The ‘flight to quality’ among HNW families

Robert Moore
September 22, 2021

A new generation is setting its sights on Jersey. Over the past year, clients wanting to relocate to the island have been likely to have children rather than grandchildren, according to Locate Jersey, the team within government responsible for guiding high‑net‑worth (HNW) individuals and families through the process of relocating to Jersey.

With six decades’ experience as an international finance centre (IFC), Jersey has earned a reputation as a leading jurisdiction when it comes to supporting wealthy families with their cross‑border wealth management, succession and legacy planning objectives. More than 30,000 trusts are administered in Jersey with a total value in excess of GBP600 billion.

According to industry experts, the pandemic has led to a flight to quality IFCs such as Jersey. ‘A number of clients have expressed uncertainty about the response of overseas governments to COVID‑19 mitigation measures, so clients may wish to invest in countries where the economy is already responding well to businesses reopening,’ says Darren Kelland, Global Head of Private Client Services at Hawksford.

Expanding on this trend, Fred Milner, Counsel at Mourant, adds: ‘I think the quality element really comes down to three things: people, law and regulation. Jersey has a great talent pool in this space, whether it be lawyers or fiduciaries. The laws, and the judiciary, are second to none. The sheer volume of case law relating to private wealth matters, and particularly trusts, means it really is an exceptional jurisdiction when it comes to legal advice and legal certainty.’

A robust leal framework

A well‑established legal framework has set Jersey apart from other jurisdictions for hundreds of years; the Royal Court of Jersey is one of the oldest courts in Europe. Aside from the certainty provided by a legal framework, experts tell us that the range of wealth management structures on offer continues to attract family offices to Jersey.

‘While there is still an interest in traditional structures, clients have become more sophisticated in their requests. We have established a small number of Jersey foundations for commercial and philanthropic purposes. Equally, there has been much more interest in Jersey private funds among private clients,’ says Kelland.

Jersey Finance’s thought leadership paper on the Great Wealth Transfer, Flourishing Futures: Making succession a success, found that modern and sophisticated HNW families often have complex family arrangements. It is no surprise then that governance is playing an increasingly important role for family offices.

‘Clients sometimes choose to hardwire additional governance into their personal affairs, because of heightened concerns about the future management of their wealth,’ says Milner, who goes on to describe a governance trend whereby families are minimising the number of jurisdictions involved in a structure to reduce reporting obligations.

With disputes being common among families, robust family governance arrangements can act as a mitigating measure. ‘Sadly, we continue to see too many family conflicts that arise unnecessarily. In one case, I have been mediating between two strands of one family where there have been various interpretations of the matriarch’s verbal wishes. These exceptions often prove the rule that governance should not be overlooked,’ says Kelland. 

Caution amid crisis

Alongside the complexities of mediating family disputes, international political and market uncertainty, and more recently the COVID‑19 pandemic, are also driving demands from HNW individuals and family offices seeking greater certainty and assurance from their investment plans.

‘We see clients with capital to invest, but there is a degree of caution around investment strategy,’ says Kelland. ‘Some of that caution has resulted in a move towards traditional investments, with significant results. Identifying consumer needs at this time, as well as making the most of the initial volatility as economies struggled, has seen one client double the value of their significant Amazon stock holding in little more than a year.’

While we have witnessed a number of fast‑changing trends among family offices in the past year, it is clear that expertise, governance, robust platforms and solid advice, which IFCs like Jersey are renowned for, will be increasingly sought after in the coming years.

About the Author

Robert Moore

Director – UK at Jersey Finance

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