Since the financial crisis prompted a renewed flight to quality amongst international investors, Jersey has been attracting increasing global interest as a leading jurisdiction for wealth management services.
Among those drawn to the attractive features Jersey has to offer are family office practitioners and other advisers to the wealthiest families. Increasingly, they are looking for a jurisdiction that can demonstrate high levels of stability, substance and experience, together with a rational
and practical response to the increasing drive for wider transparency. Jersey, with the maturity and robustness of its regulatory and legal systems, its tax neutral platform, close proximity to the UK and European markets and concentration of financial planning expertise, meets all such criteria and serves as an ideal jurisdiction.
Its pedigree as a wealth management centre is based on solid and enduring foundations. Established for more than 50 years in a politically and economically stable environment, Jersey’s financial services industry has benefited from the broad depth and range of services it offers international investors. Equipped with an experienced workforce of bankers, investment managers and private wealth professionals, it was quick to develop into a specialist wealth management centre attracting deposits and investments from around the world. Latest figures, for the year ending 2013, showed that Jersey had about £140bn in deposits and that 55% of that total was in foreign currencies, highlighting its global appeal.
Its relationship with the City of London has also been a powerful feature of its offering. Sharing a similar time zone to the UK has been important, but the key factor has been the strong partnerships that have been established between practitioners in London and the network of finance and legal professionals in Jersey. Indeed, the island’s role as a gateway for investment into London was further highlighted last year when an independent study undertaken on behalf of Jersey Finance by the macro economic research firm, Capital Economics, showed that Jersey was a conduit for £0.5tn of foreign investment into the UK, 5% of the total stock of foreign owned assets in the country.
Its world class reputation for the quality of its regulation and its willingness to co-operate in international efforts
to improve information exchange has been widely acknowledged by key independent bodies such as the IMF, OECD and the World Bank following the regular reviews they undertake of finance centres worldwide. Overall the standards Jersey demonstrates exceed most, if not all, G8, G20, OECD and EU countries.
Jersey was also one of the first jurisdictions to regulate its trust industry, a move which provided reassurance to those using the territory that the investment structures were being administered by competent service providers. Those who provide trustee services have to be licensed by the island’s financial regulator, the Jersey Financial Services Commission (JFSC), abide by codes of practice and are subject to regular inspections.
The jurisdiction has also rigorously fought tax evasion for many years. It introduced legislation in the late nineties making it a criminal offence, and has consistently followed international best practice with enhanced regulations designed to fight financial crime. Jersey has no banking secrecy laws and regulations are in place so that entities, including trusts, are fully accessible under the terms of Tax Information Exchange Agreements (TIEAs).
The concept of confidentiality and secure data handling is naturally pertinent to high net worth families and Jersey takes a mature approach to balancing transparency and conformity to global standards for information exchange, with a legitimate right to an appropriate level of confidentiality.
An examination of the figures that support the finance industry in Jersey are impressive and emphasise that substance is an important factor when considering where assets should be located. Some 42 bank licence holders are operated by some of the world’s leading international banking groups and they offer a diverse breadth of services, including private banking and wealth management solutions, often integrated with a wider trust company or investment platform.
The banking industry alone employs more than 3,000 professionals, but the infrastructure is further bolstered
by access to all the major professional services firms, at least five first tier legal practices, and a vast range of independent trust companies and wealth managers. In total, a skilled workforce of more than 12,000 is employed, the largest number of any offshore centre and an extensive intermediary network which is virtually unrivalled amongst competitor jurisdictions.
With families actively pursuing globally mobile lives, an ability to manage diverse family assets securely across borders has become a crucial part of wealth management strategies. Jersey is familiar with managing cross-border assets and handling sometimes sophisticated cross- border transactions as well as international estate planning requirements safely and efficiently.
Jersey has also ensured that its legal framework is up to date and responsive to the needs of those who wish to use its services. The Trusts (Jersey) Law 1984, which was used as a model for other jurisdictions, is not a rigid piece of legislation but is consistently updated to ensure that it meets the needs of clients. In recent years, legislative enhancements have included such innovations as trusts with unlimited duration, the ability for settlors to reserve powers and the introduction of non-charitable purpose trusts. In a major development last year, legislation brought the ‘Hastings-Bass Rule’ onto the statute, providing Jersey trusts with a tangible advantage over those governed by the laws of other jurisdictions.
Many wealthy families desire to devote some of their capital towards helping society in one form or another, and Jersey professionals are able to advise on the structures that will meet a whole range of philanthropic objectives. Jersey charitable and non-charitable trusts are easily established and since the introduction of foundations in 2009, which blends the attractive features of Jersey corporations and trusts, there has been a wider choice of investment vehicles.
Nearly 250 foundations have been established since their introduction in Jersey. They have a particular resonance in common law jurisdictions where the Anglo Saxon concept of a trust is less familiar while they have also proved popular with high net worth clients in the Middle East, Russia and Asia.
Jersey’s skills in providing Shariah compliant financing arrangements using both trusts and foundations has also proved attractive in the Gulf region especially. Jersey has also ensured that its legal framework is up to date and responsive to the needs of those who wish to use its services. The Trusts (Jersey) Law 1984, which was used as a model for other jurisdictions, is not a rigid piece of legislation but is consistently updated to ensure that it meets the needs of clients. In recent years, legislative enhancements have included such innovations as trusts with unlimited duration, the ability for settlors to reserve powers and the introduction of non-charitable purpose trusts.
Commentators generally concur that the current environment presents an opportunity for those jurisdictions that are well regulated and transparent, where there is genuine substance and a proven track record of providing solutions to the needs of the high net worth family. Increasing numbers of Single and Multi- Family Office professionals have been turning to Jersey when devising their investment strategies; during the last couple of years there has also been evidence of a steady climb in the number of family offices and family office service providers relocating to or expanding their presence in the jurisdiction. This is increasingly to serve families and family offices where demand has been greatest, especially in the Far East, the Gulf and in Africa.
With its stable political system, well regulated finance industry, broad access to expertise and strong legal and court systems, Jersey has all the ingredients necessary to retain its leading position among the top IFCs as the safe, secure jurisdiction that can best meet the needs of the wealthiest families.