Isle of Man Private Wealth Report 2020/21 Contents Foreword Welcome to the Isle of Man Private Wealth Report 2020/21 Foreword 3 Section two: Appendix Dear Reader, Private Wealth Themes I About the Author 72 We are delighted to present this Isle of Man Private Wealth Report Executive Summary 4 2.1 Isle of Man Real Estate 26 II Research Methodology 73 2020/21. A total of 41 Isle of Man based individuals participated in 2.2 Living in Isle of Man 28 III Sponsors 74 the independent research study, comprising 16 private clients (HNWs, UHNWs, HVRs, entrepreneurs) and 25 private wealth professionals Section one: 2.3 Isle of Man Private Clients 32 IV Useful Websites 74 (trustees, investment managers, family office professionals, private Isle of Man 2.4 Relationships, Trust V Disclaimer 75 bankers, insurance brokers, estate agents, lawyers, tax advisers). All and Loyalty 36 1.1 Isle of Man - A Brief History 6 have taken part in qualitative interviews, sharing their expert views 2.5 Investment Management 40 1.2 Isle of Man - Photo credit: Finance Isle of Man and experiences on the Isle of Man private wealth sector. The Island 8 2.6 Life and Pensions 44 In section one, we set the backdrop to the Isle of Man and its private 1.3 Isle of Man - 2.7 Trust and Corporate wealth sector, including its history; Island life; population; and The Population 10 Services 46 international finance centre. We include details of the Isle of Man 1.4 Isle of Man - 2.8 Aviation and Yachting 50 Financial Services Authority; Finance Isle of Man; private wealth in The International 2.9 Digital 52 numbers and relocating to Isle of Man. Finance Centre 14 2.10 Succession Planning 54 In section two, we investigated Isle of Man real estate and private 1.5 Isle of Man Financial Services 2.11 Philanthropy and 56 wealth themes, specifically Isle of Man private clients; relationships, Authority 16 Sustainability trust and loyalty; investment management; insurance and pensions; 1.6 Finance Isle of Man 18 trust and corporate services; yachting and aviation; digital; succession 2.12 Global Citizen 58 1.7 Isle of Man in Numbers 20 planning; philanthropy and sustainability; and global citizen. 1.8 Isle of Man - Finally, in section three, we researched the current unprecedented A Diverse Economy 22 COVID-19 pandemic and the future trends in the Isle of Man private Section three: 1.9 Relocating to Isle of Man 24 wealth sector. Private Wealth Trends We would like to thank all the participants who kindly shared their 3.1 Coronavirus COVID-19 60 insights and in particular our sponsors – Finance Isle of Man, ILS 3.2 Isle of Man Private Wealth – World, Old Mutual International, Prospect Capital, Rossborough and The Future 68 Turnstone. 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. Yours faithfully, Dr Stuart Gibson CEO, Gibson Strategy Limited 2 I gibsonstrategy.com I 3 STRATEGY Isle of Man Private Wealth Report 2020/21 Executive Summary Isle of Man Real Estate. Younger wealth creators are Aviation and Yachting. World class shipping and aviation moving to the Island and buying real estate. UHNWs registry on the Island. Multi-jurisdictional solutions prefer to build bespoke homes rather than live in existing available for global clients. Flag state extremely important. properties available on the market. Personal safety is the Isle of Man professionals provide full yacht and aviation major factor for wealthy families buying property on the management services. Island. Digital and Technology. Private clients and wealth Living in the Isle of Man. Abundant space to grow is a professionals have polarised views on cryptocurrency. significant benefit. Tax cap is a prominent driver. New HVRs There remains a sceptical attitude towards investing in creating employment opportunities. Low unemployment cryptocurrency. The Isle of Man has a world-class reputation but skilled workers still needed. Anonymity rather than as an e-gaming jurisdiction, which continues to grow. notoriety. Diverse immigration including north of UK, South Succession Planning. Educating the next generation is Africa, US and China. Political and economic stability - a big critical in effective succession planning. Succession planning plus. is more about estate planning than tax planning. Asset Isle of Man Private Clients. Diversity of HNWs - young, protection is essential in intergenerational wealth transfer. old, male, female, entrepreneurs, retirees. Entrepreneurs Next generation is younger and more entrepreneurial. have an absolutely laser focus on what has to be done. No Philanthropy and Sustainability. Very diverse philanthropic such thing as retirement for an UHNW. Drivers for UHNW causes. Extremely important to include the next generation. wealth - money, power, lifestyle, personal safety, enjoyment, Varied opinion in remaining anonymous. Varying amount of security for family and the next generation. involvement or commitment to philanthropy. Intrinsic link to Relationships, Trust and Loyalty. Honesty and openness green and sustainable philanthropy. most important in creating trust. Trusted relationships Global Citizen. Explosion in growth of global citizens. critical in building long-term loyalty. Institutional brand Increasing complexity of global citizens. Global citizens reinforces trust in the private wealth professional. Culture driven by lifestyle rather than tax. Political safety a key influences the creation of trust and loyalty. influence. Proximity to the UK a distinct advantage. Investment Management. Service, quality and Emotional link with home country important. relationships are extremely important in selection criteria Coronavirus COVID-19 Pandemic. The impact of rather than price. Isle of Man investment managers coronavirus COVID-19, whilst sudden and unprecedented, compete on an institutional, rather than jurisdictional, has shown that the Isle of Man’s private wealth level. Global complexity of private clients include: UHNWs, professionals and businesses are resilient, adaptable and HNWs, entrepreneurs and expats. Professionals deal with were generally well prepared. As a consequence, the gatekeepers such as lawyers or tax advisers at larger family Island’s private wealth sector and its private clients will offices. Differences in the comprehension of risk between hopefully successfully emerge from this pandemic on a the wealth creators and second/third generations. positive path. Life and Pensions. Life companies account for 17.5% of The Future. Still concern and uncertainty over Brexit. Island’s GDP, employing 2,000 staff. Joint promotional Geopolitics never more interesting. Strong regulation is activities between government and Manx Insurance positive but also a burden for service providers. Political Association. Large diversification of sectors making up the and economic stability of the jurisdiction is crucial for the Isle of Man GDP. Global and multi-jurisdictional clientele. successful future. Further consolidation of the private Trust and Corporate Services. Vast amount of services wealth service providers. offered for private clients and corporate clients. Different structure available for asset protection, succession planning, tax planning or philanthropic causes. Choice between owner managed versus private equity owned models. Increasing specialism in aviation and yachting; and digital including cryptocurrencies, eGaming and eSport. 4 I gibsonstrategy.com I 5 STRATEGY Section one I Isle of Man Isle of Man Private Wealth Report 2020/21 1.1 Isle of Man – A Brief History Isle of Man is located off the North West English coast, in a feudal basis, with fees and homage promised to all future the middle of the Irish Sea, at roughly equal distance from kings of England. England, Ireland, Scotland and Wales. The Island is 30 miles During the fifteenth and sixteenth centuries, the Isle of Man long, thought to have been formed approximately 85,000 was an important centre for the illegal contraband trade years ago, when melting glaciers meant sea levels rose, because of its convenient offshore location. The Smuggling isolating Mesolithic Britain from mainland Europe. Act was passed in 1765 by the government at Westminster, The Isle of Man is part of the British Isles; it is a self- in an attempt to legislate against such trade. Manx-folk governing kingdom; a Crown dependency (since 1828) referred to it as the Mischief Act. Manx is the term used to belonging to neither the UK nor the European Union. describe people or things that belong to, or concern the Isle Under the supervision of the British Home Office, the Island of Man and the people who live there. governs its own internal affairs and has its own parliament Evidence of the Industrial Revolution points to the building (known as Tynwald), laws, traditions and culture. of the largest waterwheel in the world on the Island The first inhabitants of the Island are understood to be in 1854. The Laxey Wheel, which is 72 feet in diameter, Celtic tribes; it is presumed that these immigrants were was built to pump water from the lead mines some 200 from Ireland, as the current Manx Gaelic language closely fathoms below. The economy of the Isle of Man also began resembles Irish Gaelic. The Celtic god of the sea, Manannán, to change