Thriving in Cayman

  • Author : Keith Johnston
  • Date : August/September
ABOUT THE AUTHOR: Keith Johnston is Director of Communications and External Affairs at STEP

In May 2012 STEP Cayman hosted the STEP Caribbean Conference, and with 325 delegates at the splendid Ritz-Carlton, it was a record-breaking event. Attendees were addressed by dozens of high-quality speakers, including the Cayman Premier, McKeeva Bush, and Donna Brazile, CNN luminary and former Al Gore campaign manager.

Tim Ridley, former chair of the Cayman Islands Monetary Authority, set the keynote Georgetown lecture on the subject of the future of the wealth structuring market.

Ridley covered the clients of the future, noting they would be driven by the fundamental shift of wealth creation from the West to the BRIC countries (Brazil, Russia, India and China). Moreover, the pressure on Western governments to raise taxes would force wealthy families to flee to low-tax jurisdictions. However, since wealthy people want to own things in the West, they would accumulate connections in high-tax jurisdictions, and these will continue to present opportunities for service providers.

Ridley thought international finance centres (IFCs) such as Cayman needed to stick to the basics to get ahead. They need the right infrastructure and a stable political, legal and economic environment. They need regularly updated and improved laws and structures, and they need to improve trust legislation to protect against former spouses and not just former heirs. The need to develop specialist judges was ‘absolutely critical’ in Ridley’s view, as were good lawyers, a sound regulatory system where costs are managed competitively, and tax neutrality. Ridley finished by predicting that: ‘IFCs are going to survive and are going to thrive. Those able to adapt and change will succeed; the key is change.’

William Walmsley, former Chair of STEP Cayman and Chair of the 2012 STEP Caribbean Conference

As Chair of the 2012 STEP Caribbean Conference I was delighted (and a touch relieved) that the Cayman Islands conference was such a tremendous success.

This was primarily due to the hard work of the conference steering committee, which recognised the need to continue the exemplary track record of the Caribbean Conference, which for many years has delivered a best- in-class conference.

The speakers in Cayman were again industry leaders speaking on topics that addressed the challenges and opportunities facing us in our respective jurisdictions. They incorporated a special focus on the global issues facing STEP professionals today.

On a lighter note, the conference was again a wonderful opportunity to build new relationships and reconnect with old friends who have supported the conference for many years.

Patrick Harney of Forsters and Paul Bailey of Azure Wealth were on hand to simplify the world of investment management for those who are legally responsible, but may not be technically expert. Patrick covered the area from a trustee’s perspective, noting the fundamental conflict between a remainderman who wants capital growth and a life tenant who wants income. Harney noted the constraints placed on trustees by total-return investment strategies, noting that trustees can be forced to invest in ways that may provide significantly lower returns than they could have obtained if investing freely.

Paul Bailey discussed some of the key considerations for trustees when monitoring the performance of their investment managers, highlighting two aspects of performance: return and the risk taken to achieve it. To summarise, Paul advised:

1Set specific objectives: benchmarks can be used to measure performance but should not be objectives in their own right2Investment is not without risks, some more apparent than others. Use a range of measures to consider the risks you are taking as trustees.3Consider whether the returns being generated are sufficient to compensate for the risks and whether the level of risk is acceptable, given the objectives. The most important measure of performance is the risk-adjusted return.4Given the complexity of measuring risks and performance, there is a benefit in seeking advice from specialist consultants. This can be particularly useful for multiple portfolios with a range of managers, as careful consideration has to be given to the overall risk, not just to that of the individual portfolios.

I have set down a couple of my personal highlights because brevity means I cannot cover the entire event with the depth each speaker deserved. For those who need the whole picture, we look forward to seeing you at STEP Nevis for the next conference in2013.

STEP LATAM Conference 2012

After the success of the first STEP Latin America Conference, in 2011, the second will be in Panama on 27-28 September 2012 at the Hotel Riu Plaza. It will provide cutting-edge information on Latin American trusts and estates. Register online at www.steplatamconference.com


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