Wealth Management During a Pandemic: DOs & DON’Ts

We speak with Steven de Jersey, a Director of Dixcart Trust Corporation Limited - the Dixcart Group office in Guernsey.

His focus is on advising and managing the larger and more complex structures for both institutional and private clients.

The Dixcart Group office in Guernsey was founded 50 years ago and is one of ten offices covering nine jurisdictions. Other offices are located in Cyprus, Isle of Man, Malta, Portugal (Lisbon and Madeira), St Kitts & Nevis, South Africa, Switzerland and the UK.

Dixcart globally provides effective solutions to both private and institutional clients, by establishing and managing structures in appropriate international jurisdictions as well as offering residency and citizenship advice for those clients looking to relocate themselves, their families or their business.

The Guernsey office provides wealth preservation and succession planning solutions to private clients, with extensive experience in establishing and managing family offices, trusts and foundations.  Alongside this, the office also provides services to institutional and corporate group clients and offers experience in administering the varied structure types generally used. Services also include company secretarial and corporate governance support to mid-tier and listed companies.

Why do more people need to consult a professional who can help them with wealth management, especially in the current uncertain environment?

There is an ever-increasing number of individuals creating wealth. This wealth is not just generated through the traditional routes of property, businesses and investment, but also through new technologies such as e-commerce and e-gaming, as well as higher incomes being earned in sport and entertainment. Much of this newer wealth is being generated at a greater pace and a younger age.

Clients and their families are increasingly mobile with family members widely spread across multiple jurisdictions. They require professional guidance for the correct structuring and planning of their affairs to ensure compliance with the differing jurisdictional requirements, while still meeting their overall goals and objectives. The correct professional adviser will offer advice and guidance and suggest solutions that the client might not even be aware of, as well as provide the comfort of having the knowledge and experience in dealing with such technical matters. In today’s world of obligations pertaining to multiple tax treaties, exchange of information and substance requirements, together with varying regulation and legislation from jurisdiction to jurisdiction, failure to comply can have substantial consequences.

With the current pandemic and its effect on the world economy, governments are going to need to fund their expensive national COVID-19 support programmes. Tax revenues will be down from traditional tax sources, and governments will look to collect additional tax from the individually wealthy.

With the current pandemic and its effect on the world economy, governments are going to need to fund their expensive national COVID-19 support programmes. Tax revenues will be down from traditional tax sources, and governments will look to collect additional tax from the individually wealthy. There is therefore even more reason for clients to ensure that their affairs are being reviewed and looked after by appropriate professional advisers.

What’s the best wealth preservation advice you can offer to our readers?

Know your goals and objectives. Think carefully about what you want to achieve and review these goals regularly. If your goals are not clear and cannot be clearly communicated, you are unlikely to attain them.

Consider how you are going to achieve these goals and objectives. You need to choose your professional advisers and service providers with your own goals in mind. Track record and experience is important but ensure that this experience is relevant to you and your circumstances. The advisers you choose must not only be good at what they do, but be professionals that you must be able to work alongside in the longer term as well.

Plan for the future. As soon as the next generation are old enough, involve them in the process. This will ensure continuity and an inflow of new ideas.

What are the current trends re-shaping wealth management?

For some time, tax has been less of a motivator in terms of wealth management with wealth protection, preservation and succession planning becoming more of a priority. This trend has been highlighted during the current pandemic as the worldwide lockdown has given people time and inclination to review their affairs. We are receiving many requests for advice on wealth protection, preservation and succession planning. Good corporate governance, transparency and tax compliance is far more important than the privacy and cheap structures of the past.

Good corporate governance, transparency and tax compliance is far more important than the privacy and cheap structures of the past.

Social and environmental concerns are much higher on clients’ agendas, particularly when looking to invest, as is reputational awareness regarding where the individual’s or family’s wealth is being managed.

Clients and their families want to be more mobile and flexible and need appropriately aligned advice.

With the potential for further lockdowns, consideration is being given as to where individuals and families wish to live.  We are seeing an increase, within the Dixcart Group, of clients looking to move to jurisdictions perceived as being ‘safer’, with no doubt increased numbers of private residences.

What is the impact of ‘Economic Substance’ (ESR), as this new requirement is being introduced across circa 140+ international jurisdictions?

ESR is very much an extension of the historical ‘mind and management’ requirements and the BEPS legislation, introduced to ensure structures meet the appropriate tax residency test. Where jurisdictions already have a good track record of tax compliance and harmonisation, ESR has effectively put what was best practice for these jurisdictions, into legislation.

This has led to a review of offshore structures by clients and their advisers with questions being asked as to the structure’s purpose and whether this is still relevant under the new legislation. Decisions are then made whether to migrate them onshore or to a more suitable jurisdiction, or simply close them down.

Jurisdictions with a less favourable track record of meeting international standards are now facing an uphill battle to meet the ESR legislative requirements that they have had to implement, with the result that banking and lending institutions are reviewing all of the arrangements with structures located in these jurisdictions.

We are pleased to report that in March 2019, the EU Code of Conduct Group approved Guernsey’s substance regime. This was followed by further endorsement in July 2019 by the OECD Forum on Harmful Tax Practices, who concluded that the domestic legal framework of Guernsey was in line with agreed standards and therefore “not harmful”.

Why is Guernsey such a popular location for High Net Worth Individuals to relocate to?

Guernsey is a popular choice for individuals looking to relocate, with its proximity to the UK and mainland Europe, together with its beneficial tax regime.

Guernsey has no capital gains, inheritance or other wealth taxes. There is no VAT or goods and service tax. There is also an attractive tax cap for newcomers to the island.

The island has the added benefits of beautiful scenery and a slightly slower-paced, more traditional way of life with the reassurance of personal safety and excellent community spirit.

What sets your firm apart from other wealth management consultancies?

Dixcart Group is privately owned and completely independent. We are not tied to any other Group that may have conflicting goals, nor owned by a Private Equity House that has performance targets to be met, nor listed on the Stock Exchange with an expectation of shareholder returns.

This means that we can provide clients with impartial advice and the best solutions to meet their specific needs.

There is constant communication throughout the Group through regular meetings and more recently via electronic conferences, to ensure that everyone is kept abreast of developments in the wealth industry. There are deep friendships that run, not only within and across the Dixcart offices, but also with our clients where we have often been trusted advisers across multiple generations.

Email: steven.dejersey@dixcart.com

Tel: +44 (0)1481 738700

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