www.privatebankerinternational.com Issue 363 / december 2018 PRIVATE BANKER THE UK ISSUE OPPORTUNITIES UP NORTH AND WORRIES BIGGER THAN

FEATURE COUNTRY FOCUS OPINION

How UK HNWIs are Despite causes for caution, Drafting omission leaves preparing from a potential the economic forecasts for UK non-doms worryingly change in government India are optimistic exposed

PBI December 363.indd 1 17/12/2018 17:00:20 contents this month

COVER STORY NEWS 12 05 / EDITOR’S LETTER 06 / NEWS ROUND-UP 07 / THE BRIEFING • Private equity, the alternative asset class that is increasingly popular among family offices and HNWIs 20 / LIQUIDITY MOMENTS 21 / TECH AND REGULATION 22 / PEOPLE MOVES

NORTHERN ENGLAND

Editor: Group Editorial Director: Head of Subscriptions: Oliver Williams Ana Gyorkos Alex Aubrey +44 (0)20 7406 6585 +44 (0)20 7406 6707 +44 (0)20 3096 2603 [email protected] [email protected] [email protected]

Correspondents: Sub-editor: Director of Events: Saloni Sardana Nick Midgley Ray Giddings Mishelle Thurai +44 (0)161 359 5829 +44 (0)20 3096 2585 Paul Golden [email protected] [email protected]

Publishing Assistant: Mishelle Thurai +44 (0)20 7406 6592 [email protected] 07 Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected] Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0956-5558 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Private Banker International. For more information, please telephone +44 (0)20 7406 6536 or email [email protected]. London office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN Asia office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688, Fax: +65 6383 5433 Email: [email protected] : linkedin: private banker PRIVATE BANKER @bankerNews international

2 | December 2018 | Private Banker International

PBI December 363.indd 2 17/12/2018 17:00:24 contents december 2018 18

OPINION 18 / BKL Failure by the UK government to correct a drafting omission in new regulations affecting offshore trusts leaves non-UK non-doms worryingly exposed to scrutiny by HMRC. BKL’s Terry Jordan explains why 19 / GLOBALDATA Robo-advice is an increasingly competitive market. In a move to expand its operations, Italian robo-advisor Moneyfarm has acquired its German peer, Vaamo. Will there be further 16 fintech consolidation? asks GlobalData FEATURES 08 / 12 / NORTHERN ENGLAND Wealthy Brits might be unlikely to vote for 2018 has seen numerous private banks invest Jeremy Corbyn in any forthcoming general in the North of England. Oliver Williams election, but many are plotting against his takes a closer look at why this is the case, policies. Oliver Williams looks at an issue and whether it could mark the beginning of that, for many HNWIs, is bigger than Brexit something much larger for the region 10 / BANKING ON SPORTS 14 / MENTAL HEALTH Professional sportspeople are unique. A common misconception is that wealth Relatively short careers threatened by injury means health: someone exuding money, or loss of form make them complex – but luxury and glamour is presumed to be happy. potentially extremely lucrative – clients for Mishelle Thurai speaks to victims and experts private banks. Jamie Crawley writes to find out how mental health affects HNWIs COUNTRY PROFILE 16 / INDIA A general election and reserve bank tussle are causes for caution in India. However, GlobalData’s new report predicts an optimistic economic future for the wealth market. Mishelle Thurai writes 14 08

www.privatebankerinternational.com | 3

PBI December 363.indd 3 17/12/2018 17:00:28 HEAR l NETWORK l DISCOVER l CELEBRATE Private Banking and Wealth Management Germany 2019 30th April 2019 l Frankfurt, Germany SHAPE THE FUTURE OF PRIVATE BANKING

Private Banking & Wealth Management: Germany 2019 Conference & Awards brings together private banks, family offices, independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The informative and inspiring keynote sessions and informal conversations provide setting for you to join other high-profile guests in engaging discussions.

Key Issues l How is the regulation change set to challenge industry practices? l What is the future of Europe without Britain? l How can the private banking industry in Germany rival its neighbours? l Is Germany the traditional wealth hub we all know or will it become the new FinTech centre? l How can robo-advisors present opportunity to traditional wealth managers? l How are FinTech start-ups rivalling the market? l How can firms remain cyber safe and raise their security profile? l Can collaboration between incumbents and FinTechs be the next big thing? l Discovering Germany’s best kept investment secrets l How can banks leverage technology to strengthen the human relationship? l An insight into the next generation and how they are shaping the industry

Gold Partner Lunch Partner Silver Partners Exhibitor

For more details please contact Hannah Leigh on [email protected] or call +44 (0) 20 7936 6689

PBI December 363.indd 4 17/12/2018 17:00:28 0219Timetric_PBI_Ad.indd 1 07/12/2018 09:37 editor’s letter

HEAR l NETWORK l DISCOVER l CELEBRATE Private Banking and Wealth Management Germany 2019 30th April 2019 l Frankfurt, Germany who would be optimistic SHAPE THE FUTURE about UK private banking? OF PRIVATE BANKING Oliver Williams, Editor Private Banking & Wealth Management: Germany 2019 Conference & Awards brings together private banks, family offices, independent wealth managers and intermediaries in an active discussion of the key issues facing the industry. The informative and inspiring keynote sessions and informal conversations provide t the time of writing, the UK parliament is Pessimism has set in at some wealth managers. Quilter – setting for you to join other high-profile guests in engaging discussions. yet to pass the Brexit withdrawal agreement formally Old Mutual – blamed “weaker investor sentiment” A – in fact, Prime Minister has and St James’s Place “a more challenging environment” just postponed the House of Commons vote on the for slow net inflows in October. Investec Wealth and treaty outlining how the UK will leave the EU. Investment and Charles Stanley both reported falls in This has not only seen sterling plummet to new lows profits for the third quarter of this year. and weigh markets down with more uncertainty, it opens But blaming external “conditions” and “sentiment” the possibility of a snap general election. As outlined on when other areas of the industry are seeing growth Key Issues pages 8 and 9, many in the industry predict a change is misleading. There is new wealth being created in of government, either before or after Brexit day. As this unexpected parts of the country, and many private banks l How is the regulation change set to challenge feature shows, a government formed by the Labour Party are seeing it in the North of England, as our feature on industry practices? in its current state would be very bad news for wealthy pages 12 and 13 shows. l What is the future of Europe without Britain? individuals and, in turn, private banks. Other niche sectors are also proving more resilient to l How can the private banking industry in Germany However, it is the Conservatives – not Labour – the current political turmoil. Sport and entertainment is rival its neighbours? that have put in place many of the measures that are one: turn to pages 10 and 11 to find out more. l Is Germany the traditional wealth hub we all know currently putting many wealthy individuals off Britain. Optimism is rewarded on the balance sheet. Wealth or will it become the new FinTech centre? The government has been on anti-corruption overdrive, managers making attempts to meet clients in regions and handing out new powers to crime agencies and closing sectors beyond the usual financial services are seeing their l How can robo-advisors present opportunity to traditional wealth managers? tax breaks used by foreign HNWIs. The first Unexplained efforts pay off. The optimists will also see the upsides to Wealth Order hit the courts in October, showcasing a new the current political climate. Political change comes with l How are FinTech start-ups rivalling the market? law that allows crime agencies to ask where your money new opportunities, be it a lower currency driving exports, l How can firms remain cyber safe and raise their comes from. or more visitors driving a tourism boom. Smart private security profile? Tighter rules and penalties around the UK’s non- banks should foresee growth and provide guidance. ‘There l Can collaboration between incumbents and domicile law are driving some to take their domicile is opportunity in every crisis,’ as the saying goes. Where FinTechs be the next big thing? elsewhere, as this month’s contributor, Terry Jordan, this is opportunity there is optimism. < l Discovering Germany’s best kept investment points out on page 18. And just last week, the government secrets suspended the popular Tier 1 Entrepreneurs visa, as you Oliver Williams l How can banks leverage technology to strengthen will read on page 6. Editor, Private Banker International the human relationship? l An insight into the next generation and how they are shaping the industry

Gold Partner Lunch Partner Silver Partners Exhibitor Get in touch with the editor at: [email protected]

For more details please contact www.privatebankerinternational.com | 5 Hannah Leigh on [email protected] or call +44 (0) 20 7936 6689

PBI December 363.indd 5 17/12/2018 17:00:29 0219Timetric_PBI_Ad.indd 1 07/12/2018 09:37 News | Round-up

round-up The biggest stories impacting the private banking and wealth management industry over the past month. Read them in full at privatebankerinternational.com

China wealth managers set to Further cost cuts at Julius Succession bought into 21st buy shares for first time Baer after profit target missed century with leadership The China Banking and Insurance Regulatory After reporting a drop in its gross margin, Ultra-high net worth families are moving Commission has allowed Chinese wealth Julius Baer has said that it will accelerate its away from traditional succession practices management subsidiaries of domestic efforts to “reduce complexity”. Any Julius Baer and instead focusing on leadership, family commercial banks to invest directly in Chinese cost cuts will only effect non-core markets, the constitutions and governance, according to shares for the first time. bank noted. multi-family office Stonehage Fleming’s The UBS to take controlling stake in Julius Baer opens south Africa Four Pillars of Capital report. < China securities Joint venture office, with Credit Suisse closure Tier 1 investor visa scheme UBS is set to raise its stake in UBS Julius Baer has announced that it will suspended in crackdown Securities, its securities joint venture in expand its presence in South Africa. Ministers have suspended the UK’s Tier China, from 24.99% to 51% after securing The news came on the same day that 1 investor visa until an audit process and the go-ahead from the country’s securities Credit Suisse said that it was closing its new rules have been established following watchdog. Johannesburg office. Clients of Credit concerns that the scheme encouraged money Suisse will now be served by offices in laundering. Santander hires 30 in three- Europe and Dubai, the bank said. year plan to woo super-rich Client satisfaction levels on the Wealthy entrepreneurs put decline in Asia-Pacific their faith in tech stocks A bull market has caused wealthy entrepreneurs to flock to equities in the past year, with tech stocks being their favourite area of investment, despite recent volatility seen in the sector. The results are from BNP Paribas’s annual Entrepreneurs Report. Citi tops M&A league table for financial advisers in Q3 Citi has topped the latest M&A league table of the top 20 financial advisers Even though both the HNWI population globally for the third quarter of 2018, and wealth are rapidly on the rise in Asia- compiled by leading data analytics Pacific, a Capgemini report shows that company GlobalData. client satisfaction levels among wealth The US bank advised on 68 deals worth managers are in decline. Spanish banking group Santander is planning $175.4bn, including the quarter’s biggest The report stated: “Even though Asia- to target the ultra-wealthy as part of a three- deal recorded globally: Energy Transfer Pacific (excluding Japan) HNWIs earned year expansion strategy. Equity’s $60.4bn stake acquisition in robust investment returns via their wealth The expansion will be led by Santander Energy Transfer Partners. managers, expectations for more value Private Wealth, a new unit created to combine from firms resulted in tepid satisfaction its private banking and asset management Global art market returns to levels.” operations. growth, driven by US buyers Sales in the global art market reached $63.7 Generali takes over CM Deutsche Bank shares plummet in billion in 2017, up 12% from 2016, according Investment Solutions wake of money laundering probe to a new report by UBS and Art Basel. Italian insurer and asset manager Generali Deutsche Bank shares slid 2.4% to €7.90 The Art Market 2018 report said US buyers Group has acquired CM Investment ($8.98), an all-time low, following raids drove the market’s growth, with over a third of Solutions, a provider of alternative carried out at its German office over money US HNWIs saying they are “active in the art Undertakings for Collective Investment in laundering suspicions connected to the and collectibles market”. The US accounted Transferable Securities strategies, from Bank of Panama Papers. for 42% of the global art market in 2017. America Merrill Lynch. <

6 | December 2018 | Private Banker International

PBI December 363.indd 6 17/12/2018 17:00:34 News | the Briefing

the briefing In this issue, The Briefing looks at recent data on private equity, the alternative asset class that is increasingly popular among family offices and HNWIs

The proportion of of HNW entrepreneurs who prefer private equity when making direct investments. The results are from BNP Paribas’s Entrepreneur Report 2019, which found the highest take-up of the asset class among entrepreneurs in India, Russia, 63% Spain and the GCC.

The average age of an entrepreneur who invests in private equity according to BNP’s report. Most – 27% – rely on a wealth manager or financial advisor for their exposure to private equity investments. Just 9% invest through family offices. 39

The share of private equity deals that produced healthy returns between 2002 and 2005, compared to roughly 20% between 2010 and 2013. The results come from analysis by Cambridge Associates and Bain & 35% Company.

The total amount expected to be invested in private equity by 2023, as estimated by Prequin. The data provider says private equity will overtake hedge funds as the largest alternative asset class within the next five years. $4.9trn

The percentage of family offices’ private equity investments that met or exceeded performance expectations, according to The Global Family Office Report 2018 by UBS and Campden Family Office. Those investing in Europe were most pleased: There, only 10% of 80% investments underperformed.

The share of private equity financing deals this year written with loose covenants , according to rating agencies Moody’s This compares with one fifth before the financial crisis in 2017. Moody’s warned that this could hamper recovery rates in the next downturn. 4/5

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PBI December 363.indd 7 17/12/2018 17:00:35 feature | jeremy corbyn

how hnwis are preparing for a corbyn government

Wealthy Brits might be unlikely to vote for the Labour Party and its leader Jeremy Corbyn in any forthcoming general election in the UK, but many are plotting against his policies should he get in. Oliver Williams looks at an issue that is bigger than Brexit in the minds of most HNWIs

heories vary as to how the seriously unsettling to anybody with wealth: Democrat Party, there can realistically only be opposition Labour Party might take inheritance, income, stamp duty, capital gains one outcome to a change of government in Tpower in Britain. and even gardens could face higher taxes. the UK. Some anticipate that a Brexit failure and More chilling still are hints of a wealth tax UK wealth manager Sanderson House, resulting government collapse would trigger from the shadow chancellor, John McDonnell. which conducted the survey of 200 wealthy a snap election. Others look to 2022, when Few have forgotten his keenness for a one-off residents, says: “Fears over a change of the next general election is scheduled to take wealth tax of 20% in 2012. government largely relate to the prospect of place. Given Labour’s success in the last one, Then there are the indirect effects on a radically changed tax landscape under a they argue, the party could quite easily win a investors. Labour plans to nationalise railway, Corbyn-led Labour government.” majority in the next. water and energy companies. Shareholders A change of government is now such a These things matter to private banks, could lose out if they do, and so will any fund concern among wealthy individuals that it has because their clients would inevitably face invested in infrastructure. eclipsed Brexit, says David Durlacher, head of higher taxes if the Labour Party were to form a And these are just the known views of the Julius Baer International. “I can’t remember government in its present form. Private banks, Labour Party. There could be more, given when Brexit came up as a major question in turn, will have less wealth to manage, and recent rhetoric: only this year at the Labour from a client,” he notes. “Their big concerns higher pressures to mitigate the effects of Party conference, Jeremy Corbyn said: “The are whether there is the potential for political Labour’s leftist policies. very richest in our society have had tax breaks, change in the domestic situation. giveaways and tax havens. I tell you what, “Clearly there is a very different type LABOUR’S WAR ON WEALTH they’re on borrowed time.” of politics that’s in play between the two [political parties]. Those are the areas that are At the last general election, the Labour HNWIS FEELING THE HEAT being bought up more than Brexit.” Party’s manifesto included a rise in income This view is shared by Ryan Tholet, head tax to 45% for people earning over £80,000 Hearing Corbyn’s warning, many wealthy in of Investec UK Private Bank. “We are finding ($102,000), and 50% for those on more than the UK are now fearful. In a poll of HNWIs around our client base much less of an issue £123,000. last month, 42% of respondents said a change around Brexit, and much more of an issue These are not huge hikes, but what of government was their biggest financial around planning for potentially a Labour Labour’s leaders have suggested since is concern. And with the demise of the Liberal government,” he says.

8 | December 2018 | Private Banker International

PBI December 363.indd 8 17/12/2018 17:00:35 feature | jeremy corbyn

“It becomes [an issue] around tax, domicile But it is not only the seriously wealthy who which allows pensions to be transferred and a lot of the ways in which HNWIs need to take currency into consideration. abroad. structure their affairs.” Anybody with an asset abroad – such as a But many HNWIs looking at retirement Here are just some of the ways HNWIs are second home – needs to think about how they are not worried about their future so much as ‘structuring their affairs’, according to people will meet future expenditure. their children’s. Inheritance is something that PBI speaks to on the matter. If sterling reaches parity with the euro – as has come under repeated fire by the Labour Goss believes it will – taking currency out Party, and one that is likely to be taxed more. CORBYN-PROOFING WEALTH of the country will become a much more Pre-empting this, many HNWIs are expensive process. transferring assets and wealth to their children 1: Change domicile earlier than any planned succession date. Changing domicile might be one of the more 3: Plan your portfolio Some assets that have no obvious succession extreme responses to a change of government, According to the Investment Association, route are being offloaded in order to lock in but it is now a straightforward one given the £10bn has been withdrawn from UK equity the current low rates of capital gains tax. number of investor visas currently available funds in the last two years. Many HNWIs using trusts for succession around the world. Although most of the withdrawals took will be reconsidering these as well. Labour “Among the most popular and prominent place immediately after the Brexit vote, said it wants a public disclosure of trusts, choices for those Brits hedging their future roughly £2bn of the £10bn has been moved something that would draw unwanted public is the Portuguese program due to the lower since June, when fears of a snap election attention to their beneficiaries. Trusts, the investment requirement – €350,000-500,000 started to mount. party believes, are “a key vehicle for tax ($398,000-568,000) compared to other Shares in listed railway, water and energy avoidance and illicit financial flows”. programs such as Cyprus and Malta (€1.2m companies have done poorly since last year’s plus),” says Particia Casaburi, CEO of Global general election that saw Labour make 5. Rent Citizen Solutions, which specialises in second significant gains. United Utilities – a water House prices in Central London are already citizenships. company covering the North West of England down. Prices in London’s most expensive postcodes have fallen by 13.6% in the three months to October, according to data group I do think there’s an increasingly high LonRes. Estate agent Savills has recorded a drop of 18.4% from previous highs in 2014. risk of a change in government, or a With much of the London market propped up by foreign wealth, which could easily leave significantly weaker Tory Party in the event of a harsh wealth tax, many are forecasting further gloom in the event of a Labour victory. This is causing prospective Other countries that might be considered – has seen its share price fall 20% since June buyers to sit out the lapse by renting rather include France, Italy and Monaco, which have 2017. The fall in these shares drags with them than buying property in the capital. all upped their efforts to attract the wealthy the infrastructure investment funds, as well as – or, in France’s case, re-attract the wealthy: the ETFs that track them. IS IT REALLY WORTH IT? many rich French left for the UK and other But it would not only be infrastructure countries after the harsh wealth taxes imposed equities that would suffer under a Labour Given the current political turmoil, a Labour by former president François Hollande. government. Plans to nationalise railways government is just one of the many political Applicants for residency in Jersey were up and other projects require big borrowing, scenarios for which HNWIs need to plan. 27% between 2016 and 2017. Most cited the which would, in turn, increase bond yields. “I do think there’s an increasingly high risk threat of a Corbyn government as their reason Therefore, money that is currently invested in of a change in government, or a significantly for residency, as Clifford Wilson, partner at ‘bond proxy’ stocks would find its way back to weaker Tory Party, or maybe a coalition,” Wilsons told the FT. However, Corbyn has bonds. Bond proxies are normally fast-moving predicts Tholet, adding: “You will have already hit out against Crown Dependencies – consumer goods companies, which have the infighting and bureaucracy and points of of which Jersey is one – saying the government highest dividend yields. principle being debated rather than points of should impose direct orders to stop them action, and I think that’s what people are more acting as tax havens. 4. Retire worried about.” “I had a question last week from someone Politics aside, there is increased public 2: Consider currency they very worried about Corbyn coming in support for higher wealth taxes and scrutiny of “We see ongoing instability and turbulence. so transferred their pension to a QROPS foreign wealth, suggesting that some of these I still think the pound is going to be under [Qualifying Recognised Overseas Pension policies might be implemented regardless of pressure. Added to that, with the prospect of Scheme]”, says Penny Cogher, partner at who is in power. a Corbyn government, we might in for a bad solicitors’ practice Irwin Mitchell. HNWIs currently concerned with year,” according to Jon Goss, head of private With the higher-rate tax relief on pensions Brexit should not forget that the process is clients at forex trader Argentex. He believes under threat, many HNWIs are looking at inextricable from a change of government. As HNWIs should consider currency hedging in a number of different ways to secure their Tholet states: “A pre-stage for that would be the same way that any business might. pensions. One of these is the QROPS system, the Tories completely messing up Brexit.” <

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PBI December 363.indd 9 17/12/2018 17:00:35 feature | banking on sports

a fan’s dream? private banking and sport’s biggest names

Professional sportspeople are unique, even among other high earners in the entertainment industry. Relatively short careers threatened by loss of form or debilitating injury make them complex – but potentially extremely lucrative – clients for private banks. Jamie Crawley writes ryce Harper is 26 years old, and PRIVATE BANKS managing sportspeople’s finances. Coutts’ in seven years in Major League sports and entertainment team was established BBaseball has established himself as It is unlikely that any baseball fan working in nearly 20 years ago, while Barclays and one of the most talented, charismatic and private banking or wealth management would Standard Chartered also possess similar units. marketable players in the game. turn down the opportunity to work alongside. Earlier this year Goldman Sachs followed suit, At the end of the 2018 season he entered And who could blame them? Top sportsmen launching a new strategy for courting wealthy free agency, having reportedly rejected a have potential to earn eye-watering sums of sportsmen as part of its ongoing expansion mammoth contract extension offer from money from a relatively young age. into the private wealth management industry. the Washington Nationals. At the time of But often their education or background Morgan Stanley formed its global sports and writing, he is being courted by a number of leaves them ill prepared for handling such entertainment division in 2014, with an aim clubs interested in his services, with experts wealth, requiring a great deal of hands-on of offering management solutions to sports suggesting Harper and his agent are looking assistance. stars from the earliest stages of their careers. for a 10-year contract worth $400m. “They have a relatively small window when Whether it is arranging short-term unsecured Should that deal come to fruition, Harper’s their earnings are at their peak,” Mark Niall, loans for prospective players in the lead-up to salary will tally over $450m by the time the head of HSBC’s media and entertainment acquiring their first professional contracts, or contract expires; this is not including windfalls group tells PBI. “We have the very long term offering programs to educate young athletes from sponsorship and endorsements which – even retirement – on the horizon almost as on topics like budgeting, credit, debt and cash would likely carry him comfortably above the soon as we start working with them.” flow, Morgan Stanley certainly wants to get $0.5bn mark – and he will still be four years Like HSBC, many private banks have in on the ground floor with up-and-coming shy of his 40th birthday. specialist divisions in place for courting and sportsmen.

10 | December 2018 | Private Banker International

PBI December 363.indd 10 17/12/2018 17:00:37 feature | banking on sports

Bryce Harper Steve Finley COURTING RISING STARS Wotton, therefore, stresses the importance can become complicated. Top-level sportsmen of building relationships with clients that are, by and large, young men, and likely to Morgan Stanley can, in fact, boast bona fide strike the right balance of professional and be headstrong to a fault – it would have been personal experience in the sporting world in personal. “We’re interested in them as people. nigh-on impossible for them to reach the level former professional baseball-player-turned- We want to get to know them as human they have were they not. Conversely, they financial-advisor Steve Finley. beings, and we’re careful not to act too much also are used to getting their own way and During a 19-year career in which he won like fans – we’d never ask them for free tickets, therefore can verge on the high-maintenance multiple individual accolades and a World for example,” he notes. or the highly strung. Series with the Arizona Diamondbacks in Much like Morgan Stanley, Coutts places Wotton has known many a sports star 2001, Finley experienced first-hand the great value in getting to know sportspeople at approach him wanting to invest in an exciting- excitement and the temptations of receiving the earliest opportunity. “Young players are sounding but risky venture that happens to that first professional contract. aware they’re in a new financial position, and be flavour of the month. “Sometimes you just After retiring, Finley made an ill-timed they want to know who to trust,” Wotton says. have to tell them no, which they might not be investment in the restaurant business in 2008, Brand image and word of mouth prove very used to hearing, but that builds respect then began working in the insurance industry, effective ways of courting up-and-coming and, with it, trust.” before joining Morgan Stanley in 2014. stars, so working closely with agents and clubs Aversion to risk is a trait with which “I help young players make their baseball is vital. Wotton continues: “You certainly see a young sportsmen would be well advised to earnings last a lifetime,” he wrote for Business dressing room effect. When a player can walk become familiar. Recent statistics around Insider earlier this year. “Young athletes who in there and his teammates see the Coutts the long-term financial security of top-level have just been drafted, for example, may buy credit card, word spreads.” sportsmen are alarming. An investigation expensive cars, houses, bling – you name it. Niall adds: “HSBC’s financial strength and by FourFourTwo magazine earlier this The last thing you want is to get to the end of global footprint is appealing, especially as year discovered that two out of every five the year and think: ‘Where did it all go?’” sports careers can be very international. Our footballers face financial difficulties during This is a view shared by Matt Wotton, commercial heritage is also an advantage; they their careers or the post-retirement period. team leader of private banking within the need advisors who know about running a US magazine Sports Illustrated found that sports and entertainment group at Coutts. business or building a brand.” a 78% of National Football League players “It’s an attractive industry for a lot of people,” experienced such difficulty two years after he tells PBI. “But they realise swiftly it’s not HEADSTRONG TALENT leaving the game, and 60% of National straightforward. Client relationships are built Basketball Association retirees go bankrupt on trust, which takes years to build up.” Wotton believes that keeping it simple, and within five years. For every superstar earning dream wages not bamboozling the up-and-coming athletes While it is unclear whether these cases as the heart and soul of their club, there are with a proliferation of information, is a are for want of expert private banking a number of players whose careers are all necessity. “‘Save first’ is what I tell them,” he management or in spite of it, it serves as a the more precarious: journeymen who are explains. “Build a pot and get on the property reminder of the importance of prior planning transferred to a new club every other season, ladder. Only with older, more experienced among young sportsmen. At the same time, it suitcases seldom unpacked. With this comes players would I look at investment ventures.” may be an indicator to financial institutions the disruption to day-to-day life of finding This is where maintaining fruitful who wish to move into the industry should new homes and new schools for the children. relationships in sports wealth management proceed with caution. <

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PBI December 363.indd 11 17/12/2018 17:00:38 feature | nothern england

uk private banks: looking up to the north

2018 has seen many private banks invest in the North of England. Oliver Williams looks at why this is the case, and whether it could mark the beginning of something much larger

ngland is divided. The GDP of entrepreneurial resurgence. Some private Projects like these are far-sighted, but have its capital, London, was £408bn bankers are taking note. already given a boost to cities like Manchester. E($519bn) in 2016, practically 35% Think-tank the Centre for Cities estimates more than the entire North of England, ANYTHING BUT GRIM that Manchester saw an 84% growth in the which was £304bn, according to ONS number of jobs between 1998 and 2015; figures. “In my opinion it’s myopic to see the UK in its population grew by 149% over the same What constitutes ‘the North’ is a matter of the context of the South East,” says David period, meaning there is increased demand for ancient debate, and one that creates furore Durlacher, CEO of Julius Baer International, housing in the area. in Midlands households that straddle the adding: “The pace of growth in the North, subjective border. However, by all definitions, clearly, is benefiting from many years of THE HOUSING BELLWETHER the cities of Liverpool, Leeds, Manchester investment. We therefore see the pace of and Newcastle constitute the North, as do the growth faster in those parts of the UK than in Housing, the great bellwether of the UK counties of Yorkshire, Cumbria, Cheshire and the South East”. economy, shows the northern resurgence Northumbria. Part of that investment has come from the better than most indicators. Central to the division between the North government’s Northern Powerhouse strategy. A report in November from estate agency and South has been economic prosperity. Started in 2016, the initiative has earmarked Savills predicted a growth in London house London and its surrounding regions have £3.4bn for infrastructure projects in the North prices of just 4.5% over the next five years, recently been growing much faster than of England, and a further £13bn for transport, blaming a “stretched affordability”. England’s northern regions. However, that which includes the HS2 rail network linking Over the same period the greatest growth is starting to change as the North sees an major cities. will be in the North, however, it noted:

12 | December 2018 | Private Banker International

PBI December 363.indd 12 17/12/2018 17:00:40 feature | northern england

“Conversely, we expect growth in the North PBI TRACKING: NEWS OF NORTHERN EXPANSION IN 2018 West and Yorkshire to be over 20% by 2023.” Investec Private Bank observes that name ATM type detail many HNWIs are following that growth Chesterfield, Consolidator AFH Financial bought the client portfolios AFH Financial Leeds, M&A of advisory business HTH (Group) and subsidiaries northwards. In a survey of HNWIs last Doncaster Thomas Heald and Thomas Heald Solutions. month, the bank said: “Respondents would Investec Wealth Investec Wealth & Investment is set to move to new Leeds Larger office be more likely to purchase a prime property & Investment premises in Leeds. The new office will be 60% larger. Barclays wealth hired six new executives to add to in Manchester than in London.” Its Prime Barclays Wealth Leeds People hires its 27-member north-east team. Property Hotspots of the Future report says there KW Wealth has acquired Marchant McKechnie is a “diversification in the market towards KW Wealth East Yorkshire M&A Independent Financial Advisers, an East Yorkshire- East and South London, Manchester and based firm with nearly 700 clients. Sanlam UK, part of a South African financial services Cambridge”. Sanlam UK East Yorkshire M&A group, purchased East Yorkshire-based Grennan Helping HNWIs to invest in such Advisers, which manages £60m of assets. Simon Pearson and Aidan Dunstan have been properties is one of the strategies of Investec UBS Wealth Yorkshire People hires appointed heads of UBS’s north-west and north- Management Private Bank. “The majority of what we do east offices. on the personal side is mostly mortgages and Consolidator Fairstone acquired Utopia Financial structured mortgages for HNWIs,” Ryan Fairstone Yrokshire M&A Planning and Sovereign Wealth Management through its downstream buyout programme. Tholet, head of Investec Private Bank UK tells Old Mutual Wealth Private Client Advisers bought PBI. “Our expansion plans over the next three Old Mutual Carlisle M&A the advisory unit of Carlisle-based accountancy to four years are to almost double that book. practice Saint & Co. Yorkshire, Julius Baer made eight new hires in its regional About 60% of that growth will come from Julius Baer People hires Leeds divisions. mortgages.” Source: PBI ENTREPRENEURIAL REVIVAL fall in sterling after the UK voted to leave the As with most expansion plans, these EU in 2016. investments can be broken down into two “There is a clear entrepreneurial spirit across “The weak sterling has benefited exporters,” categories: organic and acquisition. Wealth the region,” says Stephen Fletcher, deputy notes Durlacher. “The government is manager Sanlam UK took the latter approach chief executive at Arbuthnot Latham, and the forecasting by 2020 an increase of 22% in and entered the Yorkshire market through theme of entrepreneurs comes up frequently exports for the UK. That benefits areas in the the acquisition of Grennan Advisers earlier among the private bankers PBI speaks to for UK which have focused on manufacturing this year. Though financials of the deal were this article. and exports.” not disclosed, the size of the purchase is fairly “I was speaking with a corporate banker The North of England has traditionally typical: Grennan’s £60m of AuM is puny in financier in Newcastle,” says Durlacher. “He been home to more manufacturing comparison to Sanlam’s £5.3bn. said they can’t keep pace with the rate of businesses than the South. A report in July by However, with few native wealth managers of significant size, it is relationships that count in the North. The Sanlam-Grennan It is important that rms and advisors deal meant that the latter’s founders, Stuart Grennan and Helen Chapman, would join in regional offices are conversant Sanlam UK. The value of long-term relationships is with the local business community why Arbuthnot Latham has made a string of major hires in its Manchester office. “It is important that relationship managers and entrepreneurism that’s occurring. It’s the same manufacturers’ organisation EEF found that advisors in regional offices are conversant with message that I hear in Leeds; it’s the same 15,000 new manufacturing jobs have been the local business community and wider social message I hear in Manchester.” created since 2010; that means roughly one matters,” says Fletcher. “Trust is harder to win This entrepreneurship is being driven in 10 people in the North West now work in regionally, but the loyalty lasts much longer.” by a multitude of factors, one of which the sector. Julius Baer has also been hiring relationship is technology. “Manchester’s tech sector managers to fill its northern offices located continues to be boosted by investment,” says PRIVATE BANKS’ ENTRY in Leeds and Manchester. “The UK has been Fletcher. Technation, a network for technology a location for Julius Baer for 50 of those 130 entrepreneurs, says the city now boasts £2.8bn These economic signals have not gone years [the bank has been present in the UK], in gross value added, and an average growth unnoticed by a host of national and and for the majority of that time a London- of 17% in technology companies employing international banks. In 2018 alone, PBI has based businesses,” says Durlacher. more than 10 people. counted nine major investments by private Clearly this new wave of northern growth The Greater Manchester Export Grant banks and wealth managers into the North will see other London-centred private banks Fund is another initiative that supports of England (see table). This does not include and wealth managers look north. The race for export-focused business growth. Exports from Scotland or the multitude of smaller people relationship managers and advisory firms is the UK have also been given a boost from the hires and office openings that have gone on. only just heating up. Expect to see more. <

www.privatebankerinternational.com | 13

PBI December 363.indd 13 17/12/2018 17:00:40 feature | mental health

The secret problems of HNWIs: battling addiction, mental illness and too much wealth

A common misconception is that wealth means health. If someone is exuding money, luxury and glamour, it is presumed that they are happy. Mishelle Thurai speaks with both victims of and experts in mental health to understand how it affects HNWIs, and what it means for wealth managers

n the last few years, several high-profile book Black Rainbow: How Words Healed Me: But how does it affect their wealth managers? professionals have been in the spotlight My Journey Through Depression. Iover their battle with mental illnesses. “I am not in the category myself, but I did INHERITANCE IMPLICATIONS One terrible example was the suicide of Kate Spade, a legend in the fashion industry A key factor in the mental health and wealth with a net worth of over $100m. Only too late debate is inheritance. did it become apparent the businesswoman Members of the next generation may be and designer had been suffering with anxiety suffering with a mental illness or addiction and depression. which jeopardises their inheritance and Rachel Kelly, a writer and mental health I had a good job, succession planning. campaigner, went through her own personal Sandy Loder, CEO of AH Loder Advisers, struggles with depression. my husband had provides consultancy services to banks and After having two major episodes, Kelly law firms that want to understand the next began looking for strategies to look after her a good job, and I generation. mental health. “I had a meeting yesterday, interestingly, “I think everyone can be vulnerable to still felt unwell where the eldest son is 10 years older than mental health problems, but I do think there his two younger brothers, and they are not is something particular about high net worth inheriting yet because they are seen as being individuals,” Kelly tells PBI. rather immature,” Loder tells PBI. “They outwardly have a really privileged life have a privileged life in the sense that I had a This can cause problems for generational and they don’t seem to have anything obvious good job, my husband had a good job, and I planning. There are often concerns about the to be depressed about.” still felt unwell,” Kelly says. lack of interaction between the children of For Kelly, it was this common HNWIs who suffer from mental health wealthy and wealth managers, but when the misconception that drove her to write the issues and addiction need that extra support. communication breaks down between a child

14 | December 2018 | Private Banker International

PBI December 363.indd 14 17/12/2018 17:00:42 feature | mental health

and their parents, it forces a state of mind that Kelly has run workshops with institutions many wealth managers might find themselves and banks, providing their staff with struggling to change. strategies to look after their – and their This breakdown can arise when parents clients’ – mental health. These often force their children into a state of dependency. revolve around the psychical, for example Paul Flynn, CEO of Addcounsel, a bespoke nutritional strategies, and openness. service aimed at behavioural health, says: “The first thing I would say is, openness “I think there is definitely some truth with on the conversation is good for everybody inheritance planning strain. If you look at it and a good start. from a slightly other perspective, the reality is “I would say the second thing is that, very wealthy families control their children, with my experience working with corporates very often because the children have money, and companies, you have to have the senior or they have access to money. leadership on board,” Kelly says. “Often it is not their money, and sometimes She goes on to emphasise that nothing it’s never their money because they are going will change in the workplace or for clients to be beneficiary of a very large trust, so unless their partners are also willing to make the actual ownership of it isn’t even theirs. changes. They must make sure their staff are Secondly, often they have just enough money taking the precautionary measures to look but not too much. after their mental health. “What this does is demotivate them in a Help can also come from outside. Flynn’s way, but they are happy to take the £100,000 Addcounsel offers a one-to-one service for or £150,000 and be at the beck and call of families and individuals. However, these can their parents,” says Flynn. be expensive, even for HNWIs. “Now some people are quite happy with Paul Flynn, Addcounsel “We have had clients spend over £1m that, and if that’s how it is then fine, but it is a sometimes become part of the family. “I have ($1.26m) on treatment, so with that big challenge a lot of the time.” seen advisers that have been working with happening how do the other members of families for 15, 20 years plus, and they are the family feel about that? Is that going to TO HELP OR BE HELPED? part of the family,” he explains. impact their inheritance?” asks Flynn. “What you find as well is where it’s a “On the face of it, everyone might be There have been conflicting views on the family office-type dynamic, you might have like ‘yes we want to see them get well’ role of the wealth manager when it comes to somebody that has been involved with the but actually there might circumstances dealing with a client who has a mental illness. family for many years and they are passed where they are worth £50m in assets, not However, less has been said about treating the role of sorting things out and that brings necessarily liquid. When you look at it that’s the wellbeing of wealth managers themselves. with it a whole range of pressures.” a significant proportion of the pot.” The job description of a wealth manager According to Flynn, it is typical to have a mostly focuses on their financial abilities, call from a private banker every day, asking NEXT STEPS but is this just a traditional way of thinking? for help or advice about their client. Enabled by technology, communications “Sometimes it’s just about knowing to Wealth managers naturally form a close between a wealth manager and client are say the right things, spotting problems and relationship with their clients, which often increasingly based on constant contact. moving forward,” he says. “We have known span decades. They therefore become a listening ear and someone to go to for all advice – and not just financial. the reality is very wealthy families Furthermore, technology has enabled constant communication between client and control their children, very often advisor, which was not previously available. Clients now demand this ‘extra mile’ from because the children have money their wealth managers. This can be good for mental health: advisors can spot it early and ensure their Loder says: “You have got to look at the beneficiaries of family trusts in excess of clients find the right treatment. But it can reward. How are they paid? How are they billions of pounds; this has to be managed also take its toll. rewarded? Is it all the soft stuff as well as the really carefully, because access to too much Firms dealing with HNWIs need to hard stuff that they are getting paid to do? money will kill them.” provide training on mental health to their “They are probably rewarded for Clearly, responsibilities like this can staff. They need to look for the signs of performance and for gathering assets, not for take their toll on the wellbeing of a wealth mental illness not only in their clients, but stroking, hand holding and dealing with all manager. also in themselves. of that. Without a doubt, there is some hand Both parties need to create awareness of holding.” COPING STRATEGIES the link between health and wealth. That is Flynn acknowledges that wealth mangers best achieved through openness. <

www.privatebankerinternational.com | 15

PBI December 363.indd 15 17/12/2018 17:00:42 country profile | india

india’s wealth market: an elephant that started to run A general election and reserve bank tussle are causes for caution in India. However, GlobalData’s new report predicts an optimistic economic future for the wealth market. Mishelle Thurailooks at its predictions

espite a positive outlook, be sustained throughout 2019, according to more than $50,000 is forecast to grow at a rate optimism surrounding the Indian the IMF. 12.6% to 2020. HNWIs are set to grow even Dwealth management sector has GDP matters, says David Cornell, CIO faster; with GlobalData saying there will be suffered a period of doubt. and MD of Ocean Dial, which manages the 301,390 by 2022. In 2015, HSBC decided to close its private India Capital Growth Fund. “The point about banking business in the country, following the that is its consumption coming off a very low ALTERNATIVES GAIN lead of UBS and Morgan Stanley. All three base,” he explains. “GDP per capita is $2,000 major banks took the view that India was not a head. Mexico is about $8,000 a head. India Indian HNWIs allocate an average of 19.6% a fertile market for the wealth management is today where Mexico was 36 years ago, but of their total portfolio to property, according industry. its population is tenfold.” to GlobalData’s 2018 Global Wealth Managers Wealth management in the country was The current Indian government under Survey. This is far above the global average of struggling not because of a lack of HNWIs, Prime Minister Narendra Modi has 11.2%. however. The market was oversaturated, with implemented wide-ranging reforms that Even though property appears to be an high operating costs and myriad regulations. have impacted and improved this business attractive asset choice, wealth managers are In June 2018, a turning point came when environment. A prime example of this is advised to guide clients through a complicated investors led by Ward Ferry and General the Goods and Services Tax implemented in landscape with potential pitfalls. Atlantic paid $110m to acquire a 5.1% equity 2017 to replace various layers of central and Mumbai’s residential property market stake in IFL wealth management. state government taxes. Fewer taxes on goods has recorded a growth of 7.5% over the last and services could mean lower prices for four years, while Delhi’s has declined by an MODI’S ECONOMIC MOTIVE consumers. average of 0.7% a year. Some suggest the Even though the economy is forecast to property market is bottoming out. According India is currently the fastest-growing G20 rise, the growth of affluent individuals will be to GlobalData, fundamental issues such economic power. GDP growth for 2018 is stronger over the next five years. GlobalData as surplus housing stock mean returns on expected to be as high as 7.4%, a rate that will predicts the population of individuals with property will be scarce in the coming years.

16 | December 2018 | Private Banker International

PBI December 363.indd 16 17/12/2018 17:00:44 country profile | india

However there is a better outlook for Indian wealth alternative investments, which account for India’s affluent population, 2006-2022 9.3% of Indian HNW portfolios. Since the creation of the Alternative Investment Funds (AIF) category by the Securities and Exchange m Affluent individuals % 12.0 35 Board of India, availability and demand have Growth (right axis) 30 both increased. The Exchange Board shows 10.0 25 that there were 21 registered alternative funds 8.0 20 in 2012; this figure had risen to 366 by the 6.0 15 end of 2017. 10 Arivind Bansal, head of products and 4.0 5 advisory at Avendus Wealth Management, 2.0 0 told Business Standard in 2017: “The landscape -5 of Indian investors is changing fast, with a 0 huge spike in wealthy investors and family 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f 2020f 2021f 2022f offices. This has created demand for products like AIFs. Fund managers and professionals Proportion of HNWI wealth invested offshore – especially with entrepreneurship aspirations – are increasingly turning towards AIFs as they offer greater flexibility. The capital US requirement and compliance burden are also France Germany less.” India There has also been an increase in mutual U funds held by Indian HNWIs, according Indonesia to GlobalData. The growth is forecast to Switzerland continue after the Association of Mutual China South Africa Funds in India launched an awareness- Hong ong building campaign. Sahi Hai was launched in UAE 2017 to educate investors that mutual funds 0 10 20 30 40 50 60 can be a low-risk investment choice. “Mutual funds have become very risk-

adverse,” Gaurav Narain, head of equities Source: GlobalData at Ocean Dial, tells PBI. “They’re really not lending to many of these finance companies Wealth managers will need to guide THE FUTURE and really reserving cash.” clients through the complex tax and legal requirements for offshore holdings. Guidance With the 2019 general elections around the FOREIGN PROPERTY given to clients on oversea property purchases corner, India’s wealth market lies in a state of will be imperative to the sector. optimistic uncertainty. Modi is campaigning Knight Frank’s India Tropical Report – Looking for re-election with his NDA party, and at Beyond Borders found that Australia, Cyprus, TAX TRANSPARENCY the time of writing the polls are close; this is Malaysia, Sri Lanka, the UK and the UAE causing uncertainty in financial and property are popular destinations for Indian overseas India has signed 93 double-taxation treaties markets. property purchases. with foreign countries, the most recent being However, the election is not the only issue The top two drivers for property purchases with Hong Kong in 2017. India also has 19 affecting markets. The rupee reached an all- among HNWIs in India are investment and tax information exchange agreements in place time low against the US dollar earlier in the having a second or holiday home. Investment with offshore centres including the Bahamas, year, and a tussle between Modi and the RBI abroad is also driven by the stagnant state of Bermuda and Jersey. has seen two of its governors quit. the domestic residential property market. A crackdown on ‘round-tripping’, where India’s political quirks are trivial in However, India’s Liberalised Remittance wealthy individuals send funds abroad to comparison to the wider region, however. Scheme limits the value of money an bring them back via offshore shell companies, Trade tensions between the US and China individual can send offshore in each financial has helped reduce tax evasion. As of April have effected Asia at large, but seem to have year. This includes foreign property and share 2017, India has the right to levy capital gains passed India by. purchases. taxes of 7.5% (50% of the current domestic “I know a number of banks who have gone The current limit stands at $250,000, but rate) on share transfers, but from 31 March overweight with India because it’s kind of is periodically revised by the Reserve Bank of 2019, the full 15% rate will come into force. insulated from the global trade wars,” Daryl India (RBI). In 2013 the limit was dropped to In September 2015, India and the US Liew, head of portfolio management at Reyl $75,000 following a devaluation of the rupee signed a Foreign Account Tax Compliance Singapore, tells PBI. and a temporary ban on foreign property Act, which sees the two countries exchange “A lot of the Indian economy is heavily purchases. information annually on a reciprocal basis. dependent on domestic issues.” <

www.privatebankerinternational.com | 17

PBI December 363.indd 17 17/12/2018 17:00:44 opinion | BKL

non-reporting funds leave non-doms worryingly Exposed

Failure by the UK government to correct a drafting omission in new regulations affecting offshore trusts leaves non-UK domiciliaries (non-doms) worryingly exposed to scrutiny by HMRC. Terry Jordan, senior private client tax adviser at BKL, explains why

ince April 2017, and as part of “Current demands placed on parliamentary sweeping changes to limit tax time make it difficult for the Government Savoidance, non-doms have been to justify returning to the legislation at this treated as domiciled for tax purposes if they time.” have lived in the UK for 15 of the last 20 HMRC adds that it will “monitor this years. situation” but has no plans to amend the However, the government has promised current legislation. protection from tax for income and gains from offshore trusts set up prior to an individual UNSETTLING LIMBO becoming domiciled. The stated policy could not be clearer: “Non-doms who have set up an This leaves an unsettling limbo for advisers offshore trust before they become domiciled and for non-doms, not least because it here under the 15-year rule will not be taxed introduces a level of uncertainty and makes on trust income and gains that are retained in tax planning unclear. the trust.” What are the options? For non-doms it may Unfortunately, that pledge is not complete Terry Jordan, BKL be to reconcile themselves with paying income in the relevant legislation, the Finance Act tax from non-reporting funds held in trusts 2017 and the Finance Act 2018, as it affects The response so far has been a study in they set up before becoming domiciled for tax the holding of non-reporting funds. This fence-sitting. HMRC neither supports the purposes. omission means that income gains from such intent of government, as made clear in the Another route is to switch out of non- funds do not qualify for trust protection. They policy statement, nor does it unequivocally reporting funds altogether and into reporting remain, therefore, technically taxable whether state that income tax will have to be paid on funds, whose protected status is clearly or not they are held in a trust. This drafting gains from non-reporting funds, which is due explained in the regulations. error is complicating tax planning. on any sale of the investment. Otherwise, the question mark around The strict legal position must be that, non-reporting funds remains. Will HMRC LEGISLATIVE HOLE currently, they do not qualify for trust seek to apply the strict letter of the law on protection, irrespective of whether they self-assessment tax returns? Or worse, will Professional advisers were quick to spot the are held in one and any government policy it use any perceived infraction as an excuse legislative hole, and attempts have been made statement. to enquire more widely into the affairs of for some time – without success – to persuade Will this position change? The only an affected taxpayer? The uncertainty is a HMRC that there needs to be clarification. guidance from HMRC is not encouraging: discomfort. <

18 | December 2018 | Private Banker International

PBI December 363.indd 18 17/12/2018 17:00:44 opinion | globaldata

moneyfarm vanmo acquisition suggests more consolidation

Robo-advice is an increasingly competitive market. In a move to expand its operations, Italian robo-advisor Moneyfarm has acquired its German peer, Vaamo. Will there be further fintech consolidation? asksGlobalData

n the same way that many larger wealth increase in demand for robo-advice in the next obvious that only the strongest operators managers have pursued mergers and 12 months. will survive. As previously pointed out by Iacquisitions to accelerate growth Going from one highly competitive GlobalData, the level of competition in the and market share, some online wealth market to another, Moneyfarm has to think market is forcing companies to seek out new management platforms – or robo-advisers – outside the box. This acquisition will grow routes to growth. have been mulling similar strategies. Moneyfarm’s AuM, while also giving the For most fintech startups, a key means of Moneyfarm’s acquisition of Vaamo shows business invaluable expertise on the German expansion is to partner up or to be acquired. this is a valid option for expansion. It makes market from Vaamo. Vaamo is no stranger to collaboration – it has sense for Moneyfarm to want to expand into a partnership with German digital bank N26, Germany. The company started in Italy, but ROBO-ADVISORY PIONEER for example – but, evidently, it needs more to after launching in the UK it was able to grow grow. its assets to become one of the biggest players Having launched in 2013, Vaamo is one of GlobalData’s aforementioned survey shows in Europe – it is Europe’s largest robo-advisory Germany’s pioneers in the robo-advisory that, in Europe, less than half of the big market by AuM. space. Its AuM is undisclosed, but it clearly firms are looking to partner with or acquire Germany is already the continent’s second- lacks the scale to compete with the likes of startups, leaving ample space for robo-advisors largest robo-advisory market by AuM, but Scalable Capital, a BlackRock-backed robo- to acquire one another. GlobalData’s 2018 Global Wealth Managers advisor managing over £1bn. This new growth strategy is a clever move, Survey found that 50% of the country’s wealth Already we have seen some smaller robo- and one that may well be replicated by other managers believe that there will be a further advisors fold, and it is becoming increasingly robo-advisors if it proves successful. <

www.privatebankerinternational.com | 19

PBI December 363.indd 19 17/12/2018 17:00:46 news | liquidity moments

wealthinsight liquidity moments

PBI has partnered with leading HNWI consultancy WealthInsight to highlight some of the month’s largest and notable liquidity events – deals that have resulted in net new wealth – and those who have benefited from them

ICE GROUP ANNOUNCES IPO WILLIAM FORD SELLS 5.8 MILLION SHARES IN IHS MARKIT Deal type IPO Deal type Share sale Country Norway Country UK Value ($m) 352.83 Value ($m) 290.87 Beneficiary Hans-Holger Albrecht Beneficiary William E Ford

Ice Group, a Norwegian provider of telecommunications services, William Ford, a director at data firm IHS Markit, has sold a 1.4% says it plans to raise NOK3bn ($353m) on the Oslo stock exchange. stake in the company for the gross proceeds of $290m. The main beneficiary is Hans-Holger Albrecht, who is chair of the The US investor heads private equity firm General Atlantic. He lives Group and also CEO of music streaming service Deezer. in New York and is a keen collector of contemporary art.

SAP TO ACQUIRE QUALTRICS FOR $8BN APEX PARTNERS TO ACQUIRE TRADE ME Deal type Acquisition Deal type Private equity Country US Country New Zealand Value ($m) 8,000 Value ($m) 1,807 Beneficiary Ryan Smith, Scott Smith, Jared Smith Beneficiaries David Kirk

Software firm SAP SE intends to acquire Qualtrics, an experience Private equity firm Apex Partners has agreed to acquire Trade Me management software company, for $8bn. Group, an internet auction website based in New Zealand. CEO Ryan Smith founded the company with his father, Dr Scott David Kirk is the company’s non-executive chair, and also co-founder Smith, and brother, Jared Smith. Together they are the main and managing partner of Bailador Investment Management. beneficiaries of the $8bn that SAP has agreed to pay for their Kirk is also a former New Zealand rugby union player. company. Qualtrics and the Smiths are based in Utah.

AJ BELL STOCK MARKET DEBUT DAVID KRIEGER SELLS 52,250,000 KOSMOS ENERGY SHARES Deal type IPO Deal type Share sale Country UK Country Bermuda Value ($m) 815 Value ($m) 281 Beneficiary Andy Bell Beneficiary David Krieger

Investment platform provider AJ Bell floated 25% of its shares on David Krieger, a director at Kosmos Energy, sold a 12% stake in the the London Stock Exchange on 7 December. The IPO valued the company for gross proceeds of $281m. company at £651m ($815m). Kosmos is an oil and gas exploration and production company Founder Andy Bell cut his stake to 25%, earning him approximately headquartered in Bermuda. Krieger lives in the US and is a trustee of £100,000 in the transaction. the Kaufman Center for the Performing Arts.

WealthInsight monitors thousands of deals every week, tracking newly created wealth. Its liquidity events tracker details deals of any kind where the beneficiaries are or have become HNW – defined as somebody having a net worth of over $1m excluding primary residence. The liquidity events and beneficiaries are a selection of the most prominent and interesting events picked up by WealthInsight globally.

20 | December 2018 | Private Banker International

PBI December 363.indd 20 17/12/2018 17:00:47 news | tech and regulation

Abu Dhabi investment fund sues Goldman Sachs over news round-up: 1MDB case The International Petroleum Investment Company (IPIC) has filed a lawsuit against tech and regulation Goldman Sachs for losses due to the bank’s involvement in the 1MDB Malaysian state fund scandal. The latest technology and regulation news to impact IPIC has accused Goldman Sachs of playing a central role in the scandal and bringing private banking and wealth management. Read the significant losses to the firm. stories in full at privatebankerinternational.com Mirae Asset secures private equity funds licence in China Northern Trust unveils new With the new platform, the bank South Korean asset manager Mirae Asset alternative investment platform aims to combine planning, advice has secured a private equity funds licence in and implementation on a single China. Asset manager Northern Trust dashboard. The licence will enable the company to has launched its new ArcLine enter the $20trn Chinese asset management Alternatives managed account RBC rolls out new robo- market and manage private equity funds for platform, designed to advisory platform in customers in mainland China without a local enable its private banking canada joint-venture partner. and wealth management Royal Bank of Canada clients to capitalise on hedge CapBridge Platform wins has launched a new fund opportunities through online investment platform, approval for securities dedicated managed accounts. . designed to provide automated exchange in Singapore Standard Chartered unveils advice, recommendations and portfolio private client instant messaging management. The InvestEast platform matches StanChart has introduced secure instant customers with investment portfolio messaging and real-time file-sharing recommendations, before building a features, which will enable its private and portfolio of low-cost ETFs. priority banking clients to communicate with private bankers and relationship HSBC launches online advice managers within its mobile app. platform in the UK Deutsche Bank opens innovation HSBC has launched an online advice The Monetary Authority of Singapore has lab in Singapore service, called HSBC My Investment, granted CapBridge approval to operate a which specifically delivers tailor-made private securities exchange as a Recognised The launch of Deutsche Bank’s new lab is recommendations based on a Market Operator. part of its strategy to digitise services and user’s financial circumstances. The 1exchange private exchange adopt new technologies. structure is designed to accelerate The Asia-Pacific Innovation Lab will LPL Financial acquires liquidity for private companies focus on identifying the best start-up wealth tech provider before any exit event, including opportunities across the region to scale LPL Financial, a retail mergers and IPO. globally across the bank’s platform. investment advisory firm and Vanguard, Merian Crypto Fund secures swiss crypto independent broker and dealer based in Boston, has acquired Global Investors asset management licence wealth management technology receive regulatory Crypto Fund, a unit of Crypto Finance, has provider AdvisoryWorld in a cash deal approval for Dublin entities obtained an asset management licence in worth $28m. Investment firms Vanguard and Merian Switzerland that will place it at par with Global Investors have secured approval other fund managers in the country. Credit Suisse faces new from the Irish financial regulator to open Morgan Stanley rolls out money-laundering probe management companies in Dublin as part of Credit Suisse is facing a new investigation into their Brexit contingency planning processes. wealthDesk advisory platform an earlier money-laundering case related to a Morgan Stanley’s new WealthDesk defunct asset manager. UBS facing multiple lawsuits platform will give financial advisers a The new probe, launched by Swiss Swiss bank UBS is facing multiple lawsuits in consolidated view of various portfolios and prosecutors, will investigate whether the bank the US and France, and has a former staffer on enable them to manage client relationships did enough to prevent money laundering in trial in the UK. The cases could see the bank more effectively. the case. pay over €3.7bn ($4.2bn) in fines. <

www.privatebankerinternational.com | 21

PBI December 363.indd 21 17/12/2018 17:00:49 news | people moves

personNel briefing: people moves

PBI lists the month’s key career developments by the movers and shakers in private banking and wealth management

country name moved from old position moved to new position

Juan José González Spain UBS Senior private banker Julius Baer Head relationship manager Quintana

Spain José Casasayas Moro UBS Senior private banker Julius Baer Relationship manager

Ignacio Calderón Spain UBS Senior private banker Julius Baer Relationship manager Aguado Head – developed and Australia Alex Wade Credit Suisse AMP Head – advice emerging Asia Market leader – private Switzerland Raphael Alder Credit Suisse Bank J Safra Sarasin Head – private banking banking Indosuez Wealth France Mathieu Ferragut CEO CFM Indosuez Wealth CEO Americas Head – institutional, EMEA UK and Columbia Dominik Kremer and Latin America; co-head – Unigestion Head – business development Switzerland Threadneedle distribution Lyxor Asset Head – ETF sales, UK and Lyxor Asset UK David Lake CEO – business in UK Management Ireland Management Barclays Private Head – alternative investment Switzerland Jean-Damien Marie Pictet Banking & Overseas Head – investments for EMEA solutions Services Geraldine Global head – corporate Hong Kong BalckRock BlackRock Chair – business Buckingham strategy Thurgauer Switzerland Heinz Huber Chair Raiffeisen CEO Kantonalbank

Switzerland Lenja Lascari EFG bank Business head EFG International CEO – Luxembourg business

Fidelity USA Steve Neff Technology executive Fidelity Investments Head – asset management Investments

UK Nick Reeves Tilney Financial planning partner Deutsche Bank Head of UK financial planning

USA Michael O'Grady Northern Trust CEO; president Northern Trust Chair

22 | December 2018 | Private Banker International

PBI December 363.indd 22 17/12/2018 17:00:51 PBI December 363.indd 23 17/12/2018 17:00:51 Retail Banking London 2019 24th April 2019 l London SHAPE THE FUTURE OF RETAIL BANKING

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1118Timetric_RBI_Ad.inddPBI December 363.indd 24 1 17/12/201826/11/2018 17:00:51 10:17