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.

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?

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.

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

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

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

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?