Hawki Issue 6 - Spring 2013 by Hawksford

Issue 6 Spring 2013

IN THIS ISSUE Page 2 - Welcome from Peter Murley - Chief Executive Officer, Hawksford Page 3 - An update from our Swiss and Middle East offices Page 4 - Guest column - “Speaking about tomorrow affects the actions of today” - Sebastian Dovey - Scorpio Partnership Page 6 - Guest column - “The future of capitalism - East or West?” - Mark Field - MP for Cities of London & Westminster Page 8 - Meet the Hawksford Russia and CIS team Page 9 - Client & adviser insight research - Matthew Morel - Head of Marketing, Hawksford

Issue 6 Spring 2013

Welcome to Hawki Having concluded another successful year, now is a perfect time to look back at what we have achieved in 2012, the key highlights and what we need to continue to focus on in 2013.

2012 was a year of positive changes for Hawksford. We grew our business by acquiring Trustcorp Jersey Limited – a truly excellent addition to our business, with a great client base and highly skilled staff. 2012 also saw us place further emphasis on developing our internal processes and systems to enable us to work more efficiently and improve the service we provide. This has all paid off as we performed well, meeting our financial targets. 2013 will bring more change for Hawksford as we continue to build a strong, sustainable, client-focused business. Our clear and constant focus is on ensuring that we do not lose sight of what matters most: providing high quality, personal service for all of our clients.

Our continued commitment is to listen to our clients more As outlined in previous issues of Hawki, committing to and carrying out client and adviser research is an extremely important initiative for us to undertake as we feel that it is what sets us apart from our competitors. I am delighted to report that we successfully completed our 2012 research and have now had time to analyse the results. Overall, the feedback was very positive. A detailed analysis of the research findings is outlined on pages 9, 10 and 11.

Our focus for 2013 remains very strongly on service and improving our clients’ experience at Hawksford; this is why everything we do is based around adding value to our clients – something which will always be at the heart of our strategy.

Industry awards 2012 was an exceptional year for Hawksford in terms of industry recognitions from awarding bodies. We continued to be recognised by STEP, Citywealth and Private Client Practitioner of which we were extremely proud. With the start of a New Year came continued success and further recognition. We were voted by members of Wealth Adviser magazine to be ‘Best Offshore Trust Company - Jersey, Guernsey and the Isle of Man’; and voted by members of Private Client Practitioner to be one of the ‘Top 25 most admired companies’. Each award we win is very special to us as it reinforces our commitment to build a sustainable business of professional people who all share a joint objective; to provide the very best quality service to our clients and their advisers.

Extending our reach Our consistent objective is to offer clients choice – a choice of services and a choice of jurisdictions. With this in mind we are continuing with our plans to open an office in the Far East, a region with excellent growth prospects. We will not however rush this as we need to ensure we choose the right opportunity.

Time to refresh As you may notice, this issue of Hawki has changed dramatically from previous editions. We want to ensure that Hawki remains appealing to our readers and that the publication stays fresh and current. We also want to ensure that the content we provide is informative and provides comment on the latest topical issues. We would love to hear from you on how we can improve Hawki. Send your feedback to Matthew Morel, Head of Marketing at Hawksford by email matthew.morel@hawksford.com

Investing in our people We will continue to focus on developing our staff in 2013 and beyond. We are committed to the provision of training, management development, and career progression in order to attract and retain the very best people and ensure we have a robust succession plan.

Peter Murley Chief Executive Officer T: +44 (0) 1534 740132 E: peter.murley@hawksford.com

Market update UK Swiss Tax Agreement â&#x20AC;&#x201C; Deadline for a decision before 31st May 2013 The tax agreement between the United Kingdom and Switzerland regarding the regularisation of existing undeclared assets and the introduction of a final withholding tax in the future came into force on 1st January 2013. The UK Swiss Tax Agreement applies to UK Persons (individuals and beneficial owners of offshore companies, foundations, trust and other establishments) with a bank account in Switzerland. Further criteria are that the UK Persons were resident and domiciled in the UK on 31st December 2010 and maintained a bank account in Switzerland at the same time until 31st May 2013. Irrevocable discretionary trusts are generally not affected by the agreement. There are also a number of special provisions which apply to Non UK domiciled persons who pay the taxes on a remittance basis. The UK Persons with an account in Switzerland need to decide before 31st May 2013 between the following options: A one-off payment and final withholding tax Accounts of relevant UK persons in Switzerland will be subject to a one-off payment (21% - 41%) to settle past tax liabilities on 31st May 2013. Since 1st January 2013 income and gains are subject to a new final withholding tax of 40% on dividends, 48% on interest and other income and 27% on capital gains. Disclosure of details of the bank account to HMRC A one-off payment and the final withholding tax will not apply if the account holder decides to disclose the information to the UK tax authority (HRMC). If you have any questions regarding the UK Swiss tax agreement and the Liechtenstein Disclosure Facility (LDF), please contact our team in Zurich.

Marc Renggli Senior Lawyer T: +43 (0) 43 500 3874 E: marc.renggli@hawksford.ch

The Middle East... the story so far Following on from one of our general themes in 2012, the first part of 2013 has seen us visiting a number of countries and states in the Gulf Co-operation Council (GCC). In so doing, it has helped us to understand more about our clients, their needs and aspirations. In addition, we have been able to discuss face-toface, matters that will have an immediate and longer term impact on them, their families and ultimately their wealth wherever it may be located outside of their home territory. Furthermore, visiting the regions of the GCC has allowed us to align ourselves with other professional services firms who also occupy the same space of looking after clients who choose to place assets outside their home nation. What have we learnt so far? Using the old clichĂŠ â&#x20AC;&#x201C; the world really has become a smaller global village; In general, many clients do not immediately appreciate that the legislative changes that take place in Europe or the US will have an impact on them, if not now, sometime in the future; and More sophisticated planning and structuring is required for those that look to move assets from a zero tax regime to a high tax regime.

What will remain in focus for the rest of 2013 / 2014? Looking at things in more a little more detail, we feel the focus will be on: The impact that the new tax regime will have on clients who continue to acquire high value UK real estate; How the provisions of the newly introduced UK Statutory Residence Test (SRT) will impact clients and their families in the GCC. We believe that there is a lot more work to be done in order to educate clients, as it is not all doom and gloom; For those that have for many years maintained structures offshore, now perhaps is as good a time as any to undertake a root and branch review of their structures. Are these solutions still fit for purpose?; and At corporate level, the issue of governance continues to raise its head with certain states and countries recognising the need for their corporates to be applying best practice. The result has been the introduction of new legislation in these territories in an attempt to bring companies more in line with accepted international business standards. We continue to remain passionate about meeting and working with our clients in the GCC in order to truly understand their situation and financial aspirations. Our Middle East team will continue to visit the region to ensure that we as a business add value for clients, meet with new family members, speak with their advisers and ultimately implement bespoke solutions that cater for their changing situations.

Tim Cartwright Director T: +44 (0) 1534 740115 E: tim.cartwright@hawksford.com

Issue 6 Spring 2013

Speaking about tomorrow affects the actions of today

The challenge of wealth accumulation and managing this wealth is that it is fundamentally focused on one simple unknown. What will tomorrow bring? Fundamentally, no-one knows. Arguably, this is the challenge for all walks of life and it is largely what drives most parts of society forward. Indeed, as the famous inventor Charles Kettering once said: “I am interested in the future because I plan to spend the rest of my life there”. For any business dealing with individuals, listening to their own thoughts on what the future means to them should be a critical

Moreover, these captains of industry are not, in the main, the complaining type. They want action. They want results. They also have a good sense of how to achieve this. After all, these individuals are typically success stories in their own right and many recognise their personal business success has often come because they listened to their clients or their market.

Sebastian Dovey Managing Director

Scorpio Partnership

feedback programme with its private clients’ and advisers. This willingness of Hawksford to listen and act underscores the firm’s brand philosophy which is Thinking Beyond Tomorrow. Interestingly, this philosophy emerged out of the first wave of client feedback in 2011 which illustrated how important it was for a firm to be composed around a belief system that met with

“Any success story is based around a willingness to embrace all points of view to identify the most effective route forward.” part of their evolution as a firm. This is the client feedback process. This feedback can drive innovation and clarify focus. Any business school would underscore this as an essential activity. Without knowing how the clients feel now and how they want to feel in the future, progress can be stunted. Interestingly, most of the wealth management industry is not yet a poster child of the client feedback process. They appear in many cases to be afraid of what they think they might hear. They have also found it difficult to realise that wealthy individuals are not only willing to share their thoughts, they are actively giving them.

These individuals also recognise that their feedback could lead to even more success among their financial service providers. This, in their mind, is inexorably linked to their own success. As one wealthy client once remarked in an interview: “Any success story is based around a willingness to embrace all points of view to identify the most effective route forward.” The voices of the clients in wealth are therefore one of the most crucial source codes for the future of the industry. The pioneers in the industry are recognising this insight helps them to act distinctively and go deeper with their clients. They are laying the foundation for future growth. To that end, Hawksford has now completed its second year of a recurring

the client’s own values. The curiosity of what tomorrow will mean is, as Kettering might have said, the flywheel for positive developments. As readers of Hawki, I thought you would appreciate if I shared with you some of our independent thoughts on the results which we have since communicated to the Board. This year, the viewpoints provide a hint of what the future will hold. Clients are going to become more expressive of their needs. They are also interested in many cases in becoming a centrifugal force in the positive development of Hawksford. They like the idea that they are working with successful companies. They recognise

that success breeds confidence and confidence then breeds success. We are also enthused for Hawksford based on our experience of working with dozens of financial institutions around the world in the context of improving their connections with clients. This is a firm that not only collates the information but acts on it. 2013 will, as a result, be an exciting year. Intriguingly, based on the feedback this year, the evidence suggests that the majority of clients are also going to become more diverse in their channels of communication and they want Hawksford to get even better connected to them. They like the option to engage with Hawksford through the traditional teambased model but they also appreciate the firm can liaise with them through

electronic channels. This demand is echoed by broader independent private client research undertaken by our business which is showing a rapid shift among wealthy clients toward a more digital ecosystem. Finally, the clients are conscious that Hawksford is a business on the move. They are embracing this. They are aware, however, that change can be a challenge. They are quick to speak out on what is working and what needs attention. They are also keen that more of their peer clients do the same. The reason is the view that the more input they give the more output they will get. In the context of change, what is interesting here is that over the two year research period of assessing the feedback

of Hawksford’s clients, we have noted that they have consistently remarked on the way their own dealings with the firm have remained constant (See figure 1). This, in their minds, provides them with the all-important level of assurance that they need when it comes to matters related to their personal wealth. That assurance enables them to have the space and time to think about the future and how they can make the most of it. That outcome is, as one client indicated, “The essence of a successful relationship”. Q: How has your experience of working with Hawksford compared to your experience of other firms in the market?

Figure 1 - The primary values appreciated by clients of Hawksford

quality

team

leaders

GOOD

engage

Client focused

efficient strategic respected

knowledgeable EASY

proactive

BETTER

league

peers

pleasant

thorough

easier

similar

keen

qualified

RESOLVE

ahead

right

friendly

willing

professional

assist

POsitive EXCELLENT

infront

Source: Hawksford 2012 Client Feedback programme conducted by Scorpio Partnership The size of the circles relates to the frequency it was spoken.

Issue 6 Spring 2013

The future of capitalism East or West?

As we have all learned from the graveyard of failed forecasts, economics is an unerringly inaccurate, as well as a dismal, science. It is inextricably bound to the whims of irrational human behaviour.

CHINA

All too frequently, it follows that economies develop haphazardly and tend to reflect a nation’s collective ability to innovate and provide conditions in which the experience and aspiration of its people can flourish. One of capitalism’s enormous strengths is its accommodation of human nature by the creation of broadly stable environments that liberate and incentivise people to pursue new ideas whilst casting aside defunct thinking.

USA

“Across the Western world, continued political compromise and a desperate hope that ‘something will turn up’ are favoured over taking the immediate pain of radical restructuring” Capitalism works because it adapts and adjusts through crisis. The real problem is that we in the West are now subverting its natural processes of correction by clinging to outdated, discredited ideas and institutions. The US is currently stuck in political deadlock, seemingly too caught up in partisan wrangling over its budget deficit to provide the global leadership we have expected from it over the past century.

TAIWAN

UK EUROPE

On the other side of the Atlantic, Europe has proved incapable of finding a credible solution to its own single currency crisis, and historically low interest rates in the UK reflect an economy still firmly on a life support machine. Across the Western world, continued political compromise and a desperate hope that ‘something will turn up’ are favoured over taking the immediate pain of radical restructuring. As a result, the challenges we face appear simply too great to articulate for contemporary politicians at the mercy

established generations, inevitably the number of losers begins to increase over time. The largest contingent of these must surely be amongst our young. As we are already witnessing across the European continent, youth unemployment is regarded as a price worth paying if it avoids unstitching the patchwork of entitlements and way of life that the postwar generations of citizens have taken for granted. As power shifts eastwards, the Asian economic powerhouses will not be immune from their own demographic problems. Nevertheless, unlike the West, they have an enormous advantage in being able to construct from scratch

Alongside the tackling of our structural problems, we must begin to articulate and embrace a fresh and positive vision of the future. This will involve a painful acceptance of marked, rapid decline in relative Western influence. Unless we face up to the challenge, we risk undermining the very compact upon which our capitalist economies are based.

“Capitalism works because it adapts and adjusts through crisis” of short electoral cycles and restricted by conventional thinking. But while we appear to have avoided financial disaster turning into economic catastrophe, there will also be longterm costs to be borne, largely by future generations. The West’s financial woes have led to a comparative loss of global credibility. Undoubtedly, developed nations will find it increasingly difficult to maintain their role as directors of the world economy, as the composition and governance of international institutions no longer reflect reality. The G20, the ‘permanent five’ of the UN Security Council and the IMF, may soon seem quaintly dated. But my greatest concern is that the West will no longer seem the place where the world’s brightest and best see their future. When societies cling to conventional ideas that disproportionately benefit

a welfare state fit for the 21st century without the need to battle against a morass of vested interest. If it comes to pass that Asia becomes the region that most welcomes fresh thinking, the contrast will be stark with a Western world that complacently harks back to historical dominance and fudges the important economic and political choices we now face. Naturally the magnitude of the West’s difficulties is intimidating, and it would be naive for me to imply we face easy answers. After all, a crucial part of our future involves unravelling the past. Nevertheless, for a capitalist system to be successful and enjoy popular electoral support, it must ensure that it creates societies that liberate and incentivise people to pursue new ideas and cast aside defunct ones.

Mark Field MP for Cities of London and Westminster A qualified solicitor, Mark practised as a corporate lawyer before becoming a director of his own employment agency, Kellyfield Consulting from 1994 until 2001. Mark was elected as the MP for the Cities of London and Westminster constituency in 2001 and is currently chairman of the All-Party Parliamentary Groups on Venture Capital and Private Equity. In September 2010, Mark was appointed by the Prime Minister to the prestigious Intelligence and Security Committee, chaired by Sir Malcolm Rifkind. He is the youngest MP serving on the committee, which oversees and scrutinises the work of Britain’s intelligence services.

Issue 6 Spring 2013

Meet the Hawksford Russia & CIS team We have extensive cross-jurisdictional experience and expertise in working with individuals and corporates who are: Resident and domiciled in Russia and the CIS; or Operating from within Russia and the CIS; or Simply investing in businesses in Russia and the CIS.

The team regularly visits the region to meet with clients, advisers and other intermediaries. Examples of our work include: Setting up and administering structures to hold and maintain super yachts; Setting up and administering a number of offshore vehicles with the purpose of ensuring client confidentiality in connection with technology and social media orientated client projects;

Project managing the sale of a multimillion pound business; and Facilitating tax and legal advice for corporate multi-jurisdictional, private wealth management and family office structures. To find out more or to arrange a meeting, please get in touch with one of the team in our Jersey or Swiss offices.

Charlotte Brambilla

Richard Poingdestre

Sarah Cobden

Director

Associate Director

Manager

T: +44 (0) 1534 740194 E: charlotte.brambilla@hawksford.com

T: +44 (0) 1534 740185 E: richard.poindestre@hawksford.com

T: +44 (0) 1534 740206 E: sarah.cobden@hawksford.com

Based in our Hawksford office in Jersey

Carmen Koradi

Marc Renggli

Leon Keen

Assistant Manager

Senior Lawyer

Lawyer

T: +44 (0) 1534 740261 E: carmen.koradi@hawksford.com

T: +43 (0) 43 500 3874 E: marc.renggli@hawksford.ch

T: +43 (0) 43 500 3870 E: leon.keen@hawksford.ch

Based in our Hawksford office in Jersey

Based in our Hawksford LSS GmbH office in Zurich, Switzerland

Client & adviser insight research How did we do? How are we using these insights to improve in 2013? Matthew Morel Head of Marketing T: +44 (0) 1534 740175 E: matthew.morel@hawksford.com

We are committed to continue to build the Hawksford business for the future. Over the past 18 months we have invested heavily into our systems, refined our processes and trained and nurtured our highly talented people. A key element of our strategy is the review process and carrying out dedicated client and adviser insight research. The feedback we receive enables us to challenge existing work methods so that the business is always forward thinking and performing efficiently. This ultimately allows our people to focus more of their time on client matters; whether that is listening to and communication with clients and their advisers, or reviewing structures and administering their affairs. We are committed to add value wherever we can.

This newsletter was created as a direct result of feedback gained from our 2011 client and adviser insight research programme. Its on-going aim is to provide us with a platform from where we can deliver regularly commentary on the latest industry issues, articles of interest from our people and network of partners and an opportunity for you to meet our team members. After all, our people are the greatest asset we have to offer. As with any research programme, the secret to its success is obtaining regular and consistent feedback from clients and advisers. We carry out research on an annual basis and find that this is crucial for the validity of the programme. Our 2012 initiative invited clients and advisers to share their feedback on a number of key areas. Scorpio Partnership, an independent research consultancy, facilitated the programme again for us over a six month period. As a well established research organisation, Scorpio Partnership complies with the market research societyâ&#x20AC;&#x2122;s code of conduct and treats client confidentiality with great importance. The results we have received are therefore completely anonymous.

For 2012, we were keen to explore two main areas: 1. Map out variances in 2012 feedback levels against 2011 findings; and 2. Identify new plans and initiatives that will help improve the Hawksford experience further. We were delighted with the results across each area. The feedback broadly focused on three themes: Communication; Client / adviser experience and relationships; and Capability assessment and focus. As our graphic shows, on pages 10 and 11, within each theme there were a number of key insights. Each of these has helped to inform what strategies we implement in order to service our clients better and add value to each relationship.

Issue 6 Spring 2013

Communication This theme splits into two areas: 1. Rebranding implementation and effectiveness; and 2. Communication requirements and preferences.

“the new brand better communicates who Hawksford are and what the Group has to offer”

What respondents in our 2011 insight research programme said: “The firm’s entire approach to pro-active communication whether for relationship management or business development needs to be revamped…” “…one weakness of Hawksford is the firm’s inconsistency to communicate its proposition. The firm’s future success will be the review and reinvigoration of its entire approach to communicating its proposition to its target intermediary networks…”

communications

Client experience and relationship This theme splits into two areas:

CApability assessment & focus

Client relationship and expectations; and

Advocacy and referrals.

What respondents in our 2011 insight research programme said:

CLIENT

“Hawksford must remain strong at keeping their best staff and continuing to develop them. It is the administrative layer that matters to private clients and therefore their advisers”

client experience & relationship

“…what we all want is reciprocity; regardless of whether it is a client or knowledge sharing...”

Capability assessment and focus This theme splits into two areas:

“in my experience Hawksford’s “Drop quote strength lies in forpeople” article” its

1. 2.

Proposition and service assessment; and Competitor comparison and market positioning.

What respondents said in our 2011 insight research programme: “…Any nuggets of new information could be useful. Do they have specialist skills set, special case experience, how have they solved one-off situations. This sort of stuff is interesting and gives you ideas…” “They should be in Switzerland. That would give them more diversity...” “They need to look at complementary jurisdictions…”

What respondents said in our 2012 insight research programme? Majority of respondents have seen the new brand and believe it better communicates who Hawksford are, what the Group has to offer in terms of expertise and service line capabilities. 90% of respondents felt that Hawksford was proactive in its corporate and client communications. What are we doing to further improve?

our knowledge more with our global audiences. Examples include: New geographically focused issues of Hawki. These will be entitled Hawki Middle East and Hawki Switzerland. Both publications will be due out towards the end of Q2. As part of our thinking beyond tomorrow thought leadership series, we will be hosting a number of technical update events. These will allow us to share our knowledge on the latest issues.

“90% of respondents felt that Hawksford was proactive”

We will be implementing a number of dedicated programmes that help us share

What respondents said in our 2012 insight research programme? “In my experience Hawksford’s strength lies in its people. In addition to providing good guidance and advice, I have found the staff to be efficient, friendly, understanding and extremely helpful.” “My family situation has been complex and the team has worked with us patiently throughout. I would choose Hawksford again.” 68 % of clients / advisers surveyed said that their relationship with Hawksford was good or very good.

What respondents said in our 2012 insight research programme? Respondents highlighted Hawksford’s core strengths to be: - Quality of people (their knowledge and experience); - Client services teams across jurisdictions, their attention to detail and thoroughness; and - Technical and jurisdictional expertise / knowledge. 77% of clients stated their overall experience to be good or very good

71% said that they would use Hawksford again without hesitation. What are we doing to further improve? In order to gauge client and adviser feedback sooner and allow them to feedback comments at a more convenient time, we will implement a short client and adviser focused pulse survey within six months of establishing a new relationship. This will enable us to find out feedback quicker and identify gaps in our client service delivery and where we can improve.

good or very good. 48% of surveyed people consider Hawksford to be a top -tier firm. What are we doing to further improve? We will be publishing a number of service line specific articles as part of our continually evolving client and adviser newsletter – Hawki. As highlighted in other sections, Hawki is being evolved into other geographically focused titles so that we can comment on a wider number of topics whilst also continuing to service our global clients.

We will also implement dedicated relationship development plans as part of our go-to-market-team strategies. These will enable our teams to ensure the relationships we build with our partners penetrate all levels of each organisation. We will commit to introduce bespoke client charters for each client relationship. These charters will outline a set of dedicated principles that will demonstrate our service commitments.

Our main UK / International issue of Hawki is now in its sixth issue, so we thought it important to evolve the layout and design of it as well.

In summary If you would like to be involved in our 2013 research, please get in touch with Matthew Morel. E: matthew.morel@hawksford.com

88% of clients stated their experience with their client service team to be

Contact details

Jersey Head Office Hawksford Group Hawksford House 15 Esplanade St Helier Jersey JE1 1RB T: +44 (0) 1534 740000

Switzerland For further details on any of the content of this issue, please contact: Matthew Morel Head of Marketing T: +44 (0)1534 740175 E: matthew.morel@hawksford.com

www.hawksford.com Hawksford Group (and Hawksford International) are the Registered Business Names of Hawksford Trust Company Jersey Limited which is regulated by the Jersey Financial Services Commission.

Hawksford LSS GmbH Talacker 50 Z端rich 8001 Switzerland T: +41 (0) 43 500 3870

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