BL Magazine Issue 56 May/June 2018 by BL Magazine

BUSINESSLIFE

ISSUE 56 MAY/JUNE 2018

private wealth in asia us clients • high-end property ESG investing • wealth hotspots world's richest people dream projects

The ISSUE 56 MAY/JUNE 2018

wealth edition

With a network of offices spanning the worldâ&#x20AC;&#x2122;s leading financial centres, we deliver a seamless service across the full spectrum of offshore law. Our global reach is underpinned by extensive experience in our jurisdictions and by long-standing connections with industry bodies and other professional advisers.

BIGGER PICTURE

With you wherever your business takes you OFFSHO R E L AW S PECI A LI ST S BER MU DA C APE TOW N

BR I T I S H V I R G IN ISL A N D S H O N G KO N G

LON DON

CAYMA N ISL A N D S SI N GAP ORE

GU ERNS EY

JERS EY

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Welcome

Money, money, money… must be funny… MANY MOONS AGO, I worked on a magazine and was given the challenge of trying to include as many song titles in headlines as possible. It’s amazing how inventive you can be with a little help from Google. If I remember rightly, ‘Art for Art’s Sake’ (10CC), ‘Better the Devil You Know’ (Kylie Minogue) and ‘Love on the Rocks’ (Neil Diamond) were among the tunes that all made it into print. Those of you of a certain age will likely recognise the above headline as a lyric from an Abba song. It seems particularly appropriate for this issue – our annual wealth edition – because we talk a lot about money. But if you know the song, you probably automatically sang the next line: ‘in a rich man’s world’ – and never a truer line has been written. The fact that women are still fighting for gender parity in the workplace – be that in a boardroom or in Hollywood – is an indication of how far they have to go in general wealth terms. While putting together this magazine, it became increasingly apparent that when discussing wealthy individuals, the vast majority are men. A quick look at the richest people in the world for our feature on page 62 proves the point. There are no women in the top 10 – and precious few in the top 50. It seems that we haven’t come all that far since Abba first released ‘Money, Money, Money’ in 1976. But as it always has been, so it hopefully won’t be in the future – with female entrepreneurs markedly on the rise around the world. While the story may not be massively different in one year’s time, hopefully we won’t have to wait another 40-plus years for the picture to have shifted. All of this said, the reality is that global wealth has changed considerably in many other areas and continues to evolve. And one place where change is most noticeable is in where wealth is being generated. For decades, indeed centuries, most of the world’s wealthy individuals have come from developed Western countries – namely in North America and Europe. But it’s arguable that much of the growth in those regions has now already happened. While it might be easy to draw conclusions

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from the media that most of the new wealth might be coming from Russia and the Middle East, those regions are actually far behind Asia, which has seen remarkable growth in the number of ultra-high-networth individuals in recent years. If predictions from some quarters are anywhere near correct, wealth in Asia may well overtake all other areas in a mere 10 years’ time. This is something we explore in our feature on page 46. This changing global wealth demographic has a direct impact on business in the Channel Islands. For years, the finance industries in both Guernsey and Jersey have recognised that they have to cast their nets much wider than their traditional UK and European markets. It’s unsurprising, then, that both Jersey Finance and Guernsey Finance have established presences in the Far East and Middle East. But as any practitioner will admit, gaining a foothold in a region is very much a long game. Not only are the Channel Islands up against ‘local’ jurisdictions, such as Hong Kong, Singapore and Mauritius – breaking in also requires sensitivity around cultural issues. While both Guernsey and Jersey have introduced products such as Foundations in order to increase their appeal, it’s essential not to view continents such as Asia as one homogenous mass. As we discovered in our feature on page 32, which focuses specifically on business in Asia, each of the region’s composite countries is very distinct, with its own personality, which creates a different range of challenges and opportunities for any offshore jurisdiction looking to make headway with a wealth offering. Naturally, as this is our wealth edition, we also look at properties around the world that are out of the reach of us mere mortals. And we also gawp in admiration at the totally bonkers dream projects that some of the world’s richest people – step forward Elon Musk – get off the ground. Enjoy your read! n

The fact that women are still fighting for gender parity in the workplace is an indication of how far they have to go in general wealth terms

Nick Kirby, Editor-in-Chief, Businesslife

may/june 2018 3

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Am I ready to pass on what I treasure most? Passing on your values is as important as passing on your wealth. For some of life’s questions, you’re not alone. Together we can find an answer. Michael Clarke, Head of Private Clients UBS AG, Jersey Branch 1, IFC St Helier, Jersey JE2 3BX 01534 701148 michael.clarke@ubs.com

The value of investments can fall as well as rise. You may not get back the amount originally invested.

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4 july/august 2015

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Contents

INSIDE

BL guernsey GFSC signs MoU with Bank of England

he Guernsey Financial Services Commission has signed a Memorandum of Understanding (MoU) with the Bank of England. The new agreement is a reaffirmation of a long-held relationship between Guernsey’s financial regulator and the Bank’s Prudential Regulation Authority (PRA), which dates back to the PRA’s predecessor, the Financial Services Authority. Through the MoU, both parties will be able to share confidential information about regulated entities and formally co-operate on other supervision activities. The PRA is a part of the Bank of England and is responsible for the prudential regulation and supervision of

Pictured: Sam Woods (left) and William Mason banks, insurers and major investment firms, regulating some 1,700 financial firms. The agreement was signed by William Mason, Director-General at the GFSC, and Sam Woods, Deputy Governor at the Bank of England for Prudential Regulation and Chief Executive Officer of the PRA.

Private Investment Fund updated

hanges are being made to Guernsey’s Private Investment Fund (PIF) regime following a one-year review by the Guernsey Financial Services Commission (GFSC). The move is expected to improve take-up of the product, launched in November 2016. The GFSC has amended the PIF rules and guidance to remove the need for a licensed investment manager to warrant an investor’s ability to sustain financial loss. The warranty has been replaced with a declaration, which places a lesser burden on the licensed manager. The declaration may be satisfied in a number of ways, including the investor having a genuine close relationship with the promoter and manager through previous deals. The PIF recognises close and long-standing links between fund managers and investors. Over the past 15 months, 13 such funds have been launched by domestic and international managers of alternative assets including private equity and real estate. The PIF can be closed- or open-ended and contain no more than 50 legal or natural persons holding an economic interest, except where an appropriate agent is acting for a wider group of stakeholders. There is no restriction on the number of investors to whom the PIF might be marketed – a feature not available under comparable regimes in other jurisdictions. n

“There is a very productive and good relationship between the GFSC and the PRA, and we see this confirmation as good news for the bailiwick, demonstrating that we are regarded as credible operators by our main counterparties,” said Mason. n

Burford plans to launch Guernsey insurance business

S litigation finance firm Burford Capital has applied for a licence to establish an insurance business in Guernsey, according to a report by CityAM. The new business, which is reported to be awaiting final licensing by the Guernsey Financial Services Commission, will offer insurance cover for clients involved in litigation who may face significant costs orders in the event of losing a case. Burford previously offered ‘adverse costs’ insurance via an agency relationship with MunichRe. However, most of these were for less than £3 million and aimed at the mid-market. The new business is aimed at more complex litigation and arbitration cases. Burford London Managing Director Craig Arnott said: “This fills a hole in the market. Adverse cost insurance wasn’t available for many of the matters we dealt with – big, chunky commercial, competition and arbitration matters.” Arnott said Burford’s clients needed cover ranging from £15 million to £25 million. He anticipated the new insurance business would initially write up to 20 policies a year, focusing on cases for which Burford had already provided funding. n

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14 bl guernsey

The latest financial and business news and views from the bailiwick

EDITOR-IN-CHIEF Nick Kirby nick.kirby@blglobal.co.uk 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

Same gender, same rights Christopher Austin, Senior Associate at Parslows, explores some of the effects of extending the right to marriage in Jersey to same-sex couples ON 1 FEBRUARY this year, the States of Jersey voted in favour of the Marriage and Civil Status (Amendment No. 4) (Jersey) Law 201-. The new marriage law will, for the first time, allow same-sex couples to get married in Jersey. The approval of the new law followed a period during which a number of its provisions were hotly debated by the religious community in Jersey. These included the question of whether it should contain a so-called ‘tolerance clause’ permitting individual business owners of religious conviction, who provide goods and services for weddings and associated celebrations, to discriminate against samesex couples wishing to marry in Jersey. The clause was eventually rejected by the States. The new marriage law now awaits royal assent in the Privy Council. The Jersey government has said the law is expected to come into force ‘in a number of months’. At present, same-sex couples can already enter into a civil partnership under the provisions of the Civil Partnership (Jersey) Law 2012 – this permits same-sex couples to enter into a legally recognised relationship, which is only terminated by death, dissolution or annulment. It’s appropriate to mention at this point that the new marriage law will provide for a civil partnership to be converted into a marriage, and it contains provisions relating to the conversion application process, and the restrictions on conversion. This new marriage law, once it comes into force, represents a further expansion of a series of new ‘anti-discrimination’ legislation passed in recent years. Arguably the main effect of that legislation has been most visible in the context of employment law. Those changes were heralded by the Discrimination (Jersey) Law 2013 coming into force on 1 September 2014, which introduced a number of protected characteristics under the Employment (Jersey) Law 2003, making it unlawful to discriminate against people in a variety of specified situations, including employment, on the basis of race. This was then followed in relatively

short order (judged by the standard of the speed with which legislation is generally passed) by the Discrimination (Sex and Related Characteristics) (Jersey) Regulations 2015 and the Discrimination (Age) (Jersey) Regulations 2016.

areas, in Jersey. In circumstances where such discrimination is alleged, a complaint can already be made to the Jersey Employment and Discrimination Tribunal, which has the power to make orders to address the discrimination, including the award of damages, if it finds that discrimination has occurred. There will be effects on other areas of legislation in Jersey in order to take account of the changes introduced by the new marriage law. This includes changes to the Income Tax (Jersey) Law 1961 to facilitate the taxation of same-sex married couples so that they’re taxed on the same basis as other married couples. Same-sex married couples will be entitled to the same reliefs and allowances as different-sex married couples. Under the current legislation, for different-sex married couples there's one taxpayer: the husband. For same-sex married couples, the taxpayer will be the eldest spouse. It’s also intended that the Matrimonial Causes (Jersey) Law 1949 will be subject to complete review and amendment during 2018/19 in order to allow for divorce among same-sex couples. For example, it’s recognised that the amendments brought forward don’t address the problems associated with adultery as grounds for divorce, or refusal to consummate as a ground for nullity. The Gender Recognition (Jersey) Law 2010 will also be amended to provide for the introduction of same-sex marriage. It’s also anticipated that further legislative amendments will be required in order to enhance provisions for same-sex parents regarding the extension of parental responsibility, step-parenting agreements, and parental leave for surrogate parents. Steps in that regard have already been taken, by way of new family-friendly employment rights legislation brought forward by the Social Security Minister. Jersey is, accordingly, at an exciting stage of its legislative journey to break down more of the remaining barriers to achieving equality between different-sex and same-sex couples. n

7 News

43 wealthy priorities

61 world’s wealthiest

A round-up of the latest Channel Island business news

It’s hard to believe that high-net-worth people have worries like the rest of us – but apparently they do

Is the list of the world’s richest people being taken over by a bunch of tech geeks? And where are the women?

46 wealth hotspots

64 prime property

As growth in wealth in Western countries slows down, it’s in the East where the real action is taking place

Looking for somewhere swanky to set up home? It seems that London and New York remain top of the pile

53 ESG investing

68 dream projects

The need for people to invest where it makes a difference is driving growth in the responsible investing sector

Boys and their toys! How billionaires invest in fantasy projects that might actually benefit the world

58 HNW LENDING

technology 73 Biometrics

The Agenda

From face recognition and palm vein scanning to the more bleeding edge of tech, biometrics are becoming ubiquitous

Our lifestyle section goes seriously highend – be prepared to take out a second mortgage!

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

BL jersey

MAGAZINE

Businesslife is published six times a year by Chameleon Group +44 1534 615886 www.blglobal.co.uk

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Recent key appointments for firms in Guernsey and Jersey

24 Interview Lisa Springate, Head of Technical at Jersey Finance, gives her take on the financial state of play

wealth 32 ASIAn clients The world’s largest region is home to a diverse and booming private client base

38 US private wealth The Channel Islands are attracting increased work from US clients – even if they live elsewhere

If what we’ve found out is true, high-net-worth individuals go to lenders just as often as Joe Public, although not the ‘payday’ variety

WORKPLACE IMPACT In the context of this legislation, the new marriage law must be seen as part of an ongoing initiative by the States of Jersey to reduce the areas of discrimination that are permissible in the island. It will also bring Jersey’s legislation into line with other countries both in Europe, including the UK, and further afield. But what will be the effect of the new marriage law on employers and employees in Jersey? Will it have a radical impact on the way in which employers must treat their employees and, if so, what will those effects be? The answer to those questions is perhaps less dramatic than might at first be thought. This is because the Discrimination (Sex and Related Characteristics) (Jersey) Regulations 2015 already make discrimination on grounds of sexual orientation illegal in the context of employment, and certain other specified

18 may/june 2018

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18 bl Jersey Same-sex marriage and a review of business and finance news stories

contributors The BL Global Discussion Forum

TOM HUELIN

Follow us @blglobalnews Office: Meadowlands, La Rue a la Dame, St Saviour, Jersey JE2 7NQ © Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

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Freelance writer Tom casts his eyes stateside to see exactly what type of wealth business the Channel Islands are doing on the other side of the Atlantic – only to discover he needs to look even further afield.

KIRSTEN MOREL

Going in the opposite direction, Businesslife regular Kirsten looks towards the biggest global region, Asia, and finds a continent into which Guernsey and Jersey have made significant strides.

DAVE WALLER

Business writer Dave delves into the rarefied world of high-net-worth lending. It seems even the richest of people borrow money every now and again – and the figures are quite eye-watering.

RICHARD WILLSHER

It’s wealth and more wealth for investment writer Richard, as he examines where in the world you can find the largest number of wealthy individuals and then sees who makes the world’s top 10 richest.

MAY/JUNE 2018 5

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equiomgroup.com/private office Equiom (Guernsey) Limited is licensed by the Guernsey Financial Services Commission. Equiom Trust (Guernsey) Limited is licensed by the Guernsey Financial Services Commission. Equiom (Jersey) Limited is regulated by the Jersey Financial Services Commission.

in the NEWS Follow us @blglobalnews

Appleby reports on offshore M&A deals

JTC CEO Nigel Le Quesne

JTC lists on LSE main market JERSEY-HEADQUARTERED JTC GROUP was admitted to the London Stock Exchange on 19 March with a market capitalisation of £310 million. JTC has a 30-year track record in providing services for international private and institutional clients, and had experienced significant growth prior to listing through organic growth, mergers and acquisitions. The firm now has a presence in 17 jurisdictions in Africa, the Americas, Asia Pacific, the UK, the Caribbean and Europe. This latest milestone in JTC’s history represents a move away from being a private equity-backed company, having received investment from CBPE Capital in 2012. CBPE has relinquished its shares as part of the IPO. JTC says its commitment to shared

ownership, where employees hold an interest in the firm and benefit from its performance, will be maintained, with its Employee Benefit Trust and Equity For All schemes evolving in line with JTC’s new public company structure. CEO Nigel Le Quesne said: “This is a fantastic opportunity for JTC. Having grown the business over the last 30 years into a leader in the administration services market for funds, corporate and private clients, this is the next logical step in our strategy and will create a long-term capital base for the business. “The IPO will provide us with access to the capital markets, as we look to deliver growth, both organically and through our targeted acquisition strategy in a sector which we view as ripe for consolidation.” n

Standard Bank reports strong 2017 STANDARD BANK WEALTH International, based in Jersey and with offices in the Isle of Man and Mauritius, has announced a positive set of results for 2017. Earnings stood at £36.8 million for the full year, a 32 per cent increase on the previous year. The business achieved a return on equity of 16.6 per cent, with a 6.2 per cent increase in deposits to £5.1bn, and a 17 per cent increase in assets under management to £2.6bn at 31 December 2017. The firm is 100 per cent owned by Standard Bank Group, the largest bank in Africa by assets. Its positive results mirrored strong results at group level. Jonathan Peake, Chief Financial Officer of Standard Bank Wealth International, said: “2017 has been another strong year… All areas of the business performed well despite challenging economic conditions in our core African markets.” n

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JERSEY EXPERIENCED AN 86 per cent rise in M&A deal value in 2017, while Guernsey recorded a 40 per cent increase, in a year in which deal activity rose across the offshore region as a whole, according to Appleby. In the latest edition of the law firm’s Offshore-i report, examining M&A activity in the major offshore financial centres, Jersey recorded 129 deals during 2017, representing $19.4bn in value, and was home to three of the 10 largest deals recorded offshore. Guernsey, meanwhile, recorded a total of 157 deals, representing $6.8bn in value. In both cases, while value was up, the number of deals decreased compared with the previous year. Across offshore jurisdictions, there were 2,771 deals targeting offshore companies in 2017, with a total value of $227bn, the report found. This was an increase on 2016, when 2,735 deals were recorded at a value of $219bn. “In the face of the substantial geopolitical uncertainty which overshadowed 2017, the offshore region’s positive performance is all the more remarkable,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby. “These deals were led prominently by acquisitions, although a number of companies also chose to add additional financing firepower by issuing new stocks and bonds to eager investors.” Each deal in the offshore top 10 in 2017 was worth well over $2bn, the largest being the $6.8bn purchase of all the issued shares of Belle International, a Cayman Islands-incorporated footwear manufacturer listed on the Hong Kong Stock Exchange. The Appleby report also found that 2017 was the busiest year on record for offshore IPOs. Well over 300 IPOs were reported across the offshore region in 2017, making it by far the busiest year on record. n

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News

Done Deals

New officers: (l-r): Jeremiah O’Keeffe, Jamie McIntosh and Niall Husbands

Treasurers Association names inaugural officers THE CHANNEL ISLANDS Treasurers Association (CITA) has appointed its first officers and adopted its constitution following its first general meeting. The association, which was founded earlier this year, aims to bring together companies and individuals involved in treasury functions such as managing or advising clients on cash matters or safeguarding client money. The new officers include: ● President – Jeremiah O’Keeffe, CEO, JCAP Treasury Services ● Vice President – Niall Husbands, Director, Intertrust ● Treasurer – Jamie McIntosh, Head of Treasury Services, Link Asset Services. The organisation’s initial areas of focus include the impact of EU Directives on the Channel Islands, the implementation of Prudential Regulation Authority (PRA) ring-fencing rules for UK banks, and the risk appetite of local banks. The CITA will also be responsible for liaising with regulators, public authorities and other related professional organisations within the islands. The group has established a LinkedIn page, which will allow members to share information and discuss industry developments. Anyone interested in becoming a member should contact jeremiah.okeeffe@jcap.co.uk n

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Bedell Cristin has advised the Abu Dhabi Investment Authority on all Jersey law matters in relation to the circa £300 million sale of Regent Quarter in London’s King’s Cross to Hong Kong-based Nan Fung Group. The property comprises 250,000 square feet across 30 buildings, including nearly 200,000 square feet of offices, historic warehouses and retail space, adjacent to King’s Cross Station. The Bedell Cristin team was led by Partner Tom Davies and Associate Charlotte Bascombe on the Jersey law aspects, with Associate Louise Hassell advising in respect of BVI law. Carey Olsen has advised AX1 on the initial coin offering (ICO) of the AX1 Token. The ICO proceeds will be invested by AX1’s subsidiary into a cryptocurrency mining operation in the UK. Partner Chris Griffin led the Carey Olsen team advising AX1, assisted by Associate Joseph Barker-Willis. The law firm worked with the Jersey Financial Services Commission to shepherd the ICO through regulatory approval. Carey Olsen’s corporate team in Guernsey has advised Blue Water Energy (BWE) on its investment in new Norwegian oil firm Mime Petroleum. Partnering with Blackstone Energy Partners, the combined investment by BWE and Blackstone for Mime Petroleum is for an initial sum of up to $1bn. Carey Olsen Partner Andrew Boyce led the team advising BWE on the Guernsey legal and regulatory aspects of its investment into Mime Petroleum, supported by Senior Associate Ruth Abernethy. Collas Crill has advised Phoenix Asset Management Partners in connection with the investment of up to £19.45 million by Phoenix UK Fund in stamp and collectibles business Stanley Gibbons Group. The transaction involved the restructuring of external debt and the acquisition of certain rights of the group in intercompany indebtedness of Stanley Gibbons

(Guernsey), which went into administration towards the end of 2017. The Collas Crill team was led by Partners Sean Cheong and Michael Adkins in Guernsey, assisted by Fiona Wilson and Gareth Morgan, Senior Associates in Jersey and Guernsey, respectively. Ogier has acted as legal adviser to the Sandpiper Group, a longstanding client of the firm, on the acquisition of the Liberty Wharf retail complex in St Helier. The Ogier team, led by Partner Jonathan Hughes and Managing Associate Katharine Marshall, advised on the Jersey property law aspects of the multimillion-pound purchase, supported by Senior Associate Sarah Parish and Associate Laura Shirreffs. Partner Matthew Shaxson and his team, including Senior Associate Oliver Richardson and Associate Chloe Watson-Hill, assisted Sandpiper on the corporate law elements of the deal. Ogier has assisted Safe Harbour Holdings with the admission and listing of its shares on AIM. Trading commenced on 15 March. Safe Harbour aims to acquire a platform trading business with an enterprise value in the region of £250 million to £1.5bn via a buy-and-build strategy. Partner Niamh Lalor led the Ogier Jersey team, assisted by Associate Tara Kapur. Walkers has acted as Jersey Counsel to Westbrooke Alternative Asset Management UK on the establishment and launch of two Jersey Private Funds. The first fund, Westbrooke Yield Plus, invests in a diversified portfolio of private debt instruments with a focus on the UK, Europe and US, and plans to invest in other developed economies. The other, Westbrooke Rhythm, invests into a diversified global portfolio of early-stage companies that demonstrate innovative and disruptive business models. The Walkers team was led by Partner Jonathan Heaney, assisted by Senior Counsel Christopher Reed. n

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MALCOLM

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News

Jersey rises in rankings JERSEY HAS RISEN one place in the rankings of the latest Global Financial Centres Index (GFCI 23), taking it to number 39 and maintaining its position as a Western European Top 15 centre, while Guernsey has dropped 12 places to 53. The index, compiled by London thinktank Z/Yen and the China Development Institute, is updated every March and September. Key points in this index include: ●L ondon and New York remain at the top of the rankings, with Hong Kong retaining third place. ●W estern European financial centres remain volatile – Hamburg, Munich, Monaco and Madrid rose strongly, with improvements for Paris, Jersey, Edinburgh and Lisbon. ● I n the Asia Pacific region, there were significant rises in the ranks for Qingdao, Bangkok, Kuala Lumpur and Busan, while Tianjin and New Delhi are new entrants to the GFCI. ● I n Eastern Europe and Central Asia, Cyprus, Istanbul and Moscow rose in the ranks. ● I n the Middle East and Africa, Mauritius, Riyadh and Casablanca improved their rankings. ● I n Latin America and the Caribbean, six centres rose in the ranks, with the Bahamas rising 22 places. The Cayman Islands are now the leading centre in the region. n

Brooks Macdonald announces 2017 results THE CHANNEL ISLANDS subsidiary of investment manager Brooks Macdonald has reported an increase in net new business and is making a good contribution to the group’s overall performance, according to its financial report for the six months to 31 December. The report confirms that the value of funds under management (FUM) in the Channel Islands grew by 9.1 per cent in the second half of 2017. Revenues generated by the firm’s Guernsey and Jersey offices grew three per cent year-on-year to represent around 14 per cent of the group’s total revenues over the period. Across the group, total discretionary FUM rose 25.8 per cent year-on-year, reaching £11.7bn at 31 December, and revenue increased 10.9 per cent. The report also confirms that an extra £5.5 million will be used to deal with legacy matters following Brooks Macdonald’s acquisition of Spearpoint in 2012. These relate to discretionary portfolios and a Dublinbased fund formerly managed by Spearpoint. n

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MERGERS AND ACQUISITIONS BDO in Jersey has purchased Channel Islands technology business C5 Alliance Group. C5 was established 19 years ago and employs 200 people. Its growth has included the acquisition of Cronus Consulting in 2012, ITEX Holdings in 2013 and Altius CI in 2016. For BDO, the move follows the acquisitions of Jersey consultancies Greenlight CI and Sator Regulatory Consulting in 2016. The acquisition takes BDO’s staff count to more than 350 across the Channel Islands. Jersey-based corporate services provider Crestbridge has acquired Kingfisher Property in London. With all the necessary regulatory consents having been received from the Financial Conduct Authority, Crestbridge says it is progressing with plans to bring the two firms together. A full rebranding of the Kingfisher business is planned for later this spring, when the Kingfisher team will relocate to Crestbridge’s London office in Sackville Street. Guernsey-based discretionary fund management company MitonOptimal International has agreed the acquisition of Orchard Wealth Management in Jersey, having gained regulatory approval from the Jersey Financial Services Commission. Orchard Wealth is led by fund manager Richard Harwood, who joins the MitonOptimal board of directors. Founded in 2002, MitonOptimal offers multi-asset funds, discretionary fund management and portfolio management services to private clients, intermediaries and institutional investors globally. Financial services group PraxisIFM has completed its acquisition of Amsterdam-based Private Equity Services Group (PES). PES is a

boutique fiduciary group servicing alternative investment funds and international business clients with management, domiciliation, administrative, corporate and fund service solutions. It also has offices in Anguilla, Barbados and Curaçao. According to PraxisIFM, the acquisition – announced last November and completed on 30 March – forms part of its plans to make the Netherlands one of its main European hubs. Corporate services provider Vistra has acquired Canyon CTS, a capital markets corporate and trust business based in Shannon, Ireland, and with offices in Dublin and New York. The acquisition boosts Vistra’s presence in Ireland significantly, having purchased Dublin-based Squires Gilbride earlier this year and the corporate services business of Deutsche Bank’s Global Transaction Banking division in 2017. Founded in late 2014, Canyon’s team of 32 will remain the same under Vistra, with existing Managing Director Andrew Ryan continuing to lead the business. Vistra has also acquired Global Expandia, a Jakarta-based firm that provides market entry and related services to foreign-owned investors operating in Indonesia. Vistra says the acquisition gives it a foothold in the largest economy in South-East Asia, which is an attractive market for local and foreign businesses. Established in 2014, Global Expandia offers a service portfolio across company formation, tax compliance, accounting, bookkeeping, payroll and work permits. The team of 17, led by founders Miguel Latorre and Elsye Yaw, will join Vistra, with Miguel becoming Managing Director of Vistra’s International Expansion division in Indonesia. n

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CORPORATE | PRIVATE CLIENT | FUNDS

Outstanding together You are as important to us as your clients are to you. At Hawksford, we understand the importance of finding a trusted partner and consistently deliver value to you and your clients by anticipating their needs and thinking beyond tomorrow.

www.hawksford.com

Hawksford comprises a number of companies operating in multiple jurisdictions; for further information regarding these entities and their regulatory status, please visit www.hawksford.com/regulatory

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may/july 2018 11

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Appointments Guernsey Finance has named Adrian Norman as its London Representative. Based in London, his remit is to promote awareness of the islandâ&#x20AC;&#x2122;s financial services and connect London professionals with Guernsey practitioners. Guernsey-born Adrian has 25 years of finance experience, and more than 20 on the island. He has specialised in funds domiciled in multiple jurisdictions and has worked for companies including Credit Suisse, Northern Trust, Carey Group, Ogier and Odey Wealth. Adrianâ&#x20AC;&#x2122;s most recent role took him to London in 2014 as Head of Operations with Odey Asset Management.

Vishal Soorkia has been promoted to Associate Partner at EY in the Channel Islands. Vishal joined the firm in 2007 as a Manager in the assurance team. He has been a Director for the past three-and-a-half years, working across real estate, banking, capital markets and asset management. His real estate experience includes property funds, residential and commercial property markets with core operations in the UK, Germany, the Netherlands, Croatia, Russia, Japan and Poland. Prior to joining EY, Vishal spent 10 years with Arthur Andersen on assignments for investment firms and banks in Mauritius, the Seychelles and East Africa.

Jersey-based private client business Highvern Group has appointed Natalie Jelley as its Compliance Director. Natalie previously served as Head of Compliance for trust and funds business Link Asset Services (formerly Capita Asset Services), also based in Jersey, where she had responsibility for the compliance function of six service lines across four jurisdictions. During her career, Natalie has also spent two years working for the Jersey Financial Services Commission as a Funds Supervision Manager, having spent the previous eight years as an Assistant Manager within the audit team at EY.

Financial services provider Estera has appointed Karen Benest to the newly created role of Group Operations Director. Karen, based in Jersey, will work to deliver strategic and operational change within the group, ensure service delivery and adherence to regulatory and statutory standards. Joining Estera as an Associate Director in 2003, Karen was appointed to the board later that year, a position she will continue to hold. Earlier in her career, she spent 17 years with Lloyds Bank and three with Mourant Ozannes in management positions. She is also an Associate of the Institute of Financial Services.

Global consultancy Duff & Phelps has promoted Malin Nilsson (pictured) to Managing Director in its Compliance and Regulatory Consulting practice in the Channel Islands. Malin has served as a Director since 2012, but joined Duff & Phelps in 2007 from Deloitte. She has focused on advising clients on regulatory matters, leading regulatory enforcement and supervisory reviews. Also in the Jersey office, Sarah Bentley has been promoted to Vice President, having served as Senior Associate at the firm for the past three years and at EY in the Channel Islands before that.

Jersey-based fund and corporate services provider Alter Domus has named Antonis Anastasiou as Managing Director and Conducting Officer of its new Luxembourg business, Alter Domus Management Company â&#x20AC;&#x201C; formed after the acquisition of Luxembourg Fund Partners in December. Antonis has more than 10 years of experience, having held management positions focusing on alternative asset classes and listed investments, most recently at Lemanik Asset Management. He has also been instrumental in the set-up of three super-mancos in Luxembourg.

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Bedell Cristin has appointed two Senior Associates – Guy Westmacott in Jersey (pictured) and Lee Osborne in Guernsey – to the newly created roles of Managing Associate. Guy has been with the firm’s Jersey office since May 2016. He specialises in corporate and commercial matters, with a focus on M&A. Prior to joining Bedell Cristin, he worked in London and the Middle East, including five years with Eversheds. Lee joined Bedell Cristin last July, having spent almost a decade offshore, including with Ogier in the BVI and Walkers in Singapore. He advises on a broad range of corporate, banking and investment funds matters.

Ocorian has named Alan Booth as Managing Director of its UK business. Alan brings to the role a broad knowledge of the global regulatory and legal environment, after 12 years in structured finance, private equity and real estate structuring. Alan previously served as Global Head of Product Management within Deutsche Bank’s Corporate Services Division. He joined Deutsche Bank in 2009 and was responsible for strategy, product development and regulatory processes across 10 jurisdictions. Before this, Alan practised as a commercial and corporate lawyer, latterly for Hawksford.

Daniel Bisson has been appointed Vice President, Wealth Structuring at Butterfield Trust. Daniel will be based in Guernsey and will focus on business development in the Americas. He brings with him more than a decade of senior-level experience in the wealth management sector, including in Bermuda and Jersey. Daniel joins Butterfield from RBC Wealth Management, where he has worked since 2009. He has held a range of senior roles at RBC over the past nine years, including Head of Fiduciary Management and, most recently, Managing Director, Wealth Preservation & Family Governance.

Standard Bank Wealth International (WIN) has appointed Greg Barclay to the new role of Head of International Wealth and Investment, Personal and Corporate Banking, based in Jersey. WIN offers banking and wealth management solutions to an international client base, particularly with connections to Africa, and is consolidating its services under Greg’s leadership. Greg joined Standard Bank in 1992 and has spent most of his career working for the group in his native South Africa. Before moving to Jersey, he was its Head of International Personal Banking in Johannesburg. He has also worked for Citi and Barclays.

The board of the Association of Investment Companies has named Susie Farnon as a Non-Executive Director. She is already a NED at investment companies Apax Global Alpha, BH Global, HICL Infrastructure, Real Estate Credit Investments and Standard Life Investments Property Income. During her career, Susie has been Head of Audit, and then a Banking and Finance Partner, at KPMG Channel Islands. She has also served as President of the Guernsey Society of Chartered and Certified Accountants, as well as Vice Chairman of the Guernsey Financial Services Commission.

Carey Olsen has appointed Michael Evans as Counsel in its Jersey office. Michael joins from Ogier, where he was Managing Associate. With more than 10 years’ experience, he’s worked on a variety of finance transactions, and for a range of international institutions and borrowers, on multi-jurisdictional bilateral and syndicated facilities. Michael has a particular interest in leveraged and acquisition finance, Islamic finance and restructuring and insolvency. He trained in the London and Dubai offices of Freshfields Bruckhaus Deringer and has worked at Clifford Chance’s Dubai office.

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BL guernsey GFSC signs MoU with Bank of England

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14 may/june 2018

Burford plans to launch Guernsey insurance business

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increased Open Market activity continues

uernsey’s property open market continues to show signs of increased activity, according to the latest figures from Unusualities of Guernsey, a compiler of local conveyancing statistics. In the first quarter of 2018, there were 17 open market transactions, compared with five for the same period last year. This builds on the 21 open market transactions recorded in the last quarter of 2017 and 48 for last year as a whole. The median open market house price (realty only) of the 17 properties sold so far this year currently stands at £746,000, down from the £857,500 recorded for the same period last year. Jason Morgan, Head of Carey Olsen’s property group in Guernsey, commented: “It’s encouraging to see the island’s open market attracting renewed interest. “With new non-domicile rules for individuals being introduced in the UK, coupled with uncertainty around residency status and higher property taxes, not to mention the prospect of a Labour government, there’s no reason why a move to Guernsey shouldn’t be a compelling consideration for high-net-

G worth individuals likely to be affected.” With regard to local market properties, Unusualities of Guernsey recorded 151 houses and flats as having been sold in the first three months of 2018, down from 186 in the fourth quarter of 2017 and at its lowest since the first quarter of 2016. The median house price (realty only) of the 151 local market properties that have been sold so far this year has been calculated to be £390,000, which is a £10,000 increase on the first quarter of last year. n

Three straight years of funds growth

he total value of funds business in Guernsey has risen again, with the Guernsey Financial Services Commission confirming a growth of £1bn in the three months to the end of 2017. The latest figure of £270bn also represents an increase of approximately £14bn (5.6 per cent) over the previous 12 months, and a third consecutive year of growth for Guernsey’s fund sector. The GFSC approved 18 new investment funds during Q4 – 17 of which were closed-ended and the remaining one openended – an increase of 44.4 per cent on Q3’s 10 new funds. Open-ended funds decreased by one per cent over the quarter to £166.4bn, but still achieved annual growth of £1.2bn (2.8 per cent). Closed-ended funds increased over the quarter (0.26 per cent

16 may/june 2018

Strategy focuses on green investment

to £166.4bn) and over the year (4.46 per cent to £7.1bn). Non-Guernsey schemes – funds not domiciled in the island but with some aspect of their management, administration or custody carried out there – grew by £1.4bn (2.3 per cent). An increase of £6.1bn (11.31 per cent) since 31 December 2016 values them at £60.4bn. Real estate funds were the biggest mover, with the net asset value showing a year-on-year increase of 42 per cent to nearly £21bn, boosted by a strong Q4. There was also an increase of 8.89 per cent in the number of real estate funds over the year, from 90 at the end of December 2016 to 98 at the end of December 2017. n

uernsey has unveiled a new development strategy for the island’s financial services sector, with a focus on green investment. Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance, said the aim was to develop the broadest and best range of products with a green focus among international finance centres, incorporating investment, securities and insurance markets and services. “The potential for green and sustainable finance is enormous and streams into major global initiatives,” he said. “Action in this area builds on Guernsey’s strengths in private equity and infrastructure, supports other initiatives in areas such as impact investing, and supports a general repositioning of the island’s financial services offer.” The Guernsey Financial Services Commission (GFSC) is poised to launch a new regulatory initiative known as the Guernsey Green Fund. Compliance with green criteria will be required and it will be open to all types of funds. The Commission was expected to issue a consultation paper in May and to launch the Green Fund by the middle of the year. The GFSC also has plans to work with the global insurance industry to enable long-term green investments to be taken on as assets to meet long-term life insurance liabilities. The initiative aims to make it easier for insurance companies to access longterm investments – making it simpler for insurance companies to offer sustainable long-term returns to policyholders – and to widen the pool of purchasers for green investments. Interest from industry is being sought as the GFSC develops its new approach to regulatory life insurance solvency requirements. Sloan said a Guernsey industry strategy group would be looking to work with global organisations and standard-setters to foster international co-operation on green finance development. Its emphasis would be on infrastructure services. n

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BL jersey Same gender, same rights Christopher Austin, Senior Associate at Parslows, explores some of the effects of extending the right to marriage in Jersey to same-sex couples ON 1 FEBRUARY this year, the States of Jersey voted in favour of the Marriage and Civil Status (Amendment No. 4) (Jersey) Law 201-. The new marriage law will, for the first time, allow same-sex couples to get married in Jersey. The approval of the new law followed a period during which a number of its provisions were hotly debated by the religious community in Jersey. These included the question of whether it should contain a so-called ‘tolerance clause’ permitting individual business owners of religious conviction, who provide goods and services for weddings and associated celebrations, to discriminate against samesex couples wishing to marry in Jersey. The clause was eventually rejected by the States. The new marriage law now awaits royal assent in the Privy Council. The Jersey government has said the law is expected to come into force ‘in a number of months’. At present, same-sex couples can already enter into a civil partnership under the provisions of the Civil Partnership (Jersey) Law 2012 – this permits same-sex couples to enter into a legally recognised relationship, which is only terminated by death, dissolution or annulment. It’s appropriate to mention at this point that the new marriage law will provide for a civil partnership to be converted into a marriage, and it contains provisions relating to the conversion application process, and the restrictions on conversion. This new marriage law, once it comes into force, represents a further expansion of a series of new ‘anti-discrimination’ legislation passed in recent years. Arguably the main effect of that legislation has been most visible in the context of employment law. Those changes were heralded by the Discrimination (Jersey) Law 2013 coming into force on 1 September 2014, which introduced a number of protected characteristics under the Employment (Jersey) Law 2003, making it unlawful to discriminate against people in a variety of specified situations, including employment, on the basis of race. This was then followed in relatively

18 may/june 2018

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Finance job figures remain strong Jersey ranked third easiest for financial compliance

nly the British Virgin Islands and the Cayman Islands are less complex than Jersey when it comes to accounting and tax compliance, according to TMF Group’s 2018 Financial Complexity Index (FCI). The index ranked Jersey 92nd out of 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas, with 1 being most complex through to 94 the least complex. TMF didn’t include Guernsey in the survey. Jersey’s ranking puts it in front of Hong Kong, and two places better than its inaugural FCI ranking of 90th last year. At the other end of the financial complexity scale, China is the most complex jurisdiction in the world, followed by Brazil, Turkey, Italy and Argentina. To determine the rankings, TMF circulated a 74-question survey to specialists in each country, with weighted complexity parameters for regulatory compliance, tax, statutory reporting and bookkeeping. Cengiz Somay, Managing Director of

TMF Jersey, commented: “Jersey has a long-standing reputation as an easy place to do business, and once again this is reflected in its FCI ranking. "Local laws do require that accounting records are maintained, and annual accounts prepared and approved by the directors/shareholders or trustees. However, the laws are relatively relaxed regarding the format and content of the accounts themselves. Likewise, there is generally no audit requirement under local law for private companies and trusts.” TMF ranks the 10 least complex jurisdictions for financial compliance as: ● 94 Cayman Islands ● 93 BVI ● 92 Jersey ● 91 Hong Kong ● 90 Curaçao ● 89 Afghanistan ● 88 Guyana ● 87 Norway ● 86 Bangladesh ● 85 Singapore. n

Jersey Finance publishes roadmap

he latest Jersey Labour Market report to be published by the States of Jersey demonstrates sustained growth in finance sector jobs. According to the report, employment in the sector increased by 230 jobs on an annual basis, with total employment at the highest level for nine years. A total of 13.330 people are currently employed in financial services in the island, accounting for 22 per cent of total employment. While there were 50 fewer people working in the banking sector compared with the same time last year, the number of jobs in trust and company administration reached their highest level to date, at 5,380. Geoff Cook, CEO at Jersey Finance, commented: “The industry accounts for more than a fifth of total employment in Jersey, and for every 10 jobs created in the finance industry, an equal amount are created elsewhere in the community. "These figures chime with the feedback we’ve had from industry – a recent survey of firms forecast that 800 jobs will be created in the industry over the next five years, 83 per cent of which will be filled by local people.” The latest Jersey Labour Market report can be found at www.gov.je n

head of Jersey’s general elections on 16 May, Jersey Finance has published a document – Working Together for a Better Future – to highlight its vision for the future and a potential roadmap for the finance sector and the island more widely. The document outlines some of the key areas that are important to the industry, including education, skills, tax, regulation, connectivity, innovation and Brexit. Copies will be sent to all potential election candidates. Geoff Cook, CEO of Jersey Finance, commented: “This is not about supporting particular candidates. It is about putting clear facts out into the public domain and having sensible conversations about our combined future success. The finance industry is the largest contributor to the Jersey economy. When it does well, the island does well.” The document can be found at www.jerseyfinance.je n

20 may/june 2018

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Jersey allocated additional Brexit funding

he Minister for Treasury and Resources, Senator Alan Maclean, has allocated an additional £440,000 to the Ministry for External Relations to continue its work to prepare Jersey for Brexit. This increases the Brexit budget to £4.1 million. In a statement, the States said: ‘In 2016, the Economic Policy Political Oversight Group recommended £3.7 million as a first round of funding for Brexit preparations across government, for the period of the Medium Term Financial Plan 2016-2019. ‘Departments have prudently managed this resource, drawing on it only once the demands created by Brexit reached the point where increased staffing became necessary. To date, £3 million of the £3.7 million Brexit budget has been spent. ‘Now that the Brexit negotiations have progressed, and the UK’s likely post-exit position is better understood, it is clear that Brexit’s impact on Jersey will be greater than could have been foreseen when the first round of funding was agreed.’

The Ministry has identified additional activities and resources required to ensure an orderly transition to Jersey’s future relationship with the EU. Senator Maclean has agreed to add £440,000 to the £0.7 million that remains unspent from the original Brexit budget. This will support an additional nine fixed-term appointments in the Department for Community and Constitutional Affairs; Economic Development, Tourism, Sport and Culture; the Ministry for External Relations; and the Law Draftsman’s Office – with a focus on developing the island’s post-Brexit policy and necessary legal changes. Senator Maclean commented: “Much complex contingency work has already been done and it's a testament to the prudence of departmental officers that we are able to re-allocate £700,000 of the funds originally assigned to meet emerging requirements. The government will continue to assess the resource and staffing needs presented by Brexit and allocate funding appropriately to ensure that the interests of the island are protected.” n

island's funds reach record levels

he value of regulated funds that are administered in Jersey rose to a record level of almost £300bn at the end of 2017, driven primarily by an increase in private equity business. According to the latest figures collated by the Jersey Financial Services Commission, and published by Jersey Finance, in the final quarter of 2017, the total net asset value of regulated funds serviced through Jersey rose by 10 per cent over the quarter and by 12 per cent year-on-year, to stand at £291.1bn at 31 December 2017. This is the highest value ever recorded. The growth was driven by the alternative asset classes, which increased annually by 13 per cent to represent more than three quarters (77 per cent) of Jersey’s total funds activity. Within the alternative asset classes, private equity fund values performed particularly strongly, rising by 30 per cent to stand at £82.7bn – the second consecutive year private equity has risen by that level. Hedge fund values increased by six per cent to £50.7bn, real estate rose two per cent to £37.5bn, and the combined total of infrastructure, credit and debt funds rose by seven per cent to stand at £50.6bn. The full set of quarterly statistics can be viewed at www.jerseyfinance.je n

100th Jersey Private Fund registered

he Jersey Financial Services Commission has reported sustained uptake in the Jersey Private Fund (JPF), with 100 structures formed less than a year since its launch. The Commission registered the 100th JPF on 2 March. As the latest addition to Jersey's suite of fund structuring options, the JPF was introduced to provide institutional and professional investors with a more streamlined regime under which funds for up to 50 investors could be established in as little as 48 hours. Geoff Cook, CEO of Jersey Finance, commented: ‘‘Our reputation as a specialist funds centre is based on our ability to provide speed to market and expertise, as well as appropriate regulatory oversight. The clear evidence is that the prospect of 48-hour authorisation for funds with up to 50 investors is playing out well among fund managers.’’ n

22 may/june 2018

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Interview

As a commercial litigator with over 25 years’ experience, Lisa Springate took up a new challenge in November last year when she became Head of Technical at Jersey Finance. It’s been a fast learning curve, but one that she’s embracing

Words: Nick Kirby Pictures: Glen Perotte

What does your role as Head of Technical actually entail? I lead the delivery of Jersey Finance’s technical services to its members. My role is to assist in representing the finance industry’s needs and concerns with regard to legislation, regulation and other key areas of innovation, so as to enhance its offering and provide its members with the ‘toolkit’ they need in order to compete globally. My role also entails promoting Jersey as a leading international financial centre of excellence. What drew you to the role? I’d been a litigator for over 25 years and had risen through the ranks, from Associate to Partner. As I approach the big 5-0 next year, I was looking for a new challenge as I believe it’s important to keep pushing oneself. I’d already joined the board of the IoD in Jersey and Board Apprentice as a non-executive director, for instance. I’ve always thought that Jersey Finance was an impressive organisation with a very talented team led by Geoff [Cook, CEO] and Amy [Bryant, Deputy CEO], so I was interested in the role when it became available. I feel really privileged to be in

24 may/june 2018

this position – to be at the forefront of driving change – and proud to be able to promote the many attributes that Jersey has to offer on the world stage. I’m enjoying the role enormously. At first glance, the change from commercial litigator to Head of Technical seems unusual, but is it really? As a litigator, my role was always very varied and meant working under pressure most of the time. It was also very people-focused – dealing with high-net-worth individuals, local trust companies and banks. My new role is similar, in that I look at a wide range of topics, again under tight deadlines. I also deal with individuals from different sectors of the industry. I’ve found that the skills I acquired as a litigator and a Partner have stood me in very good stead for this role – how to lead the Technical team from the outset; be a good listener, communicator and negotiator; be calm in the face of adversity;

The skills I acquired as a litigator and a Partner have stood me in good stead – how to be a good listener and be calm in the face of adversity

as well as adopting various approaches to reaching a resolution. What’s more, how to maintain a reality check in respect of what’s being asked, keep sight of the big picture, but not lose sight of the detail. And, last but not least, how to be commercial. With everything that’s presently going on in the world of finance, did you have to hit the ground running? Yes, very much! Geoff and Amy certainly took me at my word in the interview when I said I work best at 110mph. To be honest, the weeks have really flown by since I joined. There’s always something coming down the pipeline and I think it’s going to be more of the same for the foreseeable future – it’s the nature of the organisation. In the current landscape, what do you see as Jersey’s biggest opportunities? There’s no doubt that over the coming year, jurisdictional differentiation is set to be even more important for international finance centres [IFCs] as they attempt to stand out from the crowd. There are plenty of ways in which Jersey is well placed to do just that. First, Jersey has demonstrated a commitment to innovation. During 2017, it brought a number of innovative and unique products to the market, such as the Jersey Private Fund – 100 of which have already been established, despite the short time they’ve been available. Jersey’s Charity Law has also continued to be rolled out in phases, a new Charities Commissioner was appointed in 2017, and the charities register is due to be set up in 2018. It’s a framework that’s unrivalled in other IFCs and highlights Jersey’s ambitions in the global philanthropy space. This gives private wealth lawyers something else to offer. Other innovations are in the pipeline too, with Jersey continuing to stake its claim as a centre for digital excellence. The finance industry is focused on embracing the capabilities of virtual currencies, regtech

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How did you get to where you are now? After studying law at university and completing my bar finals, I practised with Mayer Brown JSM in Hong Kong and as a barrister in London. I was at bar school with someone from Jersey and they’d always said it was a very attractive jurisdiction with much to offer. So, in my mid-20s, I thought it was worth seeing what it was like. I’d only intended to stay for a couple of years to gain some offshore experience, but I loved the island and the work and have now been here 25 years! I decided to qualify locally as an Advocate and was with Bedell Cristin for 18 years, where I was a Partner in the commercial litigation department, before joining Jersey Finance.

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Interview

The

interview Lisa Springate

Interview

And what are the biggest challenges? On a jurisdictional level, it’s a challenging landscape for the finance industry right

26 may/june 2018

there’s clear evidence that centres like Jersey provide specialist cross-border financial services that are an absolutely essential part of the global economy now. As we’ve witnessed recently, one of the requirements is supporting members through difficult times and making sure that we provide them with the information and support for managing their client relationships, as well as the appropriate tools for marketing their businesses and the jurisdiction. Obviously, we can’t sidestep issues such as the Paradise Papers, and it’s imperative we continue to fight our corner when such things happen. In the 25 years I’ve worked here, however, I’ve seen Jersey be incredibly robust. There are a lot more challenges and they seem to be coming faster down the pipeline than before – but, if anything, it means the island is reacting more quickly and is more flexible. On a personal level, a further challenge is managing stakeholders and the many

priorities across the various sectors of industry, the government and regulator. The mediation skills learned as a litigator can be of great assistance at times! The question of whether the finance industries in Guernsey and Jersey should work more closely arises time and again – do you see that as a possibility? Collaboration between the islands is already happening to some extent with high-level agenda items. For example, the islands share an office in Brussels. Ultimately, it makes sense for the islands to cooperate on certain fronts where there’s a dual interest – as Charlie Parker [Chief Executive of the States of Jersey] recently stated in his address to the Chamber of Commerce and the IoD in Jersey. But we have to bear in mind that, at the

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and wealthtech to enhance its proposition in a rapidly evolving fintech environment. It’s the future of global finance, and Jersey intends to be part of it. Second, there’s our extremely high regulatory standards. Jersey goes above and beyond most other countries where standards of regulation are concerned, and that’s been recognised by Moneyval, the World Bank and, more recently, the OECD. Last November, Jersey became one of only six countries in the world to be found to be entirely tax-compliant against OECD criteria. And in December, the EU’s Code of Conduct Group recognised Jersey as a cooperative jurisdiction following a year-long screening process. When you look worldwide at the instability in other jurisdictions, Jersey very much represents a safe harbour in rocky waters. People want stability and that’s what we offer. Finally – and perhaps most important – is the clear evidence that centres like Jersey provide specialist cross-border financial services that are an absolutely essential part of the global economy. All of the above help to differentiate Jersey very favourably when compared with other centres.

Interview

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end of the day, the islands are competitors for business. It’s therefore a question of when we feel it’s in the interest of both islands to work together.

FACT FILE Name: Lisa Springate Age: 48 Position: Head of Technical, Jersey Finance Married to: David Hobbies: Piano, travelling, gardening, walking our cockerpoo and, more recently, charity runs! Interesting facts: I’ve flown solo in a Piper Cherokee aircraft, undertaken the Lillehammer Olympic Bobsleigh track and walked parts of the Great Wall of China.

there’s always a fine balance to be struck between encouraging innovation and trailblazing in the digital and tech arena, and adopting a prudent and pragmatic regulatory position

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The Jersey Finance Annual Private Wealth Conference in London in April addressed the issue of technology in wealth management – do the jurisdictions that fail to capitalise on technology put themselves at risk of becoming obsolete? Yes, I think that’s a good assessment. As a forward-thinking jurisdiction, Jersey is always keen to work with partners on initiatives that shape our future, and there’s no doubt that virtual currencies and blockchain are key areas in the fintech space that are set to have a significant impact on the future business landscape. On innovation, Jersey has form. The world’s first-ever regulated bitcoin fund was launched in Jersey back in 2014. And last year a crypto-denominated fund was established in Jersey, which trades cryptocurrencies and other ‘coins’ and participates in selected ‘initial coin offerings’ (ICOs). It’s also now just over a year since Jersey’s virtual currency regulation was introduced – and it was good to see the launch of Jersey’s first ICO, the ARC Reserve Currency, at the end of last year. But it’s only part of the fintech story. Jersey is working with developers, experts and innovators right now to ensure that it’s ready to play a leading role in such a rapidly evolving area. We’re working with Digital Jersey to focus on developments in areas such as cyber security and digital enablement. These are areas that, alongside virtual currencies, will play an increasingly important role in international financial services in the future. From a jurisdictional point of view, however, there’s always a fine balance to be struck between encouraging innovation and trailblazing in the digital and tech arena, and adopting a prudent and pragmatic regulatory position. What are your members telling Jersey Finance about Brexit? The UK is our largest and most significant trading partner, so something that has an impact on them will quite naturally have an impact on us. There will certainly be a need for us to look at and consider the impact that Brexit will have on financial services, and the impact on Jersey as a result. This is why it’s good that we’re currently undertaking a strategic refresh, working in partnership with McKinsey. Importantly, we’ve negotiated bilateral treaties with the EU independently of our relationship with the UK. From that perspective, things are known for the finance industry. Jersey is, therefore, a very safe environment in which to do business.

What’s your view on the often-mooted skills shortage in finance and what can be done about it? To be honest, this isn’t something that I’m hearing from our members. Also, research conducted into this area has revealed that Jersey’s finance industry is a major contributor to the island’s economy, providing work for more than 13,000 people, spending around £370 million annually on goods and services in Jersey, and contributing £420 million a year in taxes. Employment figures have actually reached pre-financial crisis levels, with more than 300 local students being recruited each year for the past four years. That said, there are a number of schemes in place to make sure that we have the quality coming through from a succession planning perspective. We have a very active educational programme, where we go into schools and colleges to encourage young people to come into the finance industry. We also run the ‘Life in Finance’ programme, which is designed to help students progress from school to the professional workplace. However, we can’t achieve this alone. We need to work with our member firms to provide students with learning opportunities, allowing them to get a taste of what life can be like in finance and encourage them to consider a role in the finance industry in the future. I would therefore encourage our member firms to sign up for 2018, if they haven’t already done so! And finally, what’s your view for finance in Jersey in the next 12 to 18 months. The future of Jersey is inextricably bound up in the fortunes of the finance industry. We know from our island’s statistics that when the finance industry does well, the island does well too. Jersey has won many accolades as a well regulated and reputable finance centre to date. The upcoming election in Jersey has meant that not only has a lot of legislation recently been passed, but there’s now a good opportunity for the government, industry and regulator to work together during the period of purdah to consider innovative products for the future that suit the challenges ahead and thereby enhance Jersey’s reputation even further. Whilst the external pressures will undoubtedly continue, I believe Jersey will keep navigating the change, provided that everyone works together and adjusts their sails accordingly. As a result, Jersey will continue to be a safe harbour in an uncertain world. n NICK KIRBY is Editor-in-Chief of Businesslife

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Protecting your wealth with integrity and trust Moore Stephens in the Channel Islands has 50 yearsâ&#x20AC;&#x2122; experience in delivering efficient wealth structuring solutions for private and corporate clients. Our independence allows us to provide a bespoke service that is tailored to the needs of each of our clients and is focused on enhancing and preserving their wealth for the future. As a member of the Moore Stephens International network, we can provide an in-depth cultural and technical understanding of different markets around the world. For further information please email: angus.taylor@moorestephens-jersey.com

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The Channel Islands look east

The Asian market has long been viewed as a potential growth area for Guernsey and Jersey, but just how do they get to grips with the regionâ&#x20AC;&#x2122;s remarkable diversity? Words: Kirsten Morel

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the world with a view to doing business, there’s little to be learned by referring to a market or group of clients as ‘Asian’. The world’s largest continent is home to thousands of cultures and languages, each with different customs, expectations and ways of doing business. This means that any company looking for work in Asia should carefully do their homework before deciding which countries to target. “Asia is a huge area with a vast population, within which there’s huge diversity, culture, economic wealth and development,” says Marcus Leese, Partner at Ogier in Guernsey. “At one end of the development spectrum, you have Japan, which is hugely wealthy and highly developed. At the other end, you have Myanmar. There are also different government structures with different versions of democracy, or not.” Geographically, Asia encompasses the world’s largest and most populous countries. But while Russia is principally an Asian nation in terms of its area, from a business perspective the tendency is to classify it as a European country, albeit an idiosyncratic one. India and China are home to about two-fifths of the world’s people, and their burgeoning economies are attractive as new markets for the Channel Islands. Sub-continentality aside, however, the focus here is East Asia, because when it comes to island businesses looking towards Asia, the main thrust of their efforts is

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generally towards the East and Pacific Rim. “Most companies want to go to China, but actually the bulk of business comes from Hong Kong, Singapore, South-East Asia and also India,” explains Nancy Chien, Partner at Bedell Cristin. “Some banks have work in Taiwan and Japan, but that’s more in the corporate space.” It may be natural for island businesses to see Hong Kong and Singapore as competitive jurisdictions, but to do so would be selling them short, says Leese. “Hong Kong and Singapore play a role that’s not dissimilar to the one played by London – as a hub for citizens of other countries. Singapore is a hub for countries in South-East Asia, while Hong Kong acts as a hub for China and countries in northern Asia. Importantly, both Hong Kong and Singapore are incredibly well set up for foreigners to do business.”

ON THE GROUND Geography will always play some part in determining the ease of gaining business in new markets, but distance shouldn’t put off the Channel Islands. “There are advantages for IFCs with close geographical proximity to their target markets,” says Richard Nunn, Head of Business Development at Jersey Finance. “Our geographical proximity to Europe and the City is seen as a positive attribute, as is our time-zone. We can do business with China in the morning, North America in the afternoon, and Europe all day long.” Of course, another way of overcoming

geography is to travel to the markets under consideration. But is travel enough or should businesses take up residence? “Not all locations require a permanent presence,” says Melanie Ison, Managing Director of Nerine Trust, Hong Kong. “However, clients seek a service provider or services from businesses they feel will be around for the long term. They want commitment – so having a physical presence in Hong Kong or Singapore, which I believe are the most important to having a successful business in Asia, shows you have that.” Ultimately, it’s the markets that provide the best match for the Channel Islands’ skill profiles that become the target for island-based businesses. “Broadly, the Asian markets we target are selected because of the strategic fit of the products and the services we offer, with banking, private wealth, capital markets and funds all featuring,” says Nunn. “At Jersey Finance, we work with researchers to produce reports on key markets, exploring what their priorities are, so that we can provide the most bespoke and tailored service to individuals and firms in each region.”

DIFFERENT STROKES Those in the Channel Islands know that their strengths lie in their stability as jurisdictions, as well as in the depth of their expertise, which Melanie Ison believes is their trump card. “Given the growth we’ve seen and what these clients are

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WHEN DESCRIBING THE regions of

Wealth

looking for – whether it’s in the private wealth space, funds, insurance or other industries – they look to jurisdictions like Guernsey for specialist services. Guernsey’s been a leading jurisdiction for years and the expertise and technical knowledge is exactly what I believe clients in Asia need.” Much of the business coming out of China is private wealth work that often involves finding solutions for individuals as well as their families – but there are cultural differences that make the client ‘onboarding’ process rather more complicated than would be the case with European customers. “Each country comes with its own set of nuances and there are definitely issues around clients not wanting to give up control,” says Vicky Mills, Director, Private Clients, at Hawksford. “You have to look at ways to reassure them about giving up assets to a trust, so education on what a trust is and means is definitely needed.” Education is a two-way process, however, and Channel Island companies looking to work in Asia will have to be prepared for a very different understanding of concepts such as ‘ownership’. “For many South and South-East Asian families, property is seen as a ‘family’ asset, but is rarely codified through trust structures,” says Susanne Shah, Director at UK-based law firm Vardags. “There’s a huge degree of fluidity of ownership, both legal and beneficial, which is hard to reconcile with an English approach. Assets will often be seen as belonging to whoever’s most convenient at the time, in a way that English law struggles with.”

CULTURAL CHALLENGES Among the nuances that come with working in East Asia are the differing demographics between nations. China’s population has been shaped by its infamous ‘one-child policy’ and some of the consequences of this can be seen in the concerns that clients have. “Countries such as Hong Kong and Taiwan, where there’s old money, are looking to set up trusts more for wealth planning and confidentiality. In China, the motivation is more tax-focused than succession planning,” says Nancy Chien. “The one-child policy may be a reason, as well as the new money mindset, which focuses on generating wealth and views taxation as getting in the way of this.” Where more established wealth is concerned, there’s a desire to ensure succession planning that will protect the family’s assets over generations – but as

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with all things family-related, many aspects of this don’t run as smoothly as hoped. “Family disputes are an issue. In some family businesses, the patriarch is ageing and wanting to step away. But the younger generation tend to be less interested, and their elders want to ensure that the business will be managed properly in the future,” explains Mills. On top of differing generational expectations, a tendency to view the family as a single unit means that if a couple divorces, it can cause serious complications that can affect the structuring of the family’s wealth. “The big issues tend to involve trying to untangle the joint family financial structure first, as families often structure their finances in a way that benefits the family as a whole,” says Susanne Shah. “Funds are often in the name of an elderly parent and not either of the parties, or at best jointly. Often, they’re not held in formal accounts and large cash sums are held instead.” The biggest faux-pas a Channel Island business can make when targeting clients in Asia is to try and create a template service that treats wealthy individuals and families as one homogenous group. Whether dealing with a younger generation that wants to enjoy life rather than taking on their parents’ business, or a family caught up in marital disputes that require the restricting of trusts and corporations, there’s no one-size-fits-all solution to doing business in Asia. Clearly, there are advantages to having a presence in the East Asian hubs of Hong Kong or Singapore, but if creating a new branch is beyond the capabilities of your business, be prepared for extensive travel. As Nancy Chien says: “A lot of providers from the West expect instant returns, but after one or two meetings, they won’t be ready to do business. Channel Island companies shouldn’t expect instant returns. They have to be in it for the long run.” n KIRSTEN MOREL is a freelance finance writer

Culture club Among the cultural differences between households in East Asian countries and Western jurisdictions is the attitude towards saving. According to the OECD, China has a household savings rate of 37 per cent, meaning that, on average, households save 37 per cent of their income. This Chinese figure dwarfs the five per cent found in the US, which itself stands head and shoulders above the UK’s minus one per cent. Of course, there are economic reasons for these differences, such as the UK’s diminished wage growth in comparison to inflation, as well as the availability of credit in both the UK and US. However, when it comes to savings, culture plays a large role and East Asian attitudes to putting money aside include an interesting form of group saving called ‘hui’. These savings groups are often built around families or neighbourhood structures. A group’s members come together once a month to pay in their pre-determined monthly amount and to bid to take the money home. In Vietnam, when a hui group gets together, the bidding for that month’s pot can have the appearance of a crowd of lively gamblers. But the reality is that they’ve come together as a savings club. Each month, individuals bid for the monthly pot, but they’re only allowed to take it home once in the year. The bid they make is the amount they’re willing to pay the other members to take the pot, and each month the bids rise above the level of the previous gathering. The effect is that the bids operate as a form of interest payment to the other group members. The whole system has been described by the World Bank as a ‘rotating savings and credit system’.

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In profile:

Alex Knowelden Citing strong workflows in Jersey’s construction industry, Alex Knowelden, Building Surveyor and Project Manager at BHP, explains why his multi-disciplinary building consultancy firm decided to expand its Channel Islands operation by establishing a presence in Jersey, and why he’s enjoyed moving to the island What does your business do? BHP is a Channel Islands company that’s been delivering chartered building surveying, project management, cost consultancy and architectural services for 30 years. These are normally provided by individual firms, so having them all in one business provides a streamlined and efficient offering and helps differentiate us in the market. This multi-disciplinary approach is well suited for more complex commercial and residential buildings, as well as across all building types. We’ve been based in Guernsey for many years, but have built up a pan-island client base seeking this particular approach. What made you consider Jersey as a place to relocate to? From a personal perspective, my wife is originally from Jersey, so I’ve had a lot of exposure to the island over the past four years or so. When BHP decided to set up a physical presence in the island, it was a natural move for us as a young family. We’ve really enjoyed being here since the move last summer. Was the relocation process straightforward? There really isn’t a better way to describe the process than ‘seamless’. We couldn’t have done it without the help of Locate Jersey, who made the move as painless as possible from start to finish. Moving house, never mind island, can be a stressful and emotional period for anyone, particularly as we had a baby on the way. However, the support we got, from both a personal and a business perspective, was invaluable – in particular, guiding

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buoyant property market over the past few years, principally supported by confidence in the economy and low interest rates. Having a physical presence in Jersey means that we’re better placed to serve this economic activity.

BHP through the various steps needed to establish our operation. Even after we’d moved, the invitation to Locate Jersey’s ‘after-care’ events, with thoughtful consideration of who we might like to be introduced to on both personal and professional levels, made us feel incredibly well looked after. Is Jersey particularly well suited to your business? Absolutely. In fact, there’s a lot of synergy between Jersey and Guernsey as we have clients with property holdings in both islands. And it’s clear that our multi-disciplinary approach is very appealing to islanders – on both the residential and commercial property sides – who would otherwise procure their services through a number of different firms. We see BHP thriving under the current level of demand for property and construction services in Jersey – the economy is very active in these sectors. Indeed, the island has experienced a

How are you finding living in Jersey? Jersey is lovely. The lifestyle here is perfect for a family like ours with a young baby. I love the landscape, especially when you’re in St Ouen and there are rolling fields coupled with a fun-filled shore line. We also like the refreshing contrast of other parts of the island, such as Gorey with its seaside village feel. I appreciate fine food too, and we never get bored of trying the restaurants and cafés across Jersey. In terms of getting off the island for a holiday, transport links are strong too. Whether it’s the proximity to international airports such as Gatwick, or the choice of direct holiday flights, it really does make a difference. How do you see your business evolving? We plan to build a strong local team here over the coming years. We’ve been impressed with the calibre of professionals in Jersey so far and have already employed a number of valuable staff. We look to expand our professional team by taking on quality individuals with a wide range of experience – this will complement our existing workload and meet demand in the market. We’re confident in and excited about the growth opportunities Jersey can offer us and the people who work with us. n This advertising feature was produced in partnership with Locate Jersey.

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Advertising feature

The Channel Islands, wealth management and the modern Middle East Channel Island financial services firms are seeing a large increase in instructions from ultra-high-net-worth families from the Middle East. Ian Rumens, Global Head of Private Wealth at Intertrust, looks at a rapidly modernising region, the causes for this shift and how Guernsey and Jersey can benefit from the increase in demand for private wealth services THE MIDDLE EAST, with its wealthy families and development status, has for a long time been an interesting region for Channel Island fiduciary firms, with work trickling in over the past 25 years. However, the Channel Islands are currently witnessing a far greater level of interest due to a combination of factors that have been identified individually over the past couple of decades, but which have now come together to yield results. There has been a shift in the mindset of many wealthy and ultra-high-net-worth (UHNW) individuals. They are now more conscious of the risk of non-compliance. Running parallel to this change is the social modernisation of many of the traditional states that make up the Gulf Cooperation Council (GCC), such as Bahrain, Kuwait and the United Arab Emirates. This is most visible to us in the Western world through the domestic reforms put in place by Crown Prince Mohammed bin Salman of Saudi Arabia. His ‘Vision 2030’ sets out a bold series of economic and social goals to modernise the nation and move beyond an economic over-reliance on oil. This desire to diversify on a macro level

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extends to the micro as citizens of GCC nations are looking to diversify their own assets to protect and safeguard them for future generations. This plays into not only the specialism of many Channel Island financial services providers, but has also seen Channel Island-based firms develop new products and services in response to the specific needs of Middle Eastern clients.

A CHANGE IN APPROACH Middle Eastern clients’ requirements are changing because of the internal factors noted above, but these are allied to an increasing openness to better relations and more numerous interactions with the West. Many of the second and third generations of wealthy Middle Easterners are now being educated in Western universities. As a result, they’re working for international firms before returning home with new ideas and a more global outlook. These are exactly the kind of people who are supportive of modernisation reforms in the region and recognise that their home nations have a role to play on a global stage. Their exposure to education and work overseas also makes them

familiar with Western financial services, products and business practices. This worldliness is partly responsible for the introduction of revised trust and foundation laws in Dubai and Bahrain, and more states are expected to follow suit. Intertrust is also seeing an increased familiarity with Private Trust Companies (PTCs) as structuring vehicles for wealth management. The issue of control is a universal one for wealthy individuals and families, and a PTC or similar structure enables a family member to sit on the board and have direct input into decision-making. PTCs are the most popular vehicles for Middle Eastern families for this very reason. A secondary benefit of a family member sitting on the board is the knowledge that they can share with the other professional trustees. This allows trustees to have an intimate understanding of the requirements of the client and build stronger relationships, which has always been one of the principal strengths of Channel Island financial services practitioners. Flexibility is another of the islands’ strengths and a new approach from the

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client necessitates a new approach from the practitioner. At Intertrust, we’re being asked more and more to manage horizontal splits in assets, between business and personal, as well as vertical splits between GCC-based and non-GCC-based assets. This splitting has broadened the range of services we can provide, and we work closely with our colleagues across our Corporate Services, Capital Markets and Fund Services teams to share experience on the structures available in the region.

CHANNEL ISLANDS’ STRONG REPUTATION The Channel Islands as jurisdictions are benefiting from Middle Eastern work thanks to their centrality, not just geographically but also within the wealth management industry. As mature international finance centres (IFCs) with well developed industries and highly trained professionals, they have longstanding links with Dubai, which acts as a hub for working into the GCC nations and hosts a representative office for Jersey Finance and a Guernsey Finance representative. A strong reputation in the area of transparency, as evidenced by the Organisation for Economic Cooperation and Development (OECD), increases the islands’ global appeal as reporting and compliance become increasingly important in the minds of jurisdictions and clients alike. Geographically, the islands benefit from their convenient time zone and position at the centre of what many GCC-based clients regard as a ‘triangle of wealth’ comprising their home nation, Europe and London.

LONG-STANDING COMMITMENT The Channel Islands’ reputations are enviable but well earned. The jurisdictions are at the heart of Intertrust’s global private wealth offering. Private wealth is just that – wealth held privately in investment portfolios or substantial assets. But the new diversification means our teams from other business areas also play a part

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We understand the middle east’s culture and all its differences and have tailored our approach accordingly

in structuring our clients’ wealth, be that through institutional investing, special purpose vehicles, PTCs, private funds or regulated funds. Intertrust is highly regarded by its clients in GCC states and this is no accident; we’ve had an office and on-theground team in the region for a decade and have been visiting for more than 25 years. We understand the culture, the region and its differences, and have tailored our approach accordingly. We have a dedicated team that works in the region, comprising specialists in Sharia-flexible financial products, underlying asset classes and further niche areas. Crucially, we understand private wealth is always changing and we work hard to meet these challenges. Modernised GCC states are looking outward and expanding their horizons; their future generations are more internationally focused and have

different expectations to those of their parents as to how their wealth is managed. The private wealth industry is evolving, which means local knowledge and cultural understanding are key. By partnering with private wealth experts in jurisdictions such as the Channel Islands, GCCbased clients are in a better position to understand this evolution. n

FIND OUT MORE

For more information on Intertrust’s services in the Middle East, contact Ian Rumens, Global Head of Private Wealth at ian.rumens@intertrustgroup.com For disclaimer and legal messages, please visit the Intertrust Group website at www. intertrustgroup.com/site-services/disclaimer

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Wealth

Born in the USA… With offshore jurisdictions much closer to home, why do US private clients choose to do business in the Channel Islands? and how is that business growing?

Words: Tom Huelin

WHILE THEY MAY be small in size, the Channel Islands have, for many years, played with big boys when it comes to financial services. Corporations such as Silicon Valley giant Apple come to St Helier and St Peter Port to do business, with the islands offering the ideal offshore pivot into the City of London. But it’s not just companies that transact in the islands. Private clients – wealthy individuals or family offices – come from all over the world to benefit from the high-quality companies and services based in Jersey and Guernsey. According to Jersey Finance, £400bn is held in Jersey trusts alone, while demand for estate planning and family office services – particularly for North American clients – is also on the up. But considering the fact that Caribbean jurisdictions such as the BVI and the Cayman Islands are far closer to the US mainland, why are the Channel Islands so attractive to US clients? It’s worth starting by explaining that the term ‘US clients’ refers to an individual with US connections, either in the assets they hold or through their family. Roddy Balfour, Business Development Director at Equiom, explains: “An awful lot aren’t actually US. A typical example is a family in an unstable country, in Latin America perhaps, where the sons remain to run the family business, but daughters go to live in the US. For these, the patriarch will set up a Foreign Grantor Trust according to US rules, and when the father passes on, the trust will likely end up with US trustees as a Dynasty trust.” Guernsey and Jersey have maintained financial structures for private clients

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Wealth

and elsewhere for more than half a century. Yet in the past 10 years, the islands have seen an increase in the amount of US private clients heading to the English Channel. “There’s been a large effort made by trust companies in the Channel Islands to rely less on UK and European work,” explains David Lambotte, Client Director at Estera. “So I think our jurisdictions are bearing fruit following five to 10 years of effort in the Americas, and developing business from there.”

The reputation of Jersey and Guernsey as international finance centres, coupled with an English style and responsibility of trusteeship, are attractive to US clients. “We were one of the first to get involved,” recalls Balfour, who founded Virtus Trust, which later merged with Equiom. “Virtus was responding to a change in US legislation in the 1990s, which meant that US couples would be at a disadvantage if they held an offshore trust. As a result, Virtus obtained a US Trust Licence, a move that other Channel Islands trust firms have since mirrored.” “In 2009, we invested heavily in our knowledge base for US clients,” explains Trust Corporation Director Andréa Daley Taylor. “Since then, there’s been a notable increase in a number of historically non-US related families. “As they’ve become increasingly mobile, they stray into the US arena, one way or another. So we’ve found that the bigger growth area for us in terms of using our US capabilities and domestic offerings for US people holding US assets, is through the family clients that have then needed our US expertise.” However, it’s not just the undulating coastlines and fine restaurants for which the Channel Islands are renowned. “Jersey is known as the best jurisdiction in the world for offshore trust service providers,” Lambotte continues. “The court system is good, the network of advisers is good. The wealthiest families are attracted to the best-quality service, and the quality of individuals practising in the Channel Islands is very high.” “I think our expertise in managing non-US assets for USconnected clients is a driver,” Daley Taylor adds. “US clients could go closer to home, but quite often the other jurisdictions don’t have the level of understanding of managing both – and dealing with one service provider particularly appeals to clients.”

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HOW IT ALL BEGAN

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Wealth

Jersey and Guernsey’s expertise in managing London and Europeandomiciled assets for US clients sets them apart from Cayman, Delaware and BVIbased counterparts

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CHANGING CLIMATE

Jersey and Guernsey to get away from one Donald J Trump? “Yes, but possibly not for the reasons you might initially think,” Daley Taylor explains. “It’s actually around the reforms Trump is very quickly implementing, like the tax cuts and the Jobs Act, which came in at the end of 2017, and will effect US individuals with foreign interests.” Clearly, Trump’s leadership style divides opinion, but overall the US economy has performed pretty well under his presidency. In isolation, however, the UK economy may be considered less stable, partly due to Brexit. And this creates opportunities for US clients to buy UK property and other assets while also benefiting from a favourable exchange rate. “Part of it is a play on sterling,” Bacon continues. “If you’ve made your money in dollars and there’s a drop in sterling, it creates a buying opportunity for Guernsey funds denominated in sterling, and for investing elsewhere through the Channel Islands. The Asian market has seen a lot of investment into London and Europe, but that’s also come from the US.” As well as the benefits of US clients coming to do business in Jersey and Guernsey, there are good reasons for firms on the islands to go over to the States and look to do business with clients over there. One is diversifying their geographical risk away from the UK and Europe. “For us, the US is a very attractive market because it’s unaffected by Brexit, AIFMD and general European regulation,” Bacon continues. “If we can attract US clients, then we can do business with them irrespective of any EU regulation that’s negative to offshore. There’s a lot of uncertainty, but Guernsey is stable and is potentially unaffected by some of those bigger political issues.” So, will the US private wealth client base continue to grow in the future? “Completely,” Balfour states. “Of the nine referrals I’m working on currently, eight have US implications. It’s been a very good period. The business is alive and well, but it’s morphing into more serious estate planning, instead of people just hoping to hide ‘rainy day’ money in cheap solutions.” It’s clear that 10 years of promoting the islands to US private clients has borne fruit. And with trust companies, regulators and industry bodies all united, continued growth in this field is very much a target, and on the cards. n

US clients may look favourably on the Channel Islands. But isn’t it also possible that they’re looking to do business in

TOM HUELIN is a freelance finance writer

Jersey’s and Guernsey’s expertise in managing London and European-domiciled assets for US clients sets them apart from Cayman, Delaware and BVI-based counterparts, who are less familiar – and less connected – with investment opportunities on this side of the Atlantic. In fact, the Channel Islands’ proximity to London is significant, as Darren Bacon, Partner at Mourant Ozannes, explains. “The rise of US law firms in London has inevitably educated the US market on opportunities in the UK and Europe, through the Channel Islands.” That’s not to say US clients wouldn’t want US firms to manage their trusts or estate planning. The islands must be proactive when selling themselves against their US and Caribbean rivals. “Rivals such as Bermuda, for example, are very good at promoting themselves,” Lambotte continues. “So Jersey and Guernsey need to keep up that momentum and profile.”

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What the wealthy have on their minds they may have more money than the rest of us, but it seems that wealthy people have plenty of things to keep them awake at night Words: Kirsten Morel

services we buy is an everyday part of all our lives, but for most of us there’s one restriction that tops them all – money. While we all might like to shop at M&S Food, there are times when our pockets will only stretch to Aldi. Whether buying a new car, tonight’s meal or choosing where to go on holiday, the amount of money we have is a key determinant of our choices. And this is just one factor that affects the lives of us mere mortals. We’re also faced with decisions around job satisfaction and progression, as well as whether our children will get into their firstchoice school. It’s easy to gaze with envy at wealthy individuals for whom money is much less of an issue – in fact, for many, it could be seen as irrelevant. Yet, while having a bucketload of cash might mean you’re not concerned by price tags, that doesn’t mean you don’t have concerns about how you navigate

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PRIORITISING THE GOODS and

Wealth

your everyday life. Having money might make life easier, but it certainly doesn’t make it simple. So, just what is keeping wealthy individuals up at night – and what are their key priorities in life, aside from business and wealth management? In its Wealth Report 2017, Knight Frank focused on three key areas – the factors influencing decisions around where to live, children’s education and travel. Knight Frank found that the highest priorities for ultra-high-net-worth individuals (UHNWIs) when choosing somewhere to live were lifestyle and personal security – both of which bode well for the Channel Islands in their efforts to attract wealthy residents. They are factors that could have influenced Roman Abramovich when making his successful application for residency in Jersey (although he’s yet to move in). But it isn’t only Russians who crave safety and certainty. “We deal with people who move to Jersey for a range of reasons,” says Derek Rhodes, Director at Alex Picot Trust, a firm that focuses on the UK market. “These include security and the fear of a Corbyn government in the UK. People are also waiting to see what happens with Brexit. Privacy is another important matter. The very wealthy do worry about the security of their information because people can use it against them.” This last point is important for the Channel Islands, where a balance has been struck between the need for transparency and the desire to meet the individual need

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for privacy. They’ve done so by creating registers of beneficial ownership that are available to the authorities in other countries, but which aren’t open to the public at large. Whether a wealthy person is from the UK or Tanzania, Stephen Whale, Group Director at JTC, says that the craving for certainty and security crosses national and cultural boundaries. “High-net-worth individuals want the same things, no matter where they’re based,” he says. “They want

People want their children to be well educated and socially aware. Many are willing to spend a large tranche of their wealth on it, and finding the right school is paramount

as much certainty as they can get, both economically and politically, and this is particularly strong for people from Africa.”

LEARNING CURVE If you’re moving home, no matter what your income level, you’re likely to be interested in the standard of education available to your children and, given the resources at their disposal, private schooling is high up HNWIs’ agenda. “Education is key and forms a part of the wealth transfer element of their concerns,” says Fiona Waite, Director at RBC Wealth Management. “People want their children to be well educated and socially aware. While experience of the workplace is also really important, because there are other routes to entrepreneurship than just education, many are willing to spend a large tranche of their wealth on it, and finding the right school is paramount.” The UK and US have developed reputations as homes for world-leading educational establishments and, as such, places for their children at British or American schools are highly desired by the wealthy. “Schooling in the UK or the US is considered aspirational for a lot of people,” says Whale. “We have clients in Africa, Russia and China, and they all say they want their children schooled in the UK or the US. They see this as part of doing their best for their children.” If your children are at school in another continent and you have global business interests, then travel also becomes an important element of your lifestyle. But that doesn’t necessarily mean every wealthy

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Wealth

individual has a private jet parked at their local airport. “We’ve seen an increase in the use of firms like NetJets [an aircraft sharing business] rather than people buying their own aircraft, but many of our clients also use regular, scheduled services,” says Rhodes. Siobhan Crick, Director, Private Client at Sanne, has seen evidence of people taking the private route. “Private aviation is certainly a consideration for clients, particularly for those who have global businesses and homes and therefore family members in various geographical locations,” she says. “We’ve also seen clients taking fractional ownership of aircraft, which often meets their needs at a reduced cost.” If an individual does purchase their own aircraft or yacht, the reason for doing so usually falls into one of two categories. “We look after a variety of luxury assets, including yachts and aircraft, and there are two ways of thinking on this,” says Greta Pender, Senior Trust Manager at Saffery Champness. “One is driven by the need to travel for business, while the other reason is for fun or for bragging rights. A lot depends on culture and personality.”

GLOBAL CITIZENS For those whose interest is in travelling rather than showing off, there are other ways to increase their freedom to move, says Stephen Whale. “Mobility is the key, and many clients have multiple passports to enable worldwide travel. We’re definitely seeing a pick-up in interest in residency and citizenship schemes because people realise it can help with their travel.”

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Of course, travel is often a necessity rather than a recreational pursuit and while families may be spread around the globe, there’s often a geographical focal point. “There tends to be a central hub, either the home country or a major city like Geneva or London,” says Pender. And it’s here that some may choose to site a family office, although not just for business reasons. “If they can afford it, a family may want a family office to look after their needs,” adds Pender. “As well as managing assets, they can be linked to personal security and so may be used to run bodyguards and concierge services.” Although the media likes to put issues such as personal security and concierge services in the spotlight, they’re quite a way down the list of priorities for the globally wealthy. At the top of the list is a concern for the family’s future and a desire to ensure that assets will be protected for many years to come. But the next generation may have different ideas about what the family business should look like. “A lot of the next generation have a different view to their parents – they’re worried about the social performance of their investments,” says Pender. Importantly, this trend isn’t likely to pass anytime soon, says Fiona Waite. “We’re seeing that ESG [environmental, social and governance] investing is key – it’s not a fad. After the financial crisis, people

are aware that businesses with an ESG culture do perform well over time and so, in terms of the financial institution that the family uses, it must be in line with their values.” When you look at the messages being sent out by the Channel Islands’ financial services industries, it’s clear that those in charge have an understanding of the priorities of wealthy people. Both Jersey and Guernsey have moved to create yacht and aircraft registries, but these remain small in comparison with the amount of business relating to succession planning and the effort put into moving with the times. So the islands are able to cater for a younger, more socially concerned generation. The Channel Islands aren’t shy of highlighting their proximity to London – and from there, the rest of the world – when promoting themselves. This ensures that the mobility message is clear to anyone thinking of swapping a city life for an island one. To many, particularly the mainstream media, the lives of the globally wealthy will likely remain portrayed as being focused on living so fast that concierge services are a must. However, the reality is that for most high-net-worth individuals and their families, like the majority of us, certainty and security sit at the top of their list of priorities in life. As Siobhan Crick concludes: “The reality is that wealthy people often have the same core concerns that the rest of us have.” n KIRSTEN MOREL is a freelance finance writer

may/june 2018 45

Wealth

Where in the world? Wealth is being created around the globe, and some regions are regularly singled out as booming – but behind the headlines, where is the new money really coming from?

North America

44,000 5%

Latin America and Caribbean

4,220 20%

Europe

35,180 10%

Words: Richard Willsher

46 may/june 2018

TAKE A SNAPSHOT of news and business headlines and you’d be forgiven for thinking that the world is being overtaken by thousands of billionaire Russian oligarchs and a Middle Eastern sheikh or three. Yet while there certainly is wealth in those regions, a few headlines don’t give anywhere near the full story when it comes to global wealth. While the picture may have changed in the past 10 years, what has remained the same is that North America continues to generate more wealth, and produces

more ultra-high-net-worth individuals (UHNWIs), than anywhere else on the planet. According to Knight Frank’s Wealth Report 2018, the region as a whole – dominated by the US – is now home to 44,000 people who hold more than $50 million in net worth. And of course, many are a great deal wealthier than that. Asia, by comparison, comes home in second with 35,880 UHNWIs at the end of 2017, according to Knight Frank, with Europe a close third with 35,180. While this in itself presents an interesting picture,

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Wealth

ASIA Russia and CIS

2,870 26%

35,880 15%

Middle East

4,740 3%

africa

1,190 7%

Australasia

1,650 9%

the real story seems to be in the countries where wealth is growing most quickly. Indeed, wealth is being created all over the world and the reason for this often boils down to the same sorts of drivers. Richard Tribe, Equiom’s Head of Business Development for Europe and Head of Private Office, describes the picture from his perspective of almost three decades in the global wealth market. He says emerging markets have often been beset by negative factors such as civil conflict, poor infrastructure, lack of local

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or foreign investment, and corruption. Once these start to be cured, however, private wealth starts to germinate. “It’s about those things that you would associate with building an emerging economy,” he explains. “Where you’ve had the opportunity for foreign companies to come in and invest heavily in areas like infrastructure, they’ve had local people to help facilitate this. “Then you see the rise of entrepreneurs, in everything from property, road building and telecoms. Local small businesses

prosper in cooperation with foreign firms.” Tribe points to countries throughout South East Asia and also increasingly in Africa, where primary industries and manufacturing are starting to develop and thrive and produce wealth for countries and their citizens. This view is partly reflected in Knight Frank’s Wealth Report 2018. Over the five years from 2012 to 2017, the number of people in Asia with $50 million-plus increased from 26,250 to 35,880 – a 36 per cent increase. Indeed, Knight Frank predicts

may/june 2018 47

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Figures are for the number of individuals with wealth of more than US$50 million and the percentage increase in 2016-17

Wealth

that by 2022, Asia will have almost have caught up with North America, with a forecast 55,740 UHNWIs. To put this into context, the figure for Africa is expected to grow from 1,190 in 2017 to 1,560 in 2022 – a smaller number, but a sizeable increase in percentage terms. Drilling down further into previous Knight Frank’s findings, we see that some individual countries have experienced astonishing increases in their UHNWI populations. In its Wealth Report 2017, Vietnam outdistanced all others, with a 320 per cent increase over the previous 10 years. And with the brakes having been eased in the world’s two most populous countries, it comes as little surprise that India’s ultra-wealthy population increased by 290 per cent in 10 years and China’s by 281 per cent. By way of comparison, the UK, which is home to more of Europe’s UHNWIs than any other country, saw an increase of a mere 28 per cent in the same period.

FLIGHT TO QUALITY This changing UHNWI demographic creates significant opportunities for the Channel Islands. Factors such as potential or actual political instability, crime, corruption, natural disaster or reputational damage soon have an impact on wealth. No wonder, then, that global UHNWIs seek safe places for their money. David Lambotte, a Director within the Jersey trust services team at fiduciary and administration services provider Estera, believes that Jersey is one such place. “The appeal of the Jersey trust company to wealthy individuals is a flight to quality,” he says. “The jurisprudence and the quality of the practitioners are the most compelling reasons for these individuals to use Jersey. Also, the islands are very well known to the legal intermediaries who advise them on structuring. They often have experience of Jersey and Guernsey from a corporate planning perspective and some of that has transferred into private wealth planning.” Equiom’s Richard Tribe agrees. “Since the financial crisis, there’s been a huge flight to quality. It wasn’t just to financial houses and companies, it was by jurisdiction as well,” he explains. “We saw people moving their wealth from places like Panama and Cyprus to places like the Channel Islands and the Isle of Man. Clients say: ‘We don’t want to have the headache, the negative connotations, that dealing in these places can have. We’d rather be in a very wellrespected and well-regulated jurisdiction’.” Tribe says that, typically, the global wealthy seek the same key benefits wherever they and their wealth originate

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emerging markets have often been beset by negative factors such as civil conflict and corruption. Once these start to be cured, private wealth starts to germinate

– they’re looking for protection of their wealth for future generations, succession planning and making sure that the wealth they worked for decades to build is there for the family. Confidentiality is the other important factor.

LOOKING AHEAD Both Richard Tribe and David Lambotte are upbeat about the future of the Channel Islands as a key centre for international wealth management services. “People living in countries where they have a concern over the political or regulatory environment are choosing to move to countries that they think are more

favourable,” Lambotte explains. “They are concerned for the safety of themselves or their families. One would point to certain countries in the Middle East and Latin America, for example. “In terms of the future, I still see great growth in Latin America. When you look at the footprint of the countries that make up that sub-continent, in comparison to, say, North America, there’s still a large amount of wealth growth. It hasn’t matured by any means. “Likewise with Asia Pacific. We expect to see that trend continue,” Lambotte continues. “The long-term outliers are in Africa. There’s a relatively small HNWI population, but as stability and economic prosperity emerge in the African countries, there will be an ever-increasing desire for service into those markets.” He also points to Russia as a relatively young market as yet. Indeed, contrary to the image frequently being pushed by the media, there are only 2,870 UHNWIs worth more than $50 million in Russia and the CIS, according to Kinght Frank. Historically, the Channel Islands have drawn a great deal of their private wealth work from UK and Europe. This is changing, as they become jurisdictions of direct choice for the global wealthy. Less well-regulated centres are slowly losing their appeal, and businesses in the islands are benefiting from the global flight to quality from whichever part of the world new wealth is being generated. n RICHARD WILLSHER is a freelance finance writer

One to watch – Kenya Among the mountain of data gathered in Knight Frank’s Wealth Report 2017, Kenya stands out like a snow-capped peak above the African savannah. The equatorial East African country increased its population of UHNWIs by 93 per cent in the decade from 2006 to 2016. Moreover, this phenomenal growth rate is set to continue. Knight Frank projects that in the years to 2026, 80 per cent more ultra-wealthy individuals will make their money there. The explanation is that domestic consumption looks set to increase. This is fed by a high proportion of imported goods, which opens the way for entrepreneurs to trade and generate their wealth. Yes, there are political risks. Kenya, along with quite a few other African states, has experienced difficulties within relatively recent memory. There’s also an everpresent threat of Islamic fundamentalism. But Kenya’s almost 50 million people are reaching out for a more prosperous future and this translates into burgeoning personal wealth for some of them.

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WHY UBS JERSEY? UBS has been established in Jersey since 1979. We understand the needs of those living and working here and we offer a range of wealth management services to island residents. Whether a client’s priority is to protect, grow or transfer wealth to the next generation, UBS has a wide range of customised solutions to achieve these goals. Our local expertise, combined with the global strength of UBS, provides clients with an unrivalled wealth management experience.

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THE JERSEY TEAM The Private Clients team at UBS Jersey (pictured, facing page) looks after the investment requirements of a significant number of islanders, and we’re uniquely positioned as the wealth manager of choice in Jersey. Each of our highly qualified Client Advisors has at least 15 years’ experience in wealth management and has been a key part of the Private Clients team at

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© UBS AG, Jersey Branch is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, trust, funds and investment business. UBS AG, Jersey Branch is a branch of UBS AG (a public company limited by shares, incorporated in Switzerland whose registered offices are at Aeschenvorstadt 1, CH-4051, Basel and Bahnhofstrasse 45, CH-8098 Zurich) with its principal place of business at 1 IFC, St Helier, Jersey JE2 3BX. Terms and Conditions are available upon request. © UBS 2018. All rights reserved.

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Wealth

Investing to save the world Ethical investing was always something of a niche market but the landscape has changed dramatically, with investors demanding better governance from big businesses

FOR DECADES, ETHICAL and socially responsible investing only appealed to a handful of investors – partly because it generally didn’t deliver the returns of mainstream investments. But the times they are a-changing. The financial crisis shone a harsh spotlight on corporate governance, with investors calling for higher standards all round from the businesses they put their money in. This coincided with the rise of a new generation beginning to flex their muscles in the markets. The millennials – those born between the early 1980s and 2000 – are demanding that firms be far more socially responsible, and are putting their money where their hearts are. And the figures seem hard to refute. The value of assets managed under the UN Principles of Responsible Investment increased from $6.5 trillion in 2006 to $62 trillion at the end of 2016. The millennials have arguably become the standard bearers of responsible investing and, with their wealth predicted to rise to $24 trillion by 2020, their impact will continue to be felt. But they’re not alone. Families aiming to leave the planet in good shape for their children and grandchildren are also looking to the sector – while charities, foundations and pension funds are increasingly introducing socially responsible criteria to their investment policies.

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When 100 Jersey investors were canvassed at a forum held by UBS on the island recently, 72 per cent said they were interested in investing in impact or sustainable investments this year, while 64 per cent believed those investments would generate similar returns to a traditional portfolio. And as society’s priorities, such as energy efficiency and healthy foods, become more closely aligned with those of investors, there’s growing evidence that these funds can offer good returns. The most basic responsible investment strategies emerged in the 1960s, when faith organisations began screening out companies involved in sectors such as the arms

▼

Words: Andrew Strange

may/june 2018 53

Wealth

industry, tobacco, alcohol, gambling and pornography. But the sector has been turbo charged by more recent approaches. Impact investing, for example, focuses capital on companies that bring benefits to society, as well as environmental, social and governance (ESG) integration, which allows asset managers to include ESG factors in their financial analysis. According to Patrick Thomas, Investment Manager at Canaccord Genuity Wealth Management, the data on the effect of exclusion strategies and impact investing is mixed. Exciting companies sometimes fail to take the commercial actions to sustain the business, so for every Tesla, there’s a Drax. The value of shares in the North Yorkshire coal-fired power station has more than halved since its 2015 decision to abandon plans to introduce carbon capture technology that would reduce emissions. But there’s mounting evidence that ESG scoring, which ranks companies on such issues as the way they manage environmental issues or treat their staff, can highlight strong management, which is good for investors. Thomas explains: “I think we have enough data now to draw some pretty firm conclusions about ESG. It’s our view that thinking seriously about ESG factors is going to help companies achieve sustainable competitive advantages.” In fact, if you compare the S&P 500 index with the MSCI KLD 400, a comparable index which gives investors exposure to companies with positive ESG scores, the latter shows a slightly higher average annual return, although it’s also slightly more volatile.

FUND FOCUS With £3bn under management, Liontrust’s Sustainable Growth Funds are examples of funds that invest in companies considered to be making a positive impact on society. They screen out ‘sin stocks’ and focus on those that fit within three key themes the firm believes meet the ethical concerns of investors and offer long-term growth potential – efficiency, health and quality of life, and safety and resilience. While these are vibrant areas of today’s economy, careful analysis of the fundamentals of each company remains an important part of the process. This has seen the funds invest in, for example, ARM Technologies, which makes

54 may/june 2018

extremely energy-efficient chips for use in mobile phones, and Equinix, an energyefficient server farm provider. Peter Michaelis, Head of Sustainable Investment at Liontrust, says: “We’ve also long been looking for companies that provide food that doesn’t kill us, because of the epidemic of obesity, leading to diabetes, low quality of life and premature death. “So, we’ve invested in those companies that provide healthier food and we’ve seen massive growth – growth that’s three times stronger than conventional food producers. You only need to look down your supermarket aisles these days to see how much is given over to ‘free-from’ ingredients, herbal teas and rice cakes.” He adds: “We’ve been running these funds for more than a decade, and last year every single fund was top quartile and we’re comparing ourselves with mainstream funds. Every single fund outperformed over three years and five years. We’ve just gone over £3bn of assets in these funds. They started in 2001 and I think last year was our strongest year ever in terms of new business.” Traditionally, wealthy families have taken a philanthropic approach to improving society, often making donations through a family foundation. But as responsible and impact investing become more sophisticated could we see them switch their approach to investing instead? Rob Broughton, Director, Senior Client Adviser at UBS Wealth Management, believes we’re likely to see an increase in these foundations investing in a sustainable way and then giving the returns to good causes, which means the money is used to benefit society twice. The market for ESG funds is becoming more mature. According to Philip Radford, Director at Saffery Champness, while growth was once driven by fund providers creating products to sell on the back of growing social awareness, client demand has become by far the most important factor. As a result, companies have had to develop a great deal of expertise in order to meet that demand. “Now, certainly with what we do for clients and what we hear from other people in this area and consultants that we speak with, people are more intelligent in the way that they approach this kind of investing,” he explains. “They’re asking much more complex questions and therefore the providers of the products

There’s mounting evidence that ESG scoring can highlight strong management, which is good for investors

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Wealth

really have to have substance around them.” That said, much of the recent growth has taken place in a bull market and it remains to be seen whether investors will stick to their principles if the markets take a dive. As Rob Broughton explains: “In that situation, people might look to impact investing more than traditional strategies because responsible investing is a very liquid investment universe now and we think it’s unlikely people will head for the door. What you tend to find is that when you see big corrections, it’s the instruments and assets that are less liquid that have the biggest problems.” Whatever happens in the coming years, it’s likely to be the millennials leading the charge. This is a generation that’s determined to make a difference and we’ve already seen responsible investments grow dramatically. So who can tell where they will take us next? n ANDREW STRANGE is a freelance finance writer

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Predicting BP’s Deepwater Horizon disaster Environmental, social and governance (ESG) factors are used by socially conscious investors to screen companies by their performance in those three areas. These criteria can be applied to every sector, rather than just those traditionally thought of as socially responsible. So, for example, someone wanting to invest in an oil company could see which ones have the best ESG score. Astute ESG investors would have avoided BP before the Deepwater Horizon disaster in the Gulf of Mexico. Two years earlier, the company faced severe criticism for its performance on environmental pollution, occupational health and safety issues, labour and its impact on local communities. And in 2005, MSCI suspended BP from its sustainable equity indices after the Texas City explosion. As the Deepwater Horizon catastrophe unfolded in 2010, 50 per cent was wiped off BP’s share price – and in the wake of the disaster, a peer group of major oil companies lost 18.5 per cent. Since then, BP’s share price has underperformed the peer group by around 37 per cent.

ADVERTORIAL FEATURE

Getting your investment policy right In my first article I set out the requirement for the trustees of a charity to have a documented policy on adequate cash reserves. The Reserve Policy is a vital part of board governance and also a means of funding future liabilities and commitments, Once this is in place the trustee may ask themselves “how do we invest, and in what?” The introduction of a new charities law in Jersey (the Charities (Jersey) Law 2014) and the appointment of a Charities Commissioner means that trustees need to consider their activities and responsibilities in relation to assets under their supervision very carefully. Cash returns are at record lows and trustees are understandably under increasing pressure to mitigate the impact of inflation on the assets in their care without exposing the charity to disproportionate risk. The most common approach taken by trustees is to identify an Investment Manager to invest a defined sum of money against an agreed set of objectives and measured against a pre agreed benchmark and/or peer group. The Investment Manager will be a professional, regulated investment management service that invests in a wide range of asset classes to achieve a balance between returns, risks and liquidity. In this article we explore the components of a charity’s Investment Policy Statement (IPS) which might set out how an investment manager should manage the portfolio on the charity’s behalf. A well thought-out investment policy is essential to achieving your charity’s goals and, very importantly, demonstrating that trustees have fulfilled their duty of care. A written investment policy provides a framework for the charity’s investment decisions, helping trustees to manage the charity’s resources effectively and demonstrating good governance and care. Consider an effective IPS as a road map for the trustees and the investment manager to follow, with sensible checkpoints and clear directions (such as restrictions for certain investment types), setting out the charity’s investment objectives (a preferred destination). “A well thought-out investment policy is essential to achieving the charity’s goals and, very importantly, demonstrating that trustees have fulfilled their duty of care”

A written investment policy is a requirement of the Trustee Act 2000 in the UK and generally accepted as a universal standard of best practice for trustees and indeed all types of organisation to follow. Although you cannot delegate the writing of the policy to an investment manager, it is helpful to prepare the policy in consultation with them or a specialist independent consultant taking into account the charity’s individual circumstances and requirements. Once the IPS is constructed, most trustees delegate the investment decision-making to an investment professional and then review performance of the portfolio against the agreed benchmarks on an ongoing basis; most of these investments will have a long term outlook and it is important that trustees stay engaged periodically and hold their investment manager to account. Here are five key areas that need to be addressed when creating your investment policy:

1. Objectives and investment powers The aim is to give enough background information to the investment manager so that they can easily identify your mission, beneficiaries, structure, type of charity and the financial objectives. This should include any liquidity requirements and whether the trustees are seeking a regular income which might be used to fund future liabilities or commitments, or a ‘total return’ approach, meaning that some of the return is achieved through income and some through capital growth of assets. These factors need careful consideration as they will inform many of the manager’s decisions for investment and certainly have an impact on overall returns (eg earned income reinvested can have a dramatic impact on performance in the medium to long term).

2. Time horizon and risk Your policy needs to set out the time horizon over which your portfolio will be invested and how much risk the trustees are prepared to take. Risk is strongly linked to time horizon. For example, cash is generally seen as low risk, but currently produces almost no nominal return and remaining in cash actually erodes value when you factor in inflation (consequently, if the trustees remain in cash the result could be deemed high risk and value-eroding over the long term). Conversely over the short term equities can be very volatile (up to 3 years) “Any restrictions on the investment powers of the charity should also be documented explicitly, to remove ambiguity and may have some impact on performance.”

but over the longer term (5 years +) the effects of dividend reinvestment and growing company earnings means that, typically, equity investments can maintain the portfolio’s real value (real means once inflation is taken into account over the investment period) and as such for funds that are to be invested over a longer time horizon ‘stocks and shares’ investments may be more appropriate than cash and fixed interest investments. In practice, a combination of different asset-types is typically the most appropriate in order to strike a balance between performance and volatility. Risk will also mean different things to different people, so its essential trustees and their investment manager have a strong understanding of what each other means by risk.

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“...a combination of different assettypes is typically the most appropriate in order to strike a balance between performance and volatility””

3. Portfolio constraints and restrictions Your policy might specify permitted asset classes, define a base currency, and introduce restrictions on investment types or specify certain ethical, religious, or beliefbased considerations, geographic restriction and where relevant any tax considerations.

used as the basis of a performance benchmark; such a benchmark provides a constant measure against which the trustees can compare the performance of the investment manager on a fair and relevant basis and also a peer group average or predefined absolute measure may also be chosen. A manager may be performing strongly against a benchmark but at the bottom of the pack in terms of peer group or they may be perceived to be underperforming when measured against the benchmark but in reality outperforming the relevant market/ peer group.

Many charities now have an ethical investment policy in place. This might be based on ‘negative screens’, such as excluding investments in tobacco or arms manufacturers as standard, or ‘positive screens’, where the investment manager is instructed to allow investment only in companies following the very highest environmental, social or governance standards (for example adhering to the international standard of Sustainable Development Goals).

5. Performance and reporting

4. Strategic asset allocation, benchmarking and targets

In many cases the trustees will nominate an experienced individual or group of individuals to take responsibility for the monitoring of the portfolio. It is also recommended that there is at least an annual face to face meeting between the trustees and the investment manager, ensuring a more comprehensive review of the portfolio, to document the oversight of the trustees, and to ensure nothing has changed that might influence or change the Investment Policy Statement.

Academic research indicates that asset allocation (the allocation of monies to different asset classes such as cash, equities and bonds) is the single biggest factor in determining both risk and reward over the longer term. Therefore it is vital to agree a strategic asset allocation that will allow the charity to reach its long-term financial objectives. This can also be

Trustees should assess the performance of the portfolio on a regular basis to ensure it is achieving the objectives that were set out at the beginning of the investment period. Agreeing what reporting is required, for example quarterly valuations and annual investment reports, and how performance is documented by the trustees will make it an easier task for the trustees to undertake this ongoing requirement.

Quick checklist for establishing your investment policy 1. Consider appointing a subcommittee and/ or investment consultant to monitor and advise Trustees 2. Make sure investment objectives are workable and achievable; changing managers can be very costly 3. Consider your policy alongside your Reserves policy; you can work with your investment manager to do this and only allocate a proportion of monies for investment 4. Document the rationale behind decisions for future generations of Trustees 5. Keep it short and relevant; the policy will grow and develop over time 6. Review at least annually, and meet your investment manager face to face!

Joel Graves Investment Manager t: 01534 716823 e: joel.graves@smithandwilliamson.com

Important information Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance. Smith & Williamson is an independently owned financial and professional services group with over £20bn of assets under management (as at Dec 2017). The firm is a leading provider of investment management, financial advisory and accountancy services to private clients, charities, professional practices, entrepreneurs and mid-to-large corporates. The group’s c1,700 staff operate from a network of twelve offices: London, Belfast, Birmingham, Bristol, Cheltenham, Dublin (City and Sandyford), Glasgow, Guildford, Jersey, Salisbury and Southampton.

smithandwilliamson.com By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing. The tax treatment depends on the individual circumstances of each client and may be subject to change in future. Smith & Williamson International is regulated by the Jersey Financial Services Commission. Smith & Williamson (Channel Islands) Limited Registered in Jersey at 3rd Floor, Weighbridge House, Liberation Square, St Helier JE3 2NA. No. 109157. Smith & Williamson Investment Management LLP Authorised and regulated by the Financial Conduct Authority

Wealth

It’s hard to imagine that rich people ever have to go to lenders for some extra cash, but they do – though they’re not borrowing to get the boiler fixed

How the wealthy borrow money

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Wealth

HOW CAN YOU tell someone’s ultrawealthy? Is it the fact that they own a yacht? Or a super-yacht? Or a super-yacht that pumps thousands of litres of water a day through special jets so it’s stable enough to allow passengers to play billiards on board? Or is it that they own a classic car? A collection of classic cars? Or a Jumbo jet that’s been converted to cart their classic car collection round the world? Whatever the subtleties of the definition, the super-rich appear to be a world away from the rest of us. Even if most people aren’t stuck in the desperate cycle of payday loans, if they want to get on the property ladder, they’ll likely be hunting around for the least crippling mortgage so they can buy somewhere poky to live. It’s a world of borrowing that the super-rich know nothing about. You’d think. In reality, however, it appears that rich people borrow money all the time. If that seems unlikely, just look at the army of specialist lenders that have cropped up specifically to service their

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makes sense to go to that lender, rather than taking funds out of the business. There’s also a tax angle. When faced with a 40 per cent rate on money brought into the UK, many resident non-doms will fund their lifestyles by borrowing at more attractive rates instead. Even if they do want to use their cash for something particular, they’ll still borrow all they can. That way, the bank shoulders some of the risk, and there’s no need to risk conflicts of vision by bringing in other investors to make the project a reality. Why use your own money when you can use the bank’s? “Billionaires with a £200 million play pot to invest can make it a £300 million play pot by borrowing a bit,” says McCabe. “They’ll never put all their money down on a project just to maximise their leverage. Would you ever buy a house without a mortgage? Probably not, even if you could afford it – because it’s easy. This is the same principle, they’re just borrowing extreme amounts.”

SPOILT FOR CHOICE Not that the rich always have everything their own way. In the fallout from the financial crash of 2008, banks became increasingly risk-averse, and shy of dealing with assets any more exotic than central London property. But the shortage

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Words: Dave Waller

niche borrowing needs. Among them is largemortgageloans.com, the UK’s first broker to specialise in arranging mortgages above £500,000. “We’re an independent specialist finding people the money for whatever they require,” says founder Paul Welch. “When I started the business 15 years ago, the nature of the brand meant people would phone up saying: ‘Oh, I want to borrow £5 million, £8 million or £10 million’.” Welch is far from alone in this niche. Asset Leverage Consultants acts as a loan consultancy for borrowers. And according to Business Development Manager Jenna McCabe, business is booming. “We’re arranging 50 sizeable loans a year,” she says. “We used to handle deals for £2 million to £10 million. But the biggest now is £325 million.” So if these people have staggering amounts of wealth already, why would they need to borrow? The simple answer is because they can. When you’re ultra-rich, borrowing becomes a strategic move – it means your money goes further, and can help you alleviate risk by letting you diversify into a range of assets and sectors. There are other factors. Many have their wealth tied up in their businesses, which may generate higher returns than those charged by a lender as interest, especially in the current climate of low rates. So it

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of lending didn’t last long. An army of specialist lenders and challenger banks simply moved into the market. “Many clients with offshore structures now benefit from partnering with alternative or institutional lenders, depending on their circumstances,” says Jackie Vidigrain, Head of Treasury Services at JTC Group. “But mainstream banks are actively re-opening their lending books, and challenger banks are recognising the gaps that well-known lenders can no longer service, and are filling this requirement.” The upshot is that the wealthy now have no shortage of options. It’s just a matter of finding them. “Four years ago, I was introduced to a billionaire who had eight banking relationships, but none of those banks would fund a super-yacht,” says Welch. “But there are specialists who cater to these needs, and whom people just don’t know about. The average person may be able to name eight or 10 banks; we work with over 150 providers in 52 countries, all of whom have the ability to lend.” One company that’s actively engaged in lending is JBR Capital, a company with a wealth of experience in asset finance – helping people fund projects by borrowing against their assets. “High-net-worth individuals are very often asset-rich and cash-poor,” says Shalom Benaim, JBR’s Chief Executive. “But that’s what’s made them high-networth. They could convert any of their assets to cash, but they don’t because those assets are appreciating in value. They’d rather keep their funds tied up in those assets than monetise them.” Much of Benaim’s business works as

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When you’re ultrarich, borrowing becomes a strategic move – it means your money goes further

follows: an individual comes to him wanting to invest in an area such as buy-tolet property, but is struggling with banks restricting their loan-to-value (LTV) ratios. A bank may offer a 65 per cent LTV, which would leave that investor fronting a 35 per cent deposit. Instead, they can use their other assets – classic cars, say – as security, increasing the bank’s share to more like 80 per cent and, again, increasing the options. “We had one client from the Middle East who didn’t want to bring funds into the UK because his exchange rate to the pound had weakened, and he didn’t want to take the hit,” he says. “But he had car assets in the UK, and he raised funds on those to fund his kid’s private education in the UK.” The assets being leveraged with these specialists stretch far beyond classic cars. There’s property – whether buy-to-let, offices, warehousing, care homes or hospitals; luxury ‘esoteric’ assets such as

yachts, planes and artwork; and investment portfolio lending. McCabe says she sees lending against everything from diamonds to wine portfolios, and people wanting to use the money to build an office block in Croydon or a wellness centre in the Caribbean. The rate might be between five and 12 per cent a year, while some assets, such as art, may only be lendable if the person has a pre-existing relationship with the bank. Personal relationships become key – just like how banking used to be. “I call it relationship lending,” says Benaim. “It’s like the old days of banking, but banks just don’t have the resources to deal with customers on an individual basis any more. Everyone’s treated more like a number there, and the computer says yes or no. We know our customer. We’re present at things like classic car shows and track days for high-net-worth individuals, and we visit them to build a picture of them and their history. “So if our computer says no, we’ll look and see how we can say yes. It works – as borne out by our insignificant default rate.” But if personal service is the key to winning business, there’s one other factor that may well sway decisions, and it may also suggest why wealthy people are in that position in the first place. “People always come to us saying they don’t mind about the price,” says McCabe. “Then you lay out four options in front of them, and they always go with the cheapest.” Again, beyond the billiards-friendly yachts and the flying car collections, these super-rich don’t seem so different from the rest of us after all. n DAVE WALLER is a freelance writer

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Wealth

Rich, richer, richest… Words: Richard Willsher

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LI KA-SHING, WHO’S reportedly the richest man in Hong Kong, has decided to retire – at the age of 89. Could he be one of last of the old-style billionaires? Maybe. But then again, maybe not. Listening to the noise surrounding the publication of the 2018 edition of Forbes World’s Billionaires, it would be easy to imagine that the world’s wealthiest people were all younger techies. The top 10 seems to point that way. Jeff Bezos, Bill Gates, Mark Zuckerberg, Larry Ellison… We could think about them as technology

moguls. And if we stretch the list a little further, we see that Google’s Larry Page and Sergey Brin clock in at numbers 12 and 13 on the Forbes list, each worth in the region of $48bn. So that’s six out of the top 13. But look at the list a little closer and the picture takes on a distinctly different dimension. Warren Buffett (3), Bernard Arnault (4), Amancio Ortega (6), Carlos Slim (7) and the Koch brothers (equal 8) – these men are neither young nor techies. They, like Li Ka-shing – who’s ranked number 23 by Forbes, incidentally – have

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As Jeff Bezos is named the world’s richest person, does technology now rule the roost when it comes to global billionaires?

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all built their business empires over many years. What’s more, when you cast your eyes further down the list, only five billionaires out of the top 50 are under the age of 50. While 50 isn’t old, this stat gives lie to the notion that the ultrawealthy are all college kids who took a fast track to their first IPO. “The high-profile nature of the young tech entrepreneurs may convince us that there are more of these people around than there really are,” says Matt Tabb, Global Head of Corporate Communications at wealth services provider Equiom. “There’s still a core of very wealthy people whose wealth has been built up over many years – from industry or inheritance, for example. “The biggest change is that the wealth has been distributed more evenly around the globe. Thirty years ago, the vast bulk of ultra-high-net-worth individuals [usually defined as those with net worth exceeding $30 million] were located in the US and Europe. That’s certainly changed – especially with the opening up of Asia, and of China in particular.” Wealth can be generated across a very broad range of sectors. Nick Train, co-founder of London-based fund manager Lindsell Train, points out that although a quarter of the top 100 billionaires listed in the 2016 Forbes list made their money broadly in technology – including, for example, pharmaceuticals – natural resources, real estate, financial services and retail all figure as sources of significant wealth as well.

INHERITANCE TRENDS What’s more, inherited wealth not only endows many current UHNWIs, it’s a wealth source that’s set to burgeon. David Batey, Executive Director for Coutts Crown Dependencies in Jersey, says: “Studies estimate that £1 trillion will pass down from one generation to the next over the next 20 years or so. “Family-owned businesses are also hugely important to the global economy. Many families, but not all, will transfer their wealth and/or business successfully as they grapple with the complexities combined with a reluctance to discuss the subject.” Back to the Forbes list and, as if to prove the point, we see that three members of the Walton (Walmart) family slot in at numbers 14, 15 and 16. They inherited their wealth from founders Sam and James, who died in the 1990s. Not far

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behind them is Françoise Bettencourt Meyers, heiress to the L’Oréal empire. Old money, then, is still a key feature of the ultrawealthy landscape. What’s more, businesses such as Amazon or Google couldn’t have existed until relatively recently. Look at Forbes’ 1987 list of wealthy Americans, and although 30 years have elapsed, some familiar names appear. Top of the bill is Walmart’s Sam Walton, who’s worth $8.7bn. Second is John Werner Kluge, a media billionaire whose business empire morphed into the Fox TV network. Third is Ross Perot, sometime presidential hopeful and, by some definitions, a techie. His business interests included datahandling firm EDS; a big investment in Steve Jobs before his second coming at Apple; and Perot Systems, which he sold to Dell. Behind him appears David Packard of HP, another techie. The youngest of these, incidentally, was Perot, then aged 57, while the other three were all 73 or older. As you look down the 1987 list, Warren Buffett is in ninth place. Then, as now, the sources of wealth of many others are spread across a range of industries, including media, brewing and drinks, and real estate. Interestingly, one William Henry Gates III ranks as 29th richest – his source of wealth is described as ‘high technology’. If you look back even further, to 1937, billionaires were fewer, but at least one of them was wealthier than today’s bunch. That was the year in which John Davison Rockefeller passed away, leaving a pile of assets reported to be equal to 1.5 per cent of the GDP of the US. In today’s money, with US GDP estimated by the Central Intelligence Agency’s World Factbook to be $19.36 trillion, that would work out at around $300bn – nearly treble the wealth of Jeff Bezos.

But there are some important comparisons we might draw with today’s new wealthy. Rockefeller, through his Standard Oil empire, bought refineries and pipelines to distribute oil, as the industry was starting to develop in the last two decades of the 19th century. In so doing, it ended up controlling access to 90 per cent of the American oil market. Two points are worth noting here: Standard Oil developed a massive monopoly; and it neither owned the oil nor had the rights to produce it, but it had access to it. Look at some of today’s billionaires and they also have huge monopolies – Microsoft, in providing the operating

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Wealth

The world’s 10 richest people According to Forbes, the richest people on the planet in 2018 (all men) are: 1. Jeff Bezos, 54, Amazon, $112bn (pictured page 61) 2. Bill Gates, 62, Microsoft, $90bn 3. Warren Buffett, 87, Berkshire Hathaway, $84bn 4. Bernard Arnault, 69, LVMH, $72bn 5. Mark Zuckerberg, 33, Facebook, $71bn 6. Amancio Ortega, 82, Zara, $70bn 7. Carlos Slim Helú, 78, Grupo Carso, $67.1bn 8= Charles Koch, 82, Koch Industries, $60bn 8= David Koch, 77, Koch Industries, $60bn 10. Larry Ellison, 73, Oracle, $58.5bn

5 8= 8=

David Koch credit: Kevin Moloney/Fortune Brainstorm TECH Other images: Rex features

systems of the majority of the world’s computers; Google, in the search engine space; and Facebook, in access to friends and acquaintances. They also have, effectively, controlling market shares. Likewise, Amazon arguably provides access to the world’s largest department store. Where do so many of us go to buy a huge range of goods cheaply and conveniently? However, there’s one crucial difference between the internet billionaires and JD Rockefeller’s business empire. “They’re controlling access to a vast global market in today’s wired world,” explains Matt Tabb. “People want access to information now, and the faster you can

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supply it, the more valuable it becomes.” The global reach of the web adds scale advantages that Rockefeller could only have dreamed of. How much wealthier would he have been if he’d controlled access to 90 per cent of the world’s oil?

FUTURE WEALTH The Forbes list shows there are still relatively few women among the world’s wealthiest. When they do appear, their wealth tends to be inherited – Alice Walton, for example, is the highest ranked woman on the list, at 16. Matt Tabb believes that this is likely to change as female entrepreneurs become more common. The international spread of the

UHNWI community is already well under way. But this is likely to continue, not only because of the rise of the wealthy in emerging markets but also because the wealthy are internationally mobile. Knight Frank’s 2017 Wealth Report notes, for example, that Monaco has the highest proportion of UHNWIs per head of population. This, says the report, is because they seek havens to live in, with their associated tax advantages and lifestyle benefits. And ease of communication means that the wealthy can now live where they want and still run their businesses and investments conveniently. Despite the continuing importance of inherited wealth, technology UHNWIs seem likely to feature more frequently in the wealth lists, as they’ve been doing for some time. But don’t be surprised if the Waltons, the Kochs and other wealthy dynasties feature for many years to come. Wealth, properly managed, breeds more wealth. This fundamental truth is likely to endure, though the word ‘properly’ comes heavily loaded with risk as well as reward. n RICHARD WILLSHER is a freelance finance writer

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location, location, location...

High-end property in global hotspots continues to attract the ultra-wealthy – and sky-high prices don’t seem to be cancelling out the lure of city living Words: David Burrows

THOSE LUCKY AND WEALTHY enough to own an

apartment overlooking Central Park or a Georgian pied-à-terre in Holland Park are unlikely ever to lose a penny (or cent) on their investment. London and New York have been prime locations for years – at least in ‘des res’ post codes – and nothing looks set to change. Some places simply never lose their allure. In London, Fulham, Kensington and Chelsea tick all the boxes on the ‘address to impress’ list. You’ll need deep pockets though – a six-bed terrace house in Chelsea will currently cost you around a cool £26 million. Or if you’re looking for up-and-coming areas and more brick for your buck, then regenerated Stratford (postOlympics) can offer you a five-bedroom, Grade II-listed house for a much more reasonable £1.5 million. Alternatively, if you fancy having Robert de Niro as a neighbour in the trendy Tribeca area of New York,

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a modest-sized, two-bedroom loft apartment will set you back around $5 million. As TV property programmes will tell you, location is everything and the most in-demand areas should, in theory, insulate you from the worst of any market correction. Not that any major correction is imminent. The fact is that despite talk of bubbles, in recent years the global market in prime locations has held up well, with foreign investors continuing to see property as an asset class offering security and long-term potential. But no matter how buoyant and lucrative a market appears, history tells us that the landscape can change quite suddenly. Think Fanny Mae and Freddie Mac in the US and the Asian property bubble of 1997. There are always triggers that can instigate a shift in market confidence and direction. One obvious concern presently is Brexit and how

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Wealth

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Joel Hernandez, Partner at Mourant Ozannes, agrees that Brexit has had an impact on the UK property market – with a softening in the commercial property market having a knock-on effect on the residential side of things. “Logically, if companies are moving headquarters away from London due to Brexit, then the demand for residential housing will reduce,” he says.

PRIME PRICES Given that London in general is a softening market in terms of volumes of sales, why are prime central London residential properties still selling so well? Partly, it’s because they remain more attractive areas to be based, but also because of price, as Liam Bailey, Knight Frank’s Global Head of Research, explains. “Prices in London peaked in 2014. Since then, the average prices in prime London locations have come down five to 15 per cent,” he says. “We saw price falls in 2016 and 2017, with sellers adjusting prices to make the market more accessible for buyers.” Bailey explains that the increase in stamp duty on higher value property in the UK also had a major impact in terms of cooling valuations. He agrees with Harris that EU investor interest may have dipped due

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it’s affecting the London market. The central London skyline may well be filled with the silhouettes of tower cranes, but this doesn’t paint the whole picture of what’s going on in the capital. As Johnny Morris, Head of Hamptons International Research team, points out, specific prime sites in the London market might be attracting healthy interest, but elsewhere the market is showing signs of softening. There’s also been a subtle change in where buyer interest is coming from in the run-up to Brexit. The proportion of homes sold to international buyers in London generally fell slightly in the second half of 2017. However, the proportion of homes sold to international buyers in prime central London increased, up eight per cent on the first half of the year and up 16 per cent compared with the second half of 2016. What’s fascinating is where the interest is coming from. “The rise was due to a pick-up in Middle Eastern buyers, who bought 15 per cent of homes in prime central London in the second half of 2017, up five per cent on the first half,” Morris explains. “Even though EU buyers still make up the second biggest group of international buyers in prime central London, they’ve been gradually withdrawing as a proportion of total sales since the Brexit vote in June 2016.”

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For investors from countries pegged to the US dollar, a weak sterling has provided a good opportunity to buy

to the UK referendum on Europe, but he’s keen to point out that the wrangling over Brexit did, unwittingly, offer indirect benefits to other investors. “The weakening UK currency postBrexit vote did have an impact. For those investors from countries pegged to the US dollar, a weak sterling provided a good opportunity to buy,” Bailey says. In terms of geographical locations, Bailey insists prime urban markets are still proving the biggest pull. “Key cities such as New York, London, Berlin and Frankfurt have been strong over the past five years and continue to hold up pretty well. They remain strong because of investment potential and the ability to let out and earn good income, particularly in areas where tech and financial services companies are concentrated.” As one of the world’s biggest financial centres, New York has undoubtedly enjoyed a period of strong growth. In 2016, the average price of a Manhattan apartment rose above $2 million for the first time. So, clearly not an area for bargain hunters – unless your idea of a bargain starts at £2 million and rising. As with London, the Manhattan skyline has seen significant change, typified by the opening in 2016 of 432 Park Avenue, a 96-storey tower hailed as the tallest residential building in the US. Prestigious developments such as this forced prices in Manhattan even higher. On completion of the tower, the most expensive units were sold for an eye-watering $87.6 million, $60.9 million and $50.1 million. Since the completion of 432 Park Avenue, the New York property market has cooled a little. According to a report in the New York Times, less than half of apartments in the city sold at or above list price from the tail end of 2016 – the first downward trend since 2014. This isn’t to say that property prices are

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unduly under pressure, or that prime location rents are being squeezed. The average one-bedroom city centre apartment will set you back $3,184 per month. To put that in context, the average monthly salary in New York (after tax) stands at $3,947. While you’re unlikely to make a killing in the Manhattan property market in terms of capital appreciation, central locations are still highly sought after, and rental demand and yields remain strong.

ICH BIN EIN BERLINER On the other side of the pond, the residential market in Europe has recovered well since 2009, when confidence levels fell and sales volumes dropped on the back of the financial crisis. “Berlin and Paris, in particular, have come back strongly since then, partly due to the fact that the Eurozone economy has improved over this period,” Bailey says.

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Wealth

Credit: Shutterstock.com

Certainly, if you’re looking for better value and greater potential for price appreciation, then Berlin might be the place to be. According to a recent European property survey, an apartment in Berlin costs around five times less than in London and up to three times less than in Paris for an equivalent location and quality of property. The real estate market in Berlin has seen double-digit price growth (10.1 per cent in 2015, 9.6 per cent in 2016 and 12.7 per cent in 2017), supported by high residential housing demand. Berlin has traditionally been a city where renting rather than owning has been the norm, but that’s starting to change – especially as foreign investors have seen

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the potential in a lively, cosmopolitan city. Since property ownership in Berlin is starting from such a low level, most market watchers predict that the city still has much to offer investors.

SHOW ME THE MONEY So who’s doing the buying in Europe? Is it Russian oligarchs getting money out of the country? While there’s no doubt there’s interest from these quarters, Bailey says the biggest demand is from Asia, specifically China. He explains that Chinese investors are looking for good income returns from European capitals and major cities that have a track record of good yields. Harris agrees that Asia is a key driver. “Buyers from Asia have also taken advantage of sterling’s depreciation following the Brexit vote. The proportion of sales to Asian buyers in prime central London has risen from nine per cent in the first half of 2016 to 16 per cent in the second half of 2017. However, the interest from Asian investors doesn’t extend to southern Europe, where most money into property there still comes from northern European investors. This point is echoed by Miguel Girbes, Director at Finca Cortesín, a development near Marbella in Spain targeting the ultrahigh-net-wealth market. “We have clients from Spain, Belgium, Germany, Poland, Italy, Switzerland, the Czech Republic, Holland and, obviously, the UK,” he says. Girbes points out that, in the main, investors are buying for personal use, though the opportunity to rent out is available. Finca Cortesín is at the top-end of Spanish property development, with prices starting at €3.7 million and rising to €7.5 million-plus. He explains that the high-end of the Spanish property market is more robust than mid-to-lower price developments. Finca Cortesín currently has 32 villas under construction and has already sold 15 units off plan. Investors in developments like this demand high spec. Architects are handpicked from across the world to ensure that villas are distinctive rather than uniform in design. Sea views, top-level security, access to hotels with Michelin-star restaurants usually figure in most ‘must-have’ lists. Finca Cortesín has the added advantage of having a nationally ranked top four golf course located within the hotel and villa estate. Girbes is confident the top-end of the Spanish property market will remain strong so long as locations tick the right boxes and the developments continue to provide a feeling of exclusivity.

BUILDING THE FUTURE Without the benefit of a crystal ball, and given the level of geopolitical uncertainty right now, predicting long-term property

Most expensive real estate in the world Given its reputation over the years as the location for the super-rich, it probably comes as no surprise that Monaco heads the list of most expensive cities to buy property. Your money doesn’t stretch very far in the principality. Here are the 10 most expensive places, and how many square metres of property you’ll get for $1 million.

1. Monaco – 16 sq m 2. Hong Kong – 22 sq m 3. New York – 25 sq m 4. London – 28 sq m 5. Singapore – 39 sq m 6. Geneva – 41 sq m 7. Paris – 46 sq m 8. Sydney – 48 sq m 9. Shanghai – 54 sq m 10. Los Angeles – 58 sq m Source: Knight Frank’s Prime International Residential Index 2018

trends isn’t straightforward. However, Bailey believes the residential property market will remain stable over the next five to 10 years, although we’re unlikely to see strong price growth. “For those buying property as an investment and wanting to outperform average returns, location comes in to focus much more. Not just central city locations, but property close to main business zones and improved infrastructure – for instance, Crossrail in London,” he says. Joel Hernandez agrees that the property market will continue to soften, but thinks that post-Brexit there will be a pick-up. “European foreign investors remain wary as things stand as there are too many variables with regards to Brexit,” he says. “When there’s a clearer picture post-2019, interest is likely to increase.” All of this said, if you’ve got the money and you want to live in some of the world’s busiest and most vibrant cities, there’s plenty of choice and little to stop you. n DAVID BURROWS is a freelance writer

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The stuff of

dreams From Henry Fordâ&#x20AC;&#x2122;s utopian rainforest city to Elon Muskâ&#x20AC;&#x2122;s Falcon Heavy rocket, history is littered with dream projects of the ultra-wealthy, but are they actually more than just vanity?

Words: David Craik

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race, David Bowie’s Space Oddity is sure to be a hit with little green men or women in some far-flung galaxy. No doubt they’ll be clicking their little fingers as the Tesla electric sports car blasting out the song continues its journey through space. Those grooving aliens will have billionaire entrepreneur Elon Musk to thank after the PayPal co-founder’s Falcon Heavy rocket, under the auspices of his Space X company, delivered the Tesla payload into space in February. The event marked a significant step forward in Musk’s aim to send human beings to Mars by 2024, and to do so with reusable rockets, as the Falcon Heavy’s boosters descended back to the Cape Canaveral launch site in one piece. Musk, who pocketed $180 million when he sold PayPal in 2006, isn’t just spending cash on spaceships. He’s also investing in those Tesla electric cars and energy storage products such as the solar-powered home battery, Powerwall. The human body is also in his sights. A venture called Neuralink aims to create devices placed inside the human brain to help improve memory and interface with artificial intelligence software.

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While Musk’s escapades may seem a little ‘out there’, he’s not alone in pursuing such ambitious projects. Other mega-rich entrepreneurs are also filling their heads with dreams. Amazon founder Jeff Bezos, worth $112bn according to Forbes, is pumping $1bn a year into his Blue Origin project, which will also use reusable rocket technology to send tourists and satellites into space. Larry Page, co-founder of Google, is another fixated with the galaxies. His Planetary Resources firm is aiming to mine near-Earth asteroids for minerals and water to ‘sustain human life and as propellant for spacecraft’. Peter Thiel, another PayPal co-founder, has his own plans for water. He’s the co-founder of the Seasteading Institute, which is looking to create a series of floating cities in French Polynesia, with offices, schools and hotels on board. Its aims have evolved from the creation of a libertarian utopia to helping the human race cope with rising sea levels as a result of climate change. But why bother with human survival when, like Russian media mogul Dmitry Itskov, you can live forever as an avatar? He’s funding the 2045 Initiative, whose end goal is to transfer the mind and thoughts of a human being after death into an avatar with an artificial brain. It may be tempting to think that all of

the above projects are the fevered thinking of men who have fortunes so vast that they don’t know how to spend them and are living out childhood fantasies of Star Trek and Buck Rogers. But tycoons spending their fortunes on outlandish or innovative personal projects aren’t just confined to the 21st century – you can find echoes of present projects in the past.

BACK TO THE FUTURE Car manufacturing legend Henry Ford tried to create Fordlandia – a utopian city in the Amazonian forests of Brazil – back in the 1920s. As well as a source of cheap rubber, Ford wanted to build the city on his values, investing in health and schools, communal dances, a strict diet, no alcohol and plenty of gardening. Ford invested $20 million in the site, but it was eventually sold back, at a loss, to the Brazilian government after World War Two. In the world of pioneering transport, Howard Hughes, the US businessman, engineer and film producer, is widely remembered for designing the Spruce Goose in the 1940s. The highly ambitious flying boat was 210 feet long, weighed 800 tonnes and was made entirely out of wood. It only flew once. In the medical field, entrepreneur John D Rockefeller invested in the Rockefeller Institute, the first biomedical research centre in the US, after his grandson died of scarlet fever in 1901. There were also the first stirrings of the importance of renewable and solar energy, as 19th century Tyneside industrialist William Armstrong, who made money out of armaments, also invested in generating the world’s first hydro-electric power. Armstrong also predicted in 1863 that ‘England will cease to be a coal-producing country... within 200 years’. We can appreciate the benefits of the work done by Armstrong and Rockefeller, and there’s a strong likelihood that similar gains for the human race will be made in science and health by the current

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Wealth generation of mega-rich entrepreneurs. David Lambotte, Client Director, Trust Services, at Estera, says he’s an ardent follower of Musk and insists that what might sound like fun, fanciful schemes are much more complex. “Musk realises there has to be an economic supporting function to drive his ultimately philanthropic projects,” he says. “He gets our buy-in because his ideas, such as colonising Mars, interfacing mind and machine at Neuralink, or developing electric cars, are ultimately commercially viable ideas. He’s secured huge launch contracts from NASA and the US government at SpaceX; Tesla now has a market capitalisation beyond that of Ford; and Neuralink is early stage but has the potential to change what humans are. All of these projects, which sound farfetched, are profitable ventures.” But there are huge risks in these projects, as well as potential benefits. Musk recently told the South-By-SouthWest conference that both SpaceX and Tesla almost went bust a decade ago. Of the $180 million he made when PayPal was sold, he put half into the companies. But after research and test failures, he was soon down to his last $40 million. “SpaceX is alive by the skin of its teeth, and so is Tesla. If things had just gone a little differently, both companies would be dead,” he said.

REALITY CHECK So, what lessons, if any, can be taken by HNWIs or entrepreneurs looking to invest in personal projects? As a trustee, when faced with a beneficiary seeking funds for an entrepreneurial endeavour – perhaps not a rocket or floating city, but still requiring significant capital – Lambotte takes the professional approach. “We have a duty of care to the beneficiaries of the trust fund, based on all their needs, and to follow the expression

there’s a likelihood that gains for the human race will be made in science and health by these megarich entrepreneurs

of wishes we have from the settlor,” he says. “We ultimately apply ‘prudent man’ standards. Is it an intelligent investment? Do they have a solid business plan and realistic forecasts? Are they going about this the right way? It isn’t risk avoidance, more a case of risk management.” When it comes to exotic hobbies or interests, be it rebuilding steam trains or collecting art, it’s often preferential for a settlor, if alive, to keep that portion of his or her wealth outside a trust. “The trust fund is ultimately the safety

net, the rainy-day fund, intended to last for some time,” says Lambotte. “Entrepreneurs are best to keep their ‘play money’ outside of the structure and get some sound advice to ensure they don’t fritter it away.” Chase de Vere Head of Communications Patrick Connolly says hobbies can take the form of traditional alternative investments, such as art, coins, classic cars or wine, but care should be taken in less familiar territory. “You get investments that are expensive, unregulated and illiquid, with potentially volatile performance and that produces no income. This isn’t exactly attractive to most investors,” he says. Nevertheless, you may be inspired to follow the likes of Musk, Bezos, Rockefeller and Armstrong and invest your hard-earned cash in projects that can help empower the human race. But if you’re going to go after your dream project, with all its associated risks, you might want to take Bowie’s advice and ‘take your protein pills and put your helmet on’. n DAVID CRAIK is a freelance finance writer

Rex features

WHEN DREAMS DIE

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Australian tycoon Clive Palmer became a billionaire through real estate and minerals. He’s perhaps most well known in his home country for buying the exclusive five-star Hyatt Regency Coolum resort in Queensland in 2011, which included a professional-level golf course. But why not add to the luxurious atmosphere by creating a real-life Jurassic Park on the site, featuring more than 100 robotic dinosaurs? Well, Palmer thought it was a good idea. But tragedy struck when star exhibit Jeff – a 20-metre Tyrannosaurus Rex – burned to the ground in an electric fire in 2015. The park, called Palmersaurus, has now closed and Palmer is reportedly holding a $67 million debt from the Coolum site. Palmer also announced in 2012 that he was going to build Titanic II – an exact replica of the White Star Line’s unsinkable ship, which sank in the Atlantic in 1912. It would have similar features, such as an Edwardian gym, and was scheduled to set sail in 2016… then 2018… Back in 2012, aged 58, Palmer said: “Most people of my age and means either want to retire or build a boat. I’m going to build a boat.” There’s been no sign of Titanic II since.

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BUSINESS LIFE

Technology

All seeing

all knowing Words: Andrew Strange

ONCE THE STUFF of science fiction, biometrics that identify people by their physical characteristics or the way they behave are becoming commonplace. A KFC restaurant in China, for example, is already appealing to young customers by using a facial recognition system that allows them to pay for their chicken with a smile.

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These days, technology can recognise us by looking at everything from our facial features, fingerprints, iris and vein patterns, to the unique way in which we walk, sign our names or use our keyboards. In 2016, NEC Corporation announced that it had developed a biometric that could identify people by the

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Biometrics are increasingly being used to identify individuals in all manner of ways, but are we starting to cross a privacy line?

Technology

resonation of sound determined by the shape of human ear cavities. The reality is that biometrics are already part of everyday life, thanks largely to their adoption in mobile phones – the iPhone X is accessed using facial recognition, with the fingerprint recognition of previous iterations all rather ordinary now. Not only does biometric information in our passports allow us to pass through borders more quickly, but banks are increasingly using such technology to protect our accounts and transactions. TSB uses an iris scanning system, Coutts has installed voice recognition, while Banco Bradesco in Brazil claims to have reduced ATM fraud to almost nil by adding palm vein scanners to 35,000 machines. In the motor industry, Honda, BMW and Volvo are among a number of manufacturers that have unveiled biometric security that requires the driver’s fingerprint to open and start the car. And in sport, Ferencvárosi Soccer Club in Budapest uses palm vein scanning to identify banned fans and to ensure that each visitor can only enter their designated section, thereby keeping rival fans apart. The technology could soon be used to make travel in major cities easier. Graham Fletcher, Manager of Cubic Transportation Systems’ London research centre, explains that biometrics could pinpoint where a passenger leaves a train so that they’re charged the right amount, or track people who jump a barrier and identify regular offenders. Dr Richard Guest, a lecturer in biometric engineering at the University of Kent, heads the

it’s already possible to buy the fingerprints of well-known people on the dark web – waiters can easily collect them from wine glasses to sell

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EU’s AMBER project, which is looking at the use of biometrics on mobile devices. He explains that there was a major focus on biometric research after the 9/11 attacks in the US, as countries sought ways to improve security. “But it wasn’t until four or five years ago that mobile device companies started putting biometric sensors and systems on their devices,” he says. “That represented a fundamental shift in terms of the use of biometrics. When people such as Apple and Samsung started putting biometric systems onto their phones, it was the largest roll-out that had been seen.”

DATA PROTECTION One area of research focuses on continuous authentication, by using phones to monitor people on an ongoing basis. It would involve not just biometric sensors but location, app usage and even the way you swipe the phone, so that you’d never have to use a password or a fingerprint when using the device. But this could involve constant monitoring by companies such as Google or Apple, raising privacy questions. Indeed, while the potential for biometrics to make our lives easier is undeniable, it presents all sorts of privacy and security risks. When a password is stolen, it can simply be changed, but the same isn’t true of your fingerprint or face. Ricky Magalhaes, Managed Security Services Director at Logicalis, says it’s already possible to buy the fingerprints of well-known people on the dark web because waiters, for example, can easily collect them from wine glasses to sell. “You can steal fingerprints, and the thing about biometrics is that once they’re stolen, you can’t change your fingerprint,” says Magalhaes. “So, it’s not like a passport that you can change once it’s stolen. Biometrics need to be properly protected, because once they get compromised it can cause a huge issue.” He believes the advantages of biometrics outweigh the risks. But systems are emerging that do everything from confirming the identity of dementia patients before drugs are administered, to recording and transcribing meetings, which means privacy and data security have become critical issues. Multiple biometrics and security measures can be used to identify people and guard against theft and the misuse of biometric information – and the increasing use of machine learning and artificial intelligence is also helping. Artificial intelligence is smart enough to question suspicious biometrics, so if a facial reading is inconclusive, then fingerprints or voice patterns can be checked.

REGULATORY RESPONSE Biometrics and other advances in technology have posed a challenge for regulators, because existing regulation has begun to fall behind the pace of change. On 25 May, however, we will see one of the biggest shake-ups for years, when the European Union’s General Data Protection Regulation (GDPR) comes into force. The law covers biometrics for the first time, and companies that fail to comply with strict data processing rules face big fines of up to €20 million or four per cent of global turnover. New laws will

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Technology

come into force on the same day in both Jersey and Guernsey with the intention of strengthening data protection on the islands. Paul Vane, Acting Information Commissioner for the States of Jersey, explains: “While the current data protection regime we have in place in Jersey and Guernsey would broadly cover this kind of information, this technology didn’t really exist when those laws came into force. Technology has moved on rapidly and the law has been stretched to its limits to apply the same principles to emerging technologies. “GDPR, which has also triggered the revision of Jersey and Guernsey laws, actually specifically mentions biometric data as part of its definitions of special category data.” Under the Jersey Data Protection Law 2018, companies can be fined up to £10 million for failing to protect data properly. However, Vane says the focus will be on working with companies to help comply, and only those that ignore advice or fail to put a proper action plan in place to ensure they comply with the regulation are likely to face fines. “No legal mechanism wants to stand in the way of innovation and the data protection law is no different in that,” he says. “There are lots of benefits to using biometrics as a secure method of identity authentication or reducing the chance of hacking by using multi-factor identification techniques. It’s a research and analytical tool that leads to brilliant creativity and innovative technologies but ultimately, you’ve got to have a lawful basis to process that kind of information.” Now that biometrics have become an everyday method of identification, there’s no escaping the fact that they’re likely to become more prevalent. And as criminals continue to grow in sophistication, the public is going to need to be as protected as possible from identity theft. n ANDREW STRANGE is a freelance writer

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What the future holds The future of biometrics is unpredictable, but we could see these technologies within the next couple of years: Shape A company in the US has developed a system that can identify what you’re carrying – even if it’s in your pocket – by your shape. It does this by taking hundreds of pictures and is able to identify an object, such as a gun. This has obvious relevance within highsecurity buildings and as a system to protect schools in the US from marauding gunmen. Emotion Systems are also being developed to identify emotions by monitoring body language. If you’re happy, you tend to smile, but when you’re unhappy your body changes in a variety of measurable ways. Using this technology, you could reassure someone who was frightened or bar entry to someone who was angry. If you were videoconferencing with a client, it could warn you if they were unhappy, so that you could change tack. Body heat While we’re used to automatic doors, we could soon see doors that open automatically – but only for certain people. This is likely to be achieved by sensors behind walls that identify individuals by mapping their unique heat signatures.

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THE AGENDA The Agenda is compiled by Businesslife Fashion and Lifestyle Editor, Thom O’Dwyer, with additional material by Danny Cobbs

1. BEAUTY PERSONIFIED The aesthetic of Ralph & Russo – heir to the grand British tradition of Hardy Amies and Norman Hartnell – is the embodiment of haute couture style. The purity and refinement of its couture and ready-towear lines is the height of sophistication. The Spring/Summer 2018 Couture Collection was nothing short of magical, a divine smorgasbord of styles and design references – from strict 1940s cocktail dresses to Cinderella ballgowns and traditional Chinese silhouettes. Pictured right, a glorious strapless silk organza ballgown features ribbon embroidery and 3D orientalist flowers, embellished with metallic silver crystals. In total contrast, the ultra-chic silk tulle and woven French tweed off-the-shoulder cocktail dress and jacket, above, are embellished with white opals and crystals. This is what haute couture is all about – old school glamour, Hollywood glitz and moneyed elegance. And to add to its devotees – Beyoncé, Angelina Jolie, Gwyneth Paltrow and a bevy of private clients – Meghan Markle wore a Ralph & Russo dress for her official engagement photo alongside Prince Harry. Fashion fame big time! £POA, www.ralphandrusso.com

INSIDE THE AGENDA: ACCESSORIES, BEAUTY, CARS, DRINKS, FASHION, FOOTWEAR, FRAGRANCES, FURNITURE, HOMEWARE, JEWELLERY Everything you need for a more stylish life.

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THE AGENDA

2. DESIGNER EDGE Lust for Life – an intriguing exhibition recently held at London’s renowned Carpenters Workshop Gallery – showcased work by controversial Dutch sculptor, designer, visionary and entrepreneur Joep van Lieshout. Treading the blurry line between art and design since the early 1980s, he opened his studio Atelier Van Lieshout in 1995. He’s created everything from sexually suggestive sculptures – his fibreglass public sculpture was rejected by the Louvre last autumn for being obscene – to über-utilitarian office chairs. For three decades, van Lieshout’s work has broken the boundaries of art, design and architecture. In the artist’s latest show, he used his Lust for Life Lamps to express his fascination with man and machine, environment and

consumption, society and systems, the urge to destroy and renew, and the interplay between the dystopian and utopian. Their hard-edged feel is redolent of the Brutalist architectural style of the 1950s. Pictured here are two prime examples of the limited-edition Lust for Life Lamps – the Minimal Kiss and the Statistocrat. Both powerful ‘sculptures’ in their own right, yet practical additions to urban living and lighting. £POA, www.carpentersworkshopgallery.com; www.ateliervanlieshout.com

3. LESS IS MORE Nothing feels better than buying a new handbag to complete your superstylish springtime look. It’s just the boost a hard-working career girl needs. Whether you go for a haute-hobo fringed number, a still-in-fashion oversized bucket bag, or a haute-silly transparent bag (open invitation to pickpockets), as seen on the Chanel, Fendi and Valentino catwalks, a new handbag is just what the style doctor ordered. Our vote for the best bag of the season goes to Ralph & Russo. Channelling contemporary minimalism and hard-edged lines, this starkly simple geometric handbag in silver alligator with silver hardware trims is the perfect accessory to perk up any sophisticated ensemble. Gorgeously decadent and so gorgeously enviable. £19,500, www.ralphandrusso.com

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4. DIAMONDS ARE FOREVER Born into Polish nobility, Stone Paris founder Marie Poniatowski designs delicate, filigree pieces of jewellery that are visions of elegance and femininity. Since opening her Paris shop in 2004, Stone Paris has established a reputation for super-light, mesmerisingly beautiful jewellery. The designer describes her creative vision as “vintage-inspired, feminine, delicate, timeless and rock!” and her customers include Michelle Pfeiffer, Demi Moore and Juliette Binoche. Pictured here is the exquisite Passion Necklace, where tiny white diamonds play a lustrous contrast against the blackened white gold base, and the 18-carat rose gold pendant finishes it off impeccably. Wear the necklace the Parisian way, with skinny jeans and a white T-shirt. Toujours chic, n’est-ce pas? £6,481, www.mytheresa.com

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THE AGENDA

5. OBJECT OF DESIRE Beauty may be in the eye of the beholder, but in the case of London-based Object Studio it’s very much in the eye of the creator. Royal College of Art graduate Thomas Vaughan brought together four furniture designer/makers to create bespoke furniture and interior commissions for private and commercial spaces. All work is designed and created in-house. Exploring new materials, processes and finishes, along with advanced manufacturing techniques, their aim is to allow the user to connect with their work in a tactile way. Pictured, the twisting base of the elegant Nodum desk defies all laws of woodworking – it’s carved in ‘ebonised’ ash from 43 sections with traditional joints. Pushing the boundaries of aesthetics, technology and material, this collective produces fine pieces for the modernist connoisseur. £POA, www.objectstudio.co.uk

6. CUSTOMISED LUXURY Footwear brand SWEAR was founded 22 years ago by José Neves – also founder of online fashion retailer Farfetch – as a unisex, seasonless sneaker label. Last year, he repositioned the label and the footwear brand was relaunched as fashion’s first fully customisable sneaker label for the next generation of luxury consumers. Customise 360 allows customers to design their own sneaker with state-of-the-art 3D modelling technology, before they’re meticulously handmade and dispatched within four to six weeks. Your custom-made sneakers can be made in nappa, suede, hairy calf, python, ostrich or crocodile leathers. A contemporary take on the classic lace-up sneaker, the Vyner model, pictured, is customised in white crocodile leather. With its piping and padded collar, the shoe is all about comfort. The low-top comes complete with a rounded toe, flat laces and chunky rubber soles. As Neves himself says: “I really believe that customisation will be the next revolution in luxury. It’s a very powerful movement.” Yes, but it’ll cost you! £3,235, www.farfetch.com

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7. BEAUTY IN A BOTTLE With this light, dewy foundation and exquisitely matched concealer, instant, natural-looking perfection is at your fingertips, ladies. La Prairie Skin Caviar Concealer Foundation SPF15 is a luxurious cream emulsion that offers full, cunningly refined coverage. The concealer camouflages under-eye darkness and deeper flaws. Both formulas support firming, with La Prairie’s legendary caviar extracts. A brilliant fusion of science and cosmetic artistry, this product is the very foundation of sheer perfection. £170, www.selfridges.com

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8. ULTIMATE REJUVENATION More an extraordinary transformative experience than mere moisturiser, La Prairie Cellular Cream Platinum Rare is the height of self-indulgent luxury. From the first touch, this is a leavening immersion. Tracing its proud heritage to the renowned Clinique La Prairie in Montreux, Switzerland, for four decades this exclusive beauty company has gone to the ends of the earth – literally – to uncover the most beneficial ingredients for this cream. Colloidal platinum helps to recharge the skin’s balance, increasing its absorption of revitalising ingredients. Climate-activated hydration adjusts to changing humidity levels and the skin’s temperature, releasing moisture as needed by the skin. This rejuvenating cream preserves skin texture and tone, restoring a radiant glow. There’s nothing in the galaxy like it. The cream is the pinnacle of cosmetic art, science and sheer luxury. Costly? Yes. But you’re worth it. £894/20ml, www.selfridges.com

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9.DIVINE SCENT Founded in 2004 by the renowned fragrance specialist and historian Roja Dove, Roja Perfums has become a byword for exotic, luxury fragrances for men and women. For years, the ultra-special scent Roja Haute Luxe was the perfumer’s own private secret. As Dove explains: “I made this creation using all the materials I love the most. Everything about this fragrance is very personal, including its presentation. Having been asked constantly ‘What fragrance do you wear?’, usually followed by ‘Can I buy it?’, I decided to make a small quantify every year.” The bottle itself comes lavishly adorned with a Swarovoski crystal cap and features 24-carat gold leaf inside the opulent bottle. This is a rich, resinous, modern ‘chyré scent’, with citrus high notes and a warm mossy, woody base, and can be worn by men and women. It’s a truly head-turning, jaw-dropping scent. A fragrance of rarity, refined perfection and unrivalled beauty, this scent is bound to mesmerise even the most jaded fragrance lover, whatever the gender. £2,500/100ml, www.selfridges.com

10. BLAZING A TRAIL Since Alessandro Michele was appointed Creative Director in 2015, his eclectic and flamboyant aesthetic has made Gucci the most in-demand luxury brand in fashion. He was also largely responsible for the rebirth of the famous double G logo after the anonymous, logo-less, minimalist approach dominated fashion in the nineties and noughties. Paying homage to Gucci’s roots in recent collections, the designer has brought the established symbol of Gucci’s heritage back to the fashion forefront. And the customers love it. The attitude now is: if you’ve got it, flaunt it. And guys, what better way to show off your fashion nous than by sporting this in-yer-face, cooler-than-cool cotton jersey, two-button blazer from the 2018 Cruise Collection? The jacket has two roomy patch pockets, a single back vent, formal but comfy fit, half canvas construction, and is silk lined. Statement made. The double G motif of Gucci’s 1980s heyday is back. And bigger and bolder than ever. £1,640, www.farfetch.com

11. HOT FOOTING IT LA local Dominic Chambrone – the brains behind über-trendy, customised footwear brand The Shoe Surgeon – has lent online fashion retailer Farfetch his super-stylish, street-cred skills as part of a limited edition collaboration. Offering deconstructed and reimagined urban sneakers, the Y3 Mira sneaker, pictured, is for the fashion-forward lady. With a definite rock chick vibe, the shoe style blends the brand’s contemporary aesthetic with Chambrone’s daring design approach. Made from the finest leather and nubuck, these totally on-trend sneakers are secured by white laces that weave through rope-style loops. With contrasting dayglo orange lining, the branded Shoe Surgeon logo is boldly printed in gold on the tongue. Finished off with chunky black and white rubber soles, the Y3 branding is flashily emblazoned on the heel. These sneakers are a one-off design, and all proceeds from the sale will go to the North Bay Fire Relief charity, aiding victims of the devastating fire disaster that hit Northern California. What you might call a worthy collaboration. £2,010, www.farfetch.com

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12 12. A CLASSIC REBORN After more than 10 years in production, and a few tweaks along the way, the car that singlehandedly revived Bentley’s fortunes has had an overhaul. Yet despite the Continental GT’s obvious success and longevity, its driving dynamics were always questionable. This new model, however, which goes on sale later this year, addresses those issues, and then some, writes Danny Cobbs. Its underpinnings come from the Porsche Panamera, re-engineered to deliver handling characteristics unique to this GT. It’s the same story for its new dual-clutch, eight-speed gearbox. Add a weight saving of 76kg into the equation, and this new Bentley becomes so much sharper to drive than its predecessor. Power still comes from a six-litre twin-turbo W12 (a V8 will follow after a hybrid), but the familiar capacity belies the fact that the unit is all-new, with more muscle on offer as well.

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There’s now 626bhp and 664lb ft of torque, which translates into 3.7 seconds to 62mph and a top speed of 207mph. Where the GT’s elegant new metalwork may seem a little muted against other cars in the same price bracket, the cabin is subtly flamboyant and drips in bespoke luxury handcrafted to the highest levels. Leather acts as the backdrop for the latest onboard technology and there’s enough room in the back seats to comfortably accommodate two average-sized adults. But here’s the thing – even at full pelt, when the GT is propelling itself to what can feel like Warp Factor 1, it remains eerily quiet on the inside. This GT now offers something for everyone.

In an instant, it transforms from a practical 2+2 long-distance cruiser – with a boot large enough to swallow a set of golf clubs – into a howling, snarling, driver-focused track car. On reflection, the asking price seems like a beguiling proposition for a car this accomplished. From £156,000, www.bentleymotors.com

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13. DIFFERENT BRAND OF DANDY Having built his eponymous luxury label from scratch in just four years, Joshua Kane – the dandiest tailor on the London fashion scene – has amassed a serious cult following of both genders. He cut his tailoring teeth working in Brooks Brothers’ New York City design studio, then moved on to work with both Paul Smith and Burberry’s ex-Design Director Christopher Bailey as senior designer. The Albert suit, pictured, is a perfect example of the designer’s distinctive look. Impeccably tailored from specially woven herringbone pattern Donegal tweed, the jaunty, retro, heritage look from the Journey catwalk collection was inspired by 1920s London. The jacket features wide peak lapels and side vents, closing with a single blackhorn button with the silver crest logo. In addition to the made-to-order ready-to-wear collections on offer, Joshua Kane also offers a fully bespoke service. The latter process traditionally takes eight weeks, with a final fitting required to ensure perfection of fit and finish. The perfect suit for the well-groomed new age Beau Brummell. £1,650 suit; £470 waistcoat; £260 shirt; £150 cap; £120 tie; £120 scarf, www.joshuakanestore.com

15. DENIM DELUXE Domenico Dolce and Stefano Gabbana really let rip at their SS18 catwalk show. Always a crowd pleaser, this season was a riot of mad, playful prints, wacky motifs, traditional Sicilian Majolica folkloric prints, and more blossoms and flowers than you’re likely to find at this year’s Chelsea Flower Show. You can always count on Dolce & Gabbana to take an upmarket, designer approach to revamping and reinterpreting humble denim jeans. The mid-rise distressed jeans, pictured here, come in a comfortable bootleg cut and have been lavishly decorated all over and elaborately embroidered with hearts and an entire flower shop of different floral prints, as well as dripping graffiti slogans and the house’s adopted spotted leopard logo motif. True works of art, these denims. £1,500, www.mytheresa.com

16. SOCK IT TO ME The wildly popular Italian fashion label Etro started life in 1968 as a textile design company, becoming famous for its exotic, swirling paisley jacquard fabrics. Moving into the luxury leather goods market in 1984, it expanded even further, staging its first fashion show at Milan Fashion Week in 1996. Etro Man exemplifies the label’s blend of fine tailoring and exuberant design. More restrained clothing styles and sleek, contemporary silhouettes are offset by a wild explosion of flamboyant patterns and intense colours for accessories and shirtings. Pictured here is an eye-catching pair of flashy paisley printed pure cotton socks. Just the thing to jazz up the old navy blue or charcoal city suit during workday hours. £134, www.farfetch.com

14 14. PLAY MISTY FOR ME Perfume on your pulse points? The new way to wear your fragrance, ladies, is by spraying your hair with hair mist. There are practical reasons for adopting this new way of wearing perfume – hair holds fragrance more effectively than skin because it’s more porous, so it evaporates more slowly. For sheer luxury and pure selfindulgence, The Night Hair Mist by Frédéric Malle ticks all the right boxes. Grandson of the legendary Serge Heftler Louiche, founder of Christian Dior Perfums, Malle has perfumery in his DNA. Created in collaboration with celebrated perfumer Dominique Ropion, The Night is a potent, uncomplicated composition of oud, the dark-scented resin from the Southeast Asian agar tree – often referred to as Liquid Gold because of its rarity – mixed with Turkish rose and amber boosting the fragrance’s longevity. A subtly sexy scent exuding plain unadulterated extravagance. £530/50ml, www.selfridges.com

THE AGENDA

17. COOL AS CAN BE The iconic 50s-style FAB28 fridge by Smeg – the Italian manufacturer of upmarket domestic appliances – has been used on many occasions as a canvas for creativity and artistic expression. But none quite like the fantastical fridge pictured here. Joining forces with hip design duo Dolce & Gabbana has resulted in what can only be described as a spectacularly dramatic, mindblowing kitchen appliance. Sharing a deep passion for Italy and tradition, the designers found inspiration for the project in Sicilian folk iconography. Each refrigerator features quintessential scenes from Italy’s history and historical myths. The themes developed for each are embellished with classic floral motifs. Fine artists steeped in the Sicilian folkloric traction were commissioned to produce the vibrantly coloured panels. “The fridges really are the perfect collector’s piece,” Stefano Gabbana told Vogue when the fridge was launched at the prestigious World Furniture Exhibition in Milan. As Picasso once said: “Art washes away from the soul the dust of everyday life.” In this case, it’s kitchen drudgery. £POA, www.smeguk.com

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18. DRINK PINK For those who prefer a deep and full-bodied rosé champagne, Dom Pérignon 2002 should not be missed. This rosé is assertive and remarkably tactile, with a creamy intensity. The fullness stretches out and sustains a vibrant, crystalline note, and possesses a symphony of lilting and luminous aromas. This complexity becomes deeper in the finish, with scents of smoke and black cherry. The 2002 vintage is a tribute to pinot noir – a notoriously difficult grape to work with. This rosé, however, brings its expression to the fore. A 10-year maturation period has resulted in a champagne of astonishing and bold richness. The six-litre Methuselah, pictured, comes from the cellars of Clos19, which is your passport to vintage champagnes, fine wine and stellar spirits from the top distilleries. £8,500, www.clos19.com

19. DRY ICE To chill your Dom Pérignon 2002 rosé champagne, why not invest in the latest luxury must-have – an iceless ice bucket by the techno and thermodynamics master brand Kaelo. Be it vintage champagne or a normal bottle of plonk, loading up an ice bucket or handling dripping wet bottles isn’t just a nuisance, it’s also a messy bore. This miracle cooling vessel, however, not only does the job chillingly well, but design-wise it’s also rather attractive to look at, and would blend in nicely with most urban living interiors. One touch activates Kaelo’s patented cooling system to readily chill down the inner chamber and provide the perfect environment to reliably maintain a chilled bottle’s temperature. You’d have to have the brain of a rocket scientist (or the company’s founder) to understand how this super-cool gizmo operates, but it works beautifully. Promise. And it uses less energy than a 60W bulb. £1,395, www.kaelo.co.uk

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Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Great learning boosts performance It’s a simple fact of business that people who know how to use their IT systems properly are more productive and happier at work. At ALX Training, it is our mission to ensure that every person we work with can use their essential applications properly, saving time, smoothing processes and creating a more productive workplace.

Appleby is one of the world’s largest providers of offshore legal advice and services. Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of London, Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include:

Our trainers are renowned for their product knowledge, and their friendly and energetic attitudes to training help them get the best from every person they teach.

l Corporate l Dispute Resolution l Private Client & Trusts l Property

Learning starts at induction We are well-known for our range of Microsoft Office courses which includes Office 365, Excel, Outlook, PowerPoint, Word, Project, SharePoint and Visio but our clients know we can do much more.

Members of the Jersey and Guernsey offices regularly advise London City and international law firms on all legal aspects of offshore corporate, finance and investment fund transactions and arrangements in the Channel Islands.

Not only do we train on well-known accounting packages such a Xero and QuickBooks but we create courses on bespoke in-house systems. We design unique courses specifically for your organisation, so that your staff learn precisely the information they need to work efficiently and effectively.

For more information visit our website www.applebyglobal.com

We know there’s no better place for your new colleagues to start learning than during their induction programme, so we develop bespoke induction courses that give your new starters all the information they need to hit the ground running. We can even deliver content online, so training can be ongoing and continuous.

Michael Cushing Managing Partner, Jersey +44 (0)1534 818 395 mcushing@applebyglobal.com Wendy Benjamin Group Partner*, Guernsey +44 (0)1481 755 603 wbenjamin@applebyglobal.com

Ashburton Investments is a new generation investment manager building on a solid foundation to provide global investors with multi asset, specialist emerging market and equity products. As part of the FirstRand Group, one of South Africa’s largest financial services institutions, Ashburton has a strong footprint in Africa and understands volatile emerging markets. Ashburton believes that taking a broad-brush view of emerging markets is no longer effective and it is important to make country by country judgements enabling its specialism in Africa and India. For more than 30 years multi asset has been the cornerstone of the business, with the product set evolving over time to suit ever changing market conditions and understanding clients’ needs to effectively manage risk and access more sources of return. Globally, Ashburton Investments has over £8.8bn under management as at June 2017 with offices in the Channel Islands, United Kingdom, South Africa, and the United Arab Emirates. For more information please do not hesitate to get in touch: Laythamm Malorey E: laythamm.malorey@ashburton.com T: +44 (0)1534 512010 www.ashburtoninvestments.com

* Not admitted in Guernsey

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Independent and Professional We offer a full range of management and fiduciary services to our domestic and international private clients and corporate structure: l Family office - bespoke assurance l Wealth management - your strategy l Trustee - impartiality with vision l Corporate services - attention to detail l Good governance - a helpful eye l Strategic guidance - controlled ideas We aim to assist in the provision of personal service to meet your requirements. Ask us. Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Lisette Le Creurer – Senior Trust Manager llecreurer@baccata.co.je Wendy Warder – Senior Trust Manager wwarder@baccata.co.je Justin Clapham – Client Director jclapham@baccata.co.je Áine O’Reilly – Client Director aoreilly@baccata.co.je www.baccata.co.je

Carey Olsen is a leading offshore law firm advising on British Virgin Islands, Cayman Islands, Guernsey and Jersey law across a global network of eight international offices. We are a full service firm working across banking and finance, corporate and M&A, investment funds and private equity, trusts and private wealth, dispute resolution, insolvency and property law. Our clients include global financial institutions, investment funds, private equity houses, multi-national corporations, public organisations, sovereign wealth funds, high net worth individuals, family offices, directors, trustees and private clients. We work alongside all of the major onshore law firms, accountancy firms and insolvency practitioners on corporate transactions and matters involving our jurisdictions. Our advice is delivered by an approachable and experienced team of commerciallyminded lawyers, led by 48 partners, who help our clients achieve their objectives. We have the expertise and resources to handle the most complex international transactions combined with a personal approach to business. Contact: guernsey@careyolsen.com T +44 (0)1481 727272 jerseyco@careyolsen.com T +44 (0)1534 888900 www.careyolsen.com

Deloitte LLP Deloitte LLP offers professional services to the UK and European market. The company has the broadest and deepest range of skills of any business advisory organisation and employs over 14,400 exceptional people in 28 offices in the UK and Switzerland. We provide professional services and advice to many leading businesses, government departments and public sector bodies and publish many influential studies and thought leadership pieces. Deloitte LLP employs 160 professionals across the Jersey, Guernsey and the Isle of Man offices. It is the UK member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its global network of 150 member firms, each of which is a legally separate and independent entity. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. For further information please do not hesitate to contact: John Clacy, Partner, Guernsey Email:jclacy@deloitte.co.uk Phone +44 (0) 1481 724011 Greg Branch, Partner, Jersey Email: gbranch@deloitte.co.uk Phone: +44(0)1534 824325 www.deloitte.com

Tel: 00 44 1534 870670 Regulated by the Jersey Financial Services Commission

➔ www.blglobal.co.uk

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