Guernsey may be a small jurisdiction – 25 square miles in size, 63 000 people living in the island – but it is one which is perfectly formed for private wealth.
Guernsey operates under a constitutional arrangement with our near neighbours the UK. It dates back some 800 years in history to the reign of King John and the Magna Carta, which gives us the authority and autonomy to create and enforce our own laws. So we can innovate, and do so quickly.
This means that the island’s government, called the States of Guernsey, and industry, can work together to introduce appropriate laws which can ensure that we keep our excellent reputation, and develop a platform for our wealth management industry to best meet the needs of a sophisticated and discerning client base.
We have been an international finance centre now since the 1960s, founded on private wealth, initially with offshore banking, moving to more bespoke structuring.
Guernsey is home to a mature banking sector with substantial presence, comprised of international private and retail banks.
One of the initial drivers was tax. Guernsey offers a tax neutral regime, with a zero rate of tax for corporate entities, and no Capital Gains Tax or Inheritance Tax.
But private wealth structures in the island today are about much more than tax, and have become increasingly sophisticated to meet the demands of today’s high net worth individuals.
Trusts have been established in Guernsey for more than 150 years. The trust is, in origin, an English law concept, so that is quite unusual when you consider that much of Guernsey customary law is derived from French Norman Law.
Much more recently we introduced the Guernsey Foundation, another tool for high net worth individuals to use, either alongside or instead of trusts. This move was made particularly for those jurisdictions with a civil law background, such as the Middle East. Many Guernsey foundations are used for philanthropy.
Who uses Guernsey private wealth structures? It is almost easier to list who does not. In the Middle East Guernsey trusts and foundations enable foreign settlors to pass assets down the generations without having to contend with forced-heirship regimes.
The South African market typically chooses Guernsey to protect assets from uncertainty and volatility at home. But now South African family structures and succession planning needs have evolved, families today are more globally mobile, and asset protection is not necessarily the only driver.
We have a number of traditional markets, such as the UK and many countries in Western Europe. With economic stability an increasing concern for policymakers, who have placed many of our competitors on blacklists, Europeans are particularly drawn to our whitelisted status for economic substance.
Increased complexity, costs and regulatory demands mean clients are looking for a holistic solution for managing the financial and other affairs of wealthy families across a range of services and multiple jurisdictions. This, coupled with the generational shift taking place with the transfer of wealth to the next generation, means that attitudes, expectations and preferences are changing.
The substance and reputation of the jurisdiction in which their private wealth is being managed is increasingly of concern, particularly in light of potential data breaches and reputational damage to high profile individuals or families.
Guernsey has become a centre of excellence for family offices. Local providers have seen clients streamlining and consolidating their structures into a single jurisdiction to simplify the complex, and choosing Guernsey.
Guernsey has for several years had a very strong relationship with South Africa. Many South Africans live and work on the island and there are several well-respected South African firms that have established themselves in Guernsey. In recent years those relationships have strengthened across all sectors of financial services.
We are innovative, forward-thinking, and most definitely not resting on our laurels as we seek to meet the ever-changing needs of high and ultra-high net worth clients and their families.