A place in the sun

As banks and fund houses sign off plans for 2003, human capital change is being felt in all but the furthest corners of the financial industry. Tim Gibson examines the offshore wealth management career panoply. The ongoing woes of the equity market are taking their toll across the ranks of the financial sector. Many banking careers are in tatters and the promise of rapid progression is at the very least becoming more limited and less definable. Bonus hopes have been reduced for the majority, and employer conscience has in some cases evaporated, shocking employees and undermining client stability and loyalty. These conditions result from market forces being superimposed on strategic plans and corporate structures geared to a high volume business flow. Furthermore, when compared with their wider loss-making investment or corporate banking operations, some current providers of wealth management services only do so on a minority business basis. Add to this the seasonal business cycle and the result is making the end of the year tougher on headcount as plans are drawn up for 2003, budgets are set and bonus pools fixed. The wealth management market is not isolated from these stimuli but there remain aspects of growth, positive results and strong intent for the following year. The larger investment bank’s private client departments have felt the full force of retrenchment while the purist private bank or specialist investment management or trust firm have remained more robust and resolute. The trend in plans for 2003 appears to reflect realistic restructuring and enhanced growth in select areas. Offshore attitudes GWST supports an intellectual examination of current and predicted conditions against the above criteria and this month lifts the covers on the offshore side of the private wealth management industry. While never ignored, it is often seen as the lesser of the two halves of the industry. Offshore attitudes were being examined closely six months ago with wide-ranging concerns emerging regarding banking privacy and secrecy laws covering activities from the Caribbean to Switzerland. Most offshore jurisdictions laboured under challenges from governmental or international bodies to their particular status and tax regime. Geopolitics has exacerbated the need for wider disclosure, compliance and regulation and was reflected by negative sentiment within the human capital body serving within offshore jurisdictions. These concerns have to some extent receded as wider economic negativity has prevailed and gained momentum. There seems to be a growing perception that while change may indeed be inevitable, inter-governmental agreement and pressure for wider disclosure, regulation or alteration to tax haven status is unlikely to attract the same impetus that it had done previously. Those banks taking a bullish offshore stance have balanced the demands of reputation, restrictive business practices, regulation and cost projections against the need to provide services to highly taxed clients seeking advantageous solutions. In short, investor confidence should not be rattled nor stability undermined in troubled times, when demand for tax efficient investment is rising across European and US client domains. The combined effects of tough onshore market competition and selective easing of offshore market concerns are of interest in career terms to those facing tough choices. Offshore positions have historically been well remunerated, enjoyed a benign environment and favoured independent minded individuals. Change should be viewed as opportunity, provided an individual is capable of having an impact in those conditions. For some, eventual transition from offshore jurisdictions back onshore has been a huge challenge in terms of remuneration and skill fit within target institutions. Therefore the decision to move offshore from a domestic environment in the first instance has not been an easy one to take. It is interesting to note that most of the senior professionals within the private wealth management arena have completed at least one offshore “tour of duty” in their career. This rationale therefore raises the issue of when an individual should consider a role offshore and what is the likelihood of finding something appropriate, relevant and ultimately transmutable when tired of “island life” or life in a principality. GWST works in most jurisdictions and we are keenly aware of the substantial vacancies that exist in pure offshore markets. These skill shortages are exacerbated by the prevailing localised work permit or residency restrictions. Offshore locations are often almost sealed pools of human capital, known to each other across work and social strata. We note an upturn in demand for staff in most jurisdictions. Trust professionals are in shortage, acute in places, as are specialist private bankers willing to, or able to understand the legal and tax implications of certain international jurisdictions. The Trust human capital pyramid is almost inverted in the sense that the sector has not attracted or retained young recruits for some time. Therefore the structure is largely populated by senior individuals with a lack of personnel suitable for director and sub-director appointments. High cost staff Projected into the not too distant future, this model will face a tough challenge against demographics. The industry itself is adding to the structural pressures by attacking high cost staff. Long serving senior staff in the Trust disciplines are therefore under increasing pressure, particularly if they cover roles that remain a cost centre to wider operations. The key recent development has been the emergence of the Trust professional who can win business, business develop and turn the cost aspect of the service to that of profit generation. Similarly, we detect a trend of convergence between formal private client investment advice and Trust advice given the ability of some candidates to cover both aspects holistically and well. Regardless of the conditions or the choice between on and offshore, the key facet to consider is to never look at the job in question but to consider the future three to five years hence, one’s likely progression, desire for a particular lifestyle and overall personal plans. If these can be addressed and simple decisions reached then most offshore opportunities can be examined sensibly and assessed for real fit and potential. The employer who often sits astride a quota for the year will normally resolve permit and residency hurdles as premium candidates are sourced. Given the constant ebb and flow of personnel and general shortages this quota is often in credit. GWST sees regular demand for talent emanating from offshore jurisdictions. The prevailing and projected market conditions make offshore career appointments timely if not career-enhancing options for those prepared to examine them more closely. Tim Gibson is Managing Director of Gibson Whitaker Stevens & Thynne (GWST), tim.gibson@gwst.co.uk