The Jersey government’s recent introduction of International Savings Plans (ISPs) is just the latest sign of the growing importance to the island of clients originating from the Middle East. The new plans, which enable international companies to set up savings plans in Jersey for non-resident employees, are expected to be particularly attractive to clients from the Gulf region as they'll be useful for employers in the Middle East to meet their end of service benefit needs, deepening the island’s already strong appeal in those markets.
Joe Moynihan, who took over as CEO of Jersey Finance in February, says: “It’s an exciting time for the private wealth sector and Jersey is in a strong position to support this upward trend. In particular, the recent launch of ISPs has had a remarkably positive response, and we see that being a considerable draw for individuals and corporates in the GCC region and elsewhere.”
A number of Jersey advisers report growing workloads from the Middle Eastern markets. Darren Kelland, global head of private client services at Hawksford, says: “Geographically, we have seen an increase in interest from clients in the Middle East and the Far East. The Middle East has traditionally been a great source of business for the private wealth industry, but there has definitely been a marked upturn in new business enquiries from the Middle East over the last two years.”
Another popular tool for clients from the GCC is Jersey’s reserved power trusts, which allow settlors to reserve an extensive range of powers in respect of trusts set up on the island. Josephine Howe, a partner at the law firm Ogier in Jersey, says: “Reserved power trusts are particularly popular with Middle Eastern clients at the moment, who like to retain quite a high level of control being often less familiar with the more traditional trusts arrangements.”
Howe says she has seen an uptick in interest in reserved power trusts from UK settlors also, where there can be challenges around balancing increased control against the tax implications in the home market. “We see a lot of key persons in investment funds and private equity houses, who have made their money in investing, setting up reserved power trusts because they want to retain some control. There is a juggling act in terms of what they can do from a Jersey perspective, which is very flexible, and balancing that against home-country tax implications.”
Middle Eastern clients do not face similar issues, coming from low or no-tax home markets.
In addition to targeting the Gulf markets, Moynihan says he has a number of other goals for Jersey Finance under his leadership: “Notably, the island’s rapid evolution in the digital sphere, combined with a world-leading telecommunications infrastructure and flexible approach, is making its mark and attracting big fintech business,” he says. “This is only likely to increase in demand. Family office business is also seeing a revival and Jersey is ready to provide the expertise needed to ensure a professional and secure environment for high net worth families across the globe.”
Mark Fleming, a director in Sanne’s private client business, says: “We are certainly seeing a growing number of family offices across the UK and Europe and we increasingly spend time with those vehicles and the people behind them. There is also a reasonable number of family offices setting up in Jersey – whether or not the family office is in the UK, more often than not there is a Jersey structure involved in some shape or form.”
Locate Jersey, set up to attract inward investment and high-value residents to the island, reported an increase in new arrivals in 2018, with 29 high net worth residents moving in compared to an average of 20 HNW residents per year for the past five years.
Kevin Lemasney, director of high value residency for Locate Jersey, says: “We continue to see good-quality businesses coming to the island, setting up and employing local people. We are also seeing an increase in family offices being set up, both with and without the principals. Often those offices are looking after philanthropy assets of families, and even if the family is not based in Jersey, the availability of professional services and expertise in philanthropy here is attractive.”
Christopher Scholefield, partner with the law firm Viberts, says philanthropy is a growing area of focus for clients in Jersey, partly as a result of recent changes to the island’s charities law. “We have a new well-drafted piece of legislation, which clarifies what’s charitable and what’s not and requires entities to demonstrate some public benefit in order to register as Jersey charities,” he says. “There is a real appetite among the next generation of clients for impact investing and philanthropic giving, and Jersey is now in a very good position having taken a conscious initiative to focus on that area.”