Chair of the Jersey Board
Published: 4th Aug 2022
My thoughts on STEP Global Congress 2022.
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I had the privilege of Chairing the Programme panel for the STEP Global Congress 2022. Congress is STEP’s flagship thought leadership event and after 2 cancellations caused by Covid, we were at last able to go ahead at the beginning of July with a record attendance for Congress.
Feedback on the event has been overwhelmingly positive and I am very grateful to the panel members and the speakers for their efforts.
I have summarised my thoughts on a number of the Key Note Speakers and panel sessions that I attended.
Congress began with an opening address from John Stevenson MP, who has worked closely with STEP on various matters including the potential reform of UK inheritance tax via the All Party Parliamentary Group that he chairs.
John stressed that despite the rise in technology, clients still want to work with people they can trust and who have integrity. This resonated with me and is congruent with Altum Group’s values of Respect, Teamwork, Integrity and Ambition.
Soaking the Rich in the 2020s.
Next up was former Treasury Minister and now Macfarlanes partner David Gauke. David confirmed what I think we all knew. Tax and other Government policy is often driven by political expediency rather than the public good. This may well have significant consequences for the Crown Dependencies (“CDs”). David recognised that the CDs have met all of the requirements asked of them by the large economies that control the OECD and FATF and are generally better regulated and compliant than those asking for them to comply. Despite this it is politically expedient for some politicians to attack CDs and other financial centres as it is popular with the public and aligns with the public’s views on those centres. He encouraged those centres to showcase their efforts to fight financial crime and their value to the large economies that they serve.
There are also some serious budget challenges ahead for the UK and by analogy other Western economies as ballooning spending on health is unlikely to continue to be paid for in the future by the peace dividend following the fall of the Soviet Union. Demographics are also weighing heavily on budgets as fewer and fewer working age people have to support the ageing population.
It turns out that the vast majority of tax revenues come from income tax, national insurance and VAT, and that raising rates often results in lower tax take. Maybe it is a good time to let someone else face the challenge and take the blame?
Modern families: reframing the advisors role?
This panel looked at a number of issues surrounding the changing nature of families, including how to define family in today’s world. Family advisers need to understand what family means to the specific family that they are advising rather than making assumptions. It is also important to build a collaboration between the various advisers to build a wider team. At Altum, we work with our clients individually to understand their specific goals framed by their individual circumstances and work collaboratively as part of each client’s team to deliver solutions that meet those goals.
Education across generations is also vital to build a common understanding of the needs and desires of the different generations of family.
These perspectives are entirely consistent with the experience of Altum Group’s Family Office team. At Altum Group we work hard to build consensus across generations in collaboration with other advisers.
What is family? Unpacking the modern families of today and the future.
The theme of “Modern Families” continued with Tsitsi Mutendi from Zimbabwe, a family business adviser for African families. Tsitsi examined cultural and subcultural differences in families globally and further explored the main culture groups that had been discussed in Congress 2018 in Vancouver. At Altum Group we are accustomed to successfully working with families from all cultures.
Asset allocation implications from stagflation.
Christian Mueller-Glissmann, Goldman Sachs International gave a timely presentation on some of the big challenges that investors are currently dealing with. It is received wisdom that investors should remain invested however Christian noted that “Cash has, in the year to date, outperformed most assets, which is unheard of”.
This against a backdrop of rampant inflation and risk, whether it be oil prices, the war in Ukraine or Covid.
It is likely that in the long term equities are likely to beat inflation, but at present the risk is higher and there is benefit to investors being diversified. Real estate is seen as a great asset for return and diversification.
Altum Group is well placed to assist with real estate investments through our specialist real estate team.
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Trusting trusts: keeping faith in a hostile world.
This panel looked at the public perception of trusts. In some parts of the world, trusts are recognised as playing a key role in the fabric of society. In Australia the majority of businesses, including small businesses are operated via trusts. In the USA most wills are in fact lifetime trusts. In both of these countries there is no negative perception of trusts. In the UK, there is a negative perception that trusts are a vehicle for the wealthy (and that wealth is in some way a bad thing). Most people don’t realise that their pension is often held in a trust and possibly also their life assurance policy. In Europe trusts are not well received, possibly because there are no (or few) civil law jurisdictions that have a trust in their legal system.
Driven by the public’s perception of trusts, there is considerable pressure around Europe to implement publicly accessible registers of trusts. The panel drew a distinction between registers available to regulators and police bodies which are seen as proportionate, but were agreed that public registers served no purpose in the fight against financial crime and are measures that are entirely disproportionate to any value they may bring. The panel drew a parallel with a public register of bank accounts which is seen as essentially the same thing, and wondered what the public would think of their bank account details being available to be searched by anyone who cared to look.
The panel concluded that the industry needs to continue to put out short, clear information on trusts, encouraging the public to understand what trusts are, what they can do, and why the perceptions around hiding illicit funds are misleading. The panel made reference to STEP’s research report as a good example.
At Altum Group we support clients that wish to implement legitimate legal arrangements that are clearly documented with well understood objectives.
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Artificial Intelligence(AI): Opportunities and threats for the professions.
The final session of Congress was presented by Professor Richard Susskind OBE. He gave a compelling talk on how AI is likely to impact the professional world.
Innovation vs Automation. Innovation isn’t about supporting or enhancing the way we do things – it’s about doing new things. Many professionals look to AI to automate what they currently do, or to do it more efficiently. AI is likely to lead to both doing what we do better and also doing new things, so that what we do now becomes obsolete.
Many professionals look to interpersonal skills and “judgment” as differentiators to machines. The evidence is that AI driven machines are heading towards being better at both of these! He speaks about the use of computational statistics and data for problem-solving and prediction of outcomes, the fact that computers can process uncertainty and the dawn of an era of non-thinking machines that can ‘outthink’ and out-perform us. He gave real life examples of AI being better at diagnosing skin tumours than expert medical consultants and also better at predicting outcomes of Court disputes than expert lawyers.
His final thought is that predictions of short term impact of AI are largely overstated, but the predictions of mid to long impact of AI are largely understated.His overarching message: Embrace technology and help develop it to stay relevant.
At Altum we are committing substantial resources to technology across our business lines so that we can be at the leading edge of providing solutions to our clients.
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STEP Global Congress 2022 was a fantastic opportunity to learn and share ideas with some of the industry’s leading practitioners. I came away feeling enriched and stimulated and better placed to meet the challenges of the years ahead. I also felt encouraged that Altum Group is committed to embracing the fast changing world explored by the excellent speakers and panellists.