What sort of structures and entities do clients coming to Jersey want to use? What sort of challenges can a multi-family office such as Stonehage Fleming help them with? We find out.
The development of Jersey Private Funds five years ago has been one of the pluses for the offshore centre, an example of how the toolbox of trust and fund structures helps to keep Jersey competitive, so Stonehage Fleming says.
A JPF is a private investment fund involving the pooling of capital raised for the fund which operates on the principle of risk spreading. Established in April 2017 by the Jersey Financial Services Commission, a JPF enables it to make up to 50 offers to investors who qualify as “professional” investors or subscribe for interests with a value of at least £250,000 ($286,736).
Jersey, like its Crown Colony neighbour, Guernsey, is continually innovating structures to try to keep ahead of rivals. Post-Brexit, jurisdictions that are independent but linked to the UK need to have attractive offerings.
Stonehage Fleming, which has been beefing up its teams in Jersey, recently spoke to this news service as part of WealthBriefing’s series of interviews with wealth management figures in the island. About 120 people work in Stonehage Fleming’s Jersey office.
“Global markets continue to see an increase in the deployment of capital from private sources and a Jersey Private Fund is the appropriate product that specifically supports that trend. It combines speed, flexibility and appropriate lighter ongoing regulatory requirements that appeal to established managers, startup managers, co-investors, family offices and high net worth families, as evidenced by the rapidly-increasing number of registered JPFs,” Anita Weaver, director within the corporate services division at the multi-family office, said.
“The appeal of a JPF across a broad spectrum of clients combined with the benefits of Jersey as a specialist centre in alternative funds continues to have a positive impact on business, particularly with the expansion of the funds offering from the more traditional fund services providers for alternative asset managers by having a product that is also suitable for family offices and high net worth families as well as co-investment arrangements. Sophisticated clients are familiar with the reporting capability and functional operations of a fund and wish to introduce these standards within their own private structuring arrangements,” Weaver continued. “JPFs (including those exempt from registration as a JPF due to being held by closely-connected family members) have increasingly been used by family offices for high net worth and ultra- high net worth families as a wealth structuring tool.”
Weaver said JPFs have been generally used for meeting goals such as introducing professional expertise to future-proof the management and oversight of family assets where the next generation are not going to be actively involved.
Other structures are part of the mix.
“We are seeing an increasing number of enquiries from families wishing to use a GP/LP structure as part of their wealth planning. The ability to easily introduce capital into the structure, make distributions and provide full look-through reporting capabilities for all beneficiaries of the structure have been appealing, particularly as the Next Gen participate more actively in the management of the family’s wealth,” Weaver said.
Her colleague, Ian Crosby, who is chairman of Stonehage Fleming Jersey, took a broader look at the landscape.
“With the ever increasing complexity facing HNW clients and the escalating regulation in the sector, in five years’ time it would seem likely that the trusts/fiduciary sector will need to offer deep expertise in order to service client needs that will be ever more complex and proprietary to each family. This typically will have the complication of family members being resident in various countries, leading to complex cross-border rule applications. As a result, a client-centric, bespoke service offering, rather than scaled service delivery, will be necessary,” Crosby said.
Jersey faces challenges, and as other firms interviewed by this news service have pointed out, Crosby said talent shortages are a pain point.
“To maintain Jersey’s leading position in the servicing of the trust/fiduciary requirements of the rapidly growing HNW market, it is necessary for Jersey to similarly scale its development of its on-island skills that are necessary to service the client requirements,” he said.
The multi-family office has added to its senior team in Jersey. In May this year, it appointed Richard Stride, a senior industry figure, as head of the family office business in Jersey. It also named Bruce Sinclair as trustee director in the Jersey family office division.
Stride told WealthBriefing that the pandemic and its aftermath sharpened awareness of certain issues, such as estate planning and helping the next generation of wealth holders. “We are seeing more work around succession planning and next-gen accession.”