In this new article BDO UK Tax partner and Head of BDO Global Private Client Services, Wendy Walton, shares her perspective on current global trends in private wealth – pointing to some of the latest research.
This is the first in a series of articles from BDO Global Private Client Services in 2018.
It’s the time of year for new resolutions, and for predicting what the year ahead might bring. In BDO Global Private Client Services we operate increasingly on an international scale, working with international and domestic individuals, business owners, families and family offices to help structure their domestic and international affairs in an efficient and compliant manner. Our goal is to give our clients the reassurance that their wealth is compliant with the demands of regulators and structured effectively for long term preservation.
So, what are the trends we see in the world of private client services - in 2018 and beyond? What is the research showing? And how are we as a leading adviser responding?
1. Cross border considerations
Our clients are increasingly international and it is fair to say the world is becoming ever smaller for wealthy individuals. Their business interests, real estate, investments and family members are increasingly spread globally and not always in obvious jurisdictions.
When we work with clients, a key financial objective is ensuring long-term asset preservation while complying with global tax obligations. When choosing where to live, lifestyle factors – increasingly concerning education and security – will still be balanced with economic factors as clients look to ensure their financial affairs and global assets are structured in an efficient manner. An understanding of the tax regimes in the countries of choice is key.
The BDO Global Opportunities Report provides a review of tax regimes around the world with a focus on the 23 most popular locations where people choose to live.
2. Regulation, compliance and the drive for transparency
Regulatory issues impacting the market remain paramount, and increasingly on a worldwide scale - following the introduction of the common reporting standard, the OECD’s global standard for the automatic exchange of information, and the drive worldwide for greater transparency.
In Asia, tightening regulations mean due diligence and compliance are of increasing importance. In UK combine the common reporting standard with beneficial ownership registers and HMRC is more likely than ever to ‘spot’ non-compliance – be it as a result of genuine mistakes, carelessness or deliberate action. The Requirement to Correct is a statutory obligation for taxpayers with overseas assets to correct any issues with their historic UK tax position. Those who fail to do so face punitive financial penalties and other severe sanctions.
The BDO STEP roundtable debate, held in New York in late 2017, and attended by leading advisers and thought leaders from Asia, UK and the Americas, considered the challenges presented by the move towards worldwide transparency and reporting, and of working with clients in multiple jurisdictions.
3. What are clients most interested in?
Clients, wherever they are in the world, are interested in similar things:
- The creation and preservation of their wealth – increasingly its sustainability and security
- The transition of their wealth to future generations. In a time of global mobility this presents new challenges. Finding solutions for international private client families moving across borders – keeping this simple to be able to adapt and evolve over time and across generations – is a challenge for advisers
- The protection of their reputation – in a tax context ensuring compliance given the transparency drive worldwide. And in a wider context, of their privacy and protection of their identity.
Private View on Cyber, is the latest edition of Private View, an online publication that takes a wider view on issues that matter to private clients. It looks at the topic of cyber-crime for private individuals and their families.
4. Am I doing enough?
Increasingly we see a further trend – clients considering their individual personal sense of responsibility and a desire, among the majority, to make the world a better place.
We see this in ways of giving that are the best and in the most effective manner possible; in efforts to ensure the creation of a sustainable legacy; the continued growth in impact investing and ‘doing good’ and in efforts to ensure the success of the next generation – whatever that might mean.
So Philanthropy has many guises – and in an international context, traditional philanthropy is also changing – for example as cross border families create an increased demand for multi-jurisdictional charitable structures.
BDO is undertaking research on this topic area in 2018.
So what does this all mean
As professional advisers we need to keep abreast of increasingly complex tax systems and regulatory requirements – across the globe. We need to be able to work across jurisdictions providing solutions that work in an international context. And we need to keep up with the pace of change. This suggests an ever greater need for communication and collaboration between advisers, working as part of one client team.
Look out for more from our programme of commentary on The World of Private Clients – from BDO’s global network of private client specialists.