Guernsey Private Wealth Report 2020/21 Contents Foreword Guernsey Private Wealth Report 2020/21
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Guernsey Private Wealth Report 2020/21 Contents Foreword Guernsey Private Wealth Report 2020/21 Foreword 3 Section two: Appendix Dear Reader, Private Wealth Themes I About the Author 96 We are delighted to present this Guernsey Private Wealth Report Executive Summary 4 2.1 Guernsey Real Estate 36 II Research Methodology 97 2020/21. A total of 84 Guernsey based individuals participated 2.2 Family Offices 40 III Sponsors 98 in the independent research study, comprising 28 private clients (HNWs, UHNWs, HVRs, entrepreneurs) and 56 private wealth Section one: 2.3 Substance 48 IV Useful Websites 98 professionals (trustees, investment managers, family office Guernsey 2.4 Beyond Traditional & V Disclaimer 99 professionals, private bankers, insurance brokers, estate agents, Alternative Investments 52 1.1 Guernsey - A Brief History 6 lawyers, tax advisers). All have taken part in qualitative interviews, 2.5 Green and Sustainable 1.2 Guernsey - The Island 8 Photo credit: Livingroom sharing their expert views on and experiences of the Guernsey Investing 56 1.3 Guernsey - The Population 12 private wealth sector. 2.6 Collectibles 62 1.4 Guernsey - The International In section one, we set out the backdrop to Guernsey and its private Finance Centre 16 2.7 Cryptocurrencies 66 wealth sector, including its history, Island life, population and 1.5 Guernsey Financial Services 2.8 Succession Planning 70 international finance centre. We include details of the Guernsey Commission 20 2.9 Philanthropy 74 Financial Service Commission, We Are Guernsey, private wealth in numbers, relocating to Guernsey and the Guernsey property market. 1.6 Guernsey Finance 24 2.10 Global Citizen 78 In section two, we investigated Guernsey real estate and private 1.7 Guernsey Private Wealth in wealth themes, specifically family offices, substance, traditional Numbers 26 Section three: and alternative investments, green and sustainable investments, 1.8 Relocating to Guernsey 28 Private Wealth Trends collectibles, cryptocurrency, succession planning, philanthropy and 1.9 The Guernsey 3.1 Coronavirus COVID-19 82 global citizens. Property Market 32 3.2 Guernsey Private Wealth – Finally, in section three, we researched the current unprecedented The Future 92 COVID-19 pandemic and the future trends in the Guernsey private wealth sector. We would like to thank all the participants who kindly shared their insights and in particular our sponsors – Aberdeen Standard Capital, Cazenove Capital, CooperBrouard, EFG, Lancaster, Livingroom, Opus Private, Ravenscroft, Rossborough, Sancus, Skipton International, Trust Corporation International and We Are Guernsey. We hope you enjoy reading the report and welcome your feedback. We are committed to assisting global private clients and global private wealth professionals with thought leadership in order to help influence their private wealth strategy. If you require any further information, please do not hesitate to contact us. We look forward to working with you in the future. Dr Stuart Gibson CEO, Gibson Strategy Limited 2 I gibsonstrategy.com I 3 STRATEGY Guernsey Private Wealth Report 2020/21 Executive Summary Family offices. Patriarchs and matriarchs of high-net worth Beyond traditional and alternative investing. The choice Succession planning. Succession planning is unique to COVID-19 pandemic. All respondents believe COVID-19 (HNW) families are truly global. With that comes complexity of asset classes has exploded in recent years. Age and each family, with no set model or structure applying to will inevitably have an impact on future business but in terms of geographic spread, multiple jurisdictions, personal history shape private clients’ investment approach everyone. Bespoke solutions are needed. How and when the significance of this is likely to vary, with most (71%) extended multi-generational families and subsequent more than the size of their wealth. Private clients can be family members are brought into businesses or included expecting it to be minor. A reduction in business-related complex tax and legal issues. Family offices are looking distinguished based on whether they take an aggressive in wealth management vary among cultures and ages. Tax travel, face-to-face client contact and consequential costs, for jurisdictions which are robust in terms of political and or a defensive approach to investing, and whether they is no longer the main reason behind succession planning; seems certain, which will surely help those businesses economic stability, quality of service providers, privacy, adopt an active or a passive role in decision-making. Private wealth preservation is usually the overriding objective. With which expect to see a decrease in their number of clients, data security and reputational risk. Family offices are more clients’ personal approaches can lead to wealth managers the increase in transparency and push to share wealth income generation and profit, whilst they potentially need unique, complex and sophisticated than ever before, and extending the range of their offerings. information, political and other risks need to be kept in the to reduce their fees. are looking for simplification of services and structures in frame when creating structures for transferring wealth to a well-regulated jurisdiction with a robust legal system. Green and sustainable investing. There is growing interest future generations. Family offices require a suite of specialist services, ranging in ESG among wealth management private clients and from global wealth structuring, tax planning, succession close association between ESG and philanthropy. Wealth Philanthropy. A large amount of charitable giving in planning, investment management and compliance to full managers and private clients increasingly see positive action Guernsey is conducted anonymously. There is a significant concierge services. There is a significant increase in the and profit as not mutually exclusive. A massive generational rise in charitable AUM. Younger generations are changing professionalism of global family offices and their service shift is underway in life philosophy and investment the philanthropic landscape. Guernsey residents are providers. Family offices are committed to transparency but objectives. “Ownership” and personal involvement are notoriously good at giving, yet still believe there has been maintain the right to their privacy. At present, the demand important for ESG investors. a significant increase in philanthropy from within the Island to establish multi-family offices is increasing, higher than in recent years and their private clients in general are that for single family offices. Furthermore, the regulatory Collectibles. For the majority of UHNWs, collecting is a incredibly philanthropic. environment is increasing for all family offices. passion rather than an investment strategy. Collectibles are also seen as a way to safeguard value. Collectibles Global citizen. Families are more likely to be spread Substance. Substance requirements are so significant that pose challenges that traditional investments don’t. Wealth across many countries, hold multiple passports and have they are influencing where HNW families set up base for managers need to access expert knowledge and specialised investments in several jurisdictions. Physical meetings may their family office. Economic substance is a doctrine in services, including structuring, tax planning, valuation be less viable in future and technology may be the way tax law, which states an arrangement must have both a and insurance. Guernsey has developed awareness and forward. Communication challenges need to tackle diverse substantial purpose and an economic effect, aside from tax, expertise in several key areas. age groups as well as multiple time zones. A knowledge to be considered valid. As complex and multi-jurisdictional of the rules in several jurisdictions is needed to service a arrangements, family offices must guard against the risk global client base. Links with service providers in a variety of accusations of lack of substance – that their means and of jurisdictions, as well as opening offices in multiple motives are contrary to the letter or spirit of the law – and locations, may be helpful to service a global client base. should look to ensure they demonstrate otherwise. 4 I gibsonstrategy.com I 5 STRATEGY Section one I Guernsey Guernsey Private Wealth Report 2020/21 1.1 Guernsey - A Brief History “The island of Guernsey is steeped in history that dates back thousands of years” The island of Guernsey is steeped in history that dates was built across to Castle Cornet. Following the Second principal language for most of the Island’s inhabitants, Many reminders of the German occupation remain. Fortress back thousands of years. Recent archaeological discoveries World War, the bridge was replaced with the concrete though a small number of residents speak a version of Guernsey is a conservation programme started in 1993 and indicate people have inhabited the Island since 5,000 BC. structure that can still be seen. Norman French known as Guernésiais, or Guernsey French, responsible for the restoration of several German watch Numerous prehistoric remains have been found, an example During the German Occupation of the Channel Islands, the as their first language. towers and bunkers, which are now open to the public. being the Les Fouillages burial ground. castle was known as Stuzpunkt Hafenschloss (Strongpoint The story of the Nazi occupation is told at the Occupation Romans called the Island