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Welcome to the Guernsey Finance podcast page.
Our podcasts bring you all the latest news and insight from Guernsey, the global finance specialist, as well as audio from some of our online events.
Brandon 0:03
Hello and welcome to the We Are Guernsey podcast where we bring you interviews with leaders from the global finance industry, as well as news and developments from Guernsey's financial services sector. My name is Brandon Ashplant and I am Senior Strategy and Technical Executive here at Guernsey Finance. Guernsey is a leading global finance centre working with clients and businesses across the globe to deliver industry leading expertise, products and services. The success of the industry here is underpinned by economic substance, political stability and asset security and we are committed to the cause of sustainable finance. To find out more about Guernsey's success in sustainable finance tune in to our sister podcast, the Sustainable Finance Guernsey Podcast. Today however, I am delighted to be joined by James Anderson and Katie Royals who are from PAM Insight. James founded PAM Insight as a specialist private wealth media business in 1997. Over the 26 years since then, PAM Insight has cemented its position as the sector's market leading specialist publisher, with several branches offering a range of market leading publications such as PAM, The Wealth Net and E Private Client. Katie has worked at PAM Insight since 2018, currently holding the position of Managing Editor, since achieving her Postgraduate Diploma in journalism from the London School of Journalism. Katie has produced articles analyzing the worlds of wealth management, and private clients and currently has been working closely on the upcoming report into the changing world of private wealth. Recognized throughout the private client advisory world, PAM Insight has a paid subscriber base of almost 6000 Senior wealth management, advisory and fiduciary professionals based in more than 30 jurisdictions around the world. In recent months, PAM Insight has been conducting research commissioned by Guernsey Finance to understand key market trends, both internal and external, that are influencing High Net Worth families decision making. On this episode, we'll be discussing the upcoming report that examines the recent dynamics among high net worth families and individuals as the largest exchange of wealth in history approaches. So without further ado, welcome James and Katie.
James 2:24
Thank you for having us.
Brandon 2:25
Great to have you both on. So firstly, just tell me a bit about yourself and your career to date. If I could just start with James first please.
James 2:35
Well, in publishing since 1985, in financial and professional publishing since 1987. So I guess you might call me a senior citizen. And for the last 26 years, we've been developing, I say we, I and my team have been developing PAM Insight. We are very proud to be market leaders in almost everything that we do. And I think just an obsession with accuracy, quality, and delivery of value to our subscribers and clients is what put us in good stead, both now and in the future. I hope.
Brandon 3:18
Excellent, and Katie.
Katie 3:19
Yeah. I mean, my career hasn't been quite as exciting as James to date. I think in your introduction mentioned, I've been with the firm since 2018, after completing my postgraduate diploma in journalism, and since then, I've worked across all our editorial outputs, and just feel very aligned with the values James has just alluded to, which is why I'm very excited to be part of the business and sort of now leading the editorial charge, so to speak.
Brandon 3:51
Brilliant. So James just tell me, how has the private wealth landscape changed since your career began?
James 3:59
Well, I would say I've been observing this sector for over 30 years. And I think, looking from the outside, you might describe it a bit like a glacier. There's not much evidence of significant change in the fundamentals of wealth management over that period. But of course, like a glacier, underneath the water is flowing rapidly. And I think technology and regulation have been two of the key drivers. But I think a third driver now is the combination of another generation taking wealth, inheriting wealth, from Generation Y, and with a very different set of values and ideas about how they want their wealth to be managed, and what they want their wealth to achieve, with a particular focus on sustainability and impact on the world around them.
Brandon 4:59
And Katie, the soon to be published report focuses on the trends that are emerging in the world of private wealth, including both forces external and internal to the family, and the impact that they have, of course. In overview, how would you outline these trends?
Katie 5:18
Yeah, so I think the report has clearly identified four key trends, which in themselves are all linked in many ways, but also have their own unique qualities. I think firstly, an overwhelming majority highlighted the need or the desire for clients to be seen, and indeed be, good global citizens. Of course, there's a little bit of confusion as to what actually being a good global citizen means or how you would define that. But that has come out very strongly, which then links into our second key theme, where I think if anything, we were quite surprised by the number that said, with the next generation of clients, there is a significant change in attitudes towards tax planning. So clients actually now want to be seen to be making sure they are paying their fair share of tax, they certainly aren't necessarily as keen on minimising their tax bill, or looking for ways to be quite as aggressive, perhaps, is too strong a word, but not be quite as proactive in reducing their tax bills. And I think these two themes sort of do link into the third trend, which I would say everyone could probably guess what it is, but that is an increased focus on sustainability. It's pretty hard to ignore the climate crisis and crisis in biodiversity these days. And so it's not surprising that that is a big feature on clients' minds. And finally, which James has already alluded to, technology is playing a big role in the industry, I think it's got some catching up to do, in many ways. I know we've had AI burst onto the scene, and it's been around for a while, but seems to have really burst onto the scene this year, in many ways. There's a lot more conversations starting up about it. I think the industry is still quite wary of adopting AI, but technological solutions are certainly on the rise across the industry.
Brandon 7:16
That's interesting. And James, in your opinion, are these trends reflective of a wider shift in mood and changes in society? Or are they exclusive to finance and in particular to private wealth?
James 7:33
No, I think there's a there's a sea change in people's awareness of the fragility of planet Earth. And it's very difficult to look at any channel on television, or to read any newspapers without finding some content about what is going on in the world. And some of the extreme weather patterns that we've seen in recent years, and the accelerating collapse in biodiversity, both in marine life and in terms of, for example, 70% of insects, becoming extinct in the world in the last 50 years. Now, these are things that I think are entering the public awareness. So I don't think these are issues that are exclusively on the minds of high net worth families, and their advisors. I think this is now very much in the public conscience, and consciousness.
Katie 8:37
Yeah, and I would also, if I may just jump in there and say, in terms of the other trends, I think that's also true. You only have to look in the media to see the perception of wealthy individuals and tax. There is not a positive perception of wealth at the moment. And given social media and how easy it is to access this news and opinions, I think that undoubtedly is having an impact on high net worth attitudes.
James 9:07
I would also say, Brandon, that if you're looking at the mentality of the rich today, and let's face it, the rich have always been in the public spotlight, they've always been in the media crosshairs. They're an easy political football for politicians to play with. But ultimately, I think, over the last 30 years, in particular, we've seen a rapid acceleration in wealth polarization. And the gap between the haves and the have nots has increased. And I think that is one of the issues which is driving the behavior of the next generation is an awareness that they have a responsibility to their fellow citizens.
Brandon 9:54
Interesting and I think one of the points that was mentioned there was this nature of change and, Katie, while there is a generational handover of wealth, there is also a changing demographic of wealth advisors in motion as well. How are the changes of attitudes in both high net worth individuals reflected in the new generation of wealth advisors?
Katie 10:17
Yeah, I mean, I would say, to be honest, in many ways, advisors are still playing catch up. I think we're having a lot of conversations and the advisors themselves are having a lot of conversations about changes and what's going to be needed. But I think it's going to take a lot of time for that to filter through into the current crop of advisors. I think it's worth noting, obviously, it's such a relationship driven industry, that it takes people a long time to hve a fitting in the industry. So even if you start making the changes, five years ago, or 10 years ago, it's gonna take a little bit longer for that to really be seen. I think what we did find in our research is that advisors are acutely aware of the issues. And there are certainly changing attitudes there. I think, an overwhelming majority agree that there needs to be greater diversity in the industry. People, by and large, want to be advised by people like them, and it's easier to relate to people that are more similar to you. So they will have more successes as we see the changing nature of wealth holders. Again, we can talk about sustainability and the need for advisors to offer a greater range of sustainable solutions and engage in these topics in perhaps greater depth than they have done previously. And again, in terms of adopting technology, the next generation of clients have different communication preferences. They have different expectations of how investments can be reported to them, or how they're going to receive their documents, they don't necessarily want to fly half way around the world to sign a form, for example, and these are all topics that the industry is speaking about. And there are changes being seen. But I think there's a long way to go in terms of the changing nature of wealth advisors, as well.
Brandon 12:08
And one of the trends inevitably, that is discussed at large in the industry is the nature of families, and how they are more mobile and more global than ever before. How are the wealth advisors approaching the topic of succession in a rapidly changing economic, but also sort of a cultural environment, given the nature of families being so much more mobile than decades previously?
Katie 12:34
Yeah, so I think it all comes down to communication. While there are obviously similarities and trends among clients, all families are different, and their preferences are going to be different. And I think the communication is key, and really understanding your clients and knowing their needs, their wants, and any tensions that may exist. Like it would be amiss to think that all families are very happy and just go along with whatever the matriarch or patriarch says, there will be tensions there and it's addressing those head on and early and setting out expectations. We hear a lot about family charters or variations and theme, where essentially, you set out expectations that we will all come together, whether it's once or twice a year, and we will sit around a table and we will discuss this. That means, wherever you are in the world at that moment, everyone's coming together. Of course, you could do that virtually these days. But does that have the same impact as doing it in person? I think some families would argue it doesn't. I think some advisors would agree with that. But you know, of course, it's a huge challenge for advisors that I think the overwhelming response we get when we speak to people about this is it comes down to communication.
James 13:51
I think at a sort of top down level, in a sense, the question answers itself, the fact that clients are more mobile, the fact that families tend to be increasingly spread across different jurisdictions where there are different regulations, different laws, some of which may conflict with each other. I think, inevitably, there's more complexity today than there was in the past if you're an advisor. And I think also the requirement to be able to access local experts who have the knowledge of the local regulations, the local tax law, the local law to do with families, divorced and so on, and inheritance, these are all now requirements that perhaps didn't exist in the same way 30 years ago.
Brandon 14:47
Interesting. I'd like to get both of your views on this next question, but if I can just start with Katie, again. This year has seen obviously the hottest day on record in recorded history and a wave of dramatic sort of environment mental events from floods in China and Central Europe, including more recently in Greece this week, as we've seen, and then also, of course, the wildfires in North America and southern Europe as well. How are different generations of high net worth individuals approaching ESG focused investing if you like?
Katie 15:20
Yes, I mean, as you say, climate change is almost impossible to avoid these days, it's a regular conversation among I'd say, almost everybody. And I think that is true for all high net worth clients. As you say, there are differences between the generations and advisors still agree that it is the younger generations that are more keen in the majority of cases, obviously there are exceptions to the rule. And I think perhaps the older generations, one of the key differences is they are happy to sort of stick, you know, a certain proportion of their wealth into an ESG fund or an ESG focused strategy, as opposed to perhaps with younger generations are those that are more proactive. They're, almost going beyond ESG, that's almost just a given in any investment they make, they want to look for impacts, they want to be looking at ways they can really measure the difference that their money is making. And you know, some families perhaps are choosing one particular cause whether it's free nations or biodiversity, they're putting a lot of time and energy into having a real impact on that area. And so they're not just expecting reports on the return to their investments, they want reports on how much Co2 have we reduced or how much plastic have we removed from the ocean, how many more species are there in this area that thev'e chosen to try and improve biodiversity in. So I think, in a way, ESG is only the starting point, and the conversation is going much much further into impact and fully embracing a sustainable financial system.
Brandon 17:04
And James?
James 17:05
I would just hitchhike on Katie's point, I think that the fundamental difference between the young generation today and say, the two generations still living, their parents and their grandparents, is that the parents and the grandparents generally are more concerned about investment returns, and the attitude will be, well, let's make the money first and then we can think about what we're going to do with it. I think the the sea change is that you're seeing the younger generation now hardwiring sustainability and impact. If they're launching a business, it's in the business plan. So this is upfront and a key consideration, whether it's a business that they're starting, or it's companies that they're investing in.
Brandon 18:02
So it's almost intrinsic to the business model and almost part of it's DNA in a sense.
James 18:07
Yeah, I think that's right, I think it's now an integral part of their thinking. Whereas for my generation, and the generation before, the primary focus has tended always to be on investment returns.
Brandon 18:26
And looking forward, how do you see some of these key trends that we've mentioned and some maybe that we haven't, sort of evolving from here on?
James 18:36
Well, I think it depends on where you sit on climate change, we're either talking a lot of hot air, and there's nothing to worry about, because the world has heated up in the past, or we are facing an existential crisis. So dependent on the evidence, the growing wall of evidence accelerating, and making it obvious that one side or the other is right or wrong, I think you're going to see more emphasis by governments and regulators, on ensuring that companies are running their businesses in sustainable ways. I think citizens themselves are going to see more rules and regulations about recycling, about energy conservation. For the wealth management sector, clearly, that's going to open up a lot of opportunities, because money tends to follow innovation. So I think we're going to see a period of significant innovation to deal with these challenges. And I think that the wealth management community is in pole position in being able to take advantage of that.
Brandon 19:55
So just to finish things off James obviously, Guernsey has a long history of private wealth services. Why are financial centres such as Guernsey, but also others, important in offering opportunities to the next generation of high net worth individuals?
James 20:16
Well, I think throughout the time I've been observing this sector, for more than 30 years, I think a lot of people use what I would call tax neutral, cross border financial centers, because they find it increasingly difficult to deal with bureaucratically egg bound onshore jurisdictions where there are a growing number of barriers, perceived or real, to people getting on with doing business that they want to do. So I think that if we use offshore as a term to describe a jurisdiction that's outside your home jurisdiction or your jurisdiction where you're tax resident, if you're looking to conduct business across borders, and you're dealing with a multiplicity of different countries that you're looking to export your goods and service to, then I think so called offshore financial centres are going to continue to play a pivotal role.
Brandon 21:27
Brilliant. Well, thank you very much both for your time today.
Katie 21:30
Thank you very much for having us.
James 21:32
Yeah, a pleasure.
Brandon 21:34
Thank you. It was great to talk through the opportunities of high net worth individuals, Guernsey presents and of course, the changing trends in the private wealth sector more broadly. Thanks also to you for listening. If you enjoyed this discussion, we have a backlog of interviews on the We Are Guernsey podcast channel, you can check them out by searching for We Are Guernsey on your preferred podcast platform. We also have links to James and to PAM Insight in our show notes, so check them out to hear more from them. To find out more about Guernsey and its specialist financial services sector head over to our website Weareguernsey.com We look forward to welcoming you back to the podcast soon but until then, it's goodbye from Guernsey.
Transcribed by https://otter.ai