The Silver Lining - Part 2

Last week, I set out why it is so difficult to win business from private clients – and how we all hate being victims of product push – or the event bore – it is due to our ‘innate fear of the influence of strangers’, but before we look at the four ways to get around this – let’s digress a little – as a private client professional what are you good at, who are your best clients and what do you do for them which your competitors may not? Once this is established, you then need to go about getting your message across to the right people and in the right way.

Most books about winning business – talk about the SMART approach, which is the acronym for setting goals or targets which are Specific, Measurable, Achievable, Relevant and Timely. I am a trust and succession lawyer – and there are lots of trust and succession lawyers out there so why should anyone come to me rather than anyone else?

I was privileged to work for one of the wealthiest families in the Middle East. The founder wanted the protection provided by a trust, protection from greedy heirs, opportunistic creditors and overzealous tax authorities, but also control reserved to the family and its close advisors and binding wishes.

We were fortunate that money was not an issue so we could explore all possibilities from the traditional solution of having a Protector with power reserved to fire and hire the trustees, increased powers, advisory boards, private trustee companies and foundations. My client wanted a solution which could cope –with difficult business or family decisions in times or crisis, disharmony or disputes while at the same time giving the professional trustee freedom to administer the trust without concern as to being liable for breach of fiduciary obligations.

We came up with a solution which was robust, satisfied the physical presence test, substance over form test and did not threaten tax residence status of the trust. Since then we have introduced this solution to many families across the globe and throughout numerous jurisdictions and it is now available for clients with more modest means. This is my Unique Selling Point – but how could I get this message out to my network – I needed to find a way to give them something, educate them and aggregate with client stories to make them want to listen to each other and refer business

I am lucky to have worked with clients over many years and there are plenty of opportunities to introduce my clients to other professionals – but if I was honest, I did not refer as much business as I could because I did not know who in my network did what in sufficient detail to introduce them with confidence

The answer I decided was podcasts – I interviewed my close network of private client professionals – so that I could find out what they did for their clients which I published on Apple ITunes and Spotify under the banner ‘How to Keep your Money’– and then came covid-19 and lockdown.

Published podcasts are unthreatening because they are not about me, they are aggregated in one place and are educational – so it is hardly surprising that they are ranked within the top 160 investment podcasts in the UK.

And then came covid-19 and lockdown.

With nothing better to do last Easter, I decided to write up my research and put it together, in a book ‘Reimagining the Role of the Private Client Professional’ post lockdown which focussed my mind on building a platform designed specifically to provide the means to network effectively and efficiently.

Podcasts I decided after the book was written were not enough – remember I wrote 120 articles for the Weekend FT and did not win any business. It was important for my private client members to have their own platform where they could see the contact details of other members and follow up. But they also needed to meet and build personal relationships without putting up resistance – I still had one tool left in the box – Client Stories

My idea was to build a platform – Caroline’s Club (htpps://carolines.club) bring Private Client Professionals together on a zoom call once a month to hear a pre-recorded private client panel share Client Stories around a theme which we could publish on You Tube and then divide the attendees into client focussed curated network bubbles – so that each private client professional could share their Client Story with others and upload it against their profile so it would not be forgotten and can be referred to at a later date.

The platform took about 4 months to build and was ready by August 2020 – Caroline’s Club and much to my delight the research paid off – after every meeting members follow up and clients are being referred - effective and efficient networking!

Caroline’s Club is not therefore an events business – we are unashamedly about winning business and building trust – we aim to squash the innate fear of the influence of strangers, through a Culture of Care: care for clients, care for colleagues and care for contacts – using aggregation, education and client stories.

If you would like to find out more simply register here

If you would like to promote your services and skills to our network of private client professionals and join our Culture of Care click here to find out more and if you would like to join Caroline’s Club simply register here where you can see what we are up to and if you would like to join simply upgrade your membership.

The Silver Lining - Part 1

In 2006 a thought crossed my mind – ‘How can I win business from private clients?’. I am a lawyer and specialist in trusts, tax planning and succession. Imagine how unpopular I would be at the Monaco boat show with an elevator pitch on ‘death and taxes!’

The reason why it fascinated me so much was because I had been a contributor to the weekend Financial Times on tax and trusts for twelve years – submitting on average 10 articles a year – which were all published in full – very often on the third page with a cartoon – but I did not win one piece of business from the publications even though the article was attributed to me with the name of the firm of which I was a partner.

For many getting a mention in the weekend Financial Times is the pinnacle of marketing success – but I had 120 articles published over twelve years – (for which I was paid) and not one piece of new business

I formed the view that people bought the pink paper at the weekends – walked about a bit with it under their arm– and then put it in the bin – without reading it – so it came as a complete shock when Professor David Hayton the trust supremo – who I was introduced to for the first time in Bermuda (where we had both been invited to advice the government on how to develop its trust business)  who said on being introduced ‘So you are Caroline Garnham – you write for the Financial Times – the first thing I do when I get the weekend paper is to see whether you have written a piece!’

It is the only time I can remember – wanting the ground to swallow me I must have turned scarlet. My embarrassment was short-lived, and we subsequently became good friends swapping ideas about trusts – both onshore and offshore.

It was around this time that I was invited to join a drinks reception at the Frieze sponsored by a bank. I observed that the bankers only met with their clients briefly but on the whole the bankers and private client professionals kept separate from each other. Neither seemed comfortable socialising with the other – I wondered whether the bank considered the sponsorship a good return on investment!

I was by now very curious as to know how to win business from private clients so decided to read what I could about how to sell and negotiate.

My research revealed that we all have what I call an ‘innate fear of the influence of strangers’ – and on average only 2-3% of people will be willing to buy from a stranger on the first introduction. – It generally takes between 5-12 ‘touches’ before the innate fear subsides and a sale can be closed. This would explain why readers of my FT articles went to their trusted adviser and not to me to implement the advice I had given – they knew and trusted their lawyer they did not know me.

The conundrum was how to increase the number of ‘touches’ and with whom

The traditional way in which business is won from private clients is through – B2B marketing. Every wealthy person needs an accountant, a tax specialist and a banker – B2B marketing – is business to business – which involves cosying up to private client professional, in the hope that he or she will recommend your services to their clients.

Most private client professionals I noticed went to events – if the events were industry events – they would probably learn something useful about their area of expertise – but they would be in a room with other professionals who were doing the same work as them – so no new business opportunities would be forthcoming.

The other type of event would be of a more general nature and appeal to a wider community of professionals which would be great for networking, but the talks or panel sessions were largely a waste of time – and I noticed that the attendees would invariably do their emails during the talks and only stop at the breakout sessions. 

This is not to say the breakout sessions were particularly productive. First the professionals would exchange business cards with the other – then they would find something topical to talk about – such as ‘have you had the jab?’ or ‘what do you wear during lockdown?’

This is not surprising because even with B2B marketing the innate fear of the influence of strangers still exists. We have all experienced the ‘event bore’ who pushes product as soon as someone is listening – and we all make a mental note to avoid them in future 

This innate resistance pops up as soon as we feel that someone is trying to sell us something or trying to influence us. – There are however four ways to reduce this resistance which I will go through with you in next week’s note

If you would like to promote your services and skills to our network of private client professionals and join our Culture of Care click here to find out more and if you would like to join Caroline’s Club simply register here where you can see what we are up to and if you would like to join simply upgrade your membership.

The Windsor's - Divided

The interview of Meghan and Harry by Oprah Winfrey was sheer drama – it had everything – Royalty, Racism and Rejection, but beneath the shocking revelations I could not help feeling sad. This was a rift between two brothers brought close through the shared tragic death of their mother and now they have nothing but ‘space’ between them.

It reminds me of a family I worked for in similar circumstances. Ben and Josh (not their real names) had been expected by their father, Mat to run their family business – a household name. After many years, Ben was appointed CEO and Josh the Marketing Director. In due course, Josh got married to an ambitious young Australian woman who thought Josh would make a better CEO than Ben and suggested that he put his forward-thinking ideas to the board which were rejected. In due course, he became disillusioned and distracted.

One day Mat called his son Josh into the board room, on the table was a baseball cap with the word ‘BOSS’ on it

‘Ben’, said Mat – ‘You’re fired’

He then reached into this brief case and took out another baseball cap which he put on with the word ‘FATHER’ embossed on it ‘Son’ said Mat – ‘let’s talk about it’.

Family issues especially if they involve a Family Business, heirloom or Family home are not easy to resolve. Many such family assets are in trust – to distance the family from the decision making, provide privacy and access to the assets on death, asset protection from opportunistic creditors, and in some cases tax benefits – but for all these benefits many families are reluctant to appoint a professional who they do not know well, who will be given total control over the assets and family decisions such as to who gets what and when!

Trustees have a duty of care to act in the best interests of the beneficiaries – but often the difficulty is knowing which one of the beneficiaries should the Trustee listen to!

The situation is often even more complex if the trust – for whatever reason, is offshore – in a country such as Jersey, Isle of Man or the Bahamas – in many cases the Trustees are just not close enough or know enough to exercise their Duty of Care in a timely fashion.

To give an example, last week I was told that a beneficiary of a trust I had set up decades ago – and to which I was not an officer – had been found dead in her apartment; she had been dead for 15 days, her apartment was bare, her bed was a mattress on the floor and there was nothing in the fridge other than a small piece of cheese.

The traditional way to be involved with family members but without jeopardising its tax status is to appoint a Protector – which sounds good, but for tax reasons the Protector must have no pro-active powers other than to appoint and remove the Trustees. As you can imagine a Protector is not always welcomed by professional trustees who would prefer not to have to do their job under the threat of being replaced.

But who in their right mind would want to be a Protector? They have no access to funds to dip into when they need to take advice –no right to financial information on how to make a decision – and no proactive powers other than the blunt instrument to appoint and remove the Trustee - so they usually don’t get as close to the family as they need to be and get called in –only when it is too late to make a difference – or at all.

Where tax and jurisdiction are not an issue – such as I assume with the Queen, a cabinet will be appointed, and decisions taken by the people with the right knowledge and specialist skill about the family business and family members. The conundrum is to get the advantage of a board, which can make pro-active decisions without making the trust tax resident in the country where they meet.

I have seen one solution to this conundrum, which is to appoint an advisory board of experts with the necessary business skill and family knowledge to take the right decisions which are in the best interests of the family and business – the problem from a tax perspective is -  ‘can it be argued that the advisory board is the real decision maker in the trust – in which case the trust could be tax resident where the decisions are taken’? To address this problem – I have seen board members paid a significant sum so as to be treated as advising at arm’s length – which is fine, but then who evaluates their recommendations and implements them – are their decisions just rubber stamped by the Trustee? How much time do they take to this analysis, are they skilled in evaluating the decisions, and how much do they get paid?

The solution that I prefer is to have a structure which gives the right people, with the right experience taking the right decisions at the right time in the right place. This is possible, and much preferable for all – the professional trustee is then not expected to take difficult decisions for which it can be fired, the family founder can appoint a board with the right skills and experience to take the decisions and to take the difficult decisions as and when they arise.

Of course, this type of structure was first conceived for families of significant wealth and for whom their trust offshore was their family office – which engaged skilled administrators, had their own office and staff– but now these structures are mature and can be scaled down to be used by families with much more modest assets – but nevertheless prepared to pay a little extra for the added protection and control

As a Private Client Professional working with families of all shapes and sizes I often require the other Private Client Professionals with the skills and experience I do not have to be able to bring in to serve my clients as and when the need arises. I set up Caroline’s Club; a network of private client professionals who can meet and share their client stories and to promote what they do for their clients using the digital tools at our disposal; podcasts, webinars and a chance to meet in curated network bubbles to share client stories so as not to waste time; effective and efficient networking.

If you would like to promote your services and skills to our network of private client professionals and join our Culture of Care click here to find out more and if you would like to join Caroline’s Club simply register here where you can see what we are up to and if you would like to join simply upgrade your membership.

Hello Dublin!

In Rishi Sunak’s budget last week, he announced an increase in the rate of corporation tax from 19% to 25% in 2023. The Independent said ‘we have to balance the public finances – at some point’ – but – why announce anything now? To my mind it is sheer madness.

True, the deficit could soon hit £400billion; national debt of £2 trillion and rising, but with so much uncertainty – why announce anything now?

Unemployment now stands at 1.7 million, but if just a third of furloughed workers end up losing their jobs, Liam Halligan in the Sun says it will ‘soar over three million – to levels that convulsed British politics during the 1980s’

Sunak seems to have forgotten that we need thriving businesses to grow and expand to employ our unemployed and if some businesses go bust as a result of Covid-19 we need to attract new businesses to the UK – not drive them to places like Dublin where corporation tax rate is a mere 12.5% and it does not have the uncertainty of Brexit hanging over its head

According to an EY Financial Services Brexit Tracker report

• 43% (95 out of 222) of Financial Service Firms have moved or plan to move some UK operations and/or staff to Europe, taking the total number of Brexit related job moves to almost 7,600

• Dublin and Luxembourg remain the most popular EU destinations for staff relocations, new European hubs or office relocations

• Asset managers and investment and retail banks need clarity over Brexit which is still being negotiated in order to make strategic decisions.

And to add to the incentive to move out of the UK, Sunak bumps up the corporation tax to twice that of Dublin.

Added to this was the headline in the Saturday’s Financial Times (a paper to which I was a contributor on tax and trust for 12 years) ‘Brexit barriers hit UK-Europe trade flows’. The first hard data showed a steep decline in activity between the UK and other large EU countries

French exports to the UK were down 13 percent in January compared with the average of the previous six months, while French imports from the UK fell 20% according to the French customs office.

The volume of French exports and imports from other countries rose in January compared with the previous month. These figures indicate that the frictional barriers and uncertainty created by Brexit have dealt a heavy blow to commercial activity between the UK and the EU, its biggest trading partner.

Italy also reported sharp declines, a 38% year on year drop in exports to the UK and a 70% drop in British imports in January.

True – we don’t know how much is due to Brexit and how much is due to lockdown which dealt a heavy blow to global trade in the first half of last year.

But with so much uncertainty in my opinion it was rash of Sunak to announce any form of attempt to balance the books now – given how much we as a nation need to stimulate business activity; not suppress it.

The Daily Telegraph is of the same opinion as me – it said that the danger of announcing an increase in the rate of corporation tax now – is that it will slow if not stall the rate of recovery.

I accept that at 25% our corporation tax rate is still below the G7 average of 27% and the Biden administration’s proposed 28% - but that is to compare apples with pears – we should not look at the other G7 countries we need to look across the Irish sea and see what the rate is there – half of what we will be charging here 12.5% rather than 25%. Lunacy - bonkers.

And as if this was not enough, Sunak deliberately singled out the wealthy for special adverse treatment. Most elderly who need to live off their savings will see the raise in corporation tax adversely affect an already low rate of return on their investments, but he went further – any family which has pooled its investments into Family Investment Companies – to take advantage of the lower rates of corporate tax at 19% rather than the higher income tax rates at more than twice that will be denied access to the 19% corporation tax that is otherwise available to companies with profits of less than £50,000. Close Investment Holding Companies – of which most Family Investment Companies are a subset will pay the full rate of 25% regardless of their profits.

 So in short – Sunak’s Budget is focussed on the voters, not the need to stimulate the economy, attract new businesses to the UK and get our jobless back to work – post pandemic  - I am not a fan

If you would like to promote your services and skills to our network of private client professionals and join our Culture of Care click here to find out more and if you would like to join Caroline’s Club simply register here where you can see what we are up to and if you would like to join simply upgrade your membership.

Who Cares?

Last Tuesday we had a Caroline’s Club members meeting; Nic Arnold head of the Family Office at PwC, Charlotte Thorne founder and director of Cap Gen, Jonathan Gain founder and director of Stellar Asset Management, Silvia Andreotto associate director with JTC in Monaco and I pre-recorded our client stories which we shared with our other members (is shared with you below, and uploaded on our How to Keep your Money webinar on You Tube) before breaking out in ‘matched’ network bubbles for more ‘Client Stories’.

The ethos behind Caroline’s Club as I say often is a Culture of Care; care for our clients, care for our colleagues and care for our contacts and I am delighted to say that this ethos is catching on.

As Private Client Professionals each of us is a specialist – and our clients expect us to know our area of expertise, but to be exceptional we also need to know our clients, what motivates, fears and drives them and to navigate them through tricky areas, guide them past tricky people and lead them away from tricky situations. In this way we build trust and long lasting relationships.

Filippo Noseda – private client partner with law firm Mishcon de Reya, member of Caroline’s Club and next month’s panellist said after the meeting, the Club is not about show casing our expertise, it is about sharing traps, tricks and how to build trust. This is totally correct.

Charlotte Thorne on our panel highlighted a trap when she spoke about a client who was expected to pay for a trade £52,000 for which Cap Gen would charge only a few hundred pounds. We all need to be aware of these discrepancies and guide our clients towards a finance audit from time to time

Of course, as private client professionals, we are expected to advice our clients on ‘clever moves’ like pieces on a jig saw; Silvia for example was able to move her clients from Ukraine to Switzerland and Nic Arnold is able to guide her clients through the maze of tax laws across borders to get the most tax efficient outcome for her clients and their luxury investments and assets

But also, we need to know which professionals have skills which are complementary to our own. As a succession and trust lawyer I am fully aware of the total exemption from Inheritance Tax for assets which qualify for Business Property Relief, but through Jonathan Gain founder of Stellar Asset Management I find an asset manager who can find investments for my clients which qualify to invest in – whether a chunk of forest, the development of a golf club or investments in AIM.

But what makes the difference between a good private client professional and an exceptional one – is not just how well they know their client – but also to be knowledgeable about the traps and tricks in other areas of expertise so that we can care for the wider interests of our clients, contacts and colleagues.

A decade or so ago, the popular phrase in the private client industry was ‘owning’ the clients. Of course, in practice no-one ‘owns’ a client. One professional or another at any one time may work  very closely with a client, such as Silvia with her Ukraine family, or me with the family for whom I was consolidating their business and investment assets into a good governance structure, but at no point is it sensible to say we ‘own’ a client.

In my case, as you can see, personal conflicts in my case study could not be resolved and the family moved towards litigation, an area in which I am not a specialist – but I know of plenty of litigators who are.

For me in recommending a litigator – I was looking for someone who knows the client and the strength of the argument and the opposition, so they know when to go to court, and when to mediate.

In all areas of dispute resolution, it is essential to know the strength and tactics of the other side as well as your own clients tolerance and determination – which leads me onto tax planning and tax advice.

Our podcast professional this week is Andrew McKenna a former tax inspector and joint head of the international department of HMRC and member of Caroline’s Club. On a number of occasions, we have discussed the current attitude of the tax inspectors he once worked with. From his experience he says that the mind set and attitude of an inspector is very different from that of an advisor and this needs to be factored into the advice.

A UK born individual who has lived 30 years abroad, may decide that he has adopted a domicile of choice in his new country and therefore not liable to inheritance tax on his world-wide assets – but if he retains a home in the UK and has family connections in the UK, HMRC may decide otherwise and will adopt a zero tolerance view of the situation.

If you would like to promote your services and skills to our network of private client professionals and join our Culture of Care click here to find out more and if you would like to join Caroline’s Club simply register here where you can see what we are up to and if you would like to join simply upgrade your membership.