With London as perhaps the world’s most international city, clients increasingly live and own assets across several countries. This makes the job of trustees and professional advisers much more complex.
It is a sobering example, but believe it or not the assets of wealthy individuals can be overlooked, particularly on death or ownership change. Portfolio management for multi-jurisdictional clients is different from what more UK centric clients need. Not all wealth managers are equipped to cope.
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So what is important?
Some managers have in-house wealth planning capabilities able to work with the client’s professional advisers. This is particularly valuable for managers of portfolios in offshore jurisdictions with beneficiaries resident in complex jurisdictions like the UK or the US. The manager will ideally have investment teams across time zones and asset classes with access to proprietary research. A smaller manager will rely on external sell-side (stockbroking) analysis, which is available to the general market.
The investment process makes a difference. If clients are categorised "model portfolio 1-5" the structure will struggle to tailor the client’s preferences. Similarly the manager needs to be equipped to advise on investment globally. Coverage of UK investments is only part of the picture. For example, a Canadian living in the UK may want a portfolio of Canadian equities managed offshore.
Some managers can provide overarching global custody of assets managed by other managers. It’s rare, but much less work for trustees if this capability is on offer. When a client passes away the full extent of their personal assets may not be known by anyone else. Assets that are spread all over the world and held in a variety of structures can be difficult for beneficiaries to gather and take under control. Additionally, if a manager can provide tailored reporting to different beneficiaries, then the entire portfolio doesn’t need to be revealed to all beneficiaries.
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By GlobalDataThe back office makes a difference. Particular whether it is internal or outsourced, and where is it located. If the back office is patchy trustees will need to spend time correcting things. Size is no guarantee the back room is efficient. Cyber security is a bigger risk than many people realise. Security tends to be better if the manager’s investment platform is proprietary rather than bought in, and if the server is based locally.
Lastly, clients can suffer undue tax across different jurisdictions. A manager with accountants and tax specialists in the main territories that can work with the estate’s tax advisers by analysing taxing rights according to double tax treaties, is hugely helpful.
Clients with assets across multiple countries have complex and specific needs. The disciplines to help manage these requirements are all available, but only from the wealth managers prepared to invest in their own businesses long term. A long term perspective means the skilled people, back office resource and systems are in place when they are needed.
David Bell, Senior Wealth Planner (Lombard Odier)
