WE HAVE EXPERTS IN YOUR AREA, IN YOUR AREA. With unrivalled local knowledge and experience, no-one understands the needs of the local market like we do. To speak to our Channel Islands team, call (01534) 282076. The Royal Bank of Scotland International Limited trades in Jersey and Guernsey as Coutts & Co Channel Islands and as Coutts. The Royal Bank of Scotland International Limited. Registered Office: P.O. Box 64, Royal Bank House, 71 Bath Street, St. Helier, Jersey JE4 8PJ. Business address: 23-25 Broad Street, St. Helier, Jersey JE4 8ND. Regulated by the Jersey Financial Services Commission. Guernsey business address: P.O. Box 62, Royal Bank Place, 1 Glategny Esplanade, St. Peter Port, Guernsey GY1 4BQ. Regulated by the Guernsey Financial Services Commission and licensed under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 and the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. Calls may be recorded.
Finance THERE’S NO ESCAPING the fact that global wealth is shifting toward emerging markets, with startling figures showing just how much the demographic is changing. And it’s a situation that’s putting wealth managers under pressure to refocus their business. In India, middle-class wealth has grown 150 per cent since 2000, while Africa has seen growth of 102 per cent, according to the Global Wealth Report 2015 by Credit Suisse. But these numbers are overshadowed by China, whose middleclass wealth has grown an incredible 330 per cent over the same period. The report predicts that over the next five years, the number of dollar millionaires will rise by 46.2 per cent, with the sharpest increases likely to be across the Asia-Pacific region. Simon Finch, Fund Manager at Ashburton Investments, agrees that the growth of wealth in Asia will continue, particularly in India. “With 65 per cent of the Indian population under 35, and a demographic pyramid that has a rather broad base up through to middle age, India is in a sweet spot. The trend of a growing employment demographic will result in a boost to Indian economic growth and an uptick in domestic consumption.” The rural-to-urban migration in Asia, most notably in India and China, also means higher living standards and greater profitability for home-grown, listed companies, such as Repco Home Finance and Bharti Airtel. And they are tapping into this emerging and high-spending consumer base. As Finch points out, India is often referred to as a country with a billion entrepreneurs. And a significant number of these entrepreneurs are now at an age where they can substantially contribute to the future success of their nation. Wealth levels are growing in Africa too, as Naro Zimmerman, Business Development Assistant Manager at Nerine Trust, explains. “Africa is certainly poised for growth and, once it puts in place the necessary infrastructure to be able to support the expansion, it will grow in a very rapid fashion, with an estimated 45 per cent increase in new millionaires over the next 10 years,” he says. Zimmerman believes this will create huge amounts of new wealth and further opportunities for companies from the Channel Islands to provide wealth management services for these individuals. However, he warns that outside of the required improvements in technology, various countries across Africa need to resolve corruption and regulatory issues. “We must ensure that business we bring into the Channel Islands is of a standard in line with the quality already held here. Our standards are of paramount importance to ensure that we continue to be regarded as a well regulated, pragmatic and responsible jurisdiction of choice for high-net-worth individuals from Africa.” SHOCK OF THE NEW With massive burgeoning wealth in these emerging markets, this all begs one question: for Channel Islands companies moving into these regions, should the focus be on targeting the new wealth of entrepreneurs rather than established wealth? Indeed, is there much joy to be had in trying to attract those who have long-standing relationships with other jurisdictions and providers? Zimmerman doesn’t believe it’s as clear cut as that. Looking at the Middle East and North Africa (MENA) region in general, he says: “Many of the larger families do have long-standing relationships with various institutions and it can be challenging. However, we are seeing opportunities to meet these families as we devote time and resources to expanding our network base in MENA. Once introductions are made, we’re able to better demonstrate what we have to offer.” He adds: “It’s very much a case of being present within the region, travelling regularly and ensuring that you understand the markets in which you are investing time and resources (both from a cultural and a financial point of view). I think for any company looking at MENA, focusing on old wealth or new wealth solely would not be beneficial. Instead looking at gaining traction in the market as a whole would be more sensible.” Steve Spybey, Group COO at Hawksford and based in Singapore, agrees there is scope to win over ‘old wealth’ clients. “Although many wealthy families and individuals have existing relationships with advisers, global regulations, particularly regarding CRS and BEPs, are changing the nature of the advice clients need,” he says. “This presents additional opportunities for service providers that can be more jurisdictionally agnostic and that can offer the understanding and expertise required.” Like Zimmerman, Spybey doesn’t think solely targeting new wealth or old wealth makes much sense. He believes it’s important to be an expert in an area of focus, as a scattergun approach carries more risk. “We assess each new client and ensure that we have the right expertise to deliver impeccable service and to identify and manage our risk appropriately,” he says. “This is more important than whether the wealth is new or old.” PROTECTING WEALTH Whether old or new, individuals and business owners may well be looking to protect their wealth outside their own jurisdictions, and there is good reason for this. As Richard Sayers, Singapore- ▼ As wealth booms in emerging markets, should the Channel Islands focus purely on new money and entrepreneurial business? Words: David Burrows Out with 24 January/february 2016 www.blglobal.co.uk
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