles.

I think another big trend at the moment is the complexities of regulatory change, such as anti-money laundering regulations.

The islands have been at the forefront of driving progress around these areas, which is very important, not least in this period of increased uncertainty and complexity. And that is further enhancing the strength and reputation of the Channel Islands, which have established a very strong reputation for being stable, for having a secure regulatory environment, and for being a leading international financial centre.

The other interesting trend is the rise of alternative investment products. Private equity funds, infrastructure funds and the other alternative funds are catered

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for really well in the islands. Interest in these products from investors has grown exponentially and driven their growth.

The islands’ attitudes to risk, systems and compliance have really contributed to that. It’s also seen growth in the private wealth sector as more high-net-worth individuals and their families transfer their assets to the islands to be looked after in what is perceived as a trusted jurisdiction.

In turn, growth in the alternative investment products and private wealth has also fuelled a growth in the asset servicers – the businesses looking after these funds. We are seeing considerable activity in the asset servicing sector, with a number of big international players now headquartered in the islands, and some businesses going public.

In addition, I think we are also likely to see some forthcoming trends around digitalisation of the sector, not least because of the appeal that the islands have for some of the fintechs and digital businesses that are establishing themselves here.

How are those trends impacting and shaping the demand for different services from Deloitte?

Clearly, there will always be a demand here for assurance services such as auditing, and that is likely to continue, not least because

of the islands’ reputation for providing those types of services with real quality.

But it is absolutely true that we are also seeing growth in demand for other services, as the market continues to mature and as different types of businesses set up here.

Merger and acquisition activity is a growing area and as that happens, then of course businesses are looking for help to ensure they have the right processes, systems and procedures in place to really ensure they get efficiencies out of the new scale they are obtaining. Businesses are also looking for help and direction with dealing with new rules, regulations and taxes.

What does the trajectory look like for Deloitte in the Channel Islands from here?

Where do you see the growth coming from, what do you see as the focus going forward, and how do you see the business developing and evolving?

In terms of the evolution of Deloitte going forward, I think it is inevitable that we will see continued digitalisation, partly because our clients are increasingly looking to work in that way and because they are looking to digitalisation to ensure they have the right processes and systems in place to be more efficient and to grow.

We will also continue to be on the front foot when it comes to supporting

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an understanding of the unique factors, but they also regularly bring experts across from the UK if they feel like it adds value.

In terms of how transformational the change in the business has been in the past 25 years that I have been here, when I first sat down at my desk it was at Touche Ross & Co in Guernsey, and it was a small office with an audit department of around 20 staff. We are now part of Deloitte UK, which, as I say, is one of the country’s leading professional services firms.

Probably the biggest single pivotal moment in our development and growth was when in 2002 Deloitte merged with the old Andersen business, which I think was a step change in terms of scale and breadth of our business in the islands.

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Interview

It’s not a competitive relationship between the Channel Islands and the City, it’s absolutely a symbiotic one, and I’m sure that will continue

our clients in the evolving regulatory environment – whether that’s tax, AML, EU directives or whatever.

In the private wealth arena specifically, I think the continued need for secure and effective management of private wealth structures means that market is likely to continue to grow as well – driven by demand for quality.

In the private wealth and alternative investment structures, the opportunity for growth is certainly still there.

The City and the Channel Islands have a long established and strong relationship.

How do you see that relationship evolving in the future?

The City and the islands already have a fantastic symbiotic relationship – that’s absolutely clear. It’s not a competitive relationship, it’s absolutely a symbiotic one, and I’m sure that will continue.

What the City is looking for is a stable and modern jurisdiction, which is on the front foot in terms of regulation and legislation, is a premier jurisdiction in terms of quality of service, and is adaptable and confident. I don’t see the islands changing in those respects, so I can only see the relationship getting stronger.

You’ve talked a lot about the opportunities in the Channel Islands and the potential that exists for further growth. But what are the key challenges the islands face right now?

I mentioned the race for talent before, and I do think that is real. But I think another challenge for the islands is to get better than we are at telling our story – explaining the opportunities here and the benefits that we can deliver to businesses.

And perhaps that is also something that can help in the race for talent. We can get

FACT FILE Name: John Clacy Role: Partner in charge of the UK Portfolio Financial Services Audit, Deloitte Studied: Sussex Lives: Guernsey Family: Married to Sinead; two children, Robbie and Millie Hobbies: Walking the dogs, cycling and Dungeons and Dragons

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better at explaining the benefits of living and working here, the work-life balance that we have, the appeal of living on these islands – so that we attract the talent we need from other places and retain the talent we have here.

This is a safe, clean environment that is great for raising kids and where you will most likely have a 20-minute commute to work. What’s not to love about that?

You have chaired the IoD in Guernsey and given a lot back to the community in other roles, such as with the Guernsey Society of Chartered and Certified Accountants – how important are roles like that and what do they enable you to achieve?

I think it’s very important to be actively engaged with and help develop the community you live and work in. I feel passionately about the islands and I feel passionately about helping them to grow and evolve, and some of the roles I have held with the IoD and Guernsey accountants society have hopefully enabled me to do that in some small way.

You split your time between the City and the Channel Islands – what do you most like about that and which type of living do you prefer?

I’m probably spending around a quarter of my time in London at the moment, and that gives me a really nice balance.

I like being in the city some of the time, not least because it gives me an opportunity to see my children, who are both based there at the moment. But I also love my life here in the islands, being able to walk my dogs with my wife along the beach and have a dip with her in the water, and of course the short commute to work.

So it’s a perfect balance for me and I see it as having the best of both worlds. n

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Advertising feature

Fintech: redrawing the boundaries in embedded financial services Leigh Martin, Director of EWG, explores the effect of technology and increasingly demanding clients on financial services, and how fintech firms are competing effectively with traditional players DIGITAL TRANSFORMATION HAS

impacted all of our lives over the past few decades. There are very few industry sectors untouched by technological innovation, development and disruption.

Entertainment, music, travel, manufacturing and education are just some that are affected by shifts in technology.

Banking, however, has remained relatively unchanged. That is, until recently.

The rapid development of embedded financial services, along with increasingly knowledgeable clients who are now expecting more efficient and personalised services, means the customer experience is evolving very quickly.

By the end of 2020, up to 1.9 billion individuals worldwide actively used online banking – and that number is projected to reach 2.5 billion by 2024.

In short, people globally want to manage their finances digitally and enjoy the experience anywhere and at any time. This ‘democratisation’ of data creates greater transparency, improves client experience and puts data in the hands of the client.

The present and future of this is in fintech, an online alternative to high-street banking that is beginning to define the direction, shape and pace of change across almost every financial services subsector.

At one time viewed as nascent and disruptive technology, fintech is now most definitely becoming mainstream. Existing banks, wealth managers and insurers are able to team up with non-financial businesses and create opportunities to find more clients.

It is time for finance to be client and digital first. Fintech is playing a pivotal role in this, offering numerous benefits by helping businesses work smarter and quicker, to reduce errors and operate more efficiently by optimising resources and processes.

This new financial ecosystem is opening doors to a whole range of financial products, as well as providing consumers and end-clients with personalised services at a reduced cost.

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Evolving client expectations are driving innovation towards prioritising speed, decentralised models and frictionless transactions.

Unexpected lockdowns over the past two years forced the global economy to operate differently, so the need for a digital, accessible world became more urgent.

NEW LEVEL PLAYING FIELD The disruption of the status quo means fintech businesses are able to compete effectively with traditional players as a result of the levelling of the playing field through this digital transformation.

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In the next few years, clients and consumers will expect companies to make the journey even easier and even less demanding. The question will be why a business has not made embedded financial services available, rather than if they have.

There is already a recognised and growing dependence on technology and tailored solutions for businesses to gain an edge over the competition.

APIs (application programming interfaces) are another feature of this technological boom. These are particularly valuable for guaranteeing speed and safety in the exchange of information, while also offering the agility needed to provide greater transparency.

APIs provide a fast, low-friction and cost-effective way in which to securely

share financial data, and are an important factor for companies using embedded finance to be able to meet client needs.

If it is implemented correctly, embedded finance will open the door for forwardthinking institutions to create new routes to market and more efficient business models based on technology, value and customer service.

It can also help drive a thriving financial service platform-centric ecosystem, where more of us are able to access meaningful financial products and services that will befit our modern lifestyles.

The era of embedded finance is here.

And with an estimated market value of £2.7bn by 2030, it is clear that this is indeed the future. n

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City Edition 2022 11

Advertising feature

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12 CITY EDITION 2022

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Advertising feature

By allowing us to become your middle and back office, you can focus on what is important to you – your clients William Grant, Associate Director, has amassed over 18 years’ experience in financial services. Some 14 of these have been at UBS Jersey, heading a trade and execution desk for our UK-resident/ non-domiciled clients (RnD) client base before joining FIM Jersey in 2020.

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CITY Edition 2022 13

Fiduciaries

Fiduciary frenzy Ten years ago, the Channel Islands witnessed a flurry of management buyout activity across fiduciary services. Today, the growing need for expert and secure services means fiduciary providers are still in high demand from private equity

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Words: David Stirling

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Fiduciaries

and, if you were a participant or observer of the fiduciaries sector in the Channel Islands, three simple letters were all the rage – MBO (management buyout).

In 2014, Channel Islands and offshore law firm Ogier sold its financial services division in one such MBO deal, backed by private equity fund manager Electra Partners. At the time, then Ogier Chief Executive Nick Kershaw said that Ogier Fiduciary Services was at the stage where an MBO “makes perfect sense given the additional investment needed to achieve its significant growth plans”.

In 2016, offshore legal services firm Appleby made a similar move. It sold off its Appleby Fiduciary & Administration Business (AFB) in an MBO backed by private equity group Bridgepoint. It was reported to be worth $370m.

William Paul, Partner and Head of Bridgepoint’s financial services team, said at the time: “The buyout brings significant opportunity for AFB as a standalone business to accelerate its growth organically and via acquisition, in what remains a strongly growing market.”

According to Jonathan Smith, Partner at Wyvern Partners, these MBOs were a

continuation of growing private equity interest in the fiduciary sector that began at the start of the millennium.

“This has always been a fantastic sector for investors, such as lawyers administering structures for their own clients or accountancy firms. But because it wasn’t regulated and didn’t have KYC on all its clients, it meant PE firms were reluctant to invest,” he says. “How did you know Osama Bin Laden wasn’t a client or that Russian mafia money wasn’t involved?

“But when regulation came in during the early 2000s, you suddenly had 100% KYC for all of your client base. The floodgates opened and the bravest PE firms dipped their toes in the water.”

Other examples Smith mentions include PE group AnaCap buying business services company First Names back in 2012 and Inflexion buying Ocorian in 2016. “What you saw 10 years ago was PE firms making platform investments,” he states. “Since then, they’ve made bolt-on acquisitions.”

Indeed, this includes a number of Ocorian acquisitions, such as MAS International in 2017 and business services provider ABAX in 2018.

“A PE firm typically holds an investment for three to seven years, then exits to get

their money (and capital profit) out by selling. Exit is sometimes by IPO, but usually by selling to a bigger PE firm,” Smith explains.

This has certainly been the case for some of those earlier fiduciary MBOs.

CHANGE OF COURSE Ogier Fiduciary Services rebranded as Elian and within a couple of years, it had been sold once again – to Intertrust Group of the Netherlands, for £435m. Its name was then rebranded to Intertrust.

David de Buck, CEO of Intertrust, said then: “The acquisition of Elian presents a great opportunity for Intertrust to significantly expand its capital markets and private equity and real estate fund administration services. Consolidation in our industry continues, and the ability of global trust and corporate services providers to acquire high-quality companies will determine their success.”

Appleby Financial Services’ brand name was also changed, this time to Estera, but it too did not last the course. Only a few years later, in 2020, it was snapped up by Inflexion-backed Ocorian.

“The combination of Estera and Ocorian is extremely powerful. No matter where

when regulation came in during the early 2000 s , you suddenly had 100% KYC for all of your client base and The floodgates opened

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City Edition 2022 15

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Fiduciaries in the world our clients’ financial interests are structured, we will provide flexible, bespoke solutions that meet their needs as well as the needs of their stakeholders and regulators,” Farah Ballands, at the time CEO of Ocorian Group, said.

AnaCap also sold First Names to a bigger consolidator, SGG, and private equity group Sovereign Capital Partners has recently backed the MBO of Guernseybased specialist private client trust and corporate services provider Aquitaine.

It provides private client trust services, including estate planning and wealth management structures, together with corporate fiduciary services.

In addition, both Guernsey-based Federal Trust (Federal) and Summit Trust International (Summit) were acquired to beef up the service offering.

Sovereign Partner Alex Hay said of the deal: “We are delighted to partner with the Aquitaine management team.

The acquisition of Federal increases our presence in Guernsey, while Summit is an established provider that will enable us to develop the group’s service offering to clients, broaden its multi-jurisdictional reach and add scale.”

PE group Palatine-backed Suntera Global has also recently bought Channel Islands specialist fiduciary services provider Nedgroup Trust. It provides fiduciary services to high-net-worth and ultra-highnet worth individuals, family offices and owner managed businesses.

“Most of the buy and build strategies have been established now and we are hitting the second and third round of funding with interest from bigger PE firms and more consolidation,” Smith says. “The sector is becoming more attractive to PE. There have been success stories.”

Guernsey-based Mourant LP Partner Gilly Kennedy-Smith says that despite believing private equity is always interested in fiduciary, there have been instances where those circling did not come from a background that meant they properly understood trusts – which could impact their involvement going forward.

“The sales we are seeing now involve greater due diligence of clients, jurisdictions, types of work and staff members. They want to make sure the new business aligns with their own model to make the transition as smooth as possible for clients and staff alike,” she says.

According to a recent Barclays Fiduciaries of the Future article, in Jersey local firms currently administer 30,000 trusts with assets of over £600bn, as well as bank deposits totalling over £127bn.

“It’s an attractive environment,” the article states. “But, at the same time, cost pressures and complexity are rising.”

The article cites issues such as postlockdown inflation and ever-evolving regulatory expectations squeezing fiduciary

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fiduciaries with access to diverse perspectives and expertise across different industry sectors and jurisdictions will increase their appeal

Barclays agrees, stating that UHNWs are accustomed to receiving bespoke services, especially in matters of finance and investment. “So, fiduciaries with access to diverse perspectives and expertise across different industry sectors and jurisdictions will increase their appeal and their chance of being able to meet growing client expectations,” it says.

“Where they can offer access to a range of investment options – covering equities, private markets (for sophisticated investors only), credit, macro, funds, capital markets and structured products – preferences can be met, and market opportunities revealed.”

STAFF MOVEMENT

margins to the extent that “it is often no longer cost-effective to service clients with less than £5m in assets”.

This chimes with the experience of Kennedy-Smith. “The entry point has shifted for a multitude of reasons,” she says. “The threshold of wealth has increased over the last 10 or so years.

Onboarding, the cost of running structures, increased employment costs for experienced professionals being in high demand, as well as increased administration costs with greater regulation and reporting requirements will only increase the overall costs of running structures – and I would be surprised if these costs go down. This is a global increase and certainly not restricted to just the Channel Islands.”

She says this plays into another trend.

“There are fewer clients suitable to offshore structuring, but the ones that are suitable are more significant in terms of wealth and more complex in their needs.

They require more bespoke services, as they bring more technical and complex cases, which Guernsey is well set up for with its depth and breadth of expertise.”

Kennedy-Smith says a number of factors, including consolidation of companies, could lead to a lot of staff movement.

“This provides more opportunities to get the right staff and skillset in for companies to begin to enhance their fiduciary services,” she says.

“The demand is there and people in this sector are feeling optimistic. There’s plenty of work out there for all. I’m not seeing anyone concerned about the future of their business.”

It may not be the frenzy of activity that we saw a decade or so ago, but the fiduciary climate in the Channel Islands remains one of much interest and demand.

PE firms, fired up with large war chests accumulated during the pandemic, are active in all business sectors and, as Kennedy-Smith explains, are still looking at the fiduciary world as an option.

Smith agrees: “The fiduciary sector has shown good steady growth year on year – even through the Covid-19 pandemic. It is cash-generative and has good margins, with sticky clients.”

Demand from wealthy clients – despite the pandemic, the Russian sanctions and regulatory change – is still strong, and the Channel Islands can expect to benefit for some time to come. n

City Edition 2022 17

Advertising feature

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18 City Edition 2022

first-time and experienced investors. Our clients are using our platform to grow their savings, build their pensions, save for their first homes and invest in their children’s futures. From digitally setting up an account online and measuring your risk appetite, to fully bringing the digital experience with daily reporting on all assets held, Spring IM has embraced the future in more ways than one with its bionic concept of investing.

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There’ll be some commonality between managers adopting this approach in terms of the analysis, data sources and indicators used. However, the difference will stem from the proprietary intelligence used throughout the process.

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But how do we use the data? The concept of behaviour is key to our process – we use behaviour to categorise everything from the market itself, to each individual asset. The behaviour of the market is categorised into what we call regimes, whether it’s a low, medium or highvolatility regime. Within that, each asset that we analyse in our asset universe is also categorised in terms of its behaviour within each of those regimes – not just in terms of performance, but also what they bring to the portfolio. Is it a diversifier? Is it there for alpha, beta, and so forth.

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selection. It lends itself to scalability through efficiency, which leads to cost savings that can be passed on to clients.

WHY DON’T WE TAKE THE TRADITIONAL INVESTMENT MANAGEMENT ROUTE? Under a traditional approach, managers are people, people are human and humans simply don’t have the capacity to perform calculations and continuous analysis like a computer can.

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investing or fear of missing out. What the systematic method attempts to do is remove these human biases by taking the emotion out of investing.

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HOW ARE OUR PORTFOLIOS CREATED? We take an unconstrained approach.

We do not use a static framework of 60/40 equity to bonds, for example, particularly given the level of correlation between the two asset classes we’re currently seeing.

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ABOUT THE AUTHORS Simon O’Donoghue Simon’s industry experience spans more than 30 years, during which time he has developed three international funds businesses, raised more than £3bn in assets and is the founding member and Chairman of the Channel Islands Wealth Management Association.

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City Edition 2022 19

Legal services

London calling Amid an increasingly complex financial environment, the demand for Channel Islands-savvy lawyers is surging among City firms. Many jersey and guernsey law firms are finding value in putting people on the ground in the City, while others are focusing on finding ‘jurisdictionagnostic’ talent to find a cutting edge

20 City Edition 2022

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Legal services

THERE HAS NEVER been a better time to be a newly qualified lawyer. The number of legal vacancies grew by 99.8% year-onyear in 2021 across England and Wales, and new jobs hit a quarterly peak in the second quarter of last year, with practices advertising 2,800 new jobs for lawyers.

This represented a 521.7% rise compared with the same quarter a year earlier, and a 36% jump from Q2 2019, according to data published by recruitment firm BCL Legal.

Data from the UK government’s Office for National Statistics reveals the legal sector reported historically high turnovers last year, as the fallout from the Covid-19 pandemic led to a surge in demand for support on M&A activity, private equity deals and real estate sales.

The 13% rise in the legal sector’s turnover prompted ferocious battles between law firms to recruit and retain talent. It has resulted in salaries soaring.

A newly qualified lawyer starting out in the Channel Islands can command a pay packet in the range of £58,000-£62,000 a year, according to the 2021 Robert Walters Salary Survey. Not bad work if you can get it, especially as inflation threatens to reach double digits this year and the cost of living crisis bites.

However, for legal firms on the islands, attracting and retaining talented lawyers is a challenge, particularly for practices attempting to demonstrate their City of London credentials.

Raulin Amy, a Partner in Ogier’s Jersey office, says: “Brexit and Covid-19 have both been catalysts for increased volumes of legal work – so when the City is busy, the lawyers in Jersey and Guernsey are busy. This makes recruiting harder as the City firms are also looking for more lawyers at the same time as us.”

Ben Morgan, Partner and Head of Guernsey Funds at Carey Olsen, agrees.

“The demand for lawyers is huge, so [Channel Islands firms] end up paying a high price for talent when we compete in the same market as the City law firms.”

But given the demand for the experience that City lawyers have, and the relatively small talent pool of qualified lawyers residing on the islands, Amy believes practices have little choice but to venture into recruiting from the expensive skillset available onshore.

“Generally, lawyers from the City coming over to the Channel Islands may know a little about how the islands operate, but it is only when they have been working for those Channel Islands firms that they will have a full understanding of local legislation and practice.

“Given the strong links between the City and the islands, City lawyers will understand how Jersey and Guernsey structures are used and the benefits of them. The attraction of these City lawyers is their in-depth training and commercial knowledge that can easily be applied in the islands as our legal systems are similar in many ways to that in the UK,” Raulin says.

Channel Islands firms end up paying a high price for talent when they compete in the same market as the City law firms

This explains the current trend for legal firms based on the islands to recruit in the City.

Walkers, for example, hired two experienced City lawyers in the same month. Guernsey Funds Partner Craig Cordle, who spent 14 years in the City, and Employment Senior Counsel Danielle Brouard, who spent 11 years with Baker McKenzie in London, both joined the company in May. Jason Horobin, Head of International at recruitment consultancy Origin Legal, says: “We are seeing a growth in the London offices by Channel Islands law firms. It differs from one firm to another.

Some have a big London presence, for others it’s more surface level.”

Horobin says that some of this onshore growth can be explained by firms needing people on the ground in the City who can service some of the biggest financial clients.

City Edition 2022 21

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GOING THE EXTRA MILE Morgan says that offshore firms in the City need to go beyond having a small office in London if they are to build close relationships with the City law firms that refer on the most lucrative Guernsey and Jersey work.

“We need to be close to them – and I don’t mean just having a ‘rep’ office, but genuinely sharing the commute and being around the corner for a quick catch-up,” Morgan says. “As things have opened up [post-Covid-19], face-to-face meetings have become such an important part of our offering.”

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But the desire to have a City presence does not come cheap. In 2021, prime office space cost up to £82.50/sq ft, making it the second most expensive area of the country after London’s West End. Morgan concedes that Carey Olsen invested in large City offices just before the pandemic hit, and these then largely stood empty for two years.

However, he adds that given the burgeoning business onshore, the offices are now almost “too small”.

For firms looking to avoid the costs, there is the option to call on flexible working, which – again post-pandemic – is commonplace even among the City’s workaholic culture.

Christopher Jones, a Partner in Ogier’s Guernsey office, says: “There is an array of office space options, particularly as a result of the pandemic, which enables us to incrementally flex up and down so we are not paying for empty space.”

However, he adds, a City office “is an investment as much as a cost” and the firm encourages office working.

“There’s an intangible cost to isolation as well, so having a hub where our people can meet is a useful tool which can, in turn, increase productivity, idea sharing and so on, as well as making us one firm globally.

“One spin-off benefit is being able to have those on the ground in the UK undertake more business development meetings and attend events or meet clients at short notice,” says Jones.

The City is the dominant jurisdiction for many of the large transactions.

A lot of the movement of capital around the world flows through London

▼

In a post-pandemic world, where people increasingly sit comfortably conducting even the most confidential business online, the need to have boots on the ground seems contrarian. Yet Morgan is convinced that London is central to the firm’s global business operations.

“The London office for Channel Islands operations has become key. The number of lawyers lawyering in the London office is greater in number in relation to Jersey and Guernsey practices than it is in the other parts of the group covering the British Virgin Islands and the Caymans,” he says.

“The reason for this is that the City is the dominant jurisdiction, certainly in Europe, and arguably globally, for many of the large transactions. A lot of the movement of capital around the world flows through London.”

City Edition 2022 23

Legal services

lawyers on the ground in the UK undertake more business development meetings, attend events or meet clients at short notice

However, while developing a London profile is important, Fraser Hern, Head of Walkers’ Channel Islands business, believes that this is not enough on its own to meet client expectations.

He argues that the business model needs to change from appointing lawyers with specific regional legal knowledge to selecting those with expertise across all offshore jurisdictions.

“We have no dividing lines between the different jurisdictions, even though we sit in Jersey,” he says. “It is much more about putting a jurisdiction-agnostic solution in front of clients.”

BEYOND REGIONAL Fraser continues: “If you have a fund manager client in London who says they want to put £1bn worth of capital to play in the real estate sector, they want a firm that is going to suggest four options rather than [one that puts] them in front of four or five different lawyers.

“That’s the difference between the old school model and what needs to happen going forward.”

Horobin agrees that there is a trend towards employing lawyers with

24 City Edition 2022

knowledge of multiple offshore legal frameworks, and notes that those individuals are often based in London.

“When offshore lawyers want to return to London, law firms face a decision: lose them and all their experience or let them work onshore. Do you have them sitting in the same square mile as your client base and being able to offer London advice on the Channel Islands, Cayman and BVI? “You’ll often find that London lawyers’ knowledge crosses the different qualifying jurisdictions, so they can advise clients more comprehensively.”

With the demand for lawyers so high, Channel Islands law firms need to stay flexible – and have deep pockets – if they are to find the right talent.

There is also the opportunity to train those without the requisite islands knowledge, which Ogier’s Amy says helps ensure recruits are a cultural fit.

“Ultimately, it is more important to recruit lawyers who will fit within the team and adopt the same friendly and collaborative approach, and who have the aptitude to learn quickly, rather than looking for islanders or those with Channel Islands experience,” he says. n

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Advertising feature

The importance of diversification Michael Caetano, a founder and Senior Investment Director at TMGA Wealth Management, discusses the importance of diversification and how this is especially critical in the current investment landscape IN OUR LAST article, ‘Negotiating a VUCA world’, we discussed the importance of having a patient, disciplined approach to investing. Here, we’ll look in more detail at this approach, specifically in relation to diversification and the role it plays in ensuring that investment portfolios are robust enough for the long term, able to withstand the impact of an evolving economic environment, and in a good position to achieve our clients’ objectives over an appropriate time horizon.

WHY DIVERSIFY? Diversification is important as not all investments carry the same degree of risk or return and are often highly correlated.

As market volatility increases or decreases, investments can react differently to each other and portfolio performance may vary to a wide degree, translating to gains or losses for investors, depending on risk tolerance, type of investment and time horizon.

So from a risk perspective, it’s important to factor appropriate diversification into the construction and management of investment portfolios – bearing in mind that diversification is not one-dimensional; it has many sides and layers.

FACETS OF DIVERSIFICATION Our starting point in constructing investment portfolios is to seek suitable levels of exposure across the three main asset classes: equities, fixed income and alternatives.

Having the correct blend of diversification at this level is important as it helps mitigate the potential for underlying investments to all move in the same direction.

It is equally important to avoid asset classes, sectors and themes that are highly correlated. This can help generate a more consistent and positive return profile over the long term.

In terms of asset class, equities – which typically produce higher returns – can be subject to wide price movements,

especially when the macro environment changes and uncertainty is prevalent. Fixed income is normally deemed as being more conservative and less volatile, so exposure can act as a good portfolio hedge.

Alternatives can also be used as portfolio diversifiers, to generate returns that are less correlated to the other two asset classes.

Further diversification within asset classes can be achieved by investing in collective investment schemes, where the investor benefits from inherent diversification of the underlying fund investments, gaining exposure to specific themes, sectors and regions.

Style also has an important part to play in portfolio diversification. ‘Growth’ sectors are typically defined as long duration assets meaning that revenue and profitability profiles of growth companies typically increase at a faster rate than the market average over a business cycle.

‘Value’ sectors can be seen as investing in businesses at a discount to their intrinsic or book value. These companies tend to have a lower valuation compared to the market or index. The nature of these investments can also be deemed more cyclical and economically sensitive, and they tend to perform better when the cost of capital rises.

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TMGA Wealth Management is an independent and dynamic wealth management business that delivers investment management solutions via its flagship Discretionary Portfolio Management service.

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TMGA Wealth Management Limited (Registered Number: 132402) is authorised and regulated in Jersey by the Jersey Financial Services Commission for the conduct of investment business. Please note that the value of investments and the income derived from them may fluctuate from time to time.

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City Edition 2022 25

Corporate ownership

PE: the unseen takeover

As the stock market grabs the headlines of the business pages with billion-dollar valuations, investment scandals and failed IPO s , away from the spotlight – and the volatility – private equity is recording ground-breaking results

26 City Edition 2022

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Corporate ownership

Private equity vs public equity How private or public ownership shifts the focus for businesses Private equity

Public equity

Not obliged to publish information about their stocks

Stock and financial information are released for the public

Investors can work on long-term prospects

Investors work on short-term prospects because of public pressure

Targeted for individuals with high net worth

Targeted for the general public who can buy, sell or trade these shares

May be less regulated by organisations because they do not need to answer to public shareholders

More regulated by government organisations because they disclose their information

Source: https://askanydifference.com/difference-between-private-and-public-equity/

SOME OF THE figures around private equity (PE) activity are pretty eye-watering.

Investments in global PE reached a record $1.1trn last year, according to Bain & Company, and exit value reached $960bn.

To put that into context, the $1.1trn in buyouts doubled 2020’s total of $577bn and smashed the previous record of $804bn set in 2006. Furthermore, the average deal size for major PE funds broke the $1bn mark in 2021 for the first time.

Encouraged by strong returns and new investment vehicles, investors are

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ADDED COMPLEXITY However, PE investments can be complex.

While stocks are traded daily through public market exchanges, PE investments are long term, with capital typically tied up for at least 10 years. It can also be difficult to liquidate or transfer direct PE investment

holdings. Yet impressive risk-adjusted returns, Dean says, compensate investors for the fact that their money is less liquid and tied up for a longer period of time.

In the US, PE achieved average annual net returns of more than 10% between 2000 and 2020, according to Cambridge Associates, while the Standard and Poor’s 500 produced returns of less than 6%.

VEHICLES FOR INVESTMENT With private companies less subject to regulation, critics accuse PE firms of a lack of transparency. According to its harshest portrayals, PE is about stripping assets, loading debt and laying off staff to generate quick returns.

James Fox, a Jersey-based corporate lawyer and Partner in the private equity team at Ogier, says these notions are tired and misleading.

“The whole point of PE is high growth and high return – and the best way to give investors a return on their money is to grow a business. That asset-stripping perception is completely wrong,” he says.

“You’ll also hear that if a company is private, there’s no regulation. But there is regulation at fund or fund manager level.

Major PE fund managers, with billions under management, are often regulated in at least one jurisdiction.

“PE investors demand a level of reporting on assets equivalent to any investment. Plus, if PE firms are buying into a regulated business, they need to comply with all the same regulatory approvals as any other buyer would do.”

While major PE firms dominate the market, large family offices are also contributing to its growth.

According to UBS, 80% of family offices are making PE investments in 2022, up from 77% in 2021 and 75% in 2020. And

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Words: Marco De Novellis

increasingly deciding to put their money into private companies.

Alex Dean, Head of Private Wealth for the UK at IQ-EQ, says the growth of PE stems from the 2008 global financial crisis.

Between 2010 and 2020, private market assets under management increased by $4trn and the number of active PE firms more than doubled.

Much like the pandemic-related stimulus that has supported PE’s expansion over the past year, billions of dollars were pumped into the financial system after the crash, creating a lasting source of accessible and low-cost funds.

The financial crisis also brought about increased regulation over public companies, which drove investors towards privately owned firms.

What most attracts investors to PE, Dean says, are control, flexibility and returns.

“PE investors can have a seat on the board of a company, influence and make decisions,” he explains.

“There’s no distraction of daily stock market instability. And as private companies are not as heavily scrutinised or researched, PE offers investors the chance to spot an opportunity including combining a business with another business or transforming a business in ways that others can’t execute.”

Private firms also avoid some of the administrative burden of regular reporting, public annual general meetings and shareholder agreements.

City Edition 2022 27

Corporate ownership

PE investors can have a seat on the board of a company, influence and make decisions

Private equity trends for 2022 The sector is evolving amid a fastchanging global economic outlook:

Market growth Inflation and increasing interest rates mean PE may struggle to better 2021’s record-breaking year, yet PE is still outperforming public equity.

ESG centre stage The majority of firms have implemented ESG policies for PE investments.

Investment across industries PE investment is flooding into healthcare technology such as medtech and infrastructure projects.

family offices are now allocating 21% of their portfolios to PE – an increase of 16% on 2019.

Many of these investments are made via regulated funds or managers, which means groups of investors can take comfort from regulatory oversight at fund level while benefiting from a private company regime at asset level.

Dean also points to hybrid funds, which enable investment in both public and private securities and companies.

“Investors may look for stability in bonds or property investments, but at the same time have the flexibility to invest in listed stocks,” he says.

Meanwhile, club deals, where PE investors jointly acquire a company, are on the increase. Blackstone, The Carlyle Group and Hellman & Friedman acquired healthcare company Medline in a deal worth around $34bn in 2021, although club deals can also involve smaller-scale, individual investors.

Fox sees the PE market as a “barbell model”, with large PE funds raising billions at one end and family offices making smaller deals at the other.

There’s a market opportunity in the middle, he says, where family offices could form their own quasi-PE funds.

FUTURE TRENDS New technologies PE firms are becoming more flexible and efficient by adopting new tech such as artificial intelligence.

Barbell industry With multibillion-dollar PE firms at one end of the scale and family offices at the other, there’s a market opportunity for medium-sized PE investors.

28 City Edition 2022

Despite the eye-watering numbers around the growth of PE, the impact of inflation and rising interest rates means the coming years may be more challenging.

Amid the uncertainty of the pandemic last year, as many business owners looked to exit, PE firms raised investment, made deals and leveraged buyouts, acquiring companies using borrowed money. Interest rates were still low and debt cheap.

Now, in order to control soaring inflation across the eurozone, central banks are raising interest rates for the first time in more than a decade.

These interest rate rises, Fox predicts, will mean less leverage in the future as debt becomes more expensive.

Still, by historical standards, interest rates are relatively low. Fox says PE houses have sophisticated financial models that allow an optimum ratio of equity and debt to be applied to any particular business so that it achieves its full potential.

Industries ripe for PE investment include technology, media, telecoms and life sciences, says Fox, where companies are looking to grow as quickly as possible. Elsewhere, an expanding global population is increasing demand for investment in infrastructure.

New technologies are allowing PE businesses to manage ever more complex investments. Artificial intelligence is making financial data easier to understand and expediting the deal-making process, and reporting is becoming more automated and information more easily accessible for investors.

Family offices now have investments spread across the globe, investing in companies in countries where it wouldn’t have been possible just a few years ago.

Further, a focus on environmental, social and governance (ESG) factors is central to PE investment. Some 70% of limited partners have investment policies that include an ESG approach, according to a survey by Bain and the Institutional Limited Partner Association.

And 85% of those have an ESG policy for PE investments, while 93% would walk away from an investment if it posed an ESG concern.

PE investment in healthcare more than doubled to a record $151bn in 2021, with medtech attracting attention as investors look for ways to relieve pressures on health services.

The storm clouds may be gathering over the global economy, but Dean believes PE firms and investors have long proved their ability to thrive in difficult circumstances.

“PE has a history of investor activism; of people trying to make an impact in companies,” he says. “Investors are excited by the opportunity of finding the next global winner.” n

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SEC private fund proposed reforms Simon Guilbert, Audit Director at KPMG in the Crown Dependencies, examines some of the key takeaways around the Securities and Exchange Commission’s recent proposed rule changes for private fund advisers IN FEBRUARY, THE Securities and Exchange Commission (SEC) proposed regulatory reforms that would have a major impact on private fund managers in the US. The proposals represent the most extensive reforms since the passage of the Dodd-Frank Act of 2010 and target a sector that holds more than $18trn in gross assets. The proposals in many cases apply not only to SEC-registered advisers, but also to US and non-US private fund advisers that rely on the SEC’s ‘exempt reporting adviser’ exemptions.

While managers in the UK may not be entirely familiar with the implications of the proposed regulatory reforms, close attention should be paid to the latest developments, which are designed to capture all fund fees and expenses.

KEY POINTS If implemented, how will this influence the industry? KPMG in the Crown Dependencies has outlined the notable takeaways and how the changes would affect managers and investors. They would: • Require private fund advisers registered with the SEC to provide investors with quarterly statements detailing information about private fund performance, fees and expenses.

• Require registered private fund advisers to obtain an annual audit for each private fund and cause the private fund’s auditor to notify the SEC upon certain events.

• Require registered private fund advisers, in connection with an adviser-led secondary transaction, to distribute to investors a fairness opinion and a written summary of certain material business relationships between the adviser and the opinion provider.

• Prohibit all private fund advisers, including those not registered, from engaging in certain activities and practices that are contrary to the public interest and the protection of investors.

• Prohibit all private fund advisers from providing certain types of preferential treatment that negatively affect other investors while prohibiting all other types of preferential treatment unless disclosed to current and prospective investors.

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The extent to which the proposals would prohibit all private fund advisers is allencompassing, from engaging in several activities, including seeking reimbursement, indemnification, exculpation or limitation of liability for certain activity, charging certain fees and expenses to a private fund or its portfolio investments.

They would also extend to fee charges or expenses related to a portfolio investment on a non-pro-rata basis and borrowing or receiving an extension of credit from a private fund client.

KNOCK-ON COSTS The SEC has positioned these reforms as protecting private fund investors. But the content has raised eyebrows in the industry.

If enacted, additional costs will be incurred by private fund advisers and their funds. The requirements for annual audits, quarterly statements and fairness opinions will necessitate the engagement of external providers, the costs of which will ultimately be borne by investors.

There are also likely to be shortfalls in many (notably smaller) private fund advisers’ internal reporting systems and processes that will require investment to remediate. Furthermore, it is possible that the proposed reforms are misguided in seeking to protect private investors, because investors in private funds are typically sophisticated enough and sufficiently resourced to protect their own commercial interests.

Traditional sources of capital in private funds have the means and capability to perform extensive due diligence and negotiate terms with private fund advisers.

Additionally, these proposed rules may have an unintended adverse consequence of discouraging new private advisers, given the additional costs involved and limitations on offering preferential treatment to certain investors via confidential side-letters.

WHY MAKE THE REFORMS From the vantage point of the SEC, there are compelling reasons for reforms to be proposed to protect investors.

They will provide greater transparency and compel practices that do not

incentivise advisers to place their interests ahead of their private funds.

In particular, the requirement for SECregistered advisers to provide standardised reporting to investors detailing compensation, fees and expenses and so on, and mandating uniform definitions of performance metrics such as IRR (internal rate of return) and MOIC (multiple on invested capital), will likely be welcomed by existing and prospective investors.

In addition, annual audits will provide an important check on advisers’ valuations of private fund assets. These often form the basis for the calculation of adviser fees and can be highly subjective and prone to bias.

At the time of publication, the SEC was still in the process of considering public comments received on the proposals. Only time will tell whether these are the right proposals for the industry and if they will prove successful in striking a balance between protecting investors and imposing a regulatory burden on private advisers.

While the reforms are left hanging in the balance, KPMG in the Crown Dependencies is weighing up the proposals’ pros and cons and advising clients to get a transparent understanding of the proposed rules and the overall impact the changes will have on the industry.

KPMG wishes to provide investors with comfort by outlining a concise step forward for when the comment period ends and the rules are finalised. n

FIND OUT MORE

For further advice, contact Simon Guilbert.

Email: sguilbert@kpmg.com

ABOUT KPMG

The KPMG firms in the Channel Islands and the Isle of Man have combined to create KPMG in the Crown Dependencies. This creates a professional services business of 460 people, locally owned and dedicated to serving the key industry sectors across the three islands. The KPMG name and logo are trademarks used under licence by the independent member firms of the KPMG global organisation.

City Edition 2022 29

Gender diversity

women held just 5% of CEO positions In financial services firms in 2021, 19% of c-suite roles and 21% of board seats. So what’s being done to rectify this – and how can firms bring about real change? Part of the answer lies in a change to the language of diversity

Words: Sophie McCarthy

Finance Charter (WIFC) called for ‘urgent action’ on gender parity, warning that without it, it could take three decades to achieve equality within the industry.

The people behind the governmentbacked initiative believe that advancement in this area is stagnating. They point out that, worryingly, the proportion of women in senior management roles has increased by a mere 1% since 2020.

“Progress towards gender equality in the financial sector remains frustratingly low,” said Amanda Blanc, Chief Executive of British insurer Aviva and champion of WIFC. “Women, companies and society cannot afford to wait 30 years when we can achieve this in 10.”

There’s no denying that strides have been made in financial services in recent years.

In February 2021, Jane Fraser became the first woman to lead a Wall Street bank, Citigroup, and in July, Morgan Stanley gave the role of Chief Financial Officer to Sharon Yeshaya, formerly its Head of Investor Relations. In the UK, Baroness Shriti Vadera became the first woman to head a major British bank, Santander, in 2014. In the same year, Dame Inga Beale became CEO of Lloyd’s of London – the first woman to take on this role in the insurer’s 326-year history.

Statistics also show that today, women make up 43% of the financial services workforce. But this doesn’t quite provide us with the full picture. Far from it in fact. The percentage of female financial

30 City Edition 2022

services industry leaders globally remains at just 12% , and when they do make it to director level, women are paid £500,000 less, on average, than their male counterparts. What’s more, according to FCA data, of the 5,815 senior-level promotions and hires that took place in the financial services sector over the past year, just 1,365 (24%) were women.

“The proportion of women in more senior roles is increasing, but frustratingly, progress has been slow,” says Alexis Dolling, Executive Director of People and Culture at the Jersey Financial Services

when they do make it to director level, women are paid £500,000 less, on average, than their male counterparts

Commission. “Over the past few years, we’ve seen significant shifts in certain areas, such as retail banking, but less in the likes of the commercial, wealth and trading parts of financial services.

“There are, however, a number of different initiatives that companies can follow to try to rectify the imbalance that we still see today. These range from active career management and improving the intake balance in early career stages, to training on bias in the workplace as well as recruitment and promotion targets.”

DISPROPORTIONATE IMPACT We know, however, that despite all of the schemes in place at the time, the pandemic disproportionality affected women. In every year up until 2019, the average overall attrition rate for companies was slightly higher for men than women, but Covid-19 dealt a major setback and saw a near immediate effect on women’s employment.

In 2021, one in four women were considering leaving the workforce or downshifting their careers, versus one in five men. And while all women were affected, three major groups experienced the largest challenges: working mothers, women in senior management positions and black women.

This disparity came across as particularly stark among parents of kids under 10: the rate at which women in this group were considering leaving was 10 percentage points higher than for men.

But, Helen Baxter, Global Head, Talent Acquisition and Talent Management at

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▼

IN MARCH THIS year, the Women in

Gender diversity

Mind the gap www.blglobal.co.uk

A city job by the sea With KPMG in the Crown Dependencies, you can enjoy a rewarding career and an enviable work-life balance, with the great outdoors on your doorstep.

Experience an amazing quality of life while working alongside highly trained professionals, in the well-regulated jurisdictions of Jersey, Guernsey and the Isle of Man. To make your move, contact cdscareers@kpmg.com to send speculative applications or visit home.kpmg/cds for our job vacancies. © 2022 KPMG in the Crown Dependencies is the business name of a group of Jersey and Isle of Man limited liability entities each of which are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Gender diversity

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a broader inclusion of views and input when it comes to decision-making, which is especially important in terms of risk management. Diversity will also help ensure a wider pool of talent – which is much desired in a saturated recruitment market – and a workforce that is fair and inclusive and therefore more engaged.

“It’s key to remember, however, that diverse thinking needs to go beyond gender and should instead include a wide spread of people in terms of ethnicity, age, educational background, social classes, sexual orientation and religion.”

CHANGING LANGUAGE, CHANGING VIEWS Also imperative, according to Dolling, is being mindful of how we talk about women’s careers and the fact that they have to ‘juggle’ family life.

“This incorrectly reinforces the notion that this is solely a woman’s responsibility.

I know a number of male colleagues who have moved to an 80% week and/ or compressed hours in order to take on caring responsibilities. Examples like this need to be highlighted so it becomes the norm for men and women.

“Similarly, parental leave is extremely important. It not only allows men to have a fulfilling parenting role, but it also enables women to return to the workplace more easily after having had a child,” she continues. “Parental leave symbolises the fact that this is a joint responsibility and it sets the tone for both the mother and the

City Edition 2022 33

▼

The pandemic highlighted the fact that women need upskilling in the Channel Islands in order to boost standards of living

IQ-EQ, thinks that the pandemic could have brought with it some small positives.

“Covid-19 impacted gender equality and the gender pay gap across all sectors,” she says. “But it could also prove to be a catalyst for change.

“For example, it highlighted the fact that women need upskilling in the Channel Islands in order to boost standards of living,” she says. “PwC reported in its 2021 Channel Islands Women in Work Index that increasing the female employment rate to match Sweden’s could raise GDP by 5% in both Guernsey and Jersey (equivalent to £176m and £259m respectively).

In the same report, PwC claimed closing the gender pay gap in Guernsey would generate a 26% increase – the equivalent of £226m – in increased earnings.

“The pandemic drew attention to how women can suffer from gender imbalance in the workplace due to part-time hours and/or childcare concerns,” says Baxter.

“At IQ-EQ, we track and measure equal pay. We’ve also introduced a host of benefits to allow flexibility for all – including hybrid working, flexible hours and a generous parental leave package.”

Dolling stresses the commercial importance of more diversity in the financial services sector.

“Diversity will provide deeper connections with all customers – current and future – and therefore more relevant products and services,” she says. “It will help eradicate group think and result in

Gender diversity

father to equally focus on their career and raising a child.”

It’s not uncommon, however, for frustrations to be felt around diversity.

“In some corners, it’s something that human resources teams push onto leaders, which means that there’s resistance or lack of understanding as to why it is important,” Dolling adds.

“To support this, we should continue to challenge myths and stereotypes. Financial services companies should continue to run education programmes on bias and support people when it comes to finding the right language to talk about all aspects of diversity in the workplace.

“All too often, people feel tongue-tied and are unsure of how to speak about these issues for fear of offending people. It’s vital that leaders are as confident speaking about diversity and inclusion as they are commercial and economic topics.”

Dolling says she also always recommends that people consider more training on how to manage a diverse team, how to spot talent and potential within candidates who might be less ‘traditional’, and how to better understand the commercial and societal benefits of more diverse thinking in the workplace.

“We could also get better at thinking of and talking about careers like we do portfolios. What I mean by that is that at different times there are different needs.

Both genders can and should have career gaps either for study, travel, family or caring needs. Staff should feel able to drop in and out and progress at different speeds.

“The days of climbing the ladder in a linear fashion in one firm are behind us.

Instead, it’s about gathering a portfolio of experiences that should fit around other life activities,” she continues.

“Many organisations run development programmes to help women ‘get ready’ for senior roles, but I actually think this reinforces the myth that women are less competent and need more help. Put simply, it’s not the women who need fixing.” n

34 City Edition 2022

IQ-EQ: BLAZING A TRAIL “We’re pleased to say we have fantastic gender balance at all levels in the Channel Islands and in London – with an average 50:50 split all the way up to management team level in both client-facing and non-client-facing roles,” says Helen Baxter, Global Head, Talent Acquisition and Talent Management. “Having a diverse, forward-thinking workplace has been very beneficial to us, but we also know that we have the potential to keep improving.

“At present, we are examining our Employee Value Proposition (EVP), which is the benefits we offer our employees in return for their hard work, skills and commitment to us as an employer.

“As part of this, we are analysing our employer brand to improve how we tell our story externally, to properly promote the breadth and depth of opportunity and diversity in IQ-EQ. When it comes to careers, we offer world-class development, and this is something we need to advertise to attract and maintain a diverse workplace. We know we need to keep continuously developing our EVP internally and externally, as well as providing rewarding and fulfilling careers regardless of age or gender.

“We’ve taken a number of actions to ensure gender parity when it comes to pay, for example,” Baxter continues. “We have balanced slates in external recruitment, and we ensure we have a diverse recruitment panel with equal gender representation.

“Internally, we launched a Women in Leadership Programme that allows all women, no matter their level within the organisation, to choose development courses to suit their career aspirations. As part of this programme, we’ve had external speakers from different industries come in and talk about their leadership journey and the lessons they’ve learnt, as well as internal panel discussions and confidence workshops.”

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Lifestyle factors still loom large as desire to move remains strong While the housing market may have softened slightly in recent weeks, Geri O’Brien of Savills Jersey explores the continued popularity of island life and highlights general sentiment among buyers and sellers.

With the ‘race for space’ yet to fully run its course, demand for homes in Jersey remains extremely strong. The number of new buyers who registered with Savills during the first three months of 2022 was 80.1% higher than the same period in 2019 and only marginally lower than last year when the housing market was overwhelmed with demand.

Jersey continues to be an incredibly desirable location among those looking to relocate. The strength in our market is a reflection of the island’s long-term popularity, coupled with something new, a fundamental shift which has boosted buyer interest on and around the Bailiwick.

The pandemic prompted a change in priorities among buyers, known as the ‘race for space’, igniting urgent demand for homes offering indoor and outdoor space in attractive countryside and coastal locations. Research conducted this year by Savills underlines both the desire to move but also what is shaping this demand.

Commitment to move Our most recent buyer and seller survey, conducted in April, revealed some of the factors influencing buyers’ and sellers’ decision making. Fundamentally, there remains a sustained commitment to move – particularly those planning to relocate during the next 12 or 24 months.

Lack of stock is still presenting a challenge, with 63% of respondents stating that this is significantly inhibiting their ability to buy a property. There are also prevailing financial factors and commuting behaviours at play.

With home working now an accepted norm this has made somewhere like Jersey – with frequent daily flights to the UK and Europe – an even more attractive location for those only needing to visit the office once or even twice a week.

These results complement those from a similar survey conducted in February which found that 48% of buyers had been considering a move for over a year, with half hoping to complete in the next six months.

Indeed, the desire to move as quickly as possible is the strongest seen at any other point since the start of the pandemic.

While there continues to be a shortage of housing stock across Jersey the situation has improved as the year has gone on, with noticeable increases in the number

SOLD

of viewings and applicants registering with us. It’s not entirely surprising to see interest pick up at this time of year as between now and September is considered prime selling season, but we are recording a high level of enquiries for available properties and significantly more than the weekly averages we were seeing before the pandemic.

The market isn’t dramatically different from the last 12 months - insofar as demand is still very much there and the best in class properties – those which are both realistically priced and close to amenities – are selling very quickly.

However we do anticipate that the economic headwinds will slow house price growth in the second half of the year. This could be helped further though if, as has been mooted, there are relaxations of mortgage regulations.

SOLD

St Helier, JE2 3AX Guide £725,000

St Lawrence, JE3 1EX Guide £11.95 million

In terms of interest rate rises, 80% of respondents said that recent increases had no impact on their budget and just 4% said their budget had significantly decreased.

For 74% of respondents, the rising cost of living had no effect on their budget.

Meanwhile the reassessment of hybrid working revealed that just 16% of respondents are commuting three days or more, compared with 58% pre-pandemic.

SOLD

SOLD

Grouville, JE3 9BB Guide £5.95 million

Talk to us today Debbie Le Brun Associate Savills Jersey 01534 870 074 debbie.lebrun@savills.com

Sophie A’Court Associate Savills Jersey 01534 870 140 sophie.acourt@savills.com

St Ouen, JE3 2HN Guide £2.875 million

Advertising feature

Locate Guernsey: opening the door to opportunity Locate Guernsey is a government agency providing free and impartial advice to businesses and individuals looking to move to Guernsey. Established in 2015, the agency acts as a single point of contact within government, offering guidance on many aspects of island life to help prospective residents and businesses make informed decisions about establishing themselves on the island STAFFED BY A small team who have significant private and public sector experience, Locate Guernsey is passionate about Guernsey and always on hand to support clients throughout their relocation journey. The team is acutely aware that wealthy individuals and businesses have a choice of jurisdictions to consider. They work hard to ensure clients have access to the most up to date and relevant information about Guernsey to guide them through the decisionmaking process and ensure they are welcomed warmly into the community.

Locate Guernsey’s support can start at any point during the relocation process, from initial questions about the suitability of the island, the follow-up stage of further exploration and additional fact-finding, right through to the settling-in period, supporting new arrivals to build their own personal and professional networks.

The team has immediate access to a wealth of information and contacts, and its

36 City Edition 2022

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Advertising feature

At a glance • No application process for new residents, no minimum tax take and no minimum spend when purchasing a property.

• The simple fact of living in an Open Market Part A property allows people to live in Guernsey indefinitely if they wish to, to work for any employer, to set up or run a business or to simply live off savings.

• Locate Guernsey also assists with corporate relocation in the vein of a conventional inward investment team. Guernsey has a zero rate of corporation tax for the majority of businesses, an exceptional professional services community, excellent connectivity and a pro-business government. The local finance industry prides itself on its reputation for innovation and a high standard of regulation. A wide breadth of services are offered – investment funds, trust and fiduciary, banking and insurance are all significant sectors, well supported by more than 150 Guernsey-qualified lawyers and more than 500 qualified accountants.

• Guernsey’s small size (65km2) is viewed as a major advantage by those doing business there.

All of the agencies, regulators, businesses and government departments are only ever a short stroll away, which makes it fast and simple to discuss new initiatives and proposals. Of course, Guernsey’s proximity to the UK, with frequent and quick flights is also a very helpful factor, making same-day return business travel to London easy when needed.

• More and more relocators are discovering all that Guernsey offers. The island embraces a life that is more than just work; one that restores balance to your lifestyle. A natural environment that helps you reconnect with the good things in life and a hub that enables businesses to flourish. It’s clear that more of us than ever are striving to find that elusive work-life balance and sense of wellbeing. In Guernsey, enjoying a successful career or fulfilling an entrepreneurial dream doesn’t have to mean sacrificing family time or compromising on the good things in life.

Indeed, it provides a home that truly offers perfect equilibrium.

confidential service is always tailored to meet the client’s specific requirements.

Locate Guernsey frequently provides guidance to individuals and businesses on: • Living in the open market •R egistering for online services such as tax and social security •E ducation, sport, clubs and social organisations •P racticalities including driving licences, vehicle importation and pets • Healthcare and insurance •P opulation management formalities, such as information regarding employment permits • Immigration matters •L iaison with other government areas – for example, planning and the Digital Greenhouse • I ntroductions to senior civil servants and politicians • I ntroductions to social and business groups and societies There are many compelling reasons why Guernsey has become a destination of choice for high-net-worth individuals as well as for business relocation. As a Dependency of the British Crown, Guernsey relies on the UK for matters of defence and foreign affairs but is otherwise independently governed – our local politicians are elected by means of a

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democratic election process. The island is politically and economically stable and sets its own laws and rates of tax.

In addition to there being no minimum revenue levels or annual tax requirements to gain residency, residents do not pay inheritance tax, capital gains tax or wealth tax. Income tax is levied at a flat rate of 20% with attractive tax caps available.

Guernsey offers a family-orientated, friendly, safe and secure community with high standards of healthcare and education.

Part of the role of Locate Guernsey is to convey these positives and many others such as the island’s stability, safety, sense of community, and of course its evident beauty to individuals who might be contemplating a move to a place where life is more enjoyable.

A key advantage of island life is a typical commute of 20 minutes, enabling a fantastic work-life balance. You can be at home with your family or out in the fresh air moments after leaving the office.

Warmer temperatures than mainland UK and 29 miles of impressive and varied coastline also supply an abundance of new adventures. Take to the sea to try your hand at paddle boarding, surfing, diving, sailing or coasteering.

Hit the beach and relax on golden sands or dine on fresh local cuisine at one of more than 100 enticing restaurants. n

Relocate with ease Personal relocation to the island is refreshingly straightforward due to Guernsey’s two-tier property market.

Whilst its Local Market is essentially reserved for those with familial connections to the island or those holding employment permits, the Open Market provides an easy route to residency. Holders of UK passports or those with right of abode in the UK can become resident in Guernsey simply by purchasing or renting a property in Part A of Guernsey’s Open Market. For non-UK passport holders, visa options are also available - Locate Guernsey can provide more information about these.

FIND OUT MORE

Guernsey is enhanced by the arrival of newcomers and on the States of Guernsey’s behalf, Locate Guernsey seeks to underline this by providing a single point of contact with practical help and guidance where it is needed. The team can be contacted on enquiries@locateguernsey.com or 01481 220011. For further information, please visit www.locateguernsey.com.

City Edition 2022 37

Advertising feature

Jersey: for work and for life

With a strong business infrastructure, excellent connections to other major business centres, and a friendly, safe, cosmopolitan community where traditional values sit at the very heart of a contemporary lifestyle, Jersey offers the chance for a genuine work-life balance A LONGSTANDING REPUTATION for

attracting successful companies and the people who run them to its beautiful shores has made Jersey a location for those who want to work in a thriving, well-respected international centre of excellence, but who also seek a balanced lifestyle.

The island is self-governing, with a stable government, independent fiscal and legal systems, and a highly respected reputation as a world-leading international finance centre. Although it is not part of the EU or the UK, Jersey has strong connections to both, is English speaking, and shares the same time zone as the UK. Executives and entrepreneurs are increasingly attracted by the financial expertise, access to capital markets and business support from the first-class industry contacts and service providers that Jersey has to offer.

Some of the world’s leading banks, financial institutions and law firms are based there, managing worldwide assets and helping businesses and wealth to grow.

In addition, Jersey has a stable, resilient,

38 City Edition 2022

and highly developed communications network, topping the rankings in the World Broadband Speed League 2021, recording an average rate of 274.27 Mbps – 30% faster than its nearest rival.

It was also the first jurisdiction in the world to make 100% pure 1Gb fibre (FTTP) available to every broadband user, creating an environment where businesses and people flourish.

Part of the beauty of living in Jersey is that you can enjoy island life and still only be a 40-minute flight away from London.

Making trips for business or pleasure has been further enhanced by the recently signed agreement with British Airways, which over the next five years is expected to carry more than two million passengers between Jersey and London Heathrow – particularly important as the world opens back up following the Covid-19 pandemic.

In addition, there are more than 30 daily flights into key UK cities, so major financial centres are only a short flight away, putting you at the heart of worldwide travel networks. There are also regular ferry

sailings to Poole and Portsmouth in the UK, and St Malo in France.

For families settling there, the safety and privacy that Jersey offers is of the upmost importance.

Other key factors in the decisionmaking process include its high-quality healthcare facilities and education system, its rich rural heritage, exceptional produce from land and sea and a firstclass range of restaurants. The island also offers the ability to be home, on the beach or in breathtaking countryside within minutes of leaving the office.

Finding a location that benefits your business might be your principal driving force, but choosing a place to become home to your family is about much more.

Jersey is a friendly, safe, cosmopolitan community, where traditional values sit at the very heart of a contemporary lifestyle. A beautiful island setting with stunning beaches, coastline and countryside, Jersey offers a lifestyle to suit all tastes. In Jersey, a work-life balance really is achievable. n

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Locate Jersey: supporting your journey Locate Jersey promotes the island as a place to do business and co-ordinates the relocation of inward investment businesses and high net-worth individuals (HNWIs) and their families to Jersey.

Providing comprehensive, confidential and free advice, its officers work closely with industry bodies, regulators, the private sector and colleagues across government, to help businesses and HNWIs through the application process and move to the island.

Business relocation to Jersey Inward investment into Jersey is a vital contributor to a diverse, innovative and competitive economy and Jersey welcomes applications from high-value, low-footprint businesses and successful entrepreneurs who are wishing to move to or expand into Jersey.

Under Jersey law, you must have a business licence to run a business and employ staff on the island. To qualify for that licence, you usually need to have lived in the island for more than five years and have ‘Entitled for Work’ status in order to start a business. However, there may be an exception to this if you can show that your business is of significant economic or social value to Jersey (or if the business is specialised and meets a strategic market need).

Any business looking to relocate to Jersey will need to fulfil certain criteria, although this also does not guarantee the success

of an application. Other considerations are also taken into account, such as relevant legislation/regulation and potential reputational concerns for the island.

Relocating under the High Value Residency (HVR) regime Applications to the HVR scheme by individuals who can bring economic benefit, contribute to the community and want to make Jersey their home, also need to satisfy a number of criteria. Each application is considered on the basis of the economic and social value that it would bring to Jersey, with only a limited number of consents granted each year.

The HVR route is specifically for those who can demonstrate assets of £10m or more, and a comfortable and sustainable annual worldwide income in excess of £725,000 on which they would pay 20% income tax (£145,000). Tax is then levied at 1% on anything in excess of the initial £725,000, except for income derived from Jersey property, which is charged at 20%.

Officers are always on hand to assist businesses and individuals in the application process. They can advise on what is needed for the application and connect you to the right people. We strongly recommend that you take professional tax advice at the earliest possible opportunity.

Visit the Government of Jersey website at www.gov.je for the most up-to-date information on our tax and population laws.

● 0/10% corporate tax regime ● 20% maximum personal tax ● 1.5% long-term care contribution tax (capped at £3,910 per annum) ● Social security tax (capped at £12,234 per annum) ● 5% goods and service tax ● 0% capital gains tax ● 0% inheritance tax Please visit the Government of Jersey website – www.gov.je – for the most up-to-date information on tax rates.

FURTHER INFORMATION Locate Jersey 19-21 Broad Street, St Helier, Jersey JE2 3RR Email: locatejersey@gov.je Tel: +44 (0)1534 440604 Web: www.locatejersey.com

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City Edition 2022 39

Sustainable investing

Green growth Green finance has multiplied more than 100-fold in the past 10 years but still represents only around 4% of the overall financial markets. The Channel Islands’ financial services sector is at the heart of efforts to drive further growth

Words: Steve Falla

LONDON HAS FOR some time been considered a global powerhouse in the specialist and growing area of green finance products and services, while Guernsey and Jersey have also positioned themselves as centres for sustainable finance.

In recent years, the two jurisdictions have drawn on their longstanding and symbiotic relationship to drive forward green finance.

As a result, a body of knowledge has been developed and specialists believe the islands are well positioned to capitalise further on opportunities in the green and sustainable sector.

One of the key levers to success is the proactive role of financial regulators in Jersey and Guernsey, working to ensure that solid structures and good governance exist in tandem with an adaptable and innovative culture led by the industry.

Mark Oliphant, Head of Marketing and Communications at The International Stock Exchange (TISE), which has a sustainable market segment, TISE Sustainable, notes: “The islands have always been adaptable and innovative, with good governance and sensible regulation.

“We are extending the same principles into the area of green and sustainable finance. Going back five or 10 years, if you wanted to talk to someone about ESG, even in a London firm, there would have been a single, dedicated person sat in an office in a corner of a building; now it’s embedded in every product and service line.”

REGULATORY BACKING Annette Alexander, Partner at Carey Olsen, agrees. “There are reputable and robust products, so they can be trusted. We can channel funds into the areas where investment is needed through, for example,

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Sustainable investing

the Guernsey Green Fund. They are subject to ongoing checks from the administrator and from regulatory supervision.”

In fact, so progressive have the islands’ early activities been in this area that they have become a reference point for other jurisdictions, as Nel Schoeman, Assistant Director at Stonehage Fleming, points out.

“We have gone into great detail and created off-the-shelf solutions as well as bespoke frameworks and investment solutions – including for the insurance and funds sectors,” he says.

“But it is broader than simply trying to attract business to the islands. It boils down to playing a leading role in developing the kind of regulation that’s necessary and could be adapted elsewhere.

“I love the picture we have built of a combined green financial and regulatory ecosystem – with a regulator that’s on board, an industry that’s on board and very progressive development in terms of the interaction with both.

“This is a key takeaway, with emphasis on the degree to which the regulator has come to the party and got on board with the initiative. That gives clients the kind of guarantee they want.”

INVESTMENT CONTINUUM The current economic turbulence presents a risk that the returns and attractions of green finance as an asset class could be diminished. But Justin Sykes, Managing Director of Innovest Advisory, underlines the importance of investing in the transition towards net zero.

“It’s not a nice to have but a need to have,” he says. “Green finance is a narrow slice of an overall movement towards responsible finance, and that includes climate investment, natural capital investments and sustainable and impact investing – a continuum of investing to achieve broad sustainability and climate objectives. It’s a significant opportunity, not a one-trick pony.”

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Oliphant points to research by Bloomberg Intelligence that indicates that ESG assets will reach $41trn by the end of this year and $50trn by the end of 2025 – with growth led by the US to support new products and investment opportunities around energy transition.

“London is an international finance centre and it’s at the centre of global capital flows,” he says, adding: “It’s also in an interesting position between, for example, the US and the EU. “Much of the potential for the future growth in ESG assets comes from the US, whereas the EU was previously leading the charge and the US was catching up.

London now sits in between both of those – it’s in a convenient position but postBrexit it’s also driving its own regulation in these areas.”

David Postlethwaite, Sustainable Finance Lead at Jersey Finance, pinpoints Jersey’s role. “Access to capital will increasingly be determined by your ability to demonstrate that your activities are aligned with netzero transition,” he says. “There will need to be a wholesale redeployment of capital if these objectives are to be met.

“From Jersey’s perspective, the role that we will play as an international finance centre will be supporting that deployment of capital.”

“The Jersey role remains as it has ever been,” adds Postlethwaite. “It’s a crucial part of providing liquidity and inward investment, and supporting many hundreds of jobs as a platform for capital into the UK and out of the UK as well.”

Postlethwaite describes how investment fund structures are contributing towards the transition.

“The Jersey fund sector is supporting investment into low-carbon energy in the UK – for example, Foresight Solar, a listed company investing in renewables,” he says. “It’s a Jersey structure because of the flexibility that brings and the ability to pull in global capital.”

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We have a combined green financial and regulatory ecosystem with a regulator that’s on board, an industry that’s on board and progressive interaction with both

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Sustainable investing

Sykes cites a further example. “We serve as the impact adviser to the London manager of a Guernsey-domiciled private equity fund. It has a very focused investment into energy transition technologies that are having a major impact on the way energy is produced, transmitted and stored.

“This fund leverages all the things the Channel Islands are good at – in terms of regulation, funds lawyers and fund administration – overlayed with specific skills and expertise in the impact finance space.”

We are seeing the rise of non-financial reporting – the whole space is rapidly professionalising, it’s a global phenomenon

Schoeman lists the attributes leveraged by the islands to deliver success. “We have well-regulated structures and strong regulatory regimes from both financial regulators. In terms of investment structures, you have TISE and innovative fund products.

“These things, combined with highquality professional services, are really enabling the UK and the City of London to leverage the Channel Islands as a conduit for international capital flows in the sustainable finance space.

“This whole infrastructure can continue to pivot to best serve the sustainable finance sector.”

Developments in this area include the Guernsey Green Fund, the world’s first regulated green investment product; the Guernsey International Insurance Association’s ESG framework; and the

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TISE sustainable market segment – Europe’s most comprehensive sustainable market segment.

In addition, the Guernsey Financial Services Commission has asked boards to consider the impact of climate change on their strategy and risk profile, and the Jersey Financial Services Commission has amended codes of practice to consider antigreenwashing disclosures.

Sykes regards non-financial reporting as a potential growth area. “There’s a sense that the professional services space can expand to include ensuring authenticity, credibility and transparency around the investor’s claims regarding the nonfinancial aspects of their investments, so that the claims are justifiable.

“What you are seeing here is the rise of non-financial reporting. Because

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ISLANDS CREDENTIALS

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Sustainable investing

Guernsey’s green focus Biodiversity, energy transition, and carbon pricing and markets are the three priorities for Guernsey Finance and Guernsey’s sustainable finance industry, according to the Guernsey Green Finance Strategy Report, published in March this year.

The strategy sets out measures and themes with a view to Guernsey maintaining its position as a leading sustainable finance centre, informed by extensive research and stakeholder engagement.

The themes will form the basis of product development, thought leadership and research papers, which will be communicated through events, podcasts and business development roadshows.

Here, Guernsey Finance spells out the implications of three themes.

Biodiversity Climate change is accelerating global biodiversity loss. There needs to be accelerated investment in nature-based solutions.

Guernsey Green Finance can generate investor interest in biodiversity through proactive relationship-building in the investor community, and the generation of biodiversity/nature-based products and thought leadership.

Energy transition Every part of the financial sector is affected by the energy transition and how to reduce carbon emissions in portfolios. Frameworks are being established to facilitate transparent reporting such as the Transition Pathway Initiative and the Science Based Targets Initiative. More practical guidance and pragmatic approaches are required to facilitate the transition. It is recognised that there needs to be space in the market to acknowledge those that are contributing to the transition.

Guernsey has an opportunity to establish frameworks, product labelling and guidance on what ‘good’ looks like.

historically nobody had to account, verify or assure non-financial returns, it was not previously a priority – but now the whole space is rapidly professionalising.

“It’s a global phenomenon, everybody is trying to get their head around it and it forms the majority of our work with fund clients. This whole field is an opportunity for our islands to demonstrate expertise.

There’s deep knowledge and capability that can be leveraged.”

GREEN ECOSYSTEM In addition to these opportunities, Schoeman identifies opportunity in the private client space. “It’s hard for trustees or directors with a fiduciary capacity, whose general duty is to preserve and enhance the assets in a trust, to come to the party,” he says.

“The key question is ‘how does ESG align with that duty?’. Even if one can say returns are likely to be similar to a normal investment, as a trustee you still have to come to terms with the risk that, should it not perform as well, you are exposed to a claim or accusation that you have breached your fiduciary duty.”

The UN Principles for Responsible Investment initiative (UN PRI) report UN fiduciary duty in the 21st century argues

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Carbon pricing and markets There will be increasing demand for carbon and biodiversity credits to offset emissions during the transition period and beyond.

They are a necessary part of the energy transition as high emitters will not be able to achieve net-zero in the immediate future. Carbon and biodiversity credits can also be used as a mechanism to drive capital and investment to the communities most affected by climate change.

Guernsey has an opportunity to explore how carbon pricing and markets will impact the transition, and drive investment into lower income countries.

that if the trustee fails to incorporate ESG they are failing in their fiduciary duty.

“They are saying you have to incorporate ESG,” says Schoeman.

“Ultimately, as a trustee, you realise you might be taken to court. But will they look at what the UN PRI said or rule that the law has not developed to that point?

“Case law has developed somewhat and will continue to develop over time, but it would be a welcome development if there could be more concrete guidance or a code that trustees can hang their hat on when making these decisions,” he adds.

“It would mean that we are bringing a trustee jurisdiction to the party that’s able to accommodate a truly green trustee. You would know that if you are going to Jersey or Guernsey, you are entering a green ecosystem all the way down from trustee to investments.”

Alexander sees every reason why the City and the Channel Islands will continue to cooperate on sustainable business.

“One of the things Guernsey and Jersey have always done really well is complement the City in different ways. Both Guernsey and Jersey act as conduits through which billions of pounds of international investors’ money enter the City’s capital and private markets.” n

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Helping wealthy families live their best lives For over 40 years we have provided our sophisticated clientele with professional expertise in multi-jurisdictional wealth and asset protection, succession planning and wealth transfer solutions.

With offices in key locations around the world, Equiom is ideally placed to meet the often complex challenges presented by an increasingly global client base, enabling our private wealth clients to ‘live their best lives’.

For more information about our Private Wealth solutions please contact Graham Marsh at GrahamMarsh@equiomgroup.com or visit www.equiomgroup.com/privatewealth

equiomgroup.com/privatewealth Equiom (Jersey) Limited and its affiliates are regulated by the Jersey Financial Services Commission. Equiom (Guernsey) Limited is regulated by the Guernsey Financial Services Commission and licensed under The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020

Advertising feature

SaaS: the game-changer Suzanne Pritchard, Junior Product Manager at TrustQuay, explains software-as-a-service and why it’s a game-changer for corporate services and trust administration

THE TECHNOLOGY INDUSTRY is renowned for its acronyms. Many have heard of them without necessarily knowing what they actually stand for. SaaS is just one of those, and it’s becoming a buzzword in TrustQuay’s field of expertise – corporate services and trust administration.

To set the scene, let’s look back to one of our highlights from TrustQuay’s independent survey of the market – the Future Focus Report. One of its key findings was the dichotomy “between belief and behaviour” in the corporate services and trust administration sector.

Firms in the sector could see the value of digital transformation – but they still need to find a way to get there.

As TrustQuay Executive Chairman Keith Hale explained in the report: “Some 78% believe that digital leaders are more competitive, but only 6% felt their firm was itself a digital leader.”

The way to make that shift in digital leadership is cloud computing and SaaS.

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Back in 2020, the industry listed such solutions as one of the top areas of innovation to come over the next five years, alongside automating workflows and implementing client portals.

Then in March last year, TrustQuay’s Head of Strategy and Innovation, Adrian Akers, noted on TrustQuay’s blog: “One lesson from the Covid-19 pandemic has been the power and flexibility the cloud has demonstrated over on-premises deployment, and this will spur on firms to make the jump.”

WHAT IS SAAS? When trust and corporate services organisations consider moving away from traditional on-premises systems towards the flexibility and scalability of SaaS and the cloud, the concepts of platform-as-aservice (PaaS), infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) – and their respective benefits – can easily become intertwined and confused. So let’s

explain the differences, with the help of a mouth-watering analogy – pizza-as-aservice.

Stage one – on-premises software, or ‘homemade pizza’ Homemade pizzas are an art form and can take many hours to perfect to each individual’s exacting standards, but the preparation is entirely your responsibility. Similarly, on-premises software deployment has to be tailored to each organisation’s requirements and includes many factors for which you are responsible. From servers to network infrastructure, from the operating system to the application, the task of maintaining and operating an entire technology stack falls entirely under your responsibility.

Stage two – infrastructure-as-a-service, or ‘supermarket pizza’ Supermarket pizzas increase the

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Advertising feature convenience factor – there’s only one item to buy and none of the kitchen mess. You are still responsible for the cooking methodology and presentation, but the supermarket provides the ready-made finished product for you to select and bake.

Similarly, infrastructure-as-a-service provides your business with that extra convenience. You are still responsible for the operating system and application, but a provider takes responsibility for the servers and network, giving your team time to focus on activities other than just keeping the lights on.

Stage three – platform-as-a-service, or ‘takeaway pizza’ Ordering a pizza from the comfort of your sofa to be delivered straight to your door, piping hot, is even more ideal.

No oven required and no shopping list forward-planning. Similarly, platformas-a-service removes most of the responsibility, with the provider handling everything except the application and data itself.

Often confused with SaaS and often even marketed as SaaS, platforms-asa-service and managed services do not benefit from multi-tenanted total cost of ownership reductions, do not have best-in-class availability and security ratings, and do not future-proof your business with the latest and greatest functionality.

Stage four – software-as-a-service, or ‘restaurant pizza’ Perhaps the most efficient and preferable scenario is sitting down in a restaurant and being served your pizza, with the entire process taken care of. This is where the software-as-a-service analogy fits so perfectly.

With SaaS, there’s no infrastructure and no software to maintain. Everything from the servers to the network, the operating system to the application, is provider-managed – giving you peace of mind around your disaster recovery, data integrity and information security.

WHY OPT FOR SAAS? With the acronyms and alternatives explained, software-as-service can provide trust and corporate services with the most flexible approach to their systems, budgeting, end-client delivery and productivity. To keep things concise, let’s look at the top five benefits.

1. Streamlined budgeting It would be hard to describe the longstanding model of a financial institution’s software purchases – and its hardware purchases on which to provision them – as entirely and rapidly ‘flexible’. Let’s take

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the example of the number of users, or seats, a system requires. And a scenario of a company growing by acquisition.

The number of seats would naturally need to be quickly increased. And, with it, hardware purchases to make everything available and keep service uninterrupted.

This is all possible if the flexing required is in the long term. But if it’s in the short or medium term, it can be very difficult to budget for usage increase and accommodate financially.

2. Capacity and server planning If the above example and scenarios might be financially challenging for those in charge of software and hardware budgets, they generally prove even more challenging, logistically, for those managing the actual software and hardware itself.

Flexing systems up ‘overnight’ can be

One lesson from the pandemic has been the power and flexibility the cloud has demonstrated over on-premises deployment

nigh-on impossible with traditional onpremises, perpetual licence-based systems.

3. Integration with other applications It’s very rare these days that software systems work in isolation. If they do, teams and data all too easily end up operating in silos. It’s far better to have software that integrates easily – as and when needed – to the other platforms you use.

The ease with which integrations can be added and removed is potentially far smoother – and far more sophisticated as a result. In short, the technical due diligence of the integration of two cloud technologies will have already been done for you.

As a result, connecting and integrating one system with another should be a quicker and easier process.

4. Seamless end-user access End-user access becomes seamless when, the front, middle and back-office systems are all cloud and SaaS-based.

Digital access by clients to their own information has now moved from a niceto-have to a must-have, and the integration of front, middle and back-office systems in the cloud delivers this in the quickest and most cost-effective way.

5. It’s the experience we’ve all come to expect While TrustQuay works with a diverse client base from all generations, the expectations around the flexibility of SaaS and cloud technologies of the millennial generation – and increasingly remote workforces, no matter what the generation – should always be top of mind.

Our work across TrustQuay’s industry sectors – trust, fund and corporate services – means our software is in use every day by the ‘digital native’ generations. These are the staff who are leading the charge for SaaS and cloud-based systems, because they are the users who demand the flexibility to access and operate their systems anywhere, anytime, and on any device. n

FIND OUT MORE

TrustQuay is a global leader in technology for the corporate services, trust and alternative fund administration markets.

Serving more than 460 customers and over 20,000 users in more than 30 jurisdictions, it has nine offices worldwide.

The company recently launched TrustQuay Online, the first completely cloud-native SaaS platform for corporate services and trust administration providers – covering entity management, client accounting, general ledger and practice management.

For more information, visit: www.trustquay.com/online

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Global markets

safe harbour in uncertain times Amid rising turbulence and uncertainty across many of the world’s major financial markets, the Channel Islands are proving they are an increasingly secure and stable partner to City firms Words: David Burrows

AS THE WORLD grapples with rising costs, interest rate hikes and the impact of the Russian invasion of Ukraine, are investors starting to look elsewhere for stable, experienced and secure jurisdictions to place and manage their money?

The obvious answer is yes – but just how well set up are places like the Channel Islands to provide security during volatile periods? And does it really make a difference where you place your money in this increasingly globalised world?

John Clacy, Head of Deloitte UK Financial Services Portfolio Audit and Channel Islands Lead Partner, says trust and reputation are paramount – and certainly make a difference – in times of uncertainty and volatility. And the Channel Islands have built a considerable reputation for this over the past 50 years or so.

“Investors and advisers are familiar with the islands’ expertise and have confidence in what we offer,” he says. “The islands have unique products that provide managers with global access and flexibility, while wrapped in a strong regulatory framework that gives investors confidence.

“Unlike the UK, the islands have never been part of the EU, so they have remained unchanged over recent years and have an unbroken track record of stability.”

UNIQUE BOND Clacy points to the unique relationship with the City of London that has grown over many years as organisations from the two jurisdictions have worked together.

“As a result, there is a lot of trust and respect, which is a strong basis for doing business, particularly right now, when there is so much uncertainty,” says Clacy.

For investors looking to capitalise on private equity opportunities in particular, the number of private equity/venture capital funds in Guernsey continues to grow, thanks to products such as the Private Investment Fund.

Clacy says the islands tick every box for fund managers right now – genuine substance, a proportionate and robust regulatory regime, which is in line with international anti-money laundering standards, tax neutrality and a wellregarded professional services industry.

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Global markets

LEGISLATIVE EDGE Legislation is progressive but amended incrementally, as needed, to reflect market demands, she explains.

“Jersey’s trusts law, for instance, has only been modified a handful of times since it was introduced nearly 40 years ago, and is now seen as the blueprint that a

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range of other jurisdictions have tried to copy. That stable tax and political landscape also makes for an environment that offers no surprises or shocks – and investors like that.”

So have the Channel Islands as jurisdictions noticeably seen increased interest during the current climate? Aslam Shareef, Director and Head of Funds at Fairway Group, certainly thinks so.

“There is a visible increase. I have personally seen this for Jersey Plc in recent times and it will increase further as more investors and investment managers come to know about the Channel Islands and its offering,” he says.

“The product we are seeing particular interest in is the Jersey Private Fund (JPF), with its attractive attributes such as 48-hour turnaround and cost-effective administration.

“This makes it a popular choice among investors and investment managers. In my opinion, this is the most successful fund product coming out of Jersey.”

Bryant explains that the increased focus on regulatory change and development has been exacerbated by geopolitical instability too. Combined with the pandemic of the past two years, this means centres offering stability are more in demand than ever.

However, she stresses that it was the global financial crisis more than a decade ago that was the real trigger for the ongoing and deepening uncertainty in markets, and which resulted in the raft of new global regulatory initiatives that endure to the present day.

The islands tick every box for fund managers – genuine substance, a robust regulatory regime, tax neutrality and a well regarded professional services industry

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Amy Bryant, Deputy CEO at Jersey Finance, takes a similar line to Clacy.

“There’s no doubt that in uncertain times, investors will look for safe harbours to support their asset protection, wealth management and cross-border investment objectives,” she says. “That’s across the board, from private investors and family offices through to institutional investors and asset managers.”

But she insists this is not a new phenomenon. “Stability, in a fiscal, regulatory, legal and political sense, has been the hallmark of Jersey’s proposition as an IFC for more than six decades.

“It’s why today investors from across the globe look to Jersey to manage and administer a total of more than £1.4trn of private and institutional assets.”

She is clear what the Channel Islands offer that other jurisdictions do not.

“Looking back over the past 60 years, it has always been the case that Jersey’s financial services platform is built on ensuring stability and certainty.

“What really differentiates Jersey from other IFCs is the robust nature of the regulatory environment and the rule of law, which is tried and tested.”

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Global markets

What makes the Channel Islands a jurisdiction of choice?

Aslam Shareef, Director and Head of Funds at Fairway Group, sets out the islands’ key advantages: • Political and economic stability • A pool of experienced and seasoned professionals, from lawyers, accountants, auditors to administrators – a product of three decades of servicing the global financial world as an offshore jurisdiction • Agile regulators that listen • Ease of access – one hour from London and the same time zone. No cultural or language barriers • Compliant or largely compliant with 39 out of 40 Financial Action Task Force (FATF) requirements

The channel islands have to stand out and not just be put alongside underregulated offshore jurisdictions

These initiatives, she maintains, have shaken up global financial markets – from reporting mechanisms such as the US’s Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) to regulation such as the Alternative Investment Fund Managers Directive (AIFMD).

“It was in the aftermath of the financial crisis that Jersey’s finance industry had the foresight, with the Government of Jersey and the Jersey Financial Services Commission, to invest in a long-term strategy that would focus on delivering on innovation and diversification, while safeguarding the stable platform it had so carefully nurtured,” Bryant explains.

“That strategy has really paid off – and we’ve seen a strong uptick in highquality business during the past 10 years because of it. Our funds industry, for example, has grown some 75% over the past five years alone.”

CHALLENGES AHEAD With a clearly positive picture across the Channel Islands, it stands to reason that there are opportunities for Channel Islands financial services businesses to support the City and its clients during these more turbulent times.

Challenges remain, however. Bryant highlights the need to balance the stability that investors look for with the demand for innovative solutions.

“A good example of this is in the growing areas of digital and fintech solutions, digital assets and the world of ESG and sustainable finance,” she says.

“These are often seen as disruptors to

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the status quo. But these emerging areas play out well in terms of our strategy to diversify within our industry and there is a clear place for innovation in supporting our key message of stability.”

She adds: “Governance, compliance and oversight are areas where fintech solutions can play a big role and they are areas that are fundamental to our IFC proposition.

“Our sustainable finance strategy is exactly that – sustainable and long-term – which, by definition, should provide investors with confidence.”

STABILISING INFLUENCE The unique relationship between the City of London and the Channel Islands is something Shareef picks up on, too.

He explains that the finance world is maturing and becoming increasingly sophisticated. “It’s no more about ‘let’s go to the cheapest or most convenient jurisdiction’; it’s more of a ‘let’s go to a well-regulated, stable and competent workforce jurisdiction’,” he says.

“The UK is an integral part of the Channel Islands and a longstanding partner for various reasons. And with so much uncertainty within the UK political landscape – post-Brexit and now with the Russian invasion, too – the Channel Islands provides a calming effect to the City.

“It’s a location where investors and investment managers can be assured that they get the benefits of a well-regulated and stable jurisdiction that has ease of doing business and the required talent pool to service their needs.”

The Channel Islands, Shareef believes, has to stand out and not just be “put in the same basket” alongside under-regulated offshore jurisdictions.

So how successfully are these stand-out credentials promoted? Clacy believes both Jersey and Guernsey do a great job of marketing their financial services expertise.

“Of course we could do more, but the audiences that matter understand what we have to offer,” he says.

“Our local firms also do a tremendous amount to promote the islands’ products.

And because so many global players have a significant presence in the islands, we are well connected to the main IFCs and around the world.”

Shareef is similarly positive. “Agencies such as Jersey Finance and its counterpart in Guernsey are very active towards this cause,” he says. “Both of them do an outstanding job of keeping the Channel Islands on the table for discussion and hosting networking events.

“These agencies have got it covered.

The most recent event we attended was arranged by Jersey Finance in Riyadh and Jeddah. The main aim – which was achieved – was to promote this as a leading financial centre and jurisdiction of choice in terms of offshore.” n

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Wealth

Welcoming

the dragon

As sanctioned Russian oligarchs begin to vacate London, Chinese wealth holders with changing investment attitudes and a desire for more stable opportunities overseas are stepping in to fill the gap

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Wealth

IT MIGHT ONLY feel like yesterday, but it’s

21 years since Goldman Sachs produced a seminal piece of research that coined the term BRICs to represent Brazil, Russia, India and China – the four countries it forecast would reshape the world economy in the following decades. South Africa was added later.

Of those original four, only China has genuinely lived up to its billing to date, jumping from sixth to second place in the global ranking and poised to overtake the US in the next 10 years or so.

It’s hardly surprising that China’s stellar growth has produced a considerable number of rich and super-rich citizens, many of whom want to invest their wealth around the world.

With Russian oligarchs now in retreat following their country’s invasion of Ukraine and the subsequent sanctions placed on them, China’s high-net-worth and superhigh-net-worth individuals have become the dominant force in personal wealth targeted by international financial centres.

Research conducted by private wealth law firm Boodle Hatfield last year found that mainland China and Hong Kong provided the two biggest cohorts of non-domiciled highnet-worth individuals relocating to the UK in the previous 12 months, with 650 and 620 individuals respectively moving to the UK.

APPEAL OF A BETTER LIFE Kyra Motley, a Partner at Boodle Hatfield, says: “Despite all the uncertainties created by the pandemic and Brexit, more wealthy individuals from China are taking the opportunity to make their move to the UK and start a new life for themselves and their family.”

During the past few months, the ‘push’ factors from China have arguably intensified.

In April and May, Shanghai was subject to a brutal two-month lockdown in an effort

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to sustain China’s rigid zero-Covid-19 policy – which had the inevitable effect of disrupting the economy.

Furthermore, the Beijing government is leaning back towards socialist economics and has been introducing measures to restrict overseas travel.

“Last August, President Xi’s talk of ‘common prosperity’ – which commits to addressing income inequality and promoting people-centred development – also spooked the prosperous,” says Briony Sun, Chinese Family Office Executive at IQ-EQ in Jersey.

She cites the “prestigious education system, genteel culture, lifestyle and cultural diversity” as among the factors that have made the UK and London in particular one of the top emigration destinations for Chinese HNWIs. The UK is perceived as highly stable, she says, and getting your child admitted to a top private school in the UK can be a key target for wealthy Chinese families.

The most obvious outward manifestation of this attraction to the UK is investment in prestigious high-end property, especially in London, which has led to the city being dubbed Beijing-on-Thames.

Data published by the Office for National Statistics for 2019 suggested that more than 218,000 properties in London were owned by Hong Kong or Chinese buyers and, in that year alone, some £7.69bn was invested.

Sun says Chinese investors’ love of property can be attributed to the traditional belief that property provides security and stability in the long term over other types of assets.

She adds: “The investment in overseas properties is also propelled by the implementation of more than 300 new

regulations by the Chinese government recently to regulate the housing price and curb levels of investment domestically.”

China also has significant business investments in the UK. In 2019, there were around 800 Chinese companies in the UK, employing 71,000 people and with total revenues of £91bn.

NEXT GENERATION Professional firms in the City and elsewhere have already been wising up to this influx – for example, by employing Chinese language-speaking personnel in key roles.

However, Chinese investors are becoming more open-minded about how and where to allocate their wealth and are increasingly diversifying their investment portfolio, says Sun. “The young Chinese generation are becoming more aware of social equality and the investment impact on the environment,” she explains. “This can be reflected in the investment decisions they make.”

Alongside financial products and property, many are turning to funds and even cryptocurrency, she adds.

Jersey and Guernsey have long recognised the opportunity that HNWIs from China and Hong Kong represent in terms of offering services to those looking for an international financial centre to manage aspects of their wealth.

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Words: Alexander Garrett

Investment in high-end property in London has led to the city being dubbed Beijing-on-Thames

Wealth

Investing in a zero-Covid China The prospects for businesses with a focus on investing in China’s economy have taken a significant hit as a result of the nation’s zero-Covid-19 policy, which led to a two-month lockdown in Shanghai and other cities.

By late June, the Shanghai Stock Exchange Composite Share Index was down around 10% compared with the start of the year, after dipping almost 30% at one point.

Research by the Economist Intelligence Unit (EIU) suggests foreign investor confidence in China has also taken a hit, with

Alongside financial products and property, many young Chinese investors are turning to funds and cryptocurrency

54 City Edition 2022

75% of survey respondents saying that zero-Covid made China less attractive as a business destination. Participants expected a reduction of investment into the country this year.

However, the EIU says it does not expect a mass corporate exodus from China in terms of foreign direct investment.

And, with share markets in New York and London suffering recent slumps, along with the expectation that China will not repeat its most severe lockdowns, it may not be long before Chinese shares rediscover their mojo.

Jersey Finance’s Links with China publication sets out the island’s stall.

“Demand for our services from China has accelerated in recent years, especially given a more liberalised approach in China to international investment,” it states.

“While Jersey is ideally placed for company listings, cross-border transactions and fund servicing, it is also a highly respected centre for private wealth management, attracting deposits and investments from around the world.”

GATEWAY TO LONDON From an institutional perspective, says the Jersey Finance report, leading Chinese firms in banking and retail services have used Jersey structures. And investment firms have turned to Jersey for private equity investment, property acquisitions and sales.

It states: “Jersey is also appealing to the increasing numbers of ultra- and highnet-worth individuals in China seeking to protect their global assets through trusts, foundations and other entities, and to further their philanthropic objectives.”

The document positions Jersey as the “Gateway to London”, emphasising the island’s close relationship with the City. It cites as evidence the number of Chinese AIM-listed companies incorporated in Jersey or holding companies that are incorporated in Jersey prior to an IPO. Jersey has also established a strong reputation as a jurisdiction for property holding structures to be established, with many of the acquisitions being commercial offices in London.

The island is also a magnet for the increasing interest in private equity in

China, with Jersey-based funds sometimes carrying out transactions within the People’s Republic itself.

Guernsey has also been looking to boost its relationship with China – and its attraction to Chinese HNWIs – in recent years. In 2017, Guernsey Finance launched a Chinese language website, setting out the island’s key offerings.

Guernsey has been particularly strong in the insurance and fiduciary sectors, and is seeking to expand that by building more tailored private wealth services, such as family office.

Both Jersey’s and Guernsey’s finance associations, and many firms, have offices established in mainland China, as well as in Hong Kong.

But as the relationship with the US and the West has changed in the past few years, it’s only to be expected that the balance of effort has also shifted further towards managing wealth for those who are leaving the country.

Sun says: “I think opportunities will present themselves in many areas. However, they may take some time and firms need to be ready when they come.”

She adds: “The Channel Islands are still less known among Chinese investors, so enhancing awareness and educating investors and their trusted advisers about the benefits of using the Channel Islands will be an ongoing effort.”

Sun’s message is clear: businesses that want to do more than simply gain exposure to Chinese clients will need to focus on cultural differences and developing excellent communication and understanding. n

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Private Office / Business Lounge / Meeting rooms / Co-working To find out more about how we can help your business, call us on Tel (+44)1534 448288 or visit www.kingsmanoffices.com

The

Knowledge Brain food for the busy business professional

The Knowledge is compiled by Alexander Garrett

Talking

points Extra day off

The world’s biggest trial of a four-day working week has been launched in the UK, with 3,300 workers at 70 companies finding out whether a shorter week will affect productivity. The employers participating range from banks, digital marketing companies, recruitment firms and hospitality services to a fish and chip shop.

The trial has been organised by 4 Day Week Global in partnership with the thinktank Autonomy, the 4 Day Week Campaign, and researchers at Cambridge University, Oxford University and Boston College. It will run for six months. All those taking part will continue to receive full pay.

56 City Edition 2022

Shipping news

Plans are afoot to build a full-size replica of Great Western, the world’s first transatlantic paddle steamer, in Bristol’s Albion Dock.

Designed by Isambard Kingdom Brunel, it was launched in 1837 and was the largest passenger ship at the time. It was also the fastest vessel to cross the Atlantic. The ship ran for less than 20 years – even serving as a troop ship in the Crimean War – before it was scrapped. The replica will sit alongside Brunel’s other great ship, the SS Great Britain, and become an important new tourist attraction in Bristol.

3,300

The number of workers taking part in a groundbreaking four-day week experiment that will see their hours reduced while they continue to receive full pay

Longer life

Scientists at two US universities have developed a coating to keep food fresh without using plastic – and it’s made from food waste. The technology uses polysaccharide/biopolymer-based fibres made from unused food. These are then spun into a shrinkwrap material that can be used to cover all kinds of fresh food.

The new material prevents bruising and keeps bacteria at bay, yet it can be rinsed off with water and degrades within three days. It was developed at Rutgers University in New Jersey in conjunction with Harvard University.

Green voyage

An electrically powered ferry has broken all records by making a 90km journey on the strength of a single battery charge. The ferry, the Ellen, travelled between a number of islands in the south of Denmark, after being fitted with motors designed and built

by Danish engineering firm Danfoss. It carried passengers and vehicles on the route, and the cost has been put at 24% less than that of a newly built diesel ferry. The electric motor system can also be retrofitted to existing ferries, offering a breakthrough in countering greenhouse emissions at sea.

Say cheese

You’ve heard of cheesy peas. Well, a team of researchers at the University of Copenhagen has developed a vegan cheese that is said to be the closest to replicating the texture of dairy cheese – and it’s made from peas. The project uses pea proteins fermented to produce the rubbery quality of cheese. According to the report Design of a Functional Pea Protein Matrix for Fermented Plant-Based Cheese, 10% of the mix is made up of olive oil in order to provide the requisite amount of fat to the vegan cheese. Poul Erik Jensen, a professor of plant-based food biochemistry at the University of Copenhagen, who led the research, said the aim is to create a product that closely mimics the real thing.

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City Edition 2022 57

THE KNOWLEDGE

New in…

BOOKS

golden agE

War and disorder

Methods of the madmen: how the advertising men and women of Britain’s most awarded agency did their most awarded ads

by Mike Everett (The Choir Press, £14.95, paperback) Collett Dickenson Pearce was a legend in the advertising world, in 2012 named the “most awarded advertising agency of the last 50 years”. It spawned all those Hamlet cigar ads; Ridley Scott’s Hovis commercials of the boy pushing the bike up the hill; and the long-running “Heineken reaches the parts that other beers fail to reach” campaign. It attracted a gallery of talents: David Puttnam, Charles Saatchi, Frank Lowe, Alan Parker and John Hegarty, to name a few. This book takes a look back at London’s Golden Age of advertising, when ads were witty and entertaining, and before so much of that creativity was killed by the internet.

How civil wars start – and how to stop them

by Barbara F Walter, (Viking, £18.99, hardback) An extremely timely read at a time when commentators across the Atlantic are considering the seemingly absurd but apparently real possibility of a civil war in the United States. The recent hearings about the storming of the Capitol in Washington two years ago have shown how close that came to a genuine attempt to seize power illegally. Walter, who’s advised on political violence around the world, considers the evidence, drawing on examples such as Yugoslavia, Syria, Libya and Myanmar to explain how civil wars begin. Disturbingly, she finds that America ticks many of the boxes: ethnic resentment, stunted democracy, extensive gun ownership and a population gripped by paranoia.

High achievers

Religious meltdown

HBR at 100: the most influential and innovative articles from Harvard Business Review’s first century

by Michael Porter et al (Harvard Business Review Press, £18.95, paperback) Some of the greatest moments from this outstanding journal of management: Porter on competitive strategy; Peter F Drucker on managing yourself; Gary Hamel and CK Prahalad on strategic intent; Amy C Edmondson and Mark Mortensen on psychological safety; and Linda A Hill on being a firsttime manager. Drucker’s 1999 article began: “History’s great achievers – a Napoléon, a da Vinci, a Mozart – have always managed themselves. That, in large measure, is what makes them great achievers. But they are rare exceptions, so unusual in their talents and accomplishments as to be considered outside the boundaries of ordinary human existence. Now, most of us, even those of us with modest endowments, will have to learn to manage ourselves… and stay mentally alert and engaged during a 50-year working life, which means knowing how and when to change the work we do.”

The vanishing: the twilight of Christianity in the Middle East

by Janine di Giovanni (Bloomsbury, £20, hardcover) This tells the poignant story of how Christian communities are in danger of extinction across much of the region where the Bible was written. Syria, Egypt, Iraq, Lebanon and Palestine have all nurtured those communities for more than 2,000 years, but forces have conspired in recent years – not least the impact of Islamic State – to put them under threat as never before. Di Giovanni, a highly rated war correspondent, has travelled extensively in these countries and spent significant time among the communities.

Her mission, she writes, was “to try to record for history people whose villages, cultures and ethos would perhaps not be standing in 100 years’ time”. Their future is threatened not just by extremism and intolerance, but by economic uncertainty.

58 City Edition 2022

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The Knowledge

In numbers: champagne RESOURCES

322m Total champagne shipments in bottles, 2021

Source: Comité Champagne

Bloomberg UK The financial information network’s dedicated channel aims to be the leading source of business and financial news in London and beyond, with website, video and TV content, podcasts and radio, newsletter and analysis featuring UK-focused content. It’s produced by a 500-strong team in London who previously worked on Bloomberg’s global output. www.bloomberg.com/uk

Champagne represents around 10% of all sparkling wine drunk globally

10

Source: Wine Scholar Guild

Oceandiva London Events specialist Smart Group is collaborating with Oceandiva to launch what is billed as the UK’s first carbon-neutral venue on the Thames. The 86m x 17m space over three decks will host large-scale events from which guests can view the landmarks of the City of London. The £25m vessel features noise-reducing electric engines and superior soundproofing. www.oceandivalondon.co.uk

20m

Approximate number of bubbles in a single flute of champagne

Source: Compound Interest

LinkedIn Business Manager platform The social network’s new platform aims to make it easier for large companies and agencies to manage their staff, advertising accounts and business pages. Organisations will be able to view and manage teams, ad accounts, pages and business partners from the central dashboard, and the platform can be used to manage and control administration tasks such as permissions and billing. www.linkedin.com

€1.041m The price of a hectare of vineyard in the Champagne region Source: Le prix des terres

Workplace Geeks podcast Two workplace commentators have collaborated to launch a podcast that strives to uncover academic research from around the world and bring it to a broader audience. Created and co-hosted by Chris Moriarty and Ian Ellison, the podcast explores insights on the workplace and interviews those involved. It will feature academics from the worlds of organisational development, digital technology, workplace and facilities management. www.buzzsprout.com/1933353

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120,000 The number of vendangeurs who pick the grapes each year Source: Comité Champagne

City Edition 2022 59

THE KNOWLEDGE

How to…

...Retire from your job You’ve attained a certain age and noticed your contemporaries are increasingly mentioning the R word – and announcing they’ve moved on to the next stage of their life.

Should you do the same, and how do you set about it?

Picking the right time People think deciding when to retire is a financial decision, but for many it’s an emotional consideration and the right time is when you no longer get job satisfaction. “Non-financial barriers to retirement can be masked by questions about retirement income, pension pots, annuities and drawdowns,” says Tom Mark, Digital Marketing Manager of retirement planning consultancy Joslin Rhodes. “But once you know you can afford to retire, that’s when you might realise you don’t want to.”

So think hard about work and how much you’d miss it – or whether there are other things that you really want to do now.

Check your finances

“If you care about the organisation you work for, you’ll want to give enough notice to enable them to plan for your departure”

If you have a fully funded company pension, the financial decision to retire should be fairly straightforward. Assuming you are retiring early, ask for a statement of how much you will receive in pension, paying particular attention to whether it is inflation-indexed.

If you’re funding your own pension pot, it’s more difficult: you’ll need to work out what kind of income you can afford to take going forward. “As a general rule of thumb, you need 20 to 25 times your retirement expenses to retire at 60,” says financial adviser Frazer James. “So, if you spend

60 City Edition 2022

£30,000 per year, you’ll need £600,000 to £750,000 in pensions, investments and savings to be able to retire.” However, if you will get a state pension or have other earnings, bring these into the calculation.

Draw up a retirement budget on what you will need to spend.

Giving warning Technically, you need only give your employer the requisite notice that you intend to retire if it’s before your retirement age. However, if you care about the organisation you work for at all, you’ll want to give enough notice to enable them to plan properly by recruiting a replacement, re-organising your team and ensuring a smooth transition. If nothing else, you may want to protect your own legacy.

It’s seldom a good idea to air any grievances at this point – after all, you may still need a good reference from your employer in future, or they may offer you some other opportunities that come along.

Handing over Think about all the knowledge you’ve accrued in your years with the organisation, and whether there’s a way you can record and share it. Even in companies that have a formal succession plan, that intelligence can often be lost through failure to address how it will be passed on. You may even want to retire gradually by going part-time first of all. Abe Turner of Texas-based HR consultancy Insperity has this advice for managers: “Knowledge transfer takes time and effort, so don’t

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The Knowledge

Business leaders on making it to the top

Getting ahead Hennie Esterhuizen, Managing Director, Peregrine Wealth Group wait until a week before the retirement party to start the process. If you ask someone to document their job, it doesn’t have to be terribly formal or in-depth, but it should cover the key elements. They should identify those processes that are critical to the business, including important details, such as where files are kept.”

What’s next?

There is a viewpoint that retirement itself should be retired, and your ‘retirement’ is simply the point where you end your lengthy career and do something different. If you’re in the market for consultancies, non-executive directorships and the like, you need to advertise the fact via your network, with a degree of subtlety.

If you want to do something completely new, explore what’s needed to embark on your new career.

Celebrate Make sure you have a party, invite everyone who’s important to you in your working life – and be sure you have their details so you can stay in contact. Think about whether there’s a special legacy you’d like to leave such as a CSR project or talent programme – and find out what it takes to get it under way.

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You studied maths at university – is that the gateway to a career in finance?

No, but in certain areas it can give you a step up. There are many areas in financial services where maths is not a prerequisite – auditing, law, fiduciary. But if you’re looking for a career in asset management, a good maths base (A level) is advisable as many concepts in this field are based on mathematics. But it is not the only gateway – people who have not studied it should not be put off.

What qualities did you bring to Guernsey from your upbringing in South Africa?

Embracing diversity and the ability to co-operate cross-culturally, inside and outside the workplace. This, together with the fact that I have lived in four countries over the past 14 years, has enabled me to operate with ease in an international environment.

What challenges do you face when you launch a fund?

One of the biggest is reaching critical mass – attracting enough assets under management to ensure the cost of operating the fund does not have a material impact on the expected real return for investors.

Which single aspect of leadership is most important?

Empowering and developing your people.

What key thing did you learn from the pandemic?

The human race is remarkably adaptable in the face of crises. That fills me with a lot of hope for the future and the challenges we face. It will not be plain sailing but I’m confident we will find solutions for the environmental challenges we face.

As a keen skier, do you think skiing can tell us anything about business success?

Yes. Risk and reward are two sides of the same coin. Skiing involves risk, but there are many rewards. Not only the joy of some of the most fantastic scenery on our planet but also the sense of achievement when conquering ever more challenging slopes.

In business and on the slopes, risk should always be calculated and the execution planned. It’s easy to think a mad dash down the mountain could yield the same dazzling results, but often it leads to despair.

City Edition 2022 61

THE KNOWLEDGE

GURU

WATCH

Martin Lewis

H

e has been called “the most trusted man in Britain”. His to being an honest broker – naming the best product whatever the Money Saving Expert Money Tips newsletter is sent out commission on offer. weekly to 7.5 million people. And according to The Sunday Just lately, Lewis has revealed that he has been turned down for Times, during the course of handing out financial advice he has a House of Lords peerage on more than one occasion because he accrued a net worth of £123m. was too honest about the amount of time he would be willing to In 2003, Martin Lewis created the MoneySavingExpert website devote to the role. for just £100 and sold it nine years later to Moneysupermarket Over recent years Lewis has fought another campaign, for £87m, staying on as Editor-in-Chief. Since then, he’s against Facebook, after his name and image were used embarked on a TV career, launched and funded the on endless fake ads purporting to show him promoting “I would rather Money and Mental Health Policy Institute and been different products. It ended in 2019 when Facebook made a CBE. agreed to donate £3m to an anti-scam charity and to have electrodes on Lewis’s proposition from the outset has been to my nipples than be introduce a new button on its site that allows users find a myriad of small ways for people to save money. to report scam ads. And Lewis emerged with his Chancellor of the His trick has been to launch campaigns – whether reputation only enhanced.

Exchequer” against bank charges, PPI insurance or other iniquities What comes next for the money guru is hard to – that pit him firmly on the side of the consumer against say. Right now, he’s busy telling people how to manage big financial institutions. soaring energy costs and claim the government’s support All the while, MoneySavingExpert has helped subscribers navigate package. In the past he’s talked about nursing political ambitions the increasingly complex financial landscape, earning healthy but seems to have gone soft on that idea lately. He recently said he commissions from many of those big companies. would “rather have electrodes on my nipples” than be Chancellor The key ingredient to his success has been his personal dedication of the Exchequer.

Friendshoring

In an increasingly divided world, where Russia is out in the cold, China is under suspicion, and everyone else must make up their mind which side they’re on, how can you decide who to do business with? The answer is friendshoring – deepening your relationships with likeminded countries.

The word was coined by Janet Yellen, US Treasury Secretary, in a speech in April. Possibly with Europe’s dependency on Russian gas in mind, she said: “Countries that espouse a common set of values about international trade and conduct in the global economy should trade and get the benefits of trade so we have multiple sources of supply and are not reliant excessively on sourcing critical goods from countries where, especially, we have geopolitical concerns.”

For supply chain managers, the message is clear: think carefully where you make your key strategic decisions. So much for the old thinking that trading with your adversaries will help build peace and stability…

62 City Edition 2022

Let it rot Translation of Chinese word ‘bailan’ – youth who’ve given up looking for a job

Clean beauty Cosmetics that are natural, organic, sustainably wrapped and very expensive

BUZZWORDS…

JARGON BUSTER

ALSO NEW IN THE WORLD OF

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The Knowledge

Top tech Translation apps OFF ON YOUR SUMMER HOLIDAYS? GOT YOUR TICKETS AND PASSPORT? WELL ONE THING YOU WON’T NEED THESE DAYS IS A BLUFFERS GUIDE TO THE LOCAL LANGUAGE. HERE’S WHY…

Are we approaching a point where people no longer need to learn foreign languages? There’s little sign of it – especially with the global thirst to learn to speak English – but at the same time technology has been rapidly improving our ability to have almost instant conversations with someone in a completely different language.

For many travelling to foreign shores for their summer holidays, taking a phrase book or dictionary is a thing of the past, and younger generations will probably never experience it, as translation apps have taken over that role.

Translation apps have been around a while, but what’s changed is their accuracy, range and versatility. The best can now capture a certain amount of slang or vernacular, understand idiom and operate fairly seamlessly between text and voice. In some cases, they even use visual recognition of input such as street signs.

For business users, translation capabilities are increasingly being built into other tools. A good example is Zoom, which has recently added realtime translation and multilingual captions in a new paid-for package called Zoom One. The real Holy Grail though, for all those working in this area, is a speech-to-speech translation machine allowing people to converse in two different languages in real time.

Currently it is possible to turn speech in one language into speech in another, but in three phases: automatic speech recognition to transcribe the source speech as text; machine translation to translate the transcribed text into the target language; and text-to-speech synthesis (TTS) to generate speech in the target language from the translated text. There is an inevitable latency or delay to breaking it down in this way.

One attempt to make the process as close as possible to real time is Google’s Translatotron – an AI program known as an ‘end-to-end’ model that effectively bypasses the intermediate text phase and translates directly to speech.

In essence, it encodes part of the sentence that is spoken, searches for that in a neural network and generates a translation. First shown by Google Research in 2019, Translatotron has since been updated in a version that can even capture

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much of the vocal characteristics of the speaker.

For now, this is a work in progress. But within a few years, a system such as Translatotron may be fully operational and you’ll be able to talk to anyone in the world with no language barrier. For now, here are the top translators available:

GOOGLE TRANSLATE This is the granddaddy, and generally regarded as the most advanced translation tool that is freely available. Google Translate has an enormous range of languages available, fully integrates voice and text and has some added features others don’t have. Sign-post recognition is now built in, meaning you can point your phone at a sign, and it will display the English equivalent through augmented reality. You can also download the database of translation between two languages, meaning it can be used offline.

MICROSOFT TRANSLATOR Microsoft’s product has many of the same capabilities with some added tweaks. One is the Conversation tool, which enables you to have a text conversation with another user, each seeing the text in their own language. There’s also a Phrase Book component which replicates many of the popular expressions used by tourists in a traditional phrase book.

ITRANSLATE This is Apple’s version, available on Apple devices from Mac to iPhone and Apple Watch. More than 100 languages are available and there’s an offline capability, while it can also translate voice to voice. Camera translation enables you to instantly translate menus, cards and signs. There’s a paid for version.

WHAT’S

HOT REFLECTED GLORY The VAHA S Fitness Mirror is a full-length mirror that can play more than 1,000 immersive workout classes on its HD touchscreen. £1,295 https://uk.vaha. com/fitnessmirror-vaha-s

IN LIGHTS Logitech’s Litra Glow will attach to your screen and light up all those tedious Zoom meetings. £59 www.logitech. com/en-gb/ products/lighting/ litra-glow.946000002.html

SAYHI SayHi is owned by Amazon, and is less wellknown than the others but also free. The app features two microphone buttons so you can quickly switch from one language needing translation to another. There’s also a message that introduces the app to a native speaker you want to converse with.

City Edition 2022 63

Directory To advertise in the directory in print or online contact Carl Methven on carl.methven@blglobal.co.uk

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64 City Edition 2022

Adam Cichocki - Advisory Partner, Jersey D: +44 1534 824 393 acichocki@deloitte.co.uk

KPMG in the Crown Dependencies is a leading professional firm that delivers audit, tax and advisory services. Operating across the islands of Guernsey, Jersey and the Isle of Man, it is a standalone, locally led partnership with over 450 members of staff.

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KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. It operates in 146 countries and territories with over 220,000 people working in member firms around the world.

Find out more at https://home.kpmg/cds Contact details: Neale Jehan Senior Partner KPMG in the Crown Dependencies E: njehan@kpmg.com T: +44 (0) 1481 721000

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We get straight to the point, managing complexity to get to the essentials. It is a collaborative approach. Our global network of offices covers every time zone. We are the only law firm to advise on BVI, Cayman Islands, Guernsey, Irish, Jersey and Luxembourg law. Our network of locations also includes Beijing, Hong Kong, London, Shanghai, Singapore and Tokyo.

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Visit: www.tmgawealth.com Follow: www.linkedin.com/company/tmgawealth-management TMGA Wealth Management Limited (Registered Number: 132402) is authorised and regulated in Jersey by the Jersey Financial Services Commission for the conduct of Investment Business. Please note the value of investments and the income derived from them may fluctuate from time to time.

City Edition 2022 65

➔

Data focus

Workforce of the future

Global firms are at different stages of identifying the risks of workforce automation

Negative Positve

66

65

66

50

47 39

%

25

Channel Islands

28 23

Global

Channel islands firms are lagging behind their global counterparts when it comes to identifying the potential risks of implementing automated systems and technologies, according to the latest PwC Channel Islands Future of Work and Skills Survey 2022.

The survey reveals that, while 39% of firms have considered the potential risks of automation, this trails the global average. However, the report states this is likely to be

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the result of many firms remaining focused on human and personal delivery of services. And it adds that there remain plenty of opportunities for Channel Islands firms to identify and avoid the risks associated with automation.

“Both Jersey and Guernsey have a wealth of experts in digital transformation that can be brought in on a shortterm basis to support through periods of change and to help upskill your existing staff,” the report states.

Source: www.pwc.com/jg/en/about-us/assets/channel-islands-future-of-work-and-skills-survey-2022.pdf

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