The need to look after developed markets as well as to grow market share in the emerging and frontier territories continues, says Fiona Le Poidevin of Guernsey Finance, who reports from her recent trip to Latin America.
If there is one thing I've learnt during my tenure as chief executive of Guernsey Finance, it is that the world is a very small place. For example, this week I met someone in Latin America who has family in Guernsey going back several generations.
I am in Rio de Janeiro, Brazil, as I write, where Guernsey is exhibiting at a private equity event. However, my team and I will also be talking to private clients advisers both here in Rio and in Sao Paulo later in the week. This is my second visit to Brazil as Guernsey looks to take advantage of opportunities in the region and build on the Latin American client base we already have.
Promoting Guernsey's financial services industry does, of course, take me far and wide and, as I travel to different countries, experiencing different cultures and ways of doing business, and speaking to advisers, it is clear how different people's expectations are.
Private client needs vary greatly as do the drivers for structuring a client's private wealth. In Latin America, there is a burgeoning middle class but the growth seen in some of the countries of the region over recent years is almost in spite of the difficulties of doing business there.
However, things are changing. Take Brazil, for example. As with many other emerging markets, Brazil has typically been domestically focused because of the abundance of investment opportunities at home, typical of a country so rich in natural resources. Now, however, with such sporting events as the World Cup the Olympics in 2016, a more international focus is apparent and I'm not just talking about the entrepreneurial street vendors trying to sell me football shirts.
The number of family offices in Brazil is growing, with many going as far as setting up their own investment funds rather than relying on a third-party asset manager. The appetite for family office investment in private equity is growing and this is a great opportunity for Guernsey.
Indeed, this also reflects the changing face of the private client sector. No longer is it the place for just a simple trust structure. Now fiduciaries are working much more cross-sector and client expectations are increasing. Speak to any fiduciary in Guernsey or elsewhere and they will tell you that the line between corporate and personal work is more blurred than ever.
These days, structures rarely boil down to tax savings. Private client structures are more sophisticated because they are set up to deal with more complex and changing family issues and this is often the case for families in emerging economies.
For example, in China there may be intergenerational issues with business succession, perhaps children who do not want to carry on the family trade. Therefore, a patriarch may wish to exit his family business via IPO or put money into a trust so that his second or third generation family do not squander his fortune.
A Bollywood actor in India may recognise that not only is she earning her living from films but also just from her image. She may want to exploit that opportunity with merchandise and advertising, for example, but also protect it using Guernsey image rights. Guernsey is the first jurisdiction in the world to define image rights in law and provide a public register to deter infringement and interest in the register in India is growing.
Back here in Brazil, we have been told that the trend for philanthropy is growing and families may wish to 'give something back ' by creating a charitable foundation. Guernsey introduced its foundations in 2013 and numbers have been growing, with a significant proportion of these being used for charitable and philanthropic purposes.
While there can be some barriers to entry for international companies wanting to do business in Brazil, these are not insurmountable, and many Latin American countries are now evolving their legislative framework to bring down such barriers and to encourage foreign direct investment both into and out of their countries.
This can only bode well for Guernsey and other international finance centres that are willing to put in the investment and time to develop their offering to clients in such markets.
Originally published by Private Client Adviser, April 2014.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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