07 October 2016

Advantages of setting up a family office in Jersey

Director, Michael Powell contributes to eprivateclient's report on Jersey, examining the island's family office services for private clients.

Author of article:

Michael Powell

Director, Private Client Services

Private family offices are a useful tool for high net worth families to co-ordinate their financial advisory team and protect and preserve their 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 who have diverse requirements in the provision of what is often called a concierge service.

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 historic use of increasing investment management committees, Jersey is certainly a potent force within the private family office sector.

Jersey's regulatory framework

Jersey's regulatory framework and robust court systems have evolved to support and deal with issues that arise in the course of administering a family's affairs where there is a connection to Jersey.  Whilst 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. The Council of Europe's MONEYVAL report on Jersey, published in May 2016, championed the Island's institutional, legislative and regulatory framework, and placed Jersey significantly ahead of other jurisdictions that have been assessed.

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, including (NED!) relevant skilled succession planning - are available in Jersey. 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.

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. I am seeing the emergence of a new generation of clients who are increasingly entrepreneurial and require an even higher percentage of the services traditionally provided to a family office. Jersey clearly has a huge advantage in being able to offer or facilitate all such services that could reasonably be required to service the family office.

With all of its obvious advantages, Jersey aspires to become the best in the world at helping UHNW families to set up and manage their family offices as part of the wealth protection for future generations, facilitating the process of pro-active and constructive use of wealth.

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*Originally published in eprivateclient's Jersey Report 2016

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