Private family offices are a useful tool for high net worth families to co-ordinate their financial advisory team and protect, preserve and facilitate the further growth of wealth. Jersey has consolidated its position as one of the most reputable locations for private clients to set up their family office.
What is a family office?
Definitions of a family office differ greatly but for the purpose of this article it is suggested that a private family office comprises the provision of a structure(s) which can successfully take on, manage, administer and, where appropriate, enhance the value of a family's assets. It can also distribute funds, often working with internationally based family members to discuss appropriate distribution of funds. Working with the family to arrange such diverse requirements of how a family wishes to operate is often referred to as a concierge service. Working with advisers, a family protocol would define the basis of wealth distribution, for example, assist with acquiring property or payment of tuition fees.
A brief history of Jersey's family office services
Jersey has a long and respected history of administering the structures within a family office and, as a sophisticated and highly regarded international finance centre, the Island has the solid infrastructure in place to support the management of private family offices.
The armoury of products and services available in Jersey include private trust companies, foundations and bespoke trusts. When these are combined with an overall flexibility of approach, familiarity and willingness to work with other jurisdictions, as well as protectorship and the increasing use of family investment committees (FICs) and in some cases more corporate based structuring, Jersey is certainly a potent force within the private family office sector.
Jersey's regulatory frameworkJersey's regulatory framework and robust court systems are constantly evolving to support and deal with issues that arise in the course of administering a family's affairs where there is a connection to Jersey. The rigorous systems and protocols in place ensure Jersey remains a world-leading international finance centre with a strong reputation for the highest regulatory standards, often being considered as a benchmark for good compliance and adaptability. While few parties want to consider this possibility, access to a judicial system familiar with issues derived from family wealth confers a sense of security as to the outcome of a process.
Jersey: A preferred location
Its strategic location, between the time zones of the Americas and Asian markets also makes Jersey a preferred location for basing a family office. Close proximity to London and excellent communication links and infrastructure also help to consolidate why Jersey is a premier location for administering the wealth of ultra HNW individuals.
As families become increasingly international, the requirement for consolidated administration, advisory and tax reporting, which are all necessary components of an effective family office, becomes even more apparent. Excellent but pragmatic levels of governance are mandatory if structures are to survive beyond the third generation, so clients need to engage the services of trusted experts to ensure the effectiveness of their existing structures.
Using Jersey as a base for a private family office enables clients to take advantage of its highly skilled and specialist workforce. All of the skill sets required by a successful family office - legal, investment, wealth management, tax, corporate governance, relevant skilled succession planning - are available in Jersey with the main trusts legislation being the Trusts Law which is backed by case law within the Island's court system.
In addition Jersey advisers naturally work with international advisers to provide services to families spread out across the world. The far-reaching footprint of many companies in Jersey means that a seamless international service is very much a reality for clients.
Geographic diversification of assets
For many clients the global pandemic has provided an unusual time to reflect and focus on aspects of asset protection and succession planning. Using Jersey for relocation of wealth and business assets has been accelerating and some UHNW clients are also choosing to establish a number of private family offices in different jurisdictions to ensure their wealth is geographically diversified.
Jersey: An early adopter of regulatory change
Regulation will continue to evolve, and will only become more prevalent with Jersey at the forefront of the most requested jurisdictions. Jersey has always been an early adopter of regulatory change and remains committed to maintaining its reputation as a compliant jurisdiction, which will in turn be to the benefit of its clients. When it comes to preserving their wealth, families increasingly must accept and embrace this regulation. Jersey has always been technologically advanced but The Panama Papers remind us that complacency is never justified.
Looking ahead it is likely that the services required by family offices will become increasingly complex and specialist, recognising that each client and their respective families will have a different focus.
With all of its obvious advantages, Jersey aspires to become the best in the world at helping UHNW clients to set up and manage their private family offices, whether as part of the wealth protection for future generations or facilitating the process of pro-active investments alongside constructive use of wealth generation and preservation.