Not so much a resolution but a wish list:
1. I wish trust people would learn to say: “I don’t know”. Not “don’t know” when they should know…..like a trustee should know what’s in the trust fund….they should always know that, but rather people should start saying “don’t know” when they reasonably need not or should not know. There are plenty of things in law and tax where there are no good answers. There’s a very dangerous trait of try to impress clients by spewing out all sorts of horsesh*t that might be mistaken for knowledge. There is an insane fear of appearing not to know everything. Nothing good can come from pretending to know something. We have salemen who think they are advisors because they have LawInContext. Ahem…you have LawInContext because you “don’t know”. And not to knock LawInContext but you certainly won’t reach enlightenment even if you memorized everything they have in the database. We have banking lawyers drafting dispositive powers when it’s clear after 10 words, they don’t have (or have never bother to read) a drafting/precedents book in their library. They “don’t know”. We have some Channel Islands refugee in Singapore talking about Mexican tax and the wonders of New Zealand trusts who shouldn’t have attempted to answer questions as all it did was establish clearly to the audience that he really “didn’t know” much about New Zealand or Mexico or Singapore. There is absolutely no shame in not knowing everything. And for you clients, don’t expect one or even a few people to have all the expert answers. Just consider how many doctors do you have? A Dentist, an Optometrist, A GP, A ObGy, etc. How many places do you get investment/market advice from? A few bankers? Some Analysts and Brokers? Bernie Lo? The fish monger at the wet market? Show some respect to those that say they “don’t know”. At the end of the day, they may be the better advisor. But what do I know…..
2. Am I the only one not getting kickbacks from the BVI? I fail to see why some many damn bankers in Asia thinks a VISTA trust is the optimal solution especially when it is used just to cover a bank account (sales targets and bonuses aside of course). Bank accounts have a life span of a fruit fly. Remember all those Liechtenstein/Panama foundations some of the banks pushed onto their (namely Indian and NRI) clients years ago and are now scrambling to get them off their books now? I see the same blind-leading-the-blind exercises except now it’s a little more ruthless and pointless. Let’s see, there wouldn’t even be a BVI BC in the picture if you hadn’t “sold” the client to protect his bank portfolio by transferring it into a BC in the first place? So now we have a different set of succession issues. What did you tell him? Avoid probate? Well (potentially) avoiding probate or succession issues on 1 bank account isn’t going to do much when the client still has other assets outside the trust. Let’s see, does the client want control? That’s like asking if kids want candy. Things like tooth decay, chronic obesity and diabetes are conveniently forgotten by most. Unfettered control, especially among the second or third generations is something many conveniently or ignorantly forget to advise upon. Look forward to helping you unwind that VISTA of yours in a few years.
3. Start training. Think of everything issue that has popped up in the past year. How many were preventable? What if the Trust Sales had taken the time to really work through the settlor’s requirements instead of trying to meet his 10 trust per week target? What if your Investment Committee actually discussed investments with the settlor instead of getting a risk/investor profile form? What if you knew something about the duty to monitor? What if you insisted on this or that? What if you knew that big transaction was coming weeks before hand? Who knew that 50% of your intellectual capital was tied up in that one Manager that CitiTrust just poached from you. Probably 80% or more of the problems you’ve faced were self-inflicted. Only by training people to know what can and can’t be done, training people on what to expect, only by sharing knowledge will you stop being “blindsided”.
Tuesday, January 11, 2011
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.
"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.......
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.
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?
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.
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
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
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