It is now rare to encounter a high net worth client without family, wealth or interests outside his or her country of residence. However, given the myriad legal, regulatory and fiscal issues that such global lifestyles can raise, and the pace at which law and tax evolve, how can today’s insurers and other wealth managers efficiently serve their client base while differentiating themselves from the competition?
Regulatory cost and shrinking risk appetites have encouraged many institutions to retreat to their core offering, with responsibility for product and planning increasingly outsourced. However, by making wealth structuring a key component of their service, high-end insurers and other financial institutions can still generate time and cost savings while enhancing their ability to innovate, to the ultimate benefit of their clients.
Multi-disciplinary task force
The value of an in-house wealth structuring team lies in the breadth of its expertise and its jurisdictional coverage. To be able to address the most challenging of circumstances and meet clients’ most demanding objectives, the unit will comprise lawyers, tax advisers, insurance and investment professionals, and numerous other industry specialists. In this way, when faced with complex cross-border issues, experts in the relevant fields can be deployed at short notice to work directly with client advisers, rather than cases being handed wholesale to third party legal or tax firms. This can save clients considerable sums, not only in advisory fees but also in time otherwise spent consolidating opinions from experts in multiple countries and disciplines.
Above and beyond
Keeping pace with regulatory change is paramount. However, ensuring continued compliance with European and international norms, supranational initiatives such as information exchange, and the domestic regimes of each of the markets in which a business operates can be complex and costly and is often carried out on a reactive basis. By in-sourcing this process to a wealth structuring team, wealth planning solutions can be updated incrementally, based on the identification of changes well before they take effect. This foresight leaves greater capacity for proactivity, allowing the business to do everything possible to meet client expectations rather than the bare minimum required for compliance.
Overreliance on third party firms can result in products and associated planning becoming gradually outdated and, without sufficient in-house expertise, an insurer is less able to serve existing clients, as the technical knowledge to answer queries or adjust existing planning is missing. Although outside assistance is still occasionally required in an in-house model, internal specialists will ensure that only the most relevant questions are raised, and that these are tackled only with leading advisors. In this way, the insurer builds internal knowledge as well as a panel of selected external experts while maximising return on expenditure when commissioning advice.
A strong wealth structuring capability is also central to the development of lasting relationships with key institutional contacts such as an insurer’s partner banks and investment managers: Specialist teams can provide targeted subject matter training, work with their counterparts to research new ways of doing business, and act as a technical resource to resolve legal, tax or planning issues.
As wealth management and planning become more complex and client needs become more varied, a high-performing in-house wealth structuring team can make the difference between descending into obscurity and emerging as the provider of choice.
By Simon Gorbutt
Originally published in the Lëtzebuerger Journal