Trustees can no longer offer a universal solution that can be used in any jurisdiction and country specific offerings are critical for the international client, head of wealth planning at Julius Baer Alan Hooks told attendees of the 2017 eprivateclient Annual Trust Dinner.
Mr Hooks is increasingly seeing a bifurcation of the international fiduciary services market between those global players, offering with a host of services in multiple jurisdictions, and those who are focus more on a niche client base, concentrated on key markets.
With the continued regulatory pressures, knock-on increases in costs to serve coupled with uncertainty over international political agenda, Mr Hooks observed that many clients are suffering from "advice fatigue" at exactly the point in time when their strategic wealth planning needs are at their greatest and have become most critical.
However, he noted, that for those fiduciaries with the right strategy innovative trust solutions remain to be the "cornerstone" of an effective wealth transition solution either alone or in conjunction with others.
When it comes to advice, more and more clients are focusing on the organisation and orderly succession of assets rather than just tax. “Whilst the impact of taxation remains a factor for high net worth families, often, it is not necessarily the primary driver when it comes to structuring, particularly for international families.”
Instead "in many scenarios, families will accept that the tax will be the tax," Mr Hooks said. "It's often a case of how do we sensibly pass on the responsibility of the family’s diverse asset base in an orderly fashion, how do we comply with regulation and laws in multiple locations in a coherent manner."
Price pressures remain for trustees with a "race to the bottom" in some quarters given the fragmentation and competition in the market. He advised diners that it is up to them to set out clear business strategies, and whilst the desire for more bespoke multi-generational and jurisdictional relationships is attractive, it shouldn’t be compromised with commoditised pricing mechanisms.
In the end, client service levels can rarely be delivered in an effective and sustainable way. Furthermore, it is incumbent on wealth advisers to be mindful of the complexity and costs to deliver international fiduciary structures and ensuring they focus on the right type of business for the right type of client. For example, the changes to non-dom regime in the UK has seen rationalisation and an examination of the on-going suitability of structures for many families.
Digitisation continues to be a challenge for many trustees, according to Mr Hooks. Whilst next generation wealth owners are much more comfortable utilising technology over personal meetings, most high net worth families still prefer to see their trustees and advisers face-to-face, and most firms are people-led. Therefore the question of how trustees deliver cost-effective services through technology without compromising their client relationship remains largely unanswered.
The firms that he considers to be making "a real difference" are those with client facing personnel with specialist expertise. Indeed, he has noticed a demand for advisers with specialist advisory and relationship skills with strong understanding of legal, tax and financial markets who have a more proactive approach in the markets they serve.
The trend towards a "pure play trust business" with credible jurisdiction-specific value proposition and genuine independence is something that Mr Hooks is increasingly seeing as in demand from clients.
"Whatever the business model deployed by the trustee, we see problems arising where its shareholder interests are out of line with those of the beneficiary. Those conflicting factors, be it from culture or approach need to resolved in order to properly maximise long term opportunities," he said.
The inaugural eprivateclient Annual Trust Dinner was held on Tuesday 28 November at The Goring Hotel in London. The dinner was attended by 14 heads of trust or fiduciary services (or the like), senior & managing partners, chief executives and managing directors. It included speeches from James Quarmby, Alan Hooks and Matthew Haynes and was chaired by executive vice chairman at Rothschild Paul Stibbard. The dinner was kindly sponsored by Julius Baer International.
|RATE THIS ARTICLE|
THIS WEEK'S TOP STORIES
PAM (Private Asset Managers) and its sister website PAMonline combine to provide "...the best guide available to the leading firms in private client fund management" (FINANCIAL TIMES). PAM compares managers on a level playing field by key data such as fees and charges, minimum investment thresholds and so on.