Live in the moment

  • Author : Peter Murley
  • Date : April 2013
ABOUT THE AUTHOR: Peter Murley is Chief Executive at Hawksford

Over the past two to three years we have experienced the worst recession in living memory and it looks unlikely that there will be an early respite, with economic turmoil in Europe continuing apace. The assets of clients, be they private individuals or corporations, will increasingly be spread around the globe; this is what client choice is all about: offering clear options. In line with this we are witnessing a seismic shift as Eastern jurisdictions are unsettling the economies of the West. It’s the turn of the East (as well as Africa and South America) to be successful; just go to the Middle East, the Far East or India to see and feel the wealth and success. This globalisation means that clients are considering the use of finance centres other than, or in addition to, the ones where they have traditionally placed their business.

As this shift takes hold it is becoming clear that, to thrive, trust companies in the Crown Dependencies need to expand into other jurisdictions, such as Singapore, the Middle East, South America and Switzerland. Until four or five years ago most trust companies would choose to grow organically, but today growth by consolidation and acquisition, as well as organic growth, is where it’s at.

Growing overseas is a positive move, both for trust companies and for their shareholders, but most importantly for their staff and clients. Clients are increasingly looking for jurisdictional choice and, generally speaking, don’t want to place all their assets in one basket.

What should we be doing?

Battening down the hatches, buying in food for the siege and waiting until the world moves back to where it was three years ago is unrealistic. The world is never going back to where it was in the so-called good old days. Pricing across the world is highly competitive as many trust businesses vie for work, and business is becoming increasingly challenging. This is the time for change and reinvention – not for hiding in a corner and hoping it will all go away. It is the responsibility of the organisations operating in the sector, plus the regulators, governments and other representative bodies, to ensure that we as an industry are nimble enough to adapt to ensure we retain and grow our business operations, adding real value to our clients. Not tomorrow, but now. To do this, the survivors and thrivers need to take leadership roles and stop following. The market and our clients demand creativity and innovation, understanding of the different cultures of East and West, and to try to speak from one coordinated platform.

Difficult times and changing situations nearly always provide huge opportunities. Many ultra-high-net-worth clients and their representatives use downturns to their advantage and the trust industry must do the same. Among other jurisdictions, Jersey needs to make changes in the coming months if it is to retain its strong position in the global marketplace. It will be competing in a very different world in two years’ time, and regulation changes that take two years to implement are of no use. Private client work is hard-fought, as is UK non-domiciled work; tax-driven structures have changed; all developed economies are putting pressure on the offshore world. We need to reinvent our offerings to remain leading players.

Change is important, but timely change is critical. We need to choose the path that we should follow and commit to it, making decisions in a considered but timely fashion, or we’ll miss opportunities. We must understand the need to accommodate (and celebrate) the cultural differences between our potential clients, but we need to do so today or we’ll be beaten to their business by global competitors tomorrow. Not all cultures are the same; not all clients and prospective clients will supply the same information in the same format in a timely fashion. One size definitely does not fit all.

“We will need to continually restructure the way we provide great client service”

Jersey is a highly regulated and respected jurisdiction. Those who wish to work with it and be represented by its professionals need to accept its regulations. We should not reduce our standards – merely adapt them, apply flexibility and be lateral in our thinking. Strong regulation is a clear, marketable and competitive advantage, but it must not be a millstone. Principles-based regulation enables practitioners to meet regulations in a way that they feel is appropriate. However, there are concerns that regulators will disagree with the approach taken, with the result that practitioners apply what may be an overly zealous interpretation of the requirements. No one disagrees with the aims of regulation, but, as we explore different, less well-developed markets, a regulatory approach that encourages consultation would benefit clients, the industry and the regulator, always accepting that it is the practitioner who must make the final decision.

The volume of regulation is unremitting, and the difference in regimes across the globe makes consistent excellence difficult. What can and will the regulators do about this? Speed to market is a key part of competitive advantage, but speed does not always appear to be a priority. Why? How do we cut red tape and persuade others that we have to be commercially focused – but at the same time maintain an excellent reputation?

Consolidation will be crucial to success; we are already seeing this in Jersey, and from research carried out and many conversations with those who own businesses, we know that it is set to continue, and not just in Jersey – across the world. The trust business in Jersey is in a different position than it was in times past. It is likely that there will be fewer than 75 affiliation leaders on the island in a couple of years’ time – there are currently more than 100. There also seems to be a trend towards larger, global service providers. This may not be to everyone’s taste, but if that is what the current market requires, then the industry will have to consider changing to suit these requirements. There are benefits of scale (for everyone) to be had from consolidation, as well as the advantages of offering clients a multi-jurisdictional approach. There will always be a place for the boutique trust companies, but consolidation makes a great deal of sense in times of financial recession – it allows companies to pool their resources and save cost. We must adapt with the changing world and actively and speedily change our business models to meet the needs of our clients.

To ensure that we offer clients and prospective clients independent, professional and truly added-value services, all of us have to play our part. This means being innovative, creative, thoughtful and dynamic in the services we offer and the way we market ourselves. It also means ensuring our processes and systems are robust enough to stand the test of time. We will need to continually restructure the way we provide great client service, review our efficiencies and consider how we can streamline our businesses. All of this will bring challenges, but with challenges come opportunities for business and for clients. It means thinking beyond tomorrow and not just about tomorrow.

These are different and challenging times. The world continues to shrink and there is no such thing as standing still and hoping for the best. Opportunity comes to those who create it. Have we got a lot more to do to understand what services are needed for the future and how we should price these services? You bet. Change in this area never stops. Three-year plans are great, but three-month actions are far more important. Clients know what they want and when they want it, so it is important that we listen and adapt accordingly.

Our market awaits us, but time is of the essence.


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