AI Can Boost Our Business
Getting technology right in the wealth sector is the biggest issue, and this publication interviewed Nicholas Bernard, CTO at Stonehage Fleming, to discuss how the firm is planning to exploit the world of tech.
“If you look at the big themes, they are robo-advisory, crypto currencies, artificial intelligence and blockchain technologies,” Bernard said.
“I think AI is the technology we are most excited about. For us robo [technology] represents automation that has been around for some time.” “We have questions around crypto-currencies and whether they are currencies or just crypto-tokens. I think you need to have access to the crypto market to build some exposure but I think placing big bets at this point is not the right thing to do,” he continued.
Helping to make the earnings from professional sport last a lifetime
Matthew Fleming, a partner at Stonehage Fleming Group and himself a former professional cricketer, said sportsmen and women are a fairly unique group because their earning power typically peaks at a young age.
They acquire their wealth at a young age, when they have had little opportunity to develop the knowledge, skills and perspective to completely understand the impact on their personal life or take a long term view of life.
He added: “Because of their youth they are heavily dependent on other professionals for advice, so often the first professional relationship or first adviser-type relationship is critical in setting the benchmark for governance, professionalism, for long-termism rather than short-termism.
The first decision they make about the adviser is absolutely critical and sadly they are not in the position to judge the quality of their first adviser that well.”
Succession Planning: Strategies that work
It is often repeated that families go from ‘clogs to clogs in three generations’; wealth earned in one generation seldom lasts through to the third.
Given the hard work involved in building such fortunes, it can be difficult to understand how such seemingly successful families so often fail in their attempts to transfer wealth.
Some immediate explanations spring to mind: a lack of diversification of assets, insufficient interest from the inheriting generation, or rigid control by the previous generation.
Stonehage Fleming appoints Jersey Partner
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the appointment of Paul Matthams as Partner within the Family Office division.
Paul joins from leading offshore law firm Carey Olsen where he has been a Partner for nearly twenty years as well as Head of the firm’s Trusts and Private Wealth Group from October 2005 to June 2016. Paul has over thirty years of experience in the Jersey financial services industry both as a lawyer and as a professional trustee, as well as a notary public and is a leading authority on trusts and pensions. He has advised individuals and companies on trusts, estate planning and pension issues, and has acted for high net worth individuals and families, family offices, and private trust companies. He has also been regularly instructed by leading financial institutions and trustee boards including public and private sector pension scheme trustees.
Paul is a long-standing member of the Society of Trust and Estate Practitioners and the Association of Pension Lawyers. He is a former Chairman of the Jersey Association of Pension Funds and the Jersey Pensions Association and was an original member of the Jersey Finance Pensions Working Party.
Commenting on the appointment, Ana Ventura, Partner and Head of Jersey Family Office said: “Stonehage Fleming prides itself on its exceptional breadth and depth of technical and practical knowledge. Paul’s seniority, wealth of experience and technical expertise will be an invaluable addition to our team in Jersey and will further enhance the Group’s Family Office division. I am pleased to welcome him to Stonehage Fleming.
Paul Matthams said: “The needs of clients are constantly evolving, as is the Family Office industry. Stonehage Fleming’s business DNA is to learn and develop, and in a changing environment there is a compelling need to offer broader services and a deeper understanding of the issues our clients may face. They are true pioneers within the family office industry and they provide a very distinct integrated family office approach. It gives me great pleasure to become part of the Group at such an exciting time on its journey.”
AI Can Boost Our Business
Getting technology right in the wealth sector is the biggest issue, and this publication interviewed Nicholas Bernard, CTO at Stonehage Fleming, to discuss how the firm is planning to exploit the world of tech.
“If you look at the big themes, they are robo-advisory, crypto currencies, artificial intelligence and blockchain technologies,” Bernard said.
“I think AI is the technology we are most excited about. For us robo [technology] represents automation that has been around for some time.” “We have questions around crypto-currencies and whether they are currencies or just crypto-tokens. I think you need to have access to the crypto market to build some exposure but I think placing big bets at this point is not the right thing to do,” he continued.
Helping to make the earnings from professional sport last a lifetime
Matthew Fleming, a partner at Stonehage Fleming Group and himself a former professional cricketer, said sportsmen and women are a fairly unique group because their earning power typically peaks at a young age.
They acquire their wealth at a young age, when they have had little opportunity to develop the knowledge, skills and perspective to completely understand the impact on their personal life or take a long term view of life.
He added: “Because of their youth they are heavily dependent on other professionals for advice, so often the first professional relationship or first adviser-type relationship is critical in setting the benchmark for governance, professionalism, for long-termism rather than short-termism.
The first decision they make about the adviser is absolutely critical and sadly they are not in the position to judge the quality of their first adviser that well.”
Succession Planning: Strategies that work
It is often repeated that families go from ‘clogs to clogs in three generations’; wealth earned in one generation seldom lasts through to the third.
Given the hard work involved in building such fortunes, it can be difficult to understand how such seemingly successful families so often fail in their attempts to transfer wealth.
Some immediate explanations spring to mind: a lack of diversification of assets, insufficient interest from the inheriting generation, or rigid control by the previous generation.
Stonehage Fleming appoints Jersey Partner
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the appointment of Paul Matthams as Partner within the Family Office division.
Paul joins from leading offshore law firm Carey Olsen where he has been a Partner for nearly twenty years as well as Head of the firm’s Trusts and Private Wealth Group from October 2005 to June 2016. Paul has over thirty years of experience in the Jersey financial services industry both as a lawyer and as a professional trustee, as well as a notary public and is a leading authority on trusts and pensions. He has advised individuals and companies on trusts, estate planning and pension issues, and has acted for high net worth individuals and families, family offices, and private trust companies. He has also been regularly instructed by leading financial institutions and trustee boards including public and private sector pension scheme trustees.
Paul is a long-standing member of the Society of Trust and Estate Practitioners and the Association of Pension Lawyers. He is a former Chairman of the Jersey Association of Pension Funds and the Jersey Pensions Association and was an original member of the Jersey Finance Pensions Working Party.
Commenting on the appointment, Ana Ventura, Partner and Head of Jersey Family Office said: “Stonehage Fleming prides itself on its exceptional breadth and depth of technical and practical knowledge. Paul’s seniority, wealth of experience and technical expertise will be an invaluable addition to our team in Jersey and will further enhance the Group’s Family Office division. I am pleased to welcome him to Stonehage Fleming.
Paul Matthams said: “The needs of clients are constantly evolving, as is the Family Office industry. Stonehage Fleming’s business DNA is to learn and develop, and in a changing environment there is a compelling need to offer broader services and a deeper understanding of the issues our clients may face. They are true pioneers within the family office industry and they provide a very distinct integrated family office approach. It gives me great pleasure to become part of the Group at such an exciting time on its journey.”
Stonehage Fleming bolsters Wealth Planning team with Senior Hire
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the expansion of its Wealth Planning division with the appointment of Matthew Brown as Director.
With sixteen years’ financial planning experience Matthew joins Stonehage Fleming from Thomas Miller Wealth Management, where he was appointed Partner in 2015, having first joined the firm in 2006 (Thomas Miller acquired Broadstone/BDO Investment Management in December 2014).
Matthew will work closely with the existing team and assist in developing and delivering the wealth planning offering to the UK market. He will be based in the firm’s London office and will report to Susie Hillier, Partner and Head of Wealth Planning. His appointment was effective from Monday, 11th June.
The news comes on the heels of three client facing additional hires within the wealth planning team in London. Ashley Pontiggia joins us from Saunderson House later in the month as a Senior Financial Planner. He will be joining Ketan Patel who arrived into the team during May and they will be followed by a further new Planner during August.
Stonehage Fleming Wealth Planning sits within the wider Stonehage Fleming Group and provides integrated financial planning and investment advice in the UK across investments, pensions and protection.
Commenting on the appointment, Susie Hillier said: “I am very pleased to welcome Matthew to the Wealth Planning team. Close relationships and a deep understanding of our clients is at the heart of our offering. Matthew’s seniority and experience working with HNW individuals with complex needs makes him well-suited to contribute significantly to our rapidly expanding, talented team.”
Matthew Brown said: “The needs of our clients are constantly evolving and we as advisers must be able to offer broader servicers and have a deeper understanding of the issues they may face. Stonehage Fleming is uniquely positioned with their distinctive integrated approach to wealth management. It is an exciting time for the company and it gives me great pleasure to be a part of the journey.”
Next Gen’ clients seek greener, leaner wealth managers
Ethically minded, obsessed with technology and wealthy — the next generation of private client is a new breed of customer that wants a new kind of wealth manager to match.
The younger client is more interested in an iPhone-friendly investment portfolio than an adviser with the correct width of pinstripe and will want to debate the merits of ethical and environmental funds rather than take a trip to the golf course.
“The attitude of the younger generation of client is very different [from their parents],” says Matthew Fleming, partner at family office Stonehage Fleming. “There has been an unmistakable shift in the past five years towards impact and sustainability through overtly responsible investing.” Faced with the realities of climate change and bringing up children, wealthy millennial investors want to know their money is doing good rather than adding to the world’s problems, say wealth managers. Just as they might buy organic produce, they want their adviser to show them sustainable investments too.
More than 40 per cent of the 45 wealth managers surveyed by Wealth-X on behalf of the FT say they are focusing on environmental, social and governance (ESG) themes as a way of appealing to the next generation. Many have introduced funds or portfolios or are launching new ESG services to enhance their offering in this area. But why is this so important?
How to manage your passion investment in Art
Whether one owns art for pleasure or as an investment, the volume of administration related to managing a collection is the same: initial due diligence, lending to museums, maintaining an inventory, transport, storage, insurance, valuations, the structure through which the collection is owned, cataloguing, strategic planning for the future (including inheritance planning), and more.
Inevitably there comes a time when the collection is so vast, and the transactions so complex, that the owner realises that he or she needs assistance and guidance to address day-to-day matters as they arise.
Choosing an expert
The decision about what type of assistance is required must start with a thorough and honest appraisal of both the collector and the collection’s needs. Dedicated art advisers tend to focus on the minutiae of a transaction rather than the lifecycle of the artwork after the transaction. A collection manager, by definition, has broader knowledge and knows where to find the right expertise. Some aspects of managing the collection—such as specific art historical research, conservation, or legal and tax advice—will demand significant specialised professional input that a seasoned collection manager can easily draw upon.
If the collection manager works within the context of a family office they will also recognise that the long-term preservation of an art collection across multiple generations, and decisions about the future of the collection, are far more dependent on the collector and his or her family than on the collection manager.
Stonehage Fleming bolsters Wealth Planning team with Senior Hire
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the expansion of its Wealth Planning division with the appointment of Matthew Brown as Director.
With sixteen years’ financial planning experience Matthew joins Stonehage Fleming from Thomas Miller Wealth Management, where he was appointed Partner in 2015, having first joined the firm in 2006 (Thomas Miller acquired Broadstone/BDO Investment Management in December 2014).
Matthew will work closely with the existing team and assist in developing and delivering the wealth planning offering to the UK market. He will be based in the firm’s London office and will report to Susie Hillier, Partner and Head of Wealth Planning. His appointment was effective from Monday, 11th June.
The news comes on the heels of three client facing additional hires within the wealth planning team in London. Ashley Pontiggia joins us from Saunderson House later in the month as a Senior Financial Planner. He will be joining Ketan Patel who arrived into the team during May and they will be followed by a further new Planner during August.
Stonehage Fleming Wealth Planning sits within the wider Stonehage Fleming Group and provides integrated financial planning and investment advice in the UK across investments, pensions and protection.
Commenting on the appointment, Susie Hillier said: “I am very pleased to welcome Matthew to the Wealth Planning team. Close relationships and a deep understanding of our clients is at the heart of our offering. Matthew’s seniority and experience working with HNW individuals with complex needs makes him well-suited to contribute significantly to our rapidly expanding, talented team.”
Matthew Brown said: “The needs of our clients are constantly evolving and we as advisers must be able to offer broader servicers and have a deeper understanding of the issues they may face. Stonehage Fleming is uniquely positioned with their distinctive integrated approach to wealth management. It is an exciting time for the company and it gives me great pleasure to be a part of the journey.”
Next Gen’ clients seek greener, leaner wealth managers
Ethically minded, obsessed with technology and wealthy — the next generation of private client is a new breed of customer that wants a new kind of wealth manager to match.
The younger client is more interested in an iPhone-friendly investment portfolio than an adviser with the correct width of pinstripe and will want to debate the merits of ethical and environmental funds rather than take a trip to the golf course.
“The attitude of the younger generation of client is very different [from their parents],” says Matthew Fleming, partner at family office Stonehage Fleming. “There has been an unmistakable shift in the past five years towards impact and sustainability through overtly responsible investing.” Faced with the realities of climate change and bringing up children, wealthy millennial investors want to know their money is doing good rather than adding to the world’s problems, say wealth managers. Just as they might buy organic produce, they want their adviser to show them sustainable investments too.
More than 40 per cent of the 45 wealth managers surveyed by Wealth-X on behalf of the FT say they are focusing on environmental, social and governance (ESG) themes as a way of appealing to the next generation. Many have introduced funds or portfolios or are launching new ESG services to enhance their offering in this area. But why is this so important?
How to manage your passion investment in Art
Whether one owns art for pleasure or as an investment, the volume of administration related to managing a collection is the same: initial due diligence, lending to museums, maintaining an inventory, transport, storage, insurance, valuations, the structure through which the collection is owned, cataloguing, strategic planning for the future (including inheritance planning), and more.
Inevitably there comes a time when the collection is so vast, and the transactions so complex, that the owner realises that he or she needs assistance and guidance to address day-to-day matters as they arise.
Choosing an expert
The decision about what type of assistance is required must start with a thorough and honest appraisal of both the collector and the collection’s needs. Dedicated art advisers tend to focus on the minutiae of a transaction rather than the lifecycle of the artwork after the transaction. A collection manager, by definition, has broader knowledge and knows where to find the right expertise. Some aspects of managing the collection—such as specific art historical research, conservation, or legal and tax advice—will demand significant specialised professional input that a seasoned collection manager can easily draw upon.
If the collection manager works within the context of a family office they will also recognise that the long-term preservation of an art collection across multiple generations, and decisions about the future of the collection, are far more dependent on the collector and his or her family than on the collection manager.
Italy perceived as trouble — but not by all
Money managers are carefully watching the political situation in Italy unfold, deeming the country “too big to fail.”
But sources said they’re not just watching for negative investment effects from the country’s political and fiscal problems: They’re also looking for opportunities to add to positions. “Political risk is back with a vengeance in Italy,” said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management in London.
“As the third-largest global issuer of government bonds after the USA and Japan, Italy is too big to be allowed to fail without severe contagion to the global financial system. However, it is also too big to comfortably bail out using tried and tested mechanisms.” Recent weeks have seen Italy’s population and investors forced to reckon with a populist government coalition and a potential snap election.
Are foreign trusts still relevant for South Africans?
The role of foreign trusts in the structuring of foreign affairs of South African residents is changing, says international family wealth manager Stonehage Fleming. Foreign trusts will always have a broad benefit for wealthy families with complex, international affairs and should not be used to mitigate tax, but rather to maximise the wealth protection and estate planning opportunities. Foreign trusts are no longer the only option for investors looking to remit funds from South Africa, due to a changing international tax environment coupled with the recent focus by SARS on both local and foreign trusts.
More specifically, with the implementation on March 1 2017 of Section 7C of the Income Tax Act, which addresses low or no interest loans to trusts, the 2018 tax year marks the first year where South African taxpayers are subject to a Section 7C liability. Additionally, it was proposed in the 2018 Budget Speech that the ‘official rate of increase’ (which is also the rate used to calculate Section 7C donations) be upwardly revised to be more aligned with a market-related rate. A change in this ‘official rate of interest’ will necessitate a review of whether the interest rate applicable to existing loans needs to be adjusted, and where Section 7C applies to a loan to a trust, it will also result in an increased donation and therefore donations tax liability.
Further developments include the rising costs of administration and management of foreign trusts due to heightened governance, compliance and reporting functions of trustees, as well as the growing trend of remitting funds offshore (over and above the R10 million available through the annual foreign investment allowance) by way of special applications to the South African Reserve Bank. These special application funds cannot be lent to a trust and must be invested in the name of the applicant, which may deem the costs of establishing and maintaining a foreign trust unwarranted to house only a small portion of the taxpayer’s foreign funds remitted from South Africa.
“In determining the tax implications of a foreign trust where a loan is in place which is not attracting interest at a market-related rate, the relationship between three primary tax principles must be considered – transfer pricing provisions, attribution rules and the new Section 7C,” says Elana Nel, senior associate in the tax advisory division at Stonehage Fleming in South Africa.
In Profile: Stonehage Fleming
“In a sense, we are an outsourced family office, as we will do whatever the family itself doesn’t want to do, from everything to very little,” explains Clarke-Jervoise.
He adds that the firm’s services lean more towards fully discretionary services than solely advisory, though there is a mix between the two for many clients.
Clarke-Jervoise spends all his time on private equity in a team of four and says that of the 250 clients Stonehage Fleming has, 40-50 would like help on their private equity investing. Those clients that do wish to invest in the asset class have roughly 10-25% of their assets in private equity. Last year the family office deployed circa $100m into private equity.
Italy perceived as trouble — but not by all
Money managers are carefully watching the political situation in Italy unfold, deeming the country “too big to fail.”
But sources said they’re not just watching for negative investment effects from the country’s political and fiscal problems: They’re also looking for opportunities to add to positions. “Political risk is back with a vengeance in Italy,” said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management in London.
“As the third-largest global issuer of government bonds after the USA and Japan, Italy is too big to be allowed to fail without severe contagion to the global financial system. However, it is also too big to comfortably bail out using tried and tested mechanisms.” Recent weeks have seen Italy’s population and investors forced to reckon with a populist government coalition and a potential snap election.
Are foreign trusts still relevant for South Africans?
The role of foreign trusts in the structuring of foreign affairs of South African residents is changing, says international family wealth manager Stonehage Fleming. Foreign trusts will always have a broad benefit for wealthy families with complex, international affairs and should not be used to mitigate tax, but rather to maximise the wealth protection and estate planning opportunities. Foreign trusts are no longer the only option for investors looking to remit funds from South Africa, due to a changing international tax environment coupled with the recent focus by SARS on both local and foreign trusts.
More specifically, with the implementation on March 1 2017 of Section 7C of the Income Tax Act, which addresses low or no interest loans to trusts, the 2018 tax year marks the first year where South African taxpayers are subject to a Section 7C liability. Additionally, it was proposed in the 2018 Budget Speech that the ‘official rate of increase’ (which is also the rate used to calculate Section 7C donations) be upwardly revised to be more aligned with a market-related rate. A change in this ‘official rate of interest’ will necessitate a review of whether the interest rate applicable to existing loans needs to be adjusted, and where Section 7C applies to a loan to a trust, it will also result in an increased donation and therefore donations tax liability.
Further developments include the rising costs of administration and management of foreign trusts due to heightened governance, compliance and reporting functions of trustees, as well as the growing trend of remitting funds offshore (over and above the R10 million available through the annual foreign investment allowance) by way of special applications to the South African Reserve Bank. These special application funds cannot be lent to a trust and must be invested in the name of the applicant, which may deem the costs of establishing and maintaining a foreign trust unwarranted to house only a small portion of the taxpayer’s foreign funds remitted from South Africa.
“In determining the tax implications of a foreign trust where a loan is in place which is not attracting interest at a market-related rate, the relationship between three primary tax principles must be considered – transfer pricing provisions, attribution rules and the new Section 7C,” says Elana Nel, senior associate in the tax advisory division at Stonehage Fleming in South Africa.
In Profile: Stonehage Fleming
“In a sense, we are an outsourced family office, as we will do whatever the family itself doesn’t want to do, from everything to very little,” explains Clarke-Jervoise.
He adds that the firm’s services lean more towards fully discretionary services than solely advisory, though there is a mix between the two for many clients.
Clarke-Jervoise spends all his time on private equity in a team of four and says that of the 250 clients Stonehage Fleming has, 40-50 would like help on their private equity investing. Those clients that do wish to invest in the asset class have roughly 10-25% of their assets in private equity. Last year the family office deployed circa $100m into private equity.