Thursday, December 23, 2010

The Indians Are Coming, The Indians Are Coming....

http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/Income-tax-dept-to-open-10-overseas-I-T-units/articleshow/7100262.cms

"The Income Tax Department [of India] has begun opening overseas tax units in countries with low tax.

"We have opened two offices so far in Singapore and Mauritius and by March we will open another eight overseas locations like cyprus," Union revenue secretary Sunil Mitra said here today on the sidelines of a FICCI executive counil meeting.

"We do not say tax haven, we say low tax jurisdictions," he said when reminded that these offices are primarily targetted in tax havens to prevent tax evasion. "

Of course the public line will be they will be there to assist with tax info exchange, enquiries, case processing and so-forth. Doesn't mean that they won't be taking names, searching through registries, stopping by the supposed Sales Office or warehouse, flipping through the Tattler or wining and dining loose-lipped bankers and IFAs or eaves-droppping at the Sentosa Golf Club.

Wednesday, December 22, 2010

New Zealand: Not Sheepish About Trusts

Ok...we all know that there some 10 or so sheep for every Kiwi but one factoid that popped up that is very interesting is that: for trusts, there is "one for every 18 people, against one for 34 in Australia and one for 294 in Britain. Use of trusts in New Zealand has shot up in recent years, from 145,900 active for tax purposes in 2001 to at least 237,500 in 2008. The commission said the actual number might be as high as 400,000."

Other numbers:
* 400,000: The estimated number of family trusts in New Zealand.
* 167,925: The number of family homes held in trusts.
* $93 billion: The value of assets held in family trusts - equivalent to 18.6 per cent of all household wealth.
* 50 per cent of all couples with an annual income over $200,000 have a family trust.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10695668

I suppose those numbers do not include non-resident trusts which foreigners like to use NZ for but those are extremely enviable penetration rates. sigh now if only we could get that type of interest from the rest of Asia.......

Tuesday, November 30, 2010

On the 85th Day.....

Santiago took 85 days before he bagged the "big one".

Hugh Ellerton of EFG Trust Singapore, the old man (just an analogy Hugh, nothing personal) in our story, has taken maybe 365 days (or more) and is still out there searching, trolling, baiting....... The marlin he is seeking is his successor. Meanwhile, others have come and gone with catches of their own (including Sean Coughlan who was one of Hugh's peers or even dotted-line boss who has now relocated to Singapore for another trust company!)....tells you something.

So does EFG Bank suck? Or is it that the role sucks and none of the qualified candidates (including internally) want the job? Or is it that the EFG's requirements are unrealistic and no one is measuring up? Or is it the recruiter(s) fault?

Valuable lessons for those looking for people (especially hiring managers from outside the region, like some global Head sitting overseas) as the annual mass migration triggered by year end bonuses looms. Now how will you go about finding your catch-of-the-day?

After the first batch of résumés flow in, you should have a good idea how of where you stand and whether or not you need to formulate a fall-back plan. You should have started to get a feeling for whether you are using the right bait, which means the appropriate recruiter/headhunter, the right job portals, trade rags (or newspapers....gasp!) etc. If you're not getting bites or getting inappropriate candidates then dump the recruiter or change the ad or place an ad on another job search site, etc.. Recruiters are generally working on a success basis and for good reason, they're generally not successful. Recruiters also tend to work certain fishing spots only. For instance, if they have gotten CitiTrust engagements then they (if they're good) tend to track Citi people and you have a Citi-family tree. You will get a lot of former and current Citi candidates from them. Nice but you may need another recruiter to see what the Credit Suisse-tree has to offer. Obviously the big caché companies have little problem attracting candidates, they're problem lies in screening. For small banks and independents, getting people interested can be a daunting challenge even in buyer's market conditions. They have even more to lose when the big boys gearing up to hire.

After the first batch of interviews, you should have a clear idea of where your mismatches are. Time to consider whether or not you are going to be able to fill the role "as is" or whether you have to make adjustments like splitting up the duties or increasing the experience/seniority level or vice versa. Of course if you were close to a hire then you'll soon find out whether your compensation levels are market or not. If people are saying nay or coming back with counter-offers, then you may have to revise your budgeting. If your first run fails, then you should have a strongly focused revised game plan for your second run. Also remember the potency of the grapevine.....by day 2, 90% of the market already knows you're hiring so you're likely targeting only the remaining 10% who have been under a rock or were previously dis-interested. In a small trust community like HK and Singapore, the well dries up fairly quickly. Even these people will have had a scoop on the pros and cons of job and pay, etc. as they been talking those you already interviewed. You really have your work cut out for you with each successive search so try to get it right the first time.

"Perfect" candidates can be as elusive as great white whales. The more your organisation or role is "unique", the more trouble you will have finding a right fit. After all, a fair portion of the work force out there has been "trained" and compartmentalized by the big institutions. If you're not running a similar operation/model than you can expect some adjustment pains. Somewhere along the line, you are going to have to stop being stubborn and settle on the next best thing. Somewhere along the line, all the best candidates will be gone. Somewhere along the line you will have be forced into a corner and settle for any warm body. Particularly in Singapore, there may be no time to snooze as it is more of a seller's market. So do you begrudgingly go back to the short-listed rejects and possibly foot another 20-50% pay hike on an already inflated salary? Face a buyout or 3-month notice period? Spend more time and money on another search? Or do you continue to sit back and wait for something to fall into your lap? Now for a senior hire, 2-6 months isn't unreasonable, but what is the deadline you're prepared to work on? If EFG pulled the trigger say a year ago, they would have already put in a year of training/grooming a "sub-par" candidate. Time is an opportunity cost.

Friday, November 19, 2010

At Risk

At Risk Amount (AR)....now this term has a new usage: a nice euphemism for tax dodging and tax dodgers.

See this Reuters article on how: "Tax deals to cost UBS 10 percent European client assets"
http://www.reuters.com/article/idUSTRE6AF2U120101116 On Page 7 of Jürg Zeltner's Investor Day presentation, in the footnotes, is: "We believe that CHF15-40 billion are still at risk as a result of changes in tax regulations."

It's wonderful to know that you can potentially lose say $40b in assets and you can say "no biggie", just footnote it. By way of comparison, $40b is roughly twice the amount that UBS estimates "clients from neighboring countries have withdrawn over CHF 20 billion over the last twelve months". Not picking on UBS, as this is an industry wide issue and not just for Swiss or Europeans either. Still want to be the "new Switzerland" of wealth management?

Look at some of the salient issues and we have some real heady stuff to deal with.

Firstly, how does one actually determine one's AR amount? It used to be only outsiders (analysts/government/revenue/auditors) tried to put a number on AUM that was at risk for fiscal reasons. It's rare that any bank officially comes out and quantifies the AR amount. We all know it exists, its just we can't quantify it. So what's scarier? Having at risk assets, or you know it so well that there's actually a number for it?

OK, so I have say a 100 British or German nationals with accounts in Switzerland. Are all 100 deemed "at risk" because they are Brits or Germans? If not, what percentage? How did you arrive at that percentage? Guessing? Some formula or marker/trait? Did you have first hand knowledge or an admission of guilt? By having a AR number, doesn't that mean that you are knowingly harbouring, if not aiding and abetting, "risky business"?

Secondly, the tax witch hunts are triggering either a capture/ferreting out of the fiscal rascal; a surrender/repatriation/"amnest-icized" under some tax amnesty scheme ; or thirdly, a flee to deeper darker places. Now some of the money exiting will be "declared" and end up back in the home country. Now if your a global player, then surely you could repatriate the funds into your domestic UK or German booking center. But since they're talking about outflow/exit, the money is "hot"/undeclared and not bankable (or you're an offshore business sitting onshore and failed to see the writing on the wall years ago). Shouldn't the course of action to be proactively closing these accounts instead or waiting for the risk to exit at their leisure? An ounce of prevention....?

But inevitably some money will flee to another jurisdiction and we in Asia will be on the short list of possible destinations. Remember all that flight capital you were so keen on booking these past years? As Singapore and rest of Asia continue to sign up for OECD information exchange treaties (See my 12 Monkeys entry: ), the same thing that is happening to the Swiss/Euro banks has and will happen to the Asian banks, unless you happen to think your AR amount is zero that is. Some money will have to exit sooner or later (see my White is Good entry:).

And we need not look at European customer base to see risk. How much of the purported $460b of illicit Indian money (according to the Global Financial Integrity organisation http://india.gfip.org/) is sitting with your bank?

Thursday, November 11, 2010

Hong Kong: Hot or Not?

Bad news if you're a lawyer looking for trust work, at least according a survey of hiring managers and recruiters: http://www.hk-lawyer.com/userfiles/HKL_201011_030%281%29.jpg from http://law.lexisnexis.com/webcenters/hk/Hong-Kong-Lawyer-/Reviewing-Hong-Kong's-legal-job-market-in-2010/

Even the general banking sector looks bearish but in-house Wealth Management/Advisory roles for private client lawyers seems to buck then trend and could be hot.

However, the optimism at the STEP Asia Conference 2010 was hardly bleak. In fact the show was sold out. Some 300+ trust people! The conference has out-grown the Four Seasons venue.

And with uncertainties (aren't there always?) dogging the private wealth business, there was a silver lining within the speech made by Secretary for Financial Services and the Treasury of HK, Professor K C Chan: the HK government plans to introduce a trust law Amendment Bill into the Legislative Council in 2011. While I think we need not hold our breaths as HK will not become a significant trust booking center anytime soon, new laws often means opportunity for some advisors and analysts.

Wednesday, November 3, 2010

Kin In The Game......But Are You?

"Kin in the Game" is tagline for PwC's latest Family Business Survey which covers small and mid-sized family companies in 35 countries of which Asia is represented by Japan only. http://www.pwc.com/gx/en/press-room/2010/family-business-owners-optimistic-about-growth.jhtml

The headline that will be buzzing all the advisor/PB/wealth/asset management websites in coming weeks will be that despite their worries and concerns, some 50% of families have little or no succession planning. Sounds like absolutely nothing has changed when PwC first started this survey several years ago. Other major findings include:

• 62% haven’t prepared for the possible sickness or death of a key manager or stakeholder
• 56% haven’t established any procedures for purchasing the shares of incapacitated or deceased shareholders
• 50% either lack the liquidity to buy out family members who want to dispose of their stakes in the business or haven’t considered the possibility
• 37% don’t know how much domestic capital gains tax they or their companies might be liable for, while 58% don’t know the international implication

Family businesses are probably the predominate form of commerce in Asia so it may be fair to assume that the issues/problems are even more acute in Asia.

So what's your business plan to tap this market? Does your organisation's talking head have his speech ready on how you're going to bolster your succession services and teams of qualified advisors and product specialists?

If you're one of the families looking for answers, talk to as many people in different areas (accounting/tax/banking/insurance/etc) as you can before you do anything. The problems you face can be daunting but most people will have only a partial solution for you. They pitch only what their organisation can offer which may leave you with big holes in your planning. What do I mean? Well insurance people will sell your their "succession" insurance policies which may be great at providing liquidity for a share buy-out but they can't help with you with the buyout agreement. Is even a buyout the most tax efficient manner to accomplish a change in ownership? So bring in the tax accountant/lawyer. Are you sure you want to hold the shares in your name? Maybe bring in the trust guy.... It typically takes a slew of measures to have a workable solution.

And perhaps most important of all, don't forget it needs to work before and after succession. Dumping all the company shares into a trust may seem to be a great succession plan but can you live with a trust until then or after? What are the exit strategies? Go through your "What if" scenarios as the best laid plans of mice and men....often go awry

Monday, October 18, 2010

Give It Away, Give It Away, Give It Away Now

The title is an ode to the Californian philosopher: Anthony Kiedis

Since Warren and Willy's "Giving Pledge" roadshow hit China last month and the HK Chief Executive's annual Policy Address which included a Community Care Fund, there's been a lot of reverberation about charity and philanthropy going on. I'd just like to put in a word or 2, because I, and my colleagues in the trust industry, are often the facilitators of charitable and philanthropist giving.

Trusts are the often the structure chosen to hold, manage and/or dispense the assets, typically money and property, for the charity/philanthropist/NPOs. Why? Because, a trust is great at legally separating the patron/donor from the assets. The trustee can then independently (with help from various committees/boards) manage and carry out the intended purpose with a greater degree of skill and professionalism then the giver could. Trusts can also go on for perpetuity if needed as most jurisdictions waive the rules against perpetuity for charitable/philantropic trusts (CPTs) for the greater good of society. Many times CPTs are named or called Foundations (which have nothing to do with the civil law entity) but is technically just another a trust. Some CPTs are quite small, private, unregistered and many details of the donors are kept to a minimum. Others are registered charities and can have a team of dedicated staff running it.

Although the principles are the same, CPTs can be quiet different than your typical private family trust. Firstly, there is tax. Unlike most private trusts, most CPTs are set up as tax-transparent. CPTs that seek/accept public donations are usually required to be registered, file tax returns - often to retain a tax-exempt status and issue tax receipts donors like so much, and sometimes subject to independent audit. Compliance is a big issue and if you're big, like a Red Cross or Community Chest then you can image the volume of record keeping as you have millions of dollars or assets, hundreds of thousands of donors and beneficiaries. CPTs that are "public" need to carefully operate so as to carrying out the purposes intended. Many eyes are upon you. For those trust companies that have never dealt with CPTs or large ones, my word of advice is don't. It takes a special skill set that normal trust officers and administrators do not have. CPTs are no place for the inexperienced. For many, CPTs are a losing proposition because it can consume time and resources like nothing like else you have ever encountered.

CPTs have been around for ages in Asia, just not many of them. There are myriad of articles floating around about why Asians are "less giving" then their Western counterparts and most them have some valid points. Mass wealth in Asia is a relatively new phenomenon. Much of these past few generations has been about surviving, making money and hoarding money, not giving it away. You never quite know when enough is enough for you could lose much of it tomorrow. That is the environment that the nouveau rich in Asia have been growing up in. Worrying about losing one's wealth borders on paranoia.

Many jurisdictions require registered charities to make their financials public. Take a look and you will see that Asians are not adverse to giving as many NPOs/CPTs have accumulated quite significant funds, so much so, you need to start wondering whether they are "worthy" of receiving more of your charitable dollar. Here's a recent tax case where a HK charitable body (a church), took property it owned and made a BILLION dollars and decided it should not have to pay any tax [CHURCH BODY OF THE HONG KONG SHENG KUNG HUI v COMMISSIONER OF INLAND REVENUE [2010] 2 HKC 475]: http://www.hk-lawyer.com/innerpages/37/2010/6/Taxation%20and%20Revenue/37
Religion and tax aside, I don't think this charity needs or deserves any of my money. Of course, there are those that use the guise of CPTs and NPOs for less than admirable purposes, further dampening the giving spirit.

I would say about 30% of the private trusts/wills have some charitable intent and not just because they need a "default beneficiary". However, the amounts are typically small, say a few percentage of the trust fund are earmarked for charity. The primary concern that most settlors have is the financial well-being of their family. And in Asia, often the family extends to siblings, uncles, aunts, nephews and nieces to cousins. I estimate some two-thirds of letter of wishes/trusts/wills leave something for remoter relations which I find rarer for Western clients.

But as the living get richer, their desire to give back grows stronger. Virtually every HNWI or UHNWI I have dealt with has made some contribution of 1 kind or another. The desire is there. There is no typical philanthropist is Asia. I have seen tens of millions donated anonymously, I have seen some go to great lengths for recognition (named building/wing, etc.). I have seen some that just do it with no strings attached, while others are dead-set on pulling the strings. I have those that write the cheque and go away. I have dealt with those that roll up their sleeves and help. If there is anything about Asian donors, it is that they are often quite specific about who/what causethey want to help - it may be some specific school, town, or heath issue,etc. Asians are the least likely to give to a "general" fund. My only advice is be prepared go in with an open mind spend the time to listen and understand what the donor wants.

Short and simple but covers a lot of issues: http://www.stepjournal.org/archive/2010/philanthropy_advisor_june/international_giving.aspx

Wednesday, October 6, 2010

How Many Trust People Does It Take To Change A Lightbulb?

The countless "lightbulb" jokes often satirize or mask pain and suffering.

Here is an ad (yes, I know better than to believe everything I read from a recruiter but...) that may seem innocuous enough but it seems like one bank has a lot of problems. Reading between the lines, a job description tells you what the company lacks or is in need of, where their weaknesses are. I'm guessing the organisation is American and has a bunch of people with vested interest: bankers, Wealth Advisors, CSS (Client Service Specialist/Support?), Trust Officers, etc. but none of them are motivated or coordinated enough to work together so we need a liaison to bring them all together! Create silos, get silo mentality.

Now factor in that most trustees are not in your home country (say Jersey), their number crunchers and support team are in another geography (like Mumbai) and their services are being marketed to you by an associate in another department (banker or wealth advisor in Singapore) and not by them directly, you can expect problems. This is like a kitchen that is not in control of the menu or waiters. God knows how the waiters (bankers and wealth advisors) are pitching the food? God knows if the waiter can answer "what's in the soup?" if ever asked? Do waiters really care about what's in the soup or understand how it is prepared? Just smile, make chit chat, write up the order and give me my tip. Sometimes, the waiter goes back to the kitchen to ask the potager for the correct answer, hence the delay. Other times, the waiter makes it up or guesses.....and of course the chef pays for it when the customer is irate that his soup which was supposed to contain lobster was actually was fish. Waiters have also been known to make promises to patrons like, of course we have lobster bisque, only to find out the potager can't deliver.

If you bank or have a trust with them, you're probably a victim of the 50 emails around the world it takes to get an answer to anything (if you get one at all). If you work for them, then you're probably pissed at the lack of teamwork, you're going round and round.

This manager role sounds like a band-aid solution to a troubling, all-too-common structural problem. I guess it's a good start that they know they have a problem.
The JD should read more like: the successful candidate will require very thick skin and expect to be thrown into harm's way. This is the UN Peace Negotiator aspect of the job I refer to in: http://trustprofessioninasia.blogspot.com/2010/04/you-are-who-you-hire.html

So here goes:

1) To represent International Fiduciary Services locally as part of the integrated team - tells you they're not a team right now, to each his own.

2) on-the-ground presence and provide a local presence - tells you they're a thousand miles away

3) timely and quick resolution - tells you they're currently doing neither

4) work through complex fiduciary issues with wealth advisors and bankers - tells you the people they have on the ground aren't very good, especially the wealth advisor who is supposed to be an expert. Then again, the wealth advisor is just there to sell, it's not his job to worry about post-sales activities which is where most fiduciary issues come up just like the car salesmen is of little use when your Lamborghini breaks down, that's the mechanic's (in Italy) problem.

5) bridge information flow between Wealth Advisors and Trust Officers - tells you the two parties aren't accustomed or are refusing to talk to one another, why else need a bridge? Can't they pick up the phone or send off an email themselves?


Trust Liaison Manager – Hong Kong, Singapore
Our client, a top tier private bank is looking for a senior trust relationship manager to be a liaison manager for its international trust offices.
Suitable candidates will already be based in Hong Kong and Singapore

Responsibilities: To represent International Fiduciary Services locally as part of the integrated team and improve service levels of fiduciary through on-the-ground presence and timely resolution of issues:
- To provide a local presence for quick resolution and feedback of client issues
- To work through complex fiduciary issues with wealth advisors and bankers
- To work with the wealth advisor to represent fiduciary on new business
- To provide training and bridge information flow between Wealth Advisors and Trust Officers

The successful candidate will serve as a liaison between the bankers, wealth advisors, CSS and the Trust locations on a wide range of fiduciary issues and act as a technical resource to fiduciary officers, wealth advisors, bankers and other practice and/or functional partners on a broad range of fiduciary matters.

Requirements
- Seasoned client management skills
- 10 years + PQE fiduciary experience in an international environment including extensive client contact
- A professional qualification Law or STEP qualified
- Extensive knowledge of the marketplace as it pertains to fiduciary structures and client needs
- The ability to develop effective solutions in respect of administrative and other legal issues and to monitor these in a dynamic environment.


[Edit: It’s now June 2011 and the JP Morgan HR team is now in carpet-bombing mode trying to fill the role above (see below). After some 8-9 months, it appears they are still stuck on square 1 and even if they found someone today, it maybe another few months before they’re on the job. While JPM deal with Santiago’s curse (see http://trustprofessioninasia.blogspot.com/2010/11/on-85th-day.html) it raises an interesting question – how mission critical is it when your operation keeps chugging along without this person/function? I'm always tempted to point to managerial ineptitude when a position is not filled for any significant period but only JPM knows the whole story. When people don’t have an excuse or recourse, they tend to get the job done. Perhaps instead of a new role, observing how the various teams cope may be part of the ultimate solution. Necessity seems to have a way of solving problems.

Job Description
PB - International Fiduciary Services - Trust Client Services-110038423
Job Description

J.P. Morgan Private Bank Asia - International Fiduciary Services (IFS) - Trust Client Services

Objective
To represent IFS in Asia and improve responsiveness and service levels of IFS through on-the-ground presence and timely resolution of complex issues. Provide the technical expertise to educate and train Trust Officers on complex jurisdictional, tax, legal issues and ensure structures are in compliance with changes/updates:
• Provide a local presence in Asia for resolution and feedback of complex client issues
• Work through complex fiduciary issues with Wealth Advisors and bankers
• Coordinate with Wealth Advisory to represent fiduciary on new business opportunities
• Provide training and bridge information flow between WA and TOs
Principal Responsibilities
• New fiduciary business: Partner with Bankers, Wealth Advisors, Clients and their advisors, and Trust Officers to structure, assess and on-board new fiduciary business
o Participate with client, client's advisors, JPM colleagues to propose fiduciary solutions appropriate to client needs
o Represent IFS in this process by assessing potential fiduciary risk and suggesting appropriate risk mitigants
o Propose and negotiate fiduciary pricing
o Review and comment on draft documents
o Work with Trust Officers to on-board new fiduciary business
• Existing fiduciary business: Partner with Bankers, Trust Officers, Clients and their advisors to retain and deepen existing relationships
o Serve as technical resource to IFS to resolve specific client issues , restructuring exercises, or complex fiduciary administration issues
o Represent IFS locally by providing real-time answers and responses to questions about fiduciary administration
• Training: Lead the IFS training agenda to ensure technical skill set of Trust Officers remains current
o Develop and deliver regular training on specific issues relating to tax, regulatory, fiduciary administration topic
o Liaise between Wealth Advisory and IFS on specific, highly technical issues with respect to fiduciary structures and administration
o Participate in roll out of changes in policies/procedures; refinements to existing fiduciary products; introduction of new fiduciary products
Qualifications

• A minimum of 10 years fiduciary experience, including extensive client interaction, in an international environment
• In depth knowledge of trust law and legal/regulatory requirements affecting international fiduciary locations
• The ability to evaluate and propose effective structuring solutions
• The ability to access Fiduciary risk to make appropriate business decisions
• Experience with cross-border tax and planning issues
• Knowledge of investment and credit products and services
• Chinese Language skills preferable
Job
Private Banking
Primary Location
CN-Hong Kong-Hong Kong
Organization
Asset & Wealth Management
Schedule
Full-time
Job Type
Standard
Shift
Day Job
Employee Status
Regular

Thursday, September 30, 2010

He's Baaccccckk!

Interesting hire at Société Générale. SocGen's WPFS (wealth planning and fiduciary services, or something in that order) division has hired Steven Lim to be CEO of SG Trust (Asia). Steven is probably better known for his golf game these days than his tenure as head honcho at HSBC Trustee Singapore years ago. Welcome back to the game Steven.

Now one needs to ask the question what happened/will happen to Luke Peng's golf game now that he has ended his lengthy tenure at SG Trust?

Who's the Broad?

For my non-native English readers, "broad" is an old, likely American, mildly derogatory, term for a woman. With that in mind, consider the advertisement below for a good laugh.

But seriously, you hire a Deputy/Co-CEO by retaining a recruiter who can't spell/proof-read, won't reveal their own identity and who splashes your search for the world to see? There are only a handful of foreign joint-venture trust companies in the PRC. A Chinese trust company that even deals in private wealth [In case you didn't know, a Trust Company in China is nothing like a trust company we all know and love] and has an affiliate/office in Hong Kong really limits the possible employer to 1. Of course there's no guarantee that anything in the ad is real or correct.

Deputy CEO / Co-CEO, Private Wealth Trust Company
Location Hong Kong SAR
Remuneration Upon on request
Position Type Permanent
Employment type Full time
Updated 29-Sep-2010

Our client is a major global financial service provider, wealth manager serving affluent, high net worth and intermediary clients worldwide. They are currently looking for a Deputy CEO/Co-CEO to drives the Private Wealth / Trust unit in Asia.

Main Function of the Job:

To be responsible for the development and execution of the strategy, in particular synergies with Private Wealth bank, and the day to day operation, product delivery and new product development process in joint venture Trust company according to the visions and guidelines set by the Broad.

Work as the partner of General Manager whose main responsibilities are business origination and senior client management.

Acts as the bridge between the Trust company and Private Wealth bank to generate new business and draw support from Bank' infrastructure and product teams to develop best-in-class product innovation and execution capability according to China's unique client and regulatory environment.

Main duties and responsibilities:

Support the GM in leading the Sales function (origination, distribution, referrals between Private Wealth bank and the Trust company).

Assist the Broad and GM in developing and executing the business strategy, especially strategic initiatives relating to synergies with Private Wealth.

Help build a best-in-class infrastructure according to the business plan endorsed by the Broad and leveraging the bank where relevant.

Promote strong corporate goverance in trust company through continuous education and process development.

Requirements:

20 years+ experience in Private Wealth is a must
Used to worked in joint venture financial services partner in China
Experienced in trust management and large deal making
Strong leadership
Fluent spoken in both Mandarin and English
A degree holder

Philippines

The OECD has removed the Philippines from the tax haven "grey list".

If you have nothing good to say then say nothing.

I exercise my right to remain silent while I strap on my bullet proof vest, have my secretary check that my life and K&R insurance policies are in force, swap my Rolex for a Timex, ensure my client has an armed escort waiting for me at the airport and have a big sturdy suitcase with compartments for the big notes and the small notes. Did I remember to bring the encrypted laptop?

Tuesday, September 28, 2010

The Rich Get Richer

A "startling" revelation from the annual Merrill Lynch - Capgemini Wealth Report. "The millionaire class in the Asia-Pacific region are likely to continue growing faster than those from developed countries"

Should be like shooting fish in a barrel for us in the wealth industry.....but has any one actually seen someone shoot fish in a barrel before?

For those that are part of the nouveau HNWI or UHNWI, there will be many clammering to help you manage (err.... part) with your money. So choose your advisers carefully.

Thursday, September 16, 2010

Random Thoughts

In no particular order, here are things that you should keep dear to heart:

1. Just because someone can spew out (or can say it 3 times, really really fast): " discretionary, irrevocable, settlor-directed Cayman trust, with protector provisions...." doesn't mean they know what they are talking about. You should be as impressed as you would be with the kid behind the counter who can say: "short, tall, lite, dark, caf, decaf, low-fat, nonfat, mocha frappuccino grande". Make them explain every word. Ask them about the converse or opposite options.

2. A trust is NOT.....a bank account; a contract; a product; a vehicle; a sticky cash cow; it is just a relationship. As with every relationship you (and the other parties) are where you position yourself.

3. Causality. Action, reaction. Cause and effect. The Merovingian Rule. Not exactly Newton's 3rd Law but something like it. By creating a trust, there will be consequences. Some intended, some unintended. Anyone who can point that out to you is a probably a damn good trust planner. Anyone who doesn't has much to learn.

4. Power of Distribution, Power of Revocation, Power of this and that. All a trust is a bunch of "powers". Until you can identify and understand a power, you are a PowerPoint professional. Bonus points to those who can draft a power, but that would be showing favouritism to lawyers. And of course, power corrupts so wisely choose only what you need and to whom you confer a power unto. The more powers and power-welders there are, the more likely nothing will be accomplished.

5. Beware of the process of metamorphosis. What may have started out as a trust may not end up as a trust (or the trust you envisioned). You need to get the blueprint right.....documents, trust instrument, etc. You need to build it right.....certainties, formalities, etc. You need to care for it right....administration, etc. A screw up anywhere along the line and you may end with a partial trust or no trust at all. Even when there is no change, there could be trouble. Read about Huguette Clark and how her $3M trust allegedly stayed a $3M trust (Do google her name as her wealth or lack thereof is a very interesting, sad and surreal look at asset transfer across generations):
http://www.dailytelegraph.com.au/business/citibank-accused-of-costing-heiress-trust-fund-87-million/story-e6frez7r-1225915193776

Wednesday, September 8, 2010

I'm Robert, I Comply, Or Die Trying.......(6)

The final installment on careers in the Trust business: the Compliance/Risk/AML/KYC person.

It is unfair to group all these functions into one, but in the smaller organisations, 1 person could be wearing the many hats. Of course in the big financial institutions, there could be literally teams of people, locally, regionally and globally that separately oversee these functions, and countless sub-specialties.

It used to be Compliance/Risk and especially AML and KYC was a strictly banking or brokerage position. Outside of those financial institutions, no one really had one. Nowadays, any business that remotely touches money has to have one. Even Christie's, the auction house has a team! As more regulations and laws come into play, these fields has boomed and demand has greatly outpaced supply.

It used to be that you would take someone with relevant trust skills and turn them into Risk people. Perhaps a little cruel, but that meant the "ugly Betty's" and "techy geeks" ended up with the job. People that had little or no potential for front-line or RM work, often socially challenged and advancement denied individuals in the organisation were chosen. Being named Risk Officer was more punishment than promotion. On the plus side, these people often did know the business and knew it very well. How well they were able absorb risk principles and put them into practice was the main challenge.

Now, we have formally risk-trained people that have no idea about the trust business coming into play. We have regulatory lawyers, internal and external auditors and simply "risk management people" filling the roles. While they may have a much better understanding of general legal and regulatory issues, they also have a maddening, if not crippling, lack of knowledge of the trust/wealth/offshore world. We are at least another generation or two away from having truly competent and knowledgeable trust risk people. Most of these people don't have a clue as to what risk is in our industry. All they know are check-lists and forms. If it isn't red-flagged by those screens then all's fine. If it is red-flagged, then nothing lesser than CEO or Board sign-off will get you a reprieve. They younger and less-experienced they are, the more textbook brain-washed they are. There is absolutely no good reason for "Hold Mail". Bearer share companies are inherently evil. Why isn't the Settlor the UBO? LOL!

So if your career in stuck in low gear and you know a thing or two about trusts, PICs and bank accounts, and you have the stomach to read a ton of Regs and can put the 2 together, you could have a bright future in Risk. Of course, you must love structure, lists, menus, things in logical steps and order in everything. Being OCD really helps.

You need to be the type of person who likes meddling and dwells on doom-n-gloom. You need to constantly identify (and convince management) that there is a problem in current procedures or documentation in order to create work for yourself and prove you're a valuable asset. If all's well then you're not doing your job. The sky has to be falling somewhere in the business.

You need to be able to write clearly as you will be judged on the procedures and guidelines you produce. The less you are able to produce something readily understandable, the sooner you will be unemployed. Note that it doesn't need to be technically sound, effective or efficient, just comprehensible. You can re-visit, re-do, refine anything as your next project. Everything is a work-in-progress and you must take satisfaction on the the process and not any particular milestone.

You need to be able to take criticism as no one will agree with your draft procedure or guidelines (or at least the first 20 drafts anyway). People will find a fault with everything you propose. You intelligence, or lack thereof, will often be questioned, both privately and publicly. People do not like change and all you're about is change.

What I wrote about in-house trust counsel applies to you to (http://trustprofessioninasia.blogspot.com/2010/06/im-helen-i-possibly-maybe-like-my-job5.html). You are often seen as an impediment to doing business and you will not have many friends.

You are the Sorcerer's Apprentice. Harness your powers and you could make-or-break billion dollar transactions and shape the direction and things your company is doing. You have the power to help stamp out crime and corruption and make the world a better place. Until then, back to your little corner of the office and read the stacks of Reg's. that are piling up.

Cowboys and Secretaries: If There's a Will, There's a Way

I often make fun of the technically challenged people working in our industry......and for good reason.

We deal in very complex matters of law and regulations and truly skilled help is very under-appreciated. When you couple that with big money and family issues, we have a very volatile mix which even the finest "Risk Management" people fail to understand. In 75% of the cases, relatively little skill is required so companies are lulled into complacency, thinking their systems and templates and their people are doing a "good job". PowerPoint professionals can get by for years before someone discovers they f@#*^ked up some where along the way. (A little off track but a Compliance executive at a small private bank in Singapore told me about a litigation case. Their former Head of Trust screwed up a case. The case was on the books for about 4-5yrs but it didn't come to light until recently when the family retained counsel. While all the blame was placed on the former Head, you need to wonder about the people who administered the case for years without knowing that anything was wrong.)

People are typically hired or retained without any serious inquiries into their skills/knowledge. People are judged more on their sales results or personality than skill. There is a potentially fatal presumption of competence. Who's to question that lawyer? The guy/girl whose been working for 8years the XYZ Trust Company has to know his/her stuff right? Wrong.

The Society of Trust & Estate Practitioners has a some rather scary numbers on "cowboy Will writers": http://www.step.org/news/press_releases/2010/ww_survey_reveals_incompetence.aspx

I presume that the STEP survey was conducted primarily in the UK/Channel Islands, but I would have no doubt that you would get the same, if not worse, results for Asia. The fact that far fewer Asians use Wills makes the problem seem lesser than it is.

There are numerous non-legal professionals like banks, trust companies, accounting firms, wealth managers, IFAs and so-called Will writers, doing Will and estate work. Some are very very good. Some are not. Some will do more harm than good. These are some of the same people doing your trust work.

Play it safe and go to a lawyer right? Not are all lawyers are competent as the recent case of "Soh Eng Beng (as executor and trustee of the Estate of Soh Kim Poo, deceased) v Soh Eng Koon [2010] SGHC 257" demonstrates: http://www.singaporelawwatch.sg/remweb/legal/ln2/rss/judgment/11483.html

The punchline for those who don't like reading: The secretary prepared the Will!

The moral of the story: Be afraid, be very afraid.

Monday, September 6, 2010

1 out of 400 Ain't Bad

You say 50 Private Bankers? I'll see your 50 and raise you 175 Relationship Managers! No wait....make that 250 Client Advisors, 30 Trust Officers and 5 Wealth and Tax Planning Advisors.

I guess bank executives have nothing better to do these days than brag about their size. The banks seems to be caught in a "size matters" philosophy and everyone is sprouting how many people they plan to hire in the near future.....as if it means that the more people they say they can take on, means the better/stronger their business is. Note I wrote "plan to hire" which is not the same thing as actually hiring. Is any one impressed by this propaganda? Will the regulators not grant you a license if your business plan doesn't include hiring a thousand bankers? It's so comical when we all know that their supposed hiring targets are so-out-of-whack with reality.

http://www.vrl-financial-news.com/wealth-management/private-banker-intl/issues/pbi-2010/pbi-264/julius-baer-aims-to-double-sta.aspx

Swiss private bank Julius Baer is to double staff numbers in Asia in an attempt to deepen its market penetration in the region.

Boris Collardi, chief executive of the 120-year old bank, said growth in emerging markets will help the “investment universe” get richer and will relentlessly improve” its client-centric business model.

It is planning a Hong Kong booking office by the end of 2010, as well as a representative office in Shanghai and a trust company in Singapore by next year.

Singapore and Hong Kong were identified as key gateways to the bank’s increased presence in Asia, where the bank employs 400 people accounting for 10% of its total staff.


It should be no secret that JB did try to set up a trust company in Singapore a few years ago but that got canned presumably by the GFC. So its seems they are back on track.

However, if you gander at their careers section (http://www.juliusbaer.com/htm/691/en/Job-opportunities.htm), all I can see is 1 measly opportunity in Singapore. I guess the other 399 jobs are being filled by headhunters or did someone not get Boris' memo?

Thursday, September 2, 2010

Want Equity In Equity?

Equity Trust is up for sale. In Asia, Equity Trust headcount is probably around 120 or more, making it indeed a very large player. An awful lot of people has passed through its doors over the years. Everyone knows someone that has worked there.

Its current owner, an UK private equity fund, Candover is having a fire sale after a series of overly aggressive (read: tanked) investments. It is highly unusual that sales of this nature are even public and gives you insight into the scope and value of trustee and trust-related businesses.

The asking price is believed to be somewhere in the £250-300m range. That is a big chunk to swallow, but on the flip side, the new owner will have a turn-key toy with a formidable global platform.

Here's some numbers for you to consider if you're interested:
The €182.5m management buyout made in May 2003, involved the trust and fiduciary services business of Bank Insinger de Beaufort, in which Candover took a majority equity stake in the new business, to be known as Equity Trust. Debt finance for the deal was arranged by The Royal Bank of Scotland in the form of £90m in senior debt and £10m in mezzanine debt. Candover Investments' holding: £11.3m

[Update: SOLD! €350m !!!]

Thursday, August 26, 2010

Wherefore Art Thou?

It may seem slow news-wise but it has been a tumultuous year in many respects for the trust industry in Asia. Upon returning from vacation, a must-do task is update your telephone directory of who's gone, who's jumped ship and who's on the market. Forget the "people moves" sections of your favorite business intelligence websites, as they are usually "paid advertising" and don't give you a true indication of what's happening.

I think 2010 will go down as one of the most volatile years we will ever be part of. Now is the winter of our discontent made glorious summer by the tax witch hunts overseas and of course, the GFC. There hasn't been such buzzing in all my years. Every lunch is turning into a catch-up of session: did you hear about so and so...?

There has been so much happening on and off the playing field. Players are coming and going. Commerzbank went. So are the remnants of LGT's trust business in Asia. BSI is gearing up in Hong Kong after making a big splash in Singapore. The Swiss are undecided. The traditionally retail banks are attacking the affluent and PB segments like we have never seen.....we need 5 thousand RMs! JP Morgan has assembled a very senior and costly Wealth Advisory team.....a dream team of sorts or the Witches of Eastwick depending on how things turn out, hold on tight Kenny. UBS has been gutted of their senior Wealth Planners. HSBC Trustee went through an ugly shake-up. ABN Amro is scrambling to replace its North Asia Estate Planning team. Amicorp is re-shuffling its deck. Barclays Wealth Trustees has a new license in Singapore and will be soon poaching your people. Bank of Communications Trustee is perpetually hiring, the list goes on and on. The scale and levels of opportunity have rarely been this great. The instability of trust/wealth teams has never been greater.

My sense is that underlying all this movement is not just the typical motivators like money or another rung up the ladder but a sense of discontentment and disillusionment. I think we have reached a point where employees no longer "believe" in their employers or their business models/structures. The loyalty factor has gone. All methods of employee retention have failed. Every organisation is going through structural changes as the "new world" emerges post-GFC, but people no longer want to adapt, they opt to migrate. People are moving "to get out" more than anything else. How else do you explain the unprecedented levels of lateral/senior moves? Not everyone is moving into a "better" situation.

If you are one of those that are looking for new opportunities, and especially those "green" such as CoSecs, tax accountants and private client lawyers that are being wooed into the industry.....look closer at whose been where and for how long. Firms that can't keep their people are either too demanding or too screwed up. If you're their potentially 3rd Trust Business Development Manager in as many years (or months) then what makes you think you will last? And before you jump with glee that Big Player offered you a job, who knows, they could be out of the trust business sooner than you think.

If you're running a trust business, you better have a plan to retain those you just hired as they could be gone before their seat has warmed up. You better know the "real" reason why the incumbent left and how they are bitching about your operation to every one of his friends. Certain mid and senior-level jobs are difficult to fill
not because of the lack of qualified candidates but because all the qualified candidates know (or think they know) too much about your shop.

Expect tremors and aftershocks to continue into 2011 as businesses figure out their position and direction. There will be consolidation, there will new players and naturally there will be resignations, terminations and cessations.

Keep in touch!

Wednesday, July 14, 2010

Sporting News

Now that the (soccer) football World Cup is over, time to catch up on other sporting news.........

1) The marketing machine at Deutsche PWM made a big deal out poaching some HSBC wealth planners back in May. It was fed to an awful lot of news outlets: http://www.deutsche-bank.de/presse/en/content/press_releases_2010_5018.htm

I use poaching gingerly as most insiders will know of the recent exodus/shake-up of some very senior people at HSBC Trustee in both Hong Kong and Singapore.

Word is now that 1 of the 2 poachees has now left Deutsche. Ouch! Where's the press release on that one eh?? So Andrew T Chan has the distinction of being this years' first (that I know of...) Triple-Double trust person: 3 employers and 2 resignations/terminations in a year...actually in a couple of months. Plenty of time left to get the fourth job for the Gland Slam title.

To paraphrase Mark Smallwood: Succession planning and wealth management EMPLOYEES have increasingly become a key concern, particularly among EMPLOYERS in Asia.

Dig deep Mark and get that "passion to perform"....recruitment.....again.


2) George Steinbrenner is dead. George was the owner of the NY Yankees, one of the most economically powerful and recognisable sports franchises in the world. Throw in merchandising and broadcasting rights/revenue and George had a billion dollar estate according to Forbes. Since George was a businessman extraordinaire, he manage to save some $300-400M in US estate taxes for his heirs by dying at an opportune time: in a year without Estate Tax: http://trustprofessioninasia.blogspot.com/2010/01/2010-has-been-called-good-to-die.html


3) Catch me if you can......the fastest human Usain Bolt, the world record setting, Olympian 100m sprinter says he will not compete in the UK due to the potential to be taxed on a percentage of his worldwide income and not just on what he might make from participating in the UK track meet. In other words, he could end up paying more UK tax than what he actually made in the UK. Another example of how surreal fiscal policies can be.

Friday, July 9, 2010

Shhhhh, It's A Secret

Forbes listed what it and the Tax Justice Network (who run an interesting but somewhat skewed blog) consider the World's Best Tax Havens, where "you can hide money from prying eyes rather easily": http://www.forbes.com/2010/07/06/tax-havens-delaware-bermuda-markets-singapore-belgium.html?boxes=Homepagetopspecialreports

In no particular order: U.K. (City of London), the U.S. (Delaware), Luxembourg, Switzerland, Cayman Islands, Ireland, Hong Kong, Singapore, Belgium and Bermuda.

Wednesday, July 7, 2010

Qualified? I Am But Are You?

Had lunch with a friend the other day. He's an ITPA and TEP qualified, CA who also has been a director of several trust companies. On the topic of hiring staff, he told a story of recently receiving an unsolicited phone call from a recruiting consultant. Probably one of those that just call everyone in the company or department hoping to get lucky.

Was he interested in a very senior tax/trust job with a global investment bank? Sure!

Are you a lawyer he asked? Nope...Oh too bad, the bank only wants lawyers or solicitors.

Why? To give legal tax and trust advice to clients. Oh.....I didn't know banks could do that

Did he have any friends or referrals that might be interested? Maybe, what level of experience is required? 5yrs PQE My...how senior

Thanks! Bye.

If you were a lay person then this probably doesn't strike you as odd but this should be funny to people in the industry.

For you hiring managers out there, if you can't bother to spend the time and money to retain a good recruiter, how are you going to get good staff? Here's a recruiter that was so hung up on a legal qualification that they totally overlooked a qualified (really overqualified) candidate; mis-represented the duties of the job as when's the last time a bank issued anything that constituted as legal or tax advice to clients? And no disrespect but since when is 5PQE really senior?

Do You Speak-a My Language?

With the rapid growth of Asian wealth, we are seeing a tipping of the balance in favour of language skills over "technical" skills in the trust arena. Most job ads go as far as to list mandatory language skills.

What makes the trust industry unique is that is it an English-based industry. The laws and regulations, the precedents and practices are pretty much stem from English/common law jurisdictions. You can attempt to translate from English, but sometimes there are no words in say German or Mandarin that adequate describe terms commonly used in the trust industry. The over-whelming bulk of trust knowledge is in the west (UK, Channel Islands, Caribbean, North America, and yes, even Australia and maybe throw in Switzerland now). Their trust practitioners typically do not have have Asian language skills, never needed it. Yet, there is a growing pool of potential clients who do not understand English. Yes there are some fine trust people with the requisite language skills....just not enough of them. Hence you now have a dilemma of sorts.

The prevailing thought is that clients (people in general) prefer to do business in their native tongue. I suppose this is no different to the experiences that have occurred in Europe in the past (and present) or the Middle East or Latin America. The Spaniards want to speak and read Spanish, the Koreans want to read and speak Korean. Employers in non-English countries have forever been scrambling to hire people with relevant language skills. However, unlike Europe where many people have second or third language skills including English, much of Asia is far from being bi- or multi-lingual.

Much of Asia is uni-lingual. South Korea, Japan, Vietnam, Taiwan, Thailand and Indonesia are predominately one language countries. Outside of the big companies, major hotels, tourist areas, you will be hard pressed to find people who can (truly) read or speak English or other language.

For those who need a Chinese language lesson, Google it, but in a nut shell, the written form was largely the same, but China now uses "simplified" text whereas Taiwan/HK and other overseas Chinese communities retain the "traditional" text. As crazy as it sounds, people (particularly the younger generations) in Taiwan can't read Chinese text/articles/books from China and vice versa as they may not have been educated in the other text. A close analogy would be French and English. Many words are the same or very similar but there are enough differences to make it difficult or impossible to fully comprehend.

In case you didn't know Putonghua is the legal/official/technical name for Mandarin in China. However, different regions have different dialects (Mandarin, Wu/Shanghainese, Hakka, Cantonese, etc.). This can range from mere changes in pronunciation to a radical foreign language. Do not assume all Chinese are able to speak to one another. The Chinese have an expression: "chicken talking to duck" when there is a failure to communicate which is what we have when a south China/Guangdong native talking to a north China/Beijing native. English skills are rapidly increasing in China but again, outside the business community and certain places, English is useless.

The farther south you go, the more convoluted you get.

Hong Kong is officially tri-lingual: English, Putonghua and predominately Cantonese.
Almost all of the business community in HK can read and write English. Speaking English is a little less skilled but usually comprehensible. The Putonghua and simplified text ability of most HK people are probably the same or worse than their English. Some are great/native level and others illiterate.

Singapore is quad-lingual: Malay, English, Mandarin (with simplified text) and Tamil. Given its really diverse cultural make-up, English becomes the most common language. Put 10 Singaporeans in a room and English may be the only common language and general population have perhaps the best English skills of all of Asia, making it very expat- friendly.

Malaysian is officially uni-lingual, being Malay and Rumi in written form. There are certain dialects of Malay and there are some differences in the Malay used in Thailand, Indonesia and Brunei. Of course, if you've been there, there is a very large Chinese community (of all dialects and largely traditional text) and English is a de-facto written business language but not that commonly spoken. Many Tamils too.

The Philippines is officially Filipino and English. Filipino has different dialects but Tagalog should be most prevalent. Outside of Singapore, the Philippines has probably one of the most English-friendly populations, at least in the major cities.

In South Asian countries, there are also a large Indian and Pakistani communities. So throw in some Bengali, Hindi/Urdu, Telugu, Punjabi and some 30 other Indian continent languages. Throw in some Arabic too.

Of course there are some pockets of colonial left-overs: French in Vietnam, Portuguese in Macau, Dutch in Indonesia, Spanish in the Philippines.....

For those hiring, I guess the "right" mix of trust knowledge and language skills depends on the market you are going after. If you're targeting western educated, Forbes list, NRIs or Chinese industrialists then English isn't that big of a problem. They either know it or have the money and resources to hire their own counsel and don't need to speak. For them, skill and technical expertise outweigh the value of chit-chit. Occasionally you run into some clients that want nothing to do with a local advisor....they specifically request a non-native. Kind of a reverse-discrimination.

If you're going after grass-roots, domestic SMEs market then the opposite may hold true. If they are barely affluent or not well educated then sweet-talk may be more persuasive then technical merit.

Although cumbersome, I have not understand why people do not better utilise translators more. I would rather have a translator in the room then have some back-and-forth emails and translations and have processes drag out over days if not weeks. Not necessarily an external professional language translator but someone with the technical-jargon language skills. Sure there are privacy issues and 3's a crowd but if you're a foreign trust lawyer, why not hire and train up and drag a local junior associate/paralegal with the language skills (even from another department if necessary) to a meeting and let them translate for you? If you're a bank trust advisor, why isn't there a local banker helping you? If your client is working with a major accounting firm, why not try to get their (English speaking) partner involved at the meeting? With adequate preparation, they would get 80-90% of your message across. Think about it, a few hours time cost of a paralegal could mean the difference between being rejected or a US$20000 engagement.

Instead, what I'm am hearing and seeing are people with skills being rejected or not even considered for jobs for the reason that they lack language skills. We are seeing "inferior" people get hired and get promoted primarily on the basis they have the language skills. You may want to re-think how you attack such markets if you truly understand the risks. You may want to re-think who you assign cases to. You may want to consider teamwork as opposed to sending people out solo.

I guess it is pointless to address the prospective clients of trust companies who can't comprehend English but if you know someone that needs trust planning and doesn't speak/read English, tell them that getting good advice and service should be more important than getting someone that speaks your language. Again, utilise translators if you have to, it's your right as a consumer to get the best. I would think that if it is a significant chunk of your wealth at stake, you would rather risk going through a clumsy exercise with a 10yr experience trust person who doesn't speak your language rather than risk your wealth dealing with a 5yr experienced trust person who does speak your language. That's just me.

And for you employers out there, there is a thing called liability you always have to be aware of. In the old days, most staff were rarely, if ever, allowed to issue correspondence until they had a certain grade like Manager or Senior Associate or YEARS of experience. Now virtually anyone can send out an email with the Company footer. That makes the Company potentially liable or vicariously liable for the contents of those emails. Do you have any idea the content of the chinese email/letter your staff just sent out? I've seen plenty of fodder for lawsuits.

Which ultimately brings us to capacity issues. As most documentation is in English, does your English-illiterate client have legal capacity to enter into any trust or service contract with you? This will probably be the biggest growth area for litigation in coming years.

You Can't Take It With You

Insight from Ivan Pictet of Pictet & Cie from Wall Street Journal:
http://online.wsj.com/article/SB10001424052748703303904575291992689107112.html?mod=WSJ_latestheadlines

WSJ: What sort of private-banking products or services do you think will be most attractive to wealthy investors in Asia in the next few years?

Mr. Pictet: For the ultra-high-net-worth segment, The efficient transfer of ownership and management of family assets to the next generation will become a more pressing issue in the next five to 10 years. Wealthy families in Asia will need to take into better consideration the issue of succession planning. Family governance will play an increased role in the future.

Succession planning has become the new mantra in private wealth circles in Asia.
Time to re-name all your Wealth Planners to Succession Planners

Wednesday, June 30, 2010

I'm Helen, I Possibly, Maybe Like My Job.......(5)

The 5th in the series of careers in the trust industry is the in-house Trust Counsel.

This is typically a role that exists outside of private practice though some law firms have a high-level, figurehead, Yoda/guru which is an equivalent of in-house trust specialist. The common thread is these are the people that rarely, if ever, see clients, never have billing or revenue responsibilities and are primarily responsible for being the intellectual vault and gate-keepers of risk. The job is often seen as refuge for those that can't or don't want to make partner of a law firm. In-house is usually a cushy job with stability, reasonable hours and good financial benefits.

There are typically 2 types of in-house roles: 1 for the trust business and 1 for the company as a whole. There's a big difference which I'll explain further down.

Counsel is almost always a lawyer/barrister/attorney/solicitor. Yes, need someone with a legal background. Not so good if you can't find a lawyer with a real trust background. Far too often, the person hiring the lawyer is not a lawyer themselves and many times, not even a trust person, so you end up with a lot of private client, tax, commercial or even sometimes family law or probate lawyers filling the role. Some do OK.....others are a running joke. Far too many people over-estimate the usefulness of a lawyer when it comes to trust work. Far too many non-trust lawyers over-estimate their knowledge about trusts. My advice: consider any lawyer a trust-moron until otherwise proven.

In-house counsel that are "for the company" may be part of the "legal department" and may not even sit with the trustees. There may be other company legal matters to attend to and the trust department is just one of your many "clients". They are a resource and how a resource is used or misused depends on the organisation. Some in-house are ignored as they less competent and cognizant of trust issues than your humble and lowly 4th year Trust Officer. Some are bypassed as much as possible as they may cost the trust business real money to use. Why pay for in-house when you can get the client to retain external counsel? In-house may sometimes just be a glorified messenger between the company and external counsel as who wants to really issue an opinion these days? Who wants to rely on an in-house opinion? Some are avoided as they are as business-friendly as a paranoid Compliance Officer with conspiracy issues. Other times, the in-house is as friendly and approachable as a pit bull terrier. Why work when you will still be paid just to sit? And if they were any lawyer worth their salt, you would end up with a reply (not an answer mind you) that had a lot of words but little meaning. In other words, you got a lot of "if's" "maybe's" and "perhaps" and "possibly's" which is fine liability management for external counsel but obviously a waste of time for those who truly need advice.

The main problem with a "company" in-house is that it is an adversarial system. It is you against everyone else. You are often a hurdle for those wanting to do business. When there's money involved, people like bankers and trustees will go as far as to collude and conspire against you to get the results they want, which is sign off on the business. If the Legal Department is strong then you will make a lot of enemies as you will turn down a lot of business as being too risky or dodgy. Most will fail to understand or appreciate the risk and unfairly label you impediment. You just cost them their Thai beach house or kid's college fund. If you are weak then you will capitulate and sign off on everything as a "business decision" rendering you a mere formality and no longer a gate-keeper which is what the company really needs. Supposed allies like the Compliance or Tax Department stick their heads in the sand and deflect everything back to you as a "legal matter". No one is willing to take responsibility for anything. You would be stupid to do so as it will come back to bite you.

For those that are "for the trust business": If you were sarcastic, then you could say that the existence of an in-house trust counsel pretty much means that the employer, be it a bank or trust company, doesn't know what it is doing. So you have an in-house because no else in the trust company knows the "right way" to set up and administer trusts. Be prepared to be bombarded with a lot of "you got to be kidding me" type questions from people who have no business being in the industry. Clearly that is not the case in all trust companies. The role may have been born out of necessity but sometimes regulations and other factors have literally forced some trustees, especially banks to keep "qualified lawyers" as part of the checks and balances of the overall governance of the business.

Now the main problem of being a trust business in-house is that you are there to validate what the business wants. You will need to sign off on that bearer share Cook Islands IBC with Red Cross trust beneficiary structure as it is what the business wants. If you won't then someone will be signing off on your termination papers. I know of cases where the in-house was instructed to find a way around a damning external opinion. Yes, please turn black into white or at least grey.
You are a court jester and if the King isn't amused then you could lose your head. You might just have to learn to hold your tongue and be subservient if the job means anything to you.

In-house of course is the first place people will look to when things go bad. What idiot proposed this way of doing things? Who drafted this unworkable procedure? Who signed off on the case the IRS is investigating? Who authorised the structure that was deemed a sham by the courts? Why weren't we informed of the risk? Who says we can't sell this or that anymore? Why hasn't UBS been able to hire multiple Wealth Management counsel roles in Singapore/Hong Kong for the past year? The trust business can be extremely complex and far-reaching so much so that there is always something you weren't aware off. If your in-house isn't up to snuff, then you will be burned sooner or later. Told you not to take responsibility for anything.

On the positive side, any in-house role could be a vital and highly important role that help establish policies and procedures, provide technical/research support, vet cases, set precedents, advise on risk, support audit and litigation and perhaps input on education and training. Overall, I would say that having a qualified in-house is great business decision and you should empower them to do their job and not let the business and politics drag them off course. You should recruit the best and not take in refugees.

Wednesday, June 23, 2010

Et tu, Brute?

STEP's Singapore branch has some interesting internal rumblings. [STEP is the Society of Trust and Estate Practitioners, of which most of the Singaporean branch members are engaged in the trust business]

Their recent AGM became a Mexican standoff and a comedy of errors. The ol' wise one of Singaporean tax, Gurbachan Singh was nominated to be Chapter President as well as incumbent President Angelo Venardos (he of OIL /Heritage Fiduciary fame). But Gurbachan's nomination came late and he subsequently withdrew his consent to nomination.

Alexander van der Zwaard (ex-Meespierson/Fortis-Intertrust) current Chapter VP was also late nominated for re-election and also had to withdraw his consent to nomination.

What ensued was a humbling and humiliating hour of exchanges, posturing, snide remarks, calls for resignations and rumbling by angry voters. I wonder if David Harvey [STEP CEO] was around to witness this as he was in town.

Probably amused the hell out of Brian Balleine (he may be the new kid in town from Rothchild Trust but is hardly wet behind the ears and a STEP Worldwide Expert Panel member) who was also on the ballot for a committee role.

All this for a non-paying job.

Monday, June 7, 2010

Lucas Lin, You're #1

The Strait Times report that Lucas, a now former Standard Chartered Bank financial consultant, became the first person to be prosecuted for violating Singapore's banking secrecy laws:
http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_535994.html

(I'm too lazy to boot up the Lexis, so I relay the info as is, but I recall there were other cases)

He was caught selling client details.

Lucas, Lucas, tsk tsk......should have approached the IRAS or IRS or ATO first....they pay better.

Sunday, June 6, 2010

I'm Michael, I'm a 5 on the Grid (4)

Most trust businesses now distinctly separate the client-facing staff from others. Among the front-line are those that manage existing relationships and those that pitch to new prospects. This installment deals with the salesmen/ladies who are called anything from Business Development Managers to Trust Advisers to Wealth/Tax/Estate Planners to Fiduciary Specialists to Trust Sales or plainly Trust Officers. If there is any part of the trust industry that is "sexy", it is these rainmakers.

Obviously businesses want to put their best communicators and presentable people in front of the client. In an ideal world, your front line would also be among the best skilled, knowledgeable and technically proficient. What may not be so obvious is the impact that it has to the overall business model: you now have 2 distinct businesses. You now have people that have little or no idea what happens to trusts after they sell them, and you have people that have little or no idea how to plan or structure trusts as they only deal with after-sales processes. Training resources are usually skewed toward the front-line so your middle and back office gets dumber by the day. Can you promote your Head of Wealth Planning to run the trust business when they may have never had hands-on trust administration experience? Is your Head of Fiduciary capable of driving the business when they have had no sales or marketing responsibilities? The really big players don't have a problem running dual businesses as they have the resources/manpower to do so. Where this schism has a big impact on on the smaller trust players. They hire some Estate Planner from a big trustee and find out they can't manage a client end-to-end. Or they hire a Senior Trust Administrator and find out they have no idea how to bring in new business or capture market share.

When it comes to trust sales, it's pretty much a job whereby you need to identify or convince the client that they have a problem and establish that problem could be solved by a creating a trust. It could takes minutes or months. I would say that if you bought into a trust without weeks of deliberation and consideration then you're under-estimating the impact. If you allow a client to sign up in hours then you are a salesman, not an advisor. There are literally a hundred considerations that should be made. Whether or not most if not all were brought to your attention depends on the knowledge of the salesman and/or their agenda.

For those with a background in management or sales, you are probably familiar with some sales variation of the Blake & Mouton Grid. Google it if you don't know what I'm referring to. Your career as a front-line trust person can be encapsulated by a form the Grid. Where your employer wants you to be on the Grid and where your skills place you on the Grid tells you what your career will be like. The Grid is x-y chart that plots "caring about the Customer" on the y-axis and "caring about the sale" on the x-axis.

Those that place a high significance on the customer then to be either "people oriented" or "problem solvers". People Oriented salesmen tend to create special bonds with the customer and therefore conflicts when the product or service they are offering do not serve the customer well. A friend in deed, but in business, People Oriented salesmen have problems meeting revenue targets because they can't bring it upon themselves to close one-sided deals. People Oriented sales will work well in laid back, non-bureaucratic organisations. The Problem Solver is someone who cares greatly about solving the customers' woes as well as promoting product/services, as long as those services and products resolve the problems.

I make no judgments as to what is right or wrong or better or worse but it is very easy to identify the mismatches.

If you have a Problem Solver like a private client lawyer or tax specialist, these people will fair well in an organisation that allows them plan and devise often bespoke solutions. If you're running a holistic problem solving organisation, then you need people with problem solving skills. You can't plan a probate avoidance trust if you don't know the rules of probate. You can't advise on tax planning if you don't know taxes. On the flip side, these people get stifled in an über conservative trust company or one that has a limited or off-the-shelf offerings. When they don't have the tools or platform to solve problems, they fail or rapidly lose interest.

People Oriented salesmen are great for an organisation where there is time and resources to cultivate relationships. You will need to seek out those that those are not out for the kill. Perhaps your ideal salesmen may have even had a dismal scorecard at his previous employer as they measure themselves on the relationship, not the sale. There will be many lunch expenses and time-spent with no tangible results. If you're a People Oriented person then you will fail in the fast food-type, mass retail companies. You need to seek out more relationship-oriented employers like boutique private banks, family offices or small independent trustees or move up into the key client/UHNW space where. People Oriented salesmen are also most likely to breach controls and make self and company sacrifices in the name of the client.

Those with little concern for the customer tend to be "take-it-or-leave-it" salesmen or "product pushers". The TIOLI saleman is often low skilled simply because he can get away with it. These work well with big brand name institutions as the brand sells itself or with mass retail generic products as not much work is required from the salesman. Luxury goods sales are typical TIOLI people. Here's the Ferrari, TIOLI. As such, they are hit & miss when it comes to achieving targets. When your brand is strong and markets are booming, they look like superstars. When your brand sucks and the pipeline drying up, don't expect them to be proactive or consider it their problem. They are typically harmless and could probably be replaced with a software program or any warm body.

The Product Pushers are favorites of target-driven organisations. If you're under pressure to deliver 30 trusts or get AUM over $500M then you need these people who thrive on getting results. Of course, some of these results often come at the expense of something else like customer needs, due diligence and most things we like to think of as miss-selling. For every dollar a Product Pusher brings in, keep 10% in a war chest as you will be sued sooner or later. Product Pushers are often a little technically skilled as they need to be able to hit the right buttons, use the right sound bites, etc. Your typical PowerPoint professional. If you're not in a problem solving market, Product Pushers are fine, otherwise, they are usually in way over their heads. Product Pushers are usually fearless, energetic, boisterous and have the attention span of a fruit fly. They typically despise rules, formalities and post-sales activities. They off chasing another prospect before the ink on the last sales is even dry. Product Pushers have become the divas of the industry. They can command high salaries, get the perks and are often handled with kid gloves. If you upset them, they're off to your competitor along with their million dollar revenue stream.

Of course, there are more moderate middle grounds and where you or your organisation fit in the Grid is something you may want to look into. And in most team environments, junior staff tend to take on the characteristics of their team leader. If you have a Product Pusher as senior Trust Planning Manager then it's likely all his subordinates will become product pushers themselves. All the people he hires will likely be product pushers. If you're looking to hire, consider using the Grid to see where you're strong and where you're lacking.

Tuesday, June 1, 2010

Another One Bites the Dust

Commerzbank International Trust (Singapore) Ltd., CITS as it was known in these parts is no more. CITS was one of the early international banks to enter the Singapore trust industry. It's been home to a lot of people like Luke Peng, some may remember Jeff Halpern from the 90s,....

You knew something was up when Commerzbank basically dumped its SE Asian banking team in a deal with EFG. Pending MAS approval, the business is being sold to Trident Trust, which is now run in Singapore by former UBS (ahem, banking) big-wig Markus Grossmann.

All the best, Dudley

Thursday, May 27, 2010

Forget the Swiss, Come To Asia

A rather odd article (I guess by Sitaraman Shankar) from Reuters:
http://uk.reuters.com/article/idUSTRE64P4C820100526

The story is based around how "the Global rich want trusts, Swiss banks stay wary". It appears that the Swiss banks really want less to do with the "estimated $5-trillion global market" for it "could attract more unwelcome attention from foreign tax authorities".

WTF? Attract "more" attention? Little late don't you think? $2M threshold a problem? Are we talking private banking here or mass affluent?

While there are times when no business is better than bad business, I think this is a case where whoever is doing strategy at the Swiss banks concerned ought to be fired ( unless this is an exercise in disinformation and they are really gearing up their trust businesses). Have they stopped taking money from the same people? Is a trust any more inherently "dangerous" or "cancerous" to the institution than a bank account? Of course not....but if you've been accustomed to numbered accounts and "Red Cross" trusts, I guess you have problems adjusting to the brave (not-so-new) world.

Instead of finding a way to offer tax compliant/transparent structures and really performing due diligence and KYC and avoiding grey/dirty money, it appears they are taking the simple way out and saying no thanks. If you want honey, there will be bees, and bees can sting but there are plenty of beekeepers out there that know how to protect themselves and still get what they want. If it's bankable then it's trust-able. If it's not bankable then of course it's not trust-able.

But when push-comes-to-shove, bankers want assets under their management, not booked with some trustee. AUM that is under trust isn't exactly a selling point when negotiating with a prospective new employer. AUM under trusts screws up your revenue targets as trustees aren't as gullible and stay away from all those high profit funky geared/structured investments, accumulators and swaps. A true banker never puts their client in a trust, only true advisers do.

Obviously I'm biased and have vested interest in seeing Switzerland fall off the map as far as wealth management and trust services go. Just means more opportunities for the rest of us. So yes, pull out of the trust business, get out as fast as you can.

Wednesday, May 26, 2010

I'm Rose, I Get Satisfaction From Long Lasting Relationships (3)

This part of my "careers" insight series looks at the Trust Administrator. Titles vary from Fiduciary Specialist, Relationship Manager, Trust Advisor, etc. but a rose by any other name would smell as sweet.

The job nature pretty much depends on what team you end up in more so than the organisation. I guess there was a time when 1 person did everything from planning the trust, to setting it up to administering the trust to terminating the trust. Now you see roles catering to the various phases of the trust life-cycle. There are trust people who do just the front end (sales, structuring, implementation - more on them later) and those who do only the middle (after sales, administration), and those who take care of the back end (decommissioning).

The bigger and more complex the trusts, the more likely sub-specialists appear. When you have more than 10 people in your trust team, that type of specialization makes sense for efficiency and an expert knowledge base. If you have enough UK clients then you have a UK team. If you have enough charitable trusts, have a charities team. If you have enough BVI trusts, then you have a BVI team. But if your too specialised, then you may find that your career is limited to those few trust companies that have the same structure. Not everyone has use for an one-trick pony. How many trust companies need a BVI trust specialist? 20 out of 50? How many require a full time charities trust manager? 10 out of 50? Narrow minded hiring managers and clueless recruitment agencies see only the handicap and not the potential.

Perhaps the most telling of what your job as Administrator will be like is the range of permissible assets your trustee accepts. At one extreme are single asset class trusts, like a life insurance trust. If you administer a life-insurance trust then there not a whole to do until the life assured dies. In theory you monitor the value of the insurance, perhaps collect interest/dividends if any, and wait. Banks tend to sell a lot of "portfolio" trusts where all you have are the banks investments and products of course a trading account. You're likely to be knee-deep in trading and making investments and playing with time-deposits and currency swaps, buying derivatives and other structured products. A glorified banking clerk, stock broker or investment advisor. It can be so transaction oriented that there will be times you forget that you are a trustee. At the other extreme you may be administering to yachts in the French Riviera or some plantation in the Philippines. Again, there is a tendency to silo people into specialised teams. Some teams do only insurance trusts. Other do tax avoidance trusts, etc.. Your experience may be limited to what your team does and not what the rest of the trust company does. That is why knowing the internal workings of your competitors is crucial when pinching or hiring. Some people just won't fit in your organisation because they were specialised or worked in specialised teams.

Since the trust industry can encompass all areas of life, you could be sending out congratulations cards on your newborn to attending funerals. You could be hiring prime-brokers to gardeners. You could be in the middle of a billion dollar deal or settling someone's dry cleaning tab. You could be counting bottles of wine or sipping it with a Fortune 500 CEO. You could be paying tuition for some orphan or laundering money for some shady businessman. You may become an extended member of someone's family or you could be one of the thousand faces that the client has seen.
You could be flying around the world or you could be stuck in some back office desk the rest of your career. You can be someone's saviour as well as someone's sworn enemy.

If you have any rapport with clients, then you may find yourself being drawn or pushed to the front-line. You will take on more sales, marketing and relationship handling roles than administrative ones. It used to be that Trust Managers that brought in new business or additional assets was icing on the cake. Now it's pretty much a part of your performance assessment...bring in $10M new AUM or you will get fired, despite your administration prowess. Generating revenue seems to be more important then client retention these days.

At a junior staff or Officer level, you are most likely just an extra pair of hands. Your job is primarily to get data (accounting info, banking info, passports copies, etc.) and data input to generate reports or documentation, lots of documentation. Of course, with lots of documentation there is a lot of clerical filing, photocopying, scanning, and storage. You job is really not to screw up. Scan for errors, no typos, no missing documentation, cross the Ts and dot the i's, don't over book meetings, get the right flight connections, get the good hotel bookings, etc.. You may also be involved with trust accounting and the CoSec work if those functions haven't been specialised also. Regardless of your title or seniority, you are nothing until you have an opinion that someone values. Until someone asks you what you think about this or that, you are glorified clerk.

It would be a mistake to believe that you will get much structured training. Most of what you will learn will come from your team leader and operation/procedure manuals (if your trust company even has them). If they are good teachers and have a solid background then you are lucky. Most team leaders are there because of their their skill set and not the training expertise. Very very few people have formal training in learning/training. Virtually no one in the Learning/Development teams of the world's biggest companies like UBS or Citibank have a clue as to what trustees do. Consequently, any education is a trustee department's internal matter. I know of trust companies that have weekly chat/tech/sharing sessions. I know of trustees that have never had any training what-so-ever. If you're senior enough then you may the opportunity to attend external seminars. Seniority is usually the prerequisite because external functions cost money. Your local STEP branch or Trustees' Association may run sessions for a few measly bucks, but some seminars cost US$1000-3000 (excluding travel or accommodation). Still these are usually "powerpoint" shows and hardly true education. You will find that most junior staff are under-trained and have poor foundations. You will find that many senior staff have only powerpoint/buzzword knowledge. If you take your career seriously, self-education is priority because no one else really cares.

As most trust administration teams are pyramid based (few seniors supported by many juniors), your career prospect is usually just upwards or out. Companies are generally not very supportive of horizontal moves, so if your stuck in the HNWI trust team, you may not get the chance to move to the UHNWI trust team. If your were hired for your specialist skills, say like a US tax background, then expect to be used that way and your perceived value is just that. People may never see you as a "well rounded" or "multi-talented". They just see you as the pigeon-holed US tax specialist and unless it has to do with the US taxes, you are not on the top of the list for other choice assignments.

Of course, how well your relationship with your superior/manager will largely determine your fate. You can work for one of the most prestigious companies in the world but that means nothing when your immediate boss is an arse. Look closely at the job your superior/manager has. Embrace it as it where you will be in a few years time or get out.

There are very few "true" trust companies, where trust and fiduciary services are the primary service. Banks are banks first and their trust companies, just a subsidiary. Others are company incorporation or tax planning or legal services firms first, trusts are merely complementary or ancillary businesses. Therefore, even if you were to make it to be Head of Trust, you may may still have to answer to someone else. You are the captain of a boat in a flotilla. I cannot think of a single trust person that has become a CEO of a bank or Tax & Trust partner being managing partner of a major law firm. A few trust people become MDs of those company incorporation firms. So keep your aspirations in check.

Thursday, May 20, 2010

I'm Jane, Company Minuting Is So Exciting (2)

The second in a series [1st: http://trustprofessioninasia.blogspot.com/2010/05/im-steve-i-love-my-job1.html] on careers in the trust business.

This installment I focus on your Company Secretarial team. And you thought this was a trust blog. Well it is and trustees and CoSec's have a inter-related even incestuous relationship. So much so, that many CoSec's work as trustees or for trustees or work hand-in-hand.

It used to be that trusts, more correctly, the trustees, used to legally own the trust assets. The trustee would open bank accounts in their own name, register property under their own name, etc.. But a variety of factors from liability, privacy, tax, regulations and commercial practicality makes that proposition almost an alien concept these days. Instead, many if not most trust assets are legally owned by one or more limited liability vehicles which is are turn owned the trust. This means your typical trustee now must have someone on the team that understands company or LLP incorporation and administration. So do you train trust people to be CoSec or do you take CoSec people and train them in trusts? Depending on your organisation, it could be a little of both, or the departments work independently or perhaps some of the work is sub-contracted out.

Asia has one of biggest pool of Caribbean corporate knowledge outside of the Caribbean. Many of the CoSec people here are as intimate with BVI BCs (formerly IBCs) and Cayman non-resident companies as anybody. I believe Harney's has calculated that close to 50% of BVI BC/IBCs are owned by Asians. Whereas, most local CoSec are trained in local Company Law and administration, your team needs to have international CoSec expertise. They may need to know about Jersey/Guernsey companies, various US LLCs, and any of the 20-30 popular jurisdictions people dream up uses for. So if you're a locally trained CoSec and you want to learn about the rest of the world, find a trust company or "offshore incorporations" firm.

In some organisations, the CoSec people actually do more the trust administration documentation work then the so-called trust team. The CoSec team incorporates the holding company, does all the statutory filings, pays all the annual licensing/registration fees, appoints all the officers, prepares the minutes to open bank accounts, acquire/transfer assets, fill out the bank account opening documentation, certify this, certify that, etc. All the trust team may do is prepare the Trustee's resolutions.

Unfortunately, CoSec people are usually treated as transactional animals. Do the paper concerning the required transaction and no more, no less. Do not expect anyone to explain to you why you need a Delaware LLC in this case, or why we have a Mauritius GBL 1 company in another instance. Unless they also prepare Trustee's minutes, they can have a long career without even touching the trust deed. Some places even put up Chinese walls so the CoSec team knows as little about the trust they are working on.

Why I said unfortunately, is that many CoSec have the tools and technical skills to become good trustees. Professional CoSec staff are licensed/accredited professionals, trained in Company Law, which is a lot closer to Trust Law than say Tax Law. They have (or should have) an understanding of fiduciary duties and operating intra vires. Their gospel is the Company's By-Laws/M&A, ours is the Trust Deed. The operate within the Companies Ordinance, we operate within the Trustee's Ordinance, or opt out when desirable. So if you're looking for your next trust officer, instead of hiring some half-wit from a rival, consider training up your CoSec team.

Of course some trust operations are run by former CoSecs. If they have been trained in trusts then they are probably pretty good. It's the ones that have been thrust into or Shanghai'd into trusts, without proper training or supervision that worry me.

At junior levels, the work is pretty mundane and essentially preparing and filing documentation. At senior levels, the work can be pretty important and even vital as there could be much at stake if you don't get the corporate under-belly of the trust structure right.

Tuesday, May 18, 2010

I'm Steve, I Love My Job....(1)

As an employee, you probably rarely visit your own company's website. But you should, it's highly entertaining or depressing. I particularly find "Careers" pages to be highly amusing. There is so much BS and "sugar coated" material there to make you want to barf for days. What we often see are "United Colors of Benetton" type layouts of a culturally diverse organisation of all genders, ages, races and religions, with many happy campers spewing out testimony of how great everything is and how the organisation has furthered their career or richly rewarded their contributions.

Since it's slow in the news department, I ambitiously embark on a multi-part series to tell you what it really like.

Let's start with the Trust Accounting team.

Unless you are an individual trustee, then you likely have an accounting team. There is probably 1-2 accountants for every Trust Manager.

It used to be that the accounting area was an unsightly mess. Stacks of paper, ledgers, receipts, invoices and statements strewn all over the place. The team took up more floor and cabinet space than everybody else. Everything used to be done manually and the clicking noise of calculators would drive you crazy. Every day, boxes of even more paper would be delivered. You needed to store boxes of documents offsite on a regular basis. Then they took up all the computers and hogged the printers, photocopiers and scanners.

Nowadays, you may not even know where your trust accounting team is! They may be at some low grade office space in another part of town or sitting in Guangzhou or Mumbai. You may not even have an accounting team....the work is outsourced to some service provider. Of course there are still some trustees that seem to forget that preparing accounts is one of their duties and dispense with this function all together.

And of course much of the work is automated or computerised and digitally scanned. We get live feeds from the asset managers/traders/brokers, daily feeds from the bank, etc. Valuations and exchange rates adjustments are computed automatically and you can get instant financial statement printouts that used to take months to do. As such, the function is more or less occupied by junior data-entry clerks. Due to the sheer volume of data, the accounting team still represents a large number of staff but still won't cost you as much as a senior Wealth Planner will.

Having a bookkeeping qualification is good. Being a professional accountant is nice but probably a little overkill unless they are the department head. There are probably only a handful of accounting treatment issues that pop up during the year that require a pro to handle. Still having a Chartered Accountant may not solve all your problems as most accountants have little if any training on trust/estate accounting and few if any understand the structure they are accounting for. So the good news is that you won't have to read or understand trust deeds to be a trust accountant. When's the last time you took your accounting people to a meeting with the client? Do you think they understand the potential implications of booking a loan to/from the trust? Have your accounting staff ever been allowed to go to STEP conferences or Trustee Association seminars? Only few even get to go to accounting seminars. Of course, even when they "blow it" and make an accounting error, who ever detects it? If a tree falls in a forest and no one is there to hear it.....

Occasionally, the client/settlor/beneficiaries may actually read the trust accounts you send them. Most often not, as it is historical information and if the trust is only holding a portfolio then the bank statement is a more useful and updated source of information the trust accounts. Some may have questions. They stupidly ask their
Trust Relationship Manager who is absolutely clueless because they have had nothing to do with the accounts. We now have several generations of trust administration people that have never prepared nor can they interpret trust accounts because it's not part of their job description. This disjoint in service delivery is a perhaps a little embarrassing but 90% of the time, it's harmless, just transfer the call to Rajesh in Mubai. The remaining 10% usually leads to the trust accounts and ledgers being Exhibit B in a litigation/tax investigation case.

There are pretty much 4 scenarios when the trust accounting department gets recognition: when they're late on delivery; when they screw up the accounts; when they lose data; or when their time costs exceed budget. As the trust accounting head, you will be constantly asked to make the accounts "prettier", more user-friendly, more colourful more charts. If you're a bank trustee, then you will be asked to choose some accounting policy to hide or defer investment losses and bank/trustee remunerations so as not to embarrass the private bank or arouse fee disputes. You need to promptly recognise any earned, realized or contingent investment gains/income. Trust capital can only increase and must never decrease. Create your own GAAP as required.

The work is usually stable and promotions static. Offhand, I can't think of any trust accountant making it beyond the accounting department so I think your career path is Head of the team or the streets. The good news is they're likely always hiring in Mubai.