Guernsey report highlights new trends in private wealth sector

Approaches to wealth management are shifting at a rapid rate as significant wealth transfers take place amid sweeping societal changes, according to a new research report commissioned by Guernsey Finance from wealth management analyst PAM Insight.

The report focuses on evolving private client trends, including increasingly global families, attitudes towards sustainability, being a ‘good global citizen’, technology and digital assets, and examines the way in which service providers will need to adapt to ensure they are one step ahead.

PAM Insight surveyed an array of private client advisory professionals on the changing attitudes of high and ultra-high net worth families. These families were also given the opportunity to share their views via an in-depth survey.

Overall, the key change cited by advisers when considering succession planning and transferring wealth was changing attitudes towards tax planning (79%). This was followed by sustainability considerations (62%), a broader range of jurisdictions (50%), changing investment strategies (49%) and an increased focus on technology (42%).

With an uncertain global macro-economic environment, it is perhaps unsurprising that 91% of respondents said protecting themselves against political instability in their home countries was a key driver for decisions regarding their finances. With the outlook still uncertain, the importance of this factor is likely to increase.

The two most important factors when choosing a jurisdiction were cited as political stability and tax neutrality, both of which Guernsey offers.

The nature of families and the way they live their lives is changing, and as a result, so too are their private wealth requirements. Of the greatest differences, an increased focus on sustainable and impact investments from younger generations (under 35s) came out on top, with almost 30% acknowledging this trend.

Following closely behind, a greater interest in digital assets (24%) and the popularity of digital platforms (20%) demonstrated the importance of technology when dealing with future generations. ‘Being a good global citizen’ was also highlighted, with 86% of respondents marking it as either important (35%) or very important (51%).

“Although specific changes in aims and requirements will differ depending on the client, there are clearly identifiable trends that can be used to highlight common challenges facing the sector,” said Katie Royals, PAM Insight’s Managing Editor.

So, how does the industry need to adapt to meet the needs of these wealth holders? Survey respondents cited three main themes: greater adoption of technology (29%), more sustainable investment opportunities (24%) and a more diverse workforce (17%).

The report shows that the desire in the industry to change is there and, for the most part, advisers agree as to which adaptations need to be prioritised to meet the needs of younger clients.

The key change advisers to the wealthy are seeing is a change in attitude to tax planning, younger generations are less concerned about mitigating their tax position and instead are choosing to focus their attentions elsewhere.

Stephen Hare, Managing Director of Sovereign’s private client division in Guernsey, tends to agree. “We are definitely seeing second-generation attitudes shifting, so there is less focus on tax and more on utilising assets to increase returns.”

Attitudes towards sustainability also proved to be a top change among younger generations. This is only likely to increase, and a greater range of sustainable products and services will be required to meet the demands of these clients.

As a leading centre of sustainable finance, Guernsey launched the world’s first regulated green fund regime; the Guernsey Green Fund (2018), focusing investment into carbon mitigation and alternatives. Since then, it has also launched the Natural Capital Fund regime (2022), which is focused on biodiversity protection.

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