A report by Jersey Finance has highlighted that over £1 trillion of assets are held in Jersey trusts and other asset-holding vehicles, of which £400 billion are held in private trusts and roughly £600 billion in corporate asset vehicles. Jersey also has robust legislation for the creation of trusts and other asset and investment management and pooling vehicles, which makes it attractive to individuals, businesses and institutions with cross border asset portfolios.
No wonder then that, as the world has become more aware of the use of trusts as a way of protecting assets and for succession planning, Jersey has seen a rise in the overall values of structures being established and business flows have increased from further afield. How then does Jersey manage to take tough challenges in its stride to develop the trust industry and enhance its reputation.
Working from home in the face of COVID-19
At the outset, we have all faced and dealt with the challenges of working from home and have achieved this so successfully in Jersey that the way we work will look very different in the future. Office space requirements will certainly change as we see more people working from home on a regular basis – although office facilities will still be needed in respect of client visits and investor footfalls to the Island. As always, it was very pleasing to see the way that the Government of Jersey, the JFSC, Jersey Finance and the financial services industry worked together, with regular meetings by video conference and a weekly report to Government throughout the lockdown. In this way, any challenges that the industry was facing could be raised and answered efficiently and effectively. We were incredibly fortunate that the JFSC and Government continued to be able to action business as usual during this difficult time. This manner of working together as a team to support and grow the financial services industry in Jersey has shown how we can quickly and efficiently adapt to factors beyond our control and has proved that Jersey is resilient and open for business.
Digitalisation of the industry continues unabated
The Jersey trust industry has one of the highest numbers of qualified employees in the offshore world and has a breadth and depth of fiduciary knowledge that sets it apart as a jurisdiction of note. The way in which the Jersey Association of Trust Companies (JATCo) and other trade bodies work with Government to advise on the implications of any new legislation, through various forums and the use of different working groups, ensures that there are no surprises for the industry. In addition, working groups in the digital technology space, in which JATCo is heavily interested, can contribute to the digitalisation of our industry. For example, working groups which focus on the further digitalisation of JFSC have been extremely useful in sharing knowledge to ensure that increased digitalisation of the JFSC will not add to the industry’s burden but will rather make it easier for trust companies and the JFSC to share information going forward.
Deepening relevance of jersey as a leading fiduciary centre
Jersey is recognised worldwide as a leading fiduciary centre due to the depth of knowledge, industry communication flow and its highly regarded legal industry and court system. JFSC, the industry’s regulator, has an effective oversight system in place to ensure the regulation and reputation of our industry and to ensure that periodic visits to trust companies are handled in a highly efficient manner to ensure that potential reputational risks to our Island are mitigated to the greatest extent possible. All of these factors, along with the stability of the Island in terms of politics and the economy, ensure that Jersey is front of mind when professional advisors are advising clients on which jurisdiction to use as a safe haven for assets. As new generations become more educated, there is a greater knowledge base around how trusts and companies can assist with the collation of family assets and more assets available to structure.
Jersey professionals take their legal, tax and regulatory reporting very seriously and also work hard to build relationships with clients and their families to ensure that they are looked after in the best way possible, so that we become trusted advisors to families across the globe and within diverse cultural contexts. For instance, Middle Eastern clients wishing to treat all heirs in the same way instead of favouring male heirs can use trusts to achieve their desired results.
Asian families that wish to ensure that businesses continue to be managed upon the demise of the patriarch or matriarch can ensure succession without gaps in trading and a wait for probate before assets may be utilised.
An increase in the number of family offices being set up in Jersey is also pleasing to see and trust companies have had to become more sophisticated and aware of clients’ wishes – particularly regarding long-term family views around the use of environmental, social and governance (ESG) investing and also around the types of investment made, particularly through the use of capital markets. Some fiduciary companies have set up dedicated family office teams to service the higher demands around service and breadth of service offered.
As Jersey’s industry figures have adapted flexibly to these increased demands – and based on the reputation of the industry – we are well positioned to continue our growth in the future. Jersey’s trust industry will have to maintain its ability to nimbly adapt to change, by building on its excellent reputation as a fiduciary services centre. Over the last few decades, the source of our new business has diversified from being largely from the UK to servicing clients from around the globe.
Jersey Finance, which is seen as a leading example among IFCs around the world, has been instrumental in laying the groundwork for clients with interests in regions such as the Middle East, Africa, the US and Asia. Many of our existing and potential high net worth clients are displaying heightened concerns around the potential for civil unrest and political instability in their home countries and are seeking a safe jurisdiction to settle their family wealth. This is a huge opportunity for Jersey, be it dealing with Muslim families who wish to structure their international wealth to avoid forced heirship applications to benefit female relatives, or dealing with concerns over the transfer of wealth to the next generation.
With its excellent legal framework, the Jersey jurisdiction is very attractive to families who have previously had no exposure to fiduciary structuring and to families who wish to set up a family office to manage their family wealth.
Tackling threats to work towards a bright future for the trust industry
In a world where Jersey’s role in international finance is not always clearly understood, more must be done to educate journalists and individuals alike as to the workings of our industry and the important role it plays as a safe haven for assets.
Many onshore jurisdictions are bringing in legislation around the holding of assets abroad – and the introduction of tax implications around so doing – and it is imperative that families hand over their wealth to caring, professional trustees with a track record of understanding the requirements and wishes of global families, that have the qualifications and experience to preserve and enhance wealth in this ever-changing global landscape.
In conclusion, I believe that in a world where the requirement for succession planning will continue unabated, Jersey – with its excellent reputation and stable political and robust regulatory environment – will be among the top jurisdictions of choice for (ultra) high net worth individuals and families who wish to be serviced by fiduciary practitioners with the know-how to deal with complex structuring and the understanding to build lasting relationships.