Private Bankers, can't live with them, can't live without them

Great thing about vacations is it gives you time to read and here is a very good presentation on the global private banking industry by PricewaterhouseCoopers: http://www.pwc.com/gx/en/private-banking-wealth-mgmt-survey/index.jhtml

For most of us, much of our private trust business comes from or is inter-twined with the private banking business. Take a look at Figures 13 & 14 on pages 24 & 25, and you see where our opportunities lie.

Looks like a rosy future if Trusts and fiduciary services is "Very Important" (2nd highest, following Tax and estate planning) according to 27% of business heads but......it's one thing to have a strategy/vision and it's another thing to actually implement it.

Getting it right is entirely another matter.

Summer vacation and the biggest trust case of the year

Going on vacation, so just a little something to take note of while I'm away.....

Most people in Hong Kong know about Nina Wang. She was in the local news long before her death (for the equally intriguing tale surrounding her late husband's disappearance). For the rest of the world, she was once on Forbes list of richest people, coming in at some US$4-5 Billion net worth, and known as the richest woman in Asia. Whatever you say about her inherited wealth and bubbly persona and "unique" fashion sense, having met the woman once, I would say she was as business savvy a person as you expect to be a chairman of a listed conglomerate and wouldn't surprise me if she was the brains behind the operations.

Now fast forward to her death in 97. Her estate, still worth billions, was on one hand bequeathed to the Chinachem Charitable Foundation, or per a later will, left to Tony Chan (Chun Chuen). [For those not in probate or estate work, typically the last will & testament will super cede or wipe out any earlier will(s).] The will for Chan was made in the last months of Wang's cancer-stricken life, giving further doubt as to Wang's capacity if the will was not a forgery.

We are now awaiting for the judgement on the case brought by the Foundation against Chan. It seems that there wasn't enough evidence to render the Chan will an outright fraud, hence counsel ended up with a Wang-loves-Chan saga to give the Chan will legitimacy. Google a picture of Chan and you have this smiling, hyena-like bald guy with a comical dental work. Hardly the boy-toy type. If you buy the love story, then you probably need to recognise that Wang was off her rocker too.....double edged sword!

Chan was a former bartender, who became a self-taught fung shui practitioner and advised Wang on fortune and enriching and allegedly prolonging her life. Wang gave Chan some US$90 million during her lifetime. Chan is already likely the world's richest fung shui master....has a Gulfstream among other things thanks to Wang, but could stand to be on the Forbes list himself if he prevails. Oh, Chan was married thorough out the time he was involved with the widowed Wang.

We have had some 30+ days of testimony ranging from witnesses to both wills, handwriting experts, psychiatrists (offering opinions on the mental capacity of the deceased based on everything but without actually talking to the subject!), fung shui masters, to wacky details of Nina's belief in Chan's fung shui and alleged love affair as seen from Chan's loving perspective as well shocked friends and disbelieving family of Wang. The only thing missing was a night-vision sex tape.

Forget the tabloid fodder and we really do have a text-book case on how to litigate or defend a questionable/contentious will and there may be good pointers for trustees and lawyers on dealing with bequests and estates. How the judge rules on many of sordid points will be of great interest (to us with legal fetishes)

And for those with money, here's a good example of why you should take care of things well in advance. Do you want your family and loved ones in court for 10years after you're gone? If the will for Chan was written years ago and affirmed by others or Wang subsequently, there would be no case as it would been virtually incontestable. Or if Wang had actually started funding the Foundation while she was a alive then there would be less assets in the estate governed by the later Chan will.

Don't do things right and the only people getting rich are the litigators.

12 Monkeys

Twelve...that is the lucky number.

The OECD has set a threshold of 12 international tax exchange information agreements as "proof" of being a good country. Having 12 Agreements means that you're on the white list and not labelled as a tax haven or grey country.....gee I never knew the best corporate tax haven in the world: Delaware was a separate country from the US?

The standard OECD Agreement requires: "exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes. It also provides for extensive safeguards to protect the confidentiality of the information exchanged."

Singapore has just signed 1 (with Belgium) and now about to enter its second (with France)......10 more to go. Plays out like a "dating game" of sorts, countries running around trying to fill their dance card with willing partners.

So what does this have to do with us? Some call this as another nail in the coffin of banking secrecy. Damm......looks like the MAS and IRAS have some laws to amend. It also means that our French and Belgian clients that aren't squeaky clean will now have something to worry about. Close the account and run to another jurisdiction? Get another passport and open accounts under the new identity? Add more layers of BVI companies to an already complicated structure?

Hmmm.....good questions to ask at the STEP seminar next week: http://www.step.org.sg/events/exchange%20of%20information%20(21jul09).pdf

It takes talent to find talent

Well with the winds of economic change starting to blow, rumors are rampant about new hiring, bottoming out, expansion, etc.

For all you recruiting and recruiters out there, remember, it takes talent to find talent. Trust work is a speciality and unless you hire specialists, you will suffer for it, sooner or later.

You don't use a football coach to help find you basketball players. Just like a fixed-income guy is not the one who is best to assess your prime brokerage guy. Don't be fooled by generalities, otherwise you will have hired a gynecologist to be your neurosurgeon just because he/she was a learned and licensed....."doctor". After all, they both possess roughly the same qualifications and have similar skill sets but who do you want working on your brain?

Obviously, not every one doing the hiring is a trust specialist so what can you do? Hire a consultant! Sometimes a few beers and a dinner will get you a qualified opinion [My going rate is a 4-course meal at either the Four Seasons or Mandarin Oriental, wine excluded as I need to appear sober]. Other times, just pay a noted trust person or firm, a hour or two of their hourly rate to scan the 2 or 3 short-listed candidates' CV and come up with a few "to-the-bone" interview questions for you. If you're big enough, come up with a test. I know of at least 1 law firm that has a basic competency test it developed for a trustee client.

Look at the damage of a poor hire. Upfront you have more HR costs when you need to replace them. More of your time and energy (as well as everyone else who helps recruiting) wasted. Another Headhunter and their 3-month trailer.

Ongoing, it may cost you the respect of your team, your colleagues, your internal clients, your institution's reputation, your reputation as well as the client or any potential referrals from them. Every minute this person is on company premises he/she is poisoning your staff and colleagues. Every client this person meets could end up being a contingent lawsuit. Every industry has its "lepers": people that appear competent and may even have a reputation as an expert but behind their back, people laugh at them, no one gives them referrals, no one wants to work with them and their staff are running off like rats from a sinking ship. All it takes is a few discrete phone calls and you may have saved yourself a major headache.

With the trust business, a lot of the problems of a poor hire may not turn up for years. A few favorites from due diligence reviews I've done: A low-level manager stole a trust deed from his former employer, an international trust company, when he started a new job as "Head of Trusts" with a 3rd-tier bank trust company. However, when "reformatting" the template for his new employer, certain clauses were accidently deleted. Just too lazy or ignorant or technically-challenged to go through that 25-page document. Who knows how many trusts were created with an "incomplete" deed? Who knows if and when this may come back to haunt them and their clients? What's the cost of fixing this little oversight?? This is the price you pay when you hire someone too junior for his responsibilities. Anyone with a few year's experience can talk-the-talk but can they really walk-the-walk?? Only a pro knows.

Then there was this ethically-challenged as well as technically-challenged (non-US tax) lawyer wrote in the file upon creation of a trust years ago of which I was reviewing: "I advised Ms X to use her sister, a non-US person, to create the trust and therefore avoid US taxation under the grantor trust rules". Nothing better to plan tax evasion (poorly I might add) but also to document it so all can understand the exact purpose of the fraud being perpetrated. How many other cases has this person botched? So, do you call the client now to say you f**ked up and risk public embarrassment or a civil suit? Will it look good when your staff are prosecuted? Does your institution want to go through a lengthy UBS vs IRS type battle? How long and how many accompliances will you need to keep things hush-hush? The price you pay when you hire the wrong specialist.

These are just bad hires from a technical-qualification standpoint. Use your uncommon common sense to avoid those who may abuse their position like recent headliners Ronnie Wong [ex-Goldman Sachs] or Cheuk Sau-Yee [ex-Hang Sang Bank].

For those looking for work, try assessing the knowledge of your prospective boss and colleagues before you sign the employment contract. Ask about tenure, experience and qualifications of those you work with. Any firm with a revolving door and unqualified/under qualified department heads are a sign of trouble. Of course you should know where the lepers are at all times.

Here is a perfect example of a large, reputable, albeit clueless recruiter being lead by a clueless employer that will end up with a clueless employee creating clueless trusts which means a bright future for some clued-in litigators [name of the recruiter has been changed to protect the guilty]:

[Edit: I saw a revised verson of the ad but this was the original, verbatim]

1. Horrible grammar/typos/language through out. Why bother paying the search firm if they won't even bother presenting a clear advert? "servicing existing sophisticate clients of the company" Huh?? Who but clients of the company are we to service??? "Sophisticate" That is a verb, no?
2. "providing the most efficient and tax-effective structures to maximize returns." "maximize returns"??? Noble goal in establishing a trust/structure no? Why not just hire an investment guy and buy accumulators with the trust fund?
3. "You will help in the incorporation in Hong-Kong or more than 30 offshore jurisdictions." Utterly meaningless sentence, but the ICSA requirement farther below tells you that your also going to be the Company Secretarial sales manager too. Granted the industries are inter-related but should your neurosurgeon also be pitching ladies for smears? How many OB Gyn's know about neurosurgery? So why expect so much from your Chartered Sec???
4. "Acting as a legal referee" WTF?!!?!?! Now you have you CoSec/Trust Sales person doing arbitration? For whom? Not sure I like a firm where disputes are so common that it forms part of my job description. So where do you find a ex-judge, with a CoSec qualification that wants to sell trusts?
5. "Legal or tax background" Shouldn't this be a given?? Regardless, I already went through the doctor example and that applies here. Not every accountant/lawyer is as qualified to handle trust work as one might think. Not every lawyer or accountant is qualified to handle "tax-effective" planning as one may think. Appears these guys have never heard of the Society of Trust & Estate Practitioners? Then again, a TEP guy isn't qualified to do everything either. Aren't there qualifications to being a "legal referee"?
6. So here is an employer that thinks someone with "Sales skills, excellent presentation and outspoken" can sell anything right? Unfortunately they will, and at the same time will also mis-sell.......Lehman mini bonds anyone? They better hope that their clients or their high priced attorneys are not all that "sophisticate".
7. "Experience within a Private Practice will be highly welcome, Trust company or a bank " Clearly shows that they're reaching for anyone from anywhere.

So in conclusion, we have a worthless recruiter who is merely posting positions as written by the client - absolutely no value added in terms of industry insight or presentation or well planned search. We have a employer that thinks it knows the holes it needs to fill but using a scatter-shot and jack-of-all-trades approach which will end up not satisfying any of their original goals. We have recruits that will be jerked around having to do things they weren't expecting or qualified to do. Nice recipe for disaster.

Bottom line: if this hire isn't good enough to handle the CoSec, Trust sales, efficient, tax-effective, return maximising, legal referee aspects of the job, then what? Who suffers?

Private Clients Sales Manager - Trust

• Our client is one of the leading trust and fiduciary services group supporting high net worth individuals, corporations and intermediaries all over the world. As part of their expansion plan they are actively looking today for a Private clients Sales Manager to join their team.

Your role :

You will be in charge of servicing existing sophisticate clients of the company and perform active business development duties by providing the most efficient and tax-effective structures to maximize returns.

You will help in the incorporation in Hong-Kong or more than 30 offshore jurisdictions, provide corporate nominee directors and shareholders, provide company secretarial services, establish banking relationships in HK with some of the world’s most recognized financial institutions, etc.

Acting as a legal referee and also as Private Clients Sales manager you will be in charge of :

-Developing the business by attracting new clients

-Cross-selling with the existing clients

-Managing the existing team

Profile :

-Sales skills, excellent presentation and outspoken

-Excellent written and spoken English and Mandarin (essential)

-Legal or tax background

-ICSA qualification holder

-Experience within a Private Practice will be highly welcome, Trust company or a bank

Applicants please send your resume together with present and expected salary to EMINEM.hk Candidates not contacted within 4 weeks may consider their application for this role unsuccessful. Unless advised otherwise, unsuccessful candidates will be kept on file for future job opportunities. Your application may be forwarded to other international plc offices for recruitment purposes.

Personal data collected will be used for recruitment related purposes only and all personal data of applicants will be kept in strict accordance to the Personal Data Privacy Ordinance.

Where will you run to?

Credit Suisse in France becomes the latest in the world of disclosure (according to Forbes):

"Swiss bank Credit Suisse said on Wednesday it will pass the names of clients holding French securities to the French markets authority."

Admittedly, I know little about the French market. For an another Swiss bank to give up the ship is so "Marcovician" [This is a new term I just created in tribute to the private banking/private wealth guru Philip Marcovici. If you don't know of Philip, then he is a slick (in good way), opinionated, entertaining, often provocative lawyer that has been telling us all for years that the end of banking secrecy and non-fiscal compliance was around the corner.

This appears to be an isolated instance of Marcovicism. Probably more self-preservation than anything else. So what do the French authorities have over CS to cause this? Will BNP, SoGen, Lyonnais, Agricole follow suit? Is this policy for accounts booked in France or anywhere in the CS world? Where will the French tax evaders run to now?

Some think....... that Credit Suisse seeks new opportunities for clients, that their combined years of experience and ability to innovate mean that they are always "thinking new perspectives"

We think.....dump the CACs, close the account and move to another bank

How's that for a new perspective?